Weekend Update #219
Thank you for your continued support and engagement. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
The S&P 500 and Nasdaq Composite indices fell this week on the back of high inflation readings, declining consumer confidence, and President Trump’s confirmation of March 4th tariffs on Mexico, Canada, and China. In this week’s AAII Sentiment Survey among investors, asked what direction the U.S. stock market will move in the next 6 months, 60.6% of investors reported a “Bearish” sentiment vs. 19.4% “Bullish” — the highest weekly bearish sentiment since September 29, 2022. Demand for bonds increased as investors rotated following growth concerns emerging in the U.S. Offsetting these headwinds were strong earnings results from Nvidia on Wednesday and a PCE inflation report on Friday that was in line with economists' expectations.
News emerged of a “Mar-a-Lago Accord” this week where it is rumored that President Trump could aim to rotate foreign creditors out of Treasuries and into 100-year long-term bonds, an effort to ease the U.S.’s debt burden but that would risk additional financial market uncertainty. In addition to the affirmation of 25% tariffs on Mexico and Canada and an additional 10% tariff on China, consumers and market participants alike are left with uncertainty over potential unintended consequences these moves could have on the U.S. economy.
In economic data for the week, the February Consumer Confidence report added pressure to the market downturn on Tuesday as it showed the biggest monthly decline in confidence since August 2021, driven by consumers’ concerns over the impacts tariffs will bring on the economy. Similar to the February Consumer Sentiment survey, the report showed 12-month inflation expectations surging to a new high since November 2023. Wednesday’s New Home sales report showed the second-largest monthly decline since 2022 at -10.5%. Thursday’s GDP report showed Q4 2024 quarterly GDP growth in line with economist estimates at 2.3% while the Price Index rose 2.4% in the quarter. Initial Jobless Claims on Thursday showed another negative surprise on estimates rising to 242,000 in the week, a high since December. Friday’s January PCE report showed in line Core PCE measures at 0.3% month-over-month and 2.6% year-over-year while inflation-adjusted personal spending fell -0.5%, the biggest monthly decline since 2021.
Key earnings this week included NVDA, AMBA, SG, CAVA, CART, ZM, SDGR, FSLR, and IONQ. Nvidia results especially were in focus for the market as broader economic growth concerns emerged, but beats on sales and earnings expectations calmed fears as the company posted full-year revenue growth of 114.2%, driven by data center growth at 142.4%.
Friday’s Close (Weekly Performance)
S&P 500 5,954.50 (-0.98%)
Nasdaq 18,847.28 (-3.47%)
Dow Jones 43,840.91 (+0.95%)
Thank you Blue Room Senior Analyst JARED FENLEY
Louis Gerhardy — VP of Corporate Development
Good afternoon and thank you for joining our fourth quarter and full year fiscal 2025 financial results conference call. On the call with me today is Dr. Fermi Wang, President and CEO, and John Young, CFO. The primary purpose of today's call is to provide you with information regarding the results for our fourth quarter and full year fiscal 2025. T
he discussion today and the responses to your questions will contain forward-looking statements regarding our projected financial results, financial prospects, market growth, and demand for our solutions, among other things. These statements are based on currently available information and subject to risks, uncertainties, and assumptions. Should any of these risks or uncertainties materialize, or should our assumptions prove to be incorrect, our actual results could differ materially from these forward-looking statements. We are under no obligation to update these statements. These risks, uncertainties, and assumptions, as well as other information on potential risk factors that could affect our financial results are more fully described in the documents we file with the SEC.
Executive Summary
Schrödinger beat on Q4 2024 revenue, across both software and drug discovery segments, and guided to above consensus ranges for Q1 2025 (+32-44% YoY) and FY 2025 (+10-15% YoY) on software revenue. Offsetting the positivity on the software side was a FY 2025 drug discovery revenue guidance ($40-50 million) range $10 million below consensus estimates at the midpoint, as partner milestones will come on a slower pace than previous expectations. Along with the results, Schrödinger announced an expanded collaboration on an additional target with Eli Lilly & Co., following Lilly’s expanded software agreement and expanded collaborations with Novartis and Otsuka in Q4 2024.
Within expense and FCF burn guidance, Schrödinger said FY 2025 will result in a lower FCF loss than in FY 2025 along with below 5% OpEx growth, compared to +7.3% OpEx growth in 2024. Software margins will step down from 79.54% in 2024 to 74-75% in 2025 as 1. R&D expenses get reallocated to cost of revenue and 2. the predictive toxicology initiative will result in a higher mix of lower margin revenue for Schrödinger. As a result, the implied net income, EBITDA, and FCF trends are in-line to slightly below consensus estimates.
Total ACV grew 23.7% YoY in FY 2024 compared to software revenue that grew 11.4% YoY. Schrödinger also doubled the number of customers with >$5 million in ACV to 8 customers while improving retention rates among customers >$100k in ACV and growing all cohorts >$100k ACV. Along with expanded collaborations, these are leading indicators of further software revenue acceleration in 2026. 2025 will host initial Phase 1 clinical updates across all 3 of Schrödinger’s internal pipeline candidates: MALT1 in Q2 2025, CDC7 in H2 2025, and Wee1/Myt1 in H2 2025. So underlying progress shows up on both the software and drug discovery side.
Overall, Schrödinger gave evidence of operating toward the consensus estimates for a 19.61% total revenue CAGR 2023-2033, is executing on larger customer deployment initiatives, and will have 3 opportunities to validate the platform through clinical data this year. The combination of this and software margin headwinds through FY 2025 sent SDGR shares up 3.3% in after-hours trading to $22.41 per share.
CORPORATE PROFILE
Our mission: To improve human health and quality of life by transforming the way therapeutics and materials are discovered.
Our physics-based computational platform leverages a deep understanding of physics, chemistry, and predictive modeling to accelerate innovation.
Our platform enables our collaborators to discover high-quality, novel molecules more rapidly, at lower cost, and we believe with a higher likelihood of success compared to traditional methods. We’re also harnessing this platform for our internal drug discovery programs.
We are proud to be leading this digital revolution.
Brett Schulman
Thanks, Matt, and welcome to the call everyone. 2024 was another extraordinary year for CAVA, thanks to our more than 10,000 team members and their dedication to bringing heart, health and humanity to food. I'm inspired not just by their accomplishments, but by their spirit of generosity and how they take care of our guests, communities and one another. In 2024, their contributions allowed us to firmly establish Mediterranean as the next major cultural cuisine category. And as our unique value proposition continued to resonate with consumers , we were one of just a few publicly traded restaurant brands that generated positive traffic growth . Our success in 2024 demonstrated our broad appeal, the power of our unit economic engine and the impact of the investments we have made in our teams, guests and infrastructure to support our growth. In our first full fiscal year as a public company, we delivered four consecutive quarters of free cash flow. Our fourth quarter highlights include excluding the 53rd week in 2023, a 36.8% increase in CAVA revenue, 21.2% CAVA same restaurant sales growth, including a 15.6% increase in traffic; 15 net new restaurant openings ending the year with 367 restaurants; an 18.8% increase year-over-year; adjusted EBITDA of 25.1 million, a 60% increase over the fourth quarter of 2023; net income of 78.6 million and adjusted net income of 6.5 million, a 216% increase over the fourth quarter of 2023. And for the full year, we increased CAVA revenue 35%, excluding the 53rd week in 2023, generated 13.4% CAVA same restaurant sales growth, including an 8.7% increase in traffic; opened 58 net new restaurants, delivered adjusted EBITDA of 126.2 million, a 71% increase over the full year 2023; produced net income of 130.3 million and adjusted net income of 50.2 million, a 278% increase over full year 2023; and drove $52.9 million in free cash flow during the year.
Executive Summary
IonQ delivered a strong fourth quarter, surpassing its revenue guidance with $11.7 million in revenue for the quarter and $43.1 million for the full year, representing 95% year-over-year growth. The company secured $95.6 million in new bookings for 2024, exceeding expectations, and ended the year with $363.8 million in cash and investments. Despite a net loss of $202 million for the quarter and $331.6 million for the year, IonQ's adjusted EBITDA losses of $32.8 million in Q4 and $107.2 million for the full year were better than anticipated. The company also strengthened its corporate position with the acquisition of a majority stake in ID Quantique, a strategic partnership with SK Telecom, and the completion of its Qubitekk acquisition. IonQ also made strides with the delivery of its first datacenter-ready quantum computer in Switzerland, advancements in ion trap vacuum packaging, and the launch of its quantum operating system and hybrid services suite. The company also announced a leadership change as Peter Chapman will transition to Executive Chairman while Niccolo de Masi takes over as CEO, effective immediately.
Corporate Profile
Founded on more than 25 years of pioneering academic research, IonQ is developing trapped-ion quantum computers, bringing this powerful technology out of the lab and into commercial, industrial, and academic applications. Ionized atoms are the heart of our quantum systems, and as a result, we believe our computers can perform longer, more sophisticated calculations with fewer errors than any quantum computer yet built. With a business model aligned to rapid quantum market growth, an unparalleled technological advantage, and a deep history of quantum innovation and leadership, we believe we are well-positioned to lead the way forward as quantum computing changes the world.
Rebecca Nounou – Investor Relations
Thank you, and good afternoon, everyone. Speaking on today’s call will be Jonathan Neman, Co-Founder and Chief Executive Officer; and Mitch Reback, Chief Financial Officer. Both will be available for questions during the Q&A session following the prepared remarks. Today’s call is being webcasted live and recorded for replay. The earnings release is available on the Investor Relations section of Sweetgreen’s website at investor.sweetgreen.com. I’d like to remind everyone that the information under the heading Forward-Looking Statements included in our earnings release also applies to our comments made during the call. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements. We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of non-GAAP financial measures mentioned on the call with the corresponding GAAP measures. Our earnings release can be found on our investor website. And now I’ll turn the call over to Jonathan to kick things off.
Jonathan Neman – Co-Founder and Chief Executive Officer Thank you, Rebecca, and good afternoon everyone. At Sweetgreen, we’re redefining fast food through superior sourcing, culinary excellence, innovative technology and a consistent hospitable experience. In 2024, we expanded our menu, opened 25 new restaurants and ended the year with 12 Infinite Kitchens. We elevated our sourcing and culinary practices as well as took meaningful steps to improve the team member experience leading to the lowest turnover levels in company history.
NOBEL NETWORKS
Mr. Loren Lancaster, Founder and CEO
Ms. Trang Le, Marketing Manager
Blue Room HQ visit on February 27, 2025
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