01 · Challenge
The Challenge
Simulations Plus wanted to develop and execute a comprehensive investor relations program to increase its visibility within the investment community and deliver a compelling investment thesis. The company had a low float, and insiders owned a significant percentage of the stock and were routinely selling shares. About 50% of its revenue came from low-margin hardware sales that it was looking to divest.
02 · Solution
Our Solution
- Provided financial analysis and recommendations to support issuing a cash dividend; management embraced the strategy, which significantly reduced insider selling and positioned the company with value-oriented investors who appreciated the regular dividend
- Developed collateral positioning the company as a unique, recession-resistant growth company
- Provided an outline for investors to model the business after the hardware divestiture, bringing clarity to an operating model with over 90% recurring revenue
- Held quarterly non-deal roadshows and weekly conference calls with investors, which created awareness of the model and led the company to trade on forward expectations
03 · Impact
The Impact
- Drove a disproportionate shift in valuation by communicating performance improvement, with the stock rising from $20 to nearly $80
- Despite losing a significant portion of revenue in the hardware divestiture, the stock doubled in valuation over the following 12 months
- The chairman and CEO was able to cease selling stock under a trading plan, removing an overhang and attracting dividend-focused investors
- Share volume increased 80%
- Made introductions to more than 2,200 unique buy-side groups, including 8 of the top 12 institutional holders
- Arranged face-to-face meetings with more than 200 funds
Past results are not indicative of future performance. Figures are as reported in Hayden IR’s case study for Simulations Plus, Inc. See our disclosures.
