View Filing Data

Print Document View Excel Document

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Aug. 04, 2020
Document And Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Document Period End Date	Jun. 30, 2020
Current Fiscal Year End Date	--12-31
Entity Registrant Name	Schrodinger, Inc.
Entity Central Index Key	0001490978
Entity Tax Identification Number	95-4284541
Entity File Number	001-39206
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	120 West 45th Street
Entity Address, Address Line Two	17th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10036
City Area Code	212
Local Phone Number	295-5800
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	SDGR
Security Exchange Name	NASDAQ
Document Quarterly Report	true
Document Transition Report	false
Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		50,146,628
Limited Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		13,164,193

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 110,380	$ 25,986
Restricted cash	500	500
Marketable securities	173,646	59,844
Accounts receivable, net of allowance for doubtful accounts of $50 and $50	13,849	18,676
Unbilled and other receivables	3,345	7,062
Prepaid expenses	5,294	6,468
Total current assets	307,014	118,536
Property and equipment, net	5,837	6,268
Equity investments	22,680	15,366
Right of use assets	11,918	12,762
Other assets	2,102	2,338
Total assets	349,551	155,270
Current liabilities:
Accounts payable	5,523	3,524
Accrued payroll, taxes, and benefits	5,757	7,034
Deferred revenue	23,138	25,054
Lease liabilities	5,839	5,584
Other accrued liabilities	2,791	3,824
Total current liabilities	43,048	45,020
Deferred revenue, long-term	1,979	2,205
Lease liabilities, long-term	7,777	8,888
Other liabilities, long-term	600	900
Total liabilities	53,404	57,013
Commitments and contingencies (Note 5)
Convertible preferred stock:
Total convertible preferred stock		191,580
Stockholders' equity (deficit):
Common stock	501	61
Additional paid-in capital	417,032	11,655
Accumulated deficit	(122,272)	(105,096)
Accumulated other comprehensive income	727	16
Total stockholders’ equity (deficit) of Schrödinger stockholders	296,120	(93,364)
Noncontrolling interest	27	41
Total stockholders’ equity (deficit)	296,147	(93,323)
Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)	349,551	155,270
Series E Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		109,270
Series D Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		22,000
Series C Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		19,844
Series B Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		9,840
Series A Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		$ 30,626
Limited Common Stock
Stockholders' equity (deficit):
Common stock	132
Total stockholders’ equity (deficit)	$ 132

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Allowance for doubtful accounts receivable	$ 50	$ 50
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	425,000,000
Common stock, shares issued	50,139,639	6,121,821
Common stock, shares outstanding	50,139,639	6,121,821
Series E Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	77,150,132
Convertible preferred stock, issued	0	73,795,777
Convertible preferred stock, outstanding	0	73,795,777
Series D Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	39,540,611
Convertible preferred stock, issued	0	39,540,611
Convertible preferred stock, outstanding	0	39,540,611
Series C Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	47,242,235
Convertible preferred stock, issued	0	47,242,235
Convertible preferred stock, outstanding	0	47,242,235
Series B Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	29,468,101
Convertible preferred stock, issued	0	29,468,101
Convertible preferred stock, outstanding	0	29,468,101
Series A Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	134,704,785
Convertible preferred stock, issued	0	134,704,785
Convertible preferred stock, outstanding	0	134,704,785
Limited Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	146,199,885
Common stock, shares issued	13,164,193	0
Common stock, shares outstanding	13,164,193	0

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues:
Total revenues	$ 23,092	$ 19,010	$ 49,266	$ 39,751
Cost of revenues:
Total cost of revenues	9,509	9,159	20,058	16,896
Gross profit	13,583	9,851	29,208	22,855
Operating expenses:
Research and development	16,657	9,531	30,357	17,969
Sales and marketing	4,362	5,343	9,151	10,436
General and administrative	9,651	8,940	18,587	14,026
Total operating expenses	30,670	23,814	58,095	42,431
Loss from operations	(17,087)	(13,963)	(28,887)	(19,576)
Other income:
Gain on equity investments	4,156		4,156
Change in fair value	8,359	12,661	5,280	12,034
Interest income	570	524	1,269	962
Total other income	13,085	13,185	10,705	12,996
Loss before income taxes	(4,002)	(778)	(18,182)	(6,580)
Income tax expense (benefit)	64	(51)	155	(5)
Net loss	(4,066)	(727)	(18,337)	(6,575)
Net loss attributable to noncontrolling interest	(716)	(227)	(1,161)	(281)
Net loss attributable to Schrödinger common and limited common stockholders	$ (3,350)	$ (500)	$ (17,176)	$ (6,294)
Net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:	$ (0.05)	$ (0.01)	$ (0.33)	$ (0.14)
Weighted average shares used to compute net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:	63,296,366	44,495,701	51,981,647	44,493,667
Software Products and Services
Revenues:
Total revenues	$ 20,900	$ 14,482	$ 44,712	$ 33,087
Cost of revenues:
Total cost of revenues	3,862	3,671	7,863	6,804
Drug Discovery
Revenues:
Total revenues	2,192	4,528	4,554	6,664
Cost of revenues:
Total cost of revenues	$ 5,647	$ 5,488	$ 12,195	$ 10,092

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement Of Income And Comprehensive Income [Abstract]
Net loss attributable to Schrödinger common and limited common stockholders	$ (3,350)	$ (500)	$ (17,176)	$ (6,294)
Changes in market value of investments, net of tax:
Unrealized gain on marketable securities	1,169	18	711	28
Comprehensive loss	$ (2,181)	$ (482)	$ (16,465)	$ (6,266)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121641772&loc=SL7669619-108580

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-URI http://asc.fasb.org/extlink&oid=120399700&loc=SL114874048-224260

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721683-107760

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22595-107794

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121641772&loc=SL7669625-108580

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(18))
-URI http://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(20))
-URI http://asc.fasb.org/extlink&oid=120395209&loc=SL114868664-224227

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=121586364&loc=d3e3602-108585

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22499-107794

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22663-107794

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=75031198&loc=d3e14064-108612

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22583-107794

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121326447&loc=SL5780133-109256

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22658-107794

+ Details

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Series E Preferred Stock	Series D Preferred Stock	Series C Preferred Stock	Series B Preferred Stock	Series A Preferred Stock	Limited Common Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Non Controlling Interest
Beginning Balance at Dec. 31, 2018	$ (71,560)							$ 59	$ 8,915	$ (80,525)	$ (9)
Convertible preferred stock, Beginning Balance, Shares at Dec. 31, 2018		53,669,659	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Beginning Balance at Dec. 31, 2018		$ 79,377	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Beginning Balance, Shares at Dec. 31, 2018								5,906,976
Change in unrealized (loss) gain on marketable securities	10										10
Issuances of common stock upon stock option exercise	115							$ 1	114
Issuances of common stock upon stock option exercise, Shares								44,160
Issuances of Series E preferred stock, net of issuance costs, Shares		3,354,353
Issuances of Series E preferred stock, net of issuance costs		$ 4,951
Stock-based compensation	520								520
Contributions by non-controlling interest	100											$ 100
Net loss	(5,848)									(5,794)		(54)
Ending Balance at Mar. 31, 2019	(76,663)							$ 60	9,549	(86,319)	1	46
Convertible preferred stock, Ending Balance, Shares at Mar. 31, 2019		57,024,012	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Ending Balance at Mar. 31, 2019		$ 84,328	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Ending Balance, Shares at Mar. 31, 2019								5,951,136
Beginning Balance at Dec. 31, 2018	(71,560)							$ 59	8,915	(80,525)	(9)
Convertible preferred stock, Beginning Balance, Shares at Dec. 31, 2018		53,669,659	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Beginning Balance at Dec. 31, 2018		$ 79,377	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Beginning Balance, Shares at Dec. 31, 2018								5,906,976
Change in unrealized (loss) gain on marketable securities	$ 28
Issuances of common stock upon stock option exercise, Shares	69,187
Net loss	$ (6,575)
Ending Balance at Jun. 30, 2019	(76,550)							$ 60	10,145	(86,819)	19	45
Convertible preferred stock, Ending Balance, Shares at Jun. 30, 2019		73,795,777	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Ending Balance at Jun. 30, 2019		$ 109,270	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Ending Balance, Shares at Jun. 30, 2019								5,976,163
Beginning Balance at Mar. 31, 2019	(76,663)							$ 60	9,549	(86,319)	1	46
Convertible preferred stock, Beginning Balance, Shares at Mar. 31, 2019		57,024,012	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Beginning Balance at Mar. 31, 2019		$ 84,328	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Beginning Balance, Shares at Mar. 31, 2019								5,951,136
Change in unrealized (loss) gain on marketable securities	18										18
Issuances of common stock upon stock option exercise	$ 65								65
Issuances of common stock upon stock option exercise, Shares	25,027							25,027
Issuances of Series E preferred stock, net of issuance costs, Shares		16,771,765
Issuances of Series E preferred stock, net of issuance costs		$ 24,942
Stock-based compensation	$ 531								531
Contributions by non-controlling interest	226											226
Net loss	(727)									(500)		(227)
Ending Balance at Jun. 30, 2019	(76,550)							$ 60	10,145	(86,819)	19	45
Convertible preferred stock, Ending Balance, Shares at Jun. 30, 2019		73,795,777	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Ending Balance at Jun. 30, 2019		$ 109,270	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Ending Balance, Shares at Jun. 30, 2019								5,976,163
Beginning Balance at Dec. 31, 2019	(93,323)							$ 61	11,655	(105,096)	16	41
Convertible preferred stock, Beginning Balance, Shares at Dec. 31, 2019		73,795,777	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Beginning Balance at Dec. 31, 2019	191,580	$ 109,270	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Beginning Balance, Shares at Dec. 31, 2019								6,121,821
Change in unrealized (loss) gain on marketable securities	(458)										(458)
Issuances of common stock upon stock option exercise	177							$ 1	176
Issuances of common stock upon stock option exercise, Shares								57,581
Stock-based compensation	1,775								1,775
Issuances of common stock upon initial public offering, net of issuance costs	209,633							$ 136	209,497
Issuances of common stock upon initial public offering, net of issuance costs, Shares.								13,664,704
Conversion of convertible preferred stock into common stock	149,824							$ 303	149,521
Temporary equity, conversion of convertible preferred stock into common stock, Shares		(73,795,777)	(17,844,124)			(134,704,785)
Temporary equity, conversion of convertible preferred stock into common stock		$ (109,270)	$ (9,928)			$ (30,626)
Conversion of convertible preferred stock into common stock, Shares								30,278,832
Exchange of convertible preferred stock into limited common stock	41,756						$ 132		41,624
Temporary equity, exchange of convertible preferred stock into limited common stock, Shares			(21,696,487)	(47,242,235)	(29,468,101)
Temporary equity, exchange of convertible preferred stock into limited common stock			$ (12,072)	$ (19,844)	$ (9,840)
Exchange of convertible preferred stock into limited common stock, Shares							13,164,193
Contributions by non-controlling interest	435											435
Net loss	(14,271)									(13,826)		(445)
Ending Balance at Mar. 31, 2020	295,548						$ 132	$ 501	414,248	(118,922)	(442)	31
Ending Balance, Shares at Mar. 31, 2020							13,164,193	50,122,938
Beginning Balance at Dec. 31, 2019	(93,323)							$ 61	11,655	(105,096)	16	41
Convertible preferred stock, Beginning Balance, Shares at Dec. 31, 2019		73,795,777	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Beginning Balance at Dec. 31, 2019	191,580	$ 109,270	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Beginning Balance, Shares at Dec. 31, 2019								6,121,821
Change in unrealized (loss) gain on marketable securities	$ 711
Issuances of common stock upon stock option exercise, Shares	74,282
Net loss	$ (18,337)
Ending Balance at Jun. 30, 2020	296,147						$ 132	$ 501	417,032	(122,272)	727	27
Ending Balance, Shares at Jun. 30, 2020							13,164,193	50,139,639
Beginning Balance at Mar. 31, 2020	295,548						$ 132	$ 501	414,248	(118,922)	(442)	31
Beginning Balance, Shares at Mar. 31, 2020							13,164,193	50,122,938
Change in unrealized (loss) gain on marketable securities	1,169										1,169
Issuances of common stock upon stock option exercise	$ 55								55
Issuances of common stock upon stock option exercise, Shares	16,701							16,701
Stock-based compensation	$ 2,729								2,729
Contributions by non-controlling interest	712											712
Net loss	(4,066)									(3,350)		(716)
Ending Balance at Jun. 30, 2020	$ 296,147						$ 132	$ 501	$ 417,032	$ (122,272)	$ 727	$ 27
Ending Balance, Shares at Jun. 30, 2020							13,164,193	50,139,639

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Common Stock
Common stock issuance costs	$ 22,667
Series E Preferred Stock
Issuance of preferred stock value of issuance costs		$ 58	$ 49

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net loss	$ (18,337)	$ (6,575)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on equity investments	(4,156)
Noncash revenue from equity investments	(169)	(92)
Fair value adjustments	(5,280)	(12,034)
Depreciation	1,758	1,793
Stock-based compensation	4,504	1,051
Noncash research and development expenses	1,147	227
Noncash investment accretion	(205)	(212)
Decrease (increase) in assets:
Accounts receivable, net	4,827	233
Unbilled and other receivables	4,126	1,044
Reduction in the carrying amount of right of use assets	2,622	1,551
Prepaid expenses and other assets	(447)	1,149
Increase (decrease) in liabilities:
Accounts payable	1,999	123
Accrued payroll, taxes, and benefits	(1,277)	(35)
Deferred revenue	(1,973)	1,779
Lease liabilities	(2,634)	(1,547)
Other accrued liabilities	(1,334)	2,682
Net cash used in operating activities	(14,829)	(8,863)
Cash flows from investing activities:
Purchases of property and equipment	(1,327)	(1,393)
Purchases of equity investments	(2,869)
Distribution from equity investment	4,582
Purchases of marketable securities	(177,694)	(65,504)
Proceeds from sale and maturity of marketable securities	64,808	12,325
Net cash used in investing activities	(112,500)	(54,572)
Cash flows from financing activities:
Issuances of common stock upon initial public offering, net	211,491
Issuances of Series E preferred stock, net		29,893
Issuances of common stock upon stock option exercise	232	180
Contribution by noncontrolling interest		100
Net cash provided by financing activities	211,723	30,173
Net increase (decrease) in cash and cash equivalents and restricted cash	84,394	(33,262)
Cash and cash equivalents and restricted cash, beginning of period	26,486	77,716
Cash and cash equivalents and restricted cash, end of period	110,880	44,454
Supplemental disclosure of cash flow and noncash information
Cash paid for income taxes	149	43
Supplemental disclosure of non-cash investing and financing activities
Purchases of property and equipment		26
Acquisitions of right of use assets in exchange for lease obligations	1,778	464
Right of use assets recognized on adoption		$ 16,475
Reclass of deferred financing costs to additional paid in capital	$ 1,858

Description of Business

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business

(1)	Description of Business

Schrödinger, Inc. (“the Company”) has developed a differentiated, physics-based software platform that enables discovery of high-quality, novel molecules for drug development and materials applications more rapidly, at lower cost, and with, the Company believes, a higher likelihood of success compared to traditional methods. The Company sells its software to biopharmaceutical and industrial companies, academic institutions, and government laboratories. The Company also applies its computational platform to a broad pipeline of drug discovery programs in collaboration with biopharmaceutical companies, some of which the Company co-founded. In addition, the Company uses its platform to advance a pipeline of internal, wholly-owned drug discovery programs.

On February 10, 2020, the Company completed an initial public offering (“IPO”), in which the Company issued and sold 11,882,352 shares of common its stock at a public offering price of $17.00 per share. The underwriters fully exercised their option to purchase an additional 1,782,352 shares of the Company’s common stock at the offering price. The Company raised approximately $209.6 million in net proceeds after deducting underwriting discounts and commissions and offering expenses payable by the Company.

Immediately prior to the closing of the IPO, preferred stockholders voluntarily exchanged 98,406,823 shares of preferred stock for an aggregate of 13,164,193 shares of limited common stock. In addition, upon the closing of the IPO, the remaining 226,344,686 shares of preferred stock automatically converted into an aggregate of 30,278,832 shares of common stock.

Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Significant Accounting Policies

(2)	Significant Accounting Policies

(a)	Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted this new standard effective January 1, 2020 with no material impact on its consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808) – Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this ASU clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account and precluded recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. The new guidance is effective for fiscal years beginning after December 15, 2019. The Company adopted the amendment on January 1, 2020 with no material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Topic 350) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021, with early adoption permitted. The Company has not yet adopted ASU 2018-15 and does not expect the adoption to have a significant impact on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. This guidance will be effective for the Company in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

(b)	Basis of Presentation and Use of Estimates

The accompanying unaudited condensed consolidated financial statements and the related interim disclosures have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for the interim financial information. These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 16, 2020.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the useful lives of long-lived assets, the recoverability of deferred tax assets, assumptions used in the allocation of revenue, and the valuation of stock-based compensation. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements

(c)	Principles of Consolidation

The Company’s condensed unaudited consolidated financial statements include the accounts of Schrödinger, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The functional currency for foreign entities is the United States dollar. The Company accounts for investments over which it has significant influence, but not a controlling financial interest, using the equity method.

(d)	Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade receivables.

The Company does not require customers to provide collateral to support accounts receivable. If deemed necessary, credit reviews of significant customers may be performed prior to extending credit. The determination of a customer’s ability to pay requires judgment, and failure to collect from a customer can adversely affect revenue, cash, and net income. The Company maintains an allowance for doubtful accounts.

As of June 30, 2020, one customer accounted for 28% of total accounts receivable. As of December 31, 2019, one customer accounted for 10% of total accounts receivable. For the three and six months ended June 30, 2020 and 2019, no customer accounted for more than 10% of total revenues.

(e)	Income Taxes

The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities. Deferred tax assets are reduced by a valuation allowance when it is estimated to become more likely than not that a portion of the deferred tax assets will not be realized. Accordingly, the Company currently maintains a full valuation allowance against existing net deferred tax assets.

The Company recognizes the effect of income tax positions only if such positions are deemed “more likely than not” capable of being sustained. Interest and penalties accrued on unrecognized tax benefits are included within income tax expense in the consolidated financial statements.

(f)	Equity Investments

The Company has entered into collaboration agreements with Nimbus Therapeutics, LLC (“Nimbus”), Morphic Therapeutic, Inc., a wholly owned subsidiary of Morphic Holding, Inc. (“Morphic”), and Petra Pharma Corporation (“Petra”) to perform drug design services in exchange for minority ownership, which are included within equity investments in the Company’s condensed consolidated balance sheets.

The Company has concluded that the carrying value of its equity investment in Nimbus should reflect its contractual rights to substantive profits. The Company further determined that the hypothetical liquidation at book value method (“HLBV method”) for valuing contractual rights to substantive profits provides the best representation of its financial position in Nimbus. During 2020, the Company continued to value Nimbus using the HLBV method.

The HLBV method is a balance sheet oriented approach to equity method accounting. Under the HLBV method, the Company determines its share of earnings or losses by comparing its claim on the book value at the beginning and end of each reporting period. This claim is calculated as the amount that the Company would receive (or be obligated to pay) if the investee were to liquidate all of its assets at recorded amounts, determined as of the balance sheet date in accordance with U.S. GAAP, and distribute the resulting cash to creditors and investors in accordance with their respective priorities.

Upon the completion of Morphic’s initial public offering in June 2019, the Company changed the valuation methodology used to value the Morphic investment. As there is a readily available public market for Morphic’s common stock, the Company values its investment based on the closing price of Morphic’s common stock as of the reporting date.

Prior to May 2020, the Company had concluded that its equity investment in Petra should be valued using the historical cost method, as the Company does not exercise significant influence over Petra. During May 2020, Petra merged with a third party. For further information regarding the Company’s equity investments, including the Petra merger, see Note 4, Fair Value Measurements and Note 10, Equity Investments.

(g)	Net Loss per Share Attributable to Common and Limited Common Stockholders

Following the completion of the Company's IPO in February 2020, the outstanding equity of the Company consists of common stock and limited common stock. Under the Company’s certificate of incorporation, the rights of the holders of common stock and limited common stock are identical, except with respect to voting and conversion. Holders of limited common stock are precluded from voting such shares in any election of directors or on the removal of directors. Limited common stock may be converted into common stock at any time at the option of the stockholder.

Undistributed earnings allocated to the participating securities are subtracted from net income in determining net loss attributable to common and limited common stockholders. Basic net loss per share is computed by dividing net loss attributable to common and limited common stockholders by the weighted-average number of shares of common and limited common stock outstanding during the period.

For the calculation of diluted net loss, net income attributable to common and limited common stockholders for basic net loss is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans. Diluted net loss per share attributable to common and limited common stockholders is computed by dividing the resulting net income attributable to common and limited common stockholders by the weighted-average number of fully diluted shares of common and limited common stock outstanding. For purposes of this calculation, stock options are considered common stock equivalents but have been excluded from the calculation of net loss per share attributable to common and limited stockholders as their effect is anti-dilutive. For the three and six months ended June 30, 2020 and 2019, the computation of basic and diluted net loss per share is presented on a combined basis for common and limited common stock because the results are identical.

Revenue Recognition

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

Revenue Recognition

(3)	Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time.

The following table illustrates the timing of the Company’s revenue recognition:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Software products and services – point in time		53.1	%		45.3	%		56.7	%		54.4	%
Software products and services – over time		37.4			30.9			34.1			28.8
Drug Discovery – point in time		3.3			8.9			1.5			6.7
Drug Discovery – over time		6.2			14.9			7.7			10.1

(a)	Software Products and Services

The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis. Revenue is recognized net of any sale and value-added taxes collected from customers and subsequently remitted to governmental authorities.

The Company’s software business derives revenue from five sources: (i) on-premise software license fees, (ii) hosted software subscription fees, (iii) software maintenance fees, (iv) professional services fees, and (v) contributions.

On-premise software. The Company’s on-premise software license arrangements grant customers the right to use its software on their own in-house servers for a specified term, typically for one year. The Company recognizes revenue for on-premise software license fees upfront, either upon delivery of the license or the effective date of the agreement, whichever is later. In instances where the timing of delivery differs from the timing of its invoicing, the Company considers whether a significant financing component exists. The Company has elected the practical expedient to not assess for significant financing where the term is less than one year. The Company’s updates and upgrades are not integral to maintaining the utility of the software licenses. Payments typically are received upfront annually.

Hosted software. Hosted software revenue consists primarily of fees to provide the Company’s customers with hosted licenses, which allows these customers to access the Company’s software platform on their own hardware without taking control of licenses. Hosted software is recognized ratably over the term of the arrangement.

Software maintenance. Software maintenance includes technical support, updates, and upgrades. Software maintenance revenue is considered to be a separate performance obligation and is recognized ratably over the term of the arrangement.

Professional services. Professional services, such as technical support and installation or assisting customers with modeling, generally are not related to the functionality of the Company’s software and may be recognized as resources are consumed or over the term of the arrangement, depending on the terms of the underlying agreement. The Company has historically estimated project status with relative accuracy. A number of internal and external factors can affect such estimates, including labor rates, utilization and efficiency variances. Payments for services are due in advance or upon consumption of resources.

Contribution. Contribution revenue consists of funds received under a non-reciprocal agreement with Gates Ventures, LLC. The agreement is an unconditional non-exchange contribution without restrictions and the initial contribution was invoiced upon execution of the agreement. Revenue was recognized upon execution of the agreement when invoiced in accordance with Accounting Standards Codification (“ASC”) Topic 958, Not-for-Profit Entities as the agreement is not an exchange transaction.

The following table presents the revenue recognized from the five sources of the software products and services revenue:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
On premise software	$	11,105	$	8,601	$	26,704	$	21,624
Hosted software		2,312		1,911		4,446		3,622
Software maintenance		3,551		2,848		7,088		5,437
Professional services		2,932		1,122		5,474		2,404
Revenue from contracts with customers		19,900		14,482		43,712		33,087
Contribution		1,000		—		1,000		—
Total software revenue	$	20,900	$	14,482	$	44,712	$	33,087

(b)	Contribution Revenue

During the three months ended June 30, 2020, the Company recognized contribution revenue related to an agreement with Gates Ventures, LLC, which covers the period from June 23, 2020 through June 22, 2023 for total consideration of up to $3,000. During the three months ended June 30, 2020, the Company recorded a receivable of $1,000 in connection with its entry into the agreement, and the Company is entitled to receive additional $1,000 payments on or around the first and second anniversary of its entry into the agreement, subject to the Company providing certain progress reports to the Trustees of Columbia University in the City of New York. As of June 30, 2020, the Company had no deferred revenue balance related to this agreement. The Company has recognized $1,000 as revenue since the inception of the agreement.

(c)	Drug Discovery

Revenue from drug discovery and collaboration services contracts is recognized either over time, typically by using costs incurred or hours expended to measure progress, or at a point in time based on the achievement of milestones. Payments for services are generally due upon achieving milestones stated in a contract, upfront at the start of a contract, or upon consumption of resources. Services may at times include variable consideration and milestone payments. The Company has estimated the amount of consideration that is variable using the most likely amount method. The Company evaluates milestones on a case-by-case basis, including whether there are factors outside the Company’s control that could result in a significant reversal of revenue, and the likelihood and magnitude of a potential reversal. If achievement of a milestone is not considered probable, the Company constrains (reduces) variable consideration to exclude the milestone payment until it is probable to be achieved. As of June 30, 2020 and 2019, milestones not yet achieved that were determined to be probable of achievement totaled $750 and $3,500, respectively, and $309 and $2,318 of those milestones were recognized as revenue for the six months ended June 30, 2020 and 2019.

(d)	Significant Judgments

Significant judgments and estimates are required under Accounting Standard Codification Topic 606, Revenue from Contracts with Customers (Topic 606). Due to the complexity of certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances.

The Company’s contracts with customers often include promises to transfer multiple software products and/or licenses and services, including professional services, technical support services, and rights to unspecified updates. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or are not distinct and therefore should be accounted for together, requires significant judgment. In some arrangements, such as most of the Company’s term-based software license arrangements, the Company has concluded that the licenses and associated services are distinct from each other. In other arrangements, including collaboration services arrangements, the licenses and certain services may not be distinct from each other. The Company’s time-based software arrangements may include multiple software licenses and a right to updates or upgrades to the licensed software products, and technical support. The Company has concluded that such promised goods and services are separate distinct performance obligations.

The Company is required to estimate the total consideration expected to be received from contracts with customers, including any variable consideration. Once the estimated transaction price is established, amounts are allocated to the performance obligations that have been identified. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price (“SSP”) basis.

Judgment is required to determine the SSP for each distinct performance obligation. The Company rarely licenses or sells products on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where the SSP is not directly observable because the Company does not sell the license, product, or service separately, the Company determines the SSP using information that includes historical discounting practices, market conditions, cost-plus analysis, and other observable inputs. The Company typically has more than one SSP for individual performance obligations due to the stratification of those items by classes of customers and circumstances. In these instances, the Company may use information such as the size and geographic region of the customer in determining the SSP. Professional service revenue is recognized as costs and hours are incurred, and judgment is required in estimating both the project status and the costs incurred or hours expended.

If a group of agreements are so closely related to each other that they are, in effect, part of a single arrangement, such agreements are deemed to be one arrangement for revenue recognition purposes. The Company exercises significant judgment to evaluate the relevant facts and circumstances in determining whether the separate agreements should be accounted for separately or as, in substance, a single arrangement. The Company’s judgments about whether a group of contracts comprises a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

Generally, the Company has not experienced significant returns or refunds to customers.

The Company’s estimates related to revenue recognition require significant judgment and the change in these estimates could have an effect on the Company’s results of operations during the periods involved.

(e)	Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on the condensed consolidated balance sheets. The Company records a contract asset when revenue is recognized prior to invoicing; a deferred revenue liability is recorded when revenue is expected to be recognized subsequent to invoicing. For the Company’s time-based software agreements, customers are generally invoiced at the beginning of the arrangement for the entire term, though when the term spans multiple years the customers may be invoiced on an annual basis. For certain drug discovery agreements that include payment plans, the Company records a receivable related to revenue recognized upon delivery because it has an unconditional right to invoice and receive payment in the future related to those deliveries.

Contract assets are included in unbilled and other receivables within the condensed consolidated balance sheets and primarily relate to the Company’s rights to consideration for work completed but not billed on service contracts. Contract assets are transferred to receivables when the Company invoices the customer.

Contract balances were as follows:

	As of June 30,		As of December 31,
	2020		2019
Contract assets	$	2,625	$	6,904
Deferred revenue		25,117		27,259

For the three and six months ended June 30, 2020 and 2019, respectively, the Company recognized $10,619, $18,639, $9,847, and $13,880 of revenue that was included in deferred revenue at the end of the preceding period. All other deferred revenue activity is due to the timing of invoices in relation to the timing of revenue, as described above. The Company expects to recognize as revenue approximately 92% of its June 30, 2020 deferred revenue balance in the next 12 months and the remainder thereafter. Additionally, contracted but unsatisfied performance obligations that had not yet been billed to the customer or included in deferred revenue were $14,663 as of June 30, 2020.

Payment terms and conditions vary by contract type, although terms typically require payment within 30 to 60 days. In instances where the timing of revenue recognition differs from that of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to facilitate financing arrangements.

(f)	Deferred Sales Commissions

The Company has applied the practical expedient for sales commission expense, as any compensation paid to sales representatives to obtain a contract relates to a period of one year or less. Therefore, the Company has not capitalized any costs related to sales commissions.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

(4)	Fair Value Measurements

Various inputs are used in determining the fair value of the Company’s financial assets and liabilities. These inputs are summarized into the following three broad categories:

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc.

Level 3 – significant unobservable inputs, including the Company’s own assumptions in determining fair value

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Marketable securities, which consist primarily of corporate and U.S. government agency bonds, are classified as available for sale and fair value does not differ significantly from carrying value as of June 30, 2020 and December 31, 2019. The following table presents information about the Company’s assets and liabilities measured at fair value as of June 30, 2020:

	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	—	$	173,646	$	—	$	173,646
Equity investments		22,586		—		—		22,586
Total	$	22,586	$	173,646	$	—	$	196,232

The following table presents information about the Company’s assets and liabilities measured at fair value as of December 31, 2019:

	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	—	$	59,844	$	—	$	59,844
Equity investments		14,328		—		108		14,436
Total	$	14,328	$	59,844	$	108	$	74,280

Fair value of the Company’s investment in Morphic, classified as Level 1 in the fair value hierarchy, was determined using the market price of Morphic’s common stock as of the close of trading on June 30, 2020.

Fair value of the Company’s investment in Nimbus, classified as Level 3 in the fair value hierarchy, was determined under the HLBV method, as further described in Note 2, Significant Accounting Policies. Significant unobservable inputs used under the HLBV method include Nimbus’ annual financial statements and the Company’s respective liquidation priority. The following table sets forth changes in fair value of the Company’s Level 3 investments:

	Amount
As of December 31, 2018	$	4,288
Unrealized loss		(626	)
As of March 31, 2019		3,662
Unrealized loss		(3,662	)
As of June 30, 2019		—
Unrealized loss		—
As of September 30, 2019		—
Unrealized gain		108
As of December 31, 2019		108
Cash contributions		2,869
Unrealized loss		(1,008	)
As of March 31, 2020		1,969
Unrealized loss		(1,969	)
As of June 30, 2020	$	—

Unrealized gains and losses arising from changes in fair value of the Company’s equity investments are classified within change in fair value in the condensed consolidated statements of operations. During the six months ended June 30, 2020 and the year ended December 31, 2019 there were no transfers between Level 1, Level 2 and Level 3 investments. See Note 10, Equity Investments, for further information.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

(5)	Commitments and Contingencies

(a)

Leases

The Company leases office space under operating leases that expire at various dates through 2029. In addition to rental payments, the Company pays real property taxes, insurance, and repair and maintenance expenses for its office facilities. The Company recognizes rent expense on a straight-line basis over the life of the related lease, including any periods of free rent.

The Company adopted Topic 842, Leases as of January 1, 2019. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. At the date of adoption of Topic 842, the Company determined lease liability amounts using a discount rate of 5.01%, which represents the Company’s incremental borrowing rate. The Company determines its incremental borrowing rate for lease liability using its current borrowing rate, adjusted for various factors including level of collateralization and lease term. As of June 30, 2020, the remaining weighted average lease term was 4 years.

During the six months ended June 30, 2020, the Company entered into one new lease, which increased right-of-use (“ROU”) assets and lease liabilities by $1,778. ROU assets and lease liabilities were equal as no lease costs or incentives were associated with acquiring the leases.

Variable and short-term lease costs were immaterial for the six months ended June 30, 2020. Additional details of the Company’s operating leases are presented in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease costs	$	1,449	$	1,399	$	2,955	$	2,408
Cash paid for operating leases		1,518		1,247		2,960		2,479

Maturities of operating lease liabilities as of June 30, 2020 under noncancelable operating leases were as follows:

Year ending December 31:
Remainder of 2020	$	3,063
2021		4,457
2022		1,727
2023		1,516
2024		1,533
Thereafter		1,887
Total future minimum lease payments		14,183
Less: imputed interest		(567	)
Present value of future minimum lease payments		13,616
Less: current portion of operating leases payments		(5,839	)
Lease liabilities, long-term	$	7,777

(b)	Legal Matters

From time to time, the Company may become involved in routine litigation arising in the ordinary course of business. While the results of such litigation cannot be predicted with certainty, management believes that the final outcome of such matters is not likely to have a material adverse effect on the Company’s financial position or results of operations or cash flows.

Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

(6)	Income Taxes

The Company estimates an annual effective income tax rate based on projected results for the year and applies this rate to income before taxes to calculate income tax expense (benefit). Any refinements made due to subsequent information that affects the estimated annual effective income tax rate are reflected as adjustments in the current period.

For the three months and six months ended June 30, 2020, the difference between the effective rate and the statutory rate is primarily attributed to the change in the valuation allowance against net deferred tax assets.

For the three and six months ended June 30, 2020 and 2019, the Company’s tax expense (benefit) was $64, $155, $(51), and $(5), respectively. The Company recognizes the effect of income tax positions only if those positions are “more likely than not” capable of being sustained. As of June 30, 2020, the Company had $1,000 of unrecognized tax benefits. Interest and penalties accrued on unrecognized tax benefits are recorded as tax expense within the consolidated financial statements. The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits within the next twelve months.

The Company and its subsidiaries file U.S. federal income tax returns and various state, local and foreign income tax returns. At June 30, 2020, the Company’s statues of limitations are open for all federal and state years filed after the year ended December 31, 2015 and 2014 respectively. Net operating loss and credit carryforwards from all years are subject to examination and adjustments for the three years following the year in which the carryforwards are utilized. The Company is not currently under Internal Revenue Service or state examination.

Pursuant to Internal Revenue Code Sections 382 and 383, the utilization of net operating losses and other tax attributes may be substantially limited due to cumulative changes in ownership greater than 50% that may have occurred or could occur during applicable testing periods. The Company has performed an analysis through December 31, 2019 and determined that such an ownership change has not occurred.

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Corporate taxpayers may carryback net operating losses (“NOLs”) originating during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation.

With the enactment of the CARES Act, the Company does not expect a financial statement impact. The Company has not recorded any financial statement expense or benefit related to the CARES Act for the three and six months ended June 30, 2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Stockholders' Equity (Deficit)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Stockholders' Equity (Deficit)

(7)	Stockholders’ Equity (Deficit)

(a)	Common Stock

Upon the closing of the IPO, 226,344,686 shares of preferred stock automatically converted into an aggregate of 30,278,832 shares of common stock. As of June 30, 2020, the Company had authorized 500,000,000 shares of common stock with a par value of $0.01 per share. Holders of common stock are entitled to one vote per share, to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock.

Common stockholders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. Common stock is subordinate to preferred stock with respect to dividend rights and rights upon liquidation, winding up, and dissolution of the Company.

(b)	Limited Common Stock

Immediately prior to the closing of the IPO, preferred stockholders voluntarily exchanged 98,406,823 shares of preferred stock for an aggregate of 13,164,193 shares of limited common stock. As of June 30, 2020, the Company had authorized 100,000,000 shares of limited common stock with a par value of $0.01 per share. Holders of limited common stock are entitled to one vote per share, however, the holders of limited common stock shall not be entitled to vote such shares in any election of directors or on the removal of directors. Holders of limited common stock are entitled to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock. Holders of the Company’s limited common stock have the right to exchange each share of limited common stock for one share of the Company’s common stock.

Limited common stockholders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. The rights, preferences and privileges of holders of the limited common stock are subject to and may be adversely affected by the right of the holders of shares of any series of preferred stock that the Company may designate and issue in the future. As of June 30, 2020, 13,164,193 shares of limited common stock were outstanding.

(c)	Preferred Stock

As of June 30, 2020, the Company had authorized 10,000,000 shares of preferred stock with a par value of $0.01 per share. The Company’s board of directors has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each series of preferred stock. As of June 30, 2020, no preferred stock was issued or outstanding.

Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

(8)	Stock-Based Compensation

Stock Incentive Plans

As of June 30, 2020, the Company’s stock incentive plans included the 2010 Stock Plan (the “2010 Plan”) and the 2020 Stock Plan (the “2020 Plan”) (together, the “Plans”). The 2020 Plan provides for the award of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards.

The 2010 Plan provided for the granting of incentive stock options and non-qualified stock options. As of the effective date of the 2020 Plan, no shares remained available for future issuance under the 2010 Plan and no further awards will be made under the 2010 Plan. Any options or awards outstanding under the 2010 Plan remain outstanding and effective. Shares of common stock subject to outstanding awards granted under the 2010 Plan that expire, terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by the Company are available for issuance under the 2020 Plan.

Stock options must be granted at an exercise price not less than 100% of the fair market value per share at the grant date. The maximum contractual term of options granted under the Plans is typically 10 years, options generally vest over four years with 25% of the shares underlying the option vesting at the end of the first year and the remaining vesting monthly over the following three years.

During the three and six months ended June 30, 2020 and 2019, 16,701, 74,282, 25,027, and 69,187 stock options were exercised under the Plans with total cash received upon option exercise of $55, $232, $65, and $180, respectively.

The fair value of each option award is determined on the date of grant using the Black Scholes Merton option-pricing model. The calculation of fair value includes several assumptions that require management’s judgment. The expected terms of options granted to employees during 2020 and 2019 were calculated using an average of historical exercises. Estimated volatility for the six months ended June 30, 2020 and 2019 incorporates a calculated volatility derived from the historical closing prices of shares of common stock of similar entities whose share prices were publicly available for the expected term of the option. The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the option. The Company accounts for forfeitures as they occur, as such, the Company does not estimate forfeitures at the time of grant.

Prior to the Company’s IPO, when there was no public market for the Company’s common stock, the board of directors estimated the price of the Company’s common stock based upon several factors, including, but not limited to, third party valuations and the Company’s operating and financial performance. The third party valuations took into consideration several factors, including prices for preferred stock that were sold to outside investors in arm’s length transactions, and the rights, preferences, and privileges of the preferred stock and the common stock; the fact that the option grants involved illiquid securities in a private company; the Company’s stage of development and revenue growth; the state of the industry and the economy; the marketplace and major competitors; and the likelihood of achieving a liquidity event for the shares of common stock underlying the options, such as an initial public offering or sale of the Company, given prevailing market conditions. These valuations were performed in accordance with the American Institute of Certified Public Accountants’ Audit and Accounting Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation.

Subsequent to the Company’s IPO, the board of directors determines the exercise price of the Company’s stock options based on the closing price of the common stock as reported on the Nasdaq Global Select Market on the day of grant.

As of June 30, 2020, there were 2,250,178 shares available for grant under the 2020 Plan. As of December 31, 2019, there were 236,005 shares available for grant under the 2010 Plan. Following are the weighted average valuation assumptions used for options:

	Six Months Ended June 30,
	2020			2019
Valuation assumptions
Expected dividend yield		—	%		—	%
Expected volatility		60	%		57	%
Expected term (years)		4.49			6.25
Risk-free interest rate		1.44	%		2.52	%

The following table presents classification of stock-based compensation expense within the condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of sales	$	305	$	82	$	558	$	171
Research and development		822		113		1,330		224
Sales and marketing		116		75		208		145
General and administrative		1,486		262		2,408		511
Total stock-based compensation	$	2,729	$	532	$	4,504	$	1,051

The weighted average per share grant date fair value of options granted during the three and six months ended June 30, 2020 and 2019 was $22.22, $8.59, $2.42, and $2.48, respectively. The intrinsic value of options exercised during the three and six months ended June 30, 2020 and 2019 was $780, $2,011, $43, and $120, respectively.

As of June 30, 2020, there was $33,017 of unrecognized compensation cost related to unvested stock options granted under the Plans, which is expected to be recognized over a weighted average period of 3.39 years. The fair value of shares vested during the three and six months ended June 30, 2020 and 2019 was $680, $1,893, $378, and $948, respectively.

Net Loss per Share Attributable to Common and Limited Stockholders

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Net Loss per Share Attributable to Common and Limited Stockholders

(9)	Net Loss per Share Attributable to Common and Limited Common Stockholders

The following table presents the calculation of basic and diluted net loss per share attributable to common and limited common stockholders for the periods presented (in thousands, except per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Numerator:
Net loss attributable to Schrödinger common and limited common stockholders	$	(3,350	)	$	(500	)	$	(17,176	)	$	(6,294	)
Denominator:
Weighted average shares used to compute net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:		63,296,366			44,495,701			51,981,647			44,493,667
Net loss per share	$	(0.05	)	$	(0.01	)	$	(0.33	)	$	(0.14	)

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares and limited common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

	Three Months Ended June 30,			Six Months Ended June 30,
	2020		2019	2020	2019
Convertible preferred stock		-