How RXRX (Recursion Pharmaceuticals) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a biotech AI company like RXRX makes money is essential for investors and anyone interested in the business of drug discovery. In this post, we break down RXRX's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick RXRX Overview

RXRX operates as a clinical-stage biotech company leveraging artificial intelligence to accelerate drug discovery, focusing on protein-based therapeutics. Revenue comes primarily from collaboration agreements, milestone payments, and research funding in the AI-driven biotech space. As a pre-commercial entity, RXRX invests heavily in R&D to develop its proprietary AI platform for novel drug candidates, with no detailed revenue segments reported.

Revenue Breakdown

• Total Revenue (Q3 2025): $5.2M (-80.2% YoY)
  • No specific segment breakdowns available; revenue primarily from collaborations and milestones.
  • Growth is challenged by lumpy biotech revenue nature, with sharp YoY decline likely due to prior-period highs in partnerships.

Gross Profit and Margins

• Gross Profit: $9.5M (183.8% gross margin)
  • Cost of Revenue: $14.7K (+2.6% YoY)
  • RXRX maintains exceptionally strong margins due to its asset-light AI platform model, where low cost of revenue reflects minimal variable production costs in early-stage research.
• Most costs come from R&D and other operating expenses, as gross costs remain negligible.

Operating Income and Expenses

• Operating Income: Not specified (implied negative given expense levels)
• Operating Expenses: $162.7M (+44.8% YoY)
  • R&D: $121.1M (+62.3% YoY, 2339.4% of revenue) — Heavy investments in AI model training, clinical trials, and platform expansion for protein design and drug candidate generation.
  • SG&A: $41.6M (+10.3% YoY, 804.4% of revenue) — Covers administrative, sales, and general operations to support partnerships and regulatory compliance.
  • RXRX continues to prioritize innovation while expanding operations in a high-burn biotech environment typical for AI-biotech platforms.

Net Income

• Pre-Tax Income: Not specified
• Income Tax: Not specified (0% effective tax rate implied)
• Net Income: $162.3M (+69.6% YoY, 3135.3% net margin)
• RXRX converts a significant portion of sales into profit due to non-operating gains, likely from investment income, asset sales, or partnership milestones offsetting massive operating losses.

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What Drives RXRX's Money Machine?

• Collaborations and Milestones: Core revenue driver, though volatile at 100% of limited topline.
• R&D Investment: $121.1M (62.3% YoY growth), fueling AI platform advancements in generative biology.
• AI Platform Development: Strategic investments in tech infrastructure to de-risk drug discovery.
• Future growth areas: Clinical pipeline expansion and potential licensing deals, though currently unprofitable at operating level.

Visualizing RXRX's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after significant investments, 3135.3% of revenue drops to the bottom line due to extraordinary gains.

Key Takeaways

• RXRX's money comes overwhelmingly from collaborations and milestones
• High gross and net margins illustrate the power of RXRX's asset-light AI model
• Heavy investment in R&D, balanced by efficiency in low cost of revenue
• Ongoing growth is driven by AI platform milestones and pipeline progress

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FAQ About RXRX's Income Statement

1. What is the main source of RXRX's revenue in 2025?

RXRX generates over 100% of its revenue from collaborations, milestones, and research partnerships. No other significant sources detailed.

2. How profitable is RXRX in Q3 2025?

RXRX reported net income of $162.3M in Q3 2025, with a net margin of approximately 3135.3%, reflecting strong profitability driven by non-operating gains despite operating losses.

3. What are the largest expense categories for RXRX?

The biggest expenses on RXRX's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $121.1M in Q3 2025, as RXRX prioritizes AI platform and clinical pipeline development.

4. Why does RXRX operate at a loss?

RXRX, despite generating $5.2M in revenue, posted operating losses exceeding expenses of $162.7M in Q3 2025. This is because RXRX aggressively invests in R&D and platform expansion, believing these will drive long-term growth—even if unprofitable today.

5. How does RXRX's effective tax rate compare to previous years?

RXRX's effective tax rate in Q3 2025 was 0%, consistent with previous years. This low rate is primarily due to operating loss carryforwards and tax benefits in early-stage biotech R&D.