Schrodinger, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets as of December 31, 2025 and 2024 F- 4 Consolidated Statements of Operations for the Years ended December 31, 2025, 2024, and 2023 F- 5 Consolidated Statements of Comprehensive (Loss) Income for the Years ended December 31, 2025, 2024, and 2023 F- 6 Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2025, 2024, and 2023 F- 7 Consolidated Statements of Cash Flows for the Years ended December 31, 2025, 2024, and 2023 F- 8 Notes to Consolidated Financial Statements F- 9 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Schrödinger, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Schrödinger, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, 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, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and F-2 Table of Contents directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Identification of performance obligations in material software revenue arrangements As discussed in Note 3(a) to the consolidated financial statements, the Company reported on-premise software revenue of $101,448 thousand and hosted software revenue of $45,123 thousand for the year ended December 31, 2025. 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. We identified the determination of distinct performance obligations in material software revenue arrangements as a critical audit matter. There was subjective auditor judgment in evaluating whether promised products and services in material software revenue arrangements are separate performance obligations or inputs into a combined performance obligation. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the revenue process, including controls related to the determination of distinct performance obligations. For material software revenue arrangements, we evaluated whether the performance obligations identified by the Company were capable of being distinct in the context of the contract by obtaining an understanding of the Company’s product and service offerings, obtaining and inspecting contracts, and evaluating the application of the revenue recognition accounting guidance for the selected contract. /s/ KPMG LLP We have served as the Company’s auditor since 2010. Portland, Oregon February 25, 2026 F-3 Table of Contents SCHRÖDINGER, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, except for share and per share amounts) Assets December 31, 2025 December 31, 2024 Current assets: Cash and cash equivalents $ 230,517 $ 147,326 Restricted cash 6,868 15,331 Marketable securities 164,947 204,798 Accounts receivable, net of allowance for doubtful accounts of $ 440 and $ 210 83,041 235,692 Unbilled and other receivables, net of allowance for unbilled receivables of $ 140 and $ 100 21,352 19,641 Prepaid expenses 12,540 12,205 Total current assets 519,265 634,993 Property and equipment, net 19,456 24,196 Equity investments 73,647 43,208 Goodwill 4,791 4,791 Right of use assets - operating leases 102,736 111,883 Other assets 6,265 4,155 Total assets $ 726,160 $ 823,226 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 11,452 $ 10,666 Accrued payroll, taxes, and benefits 39,264 42,110 Deferred revenue 112,853 111,944 Lease liabilities - operating leases 16,412 16,755 Other accrued liabilities 9,155 10,272 Total current liabilities 189,136 191,747 Deferred revenue, long-term 78,877 108,814 Lease liabilities - operating leases, long-term 92,816 101,074 Other liabilities, long-term 1,278 146 Total liabilities 362,107 401,781 Commitments and contingencies (Note 6) Stockholders' equity: Preferred stock, $ 0.01 par value. Authorized 10,000,000 shares; zero shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively — — Common stock, $ 0.01 par value. Authorized 500,000,000 shares; 64,515,380 and 63,710,409 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 645 637 Limited common stock, $ 0.01 par value. Authorized 100,000,000 shares; 9,164,193 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 92 92 Additional paid-in capital 992,015 946,037 Accumulated deficit ( 628,806 ) ( 525,541 ) Accumulated other comprehensive income 107 220 Total stockholders' equity 364,053 421,445 Total liabilities and stockholders' equity $ 726,160 $ 823,226 See accompanying notes to consolidated financial statements. F-4 Table of Contents SCHRÖDINGER, INC. AND SUBSIDIARIES Consolidated Statements of Operations (in thousands, except for share and per share amounts) Year Ended December 31, 2025 2024 2023 Revenues: Software products and services $ 199,500 $ 180,365 $ 159,124 Drug discovery 56,369 27,174 57,542 Total revenues 255,869 207,539 216,666 Cost of revenues: Software products and services 51,001 36,900 29,514 Drug discovery 62,254 38,556 46,460 Total cost of revenues 113,255 75,456 75,974 Gross profit 142,614 132,083 140,692 Operating expenses: Research and development 173,138 201,785 181,766 Sales and marketing 40,963 39,917 37,226 General and administrative 95,409 99,677 99,148 Total operating expenses 309,510 341,379 318,140 Loss from operations ( 166,896 ) ( 209,296 ) ( 177,448 ) Other income: Gain on equity investments — — 147,213 Change in fair value of equity investments 48,174 5,683 53,461 Other income 16,396 17,902 19,693 Total other income 64,570 23,585 220,367 (Loss) income before income taxes ( 102,326 ) ( 185,711 ) 42,919 Income tax expense 939 1,412 2,199 Net (loss) income $ ( 103,265 ) $ ( 187,123 ) $ 40,720 Net (loss) income per share attributable to common and limited common stockholders, basic: $ ( 1.41 ) $ ( 2.57 ) $ 0.57 Weighted average shares used to compute net (loss) income per share of common and limited common stockholders, basic: 73,443,298 72,670,295 71,776,301 Net (loss) income per share of common and limited common stockholders, diluted: $ ( 1.41 ) $ ( 2.57 ) $ 0.54 Weighted average shares used to compute net (loss) income per share of common and limited common stockholders, diluted: 73,443,298 72,670,295 74,986,816 See accompanying notes to consolidated financial statements. F-5 Table of Contents SCHRÖDINGER, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive (Loss) Income (in thousands) Year Ended December 31, 2025 2024 2023 Net (loss) income attributable to common and limited common stockholders $ ( 103,265 ) $ ( 187,123 ) $ 40,720 Changes in market value of investments, net of tax: Unrealized (loss) gain on marketable securities ( 113 ) ( 61 ) 2,663 Comprehensive (loss) income $ ( 103,378 ) $ ( 187,184 ) $ 43,383 See accompanying notes to consolidated financial statements. F-6 Table of Contents SCHRÖDINGER, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity (in thousands, except for share amounts) Common stock Limited common stock Additional paid-in Accumulated Accumulated other comprehensive Total stockholders’ Shares Amount Shares Amount capital deficit (loss) income equity Balance at December 31, 2022 62,163,739 $ 622 9,164,193 $ 92 $ 828,700 $ ( 379,138 ) $ ( 2,382 ) $ 447,894 Unrealized gain on marketable securities — — — — — — 2,663 2,663 Issuances of common stock upon stock option exercises 800,336 8 — — 9,432 — — 9,440 Issuance of common stock upon vesting of RSUs and PRSUs 13,241 — — — — — — — Stock-based compensation — — — — 47,841 — — $ 47,841 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 Unrealized loss on marketable securities — — — — — — ( 61 ) ( 61 ) Issuances of common stock upon stock option exercises 169,820 2 — — 1,486 — — 1,488 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 loss — — — — — ( 187,123 ) — ( 187,123 ) Balance at December 31, 2024 63,710,409 637 9,164,193 92 946,037 ( 525,541 ) 220 421,445 Unrealized loss on marketable securities — — — — — — ( 113 ) ( 113 ) Issuances of common stock upon stock option exercises 303,770 3 — — 2,986 — — 2,989 Issuance of common stock upon vesting of RSUs and PRSUs 501,201 5 — — ( 5 ) — — — Stock-based compensation — — — — 42,997 — — 42,997 Net loss — — — — — ( 103,265 ) — ( 103,265 ) Balance at December 31, 2025 64,515,380 $ 645 9,164,193 $ 92 $ 992,015 $ ( 628,806 ) $ 107 $ 364,053 See accompanying notes to consolidated financial statements. F-7 Table of Contents SCHRÖDINGER, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net (loss) income $ ( 103,265 ) $ ( 187,123 ) $ 40,720 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Gain on equity investments — — ( 147,213 ) Changes in fair value of equity investments ( 48,174 ) ( 5,683 ) ( 53,461 ) Depreciation and amortization 6,022 6,159 5,552 Stock-based compensation 42,997 49,903 47,841 Noncash investment accretion ( 1,867 ) ( 7,592 ) ( 7,761 ) Loss on disposal of property and equipment 20 8 142 Decrease (increase) in assets: Accounts receivable, net 152,651 ( 169,700 ) ( 10,039 ) Unbilled and other receivables ( 1,711 ) 3,483 ( 9,987 ) Reduction in the carrying amount of right of use assets - operating leases 9,147 8,942 7,766 Prepaid expenses and other assets ( 2,445 ) ( 3,482 ) ( 8,462 ) Increase (decrease) in liabilities: Accounts payable 908 ( 6,119 ) 7,321 Accrued payroll, taxes, and benefits ( 2,846 ) 10,347 6,881 Deferred revenue ( 29,028 ) 155,484 ( 18,256 ) Lease liabilities - operating leases ( 8,601 ) ( 10,053 ) ( 3,694 ) Other accrued liabilities 91 ( 1,942 ) 5,917 Net cash provided by (used in) operating activities 13,899 ( 157,368 ) ( 136,733 ) Cash flows from investing activities: Purchases of property and equipment ( 1,442 ) ( 7,311 ) ( 13,403 ) Purchases of equity investments — ( 3,072 ) ( 4,125 ) Distribution from equity investment — — 147,213 Proceeds from sale and disposition of equity investments 17,735 48,798 — Purchases of marketable securities ( 312,959 ) ( 251,339 ) ( 320,624 ) Proceeds from maturity of marketable securities 354,564 361,760 383,973 Net cash provided by investing activities 57,898 148,836 193,034 Cash flows from financing activities: Proceeds from issuances of common stock upon stock option exercises 2,989 1,490 9,440 Proceeds from issuance of common stock in ATM offering — 8,868 — Payment of offering costs — ( 177 ) ( 373 ) Principal payments on finance leases ( 58 ) ( 58 ) ( 19 ) Net cash provided by financing activities 2,931 10,123 9,048 Net increase in cash and cash equivalents and restricted cash 74,728 1,591 65,349 Cash and cash equivalents and restricted cash, beginning of year 162,657 161,066 95,717 Cash and cash equivalents and restricted cash, end of year $ 237,385 $ 162,657 $ 161,066 Supplemental disclosure of non-cash investing and financing activities Purchases of property and equipment in accounts payable $ 40 $ 162 $ 192 Purchases of property and equipment in accrued liabilities 81 157 457 Acquisition of right of use assets - operating leases, contingency resolution — 2,848 514 Acquisition of right of use assets in exchange for lease liabilities - operating leases — — 15,085 Acquisition of right of use assets in exchange for lease liabilities - finance leases — — 279 See accompanying notes to consolidated financial statements. F-8 Table of Contents SCHRÖDINGER, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements For the years ended December 31, 2025, 2024, and 2023 (in thousands, except for share and per share amounts and note 3(c)) (1) Description of Business Schrödinger, Inc. (the "Company") has developed a differentiated, physics-based computational platform that enables discovery of high-quality, novel molecules for drug development and materials applications more rapidly and at a lower cost, compared to traditional methods. The Company's software platform is licensed by biopharmaceutical and industrial companies, academic institutions, and government laboratories around the world. The Company is also applying its computational platform to advance a broad pipeline of drug discovery programs in collaboration with leading biopharmaceutical companies. In addition, the Company uses its computational platform to discover novel molecules for its pipeline of proprietary drug discovery programs, which the Company is advancing through preclinical and clinical development. Liquidity, Capital Resources and Funding Requirements The Company has funded its operations to date principally from the sale of equity securities, and to a lesser extent, from sales of software solutions and from upfront payments, research funding and milestone payments from drug discovery collaborations, and from distributions on account of, or proceeds from the sale of, the Company's equity stakes in its collaborators. The Company's operating cash flows are impacted by the magnitude and timing of our software sales and by the magnitude and timing of its drug discovery milestone achievements and research funding fees. On February 28, 2024, the Company filed a universal shelf registration statement on Form S-3 which allows for the offering and selling of an indeterminate number of shares of common stock, preferred stock, depositary shares or warrants, or an indeterminate principal amount of debt securities, from time to time pursuant to one or more offerings at prices and terms to be determined at the time of the sale. As of December 31, 2025, the Company had cash, cash equivalents, restricted cash, and marketable securities of $ 402.3 million. (2) Significant Accounting Policies (a) Accounting Pronouncements Not Yet Adopted In November 2024, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326) — Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient for estimating expected credit losses. The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual periods, on a prospective basis, with early adoption permitted. The Company has not yet adopted ASU 2025-05 and is still evaluating the impact of the adoption on its consolidated financial statements. In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) — Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract , which refines the scope of the guidance on derivatives by adding a new scope exception for certain non-exchange-traded contracts that have an underlying based on operations or activities specific to one of the parties to the contract, and clarifies the interaction between the guidance on revenue from F-9 Table of Contents contracts with customers and the guidance on derivatives and equity investments for share-based noncash consideration from a customer for the transfer of goods or services. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods, with early adoption permitted. The Company has not yet adopted ASU 2025-07 and is still evaluating the impact of the adoption on its consolidated financial statements. (b) Basis of Presentation and Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the assumptions used in the allocation of revenue and estimates regarding the progress of completing performance obligations under collaboration agreements. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. (c) Principles of Consolidation 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 Company accounts for investments over which it has significant influence, but not a controlling financial interest, using the equity method. (d) Cash and Cash Equivalents and Marketable Securities and Restricted Cash Included in cash and cash equivalents were cash equivalents of $ 172,667 and $ 102,054 as of December 31, 2025 and 2024, 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 marketable securities, which consist of fixed income securities, as available for sale securities. At times, cash balances held at financial institutions were in excess of the Federal Deposit Insurance Corporation’s insured limits; 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, certificates of deposit held as collateral for its credit card facility, and funds received from certain grants which are restricted to their use. These items are classified as current in the Company’s balance sheets based on their maturity or the term of the grant. (e) Accounts Receivable Accounts receivable are stated at original invoice amount less an allowance for doubtful accounts. Management estimates the allowance for doubtful accounts by evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Account balances are considered delinquent if payment is not received by the due date. Accounts receivable are written off when deemed uncollectible. Recovery of accounts receivable previously written off is recorded when received. Changes in the balance of accounts deemed uncollectible were deemed immaterial as of December 31, 2025 and 2024. Interest is not charged on accounts receivable. (f) Fair Value of Financial Instruments The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities. (g) Property and Equipment Property and equipment are stated at cost. The Company did not capitalize any interest for the years ended December 31, 2025, 2024, and 2023. Maintenance and repairs are expensed as incurred. F-10 Table of Contents Depreciation is calculated using the straight‑line method over the estimated useful lives of the assets, which range from 3 to 10 years. Amortization of leasehold improvements is calculated using the straight‑line method over the remaining life of the lease or the useful life of the asset, whichever is shorter. Property and equipment are reviewed for impairment as discussed below under "Accounting for the Impairment of Long‑Lived Assets." (h) Goodwill Goodwill represents the excess purchase price over the fair value of net assets acquired which is not allocable to separately identifiable intangible assets. Other identifiable intangible assets are separately recognized if the intangible asset is obtained through contractual or other legal right or if the intangible asset can be sold, transferred, licensed or exchanged. Goodwill is not amortized but tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying amount more likely than not exceeds the fair value. The Company has the option to qualitatively or quantitatively assess its goodwill for impairment. The Company tests its goodwill for impairment on October 1 of each year. In 2025, the Company evaluated its goodwill using a qualitative process. If the qualitative factors determine that it is more likely than not that the fair value exceeds the carrying amount, goodwill is not impaired. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, the Company would further evaluate for potential impairment. This 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, 2025, 2024, and 2023. (i) Accounting for the Impairment of Long‑Lived Assets Long-lived assets, such as property and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for potential impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. 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. No impairment was identified for the years ended December 31, 2025, 2024, and 2023. (j) Warranties The Company typically warrants that its products will perform in a manner consistent with the product specifications provided to the customer for a period of 30 days. Historically, the Company has not been required to make payments under these obligations. Therefore, no liabilities for such obligations are presented in the consolidated financial statements. (k) Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade receivables and contract assets, which represent contracted unbilled receivables. The Company does not require customers to provide collateral to support accounts receivable. If deemed necessary, credit reviews of significant new customers may be performed prior to extending credit. The determination of a customer’s ability to pay requires judgment, and failure to collect from a customer can adversely affect revenue, cash flows, and results of operations. As of December 31, 2025 and 2024, one customer accounted for 10 % and 68 % of total accounts receivable, respectively. As of December 31, 2025, three customers accounted for 21 %, 12 %, and 10 % of total contract assets, respectively. As of December 31, 2024, three customers accounted for 33 %, 23 %, and 16 % of total contract assets, respectively. For the years ended December 31, 2025 and 2024, one customer accounted for 17 % and 10 % of total F-11 Table of Contents revenues, respectively. For the year ended December 31, 2023, two customers accounted for 26 % and 11 % of total revenues, respectively. (l) Royalties Royalties represent a component of cost of revenues and consist of royalties paid to owners of intellectual property used in or bundled with the Company’s software. Generally, royalties are incurred and recorded at the time a customer enters into a binding purchase agreement, although some royalty agreements are based instead on cash collections. Royalty expense was $ 8,401 , $ 9,342 , and $ 13,349 for the years ended December 31, 2025, 2024, and 2023, respectively. (m) Software Development Costs Costs to develop new software products and substantial enhancements to existing software products are expensed as incurred. Historically, the Company has not capitalized any software development costs because the software development process was essentially completed concurrent with the establishment of technological feasibility. (n) Research and Development Research and development costs are expensed as incurred. Research and development expense consists of drug discovery and development program costs and costs incurred for continuous development of the technology and science that supports the Company's computational platform. (o) Stock‑Based Compensation The Company calculates stock‑based compensation expense utilizing fair value–based methodologies and recognizes expense over the vesting period of such awards on a straight-line basis. For performance-based restricted stock units, the Company records stock-based compensation expense with a cumulative catch-up at the time when performance conditions are considered probable of achievement, and on a straight-line basis over the remaining period for which the performance criteria are expected to be completed. (p) Commissions Commissions represent a component of sales and marketing expense and consist of the variable compensation paid to the Company’s sales representatives. Generally, sales commissions are earned and recorded as expense at the time that a customer has entered into a binding purchase agreement. Commissions paid to sales representatives are recoverable only in the case that the Company cannot collect against any invoiced fee associated with a sales order. Commission expense was $ 2,073 , $ 1,803 , and $ 1,636 in 2025, 2024, and 2023, respectively. (q) Income Taxes The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities. Deferred tax assets are reduced by a valuation allowance when it is estimated to become more likely than not that a portion of the deferred tax assets will not be realized. Accordingly, the Company currently maintains a full valuation allowance against U.S. federal and state net deferred tax assets. 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 (Loss) Income Comprehensive (loss) income includes net (loss) income and changes in equity related to changes in unrealized gains or losses on marketable securities. F-12 Table of Contents (s) Equity Investments In the normal course of business, the Company has entered, and may continue to enter, into collaboration agreements with companies to perform drug and materials design services for such companies in exchange for equity ownership stakes in such companies. If it is determined that the Company has control over the investee, the investee is consolidated in the financial statements. If the investee is consolidated with the Company and less than 100% of the equity is owned by the Company, the Company will present non-controlling interest to represent the portion of the investee owned by other investors. 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 ("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"), Investments - Equity Securities . For further information regarding the Company’s equity investments, see Note 5, Fair Value Measurements and Note 11, Equity Investments. (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. The Company considers all limited common stock to be participating securities as the holders are entitled to the same dividend rights as holders of common stock and therefore net income (loss) attributable to common and limited common stockholders is identical for both classes. Undistributed earnings allocated to the participating securities are subtracted from net income in determining net income (loss) attributable to common and limited common stockholders. Basic net income (loss) per share is computed by dividing net income (loss) attributable to common and limited common stockholders by the weighted-average number of shares of common and limited common stock outstanding during the period. 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. (3) Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time, which can result in different revenue recognition patterns. The following table illustrates the timing of the Company’s revenue recognition patterns: Year Ended December 31, 2025 2024 2023 Software products and services – point in time 41.0 % 51.4 % 49.1 % Software products and services – over time 37.0 35.5 24.3 Drug Discovery – point in time 4.0 6.8 12.7 Drug Discovery – over time 18.0 6.3 13.9 (a) Software Products and Services 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 F-13 Table of Contents obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price ("SSP") basis. Revenue is recognized net of any sales and value-added taxes collected from customers and subsequently remitted to governmental authorities. The Company's software business derives revenue from five sources: (i) on-premise software license fees, (ii) hosted software subscription fees, (iii) software maintenance fees, (iv) professional services fees, and (v) contributions. On-premise software. The Company's on-premise software license arrangements grant customers the right to use its software on their own in-house servers or their own cloud instances for a specified term, typically for one year , though in recent years, the Company has entered into a small number of large multi-year on-premise software license agreements. The Company recognizes revenue for on-premise software license fees upfront, either upon transfer of control of the license or the effective date of the agreement, whichever is later. In instances where the timing of 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. The Company's updates and upgrades are not integral to maintaining the utility of the software licenses. Payments typically are received upfront or annually. Hosted software. Hosted software revenue consists primarily of fees to provide the Company's customers with hosted licenses, which allows these customers to access the Company's cloud-based software solution on their own hardware without taking control of the licenses, and is recognized ratably over the term of the arrangement, which is typically one year , though in recent years, the Company has entered into a small number of large multi-year hosted software license agreements. When a customer enters into a hosted arrangement for which revenue is recognized over time, the amount paid upfront that is not recognized in the current period is included in deferred revenue in the Company's statement of financial position until the period in which it is recognized. Software maintenance . Software maintenance includes technical support, updates, and upgrades related to the Company's on-premise software licenses. Software maintenance revenue is recognized ratably over the term of the arrangement. Software maintenance activities are performed in connection with the use of the Company's on-premise software. Professional services . Professional services include training, technical setup, installation or assisting customers with modeling services, where the Company uses its software to perform tasks such as virtual screening on behalf of the Company’s customers. These services are generally not related to the core functionality of the Company's software and are recognized as revenue when resources are consumed. Software contribution revenue. Software contribution revenue consists of funds received under non-reciprocal agreements, as amended, with Gates Ventures, LLC and the Bill & Melinda Gates Foundation. The agreement s are an unconditional non-exchange contribution without restrictions. Revenue is recognized annually, w hen invoiced or as costs are incurred and conditions are met, in accordance with ASC Topic 958, Not-for-Profit Entities ("Topic 958"), as the agreements are not an exchange transaction. The agreement, as amended, with Gates Ventures, LLC was originally entered into in June 2020 and further extended through August 13, 2026 and provides for total consideration of up to $ 9,000 . Revenue is recognized annually, when invoiced, in accordance with Topic 958. The Company recognized revenue of $ 2,200 , $ 2,000 , and $ 1,800 related to these agreements during the years ended December 31, 2025, 2024, and 2023, respectively. As of both December 31, 2025 and 2024, the Company had no deferred revenue balance related to this agreement. As of December 31, 2025 and 2024, the Company had no accounts receivable related to this agreement. The agreement, as amended, with the Bill & Melinda Gates Foundation was originally entered into in July 2024, and further extended through April 2026, to fund the initiative to accelerate the expansion of the Company's computational platform to predict toxicity associated with binding to off-target proteins. Revenue is recognized as costs are incurred and conditions are met in accordance with Topic 958. The Company recognized revenue of $ 13,788 and $ 6,016 related to these agreements during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the Company had deferred revenue balances of zero and $ 8,484 related to these agreements, respectively. As of both December 31, 2025 and 2024, the Company had no accounts receivable related to these agreements. F-14 Table of Contents The following table presents the revenue recognized from the sources of software products and services revenue: Year Ended December 31, 2025 2024 2023 On-premise software $ 101,448 $ 104,020 $ 104,511 Hosted software 45,123 35,253 20,381 Software maintenance 27,293 23,279 23,066 Professional services 9,648 9,797 9,366 Revenue from contracts with customers 183,512 172,349 157,324 Software contribution 15,988 8,016 1,800 Total software revenue $ 199,500 $ 180,365 $ 159,124 (b) Drug Discovery Drug discovery services. 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 completion. 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 at contract inception and at the end of each reporting period. 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 or the event is outside of the Company's control, the Company constrains variable consideration to exclude the milestone payment until it is deemed probable of achievement and that a significant reversal in revenue would not occur. 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, 2025, 2024, and 2023, milestones not yet achieved that were determined to be probable of achievement totaled $ 1,000 , zero , and $ 350 , respectively, and $ 647 , zero , and $ 350 of those milestones were recognized as revenue for the years ended December 31, 2025, 2024, and 2023, respectively. Drug discovery contribution revenue . Drug discovery contribution revenue primarily consists of funds received under agreements with the Bill & Melinda Gates Foundation on a cost reimbursement basis, to perform services aimed at accelerating drug discovery in women's health. The agreement began in November 2021 and the Company currently performs services aimed at accelerating drug discovery in women's health under an agreement with the Bill & Melinda Gates Foundation that extends through March 2026. Revenue is recognized as costs are incurred and conditions are met in accordance with Topic 958 . As of December 31, 2025 and 2024, the Company had deferred revenue balances related to these agreements of $ 72 and $ 949 , respectively. The following table presents the revenue recognized from the sources of drug discovery revenue: Year Ended December 31, 2025 2024 2023 Drug discovery services revenue from contracts with customers $ 54,760 $ 25,143 $ 54,720 Drug discovery contribution 1,609 2,031 2,822 Total drug discovery revenue $ 56,369 $ 27,174 $ 57,542 F-15 Table of Contents (c) Collaboration and License Agreements 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. 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. 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, 2025. 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. The Company, at its discretion, can further advance 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, 2025, 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 the achievement of certain specified commercial milestones. As of December 31, 2025, the Company has recognized $ 32.0 million in revenue related to milestones under this agreement. The Company is also entitled to a tiered percentage royalty on annual net sales ranging from mid-single digits to low-double digits, subject to certain specified reductions. Royalties are payable by BMS on a licensed product-by-licensed product and country-by-country basis until the later of the expiration of the last valid claim covering the licensed product in such country, expiration of all applicable regulatory exclusivities in such country for such licensed product and the tenth anniversary of the first commercial sale of such licensed product in such country. 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. 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 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 it represents 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 relative 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. During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 2.8 million, $ 10.8 million, and $ 43.2 million, respectively, of revenue associated with the agreement based on the research activities performed and milestones achieved. As of December 31, 2025 and 2024, there was $ 3.2 million and $ 5.9 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 both December 31, 2025 and 2024, the Company had no outstanding receivables for this collaboration. F-16 Table of Contents Novartis. 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 is 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 agreement, subject to certain specified reductions. For the years ended December 31, 2025 and 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. 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. 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 relative SSP of each performance obligation at inception. The Company determined the estimated SSP of the research activities at contract inception 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. During the years ended December 31, 2025 and 2024, the Company recognized $ 30.0 million and $ 0.6 million of revenue, respectively, associated with the research collaboration and license agreement. As of December 31, 2025 and 2024, the Company had $ 100.5 million and $ 116.7 million of deferred revenue, net of contract assets, respectively, related to the agreements, which was classified as either current or non-current in the consolidated balance sheets based on the period the services are expected to be performed. As of December 31, 2025 and 2024, the Company had zero and $ 150.0 million outstanding receivables for this collaboration, respectively. (d) Significant Judgments Significant judgments and estimates are required under Topic 606. Due to the complexity of certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances. The Company's contracts with customers often include 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. 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 F-17 Table of Contents 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 is required to estimate the total consideration expected to be received from contracts with customers, including any variable consideration. For collaborative arrangements, under which the Company is eligible to receive variable consideration in the form of milestones payments, judgment is required to evaluate whether the milestones are considered probable of being achieved. If it is probable that a significant revenue reversal would not occur, the constraint is removed and value of the associated milestone is included in the estimated transaction price using the most likely amount method based on contractual requirements and historical experience. Once the estimated transaction price is established, amounts are allocated to the performance obligations that have been identified. The transaction price is allocated to each separate performance obligation on a relative SSP basis consistent with the allocation objectives of Topic 606. Judgment is required to determine the SSP for each distinct performance obligation. The Company rarely licenses or sells products on a standalone basis, so the Company is required to estimate the SSP 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 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. Professional service revenue is recognized as costs and hours are incurred, and judgment is required in estimating both the project status and the costs incurred or hours expended. If a group of agreements are so closely related to each other that they are, in effect, part of a single arrangement, such agreements are deemed to be one arrangement for revenue recognition purposes. The Company exercises significant judgment to evaluate the relevant facts and circumstances in determining whether the separate agreements should be accounted for separately or as, in substance, a single arrangement. The Company's judgments about whether a group of contracts comprises a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved. Judgment is required to determine the total costs to perform research activities, which include the length of time required, the internal hours expected to be incurred on the services, and the number and costs of various studies that may be performed by third parties to complete the research plan. Generally, the Company has not experienced significant returns or refunds to customers. The Company's estimates related to revenue recognition may require significant judgment and a change in these estimates could have an effect on the Company's results of operations during the periods involved. (e) Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on the consolidated balance sheets. The Company records a contract asset when revenue is recognized prior to invoicing. A deferred revenue liability is recorded when revenue is expected to be recognized subsequent to invoicing. For the Company's time-based software agreements, customers are generally invoiced at the beginning of the arrangement for the entire term, though when the term spans multiple years the customers may be invoiced on an annual basis. For certain drug discovery agreements where the milestones are deemed probable in a period prior to when the milestone is achieved, the Company records a contract asset for the full value of the milestone. Contract assets are included in unbilled and other receivables within the consolidated balance sheets and are transferred to receivables when the Company invoices the customer. F-18 Table of Contents Contract balances were as follows: As of December 31, 2025 As of December 31, 2024 Contract assets $ 19,838 $ 16,564 Deferred revenue, short-term: Software products and services 66,695 75,660 Drug discovery 46,158 36,284 Deferred revenue, long-term: Software products and services 7,333 14,393 Drug discovery 71,544 94,421 For the years ended December 31, 2025 and 2024, the Company recognized $ 112,523 and $ 53,438 of revenue, respectively, that was included in deferred revenue at the end of the respective preceding periods. All other deferred revenue activity is due to the timing of invoices in relation to the timing of revenue, as described above. The Company expects to recognize as revenue approximately 59 % of its December 31, 2025 deferred revenue balance in the next 12 months and the remainder thereafter. Additionally, contracted but unsatisfied performance obligations that had not yet been billed to the customer or included in deferred revenue were $ 43,053 and $ 59,519 as of December 31, 2025 and 2024, respectively. Payment terms and conditions vary by contract type, although terms typically require payment within 30 to 60 days. In instances where the timing of revenue recognition differs from that of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to facilitate financing arrangements. (f) Deferred Sales Commissions The Company has applied the practical expedient for sales commission expense, as any material compensation paid to sales representatives to obtain a contract relates to a period of one year or less. The Company has not capitalized any costs related to sales commissions. (4) Property and Equipment Property and equipment consisted of the following: As of December 31, 2025 2024 Computers and equipment $ 22,581 $ 23,527 Leasehold improvements 3,648 3,693 Lab equipment 10,686 10,375 Furniture and fixtures 6,960 6,876 Right of use asset - finance leases 579 579 44,454 45,050 Less accumulated depreciation ( 24,998 ) ( 20,854 ) $ 19,456 $ 24,196 Depreciation expense for 2025, 2024, and 2023 was $ 6,022 , $ 6,159 , and $ 4,965 , respectively, and is included within cost of revenues, research and development, sales and marketing, and general and administrative expenses within the consolidated statements of operations. F-19 Table of Contents (5) Fair Value Measurements Various inputs are used in determining the fair value of the Company’s financial assets and liabilities. These inputs are summarized into the following three broad categories: Level 1 – quoted prices in active markets for identical securities Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc. Level 3 – significant unobservable inputs, including the Company’s own assumptions in determining fair value The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Marketable securities, which consist primarily of corporate and U.S. government agency bonds, are classified as available for sale and fair value did not differ significantly from carrying value as of December 31, 2025 and 2024. The following table presents information about the Company’s assets measured at fair value as of December 31, 2025: Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents and restricted cash $ 237,385 $ — $ — $ 237,385 Marketable securities — 164,947 — 164,947 Equity investments 66,641 — — 66,641 Total $ 304,026 $ 164,947 $ — $ 468,973 The following table presents information about the Company’s assets measured at fair value as of December 31, 2024: Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents and restricted cash $ 162,657 $ — $ — $ 162,657 Marketable securities — 204,798 — 204,798 Equity investments 36,202 — — 36,202 Total $ 198,859 $ 204,798 $ — $ 403,657 Unrealized gains and losses arising from changes in fair value of the Company’s equity investments are classified within change in fair value of equity investments in the consolidated statements of operations. Realized gains arising from distributions receivable from the Company's equity investments are classified within gain on equity investments in the consolidated statements of operations. For further information regarding the Company’s equity investments, see Note 11, Equity Investments. (6) Commitments and Contingencies (a) Leases The Company has multiple operating leases for office space and a finance lease for equipment that expire at various dates through 2037. The Company has elected the package of practical expedients under the transition guidance of ASC Topic 842, Leases , to exclude short-term leases from the balance sheet and to combine lease and non-lease components. The Company classifies finance lease right of use assets under property and equipment, net and finance short-term and long-term lease liabilities under other accrued liabilities and other liabilities, long-term, respectively. Upon inception of a lease, the Company determines if an arrangement is a lease, if it is classified as an operating or finance lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that the Company will exercise the options. Lease cost, representing lease payments over the term of the lease and any capitalizable direct costs less any incentives received, is recognized on a straight-line basis over the lease term as lease expense. F-20 Table of Contents In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. Upon execution of a new lease, the Company performs an analysis to determine its incremental borrowing rate using its current borrowing rate, adjusted for various factors including level of collateralization and lease term. As of December 31, 2025, the remaining weighted average lease term for operating and finance leases was 10 years. Variable and short-term lease costs for the Company's operating and finance leases were immaterial for the year ended December 31, 2025. Additional details of the Company's operating and finance leases are presented in the following table: Year Ended December 31, 2025 2024 2023 Lease costs $ 18,015 $ 18,097 $ 16,769 Cash paid for leases 17,492 17,718 12,263 Maturities of operating and finance lease liabilities as of December 31, 2025 under noncancelable leases were as follows: Year ending December 31: 2026 $ 17,182 2027 15,997 2028 14,959 2029 14,521 2030 14,624 Thereafter 82,885 Total future minimum lease payments 160,168 Less: imputed interest ( 50,857 ) Present value of future minimum lease payments 109,311 Less: current portion of lease payments 16,495 Lease liabilities, long-term $ 92,816 (b) Legal Matters From time to time, the Company may become involved in routine litigation arising in the ordinary course of business. While the results of such litigation cannot be predicted with certainty, management believes that the final outcome of such matters is not likely to have a material adverse effect on the Company’s financial position or results of operations or cash flows for the years ended December 31, 2025 and 2024. (7) Income Taxes In December 2023, the FASB issued ASU No. 2023-09 Income Taxes (Topic 740) — Improvements to Income Tax Disclosure . In 2025, the Company adopted the standard on a prospective basis. Accordingly, the income tax disclosure for the year ended December 31, 2025, is presented in the revised format prescribed by the ASU, while the comparative periods for the years ending December 31, 2024 and 2023 continue to be presented under the previous disclosure requirements. F-21 Table of Contents Income tax expense is comprised of the following: Year Ended December 31, 2025 2024 2023 Current: Federal $ 188 $ ( 202 ) $ 727 State 128 352 509 Foreign 1,237 1,515 963 Current income tax expense 1,553 1,665 2,199 Deferred: Federal — — — State — — — Foreign ( 614 ) ( 253 ) — Deferred income tax benefit ( 614 ) ( 253 ) — Total income tax expense (benefit) Federal $ 188 $ ( 202 ) $ 727 State 128 352 509 Foreign 623 1,262 963 Income tax expense $ 939 $ 1,412 $ 2,199 Components of (loss) income before income taxes by tax jurisdiction were as follows: Year Ended December 31, 2025 2024 2023 United States $ ( 105,522 ) $ ( 190,298 ) $ 39,076 Foreign 3,196 4,587 3,843 (Loss) income before income taxes $ ( 102,326 ) $ ( 185,711 ) $ 42,919 F-22 Table of Contents Reconciliation of income tax expense at the applicable statutory income tax rates to the effective income tax rate is as follows: Year Ended December 31, 2025 Income taxes (benefit) at statutory federal rate $ ( 21,489 ) 21.0 % State and local taxes, net of federal income tax effect (1) ( 47 ) — Foreign tax effects Other ( 391 ) 0.4 Effect of cross-border tax laws Other 151 ( 0.1 ) Tax credits General Business Credits ( 12,744 ) 12.4 Changes in valuation allowance 30,813 ( 30.1 ) Nontaxable or nondeductible items Equity compensation 2,356 ( 2.3 ) Section 162(m) officer's compensation 1,272 ( 1.2 ) Other 543 ( 0.5 ) Changes in unrecognized tax benefits 4,992 ( 4.9 ) Other Transfer Pricing ( 3,457 ) 3.3 Other, net ( 1,060 ) 1.1 Effective income tax rate $ 939 ( 0.9 ) % (1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include California and Massachusetts for 2025. Year Ended December 31, 2024 2023 Statutory federal income tax rate 21.0 % 21.0 % State taxes, net of federal benefits 3.6 5.8 Section 162(m) limitation — 1.2 Stock compensation ( 1.8 ) 1.7 Return-to-provision adjustments ( 1.5 ) ( 3.3 ) General Business Credits 4.8 ( 14.1 ) Changes in unrecognized tax benefits ( 0.5 ) 1.4 Change in valuation allowance ( 22.2 ) ( 4.4 ) Other ( 4.2 ) ( 4.2 ) Effective income tax rate ( 0.8 ) % 5.1 % Income tax expense for the years ended December 31, 2025 and 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 year ended December 31, 2023 represents the Company's federal and certain state income tax obligations and taxes in foreign jurisdictions in which it conducts business. As of December 31, 2025, the Company has a full valuation allowance on U.S. federal and state deferred tax assets. The total change in valuation allowance for the year ended December 31, 2025 was $ 34,701 , 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 and the generation of NOL and tax credit carryforwards. F-23 Table of Contents The amounts of cash income taxes paid by (refunded to) the Company are as follows: Year ended December 31, 2025 Federal $ 186 State and local NYS ( 757 ) MA ( 313 ) Other ( 173 ) Foreign India 617 Germany - Federal 168 Germany - Manheim 138 Germany - Other 37 Other 91 Total cash taxes paid for income taxes (net of refunds received) $ ( 6 ) Total cash paid for income taxes was $ 1,080 and $ 2,828 during the years ended December 31, 2024 and 2023, respectively, as previously reported. Tax effects of temporary differences that give rise to significant portions of deferred income tax assets and deferred income tax liabilities were as follows: As of December 31, 2025 2024 2023 Deferred income tax assets: Net operating loss carryforwards $ 48,267 $ 51,542 $ 44,116 Capitalized research and development 69,890 62,215 13,224 Accrued expenses 35,264 37,544 71,676 Deferred revenue 34,474 5,462 5,296 Lease liabilities 26,122 27,551 32,491 Credits 42,410 29,884 21,903 Gross deferred tax assets 256,427 214,198 188,706 Less valuation allowance ( 211,927 ) ( 177,226 ) ( 136,031 ) Net deferred tax assets 44,500 36,972 52,675 Deferred income tax liabilities: Unrealized gain on equity investments ( 16,193 ) ( 7,284 ) ( 18,553 ) Prepaid expenses ( 172 ) ( 652 ) ( 1,554 ) Depreciation and amortization ( 27,272 ) ( 29,036 ) ( 32,568 ) Net deferred income tax assets $ 863 $ — $ — As of December 31, 2025, the Company had federal and state net operating loss ("NOL") carryforwards of $ 208,523 and $ 119,340 , respectively. The state NOL carryforwards will expire between 2025 and 2055, 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, 2025, the Company had federal orphan drug credits and federal research and development tax credit carryforwards of $ 44,037 and various state tax credit carryforwards of $ 4,673 . The federal and state carryforwards, with the exception of $ 2,777 indefinite state credits will expire between 2033 and 2045, if not utilized. F-24 Table of Contents 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, 2025 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, 2025 is not practicable because of the complexity and variety of assumptions necessary to compute the tax. The Company classifies interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statement of operations. Following is a reconciliation of total gross unrecognized tax benefits: Year Ended December 31, 2025 2024 2023 Balance, January 1 $ 3,648 $ 2,742 $ 2,142 Additions for tax positions taken in prior years 3,941 258 89 Reductions for tax positions taken in prior years — — ( 4 ) Additions for tax positions related to the current year 1,098 648 515 Balance, December 31 $ 8,687 $ 3,648 $ 2,742 The Company and its subsidiaries file U.S. federal income tax returns and various state, local and foreign income tax returns. As of December 31, 2025, the Company’s statutes of limitations are open for all federal and state tax returns filed after the years ended December 31, 2022 and 2021, respectively. NOL and credit carryforwards for all years are subject to examination and adjustments for the three years following the year in which the carryforwards are utilized. The Company is not currently under Internal Revenue Service or state examination. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law enacting significant changes to U.S. tax and related laws. Some of the provisions of the new tax law affecting corporations include but are not limited to expensing of domestic research expenses, increasing the limit of the business interest expense deduction to thirty percent of EBITDA, and permitting one hundred percent bonus depreciation on eligible property acquired after January 19, 2025. The impact of the tax law changes from the OBBBA is included in the Company's financial statements for the fiscal year ended December 31, 2025. There has been no material change to the Company's effective income tax rate or its net deferred federal income tax assets as a result of the OBBBA as the Company maintains a full valuation allowance for all U.S. deferred tax assets. (8) Stockholders’ Equity (a) Common Stock As of December 31, 2025, the Company had authorized 500,000,000 shares of common stock with a par value of $ 0.01 per share. Holders of common stock are entitled to one vote per share, to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock, if any. 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 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. During the year ended December 31, 2025, no shares of common stock were sold under the ATM. During the year ended December 31, 2024, 323,085 shares of common stock were sold under the ATM for total F-25 Table of Contents net proceeds of $ 8,691 and gross proceeds of $ 8,868 , before deducting sales agent commissions. As of both December 31, 2025 and 2024, the Company had $ 241,132 of common stock remaining available for sale under the ATM. (b) Limited Common Stock As of December 31, 2025, the Company had authorized 100,000,000 shares of limited common stock with a par value of $ 0.01 per share. Holders of limited common stock are entitled to one vote per share, however, the holders of limited common stock shall not be entitled to vote such shares in any election of directors or on the removal of directors. Holders of limited common stock are entitled to 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. (c) Preferred Stock As of December 31, 2025, the Company had authorized 10,000,000 shares of undesignated preferred stock with a par value of $ 0.01 per share. The Company's board of directors has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each series of preferred stock . (9) Stock-Based Compensation Stock Incentive Plans As of December 31, 2025, 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. The 2020 Plan provided 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 employees, directors, consultants or advisors. As of June 15, 2022, the effective date of the 2022 Plan, no further awards will be made under the 2020 Plan. Any options or awards outstanding under the 2020 Plan are governed by the terms of the 2020 Plan. The 2010 Plan provided for the granting of incentive stock options and nonstatutory stock options to employees, directors, consultants or advisors. As of the effective date of the 2020 Plan, no further awards will be made under the 2010 Plan. Any options or awards outstanding under the 2010 Plan are governed by the terms of the 2010 Plan. F-26 Table of Contents As of December 31, 2025, there were 4,841,655 shares available for grant under the Plans. The following table presents classification of stock-based compensation expense within the consolidated statements of operations: Year Ended December 31, 2025 2024 2023 Cost of sales $ 5,578 $ 4,935 $ 5,177 Research and development 13,275 16,662 15,493 Sales and marketing 3,747 3,902 3,639 General and administrative 20,397 24,404 23,532 Total stock-based compensation $ 42,997 $ 49,903 $ 47,841 Restricted Stock Units Each restricted stock unit ("RSU") represents the right to receive one share of the Company's common stock upon vesting. 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. Restricted stock unit activity was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Beginning, January 1, 2025 1,682,548 $ 24.82 Granted 1,425,397 21.24 Vested ( 486,351 ) 24.50 Forfeited ( 234,429 ) 23.38 Balance, December 31, 2025 2,387,165 22.89 The weighted average grant date fair value for each RSU granted during the years ended December 31, 2025, 2024, and 2023 was $ 21.24 , $ 24.78 , and $ 26.09 , respectively. As of December 31, 2025, there was $ 40,438 of unrecognized compensation cost related to RSUs granted under the Plans, which is expected to be recognized over a weighted average period of 2.61 years. During the years ended December 31, 2025, 2024, and 2023, 486,351 , 231,188 , and 13,241 RSUs vested, respectively. The fair value of RSUs vested during the years ended December 31, 2025, 2024, and 2023 was $ 10,927 , $ 5,822 , and $ 355 , respectively. Performance-Based Restricted Stock Units In March 2025, 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 2025, the Company awarded to all executive officers PRSUs for a maximum of 173,438 shares (based on 150 % achievement of the applicable performance conditions outlined in the awards), with a target award of 115,625 PRSUs (based on 100 % achievement of the applicable performance conditions), and a threshold award of 57,813 PRSUs (based on 50 % achievement of the applicable performance conditions) (the "2025 PRSUs"). The 2025 PRSUs were considered granted under ASC 718, Compensation—Stock Compensation ("Topic 718") in March 2025. 18,750 2025 F-27 Table of Contents PRSUs were forfeited in June 2025, representing the number of shares that would have vested at the maximum level for the applicable milestones. The remaining 2025 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, 2027. 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) (the "2024 PRSUs"). The 2024 PRSUs were considered granted under Topic 718 in March 2024. 22,500 2024 PRSUs were forfeited in June 2025, representing the number of shares that would have vested at the maximum level for the applicable milestones. The remaining 2024 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) (the "2023 PRSUs"). The 2023 PRSUs were considered granted under Topic 718 in February 2023. 13,215 2023 PRSUs were forfeited in June 2025, representing the number of shares that would have vested at the maximum level for the applicable milestones. The remaining 2023 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 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 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. In March 2025 and 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 Annual Report on Form 10-K for the fiscal years ended December 31, 2024 and 2023, respectively. Of the 36,000 PRSUs that were eligible to vest following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the Company's compensation committee determined that the applicable performance conditions had been met for 14,850 of the PRSUs, which vested in March 2025, and that the applicable performance conditions had not been met for 12,150 PRSUs, which were forfeited in March 2025. The Company's compensation committee also determined that the applicable performance conditions for the remaining 27,000 PRSUs that were eligible to vest following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 could not be met and these awards were forfeited in March 2025. Of the 36,000 PRSUs that were eligible to vest following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the Company's compensation committee determined that the applicable performance conditions had been met for 9,000 of the PRSUs, which vested in March 2024, and that the applicable performance conditions had not been met for 27,000 PRSUs, which were forfeited in March 2024. Performance-based restricted stock unit activity was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Beginning, January 1, 2025 188,795 $ 25.62 Granted 115,625 21.24 Vested ( 14,850 ) 31.37 Forfeited (1) ( 48,460 ) 24.68 Balance, December 31, 2025 241,110 23.36 (1) Represents the number of shares forfeited at the target level. F-28 Table of Contents The weighted average grant date fair value for each PRSU granted during the years ended December 31, 2025, 2024, and 2023 was $ 21.24 , $ 26.08 , and $ 22.48 , respectively. During the year ended December 31, 2025, 14,850 PRSUs vested. The fair value of PRSUs vested during the years ended December 31, 2025, 2024, and 2023 was $ 331 , $ 241 and zero , respectively. Stock Options Stock options must be granted at an exercise price not less than 100 % of the fair market value per share at the grant date. The board of directors or compensation committee determines the exercise price of the Company’s stock options based on the closing price of the common stock as reported on the Nasdaq Global Select Market on the date of the grant. The maximum contractual term of options granted under the Plans is typically 10 years, options generally vest over four years with 25 % of the shares underlying the option vesting at the end of the first year and the remaining vesting monthly over the following three years. In March 2025, March 2024, and February 2023, the Company granted the chief executive officer premium priced options to purchase 90,000 , 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, 2025, 2024, and 2023, 303,770 , 169,820 , and 800,336 options under the Plans were exercised for total proceeds of $ 2,989 , $ 1,488 , and $ 9,440 , 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 included several assumptions that require management’s judgment. The expected terms of options granted to employees during the years ended December 31, 2025, 2024, and 2023 were calculated using an average of historical exercises. Estimated volatility for 2025 incorporated a calculated volatility derived from a 50/50 blended approach using the Company's own historical closing prices of its shares of common stock for the expected term of the option with the historical closing prices of shares of common stock of similar entities whose share prices were publicly available for the expected term of the option. Estimated volatility for 2024 and 2023 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. The Company accounts for forfeitures as they occur; as such, the Company does not estimate forfeitures at the time of grant. Following are the weighted average valuation assumptions used for option awards during the periods presented: Year Ended December 31, 2025 2024 2023 Valuation assumptions Expected dividend yield — % — % — % Expected volatility 69 % 65 % 66 % Expected term (years) 5.33 5.32 4.92 Risk-free interest rate 3.99 % 4.22 % 3.77 % Stock option activity was as follows: Number of shares Weighted average exercise price Weighted average remaining contractual term (years) Aggregate intrinsic value Beginning, January 1, 2025 11,921,153 $ 29.49 Granted 1,108,786 21.79 Exercised ( 303,770 ) 9.77 Forfeited ( 457,542 ) 26.00 Expired ( 298,575 ) 43.69 Balance, December 31, 2025 11,970,052 29.06 5.47 $ 22,554 Exercisable, December 31, 2025 9,999,428 30.11 4.91 $ 22,553 F-29 Table of Contents The weighted average grant date fair value per share of options granted during the years ended December 31, 2025, 2024, and 2023 was $ 12.81 , $ 14.88 , and $ 15.79 , respectively. The intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $ 3,989 , $ 2,365 , and $ 16,213 , respectively. As of December 31, 2025, there was $ 23,356 of unrecognized compensation cost related to unvested stock options granted under the Plans, which is expected to be recognized over a weighted average period of 2.21 years. The fair value of shares vested during the years ended December 31, 2025, 2024, and 2023 was $ 25,889 , $ 39,422 , and $ 46,877 , respectively. (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, 2025 2024 2023 Numerator: Net (loss) income attributable to common and limited common stockholders $ ( 103,265 ) $ ( 187,123 ) $ 40,720 Denominator: Weighted average shares used to compute net (loss) income per share of common and limited common stockholders, basic: 73,443,298 72,670,295 71,776,301 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 (loss) income per share of common and limited common stockholders, diluted: 73,443,298 72,670,295 74,986,816 Net (loss) income per share attributable to common and limited common stockholders, basic: $ ( 1.41 ) $ ( 2.57 ) $ 0.57 Net (loss) income per share of common and limited common stockholders, diluted: $ ( 1.41 ) $ ( 2.57 ) $ 0.54 For periods in which the Company reports net losses, 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. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows: Year Ended December 31, 2025 2024 2023 Shares subject to outstanding common stock options 11,970,052 11,921,153 6,305,741 Shares subject to outstanding unvested RSUs and PRSUs 2,514,153 1,682,548 46,255 Total shares subject to outstanding common stock options and unvested RSUs and PRSUs 14,484,205 13,603,701 6,351,996 The table above includes PRSUs for which performance-based vesting conditions are considered probable as of that date. F-30 Table of Contents (11) Equity Investments (a) Nimbus The Company has no significant influence over Nimbus and accounts for its investment in Nimbus Therapeutics, LLC ("Nimbus") as a non-marketable security. As of both December 31, 2025 and 2024, the carrying value of the Nimbus investment was $ 2,436 . The Company has no obligation to fund Nimbus' losses in excess of its investment. No gain or loss was recorded on the Nimbus investment during the year ended December 31, 2025. During the year ended 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. (b) Morphic 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. As of both December 31, 2025 and 2024, the carrying value of the Company's investment in Morphic was zero . (c) Ajax 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. No gain or loss was recorded on the Ajax investment during the year ended December 31, 2025. 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 year ended December 31, 2023. As of both December 31, 2025 and 2024, the carrying value of the Company's investment in Ajax was $ 4,498 . (d) Structure Therapeutics In July 2021, the Company purchased 494,035 shares of Series B preferred stock of Structure Therapeutics Inc. ("Structure Therapeutics") for $ 2,000 in cash. In April 2022, the Company purchased an additional 148,210 shares of Series B preferred stock for $ 600 in cash. 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. The Company purchased 275,000 American Depository Shares ("ADSs") at $ 15.00 per ADS in the IPO. Each ADS represents three ordinary shares. 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, 2025, the Company sold a portion of its equity stake in Structure Therapeutics for aggregate consideration of $ 17,735 . The Company recorded a mark-to-market gain of $ 7,519 on the portion of the investment sold during the year ended December 31, 2025. The Company recorded a mark-to-market gain of $ 40,655 on the portion of the investment held as of December 31, 2025. During the year ended December 31, 2024, the Company recorded a mark-to-market loss of $ 18,096 on the investment. During the year ended December 31, 2023, the Company recorded a mark-to-market gain of $ 49,755 on the investment. As of December 31, 2025 and 2024, the carrying value of the Company's investment in Structure Therapeutics was $ 66,641 and $ 36,202 , respectively. F-31 Table of Contents (12) Employee Benefit Plan The Company offers a 401(k) employee savings plan to its U.S.‑based employees. The Company made discretionary matching contributions equal to 100 % of the first 4 % of compensation contributed by employees for the years ended December 31, 2025, 2024, and 2023. Matching contributions during 2025, 2024, and 2023 were $ 4,424 , $ 4,478 , and $ 4,135 , respectively. (13) Related Party Transactions (a) Board Member For the years ended December 31, 2025, 2024, and 2023, the Company paid consulting fees of $ 437 , $ 428 , and $ 420 , respectively, to a member of its board of directors. (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 $ 20 , $ 111 , and $ 253 for the years ended December 31, 2025, 2024, and 2023, respectively. For the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 1,281 , $ 2,031 , and $ 2,822 , 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, 2025 and 2024, restricted cash on hand related to the arrangement was $ 72 and $ 1,021 , respectively. For the years ended December 31, 2025 and 2024, the Company recognized $ 13,788 and $ 6,016 in software contribution revenue, respectively, 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, 2025 and 2024, restricted cash on hand related to the arrangement was zero and $ 8,606 , respectively. As of December 31, 2025 and 2024, 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. Gates III, who may be deemed to be the beneficial owner of more than 5 % of the Company’s voting securities. The agreement with Gates Ventures, LLC currently extends through August 13, 2026 and provides for total consideration of up to $ 9,000 . For the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 2,200 , $ 2,000 , and $ 1,800 in contribution revenue, respectively, related to these agreements. As of December 31, 2025 and 2024, the Company had no receivables due from Gates Ventures, LLC. (c) Columbia University and Richard Friesner During the year ended December 31, 2025, the Company entered into certain license agreements with the Trustees of Columbia University ("Columbia University"), separate from the licenses discussed in Part I, Item 1. "Business—License Agreements with Columbia University" in this Annual Report. Dr. Richard Friesner, the William P. Schweitzer Professor of Chemistry at Columbia University and the principal investigator of the Friesner Research Group, a research laboratory within the Department of Chemistry at Columbia University, was the inventor of certain of the technologies licensed to the Company pursuant to certain of the Company's license agreements with Columbia University and is one of the Company's co-founders and a member of the Company's board of directors. Revenue recognized for these additional licenses for the year ended December 31, 2025 was $ 88 . As of December 31, 2025, the Company had $ 100 outstanding receivables due from Columbia University related to these licenses. F-32 Table of Contents (14) Segment Reporting The Company has determined that its chief executive officer ("CEO") is its chief operating decision maker ("CODM"). The Company’s CEO evaluates the financial performance of the Company based on two reportable segments: Software and Drug Discovery. The Software segment is focused on licensing the Company’s software to transform molecular discovery. The Drug Discovery segment is focused on building a portfolio of preclinical and clinical drug programs, internally and through collaborations. 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 cost of sales from U.S. GAAP revenue. 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. Certain cost items are not allocated to the Company’s reportable segments. 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 activities. 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. Presented below is financial information with respect to the Company’s reportable segments for the years presented: Year Ended December 31, 2025 2024 2023 Segment revenues: Software $ 199,500 $ 180,365 $ 159,124 Drug discovery 56,369 27,174 57,542 Total segment revenues 255,869 207,539 216,666 Segment cost of revenues: Software 51,001 36,900 29,514 Drug discovery 62,254 38,556 46,460 Total segment cost of revenues 113,255 75,456 75,974 Segment gross profit: Software 148,499 143,465 129,610 Drug discovery ( 5,885 ) ( 11,382 ) 11,082 Total segment gross profit 142,614 132,083 140,692 Unallocated (expense) income: Research and development ( 173,138 ) ( 201,785 ) ( 181,766 ) Sales and marketing ( 40,963 ) ( 39,917 ) ( 37,226 ) General and administrative ( 95,409 ) ( 99,677 ) ( 99,148 ) Gain on equity investments — — 147,213 Change in fair value of equity investments 48,174 5,683 53,461 Other income 16,396 17,902 19,693 Income tax expense ( 939 ) ( 1,412 ) ( 2,199 ) Consolidated net (loss) income $ ( 103,265 ) $ ( 187,123 ) $ 40,720 F-33 Table of Contents Revenues by geographic area are determined based on the address provided by the Company's customers and partners. The following table sets forth revenues by geographic area for the years ended December 31, 2025, 2024, and 2023: Year Ended December 31, 2025 2024 2023 United States $ 152,963 $ 114,869 $ 161,961 APAC 26,181 25,802 24,569 EMEA 75,164 65,650 29,135 Rest of World 1,561 1,218 1,001 $ 255,869 $ 207,539 $ 216,666 (15) Subsequent Events During January 2026, the Company sold a portion of its equity stake in Structure Therapeutics for aggregate consideration of $ 20,979 . F-34 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.