What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-28 · 271 added, 264 removed, 754 unchanged (42% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations for the Years ended December 31, 202 4 , 202 3 , and 20 2 2

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

Consolidated Statements of Comprehensive (Loss) Income for the Years ended December 31, 202 4 , 202 3 , and 20 2 2

Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 202 4 , 202 3 , and 20 2 2

1 unchanged sentence

Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

3 unchanged sentences

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

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).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S.

17 unchanged sentences

Identification of performance obligations in complex or unusual revenue arrangements

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.

As discussed in Notes 3(a) and 3(b) to the consolidated financial statements, the Company reported on-premise software revenue of $104,020 thousand, hosted software revenue of $35,253 thousand, software contribution revenue of $8,016 thousand, and drug discovery services revenue of $25,143 thousand for the year ended December 31, 2024.

As discussed in Note 3(d), the Company’s contracts with customers often include promises to transfer multiple products and services.

At contract inception, the Company assesses the products and services promised within each contract to determine distinct performance obligations that should be accounted for separately.

1 unchanged sentence

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

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

5 unchanged sentences

February 26, 2025

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Report of Independent Registered Public Accounting Firm

5 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, 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.

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, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 2025 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

17 unchanged sentences

February 26, 2025

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SCHRÖDINGER, INC.

9 unchanged sentences

235,692 65,992

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

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

19,641 23,124

4 unchanged sentences

Goodwill 4,791 4,791

Intangible assets, net — 587

Right of use assets - operating leases 111,883 117,778

26 unchanged sentences

Accumulated deficit ( 525,541 ) ( 338,418 )

Accumulated other comprehensive loss 281 ( 2,382 )

Total stockholders’ equity of Schrödinger stockholders 548,558 447,894

Noncontrolling interest — 11

Accumulated other comprehensive income 220 281

Total stockholders' equity 421,445 548,558

1 unchanged sentence

See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

19 unchanged sentences

Other income (expense)

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

Gain on equity investments — 147,213 11,825

Change in fair value 5,683 53,461 ( 18,084 )

1 unchanged sentence

Total other income (expense) 23,585 220,367 ( 2,306 )

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

(Loss) income before income taxes ( 185,711 ) 42,919 ( 149,123 )

Income tax expense 1,412 2,199 63

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:

Net (loss) income $ ( 187,123 ) $ 40,720 $ ( 149,186 )

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

$ ( 2.57 ) $ 0.57 $ ( 2.10 )

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

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

72,670,295 71,776,301 71,173,419

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

Net (loss) income per share of common and limited common stockholders, diluted:

$ ( 2.57 ) $ 0.54 $ ( 2.10 )

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

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

72,670,295 74,986,816 71,173,419

See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive (Loss) Income

(in thousands)

1 unchanged sentence

2024 2023 2022

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

Net (loss) income attributable to common and limited common stockholders $ ( 187,123 ) $ 40,720 $ ( 149,186 )

Changes in market value of investments, net of tax:

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

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

Unrealized (loss) gain on marketable securities ( 61 ) 2,663 ( 1,731 )

Comprehensive (loss) income $ ( 187,184 ) $ 43,383 $ ( 150,917 )

See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

2 unchanged sentences

(in thousands, except for share amounts)

Common stock Limited common

Accumulated Accumulated

comprehensive

Common stock Limited common stock Additional

paid-in Accumulated Accumulated

comprehensive Total

stockholders’

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

Shares Amount Shares Amount capital deficit (loss) income equity

Balance at December 31, 2021

3 unchanged sentences

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

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

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

1 unchanged sentence

62,163,739 622 9,164,193 92 828,700 ( 379,138 ) ( 2,382 ) 447,894

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

Reclassification of non-controlling interest — — — — — — — —

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

Issuances of common stock upon stock option exercises 800,336 8 — — 9,432 — — 9,440

329,224 4 — — 2,106 — — — 2,110

Issuance of common stock upon vesting of RSUs 13,241 — — — — — — —

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

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

Net income — — — — — 40,720 — 40,720

Balance at December 31, 2023

62,977,316 630 9,164,193 92 885,973 ( 338,418 ) 281 548,558

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

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

Change in unrealized loss on marketable securities — — — — — — ( 61 ) ( 61 )

Issuances of common stock upon stock option exercises 169,820 2 — — 1,486 — — 1,488

800,336 8 — — 9,432 — — — 9,440

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

Issuance of common stock upon vesting of RSUs and PRSUs 240,188 2 — — — — — 2

Issuance of common stock in ATM offering, net 323,085 3 — — 8,675 — — 8,678

Stock-based compensation — — — — 49,903 — — 49,903

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

Net loss — — — — — ( 187,123 ) — ( 187,123 )

Balance at December 31, 2024

1 unchanged sentence

See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

5 unchanged sentences

Cash flows from 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

Noncash revenue from equity investments — — ( 107 )

Fair value adjustments ( 53,461 ) 18,084 ( 11,359 )

Net (loss) income $ ( 187,123 ) $ 40,720 $ ( 149,186 )

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

Gain on equity investments — ( 147,213 ) ( 11,825 )

Changes in fair value ( 5,683 ) ( 53,461 ) 18,084

Depreciation and amortization 6,159 5,552 4,344

Stock-based compensation 49,903 47,841 39,630

Noncash research and development expenses — — 811

Noncash investment (accretion) amortization ( 7,592 ) ( 7,761 ) 629

5 unchanged sentences

Prepaid expenses and other assets ( 3,482 ) ( 8,462 ) ( 7,067 )

Increase (decrease) in liabilities, net of acquisition:

(Decrease) increase in liabilities, net of acquisition:

Accounts payable ( 6,119 ) 7,321 1,179

8 unchanged sentences

Distribution from equity investment — 147,213 11,825

Proceeds from sale of equity investments — — 15,735

Proceeds from disposition and sale of equity investments 48,798 — —

Acquisition, net of acquired cash — — ( 6,427 )

1 unchanged sentence

Proceeds from maturity of marketable securities 361,760 383,973 364,711

Net cash provided by (used in) investing activities 193,034 90,023 ( 16,812 )

Net cash provided by investing activities 148,836 193,034 90,023

Cash flows from financing activities:

1 unchanged sentence

Payment of offering costs ( 177 ) ( 373 ) —

Issuance of common stock in ATM offering 8,868 — —

Principal payments on finance leases ( 58 ) ( 19 ) —

Contribution by noncontrolling interest — — 25

Net cash provided by financing activities 10,123 9,048 2,110

12 unchanged sentences

See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

10 unchanged sentences

(2) Significant Accounting Policies

(a) Accounting Pronouncements Not Yet Adopted

(a) Recently Issued Accounting Pronouncements

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

1 unchanged sentence

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.

The Company adopted this new standard for the year ended December 31, 2024 with no material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2 unchanged sentences

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

In November 2024, the FASB issued ASU No.

2024-03, Income Statement — Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses .

which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses.

This standard is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027, on a prospective basis, with early adoption and retrospective application permitted.

The Company has not yet adopted ASU 2024-03 and is still evaluating the impact of the adoption on its consolidated financial statements.

(b) Basis of Presentation and Use of Estimates

5 unchanged sentences

The Company’s consolidated financial statements include the accounts of Schrödinger, Inc., its wholly owned subsidiaries, and its variable interest entity.

The Company’s consolidated financial statements include the accounts of Schrödinger, Inc.

and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

The functional currency for foreign entities is the United States dollar.

The functional currency

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for foreign entities is the United States dollar.

The Company accounts for investments over which it has significant influence, but not a controlling financial interest, using the equity method.

1 unchanged sentence

Included in cash and cash equivalents were cash equivalents of $ 102,054 and $ 85,497 as of December 31, 2024 and 2023, 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.

1 unchanged sentence

however, the Company primarily places its cash with high-credit quality financial institutions.

Restricted cash consists of letters of credit held with the Company’s financial institution related to facility leases and is classified as current in the Company’s balance sheets based on the maturity of the underlying letters of credit.

Restricted cash primarily consists of letters of credit held with the Company’s financial institution related to facility leases and is classified as current in the Company’s balance sheets based on the maturity of the underlying letters of credit.

The Company also has restricted cash related to a certificate of deposit held as collateral for its credit card facility.

Additionally, funds received from certain grants are restricted as to their use and are therefore classified as restricted cash.

24 unchanged sentences

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.

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qualitative assessment indicated that it was more likely than not the Company's reporting unit’s fair value exceeded its carrying value.

No impairment of goodwill was recognized for the years ended December 31, 2024, 2023, and 2022.

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

2 unchanged sentences

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, 2024, 2023, and 2022.

8 unchanged sentences

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, 2024, one customer accounted for 68 % of total accounts receivable.

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

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

As of December 31, 2024, three customers accounted for 33 %, 23 %, and 16 % of total contract assets, respectively.

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

For the year ended December 31, 2024, one customer accounted for 10 % of total revenues.

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, 2021, one customer accounted for more than 14 % of total revenues.

(l) Royalties

8 unchanged sentences

The Company did not incur any significant advertising costs in 2024, 2023, and 2022.

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(o) Stock‑Based Compensation

10 unchanged sentences

Accordingly, the Company currently maintains a full valuation allowance against existing net deferred tax assets.

The Company recognizes the effect of income tax positions only if such positions are deemed “more likely than not” capable of being sustained.

The Company recognizes the benefit of a tax position in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

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

(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.

(r) Comprehensive (Loss) Income

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

(s) Equity Investments

3 unchanged sentences

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 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 5, Fair Value Measurements and Note 11, Equity Investments.

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

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

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

Under the Company’s certificate of incorporation, the rights of the holders of common stock and limited common stock are identical, except with respect to voting and conversion.

Holders of limited common stock are precluded from voting such shares in any election of directors or on the removal of directors.

Holders of limited common stock are precluded from voting such shares in

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any election of directors or on the removal of directors.

Limited common stock may be converted into common stock at any time at the option of the stockholder.

1 unchanged sentence

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.

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.

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.

10 unchanged sentences

(a) Software Products and Services

The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations.

The Company enters into contracts that can include various combinations of licenses, products and services, most of which are distinct and are accounted for as separate performance obligations.

For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price ("SSP") basis.

5 unchanged sentences

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.

In instances where the timing of the transfer of control differs from the timing of invoicing, the Company considers whether a significant financing component exists.

The Company has elected the practical expedient to not assess for significant financing where the term is less than one year.

3 unchanged sentences

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.

When a customer enters into a hosted arrangement for which revenue is recognized over time,

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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 .

1 unchanged sentence

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.

Software maintenance activities are performed in connection with the use of the Company's on-premise software.

Professional services .

1 unchanged sentence

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

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 originally entered into in June 2020 and further extended through August 2026 .

Software contribution revenue consists of funds received under non-reciprocal agreements with Gates Ventures, LLC and the Bill & Melinda Gates Foundation.

The agreement with Gates Ventures, LLC was originally entered into in June 2020 and further ext ended through August 2026.

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

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.

Revenue is recognized annually, w hen invoiced, in accordance with ASC Topic 958, Not-for-Profit Entities ("Topic 958"), 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.

The agreement was then extended through August 13, 2026 and provides for total additional consideration of up to $ 6,000 .

The Company recognized revenue of $ 2,000 , $ 1,800 , and $ 1,000 related to these agreements during the years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2024, the Company had no deferred revenue balance related to this agreement.

As of December 31, 2024 and 2023, the Company had no accounts receivable related to this agreement.

In July 2024, the Company entered into a one-year agreement with the Bill & Melinda Gates Foundation to fund the initiative to accelerate the expansion of the Company's computational platform to predict toxicity associated with binding to off-target proteins.

In November 2024, the Company and the Bill & Melinda Gates Foundation entered into an amendment to the agreement to expand the original term of the agreement to April 30, 2026 and provide supplemental funds on terms similar to the original agreement.

Revenue is recognized as conditions are met and on a cost reimbursement basis in accordance with Topic 958.

The Company recognized revenue of $ 6,016 related to these agreements during the year ended December 31, 2024.

As of December 31, 2024, the Company had a $ 8,484 deferred revenue balance related to these agreements.

As of December 31, 2024, the Company had no accounts receivable related to these agreements.

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

10 unchanged sentences

Drug discovery services.

Revenue from drug discovery and collaboration services contracts is recognized either over time or at a point in time, typically by using costs incurred, hours expended to measure progress, or based on the achievement of milestones.

Payments for services are generally due upfront at the start of a contract, upon achieving milestones stated in a contract, or upon consumption of resources.

Services may at times include variable consideration, and the Company has estimated the amount of consideration that is variable using the most likely amount method.

Revenue from drug discovery and collaboration services contracts includes revenue from research services and the achievement of milestones.

Research services revenue is generally recognized over time, typically by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input method based on the services promised to the customer, such as costs incurred and hours expended.

This method of recognizing revenue requires the Company to make estimates of the work required to complete the performance obligation in order to determine the progress towards

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Payments for research services are generally due upfront at the start of a contract or periodically through the contract term.

In addition, the Company is generally entitled to receive variable consideration as certain milestones are achieved.

The Company estimates the amount of variable consideration using the most likely amount method.

The Company evaluates milestones on a case-by-case basis, including whether there are factors outside the Company’s control that could result in a significant reversal of revenue, and the likelihood and magnitude of a potential reversal.

If achievement of a milestone is not considered probable, the Company constrains (reduces) variable consideration to exclude the milestone payment until it is probable to be achieved.

If achievement of a milestone is not considered probable or the event is outside of the Company's control, the Company constrains (reduces) variable consideration to exclude the milestone payment until it is deemed probable of being achieved or the event occurs.

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, 2024, there were no milestones not yet achieved that were determined to be probable of achievement.

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

Drug discovery contribution revenue .

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.

Drug discovery contribution revenue consists of funds received under an agreement with the Bill & 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 .

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

Revenue is recognized as costs are incurred in accordance with Topic 958 .

As of December 31, 2024 and 2023, the Company had deferred revenue balances related to these agreements of $ 949 and $ 1,581 , respectively.

6 unchanged sentences

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.

Bristol Myers-Squibb.

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 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 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 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.

As a result of BMS electing not to proceed with further development of certain targets, there is one remaining neurology target under the agreement, as amended, as of December 31, 2024.

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 $ 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.

The Company is solely responsible for the development of any programs that have been returned by BMS.

Under the terms of the agreement, as amended, BMS paid the Company an initial upfront payment of $ 55.0 million in November 2020, an additional upfront payment in December 2022, and a program fee in December 2024.

As of December 31, 2024 the Company is eligible to receive up to $ 482.0 million in total milestone payments related to the one remaining neurology target currently subject to the collaboration, consisting of up to $ 257.0 million in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225.0 million in the aggregate for

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the achievement of certain specified commercial milestones.

As of December 31, 2024, the Company has recognized $ 32.0 million in revenue related to milestones under this agreement.

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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 initially covered 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.

The Company determined that the transaction price at the onset of the agreement is $ 55.0 million.

Additional consideration to be paid to the Company upon the achievement of future milestone payments were excluded from the transaction price as they represent milestone payments that are not considered probable as of the inception date such that there is not a significant risk of revenue reversal.

The Company has allocated the transaction price of $ 55.0 million to each performance obligation based on the SSP of each performance obligation at inception, which was determined based on each performance obligation’s estimated SSP.

The Company determined that the transaction price at the onset of the agreement was $ 55.0 million.

Additional consideration to be paid to the Company upon the achievement of future milestone payments was excluded from the transaction price as they represent milestone payments that were not considered probable as of the inception date such that there is not a significant risk of revenue reversal.

The Company has allocated the transaction price of $ 55.0 million to each performance obligation based on the SSP of each performance obligation at inception.

The Company determined the estimated SSP at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin.

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

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.

During the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 10.8 million, $ 43.2 million, and $ 22.1 million, respectively, of revenue associated with the agreement based on the research activities performed and milestones achieved.

As of December 31, 2024 and 2023, there was $ 5.9 million and $ 7.3 million, respectively, 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.

As of December 31, 2024 and 2023, the Company had no outstanding receivables for this collaboration.

On November 11, 2024, the Company entered into a research collaboration and license agreement with Novartis Pharma AG ("Novartis"), pursuant to which the Company and Novartis agreed to collaborate on the discovery, research and preclinical development of small molecule compounds for targets in certain specified therapeutic areas.

The agreement is intended to advance multiple development candidates for development and commercialization by Novartis.

The Company also entered into an expanded three-year software agreement with Novartis that substantially increases Novartis' access to the Company’s computational predictive modeling technology and enterprise informatics platform.

Under Topic 606, the research collaboration and license agreement as well as the three-year software agreement ("the agreements") are collectively accounted for as a single contract.

Under the terms of the research collaboration and license agreement, once a development candidate has been identified, Novartis will be solely responsible for the further development, manufacturing and commercialization of such development candidate.

Novartis agreed to pay the Company an initial upfront payment of $ 150.0 million under the terms of the research collaboration and license agreement, and the Company will be eligible to eligible to receive up to $ 2.272 billion in total milestone payments across the initial programs.

Such milestones consist of up to $ 892.0 million in discovery and development milestones and up to $ 1.38 billion in commercial milestones.

The Company is also entitled to a tiered percentage royalty ranging from mid-single-digits to low double-digits on products commercialized by Novartis under the

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agreement, subject to certain specified reductions.

As of December 31, 2024, no revenue has been recognized related to milestones under this agreement.

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

The promises identified by the Company include research activities for each program under the agreement, a license grant for the underlying intellectual property, and software licenses and services.

Software licenses and services provided under the agreement are considered distinct and are accounted for as separate performance obligations in accordance with Topic 606.

The Company has allocated the transaction price for the agreements to each performance obligation based on the SSP of each performance obligation at inception.

The Company determined the estimated SSP at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin.

Significant inputs used to determine the total costs to perform the research activities included the length of time required, the internal hours expected to be incurred on the services and the number and costs of various studies that will be performed to complete the research plan.

Revenue associated with the research activities is recognized on a proportional performance basis over the period of service for research activities, using input-based measurements of total costs of research incurred to estimate the proportion performed.

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

During the year ended December 31, 2024, the Company recognized $ 0.6 million of revenue associated with the research collaboration and license agreement.

As of December 31, 2024, there was $ 116.7 million of deferred revenue, net of contract assets, related to the agreements, which was classified as either current or non-current in the condensed consolidated balance sheet based on the period the services are expected to be performed.

As of December 31, 2024, the Company had $ 150.0 million outstanding receivables for this collaboration.

(d) Significant Judgments

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Due to the complexity of certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances.

The Company’s contracts with customers often include promises to transfer multiple software products and services, including training, professional services, technical support services, and rights to unspecified updates.

The Company's contracts with customers often include but are not limited to promises to transfer multiple software products and services, including training, professional services, technical support services, and rights to unspecified updates, as well as collaborative research services, licenses to intellectual properties, and customer options.

Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or are not distinct and therefore should be accounted for together, requires significant judgment.

In some arrangements, such as most of the Company’s term-based software license arrangements, the Company has concluded that the licenses and associated services are distinct from each other.

In some arrangements, such as most of the Company's term-based software license arrangements, may include multiple software licenses, a right to updates or upgrades to the licensed software products, and technical support.

The Company has concluded that such promised licenses and services are separate distinct performance obligations.

In other arrangements, including collaboration services arrangements, the licenses and certain services may not be distinct from each other.

The Company’s time-based software arrangements may include multiple software licenses and a right to updates or upgrades to the licensed software products, and technical support.

The Company has concluded that such promised goods and services are separate distinct performance obligations.

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

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The Company rarely licenses or sells products on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation.

In instances where the SSP is not directly observable because the Company does not sell the license, product, or service separately, the Company determines the SSP using information that includes historical discounting practices, market conditions, cost-plus analysis, and other observable inputs.

The Company typically has more than one SSP for

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

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market conditions, cost-plus analysis, and other observable inputs.

The Company typically has more than one SSP for individual software license 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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Additionally, contracted but unsatisfied performance obligations that had not yet been billed to the customer or included in deferred revenue were $ 59,519 as of December 31, 2024.

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Payment terms and conditions vary by contract type, although terms typically require payment within 30 to 60 days.

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Depreciation expense for 2024, 2023, and 2022 was $ 6,159 , $ 4,965 , and $ 3,831 , respectively, and is included within cost of revenues and research and development, sales and marketing, and general and administrative expenses within the consolidated statements of operations.

(5) Business Acquisition

On January 14, 2022, the Company used cash on hand to acquire all outstanding shares of XTAL BioStructures, Inc.

(“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 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 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 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.

Accounts receivable 588

Other current assets 95

Property, plant and equipment 297

Intangible assets 1,100

Goodwill 4,791

Total assets acquired 7,873

Current liabilities 209

Deferred tax liability 235

Total liabilities assumed 444

Net assets acquired $ 7,429

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

Backlog $ 270 1

Customer relationships 710 5

Tradename/Trademark 120 1

The results of operations for XTAL beginning as of the January 14, 2022 acquisition date are included in these consolidated financial statements.

For the fiscal year ended December 31, 2022, the amount of revenues and net income of XTAL were not material to the consolidated financial statements taken as a whole.

Because the pro forma results of operations of the Company for the periods presented in these consolidated financial statements would not be materially different as a result of the acquisition, such information is not presented.

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

(5) Fair Value Measurements

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Total $ 198,859 $ 204,798 $ — $ 403,657

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

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

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

As of December 31, 2021

Cash contributions 600

Unrealized loss ( 858 )

As of December 31, 2022

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.

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 Topic 323 using the hypothetical liquidated book value method (“HLBV method”) through June 30, 2023, as further described in Note 11, 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.

Following the dilution of the Company's investment in Nimbus during the year ended December 31, 2023, the fair value of the Company's investment was recorded under 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 and subsequent removal from the Level 3 fair value hierarchy table during the year ended December 31, 2024.

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.

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As of December 31, 2024, the remaining weighted average lease term for operating and finance leases was 11 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.

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During the year ended December 31, 2024, operating lease right of use assets increased by $ 2,952 due to contingency resolutions associated with office leases.

Variable and short-term lease costs for the Company's operating and finance leases were immaterial for the year ended December 31, 2024.

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Cash paid for leases 17,718 12,263 3,275

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

Maturities of operating and finance lease liabilities as of December 31, 2024 under noncancelable leases were as follows:

Year ending December 31:

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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.

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(7) Income Taxes

Income tax expense is comprised of the following:

Income tax expense (benefit) is comprised of the following:

Year Ended December 31,

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Foreign ( 253 ) — —

Deferred income tax expense — — —

Deferred income tax benefit ( 253 ) — —

Income tax expense $ 1,412 $ 2,199 $ 63

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

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

Year Ended December 31,

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Foreign 4,587 3,843 1,021

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

(Loss) income before income taxes $ ( 185,711 ) $ 42,919 $ ( 149,126 )

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 ( 0.8 ) % 5.1 % — %

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.

Income tax expense for the year ended December 31, 2024 represents the Company's income tax obligations in certain states and taxes in foreign jurisdictions in which it conducts business.

Income tax expense for the years ended December 31, 2023 represents the Company's federal and certain state income tax obligations and taxes in foreign jurisdictions for which it conducts business.

Income tax expense for the year ended December 31, 2022 represents the Company's income tax obligations in certain states and taxes in foreign jurisdictions in which it conducts business.

As of December 31, 2024, the Company has a full valuation allowance on U.S.

federal and state deferred tax assets.

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The total change in valuation allowance for the year ended December 31, 2024 was $ 41,195 , 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.

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As of December 31, 2024, the Company had federal and state net operating loss ("NOL") carryforwards of $ 204,474 and $ 129,490 , respectively.

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 2024 and 2043 if not utilized.

The state NOL carryforwards will expire between 2025 and 2044, if not used by the Company to reduce income taxes payable in future periods.

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

As of December 31, 2024, the Company had federal orphan drug credits and federal research and development tax credit carryforwards of $ 31,294 and state research and development tax credit carryforwards of $ 2,736 .

The federal and state carryforwards, with the exception of $ 2,223 indefinite state credits will expire between 2025 and 2044, 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.

The Company has performed an analysis through December 31, 2023 and determined that such an ownership change occurred on March 31, 2021.

There was no material impact to the financial statements due to this ownership change.

The Company has performed an analysis through December 31, 2024 and determined no such ownership change has occurred in the periods presented.

The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign operations as the Company considers these earnings to be indefinitely reinvested.

The determination of a hypothetical unrecognized deferred tax liability as of December 31, 2024 is not practicable because of the complexity and variety of assumptions necessary to compute the tax.

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The Company classifies interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statement of operations.

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

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.

As of December 31, 2024, the Company’s statutes of limitations are open for all federal and state tax returns filed after the years ended December 31, 2021 and 2020, 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.

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The rights, preferences and privileges of holders of the common stock are subject to and may be adversely affected by the right of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.

In February 2024, the Company entered into an amended and restated sales agreement with Leerink Partners LLC ("Leerink Partners"), as sales agent, with respect to an at-the-market offering program (the "ATM") under which the Company could offer and sell, from time to time pursuant to its Registration Statement on Form S-3, shares of common stock, having an aggregate offering price of up to $ 250,000 , through Leerink Partners.

The amended and restated sales agreement amends and restates the original sales agreement that the Company entered into with Leerink Partners with respect to the ATM in May 2023, which is no longer in effect.

During the year ended December 31, 2024, 323,085 shares of common stock were sold under the ATM for total net proceeds of $ 8,691 and gross proceeds of $ 8,868 , before deducting sales agent commissions.

As of December 31, 2024, the Company had $ 241,132 of common stock remaining available for sale under the ATM.

(b) Limited Common Stock

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Holders of limited common stock are entitled to one vote per share, however, the holders of limited common stock shall not be entitled to vote such shares in any election of directors or on the removal of directors.

Holders of limited common stock are entitled to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock, if any.

Holders of limited common stock are entitled to the same dividend rights as holders of common stock, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company's preferred stock, if any.

Holders of the Company's limited common stock have the right to convert each share of limited common stock into one share of the Company's common stock.

Limited common stockholders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

The rights, preferences and privileges of holders of the limited common stock are subject to and may be adversely affected by the right of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.

The rights, preferences and privileges of holders of the limited

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common stock are subject to and may be adversely affected by the right of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.

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Stock Incentive Plans

As of December 31, 2023, the Company’s stock incentive plans included the 2010 Stock Plan (the “2010 Plan”), the 2020 Equity Incentive Plan (the “2020 Plan”), the 2021 Inducement Equity Incentive Plan, as amended (the “2021 Plan”), and the 2022 Equity Incentive Plan (the “2022 Plan”) (together, the “Plans”).

As of December 31, 2024, the Company's stock incentive plans included the 2010 Stock Plan (the "2010 Plan"), the 2020 Equity Incentive Plan (the "2020 Plan"), the 2021 Inducement Equity Incentive Plan, as amended (the "2021 Plan"), and the 2022 Equity Incentive Plan, as amended (the "2022 Plan") (together, the "Plans").

The 2022 Plan provides for the award of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards, and cash-based awards to employees, directors, consultants or advisors.

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).

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

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The fair value of RSUs 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 over the vesting period.

RSUs generally vest over four years with 25 % of the grants vesting at the end of the first year and the remaining vesting annually over the following three years.

RSUs generally vest

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over four years with 25 % of the grants vesting at the end of the first year and the remaining vesting annually over the following three years.

Restricted stock unit activity was as follows:

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As of December 31, 2024, there was $ 32,264 of unrecognized compensation cost related to RSUs granted under the Plans, which is expected to be recognized over a weighted average period of 2.90 years.

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 .

During the years ended December 31, 2024 and 2023, 231,188 and 13,241 RSUs vested, respectively.

The fair value of RSUs vested during the years ended December 31, 2024 and 2023 was $ 5,822 and $ 355 , respectively.

No RSUs vested during year ended December 31, 2022.

Performance-Based Restricted Stock Units

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.

In March 2024 and 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 when 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 March 2024, the Company awarded to all executive officers PRSUs for a maximum of 180,000 shares (based on 150 % achievement of the applicable performance conditions outlined in the awards), with a target award of 120,000 PRSUs (based on 100 % achievement of the applicable performance conditions), and a threshold award of 60,000 PRSUs (based on 50 % achievement of the applicable performance conditions).

All such PRSUs were considered granted under ASC 718, Compensation—Stock Compensation ("Topic 718") in March 2024.

Such 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, 2026.

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.

All such PRSUs were considered granted under Topic 718 in February 2023.

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.

In March 2024 and 2023, of the 90,000 PRSUs awarded in August 2022, an additional 14,850 and 45,000 PRSUs were considered granted under Topic 718, respectively.

During the year ended December 31, 2024, the Company's compensation committee determined the achievement of the awards set to vest upon the certification by the Company's compensation committee following the filing of the Company's

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Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Of the 36,000 PRSUs that were eligible to vest, the Company's compensation committee determined that the applicable performance conditions had been met for 9,000 of the PRSUs, which vested during the year ended December 31, 2024, and that the applicable performance conditions had not been met for 27,000 PRSUs, which were forfeited during the year ended December 31, 2024.

The remaining 54,000 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, 2024 and 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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Granted 134,850 26.08

Vested ( 9,000 ) 28.55

Forfeited ( 54,000 ) 22.87

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The weighted average grant date fair value for each PRSU granted during the years ended December 31, 2024, 2023, and 2022 was $ 26.08 , $ 22.48 , and $ 28.55 , respectively.

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

During the year ended December 31, 2024, 9,000 PRSUs vested.

The fair value of PRSUs vested during the year ended December 31, 2024 was $ 241 .

No PRSUs vested during the years ended 2023 and 2022.

Stock Options

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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.

In March 2024 and February 2023, the Company granted the chief executive officer premium priced options to purchase 87,271 and 65,525 shares of common stock, respectively, with exercise prices equal to 110 % of the closing price of the Company's common stock on the date of grant.

During the years ended December 31, 2024, 2023, and 2022, 169,820 , 800,336 , and 329,224 options under the Plans were exercised for total proceeds of $ 1,488 , $ 9,440 , and $ 2,110 , respectively.

The fair value of each option award is determined on the date of grant using the Black Scholes Merton option-pricing model.

The calculation of fair value includes several assumptions that require management’s judgment.

The calculation of fair value included several assumptions that require management’s judgment.

The expected terms of options granted to employees during the years ended December 31, 2024, 2023, and 2022 were calculated using an average of historical exercises.

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.

Estimated volatility for 2024, 2023, and 2022 incorporated 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 was based on the U.S.

Treasury constant maturities in effect at the time of grant for the expected term of the option.

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

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

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The fair value of shares vested during the years ended December 31, 2024, 2023, and 2022 was $ 39,422 , $ 46,877 , and $ 43,559 , respectively.

(11) Noncontrolling Interest

The Company reviews each legal entity formed by parties related to the Company to determine whether or not the Company has a variable interest in the entity and whether or not the entity would meet the definition of a variable interest entity (“VIE”) in accordance with ASC Topic 810, Consolidation .

If the entity is a VIE, the Company assesses whether or not the Company is the primary beneficiary of that VIE based on a number of factors, including (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to any contractual agreements and (iii) which party has the obligation to absorb losses or the right to receive benefits from the VIE.

If the Company determines it is the primary beneficiary of a VIE, the Company consolidates the financial statements of the VIE into the Company’s consolidated financial statements at the time that determination is made.

The Company evaluates whether it continues to be the primary beneficiary of any consolidated VIEs on a quarterly basis.

If the Company were to determine that it is no longer the primary beneficiary of a consolidated VIE, or no longer has a variable interest in the VIE, it would deconsolidate the VIE in the period that the determination is made.

If the Company determines it is the primary beneficiary of a VIE that meets the definition of a business, the Company measures the assets, liabilities and noncontrolling interests of the newly consolidated entity at fair value in accordance with Topic 805 at the date the reporting entity first becomes the primary beneficiary.

In October 2018, Faxian Therapeutics, LLC (“Faxian”) was formed in the United States.

In April 2019, upon consummation of the joint venture, the Company and WuXi AppTech ("WuXi"), each received a 50 % equity interest in the entity in exchange for their contributions to the entity.

The Company determined that Faxian was a VIE and concluded that it is the primary beneficiary of the VIE.

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 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):

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

The following table presents the calculation of basic and diluted net (loss) income 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,

2024 2023 2022

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:

Net (loss) income attributable to common and limited common stockholders $ ( 187,123 ) $ 40,720 $ ( 149,186 )

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

72,670,295 71,776,301 71,173,419

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:

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

72,670,295 74,986,816 71,173,419

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

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

$ ( 2.57 ) $ 0.57 $ ( 2.10 )

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

Net (loss) income per share of common and limited common stockholders, diluted:

$ ( 2.57 ) $ 0.54 $ ( 2.10 )

Since the Company was in a loss position for the years ended December 31, 2024 and 2022, 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.

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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(11) Equity Investments

The Company previously provided 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 Therapeutics, LLC ("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.

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.

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.

As of December 31, 2024 and 2023, the carrying value of the Nimbus investment was $ 2,436 and $ 1,928 , 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 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.

During the year ended

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December 31, 2024, the Company reported an unrealized gain of $ 508 on the Nimbus investment.

During 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 received 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 on the Nimbus investment due to the change in accounting method.

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

On August 15, 2024, the Company disposed of its equity stake in Morphic Holding, Inc.

("Morphic") for aggregate consideration of $ 47,588 in connection with Eli Lilly and Company's acquisition of Morphic.

Prior to the disposition of the Morphic investment, the Company accounted for its investment in Morphic at fair value based on the share price of Morphic’s common stock at the measurement date.

During the years ended December 31, 2024 and 2023, the Company reported a mark-to-market gain of $ 23,474 and $ 1,778 , respectively, on the Morphic investment.

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

As of December 31, 2024 and 2023, the carrying value of the Company's investment in Morphic was zero and $ 24,114 , respectively.

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

("Ajax") for $ 1,700 in cash.

In April 2024, the Company purchased 1,416,450 shares of Series C preferred stock of Ajax for $ 3,000 in cash.

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

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

During the year ended December 31, 2024, the Company recorded an impairment loss of $ 202 on the Ajax investment.

No gain or loss was recorded on the Ajax investment during the years ended December 31, 2023 and 2022.

As of December 31, 2024 and 2023, the carrying value of the Company's investment in Ajax was $ 4,498 and $ 1,700 , respectively.

(d) Structure Therapeutics

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

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

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

The Company purchased 275,000 American Depository Shares ("ADSs") 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.

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.

The Company accounts for its investment in Structure Therapeutics at fair value based on the closing price of Structure Therapeutics' ADSs as of the reporting date.

During the year ended December 31, 2024, the Company recorded a mark-to-market loss of $ 18,096 on the Structure Therapeutics investment.

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

During the year ended December 31, 2022, the Company recorded a loss of $ 858 on the Structure Therapeutics investment under the hypothetical liquidation book value method.

As of December 31, 2024 and 2023, the carrying value of the Company's investment in Structure Therapeutics was $ 36,202 and $ 55,509 , respectively.

(12) Employee Benefit Plan

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Matching contributions during 2024, 2023, and 2022 were $ 4,478 , $ 4,135 , and $ 3,243 , respectively.

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(13) Related Party Transactions

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For the years ended December 31, 2024, 2023, and 2022, the Company paid consulting fees of $ 428 , $ 420 , and $ 410 , respectively, to a member of its board of directors.

(b) Bill and Melinda Gates Foundation

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 $ 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.

(b) Bill & Melinda Gates Foundation

The Bill & Melinda Gates Foundation, an entity under common control with Bill & 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 licenses and services provided by the Company under this grant were $ 111 , $ 253 , and $ 387 for the years ended December 31, 2024, 2023, and 2022, respectively.

For the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 2,031 , $ 2,822 , and $ 1,949 , 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, 2024 and 2023, restricted cash on hand related to the arrangement was $ 1,021 and $ 2,251 , respectively.

For the year ended December 31, 2024, the Company recognized $ 6,016 in software contribution revenue related to funds received under agreements with the Bill & Melinda Gates Foundation to fund the initiative to accelerate the expansion of the Company's computational platform to predict toxicity associated with binding to off-target proteins.

As of December 31, 2024, restricted cash on hand related to the arrangement was $ 8,606 .

As of December 31, 2024 and 2023, the Company had no receivables due from the Bill & Melinda Gates Foundation related to any of these agreements.

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

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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.

In August 2023, the Company renewed the agreement with Gates Ventures, LLC and recognized $ 1,800 in contribution revenue upon extension of the agreement and $ 2,000 in contribution revenue upon the first anniversary of the extension.

As of December 31, 2024 and 2023, 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 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.

(14) Segment Reporting

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The CODM reviews segment performance and allocates resources based upon segment revenue and segment gross profit of the Software and Drug Discovery reportable segments.

Segment gross profit is derived by deducting operational expenditures, with the exception of research and development, sales and marketing, and general and administrative activities from U.S.

Segment gross profit is derived by deducting cost of sales from U.S.

GAAP revenue.

Operational expenditures are expenditures made that are directly attributable to the reportable segment.

These expenditures are allocated to the segments based on headcount.

Cost of sales are expenditures made that are directly attributable to the reportable segment.

These expenditures are allocated to the segments based on headcount or by expenses directly incurred to support the Software or Drug Discovery segments.

The reportable segment expenditures include compensation, supplies, and services from contract research organizations.

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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.

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 subjective and may not provide meaningful analysis.

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.

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Presented below is financial information with respect to the Company’s reportable segments for the years presented:

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Total segment revenues 207,539 216,666 180,955

Segment cost of revenues:

Software 36,900 29,514 29,576

Drug discovery 38,556 46,460 50,357

Total segment cost of revenues 75,456 75,974 79,933

Segment gross profit:

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General and administrative ( 99,677 ) ( 99,148 ) ( 90,825 )

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

Gain on equity investments — 147,213 11,825

Change in fair value 5,683 53,461 ( 18,084 )

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Income tax expense ( 1,412 ) ( 2,199 ) ( 63 )

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

Consolidated net (loss) income $ ( 187,123 ) $ 40,720 $ ( 149,186 )

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

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$ 207,539 $ 216,666 $ 180,955

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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