Third Quarter 2026
Filed Nov 4, 2026Third Quarter ACV of $45 Million, Representing 17% Growth; Increases Full-Year 2026 ACV and Drug Discovery Revenue Guidance
Third-quarter total revenue increased 19%, ACV increased 17%, drug discovery revenue increased to $24.2 million, and the company raised its full-year ACV and drug discovery revenue outlook. Net loss increased to $37.7 million and software gross margin decreased 2%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| ACV, third quarter 2026other | $44.7M | – | 17% increase |
| ACV, trailing four-quarter basisother | $214M | – | – |
| ACV excluding contribution, third quarter 2026other | – | 24% increase | |
| Hosted software revenue, third quarter 2026GAAP | $17.2M | – | 49% increase |
| Hosted software revenue as percentage of total software revenue, third quarter 2026other | 45% | – | – |
| Hosted software revenue as percentage of total software revenue, trailing four-quarter basisother | 32% | – | – |
| Total revenue, three months ended September 30, 2026GAAP | $64.49M | – | 19% increase |
| Total revenue, nine months ended September 30, 2026GAAP | 181,967 | – | – |
| Software products and services revenue, three months ended September 30, 2026GAAP | $38.15M | – | 6% increase |
| Software products and services revenue, nine months ended September 30, 2026GAAP | 106,257 | – | – |
| Drug discovery revenue, three months ended September 30, 2026GAAP | $24.19M | – | – |
| Drug discovery revenue, nine months ended September 30, 2026GAAP | 70,052 | – | – |
| Contribution revenue, three months ended September 30, 2026GAAP | $2.15M | – | – |
| Contribution revenue, nine months ended September 30, 2026GAAP | 5,658 | – | – |
| Software products and services cost of revenues, three months ended September 30, 2026GAAP | 9,447 | – | – |
| Drug discovery cost of revenues, three months ended September 30, 2026GAAP | 14,497 | – | – |
| Contribution cost of revenues, three months ended September 30, 2026GAAP | 2,294 | – | – |
| Total cost of revenues, three months ended September 30, 2026GAAP | 26,238 | – | – |
| Gross profit, three months ended September 30, 2026GAAP | 38,253 | – | – |
| Software gross margin, third quarter 2026GAAP | 75% | – | 2% decrease |
| Research and development expense, three months ended September 30, 2026GAAP | 34,090 | – | – |
| Sales and marketing expense, three months ended September 30, 2026GAAP | 10,040 | – | – |
| General and administrative expense, three months ended September 30, 2026GAAP | 20,252 | – | – |
| Total operating expenses, three months ended September 30, 2026GAAP | $64.38M | – | 13% decrease |
| Total operating expenses, nine months ended September 30, 2026GAAP | 216,702 | – | – |
| Loss from operations, three months ended September 30, 2026GAAP | (26,129) | – | – |
| Loss from operations, nine months ended September 30, 2026GAAP | (116,470) | – | – |
| Change in fair value of equity investments, three months ended September 30, 2026GAAP | (14,752) | – | – |
| Other income, three months ended September 30, 2026GAAP | 3,326 | – | – |
| Total other (expense) income, three months ended September 30, 2026GAAP | (11,426) | – | – |
| Net loss, three months ended September 30, 2026GAAP | −$37.71M | – | – |
| Net loss, nine months ended September 30, 2026GAAP | −$91.76M | – | – |
| Net loss per share of common and limited common stockholders, basic and diluted, three months ended September 30, 2026GAAP | $ (0.50) | – | – |
| Net loss per share of common and limited common stockholders, basic and diluted, nine months ended September 30, 2026GAAP | $ (1.23) | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | −$16.83M | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | −$85.47M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Software products and servicesHosted software revenue was $17.2 million and represented 45% of total software revenue. | $38.2M | – | 6% increase |
| Drug discoveryPrimarily due to the recognition of a milestone payment from Structure Therapeutics. | $24.2M | – | – |
| ContributionThe company presents contribution revenue and cost of revenue separately from software and drug discovery revenue and cost of revenues. | $2.15M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fiscal year ending December 31, 2026 outlook
- Operating expensesless than 2025
- NoteACV is expected to range from $222 million to $232 million, representing 12-17% growth over 2025.
- NoteDrug discovery revenue is expected to range from $75 million to $85 million.
What drove it
- ACV was $44.7 million, a 17% increase, while ACV excluding contribution increased 24%.
- Hosted software revenue was $17.2 million, a 49% increase.
- Drug discovery revenue was primarily supported by recognition of a milestone payment from Structure Therapeutics.
- Schrödinger entered a licensing and collaboration agreement with Tectora Therapeutics and contributed SDGR-4594 and SDGR-8139 in exchange for an equity stake, as well as eligibility for future milestones and royalties.
- Takeda announced that the Food and Drug Administration accepted its New Drug Application under Priority Review for zasocitinib (TAK-279).
Concerns
- Net loss was $37.7 million, compared to a net loss of $32.8 million.
- Software gross margin was 75%, a 2% decrease reflecting the company’s ongoing transition to hosted licenses.
- Other expense was $11.4 million, primarily due to changes in the market value of the company’s equity positions.
- Net cash used in operating activities was $ (96,482) for the nine months ended September 30, 2026.
- Deferred revenue was 97,674 current and 53,560 long-term as of September 30, 2026, compared with 112,853 current and 78,877 long-term as of December 31, 2025.
What to watch
- Execution against ACV guidance of $222 million to $232 million for the fiscal year ending December 31, 2026.
- Delivery of drug discovery revenue guidance of $75 million to $85 million for the fiscal year ending December 31, 2026.
- The ongoing transition to hosted licenses and its effect on software gross margin.
- Potential future milestones and royalties from the Tectora Therapeutics collaboration.
- Updated Phase 1 data for SGR-1505, scheduled for presentation at the American Society of Hematology Annual Meeting taking place December 12-15, 2026.
Balance sheet and cash flow
- Cash and cash equivalents were $ 246,983 as of September 30, 2026, compared to $ 230,517 as of December 31, 2025.
- Restricted cash was 7,020 as of September 30, 2026, compared to 6,868 as of December 31, 2025.
- Marketable securities were 119,375 as of September 30, 2026, compared to 164,947 as of December 31, 2025.
- Cash, cash equivalents, restricted cash and marketable securities were $373 million.
- Net cash used in operating activities was $ (96,482) for the nine months ended September 30, 2026, compared to net cash provided by operating activities of $ 29,992 for the nine months ended September 30, 2025.
- Purchases of property and equipment were (4,158) for the nine months ended September 30, 2026.
- Net cash provided by investing activities was 109,159 for the nine months ended September 30, 2026.
- Net cash provided by financing activities was 3,941 for the nine months ended September 30, 2026.
- Cash and cash equivalents and restricted cash at the end of the period were $ 254,003.
Analysis
Schrödinger reported $64.5 million of third-quarter total revenue, a 19% increase, supported by $24.2 million of drug discovery revenue and $38.2 million of software revenue. ACV was $44.7 million, a 17% increase, while ACV excluding contribution increased 24%. The company reported $214 million of ACV on a trailing four-quarter basis, indicating that software contract value continued to expand alongside reported revenue.
Drug discovery was the principal source of quarterly growth. Drug discovery revenue was $24.2 million compared to $13.0 million, primarily due to recognition of a milestone payment from Structure Therapeutics. Software revenue increased 6%, while hosted software revenue increased 49% to $17.2 million and represented 45% of total software revenue. Contribution revenue was $2.2 million, compared with $5.4 million in the prior-year quarter.
Profitability improved at the operating level but remained negative. Gross profit was 38,253 compared with 28,039, and loss from operations narrowed to (26,129) from (45,947). Total operating expenses decreased 13% to $64.4 million. Software gross margin was 75%, a 2% decrease that the company attributed to its ongoing transition to hosted licenses. Net loss was $37.7 million versus $32.8 million because total other expense was (11,426), including a (14,752) change in fair value of equity investments. Adjusted EBITDA improved to $16.8 million of loss from $33.6 million of loss.
Liquidity included $373 million of cash, cash equivalents, restricted cash and marketable securities. For the nine months ended September 30, 2026, net cash used in operating activities was $96.5 million, compared with $30.0 million of cash provided in the prior-year period. The company raised full-year ACV guidance to $222 million to $232 million from its prior expectation of $218 million to $228 million, and raised drug discovery revenue guidance to $75 million to $85 million from $65 million to $75 million. Operating expenses are expected to be less than 2025.
Management, verbatim
We are very pleased with our third quarter performance, delivering 17% ACV growth, $24 million of drug discovery revenue, and raising our full-year ACV and drug discovery revenue outlook. Our strong performance highlights the power of our industry-leading platform and also our business model in which our software and drug discovery businesses reinforce each other.
Ramy Farid, Ph.D., chief executive officer of Schrödinger
Not in the filing
stated, not guessed- ACV excluding contribution absolute value was not reported.
- Prior-year ACV absolute value was not reported.
- Prior-year hosted software revenue absolute value was not reported.
- Quarterly operating cash flow was not reported.
- Free cash flow was not reported.
- Debt other than operating lease liabilities was not reported.
- Share repurchases were not reported.
- Dividends were not reported.
- Prior guidance comparison is not included because no previous outlook section was provided.
- Third-quarter 2026 revenue guidance was not reported.
- Gross margin guidance was not reported.
- Tax-rate guidance was not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.