Schrodinger Stock: Digging into The Business Model

Checking in with your stocks about once a year seems like the minimum cadence for a long-term tech investor. In reality, you’ll be checking in more often when dramatic stock price movements happen, or corporate events take place. Today, we’re going to check in on a company we haven’t written about in several years – Schrodinger Inc (SDGR).

The last time we wrote about the firm was in a piece titled A Computational Chemistry IPO From Schrodinger which looked at the S-1 filing document which accompanied their initial public offering (IPO) which took place in February 2020. Simply put, Schrodinger has developed a physics-based computational platform that uses artificial intelligence to help drug developers better predict which novel molecules will successfully pass the FDA drug approval gauntlet. The business model derives revenues from two main sources:

  • Licensing software to customers – largely on-premise
  • Capturing some downstream upside through royalties and milestone payments – large rewards if drugs are successful

Let’s start by looking at how overall revenue growth has been progressing.

Schrodinger’s Revenue Growth

In looking at Schrodinger’s latest revenue projections, steady growth across the business appears promising. The be

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