What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-02-28 · 274 added, 271 removed, 744 unchanged (42% of the section changed)

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Consolidated Statements of Operations for the Years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2022, 2021, and 2020

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years ended December 31, 2022, 2021, and 2020

Consolidated Statements of Comprehensive Income (Loss) for the Years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Cash Flows for the Years ended December 31, 2023, 2022, and 2021

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We have audited the accompanying consolidated balance sheets of Schrödinger, Inc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2023 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Estimation of total costs to perform for Bristol-Myers Squibb Company collaboration and license agreement

As discussed in Note 3(c) to the consolidated financial statements, the Company recorded revenue of $22.1 million during the year ended December 31, 2022 related to research activities for the Bristol-Myers Squibb Company (“BMS”) collaboration and license agreement on a proportional performance basis.

The proportional performance is determined using input-based measurements of total costs of research activities incurred for the agreement relative to the total estimate of costs of research activities for the agreement.

The Company remeasures proportional performance at the end of each reporting period based on measuring progress towards completion.

We identified the estimation of total costs to perform research activities for the BMS collaboration and license agreement as a critical audit matter.

There was subjective auditor judgment in evaluating the Company’s estimate of total costs to perform research activities.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to account for the BMS collaboration and license agreement, including controls related to the determination of total costs to perform research activities.

We evaluated the Company’s estimate of costs to be incurred by:

— comparing the estimated length of time required to complete the research plan to both industry publications and actual time incurred to achieve development candidate for a selection of the Company’s proprietary drug discovery programs

—comparing the estimated internal employee hours and external contract research organizations costs to be incurred to historical actual results for the BMS collaboration and license agreement

—attending the fourth quarter forecast review meeting and inspecting quarterly meeting minutes to evaluate factors impacting total costs to perform research activities

—inspecting minutes of Joint Steering Committee meetings between the Company and BMS to evaluate factors impacting total costs to perform research activities and comparing them with the outcome of the inquiries stated above

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Identification of performance obligations in complex or unusual revenue arrangements

As discussed in Notes 3(a) and 3(b) to the consolidated financial statements, the Company reported on-premise software revenue of $84.5 million, hosted software revenue of $14.9 million, and drug discovery revenue of $45.4 million for the year ended December 31, 2022.

As discussed in Note 3(a) to the consolidated financial statements, the Company reported on-premise software revenue of $104,511 thousand and hosted software revenue of $20,381 thousand for the year ended December 31, 2023.

As discussed in Note 3(d), the Company’s contracts with customers often include promises to transfer multiple software products and services, including training, professional services, technical support services, and rights to unspecified updates.

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We identified the determination of distinct performance obligations in complex or unusual revenue arrangements as a critical audit matter.

There was subjective auditor judgment in evaluating whether promised products and services in complex or unusual revenue arrangements are separate performance obligations or inputs into a combined performance obligation.

There was subjective auditor judgment in evaluating whether promised products and services in

complex or unusual revenue arrangements are separate performance obligations or inputs into a combined performance obligation.

The following are the primary procedures we performed to address this critical audit matter.

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and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 28, 2023 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

A material weakness was identified and included in management's assessment related to a deficiency in the design of a control in the Company's revenue process to determine whether performance milestones in a newly executed drug discovery arrangement were probable of achievement and the constraint on variable consideration in the form of milestone payments can be removed.

The deficiency was the result of ineffective risk assessment as the Company’s existing controls were designed insufficiently to identify a change in timing of performance milestones in the newly executed contract.

The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 28, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and

directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Unbilled and other receivables, net for allowance for unbilled receivables of $ 100 and $ 100

23,124 13,137

Prepaid expenses 9,926 8,569

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Intangible assets, net — 587

Right of use assets 105,982 75,384

Right of use assets - operating leases 117,778 105,982

Other assets 6,014 3,311

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Deferred revenue 56,231 57,931

Lease liabilities 11,006 2,042

Lease liabilities - operating leases 16,868 11,006

Other accrued liabilities 11,996 5,510

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Deferred revenue, long-term 9,043 25,598

Lease liabilities, long-term 105,485 77,827

Lease liabilities - operating leases, long-term 111,014 105,485

Other liabilities, long-term 667 800

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Other income 19,693 3,950 1,057

Total other (expense) income ( 2,309 ) 10,635 34,624

Loss before income taxes ( 149,126 ) ( 100,808 ) ( 26,292 )

Total other income (expense) 220,367 ( 2,309 ) 10,635

Income (loss) before income taxes 42,919 ( 149,126 ) ( 100,808 )

Income tax expense 2,199 63 411

Net loss ( 149,189 ) ( 101,219 ) ( 26,637 )

Net loss attributable to noncontrolling interest ( 3 ) ( 826 ) ( 2,174 )

Net loss attributable to Schrödinger common and limited common stockholders $ ( 149,186 ) $ ( 100,393 ) $ ( 24,463 )

Net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:

Net income (loss) 40,720 ( 149,189 ) ( 101,219 )

Net income (loss) attributable to noncontrolling interest — ( 3 ) ( 826 )

Net income (loss) attributable to Schrödinger common and limited common stockholders $ 40,720 $ ( 149,186 ) $ ( 100,393 )

Net income (loss) per share attributable to Schrödinger common and limited common stockholders, basic:

$ 0.57 $ ( 2.10 ) $ ( 1.42 )

Weighted average shares used to compute net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:

Weighted average shares used to compute net income (loss) per share attributable to Schrödinger common and limited common stockholders, basic:

71,776,301 71,173,419 70,594,950

Net income (loss) per share attributable to Schrödinger common and limited common stockholders, diluted:

$ 0.54 $ ( 2.10 ) $ ( 1.42 )

Weighted average shares used to compute net income (loss) per share attributable to Schrödinger common and limited common stockholders, diluted:

74,986,816 71,173,419 70,594,950

See accompanying notes to consolidated financial statements.

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AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

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2023 2022 2021

Net loss attributable to Schrödinger common and limited common stockholders $ ( 149,186 ) $ ( 100,393 ) $ ( 24,463 )

Net income (loss) attributable to Schrödinger common and limited common stockholders $ 40,720 $ ( 149,186 ) $ ( 100,393 )

Changes in market value of investments, net of tax:

Unrealized (loss) gain on marketable securities ( 1,731 ) ( 968 ) 301

Comprehensive loss $ ( 150,917 ) $ ( 101,361 ) $ ( 24,162 )

Unrealized gain (loss) on marketable securities 2,663 ( 1,731 ) ( 968 )

Comprehensive income (loss) $ 43,383 $ ( 150,917 ) $ ( 101,361 )

See accompanying notes to consolidated financial statements.

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AND SUBSIDIARIES

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

(in thousands, except for share amounts)

Series E preferred

Series D preferred

Series C preferred

Series B preferred

Series A preferred

Common stock Limited common

Accumulated Accumulated

comprehensive

stockholders’

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount capital deficit loss (income) interest equity (deficit)

Shares Amount Shares Amount capital deficit income (loss) interest equity

Balance at December 31, 2020

60,713,534 $ 607 9,164,193 $ 92 $ 752,558 $ ( 129,559 ) $ 317 $ 4 $ 624,019

Change in unrealized gain on marketable securities

— — — — — — — — — — — — — — — — 301 — 301

Change in unrealized loss on marketable securities — — — — — — ( 968 ) — ( 968 )

Issuances of common stock upon stock option exercises 1,120,981 11 — — 7,916 — — — 7,927

— — — — — — — — — — 1,398,177 14 — — 4,169 — — — 4,183

Stock-based compensation — — — — 26,490 — — — 26,490

Issuances of common stock upon initial public offering, net of issuance costs of $ 22,667

— — — — — — — — — — 13,664,704 136 — — 209,497 — — — 209,633

Issuances of common stock upon follow-on offering, net of issuance costs of $ 20,901

— — — — — — — — — — 5,250,000 53 — — 325,547 — — — 325,600

Conversion of convertible preferred stock into common stock

( 73,795,777 ) ( 109,270 ) ( 17,844,124 ) ( 9,928 ) — — — — ( 134,704,785 ) ( 30,626 ) 30,278,832 303 — — 149,521 — — — 149,824

Exchange of convertible preferred stock into limited common stock

— — ( 21,696,487 ) ( 12,072 ) ( 47,242,235 ) ( 19,844 ) ( 29,468,101 ) ( 9,840 ) — — — — 13,164,193 132 41,624 — — — 41,756

Conversion of limited common stock into common stock

— — — — — — — — — — 4,000,000 40 ( 4,000,000 ) ( 40 ) — — — — —

Contributions by non-controlling interest — — — — — 836 836

— — — — — — — — — — — — — — — — 2,137 2,137

Net loss — — — — — ( 100,393 ) — ( 826 ) ( 101,219 )

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Change in unrealized loss on marketable securities — — — — — — ( 1,731 ) — ( 1,731 )

— — — — — — — — — — — — — — — — ( 968 ) — ( 968 )

Issuances of common stock upon stock option exercises

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Stock-based compensation — — — — 39,630 — — — 39,630

Contributions by non-controlling interest

— — — — — — — — — — — — — — — — 836 836

Net loss — — — — — ( 149,186 ) — ( 3 ) ( 149,189 )

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62,163,739 622 9,164,193 92 828,700 ( 379,138 ) ( 2,382 ) 11 447,905

Change in unrealized loss on marketable securities

— — — — — — — — — — — — — — — — ( 1,731 ) — ( 1,731 )

Change in unrealized gain on marketable securities 2,663 2,663

Reclassification of non-controlling interest ( 11 ) ( 11 )

Issuances of common stock upon stock option exercises

800,336 8 — — 9,432 — — — 9,440

Issuance of common stock upon vesting of restricted stock units 13,241 — — — — — — —

Stock-based compensation — — — — 47,841 — — — 47,841

Contributions by non-controlling interest

— — — — — — — — — — — — — — — — — —

Net loss — — — — — — — — — — — — — — — ( 149,186 ) — ( 3 ) ( 149,189 )

Net income — — — — — 40,720 — — 40,720

Balance at December 31, 2023

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Cash flows from operating activities:

Net loss $ ( 149,189 ) $ ( 101,219 ) $ ( 26,637 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Net income (loss) $ 40,720 $ ( 149,189 ) $ ( 101,219 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

(Gain) loss on equity investments ( 147,213 ) ( 11,825 ) 1,781

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Noncash research and development expenses — — 811

Noncash investment amortization 629 5,270 646

Noncash investment (accretion) amortization ( 7,761 ) 629 5,270

Loss on disposal of property and equipment 142 19 140

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Unbilled and other receivables ( 9,987 ) ( 4,253 ) ( 5,187 )

Reduction in the carrying amount of right of use assets 7,287 5,799 5,342

Reduction in the carrying amount of right of use assets - operating leases 7,766 7,287 5,799

Prepaid expenses and other assets ( 8,462 ) ( 7,067 ) ( 1,121 )

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Deferred revenue ( 18,256 ) ( 1,903 ) ( 1,028 )

Lease liabilities 1,900 ( 2,949 ) ( 5,417 )

Lease liabilities - operating leases ( 3,694 ) 1,900 ( 2,949 )

Other accrued liabilities 5,917 ( 1,298 ) 3,490

Net cash (used in) provided by operating activities ( 119,683 ) ( 70,669 ) 16,757

Net cash used in operating activities ( 136,733 ) ( 119,683 ) ( 70,669 )

Cash flows from investing activities:

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Cash flows from financing activities:

Issuances of common stock upon initial public offering, net — — 211,491

Issuances of common stock upon follow-on public offering, net — — 325,600

Issuances of common stock upon stock option exercises 9,440 2,110 7,927

Payment of offering costs ( 373 ) — —

Principal payments on finance leases ( 19 ) — —

Contribution by noncontrolling interest — — 25

Net cash provided by financing activities 9,048 2,110 7,952

Net (decrease) increase in cash and cash equivalents and restricted cash ( 27,550 ) ( 79,529 ) 176,310

Net increase (decrease) in cash and cash equivalents and restricted cash 65,349 ( 27,550 ) ( 79,529 )

Cash and cash equivalents and restricted cash, beginning of year 95,717 123,267 202,796

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Purchases of property and equipment in accrued liabilities 457 293 —

Acquisition of right to use assets, contingency resolution 1,513 —

Acquisitions of right of use assets 34,763 71,054 2,709

Acquisition of lease liabilities 34,430 71,054 —

Reclassification of deferred financing costs to additional paid-in capital — — 1,858

Acquisition of right of use assets - operating leases, contingency resolution 514 1,513 —

Acquisition of right of use assets - operating leases 15,085 34,763 71,054

Acquisition of lease liabilities - operating leases 15,085 34,430 71,054

Acquisition of right of use assets in exchange for lease liabilities - finance leases 279 — —

See accompanying notes to consolidated financial statements.

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The Company's software platform is licensed by biopharmaceutical and industrial companies, academic institutions, and government laboratories around the world.

The Company also applies its computational platform to a broad pipeline of drug discovery and development programs in collaboration with biopharmaceutical companies.

In addition, the Company uses its platform to advance a pipeline of partnered and wholly-owned drug discovery programs, which the Company refers to as its proprietary drug discovery programs.

The Company is also applying its computational platform to advance a broad pipeline of drug discovery programs in collaboration with leading biopharmaceutical companies.

In addition, the Company uses its computational platform to discover novel molecules for its pipeline of proprietary drug discovery programs, which the Company is advancing through preclinical and clinical development.

(2) Significant Accounting Policies

(a) Recently Issued Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("Topic 805"), which requires the measurement and recognition of contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers ("Topic 606").

This update replaces the existing guidance requiring contract assets and contract liabilities to be measured and recognized at fair value.

The standard is effective on a prospective basis for annual periods beginning after December 15, 2022, including interim periods within the fiscal year, with early adoption permitted.

The Company early adopted this new standard effective January 1, 2022 with no material impact on its consolidated financial statements.

(a) Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This standard is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted.

The Company has not yet adopted ASU 2023-07 and is still evaluating the impact of the adoption on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures , which requires public business entities to disclose specific categories in the tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

This standard is effective for annual periods beginning after December 15, 2024, and interim periods within annual periods beginning after December 15, 2025, on a prospective basis, with early adoption permitted.

The Company has not yet adopted ASU 2023-09 and is still evaluating the impact of the adoption on its consolidated financial statements.

(b) Basis of Presentation and Use of Estimates

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Included in cash and cash equivalents were cash equivalents of $ 85,497 and $ 78,066 as of December 31, 2023 and 2022, respectively, which consisted of money market funds and certificates of deposit, and are stated at cost, which approximates market value.

The Company classifies all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.

The Company classifies all highly liquid investments with an original maturity of 90 days or

less to be cash equivalents.

The Company classifies all marketable securities, which consist of fixed income securities, as available for sale securities.

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Property and equipment are reviewed for impairment as discussed below under Accounting for the Impairment of Long‑Lived Assets.

( h) Goodwill

Goodwill represents the excess purchase price over the fair value of net assets acquired which is not allocable to separately identifiable intangible assets.

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Goodwill is not amortized but tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying amount more likely than not exceeds the fair value.

We have the option to qualitatively or quantitatively assess goodwill for impairment.

We test our goodwill for impairment on October 1 of each year.

In 2022, we evaluated our goodwill using a qualitative process.

The Company has the option to qualitatively or quantitatively assess its goodwill for impairment.

The Company tests its goodwill for impairment on October 1 of each year.

In 2023, the Company evaluated its goodwill using a qualitative process.

If the qualitative factors determine that it is more likely than not that the fair value exceeds the carrying amount, goodwill is not impaired.

If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, we would further evaluate for potential impairment.

We have deemed our goodwill not impaired for the year ended December 31, 2022.

If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, the Company would further evaluate for potential impairment.

The Company has deemed its goodwill not impaired for the year ended December 31, 2023.

(i) Accounting for the Impairment of Long‑Lived Assets

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If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that carrying value exceeds fair value.

Fair value is determined using various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, depending on the nature of the asset.

Fair value is determined using various valuation

techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, depending on the nature of the asset.

No impairment was identified for the years ended December 31, 2023, 2022, and 2021.

(ij Warranties

(j) Warranties

The Company typically warrants that its products will perform in a manner consistent with the product specifications provided to the customer for a period of 30 days.

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The determination of a customer’s ability to pay requires judgment, and failure to collect from a customer can adversely affect revenue, cash flows, and results of operations.

As of December 31, 2023, two customers accounted for 15 % and 11 % of total accounts receivable, respectively.

As of December 31, 2022, one customer accounted for 26 % of total accounts receivable.

As of December 31, 2021, three customers accounted for 17 %, 15 %, and 11 % of total accounts receivable, respectively.

As of December 31, 2023, two customers accounted for 42 % and 22 % of total contract assets, respectively.

As of December 31, 2021, three customers accounted for 27 %, 18 %, and 17 % of total contract assets, respectively.

For the year ended December 31, 2022, one customer accounted for 16 % of total revenues.

As of December 31, 2022, two customers accounted for 23 % and 17 % of total contract assets, respectively.

For the year ended December 31, 2023, two customers accounted for 26 % and 11 % of total revenues, respectively.

For the year ended December 31, 2022, one customer accounted for 16 % of total revenues.

For the year ended December 31, 2020, no customers accounted for more than 10% of total revenues.

For the year ended December 31, 2021, one customer accounted for more than 14 % of total revenues.

(l) Royalties

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The Company calculates stock‑based compensation expense utilizing fair value–based methodologies and recognizes expense over the vesting period of such awards.

For performance-based restricted stock units, the Company records stock-based compensation expense with a cumulative catch-up at the time when performance conditions are considered probable of achievement, and on a straight-line basis over the remaining period for which the performance criteria are expected to be completed.

(p) Commissions

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Interest and penalties accrued on unrecognized tax benefits are included within income tax expense in the consolidated financial statements.

(r) Comprehensive Loss

Comprehensive loss includes net loss and changes in equity related to changes in unrealized gains or losses on marketable securities.

(r) Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss) and changes in equity related to changes in unrealized gains or losses on marketable securities.

(s) Equity Investments

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If it is determined that the Company does not have control over the investee, the Company evaluates the investment for the ability to exercise significant influence.

Equity investments over which the Company has significant influence may be accounted for under equity method accounting in accordance with ASC Topic 323, Equity Method and Joint Ventures.

If it is determined that the Company does not have significant influence over the investee, and there is no readily determinable fair value for the investment, the equity investment may be accounted for at cost minus impairment in accordance with ASC Topic 321, Equity Securities.

For further information regarding the Company’s equity investments, see Note 6, Fair Value Measurements, Note 11, Noncontrolling Interest, and Note 13, Equity Investments.

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

Equity investments over which the Company has significant influence may be accounted for under equity method accounting in accordance with Accounting Standards Codification ("ASC") Topic 323, Equity Method and Joint Ventures .

If it is determined that the Company does not have significant influence over the investee, and there is no readily determinable fair value for the investment, the equity investment may be accounted for at cost less impairment, in accordance with ASC Topic 321 ("Topic 321"), Equity Securities .

For further information regarding the Company’s equity investments, see Note 6, Fair Value Measurements and Note 13, Equity Investments.

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

The outstanding equity of the Company consists of common stock and limited common stock.

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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) income attributable to common and limited common stockholders.

Basic net (loss) income per share is computed by dividing net (loss) income 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 income, net income attributable to common and limited common stockholders for basic net income is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans.

Undistributed earnings allocated to the participating securities are subtracted from net income in determining net income (loss) attributable to common and limited common stockholders.

Basic net income (loss) per share is computed by dividing net income (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.

compensation plans.

Diluted net income 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.

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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.

Company’s performance obligations are satisfied either over time or at a point in time, which can result in different revenue recognition patterns.

The Company’s performance obligations are satisfied either over time or at a point in time, which can result in different revenue recognition patterns.

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

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On-premise software.

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.

The Company’s on-premise software license arrangements grant customers the right to use its software on their own in-house servers or their own cloud instances for a specified term, typically for one year , though in recent years, the Company has entered into a small number of large multi-year on-premise software license agreements.

The Company recognizes revenue for on-premise software license fees upfront, either upon transfer of control 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 invoicing, the Company considers whether a significant financing component exists.

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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 cloud-based software solution on their own hardware without taking control of licenses.

Hosted software is recognized ratably over the term of the arrangement.

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 cloud-based software solution on their own hardware without taking control of the licenses, and is recognized ratably over the term of the arrangement, which is typically one year, though in recent years, the Company has entered into a small number of large multi-year hosted software license agreements.

When a customer enters into a hosted arrangement for which revenue is recognized over time, the amount paid upfront that is not recognized in the current period is included in deferred revenue in the Company's statement of financial position until the period in which it is recognized.

Software maintenance .

Software maintenance includes technical support, updates, and upgrades related to our on-premise software licenses.

Software maintenance revenue is considered to be a separate performance obligation and is recognized ratably over the term of the arrangement.

Software maintenance includes technical support, updates, and upgrades related to the Company's on-premise software licenses.

Software maintenance revenue is recognized ratably over the term of the arrangement.

Software maintenance activities are performed in connection with the use of the Company's on-premise software, and may fluctuate from period to period.

Professional services .

Professional services include training, technical setup, installation or assisting customers with modeling and structural biology services, where the Company uses its software to perform tasks such as virtual screening and homology modeling on behalf of the Company’s customers.

Professional services include training, technical setup, installation or assisting customers with modeling services, where the Company uses its software to perform tasks such as virtual screening on behalf of the Company’s customers.

These services are generally not related to the core functionality of the Company’s software and are recognized as revenue when resources are consumed.

The Company has historically estimated project status with relative accuracy, although 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.

Since each professional services agreement represents a unique, ad hoc engagement, professional services revenue may fluctuate from period to period.

Software contribution revenue.

Software contribution revenue consists of funds received under a non-reciprocal agreement with Gates Ventures, LLC.

Software contribution revenue consists of funds received under a non-reciprocal agreement with Gates Ventures, LLC originally entered into in June 2020 and further extended through August 2026 .

The agreement is an unconditional non-exchange contribution without restrictions.

Revenue was recognized upon execution of the agreement and on the first anniversary of the agreement when invoiced in accordance with ASC Topic 958, Not-for-Profit Entities as the agreement is not an exchange transaction.

The agreement with Gates Ventures, LLC covers the period from June 23, 2020 through June 22, 2023 for total consideration of up to $ 3,000 .

The Company recognized revenue of $ 1,000 upon entry to the agreement and $ 1,000 upon each of the first and second anniversary of the agreement.

As of December 31, 2022, the Company had no deferred revenue

balance related to this agreement.

As of December 31, 2022, the Company had no accounts receivable related to this agreement.

Revenue was recognized annually from June 2020 through June 2022 and upon extension of the agreement in August 2023, when invoiced, in accordance with ASC Topic 958, Not-for-Profit Entities as the agreement is not an exchange transaction.

The agreement with Gates Ventures, LLC initially covered the period from June 23, 2020 through June 22, 2023 for total consideration of up to $ 3,000 .

The Company recognized revenue of $ 1,000 upon entry into the agreement and $ 1,000 upon each of the first and second anniversary of the agreement.

During the period ended September 30, 2023, the agreement was extended through August 13, 2026 and provides for total additional consideration of up to $ 6,000 .

The Company recognized revenue of $ 1,800 upon extension of the agreement.

As of December 31, 2023, the Company had no deferred revenue balance related to this agreement.

As of December 31, 2023 and 2022, the Company had no accounts receivable related to this agreement.

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

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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.

Upon removal of the constraint on variable consideration, revenue may be recognized at a point in time by applying the allocation guidance of Topic 606.

Upon removal of the constraint on variable consideration, revenue may be recognized at a point in time or over time by applying the allocation guidance of ASC Topic 606, Revenue from Contracts with Customers ("Topic 606").

As of December 31, 2023, 2022, and 2021, milestones not yet achieved that were determined to be probable of achievement totaled $ 350 , $ 4,000 , and $ 2,250 , respectively, and $ 350 , $ 3,939 , and $ 2,250 of those milestones were recognized as revenue for the years ended December 31, 2023, 2022, and 2021, respectively.

Drug discovery contribution revenue .

Drug discovery contribution revenue consists of funds received under an agreement with Bill and Melinda Gates Foundation on a cost reimbursement basis, to perform services aimed at accelerating drug discovery in women’s health, which began in November 2021.

Drug discovery contribution revenue consists of funds received under an agreement with the Bill and Melinda Gates Foundation on a cost reimbursement basis, to perform services aimed at accelerating drug discovery in women’s health.

The initial agreement began in November 2021 and expired in September 2023.

In September 2023, the Company entered into a new agreement with the Bill and Melinda Gates Foundation to perform services aimed at accelerating drug discovery in women's health that expires in October 2025.

Revenue is recognized as conditions are met in accordance with ASC Topic 958, Not-for-Profit Entities .

As of December 31, 2022 and 2021, the Company had deferred revenue balances related to this agreement of $ 1,718 and $ 1,129 , respectively.

As of December 31, 2023 and 2022, the Company had deferred revenue balances related to these agreements of $ 1,581 and $ 1,718 , respectively.

The following table presents the revenue recognized from the sources of drug discovery revenue:

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On November 22, 2020, the Company entered into an exclusive, worldwide collaboration and license agreement with Bristol-Myers Squibb Company (“BMS”), pursuant to which the Company and BMS have agreed to collaborate in the discovery, research and preclinical development of new small molecule compounds for disease indications in oncology, neurology, and immunology therapeutics areas.

Under the agreement, the Company was initially responsible, at its own cost and expense, for the discovery of small molecule compounds directed to five specified biological targets pursuant to a

mutually agreed research plan for each such target.

The initial targets included HIF-2 alpha and SOS1/KRAS, which were two of the Company’s wholly-owned programs.

Under the agreement, the Company was initially responsible, at its own cost and expense, for the discovery of small molecule compounds directed to five specified biological targets pursuant to a mutually agreed research plan for each such target.

The initial targets included HIF-2 alpha and SOS1/KRAS, which were two of the Company’s proprietary programs.

In November 2021, the Company and BMS mutually agreed to replace the HIF-2 alpha target with another precision oncology target.

Following the replacement election, all rights to the HIF-2 alpha target program reverted to the Company.

In September 2022, BMS elected not to proceed with further development of another target and all rights to this program reverted to the Company, which increased revenue recognition due to the accelerated completion of our obligations related to the program.

In September 2022, BMS elected not to proceed with further development of another target and all rights to this program reverted to the Company, which increased revenue recognition in the third quarter of 2022 due to the accelerated completion of the Company's obligations related to the program.

In December 2022, the Company and BMS entered into an amendment to the agreement to include an additional target in neurology on terms similar to the original agreement.

In September 2023, BMS elected not to proceed with further development of two related oncology programs and all rights to these programs reverted to the Company, which increased revenue recognition in the third quarter of 2023 due to the accelerated completion of the Company's obligations related to those programs.

Once a development candidate meeting specified criteria for a target under the agreement has been identified by the Company, BMS will be solely responsible for the further development, manufacturing and commercialization of such development candidate at its own cost and expense.

Under the terms of the agreement, as amended, BMS paid the Company an initial upfront fee payment of $ 55.0 million in November 2020 and an additional upfront payment in December 2022.

The Company also is eligible to receive up to $ 2.7 billion in total milestone payments across all potential targets, consisting of:

a) up to $ 585.0 million in milestone payments per oncology target, including $ 360.0 million in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225.0 million in the aggregate for the achievement of certain specified commercial milestones;

and b) up to $ 489.0 million in milestone payments per neurology and immunology target, including $ 264.0 million in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225.0 million in the aggregate for the achievement of certain specified commercial milestones.

The Company also is eligible to receive up to $ 1.5 billion in total milestone payments across the potential currently targets subject to the collaboration, consisting of:

a) up to $ 585.0 million in milestone payments per oncology target, consisting of $ 360.0 million in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225.0 million in the aggregate for the achievement of certain specified commercial milestones;

and b) up to $ 489.0 million in milestone payments per neurology and immunology target, consisting of $ 264.0 million in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225.0 million in the aggregate for the achievement of certain specified commercial milestones.

As of December 31, 2023, the Company has recognized $ 25.0 million in revenue related to milestones under this agreement.

The Company is also entitled to a tiered percentage royalty on annual net sales ranging from mid-single digits to low-double digits, subject to certain specified reductions.

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The Company assessed the collaboration and license agreement in accordance with Topic 606, and concluded that BMS is a customer based on the agreement structure.

At inception, the Company identified one performance obligation for each of the five programs under the agreement, which includes research activities for each program and a license grant for the underlying intellectual property.

At inception, the Company identified one performance obligation for

each of the five programs initially covered under the agreement, which includes research activities for each program and a license grant for the underlying intellectual property.

The Company determined that the license grant for intellectual property is not separable from the research activities, as the research activities are expected to significantly modify or enhance the license grant over the period of service, and therefore are not distinct in the context of the contract.

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Progress towards completion is remeasured at the end of each reporting period.

During the years ended December 31, 2022, 2021, and 2020, the Company recognized $ 22.1 million, $ 13.7 million, and $ 1.0 million, respectively, associated with the agreement based on the research activities performed.

As of December 31, 2022 and 2021, there was $ 25.5 and $ 40.3 of deferred revenue related to the agreement, which was classified as either current or non-current in the consolidated balance sheet based on the period the services are expected to be performed.

There was $ 8.0 of outstanding receivables for this collaboration as of December 31, 2022.

During the years ended December 31, 2023, 2022, and 2021, the Company recognized $ 43.2 million, $ 22.1 million, and $ 13.7 million of revenue, respectively, associated with the agreement based on the research activities performed and milestones achieved.

As of December 31, 2023 and 2022, there was $ 7.3 million and $ 25.5 million of deferred revenue related to the agreement, which was classified as either current or non-current in the consolidated balance sheet based on the period the services are expected to be performed.

There were no outstanding receivables for this collaboration as of December 31, 2023.

(d) Significant Judgments

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The Company is required to estimate the total consideration expected to be received from contracts with customers, including any variable consideration.

For collaborative arrangements which we are eligible to receive variable consideration in the form of milestones payments, we evaluate whether the milestones are considered probable of being achieved.

For collaborative arrangements, under which the Company is eligible to receive variable consideration in the form of milestones payments, judgment is required to evaluate whether the milestones are considered probable of being achieved.

If it is probable that a significant revenue reversal would not occur, the constraint is removed and value of the associated milestone is included in the estimated transaction price using the most likely amount method based on contractual requirements and historical experience.

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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.

The Company typically has more than one SSP for

individual performance obligations due to the stratification of those items by volume of sales, classes of customers and other relevant circumstances.

In these instances, the Company may use information such as the size and geographic region of the customer in determining the SSP.

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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 where the

milestones are deemed probable in a period prior to when the milestone is achieved, the Company records a contract asset for the full value of the milestone.

For certain drug discovery agreements where the milestones are deemed probable in a period prior to when the milestone is achieved, the Company records a contract asset for the full value of the milestone.

Contract assets are included in unbilled and other receivables within the consolidated balance sheets and are transferred to receivables when the Company invoices the customer.

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Drug discovery 6,636 23,072

For the years ended December 31, 2022 and 2021, respectively, the Company recognized $ 60,039 and $ 42,127 of revenue that was included in deferred revenue at the end of the respective preceding periods.

For the years ended December 31, 2023 and 2022, the Company recognized $ 64,120 and $ 60,039 of revenue, respectively, that was included in deferred revenue at the end of the respective preceding periods.

All other deferred revenue activity is due to the timing of invoices in relation to the timing of revenue, as described above.

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The Company has applied the practical expedient for sales commission expense, as any material 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.

The Company has not capitalized any costs related to sales commissions.

(4) Property and Equipment

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Lab equipment 8,757 76

Right of use asset - finance leases 579 —

41,475 28,357

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(“XTAL”), a company that provides structural biology services, including biophysical methods, protein production and purification, and X-ray crystallography.

The transaction qualified as a business combination for accounting purposes, which involves application of the acquisition method described in Topic 805.

The transaction qualified as a business combination for accounting purposes, which involves application of the acquisition method described in ASC 805, Business Combinations ("Topic 805").

The cash purchase price was approximately $ 7,429 which included $ 6,427 in upfront purchase price, net of cash acquired.

The acquisition of XTAL enables the Company to pursue scientific advancements in the field of structural biology, augment its ability to produce high quality target structures for its drug discovery programs, and expand its offerings to include an advanced and differentiated service that provides customers access to protein structures that have been computationally validated and are ready for structure-based virtual screening and lead optimization, giving rise to expected benefits supporting the amount of acquired goodwill.

The acquisition of XTAL enables the Company to pursue scientific advancements in the field of structural biology, augment its ability to produce high quality target structures for its proprietary drug discovery programs, and expand its offerings to include an advanced and differentiated service that provides customers access to protein structures that have been computationally validated and are ready for structure-based virtual screening and lead optimization, giving rise to expected benefits supporting the amount of acquired goodwill.

The following table summarizes the fair values of the assets acquired and liabilities assumed by the Company as of the January 14, 2022 acquisition date.

The business combination accounting under Topic 805 was finalized for this acquisition during the three months ended June 30, 2022, with no changes to the provisional amounts disclosed for the three months ended March 31, 2022.

The Company has elected to use both practical expedients provided by ASU No.

The Company elected to use both practical expedients provided by ASU No.

for the valuation of contract assets and contract liabilities from contracts with customers, with no material impact to the consolidated financial statements.

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The following table summarizes the purchase price allocation to the identifiable intangible assets and their estimated useful lives as of the January 14, 2022 acquisition date.

All intangibles have been fully amortized as of December 31, 2023:

Amount Useful Life

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The costs incurred to acquire XTAL were not material and have been fully expensed and are included in general and administrative expenses in the consolidated statements of operations.

Amortization of intangibles was $ 513 and zero in general and administrative expenses as of December 31, 2022 and 2021, respectively.

Amortization of intangibles was $ 587 and $ 513 in general and administrative expenses as of December 31, 2023 and 2022, respectively.

(6) Fair Value Measurements

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government agency bonds, are classified as available for sale and fair value did not differ significantly from carrying value as of December 31, 2023 and 2022.

The following table presents information about the Company’s assets and liabilities measured at fair value as of December 31, 2022:

The following table presents information about the Company’s assets measured at fair value as of December 31, 2023:

Level 1 Level 2 Level 3 Total

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Total $ 240,689 $ 307,688 $ 1,928 $ 550,305

The following table presents information about the Company’s assets and liabilities measured at fair value as of December 31, 2021:

The following table presents information about the Company’s assets measured at fair value as of December 31, 2022:

Level 1 Level 2 Level 3 Total

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Total $ 118,052 $ 360,613 $ 1,629 $ 480,294

Fair value of the Company’s investments in Nimbus Therapeutics, LLC (“Nimbus”), Structure Therapeutics Inc., formerly known as ShouTi Inc., (“Structure Therapeutics”), and Eonix, LLC (“Eonix”), classified as Level 3 in the fair value hierarchy, was determined under the hypothetical liquidated book value method (“HLBV method”), as further described in Note 13, Equity Investments.

Significant unobservable inputs used under the HLBV method include Nimbus’, Structure Therapeutics’, and Eonix’s annual financial statements and the Company’s respective liquidation priorities.

The following table sets forth changes in fair value of the Company’s Level 3 investments:

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As of December 31, 2022

Cash contributions 600

Unrealized loss ( 858 )

Realized gain 147,213

Cash distributions ( 147,213 )

Transfer to Level 1 ( 1,629 )

Unrealized gain 1,928

As of December 31, 2023

The fair value of the Company’s investment in Nimbus Therapeutics, LLC (“Nimbus”), classified as Level 3 in the fair value hierarchy, was recorded as an equity method investment under ASC Topic 323, Investments - Equity Method and Joint Ventures, using the hypothetical liquidated book value method (“HLBV method”) through June 30, 2023, as further described in Note 13, Equity Investments.

Significant unobservable inputs used to determine Nimbus’ fair value under the HLBV method were the entity's annual financial statements and the Company’s liquidation preference.

During the year ended December 31, 2023, the Company recorded a gain of $ 147,213 on account of its equity position in Nimbus following the closing of Takeda's acquisition of Nimbus Lakshmi, Inc., a wholly-owned subsidiary of Nimbus, and its tyrosine kinase 2 inhibitor, NDI-034858.

On February 13, 2023, the Company reported receipt of a $ 111,328 cash distribution from Nimbus related to the sale.

On April 6, 2023, the Company reported receipt of a $ 35,789 cash distribution from Nimbus related to the sale.

On November 9, 2023, the Company reported receipt of a $ 96 cash distribution from Nimbus related to the sale.

The realized gain on Level 3 investment during the year ended December 31, 2023 relates to these cash distributions from Nimbus.

Following the dilution of the Company's investment in Nimbus during the three months ended September 30, 2023, the fair value of the Company's investment is recorded under ASC Topic 321 as a non-marketable equity security as the Company no longer exercises significant influence over Nimbus.

This change in accounting method resulted in an unrealized gain of $ 1,928 .

During the three months ended March 31, 2023, the Company recorded a transfer of $ 1,629 from a Level 3 investment to a Level 1 investment due to the completion of Structure Therapeutics Inc.'s, ("Structure Therapeutics"), initial public offering ("IPO").

The Company's investment in Structure Therapeutics was previously recorded using the HLBV method.

Following the completion of Structure Therapeutics' IPO, the Company's investment in Structure Therapeutics is recorded under Topic 321 because there is an observable price of the investment .

During the year ended December 31, 2022 there were no transfers between Level 1, Level 2 and Level 3 investments.

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 consolidated statements of operations.

During the years ended December 31, 2022 and

2021, there were no transfers between Level 1, Level 2 and Level 3 investments.

See Note 13, Equity Investments, for further information.

Realized gains arising from distributions receivable from the Company's equity investments are classified within gain on equity investments in the consolidated statements of operations.

For further information regarding the Company’s equity investments, see Note 13, Equity Investments.

(7) Commitments and Contingencies

The Company leases office space under operating leases that expire at various dates through 2037.

The Company has multiple operating leases for office space and a finance lease for equipment that expire at various dates through 2037.

The Company has elected the package of practical expedients under the transition guidance of ASC Topic 842, Leases , to exclude short-term leases from the balance sheet and to combine lease and non-lease components.

Upon inception of a lease, the Company determines if an arrangement is a lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that the Company will exercise the options.

The Company classifies finance lease right of use assets under property and equipment, net and finance short-term and long-term lease liabilities under other accrued liabilities and other liabilities, long-term, respectively.

Upon inception of a lease, the Company determines if an arrangement is a lease, if it is classified as an operating or finance lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that the Company will exercise the options.

Lease cost, representing lease payments over the term of the lease and any capitalizable direct costs less any incentives received, is recognized on a straight-line basis over the lease term as lease expense.

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Upon execution of a new lease, the Company performs an analysis to determine its incremental borrowing rate using its current borrowing rate, adjusted for various factors including level of collateralization and lease term.

As of December 31, 2022, the remaining weighted average lease term was 13 years.

During the year ended December 31, 2022, right-of-use (“ROU”) assets increased by $ 34,763 due to the accounting commencement of seven new leases and by $ 2,824 due to a contingency resolution associated with the Company’s New York office lease.

During the same period, lease liabilities increased by $ 34,430 due the accounting commencement of the new leases.

On August 15, 2022, the Company entered into an office lease agreement for 17,500 square feet of office space in Framingham, Massachusetts.

Under the terms of the agreement, the Company is obligated to pay base rent of approximately $ 114 per month with a 2 % annual rental escalation each year.

The Company estimates that the lease commencement date will occur during the three months ending June 30, 2023 and continue to the end of the lease, which is ten years after commencement.

On December 20, 2022, the Company entered into a service agreement with a contract research organization, which includes the use of 12,000 square feet of lab space and lab equipment in Hyderabad, India.

This agreement has been identified as an embedded lease in this contract research agreement.

Under the terms of the agreement, the Company is obligated to pay a base fee of approximately $ 29 per month for the first year, and $ 56 per month for the four remaining years.

The Company estimates that the lease commencement date will occur during the three months ending June 30, 2023 and continue to the end of the lease, which is five years after commencement.

Variable and short-term lease costs were immaterial for the year ended December 31, 2022.

Additional details of the Company’s operating leases are presented in the following table:

As of December 31, 2023, the remaining weighted average lease term for operating and finance leases was 12 years.

During the year ended December 31, 2023, operating lease right of use (“ROU”) assets increased by $ 15,173 due to the accounting commencement of five new leases and by $ 4,388 due to contingency resolutions associated with office leases.

During the same period, operating lease liabilities increased by $ 15,085 due the accounting commencement of the new leases.

During the year ended December 31, 2023, finance lease right of use assets increased by $ 579 and finance lease liabilities increased by $ 279 due to the accounting commencement of an equipment lease for the Company's Framingham, Massachusetts lab.

Variable and short-term lease costs for the Company's operating and finance leases were immaterial for the year ended December 31, 2023.

Additional details of the Company’s operating and finance leases are presented in the following table:

Year Ended December 31,

2023 2022 2021

Operating lease costs $ 11,999 $ 7,627 $ 5,895

Cash paid for operating leases 3,275 4,561 6,050

Maturities of operating lease liabilities as of December 31, 2022 under noncancelable operating leases were as follows:

Lease costs $ 16,769 $ 11,999 $ 7,627

Cash paid for leases 12,263 3,275 4,561

Maturities of operating and finance lease liabilities as of December 31, 2023 under noncancelable operating leases were as follows:

Year ending December 31:

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Present value of future minimum lease payments 128,150

current portion of operating leases payments ( 11,006 )

current portion of lease payments ( 16,954 )

Lease liabilities, long-term $ 111,196

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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.

The Company is currently under audit with a royalty partner.

As of December 31, 2023, the Company believes a contingency is probable and has accrued $ 2,500 related to this audit.

(8) Income Taxes

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Income tax expense $ 2,199 $ 63 $ 411

Components of loss before income taxes by tax jurisdiction were as follows:

Components of income (loss) before income taxes by tax jurisdiction were as follows:

Year Ended December 31,

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Foreign 3,843 1,021 1,359

Loss before income taxes $ ( 149,126 ) $ ( 99,982 ) $ ( 24,118 )

Income (loss) before income taxes $ 42,919 $ ( 149,126 ) $ ( 99,982 )

Reconciliation of income tax expense at the applicable statutory income tax rates to the effective income tax rate is as follows:

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Effective income tax rate 5.1 % — % ( 0.4 ) %

The income tax expense for the years ended December 31, 2022, 2021, and 2020 primarily related to state taxes and taxes in foreign jurisdictions.

The total change in valuation allowance for the year ended December 31, 2022 was $ 42,653 , which primarily was due to the generation of net operating losses.

Income tax expense for the year ended December 31, 2023 represents our federal and certain state income tax obligations and taxes in foreign jurisdictions for which we conduct business.

Income tax expense for the years ended December 31, 2022 and 2021 represents our income tax obligations in certain states and taxes in foreign jurisdictions in which we conduct business.

As of December 31, 2023, the Company has a full valuation allowance on U.S.

federal and state deferred tax assets.

The total change in valuation allowance for the year ended December 31, 2023 was $ 1,926 , which was primarily due to temporary differences for capitalized research and development expenses and share based compensation, partially offset by adjustments to equity method investments.

Tax effects of temporary differences that give rise to significant portions of deferred income tax assets and deferred income tax liabilities were as follows:

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Net operating loss carryforwards $ 44,116 $ 67,758 $ 67,985

Capitalized research and development 13,224 5,511 —

Accrued expenses 71,676 43,362 10,309

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As of December 31, 2023, the Company had federal and state net operating loss (“NOL”) carryforwards of $ 179,076 and $ 98,576 , respectively.

These carryforwards, with the exception of federal NOLs generated post 2017, will expire between 2023 and 2042 if not used by the Company to reduce income taxes payable in future periods.

Utilization of post 2017 federal NOL carryforwards are limited to 80 % of taxable income generated in a given year and carry forward indefinitely.

The state NOL carryforwards will expire between 2025 and 2042, if not utilized.

The federal NOL carryforwards are limited to 80% of taxable income generated in a given year and carry forward indefinitely.

As of December 31, 2023, the Company had federal and state research and development tax credit carryforwards of $ 23,336 and $ 1,598 , respectively.

These carryforwards will expire between 2023 and 2042 if not used by the Company to reduce income taxes payable in future periods.

These carryforwards will expire between 2024 and 2043 if not utilized.

Pursuant to Internal Revenue Code Sections 382 and 383, the utilization of NOLs 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.

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federal income tax returns and various state, local and foreign income tax returns.

As of December 31, 2022, the Company’s statutes of limitations are open for all federal and state years tax returns filed after the years ended December 31, 2018 and 2017, respectively.

Net operating loss and credit carryforwards for all years are subject to examination and adjustments for the three years following the year in which the carryforwards are utilized.

As of December 31, 2023, the Company’s statutes of limitations are open for all federal and state years tax

returns filed after the years ended December 31, 2020 and 2019, respectively.

NOL and credit carryforwards for 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.

(9) Stockholders’ Equity (Deficit)

(9) Stockholders’ Equity

(a) Common Stock

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Shares of common stock subject to outstanding awards granted under the 2020 Plan and the 2010 Plan that expire, terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by the Company are available for issuance under the 2022 Plan.

The 2021 Plan provides for the award of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards to persons who were not previously an employee or director of the Company or who are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to such person’s entry into employment with the Company and in accordance with the requirements of the Nasdaq Stock Market Rule 5635(c)(4).

and in accordance with the requirements of the Nasdaq Stock Market Rule 5635(c)(4).

Neither consultants nor advisors are eligible to participate in the 2021 Plan.

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As of June 15, 2022, the effective date of the 2022 Plan, no further awards will be made under the 2020 Plan.

Any options or awards outstanding under the 2020 Plan remain outstanding and effective.

Any options or awards outstanding under the 2020 Plan are governed by the terms of the 2020 Plan.

The 2010 Plan provided for the granting of incentive stock options and nonstatutory stock options to employees, directors, consultants or advisors.

As of the effective date of the 2020 Plan, no further awards will be made under the 2010 Plan.

Any options or awards outstanding under the 2010 Plan remain outstanding and effective.

Any options or awards outstanding under the 2010 Plan are governed by the terms of the 2010 Plan.

As of December 31, 2023, there were 3,472,195 shares available for grant under the Plans.

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Granted 773,240 26.09

Vested ( 13,241 ) 26.81

Forfeited ( 34,985 ) 24.36

Balance, December 31, 2023

The weighted average grant date fair value for each RSU granted during the year ended December 31, 2022 was $ 26.86 .

There was no intrinsic value of RSUs settled during 2022.

773,814 26.19

The weighted average grant date fair value for each RSU granted during the years ended December 31, 2023 and 2022 was $ 26.09 and $ 26.86 , respectively.

As of December 31, 2023, there was $ 15,375 of unrecognized compensation cost related to RSUs granted under the Plans, which is expected to be recognized over a weighted average period of 3 years.

No RSUs vested during twelve months ended December 31, 2022.

During the year ended December 31, 2023, 13,241 RSUs vested.

The fair value of RSUs vested during the year ended December 31, 2023 was $ 355 .

No RSUs vested during year ended December 31, 2022.

Performance-Based Restricted Stock Units

In August 2022, the Company awarded performance-based restricted stock units ("PRSUs") under the 2021 Plan.

Each PRSU represents a contingent right to receive one share of common stock upon the achievement of specified performance goals.

In February 2023, the Company awarded performance-based restricted stock units ("PRSUs") under the 2022 Plan.

Each PRSU represents a contingent right to receive one share of common stock upon the achievement of specified

performance goals.

The fair value of PRSUs granted by the Company was calculated based upon the Company's closing stock price on the date of the grant, and the stock-based compensation expense is recognized when the grant date is determined and performance conditions are probable of achievement.

At the point where performance conditions are considered probable of achievement, the Company records stock-based compensation expense with a cumulative catch-up expense in the period first recognized and on a straight-line basis over the remaining period for which the performance criteria are expected to be completed.

In February 2023, the Company awarded to certain executive officers PRSUs for a maximum of 62,693 shares (based on 150 % achievement of the applicable performance conditions outlined in the awards), with a target award of 41,795 PRSUs (based on 100 % achievement of the applicable performance conditions), and a threshold award of 20,898 PRSUs (based on 50 % achievement of the applicable performance conditions).

All PRSUs were considered granted under ASC 718, Compensation—Stock Compensation ("Topic 718") in February 2023.

The PRSUs granted in February 2023 are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2025.

In August 2022, the Company awarded 90,000 PRSUs to an executive officer of which 30,150 PRSUs were considered granted under Topic 718 at the time the PRSUs were awarded.

In March 2023, of the 90,000 PRSUs awarded in August 2022, an additional 45,000 PRSUs were considered granted under Topic 718.

Of the 45,000 PRSUs that were considered granted in March 2023, 18,000 PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and 27,000 PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2025.

Performance based restricted stock unit activity was as follows:

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Balance, December 31, 2023

During the year ended December 31, 2022, the Company awarded 90,000 PRSUs to an employee of which 30,150 PRSUs were considered granted under ASC 718, Compensation—Stock Compensation .

The weighted average grant date fair value for each PRSU granted during the year ended December 31, 2022 was $ 28.55 .

There was no intrinsic value of PRSUs settled during the year ended December 31, 2022.

No PRSUs vested during the year ended December 31, 2022.

Of the 30,150 PRSUs that were considered granted during the year ended December 31, 2022, 18,000 of the PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2023 and 12,150 PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the

Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2024.

No conditions were determined to be probable as of December 31, 2022 and no expense was recorded during the year ended December 31, 2022.

116,945 24.05

The weighted average grant date fair value for each PRSU granted during the years ended December 31, 2023 and 2022 was $ 22.48 and $ 28.55 , respectively.

No PRSUs vested during the years ended December 31, 2023 and 2022.

Stock Options

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 board of directors or compensation committee 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 the grant.

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.

In February 2023, the Company granted the chief executive officer a premium priced option to purchase 65,525 shares of common stock with an exercise price equal to 110 % of the closing price of the Company's common stock on the date of grant.

During the years ended December 31, 2023, 2022, and 2021, 800,336 , 329,224 , and 1,120,981 options under the Plans were exercised for total proceeds of $ 9,440 , $ 2,110 , and $ 7,927 , respectively.

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The expected terms of options granted to employees during the years ended December 31, 2023, 2022, and 2021 were calculated using an average of historical exercises.

Estimated volatility for 2022, 2021, and 2020 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.

Estimated volatility for 2023, 2022, and 2021 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.

The Company accounts for forfeitures as they occur;

as such, the Company does not estimate forfeitures at the time of grant.

Following are the weighted average valuation assumptions used for option awards during the periods presented:

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As such, the Company has consolidated Faxian's results into the consolidated financial statements, and eliminated WuXi's ownership as a non-controlling interest.

(12) 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 years presented (in thousands, except for share and per share data):

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

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

Year Ended December 31,

2023 2022 2021

Net loss attributable to Schrödinger common and limited common stockholders $ ( 149,186 ) $ ( 100,393 ) $ ( 24,463 )

Weighted average shares used to compute net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:

Net income (loss) attributable to Schrödinger common and limited common stockholders $ 40,720 $ ( 149,186 ) $ ( 100,393 )

Weighted average shares used to compute net income (loss) per share attributable to Schrödinger common and limited common stockholders, basic:

71,776,301 71,173,419 70,594,950

Net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:

Effect of the exercise of common stock options and vested RSUs on weighted average common and limited common shares 3,210,515 — —

Weighted average shares used to compute net income (loss) per share attributable to Schrödinger common and limited common stockholders, diluted:

74,986,816 71,173,419 70,594,950

Since the Company was in a loss position for all years 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.

Net income (loss) per share attributable to Schrödinger common and limited common stockholders, basic:

$ 0.57 $ ( 2.10 ) $ ( 1.42 )

Net income (loss) per share attributable to Schrödinger common and limited common stockholders, diluted:

$ 0.54 $ ( 2.10 ) $ ( 1.42 )

For the year ended December 31, 2023, in order to calculate diluted net income per share, the weighted average shares used to compute net income is adjusted by the effect of dilutive securities, including awards under the Plans.

Diluted net income per share is computed by dividing the resulting net income by the weighted average number of fully diluted common and limited shares outstanding.

Since the Company was in a loss position for the years ended December 31, 2022 and 2021, 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:

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2023 2022 2021

Shares subject to outstanding common stock options and RSUs 11,013,177 7,680,341 7,257,460

11,013,177 7,680,341 7,257,460

Shares subject to outstanding common stock options and unvested RSUs 6,351,996 11,013,177 7,680,341

(13) Equity Investments

The Company provides collaboration services for Nimbus under the terms of a master services agreement executed on May 18, 2010, as amended.

The Company previously provided collaboration services for Nimbus under the terms of a master services agreement executed on May 18, 2010, as amended.

Collaboration agreements are separate from the transaction that resulted in equity ownership and related fees are paid in cash to the Company.

As Nimbus is a limited liability company and the Company is not a passive investor due to its collaboration with Nimbus on a number of drug discovery targets, the Company's management determined that it has significant influence over the entity and therefore accounts for the investment as an equity method investment.

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 HLBV method for valuing contractual rights to substantive profits provides the best representation of its financial position in Nimbus.

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.

The carrying value of the Nimbus investment was zero as of December 31, 2022 and December 31, 2021.

The Company has no obligation to fund Nimbus losses in excess of its initial investment.

The Company reported losses of zero , zero , and $ 2,977 on the Nimbus investment during the years ended December 31, 2022, 2021, and 2020, respectively.

Nimbus was previously recorded as an equity method investment under the HLBV method, as the entity is a limited liability company and the Company was determined to have significant influence due to the Company's collaboration with Nimbus on a number of drug discovery targets, as well as the Company's level of ownership in Nimbus.

During the period ended September 30, 2023, the Company's equity

ownership in Nimbus was diluted to the point that the Company no longer has significant influence over the entity.

As the Company no longer has significant influence over Nimbus, after June 30, 2023, the equity investment in Nimbus is valued as a non-marketable equity security.

The carrying value of the Nimbus investment was $ 1,928 and zero as of December 31, 2023 and December 31, 2022, respectively.

The Company has no obligation to fund Nimbus losses in excess of its investment.

For the year ended December 31, 2023, the Company reported a realized gain of $ 147,213 on the Nimbus investment, which reflected the total cash distribution the Company was eligible to receive from Nimbus on account of Takeda's acquisition of Nimbus Lakshmi, Inc., a wholly-owned subsidiary of Nimbus, and its tyrosine kinase 2 inhibitor NDI-034858, as well as an unrealized gain of $ 1,928 due to the change in accounting method.

The Company reported no gains or losses on the Nimbus investment during the years ended December 2022 and 2021.

The Company accounts for its investment in Morphic Holding, Inc.

(“Morphic”) at fair value based on the share price of Morphic’s common stock at the measurement date.

During the year ended December 31, 2023, the Company reported a mark-to-market gain of $ 1,778 on the Morphic investment.

During the year ended December 31, 2022, the Company reported a loss of $ 17,226 on the Morphic investment.

During the years ended December 31, 2021 and 2020, the Company reported gains of $ 11,548 , and $ 13,685 on the Morphic investment, respectively.

During the year ended December 31, 2021, the Company reported a gain of $ 11,548 on the Morphic investment.

As of December 31, 2023 and December 31, 2022, the carrying value of the Company’s investment in Morphic was $ 24,114 and $ 22,335 , respectively.

In connection with the merger of Petra Pharma Corporation ("Petra") and a third party, the Company received 2,676,191 shares of common stock of Ravenna Pharmaceuticals, Inc.

The Company concluded that its equity investment in Ravenna should be valued as a non-marketable equity security as the Company does not exercise significant influence over Ravenna.

As of each of December 31, 2022 and December 31, 2021, the carrying value of the Company’s investment in Ravenna was $ 19 .

The Company reported losses of zero , $ 75 , and zero on the Ravenna investment during 2022, 2021, and 2020, respectively.

In May 2021, the Company purchased 631,377 shares of Series B preferred stock of Ajax Therapeutics, Inc.

2 unchanged sentences

As of each of December 31, 2023 and December 31, 2022, the carrying value of the Company’s investment in Ajax was $ 1,700 .

(e) Structure Therapeutics

(d) Structure Therapeutics

In July 2021, the Company purchased 494,035 shares of Series B preferred stock of Structure Therapeutics for $ 2,000 in cash.

In April 2022, the Company purchased an additional 148,210 shares of Series B preferred stock for $ 600 in cash.

As Structure Therapeutics is structured as an exempted company limited by shares, incorporated under the laws of the Cayman Islands and the Company is not a passive investor due to its collaboration with Structure Therapeutics on a

number of drug discovery targets, the Company’s management determined that it has significant influence over the entity and therefore accounts for the investment as an equity method investment.

The Company has determined that the HLBV method for valuing contractual rights to substantive profits provides the best representation of its financial position in Structure Therapeutics.

On February 7, 2023, Structure Therapeutics completed its IPO.

Immediately upon the closing of Structure Therapeutics' IPO, all of the outstanding Series B preferred stock automatically converted into ordinary shares on a one -for-one basis.

As of December 31, 2023, the Company owned 3,260,495 ordinary shares of Structure Therapeutics.

The Company purchased 275,000 American Depository Shares ("ADS") at $ 15.00 per ADS in the IPO.

Each ADS represents three ordinary shares.

Upon completion of Structure Therapeutics' IPO, the Company changed the valuation methodology used to value the Structure Therapeutics investment from an equity method investment under the HLBV method to an equity investment reported at fair value as the Company no longer exerts significant influence over Structure after the IPO.

As there is a readily available market price for Structure Therapeutics' ADSs, the Company values its investment based on the closing price of Structure Therapeutics' ADSs as of the reporting date.

The carrying value of Structure Therapeutics was $ 55,509 and $ 1,629 as of December 31, 2023 and December 31, 2022, respectively.

The Company has no obligation to fund Structure Therapeutics losses in excess of its initial investment.

For the years ended December 31, 2022 and 2021, the Company recorded losses of $ 858 and $ 113 , respectively, on the Structure Therapeutics investment.

On March 31, 2022, the Company received 4,000,000 membership interest units of Eonix in exchange for material science collaboration services under the terms of a master services agreement executed on March 31, 2022.

As Eonix is a limited liability company and the Company is not a passive investor due to its collaboration with Eonix on a number of material science targets, the Company's management determined that it has significant influence over the entity and therefore accounts for the investment as an equity method investment.

The Company has determined that the HLBV method for valuing contractual rights to substantive profits provides the best representation of its financial position in Eonix.

The carrying value of Eonix was zero as of December 31, 2022.

For the year ended December 31, 2022, there was no gain or loss on the Eonix investment .

For the year ended December 31, 2023, the Company recorded a mark-to-market gain of $ 49,755 on the Structure Therapeutics investment.

For the years ended December 31, 2022 and 2021, the Company recorded losses of $ 858 and $ 113 on the Structure Therapeutics investment under the HLBV method, respectively.

(14) Employee Benefit Plan

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The Bill & Melinda Gates Foundation, an entity under common control with Bill and Melinda Gates Foundation Trust, a stockholder of the Company, issued a grant under which it agreed to pay the Company directly for certain licenses and services provided to a specified group of third-party organizations.

Revenue recognized for services provided by the Company under this grant were $ 387 , $ 1,160 , and $ 2,094 for the years ended ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2022 and 2021, the Company had net receivables of $ 20 and $ 165 , respectively, due from the Bill & Melinda Gates Foundation.

For the three months and year ended December 31, 2022, the Company recognized $ 573 and $ 1,949 , respectively, in drug discovery contribution revenue related to funds received under an agreement with the Bill & Melinda Gates Foundation, aimed at accelerating drug discovery in women’s health.

As of December 31, 2022, the Company had no receivables due under this agreement from the Bill & Melinda Gates Foundation.

Revenue recognized for services provided by the Company under this grant were $ 253 , $ 387 , and $ 1,160 for the years ended December 31, 2023, 2022, and 2021, respectively.

As of December 31, 2023, the Company had no receivables due from the Bill and Melinda Gates Foundation.

As of December 31, 2022, the Company had net receivables of $ 20 due from the Bill & Melinda Gates Foundation.

For the years ended December 31, 2023, 2022, and 2021, the Company recognized $ 2,822 , $ 1,949 , and $ 111 , respectively, in drug discovery contribution revenue related to funds received under agreements with the Bill & Melinda Gates Foundation, aimed at accelerating drug discovery in women’s health.

As of December 31, 2023 and 2022, the Company had no receivables due under these agreements from the Bill & Melinda Gates Foundation.

As of December 31, 2023 and 2022, restricted cash on hand related to the arrangement was $ 2,251 and $ 1,742 , respectively.

The Company received $ 1,000 in contribution revenue in connection with its entry into an agreement with Gates Ventures, LLC in the second quarter of 2020, $ 1,000 in contribution revenue in the second quarter of 2021 on the first anniversary of its entry into the agreement, and $ 1,000 in contribution revenue in the second quarter of 2022 on the second anniversary of its entry into the agreement.

Gates Ventures, LLC is an entity under the control of William H.

Gates III, who may be deemed to be the beneficial owner of more than 5 % of the Company’s voting securities.

As of December 31, 2022 and 2021, the Company had no net receivables due from Gates Ventures, LLC.

The Company received $ 1,000 in contribution revenue in connection with its entry into an agreement with Gates Ventures, LLC annually from June 2020 to June 2022.

In August 2023, the Company renewed the agreement with Gates Ventures, LLC and recognized $ 1,800 in contribution revenue.

As of December 31, 2023 and 2022, the Company had no receivables due from Gates Ventures, LLC.

During the year ended December 31, 2021, the Company entered into multiple software agreements with Structure Therapeutics and its subsidiary for approximately $ 650 .

The Company recognized revenue of approximately $ 297 in the aggregate related to these agreements during the year ended December 31, 2022.

During the year ended December 31, 2021, the Company entered into multiple software agreements with Structure Therapeutics and its subsidiaries for approximately $ 650 .

During the years ended December 31, 2023, 2022, and 2021, the Company recognized revenue of approximately $ 221 , $ 297 , and $ 129 , respectively, in the aggregate related to these software agreements.

During the year ended December 31, 2023, the Company entered into a collaboration agreement with Structure Therapeutics and its subsidiaries to conduct certain drug discovery services as well as provide software access.

Revenue recognized under this collaboration was $ 433 for the year ended December 31, 2023 .

As of December 31, 2023 and 2022, the Company had net receivables of $ 494 and zero , respectively, due from Structure Therapeutics.

(16) Segment Reporting

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Certain cost items are not allocated to the Company’s reportable segments.

These cost items primarily consist of compensation and general operational expenses associated with the Company’s research and development, sales and marketing, and general and administrative.

These cost items primarily consist of non-drug discovery program related compensation and general operational expenses associated with the Company’s research and development, sales and marketing, and general and administrative.

These costs are incurred by both segments and due to the integrated nature of the Company’s Software and Drug Discovery segments, any allocation methodology would be arbitrary and provide no meaningful analysis.

All segment revenue is earned in the United States and there are no intersegment revenues.

Segment revenue is primarily earned in the United States and there are no intersegment revenues.

Additionally, the Company reports assets on a consolidated basis and does not allocate assets to its reportable segments for purposes of assessing segment performance or allocating resources.

10 unchanged sentences

Total segment gross profit 140,692 101,022 65,620

Unallocated (expense) income:

Research and development ( 181,766 ) ( 126,372 ) ( 90,904 )

4 unchanged sentences

Other income 19,693 3,950 1,057

Income tax (expense) benefit ( 63 ) ( 411 ) ( 345 )

Consolidated net loss $ ( 149,189 ) $ ( 101,219 ) $ ( 26,637 )

Income tax expense ( 2,199 ) ( 63 ) ( 411 )

Consolidated net income (loss) $ 40,720 $ ( 149,189 ) $ ( 101,219 )

Revenues by geographic area are determined based on the address provided by the Company's customers and partners.

The following table sets forth revenues by geographic area for the years ended December 31, 2023, 2022, and 2021:

2 unchanged sentences

United States $ 161,961 $ 123,556 $ 90,398

Europe 33,049 27,810 24,370

Japan 10,469 8,565 14,558

APAC 24,569 21,680 17,778

EMEA 29,135 34,451 28,880

Rest of World 1,001 1,268 875

$ 216,666 $ 180,955 $ 137,931

(17) Subsequent Events

On February 13, 2023, on account of its equity position in Nimbus, the Company reported the receipt of a $ 111,300 cash distribution from Nimbus following the closing of Takeda's acquisition of Nimbus Lakshmi, Inc., a wholly-owned subsidiary of Nimbus, and its tyrosine kinase 2 inhibitor NDI-034858.

The Company expects to receive from Nimbus a second cash distribution of $ 36,000 in the second quarter of 2023, for a total cash distribution of $ 147,300 .

The Company will record a gain on this transaction in the first quarter of 2023.

On February 7, 2023, Structure Therapeutics completed its initial public offering ("IPO").

The Company participated in the IPO and purchased 275,000 American Depository Shares ("ADS") at $ 15 per ADS in the IPO.

Each ADS represents three ordinary shares.

The Company also owns 3,260,495 ordinary shares in Structure Therapeutics.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data