Simulations Plus (SLP) Q3 $67M Net Loss Tests Market’s High-Growth Profitability Narrative

Simulations Plus (SLP) just closed FY 2025 with fourth quarter revenue of about $17.5 million and basic EPS of roughly -$0.03, capping a volatile year in which quarterly revenue swung between $17.5 million and $22.4 million while EPS ranged from a high of about $0.15 to a steep loss of roughly -$3.35. Over the last 12 months, the company booked about $79.2 million in revenue but remained unprofitable on a trailing basis, setting up a results season where investors are laser focused on whether margins can recover from recent pressure.

See our full analysis for Simulations Plus.

With the latest numbers on the table, the next step is to weigh this margin story against the most widely held narratives about Simulations Plus and see which views the data actually supports.

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Losses Deepen Despite $79 Million Trailing Sales

• Over the last 12 months Simulations Plus generated about $79.2 million in revenue but posted a trailing net loss of roughly $64.7 million, with losses having increased at about 49.5% per year over the past five years.
• Analysts' consensus narrative leans on strong future earnings growth, yet the shift from $9.6 million to a loss of about $64.7 million over recent five year trends creates a clear tension between past execution and the expectation of a sharp profitability turnaround.
  • Consensus commentary highlights disciplined growth and higher EBITDA margin targets. However, the trailing 12 month loss stands in contrast to that profitability focus.
  • The same consensus view points to growth in QSP and cross selling as key drivers. At the same time, the current trailing net margin implied by $64.7 million of losses on $79.2 million of revenue shows those growth initiatives have not yet translated into positive bottom line results.

Mixed Valuation Signals At $19.53 Share Price

• At a share price of $19.53 and a price to sales ratio near 5 times, the stock trades above peer and industry averages of about 2.1 times and 2.6 times sales even though trailing 12 month earnings are negative.
• Consensus narrative suggests that higher future margins will justify this premium. However, the contrast between the elevated sales multiple and the company being currently unprofitable while revenue is only expected to grow about 8.6% per year invites skepticism about how quickly that premium can be earned.
  • Forecast revenue growth of 8.6% annually trails the broader US market expectation of 10.5% per year, which is not obviously consistent with paying nearly double the sector average price to sales multiple.
  • The DCF fair value of about $22.09 is only modestly above the current $19.53 share price. As a result, most of the expected upside depends on the company delivering the anticipated profit improvement rather than on rapid top line expansion.

Forecast 131% Earnings Growth Versus Recent $67 Million Quarterly Hit

• Analysts are modeling earnings to grow about 131% per year and move from a trailing loss of roughly $64.7 million toward profitability within three years even though fiscal 2025 included a third quarter net loss of about $67.3 million on $20.4 million of revenue.
• Bears argue that deepening losses make the profitability path uncertain, and the combination of the $67.3 million loss in a single quarter and worsening five year loss trends heavily supports that cautious stance against the bullish expectations for rapid earnings recovery.
  • The step down from a trailing profit of about $9.6 million in earlier years to a current trailing loss near $64.7 million shows that earnings have not just softened; they have swung sharply negative despite revenue growth.
  • Even with a smaller fourth quarter loss of around $0.7 million on $17.5 million in revenue, the full year pattern of negative EPS across three of four quarters reinforces the bearish concern that the business has not yet stabilized enough to support the aggressive profit forecasts.

Analysts who think the recent $67 million quarterly loss is a temporary detour, not a new normal, will want to explore the detailed bull case narrative for how earnings could compound at triple digit rates from here. 🐂 Simulations Plus Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Simulations Plus on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers another way? Use that angle to shape a fresh narrative in just a few minutes with Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Simulations Plus.

Explore Alternatives

Simulations Plus faces deepening losses, a premium valuation, and volatile margins, raising doubts about whether its earnings can rebound quickly enough to justify the current price.

If you want steadier execution and more attractive pricing, use our these 935 undervalued stocks based on cash flows to quickly find companies where fundamentals and valuation appear more favorable right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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