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Total turnover: $35.3 million in the third quarter, down 17% from the prior year.
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Software revenue: $31.9 million in the third quarter, up 10% from the same period a year ago.
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Drug discovery revenues: $3.4 million in Q3, down significantly from $13.7 million in Q3 last year.
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Software gross margin: 73.4% in the third quarter, compared to 75.7% a year ago.
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Total gross margin: 50% in the third quarter of 2024, compared to 56% in the same period a year ago.
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Operating loss: $68.4 million in the third quarter, compared to a loss of $56 million in the third quarter of 2023.
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Net income: Loss of $38 million or $0.52 per share in the third quarter, compared to a net loss of $62 million or $0.86 per share a year ago.
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Cash and marketable securities: $398 million at the end of the third quarter, compared to $382 million at the end of the second quarter.
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R&D costs: $51 million in Q3, compared to $47 million in Q3 last year.
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Sales and marketing costs: $10.3 million in Q3 2024, up 13.6% compared to Q3 last year.
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General and administrative costs: $24.8 million in the third quarter, up 4% compared to the third quarter of 2023.
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Operating costs: $86 million in the third quarter, compared to $80 million in the third quarter last year.
Release date: November 12, 2024
For the full earnings call transcript, please refer to the full earnings call transcript.
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Schrodinger Inc (NASDAQ:SDGR) has announced a major collaboration with Novartis that includes an upfront payment of $150 million and the potential for up to $2.3 billion in milestone payments.
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The company reported a 10% increase in software revenue for the third quarter, driven by higher hosted revenues and customer transitions to hosted software licenses.
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Schrodinger Inc (NASDAQ:SDGR) added $48 million to its cash balance through the sale of Morphic to Lilly, strengthening its financial position.
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The company is expanding its own pipeline with programs in three clinical phases, with first data expected in 2025.
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Schrodinger Inc (NASDAQ:SDGR) has raised the lower end of its software revenue growth forecast for this year, signaling confidence in future performance.
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Software revenue for the third quarter came in slightly below expectations, partly due to slower recognition of revenue from the Gates Foundation grant.
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Drug research revenues in the third quarter were significantly lower than in the previous year, leading to a reduction in full-year expectations for this segment.
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The company’s overall gross margin fell to 50% in the third quarter, compared to 56% a year ago, driven by lower drug discovery revenues and lower software gross margins.
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Operating expenses increased due to higher R&D costs, contributing to an operating loss of $68.4 million for the quarter.
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Schrodinger Inc (NASDAQ:SDGR) reported a net loss of $38 million for the third quarter, although this was an improvement from last year’s loss.
Q: Can you elaborate on the key drivers that give you confidence in the updated software guidance, and how does the Novartis deal contribute to this? A: Geoff Porges, CFO, explained that the fourth quarter is typically responsible for a large portion of annual revenue, about 42% to 44%. The Novartis deal is an important part, but not the only one. Discussions are ongoing with multiple companies regarding extensions, and confidence in the guidance range is based on these discussions and the progress made in the quarter to date.
QShould the tightened drug discovery guidelines be seen as a timing issue, and can we expect stronger performance in early 2025? A: Geoff Porges noted that the lowering of expectations reflects the uncertainties surrounding the timing surrounding year-end events. Confidence for next year is high, with expectations that the opportunities expected before the end of this year can materialize in 2025, supported by the partnership with Novartis.
Q: What percentage of your software business is now cloud-based versus on-premises? A: Geoff Porges stated that 28% of software activity was hosted in the third quarter, compared to 23% last year. This percentage is higher if the focus is solely on customer contracts, probably in the high range of 30%. The trend towards hosted solutions is expected to continue in the coming years.
Q: With the first MALT1 data expected soon, what are your expectations for this data release, and how do you define success? A: Karen Akinsanya, president of R&D Therapeutics, said the focus is on safety, PK, PD and evidence for early efficacy. The study is a dose-escalation study and is not suitable for full analysis of efficacy, but they are looking for positive drug properties and activity evidence in patients with relapsed refractory B-cell malignancy.
Q: How do you manage P&L with advanced clinical programs, and what are the go/no-go criteria to advance clinical programs beyond Phase 1? A: Geoff Porges emphasized reducing cost growth and achieving operating leverage. Investments continue in the platform and proprietary molecules, but not all molecules will be developed independently. Karen Akinsanya added that monotherapy activity is crucial for MALT1, CDC7 and Wee1, with clear evidence that activity is the barrier to progress.
For the full earnings call transcript, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
