Simulations Plus, Inc.
For the period ended Nov 30, 2025. Filed Jan 9, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 30, 2025 · Filed Jan 9, 2026
SLP$18.500.0%Stored close · as of Oct 5, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-05-31; filed 2025-07-15.
0001023459-25-000049
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-11-30; filed 2026-01-09.
0001023459-26-000006
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 111 previous paragraphs and 84 current paragraphs.
50 unchanged; 15 reworded; 19 added; 46 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
The Company is headquartered in Research Triangle Park, North Carolina, and has a European office in Paris, France. The Company has a remote work culture that supports employee work-life balance and minimizes its carbon footprint.
Current report
Cost of revenues decreased by $1.2 million, or 14%, for the three months ended November 30, 2025, compared to the three months ended November 30, 2024. This decrease is primarily due to a $1.2 million, or 46%, decrease in software-related cost and a $0.1 million, or 1%, decrease in service-related costs. The decrease reflects lower software-related costs, partially offset by higher services-related costs, consistent with the period’s revenue mix and delivery activity.
Current report
The software-related costs decrease of $1.2 million, or 46%, compared to the three months ended November 30, 2024, was primarily due to less amortization of $0.8 million as a result the of Pro-ficiency developed technology being impaired in the third quarter of fiscal year 2025 and lower capitalized software amortization costs of $0.1 million.
Current report
The service-related costs decreased $0.1 million, or 1%, compared to the three months ended November 30, 2024, was primarily due to a $0.3 million reclassification of certain costs from general, and administrative (“G&A”) to cost of revenues to better align expenses with service delivery, and higher pass-through costs billed to a customer of $0.7 million associated with specific client engagements. These increases were partially offset by lower compensation-related costs as a result of the approximately 11% headcount reduction implemented in the third quarter of fiscal year 2025.
Current report
Gross profit increased $1.5 million, or 15% to $10.9 million for the three months ended November 30, 2025, compared to $10.2 million for the three months ended November 30, 2024.
Current report
Software gross profit decreased by $0.6 million primarily due to lower software revenue, particularly in Clinical Operations and Development solutions, offset by lower software-related costs, including reduced amortization.
Current report
Services gross profit increased by $1.4 million, primarily due to higher services revenue driven by increased client services activity and headcount reduction implemented in the third quarter of fiscal 2025, partially offset by higher delivery costs, and higher pass-through costs on customer engagements.
Current report
Overall gross margin was 59% for the three months ended November 30, 2025, compared to 54% for the three months ended November 30, 2024, primarily from a decrease in software amortization and by the effect of pass-through costs associated with certain services engagements.
Current report
R&D spend as a percentage of revenue increased to 16% for the three months ended November 30, 2025, from 10% for the three months ended November 30, 2024 representing our continued investment in innovation for future growth. Total R&D cost (defined as capitalized R&D plus R&D expense) was 21% of revenue for the three months ended November 30, 2025, compared to 14% for the three months ended November 30, 2024.
Current report
Sales and marketing expenses increased by $0.3 million, or 12%, to $3.2 million for the three months ended November 30, 2025, compared to $2.9 million for the three months ended November 30, 2024. Sales and marketing as a percentage of revenue increased to 17% for the three months ended November 30, 2025, from 15% for the three months ended November 30, 2024. The increase primarily reflected higher variable selling costs and customer-facing activities to support commercial execution and demand generation across our offerings.
Current report
G&A expenses decreased by $1.4 million, or 25%, to $4.0 million for the three months ended November 30, 2025, compared to $5.4 million for the three months ended November 30, 2024. G&A as a percentage of revenue decreased to 22% for the three months ended November 30, 2025, from 28% for the three months ended November 30, 2024. The decrease primarily reflected lower corporate support costs and reduced non-recurring spending. In addition, merger and acquisition-related costs decreased due to lower deal activity and associated professional fees in the current period. Facilities costs decreased as we continued to optimize our real estate footprint consistent with a remote-first operating model.
Current report
Total other income was $0.3 million for the three months ended November 30, 2025, compared to total other income of $0.1 million for the three months ended November 30, 2024. Interest income increased by $0.1 million due to higher balances of cash invested in interest-bearing accounts.
Current report
Income tax expense
Current report
The expense for income taxes was $0.3 million for the three months ended November 30, 2025, compared to $0.1 million for the three months ended November 30, 2024. The Company tax rate increased to 30.3% for the three months ended November 30, 2025, compared to 23.7% for the three months ended November 30, 2024. The income tax rate increase is primarily due to favorable discrete items recognized for the three month ended November 30, 2024 that did not recur for the three months ended November 30, 2025.
Current report
Net cash provided by operating activities was $4.2 million for the three months ended November 30, 2025, compared to net cash used by operating activities of $1.3 million for the three months ended November 30, 2024. The $5.5 million improvement was driven primarily by a $5.8 million year-over-year improvement in working capital cash flows, largely reflecting lower variable compensation of $1.8 million in the prior period, a $2.0 million higher contribution from deferred revenue, reflecting higher billings collected in advance and timing of revenue recognition, and a $1.2 million improvement in accounts receivable cash usage due to the timing of billings and collections. These favorable changes were partially offset by a $1.7 million increase in prepaid expenses and other assets and a $0.3 million decrease in cash generated from operating results before working capital changes (defined as net (loss) income adjusted for non-working capital items).
Current report
Net cash used in operating activities was $1.3 million for the three months ended November 30, 2024. While we generated cash from operating results before working capital changes, working capital was a net use of cash, driven primarily by a $3.7 million increase in accounts receivable resulting from customer invoicing that occurred closer to quarter-end and the timing of collections, and a $4.1 million decrease in other liabilities, primarily reflecting cash payments of $1.8 million for variable compensation, $1.1 million of payments of accrued expenses, and one-time reorganization costs of $0.3 million. These uses of cash were partially offset by a $1.2 million increase in deferred revenue, reflecting customer billings collected in advance and timing of revenue recognition, a $0.5 million increase in accounts payable, and a $0.7 million decrease in prepaid expenses and other assets.
Current report
Net cash used in investing activities during the three months ended November 30, 2025, was $4.9 million. Investing cash flows primarily reflect deployment and rebalancing of our short-term investment portfolio and capitalized software development to support product and platform enhancements. During the quarter, we invested $5.5 million in short-term investments as part of our treasury strategy to prudently invest excess cash while preserving liquidity and capital, and we incurred $0.9 million of capitalized computer software development costs to support ongoing product development and technology improvements. These uses of cash were partially offset by $1.5 million of maturities of short-term investments as securities matured in the normal course of portfolio management.
Current report
Net cash used in investing activities during the three months ended November 30, 2024, was $3.1 million. Investing cash flows primarily reflect deployment and rebalancing of our short-term investment portfolio, capitalized software development to support product and platform enhancements, and certain strategic investment and acquisition-related items. During the quarter, we invested $3.5 million in short-term investments as part of our treasury strategy to prudently invest excess cash while preserving liquidity and capital, and we incurred $0.6 million of capitalized computer software development costs to support ongoing product development and technology improvements. We also used cash for investing in intangible assets of $0.2 million, and a net working capital and excess cash settlement payment of $0.2 million related to the Pro-ficiency acquisition. These uses of cash were partially offset by $1.5 million of maturities of short-term investments as securities matured in the normal course of portfolio management.
Current report
Net cash provided by financing activities during the three months ended November 30, 2025, was less than $0.1 million, consisting of proceeds from the exercise of stock options.
Removed paragraphs (46)
Previous report
The Company was previously headquartered in Southern California; however, in support of the Company's remote work culture and plan to reduce excess office space to achieve its carbon footprint reduction targets, the Company fully exited four office locations in Lancaster, California; Raleigh, North Carolina; Buffalo, New York; and Pittsburgh, Pennsylvania. As a result, the company moved its headquarters from Lancaster, California, to Research Triangle Park, North Carolina, and also maintains a European office in Paris, France.
Previous report
Cost of revenues increased by $2.0 million, or 39%, for the three months ended May 31, 2025, compared to the three months ended May 31, 2024. This increase is primarily due to a $1.1 million or 81%, increase in software-related cost and a $0.9 million or 23%, increase in service-related costs. The software-related costs increase of $1.1 million or 81%, compared to the three months ended May 31, 2024, was primarily due to additional amortization of $0.8 million as a result of the acquisition of Pro-ficiency and $0.3 million of higher amortization of capitalized software cost driven by the release of GastroPlus in May 2024. The service-related costs increase of $0.9 million or 23%, compared to the three months ended May 31, 2024, was primarily due to additional costs from the Pro-ficiency acquisition of $1.6 million, and a $1.0 million shift from G&A expense to cost of revenues, due to the FY24 reorganization, partially offset by $1.3 million of lower accrued bonuses due to Company performance, lower stock compensation expense of $0.2 million, and lower cost of revenues of $0.2 million due to lower revenues.
Previous report
Gross profit decreased marginally to $13.0 million from $13.3 million, or 1.7% for the three months ended May 31, 2025, and May 31, 2024. The gross profit decreased modestly in our software business by $0.4 million, or 4%, and increased moderately for our services business by $0.2 million, or 8%, for the three months ended May 31, 2025, compared to the three months ended May 31, 2024.
Previous report
Overall gross margin percentage was 64% and 71% for the three months ended May 31, 2025 and 2024, respectively, due to the factors described above.
Previous report
Sales and marketing expenses increased by $0.3 million, or 12%, to $2.7 million for the three months ended May 31, 2025, compared to $2.4 million for the three months ended May 31, 2024. The increase for the three months ended May 31, 2025, was primarily due to a $0.5 million increase in expenses related to the acquisition of Pro-ficiency, partially offset by lower stock compensation of $0.1 million and lower sales commissions of $0.1 million.
Previous report
General, and administrative (“G&A”) expenses decreased by $1.5 million, or 20%, to $6.1 million for the three months ended May 31, 2025, compared to $7.7 million for the three months ended May 31, 2024. The decrease is primarily driven by a $1.0 million shift from G&A expense to cost of revenues, due to the FY24 reorganization, reduction in bonus expense of $0.9 million, lower travel and entertainment expenses of $0.1 million, partially offset by $0.6 million expense related to a company wide employee summit.
Previous report
Impairments
Previous report
During the third quarter of 2025, the Company identified the underperformance of revenue at ALI and MC relative to forecasts utilized in the purchase price allocation and the significant stock price decline in relative terms and in comparison to peers as a triggering event as of May 31, 2025, indicating goodwill, other intangibles and long-lived assets may be impaired. As a result of the impairment test performed, the Company determined goodwill, other intangibles and certain long-lived assets were impaired for its PBPK Services, QSP Software, QSP Services, ALI/MC Software and MC Services reporting units and recorded impairment charges of $0.3 million, $2.7 million, $2.2 million, $33.6 million and $38.4 million, respectively. No impairment was recognized as of May 31, 2024.
Previous report
Total other income was $0.2 million for the three months ended May 31, 2025, compared to total other income of $2.0 million for the three months ended May 31, 2024. Interest income decreased by $1.4 million due to the use of cash from investment in debt securities to acquire Pro-ficiency and other income decreased by $0.6 million due to changes in the fair value of the earnout liability related to the Immunetrics acquisition. The fair value of the earnout liability decreased, as no earnout payment was earned in the second earnout measurement period.
Previous report
Provision for income taxes
Previous report
The benefit for income taxes was $6.7 million for the three months ended May 31, 2025, compared to an expense of $0.8 million for the three months ended May 31, 2024. The Company tax rate decreased to 9.1% for the three months ended May 31, 2025, when compared to 19.4% for the three months ended May 31, 2024. The decrease in the tax rate is primarily due to discrete expenses recognized during the three months ended May 31, 2025.
Previous report
Results of Operations
Previous report
Comparison of Nine Months Ended May 31, 2025 and May 31, 2024
Previous report
Revenues
Previous report
Revenues increased by $10.4 million, or 20%, to $61.7 million for the nine months ended May 31, 2025, compared to $51.3 million for the nine months ended May 31, 2024. This increase is primarily due to a $5.7 million, or 18%, increase in software-related revenue and a $4.7 million, or 23%, increase in service-related revenue when compared to the nine months ended May 31, 2024. The software-related revenue increase of $5.7 million, or 18%, compared to the nine months ended May 31, 2024, was primarily due to additional revenue from the Pro-ficiency acquisition of $3.0 million, higher revenues from CPP of $1.0 million and higher revenues from QSP of $0.9 million as perpetual licenses sales increased. The service-related revenue increase of $4.7 million, or 23%, compared to the nine months ended May 31, 2024, was primarily due to additional revenue from the Pro-ficiency acquisition of $6.2 million offset by lower revenue from PBPK of $0.8 million and lower revenue from QSP of $0.8 million due to soft market conditions.
Previous report
Cost of revenues
Previous report
Cost of revenues increased by $10.3 million, or 69%, for the nine months ended May 31, 2025, compared to the nine months ended May 31, 2024. This increase is primarily due to a $4.0 million or 108%, increase in software-related cost and a $6.3 million or 56%, increase in service-related costs. The software-related costs increase of $4.0 million or 108%, compared to the nine months ended May 31, 2024, was primarily due to additional cost of revenues of $3.0 million as a result of the Pro-ficiency acquisition out of which $2.5 million is from amortization of developed technology from the acquisition of Pro-ficiency, and $1.0 million of higher amortization of capitalized software cost driven by the release of GastroPlus in May 2024, offset by a decrease of $0.4 million of fully amortized TSRL in the third quarter of fiscal year 2024. The service-related costs increase of $6.3 million or 56%, compared to the nine months ended May 31, 2024, was primarily due to additional costs from the Pro-ficiency acquisition of $4.7 million, and $2.6 million shift from G&A expense to cost of revenues, due to the FY24 reorganization. The $2.6 million increase in cost of revenues corresponds to the $2.6 million decrease in general and administrative expenses discussed below, partially offset by $1.2 million of lower accrued bonuses due to Company performance.
Previous report
Gross profit
Previous report
Gross profit remained relatively flat at $36.4 million for the nine months ended May 31, 2025, compared to $36.3 million for the nine months ended May 31, 2024. Gross profit increased in our software business by $1.7 million, or 6%, and decreased for our services business by $1.6 million, or 18%, for the nine months ended May 31, 2025, compared to the nine months ended May 31, 2024.
Previous report
Overall gross margin percentage was 59% and 71% for the nine months ended May 31, 2025 and 2024, respectively. Gross margin decline is largely attributable to the underperformance of Pro-ficiency revenues.
Previous report
Research and development
Previous report
We incurred $7.6 million of research and development costs during the nine months ended May 31, 2025. Of this amount, $2.4 million was capitalized as a part of capitalized software development costs and $5.2 million was expensed. We incurred $6.4 million of research and development costs during the nine months ended May 31, 2024. Of this amount, $2.6 million was capitalized and $3.8 million was expensed. Research and development spend increased by $1.2 million, or 18%, for the nine months ended May 31, 2025, compared to the nine months ended May 31, 2024, primarily due to an increase of $1.2 million from the acquisition of Pro-ficiency.
Previous report
Sales and marketing expenses
Previous report
Sales and marketing expenses increased by $2.9 million, or 46%, to $9.2 million for the nine months ended May 31, 2025, compared to $6.3 million for the nine months ended May 31, 2024. The increase was primarily due to an increase of $1.3 million from the acquisition of Pro-ficiency, $0.4 million in higher event-related spending to enhance brand awareness and customer engagement, increased headcount costs of $0.7 million, $0.3 million incurred to support our business development efforts, and increased sales commission to employees of $0.1 million.
Previous report
General, and administrative expenses
Previous report
General, and administrative (“G&A”) expenses decreased by $2.8 million, or 15%, to $16.1 million for the nine months ended May 31, 2025, compared to $18.9 million for the nine months ended May 31, 2024. The decrease is primarily driven by a $2.6 million shift from G&A expense to cost of revenues, as referenced above, due to the FY24 reorganization and a decrease in bonus expense of $1.2 million, partially offset by an increase of $0.9 million from the acquisition of Pro-ficiency.
Previous report
Impairments
Previous report
During the third quarter of 2025, the Company identified the underperformance of revenue at ALI and MC relative to forecasts utilized in the purchase price allocation and the significant stock price decline in relative terms and in comparison to peers as a triggering event as of May 31, 2025, indicating goodwill, other intangibles and long-lived assets may be impaired. As a result of the impairment test performed, the Company determined goodwill, other intangibles and certain long-lived assets were impaired for its PBPK Services, QSP Software, QSP Services, ALI/MC Software and MC Services reporting units and recorded impairment charges of $0.3 million, $2.7 million, $2.2 million, $33.6 million and $38.4 million, respectively. No impairment was recognized in May 31, 2024.
Previous report
Other income
Previous report
Total other income was $1.1 million for the nine months ended May 31, 2025, compared to total other income of $4.3 million for the nine months ended May 31, 2024. $3.7 million of the decrease in interest income is attributable to the use of cash from investment in debt securities to acquire Pro-ficiency, partially offset by a $0.4 million increase due to the decrease in the fair value of the Immunetrics earnout liability, as no earnout payment is anticipated related to the second earnout measurement period.
Previous report
Provision for income taxes
Previous report
The benefit for income taxes was $6.2 million for the nine months ended May 31, 2025, compared to an expense of $2.4 million for the nine months ended May 31, 2024. The Company tax rate decreased to 8.9% mainly due to both the lower proportion of US taxable income vs France where the effective tax rate is significantly lower and tax benefits from discrete items, when compared to 21.1% for the nine months ended May 31, 2024.
Previous report
Net cash provided by operating activities was $12.5 million for the nine months ended May 31, 2025. Our operating cash flows resulted in part from our net loss of $64.0 million, offset by cash payments we made to third parties for their services, employee compensation, and non-cash impairment charges. The changes in balances of assets of $4.1 million was primarily due to change in accounts receivables driven by higher revenues and invoicing that occurred closer to the end of the current quarter and higher prepaid income taxes of $1.2 million driven by timing of cash tax payments. The changes in liabilities balances of $0.8 million were primarily due to higher deferred revenues of $2.3 million driven by higher invoicing that occurred closer to the end of the current quarter and timing of revenue recognition, and higher accounts payable of $1.1 million driven by timing of payments, offset by lower bonus accrual of $2.4 million driven by lower business performance.
Previous report
Net cash provided by operating activities was $11.7 million for the nine months ended May 31, 2024. Our operating cash flows resulted primarily from our net income of $9.1 million. In addition, $3.0 million related to changes in balances of operating assets and liabilities was added to net income and $5.6 million related to noncash charges was added to net income to reconcile to cash flow from operations.
Previous report
Net cash provided by operating activities decreased by $0.9 million during the nine months ended May 31, 2025, compared to the nine months ended May 31, 2024. This decrease was driven by drivers as explained above for both comparative periods.
Previous report
Net cash provided by investing activities during the nine months ended May 31, 2025, was $5.4 million, primarily due from maturities of short-term investments of $14.0 million and sale of short-term investments of $1.0 million, partially offset by the purchase of short-term investments of $6.5 million and computer software development costs of $2.1 million,
Previous report
Net cash provided by investing activities during the nine months ended May 31, 2024, was $45.5 million, primarily due to the sale of investments for $45.1 million and maturities of short-term investments for $71.1 million. This was partially offset by purchase of short-term investments of $67.2 million and computer software development costs of $2.5 million.
Previous report
Net cash used in financing activities during nine months ended May 31, 2024, was $5.6 million, primarily due to dividend payments totaling $3.6 million and the first cash earnout payments in the aggregate amount of $2.5 million to the former equity holders and employees of Immunetrics, partially offset by proceeds from the exercise of stock options totaling $0.5 million.
Previous report
Pro-ficiency Acquisition
Previous report
On June 11, 2024, the Company entered into a Stock Purchase Agreement, by and among the Company, Pro-ficiency, each of the stockholders of Pro-ficiency (collectively, the “Sellers”) and WRYP Stockholders Services, LLC, solely in its capacity as the Sellers’ Representative (the “Purchase Agreement”). Pursuant to the Purchase Agreement, at closing on June 11, 2024, (the “Closing”), the Company purchased 100% of the issued and outstanding capital stock of Pro-ficiency (the “Acquisition”) from the Sellers for an aggregate purchase price of $100 million in cash, subject to post-closing adjustments for net working capital, closing cash, indebtedness, and transaction expenses (collectively, the “Purchase Price”). An aggregate of $1 million of the Purchase Price was placed in escrow to fund payment obligations of the Sellers with respect to post-closing Purchase Price adjustments and post-Closing indemnification obligations of the Sellers, and another portion of the Purchase Price was deposited into an account to reimburse the Seller Representative for any fees and expenses incurred by the Seller Representative in performing its duties under the Purchase Agreement as the representative of the Sellers. As a result of the Acquisition, at Closing, Pro-ficiency became a wholly-owned subsidiary of the Company.
Showing the first 40 of 46 passages. Open the source sections for the rest.
Reworded paragraphs (15)
Previous wording
Our clients face many challenges. Developing new therapies is time-consuming and expensive, requiring an average of 10-15 years and an average cost of approximately $1.3-$2.8 billion to develop a single drug. Drug sponsors must prioritize not only efficacy and safety of the drug, but also issues like drug-drug interactions, inclusion of patients representative of the indicated population, regulatory approvals, minimization of animal testing, safety and compliance during clinical trials, and commercial success.
Current wording
Our clients face many challenges. Developing new therapies is time-consuming and expensive, requiring an average of 10-15 years and an average cost of approximately $2.2 billion to develop a single drug. Drug sponsors must prioritize not only efficacy and safety of the drug, but also issues like drug-drug interactions, inclusion of patients representative of the indicated population, regulatory approvals, minimization of animal testing, safety and compliance during clinical trials, and commercial success. Our clients face many macro-economic issues including the current attention on global drug pricing resulting in temporary reduction in R&D spending on the part of pharmaceutical and biotech companies.
Previous wording
Our model-informed drug development (“MIDD”) software and services allow clients to use modeling and simulation to accelerate drug development, reduce the costs of R&D, comply with regulatory guidance and best practices, and increase confidence in the safety and efficacy of their drugs and biologics. Our adaptive learning solutions support the success of clinical trials by accelerating recruitment of an appropriate patient population, increasing retention of participants, and by driving competency and compliance with trial protocols, while our medical communications solutions provide support in obtaining regulatory approval and commercialization of drugs.
Current wording
Our MIDD software and services allow clients to use modeling and simulation to accelerate drug development, reduce the costs of R&D, comply with regulatory guidance and best practices, and increase confidence in the safety and efficacy of their drugs and biologics. Our adaptive learning solutions support the success of clinical trials by accelerating recruitment of an appropriate patient population, increasing retention of participants, and by driving competency and compliance with trial protocols, while our medical communications solutions provide support in obtaining regulatory approval and commercialization of drugs.
Previous wording
Revenues increased by $1.8 million, or 10%, to $20.4 million for the three months ended May 31, 2025, compared to $18.5 million for the three months ended May 31, 2024. This increase is primarily due to a $0.7 million, or 6%, in software-related revenue and a $1.1 million, or 17%, increase in service-related revenue when compared to the three months ended May 31, 2024. The software-related revenue increase of $0.7 million, or 6%, compared to the three months ended May 31, 2024, was primarily due to additional revenue from the Pro-ficiency acquisition of $0.4 million. The service-related revenue increase of $1.1 million or 17%, compared to the three months ended May 31, 2024, was primarily due to additional revenue from the Pro-ficiency acquisition of $2.0 million; however this was partially offset by a lower number of insufficient actionable projects and lower utilization from scientific staff.
Current wording
Revenues decreased by $0.5 million, or 3%, to $18.4 million for the three months ended November 30, 2025, compared to $18.9 million for the three months ended November 30, 2024. This decrease is primarily due to a $1.8 million, or 17% decrease, in software-related revenue and a $1.3 million, or 16%, increase in service-related revenue when compared to the three months ended November 30, 2024. The software-related revenue decrease of $1.8 million, or 17%, compared to the three months ended November 30, 2024, was primarily due to a $1.4 million decline in revenue from Clinical Operations and a $0.4 million decline in revenue from Development. The service-related revenue increase of $1.3 million, or 16%, compared to the three months ended November 30, 2024, was primarily due to organic revenue growth of $0.8 million from Commercialization and $0.5 million from Development.
Previous wording
We incurred $2.1 million of research and development costs during the three months ended May 31, 2025. Of this amount, $0.9 million was capitalized as part of capitalized software development costs, and $1.2 million was expensed. We incurred $2.1 million of research and development costs during the three months ended May 31, 2024. Of this amount, $0.8 million was capitalized, and $1.3 million was expensed. Research and development spend decreased by $0.1 million, or 2%, for the three months ended May 31, 2025, compared to the three months ended May 31, 2024.
Current wording
We incurred $3.9 million of research and development costs during the three months ended November 30, 2025. Of this amount, $0.9 million was capitalized as part of capitalized software development costs, and $3.0 million was expensed. We incurred $2.6 million of research and development costs during the three months ended November 30, 2024. Of this amount, $0.7 million was capitalized, and $1.8 million was expensed. Research and development spend increased by $1.3 million, or 51%, for the three months ended November 30, 2025, compared to the three months ended November 30, 2024, reflecting higher investment in product and platform development activities, including continued enhancement and expansion of our software offerings and related capabilities. The increase was primarily attributable to higher personnel-related costs, consistent with increased efforts to support these development initiatives.
Previous wording
Our principal sources of capital have been cash flows from our operations. We expect existing cash, cash equivalents, short-term investments, cash generated by ongoing operations, and working capital will be sufficient to fund our operating activities and cash commitments for investing and financing activities and material capital expenditures for the next 12 months and beyond.
Current wording
Our principal sources of capital have been cash flows from our operations. We expect existing cash, cash equivalents, short-term investments, cash generated by1 ongoing operations, and working capital will be sufficient to fund our operating activities and cash commitments for investing and financing activities and material capital expenditures for the next 12 months and beyond.
Previous wording
At May 31, 2025, the Company had $27.0 million in cash and cash equivalents, $1.5 million in short-term investments, and net working capital of $41.6 million. Short-term investments consist of highly liquid investment-grade fixed-income securities, diversified among industries and issuers. The investments are U.S.-dollar-denominated securities. Our fixed-income investments are exposed to interest rate risk and credit risk. The settlement risk related to these investments is insignificant, given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities and can readily be converted to cash when needed.
Current wording
At November 30, 2025, the Company had $30.2 million in cash and cash equivalents, $5.5 million in short-term investments, and net working capital of $47.8 million. Short-term investments consist of CD's and cash equivalents. The investments are U.S.-dollar-denominated securities.
Previous wording
Net cash used in financing activities during the nine months ended May 31, 2025, was $1.3 million, primarily due to cash settlement of $1.6 million from the holdback obligation related to the Immunetrics acquisition, offset by proceeds from the exercise of stock options totaling $0.3 million.
Current wording
Net cash provided by financing activities during the three months ended November 30, 2024, was $0.3 million, primarily due to proceeds from the exercise of stock options.
Previous wording
For the three and nine months ended May 31, 2025, and May 31, 2024, respectively, we did not repurchase any shares of Company stock. As of May 31, 2025, $30 million remains available for additional repurchases under our authorized repurchase program. However, we are not obligated to repurchase any additional shares, and the timing, manner, price, and actual amount of further share repurchases will depend on a variety of factors, including stock price, market conditions, other capital management needs and opportunities, and corporate and regulatory considerations. The share repurchase program has no expiration date but may be terminated at any time at our Board of Directors’ discretion.
Current wording
For the three months ended November 30, 2025, and November 30, 2024, respectively, we did not repurchase any shares of Company stock. As of November 30, 2025, $30 million remains available for additional repurchases under our authorized repurchase program. However, we are not obligated to repurchase any additional shares, and the timing, manner, price, and actual amount of further share repurchases will depend on a variety of factors, including stock price, market conditions, other capital management needs and opportunities, and corporate and regulatory considerations. The share repurchase program has no expiration date but may be terminated at any time at our Board of Directors’ discretion.
Previous wording
The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Contracts generally have fixed pricing terms and are not subject to variable pricing. The Company considers the nature and significance of each specific performance obligation under a contract when allocating the proceeds under each contract. Accounting for contracts includes significant judgement in the estimation of hours/cost to be incurred on consulting contracts, and thede minimis nature of the post-sales costs associated with software sales.
Current wording
The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Contracts generally have fixed pricing terms and are not subject to variable pricing. The Company considers the nature and significance of each specific performance obligation under a contract when allocating the proceeds under each contract. Accounting for contracts includes significant judgment in the estimation of hours/cost to be incurred on consulting contracts, and thede minimis nature of the post-sales costs associated with software sales.
Previous wording
Software development costs are capitalized in accordance with ASC 985-20, “Costs of Software to Be Sold, Leased, or Marketed.” Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized computer software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in the Company’s software products. Total capitalized computer software development costs were $0.9 million and $0.8 million for the three months ended May 31, 2025, and May 31, 2024, respectively, and $2.4 million and $2.6 million for the nine months ended May 31, 2025, and May 31, 2024, respectively.
Current wording
Software development costs are capitalized in accordance with ASC 985-20, “Costs of Software to Be Sold, Leased, or Marketed.” Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized computer software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in the Company’s software products. Total capitalized computer software development costs were $0.9 million and $0.7 million for the three months ended November 30, 2025, and November 30, 2024, respectively.
Previous wording
Amortization of capitalized computer software development costs is calculated on a product-by-product basis on the straight-line method over the estimated economic life of the products, not to exceed five years. Amortization of software development costs amounted to $0.8 million and $0.5 million, respectively, for the three months ended May 31, 2025, and May 31, 2024, respectively, and $2.4 million and $1.3 million for the nine months ended May 31, 2025, and May 31, 2024, respectively. We expect future amortization expense to vary due to variations in capitalized computer software development costs.
Current wording
Amortization of capitalized computer software development costs is calculated on a product-by-product basis on the straight-line method over the estimated economic life of the products, not to exceed five years. Amortization of software development costs amounted to $0.7 million and $0.8 million, respectively, for the three months ended November 30, 2025, and November 30, 2024, respectively. We expect future amortization expense to vary due to variations in capitalized computer software development costs.
Previous wording
Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. As of May 31, 2025, the Company determined that it had nine reporting units: CHEM Software, PBPK Software, QSP Software, CPP Software, ALI/MC Software, PBPK Services, CPP Services, QSP Services, and ALI/MC Services.
Current wording
Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. As of November 30, 2025, the Company determined that it had two reporting units - Software and Services.
Previous wording
As of May 31, 2025, the entire balance of goodwill was attributed to six of the Company's reporting units, CPP Software, CPP Services, QSP Software, QSP Services, ALI/MC Software, and MC Services. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. As a result of the quantitative impairment test performed, the Company determined goodwill was impaired for its QSP Software, ALI/MC Software and MC Services reporting units and recorded a goodwill impairment charge of $1.8 million, $13.3 million and $36.7 million, respectively during the period ended May 31, 2025. Such charges are recorded in Impairments on the condensed consolidated statements of operations and comprehensive (loss) income.
Current wording
As of November 30, 2025, the entire balance of goodwill was attributed to two of the Company's reporting units, Software and Services. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.
Previous wording
No impairment losses were recorded during the three and nine months ended May 31, 2024, respectively.
Current wording
No impairment losses were recorded during the three months ended November 30, 2025, and November 30, 2024, respectively.
Previous wording
The Company accounts for stock options in accordance with ASC 718-10, “Compensation-Stock Compensation.” Under this method, compensation costs include the estimated grant-date fair value of awards amortized over the options’ vesting period. Stock-based compensation costs, not including shares issued to directors for services, were $1.4 million and $1.7 million, for the three months ended May 31, 2025, and May 31, 2024, respectively, and $4.7 million and $4.6 million for the nine months ended May 31, 2025, and May 31, 2024, respectively.
Current wording
The Company accounts for stock options in accordance with ASC 718-10, “Compensation-Stock Compensation.” Under this method, compensation costs include the estimated grant-date fair value of awards amortized over the options’ vesting period. Stock-based compensation costs, not including shares issued to directors for services, were $1.5 million and $1.7 million, for the three months ended November 30, 2025, and November 30, 2024, respectively.