Schrodinger NASDAQ: SDGR said second-quarter annual contract value growth accelerated as demand broadened across large pharmaceutical customers, biotechnology companies and materials-science customers, while the company launched early access for Bunsen, its agentic AI co-scientist.
Second-quarter ACV was $29.6 million, up 27% from a year earlier. ACV excluding contribution revenue was $22.6 million, an increase of 23% year over year and at the upper end of the company’s expectations, Chief Financial Officer Richie Jain said. First-half ACV totaled $58 million, representing 19% growth from the comparable 2025 period, while trailing four-quarter ACV reached $208 million.
“The biopharma industry is increasingly recognizing that a computationally driven predict-first approach is a critical driver for accelerating drug discovery timelines and improving probabilities of success,” President and CEO Ramy Farid said.
Revenue, Profitability and Cash Position
Total revenue for the second quarter was $58.9 million. Software revenue was $32.5 million, including $15.2 million of hosted revenue, or 47% of the software total. That compared with hosted revenue representing 31% of software revenue in the second quarter of 2025.
Jain said the company’s planned transition toward hosted licenses continues to affect reported revenue growth because hosted-contract revenue is recognized ratably over the contract term rather than primarily upfront. Schrodinger said each 1-percentage-point increase in hosted revenue can temporarily reduce reported revenue by $2 million to $3 million, depending on renewal timing and contract duration.
Software gross margin was 71%, compared with 76% a year earlier, reflecting the hosted-licensing transition. Contribution revenue was $3.4 million, down from $4.8 million in the prior-year quarter, primarily because initial Gates Foundation funding for the company’s Predictive Toxicology initiative had been completed. The decline was partly offset by a Gates Ventures grant supporting battery research.
Drug discovery revenue increased to $23 million from $13.9 million in the prior-year period, primarily due to a $10 million collaboration milestone from Ajax Therapeutics. Total other income was $48.9 million, primarily associated with the completion of Eli Lilly’s acquisition of Ajax.
Operating expenses declined 6% year over year to $74 million, which Jain attributed to lower headcount, contract research organization costs and professional-services fees. The company reported net income of $6 million, compared with a net loss of $43 million in the second quarter of 2025, and ended the quarter with $419 million in cash and marketable securities.
Bunsen Launch and Software Strategy
Schrodinger launched Bunsen in early access during the quarter. Farid described the product as an AI co-scientist designed to execute the company’s validated computational methods and complex multistep workflows. The company said Bunsen can help computational chemists work more efficiently while enabling more drug hunters to use advanced simulations.
Bristol Myers Squibb, a longtime customer and collaborator, is deploying Bunsen and expanding use of Schrodinger’s platform across its research organization under a new strategic software agreement. The agreement combines Bunsen with the company’s computational technologies for large-scale chemical exploration.
Farid said the company expects to capture value from increased use of its platform through its throughput-based licensing model. He also said collaborations with NVIDIA and Google Cloud are providing additional tools and compute resources for Bunsen’s early-access program.
Management said Bunsen is already being used internally in the therapeutics organization. Karen Akinsanya, president, head of therapeutics research and development, and chief strategy officer for partnerships, said the AI system has accelerated workflows involving target analysis, structural biology, and analysis of DMPK, pharmacology and toxicology data.
Chief Technology and COO Pat Lorton said Bunsen can monitor computational jobs, identify failures and attempt restarts, potentially improving utilization of computing resources outside normal working hours.
New Products and Market Demand
Schrodinger cited its Predictive Toxicology solution as an emerging contributor to ACV growth. The technology is intended to predict off-target binding risks before synthesis, allowing customers to address potential safety issues earlier in drug discovery. Farid said commercial evaluations are progressing well, though the company did not disclose the specific ACV contribution from the product.
Farid also identified RetroSynth as another new product contributing to growth and said it is included in the Bristol Myers Squibb agreement. He said new products, along with increased usage by existing customers, are a major component of the company’s growth strategy.
On market conditions, Farid said the biotechnology sector has improved compared with last year. He pointed to an increase in biotechnology IPO activity and said the company has seen fewer customers struggling to raise funds than it did in 2025.
Guidance and Therapeutics Portfolio
Schrodinger maintained its full-year 2026 ACV guidance of $218 million to $228 million, representing growth of 10% to 15% from 2025. Jain noted that the fourth quarter is typically the company’s largest ACV quarter and generally accounts for more than half of annual ACV.
The company raised its full-year drug discovery revenue outlook to $65 million to $75 million, from a prior range of $55 million to $65 million, reflecting recognition of the Ajax milestone. It expects 2026 operating expenses to be lower than in 2025.
For the third quarter, Schrodinger expects ACV excluding contribution of $41 million to $45 million, compared with $38.3 million in the third quarter of 2025, which included $2.2 million of contribution ACV.
Akinsanya also highlighted Schrodinger’s July collaboration with Simcere Pharmaceutical Group, under which the company is eligible for development and commercial milestones and tiered royalties on net sales. She said the company has realized more than $750 million from therapeutic activities since 2020, including collaborations, co-invented drugs and co-founded companies. She also cited phase I data presented in June for Ajax asset AJ11095, a Type II JAK inhibitor, as initial clinical evidence supporting its intended differentiated target profile.
About Schrodinger (NASDAQ:SDGR)
Schrödinger, Inc is a life sciences and materials discovery company that specializes in the application of physics-based computational platforms to accelerate drug discovery and advanced materials design. Founded in 1990 by Professor Richard A. Friesner, Schrödinger has developed a suite of proprietary software tools—such as Maestro for molecular modeling, Glide for molecular docking and Jaguar for quantum chemistry calculations—that enable scientists to predict molecular behavior with high accuracy.
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