Schrodinger, Inc. ((SDGR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Schrodinger, Inc.’s recent earnings call painted a picture of cautious optimism, underscored by strong revenue growth and promising pipeline advancements. The company demonstrated effective cost management and strategic collaborations, although it faced challenges such as a decline in software gross margins, continued net losses, and a challenging biotech sector landscape. Despite these hurdles, the overall sentiment remained positive, with a focus on future potential.
Revenue Growth
Schrodinger reported a total revenue of $54.8 million for the second quarter of 2025, representing a 16% increase from the same period in 2024. Software revenue rose by 15% year-over-year to $40.5 million, while drug discovery revenue saw a 19% increase, reaching $14.2 million. This growth highlights the company’s robust performance in its core business areas.
Pipeline Advancements
The company shared promising Phase I data for SGR-1505 and is actively exploring strategic opportunities to accelerate its clinical development. Additionally, Schrodinger anticipates initial Phase I data for SGR-2921 and SGR-3515 in the fourth quarter of 2025, reflecting its commitment to advancing its therapeutic pipeline.
Cost Management and Financial Health
Schrodinger successfully reduced its operating expenses by 6% compared to Q2 2024, thanks to a $30 million expense reduction initiative. The company remains well-capitalized, ending the quarter with $462 million in cash and equivalents, which positions it well for future investments and growth.
Collaborations and Strategic Partnerships
The company expanded its collaborations with major players like Lilly, Otsuka, and Ajax Therapeutics, and established a new partnership with the Novo Nordisk Foundation Center for Basic Metabolic Research. These collaborations are expected to bolster Schrodinger’s research and development efforts.
Software Gross Margin Decline
Despite the positive revenue growth, Schrodinger experienced a decline in software gross margin, which fell to 68% from 80% in Q2 2024. This was attributed to changes in revenue mix and investments in the predictive toxicology initiative.
Net Loss
The company reported a net loss of $43 million, or $0.59 per share, an improvement from a net loss of $54 million, or $0.74 per share, in Q2 2024. While still a loss, the reduction indicates progress in managing financial challenges.
Biotech Sector Challenges
Schrodinger acknowledged ongoing challenges within the biotech sector, which have impacted growth from new customers due to the broader macroeconomic landscape. This remains a critical area of concern for the company.
Forward-Looking Guidance
Schrodinger’s forward-looking guidance remains strong despite macroeconomic challenges. The company maintained its full-year software revenue growth guidance of 10% to 15% and drug discovery revenue guidance of $45 million to $50 million. With $462 million in cash and equivalents, Schrodinger is well-positioned to continue its growth trajectory and advance its therapeutic pipeline, with key data expected in the fourth quarter.
In conclusion, Schrodinger’s earnings call reflected a cautiously optimistic outlook, driven by strong revenue growth, strategic partnerships, and effective cost management. While challenges such as declining software margins and sector-wide issues persist, the company’s forward-looking guidance and pipeline advancements suggest a promising future.