Schrödinger Shares Fall After Q3 Miss, Narrowed FY21 Revenue Outlook

  • Schrödinger Inc (NASDAQ:SDGRposted Q3 sales of $29.9 million, +16% Y/Y, missing the consensus of $31.58 million.
  • Software revenue was $24.3 million, +6% primarily due to increased sales from existing customers and the addition of new customers, partially offset by multi-year contracts executed in Q3 FY20.
  • Drug discovery revenue was $5.6 million, compared to $2.9 million a year ago, and it included the recognition of $4.4 million of revenue from the collaboration with Bristol Myers Squibb & Co (NYSE:BMY).
  • Software gross margin was 73%, down from 81% a year ago, reflecting planned investments and increased royalty expenses in the quarter.
  • Operating expenses increased to $45.8 million, compared to $30.7 million in Q3 FY20.
  • Schrödinger posted a Q3 EPS loss of $(0.49), missing the consensus of $(0.43) and a turnaround from the income of $0.06.
  • The company held cash and equivalents of $600.2 million.
  • Guidance: Schrödinger revised the upper end of FY21 sales guidance and forecasts revenue of $124 million - $134 million, compared to earlier guidance of $124 million - $142 million, below the consensus of $138.49 million.
  • The company is maintaining its full-year software revenue expectation of $102 million - $110 million. 
  • It lowered its full-year drug discovery revenue expectation to $22 million - $24 million, from the earlier expectation of $22 million - $32 million, primarily due to the timing of anticipated milestones from collaborators.
  • Price Action: SDGR shares are down 15.4% at $43.29 during the premarket session on the last check Thursday.
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