Schrodinger(SDGR) - 2025 Q2 - Quarterly Results

Executive Summary Second Quarter 2025 Performance Overview Schrödinger reported solid second quarter 2025 results with increased total revenue and software revenue, while maintaining its full-year 2025 revenue growth guidance and lowering operating expense guidance Metric | Metric | Q2 2025 | Q2 2024 | Change | | :----------------- | :------ | :------ | :----- | | Total Revenue | $54.8 million | $47.3 million | +16% | | Software Revenue | $40.5 million | $35.4 million | +15% | - Maintained full-year 2025 revenue growth guidance and lowered operating expense guidance[1] Strategic Highlights and Pipeline Progress The company achieved an important milestone with encouraging initial Phase 1 data for SGR-1505, its MALT1 inhibitor, and is exploring strategic opportunities for its clinical development. Initial clinical data for two other programs, SGR-3515 and SGR-2921, are expected in the fourth quarter of 2025 - Presented encouraging initial Phase 1 data for MALT1 inhibitor, SGR-1505, which was well tolerated and clinically active with responses in multiple histologies[2][3] - Exploring strategic opportunities for SGR-1505 to accelerate clinical development and maximize patient benefit[3] - Initial clinical data for SGR-3515 and SGR-2921 are expected in the fourth quarter of 2025[1] Second Quarter 2025 Financial Results Consolidated Financial Performance Schrödinger reported a 16% increase in total revenue for Q2 2025, with software revenue growing by 15% and drug discovery revenue by 19%. Operating expenses decreased by 6%, contributing to a reduced net loss compared to the prior year Metric | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--------------------- | :-------------------- | :-------------------- | :------- | | Total revenue | $54.8 | $47.3 | 16% | | Software revenue | $40.5 | $35.4 | 15% | | Drug discovery revenue | $14.2 | $11.9 | 19% | | Software gross margin | 68 % | 80 % | -12% | | Operating expenses | $79.1 | $84.1 | (6.0)% | | Other income (expense) | $10.0 | $(1.2) | — | | Net loss | $(43.2) | $(54.0) | — | - Non-GAAP net loss for Q2 2025 was $47.5 million, compared to $48.1 million for Q2 2024[6] Revenue Breakdown Total revenue for the second quarter increased by 16% to $54.8 million. Software revenue grew by 15% to $40.5 million, primarily due to hosted contracts and contribution revenue, while drug discovery revenue increased by 19% to $14.2 million - Total revenue increased 16% to $54.8 million, compared to $47.3 million in Q2 2024[4] - Software revenue increased 15% to $40.5 million, compared to $35.4 million in Q2 2024, driven by hosted contracts and contribution revenue[4] - Drug discovery revenue was $14.2 million, compared to $11.9 million in Q2 2024[4] Gross Margin and Operating Expenses Software gross margin decreased to 68% in Q2 2025 from 80% in Q2 2024, mainly due to costs associated with the predictive toxicology initiative. Operating expenses decreased by 6% to $79.1 million, primarily driven by lower R&D expenses - Software gross margin was 68% for Q2 2025, down from 80% in Q2 2024, reflecting costs for the predictive toxicology initiative[4] - Operating expenses decreased 6% to $79.1 million, compared to $84.1 million in Q2 2024, due to lower R&D expenses[4] Net Loss and Other Income Net loss for Q2 2025 improved to $43.2 million from $54.0 million in Q2 2024. This improvement was supported by a significant increase in other income to $10.0 million, which included changes in fair value of equity investments and interest income/expense - Net loss for Q2 2025 was $43.2 million, an improvement from $54.0 million in Q2 2024[5] - Other income was $10.0 million for Q2 2025, including changes in fair value of equity investments and interest income/expense, compared to an other expense of $1.2 million in Q2 2024[4] 2025 Financial Outlook Updated Guidance Schrödinger updated its 2025 financial outlook, projecting operating expenses to be lower than 2024 and reaffirming other guidance, including software revenue growth of 10% to 15% and drug discovery revenue of $45 million to $50 million. Cash used for operating activities is also expected to be significantly lower than 2024 - Operating expenses in 2025 are now expected to be lower than 2024[9] Metric | Metric | 2025 Guidance | | :-------------------------- | :------------ | | Software revenue growth | 10% to 15% | | Drug discovery revenue | $45 million to $50 million | | Software gross margin | 74% to 75% | | Q3 2025 Software revenue | $36 million to $40 million | - Cash used for operating activities in 2025 is expected to be significantly lower than 2024[9] Key Highlights Proprietary and Collaborative Pipeline Schrödinger made significant progress in its clinical pipeline, presenting encouraging Phase 1 data for SGR-1505, which also received FDA Fast Track Designation. Initial clinical data for SGR-2921 and SGR-3515 are anticipated in Q4 2025, and the company expanded its research collaboration with Ajax Therapeutics - Presented encouraging initial Phase 1 clinical data for SGR-1505 (MALT1 inhibitor) in patients with relapsed/refractory B-cell malignancies[9] - SGR-1505 received Fast Track Designation from the FDA for Waldenström macroglobulinemia[9] - Initial clinical data for SGR-2921 (CDC7 inhibitor) and SGR-3515 (Wee1/Myt1 co-inhibitor) are expected in the fourth quarter of 2025[9][14] - Expanded research collaboration with Ajax Therapeutics to include a new Janus kinase (JAK) target, with eligibility for discovery, development, sales milestones, and single-digit royalties[14] Platform Advancements Scientists from Schrödinger and collaborators published an industry perspective in the Journal of Medicinal Chemistry, highlighting how computational power, AI, and physics-based methods like Schrödinger's FEP+ are transforming virtual screening and hit identification - Published an industry perspective on computational hit-finding in the Journal of Medicinal Chemistry, emphasizing breakthroughs in computational power, AI, and accurate physics-based methods (Schrödinger's FEP+)[10] Corporate Updates Schrödinger completed an organizational review, implementing changes including a 7% reduction in force, expected to reduce operating expenses by approximately $30 million annually. The company also announced new executive appointments, including a new CFO and Chief Commercial Officer, and an expanded role for Karen Akinsanya - Completed an organizational review, implementing changes to improve operating expense profile and reduce cash burn[11] - Reduced full-time employees by approximately 7%, expected to reduce operating expenses by approximately $30 million on an annualized basis[11] - Appointed Richie Jain as Chief Financial Officer and Mannix Aklian as Chief Commercial Officer, Global Head of Software Sales and Marketing. Karen Akinsanya's role expanded to President, Head of Therapeutics R&D and Chief Strategy Officer, Partnerships[11] Webcast and Conference Call Information Conference Call Details Schrödinger hosted a conference call on August 6, 2025, to discuss its second quarter 2025 financial results. A live webcast and archived recording are available on the company's investor relations website - Schrödinger hosted a conference call on August 6, 2025, at 4:30 p.m. ET to discuss Q2 2025 financial results[12] - The live webcast and an archived version are accessible via the 'News & Events' section of Schrödinger's investor relations website[12] Non-GAAP Information Definition and Reconciliation This section defines non-GAAP net income (loss) and non-GAAP net income (loss) per share, which exclude gains/losses on equity investments, changes in fair value of equity investments, and income tax benefits/expenses. These measures are presented to provide greater period-over-period comparability of the company's operating performance - Non-GAAP net income (loss) and per share exclude gains/losses on equity investments, changes in fair value of equity investments, and income tax benefits/expenses[13] - Management believes these non-GAAP measures provide greater period-over-period comparability of operating performance by excluding non-cash mark-to-market and non-recurring items[13] - Non-GAAP measures should be considered only in addition to, not as a substitute for or superior to, GAAP financial measures[15] About Schrödinger Company Overview Schrödinger transforms molecular discovery using its computational platform for drug development and materials design. The platform, built on over 30 years of R&D, is licensed globally and also used to advance a portfolio of proprietary and collaborative drug discovery programs, including three clinical-stage oncology programs - Schrödinger transforms molecular discovery with its computational platform for drug development and materials design[17] - The software platform is licensed by biotechnology, pharmaceutical, and industrial companies, and academic institutions worldwide[17] - The company leverages its platform to advance a portfolio of collaborative and proprietary programs, including three clinical-stage oncology programs[17] Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Disclaimer This section advises that the press release contains forward-looking statements regarding Schrödinger's expectations, plans, and future results, which are subject to various assumptions, uncertainties, risks, and important factors beyond the company's control. Actual results may differ materially, and Schrödinger undertakes no obligation to update these statements unless legally required - The press release contains forward-looking statements about Schrödinger's computational platform, financial outlook, strategic plans, and drug discovery programs[18] - These statements are subject to assumptions, uncertainties, risks, and important factors beyond Schrödinger's control, and actual results may differ materially[18] - Schrödinger undertakes no duty or obligation to update any forward-looking statements unless required by law[19] Contacts Investor and Media Relations Contact information is provided for investor inquiries, directed to Matthew Luchini, and media inquiries, directed to Allie Nicodemo, both at Schrödinger, Inc - Investors can contact Matthew Luchini at matthew.luchini@schrodinger.com or 917-719-0636[20] - Media can contact Allie Nicodemo at allie.nicodemo@schrodinger.com or 617-356-2325[20] Financial Statements (Unaudited) Condensed Consolidated Statements of Operations This statement provides a detailed breakdown of revenues, costs, gross profit, operating expenses, other income/expense, and net loss for the three and six months ended June 30, 2025, and 2024, showing overall revenue growth but also increased costs of revenues Condensed Consolidated Statements of Operations (Unaudited) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Software products and services revenue | $40,544 | $35,404 | $89,360 | $68,819 | | Drug discovery revenue | $14,215 | $11,930 | $24,950 | $15,113 | | Total revenues | $54,759 | $47,334 | $114,310 | $83,932 | | Total cost of revenues | $28,601 | $15,999 | $57,028 | $33,707 | | Gross profit | $26,158 | $31,335 | $57,282 | $50,225 | | Total operating expenses | $79,061 | $84,064 | $161,074 | $170,387 | | Loss from operations | $(52,903) | $(52,729) | $(103,792) | $(120,162) | | Total other income (expense) | $10,017 | $(1,235) | $1,126 | $11,930 | | Net loss | $(43,173) | $(54,047) | $(102,981) | $(108,771) | | Net loss per share (basic & diluted) | $(0.59) | $(0.74) | $(1.41) | $(1.50) | Condensed Consolidated Balance Sheets This statement presents the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, showing a decrease in total assets and total liabilities, while cash and cash equivalents increased significantly Condensed Consolidated Balance Sheets (Unaudited) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $219,901 | $147,326 | | Marketable securities | $230,284 | $204,798 | | Total current assets | $513,995 | $634,993 | | Total assets | $688,244 | $823,226 | | Total current liabilities | $155,769 | $191,747 | | Total liabilities | $345,372 | $401,781 | | Total stockholders' equity | $342,872 | $421,445 | Condensed Consolidated Statements of Cash Flows This statement details the cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024. Notably, net cash provided by operating activities significantly improved to $91.9 million in 2025 from a net cash used of $93.0 million in 2024 Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $91,865 | $(92,999) | | Net cash (used in) provided by investing activities | $(24,969) | $34,657 | | Net cash provided by financing activities | $2,427 | $9,612 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $69,323 | $(48,730) | | Cash and cash equivalents and restricted cash, end of period | $231,980 | $112,336 | Reconciliation of GAAP to Non-GAAP Financial Measures This table reconciles GAAP net loss to non-GAAP net loss for the three and six months ended June 30, 2025, and 2024, by adjusting for income tax expense and changes in fair value of equity investments. The non-GAAP net loss for Q2 2025 was $(47.5) million, an improvement from $(48.1) million in Q2 2024 Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss (GAAP) | $(43,173) | $(54,047) | $(102,981) | $(108,771) | | Income tax expense | $287 | $83 | $315 | $539 | | Change in fair value | $(4,579) | $5,833 | $8,516 | $(2,304) | | Non-GAAP net loss | $(47,465) | $(48,131) | $(94,150) | $(110,536) | | Non-GAAP net loss per share | $(0.65) | $(0.66) | $(1.29) | $(1.52) |