Group 1: Earnings Performance - Schrodinger, Inc. reported a quarterly loss of $0.55 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.35, and compared to a loss of $0.32 per share a year ago, indicating a significant earnings surprise of -57.14% [1] - Over the last four quarters, the company has only surpassed consensus EPS estimates once, while it posted revenues of $88.32 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 5.79% and up from $74.13 million a year ago [2] Group 2: Stock Performance and Outlook - Schrodinger shares have increased by approximately 9.1% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] Group 3: Estimate Revisions and Industry Context - The trend for estimate revisions for Schrodinger is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is -$0.78 on revenues of $47.5 million, and for the current fiscal year, it is -$2.08 on revenues of $272.34 million [7] - The Medical Info Systems industry, to which Schrodinger belongs, is currently ranked in the bottom 49% of over 250 Zacks industries, suggesting that the industry outlook could materially impact the stock's performance [8]

Revolutionizing Medicines and Materials Discovery 4Q/FY24 Financial Results February 26, 2025 Cautionary Note and Disclaimer This presentation contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact, made by Schrödinger, Inc. ("we," "us," "our," "Schrödinger," or the "Company") contained in this presentation, including, without limit ...

Revenue and Financial Performance - The company achieved total revenue of $207.5 million for the year ended December 31, 2024, with a net loss of $187.1 million[40]. - The annual contract value (ACV) for the company was $190.8 million in 2024, up from $154.2 million in 2023, indicating a significant growth in revenue[58]. - The customer retention rate for those with an ACV of at least $100,000 was 95% for the year ended December 31, 2024, demonstrating strong customer loyalty[59]. - In 2024, 19 of the top 20 pharmaceutical companies licensed the company's software solutions, contributing $74.7 million, or 41%, to total software revenue[31]. - The company had 1,752 active customers as of December 31, 2024, with the top 10 customers representing approximately 39% of software revenue[54]. Customer Base and Contracts - The company had 235, 222, and 227 customers with an annual contract value (ACV) of at least $100,000 for the years ended December 31, 2024, 2023, and 2022, representing 87%, 83%, and 82% of total ACV, respectively[31]. - The number of customers with an ACV of at least $500,000 increased to 61 in 2024 from 54 in 2023, and those with an ACV of at least $1.0 million rose to 31 in 2024 from 27 in 2023[31]. - The company entered into an expanded three-year software agreement with Novartis in November 2024, enhancing access to its computational predictive modeling technology[55]. - The company has established distribution channels in important markets, including China, to support its software sales[227]. Drug Discovery and Development - Drug discovery revenue was $27.2 million in 2024, with significant contributions from collaboration agreements and equity positions in collaborators[41]. - The company has proprietary drug discovery programs focused on various therapeutic areas, including immunology and neurology, with a strategy to evaluate each program for potential advancement[89]. - The company has developed a computational platform that predicts molecular properties with high accuracy, combining physics-based methods and machine learning[46]. - The computational platform can evaluate billions of molecules per day, significantly outperforming traditional methods that evaluate approximately 1,000 molecules per year[50]. - The company launched an initiative in 2024 to expand its computational platform to predict toxicology risk, funded by $19.5 million in grants from the Bill & Melinda Gates Foundation[41]. Collaborations and Partnerships - The company is eligible to receive up to $2.272 billion in total milestone payments from Novartis, with $892.0 million in discovery and development milestones and $1.38 billion in commercial milestones[87]. - The collaboration with BMS includes a potential total of $482.0 million in milestone payments for the remaining neurology target, with $32.0 million already recognized[84]. - The collaboration with Lilly allows for up to $420.0 million in discovery, development, and commercial milestone payments[85]. - The company received an aggregate of $147.2 million in cash distributions related to the acquisition of Nimbus by Takeda in February 2023[78]. Clinical Trials and Regulatory Approvals - The FDA cleared the IND for the company's SGR-1505 in June 2022, and initial data from the ongoing Phase 1 clinical trial is expected in Q2 2025[35]. - The FDA granted Fast Track designation to SGR-2921 in July 2024, with initial data from its Phase 1 clinical trial anticipated in the second half of 2025[37]. - The Phase 1 clinical trial for SGR-1505 is designed to enroll up to 52 patients with relapsed or refractory B-cell malignancies, with initial data expected in Q2 2025[102]. - The Phase 1 clinical trial for SGR-2921 aims to enroll up to 144 patients with relapsed or refractory acute myeloid leukemia or high-risk myelodysplastic syndrome, with initial data anticipated in H2 2025[118]. - The FDA granted Fast Track designation to SGR-2921 for patients with relapsed or refractory acute myeloid leukemia in July 2024[121]. Intellectual Property and Licensing - As of January 24, 2025, the company owns or holds exclusive license rights to approximately 40 patents and patent applications, including 14 issued or allowed U.S. cases[219]. - The company has approximately 10 published patent families related to its proprietary drug discovery business, with over 100 compound patents and patent applications filed since 2010[220]. - The company actively seeks to protect its intellectual property through patents, copyrights, and trade secrets, although challenges remain in enforcement[226]. - The company has entered into multiple license agreements with Columbia University, establishing rights and obligations regarding patents and software used in its computational platform[189]. Competitive Landscape - The company faces intense competition in oncology, with multiple competitors in clinical development for its product candidates[165][167][168]. - The competitive landscape includes major pharmaceutical companies, specialty biopharmaceutical companies, and emerging startups, all vying for market share in drug discovery[163][170]. - The competitive factors affecting the success of the company's product candidates include efficacy, safety, tolerability, convenience, and price[164].

Revenue Performance - Total revenue for Q4 2024 increased by 19.1% to $88.3 million, compared to $74.1 million in Q4 2023[3] - Software revenue for Q4 2024 rose by 16.0% to $79.7 million, driven by increased hosted revenue from large customers[3] - Drug discovery revenue for Q4 2024 was $8.7 million, a 58% increase from $5.5 million in Q4 2023[3] - Full-year 2024 total revenue decreased by 4.2% to $207.5 million, while software revenue increased by 13.3% to $180.4 million[7] - Drug discovery revenue for the full year was $27.2 million, down 53% from $57.5 million in 2023[7] - Total revenues for the year ended December 31, 2024, were $207.539 million, a decrease of 4.9% compared to $216.666 million in 2023[35] - Software products and services revenue increased to $180.365 million in 2024, up 13.3% from $159.124 million in 2023[35] - Drug discovery revenue decreased significantly to $27.174 million in 2024, down 52.8% from $57.542 million in 2023[35] Profit and Loss - The company reported a net loss of $40.2 million for Q4 2024, compared to a net loss of $30.7 million in Q4 2023[6] - The company reported a net loss of $187.123 million for 2024, compared to a net income of $40.720 million in 2023[35] - Non-GAAP net loss for the year was $(191,394,000) in 2024, compared to $(157,755,000) in 2023[41] Expenses - Gross profit for 2024 was $132.083 million, a decrease from $140.692 million in 2023[35] - Research and development expenses rose to $201.785 million in 2024, an increase of 11% from $181.766 million in 2023[35] - The depreciation and amortization expense increased to $6,159,000 in 2024 from $5,552,000 in 2023[39] Customer Metrics - Schrödinger's total annual contract value (ACV) increased by 23.7% to $190.8 million in 2024[10] - The number of customers with an ACV of at least $5 million increased from four to eight[10] - Customer retention rate for customers with an annual contract value (ACV) of at least $100,000 is calculated based on the number of active customers from the previous fiscal year[26][27] - Active customers are defined as those with an ACV of at least $1,000, excluding low-cost software users[28] Cash Flow and Investments - Cash flows from operating activities resulted in a net cash used of $157,368,000 in 2024, an increase from $136,733,000 in 2023[39] - Net cash provided by investing activities was $148,836,000 in 2024, down from $193,034,000 in 2023[39] - The company issued common stock in an ATM offering, raising $8,868,000 in 2024[39] - The company reported a cash and cash equivalents balance of $162,657,000 at the end of 2024, slightly up from $161,066,000 at the end of 2023[39] Future Outlook - For 2025, software revenue is expected to grow by 10% to 15%, with drug discovery revenue projected between $45 million and $50 million[13] - Forward-looking statements indicate expectations for continued investment in research and growth in software licensing and drug discovery programs through 2025[31] Collaborations and Programs - Schrödinger ended 2024 with 13 ongoing programs eligible for royalties, up from 12 the previous year[11] - The company has tracked a cumulative number of collaborators for drug discovery since 2018, focusing on those collaborations that have generated revenue[30] Accounts Receivable - The company experienced a significant decrease in accounts receivable, net, amounting to $(169,700,000) in 2024, compared to $(10,039,000) in 2023[39] Equity Investments - The company recorded a gain on equity investments of $147,213,000 in 2023, which was not repeated in 2024[39]

Company Overview - Schrodinger, Inc. (SDGR) shares increased by 14.1% to $24.34 in the last trading session, with a higher-than-average trading volume [1] - The stock has gained 8.1% over the past four weeks [1] Strategic Updates - The price rise is attributed to investor optimism following the company's announcement of strategic priorities for 2025 and an update on its 2024 progress [2] - In 2024, Schrodinger achieved a multi-target research collaboration and license agreement with Novartis [2] Financial Expectations - The company is expected to report a quarterly loss of $0.25 per share, reflecting a year-over-year change of +21.9% [3] - Revenues are anticipated to be $84.93 million, which is a 14.6% increase from the same quarter last year [3] Earnings Estimates and Stock Performance - The consensus EPS estimate for the upcoming quarter has remained unchanged over the last 30 days [4] - A stock's price typically does not continue to rise without trends in earnings estimate revisions, indicating the need to monitor SDGR for potential future strength [4] - Schrodinger currently holds a Zacks Rank of 2 (Buy) [4] Industry Context - Schrodinger is part of the Zacks Medical Info Systems industry, which includes Fulgent Genetics, Inc. (FLGT) [4] - Fulgent Genetics has a consensus EPS estimate of -$0.12 for its upcoming report, representing a change of -142.9% from the previous year [5] - Fulgent Genetics currently holds a Zacks Rank of 3 (Hold) [5]

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $35.3 million, a decrease of 17% compared to the prior year, primarily due to lower drug discovery revenue [34][44] - Software revenue was $31.9 million, reflecting a 10% increase year-over-year, driven by growth in hosted revenue [31][44] - Drug discovery revenue was $3.4 million in Q3, down from $13.7 million in the same quarter last year, attributed to fewer collaboration projects and lack of significant milestones [33][44] - Operating loss for Q3 was $68.4 million, compared to a loss of $56 million in Q3 2023 [41] Business Line Data and Key Metrics Changes - Software revenue growth for the first nine months of 2024 was 11%, consistent with expectations [44] - Hosted revenue increased to 28% of total software revenue, up from 23% in the same period last year [31] - Contribution revenue rose to $3.1 million, driven by initial revenue from the Gates Foundation for the predictive toxicology initiative [32] Market Data and Key Metrics Changes - The collaboration with Novartis includes an upfront payment of $150 million and potential milestone payments of up to $2.3 billion, along with royalties on sales [14][15] - The software agreement with Novartis is expected to significantly increase access to Schrödinger's technology, contributing to revenue in Q4 [49] Company Strategy and Development Direction - The company aims to accelerate growth in its software business and advance collaborative and proprietary drug discovery programs [7] - The partnership with Novartis reflects a strategy to leverage the expertise of partners to enhance the development of proprietary programs [21] - The company is focusing on expanding its presence in both oncology and non-oncology therapeutic areas, with plans to advance select non-oncology assets into clinical trials [90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the updated software revenue guidance, citing strong customer engagement and ongoing discussions with multiple companies [55] - The company anticipates modest drug discovery revenue contribution from the Novartis collaboration in 2024, with expectations for significant contributions in 2025 [48][50] - Management highlighted the importance of the predictive toxicology initiative and its potential to enhance drug discovery efforts [27] Other Important Information - R&D expenses for Q3 were $51 million, an increase from $47 million in the same period last year, driven by higher FTE-associated expenses [38] - Cash and marketable securities balance increased to $398 million at the end of Q3, up from $382 million at the end of Q2 [47] Q&A Session Summary Question: Can you expand on the key drivers for updated software guidance? - Management indicated that Q4 typically accounts for a large portion of annual revenue, and they are confident in closing necessary renewals to meet guidance [55] Question: Should the narrowed drug discovery guidance be viewed as a timing event? - Management confirmed that the reduction reflects uncertainty about timing, with confidence in opportunities for next year [58] Question: What is the percentage of software business that is cloud versus on-prem? - Management reported that 28% of total software revenue in Q3 was hosted, up from 23% the previous year [63] Question: Can you recap expectations for initial MALT1 data? - Management expects to report on safety, pharmacokinetics, pharmacodynamics, and early efficacy evidence in the first half of 2025 [67] Question: How is the company managing P&L with advanced clinical programs? - Management is focused on controlling expense growth while continuing to invest in proprietary molecules and platform [72] Question: What are the revenue recognition dynamics for hosted versus non-hosted contracts? - Hosted contracts are recognized ratably over the contract period, while on-prem contracts see substantial revenue recognized at contract initiation [96][97]

Company Performance - Schrodinger, Inc. reported a quarterly loss of $0.52 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.40, representing an earnings surprise of -30% [1] - The company's revenues for the quarter ended September 2024 were $35.29 million, missing the Zacks Consensus Estimate by 13.85%, and down from $42.57 million a year ago [2] - Over the last four quarters, Schrodinger has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Movement and Outlook - Schrodinger shares have declined approximately 45.4% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at -$0.26 on revenues of $88.58 million, and -$2.19 on revenues of $211.65 million for the current fiscal year [7] Industry Context - Schrodinger operates within the Zacks Medical Info Systems industry, which is currently ranked in the top 19% of over 250 Zacks industries, indicating a favorable industry outlook [8] - The performance of Schrodinger's stock may be influenced by the overall outlook for the industry, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - The company reported significant operating losses and expects to incur losses over the next several years[11]. - Total revenues for Q3 2024 were $35.29 million, a decrease of 17.3% compared to $42.57 million in Q3 2023[19]. - The net loss for Q3 2024 was $38.14 million, compared to a net loss of $62.02 million in Q3 2023, showing an improvement of 38.5%[22]. - Operating expenses for Q3 2024 totaled $86.15 million, up from $79.83 million in Q3 2023, reflecting a 7.9% increase[19]. - The company reported a gross profit of $17.73 million for Q3 2024, down from $23.64 million in Q3 2023, a decrease of 25.1%[19]. - Net loss for the nine months ended September 30, 2024, was $146.9 million compared to a net income of $71.4 million for the same period in 2023[26]. - Cash used in operating activities for the nine months ended September 30, 2024, was $126.3 million, an increase from $99.5 million in the same period of 2023[26]. - Total stockholders' equity as of September 30, 2024, was $449.4 million, down from $563.6 million at the end of September 2023[24]. - The company reported a fair value adjustment loss of $27.8 million for the nine months ended September 30, 2024[26]. - The company reported a consolidated net loss of $38,136 for the three months ended September 30, 2024, compared to a net loss of $62,024 in the same period of 2023[164]. Revenue Sources - A substantial portion of the company's revenue is generated from life sciences industry customers, making it vulnerable to industry-specific factors[11]. - The company’s software business derives revenue from five sources, including on-premise software license fees and hosted software subscription fees[55]. - Software products and services revenue increased to $31.88 million in Q3 2024 from $28.90 million in Q3 2023, representing an increase of 6.9%[19]. - Revenue from drug discovery services for the three months ended September 30, 2024, was $2,813, a decrease of 77.9% from $12,730 in the same period of 2023[69]. - The total software revenue for the nine months ended September 30, 2024, was $100,703, an increase of 11.5% from $90,469 in the same period of 2023[64]. - The Company recognized $1.1 million and $10.1 million in revenue associated with the collaboration agreement with Bristol-Myers Squibb for the three and nine months ended September 30, 2024, respectively, compared to $11.2 million and $40.0 million in the same periods of 2023[79]. Research and Development - The company is focused on expanding its proprietary drug discovery programs and plans to submit investigational new drug applications to the FDA[4]. - Research and development expenses increased to $50.98 million in Q3 2024, compared to $46.83 million in Q3 2023, an increase of 4.6%[19]. - Research and development expenses for the nine months ended September 30, 2024, were $12,512, up from $11,422 in 2023, indicating a year-over-year increase of 9.5%[123]. - The company has limited experience in clinical development, which may impact the success of its programs[11]. - The company relies on third parties for clinical trials, which may affect the timeline for seeking marketing approval[11]. Strategic Initiatives - The company aims to accelerate the growth of its software business and acquire new customers[4]. - The company is pursuing multiple business strategies and expects to expand its development and regulatory capabilities[13]. - The company emphasizes the importance of retaining key executives and attracting qualified personnel for future success[13]. - The company acknowledges the potential impact of geopolitical and global economic developments on its operations[5]. Cash and Assets - Cash and cash equivalents as of September 30, 2024, were $160.42 million, up from $155.32 million at the end of 2023[17]. - Total current assets decreased to $456.40 million as of September 30, 2024, down from $567.80 million at the end of 2023, a decline of 19.6%[17]. - Total liabilities decreased to $219.87 million as of September 30, 2024, down from $254.40 million at the end of 2023, a reduction of 13.5%[17]. - Cash and cash equivalents at the end of the period were $170.2 million, compared to $255.6 million at the end of September 2023[26]. - The company's total assets measured at fair value as of September 30, 2024, amounted to $457,027, with cash and cash equivalents at $170,176 and marketable securities at $228,263[95]. Stock and Compensation - The company has authorized 500,000,000 shares of common stock and 100,000,000 shares of limited common stock as of September 30, 2024[112]. - The company’s stock incentive plans include the 2010 Stock Plan, 2020 Equity Incentive Plan, 2021 Inducement Equity Incentive Plan, and 2022 Equity Incentive Plan[118]. - Total stock-based compensation for the nine months ended September 30, 2024, was $37.4 million, up from $35.3 million in the same period of 2023[26]. - Total stock-based compensation expense for the three months ended September 30, 2024, was $12,398, compared to $12,654 for the same period in 2023, reflecting a decrease of 2%[123]. - The intrinsic value of options exercised during the nine months ended September 30, 2024, was $1,534, compared to $7,099 for the same period in 2023, showing a decrease of 78%[139]. Collaborations and Agreements - The Company entered into a research collaboration and license agreement with Novartis, with an initial upfront fee of $150 million and potential total milestones of up to $2.272 billion[166]. - The collaboration with Novartis includes an initial upfront fee of $150.0 million and potential total milestones of up to $2.272 billion[185]. - The company is eligible to receive up to $482.0 million in total milestone payments from Bristol-Myers Squibb for ongoing collaborations[183]. - Contribution revenue from the Bill & Melinda Gates Foundation is recognized on a cost reimbursement basis for services in women's health[196].

Revenue Performance - Total revenue for Q3 2024 was $35.3 million, a decrease of 17% compared to $42.6 million in Q3 2023[3] - Software revenue increased by 10% to $31.9 million in Q3 2024, up from $28.9 million in Q3 2023[3] - Drug discovery revenue fell to $3.4 million in Q3 2024, down 75% from $13.7 million in Q3 2023[3] - Total revenues for the three months ended September 30, 2024, were $35,290,000, a decrease of 17.1% compared to $42,569,000 for the same period in 2023[22] - Software products and services revenue increased to $31,884,000, up 10.3% from $28,904,000 year-over-year[22] Operating Expenses and Losses - Operating expenses rose to $86.2 million in Q3 2024, an increase of 7.9% from $79.8 million in Q3 2023[3] - The net loss for Q3 2024 was $38.1 million, an improvement from a net loss of $62.0 million in Q3 2023[3] - Operating expenses increased to $86,150,000 for the three months ended September 30, 2024, compared to $79,832,000 in the prior year, reflecting a rise of 7.5%[22] - The net loss for the three months ended September 30, 2024, was $(38,136,000), compared to a net loss of $(62,024,000) for the same period in 2023, representing a 38.5% improvement[22] Cash and Assets - Cash, cash equivalents, and marketable securities totaled $398.4 million as of September 30, 2024, down from $468.8 million at the end of 2023[3] - Cash and cash equivalents as of September 30, 2024, were $160,416,000, an increase from $155,315,000 at the end of 2023[23] - Total assets decreased to $669,296,000 as of September 30, 2024, down from $802,955,000 at the end of 2023, a decline of 16.6%[23] - Total liabilities decreased to $219,871,000 as of September 30, 2024, compared to $254,397,000 at the end of 2023, a reduction of 13.5%[23] - The accumulated deficit increased to $(485,325,000) as of September 30, 2024, compared to $(338,418,000) at the end of 2023[23] Financial Guidance and Collaborations - Schrödinger updated its 2024 financial guidance, expecting software revenue growth between 8% and 13%[5] - The company announced a collaboration with Novartis, receiving $150 million upfront and potential milestone payments up to $2.3 billion[1] Non-GAAP Metrics and Adjustments - Non-GAAP net loss for the nine months ended September 30, 2024, was $174,221, compared to a non-GAAP net loss of $134,760 for the same period in 2023[25] - Non-GAAP net loss per share for the nine months ended September 30, 2024, was $2.40, compared to $1.88 for the same period in 2023[25] - The company experienced a fair value adjustment loss of $27,763 for the nine months ended September 30, 2024, compared to a loss of $61,869 in the same period last year[24] Other Financial Activities - The company reported a net cash provided by investing activities of $125,361 for the nine months ended September 30, 2024, compared to $252,648 in the prior year[24] - The company issued common stock upon ATM offering, netting $8,691 during the nine months ended September 30, 2024[24] - The company had a significant increase in accounts receivable, netting $52,711 for the nine months ended September 30, 2024, compared to $36,069 in the prior year[24]

Group 1 - Kuehn Law, PLLC is investigating potential breaches of fiduciary duties by officers and directors of Schrodinger, Inc. (NASDAQ: SDGR) related to self-dealing [1] - The investigation may lead to shareholder damages and corporate governance reforms [1] Group 2 - Long-term shareholders of SDGR are encouraged to contact Kuehn Law for a free consultation regarding their rights [2] - Kuehn Law covers all case costs and does not charge investor clients [2]