The earnings call highlighted a significant new collaboration with Novartis, boosting cash reserves and software revenue growth. However, challenges such as a decline in drug discovery revenue, decreased total revenue, and increased operating loss were also noted. The collaboration with Novartis provides a positive outlook for future revenue growth, but current financial challenges balance out the overall sentiment.

Company Guidance

During the third quarter 2024 earnings call for Schrodinger (SDGR), several key financial metrics were discussed that guided the company's outlook. Total revenue for the quarter was reported at $35.3 million, with software revenue contributing $31.9 million, marking a 10% increase year-over-year. Despite a slight shortfall in software revenue from expectations, the company remains confident about meeting its full-year software revenue growth, adjusting the lower end of its guidance to 8% from the previous 6%. Drug discovery revenue saw a significant drop to $3.4 million compared to $13.7 million in the same quarter of the previous year, prompting a revision in the annual guidance for this segment to a range of $20 million to $30 million. The company highlighted a new multi-target collaboration with Novartis, which includes a $150 million upfront payment and potential milestone payments up to $2.3 billion, with royalties on sales anticipated. This collaboration is expected to bolster future revenue, particularly in drug discovery, with increased activity projected for 2025. Schrodinger also reported a $48 million cash increase from the sale of Morphic shares, leading to a cash balance of $398 million. Operating expenses rose slightly, driven by R&D, resulting in an operating loss of $68.4 million for the quarter. The company emphasized its strategic focus on advancing its software business and proprietary drug discovery programs, with anticipated initial data from its clinical stage programs expected in 2025.

New Collaboration with Novartis

Schrodinger entered a multi-target collaboration with Novartis, receiving $150 million upfront and being eligible for up to $2.3 billion in milestone payments along with royalties on sales. This also includes an expanded multiyear software agreement.

Financial Growth in Software Revenue

Software revenue in Q3 was $31.9 million, marking a 10% increase compared to the same period a year ago. For the first 9 months of the year, software revenue growth was 11%.

Increase in Hosted Revenue

Hosted revenue increased to 28% of total software revenue in Q3, up from 23% in the same period in 2023, driven by transitions from on-prem to hosted software licenses.

Cash Reserves Bolstered

Schrodinger added $48 million to its cash reserves from the sale of Morphic to Lilly, increasing the cash and marketable securities balance to $398 million at the end of Q3.

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Schrodinger (SDGR) Earnings, Revenues Date & History

The upcoming earnings date is based on a company’s previous reporting, and may be updated when the actual date is announced

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SDGR Earnings History

Report Date	Fiscal Quarter	Forecast / EPS	Last Year's EPS	EPS YoY Change	Slides	Play Transcript
May 13, 2020	2020 (Q1)	- / -0.34	-0.092	-269.57% (-0.25)	―	―
Aug 10, 2020	2020 (Q2)	- / -0.05	-0.008	-525.00% (-0.04)	―	―
Nov 12, 2020	2020 (Q3)	- / 0.05	-0.182	127.47% (+0.23)	―	―
Mar 04, 2021	2020 (Q4)	- / -0.11	-0.185	40.54% (+0.07)	―	―
May 11, 2021	2021 (Q1)	-0.15 / 0.00	-0.34	―	―	―
Aug 12, 2021	2021 (Q2)	-0.27 / -0.49	-0.05	-880.00% (-0.44)	―	―
Nov 10, 2021	2021 (Q3)	-0.37 / -0.49	0.05	-1080.00% (-0.54)	―	―
Feb 24, 2022	2021 (Q4)	-0.33 / -0.44	-0.11	-300.00% (-0.33)	―	―
May 04, 2022	2022 (Q1)	-0.47 / -0.48	0	―	―	―
Aug 04, 2022	2022 (Q2)	-0.54 / -0.67	-0.49	-36.73% (-0.18)	―	―

The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.

Beat

Missed

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SDGR Earnings-Related Price Changes

Report Date	Price 1 Day Before	Price 1 Day After	Percentage Change
Nov 12, 2024	$19.54	$22.25	+13.87%
Jul 31, 2024	$22.28	$22.60	+1.44%
May 01, 2024	$25.26	$23.19	-8.19%
Feb 28, 2024	$31.37	$25.46	-18.84%

Earnings announcements can affect a stock’s price. This table shows the stock's price the day before and the day after recent earnings reports, including the percentage change.

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