Schrödinger, Inc. (SDGR) reported fourth‑quarter and full‑year 2025 results that exceeded analyst expectations. Total revenue rose 23% to $256 million, while software revenue grew 11% year‑over‑year. Earnings per share for the year were $0.44, a $0.57 beat over the consensus estimate of –$0.13. In the fourth quarter alone, revenue reached $87.2 million, surpassing the $83.65 million estimate by $3.55 million, and EPS of $0.44 outpaced the –$0.13 forecast by $0.57.
The growth was driven by a doubling of drug‑discovery revenue, which more than doubled compared to the prior year, and a modest 11% increase in software revenue. However, the company’s software gross margin contracted to 74% from 80% in 2024, reflecting higher costs associated with grant‑contributed contribution revenue. Net dollar retention fell to 100% from an average of over 110% in previous years, indicating a more challenging environment for pharma and biotech customers.
Schrödinger is accelerating a transition from on‑premise licenses to a hosted, subscription‑based model, with the goal of having 75% of software revenue from hosted contracts by 2028. Management guided for 2026 ACV growth of 10%–15% annually and projected positive adjusted EBITDA by the end of 2028. The company also reiterated its 2028 financial objectives, targeting drug‑discovery revenue of roughly $50 million per year and a shift toward capital‑efficient operations.
CEO Ramy Farid said, “the resilience of its physics‑based computational platform and its expanding partnership model.” CFO Richie Jain added, “Schrodinger had a strong 2025 delivering $256 million of revenue or 23% growth against a challenging backdrop of tight pharma budgets and challenging biotech capital markets.” He also noted, “software revenue increased 11% and drug discovery revenue more than doubled compared to the prior year.” Farid further emphasized, “Our priorities for 2026 are focused on scaling our impact, maintaining scientific leadership, expanding the reach of our platform, advancing our collaborative portfolio of drug discovery programs, and securing development partners for our clinical programs.”
The results underscore Schrödinger’s ability to generate top‑line growth amid a tightening biotech market, while the shift to hosted contracts signals a strategic move toward predictable recurring revenue. The company’s margin compression and flat net dollar retention highlight the headwinds of higher operating costs and a more competitive environment, but the strong earnings beat and forward guidance suggest management confidence in the physics‑plus‑AI platform’s scalability and the partnership model’s ability to drive future growth.
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