Schrödinger sells the physics-based simulation software that drug chemists use to decide which molecules are worth synthesizing, and in the June quarter that business got smaller. Software revenue fell 10%, to $32.5m. Total revenue still rose 7.5% to $58.9m, because drug-discovery revenue jumped to $23.0m from $13.9m on a single $10m collaboration milestone triggered by Eli Lilly's acquisition of Ajax Therapeutics, a company Schrödinger helped found. Management raised full-year drug-discovery guidance on that one payment.

Since 22 July the shares are up 34%. Certara, which sells biosimulation software and modelling services used in regulatory filings, is up 25%. Veeva Systems, the cloud software vendor built exclusively for life-sciences commercial and clinical operations, and the only one of the three with no discovery-compute workload, is up 34% — the leader.

What actually improved

The genuinely encouraging number at Schrödinger is annual contract value, which grew 27% year on year to $29.6m as biotech funding thawed; management points to an initial public offering pace running at twice last year's. But the full-year contract-value guide of $218-228m implies 10-15% growth, embedding a sharp second-half slowdown. The reported software decline is partly mechanical: hosted licensing reached 47% of software revenue from 31% a year earlier, and hosted contracts are recognized ratably rather than upfront, costing roughly $2-3m of revenue for each point of mix shift. Software gross margin still slipped to 71% from 76%.

Below that, the operating loss was $41.5m. The $6.0m of net income came from below the operating line, flattered by a gain tied to the Ajax transaction. Cash and marketable securities stood at $418.8m against a trailing burn near $32m — years of runway — but diluted shares grew to 75.8m from 73.4m, with no repurchase.

Certara's picture inverts. Revenue fell 10.8% to $93.3m and missed consensus of $98.6m, sending the stock down about 16% before the open; most of the decline is the May carve-out of its regulatory and medical-writing unit, which had carried $19.2m of quarterly revenue. Operating margin swung to -0.2% from +9.1%. Yet software bookings rose 9% to $50.7m, and trailing-twelve-month software bookings grew 7% excluding the Chemaxon acquisition against 0.8% at the end of 2025. Software is now 53% of revenue, up from 40% two years ago. Services bookings fell 6%. Certara also shrank its share count 4%, to 154.4m.

Its moat is regulatory, not computational: every one of the 13 novel therapies the Food and Drug Administration approved in the quarter came from a Certara client. Its artificial-intelligence attachment — an NVIDIA collaboration integrating the BioNeMo agent toolkit — carries no disclosed revenue, as Schrödinger's Bunsen agentic co-scientist, now deployed at Bristol Myers Squibb, does not either.

The control name is winning

Veeva grew revenue 16.3% to $882.9m last quarter at a 30.9% operating margin, with operating income up 16.8%. It is the only one of the three whose forward multiples sit below trailing: 26.8x forward earnings against 42.1x trailing, 14.4x forward gross profit against 15.9x. Consensus expects Veeva's gross profit to grow and both protagonists' to shrink — Schrödinger's price-to-gross-profit is 10.0x trailing and 10.7x forward; Certara's 5.5x and 5.9x, with consensus revenue down 9% this year.

The timing points away from a discovery-compute story. Two sessions carry two-thirds of Schrödinger's month: 6 August, the day after earnings, and 19 August. On that second day the S&P 500 fell 0.87% and the Nasdaq 1% as yields rose, while enterprise software names rallied on a rotation out of capital-hungry AI hardware. The other force is customer budgets: the S&P Biotech ETF has risen more than 50% since bottoming on 11 May.

What has changed most is price. Schrödinger costs about 10.2x trailing gross profit versus roughly 6.7x at the May close, and Certara 5.6x versus 3.4x — expansion of 50% and 66% in three months against businesses whose recurring lines are, respectively, shrinking and only just reaccelerating off a very low base.

The setup

Where it stands — Both discovery-software names have re-rated hard on bookings and one-off milestones while reported recurring revenue fell at each. Would confirm — Schrödinger software revenue returning to year-on-year growth, and Certara total bookings growing faster than 1%. Would invalidate — Schrödinger's full-year contract value landing inside the 10-15% guide, or Certara services bookings falling again. Watch next — Veeva reports 26 August; both smaller names report third quarters in early November. Valuation — Schrödinger 10.0x trailing gross profit and 10.7x forward, against 6.7x in May; Certara 5.5x and 5.9x, against 3.4x.