Simulations Plus, Inc. (NASDAQ:SLP) Q3 2023 Earnings Call Transcript

Shawn O’Connor: Yes, it’s very much like our existing QSP business, which delivers maybe a 20/80 split: 20% of the revenue generated is licensing of those models, the client who brings it in-house and uses it; and 80%, service-based revenues, client that are asking us to do the heavy lifting and perform projects using the model for them. And very similar between our existing QSP business and Immunetrics business. Will that change? I don’t think it will change dramatically. Quite frankly, they’ve been a little bit more successful in giving some technology fees where projects are essentially service engagements. They’ve established arrangements with the client to license the model during the project window of time. Maybe there’s something we’ll learn from them in that regard. But I don’t think it’ll change that mix of 20/80.

Francois Brisebois: Great. And then just lastly — last one here. In terms of the percentage, do you disclose the percentage of your business just in relation to all the funding headwinds, the percentage of your business that comes from pharma versus small biotech? And any color on the stickiness? I think we had talked about a 95% kind of stickiness. Any added color there?

Shawn O’Connor: Yes, I mean, it’s where do you draw the line, Frank. I mean, where we stumble a bit is small biotech, where do you draw the line and weed out the Genentechs and Amgens of the world and identify just small biotech. So I do know that biotech as a overall label represents maybe 20% of our business, but again it includes those large players that aren’t subject to these funding issues that exist out there. So it’s something much less than that in terms of the total segment. In terms of the renewal rates, yeah, certainly the smallest of biotechs are the ones that we see the most churn in that are not redoing. But as you can see in terms of the differential between the renewal rate for fee and the mid-90%-s, that’s held pretty steady, which, in the end, means that we’ve overcome any shortfalls there with incremental price increases.

And by account renewal fee in the mid-80%s, that one’s come down from maybe more typically in the high 80% down to the mid-80%s. That’s reflective of these smaller biotechs, not the new one on just sort of a churn number of accounts basis.

Francois Brisebois: Thank you.

Shawn O’Connor: Very good, Frank.

Operator: There are no further questions in queue. I’d like to hand the call back to Mr. O’Connor for closing remarks.

Shawn O’Connor: Well, thank you everyone for joining us here on our third quarter earnings call, and look forward to racing through the fourth quarter here and speaking again in due time in October. Take care, everyone.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.