SLP - NASDAQ

Greetings and welcome to the Simulations Plus First Quarter Fiscal 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Lisa Fortuna from Financial Profiles. Ms. Fortuna, you may now begin.

Welcome to the Simulations Plus first quarter fiscal 2025 financial results conference call. With me today are Shawn O'Connor, Chief Executive Officer, and Will Frederick, Chief Financial Officer and Chief Operating Officer of Simulations Plus. Please note that we updated our quarterly earnings presentation, which will serve as a supplement to today's prepared remarks. You can access the presentation on our Investor Relations website at www.simulations-plus.com. After management's commentary, we will open the call for questions. As a reminder, the information discussed today may include forward-looking statements that involve risks and uncertainties. Words like "believe," "expect," and "anticipates" refer to our best estimates as of this call, and actual future results could differ significantly from these statements. Further information on the company's risk factors is contained in the company's quarterly and annual reports filed with the Securities and Exchange Commission. In the remarks or responses to questions, management may mention some non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in the most recent earnings release available on the company's website. Please refer to the reconciliation tables in the accompanying materials for additional information. With that, I'll turn the call over to Shawn O'Connor. Please go ahead.

Thank you, Lisa. Good afternoon, and happy New Year, everyone. Thank you for joining our first quarter fiscal 2025 conference call. We are off to a strong start in 2025. Total revenue increased 31% year-over-year and 5% on an organic basis, including the contribution from our Adaptive Learning and Insights (ALLIE) business unit and our Medical Communications (MC) position. Diluted EPS was one penny, adjusted diluted EPS was 17 cents, and adjusted EBITDA was $4.5 million or 24% of revenue. Turning to the macro environment, which continues to be a key area of focus for the financial community, we are continuing to face a challenging funding and cost-constrained environment in our sector. Key measures such as funding, pharma budgets, and the number of clinical trials all indicate that activity levels are marginally better compared to the last two years. Additionally, there continues to be a range of activity levels amongst our clients and prospective clients, from stagnant to quite active, depending on their specific situations. As the calendar year closed out, our clients were clearly turning their attention to planning for 2025, and our client engagement activities were especially robust. We participated in several major industry conferences that presented the opportunity to have positive and meaningful conversations with clients that are deeply immersed in their annual budgeting process. This resulted in new budget proposals and outlined plans to expand modeling and simulation capabilities within our client organizations. While this increased level of interest and activity is promising, we are still taking a cautious stance until spending plans are inked and the timing of those expenditures is finalized for calendar 2025. We are committed to maintaining the disciplined execution in a tough environment approach that has driven our success over the past two years. At the same time, we are ready to capitalize on any increases in client spending. I'm proud of our team who delivered these results despite the ongoing cost-constrained and limited funding environment for our pharma and biotech clients. Turning to our software segment, software revenue grew 41% in the first quarter of 2025, 18% on an organic basis, with strong performance across our software solutions. Our Clinical Pharmacology and Pharmacometrics (CPP) business unit led software revenue growth with Monolix Suite increasing by 43%, including a large pharma client fully committing to PK Analytics, our user-friendly and fast application for compartmental analysis, non-compartmental analysis, and bioequivalent studies. During the quarter, we added 12 new customers and had nine customer upsells. Our Quantitative Systems Pharmacology (QSP) software revenue grew by 40%, and we added model licenses for psoriatic arthritis and Crohn's disease. As a reminder, quarterly results can be lumpy for QSP software based on the high ticket price license and a smaller pool of end users. Our Cheminformatics (CIM) business unit software revenue grew by 15%, driven by higher revenues from ADMET Predictor. Additionally, there were four new customers and one upsell during the quarter. Our Physiologically Based Pharmacokinetics (PBPK) software revenue increased 4% for the quarter. GastroPlus added two new customers and booked four upsells with existing customers. Software revenue in our ALLIE business unit was $1.7 million, and software revenue in our MC business unit was $0.1 million. Overall, software revenue in these two new business units was in line with our expectations. Turning to our services segment, services revenue grew by 19% in the first quarter of 2025, yet declined by 9% on an organic basis. This quarter, our business was temporarily impacted by client-driven data delays that postponed the ramp-up of certain projects into our fiscal year second quarter. PBPK services revenue decreased 9%, CPP services revenue declined 6%, and QSP services revenue decreased 14%. Medical communication services revenue was $1.9 million, in line with our expectations. On a positive note, services bookings were very strong during the quarter, especially in our CPP and MC business units. We ended the quarter with $17.3 million in backlog, up 22% from $14.1 million sequentially. This was successfully achieved during a year-end quarter in which our clients' existing calendar year 2024 budgets were depleted, and attention was turning to calendar year 2025 activity. The year-over-year decline in services backlog was reflective of cost-driven pullback by our clients during the course of calendar year 2024. With that, I'll turn the call over to Will.

Thank you, Shawn. To recap our solid first quarter performance, total revenue increased 31% to $18.9 million, including a $3.7 million contribution from the newly formed ALLIE and MC business units. Software revenue increased 41%, representing 57% of total revenue, and services revenue increased 19%, representing 43% of total revenue. Turning to the software revenue contribution from our products, for the quarter, GastroPlus was 38%, Monolix Suite was 21%, ADMET Predictor was 12%, ALLIE training platform was 16%, and other products were 13%. For the trailing twelve months, GastroPlus was 50%, Monolix Suite was 20%, ADMET Predictor was 17%, ALLIE training platform was 6%, and other products were 7%. The trailing twelve-month software revenue for the ALLIE and MC business units only includes revenue since the acquisition of Proficiency in June 2024. During the quarter, our software customer renewal rate was 95% based on fees and 83% based on accounts, both in line with prior year trends recognizing the quarterly timing of renewals during the fiscal year. Average software revenue per customer for the quarter increased to $94,000. On a trailing twelve-month basis, our software customer renewal rate was 92% based on fees and 83% based on accounts, also both in line with prior period trends. Average revenue per customer increased to $98,000 on a trailing twelve-month basis. Shifting to our services revenue contribution by business unit for the quarter, CPP was 37%, MC was 23%, QSP was 22%, and PBPK was 18%. On a trailing twelve-month basis, CPP was 40%, QSP was 28%, PBPK was 21%, and MC was 11%. The trailing twelve-month services revenue for the MC business unit only includes revenue since the acquisition of Proficiency in June.

Total service projects worked on during the quarter were 183. Year-end backlog increased to $17.3 million from $14.1 million in the prior quarter. The largest driver of the backlog growth quarter over quarter was in the CPP business unit, while the backlog growth in the other business units remained relatively flat, with new bookings offset by revenue recognized during the quarter. The year-over-year backlog decline is primarily in the QSP and CPP business units, with an increase in the MC business unit. Total gross margin for the quarter was 54% with software gross margin of 75% and services gross margin of 26%. On a comparative basis, total gross margin for the prior year quarter was 62% with software gross margin of 87% and services gross margin of 36%. The decrease in software gross margin was primarily due to an increase in cost of revenue for the amortization of capitalized software development costs and developed technology amortization from the Proficiency acquisition. The decrease in services gross margin was primarily due to the decrease in services revenue on an organic basis with relatively fixed cost of revenue. For the comparative basis reporting, the prior period reflects a reclassification of $0.8 million from G&A expense to cost of revenues in connection with the prior year business unit reorganization. Turning to our consolidated income statement for the quarter, R&D expense was 10% of revenue compared to 8% last year. Sales and marketing expense was 15% of revenue compared to 14% last year. G&A expense on a comparative basis was 28% of revenue compared to 34% last year, and total operating expenses were 53% of revenue compared to 56% last year. Income tax expense for the quarter was $0.1 million compared to $0.5 million last year, and our effective tax rate was 24% compared to 19% last year. Net income for the quarter was $0.2 million or 1% of revenue compared to $1.9 million or 13% of revenue last year, and diluted EPS was $0.01 compared to $0.10 last year. Adjusted EBITDA for the quarter was $4.5 million or 24% of revenue compared to $3.4 million or 23% of revenue last year, and adjusted diluted EPS was $0.17 compared to $0.18 last year. We believe both our adjusted EBITDA margin to achieve our fiscal 2025 guidance ranges. The reconciliation of non-GAAP financial metrics to the relevant GAAP metrics is in our earnings release and on our website. Turning to our balance sheet, we ended the quarter with $18.2 million in cash and investments. Consistent with prior year trends, the first quarter cash and investments balance decreased compared to the fourth quarter, primarily due to the timing of prior year annual bonus payments in the first quarter. We remain well-capitalized with no debt and strong free cash flow to execute our growth strategy. I'll now turn the call back to Shawn.

Thank you, Will. Our strong first quarter results reflected notable strength in software performance across all of our solutions. We are encouraged by our robust services backlog, which should drive sequential improvement in the coming quarters. Also, the integration of our ALLIE and MC business units continues to be progressing well and is tracking in line with our expectations. Moving on to our outlook for the balance of fiscal year 2025, our first quarter 2025 results in line with our expectations, we are reaffirming our fiscal year 2025 guidance as follows: Total revenue is expected to be between $90 million and $93 million, and we will still expect ALLIE and MC to contribute between $15 million to $18 million, as previously provided. Year-over-year revenue growth is expected to be in the range of 28% to 33%, software mix between 55% and 60%, adjusted EBITDA margin between 31% and 33%, and an adjusted diluted earnings per share of between $1.07 to $1.20. We also expect total revenue for our second fiscal quarter to be approximately 24% of our fiscal year guidance range, with a year-over-year growth rate of between 18% and 22%. We expect the balance of our full-year revenues to be evenly split in the third and fourth quarters. As a reminder, our guidance does not include the impact of any future acquisitions. Our near-term priorities include successfully completing the acquisition integration, expanding cross-selling opportunities, and driving towards our historical adjusted EBITDA margin target of 35% to 40% in corresponding profitability levels. We are well-positioned to achieve our goals this year and remain focused on executing our disciplined growth strategy to deliver long-term value to shareholders. Thank you for your time today. And with that, I'll now turn the call over to the operator for your questions.

Great. Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. You may press star two to remove yourself from the queue. It may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question is from David Larsen from BTIG. Please go ahead.

Hi. The number that stuck out to me this quarter was the software revenue growth, up 41% year-over-year. That's good. What's even better, I think, was I think you said it was 8% organic revenue growth. Can you maybe just talk about I think last quarter, the organic software revenue growth was, like, minus 6%. Why the huge positive rebound sequentially? Any color there would be very helpful. Thank you.

Sure, David. Yeah. Great quarter on the software side and really healthy across all of our platforms. The highlights during the quarter were sourced in our CPP platform, the Monolix platform, where we continue to see significant uptake both in the context of expanding existing license holders there, expanding the footprint with upsell there, and came into new logos. End of note, during the quarter, we had a large pharma account commit 100% to the use of PK Analytics, the NCA component of the Monolix Suite, which is a significant step forward, obviously, with any client. Also, very significant progress on the QSP front, where we had some significant license activity in two therapeutic areas that bode well both in terms of the acceptance of those therapeutic models and the value in them in general for license to more broadly in the industry, but as well with those two specific clients, their commitment in partnership with Simulations Plus as their QSP partner and anticipate that they will expand in the other therapeutic areas with us on the QSP side as well. So certainly those two areas delivered very strong results this quarter, but across the board as well. And as we identified towards the end of the year, a focus in terms of our Asian market. If you look to those numbers, which I think were in the 10-Q that was filed today, you'll see that 30% growth in the Asian market, which is pretty much essentially software revenue, good results, and a good start to the year in that geography as well. So quite pleased. Our software revenue, because of the recognition upfront, can be seasonal as a result of what renewals are coming up for renewal in a quarter. In this first quarter, the start of this year, we've kicked off the year very strong on the software side.

Okay. And just any color on maybe pricing? Are we thinking, like, mid to high single digits? And then isn't software sort of a more leading indicator of the overall health of the business? I mean, services you have consulting engagements. They can be lumpy. It seems to me like software is sort of a core metric for the overall health of the business. Just any thoughts on pricing and those comments there? Thanks.

Sure. Yeah. No. Certainly, we're focused on the software side of our business. Both are important, software and services, in terms of how we support our clients. But our model and our strategy have always been in terms of a lean on the software side because of its obvious benefits in terms of consistency, recurring revenue, profitability, and margin. So a leading indicator certainly in terms of the health of the business is the growth of our software segment of our business. In the context of price increase this year, yeah, your mid-single digits is where we typically fall. In our history, and this year is going to be in that same ballpark.

Just one last quick one for me before I hop back in the queue. What was the GastroPlus year-over-year software revenue growth? It looked a little light. Is that 3% year-over-year?

Yes. Four percent, I think. Maybe we're rounding up or rounding down there, but I think it was about four percent. Yeah. We had good results out of Asia, which is predominantly GastroPlus. Decent uptake in terms of some upsells, relatively low in terms of new logos. It's a little bit bigger price point, and I think our view is that some of those newer clients are waiting until after the New Year budgets in 2025. But healthy activity in terms of our pipeline and GastroPlus. No change in what's expected.

Okay. One last quick one. When you say Asia, how much of Asia is China?

China's a relatively smaller portion there. The Japanese market is a significant contributor in our Asian marketplace. India, Korea, and then probably China coming up fourth.

Okay. Great. Because China's been under pressure. Thanks very much. I'll hop back in the queue next quarter.

Thanks, François. The next question is from Christine Rains on behalf of Max Smock from William Blair. Please go ahead.

Hi. It's Christine Rains on for Max Smock. Thanks for taking our questions. Just digging a little bit more into your previous comments, you discussed some promising conversations with large pharma companies as they went through their process of setting their 2025 budget. But also noted that all these deals haven't been finalized. Just hoping you can give us an idea of how much of this incremental business has been contracted. And now that we've closed out the calendar year, if you have any idea of how your large pharma clients, in specific, their budgets for modeling and simulation in 2025 compared to 2024. And how this reflects on your initial booking expectations. Really, just trying to get at if you think we're at a bottom for large pharma demand or if you think there's potential other shoe to drop this year. And if we're at a bottom, then what is kind of your sense of a timeline for a rebound? Thanks.

Let me pull my crystal ball out and see how well I can respond on this one. It was a very good quarter in terms of our discussions with our clients. A quarter in which we had a couple of our more significant conferences in our industry. But a lot of face time across the board at all levels with our clients. And I'd say the thing I walked away from those conversations with, I'll come back to the specifics of bookings and timings and all that sort of thing. But certainly a strong commitment on our clients and appetite to expand their use of modeling and simulation in their programs. I think we are a set of solutions that can provide efficiency and better ROI on programs. And this has been their learning lesson during this past year or two. A budget crunch and trying to improve their effective delivery of ROI to their shareholders, and so I certainly walked away from the last few months and just discussions with clients with our clients are very committed and see the strength and value of what modeling and simulation can do. And improving their performance and good discussion in terms of collaborative partnerships, something that Simulations Plus has always been very good at in terms of partnering with our clients. And a number of these discussions were quite extensive in terms of how can we form an even closer alliance and work together. So strong commitment out of our clients the client discussions over the last three months. Inevitably, we work that down to what's the budget and what's the project outlook, what's the modeling department need for more tools expanding of our platform usage. And those discussions were good. Some commitments have come in already. Much of the discussion was in the context of what they were going to put into their budgets in their calendar year 2025. Getting it into the budget and getting it approved is that first hurdle. That next hurdle is then their rollout. They don't roll it all out on January first. That's spread. They're spending through the course of the year, and so as of mid-January or first week of January, people are just getting back and we're getting good calls and conversations going in terms of how do we roll this out. Are their budgets greater than last year? What's the relationship? Or is it spending on the uptick? We don't get visibility to that level. Certainly, our discussions with them and their planning process indicate such. But, overall, we're going to continue to take a cautious optimistic outlook here that hey, there's some bright lines, some good discussions. Some promise for a pickup in the industry. We're going to live that as it occurs and be ready to execute at levels that we've been operating at or step up and respond to higher spend rates in our industry going forward. I'm confident that it will be somewhat a better environment than it was last year, but let's see how it plays out.

Thank you. Appreciate the detail there. I'm also hoping you can give the contribution from Proficiency in software versus services. And discussed at both the total top line and margin contribution from Proficiency in the quarter aligned with your expectations or if a ramp is needed to hit the $15 million to $18 million sales target. And, similarly, just on margins overall in services if utilization has improved there and how that plays into the cadence for the year.

I'll give Will a heads up to respond on some of those numbers. I'll talk in general. Contribution from Adaptive Learning Insights and Medical Communications, the two biggest issues that's up for efficiency, right in line with both expectations in general as well as in the context of the $15 to $18 million that we've guided to in terms of their revenue contribution. They're settling in well from an internal perspective in terms of integration to the Simulations Plus organization, the activity level, and the marketplace is very active. Active both in terms of the continuation of their business development efforts as part of a larger business development team, their existing accounts and pipeline, as well as cross conversations of introductions across the two entities, if you will, in terms of our introduction to our clients and their introduction of the legacy SaaS products into their client base. In terms of specific revenue numbers in the others, Will, you want to comment?

Sure. And I would definitely point you to the earnings deck that we put out that has some of this detail, but the two business units for software it was about $1.8 million for the quarter and $1.9 million for services.

Great. Thank you both. And last, just one quick one for me. Just hoping you can give some more color on the data delays and behind that and a resolution timeline.

I don't think it ever fully resolves. I think this is the reality of drug development today. It's the banner headline of fail fast and reallocate resources to programs that have a higher likelihood of success. That is going to result in terms of a higher frequency of resource allocation decisions on the part of our clients. So, it's something that we encounter on a quarterly basis, have in the past. We've seen that frequency increase, and I don't think we reach an end date in which that activity. It's always going to ebb and flow quarter by quarter. But it's a reality of the business model of our ultimate right now. So a little bit more activity than typical in the first quarter. Take a look at our backlog and our pipeline, very robust bookings quarter on the service side. And so mostly success and those projects are teed up. And, eventually, there'll be some shifting of the planned timing for them down the road, but certainly starts out the year with good backlog to fuel our service expectations in fiscal year 2025.

Great. Thank you so much.

Next question is from Scott Schoenhaus from KeyBanc Capital Markets. Please go ahead.

Hey, team. Thanks for the ask. Most of my questions have been asked, but I just wanted to get a sense, Shawn, this back half ramp, has anything changed in the last ninety days from that based on that commentary, and specifically, this is a follow-up to a previous question that was asked about the services revenue. Flowing into 2Q. Should it all flow back into 2Q that was lost in 1Q? I just want to get some clarity around it. Is there an air pocket in 2Q that's causing the back half commentary, or is it always that you thought of this year as having a back half ramp based on what you're seeing in the industry? Thanks.

Yeah. Fair question, Scott. Our seasonality by quarter, software is the bigger impact there in terms of the sequencing of renewals that take place on a quarter-to-quarter basis, but some seasonality on the service side. We've seen historically second and third quarter being sort of peak and fourth quarter a little bit of step down. Our comment there was just sort of recognizing that a lot of this project activity and budgeting discussions, that's not all going to close and be handed out and driven to revenue in the first half of the year. And if budgets pick up, if the activity level picks up, it's going to go through the typical sales pipeline activity time frame. You then get project performance that ultimately leads to revenue and probably pushes some of that service revenue to the back half of the year. But when we say push out here, we're talking about we've guided to 24% of our revenue being in the second quarter. In the past, it's been 26%. We're not really talking about a big push option to the back half of the year. We just wanted to make sure people's expectation in terms of the consensus revenue for the second quarter was on target.

Great. Thank you so much.

Next question is from Matt Hewitt from Craig Hallum. Please go ahead.

Good afternoon. Happy New Year, guys.

How are you doing, Matt?

Pretty good. So maybe first up, I think I heard you say total organic revenue growth in the quarter was 5%. I realize maybe not everybody's reported, but do you have a sense where the market shook out for last year? Historically, it was kind of mid-teens. Obviously, and you noted that the last couple of years have been challenging. So below that, but do you have a sense where the market was last year?

We gotta wait and see some of the other reports come out to get the visibility there. I think many of the peer group reporting that I saw whittled down to our comparable modeling and simulation components. While our 2024 growth was significant up at 14% level organically, most of our peers were in the single-digit area. Our organic growth in the first quarter, I think you're right. It was 5%, 6%, something like that. That's essentially within our expectations and our guidance as anticipated.

Got it. And then one of the opportunities when you acquired Proficiency was that it expanded the market opportunity in that you basically got to move into the commercial budgets within your customer partners versus just in the modeling and simulation and kind of the earlier stage work. Are you seeing some of the benefit? I mean, some of the comments that you've made today indicate that you were still facing some headwinds in Q1, but are you starting to see some of that new budget opportunity open up to you because of the acquisition?

The acquisition opened us up into two new budget areas. One is clinical operations and probably the most important budget, most adjacent budget in terms of the potential to see opportunities for synergy, if you will, between the modeling and simulation biosimulation solutions that we have and the training platform that is sold into clinical ops. The second budget that it opened us up into is medical affairs, both preapproval and commercial budgets. In that regard. And I think we're going to see the play out of the opportunity and expansion in those budgets to roll in that sequence. I think clinical operations first and leading ultimately on the commercial side. The proficiency operation of medical communications business unit internally today that is selling through to that commercial medical affairs budget very robust, had a good bookings quarter. And as we're learning, a more dramatic front-end budgeting process that gives you the visibility of their business for the coming year. It's a bit played out a little bit more explicitly. And so it's a good first quarter bookings quarter was a good confirmation of our expectations for medical communications in that regard into the latter part of the fiscal year here.

Got it. And maybe one last one, and I don't know if you're going to even have this handy, but I thought I'd ask. Obviously, the press release, it kind of notes that there were some data delays that prevented getting some of those service contracts going pushed them into Q2 and later in the year. And then on the call here, you've kind of mentioned at least earlier in the prepared remarks, that there were some budgetary constraints. Is there a way to kind of parse out the delta between the two? How much of it was budgets versus data delays?

Difficult to quantify there for you, Matt. And as I've said before on the budget constraint side, that is for we're operating our first quarter and the last quarter of the calendar year budgets for our clients. And, like, my son sometimes, when it gets to the end of the year or the end of the month, he spent all his money in the beginning of the month or the beginning of the year or the end of the time frame becomes a little bit more difficult than that. I would characterize the on the budget constraint side, the activity level. With regard to project delays, I've also commented in that regard that hey, it's something that is encountered every quarter. Some quarters are going to be a little bit more populated with project delays and changes than others. That's what took place here in the first quarter for us. But it's an operating environment or phenomena that we will have to become adept at on an ongoing basis because it doesn't go away. That quarter in which there are no data delays or project delays in any of our expectations from the beginning of the quarter. I think that may be in the rearview mirror. We're always going to have that sort of the sort of challenge.

Got it. Thank you very much.

Next question is from Jeff Garro from Stephens. Please go ahead.

Yeah. Good afternoon. Thanks for taking the questions. I want to ask a little bit further on the ALLIE and MC contribution being in line with your expectations and doing the math there that annualizing the contribution you saw here in your fiscal first quarter will put you at the low end of the range you've set. But, you know, like to think about that whole range of outcomes that you've outlined. And what was hoping you could comment a little bit further on the seasonality of that business catalyst you might see for the rest of the year, and then maybe outside the contributions, just next steps for the integration of that piece of the business with the broader operation.

Sure, Jeff. The ALLIE side, the clinical simulation side, probably patterned similar to biosimulation project support for clinical trials. So, when are those client clinical trials going to take place? And so the seasonality for that side of the business kind of mirrors ours. The year-end quarter calendar quarter, our first quarter, not the most robust quarter for that. They'll be peaked in the first three quarters of the calendar year. So our second through our fourth quarter. Medical communications, as I commented before as well, most of their program efforts are not going to take place in November, December, sort of time frame. So they're probably similar, but maybe even a little bit more skewed towards what would be our fiscal year third and fourth quarter. Next steps in terms of the integration there, settle into operating regimen within the greater SLP company. We've undertaken most of the major steps to achieve internal integration. We've got the business development team integrated and a comprehensive go-to-market with regard to all of the solutions on a combined basis now. Putting those feelers out and beginning that networking of the proficiency spider web of relationships within clients and our spider web and trying to increase the number of conversations that lead to leads that fuel the pipeline for future business down the road. So next steps are really more market-driven as opposed to internal drilling.

Understood. That helps. Then want to ask one around the macro environment. You said that funding challenges and cost constraints in the press release and then hearing your remarks, you said a wide range of activity levels, wide variance by client. So we want to ask if there's any pattern by customer size or therapeutic area or stage of clinical development work or any other vector there.

I think you can, the basic answer is no. It kind of goes all over the map. There are some trends, if you will, that are probably obvious. In terms of, on a company perspective, look at those companies that are being a little bit more aggressive, a little bit better financial position out there, Novo Nordisk type of scenario versus some that may be still struggling in terms of their own financial reporting. From the therapeutic area, oncology still is singing loudest out there, and its activity level in that therapeutic area is up. Obesity is up, but it's still a trickle down in terms of clinical trial activity in the obesity space. A lot of attention, a lot of early program start, but clinical trial activity is still to follow. So, yeah, there's some trends in there. But it's pretty sporadic. I walk into a customer meeting wondering what's going to be the tone of this one. With some ability to predict, but not perfect.

Appreciate that. Thanks for taking the questions.

Thanks, Jeff. This concludes the question and answer session. I'd like to turn the floor back to management for any closing remarks.

Very good. Thanks again for joining our call today and for your interest in SLP. In the next few months, we'll be attending a few key events. In early February, the company will be at SCOPE, a flagship conference for clinical operations executives. It's a top conference for our ALLIE and MC business units. For the financial community, in January, we'll be holding meetings during the JPM annual healthcare conference next week. And in February, we'll be attending the BTIG MedTech in Digital Health Life Science and Diagnostic Tools Conference and the Oppenheimer Annual Healthcare Life Science Conference as well. Hope to see you there or speak to you soon. Thanks for your attention. Take care.