Q4 2023 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$31.37Last close (Feb 28, 2024)
Post-Earnings Price$26.89Open (Feb 29, 2024)
Price Change
$-4.48(-14.28%)
- Schrödinger has high confidence in the long-term growth potential of its software business, with opportunities to increase adoption among large customers and mid-tier companies, which can drive substantial growth in the future.
- The company is well positioned to capitalize on advancements in AI and machine learning in drug discovery, leveraging their physics-based computational platform to enhance AI methods and differentiate themselves from competitors.
- Schrödinger's internal pipeline is advancing, with two programs in the clinic and one more expected to enter the clinic, providing flexibility to either partner or advance programs internally, potentially leading to significant value creation.
- The company's software revenue growth guidance for 2024 is 6% to 13%, which is lower than the typical 15% growth guided in past years. This slowdown is partly due to the difficulty in matching outsized contributions from large multi-year renewals in the prior year, indicating potential challenges in sustaining growth momentum. Additionally, there is a drag on software revenue growth from smaller biotech customers facing financing challenges, leading to lower growth expectations in the software business.
- There is uncertainty and lack of visibility in the drug discovery revenue segment, making it difficult to predict future growth. The company is cautious in providing forecasts due to the unpredictable nature of milestones and collaborations. They are shifting capital allocation towards proprietary programs but cannot provide specific guidance on revenue timing or value from these transactions, which may impact investor confidence in this segment's growth trajectory.
- The company's strategic focus between advancing its internal pipeline and out-licensing programs remains uncertain. Management indicates they may need to partner programs earlier than anticipated due to resource constraints, potentially limiting long-term upside from proprietary assets. This uncertainty may affect the company's ability to fully capitalize on its drug discovery efforts.