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01/11 04:42
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite risks like market conditions and tariffs, Twist shows strong financial performance with 23% revenue growth and improved gross margins. The spin-off of Atlas Data Storage reduces cash burn and enhances EBITDA. Positive guidance and strategic reinvestment plans further bolster sentiment. The market cap suggests moderate sensitivity to these developments, leading to a positive stock price prediction.
Revenue $92,800,000, an increase of 23% year over year and approximately 4.6% sequentially.
Gross Margin 49.6%, an improvement of almost 9 percentage points compared to 41% for the second quarter of fiscal twenty twenty four.
Synbio Revenue $36,000,000, growth of 21% year over year.
NGS Revenue $51,100,000, an increase of 25% year over year.
Biopharma Revenue $5,700,000, growth of 21% year over year.
Operating Expenses Approximately $87,600,000, compared to approximately $79,800,000 in the same period of 2024, driven by a $5,500,000 increase in non-cash stock-based compensation.
Adjusted EBITDA Loss of approximately $14,800,000, an improvement of about $11,900,000 versus the second quarter of fiscal twenty twenty four.
Cash, Cash Equivalents and Short-term Investments Approximately $257,100,000.
New Product Launch: Twist Bioscience has developed a proprietary high fidelity polymerase for internal Synbio workflows, enhancing performance and reducing costs.
Promotional Program: Introduced the Twist Wallet for customers to manage credits and a promotional program for academic customers to order Xpress genes without the premium.
Market Expansion: Twist has spun out DNA Data Storage into a new company, Atlas Data Storage, to focus on end-to-end data storage solutions.
Revenue Growth: Twist reported record revenue of $92.8 million, a 23% increase year-over-year, with significant growth in Synbio and NGS segments.
Operational Efficiency: Increased capacity for NGS product line by 200% while reducing turnaround time by 20% through automation and process improvements.
Cost Optimization: Operational leverage improved with gross margin at 49.6%, reflecting continuous process improvements and increased revenue.
Strategic Shift: Twist is focusing on agility and innovation to navigate market changes, emphasizing customer engagement and operational discipline.
Investment Strategy: Received $155 million investment for Atlas Data Storage to accelerate commercialization and maintain a 24% equity interest.
Market Conditions: The company is operating in a time of accelerated change, with policy shifts, trade adjustments, and evolving financial markets posing risks to business stability.
Regulatory Issues: There is uncertainty regarding tariffs, which could impact the competitive landscape, particularly for competitors manufacturing in China.
Supply Chain Challenges: The company is actively monitoring and refining its supply chain strategies to ensure continuity and responsiveness, indicating potential risks in supply chain management.
Economic Factors: The company acknowledges pressure in the academic market due to funding constraints, which may affect customer spending and demand.
Investment Risks: The company has constrained spending in DNA data storage to less than $25 million annually, indicating a cautious approach to investment in specialized areas.
Customer Behavior: There are indications of softer market conditions and customer spending, particularly in academia, which may impact revenue growth.
Operational Risks: The company is focused on maintaining operational agility and execution discipline to navigate the evolving market landscape.
Spinout of DNA Data Storage: Twist Bioscience has spun out DNA Data Storage as an independent company named Atlas Data Storage, focusing on end-to-end data storage solutions.
Investment in Atlas Data Storage: Atlas Data Storage will receive a significant $155 million investment from joint venture partners to accelerate commercialization.
Equity Interest and Royalties: Twist will retain a 24% equity interest in Atlas and will receive royalties on future sales and up to $75 million in milestone payments.
Customer Engagement Programs: Twist introduced the Twist Wallet for customer flexibility and a promotional program for academic customers to try Xpress genes.
Operational Agility: Twist is employing real-time operational agility to refine commercial and supply chain strategies.
Total Revenue Guidance: Twist expects total revenue of $372 million to $379 million for fiscal 2025, indicating approximately 20% growth year-over-year.
Synbio Revenue Guidance: Synbio revenue guidance is set at $144 million to $147 million, reflecting approximately 18% growth year-over-year.
NGS Revenue Guidance: NGS revenue guidance is projected at $205 million to $209 million, indicating approximately 23% growth year-over-year.
Biopharma Revenue Guidance: Biopharma revenue guidance is set at $23 million, reflecting approximately 13% growth year-over-year.
Adjusted EBITDA Loss: Expected adjusted EBITDA loss for fiscal 2025 is approximately $48 million to $53 million, an improvement of $41 million to $46 million versus fiscal 2024.
Q3 Revenue Expectations: For Q3 fiscal 2025, total revenue is expected to be approximately $94 million to $97 million, indicating growth of approximately 17% year-over-year.
Gross Margin Expectations: Twist expects gross margin of approximately 49.5% for fiscal 2025, with expectations of exceeding 50% in the latter half of the fiscal year.
Path to Profitability: Twist aims to reach adjusted EBITDA breakeven by the end of fiscal 2026.
Equity Interest in Atlas Data Storage: Twist will receive approximately 24% equity interest in Atlas on a fully diluted basis.
Royalties and Milestone Payments: Twist will receive royalties on future commercial sales and up to $75,000,000 in future milestone payments.
Upfront Cash Payment: Twist will receive an upfront cash payment of $2,500,000.
Promissory Note: Twist will receive a $2,000,000 secure promissory note.
Cash Burn Reduction: The spin-off of Atlas Data Storage is expected to reduce cash burn by approximately $5,000,000 per quarter.
Adjusted EBITDA Improvement: The transaction is expected to improve adjusted EBITDA by approximately $7,000,000 in the current quarter.
The earnings call summary and Q&A indicate a positive sentiment. The company shows strong revenue growth guidance across all segments, improving gross margins, and a strategic focus on AI synergies. Despite some guidance below expectations, management remains optimistic about long-term growth, especially in NGS and Biopharma. The expected breakeven point for adjusted EBITDA and new product launches further support a positive outlook. The market cap suggests a moderate reaction, leading to a predicted positive stock price movement of 2% to 8% over the next two weeks.
The earnings call highlights strong revenue growth across multiple segments, particularly in NGS and healthcare. Despite some challenges like customer pushouts and SynBio weakness due to tough comparisons, the overall sentiment remains positive with optimistic future guidance. The company expects to reach adjusted EBITDA breakeven by 2026, and gross margins are improving. The Q&A section reveals analysts' confidence in the company's strategic direction and growth potential, especially with new product introductions and international expansion efforts. Given the market cap, a positive reaction (2% to 8%) is expected over the next two weeks.
The earnings call indicates several concerning factors: a missed EPS expectation, increased operational costs, and ongoing financial challenges. While there is revenue growth and improved gross margins, the lack of a shareholder return plan and unclear guidance on tariffs and R&D reinvestment pose risks. The market's uncertainty, especially with policy shifts, further compounds these issues. Given the company's small market cap, these negative elements could lead to a stock price decrease in the short term.
Despite risks like market conditions and tariffs, Twist shows strong financial performance with 23% revenue growth and improved gross margins. The spin-off of Atlas Data Storage reduces cash burn and enhances EBITDA. Positive guidance and strategic reinvestment plans further bolster sentiment. The market cap suggests moderate sensitivity to these developments, leading to a positive stock price prediction.
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