What happened
Shares of Schrödinger (SDGR -3.44%) rose by more than 20% on Wednesday morning after the healthcare company released its fourth-quarter and annual reports following the close of trading on Tuesday. The company provides molecular simulations and software solutions and services for pharmaceutical, biotechnology, and materials science research. As of 12:20 p.m. ET, the shares were still up by 19.6%.
So what
The company reported fourth-quarter revenue of $56.8 million, up 23% year over year, and a net loss for the quarter of $27.2 million, compared to a $30.7 million net loss in the prior-year period.
For the year, Schrödinger's revenue rose 31% to $181 million, though its net loss increased to $149.2 million, up from $101.2 million in 2021. Its revenue rose in several areas, with drug discovery revenue notably up by 84% to $45.4 million. Software revenue rose 20% to $135.6 million thanks to increased renewals from current customers, according to CEO Ramy Farid.
Now what
Companies that use artificial intelligence are hot in the stock market these days. New drug development has a high failure rate, and Schrödinger already works with most of the large pharmaceutical companies to provide them with tools to help increase their success rates. The key for the company will be building its customer base. It has 1,750 active clients, up from 1,647 in 2021 and 1,463 in 2020.
Investors also liked the company's guidance for 2023. Management says it expects software revenue to grow by 13% to 17%, and forecasts that drug discovery revenue will make a major jump to the $70 million to $90 million range. The stock is down more than 26% over the past 12 months, but is up more than 39% so far in 2023.
