Schrodinger(US:SDGR)2023-03-01 03:07Financial Data and Key Metrics Changes - Total revenue for the year was $181 million, a 31% increase over 2021, driven by both software and discovery revenue growth [50][97] - Software revenue for Q4 was $47.8 million, an increase of 24% compared to Q4 2021 [41] - Drug discovery revenue for the full year was $45.4 million, compared to $24.7 million in 2021, marking an 84% increase [96] - Overall gross margin for 2022 was 56%, compared to 48% in 2021, due to improved software gross margin and lower losses on drug discovery revenue [33] Business Line Data and Key Metrics Changes - R&D expenses were $34.5 million in Q4 2023, compared to $25.1 million in Q4 2021, driven by increased headcount and technology investments [28] - Sales and marketing expenses for Q4 were $9.4 million, compared to $6 million in Q4 2021, mainly due to higher staffing and associated expenses [57] - Total operating expenses for the year increased to $248 million, compared to $177 million in 2021, driven by increases in R&D, sales and marketing, and G&A [29] Market Data and Key Metrics Changes - The number of customers increased from 1,600 to 1,750, indicating growth in customer base despite challenges in the biotech sector [11][149] - The company noted that large pharma customers have stabilized, while emerging biotech companies remain under pressure due to the capital market environment [9] Company Strategy and Development Direction - The company aims to grow its software business by increasing adoption among large pharmaceutical and materials companies, as well as emerging biotech firms [53] - The strategy includes a mix of collaborative projects and proprietary programs to manage R&D risk across the pipeline [42] - The company is focused on advancing its computational platform and expanding its capabilities in drug discovery [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth outlook for the software business, with guidance for software revenue growth in 2023 expected to be in the range of 13% to 17% [61][100] - The company anticipates a significant increase in cash position due to distributions from Nimbus and expects to report a GAAP profit in Q1 2023 [78][80] - Management acknowledged the challenges posed by multiyear contracts but remains optimistic about overcoming these headwinds [130][151] Other Important Information - The company received a $111.3 million cash distribution from Nimbus following Takeda's acquisition of Nimbus' TYK2 inhibitor [40] - The drug discovery loss ratio improved to 11% for 2022, compared to 85% in 2021, reflecting better collaboration revenue growth [33] Q&A Session Summary Question: What drove the expected reduction in year-over-year operating expenses? - Management indicated that the reduction is due to improved operational efficiencies and cost management strategies [5] Question: How is the company approaching the indications for Wee1 inhibitors? - Management confirmed that they are considering both existing and new indications for Wee1 inhibitors, with a focus on optimizing potency and selectivity [6][7] Question: Can you provide insights on the trends with large pharma and biotech customers? - Management noted that large pharma customers have stabilized, while emerging biotech companies are under pressure, impacting their purchasing behavior [9][10] Question: What is the outlook for drug discovery revenue in 2023? - The company expects drug discovery revenue to be in the range of $70 million to $90 million for 2023, with a goal of achieving $100 million or greater [101] Question: How does the company plan to utilize the cash from Nimbus? - The cash will be used to fund operations and potentially explore M&A opportunities, while continuing to invest in R&D and technology [16][18]