Schrodinger, Inc.

Thank you for standing by. Welcome to Schrodinger's conference call to review fourth quarter and full year 2024 financial results. My name is Kelvin and I'll be your operator for today's call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press pound key or star two. Please be advised that today's call is being recorded at the company's request. Now I would like to introduce your host for today's conference, Ms. Jared Madden, Senior Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Thank you and good afternoon, everyone. Welcome to today's call, during which we will provide an update on the company and review our fourth quarter and full year 2024 financial results. Earlier today, we issued the press release summarizing our financial results and progress across the company, which is available on our website at Schrodinger.com. Here with me on our call today are Rami Fareed, Chief Executive Officer. Jeff Porges, Chief Financial Officer, and Karen Nakansanya, President of R&D Therapeutics. Following our prepared remarks, we'll open the call for Q&A. During today's call, management will make statements that are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation, statements related to our outlook for the full year 2025, our plans to accelerate the growth of our software business and advance our collaborative and proprietary drug discovery programs, the timing of initiation of and readouts from our clinical trials, the clinical potential and properties of our compounds, the use of our cash resources, as well as our future expenses. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies, and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially due to a number of important factors, including considerations described in the risk factors section and elsewhere in the filings we make with the SEC, including our Form 10-K for the year ended December 31, 2024. These forward-looking statements represent our views only as of today, and we caution you that, except as required by law, we may not update them in the future, whether as a result of new information, future events, or otherwise. Also included in today's call are certain non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and should be considered only in addition to and not a substitute for or superior to GAAP measures. Please refer to the tables at the end of our press release, which is available on our website for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. With that, I'd like to turn the call over to Rami.

Thanks, Jaron, and thank you everyone for joining us today. 2024 was an exciting year for Schrodinger. We exceeded our software revenue expectations, established a new drug discovery collaboration and expanded software agreement with Novartis, and we continue to advance our collaborative and proprietary pipeline. We advanced the science underlying our platform, including initiating a project to predict toxicity associated with off-target binding and launching a new enterprise informatics platform for biologics. 2024 was also marked by important milestones at companies we co-founded. Ajax and Structure progressed their clinical programs, and Morphic was acquired by Lilly for $3.2 billion, resulting in approximately $48 million for Schrodinger. As we look to 2025, I'm optimistic this broad momentum will continue. Total revenue for the year was $208 million. Software revenue was $180 million, representing just over 13% growth, and fourth quarter software revenue grew 16% to $80 million. The strength of our business is also reflected in our 2024 KPIs. The number of software customers with an annual contract value of greater than 5 million increased from 4 to 8, and the number of customers with ACV of greater than 1 million increased from 27 to 31. Total ACV increased by 24% to 191 million. our software customer retention was 100% for customers with ACV of at least 500,000. We believe this strong performance of our KPIs is a direct consequence of the impact our technology is having on our customers' programs. Our priority for 2025 is driving continued increases in adoption of our computational technology and enterprise informatics platform. It is clear that the computational landscape in the industry is changing rapidly and that our unique integration of physics and AI ML methods is producing powerful solutions for drug discovery and materials design. This year, we plan to release several new products and solutions that reflect our continued investment in the platform, including our predictive toxicology technology, where we have already enabled more than 50 off-targets. We are also planning to release enhancements to our biologics discovery technologies and additional applications of AI ML methods that are accelerating and broadening the impact of our physics-based methods. Our platform is having a big impact on our ability to rapidly progress a broad pipeline of collaborative and proprietary discovery programs. This year, we look forward to sharing initial phase one clinical data from our three lead programs. Karen will provide a detailed update later in the call. We are well positioned for a transformational 2025, and we look forward to providing updates over the course of the year. I will now turn the call over to Jeff.