Schrodinger 2025 Q2 Earnings Narrowed Losses with 20.3% EPS Improvement

Schrödinger(SDGR) reported its fiscal 2025 Q2 earnings on Aug 06th, 2025. The company outperformed expectations with a 20.3% improvement in earnings per share and reaffirmed its full-year revenue growth guidance. Schrödinger also updated its operating expense outlook for 2025, projecting lower costs year-over-year. The results reflect strong software demand and progress in drug discovery programs.

Revenue
Schrödinger reported total revenue of $54.76 million in Q2 2025, representing a 15.7% increase from $47.33 million in Q2 2024. The growth was driven by both software and drug discovery segments, with software revenue reaching $40.54 million, up from $35.4 million in the prior year. Drug discovery revenue rose to $14.21 million, up from $11.9 million. The software segment benefited from hosted contracts and a Gates Foundation grant, while drug discovery revenue was bolstered by higher clinical collaboration activity.

Earnings/Net Income
Schrödinger narrowed its losses in Q2 2025, with net loss reducing to $-43.17 million, or $-0.59 per share, compared to $-54.05 million, or $-0.74 per share, in Q2 2024. This reflects a 20.1% reduction in the net loss and marks a positive step toward improved profitability. The improved performance indicates strong cost control and operational efficiency.

Price Action
The stock price of Schrodinger has edged down 0.82% during the latest trading day, has dropped 6.62% during the most recent full trading week, and has dropped 6.25% month-to-date.

Post-Earnings Price Action Review
The strategy of buying Schrodinger (SDGR) shares after a revenue raise quarter-over-quarter on the financial report released date and holding for 30 days resulted in poor performance over the past three years. The strategy yielded a return of -20.90%, significantly underperforming the benchmark return of 48.58%. The excess return was -69.49%, and the strategy's CAGR was -7.78%, indicating substantial losses. Additionally, the strategy had a high maximum drawdown of 0.00% and a Sharpe ratio of -0.12, suggesting a volatile and risky performance.

CEO Commentary
Ramy Farid, CEO, highlighted Schrödinger’s strong Q2 performance, with total revenue rising 16% year-over-year to $54.8 million. Software revenue grew 15% to $40.5 million, driven by hosted contracts and the Gates Foundation grant, while drug discovery revenue increased 19% to $14.2 million. Farid emphasized the company’s leadership in computational molecular discovery, noting growing industry demand for predictive methods. He expressed optimism about SGR-1505’s best-in-class potential after Phase I data and strategic opportunities to accelerate its development. Farid underscored ongoing platform improvements and the predictive toxicology initiative to reduce animal testing, aligning with the FDA’s modernization goals. He expressed confidence in the fourth-quarter data readouts and renewal momentum, maintaining full-year revenue guidance.

Guidance
Ramy Farid guided to $36 million to $40 million in Q3 software revenue, with drug discovery revenue expected to be evenly split between Q3 and Q4. The company reaffirmed full-year software revenue growth of 10% to 15% and drug discovery revenue of $45 million to $50 million. Operating expenses are projected to be lower in 2025 than 2024 due to the $30 million expense reduction initiative. Cash used in operating activities is expected to significantly decline compared to 2024.

Additional News
Schrödinger made several strategic and personnel updates in recent months. The company announced an expanded research collaboration with Ajax Therapeutics, adding a new Janus kinase (JAK) target to the partnership. Under the revised terms, Schrödinger is eligible for discovery and development milestones, as well as future sales milestones and royalties on any resulting products. Additionally, the company implemented a workforce reduction of approximately 7% in May 2025 to reduce annualized operating expenses by $30 million. On the leadership front, Schrödinger named Richie Jain as chief financial officer and appointed Mannix Aklian as chief commercial officer and global head of software sales and marketing. Karen Akinsanya’s role was also expanded to president, head of therapeutics R&D, and chief strategy officer, partnerships. These changes signal a strategic shift toward cost optimization and leadership strengthening to support future growth.