GICS Sector : Healthcare
Schrödinger, Inc., together with its subsidiaries, provides physics-based software platform that enables discovery of novel molecules for drug development and materials applications.The company operates in two segments, Software and Drug Discovery.The Software segment is focused on selling its software for drug discovery in the life sciences industry, as well as to customers in materials science industries.
The company reported a robust third quarter 2025, with total revenue reaching $54 million, a 54% increase from the same period in 2024. Software revenue was $40.9 million, representing 28% year-over-year growth, slightly above expectations. The software gross margin was 73%, indicating a stable and profitable software business. Research and development (R&D) expenses decreased by 16% to $42.8 million, while sales and marketing expenses declined by 8% to $9.5 million, and general and administrative (G&A) expenses dropped by 13% to $21.7 million, primarily due to lower employee-related expenses. The actual EPS loss was $-0.45, better than the estimated loss of $-0.75.
Publication Date: Nov -16
The company is witnessing strong demand for its advanced computational solutions, driven by its differentiated and extensively validated platform. The new computational physics plus AI paradigm is becoming the accepted standard, positioning the company for long-term growth. The company updated its software revenue growth guidance for 2025 to 8%-13% from 10%-15%, reflecting a slowdown in pharma discussions due to industry pressures. However, the company remains confident in its long-term potential, with positive conversations with customers and scheduled renewals on track. As Ramy Farid mentioned, "We are very optimistic about the long-term potential and value of our platform."
The company has made significant progress in its collaborative portfolio, increasing its drug discovery revenue guidance to $49 million-$52 million. The company has also achieved more than half of its $30 million expense reduction goal, with the remainder to be realized in 2026. This action, combined with the phasing out of independent clinical development activities, is expected to improve the company's long-term profitability profile. The company's highly experienced drug discovery team is pioneering the "predict first" computational approach to drug discovery.
Analysts estimate next year's revenue growth at 15.8%. The current valuation metrics indicate a Price-to-Sales Ratio of 5.46 and an EV/EBITDA of -6.7. Given the company's improving operational efficiency and growth prospects, the current valuation appears reasonable. However, investors should continue to monitor the company's progress in executing its strategic plans and achieving its guidance.
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Dec -01
Envestnet Asset Management Inc. Sells 40,529 Shares of Schrodinger, Inc. $SDGR
Nov -16
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Nov -10
Schrödinger to Present at Jefferies London Healthcare Conference
Nov -06
Schrödinger, Inc. (SDGR) Q3 2025 Earnings Call Transcript
Nov -06
Schrodinger, Inc. (SDGR) Reports Q3 Loss, Tops Revenue Estimates
Nov -06
Schrödinger Reports Third Quarter 2025 Financial Results
Nov -05
Schrödinger's software growth is driven by increasing adoption in pharmaceutical and biotech industries, fueled by the need for computational chemistry and molecular modeling. Growing demand for personalized medicine, gene editing, and drug discovery also contribute to the growth. Additionally, the company's expanding product portfolio and strategic partnerships further accelerate its growth.
Schrödinger's 12.53% growth in Drug Discovery is driven by increasing adoption of its computational platform, FEP+, which accelerates drug development. Growing demand for precision medicine, partnerships with pharma companies, and expansion into new therapeutic areas also contribute to growth. Additionally, the company's AI-driven approach reduces costs and timelines, making it an attractive solution for biotech and pharma companies.
A comprehensive suite of molecular modeling and computational chemistry software for pharmaceutical, biotech, and academic research
A molecular modeling and visualization software for understanding protein-ligand interactions and designing new molecules
A software tool for preparing 3D molecular structures for molecular modeling and simulation
A software tool for predicting the ionization states of molecules
A software tool for pharmacophore modeling and 3D QSAR analysis
A software tool for designing and optimizing small molecules
A molecular visualization software for visualizing and analyzing molecular structures
The threat of substitutes for Schrödinger, Inc. is moderate due to the availability of alternative products in the market.
The bargaining power of customers is high for Schrödinger, Inc. due to the concentration of buyers in the market.
The bargaining power of suppliers is low for Schrödinger, Inc. due to the availability of multiple suppliers in the market.
The threat of new entrants for Schrödinger, Inc. is moderate due to the moderate barriers to entry in the market.
The intensity of rivalry for Schrödinger, Inc. is high due to the high level of competition in the market.
| Value | |
|---|---|
| Debt Weight | 18.91% |
| Debt Cost | 3.95% |
| Equity Weight | 81.09% |
| Equity Cost | 11.79% |
| WACC | 10.31% |
| Leverage | 23.31% |
Value: 8.0
Growth: 5.8
Quality: 3.8
Yield: 0.0
Momentum: 9.5
Volatility: 0.7
1-Year Total Return ->
Value: 9.2
Growth: 5.6
Quality: 4.3
Yield: 0.0
Momentum: 0.5
Volatility: 2.0
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Value: 4.6
Growth: 2.8
Quality: 3.9
Yield: 0.0
Momentum: 7.0
Volatility: 2.3
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Value: 6.7
Growth: 5.1
Quality: 3.2
Yield: 0.0
Momentum: 3.5
Volatility: 2.0
1-Year Total Return ->
Value: 0.2
Growth: 4.3
Quality: 5.3
Yield: 0.0
Momentum: 9.5
Volatility: 1.0
1-Year Total Return ->
Value: 6.4
Growth: 4.6
Quality: 3.5
Yield: 0.0
Momentum: 5.0
Volatility: 0.0
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