GET DAILY SIGNALSSchrödinger (SDGR) Posts +19% Revenue Increase in Third Quarter
Key Takeaways
- Total revenue rose 19% year over year to $64.5 million, driven by software growth and a milestone payment in drug discovery.
- Software revenue reached $38.2 million, with hosted revenue climbing 49% to $17.2 million.
- Drug discovery revenue jumped to $24.2 million from $13.0 million in the prior-year quarter.
- Net loss was $38 million, or $0.50 per share, compared with a net loss of $33 million, or $0.45 per share, a year earlier.
- Management raised its full-year 2026 annual contract value (ACV) and drug discovery revenue guidance.
- Annual contract value grew 17% year over year to $44.7 million, reflecting broad-based customer demand.
Earnings Context and Why It Matters
SDGR occupies a distinctive position at the intersection of computational science, software, and drug discovery, which makes its quarterly results a window into two different businesses at once. Investors watch its software segment for evidence of durable subscription growth, while the drug discovery line reflects milestone payments and the value of its physics-based platform in generating clinical candidates. The third quarter of 2026 carried particular weight because it tested whether the company's ongoing transition from on-premise licenses to hosted (cloud-based) contracts could sustain momentum without pressuring reported revenue. Broader industry demand for AI-enabled and physics-based discovery tools has also kept the company in focus. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Reported Results
SDGR reported total revenue of $64.5 million for the third quarter of 2026, a 19% increase from $54.3 million in the same period a year earlier and comfortably above consensus estimates of roughly $48 million. Software revenue was $38.2 million, with hosted revenue of $17.2 million up 49% year over year and representing 45% of the software total, up from 32% in the third quarter of 2025. Drug discovery revenue was $24.2 million, compared with $13.0 million a year ago, driven primarily by a milestone payment tied to Structure Therapeutics' oral amylin program.
The company reported a net loss of $38 million, or $0.50 per share, versus a net loss of $33 million, or $0.45 per share, in the prior-year quarter. The per-share loss was modestly better than consensus, which had anticipated a loss of roughly $0.55 per share. Total operating expenses declined 13% to $64 million, reflecting lower clinical contract research organization (CRO) costs and headcount-related expenses. SDGR ended the quarter with $373 million in cash and marketable securities.
Market Reaction and Investor Sentiment
SDGR entered the report with mixed sentiment, as analysts had projected a year-over-year decline in earnings on lower expected revenue, reflecting the near-term revenue-recognition drag from the hosted-software transition. The reported 19% revenue increase and the upward revision to full-year guidance therefore ran counter to that cautious backdrop. Investors were also watching the drug discovery line closely, since milestone payments from partners such as Structure Therapeutics can create lumpy quarter-to-quarter results. The combination of stronger-than-expected top-line performance, disciplined expense management, and raised guidance provided a clearer signal of business momentum heading into year-end.
Forward Outlook and Key Factors to Monitor
Looking ahead, several themes will shape how investors interpret SDGR's trajectory. First, the hosted-software transition remains the central dynamic in the software segment. Because hosted contracts are recognized ratably over the life of the agreement rather than upfront, continued migration can temporarily moderate reported revenue even as underlying demand improves. Monitoring the mix of hosted versus on-premise revenue will be essential to separating accounting effects from real growth.
Second, management's guidance update is worth tracking. The company now expects full-year 2026 ACV in the range of $222 million to $232 million, implying 12% to 17% growth, and drug discovery revenue of $75 million to $85 million, up from a prior range of $65 million to $75 million following the Structure milestone. Whether those targets hold through the fourth quarter will test management's visibility.
Finally, the therapeutics portfolio and co-founding strategy remain catalysts. The quarter included the launch of Tectora, a discovery-stage company funded with $55 million, while partner Takeda's FDA acceptance of a new drug application for Zascitinib under priority review highlighted progress across partnered assets. Milestones, equity-method value changes, and clinical updates can all introduce volatility into non-operating results, so investors should watch those items alongside core software demand and cost discipline. From what I see, this is important because it highlights how the platform continues to generate external validation.
Using Tickeron’s AI Screener in My Research
I often turn to Tickeron’s AI Screener when reviewing earnings reports like this one. It lets me quickly filter for similar companies based on fundamentals, technical patterns, and AI-driven signals, which helps put SDGR's results in broader context without spending hours on manual comparisons. The tool has become a regular part of how I evaluate software and biotech names together.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
SDGR in downward trend: price expected to drop as it breaks its higher Bollinger Band on October 28, 2026
SDGR broke above its upper Bollinger Band on October 28, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options. The A.I.dvisor looked at 41 similar instances where the stock broke above the upper band. In 39 of the 41 cases the stock fell afterwards. This puts the odds of success at 90%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for SDGR moved out of overbought territory on October 06, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 29 similar instances where the indicator moved out of overbought territory. In 25 of the 29 cases, the stock moved lower in the following days. This puts the odds of a move lower at 86%.
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In 49 of 59 cases where SDGR's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are 83%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SDGR declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 86%.
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 27, 2026. You may want to consider a long position or call options on SDGR as a result. In 75 of 90 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 83%.
The Moving Average Convergence Divergence (MACD) for SDGR just turned positive on October 28, 2026. Looking at past instances where SDGR's MACD turned positive, the stock continued to rise in 39 of 47 cases over the following month. The odds of a continued upward trend are 83%.
SDGR moved above its 50-day moving average on October 26, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for SDGR crossed bullishly above the 50-day moving average on October 28, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 13 of 15 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 87%.
Following a +26.00% 3-day Advance, the price is estimated to grow further. Considering data from situations where SDGR advanced for three days, in 213 of 274 cases, the price rose further within the following month. The odds of a continued upward trend are 78%.
The Aroon Indicator entered an Uptrend today. In 139 of 187 cases where SDGR Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 74%.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of 12 (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (6.486) is normal, around the industry mean (4.691). SDGR has a moderately low P/E Ratio (-39.068) as compared to the industry average of (13.172). Projected Growth (PEG Ratio) (0.000) is also within normal values, averaging (2.133). Dividend Yield (0.000) settles around the average of (0.012) among similar stocks. P/S Ratio (6.835) is also within normal values, averaging (6.065).
The Tickeron Price Growth Rating for this company is 35 (best 1 - 100 worst), indicating steady price growth. SDGR’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron SMR rating for this company is 94 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is 96 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. SDGR’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 96, placing this stock worse than average.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Advertisement
General Information
a provider of chemical simulation software solutions to pharmaceutical industry.
Industry ServicestotheHealthIndustry
Advertisement