Simulations Plus, Inc.SLP
Simulations Plus, Inc. Revenue Disclosure
Revenue Recognition
We generate revenue primarily from the sale of software licenses and by providing consulting services to the pharmaceutical industry for drug development and commercialization.
In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, we determine revenue recognition through the following steps:
i.Identification of the contract, or contracts, with a client
ii.Identification of the performance obligations in the contract
iii.Determination of the transaction price
iv.Allocation of the transaction price to the performance obligations in the contract
v.Recognition of revenue when, or as, we satisfy a performance obligation
Components of Revenue
The following is a description of principal activities from which the Company generates revenue. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. Standalone selling prices are determined based on the prices at which the Company separately sells its services or goods.
Software Revenues:
Software revenues are primarily derived from the sale of software licenses, which are recognized at the time the software is unlocked and the license term begins. Most licenses are for a duration of one year or less.
In addition to the software license, we provide a minimal level of client support to assist clients with software usage. If clients require more extensive support, they may enter into a separate agreement for additional training services and maintenance.
The majority of the software is installed on clients’ servers, and the Company does not maintain control over the software post-sale, except through licensing parameters that govern the number of users, accessible modules, and license expiration dates.
The Pro-ficiency adaptive learning platform includes software customization by incorporating content tailored to specific needs. Following customization, it generates a recurring revenue stream throughout the duration of a clinical trial. Revenue is recognized over time.
Payments are generally due upon invoicing on a net-30 basis, unless alternative payment terms are negotiated with the client based on their payment history. Standard industry practices apply.
For certain software arrangements, the Company hosts the licenses on servers maintained by the Company. Revenue for those arrangements is accounted as Software as a Service over the life of the contract. These arrangements account for a small portion of software revenues of the Company.
Services Revenue:
Consulting services provided to our clients are generally recognized over time as the contracts are performed and the services are rendered. The Company measures its consulting revenue based on time expended compared to total estimated hours to complete a project. The Company believes the method chosen for its contract revenue best depicts the transfer of benefits to the client under the contracts. Payments are generally due upon invoicing on a net-30 basis, unless other payment terms are negotiated with the client based on client history. Standard industry practices apply.
Grant revenue:
The Company receives government awards in the form of cash grants that vary in size, duration, and conditions from domestic governmental agencies. Accounting for grant revenue does not fall under ASC 606, Revenue from Contracts with Clients. For government awards in which no specific US GAAP applies, the Company accounts for such transactions as revenue and by analogy to a grant model. The grant revenue is recognized on a gross basis. The grant revenue is recognized over the duration of the program when the conditions attached to the grant are achieved. If conditions are not satisfied, the grants are often subject to reduction, repayment, or termination. The Company classifies the impact of government assistance on the accompanying Consolidated Statements of Operations and Comprehensive (Loss) Income as services revenue.
The Company received assistance from domestic governmental agencies to provide reimbursement for various costs incurred for research and development. These include direct grant awards and subawards. The grants awarded are currently set to expire at various dates through 2025. The Company recognized $0.7 million, $1.0 million, and $1.1 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively within on the Consolidated Statements of Operations and Comprehensive (Loss) Income related to such assistance. Amounts that have been earned but not yet funded are included in accounts receivable. Computer equipment allowable by the grants is classified under fixed assets. Subawards due to unrelated entities are classified under accrued expenses.
Remaining Performance Obligations
As of August 31, 2025, remaining performance obligations were $12.1 million; 95% of the remaining performance obligations are expected to be recognized over the next twelve months, with the remainder expected to be recognized thereafter.
Disaggregation of Revenues
The components of revenue for the fiscal years ended August 31, 2025, 2024, and 2023 were as follows:
| Years ended August 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Software licenses | ||||||||||||||||||||
| Point in time | $ | 42,792 | $ | 40,068 | $ | 35,369 | ||||||||||||||
| Over time | 3,036 | 956 | 1,148 | |||||||||||||||||
| Services | ||||||||||||||||||||
| Over time | 33,351 | 28,989 | 23,060 | |||||||||||||||||
| Total revenues | $ | 79,179 | $ | 70,013 | $ | 59,577 | ||||||||||||||
Contract Balances
Contract assets excluding accounts receivable balances as of August 31, 2025, 2024, and 2023, were $4.9 million, $5.9 million, and $2.7 million, respectively. This balance is included in Prepaid and Other Current Assets on the Consolidated Balance Sheets.
During the fiscal year ended August 31, 2025 and August 31, 2024, the Company recognized $1.8 million and $2.9 million of revenue, respectively, that was included in contract liabilities as of August 31, 2024 and August 31, 2023.
Deferred Commissions
Sales commissions earned by our sales force and our commissioned sales representatives are considered incremental and recoverable costs of obtaining a contract with a client. We apply the practical expedient as described in ASC 340-40-25-4 to expense costs as incurred for sales commissions, since the amortization period of the asset that we otherwise would have recognized is one year or less. This expense is included in the Consolidated Statements of Operations and Comprehensive (Loss) Income as sales and marketing expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 1, 2025 | Showing above |
| 2021 | Oct 27, 2021 | |
| 2020 | Nov 16, 2020 | |
| 2019 | Nov 13, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.