Schrödinger Reports Fourth Quarter and Full - Year 2025 Financial Results

pharmiweb.com · Feb 26, 2026 · Collected from GDELT

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2025 Total Revenue of $256 Million 2025 Software Revenue of $200 Million; 2025 Software ACV of $198 Million Strong Balance Sheet Supports Path to Positive Adjusted EBITDA by Year-End 2028 Accelerating Transition to Ratable, Hosted Software RevenueNEW YORK--(BUSINESS WIRE)--Schrödinger, Inc. (Nasdaq: SDGR) today announced financial results for the fourth quarter and full-year ended December 31, 2025, and provided its 2026 outlook and 2028 financial objectives. "Schrödinger’s performance in 2025, marked by 23% total revenue growth and 11% software revenue growth, is a testament to the resilience of our business and the unique value we provide," said Ramy Farid, Ph.D., chief executive officer of Schrödinger. “While the drug discovery AI landscape is expanding rapidly, we differentiate ourselves by consistently delivering outsized real-world impact, validated by continued robust customer engagement, high customer retention, and a strong track record of highly differentiated development candidates across our collaborative and internal therapeutics portfolio. Our success is enabled by our transformative platform that integrates ground-truth, physics-based simulation with leading-edge AI and machine learning. Looking ahead to 2026, we are poised to scale our impact through new platform enhancements and the commercial launch of our predictive toxicology solution.” Full Year 2025 Financial Highlights (comparisons are to full year 2024, unless otherwise noted) Total revenue was $255.9 million, a 23.3% increase. Software revenue was $199.5 million, a 10.6% increase. Drug discovery revenue was $56.4 million compared to $27.2 million. Software gross margin was 74%. Operating expenses were $309.5 million, a 9.3% decrease. Other income, which includes gains/losses on equity investments, changes in fair value of such investments and interest income/expense, was $64.6 million. Net loss for the full year was $103.3 million, compared to $187.1 million. At December 31, 2025, Schrödinger had cash, cash equivalents, restricted cash and marketable securities of approximately $402.3 million, compared to approximately $367.5 million at December 31, 2024. Fourth Quarter 2025 Financial Highlights (comparisons are to fourth quarter 2024, unless otherwise noted) Total revenue was $87.2 million, a 1.2% decrease. Software revenue was $69.3 million, a 13% decrease, primarily due to the accelerated recognition of upfront revenue from multi-year agreements signed in 2024, partially offset by higher hosted revenue. Drug discovery revenue was $18.0 million compared to $8.7 million. Software gross margin was 81%. Operating expenses were $74.5 million, a 12.2% decrease. Other income, which includes gains/losses on equity investments, changes in fair value of such investments and interest income/expense, was $50.1 million. Net income for the fourth quarter was $32.5 million, compared to a net loss of $40.2 million in the fourth quarter of 2024. For the three months and year ended December 31, 2025, Schrödinger reported adjusted EBITDA of $(5.2) million and $(114.9) million, respectively, compared to adjusted EBITDA of $(6.6) million and $(152.5) million for the three months and year ended December 31, 2024, respectively. See “Non-GAAP Information” below and the table at the end of this press release for a reconciliation of adjusted EBITDA to GAAP net income (loss). Full Year 2025 Key Performance Indicators (KPIs) Schrödinger today reported 2025 key performance indicators for both the software and drug discovery components of its business. Software KPI 2025 2024 % Growth Total annual contract value (ACV) $198.5M $190.8M 4.0% Top 20 Pharma ACV $80.8M $70.0M 15.3% Commercial ACV $177.4M $165.8M 7.0% ACV per Commercial Customer (>$1M ACV) $3.9M $3.3M 16.3% Number of Commercial Customers (>$1M ACV) 27 29 — Net Dollar Retention (Commercial Customers) 100% 113% — Gross Dollar Retention (Commercial Customers) 96% 96% — Drug Discovery KPI 2025 2024 Ongoing programs eligible for royalties 16 13 Number of collaborators since 2018 20 19 For additional information about the company’s KPIs, see “Operating Metrics” below. Today Schrödinger announced that it is accelerating its transition to hosted software and license server solutions from traditional on-premise deployments. While this transition was already underway, the company believes that accelerating it will result in more predictable revenue and normalize the impact of contract renewal timing and duration. This industry-standard shift provides customers with faster onboarding, enhanced renewals, and improved support. This transition shifts upfront revenue recognition associated with on-premise licenses to ratable revenue recognition for hosted contracts. While this shift is expected to introduce short-to-medium term declines in software revenue, there will be no change to ACV or cash flow from this transition. Schrödinger believes this model better aligns with the evolving infrastructure needs of its customers and regulatory trends. Schrödinger expects that the majority of its software contracts will be transitioned to hosted agreements by 2028. Hosted revenue was 23% of software revenue for the year ended December 31, 2025 compared to 20% for the year ended December 31, 2024. 2026 Financial Outlook As of February 25, 2026, Schrödinger provided the following expectations for the fiscal year ending December 31, 2026: Software 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 first quarter of 2026, software ACV is expected to range from $24 million to $28 million, representing $197 million to $201 million on a trailing four quarter basis. 2028 Financial Objectives In addition to its 2026 financial outlook, Schrödinger is establishing the following financial objectives reflecting its goal of achieving positive adjusted EBITDA by the end of 2028: Software ACV Growth: Deliver durable software ACV growth of 10% - 15% annually. Hosted Software Transition: Substantially complete transition to hosted software as revenue converges with ACV. Gross Margin: Return software gross margin percentage to high 70s. Drug Discovery Revenue: Target drug discovery revenue of $50 million annually, with potential variability each year due to milestone-driven timing of collaboration revenue. Operating Expense Discipline and Cash Flow Generation: Achieve positive adjusted EBITDA by the end of 2028. “Our 2026 outlook and 2028 financial objectives reflect a strategic evolution in our business model,” said Richie Jain, chief financial officer of Schrödinger. “We are accelerating our transition to a hosted licensing model. This shift from upfront to ratable recognition is expected to establish a more predictable, higher-visibility revenue stream that better aligns with standard software business practices without impacting cash flow. During this transition, we believe ACV provides useful insight into the underlying trends and performance of our software business given the transition’s impact on the timing of recognition of GAAP revenue, which we expect to decrease in the short-to-medium term. Accordingly, we have introduced a new set of key performance indicators to provide supplemental insight into our business performance. With our opportunities for continued growth and disciplined expense management, we aim to achieve positive adjusted EBITDA by the end of 2028.” Recent Highlights Platform Schrödinger’s platform addresses the challenge of data scarcity in molecular discovery by combining ground-truth, physics-based simulation with AI to enable teams to efficiently design high-quality, novel drug candidates and materials. Recent platform highlights include the following: In January, Schrödinger introduced RetroSynth, an AI-driven solution that enables chemists to rapidly identify the most efficient routes for the synthesis of novel molecules. RetroSynth reduces the time spent on manual route design and helps scientists prioritize the synthesis of molecules that not only have the most desirable attributes but are also synthetically tractable, while reducing costly lab failures. In January, the company announced a collaboration with Lilly TuneLab, whereby LiveDesign, Schrödinger’s widely used informatics platform, will be a priority interface for participating biotech companies to access TuneLab workflows. This allows users to combine Lilly’s federated learning models with Schrödinger’s physics-based simulations, addressing the data scarcity problem that often hinders AI-driven discovery. Also in January, Schrödinger announced a strategic agreement with Manas AI. Under the terms of the agreement, Manas AI will gain significant access to the company’s computational platform and is able to integrate Schrödinger’s physics-based modeling solutions with Manas AI’s algorithms to improve predictive accuracy and speed. Therapeutics Portfolio Schrödinger is advancing a portfolio of proprietary and collaborative programs that demonstrate the impact of its predict-first approach to drug design. The portfolio includes over twenty-five first-in-class, best-in-class, and first-in-modality programs across all stages of development, including more than ten clinical-stage programs. Sixteen programs are eligible for royalties on sales. The company has generated over $650 million in cash from its drug discovery initiatives since 2020 and is eligible for up to nearly $5 billion in potential future milestones. Recent highlights include the following: Schrödinger is working to complete the Phase 1 clinical packages for SGR-1505, Schrödinger’s investigational MALT-1 inhibitor for the treatment of relapsed or refractory B-cell malignancies, and of SGR-3515, its investigational Wee1/Myt1 inhibitor for the treatment of solid tumors. The company expects to present initial SGR-35