Twist Bioscience Corp Q1 FY2025 earnings call

• Emily Leproust highlighted strong sequential growth in revenue and gross margin, with record revenue of $88.7 million, a 24% year-over-year increase and 5% sequential growth. The DNA synthesis platform serves as the foundation for all product groups. • SynBio saw growth in its Express portfolio, with sequential revenue and net new accounts growth. • NGS revenue grew due to customers commercializing liquid biopsy and rare disease assays, and initial uptake in emerging applications. • Biopharma Services had revenue of $5.7 million and orders of $5.9 million, with the data storage team continuing development. • Patrick Finn discussed margin improvement driven by revenue growth and cost initiatives, such as plastic tip cost reduction, and future gross margin improvement from enzymology.

In the first quarter of fiscal 2025, SynBio revenue reached $34.4 million, a year-over-year increase of 28%. NGS revenue was $48.6 million, up 23% year-over-year. Biopharma Services revenue stood at $5.7 million. SynBio contributed approximately 38.8% of total revenue, NGS accounted for around 54.8%, and Biopharma Services made up about 6.4% of total revenue.

• Increased fiscal 2025 total revenue guidance to $372 million to $379 million, up from $367 million to $377 million, with midpoint growth of approximately 20% year-over-year. • SynBio revenue guidance raised to $144 million to $147 million, a year-over-year growth of approximately 17% to 18%. • NGS revenue guidance increased to the top range of $205 million to $209 million, a year-over-year growth of approximately 21% to 24%. • Biopharma Services revenue guidance increased to $23 million, a year-over-year growth of approximately 13%. • For Q2 fiscal 2025, total revenue is expected to be $91 million to $93 million, a growth of approximately 21% to 24% versus Q2 of fiscal 2024. • Expect gross margin of approximately 49% for fiscal 2025 with Q4 fiscal 2025 gross margin over 50%, and adjusted EBITDA loss expected to be $55 million to $60 million for fiscal 2025.

• Tariff impacts: There is a 25% tariff on goods from Canada and Mexico, and a 10% tariff on goods from China, with removal of the de minimis rule. Twist's 100% US manufacturing mitigates direct impact, but competitors from China face headwinds. • Market uncertainty: Uncertainty in Biopharma funding and academic market pressure, though Twist's differentiated products aim to capture share in turbulent markets.

Q: Matthew Sykes asked about mix shift in SynBio towards Express genes and expectations for contribution.

A: Adam Laponis said there is sequential improvement in Express gene revenue, and the Express portfolio is enabling wallet share expansion and new customer acquisition.

Q: Luke Sergott inquired about Canada-Mexico exposure and tariff impacts.

A: Emily Leproust explained that Twist manufactures 100% in the US, so US prices stay the same, and competitors from China face tariffs, creating headwinds for them.

Q: Subbu Nambi asked about Express dynamic's responsibility for better margins.

A: Adam Laponis stated revenue growth is the primary driver of gross margin expansion, with Express and process improvements contributing.

Q: Catherine Schulte asked about gross margin progression and tip process change.

A: Adam Laponis and Patrick Finn discussed sequential gross margin improvement, with benefits from tip process change continuing and multiple small opportunities for margin expansion.

Q: Brendan Smith asked about proprietary enzyme production and GM leverage.

A: Patrick Finn said proprietary enzymes benefit high-throughput processes, supply chain, and new products, with timing baked into guidance.

Q: Vijay Kumar asked about Q1 gross margin and guidance raise.

A: Adam Laponis said gross margin improvement was from revenue growth and process improvements, and guidance raise was due to confidence in Biopharma and SynBio progress.

Q: Matt Larew asked about Express portfolio data points and competitor response.

A: Emily Leproust said high customer satisfaction with Express, competitors' limited capacity, and Twist's differentiated price point.

Q: Puneet Souda asked about growth given market backdrop.

A: Emily Leproust explained monetization of Biopharma assets, prudent guidance, and Twist's differentiated products to capture share in turbulent markets.

Q: Doug Schenkel asked about customer penetration and guidance uncertainty.

A: Emily Leproust discussed customer account penetration tracking, and Adam Laponis said Twist's customer mix insulates from noise and sees opportunity in uncertainty.

Q: Sung-Ji Nam asked about DNA storage segment milestones.

A: Emily Leproust discussed milestones in silicon chip, enzymatic chemistry, hardware, and software for terabyte-scale DNA storage.