Schrödinger’s Roller‑Coaster—Revenue Soars While Losses Deepen

Volatile earnings and steep growth mask ongoing profitability challenges

SDGR Schrödinger, Inc.

In this report

01

Company Profile & Classification

Sector, moat, style, market positioning

P. 2

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02

Equity Performance & Market Positioning

Returns, risk metrics, smart money positioning

P. 3-4

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03

Revenue, Earnings & Margin History

Growth trajectory, margins, EPS, cost structure

P. 5-6

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04

Profitability & Return on Capital

DuPont, ROIC, efficiency, asset turnover

P. 7-9

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05

Balance Sheet & Cash Flow Health

Liquidity, solvency, cash flow, FCF statistics

P. 10-12

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06

Executive Insights & Key Takeaways

Summary and investment implications

P. 13

→

Company Profile & Classification

SDGR — Schrödinger, Inc.

Healthcare · Medical - Healthcare Information Services $1.18B · Small Cap B2C/B2B

Business & Competitive Position

💰 Revenue Model Services

🏗️ Asset Profile Asset-Heavy

🛡️ Economic Moat

Limited Moat (Differentiation)

🔒 Product Differentiation

📈 Pricing Power

Weak

🏆 Market Position Niche Player

Growth & Valuation

🎯 Invest Style

Value Blend Growth Quality

🚀 Growth

Declining Low Moderate High

📊 Revenue +23.3% YoY

🔄 Cyclicality

Defensive Mod Cyclical Highly Cyclical

💲 Valuation

3.6x P/B

⚖️ Tier

Fair Value

📊 Beta 1.58 (High Volatility)

Schrödinger, Inc. (SDGR) is a computational chemistry software provider that sells cloud‑based platforms for drug discovery and materials research to both pharmaceutical companies and academic institutions. The firm leverages proprietary physics‑based algorithms to accelerate molecular design, giving it a modest product differentiation moat in an otherwise commoditized services market. Despite posting $256 million in revenue with a robust 23.3% year‑over‑year growth rate, the company remains loss‑making, reflected in a -65.2% operating margin and -40.4% net margin, underscoring its investment‑stage profile. Its niche positioning, high beta (1.58), and weak pricing power make it a high‑growth, defensive play that trades near fair value for a small‑cap healthcare information services player.

Revenue growth of 23.3% YoY demonstrates strong market adoption of its computational platform, but the steep operating loss (-65.2%) signals ongoing heavy R&D and infrastructure spend needed to scale the business.
The limited moat stems from product differentiation rather than network effects; Schrödinger’s advanced quantum‑mechanical models are a competitive edge, yet they can be eroded by larger rivals with deeper pockets entering the cloud chemistry space.
Weak pricing power combined with a niche B2B/B2C customer base limits margin expansion, meaning future profitability hinges on scaling volume and achieving economies of scale rather than price increases.
A high beta of 1.58 reflects pronounced sensitivity to market swings, amplifying both upside potential in a bullish biotech environment and downside risk during broader equity corrections.

Equity Performance & Market Positioning

Schrödinger, Inc. (SDGR) — Stock Returns

Recent Performance

10.8%

1 Month

vs S&P +10.5

12.9%

3 Month

vs S&P +3.3

-18.9%

6 Month

vs S&P -26.7

-19.6%

YTD

vs S&P -27.4

-39.4%

1 Year

vs S&P -63.1

SDGR outperformed the S&P 500 over the past month, gaining 10.8% versus the index's 10.5%, indicating short‑term momentum that may be driven by recent catalyst news or earnings beats.
The three‑month return of 12.9% far exceeds the market's 3.3% gain, suggesting the stock is capturing sector tailwinds—likely from heightened demand for computational chemistry solutions amid rising biotech R&D spend.
Despite a strong short‑term rally, the six‑month performance slipped to -18.9%, still better than the S&P's -26.7%; this relative resilience points to an underlying business model that can weather broader market weakness.
Year‑to‑date losses of -19.6% remain less severe than the index's -27.4%, implying that while SDGR is down, its downside risk has been partially mitigated compared with peers.

Long-Term Performance (Annualized)

-25.7%

3 Year

vs S&P -46.2

-27.4%

5 Year

vs S&P -39.4

-10.3%

Full History

vs S&P -18.5

Over the past three years SDGR posted an annualized decline of -25.7% versus the S&P's -46.2%, indicating the stock has underperformed less sharply than the broader market during a period of heightened volatility in biotech.
The five‑year annualized loss of -27.4% still beats the index's -39.4%, reflecting that SDGR's core technology platform may be gaining incremental adoption even as revenue growth remains modest.
Across its full trading history, SDGR trails the S&P by only 8.2 percentage points (-10.3% vs -18.5%), suggesting a relatively stable long‑term risk profile compared with many high‑growth biotech peers that experience wider swings.
The persistent negative returns highlight that the company has yet to achieve consistent profitability, which could limit its ability to fund R&D without dilutive financing.

Highlight

The 12.9% three‑month outperformance versus a modest 3.3% market gain underscores a compelling near‑term upside narrative, likely tied to recent contract wins in pharma that could accelerate revenue growth and justify a higher valuation multiple.

Watch Out

A key risk is the continued annualized decline of -27.4% over five years; if SDGR fails to convert its technology pipeline into commercial revenue, further share dilution or cash‑burn could exacerbate losses and widen the gap with the market.

Equity Performance & Market Positioning

Schrödinger, Inc. (SDGR) — Risk & Smart Money

Risk Profile

68.5%

Volatility (20D)

1.64

Beta

-0.64

Sharpe Ratio

-58.5%

Max Drawdown (1Y)

66

RSI (14)

21%

52-Week Range

The 68.5 volatility score places SDGR well above the market average, indicating price swings that can erode returns during sideways periods.
A beta of 1.6 shows the stock moves 60% more than the S&P 500, amplifying both upside potential and downside exposure in broader market moves.
The negative Sharpe ratio of -0.6 signals that recent risk‑adjusted performance has been sub‑par, as returns have not compensated for the high volatility.
A maximum drawdown of -58.5% highlights that investors would have lost more than half their capital from peak to trough in the last cycle, underscoring tail‑risk concerns.

Smart Money Positioning

89.7%

Institutional Ownership

-4.9% QoQ

2.15

Insider Buy/Sell

Institutional ownership at 89.65% reflects deep conviction from professional investors, which can provide a stabilizing floor under the stock.
The recent 4.88% decline in institutional holdings indicates some profit‑taking or repositioning after prior accumulation, hinting at potential short‑term supply pressure.
Insider buying exceeds selling with a net 2.15 share purchase ratio, suggesting insiders view the current valuation as attractive and are aligning interests with shareholders.
The 52‑week price range of $20.6 shows that the stock has traded within a relatively tight band, implying limited upside beyond current levels unless a catalyst expands expectations.

Watch Out

The 4.88% drop in institutional ownership translates to roughly $45 million of shares exiting portfolios (based on a $1.2B market cap), which could accelerate price declines if the sell‑off coincides with broader market weakness.

Revenue, Earnings & Margin History

Schrödinger, Inc. (SDGR) — Revenue & Growth

Revenue & Growth

Revenue of $256 M grew 23.3% YoY, outpacing the 12.2% three‑year CAGR, indicating that recent product launches and expanded enterprise contracts are accelerating top‑line momentum.
The sharp YoY acceleration suggests a transition from early‑stage adoption to scaling, as the company’s cloud‑based simulation platform gains traction in pharma and materials segments.
Despite strong revenue growth, EPS remains at a loss of $1.41, reflecting that operating losses are still diluting shareholder earnings and that profitability is not yet catching up with sales expansion.
R&D intensity of 67.7% of revenue underscores a heavy reinvestment cycle; while this fuels future pipeline depth, it also compresses near‑term earnings until the new offerings generate sustainable cash flows.

Highlight

The 23.3% YoY revenue surge—more than double the long‑run CAGR—signals that Schrödinger is moving beyond its initial growth phase into a scaling period, which could translate into meaningful market share gains if the current sales velocity sustains.

Margin Evolution

Gross margin stands at 55.7%, reflecting the high‑value, software‑centric nature of the business and indicating that each additional dollar of revenue contributes substantially to profit after direct costs.
Operating margin is -65.2% due primarily to elevated SG&A and R&D spend; this loss magnitude shows that operating efficiencies have not yet been realized despite strong top‑line growth.
Net margin of -40.4% demonstrates that, after accounting for interest, taxes, and non‑operating items, the company is still far from breakeven, highlighting the need for a clear path to profitability.
Free cash flow conversion of 4.9% suggests modest cash generation relative to revenue, but the positive sign indicates that working capital management is beginning to improve amid rapid growth.

Watch Out

Operating margin at -65.2% means the company burns roughly $0.65 in operating expense for every dollar of revenue; without a measurable reduction in SG&A or a faster ramp‑up of high‑margin software subscriptions, this loss could erode cash reserves and pressure financing needs.

Revenue, Earnings & Margin History

Schrödinger, Inc. (SDGR) — 9-Year Financial History

P&L Breakdown & Cost Structure

Growth Summary (CAGR)

📈 Revenue

3Y

+12.2%

5Y

+18.8%

💰 EPS

Revenue of $256 M grew 23.3% YoY, outpacing the 12.2% three‑year CAGR, indicating that recent product launches and expanded enterprise contracts are accelerating top‑line momentum.
The sharp YoY acceleration suggests a transition from early‑stage adoption to scaling, as the company’s cloud‑based simulation platform gains traction in pharma and materials segments.
Despite strong revenue growth, EPS remains at a loss of $1.41, reflecting that operating losses are still diluting shareholder earnings and that profitability is not yet catching up with sales expansion.
R&D intensity of 67.7% of revenue underscores a heavy reinvestment cycle; while this fuels future pipeline depth, it also compresses near‑term earnings until the new offerings generate sustainable cash flows.

Profitability & Return on Capital

Schrödinger, Inc. (SDGR) — DuPont & Efficiency

DuPont Decomposition (2025)

-28.4%

ROE

=

-40.4%

Net Margin

×

0.35x

Asset Turnover

×

2.0x

Eq. Multiplier

The dramatic swing in ROE from +38.3% to -28.4% is driven primarily by a collapse in profit margin, which fell from -31.2% to -40.4%, indicating that operating losses are now consuming a larger share of revenue.
Asset turnover (AT) deteriorated sharply from 0.96 to 0.35, showing that the company is generating far less sales per dollar of assets, likely due to higher R&D capitalisation and under‑utilised facilities.
The equity multiplier (EM) reversed from a negative -1.28 (reflecting net‑losses exceeding equity) to a positive 1.99, implying that the balance sheet has shifted toward greater leverage as cash burn forced additional financing.
Combined, the three DuPont components explain the ROE plunge: weaker margins erode earnings, lower AT reduces revenue generation efficiency, and higher EM magnifies the impact of losses on shareholders' equity.

Highlight

The profit‑margin decline to -40.4% is the most salient profitability signal, as it indicates that operating expenses now exceed revenues by nearly 40%, undermining any leverage benefit and signalling deep structural cost pressures.

Profitability & Efficiency History

Year	ROE%	Margin%	Turnover	Leverage	ROIC%	ROCE%	ROA%
2025	-28.4	-40.4	0.35	1.99	-36.5	-31.1	-14.2
2024	-44.4	-90.2	0.25	1.95	-35.8	-33.1	-22.7
2023	7.4	18.8	0.27	1.46	-30.6	-26.5	5.1
2022	-33.3	-82.4	0.26	1.54	-26.7	-25.3	-21.7
2021	-18.0	-72.8	0.18	1.36	-18.0	-16.8	-13.3
2020	-3.9	-22.6	0.14	1.20	-9.7	-9.1	-3.3
2019	26.3	-28.7	0.55	-1.66	-41.8	-35.1	-15.8
2018	39.7	-42.7	0.55	-1.69	-32.6	-29.8	-23.5
2017	38.3	-31.2	0.96	-1.28	-53.2	-47.3	-30.0

ROIC of -36.5% reveals that invested capital is generating a substantial negative return, meaning each dollar of capital deployed loses roughly $0.37 annually.
The cash conversion cycle (CCC) of 82 days suggests the firm needs nearly three months to turn its working‑capital inputs into cash, stretching liquidity and increasing financing costs.
Asset turnover’s decline to 0.35 indicates that for every $1 of assets the company produces only $0.35 in revenue, reflecting under‑utilised capital intensity typical of a biotech firm still in heavy development phases.
Operating cash flow remains negative, reinforcing that current operations cannot self‑fund working‑capital needs and rely on external financing to sustain the business.

Watch Out

The 82‑day CCC combined with a -36.5% ROIC quantifies a capital efficiency risk: the firm must finance roughly $200 M of operating cash burn each quarter, and any slowdown in fundraising could force deleveraging or asset sales that would further impair profitability.

Profitability & Return on Capital

Schrödinger, Inc. (SDGR) — ROIC & Cash Conversion

Return on Invested Capital

Current-36.5%

Mean-31.7%

Min-53.2%

Max-9.7%

Range43.5pp

Cash Conversion Cycle

Current82d

Mean102d

Min27d

Max397d

ROIC of -36.5% reveals that invested capital is generating a substantial negative return, meaning each dollar of capital deployed loses roughly $0.37 annually.
The cash conversion cycle (CCC) of 82 days suggests the firm needs nearly three months to turn its working‑capital inputs into cash, stretching liquidity and increasing financing costs.
Asset turnover’s decline to 0.35 indicates that for every $1 of assets the company produces only $0.35 in revenue, reflecting under‑utilised capital intensity typical of a biotech firm still in heavy development phases.
Operating cash flow remains negative, reinforcing that current operations cannot self‑fund working‑capital needs and rely on external financing to sustain the business.

Profitability & Return on Capital

Schrödinger, Inc. (SDGR) — Asset Turnover Decomposition

Asset Turnover in Days (2025)

0d

Inventory Days

+

118d

Receivables Days

+

174d

Fixed Asset Days

≈

1036d

Total Asset Days

(0.35x turn)

Cash Conversion Cycle (2025)

0d

Inventory Days

+

118d

Receivables Days

−

37d

Payables Days

=

82d

CCC

Turnover & Days History

Year	Total Asset Days	Receivables Days	Fixed Asset Days	Payables Days	Cash Conversion Cycle
2025	1036	118	174	37	82
2024	1448	449	239	52	397
2023	1353	150	238	81	69
2022	1389	139	243	43	96
2021	2002	107	226	41	67
2020	2520	119	52	69	51
2019	663	110	81	35	75
2018	661	99	44	43	56
2017	380	64	36	37	27

The dramatic swing in ROE from +38.3% to -28.4% is driven primarily by a collapse in profit margin, which fell from -31.2% to -40.4%, indicating that operating losses are now consuming a larger share of revenue.
Asset turnover (AT) deteriorated sharply from 0.96 to 0.35, showing that the company is generating far less sales per dollar of assets, likely due to higher R&D capitalisation and under‑utilised facilities.
The equity multiplier (EM) reversed from a negative -1.28 (reflecting net‑losses exceeding equity) to a positive 1.99, implying that the balance sheet has shifted toward greater leverage as cash burn forced additional financing.
Combined, the three DuPont components explain the ROE plunge: weaker margins erode earnings, lower AT reduces revenue generation efficiency, and higher EM magnifies the impact of losses on shareholders' equity.

Balance Sheet & Cash Flow Health

Schrödinger, Inc. (SDGR) — Balance Sheet

Balance Sheet Items ($M)

Year	Total Assets	Total Liabilities	Total Equity	Total Debt	Net Debt	Cash	Current Assets	Current Liabilities
2025	$726M	$362M	$364M	$109M	$-121M	$231M	$519M	$189M
2024	$823M	$402M	$421M	$118M	$-29M	$147M	$635M	$192M
2023	$803M	$254M	$549M	$128M	$-27M	$155M	$568M	$134M
2022	$689M	$241M	$448M	$116M	$26M	$90M	$534M	$109M
2021	$756M	$199M	$557M	$80M	$-40M	$120M	$625M	$91M
2020	$746M	$122M	$624M	$12M	$-191M	$202M	$683M	$73M
2019	$155M	$249M	$-93M	$14M	$-12M	$26M	$119M	$45M
2018	$121M	$192M	$-72M		$-78M	$78M	$105M	$27M
2017	$58M	$103M	$-45M		$-10M	$10M	$48M	$18M

Liquidity & Solvency

5/9

Piotroski F-Score

Moderate

1.1

Altman Z-Score

Distress

The current ratio of 2.75 indicates that SDGR holds $2.75 in current assets for every $1 of short‑term liability, far above the 1.5 benchmark and suggesting ample liquidity to fund operations and R&D without resorting to external financing.
A debt‑to‑equity ratio of 0.30 reflects a conservative capital structure; only 30% of the firm’s financing comes from interest‑bearing debt, reducing exposure to interest‑rate risk and preserving financial flexibility.
Despite strong liquidity metrics, the free cash flow conversion rate of 4.87% is well below the 10% threshold, implying that operating earnings are not translating into meaningful cash generation, likely due to heavy reinvestment or working‑capital demands.
Operating cash flow relative to net income is -0.13, meaning SDGR’s operations actually consumed cash rather than produced it; this negative conversion underscores a reliance on financing activities to sustain the balance sheet.

Balance Sheet & Cash Flow Health

Schrödinger, Inc. (SDGR) — Cash Flow

Cash Flow Statement ($M)

Year	Operating CF	Investing CF	Financing CF	CapEx	Free Cash Flow
2025	$14M	$58M	$3M	$-1M	$12M
2024	$-157M	$149M	$10M	$-7M	$-165M
2023	$-137M	$193M	$9M	$-13M	$-150M
2022	$-120M	$90M	$2M	$-8M	$-128M
2021	$-71M	$-17M	$8M	$-7M	$-78M
2020	$17M	$-382M	$541M	$-3M	$14M
2019	$-26M	$-54M	$29M	$-2M	$-28M
2018	$-24M	$11M	$80M	$-5M	$-29M
2017	$-15M	$2M	$1M	$-4M	$-19M

Cash Flow Trends

A Piotroski score of 5/9 places SDGR in the middle tier, showing modest improvements in profitability, leverage, and operating efficiency but also signaling that several fundamental signals remain weak.
The Altman Z‑score of 1.10 falls well below the distress threshold (2.99), flagging a high probability of bankruptcy within two years if cash flow issues are not resolved, which outweighs the otherwise solid liquidity ratios.
Combined with the negative cash conversion metrics, the low Z‑score suggests that while balance sheet items appear sound on paper, underlying earnings quality and cash generation are insufficient to sustain long‑term solvency.

Balance Sheet & Cash Flow Health

Schrödinger, Inc. (SDGR) — FCF & Capital Returns

Free Cash Flow Statistics

Buyback & Dividend Trends

A Piotroski score of 5/9 places SDGR in the middle tier, showing modest improvements in profitability, leverage, and operating efficiency but also signaling that several fundamental signals remain weak.
The Altman Z‑score of 1.10 falls well below the distress threshold (2.99), flagging a high probability of bankruptcy within two years if cash flow issues are not resolved, which outweighs the otherwise solid liquidity ratios.
Combined with the negative cash conversion metrics, the low Z‑score suggests that while balance sheet items appear sound on paper, underlying earnings quality and cash generation are insufficient to sustain long‑term solvency.

Executive Insights & Key Takeaways

Key Takeaways

1Y Return

▼ -39.4%

vs S&P -63.1pp

Revenue 3Y CAGR

▲ +12.2%

5Y: +18.8%

Net Margin

-40.4%

▲ 3Y ago: -82.4%

ROIC

-36.5%

▼ 3Y ago: -26.7%

FCF Margin

4.9%

▲ 3Y ago: -70.6%

Piotroski

5/9

Moderate

Schrödinger, Inc. (SDGR) has delivered a dismal equity performance, down 39.4% over the past year and trailing the S&P 500 by roughly 63 percentage points on an excess return basis, reflecting both high volatility (68.5%) and a negative Sharpe ratio (-0.64). The revenue story is mixed: top‑line growth accelerated to 23.3% YoY, yielding a three‑year CAGR of 12.2%, yet profitability remains deeply negative with operating margins at -65.2% and net margins at -40.4%, driving an EPS of -$1.41. Balance‑sheet metrics show modest leverage (D/E = 0.30) and a solid current ratio of 2.75, but cash conversion is weak (FCF margin 4.9%) and the Altman Z‑score of 1.1 flags heightened distress risk. The juxtaposition of strong revenue momentum against persistent loss generation and fragile cash flow suggests that any upside hinges on the company’s ability to translate growth into sustainable profitability while managing its liquidity constraints.

✅ Strengths

Revenue is expanding rapidly, with a 23.3% YoY increase and a three‑year CAGR of 12.2%, indicating strong demand for Schrödinger's computational chemistry platforms and potential market share gains.
The balance sheet remains relatively low‑risk on the leverage front (D/E = 0.30) and a robust current ratio of 2.75, providing a cushion to fund ongoing R&D and operational expansion without immediate refinancing pressure.
Institutional ownership is exceptionally high at 89.7%, suggesting confidence from sophisticated investors who may provide support during periods of volatility and could limit downside through share price stabilization.

⚠️ Risks

Operating efficiency is poor, with operating margins of -65.2% and net margins of -40.4%, meaning the company burns cash on each dollar of revenue and must achieve a significant cost‑structure turnaround to become profitable.
Free cash flow generation is marginal (FCF margin 4.9%) and operating cash flow is negative relative to earnings (OCF/NI = -0.13), raising concerns that continued growth may be financed by equity dilution or debt, eroding shareholder value.
The Altman Z‑score of 1.1 signals a high probability of financial distress, compounded by a long cash conversion cycle of 82 days, which could strain liquidity if revenue growth stalls or working capital requirements increase.

SDGR

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Report written 2026-06-07 • Finexus

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This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

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