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01/11 04:43
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue For the third quarter of fiscal 2025, revenue was $96.1 million, an increase of 18% year-over-year. This growth was attributed to sequential growth and record performance across revenue, gross margin, and adjusted EBITDA.
Gross Margin Gross margin for the quarter was 53.4%, compared to 43.3% for the third quarter of fiscal 2024, an improvement of over 10 margin points. This was due to leverage of fixed costs with higher volume, some benefit from mix, and continuous improvement initiatives.
SynBio Revenue Revenue for SynBio was $35.2 million, reflecting 7% year-over-year growth. The prior year included a significant one-time order from a large contracted customer, which did not recur in fiscal 2025. Excluding this, underlying revenue grew more than 20% year-over-year, driven by increased demand and diversification of the customer base.
NGS Revenue NGS revenue was $55.3 million, an increase of 27% year-over-year. Growth was driven by customers' commercial assays for diagnostic tests and smaller accounts, which are critical for long-term growth.
Biopharma Services Revenue Revenue was $5.6 million, a growth of 10% year-over-year. Growth was supported by synergies between biopharma services and SynBio business, particularly within large pharma accounts.
Healthcare Revenue Healthcare revenue rose to $56.4 million, an increase of 32% year-over-year, reflecting increased uptake of products by large pharma, biotech, and diagnostic customers.
Industrial Chemical Revenue Revenue was $23.1 million, approximately flat compared to $23.2 million in the same period of fiscal 2024. This was due to the anticipated step back in one large contracted customer, but revenue was held flat due to growth in other accounts.
Academic Revenue Revenue was $15.9 million, up 7% from $14.9 million in the same period of fiscal 2024. Growth came from both SynBio and NGS customers, with North America academic revenue growing 10% sequentially.
Americas Revenue Revenue increased to $59.4 million, up 16% compared to $51.4 million in the same period of fiscal 2024, driven by ongoing demand dynamics.
EMEA Revenue Revenue rose to $30.7 million, up 30% compared to $23.6 million in the same period of fiscal 2024, reflecting ongoing demand dynamics in the region.
APAC Revenue Revenue was $5.9 million, compared to $6.5 million in the same period of fiscal 2024, reflecting a decline. China contributed approximately 1.5% of total revenue for the quarter.
SynBio product line expansion: Introduced the first in a series of planned portfolio expansions for SynBio products, including Express Genes, DNA prep, and high-throughput IgG protein. Enhanced manufacturing processes to offer gene fragments without adapters, improving flexibility and delivery speed.
NGS tools: Reported $55.3 million in revenue, a 27% year-over-year increase, driven by commercial assays for diagnostic tests and growth in smaller accounts.
Academic market expansion: Extended reach into the academic market, adding hundreds of new customers and driving a strong influx of net new customers to the platform.
Geographic revenue growth: Revenue growth in Americas (16%), EMEA (30%), and stable performance in APAC. North America academic revenue grew 10% sequentially.
Gross margin improvement: Achieved a gross margin of 53.4%, up from 43.3% in the prior year, driven by increased revenue, volume leverage, and process improvements.
Adjusted EBITDA improvement: Reduced adjusted EBITDA loss to $8 million, a $14 million improvement year-over-year.
AI-driven opportunities: Positioned to capitalize on AI drug discovery growth by offering products and services to accelerate industry advancements.
Customer diversification: Focused on converting smaller accounts into future growth drivers and diversifying the customer base to mitigate risks.
Market Conditions: The company faces challenges in maintaining revenue growth in the Industrial Chemical segment, which remained flat year-over-year due to the anticipated step back in one large contracted customer.
Customer Dynamics: A key top 10 account is transitioning from validation to commercial deployment, causing a planned $5 million revenue normalization in Q4 and some Q1 impact, which could temporarily affect revenue.
Supply Chain: The company had to pivot quickly to develop an internal primer manufacturing process after one of two primer suppliers stopped shipping, highlighting potential vulnerabilities in supply chain dependencies.
Geographic Revenue Variability: APAC revenue declined year-over-year, and EMEA academic revenue saw a sequential dip, indicating potential regional challenges in revenue growth.
Economic Uncertainties: Evolving funding dynamics among U.S. academic customers could impact order volumes, requiring the company to diversify its customer base further.
Operational Execution: The company is investing in new product launches and innovation, which, while promising, require significant execution to unlock market opportunities and sustain growth.
Revenue Guidance for Fiscal 2025: The company expects total revenue of $374 million to $376 million for fiscal 2025, indicating growth of approximately 19.7% at the midpoint year-over-year.
SynBio Revenue Guidance: SynBio revenue is projected to be $144 million to $145 million, reflecting growth of approximately 17% at the midpoint year-over-year.
NGS Revenue Guidance: NGS revenue is expected to be $207 million to $208 million, representing growth of approximately 23% at the midpoint year-over-year.
Biopharma Revenue Guidance: Biopharma revenue is anticipated to be $23 million, showing growth of approximately 13% year-over-year.
Q4 Fiscal 2025 Revenue Guidance: Total revenue for Q4 fiscal 2025 is expected to be $96 million to $98 million, reflecting growth of approximately 14.5% versus Q4 of fiscal 2024 at the midpoint.
Q4 SynBio Revenue Guidance: SynBio revenue for Q4 is projected to be $38 million to $39 million.
Q4 NGS Revenue Guidance: NGS revenue for Q4 is expected to be $52 million to $53 million.
Q4 Biopharma Revenue Guidance: Biopharma revenue for Q4 is anticipated to be approximately $6 million.
Gross Margin Guidance for Fiscal 2025: Gross margin is expected to be approximately 50.5% to 51%, an increase of 8.1 points year-over-year at the midpoint.
Adjusted EBITDA Guidance for Fiscal 2025: The company expects an adjusted EBITDA loss of approximately $45 million to $47 million for fiscal 2025, an improvement of more than $46 million versus fiscal 2024.
Adjusted EBITDA Guidance for Q4 Fiscal 2025: Adjusted EBITDA for Q4 fiscal 2025 is expected to show sequential improvement over Q3.
Future Product Launches: The company plans a series of new product launches in synthetic biology over the next 12 months to unlock new market opportunities and expand share in existing segments.
AI and Biopharma Synergies: The company anticipates significant opportunities from the exponential growth of AI drug discovery, which is expected to drive demand for its products and services.
Customer Base Expansion: The company is focused on converting smaller accounts into future growth drivers and expanding its base of ordering customers.
Operational Milestone: The company aims to cross the adjusted EBITDA breakeven point next year, positioning itself for accelerated growth.
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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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