Simulations Plus, Inc. (SLP) Income Statement

Growth has decelerated from 30.5% in 2025Q1 to 7.5% in 2026Q3, and the sequential dip from $24.3M in 2026Q2 suggests order timing or contract start dates may matter more than underlying demand trend. The mid-2025 spike to $22.4M could have pulled revenue forward rather than expanded it, and investors should watch whether 2026 stabilizes in the low-to-mid 20s per quarter, since annualizing recent quarters implies top-line growth closer to mid-single digits than the double-digit rates seen earlier.

The 72% gross margins of early 2024 have not been sustained, and the 2024Q4 print of 36.6% alongside elevated COGS of $11.8M implies project delivery costs can overwhelm the software-like revenue profile in any single quarter. Recent quarters' recovery to 66-69% is encouraging, but the absence of a consistent gross margin band makes forward margin modeling fragile; against Veeva's 75.5% and Certara's 61.5%, SLP's average margin looks competitive but its variance does not.

The recent pattern — R&D up sharply to $3.4M while SG&A held at $7.2M — suggests management is shifting spend toward product development while keeping overhead flat, which produced operating income scaling faster than revenue in 2026Q2 and 2026Q3. However, that same overhead base generated only $0.7M of operating income on $18.4M of revenue in 2026Q1, implying the operating leverage observed recently may depend on clearing a revenue threshold the business does not consistently achieve.

Below-the-line items appear to dominate SLP's recent earnings history: gross profit of $13.0M in 2025Q3 against an operating loss of $74.2M implies roughly $77M of charges, which dwarfs cumulative operating income across the surrounding quarters. That reset makes year-over-year EPS comparisons, such as the 105.4% growth in 2026Q3, largely a function of a depressed prior-year base rather than a clean underlying earnings trajectory; the durability of margins after the reset warrants closer scrutiny of the 2026 quarters.