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Earnings documents stored for SDGR.
Investor releaseQuarter not tagged2026-08-06Schrodinger Q2 Earnings Call Highlights
MarketBeat
Schrodinger Q2 Earnings Call Highlights
Interested in Schrodinger, Inc.? Here are five stocks we like better. Second-quarter ACV rose 27% year over year to $29.6 million, driven by broader demand from pharmaceutical, biotech and materials-science customers. Revenue reached $58.9 million, while net income improved to $6 million from a $43 million loss a year earlier. Schrödinger launched early access for Bunsen, an agentic AI co-scientist, and signed a strategic software agreement with Bristol Myers Squibb. The company is also seeing growth from new offerings including Predictive Toxicology and RetroSynth. Management maintained 2026 ACV guidance of $218 million to $228 million but raised drug-discovery revenue guidance to $65 million-$75 million, reflecting a $10 million Ajax Therapeutics collaboration milestone. 3 Momentum Stocks That Could Soar Post-Market Volatility Schrodinger (NASDAQ:SDGR) said second-quarter annual contract value growth accelerated as demand broadened across large pharmaceutical customers, biotechnology companies and materials-science customers, while the company launched early access for Bunsen, its agentic AI co-scientist. Second-quarter ACV was $29.6 million, up 27% from a year earlier. ACV excluding contribution revenue was $22.6 million, an increase of 23% year over year and at the upper end of the company’s expectations, Chief Financial Officer Richie Jain said. First-half ACV totaled $58 million, representing 19% growth from the comparable 2025 period, while trailing four-quarter ACV reached $208 million. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control AI Pharma: 2 Paths to AI-Powered Drug Investment “The biopharma industry is increasingly recognizing that a computationally driven predict-first approach is a critical driver for accelerating drug discovery timelines and improving probabilities of success,” President and CEO Ramy Farid said. Total revenue for the second quarter was $58.9 million. Software revenue was $32.5 million, including $15.2 million of hosted revenue, or 47% of the software total. That compared with hosted revenue representing 31% of software revenue in the second quarter of 2025. → 3 Drone Stocks That Should Soar After the Summer Slump Simulations Plus Stock Drops 15% Despite EPS Beat Jain said the company’s planned transition toward hosted licenses continues to affect reported revenue growth because hosted-contr…Read full documentShow less
Interested in Schrodinger, Inc.? Here are five stocks we like better. Second-quarter ACV rose 27% year over year to $29.6 million, driven by broader demand from pharmaceutical, biotech and materials-science customers. Revenue reached $58.9 million, while net income improved to $6 million from a $43 million loss a year earlier. Schrödinger launched early access for Bunsen, an agentic AI co-scientist, and signed a strategic software agreement with Bristol Myers Squibb. The company is also seeing growth from new offerings including Predictive Toxicology and RetroSynth. Management maintained 2026 ACV guidance of $218 million to $228 million but raised drug-discovery revenue guidance to $65 million-$75 million, reflecting a $10 million Ajax Therapeutics collaboration milestone. 3 Momentum Stocks That Could Soar Post-Market Volatility Schrodinger (NASDAQ:SDGR) said second-quarter annual contract value growth accelerated as demand broadened across large pharmaceutical customers, biotechnology companies and materials-science customers, while the company launched early access for Bunsen, its agentic AI co-scientist. Second-quarter ACV was $29.6 million, up 27% from a year earlier. ACV excluding contribution revenue was $22.6 million, an increase of 23% year over year and at the upper end of the company’s expectations, Chief Financial Officer Richie Jain said. First-half ACV totaled $58 million, representing 19% growth from the comparable 2025 period, while trailing four-quarter ACV reached $208 million. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control AI Pharma: 2 Paths to AI-Powered Drug Investment “The biopharma industry is increasingly recognizing that a computationally driven predict-first approach is a critical driver for accelerating drug discovery timelines and improving probabilities of success,” President and CEO Ramy Farid said. Total revenue for the second quarter was $58.9 million. Software revenue was $32.5 million, including $15.2 million of hosted revenue, or 47% of the software total. That compared with hosted revenue representing 31% of software revenue in the second quarter of 2025. → 3 Drone Stocks That Should Soar After the Summer Slump Simulations Plus Stock Drops 15% Despite EPS Beat Jain said the company’s planned transition toward hosted licenses continues to affect reported revenue growth because hosted-contract revenue is recognized ratably over the contract term rather than primarily upfront. Schrodinger said each 1-percentage-point increase in hosted revenue can temporarily reduce reported revenue by $2 million to $3 million, depending on renewal timing and contract duration. Software gross margin was 71%, compared with 76% a year earlier, reflecting the hosted-licensing transition. Contribution revenue was $3.4 million, down from $4.8 million in the prior-year quarter, primarily because initial Gates Foundation funding for the company’s Predictive Toxicology initiative had been completed. The decline was partly offset by a Gates Ventures grant supporting battery research. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure Drug discovery revenue increased to $23 million from $13.9 million in the prior-year period, primarily due to a $10 million collaboration milestone from Ajax Therapeutics. Total other income was $48.9 million, primarily associated with the completion of Eli Lilly’s acquisition of Ajax. Operating expenses declined 6% year over year to $74 million, which Jain attributed to lower headcount, contract research organization costs and professional-services fees. The company reported net income of $6 million, compared with a net loss of $43 million in the second quarter of 2025, and ended the quarter with $419 million in cash and marketable securities. Schrodinger launched Bunsen in early access during the quarter. Farid described the product as an AI co-scientist designed to execute the company’s validated computational methods and complex multistep workflows. The company said Bunsen can help computational chemists work more efficiently while enabling more drug hunters to use advanced simulations. Bristol Myers Squibb, a longtime customer and collaborator, is deploying Bunsen and expanding use of Schrodinger’s platform across its research organization under a new strategic software agreement. The agreement combines Bunsen with the company’s computational technologies for large-scale chemical exploration. Farid said the company expects to capture value from increased use of its platform through its throughput-based licensing model. He also said collaborations with NVIDIA and Google Cloud are providing additional tools and compute resources for Bunsen’s early-access program. Management said Bunsen is already being used internally in the therapeutics organization. Karen Akinsanya, president, head of therapeutics research and development, and chief strategy officer for partnerships, said the AI system has accelerated workflows involving target analysis, structural biology, and analysis of DMPK, pharmacology and toxicology data. Chief Technology and COO Pat Lorton said Bunsen can monitor computational jobs, identify failures and attempt restarts, potentially improving utilization of computing resources outside normal working hours. Schrodinger cited its Predictive Toxicology solution as an emerging contributor to ACV growth. The technology is intended to predict off-target binding risks before synthesis, allowing customers to address potential safety issues earlier in drug discovery. Farid said commercial evaluations are progressing well, though the company did not disclose the specific ACV contribution from the product. Farid also identified RetroSynth as another new product contributing to growth and said it is included in the Bristol Myers Squibb agreement. He said new products, along with increased usage by existing customers, are a major component of the company’s growth strategy. On market conditions, Farid said the biotechnology sector has improved compared with last year. He pointed to an increase in biotechnology IPO activity and said the company has seen fewer customers struggling to raise funds than it did in 2025. Schrodinger maintained its full-year 2026 ACV guidance of $218 million to $228 million, representing growth of 10% to 15% from 2025. Jain noted that the fourth quarter is typically the company’s largest ACV quarter and generally accounts for more than half of annual ACV. The company raised its full-year drug discovery revenue outlook to $65 million to $75 million, from a prior range of $55 million to $65 million, reflecting recognition of the Ajax milestone. It expects 2026 operating expenses to be lower than in 2025. For the third quarter, Schrodinger expects ACV excluding contribution of $41 million to $45 million, compared with $38.3 million in the third quarter of 2025, which included $2.2 million of contribution ACV. Akinsanya also highlighted Schrodinger’s July collaboration with Simcere Pharmaceutical Group, under which the company is eligible for development and commercial milestones and tiered royalties on net sales. She said the company has realized more than $750 million from therapeutic activities since 2020, including collaborations, co-invented drugs and co-founded companies. She also cited phase I data presented in June for Ajax asset AJ11095, a Type II JAK inhibitor, as initial clinical evidence supporting its intended differentiated target profile. Schrödinger, Inc is a life sciences and materials discovery company that specializes in the application of physics-based computational platforms to accelerate drug discovery and advanced materials design. Founded in 1990 by Professor Richard A. Friesner, Schrödinger has developed a suite of proprietary software tools—such as Maestro for molecular modeling, Glide for molecular docking and Jaguar for quantum chemistry calculations—that enable scientists to predict molecular behavior with high accuracy. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Schrodinger Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.
Investor releaseQuarter not tagged2026-08-06Schrodinger, Inc. (SDGR) Q2 Earnings and Revenues Top Estimates
Zacks
Schrodinger, Inc. (SDGR) Q2 Earnings and Revenues Top Estimates
Schrodinger, Inc. (SDGR) came out with quarterly earnings of $0.08 per share, beating the Zacks Consensus Estimate of a loss of $0.6 per share. This compares to a loss of $0.59 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +113.33%. A quarter ago, it was expected that this company would post a loss of $0.56 per share when it actually produced a loss of $0.81, delivering a surprise of -44.64%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Schrodinger, which belongs to the Zacks Medical Info Systems industry, posted revenues of $58.89 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 15.58%. This compares to year-ago revenues of $54.76 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Schrodinger shares have lost about 12.5% since the beginning of the year versus the S&P 500's gain of 13%. While Schrodinger has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Schrodinger was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (S…Read full documentShow less
Schrodinger, Inc. (SDGR) came out with quarterly earnings of $0.08 per share, beating the Zacks Consensus Estimate of a loss of $0.6 per share. This compares to a loss of $0.59 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +113.33%. A quarter ago, it was expected that this company would post a loss of $0.56 per share when it actually produced a loss of $0.81, delivering a surprise of -44.64%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Schrodinger, which belongs to the Zacks Medical Info Systems industry, posted revenues of $58.89 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 15.58%. This compares to year-ago revenues of $54.76 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Schrodinger shares have lost about 12.5% since the beginning of the year versus the S&P 500's gain of 13%. While Schrodinger has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Schrodinger was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.64 on $51.84 million in revenues for the coming quarter and -$1.89 on $230.28 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical Info Systems is currently in the top 30% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Phreesia (PHR), has yet to report results for the quarter ended July 2026. This developer of health care software is expected to post quarterly earnings of $0.11 per share in its upcoming report, which represents a year-over-year change of +1000%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Phreesia's revenues are expected to be $129.63 million, up 10.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Schrodinger, Inc. (SDGR) : Free Stock Analysis Report Phreesia, Inc. (PHR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research
Investor releaseQuarter not tagged2026-08-06Schrodinger Inc (SDGR) (Q2 2026) Earnings Call Highlights: ACV Surges 27% on Bunsen Launch and ...
GuruFocus.com
Schrodinger Inc (SDGR) (Q2 2026) Earnings Call Highlights: ACV Surges 27% on Bunsen Launch and ...
This article first appeared on GuruFocus. ACV: $29.6 million in Q2 2026, representing 27% year-over-year growth; ACV excluding contribution was $22.6 million, up 23%. Trailing Four-Quarter ACV: Reached $208 million; first half 2026 ACV of $58.0 million, up 19% year over year. Total Revenue: $58.9 million for Q2 2026. Software Revenue: $32.5 million, with hosted revenue contributing $15.2 million, or 47% of software total (up from 31% in Q2 2025). Software Gross Margin: 71% for the quarter, compared to 76% in Q2 2025. Drug Discovery Revenue: $23 million, up from $13.9 million in Q2 2025, primarily due to a $10 million collaboration milestone from Ajax Therapeutics. Contribution Revenue: $3.4 million, down from $4.8 million in Q2 2025. Operating Expenses: $74 million in Q2, a 6% decrease from $79 million in Q2 2025. Net Income: $6 million, compared to a net loss of $43 million in Q2 2025. Cash and Marketable Securities: $419 million at quarter end. Fully Diluted Share Count: $75.8 million. Full Year 2026 Guidance: ACV expected between $218 million and $228 million (10% to 15% growth); drug discovery revenue guidance raised to $65 million to $75 million. Q3 2026 ACV Guidance: Excluding contribution, expected to be $41 million to $45 million. Warning! GuruFocus has detected 4 Warning Signs with SDGR. Is SDGR fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. ACV growth of 27% in Q2 2026, driven by broad-based demand across large pharma, biotech, and materials science customers. Successful launch of Bunsen, an agentic AI co-scientist, with early access and a strategic deployment agreement with Bristol Myers Squibb, expanding platform usage. Predictive toxicology solution is gaining traction, with commercial evaluations going well and already contributing to 2026 ACV. Strong balance sheet with $419 million in cash and marketable securities, providing financial stability for strategic initiatives. Drug discovery revenue increased significantly to $23 million in Q2 2026, driven by a $10 million collaboration milestone from Ajax Therapeutics, and full-year guidance raised to $65-$75 million. Operating expenses decreased 6% year-over-year, reflecting disciplined expense management and improved efficiency. Therapeutics portfolio…Read full documentShow less
This article first appeared on GuruFocus. ACV: $29.6 million in Q2 2026, representing 27% year-over-year growth; ACV excluding contribution was $22.6 million, up 23%. Trailing Four-Quarter ACV: Reached $208 million; first half 2026 ACV of $58.0 million, up 19% year over year. Total Revenue: $58.9 million for Q2 2026. Software Revenue: $32.5 million, with hosted revenue contributing $15.2 million, or 47% of software total (up from 31% in Q2 2025). Software Gross Margin: 71% for the quarter, compared to 76% in Q2 2025. Drug Discovery Revenue: $23 million, up from $13.9 million in Q2 2025, primarily due to a $10 million collaboration milestone from Ajax Therapeutics. Contribution Revenue: $3.4 million, down from $4.8 million in Q2 2025. Operating Expenses: $74 million in Q2, a 6% decrease from $79 million in Q2 2025. Net Income: $6 million, compared to a net loss of $43 million in Q2 2025. Cash and Marketable Securities: $419 million at quarter end. Fully Diluted Share Count: $75.8 million. Full Year 2026 Guidance: ACV expected between $218 million and $228 million (10% to 15% growth); drug discovery revenue guidance raised to $65 million to $75 million. Q3 2026 ACV Guidance: Excluding contribution, expected to be $41 million to $45 million. Warning! GuruFocus has detected 4 Warning Signs with SDGR. Is SDGR fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. ACV growth of 27% in Q2 2026, driven by broad-based demand across large pharma, biotech, and materials science customers. Successful launch of Bunsen, an agentic AI co-scientist, with early access and a strategic deployment agreement with Bristol Myers Squibb, expanding platform usage. Predictive toxicology solution is gaining traction, with commercial evaluations going well and already contributing to 2026 ACV. Strong balance sheet with $419 million in cash and marketable securities, providing financial stability for strategic initiatives. Drug discovery revenue increased significantly to $23 million in Q2 2026, driven by a $10 million collaboration milestone from Ajax Therapeutics, and full-year guidance raised to $65-$75 million. Operating expenses decreased 6% year-over-year, reflecting disciplined expense management and improved efficiency. Therapeutics portfolio continues to generate value, with over $750 million realized since 2020, including recent milestones from the Lilly-Ajax acquisition. Hosted revenue percentage increased to 47% of software revenue, indicating successful transition to recurring revenue model. Improved biotech sector conditions, with increased IPO activity and reduced customer funding challenges compared to the prior year. New global collaboration with Simcere Pharmaceutical Group to advance discovery programs into clinical stages, with potential for milestones and royalties. Software gross margin declined to 71% in Q2 2026 from 76% in Q2 2025, due to the accelerated transition to hosted licensing. Contribution revenue decreased to $3.4 million in Q2 2026 from $4.8 million in Q2 2025, due to completion of initial Gates Foundation funding for predictive toxicology. Total revenue growth is negatively impacted by the planned transition to hosted licenses, which recognizes revenue ratably over contract life. The company expects a temporary negative impact on reported revenue from the hosted transition, with each 1% increase in hosted revenue reducing revenue by $2-$3 million. Full-year ACV guidance remains at 10%-15% growth, which is lower than the 27% growth seen in Q2, indicating potential slowdown in the second half. Predictive toxicology and other new products have long lead times for customer adoption, requiring extensive evaluation and validation, which may delay revenue contributions. The company's reliance on a few large customers, such as BMS, for significant platform deployments could concentrate risk. Operating expenses, while reduced, remain high at $74 million for the quarter, and the company expects them to be less than 2025 but still substantial. The drug discovery revenue increase is partly due to a one-time milestone payment, which may not be recurring. The company's net income was boosted by a one-time gain from the Lilly-Ajax acquisition, which may not be sustainable in future quarters. Q: Can you provide more color on end market health in biopharma and biotech, as well as customer activity overall? How much has predictive tox contributed to ACV so far, and what are the expectations for that going forward? A: Ramy Farid (CEO) noted that the biotech sector is healthier this year than last, citing a doubling of IPOs and fewer companies struggling to raise funds. Regarding predictive tox, he stated the company is not disclosing the specific ACV breakdown by product, but confirmed it has contributed to ACV this year and is included in the full-year guidance. Q: What does the pipeline look like for Bunsen, and can you provide details on the pricing model? Is it similar to the rest of the software? A: Ramy Farid (CEO) highlighted the new agreement with Bristol Myers Squibb (BMS), a longtime customer, which significantly scaled up their access to the technology. He explained that the value of Bunsen is recognized through increased demand for their core technologies, as demonstrated by the BMS collaboration, rather than a separate pricing model. Q: As you convert customers to hosted licenses, what is the feedback? Can you achieve a majority of conversions within the first two years, or will it take longer? A: Richie Jain (CFO) confirmed the company is on track to reach its goal of 75% hosted revenue by the end of 2028. He noted that the hosted revenue percentage reached 47% this quarter, partly due to some customers transitioning early, and that customer engagement has been strong. Q: How much of the ACV growth is a function of new product launches, and what areas should we expect for the next wave of product launches to unlock more budget? A: Ramy Farid (CEO) stated that new products are a major contributor to growth in the first half of the year and are expected to remain so in the second half. He cited predictive tox and RetroSynth as examples, noting that the company's R&D group continuously develops new products based on feedback from its internal therapeutics group and thousands of users. Q: Can you talk about the areas where you are able to gain efficiencies and reduce operating expenses? A: Richie Jain (CFO) explained that operating expenses decreased 6% year-over-year and sequentially, driven by reductions in personnel costs, CRO costs, and professional services fees. This reflects the company's disciplined expense management and execution against its plans. Q: Can you speak to the specific areas of your workflows where you are seeing the greatest benefits from Bunsen? A: Karen Akinsanya (President, Head of Therapeutics R&D) highlighted that Bunsen is accelerating structure-based drug design workflows, including analyzing structures and binding sites. Ramy Farid (CEO) added that Bunsen acts as a true co-scientist, enabling users to run multiple tasks in parallel and handle routine tasks, significantly boosting efficiency. Patrick Lorton (CTO) noted that Bunsen can monitor and restart failed jobs, preventing the loss of overnight or weekend work on expensive supercomputers. Q: Does the 10% to 15% medium-term growth expectation factor in assumptions about predictive tox? How are you thinking about predictive tox relative to the core software business? A: Ramy Farid (CEO) reiterated that the company is not breaking down the growth component tied to predictive tox but confirmed that evaluations are going well and there is real demand. He noted that safety issues are a major source of drug discovery failures, and predictive tox addresses this. He expects the technology to contribute to growth for several years, given the typical long lead time for customers to evaluate and validate new technologies. For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Investor releaseQuarter not tagged2026-08-05Schrödinger Reports Second Quarter 2026 Financial Results
Business Wire
Schrödinger Reports Second Quarter 2026 Financial Results
Second Quarter ACV of $30 Million, Representing 27% Growth Launched Early Access Version of Bunsen, A New Agentic AI Co-Scientist for Molecular Discovery NEW YORK, August 05, 2026--(BUSINESS WIRE)--Schrödinger, Inc. (Nasdaq: SDGR) today announced financial results for the quarter ended June 30, 2026. "We are very pleased with our second quarter results, delivering ACV of $29.6 million, which represents 27% growth. Our results reflect growing industry adoption of a predict-first approach to molecular discovery," said Ramy Farid, Ph.D., chief executive officer of Schrödinger. "As biopharma navigates a rapidly evolving AI landscape and mounting pressure to optimize and accelerate the discovery of new medicines, the need to generate ground-truth data has never been greater. By integrating our highly accurate, physics-based simulations with AI, and launching our agentic co-scientist Bunsen, we are enabling teams to execute complex workflows on a large scale and building the definitive computational infrastructure for the future of drug discovery." Second Quarter 2026 Operating and Financial Highlights (comparisons are to second quarter 2025, unless otherwise noted) ACV was $29.6 million, a 27% increase, and $208 million on a trailing four-quarter basis. ACV excluding contribution ACV was $22.6 million, a 23% increase, and $196 million on a trailing four-quarter basis. Software revenue was $32.5 million, a 10% decrease, primarily reflecting continued progress in the company’s accelerated transition to hosted software licensing. Hosted revenue was 47% of total software revenue, and 30% on a trailing four-quarter basis. Drug discovery revenue was $23.0 million compared to $13.9 million, primarily due to the achievement of a $10 million collaboration milestone associated with the Ajax Therapeutics acquisition. Contribution revenue was $3.4 million, compared to $4.8 million, primarily due to timing of revenue associated with the Gates Foundation predictive toxicology and Gates Ventures battery project grants. Total revenue was $58.9 million, an 8% increase. Software gross margin was 71%, reflecting the company’s planned accelerated transition to hosted software licensing. Operating expenses were $74.0 million, a 6% decrease. Other income, which includes changes in fair value of equity investments and interest income/expense, was $48.9 million primarily due to a gain a…Read full documentShow less
Second Quarter ACV of $30 Million, Representing 27% Growth Launched Early Access Version of Bunsen, A New Agentic AI Co-Scientist for Molecular Discovery NEW YORK, August 05, 2026--(BUSINESS WIRE)--Schrödinger, Inc. (Nasdaq: SDGR) today announced financial results for the quarter ended June 30, 2026. "We are very pleased with our second quarter results, delivering ACV of $29.6 million, which represents 27% growth. Our results reflect growing industry adoption of a predict-first approach to molecular discovery," said Ramy Farid, Ph.D., chief executive officer of Schrödinger. "As biopharma navigates a rapidly evolving AI landscape and mounting pressure to optimize and accelerate the discovery of new medicines, the need to generate ground-truth data has never been greater. By integrating our highly accurate, physics-based simulations with AI, and launching our agentic co-scientist Bunsen, we are enabling teams to execute complex workflows on a large scale and building the definitive computational infrastructure for the future of drug discovery." Second Quarter 2026 Operating and Financial Highlights (comparisons are to second quarter 2025, unless otherwise noted) ACV was $29.6 million, a 27% increase, and $208 million on a trailing four-quarter basis. ACV excluding contribution ACV was $22.6 million, a 23% increase, and $196 million on a trailing four-quarter basis. Software revenue was $32.5 million, a 10% decrease, primarily reflecting continued progress in the company’s accelerated transition to hosted software licensing. Hosted revenue was 47% of total software revenue, and 30% on a trailing four-quarter basis. Drug discovery revenue was $23.0 million compared to $13.9 million, primarily due to the achievement of a $10 million collaboration milestone associated with the Ajax Therapeutics acquisition. Contribution revenue was $3.4 million, compared to $4.8 million, primarily due to timing of revenue associated with the Gates Foundation predictive toxicology and Gates Ventures battery project grants. Total revenue was $58.9 million, an 8% increase. Software gross margin was 71%, reflecting the company’s planned accelerated transition to hosted software licensing. Operating expenses were $74.0 million, a 6% decrease. Other income, which includes changes in fair value of equity investments and interest income/expense, was $48.9 million primarily due to a gain associated with the completion of Eli Lilly and Company’s acquisition of Ajax Therapeutics. Net income was $6.0 million, compared to a net loss of $43.2 million. Cash, cash equivalents, restricted cash and marketable securities were $418.8 million. Schrödinger presents contribution revenue and cost of revenue separately from software and drug discovery revenue and cost of revenues. Prior periods have been reclassified to conform to this presentation to facilitate year-over-year comparability. 2026 Financial and Operational Outlook As of August 5, 2026, Schrödinger provided the following financial guidance for the fiscal year ending December 31, 2026: ACV is expected to range from $218 million to $228 million, representing 10-15% growth over 2025. Drug discovery revenue is expected to range from $65 million to $75 million, compared to the prior expectation of $55 million to $65 million, due to the achievement of a $10 million collaboration milestone associated with the Ajax acquisition. Operating expenses are expected to be less than 2025. For the third quarter of 2026, ACV is expected to range from $41 million to $45 million, excluding contribution ACV, compared to $38.3 million in the third quarter of 2025, which included $2.2 million of contribution ACV. Recent Highlights Schrödinger launched the early access version of Bunsen, its new agentic AI co-scientist. Unlike general-purpose agents, Bunsen is optimized to execute Schrödinger's validated, physics-based computational platform to plan and execute complex molecular discovery workflows and interpret results. Bunsen helps computational chemists run concurrent research sessions and accomplish more across multiple programs. Bunsen also makes advanced computational methods accessible to drug hunters who are not experienced computational chemists, further expanding the user base for the company’s computational platform. To accommodate the expected increase in throughput enabled by Bunsen and support early adoption, long-time collaborators NVIDIA and Google Cloud will provide a full stack AI platform, infrastructure, and access to the NVIDIA BioNeMo Agent Toolkit for early customers. Schrödinger announced a strategic software agreement with Bristol Myers Squibb (BMS) to deploy Bunsen, significantly expanding the scale of Schrödinger’s platform within BMS’s research organization and empowering scientists to explore more scientific possibilities, prioritize the most promising molecules with greater confidence, and accelerate discovery decisions. Schrödinger will collaborate with BMS scientists on developing novel functionality within Bunsen in conjunction with its computational technologies designed to enable large-scale chemical exploration as well as with RetroSynth, its AI-driven synthesis planning platform. Schrödinger announced a global drug discovery and development collaboration with Simcere Pharmaceutical Group to advance an innovative program based on unmet clinical needs. Schrödinger is leveraging its physics-based computational platform to lead drug design and optimization during the joint research phase, while Simcere will lead subsequent preclinical and clinical development. Schrödinger is eligible to receive discovery, development, and commercial milestone payments, as well as tiered royalties on net sales. Schrödinger scientists published research in the Journal of Chemical Information and Modeling validating the use of the FEP+ framework to accurately predict binding affinity and optimize macrocycles and cyclic peptides. The study evaluated over 230 unique compounds across five diverse and highly challenging therapeutic targets. The publication highlights how Schrödinger’s platform can successfully derisk the drug design process, allowing discovery teams to bypass low-probability chemical synthesis, substantially compress development timelines, and drive cost-effective pipeline advancements for historically "undruggable" targets. Schrödinger researchers published research in the Journal of Chemical Information and Modeling introducing a new workflow that combines mixed solvent molecular dynamics simulations with SiteMap, the company’s binding site identification software, to identify hidden, or cryptic, protein binding sites. Tested across a 65 target site dataset, this approach correctly identified the hidden pocket in the top predictions in nearly 80% of cases, expanding the ability to target previously undruggable proteins. Webcast and Conference Call Information Schrödinger will host a conference call to discuss its second quarter 2026 financial results on Wednesday, August 5, 2026, at 4:30 p.m. ET. The live webcast can be accessed under "Events & Presentations" in the investors section of Schrödinger’s website, https://ir.schrodinger.com/news-and-events/event-calendar. To participate in the live call, please register for the call here. It is recommended that participants register at least 15 minutes in advance of the call. Once registered, participants will receive the dial-in information. The archived webcast will be available on Schrödinger’s website for approximately 90 days following the event. Non-GAAP Information Included in this press release is certain financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The company presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, and stock-based compensation expense, and further adjusted to exclude gains and losses on equity investments, changes in fair value of equity investments, restructuring costs, litigation and settlement expenses, and, when applicable, other non-recurring items that management does not consider indicative of ongoing operating performance. Management believes adjusted EBITDA is a useful measure for investors, taken in conjunction with the company’s GAAP financial statements because they provide greater period-over-period comparability with respect to the company’s operating performance, by excluding the effects of capital structure, tax impacts, non-cash depreciation and amortization, non-cash equity compensation expense, non-cash mark-to-market and other valuation adjustments for the company’s equity investments, non-recurring cash distributions from the company’s equity investments, and other non-recurring items that are not reflective of the ongoing performance of the business. However, adjusted EBITDA as a non-GAAP financial measure should be considered only in addition to, not as a substitute for or as superior to, net income (loss) or other financial measures prepared in accordance with GAAP. Other companies in Schrödinger’s industry may calculate adjusted EBITDA differently than Schrödinger does, limiting their usefulness as comparative measures. For a reconciliation of adjusted EBITDA to GAAP net income (loss), please refer to the tables at the end of this press release. About Schrödinger Schrödinger is transforming molecular discovery with its computational platform, which enables the discovery of novel, highly optimized molecules for drug development and materials design. Schrödinger’s software platform is built on more than 30 years of R&D investment and is licensed by biotechnology, pharmaceutical and industrial companies, and academic institutions around the world. Schrödinger also leverages the platform to advance a portfolio of collaborative and proprietary programs. To learn more, visit www.schrodinger.com, follow us on LinkedIn, or visit our blog, Extrapolations.com. Operating Metrics To supplement the financial measures presented in this press release and related conference call or webcast in accordance with generally accepted accounting principles in the United States (GAAP), Schrödinger also presents certain other performance metrics, such as annual contract value, or ACV, and ACV by certain industries and customer cohorts. Annual Contract Value (ACV). Schrödinger tracks the ACV for each customer. With respect to contracts that have a duration of one year or less, or contracts of more than one year in duration that are billed annually, ACV is defined as the contract value billed during the applicable period. For contracts with a duration of more than one year that are billed upfront, ACV in each period represents the total billed contract value divided by the term. We present ACV as a supplemental operating metric because it provides a consistent measure of the underlying performance of our software business that is not affected by differences in revenue recognition timing across contract types, delivery models, or billing structures. ACV should be viewed independently of revenue and does not represent revenue calculated in accordance with GAAP on an annualized basis, as it is an operating metric that can be impacted by contract execution start and end dates and renewal rates. ACV is not intended to be a replacement for, or forecast of, revenue. ACV by Cohorts. Schrödinger tracks ACV by certain industries and customer cohorts. These cohorts include contribution, which consists of customers from which we derive contribution revenue. We present this ACV separately because it relates to grant agreements accounted for as non-exchange contributions, rather than commercial software contracts. The operating metrics for the cohorts are not prepared in accordance with GAAP and do not correspond to the company’s reportable segments or the allocation of costs for GAAP purposes. These metrics allow management to better understand differences in sales cycles, contract duration, deployment models, renewal behavior, and expansion opportunities among customer and industry groups, supplementing but not replacing Schrödinger’s GAAP results. Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 including, but not limited to those statements regarding Schrödinger’s expectations about the speed and capacity of its computational platform, its financial outlook for the fiscal year ending December 31, 2026, and third quarter ending September 30, 2026, its plans to continue to invest in research and its strategic plans to accelerate the growth of its software licensing business and advance its collaborative and proprietary drug discovery programs, the long-term potential of its business, its ability to improve and advance the science underlying its platform, the initiation, timing, progress, and results of the drug discovery programs and product candidates of its collaborators, the clinical potential and favorable properties of its collaborators’ product candidates, expectations relating to the potential of, and the use of, Bunsen, its agentic AI co-scientist, including researchers’ ability to utilize a full stack AI platform provided by NVIDIA and Google Cloud with Bunsen to scale their use of the platform and the successful deployment of Bunsen within BMS’s research organization, the ability for the company to realize potential benefits from its collaborations, including the amount and timing of additional milestones, if any, as well as expectations related to the use of its cash, cash equivalents and marketable securities. Statements including words such as "aim," "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "goal," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "target," "will," "would" and statements in the future tense are forward-looking statements. These forward-looking statements reflect Schrödinger’s current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the company and on assumptions the company has made. Actual results may differ materially from those described in these forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and important factors that are beyond Schrödinger’s control, including the demand for its software platform, its ability to further develop its computational platform, its reliance upon third-party providers of cloud-based infrastructure to host its software solutions, its ability to transition customers to hosted software deployments, factors adversely affecting the life sciences industry, fluctuations in the value of the U.S. dollar and foreign currencies, its reliance upon its third-party drug discovery collaborators, the uncertainties inherent in drug development and commercialization, such as the conduct of research activities, the ability to retain and hire key personnel and other risks detailed under the caption "Risk Factors" and elsewhere in the company’s Securities and Exchange Commission filings and reports, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed with the Securities and Exchange Commission on August 5, 2026, as well as future filings and reports by the company. Any forward-looking statements contained in this press release speak only as of the date hereof. Except as required by law, Schrödinger undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, changes in expectations or otherwise. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805908510/en/ Contacts Jaren Madden (Investors and Media)Schrödinger, [email protected] 617-286-6264 Matthew Luchini (Investors)Schrödinger, [email protected] 917-719-0636 Rebecca Pocock (Media)SHIFT [email protected]
TranscriptFY2026 Q22026-08-05FY2026 Q2 earnings call transcript
Earnings source - 64 paragraphs
FY2026 Q2 earnings call transcript
Thank you for standing by. Welcome to Schrödinger's conference call to review second quarter 2026 financial results. My name is Rob and I will be your operator for today's call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. Please be advised that this call is being recorded at the company's request. Now, I would like to introduce your host for today's conference, Ms. Jaren Madden, Chief Corporate Affairs Officer and Head of Investor Relations. Please go ahead.
Thank you. Good afternoon, everyone. Welcome to today's call, during which we will provide an update on the company and review our second quarter 2026 financial results. Earlier today, we issued the press release summarizing our financial results and progress across the company, which is available on our website at schrodinger.com. During today's call, management will make statements that are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements related to our outlook for the full year 2026 and third quarter 2026, our plans to accelerate the growth of our software business and advance our therapeutics portfolio, the capabilities and potential advantages of Bunsen, our agentic AI co-scientist, the clinical potential and properties of our and our collaborators' compounds, the use of our cash resources, as well as our future expenses.
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 due to a number of important factors, including the considerations described in the risk factors section and elsewhere in the filings we make with the SEC, including our Form 10-Q for the quarter ended June 30, 2026. These forward-looking statements represent our views only as of today, and we caution you that, except as required by law, we may not update them in the future, whether as a result of new information, future events, or otherwise. Also included in today's call are certain non-GAAP financial measures.
These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and should be considered only in addition to, and not a substitute for or superior to, GAAP measures. Please refer to the tables at the end of our press release, which is available on our website for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. This afternoon, Ramy Farid, our CEO, will review our recent progress. Richie Jain, Chief Financial Officer, will discuss our financial results and 2026 guidance. Karen Akinsanya, President, Head of Therapeutics R&D, and Chief Strategy Officer Partnerships, will provide an update on our therapeutics portfolio. Pat Lorton, our Chief Technology and Chief Operating Officer, will join us for the Q&A. With that, I will turn the call over to Ramy.
Thanks, Jaren, and thank you, everyone, for joining us today. We are very pleased with our momentum across the business in the second quarter. The biopharma industry is increasingly recognizing that a computationally driven predict-first approach is a critical driver for accelerating drug discovery timelines and improving probabilities of success. Our ACV growth of 27%, driven by broad-based demand, reflects this ongoing shift. In the quarter, we saw continued scale-up within large customers, uptake of new products, an improved biotech sector, and new customers across life sciences and materials science. A key driver of our growth strategy is introducing new products that expand platform usage and provide access to new budgets. We are excited about Bunsen, our AI co-scientist, which we officially launched in early access last week. We have optimized Bunsen to execute our validated computational methods and leverage our decades of molecular discovery expertise.
By executing complex multi-step workflows, Bunsen helps expert computational chemists work more efficiently and run more design projects. Bunsen will also enable, more broadly, drug hunters to access our software and run advanced simulations, expanding our user base over time. Our longstanding collaborators, NVIDIA and Google Cloud, are providing additional tools and compute resources to support early access to Bunsen. Our throughput-based licensing model ensures we are positioned to capture the value of the significantly increased platform usage we expect Bunsen to drive. We are also very pleased that Bristol Myers Squibb, a longtime customer and collaborator, is deploying Bunsen and expanding their use of the platform across their research organization. Our new strategic software agreement with BMS, announced earlier today, allows us to deploy Bunsen in conjunction with our computational technologies designed to enable large-scale chemical exploration.
We view BMS's implementation as a compelling model for how large-scale deployment can expand platform usage and integration across the industry. Our commitment to scientific innovation is a key component of our strategy to expand our addressable market and access new budgets. Our Predictive Toxicology solution is a clear example of this approach. Our advanced physics-based technologies predict off-target binding risks before synthesis, enabling customers to address safety liabilities early in discovery programs and deliver optimized candidates with substantial time and cost savings. Commercial evaluations are going well, and predictive tox has already contributed to our 2026 ACV. As the promise of AI dominates the dialogue in both drug discovery and materials design, I'd like to take a moment to discuss what differentiates Schrödinger's platform. For molecular discovery, AI is a powerful tool enabled by the data used to train it. The more high-quality data, the more predictive the models.
By using rigorous first principles physics, we generate the accurate, reliable data required for AI models. This integration of the most advanced ground truth physics calculations and cutting-edge AI is the foundation of our computational molecular discovery platform. By continually expanding our platform capabilities and introducing new products, we are unlocking new budgets and broadening our user base across the biopharma and material science industries. None of this progress would be possible without our team, and I want to thank our employees for their dedication and hard work in advancing our mission. We are executing well against our strategy, expanding our software footprint, and continuing to build long-term value across our therapeutics portfolio. I'll now turn the call over to Richie to review our financial results.
Thank you, Ramy, and good afternoon. In the second quarter, we saw strong execution across both our software and drug discovery businesses, characterized by robust ACV growth, a rapid acceleration in hosted revenue percentage, continued portfolio progress, disciplined expense management, and a strong balance sheet. Second quarter ACV was $29.6 million, which represents 27% growth year-over-year. ACV excluding contribution was $22.6 million, a 23% increase compared to Q2 2025 and at the upper end of our expectations. On a trailing four-quarter basis, ACV reached $208 million and first half 2026 ACV of $58.0 million represents 19% growth compared to the first half of last year. ACV growth was broad-based, driven by our top 20 pharma customers as well as from biotech and material science customers.
Contribution ACV was $7 million in the second quarter, $5 million as a result of the Gates Foundation extending its funding for our Predictive Toxicology initiative based on the progress we've made and $2 million from Gates Ventures in support of our continued work in battery research to develop and apply atomistic simulation methods to improve battery performance. Total revenue for the second quarter of 2026 was $58.9 million. Software revenue was $32.5 million, of which hosted revenue contributed $15.2 million or 47% of the software total, compared to 31% in the second quarter of 2025. On a trailing four-quarter basis, hosted revenue increased to 30% of the software total from 23% in Q2 2025 and 27% last quarter. Overall, we are pleased with the progress we are making with transitioning customers to hosted licensing.
Our year-over-year revenue growth continues to be impacted by our planned accelerated transition to hosted licenses, for which revenue is recognized ratably over the life of the contract rather than mostly upfront. We are pleased with the conversion dynamics we are seeing so far, and our priority remains converting customers as their contracts come up for renewal. As a reminder, increasing the percentage of revenue from hosted contracts will have a temporary negative impact on revenue, with every 1% increase in hosted revenue resulting in a $2 million-$3 million reduction in reported revenue, depending on renewal quarter and contract length. Software gross margin was 71% for the quarter compared to 76% in Q2 2025, reflecting our planned accelerated transition to hosted software licensing. Contribution revenue was $3.4 million for the period, compared to $4.8 million in Q2 2025.
The decline is driven by the completion of the initial funding by the Gates Foundation in support of our Predictive Toxicology initiative, partially offset by the Gates Ventures grant supporting our battery research. Drug discovery revenue was $23 million, compared to $13.9 million in Q2 2025. The increase is primarily due to the receipt of a $10 million collaboration milestone from Ajax Therapeutics. Total operating expenses for Q2 were $74 million, a decrease of 6% compared to $79 million in Q2 2025. The decrease was primarily driven by lower headcount, CRO, and professional services fees and reflects our commitment to disciplined expense management. Total other income was $48.9 million, primarily due to a gain associated with the completion of Eli Lilly's acquisition of Ajax. Net income for the quarter was $6 million, compared to a net loss of $43 million in the second quarter of 2025.
We ended the quarter with a strong balance sheet of $419 million in cash and marketable securities. The fully diluted share count was 75.8 million. Turning to our full year 2026 guidance, we continue to expect ACV to be in the range of $218 million-$228 million, representing 10%-15% growth over 2025. As a reminder, Q4 is our largest quarter and typically greater than 50% of annual ACV. We remain pleased with how opportunities we expect to close this year are progressing. We now expect drug discovery revenue to be in the range of $65 million-$75 million, compared to our prior expectation of $55 million-$65 million, due to the recognition of a $10 million collaboration milestone payment from Ajax. Our operating expenses are expected to be less than in 2025.
Finally for the third quarter of 2026, we expect ACV excluding contribution to be $41 million-$45 million, compared to $38.3 million in Q3 2025, which included $2.2 million of contribution ACV. To wrap up, our performance in the second quarter reflects continued momentum across our business, backed by a strong balance sheet. Given the combination of robust ACV growth, disciplined expense management, and accelerating hosted software adoption, we remain very well positioned to execute on our strategic priorities. I would now like to hand the call over to Karen.
Thank you, Richie. The therapeutics team is experiencing a boost in productivity across our portfolio following the integration of our new agentic AI co-scientist, Bunsen. While Bunsen has clearly accelerated the day-to-day productivity of our computational chemists, its impact extends to the rest of our cross-functional drug hunting team. Bunsen is enabling target analysis and structural biology workflows as our structure-based programs begin, as well as the integrated analysis of DMPK, pharmacology, and toxicology data during the mature stages of programs. These capabilities are helping our scientists drive rapid data-driven decisions and to accelerate the predict, design, make, test, and analyze cycle. Our new global collaboration with Simcere Pharmaceutical Group, announced in July, combines our complementary predict-first design approach with Simcere's pre-clinical and clinical execution. This collaboration allows us to rapidly translate discovery breakthroughs into clinical stage opportunities consistent with our evolving strategy for our therapeutics portfolio.
We are eligible for development and commercial milestone payments, as well as tiered royalties on net sales. The growing track record for therapeutics designed using our platform provides the ultimate validation of its impact. Since 2020, we have realized over $750 million from our therapeutics activities across collaborations, co-invented drugs, and co-founded companies, including Nimbus, Morphic, Structure, and most recently, Lilly's $2.3 billion acquisition of Ajax. In June, data presented at the European Hematology Association for AJ11095, the phase I Type II JAK inhibitor, which was the most advanced asset in the Ajax portfolio, provided initial clinical evidence that the characteristics of this selective molecule align with the desired differentiated target product profile. With multiple programs eligible for future milestones and royalties, our pipeline continues to represent the potential for substantial long-term value.
We look forward to keeping you updated on our progress and thank our team and partners for the advances across the combined portfolio of important innovations for patients. I'll now turn the call back to Ramy.
Thank you, Karen. As you've heard today, the first half of 2026 has been marked by innovation and strong execution. From robust ACV growth to the launch of our AI co-scientist, Bunsen, to the continued advancement of co-invented development candidates now in the clinic, we are fundamentally transforming how drugs and materials are discovered. At this time, we are happy to take your questions.
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, again, press star one. Your first question today comes from the line of Michael Ryskin from Bank of America. Your line is open.
Hi, this is Alexa Chan on for Mike. Thank you so much for taking the questions. I have a couple here. Maybe to start, can you give a bit more color on end market health in biopharma and biotech as well as customer activity overall? Kind of sounds like funding's moving in the right direction. Then for my follow-up, can you talk about how much maybe Predictive Tox has contributed to ACV so far, and what are the expectations for that going forward?
Sure. I'll take the first question. You were asking, I think, about the health of the biotech sector.
Yeah.
We've noticed what I think a lot of other people have noticed, that certainly things are better this year than they were last year. I think a good reflection of that is the number of IPOs that we've seen this year compared to last year. I think we're already at two times where we were last year. We're also noticing a trend, a better situation with regard to customers just in the biotech sector, where last year we saw what I think a lot of people were seeing is the number of biotech companies struggling to raise funds and that impacted our business as it did a lot of companies that were selling technology to biotech companies, and we're just not seeing that this year at anywhere near the same rate as we were seeing last year.
These are all encouraging signs that I think are consistent with what a lot of other people are reporting. With regard to Predictive Tox, we're not disclosing, of course, we haven't broken down the ACV from individual products, but it has contributed, as we said, to ACV this year, and it's part of our guidance that we provided for the full year. Richie, is there anything else to add to that?
Nope.
Great.
Thank you so much.
Thank you.
Your next question comes from the line of Matt Hewitt from Craig-Hallum Capital Group. Your line is open.
Good afternoon. Thanks for taking the questions. Maybe first up on Bunsen, obviously, congratulations on getting that first collaboration or contract signed. I'm just curious what the pipeline looks like and if you could provide any details on maybe what the pricing model for that looks like. Is it similar to the rest of the software, or is there some other angles with Bunsen?
I'll start and maybe hand it over to Pat. As we said, well, thank you, first of all. Yeah, we're excited, of course, about the agreement with BMS. They're one of our large customers, and as a result of the agreement of the collaboration, they significantly scaled up their access to our technology. I think that answers the second part of your question is that's how we see Bunsen or how we think we'll recognize the value of Bunsen and translate all the excitement around the gentrification of these complex workflows is through the increased demand of our technologies. Again, that's sort of what was borne out in the collaboration with BMS. Is there anything else to add to that or pretty much covered?
I think it's covered.
Yeah. Great.
Maybe as a follow-up, obviously some nice progress on converting customers to hosted, and I recognize that probably a big chunk of that's going to come in Q4 when contracts renew. As you're having those discussions now, what is the feedback? Is your sense that you could get a lion's share of customers converted, say, within the first two years? Or is this going to maybe take a little bit longer than that? Thank you.
Richie will cover that.
Yep. Yep, thanks, Matt. Overall, we're still tracking towards the same goals of 75% hosted by the end of 2028. So far, we've been pleased with how we're progressing. We were 47% hosted this quarter, I'd say we're on track towards our goals. As a reminder, we did transition a few customers prior to their renewal date, which did have an outsized impact on the hosted revenue percentage for this quarter. Overall, the customer engagement's been really strong, and we're progressing towards our three-year goals.
That's great. Thank you.
Your next question comes from the line of Scott Schoenhaus from KeyBank. Your line is open.
Hey, team. Thanks for taking my question and congrats on the results.
Thanks.
You mentioned that Predictive Tox is now being included in ACV, and I know part of your growth strategy was to unlock more pharma budgets by expanding product scope and capabilities. How much are we seeing in terms of ACV growth as a function of new product launches, and how should we think about areas for the next wave of product launches to unlock more of the budget? Thanks.
Yep. Yeah. No, that's correct. A major sort of contributor to growth so far in the first half of the year, and our expectations are the same for the second half of the year, is from new products. As we said, Predictive Tox is now contributing to that growth. So are other new products like RetroSynth. In fact, we mentioned that in the BMS collaboration. That's a part of that agreement. It's a major part of our strategy. As you know, we have a very productive R&D group at Schrödinger that continues to make scientific breakthroughs that result in these sort of exciting new products that continue to solve the kinds of problems that our internal therapeutics group encounters and the projects we're working on. Also, the many thousands of users that we interact with. We accumulate all of that feedback.
We learn about what sorts of technologies are required to have a bigger impact. We invest in those technologies and develop new products. They continue to play an important role in contributing to the growth, in addition to not just new products but of course, existing customers scaling up their usage of those products is also a contributor. New products is certainly a big part of it.
Thanks. As a follow-up, maybe this is for Richie. You guys noted reduction in operating expenses. Maybe talk about the areas where you're able to gain efficiencies. It sounds like you're applying Bunsen internally to drive some efficiencies on the drug discovery side. Maybe some other areas you could talk about on how you're controlling costs here.
Thanks for the follow-up question. In addition to just enhanced productivity inside the company, operating expenses are down 6% year-over-year and also sequentially. We've seen some reductions in personnel costs as well as CRO costs and professional services. This is a reflection of just the plans that we've put forward and the execution against that.
Thanks, guys.
Thank you.
Again, if you'd like to ask a question, press star then the number one on your telephone keypad. Your next question comes from the line of Evan Seigerman from BMO Capital Markets. Your line is open.
Hi there. This is Connor on for Evan. Thanks for taking our question. I have one for Karen. You noted in your prepared remarks today that your therapeutics team is already seeing productivity increases from the integration of Bunsen. Being as Schrödinger is on the cutting edge of computer-aided drug design, I'm wondering if you can just speak to the specific areas of your workflows where you're seeing the greatest benefits from the technology as we all kind of try to wrap our minds around maybe what the ultimate benefits of sort of AI and computer-aided drug discovery could be. Thank you.
Yeah, happy to answer that. As you know, we participate in structure-based drug design, and there's an explosion now of structures available because of a lot of what's going on broadly in the industry. I think this is a great lift for Schrödinger. In particular, our teams are now not just using Bunsen to help us with running Schrödinger's platform, running the workflows for computational chemists, but analyzing structures, analyzing binding sites. A lot of the products that we use are not just about predicting the properties of molecules, but they're also about characterizing, refining, and accurately predicting protein structures, but also preparing those structures for use by our platform. I would say that that work has been accelerated. Those workflows have been accelerated by the use of Bunsen, which is now sort of trained or expert in running our workflows.
We're seeing that on the preparation of programs for structure-based drug design. We're also seeing it at every stage of the drug discovery process, which includes chemistry, but it also includes a lot of ancillary functions who interface with the platform. Yeah, just pretty excited about what we're seeing, and I think this is going to be, as you heard today, adopted by our peers in the industry.
Maybe I can add, too. I think this concept.
Thank you
If I can just add, this concept of a co-scientist isn't just a sort of word that we throw around. In every sense of that word, Bunsen acts as a co-scientist in that it allows users to initiate a number of tasks and projects in parallel, doing a number of things at the same time, just like you could imagine a co-scientist. We like to think of every computational chemist, drug hunter in the group all of a sudden has a team of people that are helping them perform some of the routine tasks that end up taking up a lot of human time. Those routine tasks being performed by Bunsen is also, in addition to what Karen said, is contributing to this efficiency and productivity.
Yeah. I'd also add one thing that's really important is that, as everyone knows, AI doesn't sleep, but a lot of our users do. One common problem in this space is both nights and weekends, you'll set up a bolus of work, and you'll kick it off using your very expensive supercomputer, and one hour in, something goes wrong and it dies, and now you've lost that night's work or that weekend's work unless you're actively monitoring it. If you're working with Bunsen, it will see that the job has died, it will try to figure out the problem, and it will be able to restart it. The throughput of work you're able to accomplish just from that optimization, ignoring all the other benefits of working with a co-scientist, is really incredible.
Yeah. Exciting time. Thank you.
Thank you.
Your next question comes from the line of Brendan Smith from TD Cowen. Your line is open.
Great. Thanks for taking the questions, guys. Maybe just one more follow-up on PredictiveTox. I appreciate all the color there so far. I think I wanted to ask maybe how we should think about kind of the 10%-15% medium-term growth expectations you've noted previously. I guess, does that kind of factor in some assumptions about PredictiveTox already? Maybe similarly, I guess based on your broader market and feedback in the launch so far, how are you kind of thinking of PredictiveTox relative to the kind of the core software business, just as some of this starts to get its legs over the next couple quarters? Thanks.
Sure. Yeah, you broke up a little bit, but I think we got the gist of your question. I think you're just asking for a little bit more color about how PredictiveTox, maybe more specifically, is contributing to growth. As we said, we're not breaking down sort of the component of growth that's tied to PredictiveTox. All we can say is that the evaluations are going very well. There's real demand for this kind of technology. A major source of failure of so many drug discovery projects is issues with safety, and safety is often tied to selectivity and binding to off targets, and that's what PredictiveTox aims to do. We're pleased with the discussion so far. We're happy about how the evaluations are going. We're happy that it's already started to contribute.
As with technology like this, we're very used to introducing new technologies that are sort of transformative. There's a long lead time. It takes time to introduce the technology for customers to evaluate the technology, get their own results, which involves, by the way, running copy calculations, but also then validating those with experiment, and that obviously takes time. We expect for PredictiveTox to continue to contribute to growth for quite a number of years.
Got it. Thanks, guys. Appreciate it.
Great. Thanks.
I am showing no further questions at this time. That concludes today's call. You may now disconnect
Investor releaseQuarter not tagged2026-07-22Schrödinger to Announce Second Quarter 2026 Financial Results on August 5
Business Wire
Schrödinger to Announce Second Quarter 2026 Financial Results on August 5
NEW YORK, July 22, 2026--(BUSINESS WIRE)--Schrödinger, Inc. (Nasdaq: SDGR) will report its second quarter 2026 financial results on Wednesday, August 5, 2026, after the financial markets close. The company will host a conference call and webcast at 4:30 p.m. ET. The live webcast can be accessed in the "Investors" section of Schrödinger’s website and will be archived for approximately 90 days following the event. About SchrödingerSchrödinger is transforming molecular discovery with its computational platform, which enables the discovery of novel, highly optimized molecules for drug development and materials design. Schrödinger’s software platform is built on more than 30 years of R&D investment and is licensed by biotechnology, pharmaceutical and industrial companies, and academic institutions around the world. Schrödinger also leverages the platform to advance a portfolio of collaborative and proprietary programs. To learn more, visit www.schrodinger.com, follow us on LinkedIn, or visit our blog, Extrapolations.com. View source version on businesswire.com: https://www.businesswire.com/news/home/20260722696785/en/ Contacts Matthew LuchiniSchrödinger, [email protected] 917-719-0636
Investor releaseQuarter not tagged2026-05-08Earnings Update: Schrödinger, Inc. (NASDAQ:SDGR) Just Reported And Analysts Are Trimming Their Forecasts
Simply Wall St.
Earnings Update: Schrödinger, Inc. (NASDAQ:SDGR) Just Reported And Analysts Are Trimming Their Forecasts
It's been a pretty great week for Schrdinger, Inc. (NASDAQ:SDGR) shareholders, with its shares surging 11% to US$13.28 in the week since its latest first-quarter results. Revenues came in 23% better than analyst models expected, at US$59m, although statutory losses ballooned 29% to US$0.81, which is much worse than what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Taking into account the latest results, the current consensus, from the seven analysts covering Schrdinger, is for revenues of US$233.9m in 2026. This implies a definite 8.3% reduction in Schrdinger's revenue over the past 12 months. Losses are forecast to balloon 51% to US$2.09 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$252.7m and losses of US$1.84 per share in 2026. So it's pretty clear the analysts have mixed opinions on Schrdinger after this update; revenues were downgraded and per-share losses expected to increase. See our latest analysis for Schrdinger There was no major change to the consensus price target of US$21.13, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Schrdinger analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$13.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business. Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 11% annualised decline to the end of 2026. That is a notable change from historical…Read full documentShow less
It's been a pretty great week for Schrdinger, Inc. (NASDAQ:SDGR) shareholders, with its shares surging 11% to US$13.28 in the week since its latest first-quarter results. Revenues came in 23% better than analyst models expected, at US$59m, although statutory losses ballooned 29% to US$0.81, which is much worse than what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Taking into account the latest results, the current consensus, from the seven analysts covering Schrdinger, is for revenues of US$233.9m in 2026. This implies a definite 8.3% reduction in Schrdinger's revenue over the past 12 months. Losses are forecast to balloon 51% to US$2.09 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$252.7m and losses of US$1.84 per share in 2026. So it's pretty clear the analysts have mixed opinions on Schrdinger after this update; revenues were downgraded and per-share losses expected to increase. See our latest analysis for Schrdinger There was no major change to the consensus price target of US$21.13, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Schrdinger analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$13.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business. Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 11% annualised decline to the end of 2026. That is a notable change from historical growth of 14% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% per year. It's pretty clear that Schrdinger's revenues are expected to perform substantially worse than the wider industry. The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Schrdinger. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates. With that in mind, we wouldn't be too quick to come to a conclusion on Schrdinger. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Schrdinger analysts - going out to 2028, and you can see them free on our platform here. You should always think about risks though. Case in point, we've spotted 1 warning sign for Schrdinger you should be aware of. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Investor releaseQuarter not tagged2026-05-06Schrödinger Reports First Quarter 2026 Financial Results
Business Wire
Schrödinger Reports First Quarter 2026 Financial Results
First Quarter ACV of $28 Million, Representing 12% Growth Continued Momentum in Transition to Hosted Software Licensing Schrödinger to Launch Bunsen, an Agentic AI Co-Scientist, This Summer Lilly’s Announced $2.3 Billion Acquisition of Ajax Validates Schrödinger’s Track Record of High-Value Collaborations NEW YORK, May 05, 2026--(BUSINESS WIRE)--Schrödinger, Inc. (Nasdaq: SDGR) today announced financial results for the quarter ended March 31, 2026. "Our first quarter results show strong growth in both ACV and drug discovery revenue. ACV growth of 12 percent was driven by usage scale-ups and new deployments; we are also pleased with our progress transitioning customers to hosted licensing. The biopharmaceutical funding environment is improving, and the depth of customer engagement reflects the critical importance of our computational platform that integrates ground truth simulation with leading edge AI. We have a strong commitment to technology leadership and are excited about the release this summer of Bunsen, an agentic AI co-scientist designed to autonomously execute complex molecular discovery workflows and expand utilization to a broader user base," said Ramy Farid, Ph.D., chief executive officer of Schrödinger. "We also continue to see the impact of our platform through the success of our co-founded companies. Lilly’s announced acquisition of Ajax Therapeutics, in which we have an approximately six percent equity stake, marks another multi-billion dollar acquisition of a Schrödinger co-discovered molecule. This milestone reinforces the strength of our platform, team and integrated business model." First Quarter 2026 Operating and Financial Highlights (comparisons are to first quarter 2025, unless otherwise noted) ACV was $28.4 million, a 12% increase, and $201 million on a trailing four-quarter basis. Software revenue was $35.6 million, a 21% decrease, reflecting the company’s planned accelerated transition to hosted software licensing. Drug discovery revenue was $22.9 million compared to $10.2 million, due to the accelerated recognition of deferred revenue associated with the continued progress of the company’s collaboration portfolio and the discontinuation of one collaboration program. Contribution revenue was $0.1 million, compared to $4.3 million, primarily due to completion of the predictive toxicology grant. Total revenue was $58.6 million, a 2%…Read full documentShow less
First Quarter ACV of $28 Million, Representing 12% Growth Continued Momentum in Transition to Hosted Software Licensing Schrödinger to Launch Bunsen, an Agentic AI Co-Scientist, This Summer Lilly’s Announced $2.3 Billion Acquisition of Ajax Validates Schrödinger’s Track Record of High-Value Collaborations NEW YORK, May 05, 2026--(BUSINESS WIRE)--Schrödinger, Inc. (Nasdaq: SDGR) today announced financial results for the quarter ended March 31, 2026. "Our first quarter results show strong growth in both ACV and drug discovery revenue. ACV growth of 12 percent was driven by usage scale-ups and new deployments; we are also pleased with our progress transitioning customers to hosted licensing. The biopharmaceutical funding environment is improving, and the depth of customer engagement reflects the critical importance of our computational platform that integrates ground truth simulation with leading edge AI. We have a strong commitment to technology leadership and are excited about the release this summer of Bunsen, an agentic AI co-scientist designed to autonomously execute complex molecular discovery workflows and expand utilization to a broader user base," said Ramy Farid, Ph.D., chief executive officer of Schrödinger. "We also continue to see the impact of our platform through the success of our co-founded companies. Lilly’s announced acquisition of Ajax Therapeutics, in which we have an approximately six percent equity stake, marks another multi-billion dollar acquisition of a Schrödinger co-discovered molecule. This milestone reinforces the strength of our platform, team and integrated business model." First Quarter 2026 Operating and Financial Highlights (comparisons are to first quarter 2025, unless otherwise noted) ACV was $28.4 million, a 12% increase, and $201 million on a trailing four-quarter basis. Software revenue was $35.6 million, a 21% decrease, reflecting the company’s planned accelerated transition to hosted software licensing. Drug discovery revenue was $22.9 million compared to $10.2 million, due to the accelerated recognition of deferred revenue associated with the continued progress of the company’s collaboration portfolio and the discontinuation of one collaboration program. Contribution revenue was $0.1 million, compared to $4.3 million, primarily due to completion of the predictive toxicology grant. Total revenue was $58.6 million, a 2% decrease. Software gross margin was 69%, reflecting the company’s planned accelerated transition to hosted software licensing. Operating expenses were $78.3 million, a 4% decrease. Other expenses, which include changes in fair value of equity investments and interest income/expense, were $10.8 million. Net loss was $60.0 million, compared to $59.8 million. Cash, cash equivalents, restricted cash and marketable securities were $406 million at the end of the first quarter of 2026. Schrödinger now presents contribution revenue and cost of revenue separately from software and drug discovery revenue and cost of revenues. Prior periods have been reclassified to conform to this presentation to facilitate year-over-year comparability. 2026 Financial and Operational Outlook As of May 5, 2026, Schrödinger maintained its previously issued financial guidance for the fiscal year ending December 31, 2026: ACV is expected to range from $218 million to $228 million, representing 10-15% growth over 2025. Drug discovery revenue is expected to range from $55 million to $65 million. Operating expenses are expected to be less than 2025. For the second quarter of 2026, ACV is expected to range from $19 million to $23 million, exclusive of contribution ACV, compared to $23.3 million in the second quarter of 2025, which included $5.0 million of contribution ACV. Recent Highlights Platform Today Schrödinger announced plans for release of an early-access version of Bunsen, its new agentic AI co-scientist, this summer. Bunsen autonomously executes complex molecular discovery workflows, expanding the user base and enhancing productivity across Schrödinger’s industry-leading computational platform. Bunsen allows for greater throughput and utilization of Schrödinger’s predict-first approaches, accelerating discovery timelines and improving project outcomes. Schrödinger’s materials science and therapeutics teams have been using Bunsen internally to enhance productivity across research projects. In April, researchers at Schrödinger and Bristol Myers Squibb published the discovery of a series of potent sterile alpha and TIR motif containing 1 (SARM1) inhibitors as a potential treatment for neurodegenerative diseases. The inhibitors were identified through a unique workflow for free-energy perturbation (FEP+). This computational approach identified molecules with unique binding properties while establishing precise dose levels to optimize safety profiles. In March, researchers at Schrödinger and Lilly published a simulation method that predicts the viscosity and injectability of antibody-based drugs by mapping interactions between individual amino acids. This computational approach replaces resource-intensive physical experiments by identifying the specific points of contact where proteins interact with one another. By computationally determining how different additives improve drug consistency, the new method can significantly accelerate the development of subcutaneous treatments. Therapeutics Portfolio In April, Ajax Therapeutics, a company co-founded by Schrödinger, announced its sale to Lilly for up to $2.3 billion in cash, inclusive of an upfront payment and subsequent payments upon the achievement of certain clinical and regulatory milestones. AJ1-11095, an investigational, once-daily oral, first-in-class Type II JAK2 inhibitor, was designed in collaboration with Schrödinger. As of December 31, 2025, Schrödinger had a 5.8% equity stake in Ajax. Schrödinger is exploring strategic partnerships for mid-and late-stage development of SGR-1505, its differentiated MALT1 inhibitor, and SGR-3515, its Wee1/Myt1 dual inhibitor. In April, Schrödinger presented preliminary Phase 1 clinical data for SGR-3515 at the American Association for Cancer Research (AACR) Annual Meeting. The initial data demonstrated that SGR-3515 was generally well-tolerated on an intermittent dosing schedule and achieved a 65% disease control rate among evaluable participants at doses of 100 mg or higher. Data most recently presented at the American Society of Hematology (ASH) Annual Meeting demonstrated that SGR-1505 was generally well tolerated and clinically active in patients with relapsed/refractory B-cell malignancies, including a 100% response rate in patients with Waldenström macroglobulinemia (WM). SGR-1505 has FDA Fast Track and Orphan Drug Designations for WM. In March, Structure Therapeutics, a collaborator and company co-founded by Schrödinger, announced positive topline results from its Phase 2 clinical program for aleniglipron, its once-daily oral GLP-1 receptor agonist for the treatment of obesity. Schrödinger has an equity stake in Structure. Webcast and Conference Call Information Schrödinger will host a conference call to discuss its first quarter 2026 financial results on Tuesday, May 5, 2026, at 4:30 p.m. ET. The live webcast can be accessed under "Events & Presentations" in the investors section of Schrödinger’s website, https://ir.schrodinger.com/news-and-events/event-calendar. To participate in the live call, please register for the call here. It is recommended that participants register at least 15 minutes in advance of the call. Once registered, participants will receive the dial-in information. The archived webcast will be available on Schrödinger’s website for approximately 90 days following the event. Non-GAAP Information Included in this press release is certain financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The company presents adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, and stock-based compensation expense, and further adjusted to exclude gains and losses on equity investments, changes in fair value of equity investments, restructuring costs, litigation and settlement expenses, and, when applicable, other non-recurring items that management does not consider indicative of ongoing operating performance. Management believes adjusted EBITDA is a useful measure for investors, taken in conjunction with the company’s GAAP financial statements because they provide greater period-over-period comparability with respect to the company’s operating performance, by excluding the effects of capital structure, tax impacts, non-cash depreciation and amortization, non-cash equity compensation expense, non-cash mark-to-market and other valuation adjustments for the company’s equity investments, non-recurring cash distributions from the company’s equity investments, and other non-recurring items that are not reflective of the ongoing performance of the business. However, adjusted EBITDA as a non-GAAP financial measure should be considered only in addition to, not as a substitute for or as superior to, net income (loss) or other financial measures prepared in accordance with GAAP. Other companies in Schrödinger’s industry may calculate adjusted EBITDA differently than Schrödinger does, limiting their usefulness as comparative measures. For a reconciliation of adjusted EBITDA to GAAP net income (loss), please refer to the tables at the end of this press release. About Schrödinger Schrödinger is transforming molecular discovery with its computational platform, which enables the discovery of novel, highly optimized molecules for drug development and materials design. Schrödinger’s software platform is built on more than 30 years of R&D investment and is licensed by biotechnology, pharmaceutical and industrial companies, and academic institutions around the world. Schrödinger also leverages the platform to advance a portfolio of collaborative and proprietary programs. To learn more, visit www.schrodinger.com, follow us on LinkedIn, or visit our blog, Extrapolations.com. Operating Metrics To supplement the financial measures presented in this press release and related conference call or webcast in accordance with generally accepted accounting principles in the United States (GAAP), Schrödinger also presents certain other performance metrics, such as annual contract value, or ACV, and ACV by certain industries and customer cohorts. Annual Contract Value (ACV). Schrödinger tracks the ACV for each customer. With respect to contracts that have a duration of one year or less, or contracts of more than one year in duration that are billed annually, ACV is defined as the contract value billed during the applicable period. For contracts with a duration of more than one year that are billed upfront, ACV in each period represents the total billed contract value divided by the term. ACV should be viewed independently of revenue and does not represent revenue calculated in accordance with GAAP on an annualized basis, as it is an operating metric that can be impacted by contract execution start and end dates and renewal rates. ACV is not intended to be a replacement for, or forecast of, revenue. ACV by Cohorts. Schrödinger tracks ACV by certain industries and customer cohorts. These cohorts include contribution, which consists of customers from which we derive contribution revenue. We present this ACV separately because it relates to grant agreements accounted for as non-exchange contributions, rather than commercial software contracts. The operating metrics for the cohorts are not prepared in accordance with GAAP and do not correspond to the company’s reportable segments or the allocation of costs for GAAP purposes. These metrics allow management to better understand differences in sales cycles, contract duration, deployment models, renewal behavior, and expansion opportunities among customer and industry groups, supplementing but not replacing Schrödinger’s GAAP results. Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 including, but not limited to those statements regarding Schrödinger’s expectations about the speed and capacity of its computational platform, its financial outlook for the fiscal year ending December 31, 2026, and second quarter ending June 30, 2026, its plans to continue to invest in research and its strategic plans to accelerate the growth of its software licensing business and advance its collaborative and proprietary drug discovery programs, the long-term potential of its business, its ability to improve and advance the science underlying its platform, the initiation, timing, progress, and results of its proprietary drug discovery programs and product candidates and the drug discovery programs and product candidates of its collaborators, the clinical potential and favorable properties of SGR-1505 and SGR-3515, its MALT1 and Wee1/Myt1 inhibitors, its plans to explore strategic opportunities for the continued clinical development of SGR-1505 and SGR-3515, potential partnering and other business development activities for its programs, the clinical potential and favorable properties of its collaborators’ product candidates, expectations relating to the potential of, and the timing of release of, Bunsen, its agentic AI co-scientist, the ability for the company to realize potential benefits from its collaborative programs, including the amount and timing of additional milestones, if any, as well as expectations related to the use of its cash, cash equivalents and marketable securities. Statements including words such as "aim," "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "goal," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "target," "will," "would" and statements in the future tense are forward-looking statements. These forward-looking statements reflect Schrödinger’s current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the company and on assumptions the company has made. Actual results may differ materially from those described in these forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and important factors that are beyond Schrödinger’s control, including the demand for its software platform, its ability to further develop its computational platform, its reliance upon third-party providers of cloud-based infrastructure to host its software solutions, its ability to transition customers to hosted software deployments, factors adversely affecting the life sciences industry, fluctuations in the value of the U.S. dollar and foreign currencies, its reliance upon its third-party drug discovery collaborators, the uncertainties inherent in drug development and commercialization, such as the conduct of research activities and the timing of and its ability to initiate and complete preclinical studies and clinical trials, whether results from preclinical studies will be predictive of the results of later preclinical studies and clinical trials, uncertainties associated with the regulatory review of investigational new drug application submissions, clinical trials and applications for marketing approvals, the ability to retain and hire key personnel and other risks detailed under the caption "Risk Factors" and elsewhere in the company’s Securities and Exchange Commission filings and reports, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed with the Securities and Exchange Commission on May 5, 2026, as well as future filings and reports by the company. Any forward-looking statements contained in this press release speak only as of the date hereof. Except as required by law, Schrödinger undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, changes in expectations or otherwise. View source version on businesswire.com: https://www.businesswire.com/news/home/20260505334998/en/ Contacts Jaren Madden (Investors and Media) Schrödinger, Inc. [email protected] 617-286-6264 Matthew Luchini (Investors) Schrödinger, Inc. [email protected] 917-719-0636
Investor releaseQuarter not tagged2026-05-06Schrodinger Q1 Earnings Call Highlights
MarketBeat
Schrodinger Q1 Earnings Call Highlights
Schrödinger is accelerating its shift to hosted software licensing, reporting Q1 ACV of $28.4 million (up 12%) and trailing four‑quarter ACV of $201 million, with hosted revenue now at 34% of software revenue and a target of reaching 75% hosted within three years. Q1 total revenue was $58.6 million with drug discovery revenue rising to $22.9 million (from $10.2M a year earlier), while software gross margin compressed to 69% due to the hosted transition; management reiterated 2026 guidance of ACV $218–228 million and drug discovery revenue $55–65 million. Corporate catalysts include Eli Lilly’s planned $2.3 billion acquisition of Ajax (Schrödinger holds ~6% equity) that could produce cash and a non‑operating gain on closing, and the upcoming early access release of agentic AI “Bunsen,” which management says could expand throughput‑based licensing demand. Interested in Schrodinger, Inc.? Here are five stocks we like better. 3 Momentum Stocks That Could Soar Post-Market Volatility Schrodinger (NASDAQ:SDGR) reported first-quarter 2026 results and highlighted progress in its transition to hosted software licensing, growth in annual contract value (ACV), and recent business development activity tied to its drug discovery collaborations. CEO Ramy Farid said the company was “off to a strong start,” reporting first-quarter ACV of $28.4 million, up 12% from the year-ago period. CFO Richie Jain added that trailing four-quarter ACV reached $201 million and said growth was “primarily driven by our top 20 pharma customers” expanding platform access, onboarding new products, and integrating Schrodinger’s tools more deeply into R&D workflows. → Roblox Stock Slides to New Low as Safety Changes Weigh on Outlook AI Pharma: 2 Paths to AI-Powered Drug Investment Total revenue in the quarter was $58.6 million. Software revenue was $35.6 million, and Jain said hosted revenue contributed $12.1 million, or 34% of software revenue, compared with 24% in the first quarter of 2025. On a trailing four-quarter basis, hosted revenue represented 27% of software revenue. Management emphasized that recognized software revenue can be “highly variable” during the accelerated shift to hosted contracts because hosted revenue is recognized ratably over the contract term rather than upfront. On the hosted transition, Jain said the company is “aiming to transition from on-prem to hosted upon the con…Read full documentShow less
Schrödinger is accelerating its shift to hosted software licensing, reporting Q1 ACV of $28.4 million (up 12%) and trailing four‑quarter ACV of $201 million, with hosted revenue now at 34% of software revenue and a target of reaching 75% hosted within three years. Q1 total revenue was $58.6 million with drug discovery revenue rising to $22.9 million (from $10.2M a year earlier), while software gross margin compressed to 69% due to the hosted transition; management reiterated 2026 guidance of ACV $218–228 million and drug discovery revenue $55–65 million. Corporate catalysts include Eli Lilly’s planned $2.3 billion acquisition of Ajax (Schrödinger holds ~6% equity) that could produce cash and a non‑operating gain on closing, and the upcoming early access release of agentic AI “Bunsen,” which management says could expand throughput‑based licensing demand. Interested in Schrodinger, Inc.? Here are five stocks we like better. 3 Momentum Stocks That Could Soar Post-Market Volatility Schrodinger (NASDAQ:SDGR) reported first-quarter 2026 results and highlighted progress in its transition to hosted software licensing, growth in annual contract value (ACV), and recent business development activity tied to its drug discovery collaborations. CEO Ramy Farid said the company was “off to a strong start,” reporting first-quarter ACV of $28.4 million, up 12% from the year-ago period. CFO Richie Jain added that trailing four-quarter ACV reached $201 million and said growth was “primarily driven by our top 20 pharma customers” expanding platform access, onboarding new products, and integrating Schrodinger’s tools more deeply into R&D workflows. → Roblox Stock Slides to New Low as Safety Changes Weigh on Outlook AI Pharma: 2 Paths to AI-Powered Drug Investment Total revenue in the quarter was $58.6 million. Software revenue was $35.6 million, and Jain said hosted revenue contributed $12.1 million, or 34% of software revenue, compared with 24% in the first quarter of 2025. On a trailing four-quarter basis, hosted revenue represented 27% of software revenue. Management emphasized that recognized software revenue can be “highly variable” during the accelerated shift to hosted contracts because hosted revenue is recognized ratably over the contract term rather than upfront. On the hosted transition, Jain said the company is “aiming to transition from on-prem to hosted upon the contract date,” with new customers deployed on hosted “in the first instance.” He reiterated a longer-term target “getting to 75% by the 3-year period.” Farid and Jain also noted “limited cases” where multi-year on-premise deals were converted to hosted ahead of renewal dates, with Jain saying the impact was modest in Q1 but expected to become more visible from Q2 onward. → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches Simulations Plus Stock Drops 15% Despite EPS Beat Software gross margin was 69%, down from 80% in Q1 2025, which Jain attributed to the planned accelerated transition to hosted licensing. Starting this quarter, the company began reporting contribution revenue as a separate line item for additional visibility into software and drug discovery performance. Jain said historical results were reclassified because contribution had previously been included within software and drug discovery revenue. → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries Contribution revenue was $0.1 million in Q1 2026, down from $4.3 million in Q1 2025. Jain said the decline was driven by completion of initial funding from the Gates Foundation supporting Schrodinger’s predictive toxicology initiative. Farid said Schrodinger expects to benefit from an evolving regulatory environment and described predictive toxicology as aligned with FDA efforts to reduce animal testing and expand computational methods. In response to an analyst question on the initiative’s commercial traction, Farid said customer feedback “continues to be really very positive,” adding that prospective testing by customers is validating results the company observed during development and internal use. Drug discovery revenue was $22.9 million in the quarter, up from $10.2 million a year earlier. Jain attributed the increase to “accelerated recognition of deferred revenue associated with the continued progress” of collaboration programs and “the discontinuation of one collaboration program.” Farid separately cited “drug discovery revenue of $23 million” as a significant contributor to quarterly performance. Management also discussed Eli Lilly’s announced $2.3 billion planned acquisition of Ajax Therapeutics, a company Schrodinger co-founded. Farid said Schrodinger holds an approximately 6% equity stake in Ajax and called the deal “the latest example of a multi-billion dollar deal for a Schrödinger co-developed molecule.” President and Head of Therapeutics R&D Karen Akinsanya said Ajax’s AJ11095, described as “a first-in-class type 2 JAK inhibitor,” was “the primary driver of the announced deal.” She also pointed to prior transactions and liquidity events involving molecules Schrodinger co-discovered, including Lilly’s acquisitions of Morphic, Petra, and Ajax, the sale of Nimbus’ ACC and TYK2 inhibitors, and the IPOs of Relay and Structure. On financial reporting implications from the Ajax transaction, Jain said the sale was “not contemplated” in guidance. He said the primary impact would be to cash when the deal closes, noting Schrodinger ended the quarter with $406 million in cash and marketable securities and “anticipate receiving our portion of the upfront cash payment” upon closing. Jain added that any equity proceeds would be reflected on the balance sheet, while in response to another question he said he would expect the equity stake impact to run through the P&L as a non-operating gain. Akinsanya reviewed clinical updates on two wholly owned programs. She said Schrodinger presented initial clinical data in April at the AACR annual meeting for SGR-3515, a Wee1/Myt1 inhibitor, from an ongoing phase I dose escalation study focused on safety, tolerability, and pharmacokinetics. According to Akinsanya, SGR-3515 was “generally well-tolerated” on an intermittent schedule of three days on and 11 days off, and initial biomarker data supported the company’s dual-inhibition hypothesis. She reported “encouraging early anti-tumor activity,” citing a 65% disease control rate among evaluable patients treated at doses of 100 milligrams or higher. She also said the company remains encouraged by SGR-1505, a MALT1 inhibitor, where it continues to see a 100% response rate and durable responses in patients with Waldenström’s macroglobulinemia. Akinsanya noted SGR-1505 has both FDA Fast Track and Orphan Drug designations. As the phase I studies conclude, Akinsanya said Schrodinger is “actively exploring partnership opportunities” for mid- and late-stage development of both assets. Jain said clinical activities are expected to be “largely complete by the end of 2026,” with approximately $10 million to $15 million of R&D expected in full-year 2026 “as we wind down these activities and seek partners.” Farid said Schrodinger plans to release an early access version this summer of Bunsen, an “agentic AI co-scientist” designed to autonomously execute complex molecular discovery workflows. He said Schrodinger’s material science and therapeutics teams have already been using Bunsen internally, and that it has had an “extraordinary” impact on productivity for both expert and non-expert users. In Q&A, Farid linked Bunsen to the company’s throughput-based licensing approach, saying increased automation could expand demand and “the need for our customers to license that technology on a larger scale.” CTO and COO Patrick Lorton added that customers are already using more general agentic AI tools alongside Schrodinger’s technology, but said Schrodinger built Bunsen because its tools are “such an expert tool” and require a model trained specifically on how to use them efficiently. Lorton said the company is “building an agentic layer on top of LLMs” and is not tied to a single large language model provider; he said the company “regularly work[s] with, and talk[s] with Anthropic” as Bunsen is built. Asked about go-to-market and pricing, Farid said details are still being worked out during early access rollouts with close partners, including validation efforts to maximize reliability. He said the company expects the technology to become “ubiquitous” and broadly available to customers over time, but said pricing decisions will depend on feedback during the early access period. Operating expenses in Q1 were $78 million, down 4% from $82 million a year earlier. Jain attributed the decrease to efficiency measures and disciplined expense management across R&D and G&A, while continuing to invest in sales and marketing. Other expenses totaled $11 million, which Jain said was primarily due to changes in fair value of equity investments and net interest income/expense items. Net loss was $60 million, unchanged from Q1 2025. Schrodinger maintained its full-year 2026 guidance. Jain reiterated expectations for: ACV of $218 million to $228 million (10% to 15% growth) Drug discovery revenue of $55 million to $65 million, with quarterly variability due to milestone and collaboration timing For Q2 2026, the company guided to $19 million to $23 million in ACV, explicitly excluding contribution ACV, and noted that Q2 2025 ACV of $23.3 million included $5 million of contribution ACV related to the Gates Foundation grant. Jain said the full-year ACV range could include some contribution ACV, but the company did not quantify that component. Schrödinger, Inc is a life sciences and materials discovery company that specializes in the application of physics-based computational platforms to accelerate drug discovery and advanced materials design. Founded in 1990 by Professor Richard A. Friesner, Schrödinger has developed a suite of proprietary software tools—such as Maestro for molecular modeling, Glide for molecular docking and Jaguar for quantum chemistry calculations—that enable scientists to predict molecular behavior with high accuracy. The article "Schrodinger Q1 Earnings Call Highlights" was originally published by MarketBeat.
Investor releaseQuarter not tagged2026-05-06A Look At Schrödinger (NasdaqGS:SDGR) Valuation After Q1 Earnings And Hosted AI Software Push
Simply Wall St.
A Look At Schrödinger (NasdaqGS:SDGR) Valuation After Q1 Earnings And Hosted AI Software Push
Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Schrödinger (SDGR) is back in focus after first quarter earnings. Revenue held near prior year levels, and sales, net loss and per share figures gave investors fresh data on the company’s current spending profile. See our latest analysis for Schrödinger. The stock has seen an 11.14% 1 month share price return and a 5.15% 7 day share price return. However, the year to date share price return shows a 28.42% decline and the 1 year total shareholder return reflects a 45.37% loss, indicating that momentum has been fading over a longer horizon. If Schrödinger’s recent moves have you reassessing the space, this can be a good moment to scan for other opportunities in AI focused healthcare, starting with 35 healthcare AI stocks With analysts seeing room between the current US$12.87 share price and their targets, and the business still reporting losses, the real question is whether Schrödinger is undervalued today or if the market is already pricing in future growth. With Schrödinger’s most followed narrative pointing to a fair value of $21.38 against a last close of $12.87, the gap in expectations is clear and centers on how future growth and margins could reshape the earnings profile. Read the complete narrative. Curious what kind of revenue climb and margin shift are baked into that view? The narrative leans on a specific growth pace, a profit swing, and a punchy future earnings multiple. The exact mix behind that $21.38 figure might surprise you. Result: Fair Value of $21.38 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this hinges on software margins and biotech demand. Pressure from hosted revenue mix shifts or weaker client budgets could quickly challenge that 40% undervalued narrative. Find out about the key risks to this Schrödinger narrative. The 40% undervalued fair value hinges on future earnings, but the current P/S ratio tells a tougher story. At about 3.7x sales versus a fair ratio of 1.9x and a peer average of 1.5x, the stock screens as expensive today. Which signal do you put more weight on? See what the numbers say about this price — find out in our valuation breakdown. Mixed messages on value and risk so far? Act while the data is fresh and weigh it aga…Read full documentShow less
Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Schrödinger (SDGR) is back in focus after first quarter earnings. Revenue held near prior year levels, and sales, net loss and per share figures gave investors fresh data on the company’s current spending profile. See our latest analysis for Schrödinger. The stock has seen an 11.14% 1 month share price return and a 5.15% 7 day share price return. However, the year to date share price return shows a 28.42% decline and the 1 year total shareholder return reflects a 45.37% loss, indicating that momentum has been fading over a longer horizon. If Schrödinger’s recent moves have you reassessing the space, this can be a good moment to scan for other opportunities in AI focused healthcare, starting with 35 healthcare AI stocks With analysts seeing room between the current US$12.87 share price and their targets, and the business still reporting losses, the real question is whether Schrödinger is undervalued today or if the market is already pricing in future growth. With Schrödinger’s most followed narrative pointing to a fair value of $21.38 against a last close of $12.87, the gap in expectations is clear and centers on how future growth and margins could reshape the earnings profile. Read the complete narrative. Curious what kind of revenue climb and margin shift are baked into that view? The narrative leans on a specific growth pace, a profit swing, and a punchy future earnings multiple. The exact mix behind that $21.38 figure might surprise you. Result: Fair Value of $21.38 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this hinges on software margins and biotech demand. Pressure from hosted revenue mix shifts or weaker client budgets could quickly challenge that 40% undervalued narrative. Find out about the key risks to this Schrödinger narrative. The 40% undervalued fair value hinges on future earnings, but the current P/S ratio tells a tougher story. At about 3.7x sales versus a fair ratio of 1.9x and a peer average of 1.5x, the stock screens as expensive today. Which signal do you put more weight on? See what the numbers say about this price — find out in our valuation breakdown. Mixed messages on value and risk so far? Act while the data is fresh and weigh it against the company's 2 key rewards and 1 important warning sign If Schrödinger has sharpened your focus, do not stop here. Use fresh data while it is top of mind and line up your next watchlist candidates. Spot potential value opportunities early by reviewing the 51 high quality undervalued stocks before others start paying attention. Prioritize resilience by scanning the 72 resilient stocks with low risk scores to see which companies score well on stability and lower risk profiles. Hunt for quality beyond the usual tickers by checking the screener containing 25 high quality undiscovered gems that may not yet be widely followed. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SDGR. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]
Investor releaseQuarter not tagged2026-05-06Schrödinger, Inc. Q1 2026 Earnings Call Summary
Moby
Schrödinger, Inc. Q1 2026 Earnings Call Summary
Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by broad-based growth in ACV, reflecting usage scale-ups among top 20 pharma customers and the onboarding of new products. The $2.3 billion acquisition of Ajax Therapeutics by Eli Lilly serves as a major validation of the company's physics-based computational platform and its ability to co-develop high-value molecules. Management is executing a deliberate shift from on-premise to hosted licensing to align revenue with operational growth and create a more predictable financial profile. The platform's competitive advantage is defined by its ability to generate 'ground truth' simulations that overcome the data scarcity limitations of standard AI models. A new agentic AI co-scientist, Bunsen, is being introduced to automate complex discovery workflows and lower the barrier for non-expert users to deploy sophisticated technology. The biopharmaceutical funding environment is showing signs of improvement, leading to increased demand for 'predict-first' computational paradigms that reduce R&D time and costs. Full-year ACV guidance of $218 million to $228 million is maintained, assuming 10% to 15% growth despite the near-term revenue headwinds from the hosted transition. The company expects to reach a 75% hosted software mix within a three-year period, which will transition revenue recognition from upfront to ratable. Schrdinger is actively exploring partnership opportunities for the mid- and late-stage development of its wholly-owned programs SGR-1505 and SGR-3515 as it completes current Phase I studies, consistent with a strategy of partnering programs rather than advancing them further into the clinic internally. Operating expenses are projected to be lower than 2025 levels due to disciplined expense management and the winding down of internal clinical trial costs. The summer release of the Bunsen early access version is expected to drive higher utilization of throughput-based licensing by accelerating the design-predict-make-test-analyze cycle. The company introduced 'contribution revenue' as a separate line item to improve visibility into core software and drug discovery performance. Software gross margin declined to 69% from 80% year-over-year, a direct result of the planned transition t…Read full documentShow less
Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by broad-based growth in ACV, reflecting usage scale-ups among top 20 pharma customers and the onboarding of new products. The $2.3 billion acquisition of Ajax Therapeutics by Eli Lilly serves as a major validation of the company's physics-based computational platform and its ability to co-develop high-value molecules. Management is executing a deliberate shift from on-premise to hosted licensing to align revenue with operational growth and create a more predictable financial profile. The platform's competitive advantage is defined by its ability to generate 'ground truth' simulations that overcome the data scarcity limitations of standard AI models. A new agentic AI co-scientist, Bunsen, is being introduced to automate complex discovery workflows and lower the barrier for non-expert users to deploy sophisticated technology. The biopharmaceutical funding environment is showing signs of improvement, leading to increased demand for 'predict-first' computational paradigms that reduce R&D time and costs. Full-year ACV guidance of $218 million to $228 million is maintained, assuming 10% to 15% growth despite the near-term revenue headwinds from the hosted transition. The company expects to reach a 75% hosted software mix within a three-year period, which will transition revenue recognition from upfront to ratable. Schrdinger is actively exploring partnership opportunities for the mid- and late-stage development of its wholly-owned programs SGR-1505 and SGR-3515 as it completes current Phase I studies, consistent with a strategy of partnering programs rather than advancing them further into the clinic internally. Operating expenses are projected to be lower than 2025 levels due to disciplined expense management and the winding down of internal clinical trial costs. The summer release of the Bunsen early access version is expected to drive higher utilization of throughput-based licensing by accelerating the design-predict-make-test-analyze cycle. The company introduced 'contribution revenue' as a separate line item to improve visibility into core software and drug discovery performance. Software gross margin declined to 69% from 80% year-over-year, a direct result of the planned transition to ratable revenue recognition for hosted licenses. The Ajax acquisition proceeds are not included in current guidance; the company expects to receive approximately 6% of the undisclosed upfront cash payment upon closing. Drug discovery revenue saw a significant increase to $22.9 million due to accelerated recognition of deferred revenue from collaboration progress and one program discontinuation. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Bunsen acts as a 'co-scientist' that eliminates barriers to large-scale deployment for both expert and non-expert users. Because Schrodinger uses a throughput-based rather than seat-based licensing model, increased efficiency from AI directly drives higher license demand. While most conversions happen at renewal, management successfully transitioned several large multi-year on-premise contracts to hosted ahead of schedule in Q1. All new customers are now being deployed as hosted in the first instance to accelerate the 75% adoption target. Management emphasized that the drug discovery business is highly synergistic with software, providing the 'real-world' validation necessary to refine the platform. The company will no longer take programs into the clinic internally, instead seeking early-stage partnerships like the recent Novartis deal to create value without clinical risk.
TranscriptFY2026 Q12026-05-05FY2026 Q1 earnings call transcript
Earnings source - 112 paragraphs
FY2026 Q1 earnings call transcript
Thank you for standing by. Welcome to Schrödinger's conference call to review first quarter 2026 financial results. My name is Rob, and I'll be your operator for today's call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. Please be advised that this call is being recorded at the company's request. Now I would like to introduce your host for today's conference, Ms. Jaren Madden, Chief Corporate Affairs Officer and Head of Investor Relations. Please go ahead.
Thank you, good afternoon, everyone. Welcome to today's call, during which we will provide an update on the company and review our first quarter 2026 financial results. Earlier today, we issued a press release summarizing these results and progress across the company, which is available on our website at schrodinger.com. During today's call, management will make statements that are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation, statements related to our outlook for the full year 2026, our plans to accelerate the growth of our software business and advance our therapeutics portfolio, the clinical potential and properties of our and our collaborators' compounds, the use of our cash resources, as well as our future expenses.
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 due to a number of important factors, including the considerations described in the Risk Factors section and elsewhere in the filings we make with the SEC, including our Form 10-Q for the quarter ended March 31, 2026. We caution you that except as required by law, we may not update them in the future, whether as a result of new information, future events, or otherwise. Also included in today's call are certain non-GAAP financial measures.
These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and should be considered only in addition to and not a substitute for or superior to GAAP measures. Please refer to the tables at the end of our press release, which is available on our website for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. This afternoon, Ramy Farid, our CEO, will review our recent progress. Richie Jain, Chief Financial Officer, will discuss our financial results in 2026 guidance. Karen Akinsanya, President, Head of Therapeutics R&D and Chief Strategy Officer, Partnerships, will review our therapeutics portfolio. Pat Lorton, our Chief Technology and Chief Operating Officer, will join us for the Q&A. With that, I will turn the call over to Ramy.
Thanks, Jaren, and thank you everyone for joining us today. We are off to a strong start this year, delivering $28.4 million in ACV, a 12% increase compared to Q1 last year. Our growth was broad-based, reflecting usage scale-ups, new customers, and growth from new products. Drug discovery revenue of $23 million was also a significant contributor in the quarter. Lilly's announced $2.3 billion acquisition of Ajax Therapeutics, a company we co-founded and in which we have an approximately 6% equity stake, is the latest example of a multi-billion dollar deal for a Schrödinger co-developed molecule and speaks to the power of our platform. We are pleased with our momentum transitioning customers to hosted licensing. We are seeing positive conversion dynamics upon contract renewals and with new products that are hosted.
In limited cases, we are also seeing the early conversion of multi-year on-premise deals to hosted ahead of the scheduled renewal date. We are encouraged by the improving biopharmaceutical funding environment. While macroeconomic uncertainty remains, it is clear to us that there is a growing recognition of the critical importance of our computational platform as R&D organizations embrace the predict first computational paradigm that offers a demonstrated path toward improving probability of success and reducing the time and cost of molecular discovery. We remain poised to benefit from the evolving regulatory environment with our Predictive Toxicology initiative set to address a key element of the FDA's focus on reducing animal testing and broadening the use of computational methods. Our market-leading position is built on the inherent accuracy and scalability of our physics-based approach and is further reinforced by our unmatched track record.
While standard AI models are limited by the scarcity of training data, our platform generates the ground truth simulations, accuracy, and scale required for AI to precisely navigate the vastness of chemical space. By combining the accuracy of physics with the speed and scalability of AI, we are able to evaluate key properties of billions, even approaching trillions of molecules with a level of accuracy impossible to achieve through models trained solely on experimental data. This capability enables our customers to integrate computation more deeply into their workflows, driving the consistent demand that underpins our long-term growth trajectory. We are committed to technology leadership and evolving our platform to meet customer needs. We are very excited about the upcoming release this summer of an early access version of Bunsen, our new agentic AI co-scientist.
Designed to autonomously execute complex molecular discovery workflows, Bunsen enhances productivity and accelerates the design, predict, make, test, analyze cycle that drives modern molecular discovery. Our material science and therapeutics teams have been successfully using Bunsen internally. We are excited to offer this capability to our customers. Our throughput-based licensing model is well-positioned to capture the value of this expanding utilization. The repeated success of our co-invented molecules and the continued progress of our therapeutics portfolio place us at the forefront of a digital transformation, moving material science and life science industries toward a more efficient, predict first, computationally driven model of discovery. We continue to deliver the technology that transforms the way molecules are discovered. We look forward to updating you on our progress throughout the year. I'll now turn the call over to Richie.
Thank you, Ramy, and good afternoon. ACV in the first quarter was $28.4 million, which represents 12% growth compared to $25.4 million in Q1 2025. On a trailing 4-quarter basis, ACV reached $201 million. As a reminder, we believe ACV provides important visibility into the performance of our business during a period where we expect recognized revenue to be highly variable due to the accelerated transition to hosted. ACV growth was primarily driven by our top 20 pharma customers as these customers broaden their platform access, onboard new products, and integrate our platform more deeply into their R&D organizations. Starting this quarter, we are breaking out contribution revenue as a separate line item to provide better visibility into our software and drug discovery performance.
To facilitate year-over-year comparisons, we have reclassified our historical results to reflect this change as contribution was previously included in software and drug discovery revenue. Total revenue for the first quarter of 2026 was $58.6 million. Software revenue was $35.6 million, of which hosted revenue contributed $12.1 million, or 34% of the software total, compared to 24% in the first quarter of 2025. On a trailing four-quarter basis, hosted revenue increased to 27% of the software total. As we've discussed, the year-over-year software revenue comparison reflects our planned accelerated transition to hosted licenses, for which revenue is recognized ratably over the life of the contract rather than upfront. While this dynamic creates a near-term headwind on recognized revenue, over the long term, it will better align revenue with operational growth, resulting in a more predictable financial profile.
Software gross margin was 69% for the quarter, compared to 80% in Q1 2025, reflecting our planned accelerated transition to hosted software licensing. Contribution revenue was $0.1 million for the period, compared to $4.3 million in Q1 2025. The decline is driven by completion of the initial funding by the Gates Foundation in support of our predictive toxicology initiative. Drug discovery revenue was $22.9 million, compared to $10.2 million in the same period last year. The increase is due to the accelerated recognition of deferred revenue associated with the continued progress of the company's collaboration portfolio and the discontinuation of one collaboration program. Total operating expenses for Q1 were $78 million, a decrease of 4% compared to $82 million in Q1 2025.
This reflects the impact of our efficiency measures and disciplined expense management across R&D and G&A while we continue to invest in sales and marketing to drive long-term growth. Total other expenses were $11 million, primarily due to changes in fair value of equity investments and interest income expense. Net loss for the quarter and for the first quarter of 2025 was $60 million. We ended the quarter with a strong balance sheet of $406 million in cash and marketable securities. We anticipate receiving our portion of the upfront cash payment from the Ajax Lilly transaction when the deal closes. The fully diluted share count was 74 million. Today, we are maintaining our full year 2026 guidance.
For the full year, we continue to expect ACV to be in the range of $218 million-$228 million, representing 10%-15% growth. We anticipate drug discovery revenue between $55 million and $65 million for the year. As a reminder, drug discovery revenue has quarterly variability due to the collaboration and milestone-driven nature of the business. Our operating expenses are expected to be less than 2025 as we maintain overall expense discipline and make select investments in sales and marketing to support growth and the release of new products. We anticipate our clinical activities will be largely complete by the end of 2026 and to incur approximately $10 million-$15 million of R&D for full year 2026 as we wind down these activities and seek partners for mid- and late-stage clinical development.
Our $19 million-$23 million guidance range for Q2 2026 ACV excludes contribution ACV compared to $23.3 million from Q2 2025 that included $5 million of contribution ACV. I would like to hand the call over to Karen.
Thank you, Richie. Our therapeutics business continues to create significant value, most recently highlighted by Lilly's planned acquisition of Ajax Therapeutics for $2.3 billion. By combining Ajax's deep expertise in blood cancer and JAK family structural biology with our industry-leading track record in computational drug design, we discovered AJ11095, a first-in-class type 2 JAK inhibitor, which is the primary driver of the announced deal. Over a 10-year span, Schrödinger has co-founded multiple companies, including Ajax. There have been seven major transactions and liquidity events related to molecules we co-discovered across our biotech collaboration portfolio, including Lilly's acquisitions of Morphic, Petra, and Ajax, the sale of Nimbus' ACC and TYK2 inhibitors, and the successful IPOs of Relay and Structure. The success of these companies and multi-billion dollar exits establishes unquestionable validation of the impact of computational physics-based design and our biotech and pharma collaboration business model.
The emerging results from our maturing therapeutics portfolio span internal discovery programs licensed to pharma through to co-invented molecules with late-stage clinical readouts like Takeda's zasocitinib, which completed phase III trials earlier this year. To date, our equity and business development activities have resulted in close to $700 million of cash, as well as potential future preclinical, clinical, and commercial milestones of up to $5 billion and royalties on 15 programs. Our wholly owned programs also represent future value capture opportunities. As Ramy mentioned, the therapeutics team has integrated our new agentic solution, Bunsen, across the combined portfolio. Bunsen's ability to execute our powerful predictive models and orchestrate multi-step, multi-skill drug discovery workflows enables us to accelerate the design, predict, make, test, analyze cycle.
This is an exciting development that we expect to have a major impact on the productivity of our team and teams across biopharma once they get access. Turning to our wholly owned portfolio, in April, we presented initial clinical data for SGR-3515, our Wee1/Myt1 inhibitor, at the AACR annual meeting. As a reminder, this is an ongoing phase I dose escalation study with primary objectives of safety, tolerability, and pharmacokinetics. The data presented demonstrate that SGR-3515 was generally well-tolerated on an intermittent dosing schedule of 3 days on and 11 days off. Importantly, the initial clinical biomarker data validated our hypothesis that dual inhibition can overcome compensatory resistance mechanisms. We observed encouraging early anti-tumor activity with a 65% disease control rate among evaluable patients treated at doses of 100 milligrams or higher.
We also remain encouraged by the progress of SGR-1505, our MALT1 inhibitor. We continue to see a 100% response rate and durable responses in patients with Waldenström's macroglobulinemia, where the drug has both FDA Fast Track and Orphan Drug Designations. As we complete these phase I studies, we are actively exploring partnership opportunities to continue the mid and late-stage development of SGR-1505 and SGR-3515. Our track record of generating differentiated discovery stage breakthroughs, clinic-ready molecules, and valuable data packages is well established. We believe our drug discovery expertise, coupled with the use of our computational platform at scale, will enable us to continue unlocking high-potential target product profiles and drive the next wave of successful collaborations and transactions. I'll now turn the call back to Ramy.
Thank you, Karen. As you have heard, we are off to a strong start in 2026. I want to thank our employees for their hard work and commitment to our mission. We are pleased with the momentum across the company and look forward to updating you on our progress throughout the year. At this time, we are happy to take your questions.
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Scott Schoenhaus from KeyBanc Capital Markets. Your line is open.
Hey, guys. This is Steve on for Scott. Can you talk more about how agentic AI is driving our utilization of high compute calculations and how this is impacting your business? What's the upside potential as adoption of it increases? How would this show up in your customer contracts? Thanks.
Absolutely. Yeah. I assume you're referring to the announcement we just made about the release this summer of Bunsen, an agentic AI system for automating complex workflows. We've already been using Bunsen internally for a number of months. The impact that it's had already on productivity of both our expert modelers and computational chemists as well as non-experts has been extraordinary. We're very excited about it. What it's doing is eliminating sort of barriers to large scale deployment of the technology, and it's very much as we describe it, a co-scientist, a companion that improves efficiency and productivity, again, both for experts and non-experts.
Our collaborators who we're working with are already recognizing the impact, this improved efficiency and our ability to actually use the technology on a larger scale and in a more effective way. Again, as we said, we'll be releasing it this summer. Already feedback that we've been getting as we start to talk about the imminent release of Bunsen has been very positive. I think there's a lot of excitement about the potential.
The last thing I'll say is, and we've talked about this actually, in the last earnings call and we mentioned it again today, that our throughput-based licensing, that is not seat-based licensing, but throughput-based licensing, of course, benefits from solutions like this where an agentic AI has the potential to increase the demand for the technology and the need for our customers to license that technology on a larger scale. Pat, is there anything you wanted to add? Did I cover it?
I think you pretty much covered it.
Yeah.
I think the one thing I would add is that we are seeing customers using more general generic agentic AI, and they are already having access to higher throughput of our technology using other LLM providers. That said, the reason we've built Bunsen is because our tools are such an expert tool that we feel that the LLM has to be trained specifically to how to use our tools to optimize it and to run in the most efficient way, and we think the solution we're putting together will be best for that.
Yeah.
Great. Just one follow-up. You mentioned, you were working with Anthropic last quarter. Just any update on that partnership or collaboration, whatever you, however you wanna refer to it?
Sure. Pat, do you wanna give an update?
Sure, yeah. We regularly work with, and talk with Anthropic as we're building out Bunsen. It is one of the top LLM providers. We are not tied to a single LLM. We are open to using whatever our customers prefer or whatever we think would be working best. We're building an agentic layer on top of LLMs. Anthropic is, you know, obviously a fantastic provider in this space and we've learned a lot from them. We're really excited to continue to work with them.
Okay, great. Thank you.
Thank you.
Your next question comes from the line of Mani Foroohar from Leerink Partners. Your line is open.
Hey, guys. A quick question. When you think about the % of customers or % of contract value that are previously on-prem that are renewing, in 1Q, recognizing that we're often recycled for many, can you give us a sense of what % we're able to convert over to hosted? Just so you can give us a little bit of real-time quantitative feedback on how that transition is going.
Yeah. Richie?
Yep, I'll cover that. Thanks, Mani, for the question.
Thanks.
For the quarter, we were pleased with the progress for the revenue. Hosted revenue was 34% of the software revenue in the quarter and 27% on a trailing 4-quarter basis. That compares to 23% just a quarter ago. We're pleased with the early progress. Anecdotally, we're aiming to transition from on-prem to hosted upon the contract date, that's what we achieved in the quarter as well as all new customers, we're deploying them hosted in the first instance. Overall, we're pleased with the first quarter and, you know, still have our same expectations for the year and the 3-year outlook, getting to 75% by the 3-year period.
I think it's also worth mentioning that in a few cases, which I think is quite encouraging, is that we were able to transition some customers to hosted before their renewal dates. Richie, is there worth, sorry.
Yeah. While the primary emphasis has been on transitioning at renewal, in a few instances for larger multiple year contracts that were on-premise, we were able to work with those customers and transition over to hosted well in advance of the renewal date. That you'll start there was modest impact of that in Q1, but you'll start to see more impact in that in Q2 onwards.
Great. A quick follow-up. We're seeing substantial pickup in M&A activity in private biotech markets, Ajax being one example. How much velocity would you have to see in that space to start tinkering with how you think about guidance for drug discovery revenue, given the broad portfolio of co-founded, partnered, et cetera, companies and your equity exposure there?
Yeah. I mean, first of all, we can certainly, and Karen, I'll hand it over to you to answer. Let me just say, on the software side, we're also quite encouraged. We definitely, things look a lot better this year or this quarter, I should say, so far this year compared to last year where we saw lots of biotech companies, of course, shutting down or very significantly reducing their discovery budgets. We're not seeing that. We're even seeing a pickup in new customers, so that's very encouraging and that sort of, you know, dynamic is the premise of your question is certainly impacting, we think the software business. As far as the drug discovery business, Karen, I think you have some thoughts about that?
Yeah, sure. Happy to share. So as you know, we have always had a lot of interest in partnerships, both obviously with the companies we've co-founded, you mentioned Ajax, and prior companies we've co-founded. I will say that your comment about the private market and companies is who are still in stealth even as well as public companies are still reaching out very actively to Schrödinger with respect to collaboration on programs that are in their pipelines, but also on new programs. We remain very enthusiastic about the potential for new collaborations. Obviously, we're not guiding to any specific BD event, but the momentum and the interactions remain very robust both with biotech and with pharma.
Thanks. That's helpful.
Your next question comes from the line of Brendan Smith from TD Cowen. Your line is open.
Great. Thanks for taking the questions, guys. Congrats on all the progress here. Actually wanted to first quickly ask about the Predictive Toxicology launch, if you can maybe just give us a sense of, if not relative revenue breakdown between the legacy business and that, and then Predictive Toxicology, at least maybe how new customer adds there are tracking. Just quickly, I guess on the upcoming Bunsen launch, how should we really think about this go-to-market strategy for the agent? I know you gave us some good color earlier. I guess, is this just something that you expect to kind of roll out as an add-in with existing customers, or is there kind of a whole separate base you could potentially reach with this?
I guess just any kind of go-to-market strategy there, stuff would be super helpful. Thanks.
Yep, we can cover both those. Thanks for the questions. With regard to Predictive Toxicology, feedback continues to be really very positive for the results of evaluations now that are being kicked off. It's very clear that there's significant interest in the technology, but also that prospective testing of it in our customers' hands is validating the kind of results that we were seeing when we were developing the technology and using it also prospectively internally. That's really quite gratifying to see. That continues to go well. With regard to Bunsen and the go-to-market strategy and you asked about the base, that's a really good question because, and I sort of alluded to this in talking about it earlier.
Certainly this in some sense democratizes access to very sophisticated technology, and you can appreciate what kind of impact that can have on the business. When this kind of technology, you know, previous to systems like this may just have been inaccessible and, you know, it would take years of training. You know, you need an advanced degree, you're not sure, or you're using the technology and not using it quite right and not getting very good results. That's not a good thing for anybody, for a customer or for us. This obviously, you know, very directly addresses that. This is very similar to image processing. That used to be a thing that was not available to very many people, only people who were expert users at Photoshop, right?
You know, to remove red eye or remove somebody who is in the background of your vacation photo was really difficult. Now you just circle the area and say, "Remove the background," and it's done. It's the same basic idea, now all of a sudden, a very sophisticated image processing or image manipulation is available to the masses. We expect the same sort of thing, well, not masses, but you understand, to non-experts in research. Pat, anything to add to that?
No, I think that sums it up great. The other thing I would just highlight on top of adding additional customers is one thing that is really limiting. I think we've discussed in the past that the amount of computational chemists we have per project at Schrödinger is a lot higher than the industry average. That's part of the reason behind our very high success rate. One thing that's very limiting in our customers is they simply don't have enough people who can run this to get it done, even if they have experts who are good enough. Simply getting this in the hands of those experts and allowing them to get a multiple of their work done, similar to how the agentic coding tools have allowed developers to work much, much faster.
We think even those experts being able to run much, much faster, they'll be able to consume a lot more of our throughput-based licensing before we even have it broadened to a broader user base.
Exactly.
Got it. Sounds good. Thank you, guys.
Thank you.
Your next question comes from a line of Michael Ryskin from Bank of America. Your line is open.
Hey. Hey, thanks for taking the question, guys. First I wanna dig into sort of the new way you're guiding ACV. I wanna talk about the contribution ACV. You called out, you know, for the second quarter, your guide is $19-$23, and that's excluding any contributions. Is that your way of saying we, you know, we don't know what the contribution ACV will be, or are you actually expecting it to be, you know, zero because it was, you know, relatively modest in the first quarter? Sort of the same question for the full year. Anything you could tell us in terms of how much of the full year ACV is made up of that or how much there was in all of 2025?
Yeah. Richie?
Yep. The guidance for the Q2 is $19 million-$23 million, as you noted. The reason we explicitly called out the comparison to last year, Q2 of 2025 was $23.3 million, of which $5 million was contribution ACV related to our grant with the Gates Foundation. We just wanted to call out when you're looking quarter to quarter that on a commercial business or excluding contribution, we're still projecting growth for this quarter. For the full year range, $218 million-$228 million of ACV, we do expect potentially some contribution ACV in there. That's a component of it, in the full year number.
You don't want to break that out or quantify that?
Correct.
Okay. Okay. All right. Fair enough. In terms of Ajax, just how should we think about that flowing through the P&L, and in terms of, you know, use of proceeds, anything like that? Is that in your guide for the year? I don't believe it is. Just timing and pacing of that.
Richie, you should answer that, but let me just say, just to remind, that our equity stake is around 6%. Just wanted to throw that in there. Richie, please go ahead and answer.
The Ajax sale was not contemplated in our guidance framework. Obviously it's a private company sale that we couldn't have included, but its impact to our financials will mostly be to cash. Our cash position at the end of the quarter was $406 million. As Ramy just noted, we own about a 6% equity stake in Ajax, when the upfront portion is received by Ajax, we will receive our 6% of that approximately. The impact to us will be cash. The upfront amount was not disclosed in the Ajax Lilly announcement, as we receive the cash, we'll be able to reflect it in the balance sheet.
But, but the-
Beyond the upfront
Yeah, just in terms of how you think about.
There's also, you know.
Yeah.
There's also milestones, you know, kinda near term and downstream milestone opportunities, in which we would continue to have that 6% participation.
Okay. I guess my question is, does that change in terms of how you think about investment priorities in the second half or just, you know, the fact the balance sheet's gonna be a little bit stronger? Any early thoughts on that or just gonna wait and see for now?
I would say more the latter. I think our path to profitability between growth in software and drug discovery as well as expense management, over the three-year window, that was all based on our cash position at the time. This is just upside to that. We will, once we receive the cash, kind of revisit if anything changes, but I would expect our three-year outlook at the time to be unchanged.
Okay. All right. Thank you.
Thanks.
Your next question comes from the line of Michael Yee from UBS Securities. Your line is open.
Great. Thanks. We had 2 questions. First, maybe for Ramy. Just thinking about your overall P&L, you've got some very attractive 70% gross margins. Overall as an entity, you're EBITDA negative and running operating losses. Given the general shift to reduce focus on moving things to later preclinical or in clinical and looking to partner things, how would we expect the overall operating expense structure to potentially change? In other words, what % of your R&D do you estimate is going towards those types of programs? If I back that out, could think about a more appropriate run rate of where you think your R&D could. That's question number 1. Appreciate, I think you have guided to sort of be EBITDA profitable in 2028, that's helpful.
Wanted to know what % of R&D is related to drugs. The second question relates as a follow-up. I estimate, given I cover Lilly, that Ajax could be like $1 billion upfront. Is the 6%, I think you said is not in your current cash guidance, so we should take 6% of whatever our estimate is and apply that upside to the cash. Does that also, is that booked in the income statement and flows through the income statement? Thank you.
Absolutely. Richie, do you wanna cover the second? Yeah. I'll.
Sure. Exactly. We can't comment on the size of the upfront, but the 6% equity stake we have is not in our cash guidance. I would expect it to run through our P&L as a non-operating gain.
Okay. With regard to the question about R&D and drug discovery. I think we've been very clear about this, that the drug discovery part of our business, which has been in existence for a long time, since the, even a little bit before, but around the founding of Nimbus over 15 years ago, has been an incredibly important part of our business and is highly synergistic with our software business.
We've shown, I think, very clearly that the success, the extraordinary success of these drug discovery partnerships, Nimbus, Morphic, Relay, Structure, Ajax, have had such a huge impact on validating our platform, and they've also had a huge impact on helping us understand what it is that we should be working on, how we should be advancing the platform to have sort of the maximum impact on projects. That will continue to the extent that there is still a huge amount of work to be done in advancing the field. We're obviously incredibly excited about the accomplishments that we've made, and it's really been transformative. We've transformed the way molecules are discovered. That was our mission. I think we've been accomplishing that.
You can see through this initiative, like the Predictive Toxicology initiative and many other initiatives like that, there's more work to be done, and we can continue to improve the way molecules are discovered, both in material science and life science. Again, that's a long way of saying that these businesses are highly synergistic, and it will continue to be an incredibly important part of our overall business model. Karen, I don't know if you wanna add anything to that.
As we've shared in the past, the vast majority of our portfolio, the combined portfolio of collaborations with our co-founded companies, with biotechs and with large pharma, are an important part of the business, as Ramy just described, both from a scientific point of view, but also, as you saw this quarter, generating revenue. I would say that the vast majority of our activities actually in the R&D space are actually those collaborations. It's a small portion of the overall effort that is allocated to wholly owned research. As you heard previously on prior calls, we will not be taking programs into the clinic.
We are also obviously partnering programs early, as you saw with the Novartis deal, partnering a program that hadn't even reached lead optimization yet. You know, our investment in R&D is partly obviously on the science side, as I'll say again, it's also to create value. As you heard, we have 15 programs now with royalties on sales and revenue coming from these programs. As you heard across the whole portfolio, close to $700 million generated from collaborative activities in the R&D drug discovery efforts.
Thanks, Karen.
Got it. We have guidance for 2028. That's helpful and positive. Thank you.
Yep. Thanks.
Again, if you'd like to ask a question, press star, then one on your telephone keypad. Your next question comes from a line of Evan Seigerman from BMO Capital Markets. Your line is open.
Hi there. This is Connor on for Evan. Thanks for taking our question. We just have a follow-up on how we should think about the rollout of Bunsen and maybe kind of the phasing over the next couple of years. Of course, you have the upcoming early access launch this summer. We're just, you know, trying to think about maybe which types of accounts you'll be sharing access with in kind of the early summer launch. Maybe as we think longer term, thinking about kind of, you know, understanding the throughput-based licensing, we're wondering kind of the functional rollout of Bunsen. Will this be kind of a premium add-on or come included as a part of your standard software offering? Thank you.
Yeah. We're still working out all of the details of that, as we typically do with our early access versions of our technology. We work with our close partners, and we will do that the same thing here, where we can work together to work out the sort of mechanics of integrating it into their workflows, but also checking on the science. Everybody listening to this call and all of us have had experiences that are mixed with LLMs. Sometimes they're extraordinary, sometimes they do some pretty crazy things. There's a lot of work that has to be done to make sure that we optimize and maximize the former and minimize the latter. That requires working with close partners, of which, again, we have a large number.
As far as the future, our expectation, of course, is that this will be ubiquitous and, you know, this technology will be available to all of our customers. Exactly how we price it is still to be worked out. That has a lot to do with this feedback that we get as we roll out this early access version. Yep. I think that's as much as we can say unless Pat Lorton has anything more to add.
Nope, that covered it perfectly.
Yeah. Yep. Great.
Thanks.
Thank you.
Your next question comes from a line of Matthew Hewitt from Craig-Hallum. Your line is open.
Good afternoon. Thanks for taking the questions. Maybe first up, given that Q4 is such a big renewal period for you, and you spoke to it earlier that you're starting to see some of those earlier conversions, is it your hope and intention that you can get through some of that or maybe half of that before you get to Q4 just to kinda ease the burden or the rush that you would see at year-end? How should we be thinking about maybe the conversion over the course of the next couple of quarters before you get to Q4?
Richie, do you wanna try?
Yes.
Yep.
Let me start. Hey, Matt.
Yeah.
Thanks for the question. I think the examples that we gave were more anecdotal and not the base case, but they were large contracts, and they, we had a dedicated effort, I think, to try to convert those in advance. More broadly, though, the natural time for us to address a transition is on the contract renewal date. I still would expect Q4 to be our largest quarter of the year for ACV. Having said that, I think you'll see, you know, where there's opportunities, we will pull them forward ahead of the renewal date. Sometimes that relates to a new product, sometimes that relates to a new offering.
I think here, on the margin, you may see we'll do what we can to kind of pull forward, and drive ahead of, Q4, but I'd still expect Q4 to be our largest quarter of the year. Yeah.
Got it. Maybe separately, with the strategic shift where you're not going to be taking internally discovered molecules into the clinic, besides the ones that you've already got there, will you provide an update on how that is progressing? I mean, will you give us a, "Hey, we've discovered," or, "We've got 17 molecules that are, that we're working on right now," and maybe three quarters later, "Now we're up to 20"? Like, how will we monitor, how will we know the progress that you're having on that internal molecule discovery side? Thanks.
Yep. Karen?
I mean, I think we have in the past kept our pre-LO pipeline relatively quiet for a number of reasons. Obviously, you want to be progressing the program before you start announcing the identity of the program or the progress. What we have been announcing, obviously, is the deals that we've been doing. I will say we don't plan to kind of expand and expand and expand the size of this portfolio without actually transacting some of these programs as they move through the discovery space. Again, as you saw us do with Novartis, we felt that those programs were well-positioned to partner with that particular company because of their expertise and the synergy with those programs. You'll see us do more of that.
I don't think you should be expecting an ever-growing, early stage portfolio, but updates as we identify partners for them.
Yeah.
Understood. Thank you.
I am showing no further questions at this time. That concludes today's call. You may now disconnect.

