Twist Bioscience Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 5, 2025
Skip to Participants
Operator

day. Thank you for standing by. Welcome to Twist Bioscience's Second Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

Please note that today's conference is being recorded. I would now like to turn the call over to Angela Bidding, SVP of Corporate Affairs. Please go ahead.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

Thank you, operator. Good morning, everyone. I'd like to thank you for joining us for Twist Bioscience's conference call to review our fiscal twenty twenty five second quarter financial results and business progress. We issued our financial results press release before the market and it is available at our website at www.twistbioscience.com. With me on the call today are Doctor.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

Emily Laproust, CEO and cofounder of Twist Adam Laponis, CFO of Twist and Doctor. Patrick Finn, President and COO of Twist. Today we will discuss our business progress, financial and operational performance, as well as growth opportunities. We will then open the call for questions. We ask that you limit your questions to only one and then re queue as a courtesy to others on the call.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

This call is being recorded. The audio portion will be archived in the investor section of our website and will be available for two weeks. During today's presentation, we will make forward looking statements within the meaning of The US federal securities laws. Forward looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

These risks include those set forth in our press release we issued earlier today, as well as those more fully described in our filings with the SEC. The forward looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward looking statements except as required by law. We'll also discuss adjusted EBITDA, a financial measure that does not conform with generally accepted accounting principles. Information may be calculated differently than similar non GAAP data presented by other companies. When reported, a reconciliation between GAAP and the non GAAP financial measures will be included in our earnings documents, which can be found on the investor section of our website.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

With that, I will now turn the call over to our CEO and cofounder, Emily Babroust.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Thank you, Angela, and good morning, everyone. As we look across today's global landscape, it's clear that we are operating in a time of accelerated change. From policy shifts and trade adjustments to evolving financial markets and structural transitions in healthcare and academia, the world is transforming at an unprecedented pace. At WIST, we are responding proactively. We recognise that such dynamic conditions require both vigilance and vision.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

We are continuously analysing the broader environment, identifying not only challenges, but also the strategic opportunities that can strengthen our long term position. Our approach is grounding in agility, supported by rigorous execution and driven by our commitment to delivering lasting value. Adding into our significant news released this morning, I am very excited to announce that we have spun out DNA Data Storage as an independent company. The new company called Atlas Data Storage is a pure play company focused on end to end data storage. As many of you know, there are nearly endless applications of synthetic DNA.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Since Twist's inception, we have prioritized opportunities where there is a significant market potential and where our technology offers a clear competitive advantage and differentiation. The market for data storage remains large and our technology for this application has been proven. However, since May of twenty twenty three, we have intentionally constrained our spending in DNA data storage to keep twist over investment in this business to less than $25,000,000 annually. Because DNA data storage is a specialized area, the business, customers, team, investors will look different. To drive the commercialization, a dedicated team will be needed, which can be more easily accomplished by a pure play DNA data storage company.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

We have now reached a point where we believe increased investment is essential to accelerate development with a significant $155,000,000 investment from our joint venture partners, Deerfield Management, Bezos Expeditions, TelCapital, In Q Tel, Earth Foundry, R2VC and other undisclosed investors. As a pure play DNA data storage company Atlas Data Storage will have significant capital that will enable the new company to accelerate towards commercialization and drive success. As part of this transaction, Twist will receive consideration of approximately 24% equity interest in Atlas on a fully diluted basis, as well as royalties on future commercial sales and up to $75,000,000 in future milestones payments, ensuring we continue to participate in future upside opportunities. In addition, we will receive $2,500,000 upfront cash payment and a $2,000,000 secure promissory note. Importantly, Twist will benefit from technology advancement made by Atlas where it applies to our product groups.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

By operating as two separate companies, we are able to maintain sharp focus with each organization dedicated to developing and commercializing disruptive products and services while prioritizing exceptional customer engagement. At last will be led by Varun Mehta, our CEO, who brings extensive data storage experience, including co funding and leading Nibble Storage, which was acquired by Hewlett Packard. While at HP, he helped to define storage strategy and introduce new products, including an entirely new product category. Georges Califa, Managing Director of Seminary Equity Partners brings more than three decades of technology operating experience and will serve as Executive Chairman of the Board for Atlas. Bill Bagnier, who has been the General Manager of the DNA Data Storage team at WIST, will serve as Chief Technology Officer of Atlas.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Turning to our financial results, I am pleased to report another quarter of strong sequential growth and record performance across revenue, gross margin and adjusted EBITDA. For the second quarter of fiscal twenty twenty five, we reported record revenue of $92,800,000 an increase of 23% year over year and 4.6% sequentially. Gross margin for the quarter came in ahead of our guidance at 49.6% compared to 41% for the second quarter of fiscal twenty twenty four, demonstrating the leverage of fixed costs with higher volume as well as our ongoing commitment to continuous improvement and margin expansion initiatives. In addition, this is another quarter showing that on average 75% to 80% of incremental revenue drops to the gross margin line. Revenue for synbio increased to $36,000,000 growth of 21% year over year.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Over the course of the quarter, we have implemented programs to streamline customer experience and serve our customers. I'd like to share two of these programs to give you a sense of how we are meeting our customers where they are today. First, we introduced the Twist Wallet, a way for customers to put money into an account as a credit and then order against that credit over a period of time. This allows our customers flexibility for timing of their order and lessens the administrative burden for purchasing. In addition, given the new normal for academic customers today, we offer a promotional program to enable these customers to order Xpress genes without paying the Xpress premium for a limited period of time.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Science does not stop, and we have found that when customers try the Xpress Feed, they do get hooked on receiving their products on the Xpress timeline. This promotion allows more customers to try Xpress Feed and we believe they may continue even after the promotional period ends. Already, this promotion has resulted in many new customers accessing our products, and importantly, it's something tangible we can do to support our customers as they navigate through these times. I'd like to note that both programs illustrate our innovative approach to everything we do at Twist. When innovation drives our product lines, it also feeds into our approach to reaching customers, our user experience, and our commitment to play the long game.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Turning to NGS, we reported $51,100,000 in revenue, an increase of 25% year over year, with trends coming primarily from our customers' commercial assays for diagnostic tests. During the quarter, we partnered with an additional software vendor to further enable the adoption of our NGS workflows in the iBio space. While the conversions from an array to an NGS workflow take time, the resulting opportunities could bring substantive revenue in this $500,000,000 market, where today we have close to the market share. Turning to biopharma services, our revenue was $5,700,000 growth of 21% year over year, with orders increasing to $6,400,000 We remain cautiously optimistic as the funnel of opportunities continues to build. By leveraging our strategic fit across our synbio and biopharma services portfolio, we continue to remain focused on delivering valuable services for our customers.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

I would now like to turn the call over to Paddy for commentary on operations and innovation.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

Thanks, Emily. To underscore what Emily said earlier, Twist was intentionally designed to thrive in evolving conditions. Our foundation rests on a diversified strategy, including differentiation in product lines, customer categories and international markets. What that looks like today is we're employing real time operational agility. We are actively monitoring and refining our commercial and supply chain strategies to ensure continuity, speed and responsiveness across all regions.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

We are deepening customer relationships. We are engaging closely with customers and partners to reinforce trust in our platform, sustain momentum and even co create solutions. We are investing judiciously and strategically to ensure we deliver on our innovative roadmap to continue to expand our reach, our scalability and the long term competitive positioning of our offerings. We are relentless in driving executional discipline. We are prioritizing quality, efficiency and innovation to maximize value for our customers while improving operational performance.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

We're optimizing costs to increase our operational leverage across the company while in parallel fueling long term growth. Automation and scale continue to unlock meaningful cost savings across production while maintaining the highest quality and value as well as R and D velocity for new product introductions. To dive into a specific example that illustrates our focus for our NGS product line, we know that as our customers begin to launch bespoke MRD assays, we will need additional capacity for this product line. We've been working with many customers over the course of the last few years as we move from the pilot stage to verification and validation to clinical studies. While some smaller tests are already commercial, we expect others to advance clinical studies next year and more to be available in the broader commercial market in 2026.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

We also know that the workflow for this product line must be very fast, incredibly efficient and the highest quality as our customers' tests literally support life or death decisions. With this input, we used a twist approach to level up our automation within the same footprint, upgrading hardware and software and leveraging an exceptional engineering and software team. With a fixed headcount, we increased capacity by about 200% and lowered turnaround time by approximately 20%. In other words, we did what we are known to do. We see the ramp coming, we plan and we prepare so that our customers can count us consistently and then we execute to ensure we are delivering.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

Turning to enzyme development, we recently developed a proprietary high fidelity polymerase that we have deployed into select internal Synbio workflows. In addition to reducing supplier dependency, by using this internally developed product in our own manufacturing processes, we enable enhanced performance and reduce cost. This also opens up differentiated workflow opportunities within our NGS product group that we're actively exploring. At this time, I'd like to turn the call over to Adam to discuss our financials.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Thank you, Patty. Revenue for the second quarter of twenty twenty five increased to 92,800,000.0. Growth is 23% year over year and approximately 4.6% sequentially. Gross margin came in higher than expected at 49.6%, primarily due to increased revenue, volume leverage and faster than anticipated gains and continuous process improvements within operations. Synbio revenue increased to 36,000,000, growth of 21% over 29,800,000.0 for the second quarter of fiscal twenty four.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

NGS revenue for the second quarter grew to approximately 51,100,000.0, an increase of 25% over 40,800,000.0 for the same period last year. For the quarter, revenue from our top 10 NGS customers accounted for approximately 43% of NGS revenue. We served six ten NGS customers in the quarter with 150 having adopted our products. For biopharma, revenue was 5,700,000.0 growth of 21% over 4,700,000.0 for the same period of fiscal twenty twenty four. Orders are 6,400,000.0.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

We had 95 active programs as of 03/31/2025, and we started 64 new programs during the quarter. Looking at revenue by industry. Healthcare revenue rose to 52,800,000.0 for the second quarter of twenty five compared to 40,900,000.0 in the same period of fiscal twenty four. An increase of 29% reflecting the increased uptake of our products by pharma, biotech and diagnostic customers. Industrial chemical revenue rose to 22,800,000.0 in the second quarter, up 12% from 20,300,000.0 in the same period of fiscal twenty four.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Academic revenue was 16,500,000.0 for the second quarter of twenty five, up 20% from 13,700,000.0 from the same period of fiscal twenty four, with growth coming from both Symbio and NGS customers. Looking geographically, Americas revenue increased to approximately $55,200,000 in the second quarter, up 20% compared to $45,900,000 in the same period of fiscal twenty four. EMEA revenue rose to $30,600,000 in the second quarter versus 22,300,000.0, up 38% compared to the same period of fiscal twenty four, strong growth year over year. APAC revenue was $7,000,000 in the second quarter compared to 7,200,000.0 in the same period of fiscal twenty four. China continues to be a relatively small portion of our revenue at approximately 1.5% of total revenue for the second quarter of fiscal twenty twenty five.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Moving down the P and L.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Our gross margin for the second quarter increased to 49.6%, an improvement of almost nine margin percentage points versus the second quarter of fiscal twenty twenty four, reflecting our strong revenue growth, as well as our continuous process improvements, while holding expenses relatively flat year over year. With the evolving landscape, we expect our supply chain to be minimally impacted by tariffs at this time. In addition to sourcing our raw materials primarily from US based providers, our technology miniaturizes the chemical synthesis process for making DNA, so we use significantly less material than a traditional well plate based approach to DNA synthesis. Importantly, we continue to expect improvements in gross margin after comprehending supplier price increases from tariffs, even after the ninety day pause. All these assumptions are included in our guide.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Operating expenses excluding cost of revenues, the second quarter were approximately 87,600,000.0 compared to approximately 79,800,000.0 in the same period of 2024, driven by a $5,500,000 increase in non cash stock based compensation. Operating expenses included approximately 6,100,000.0 for data storage in the second quarter. Looking at our progress in our path to profitability. For the second quarter of fiscal twenty twenty five, adjusted EBITDA was a loss of approximately $14,800,000 an improvement of about $11,900,000 versus the second quarter of fiscal twenty twenty four. Cash flow from operating activities continues to improve and we're driving to adjusted EBITDA breakeven.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

We ended the quarter with cash, cash equivalents and short term investments of approximately $257,100,000 Turning to guidance. We are reiterating our total revenue guide of $372,000,000 to $379,000,000 for fiscal twenty twenty five, indicating growth of approximately 20% at the midpoint year over year, which comprehends NIH funding and tariff impacts and the expectation that we will continue to take share in H2 as we have in the first half of the fiscal year. Synbio revenue guidance of 144 to 147,000,000, growth of approximately 18% at the midpoint year over year, reflecting the continued share gains we saw in H1 driven by the Express portfolio. NGS revenue guidance of $2.00 5,000,000 to $2.00 $9,000,000 growth of approximately 23% at the midpoint year over year. Biopharma revenue guidance of $23,000,000 growth of approximately 13% year over year.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

For Q3 fiscal twenty twenty five, we expect total revenue of approximately 94,000,000 to 97,000,000 Growth of approximately 17% versus Q3 of fiscal 'twenty four at the midpoint. Synbio revenue of approximately $37,000,000 to $39,000,000 Growth of approximately 15% year over year at the midpoint. NGS revenue of approximately 51,000,000 to $52,000,000 growth of 19% year over year at the midpoint. Biopharma revenue of approximately $6,000,000 growth of 18% year over year. For the full year fiscal twenty twenty five, we now expect gross margin of approximately 49.5% with quarterly sequential improvements.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

In addition, we expect the margin above 50% in the back half of the fiscal year. We now expect adjusted EBITDA loss of approximately 48,000,000 to $53,000,000 for fiscal twenty twenty five, an improvement of approximately $41,000,000 to $46,000,000 versus fiscal twenty twenty four. This improvement includes the expected impact of the Atlas Data Storage transaction. Starting in Q4 of fiscal twenty twenty five, we expect a $5,000,000 per quarter improvement to adjusted EBITDA and cash burn. We expect Q3 fiscal twenty twenty five adjusted EBITDA loss to be approximately $13,000,000 as improvements from the Atlas Data Storage transaction will be partially offset by transaction related expenses in the current quarter with sequential improvements in subsequent quarters.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

In addition, with the announcement made today regarding data storage, we expect to reach adjusted EBITDA breakeven on an accelerated timeline by the end of fiscal twenty twenty six. With that, I'll turn the call back to Emily.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Thank you, Adam. As you can see, we are not staying still, we are leaning in. We view this environment not just as something to manage through, but the chance to accelerate our impact and strengthen our competitive position. Our leadership team is focused on what we can control. We will make decisions, backpack data, and grounded in the culture that has always defined Twist.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

We focus on innovation, resilience and customer impact. Our guiding principles of grit, impact, service and trust resonates in this and in any environment. Twist's ability to adjust quickly and operate with discipline gives us an edge over competitors who are larger and less nimble. Our leadership team is actively prioritizing the variables we can control while tracking global shifts to stay ahead of the curve. We continue to take market share, leveraging our differentiated platform with our customers at the forefront of our attention.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Our team, platform and mission remains our greatest asset, and we are leveraging all three to support sustainable growth. We know predictability is on everyone's mind, including all of us at Twist. One thing that gives us confidence moving into the second half of our fiscal year is that we booked more than $100,000,000 of orders in each of the last two quarters. In addition, our sales team sees strength in the funnel and opportunities ahead. Our view of the future is clear and optimistic.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Every employer twist is aligned around our high impact goals and empowered by a team committed to scientific advancement and market leadership. We are moving forward with confidence, prepared to withstand volatility and where possible to turn that volatility into opportunity. At this time, let's open up the call for questions. Operator?

Operator

Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. Your line is now open.

Luke Sergott
Luke Sergott
Analyst at Barclays Capital

Hey, great. Thanks for the question. Good big news on the DNA storage. So I just wanted to kind of figure out what you guys are given all the uncertainty around tariffs, what you guys are baking in there from within the within your guide, given the kind of

Luke Sergott
Luke Sergott
Analyst at Barclays Capital

how the quarter played out,

Luke Sergott
Luke Sergott
Analyst at Barclays Capital

what you guys are seeing there? And if you're also seeing any demand starting to come over from competitors that manufacture in China, ultimately this the tariff situation serving as the catalyst to push forward potential there for Biosecure?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Hey, Luke, this is Adam. Thanks for the question. A couple of comments here. We did see strong share gains in this quarter across the business. Obviously, team's innovation and our ability to remain nimble in that react quickly to some of the macro challenges we highlighted in the call were a big part of this.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

As I look to what's baked into the guide is we do see opportunity for upside in our 2025 guidance of 20% growth to the midpoint. But we never want to be on the wrong side of the guide. With today's announcement, you know, on the data storage, we're more focused than we've ever been. And we see that path to profitability. But we also want to be understanding and respectful of the fact that there is uncertainty and we have baked in, what we know today around the tariffs.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

In terms of the what we discussed in terms of the Q3 and beyond, We know we're lapping some tougher numbers in Q3, where last quarter year in Synbio, we had a bump in revenue. But the key for us is we're going to win by winning. We view any market disruptions and opportunity to take share. And for the last few years, even with constrained budgets and biotechnology, we were able to take share. We see this similar opportunity today in academic research and really encouraged by the performance in Q2, where we saw 20% growth year over year, with our academic customers across the board.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

So we're confident moving forward, but we're also, understanding that there is, uncertainty in the market, but we'll take advantage of that work.

Operator

Thank you. And our next question coming from the line of Matt Sykes with Goldman Sachs. Your line is now open.

Matthew Sykes
Matthew Sykes
Analyst at Goldman Sachs

Hey, good morning. Thanks for taking my questions. Maybe just one on the promotions that you guys are doing in Synbio. I know earlier this year you rolled out a promotion for academic customers given the stress they're under. And it sounds like if I heard it right, you're broadening that out across the business.

Matthew Sykes
Matthew Sykes
Analyst at Goldman Sachs

So I guess my question would be, one, is that 20% growth you saw in the academic market this quarter partly a result of that promotional activity? And were there any kind of visible market share shifts that were helped by that promotion? And two, do you expect a similar kind of dynamic if that is the case for the rest of your customers for Synbio? And how long do you believe that you'll stick with this promotional period, and what are the impacts on gross margins for that? Thank you.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Thank

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

you, Matt. Great great question. So the the one of the reason why we, we we push for the promotion is really anchored in the performance of the product. When we said that, we can ship genes in five to six days, it does what it says on the tube. We we do do it, and we do it not just for one gene, but we can do it for all of our genes to a very, very high throughput.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

And, you know, we saw that there was some confusion, worry in the academic field around around funding, and so it was our way to do one to punch, one to assist our customers, and two, making sure that the express going into more more hands. And and we believe that that that's gonna help us long term to convert the academic market where, as you know, we're we're still at at the beginning of that conversion. So in terms of how long it's going to last, we said it would at least last until, until for for the next the the until the end of our fiscal year. And we, we want to make sure that our customers know that. In terms of, impact on on margin, I think it's it's positive.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

As as you know from from the math, if we if the the sales price is is 5% lower than than average, but your your volume increased, you know, more percent, it is positive. And as far as the impact on the quarter, it was a a not complete impact since we we started, about midway through the quarter. But at the end of the day, a lot more academic customers are getting their hands on X-ray genes, and they're getting, they they're seeing the value of it during the reordering. And so we see it as a as a win for the customers and a win for us as well.

Operator

Thank you. And our next question coming from the line of Subunami with Guggenheim Securities. Your line is now open.

Subbu Nambi
Managing Director at Guggenheim Securities

Hey, guys. Good morning. Thank you for taking my questions. You have been reporting the percent of NGS revenue from your top 10 customers each quarter. How much of the second half guidance is from these top 10 customers, especially in NGS?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Super, this is Adam. Thank you for the question. And if I look at the guidance for NGS, I'd say the, we expect to see growth from both the existing customers and the top 10 as well as other customers who aren't in the top 10 today. One thing we talk about a lot is it's not always the same top 10 customers every quarter. So we do see a rotation there.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

We are seeing new customers launching. We haven't baked in any assumed increases for things like MRD in that back half guide. But we do see the top 10 growing at about the same rate as the entire NGS business.

Operator

Thank you. And our next question coming from the line of Doug Schenkel with Wolfe Research. Your line is now open.

Doug Schenkel
Managing Director at Wolfe Research LLC

Good morning. Thanks for taking the question. I want to just dig a little deeper into guidance questions. So the first is on the SpinCo. Are you planning to reinvest some of the spin savings into higher priority R initiatives.

Doug Schenkel
Managing Director at Wolfe Research LLC

If we're interpreting guidance right, it seems like that might be the case. So that's the first part. The second is on the MRD launches that you referenced. You talked about customers moving into clinical studies. When would they start to build inventory and how is that contemplated into guidance?

Doug Schenkel
Managing Director at Wolfe Research LLC

And then the third part is on pacing. Guidance implies about 28% of sales in the fourth quarter at the midpoint. That's a smidge more back end loaded compared to the last two years. Is there anything to read into that? Thank you.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Hi, Doug, this is Adam here. I'll see if I

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

can hit all three parts.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

I may need you to help me out a bit because I'll forget them as I start talking. So, in terms of the last one first, I think the pacing is, you know, we said consistently that we're going to see sequential growth and we feel confident in that growth. When you look at it year on year, you know, the impact of growth in both quarters is slower than it was in the front half, but it is seeing that sequential increase and we're seeing that, set up nicely in terms of the continued adoption of share taking both in Synbio and the growth in our existing and new customers in NGS. Stepping back into the, the first two questions, if you could repeat them for me, I'd appreciate it. Like I said, I knew it for you.

Doug Schenkel
Managing Director at Wolfe Research LLC

Absolutely. Yeah. Sorry to rattle through those so quickly. So the first was on, reinvestment of spend savings and R and D initiatives. It looks like that's what you're doing, at least partially a small amount.

Doug Schenkel
Managing Director at Wolfe Research LLC

And then the second was on the MRD launches. You talked about customers moving into clinical studies. I'm just wondering when they would build inventory and how is that contemplated into guidance?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Great question. So, in terms of the launch of Atlas Data Storage, we did raise our adjusted EBITDA at the midpoint, about $7,000,000 this quarter. That does reflect most of the savings from not having, data storage, which is about a 5,000,000 a quarter cash burn, in our P and L. So that is contemplated in Q4 and Q3, given the timing of it, as well as some transactional cost, the impact will be only partial. But we are assuming that most of that savings is dropping to the bottom of the P and L.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

And then in terms of the MRD, we're not assuming any material launches ramping in the back half of twenty twenty six.

Operator

Thank you. And our next question coming from the line of Vijay Kumar with Evercore ISI. Your line is now open.

Vijay Kumar
Analyst at Evercore

Hey, guys. Thank you for taking my question. I I guess just to clarify one on the macro here, Adam or Anna, if you will. On on tariffs, are you assuming no impact at all? Is there any impact with your offsetting those impacts?

Vijay Kumar
Analyst at Evercore

And sticking to that macro team, academic and government, can you just remind us what is US A and G as a percentage of revenues? I think there's a proposal for NIH, but it's been down 37%. So are you assuming second half growth to moderate, or or should that sustain at second quarter levels? Thank you.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Thanks thanks for the question. As far as the the the tariffs, so obviously, the the tariffs are imposed now. Even when when the tariffs, were not imposed, the vast majority of our products were exempt to any tariffs into Europe. As far as China tariffs, first of all, China is a very small number for And and similarly, even now, even though there's big tariffs on on most US product into China, DNA rated products are exempt as well now. So, you know, overall, we think that if tariffs are are back, it will be more of a headwind for our competitors than than for us.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

And, again, as Adam mentioned earlier, we will we will, win by winning. Our products are faster, better, with better scales, with higher quality, better user experience, and so tariffs, in the end, are a tailwind for us and and the headwind for competitions, but but we will we will win by winning. As far as academia, you know, with a very good growth in academia of 20% in in in the last quarter sorry, year over year. So, great great growth. We are still massively underpenetrated in in in academia, so we have we have, a big opportunity, ahead of us.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

It's a very similar opportunity to what we had experienced over the last few years with biopharma when biopharma funding was under pressure. Our product quality the value of our products from a quality to cost point of view was just so so positive that, we've grown significantly, and we think the the the same Mhmm. The the the same opportunity will will happen, here.

Operator

Thank you. And our next question coming from the line of Matt Larew with William Blair. Your line is now open.

Matt Larew
Research Analyst - Healthcare at William Blair

Good morning. Maybe just following up on the question on the environment. You referenced a couple of times on the call that the guidance assumes continued share taking in the back up here. And clearly, has been a story of share taking for many years. So maybe it's not that unusual, but just the emphasis on that.

Matt Larew
Research Analyst - Healthcare at William Blair

Can we read into that that you're observing softer market conditions or softer customer wallets in April versus March and moving on and thus the share to that taking aspect is more important? Maybe just speak a little bit to what you're seeing broadly for some of your customers, their spend, and behavior relative to to what you're seeing in terms of your own activity levels with your customers.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Yeah. Thank you, Matt. I mean, it's a it's a very broad question. As you know, we we have, we have, a lot of skews in many different applications, many different, geographies In terms of academia, know, for sure it's clear that there is some pressure in academia. However, in a world with funding pressure, I think we have a very strong value proposition.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

In NGS diagnostics, we don't have the same dynamic at all. I'd say that liquid biopsy MRB broadly genetic testing is doing really well, and so it's a completely different dynamic there. In terms of biopharma, I think there's a little bit of a continuation of dynamic from from the past where there'll be haves and be have not, in terms of funding. And so for the customers that don't have that have tight funding, we we resonate really well. Even with the the company that that have good funding, you know, they are they are cautious about about budget.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

And so, in this environment where our brand is high quality, high speed, and low cost, I think it resonates really well. Plus, we've we've launched a number of new products over over the the last few quarters, to expand our aperture. For instance, FlexPrep, it's still early days, but, seems to be doing really well in in AgBio. Our our new library preps are doing great. So, you know, overall, yes, there's different different and most macro environment for for each of the the different markets we serve, but I think that that that's where we're we're good at.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

We are not the one size fits all. Right? We are a customization of biology company, and and we'll meet customer where they are in terms of their funding, what they need, And and our products are just based innovation of, again, speed, quality, at at a at a very, very competitive, if if not leading leading cost. And so I think that that makes us in any environment, we we can win, but we adjust and adapt our tactics for each of the products and and the markets we serve.

Operator

Thank you. And our next question coming from the line of Puneet Souda with Leerink Partners. Your line is now open.

Puneet Souda
Senior MD at Leerink Partners

Yeah. Hi, guys. Thanks for taking my questions. So just a couple here, if I could. First, I don't know if you provided The U.

Puneet Souda
Senior MD at Leerink Partners

S. Academic growth. I think you provided the international the worldwide growth. And what are you assuming in the second half for The U. S.

Puneet Souda
Senior MD at Leerink Partners

Academic growth? On the order side, you had more than $100,000,000 you said in the orders in the last two quarters. Can you elaborate a bit into what is the assumption there? What's growing within that NGS versus Synbio versus other segment? And then was there any pull forward due to tariffs, meaning European customers assuming tariffs and retaliation retaliatory tariffs?

Puneet Souda
Senior MD at Leerink Partners

And did you see any impact from that? Thank you.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Yeah, so let me start on that with The US academics. We did not disclose The US academics, but we did see strong growth across the board in both NGS and Synbio, and we expect the growth to continue in the second half. With orders more than 100,000,000 in the, each of the first two quarters, we did see significant growth across all of our platforms, Synbio, NGS, and biopharma products and services. And we expect that to continue. We did not see any meaningful pull forward from tariffs.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

We see the demand continuing to grow, and we are confident that we'll continue to see sequential share gains in the back half.

Operator

Thank you. And our next question coming from the line of Sung Ji Nam with Scotia Bank. Your line is now open.

Sung Ji Nam
Managing Director, Senior Equity Research Analyst at Scotiabank

Hi. Thanks for taking the question. Maybe on The US academic one as Could you talk about how important is the academic market for the DNA makers market and you know in terms of based on all the policy discussions going on do you have your assumptions in terms of that the expressed gene growth opportunity, has that changed at all, especially targeting The U. S. Academic market?

Sung Ji Nam
Managing Director, Senior Equity Research Analyst at Scotiabank

Thank you.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

Yeah, thanks, Lei. Good question. Yeah, I think that the value proposition is really starting to resonate. We know there's about a $1,400,000,000 opportunity to convert the makers into buyers. It's underpinned by economics and speed.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

From an academic standpoint in a constrained budget environment, then the Twist value proposition resonates very, very strongly again, you know, it's more shots on goal, but then secondly, in a situation where you maybe want to focus on higher value research, sending Twist more clonal work to do, more cloning and delivering more product to the customer base is actually a very, very favorable offering. So we continue to be very optimistic and bullish looking forward.

Operator

Thank you. And our next question coming from the line of Tom Peterson with R. W. Baird. Your line is now open.

Tom Peterson
Senior Research Associate at Baird

Hey, everyone. Congrats on the quarter. Thanks for taking our questions. Adam, maybe just a follow-up on the adjusted EBITDA commentary. Appreciate some of the color on the OpEx spend for the DNA data storage business.

Tom Peterson
Senior Research Associate at Baird

I guess, what other assumptions underpin the fiscal twenty twenty six adjusted EBITDA breakeven target that you've put out? How should we be thinking about core OpEx growth over the medium term? Thanks.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Tom, thanks for the question and happy to talk about it. So we did announce that we expect to be adjusted EBITDA positive by the end of fiscal twenty twenty six. I think given the Atlas announcement, we can see a clear path to that. What we said previously is that we see continued sequential improvements, not just in revenue and gross margin, but also in adjusted EBITDA moving forward. And that would that trend will continue in terms of investment level.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

What we've talked about in the past is inflationary levels of investment in OpEx across the business. I think we'll see a general trend similar to that moving forward on the path to adjusted EBITDA positive.

Operator

Thank you. And our next question coming from the line of Brandon Smith with TD Cowen. Your line is now open.

Brendan Smith
Director - Senior Analyst at TD Cowen

All right. Great. Thanks for taking the questions, guys. Congrats on all the progress. Kind of piggybacking on that last question.

Brendan Smith
Director - Senior Analyst at TD Cowen

I guess with the adjusted EBITDA breakeven now by the

Brendan Smith
Director - Senior Analyst at TD Cowen

end of next year, I

Brendan Smith
Director - Senior Analyst at TD Cowen

just want to ask maybe how do your expectations for profitability of each revenue segment with this new guidance kind of compare to your prior adjusted EBITDA issuance? And I guess I'm really just wondering if you can give any additional color on where you see the profitability bar for each segment, just given all the new product launches and kind of internal initiatives you've implemented since that prior issuance?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Brandon, thank you for the question. And we do look at the business in aggregate in single segment. But what I've talked about a lot in the past, I think it'll continue on average in the future moving forward is, you know, as the gross margin continues to expand above 50, we won't be happy and we want to continue marching. And we see about 75 to 80% of incremental revenue dropping to the gross margin line on all of our product lines across the business. And we'll continue to adapt and adjust the, the investment levels in the OpEx line, to meet the growth that we want to attain across, different products.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

So, we're pretty pleased with all three seeing the growth and the contribution to the growth in gross margin as well. And I expect that trend to continue beyond just 2025.

Operator

Thank you. I'm showing no further questions in the queue at this time. I will now turn the call back over to Doctor. Emily Laproos for any closing.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Thank you for your questions and for joining us today. At Twist, we remain committed to transparency, disciplined growth, and long term value creation. We recognize that the world around us is shifting, but our focus is steady. We're executing with purpose, investing in innovation, and continuing to build a business designed not just to endure complexity, but to lead through it. We appreciate your continued confidence in our team and our mission, and we look forward to updating you on our progress in the next quarters ahead.

Emily Leproust
Emily Leproust
CEO and Co-Founder at Twist Bioscience

Thank you.

Operator

Thank you. This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Executives
Analysts
Powered by Quartr

Key Takeaways

  • Twist spun out its DNA Data Storage business into Atlas Data Storage with a $155 million joint‐venture investment, retaining a 24% equity stake, royalties and up to $75 million in milestone payments plus $2.5 million in cash upfront and a $2 million promissory note.
  • In Q2 FY25, Twist delivered record revenue of $92.8 million, up 23% year over year and 4.6% sequentially, while gross margin expanded to 49.6% from 41% a year earlier.
  • To streamline customer experience, Twist launched the Twist Wallet pre‐funding system and offered academic researchers free Xpress Genes during a limited period, driving trial and adoption of its faster synthesis service.
  • Operational improvements included automating NGS workflows to boost capacity by ~200% and cut turnaround times by ~20%, plus deployment of a proprietary high‐fidelity polymerase to reduce costs and supplier reliance.
  • Twist reaffirmed full‐year guidance of $372 million–$379 million in revenue (~20% growth), expects gross margin to exceed 50% in H2, and sees adjusted EBITDA losses narrowing to $48 million–$53 million with breakeven targeted by end of FY26.
AI Generated. May Contain Errors.
Earnings Conference Call
Twist Bioscience Q2 2025
00:00 / 00:00

Transcript Sections