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Schrödinger, Inc. (NASDAQ:SDGR), which accounts for 0.29% of Bill Gates’s stock portfolio, is one of his top 15 stock picks. Schrödinger (SDGR) and Copernic Catalysts Surpass the Final Technical Milestone for Neptune Schrödinger, Inc. (NASDAQ:SDGR) and Copernic Catalysts announced on October 30, 2025, that they have surpassed the final technical milestone for Neptune, their jointly developed ammonia synthesis catalyst. The breakthrough catalyst, designed to operate under milder conditions, achieved more ...

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Core Insights - Schrodinger, Inc. reported a quarterly loss of $0.45 per share, better than the Zacks Consensus Estimate of a loss of $0.75, representing an earnings surprise of +40.00% [1] - The company posted revenues of $54.32 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 8.68% and showing a year-over-year increase from $35.29 million [2] - Schrodinger shares have increased by approximately 3.6% since the beginning of the year, underperforming compared to the S&P 500's gain of 15.1% [3] Financial Performance - Over the last four quarters, Schrodinger has surpassed consensus EPS estimates two times and topped revenue estimates four times [2] - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $89.1 million, while for the current fiscal year, it is -$2.18 on revenues of $251.99 million [7] Industry Context - Schrodinger operates within the Zacks Medical Info Systems industry, which is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable industry outlook [8] - The performance of Schrodinger's stock may be influenced by the overall industry outlook, as empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [5][8] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, with management's commentary on the earnings call expected to provide insights [3][4] - The estimate revisions trend for Schrodinger was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market [6]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $54 million, a 54% increase from Q3 2024, driven by strong execution across the business [5][9] - Software revenue was $40.9 million, representing a 28% year-over-year growth, exceeding expectations [5][10] - Drug discovery revenue was $13.5 million, up from $3.4 million in Q3 2024, reflecting successful execution across collaborations [10] - Net loss was $33 million, or $0.45 per diluted share, compared to a net loss of $38 million, or $0.52 per diluted share in Q3 2024 [11] Business Line Data and Key Metrics Changes - Software gross margin remained at 73% for both Q3 2025 and Q3 2024 [10] - R&D expenses decreased by 16% to $42.8 million from $51 million in Q3 2024, primarily due to lower employee-related expenses [10] - Sales and marketing expenses decreased by 8% to $9.5 million, while G&A expenses decreased by 13% to $21.7 million [10] Market Data and Key Metrics Changes - The company updated its software revenue growth guidance for 2025 to 8%-13% from 10%-15% due to delays in pharma scale-up opportunities [6][11] - Drug discovery revenue guidance was increased to $49-$52 million, slightly exceeding prior expectations of $45-$50 million [12] Company Strategy and Development Direction - The company is focusing on increasing customer adoption of its software, delivering scientific advancements, and advancing its therapeutics portfolio [9][20] - The decision was made to not advance internal discovery programs into the clinic independently, aiming to improve operational efficiency and long-term profitability [7][51] - The company plans to leverage partnerships for clinical development, allowing for a broader range of discovery programs [37][51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term potential of the business despite current macroeconomic pressures [6][12] - There are early signs of recovery in the biotech sector, including capital markets and new capital formation, which could create additional opportunities [12] - The company remains committed to managing expenses and expects cash used in operating activities to be significantly lower than in 2024 [13][14] Other Important Information - The company has made significant improvements to its platform, including enhancements for challenging modalities and ongoing beta testing for predictive toxicology solutions [8][20] - The company has generated approximately $600 million in cash from collaborations and licensing activities since 2020 [20] Q&A Session Summary Question: Implications of reduced spend year over year - Management confirmed that a $30 million expense reduction was announced in May, with more than half achieved, aiming to improve profitability [23][24] Question: Software guidance and market slowdown - Management acknowledged a slowdown in customer discussions and delays in scale-up opportunities, leading to a slight reduction in software revenue guidance [27][30] Question: Predictive toxicology product monetization - The predictive toxicology solution is still in beta, with significant interest from customers, but it is too early to discuss monetization [32][33] Question: Discovery programs and partnerships - The company will continue to work on discovery stage programs and seek partnerships for clinical advancement, emphasizing the value of discovery partnerships [36][37] Question: Update on SGR-1505 and clinical data - Management provided updates on SGR-1505, highlighting a complete response in an aggressive lymphoma patient and upcoming data presentations [58][61] Question: NLRP3 inhibitor SGR-6016 progress - The company is excited about SGR-6016, a brain-penetrant NLRP3 inhibitor, and is in discussions with potential partners for its development [45][48] Question: Novartis partnership progress - Management reported excellent progress with Novartis, with teams working well together on program advancements [53][55]

Revolutionizing Medicines and Materials Discovery These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and important factors that are beyond our control, including the demand for our so ...

Financial Performance - The company reported revenue of $54.3 million for the three months ended September 30, 2025, representing a year-over-year increase of 54% from $35.3 million in the same period of 2024[187]. - The net loss for the three months ended September 30, 2025, was $32.8 million, compared to a net loss of $38.1 million for the same period in 2024[187]. - Total revenues rose by 54% to $54,324,000 for the three months ended September 30, 2025, compared to $35,290,000 in 2024[217]. - The company reported a net loss of $135.8 million for the nine months ended September 30, 2025, compared to a net loss of $146.9 million in the same period of 2024[268][269]. Revenue Breakdown - Software products and services revenue increased by 28% to $40,858,000 for the three months ended September 30, 2025, compared to $31,884,000 in 2024[217]. - Drug discovery revenue surged by 295% to $13,466,000 for the three months ended September 30, 2025, compared to $3,406,000 in 2024[217]. - Drug discovery revenue for the nine months ended September 30, 2025, increased by 107% to $38,416,000 compared to $18,519,000 in 2024[217]. - Software revenue from on-premise software grew by 30% to $15,928,000 for the three months ended September 30, 2025, compared to $12,250,000 in 2024[219]. - Hosted software revenue increased by 31% to $11,585,000 for the three months ended September 30, 2025, compared to $8,814,000 in 2024[221]. - Drug discovery services revenue surged by 362% to $13,008,000 for the three months ended September 30, 2025, compared to $2,813,000 in 2024[225]. Expenses and Cost Management - Research and development expenses decreased by 16% to $42,757,000 for the three months ended September 30, 2025, compared to $50,977,000 in 2024[217]. - Total operating expenses decreased by 14% to $73,986,000 for the three months ended September 30, 2025, compared to $86,150,000 in 2024[217]. - Sales and marketing expenses decreased by $825,000 (8%) for the three months ended September 30, 2025, primarily due to a $400,000 reduction in personnel-related expenses[240]. - General and administrative expenses decreased by $3.1 million (13%) for the three months ended September 30, 2025, mainly due to a $2.3 million decrease in personnel-related expenses[242]. - The restructuring implemented in May 2025 is expected to reduce operating expenses by approximately $30 million on an annualized basis[190]. Cash Flow and Financing - As of September 30, 2025, the company had cash, cash equivalents, restricted cash, and marketable securities totaling $401.0 million[258]. - The accumulated deficit as of September 30, 2025, was $661.3 million, reflecting a history of significant operating losses[254]. - The company plans to utilize existing cash and marketable securities primarily to fund software and drug discovery activities[260]. - The company may seek additional equity or debt financing if required, but there is uncertainty regarding the ability to raise such financing on acceptable terms[261]. - For the nine months ended September 30, 2025, the company generated approximately $30.0 million in cash from operating activities, a significant improvement compared to a cash usage of $126.3 million in the same period of 2024[268][269]. Collaborations and Milestones - The company received $147.2 million in cash distributions from Nimbus Therapeutics in connection with Takeda's acquisition of Nimbus Lakshmi, Inc.[178]. - The company is eligible to receive up to $482.0 million in total milestone payments from its collaboration with Bristol-Myers Squibb, with $32.0 million recognized as of September 30, 2025[183]. - The collaboration with Novartis includes an initial upfront fee of $150.0 million and potential total milestone payments of up to $2.272 billion[185]. Clinical Development - The company plans to present additional clinical data from the ongoing Phase 1 clinical trial of SGR-1505 at the American Society of Hematology Annual Meeting in December 2025[171]. - The FDA granted orphan drug designation to SGR-1505 for the potential treatment of mantle cell lymphoma and Waldenström macroglobulinemia[173]. - The company anticipates reporting initial data from the Phase 1 clinical trial of SGR-3515 in the first half of 2026[174]. Market Risks and Obligations - The change in fair value of equity investments showed a decrease of $15.8 million for the three months ended September 30, 2025, compared to a gain of $25.5 million in the same period in 2024[246]. - Other income decreased by $1.1 million (23%) for the three months ended September 30, 2025, attributed to unfavorable currency fluctuations and decreased interest income[248]. - The company has no material non-cancelable obligations under agreements with CRO vendors and other service providers[266]. - There have been no material changes in reported market risks or risk management policies since the last annual report[274].

Exhibit 99.1 Schrödinger Reports Third Quarter 2025 Financial Results Third Quarter Total Revenue of $54.3 Million, Software Revenue of $40.9 Million Third Quarter 2025 Financial Results • Total revenue for the third quarter increased 54% to $54.3 million, compared to $35.3 million in the third quarter of 2024. • Software revenue for the third quarter increased 28% to $40.9 million, compared to $31.9 million in the third quarter of 2024 reflecting growth in hosted and on-premise contracts. • Drug discovery ...

Company Overview - Schrodinger, Inc. (SDGR) shares increased by 13.8% to close at $21.98, with trading volume significantly higher than usual, contrasting with a 0.7% loss over the past four weeks [1] - The company is expected to report a quarterly loss of $0.72 per share, reflecting a year-over-year decline of 38.5%, while revenues are projected to be $52.68 million, marking a 49.3% increase from the previous year [3] Financial Performance - In the last reported quarter, Schrodinger experienced a 16% year-over-year growth in revenue, driven by increased software and drug discovery revenue [2] - The consensus EPS estimate for the upcoming quarter has remained unchanged over the last 30 days, indicating stability in earnings expectations [4] Market Position - Schrodinger holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook in the market [4] - The company is part of the Zacks Medical Info Systems industry, which includes Fulgent Genetics, Inc. (FLGT), another stock in the same sector that closed 5.1% higher at $23.84 [4]

Core Viewpoint - Schrodinger, Inc. (SDGR) shows potential for significant upside, with a mean price target of $27.3 indicating a 40.4% increase from its current price of $19.44 [1] Price Targets and Analyst Consensus - The average of 10 short-term price targets ranges from a low of $19.00 to a high of $33.00, with a standard deviation of $5.01, indicating variability in analyst estimates [2] - The lowest estimate suggests a decline of 2.3%, while the highest points to a 69.8% upside [2] - A low standard deviation indicates a high degree of agreement among analysts regarding the stock's price movement [9] Earnings Estimates and Analyst Optimism - Analysts are optimistic about SDGR's earnings prospects, as indicated by a positive trend in earnings estimate revisions [4][11] - The Zacks Consensus Estimate for the current year has increased by 8% over the past month, with two estimates rising and no negative revisions [12] - SDGR holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Caution on Price Targets - While price targets are commonly referenced, they can mislead investors, as empirical research shows they rarely indicate actual stock price movements [7][10] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [8]