Schrödinger's hosted software jumps 49% as it lifts its ACV guidance

Schrödinger's reported software growth looks modest at 6%. Underneath it, the business is changing shape quickly. Third-quarter results released on 4 November show hosted software revenue of $17.2 million, up 49%, now 45% of all software revenue in the quarter.

The numbers

Total revenue was $64.5 million, up 19%, helped by $24.2 million of drug discovery revenue, mostly from a milestone payment from Structure Therapeutics. Software revenue was $38.2 million.

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Annual contract value (ACV) is the figure to watch. It rose 17% to $44.7 million in the quarter, and Schrödinger raised its full-year ACV guidance to $222 million to $232 million, from $218 million to $228 million. It also raised drug discovery revenue guidance to $75 million to $85 million. Operating expenses fell 13% to $64.4 million, and the company ended the quarter with $373 million in cash, equivalents, restricted cash and marketable securities.

Why hosted drags the headline

On the earnings call, CFO Richie Jain explained that hosted contracts are recognised over time, which temporarily holds back reported software revenue. He estimated each 1% rise in hosted mix trims reported revenue by about $2 million to $3 million. Software gross margin slipped to 75% from 77% for the same reason.

In other words, customers are buying more, and paying for it differently.

Where the growth is coming from

CEO Ramy Farid said growth came from top 20 pharma, biotech and materials customers, plus new customers. He noted "a fair discrepancy" in what the top 20 pharma companies spend, and sees room to move lower spenders closer to the biggest accounts.

Two newer products featured heavily. Bunsen, Schrödinger's agentic AI layer, "has rapidly become the primary interface for discovery workflows," Farid said, with an open beta expected this year. Predictive toxicology, which screens compounds computationally against more than 80 off-target proteins, has already contributed to ACV this year.

Farid also said biotech customers are finding it much easier to raise money than last year, which matters for a vendor that sells into that segment.

The bigger picture

A move to hosted, usage-linked AI and a push to grow spend inside existing pharma accounts all point the same way. The commercial engine shifts from landing licences to expanding and renewing them. Jain said the company is "basically at scale" on cost, but will keep investing where it drives top-line growth.

What it means for hiring

Growing spend inside the top 20 pharma accounts is an account management job. We'd expect strategic account directors who can map large, decentralised R&D organisations to be in demand.
Throughput-priced AI like Bunsen needs customer success and application scientists who drive usage, not just sign-off. That's a different profile from a classic licence seller.
Predictive tox brings safety and toxicology scientists into the commercial conversation. People who can bridge computational chemistry and safety teams will be hard to find.

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