Group 1 - The company's mission is to develop a computational platform that enables researchers in life sciences and material sciences to design better molecules more rapidly and efficiently [2] - The traditional drug discovery process involves trial and error, which is time-consuming and has a high failure rate [3] - The goal of the computationally driven approach is to replace experimental methods in drug discovery, thereby optimizing the process [3]

Summary of Schrödinger Conference Call Company Overview - **Company**: Schrödinger (NasdaqGS:SDGR) - **Industry**: Computational drug discovery and materials design Core Points and Arguments - **Mission**: Develop a computational platform for researchers in life sciences and materials science to design better molecules more efficiently, aiming to replace traditional trial-and-error methods in drug discovery [2][3] - **Platform Validation**: The platform has been validated over 15 years with a track record of success, including 15-16 programs in clinical stages and successful exits for co-founded biotech companies [4] - **Customer Retention**: The company boasts a 100% customer retention rate, indicating the platform's significant impact on projects [5] - **Market Potential**: The total addressable market (TAM) is projected to be much larger than the current $200 million annual revenue, with expectations for growth as more pharmaceutical companies adopt the technology [5][6] - **New Product Launch**: Introduction of "Predictive Tox," aimed at predicting toxicity in drug discovery, which is a significant challenge in the industry [6][7] Strategic Changes - **Business Structure Simplification**: The company is shifting focus from executing clinical programs independently to partnering with other firms, allowing for downstream milestones and royalties [9] - **Transition to Hosted Contracts**: A strategic pivot towards hosted contracts in the software business, moving from 25% to an expected 75% hosted contracts over three years, which may initially reduce revenue but aims for long-term stability [10][11] - **Financial Goals**: Aiming for adjusted EBITDA profitability within three years by growing both software and drug discovery businesses while maintaining expense discipline [9] Market Environment - **Funding Environment**: The company is optimistic about a 10%-15% growth in annual contract value (ACV) compared to a challenging previous year, with budget pressures in pharma and biotech easing [27][28] - **New Product Impact**: The release of new products, including Predictive Tox, is expected to unlock additional budgets and contribute to growth [31][34] Technology and Innovation - **Agentic AI Integration**: The company is embedding agentic AI into its platform to enhance efficiency and support more programs, aiming to make computational methods more accessible to a broader user base [49][50] - **Unique Technology Development**: The predictive toxicity technology is physics-based, allowing for early-stage application in drug discovery, which is expected to create a new sector and increase usage [39][40] Financial Model and Transition - **Revenue Recognition Changes**: Transitioning from on-premise to hosted solutions will lead to a shift in revenue recognition, with a focus on ACV as a key operating metric during the transition [60][63] - **Long-term Profitability**: The company expects to achieve profitability by 2028, with a smoother revenue profile as hosted contracts become the norm [58][64] Customer Engagement and Market Trends - **Increased Interest in Computation**: There is a growing demand for computational methods in drug discovery, driven by the excitement around AI and the need for large datasets to train AI models [72][73] - **Partnership Opportunities**: The company is open to M&A for complementary capabilities that align with its platform, although it will not venture into areas far removed from its core competencies [47][48] Conclusion - Schrödinger is positioned for growth through strategic pivots in its business model, innovative product offerings, and a strong focus on computational drug discovery, with a clear path towards profitability and market expansion in the coming years.

Summary of Schrödinger's 2026 Conference Call Company Overview - **Company**: Schrödinger (NasdaqGS:SDGR) - **Industry**: Healthcare, specifically in drug discovery and computational chemistry Key Points and Arguments Transition to Annual Contract Value (ACV) - Schrödinger is transitioning to an ACV model to provide better revenue visibility and align with customer demands, which is expected to grow by 10%-15% annually [18][17] - The shift to hosted contracts will result in a decline in revenue for 2026 due to the recognition of revenue being ratable over the contract's life, contrasting with the previous model where revenue was recognized mostly in the quarter booked [18][19] - The company anticipates that this transition will stabilize over a three-year period as more contracts shift to the hosted model [19] Investor Concerns - There is investor skepticism regarding whether the shift to ACV is a way to mask declining new contract ACVs. However, management clarified that ACV growth reflects true business growth and customer adoption [28][36] - The company emphasized that if ACV is not growing, the business is not growing, and thus there is no intention to obscure financial performance [36][28] Collaboration and Partnerships - Schrödinger has a strong track record of successful collaborations, having generated $650 million from equity stakes, milestones, and upfront payments over the last five years [49] - The company has 16 programs in clinical trials that generate royalties, showcasing the effectiveness of its platform in drug discovery [50] AI and Technology Disruption - Management addressed concerns about AI potentially disrupting their business, asserting that AI cannot replace the foundational physics required for drug discovery [72][70] - The proprietary knowledge and technology developed by Schrödinger are deemed irreplaceable, and the company is not worried about AI competition in their specific domain [72][73] Predictive Toxicology Module - The predictive toxicology module is expected to be a significant growth driver, addressing a major source of failure in drug discovery [84] - Customers will pay extra for this new module, tapping into larger budgets from toxicology groups rather than just research groups [85] - The company anticipates that this module will contribute to growth over the coming years, with positive feedback from beta testing [99][98] Market Dynamics and Growth Opportunities - While the company is not relying on a re-acceleration of the IPO market for immediate growth, they expect biotech and life sciences markets to return to historical levels over the next three years [105] - Schrödinger is also exploring growth opportunities in materials science, leveraging their existing technologies to address challenges in that field [112][114] Long-term Vision and Capital Use - The company aims to continue innovating in drug discovery and materials science, with a focus on reducing the time and cost associated with bringing new drugs to market [146] - As profitability is achieved, Schrödinger plans to increase its ownership stake in co-founded companies, which could enhance shareholder value [148][149] Conclusion - Schrödinger is positioned for growth through its transition to ACV, successful collaborations, and innovative technologies in drug discovery and materials science. The company remains focused on long-term innovation and profitability while addressing investor concerns transparently.

Question-and-Answer SessionBrendan SmithTD Cowen, Research Division So maybe I want to kind of keep this as interactive as possible here. I will be checking my phone for any questions that kind of come in at brendan.smith@tdsecurities.com. But maybe I do want to kind of kick us off with the conversation, Ramy, give you a minute, talk about more substantive update we got last week when it comes to kind of the shifting towards hosted services. ACV reporting relative to revenues. Ultimately, what that means an ...

Summary of Schrödinger FY Conference Call - March 03, 2026 Company Overview - **Company**: Schrödinger (NasdaqGS:SDGR) - **Industry**: Healthcare, specifically computational chemistry and drug discovery Key Points and Arguments Transition to Hosted Services - Approximately 25% of Schrödinger's revenue is now from hosted services, which allows for better customer support and monitoring of software usage [13][14] - Revenue recognition for hosted services occurs ratably over the contract term, contrasting with on-premise services where revenue is recognized upon closing [14] - The transition to hosted services is expected to temporarily reduce revenue for the current year, but deferred revenue will be recognized in the following year [19][20] Advances in Computational Chemistry - Significant advancements in computational chemistry allow Schrödinger to run calculations that can replace traditional experiments, generating data at a scale 10 years faster than experimental methods [30] - The integration of AI with computational chemistry enhances the ability to explore vast chemical spaces, improving the probability of success in drug development [30][31] - Schrödinger has produced 16 clinical assets, with a success rate better than the industry average [31] Predictive Toxicology - The predictive toxicology offering has exited beta testing with positive feedback and is expected to drive growth [56] - This tool addresses a major challenge in drug discovery by predicting toxicity early in the development process, potentially reducing reliance on animal testing [70][71] Growth Opportunities - Continued scale-up of technology usage among pharmaceutical companies is anticipated, which will drive growth [58] - Expansion into biologics and material science applications, including battery chemistry, is also a focus area for growth [59][60] - The introduction of a large molecule offering is expected to attract interest from companies working with ADCs and peptides [61] Partnership Strategy - A new partnership with TuneLab at Lilly aims to provide biotechs access to machine learning-trained toxicity models, enhancing the value of Schrödinger's offerings [94][95] - The partnership strategy is designed to enable users to become power users, increasing throughput and expanding the user base [97] Therapeutics Pipeline - Schrödinger is focused on advancing its therapeutics pipeline, with updates expected on SGR-3515 and SGR-1505 in the near future [100] - The company is excited about collaborations that generate IP and development candidates while also accruing royalties from successful programs [101] Market Position and Challenges - There is a disconnect in understanding the value of Schrödinger's platform due to the noise from numerous companies claiming to revolutionize drug discovery with AI [108] - The emphasis is on the company's track record of producing clinical assets and maintaining high customer retention [110][111] Conclusion - Schrödinger is positioned for growth through its innovative computational chemistry platform, strategic partnerships, and a focus on predictive toxicology and biologics. The company aims to clarify its value proposition amidst a crowded market of AI-driven drug discovery claims [112][113]

Core Insights - Schrodinger Inc. is recognized as a promising investment in the cancer sector, showcasing strong revenue growth and a strategic shift towards a licensing model for more predictable revenue streams [1][3]. Financial Performance - Full-year revenue for 2025 increased by 23.3% to $255.9 million, with software revenue rising by 10.6% [3]. - Drug discovery revenue more than doubled to $56.4 million from $27.2 million in the previous year [3]. - Fourth-quarter revenue decreased by 1.2% year-over-year to $87.2 million, primarily due to a 13% decline in software revenue to $69.3 million [3]. - Drug discovery revenue in the fourth quarter surged to $18 million, up from $8.7 million in the same quarter of the prior year [3]. Profitability and Loss - The company's net loss for the full year decreased to $103.3 million from $187.1 million in 2024 [4]. - Schrodinger achieved profitability in the fourth quarter of FY25, reporting a net income of $32.5 million compared to a net loss of $40.2 million in the fourth quarter of 2024 [4]. Future Guidance - For 2026, the company projects software revenue between $218 million and $228 million, indicating a growth of 10-15% [5]. - Drug discovery revenue is anticipated to be in the range of $55 million to $65 million [5]. Company Overview - Schrodinger, Inc. operates as a healthcare technology company, providing a physics-based software platform for molecular simulation aimed at accelerating drug development and materials science [6].

Schrödinger (NasdaqGS:SDGR) Q4 2025 Earnings call February 25, 2026 04:30 PM ET Company ParticipantsConor MacKay - Equity Research AssociateJaren Madden - Chief Corporate Affairs Officer and Head of Investor RelationsKaren Akinsanya - President, Head of Therapeutics R&D, and Partnerships Chief Strategy OfficerRamy Farid - CEORichie Jain - CFONone - Company RepresentativeNone - Company RepresentativeNone - Company RepresentativeNone - Company RepresentativeConference Call ParticipantsBrendan Smith - Director ...

Schrödinger (NasdaqGS:SDGR) Q4 2025 Earnings call February 25, 2026 04:30 PM ET Company ParticipantsConor MacKay - Equity Research AssociateJaren Madden - Chief Corporate Affairs Officer and Head of Investor RelationsKaren Akinsanya - President, Head of Therapeutics R&D, and Partnerships Chief Strategy OfficerRamy Farid - CEORichie Jain - CFONone - Company RepresentativeNone - Company RepresentativeNone - Company RepresentativeNone - Company RepresentativeConference Call ParticipantsBrendan Smith - Director ...

Financial Data and Key Metrics Changes - Schrödinger reported a total revenue of $256 million for 2025, reflecting a 23% growth compared to the previous year [12] - The software business generated approximately $199.5 million in revenue, with an annual contract value (ACV) of $198.5 million, showing strong growth from commercial customers [12][9] - Drug discovery revenue more than doubled to $56.4 million, indicating successful execution across collaborative programs [12][13] - The net loss for the year was $103 million, an improvement from a net loss of $187 million in 2024 [15] Business Line Data and Key Metrics Changes - Software revenue increased by 11%, while drug discovery revenue saw significant growth, more than doubling compared to the prior year [12][13] - The software gross margin decreased to 74% from 80% in 2024, attributed to higher costs associated with contribution revenue from grants [13] - Total operating expenses were $310 million, a decrease of approximately 9% compared to 2024, reflecting cost reduction initiatives [13][14] Market Data and Key Metrics Changes - The company experienced a challenging backdrop of tight pharma budgets and difficult biotech capital markets, yet managed to achieve balanced growth [12] - The materials science business grew from $15 million to $17 million as new capabilities were introduced [20] - The company is targeting additional budgets within existing customers and unlocking opportunities in large markets such as biologics and toxicology [11] Company Strategy and Development Direction - Schrödinger aims to achieve 10%-15% software ACV growth and maintain expense discipline while transitioning to a primarily hosted model [10][26] - The company plans to complete phase 1 studies for SGR-1505 and SGR-3515 and advance collaborative programs [10] - The strategic pivot initiated last year is expected to position the company for long-term success, with a target of achieving positive adjusted EBITDA by the end of 2028 [36][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic direction and the potential for growth driven by new product launches, including the predictive toxicology platform [10][41] - The company views the adoption of AI as a tailwind, increasing demand for its software and enhancing its competitive position [56] - Management acknowledged the challenges in the biotech sector but anticipates a recovery over the next three years [72] Other Important Information - The company is transitioning to hosted contracts, which will result in more predictable revenue but may compress gross margins and adjusted EBITDA in the near term [24][66] - Schrödinger's platform is uniquely positioned to leverage AI in drug and materials discovery, with a focus on physics-based simulations [11][8] Q&A Session Summary Question: Impact of transitioning to hosted contracts on profitability - Management confirmed that the transition to hosted contracts is an ongoing process and remains a critical component of the business strategy [39][40] Question: Growth expectations from new products like Predictive Tox - Management indicated that new products, including Predictive Tox, are expected to contribute to growth, with positive feedback from beta testing [41][42] Question: Customer engagement with the transition to hosted platforms - Management noted that customers are increasingly preferring hosted deployments, which allow for faster deployment and enhanced support [51][52] Question: Assumptions regarding biotech recovery and capital allocation - Management expects a normalization of growth in the biotech sector over the next three years and prefers to invest cash into growth opportunities rather than share buybacks [72][71] Question: Clarification on ACV definition and its impact on revenue - Management explained that ACV reflects the value of contracts, while revenue recognition varies based on contract type, with hosted contracts resulting in more predictable revenue [76][78]

4Q/Full-Year 2025 Financial Results February 2026 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 limitation, statements regarding the potential ad ...