Nasdaq:SDGR
Schrodinger, Inc.
A cloud-native computational biology platform enabling pharma and biotech firms to reduce drug discovery timelines through AI-driven molecular simulations.
Key Metrics
Investment Thesis
Bull Case
Schrodinger represents a high-potential turnaround story where recent revenue growth validates its platform utility in an expanding AI-driven drug discovery market. The company's transition to positive operating cash flow and strong balance sheet with $230.5M in cash provides ample runway to bridge to profitability while scaling cloud adoption among mid-sized biotech firms. Investors may view current valuation as attractive given the scarcity of pure-play computational biology leaders with proprietary IP that directly correlates to clinical trial outcomes.
Bear Case
The persistent and widening net losses, compounded by a massive accumulated deficit, signal fundamental challenges in achieving sustainable profitability within a capital-intensive R&D model. High operating expenses exceeding revenue by over $200M annually create a precarious burn rate that relies entirely on external financing or future IPO success to avoid dilution. The lack of positive free cash flow generation from core operations suggests the business model may struggle to defend its market position against lower-cost competitors in a price-sensitive environment.
About Schrodinger, Inc.
Schrodinger, Inc. (SDGR) is a computational biology software company that provides cloud-based simulation platforms for life sciences clients in the pharmaceutical, biotechnology, and chemical industries. The company serves global markets including academic research institutions and corporate R&D departments by offering tools to accelerate drug discovery and development processes. Key products include the Schrödinger Suite, which integrates molecular modeling, machine learning, and artificial intelligence to optimize lead generation and clinical trial success rates.
Analysis
Management Discussion
Despite a notable 32% revenue increase to $255.9M in the latest fiscal year, Schrodinger continues to report significant losses with net profit of -$103.3M, reflecting ongoing heavy investments in research and development totaling $173.1M. The substantial non-cash adjustments of $258.7M, largely driven by share-based compensation of $43.0M, suggest aggressive growth strategies that are inflating operating expenses relative to current earnings. Cash flow from operations turned positive at $13.9M while cash and equivalents rose to $230.5M, indicating improving liquidity management despite the large non-operating outflows from investing activities.
Industry Overview
The computational biology and drug discovery software sector is experiencing rapid expansion driven by the integration of artificial intelligence and machine learning into traditional R&D pipelines. Life sciences companies are increasingly outsourcing simulation capabilities to cloud providers to reduce time-to-market for new therapies, creating favorable long-term demand tailwinds. However, the industry remains volatile due to cyclical biotech funding patterns and intense competition from big tech entrants offering integrated AI platforms at scale.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $181.0M | $216.7M | $207.5M | $255.9M |
| Cost of Revenue | $79.9M | $76.0M | $75.5M | $113.3M |
| Gross Profit | $101.0M | $140.7M | $132.1M | $142.6M |
| Operating Expenses | $247.8M | $318.1M | $341.4M | $309.5M |
| Operating Income | $-146.8M | $-177.4M | $-209.3M | $-166.9M |
| R&D | $126.4M | $181.8M | $201.8M | $173.1M |
| G&A | $90.8M | $99.1M | $99.7M | $95.4M |
| Marketing | $30.6M | $37.2M | $39.9M | $41.0M |
| Stock-Based Comp | $39.6M | $47.8M | $49.9M | $43.0M |
| D&A | $4.3M | $5.6M | $6.2M | $6.0M |
| Depreciation | $3.8M | $5.0M | $6.2M | $6.0M |
| Amortization | $513.0K | $587.0K | — | — |
| Other OpEx | $0 | $0 | $0 | $0 |
| Non-Operating Income | $-2.3M | $220.4M | $23.6M | $64.6M |
| Interest Income | $4.0M | — | — | — |
| Pre-Tax Income | $-149.1M | $42.9M | $-185.7M | $-102.3M |
| Income Tax | $63.0K | $2.2M | $1.4M | $939.0K |
| Continuing Ops | $-149.2M | $40.7M | $-187.1M | $-103.3M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $-149.2M | $40.7M | $-187.1M | $-103.3M |
| Minority Interest | $-3.0K | $0 | $0 | $0 |
| Net to Common | $-149.2M | $40.7M | $-187.1M | $-103.3M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $534.0M | $567.8M | $635.0M | $519.3M |
| Cash & Equivalents | $90.5M | $155.3M | $147.3M | $230.5M |
| Marketable Securities | $360.6M | $307.7M | $204.8M | $164.9M |
| Accounts Receivable | $56.0M | $66.0M | $235.7M | $83.0M |
| Other Current Assets | $26.9M | $38.8M | $47.2M | $40.8M |
| Long-Term Assets | $154.6M | $235.2M | $188.2M | $206.9M |
| PP&E (Net) | $14.2M | — | — | — |
| Intangibles | $587.0K | $0 | — | — |
| Goodwill | $4.8M | $4.8M | $4.8M | $4.8M |
| Operating Leases | $106.0M | $117.8M | $111.9M | $102.7M |
| Other LT Assets | $3.3M | $29.3M | $28.4M | $25.7M |
| Total Assets | $688.6M | $803.0M | $823.2M | $726.2M |
| Current Liabilities | $108.8M | $133.7M | $191.7M | $189.1M |
| Accounts Payable | $9.5M | $16.8M | $10.7M | $11.5M |
| Current Leases | $11.0M | $16.9M | $16.8M | $16.4M |
| Deferred Revenue | $57.9M | $56.2M | $111.9M | $112.9M |
| Other Current Liab | $30.4M | $43.8M | $52.4M | $48.4M |
| Long-Term Liabilities | $131.9M | $120.7M | $210.0M | $173.0M |
| LT Operating Leases | $105.5M | $111.0M | $101.1M | $92.8M |
| Other LT Liab | $800.0K | $667.0K | $146.0K | $1.3M |
| Total Liabilities | $240.7M | $254.4M | $401.8M | $362.1M |
| Shareholders' Equity | $447.9M | $548.6M | $421.4M | $364.1M |
| Retained Earnings | $-379.1M | $-338.4M | $-525.5M | $-628.8M |
| AOCI | $-2.4M | $281.0K | $220.0K | $107.0K |
| Total L&E | $688.6M | $803.0M | $823.2M | $726.2M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $-149.2M | $40.7M | $-187.1M | $-103.3M |
| Non-Cash Adjustments | $10.5M | $-247.6M | $-296.8M | $258.7M |
| Working Capital Changes | $19.0M | $70.1M | $326.6M | $-141.5M |
| Cash from Operations | $-119.7M | $-136.7M | $-157.4M | $13.9M |
| Capital Expenditures | $8.0M | $13.4M | $7.3M | $1.4M |
| Cash from Investing | $90.0M | $193.0M | $148.8M | $57.9M |
| Cash from Financing | $2.1M | $9.0M | $10.1M | $2.9M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $-27.6M | $65.3M | $1.6M | $74.7M |
| Beginning Cash | $123.3M | $95.7M | $161.1M | $162.7M |
| Ending Cash | $95.7M | $161.1M | $162.7M | $237.4M |
Frequently Asked Questions
How does Schrodinger, Inc. make money?
The company's revenue is primarily derived from license fees for its proprietary Schrödinger software suite used in small molecule drug discovery, subscription-based cloud computing services for large-scale simulations, and professional support contracts for academic and corporate research institutions. Additional streams include consulting services for complex simulation projects and strategic partnerships with major pharmaceutical entities to co-develop specialized simulation workflows.
What are the main risks for SDGR?
Persistent net losses and a growing retained earnings deficit of over $628M indicate significant cash burn that could threaten solvency if profitability is not achieved soon. The company faces intense competition from large tech giants entering the life sciences simulation space and emerging AI-native startups offering more affordable alternatives. Heavy reliance on a concentrated base of large pharmaceutical clients creates vulnerability to budget cuts or contract non-renewals during economic downturns. Regulatory changes in data privacy or intellectual property rights for computational models could disrupt core revenue streams.
What is SDGR's competitive advantage?
Schrodinger maintains a robust first-mover advantage in integrating advanced artificial intelligence with traditional molecular dynamics simulations, creating a high barrier to entry for competitors. The company's scalable cloud infrastructure allows clients to process massive datasets without heavy on-premise hardware investments, offering significant cost savings compared to traditional modeling approaches. Strong recurring revenue from subscription models and deep domain expertise in computational biology foster high customer retention rates within the specialized life sciences sector.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.