Simulations Plus, Inc.
For the period ended May 31, 2026. Filed Jul 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.
May 31, 2026 · Filed Jul 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 2026-02-28; filed 2026-04-10.
0001023459-26-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-05-31; filed 2026-07-09.
0001023459-26-000038
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 105 previous paragraphs and 123 current paragraphs.
60 unchanged; 43 reworded; 20 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 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 (20)
Current report
•the proposed Merger and the anticipated timing, completion of the transaction;
Current report
•the ability of the parties to satisfy the conditions to closing the Merger, including obtaining stockholder approval and required regulatory approvals;
Current report
•the expected timing and outcome of the stockholder meeting relating to the proposed Merger;
Current report
•the availability and sufficiency of financing arrangements for the proposed Merger and the potential impact of any financing-related developments on the timing or completion of the transaction;
Current report
•the Company's business, operating strategy, and strategic initiatives pending completion of the Merger;
Current report
•anticipated operating results, financial performance, cash flows, liquidity, and capital resources;
Current report
•expected demand for the Company's software products and consulting services;
Current report
•investments in research and development, including cloud-enabled platforms and artificial intelligence-enabled capabilities;
Current report
•expected revenues, gross margins, operating expenses, profitability, and tax rates;
Current report
•capitalized software development costs, goodwill, intangible assets, and impairment assessments;
Current report
•expected future acquisitions, strategic partnerships, and investments;
Current report
•the impact of recently issued accounting standards; and
Current report
•other statements that are not historical facts.
Current report
Impairments
Current report
During the three months ended May 31, 2025, the Company recorded $77.2 million of non-cash impairment charges. No impairment charges were recorded during the three months ended May 31, 2026.
Current report
Comparison of Nine Months Ended May 31, 2026, and May 31, 2025
Current report
Impairments
Current report
During the nine months ended May 31, 2025, the Company recorded $77.2 million of non-cash impairment charges. No impairment charges were recorded during the nine months ended May 31, 2026.
Current report
Pursuant to the Merger Agreement entered into on June 15, 2026, the Company is subject to customary interim operating covenants pending completion of the merger. These covenants, subject to specified exceptions and the prior written consent of Parent, restrict certain capital allocation and corporate activities, including repurchases or redemptions of common stock, payment of dividends or other distributions, issuance of equity securities, incurrence of certain indebtedness, acquisitions and investments, significant capital expenditures, and certain other actions outside the ordinary course of business. Accordingly, the Company expects to operate within these contractual limitations until the merger is completed or the Merger Agreement is terminated.
Current report
Pursuant to the Merger Agreement entered into on June 15, 2026, the Company is subject to customary interim operating covenants pending completion of the merger. These covenants, subject to specified exceptions and the prior written consent of Parent, restrict certain capital allocation and corporate activities, including repurchases or redemptions of common stock, payment of dividends or other distributions, issuance of equity securities, incurrence of certain indebtedness, acquisitions and investments, significant capital expenditures, and certain other actions outside the ordinary course of business. Accordingly, the Company expects to operate within these contractual limitations until the merger is completed or the Merger Agreement is terminated.
Removed paragraphs (2)
Previous report
Comparison of Six Months Ended February 28, 2026, and February 28, 2025
Previous report
We continue to seek opportunities for strategic acquisitions, investments, and partnerships. If one or more strategic opportunities are identified, a substantial portion of our cash reserves may be required to complete the transaction. If we identify an attractive strategic opportunity that would require more cash to complete than we are willing or able to use from our cash reserves, we may consider financing options to complete the transaction, including obtaining loans or selling our securities. Additionally, our quest for strategic opportunities could result in a significant change to our liquidity position and/or our results of operations if any such transactions are completed.
Reworded paragraphs (43)
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 $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.
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 macroeconomic 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 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 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
This document and the documents incorporated in this document by reference contain forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact contained in this document and the materials accompanying this document are forward-looking statements.
Current wording
This quarterly report and the documents incorporated in this Quarterly Report by reference contain forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact contained in this Quarterly Report and the materials accompanying this document are forward-looking statements.
Previous wording
The forward-looking statements contained or incorporated by reference in this document are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements include declarations regarding our plans, intentions, beliefs, or current expectations.
Current wording
The forward-looking statements contained or incorporated by reference in this Quarterly Report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements include declarations regarding our plans, intentions, beliefs, or current expectations. The forward-looking statements contained primarily in this Quarterly Report include but are not limited to:
Previous wording
Among the important factors that could cause actual results to differ materially from those indicated by forward-looking statements are the risks and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on December 1, 2025, and elsewhere in this document and in our other filings with the SEC.
Current wording
Among the important factors that could cause actual results to differ materially from those indicated by forward-looking statements are the risks and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on December 1, 2025, as updated by Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q and elsewhere in this document and in our other filings with the SEC.
Previous wording
Forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this document are made as of the date of this document and we do not undertake any obligation to update forward-looking statements to reflect new information, subsequent events, or otherwise.
Current wording
Forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this Quarterly Report are made as of the date of this filing and we do not undertake any obligation to update forward-looking statements to reflect new information, subsequent events, or otherwise.
Previous wording
Revenues increased by $1.9 million, or 8%, to $24.3 million for the three months ended February 28, 2026, compared to $22.4 million for the three months ended February 28, 2025. This increase is primarily due to a $1.2 million, or 9% increase, in software-related revenue and a $0.7 million, or 8%, increase in service-related revenue when compared to the three months ended February 28, 2025. The software-related revenue increase of $1.2 million, or 9%, compared to the three months ended February 28, 2025, was primarily due to a $1.2 million increase in revenue from Development solutions, $0.4 million increase in revenue from Discovery solutions, partially offset by a $0.5 million decline in revenue from Clinical Operations solutions. The service-related revenue increase of $0.7 million, or 8%, compared to the three months ended February 28, 2025, was primarily due to organic revenue growth of $0.8 million from Development solutions.
Current wording
Revenues increased by $1.5 million, or 7%, to $21.9 million for the three months ended May 31, 2026, compared to $20.4 million for the three months ended May 31, 2025. This increase is primarily due to a $1.5 million, or 20%, increase in service-related revenue when compared to the three months ended May 31, 2025. The software-related revenue was flat compared to the three months ended May 31, 2025. The service-related revenue increase of $1.5 million, or 20%, compared to the three months ended May 31, 2025, was primarily due to organic revenue growth of $1.5 million from Development solutions.
Previous wording
Cost of revenues decreased by $1.2 million, or 12%, for the three months ended February 28, 2026, compared to the three months ended February 28, 2025. This decrease is primarily due to a $0.9 million, or 36%, decrease in software-related costs, partially offset by a $0.2 million, or 3%, increase in service-related costs.
Current wording
Cost of revenues decreased by $0.6 million, or 8%, for the three months ended May 31, 2026, compared to the three months ended May 31, 2025. This decrease is primarily due to a $1.0 million, or 40%, decrease in software-related costs, partially offset by a $0.5 million, or 9%, increase in service-related costs.
Previous wording
The software-related costs decrease of $0.9 million, or 36%, compared to the three months ended February 28, 2025, was primarily due to less amortization of $0.8 million following the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025.
Current wording
The software-related costs decrease of $1.0 million, or 40%, compared to the three months ended May 31, 2025, was primarily due to less amortization of $1.1 million, mainly due to the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025.
Previous wording
The service-related costs increased $0.2 million, or 3%, compared to the three months ended February 28, 2025; the increase was primarily due to higher fulfillment costs associated with increased client services activity. The modest increase in service-related costs relative to revenue growth also reflected improved operating efficiency from headcount reductions implemented in the third quarter of fiscal 2025, and organizational changes that shifted certain internal resources from supporting services to research and development.
Current wording
The service-related costs increased $0.5 million, or 9%, compared to the three months ended May 31, 2025; the increase was primarily due to higher fulfillment costs associated with increased client services activity. The modest increase in service-related costs relative to revenue growth also reflected improved operating efficiency from headcount reductions implemented in the third quarter of fiscal 2025, and organizational changes that shifted certain internal resources from supporting services to research and development, improved billable utilization, and higher average yields.
Previous wording
Gross profit increased $3.0 million, or 23% to $16.1 million for the three months ended February 28, 2026, compared to $13.1 million for the three months ended February 28, 2025. This increase was primarily driven by higher revenues, lower software-related costs, organizational changes that shifted certain internal resources from supporting services to research and development, improved billable utilization, and higher average yields.
Current wording
Gross profit increased $2.1 million, or 16%, to $15.1 million for the three months ended May 31, 2026, compared to $13.0 million for the three months ended May 31, 2025. This increase was primarily driven by higher revenues, lower software-related costs, organizational changes that shifted certain internal resources from supporting services to research and development, improved billable utilization, and higher average yields.
Previous wording
Software gross profit increased by $2.1 million to 89% gross margin compared to 81% gross margin for the three months ended February 28, 2025. This improvement was primarily driven by increased software-related revenue, particularly from Development and Discovery solutions, and lower software-related costs, largely reflecting reduced amortization expense following the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025.
Current wording
Software gross profit increased by $1.0 million to 88% gross margin compared to 80% gross margin for the three months ended May 31, 2025. This improvement was primarily driven by lower software-related costs, largely reflecting reduced amortization expense mainly due to the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025.
Previous wording
Services gross profit increased by $0.9 million to 33% gross margin compared to 25% gross margin for the three months ended February 28, 2025. The increase was primarily attributable to higher services revenue from increased client services activity within Development solutions, as well as improved operating efficiency driven by headcount reductions implemented in the third quarter of fiscal 2025, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields.
Current wording
Services gross profit increased by $1.1 million to 43% gross margin compared to 38% gross margin for the three months ended May 31, 2025. The increase was primarily attributable to higher services revenue from increased client services activity within Development solutions, as well as improved operating efficiency driven by headcount reductions implemented in the third quarter of fiscal 2025, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields.
Previous wording
Overall gross margin was 66% for the three months ended February 28, 2026, compared to 59% for the three months ended February 28, 2025, primarily due to higher software and services revenues, lower software amortization expense, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields.
Current wording
Overall gross margin was 69% for the three months ended May 31, 2026, compared to 64% for the three months ended May 31, 2025, primarily due to higher services revenue, lower software amortization expense, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields.
Previous wording
We incurred $4.3 million of research and development costs during the three months ended February 28, 2026. Of this amount, $0.8 million was capitalized as part of capitalized software development costs, and $3.5 million was expensed. We incurred $2.9 million of research and development costs during the three months ended February 28, 2025. Of this amount, $0.8 million was capitalized, and $2.1 million was expensed. Research and development spend increased by $1.3 million, or 46%, for the three months ended February 28, 2026, compared to the three months ended February 28, 2025, representing our continued investment in innovation for future growth, including the development of an integrated, cloud-enabled modeling ecosystem that connects our validated scientific engines with AI-driven capabilities and workflow automation across the drug development lifecycle. The increase was primarily attributable to higher personnel-related costs, including organizational changes that shifted certain internal resources from supporting services to research and development, as well as increased efforts to support these development initiatives.
Current wording
We incurred $4.1 million of research and development costs during the three months ended May 31, 2026. Of this amount, $0.7 million was capitalized as part of capitalized software development costs, and $3.4 million was expensed. 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, and $1.2 million was expensed. Research and development spend increased by $2.0 million, or 98%, for the three months ended May 31, 2026, compared to the three months ended May 31, 2025, representing our continued investment in innovation for future growth, including the development of an integrated, cloud-enabled modeling ecosystem that connects our validated scientific engines with AI-driven capabilities and workflow automation across the drug development lifecycle. The increase was primarily attributable to higher personnel-related costs, including organizational changes that shifted certain internal resources from supporting services to research and development, as well as increased efforts to support these development initiatives.
Previous wording
R&D spend as a percentage of revenue increased to 14% for the three months ended February 28, 2026, from 10% for the three months ended February 28, 2025, representing our continued investment in innovation for future growth. Total R&D cost (defined as capitalized R&D plus R&D expense) was 18% of revenue for the three months ended February 28, 2026, compared to 13% for the three months ended February 28, 2025.
Current wording
R&D spend as a percentage of revenue increased to 16% for the three months ended May 31, 2026, from 6% for the three months ended May 31, 2025, representing our continued investment in innovation for future growth. Total R&D cost (defined as capitalized R&D plus R&D expense) was 19% of revenue for the three months ended May 31, 2026, compared to 10% for the three months ended May 31, 2025.
Previous wording
Sales and marketing expenses decreased by $0.8 million, or 21%, to $2.9 million for the three months ended February 28, 2026, compared to $3.7 million for the three months ended February 28, 2025. Sales and marketing as a percentage of revenue, decreased to 12% for the three months ended February 28, 2026, from 17% for the three months ended February 28, 2025. The decrease is attributable to the headcount reduction implemented in the third quarter of fiscal 2025.
Current wording
Sales and marketing expenses decreased by $0.1 million, or 5%, to $2.5 million for the three months ended May 31, 2026, compared to $2.7 million for the three months ended May 31, 2025. Sales and marketing as a percentage of revenue decreased to 12% for the three months ended May 31, 2026, from 13% for the three months ended May 31, 2025. The decrease is attributable to the headcount reduction implemented in the third quarter of fiscal 2025.
Previous wording
G&A expenses decreased by $0.4 million, or 10%, to $4.1 million for the three months ended February 28, 2026, compared to $4.6 million for the three months ended February 28, 2025. G&A as a percentage of revenue decreased to 17% for the three months ended February 28, 2026, from 20% for the three months ended February 28, 2025. The decrease primarily reflected lower corporate support costs and reduced non-recurring spending.
Current wording
G&A expenses decreased by $1.5 million, or 24%, to $4.7 million for the three months ended May 31, 2026, compared to $6.1 million for the three months ended May 31, 2025. G&A as a percentage of revenue, decreased to 21% for the three months ended May 31, 2026, from 30% for the three months ended May 31, 2025. The decrease was primarily due to lower corporate support costs and lower non-recurring expenses, including the absence of expenses associated with the company-wide employee summit that occurred in the prior-year period.
Previous wording
Total other income was $0.3 million for the three months ended February 28, 2026, compared to total other income of $0.8 million for the three months ended February 28, 2025. Interest income increased by $0.1 million due to higher balances of cash invested in interest-bearing accounts. For the three months ended February 28, 2025, the Company recognized $0.6 million gain on the change in fair value of contingent consideration related to the Immunetrics holdback liability, which was settled.
Current wording
Total other income was $0.3 million for the three months ended May 31, 2026, compared to $0.2 million for the three months ended May 31, 2025. The increase was primarily driven by higher interest income due to higher average balances of cash invested in interest-bearing accounts. For the three months ended May 31, 2025, the Company also recognized a $0.6 million gain from the change in fair value of contingent consideration related to the Immunetrics holdback liability, which was subsequently settled.
Previous wording
The expense for income taxes was $1.6 million for the six months ended February 28, 2026, compared to $0.5 million for the six months ended February 28, 2025. The Company tax rate increased to 24% for the six months ended February 28, 2026, compared to 13% for the six months ended February 28, 2025. The increase in the tax rate is primarily due to the result of a favorable discrete item in the prior year that did not recur in the current year, a less favorable jurisdictional mix of earnings between the U.S. and France, increased unfavorable Global Intangible Low-Taxed Income ("GILTI") impacts driven by higher French taxable income, and a lower Foreign-Derived Intangible Income ("FDII") benefit. In addition, certain items affecting the current-year effective tax rate relate to accelerated deductions elected under the One Big Beautiful Bill Act ("OBBBA"). These deductions are expected to be favorable to cash flows as they accelerate the timing of tax benefits and reduce near-term cash tax payments.
Current wording
The expense for income taxes was $1.2 million for the three months ended May 31, 2026, compared to income tax benefit of $6.7 million for the three months ended May 31, 2025. The Company tax rate increased to 26% for the three months ended May 31, 2026, compared to 9% for the three months ended May 31, 2025. The increase in the tax rate is primarily due to higher income in the US, which is taxed at higher tax rate than income in France. The France effective tax rate increased from 2% to 7% due to less qualifying R&D expenditures in France which drove up the effective tax rate. The Company incurred costs with respect to the Merger Agreement. These costs are deductible for GAAP purposes. Generally, many of the costs incurred must be capitalized and are not deductible for tax purposes. The fiscal year had a smaller benefit from Foreign-Derived Intangible Income ("FDII"). In the current fiscal year, the Company is accelerating deductions elected under the One Big Beautiful Bill Act ("OBBBA"). These deductions are expected to be favorable to cash flows as they accelerate the timing of tax benefits and reduce near-term cash tax payments.
Previous wording
Revenues increased by $1.4 million, or 3%, to $42.7 million for the six months ended February 28, 2026, compared to $41.4 million for the six months ended February 28, 2025. This increase is primarily due to a $2.0 million, or 12%, increase in service-related revenue and a $0.7 million, or 3%, decrease in software-related revenue when compared to the six months ended February 28, 2025. The service-related revenue increase of $2.0 million, or 12%, compared to the six months ended February 28, 2025, was primarily due to organic revenue growth within Development solutions of $1.3 million and Commercialization solutions of $0.8 million. The software-related revenue decrease of $0.7 million, or 3%, compared to the six months ended February 28, 2025, was primarily due to Clinical Operations solutions revenue decline of $1.9 million, partially offset by revenue growth of $0.8 million and $0.5 million within Development solutions and Discovery solutions, respectively.
Current wording
Revenues increased by $2.9 million, or 5%, to $64.6 million for the nine months ended May 31, 2026, compared to $61.7 million for the nine months ended May 31, 2025. This increase is primarily due to a $3.6 million, or 14%, increase in service-related revenue and a $0.7 million, or 2%, decrease in software-related revenue when compared to the nine months ended May 31, 2025. The service-related revenue increase of $3.6 million, or 14%, compared to the nine months ended May 31, 2025, was primarily due to organic revenue growth within Development solutions of $2.7 million and Commercialization solutions of $0.8 million. The software-related revenue decrease of $0.7 million, or 2%, compared to the nine months ended May 31, 2025, was primarily due to Clinical Operations solutions revenue decline of $2.0 million, partially offset by revenue growth of $1.0 million and $0.4 million within Development solutions and Discovery solutions, respectively.
Previous wording
Cost of revenues decreased by $2.3 million, or 13%, for the six months ended February 28, 2026, compared to the six months ended February 28, 2025. This decrease is primarily due to a $2.2 million or 41% decrease in software-related costs and a $0.2 million or 1% increase in service-related costs.
Current wording
Cost of revenues decreased by $2.9 million, or 11%, for the nine months ended May 31, 2026, compared to the nine months ended May 31, 2025. This decrease is primarily due to a $3.2 million or 41% decrease in software-related costs and a $0.3 million or 2% increase in service-related costs.
Previous wording
The software-related costs decrease of $2.2 million or 41%, compared to the six months ended February 28, 2025, was attributable to $1.6 million less amortization of acquired technology from the Pro-ficiency as the balances were impaired in the third quarter of fiscal 2025.
Current wording
The software-related costs decrease of $3.2 million or 41%, compared to the nine months ended May 31, 2025, was mainly attributable to $3.1 million less amortization of acquired technology from the Pro-ficiency as the balances were impaired in the third quarter of fiscal 2025.
Previous wording
The service-related costs increase of $0.2 million or 1%, compared to the six months ended February 28, 2025. The increase in service-related costs was primarily due to higher fulfillment costs associated with increased client services activity. The modest increase in service-related costs relative to service-related revenue growth reflected improved operating efficiency resulting from headcount reductions implemented in the third quarter of fiscal 2025, organizational changes that shifted certain internal resources from supporting services to research and development.
Current wording
The service-related costs increase of $0.3 million or 2%, compared to the nine months ended May 31, 2025. The increase in service-related costs was primarily due to higher fulfillment costs associated with increased client services activity. The modest increase in service-related costs relative to service-related revenue growth reflected improved operating efficiency resulting from headcount reductions implemented in the third quarter of fiscal 2025, organizational changes that shifted certain internal resources from supporting services to research and development.
Previous wording
Gross profit increased to $27.0 million or 63% gross margin for the six months ended February 28, 2026, compared to $23.3 million or 56% gross margin for the six months ended February 28, 2025. The increase was primarily attributable to higher service-related revenues, lower software-related costs, organizational changes that shifted certain internal resources from supporting services to research and development, and improved operating efficiency.
Current wording
Gross profit increased to $42.2 million or 65% gross margin for the nine months ended May 31, 2026, compared to $36.4 million or 59% gross margin for the nine months ended May 31, 2025. The increase was primarily attributable to higher service-related revenues, lower software-related costs, organizational changes that shifted certain internal resources from supporting services to research and development, and improved operating efficiency.
Previous wording
Software gross profit increased by $1.5 million, and software gross margin increased to 87% for the six months ended February 28, 2026, compared to 78% for the six months ended February 28, 2025. This improvement was primarily due to lower software-related costs, largely reflecting reduced amortization expense following the impairment of the Pro-ficiency acquired technology in the third quarter of fiscal 2025, partially offset by lower software-related revenue driven primarily by a decline in Clinical Operations solutions revenue.
Current wording
Software gross profit increased by $2.5 million, and software gross margin increased to 87% for the nine months ended May 31, 2026, compared to 79% for the nine months ended May 31, 2025. This improvement was primarily due to lower software-related costs, largely reflecting reduced amortization expense following the impairment of the Pro-ficiency acquired technology in the third quarter of fiscal 2025, partially offset by lower software-related revenue driven primarily by a decline in Clinical Operations solutions revenue.
Previous wording
Services gross profit increased by $2.2 million, and services gross margin increased to 34% for the six months ended February 28, 2026, compared to 25% for the six months ended February 28, 2025. This improvement was primarily due to higher service-related revenue from organic growth within Development solutions and Commercialization solutions, together with improved operating efficiency resulting from headcount reductions implemented in the third quarter of fiscal 2025 and organizational changes that shifted certain internal resources from supporting services to research and development.
Current wording
Services gross profit increased by $3.3 million, and services gross margin increased to 37% for the nine months ended May 31, 2026, compared to 29% for the nine months ended May 31, 2025. This improvement was primarily due to higher service-related revenue from organic growth within Development solutions and Commercialization solutions, together with improved operating efficiency resulting from headcount reductions implemented in the third quarter of fiscal 2025 and organizational changes that shifted certain internal resources from supporting services to research and development.
Previous wording
Overall gross margin increased to 63% for the six months ended February 28, 2026, compared to 56% for the six months ended February 28, 2025, primarily due to higher service-related revenues, lower software amortization expense, organizational changes that shifted certain internal resources from supporting services to research and development, and improved operating efficiency.
Current wording
Overall gross margin increased to 65% for the nine months ended May 31, 2026, compared to 59% for the nine months ended May 31, 2025, primarily due to higher service-related revenues, lower software amortization expense, organizational changes that shifted certain internal resources from supporting services to research and development, and improved operating efficiency.
Previous wording
We incurred $8.2 million of research and development costs during the six months ended February 28, 2026. Of this amount, $1.7 million was capitalized as part of capitalized software development costs and $6.5 million was expensed. We incurred $5.5 million of research and development costs during the six months ended February 28, 2025. Of this amount, $1.5 million was capitalized and $4.0 million was expensed. Research and development spend increased by $2.7 million, or 48%, for the six months ended February 28, 2026, compared to the six months ended February 28, 2025, 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, including organizational changes that shifted certain internal resources from supporting services to research and development, as well as increased efforts to support these development initiatives.
Current wording
We incurred $12.3 million of research and development costs during the nine months ended May 31, 2026. Of this amount, $2.4 million was capitalized as part of capitalized software development costs and $9.9 million was expensed. 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 and $5.2 million was expensed. Research and development spend increased by $4.7 million, or 62%, for the nine months ended May 31, 2026, compared to the nine months ended May 31, 2025, 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, including organizational changes that shifted certain internal resources from supporting services to research and development, as well as increased efforts to support these development initiatives.
Previous wording
R&D spend as a percentage of revenue increased to 15% for the six months ended February 28, 2026, from 10% for the six months ended February 28, 2025, representing our continued investment in innovation for future growth, including the development of an integrated, cloud-enabled modeling ecosystem that connects our validated scientific engines with AI-driven capabilities and workflow automation across the drug development lifecycle. Total R&D cost (defined as capitalized R&D plus R&D expense) was 18% of revenue for the six months ended February 28, 2026, compared to 13% for the six months ended February 28, 2025.
Current wording
R&D spend as a percentage of revenue increased to 15% for the nine months ended May 31, 2026, from 8% for the nine months ended May 31, 2025, representing our continued investment in innovation for future growth, including the development of an integrated, cloud-enabled modeling ecosystem that connects our validated scientific engines with AI-driven capabilities and workflow automation across the drug development lifecycle. Total R&D cost (defined as capitalized R&D plus R&D expense) was 19% of revenue for the nine months ended May 31, 2026, compared to 12% for the nine months ended May 31, 2025.
Previous wording
Sales and marketing expenses decreased by $0.5 million, or 7%, to $6.1 million for the six months ended February 28, 2026, compared to $6.6 million for the six months ended February 28, 2025. The decrease is attributable to $0.4 million lower compensation cost from the headcount reduction implemented in the third quarter of fiscal 2025, offset by $0.3 million of higher variable selling costs and customer-facing activities to support commercial execution and demand generation across our offerings.
Current wording
Sales and marketing expenses decreased by $0.6 million, or 6%, to $8.6 million for the nine months ended May 31, 2026, compared to $9.2 million for the nine months ended May 31, 2025. The decrease is attributable to lower compensation cost from the headcount reduction implemented in the third quarter of fiscal 2025, offset by higher customer-facing activities to support commercial execution and demand generation across our offerings.
Previous wording
General and administrative (“G&A”) expenses decreased by $1.8 million, or 18%, to $8.1 million for the six months ended February 28, 2026, compared to $9.9 million for the six months ended February 28, 2025. 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 wording
General and administrative (“G&A”) expenses decreased by $3.3 million, or 20%, to $12.8 million for the nine months ended May 31, 2026, compared to $16.1 million for the nine months ended May 31, 2025. The decrease primarily reflected lower corporate support costs and reduced non-recurring spending. In addition, facilities costs decreased as we continued to optimize our real estate footprint consistent with a remote-first operating model.
Previous wording
Total other income was $0.5 million for the six months ended February 28, 2026, compared to total other income of $0.9 million for the six months ended February 28, 2025. The decrease is attributable to a $0.6 million decrease in the fair value of the Immunetrics earnout liability in the prior period, as no earnout payment was anticipated related to the second earnout measurement period, this was partially offset by increased interest income of $0.2 million due to higher balances of cash invested in interest-bearing accounts.
Current wording
Total other income was $0.8 million for the nine months ended May 31, 2026, compared to $1.1 million for the nine months ended May 31, 2025. The decrease was primarily attributable to a $0.6 million gain recognized in the prior-year period from the change in fair value of the Immunetrics earnout liability, as no earnout payment was anticipated for the second earnout measurement period. The liability was subsequently settled. This decrease was partially offset by a $0.4 million increase in interest income due to higher average balances of cash invested in interest-bearing accounts.
Previous wording
The expense for income taxes was $1.4 million for the three months ended February 28, 2026, compared to $0.4 million for the three months ended February 28, 2025. The Company tax rate increased to 23% for the three months ended February 28, 2026, compared to 12% for the three months ended February 28, 2025. The increase in the tax rate is primarily due to the result of a favorable discrete item in the prior year that did not recur in the current year, a less favorable jurisdictional mix of earnings between the U.S. and France, increased unfavorable Global Intangible Low-Taxed Income ("GILTI") impacts driven by higher French taxable income, and a lower Foreign-Derived Intangible Income ("FDII") benefit. In addition, certain items affecting the current-year effective tax rate relate to accelerated deductions elected under the One Big Beautiful Bill Act ("OBBBA"). These deductions are expected to be favorable to cash flows as they accelerate the timing of tax benefits and reduce near-term cash tax payments.
Current wording
The expense for income taxes was $2.9 million for the nine months ended May 31, 2026, compared to an income tax benefit of $6.2 million for the nine months ended May 31, 2025. The Company tax rate increased to 25% for the nine months ended May 31, 2026, compared to 9% for the nine months ended May 31, 2025. The increase in the tax rate is primarily due to the result of a favorable discrete item in the prior year that did not recur in the current year, a less favorable jurisdictional mix of earnings between the U.S. and France, increased unfavorable Global Intangible Low-Taxed Income ("GILTI") impacts driven by higher French taxable income, and a lower Foreign-Derived Intangible Income ("FDII") benefit. In addition, certain items affecting the current-year effective tax rate relate to accelerated deductions elected under the One Big Beautiful Bill Act ("OBBBA"). These deductions are expected to be favorable to cash flows as they accelerate the timing of tax benefits and reduce near-term cash tax payments.
Previous wording
At February 28, 2026, the Company had $25.7 million in cash and cash equivalents, $16.1 million in short-term investments, and net working capital of $55.2 million. Short-term investments consist of CD's, corporate bonds, and cash equivalents. The investments are U.S.-dollar-denominated securities.
Current wording
As of May 31, 2026, the Company had $35.3 million in cash and cash equivalents, $14.7 million in short-term investments, and net working capital of $61.6 million. Short-term investments consist of certificate of deposits, corporate bonds, and cash equivalents. The investments are U.S.-dollar-denominated securities.
Previous wording
Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions (recoveries) for credit losses, depreciation and amortization, stock-based compensation, deferred taxes, and other non-cash items and (ii) changes in the balances of operating assets and liabilities. Net cash provided by operating activities was $10.6 million for the six months ended February 28, 2026, compared to $4.4 million for the six months ended February 28, 2025. The $6.3 million improvement was driven primarily by an increase in cash-adjusted net income, an increase in deferred revenue and a decrease in cash outflow in other liabilities, partially offset by an increase in accounts receivable.
Current wording
Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions (recoveries) for credit losses, depreciation and amortization, stock-based compensation, deferred taxes, and other non-cash items and (ii) changes in the balances of operating assets and liabilities. Net cash provided by operating activities was $19.4 million for the nine months ended May 31, 2026, compared to $12.5 million for the nine months ended May 31, 2025. The $6.8 million improvement was driven primarily by an increase in cash-adjusted net income, an increase in other liabilities and a decrease in deferred taxes, partially offset by an increase in accounts receivable.
Previous wording
Net cash used in investing activities during the six months ended February 28, 2026, was $16.2 million, compared to $2.5 million during the six months ended February 28, 2025. The increase of $13.8 million primarily reflects deployment and rebalancing of our short-term investment portfolio and capitalized software development to support product and platform enhancements. During the six months ended February 28, 2026, we invested $16.0 million in short-term investments as part of our treasury strategy to prudently invest excess cash while preserving liquidity and capital, and we incurred $1.7 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 wording
Net cash used in investing activities during the nine months ended May 31, 2026, was $15.4 million, compared to net cash provided by investing activities of $5.4 million during the nine months ended May 31, 2025. The decrease of $20.7 million primarily reflects deployment and rebalancing of our short-term investment portfolio and capitalized software development to support product and platform enhancements. During the nine months ended May 31, 2026, we invested $28.2 million in short-term investments as part of our treasury strategy to prudently invest excess cash while preserving liquidity and capital, and we incurred $2.3 million of capitalized computer software development costs to support ongoing product development and technology improvements. These uses of cash were partially offset by $15.0 million of maturities of short-term investments as securities matured in the normal course of portfolio management.
Previous wording
Net cash provided by financing activities during the six months ended February 28, 2026, was $0.5 million, compared to cash used in financing activities of $1.3 million for the six months ended February 28, 2025. The increase of $1.7 million was attributable to cash settlement of $1.6 million from the holdback obligations related to the Immunetrics acquisition and an increase in proceeds from the exercise of stock options.
Current wording
Net cash provided by financing activities during the nine months ended May 31, 2026, was $0.5 million, compared to cash used in financing activities of $1.3 million for the nine months ended May 31, 2025. The $1.7 million increase was primarily attributable to the prior-year cash settlement of $1.6 million for holdback obligations related to the Immunetrics acquisition, as well as higher proceeds from the exercise of stock options.
Previous wording
For the three and six months ended February 28, 2026, and February 28, 2025, respectively, we did not repurchase any shares of Company stock. As of February 28, 2026, $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 and nine months ended May 31, 2026, and May 31, 2025, respectively, we did not repurchase any shares of Company stock. As of May 31, 2026, $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
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 $0.8 million and $0.8 million for the three months ended February 28, 2026, and February 28, 2025, 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 $0.7 million and $0.9 million for the three months ended May 31, 2026, and May 31, 2025, respectively, and $2.4 million and $2.4 million for the nine months ended May 31, 2026, and May 31, 2025, respectively.
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