Schrödinger, Inc. (NASDAQ:SDGR) Q3 2023 Earnings Call Transcript

It’s roughly $100 million. We do expect the fourth quarter operating cash use to be lower than the third quarter, which is giving you a sense of what the outlook for the year is. But it’s really those factors that I mentioned to my – sort of changed the outlook on the cash side, even though we’ve maintained revenue and the operating expense outlook.

Michael Ryskin: If I can take a follow-up on the software side of the business, again, know that you reiterated the guide and 3Q was pretty much right down the middle of your outlook. But still, there’s been a lot of chatter and a lot of updates among other biopharma players in terms of program reprioritization, some cost cutting, some reevaluating of their spend across various baskets. Obviously, when they use Schrödinger software, it’s a very small part of their total OpEx spend. But I’m just wondering, anything you’re hearing from your customers in terms of reevaluating spend levels, whether it is company specific updates or something related to IRA or whatnot? Can you just talk about those conversations?

Ramy Farid: Yeah. First, I just want to emphasize, again, that we have very high confidence in achieving the implied growth in Q4 that’s implied from the maintaining of the 15% to 18% overall growth for the year. And what I’ll tell you is the same thing that we’ve been talking about before. We think, in this environment of this cost cutting, as you describe it, environment, it appears – and again, I don’t think this is surprising – to be resulting in higher demand for technology that improves efficiency and reduces costs and improves probabilities of success. We certainly are aware of what you’re talking about. But we can tell you that it does not appear to be having an impact on the interests and scaling up of the usage of our software. And it is not impacting our sort of confidence in achieving the growth that’s required in Q4 to hit the 15% to 18% overall growth for the Software business.

Operator: Your next question comes from the line of Matthew Hewitt with Craig-Hallum.

Matthew Hewitt: Kind of following up on that regarding the Software. And you’ve commented on this a couple different times, but significant growth potential this year. I just want to clarify, it’s not just about this year, you’re also talking about the conversations you’re having with your larger customers, and what that will mean for next year’s commitments from those same customers, correct?

Geoff Porges: We’re definitely not giving financial guidance for next year or giving you an indication about next year. The discussions that we’ve been having throughout the year have been very positive, continue to be very positive, very supportive of the revenue guidance that we provide or reiterated today, but equally about the opportunity for us to continue to grow the deployment of our software into our largest customers going forward. I also want to highlight, in the comments that I provided about the third quarter, we did see a number of smaller customers actually stepping up their use of our software. So even in a part of the market that many people think is particularly stressed as a result of capital markets, et cetera. We are seeing customers coming forward and stepping up their use of our technology to become larger customers, not necessarily at the scale of the global customers, but definitely contributing.

Ramy Farid: Let me add one more thing. It’s very important to keep in mind, remember, we are advancing the platform very aggressively. We continue to make very important scientific breakthroughs. We continue to improve the software, as we said many times. We have four releases a year. So there are many more opportunities associated with just continued improvements to the platform, expanding its domain of applicability, expanding the types of targets we can work on, expanding the number of properties we can predict. We actually made a statement about that in our prepared remarks. So that’s another important thing to keep in mind. And I think it addresses your question.