Schrodinger, Inc.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 5 November 2025: press release. Guidance figures: 1 raised, 2 lowered, 1 new, 2 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Total revenue rose 54%: Total revenue was $54.3 million for the quarter, against $35.3 million a year earlier. Software and drug discovery both contributed to the increase. Source
• Software revenue up 28%: Software revenue rose 28% to $40.9 million, against $31.9 million, which the company attributed to hosted and on-premise contracts. Source
• Drug discovery revenue from upfront payments: Drug discovery revenue was $13.5 million against $3.4 million a year earlier. The company said the increase came mainly from recognizing upfront payments on ongoing collaborations. Source
• Software growth range cut: Full-year software revenue growth now runs 8% to 13%, down from 10% to 15%. Management tied the change to the timing of pharma scale-up. Source
• Drug discovery range raised: Full-year drug discovery revenue is now expected at $49 million to $52 million, up from $45 million to $50 million. Source
• SGR-1505 gains orphan designation: In October the FDA granted SGR-1505 orphan drug designation for Waldenström macroglobulinemia. The June release had reported Fast Track designation for the same indication. Source
• Shift to discovery-focused model: Beyond planned Phase 1 dose-escalation work on SGR-1505 and SGR-3515, the company will not take discovery programs into the clinic on its own. Source

“Schrödinger delivered a solid third quarter with software revenue growth of 28%, reflecting the industry’s increasing demand for our leading computational platform,”

Ramy Farid, Ph.D., chief executive officer of Schrödinger

Guidance

What changed from last quarter

• Guidance lowered: Software revenue growth guidance for 2025 cut to 8% to 13% from 10% to 15%. Source
• Guidance raised: Drug discovery revenue guidance for 2025 raised to $49 million to $52 million from $45 million to $50 million. Source
• Guidance lowered: Software gross margin guidance range now starts at 73%, down from 74%; the top of the range stays at 75%. Source
• Guidance kept: Operating expense guidance for 2025 is unchanged at lower than 2024. Source
• New: SGR-6016, a brain-penetrant NLRP3 inhibitor, selected as a development candidate, the fifth since 2021. Source
• New: Management does not intend to advance discovery programs into the clinic independently, beyond the planned Phase 1 work on SGR-1505 and SGR-3515. Source
• Ended: The company description no longer refers to advancing three clinical-stage oncology programs, which the August release did.

Results and growth drivers

• Total revenue rose 54%: Total revenue was $54.3 million for the quarter, against $35.3 million a year earlier. Software and drug discovery both contributed to the increase. Source
• Net loss narrowed from last year: GAAP net loss was $32.8 million for the quarter. For the nine months, the GAAP net loss was $135.8 million, against $146.9 million a year earlier. Source
• Non-GAAP net loss was smaller: Non-GAAP net loss was $42.3 million for the quarter, against $63.7 million. For the nine months it was $136.5 million, against $174.2 million. Source
• Software revenue up 28%: Software revenue rose 28% to $40.9 million, against $31.9 million, which the company attributed to hosted and on-premise contracts. Source

Segments and revenue lines

• Drug discovery revenue from upfront payments: Drug discovery revenue was $13.5 million against $3.4 million a year earlier. The company said the increase came mainly from recognizing upfront payments on ongoing collaborations. Source
• Software revenue above prior range: Third-quarter software revenue of $40.9 million compares with the $36 million to $40 million range the August release gave for the quarter.
• Nine-month revenue by line: For the nine months, drug discovery revenue was $38.4 million against $18.5 million, and software revenue was $130.2 million against $100.7 million. Source

“This shift toward a discovery-focused therapeutics R&D model has the potential to deliver significant long-term value through licensing, new ventures, and discovery collaborations,”

Ramy Farid, Ph.D., chief executive officer of Schrödinger

Full-year 2025 guidance

• Software growth range cut: Full-year software revenue growth now runs 8% to 13%, down from 10% to 15%. Management tied the change to the timing of pharma scale-up. Source
• Drug discovery range raised: Full-year drug discovery revenue is now expected at $49 million to $52 million, up from $45 million to $50 million. Source
• Gross margin low end lowered: Full-year software gross margin is now expected at 73% to 75%, with the low end one point below the prior 74% to 75% range. Source
• Cash use expected to fall: Cash used for operating activities in 2025 is expected to be significantly lower than in 2024. No dollar figure is given. Source

Operating expenses and staff actions

• Operating expenses down 14%: Operating expenses were $74.0 million, against $86.2 million a year earlier, a decline of 14%. Source
• Lower R&D and staff costs: The company attributed the decline mainly to lower research and development spending and lower employee-related expenses. Source
• Earlier staff cut targeted $30M: The August release said the May staff reduction of about 7% was expected to lower operating expenses by about $30 million a year.

“These actions, coupled with expense-reduction measures we undertook earlier this year, are expected to result in savings of approximately $70 million and improve our operational efficiency and long-term profitability profile.”

Ramy Farid, Ph.D., chief executive officer of Schrödinger

Margins and cost of revenues

• Software gross margin flat at 73%: Software gross margin was 73% in both the third quarter of 2025 and the third quarter of 2024, with no change year over year. Source
• Second-quarter margin fell on toxicology: The August release reported second-quarter software gross margin of 68%, against 80%, which it attributed mainly to costs of the predictive toxicology initiative.
• Cost of revenues by line: Third-quarter cost of revenues was $11.1 million for software and $15.2 million for drug discovery, against $8.5 million and $9.1 million a year earlier. Source

Pipeline and clinical programs

• SGR-1505 gains orphan designation: In October the FDA granted SGR-1505 orphan drug designation for Waldenström macroglobulinemia. The June release had reported Fast Track designation for the same indication. Source
• SGR-5573 preclinical data presented: Preclinical data for SGR-5573, a brain-penetrant inhibitor of osimertinib-resistant EGFR variants, were presented at ESMO, including activity in brain metastases models. Source
• SGR-3515 Phase 1 continuing: The Phase 1 study of SGR-3515, a Wee1/Myt1 co-inhibitor, in advanced solid tumors is continuing. Initial data are expected in the first half of 2026. Source

Collaborations and platform

• Zasocitinib Phase 2b results reported: Nimbus, co-founded by Schrödinger, and Takeda published Phase 2b psoriatic arthritis results for zasocitinib, a TYK2 inhibitor. A Phase 3 psoriasis study is ongoing. Source
• Copernic ammonia catalyst announced: Copernic Catalysts, in which Schrödinger holds an equity position, announced a new ammonia synthesis catalyst. The two companies are collaborating on the research. Source
• Kinome selectivity paper published: Scientists published a Nature Communications paper on computational routes to kinome-wide selectivity, using selective Wee1 kinase inhibitors as a case study. Source
• SGR-1505 modeling and machine learning paper: Scientists published in the Journal of Medicinal Chemistry on combining physics-based modeling and machine learning in the discovery of SGR-1505. Source

Cash, capital and other income

• Cash and securities of $401.0 million: Cash, restricted cash and marketable securities totaled $401.0 million at September 30, against $367.5 million at December 31, 2024. Source
• Nine-month operating cash flow positive: Net cash provided by operating activities was $30.0 million for the nine months, against $126.3 million used in the prior-year period. Source
• Other income from equity investments: Other income was $13.3 million for the quarter, including fair-value changes on equity investments and interest income, against $30.2 million a year earlier. Source
• Option exercises added cash: Stock option exercises brought in $2.8 million for the nine months, against $1.4 million a year earlier. Source

Strategy and therapeutics model

• Shift to discovery-focused model: Beyond planned Phase 1 dose-escalation work on SGR-1505 and SGR-3515, the company will not take discovery programs into the clinic on its own. Source
• About $70 million of savings expected: Management expects the discovery-focused model and earlier expense reductions to save about $70 million. No time period is given. Source
• Licensing and collaborations as value route: Management said the discovery-focused model has the potential to add long-term value through licensing, new ventures and discovery collaborations. Source

Coming up, as management said on 5 November 2025

• SGR-1505 data at December meeting: A poster presentation of SGR-1505 data in patients relapsed or refractory to BTK inhibitor treatment is planned for the ASH meeting. Source
• SGR-3515 initial data in 2026: Initial SGR-3515 clinical data are expected in the first half of 2026, as dose escalation work continues. Source
• SGR-1505 Phase 1 package completion: The company is completing the Phase 1 package for SGR-1505 and exploring ways to advance its development. Source

Figures management reported

Risks management discussed

• Demand: Management tied the lower software growth range to the timing of pharma scale-up. Source
• External: Management cited macroeconomic pressures on the industry, which it described as stabilizing. Source

Earlier plans management reported on

• Not stated: The August release expected initial SGR-3515 data in the fourth quarter of 2025. The current release gives the first half of 2026.
• Not stated: The August release expected the May staff reduction to lower annualized operating expenses by about $30 million.

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.