Azenta(AZTA) - 2025 Q3 - Quarterly Results

Executive Summary Azenta reported flat Q3 FY2025 revenue from continuing operations, with margin expansion and improved Non-GAAP EPS, driven by operational turnaround and cost management Q3 FY2025 Highlights Azenta reported flat revenue from continuing operations year-over-year for Q3 FY2025, with organic revenue declining 2%. Multiomics revenue grew 4% while Sample Management Solutions revenue decreased by 4%. The company achieved significant margin expansion and improved Non-GAAP Diluted EPS and Adjusted EBITDA Metric (Continuing Operations) | Metric (Continuing Operations) | June 30, 2025 | March 31, 2025 | June 30, 2024 | Change Prior Qtr | Change Prior Yr. | | :------------------------------ | :------------ | :------------- | :------------ | :--------------- | :--------------- | | Revenue ($ millions) | 144 | 143 | 144 | 0% | (0)% | | Organic growth | | | | | (2)% | | Sample Management Solutions ($ millions) | 78 | 80 | 81 | (3)% | (4)% | | Multiomics ($ millions) | 66 | 64 | 64 | 4% | 4% | | Diluted EPS | 0.01 | (0.40) | (0.00) | NM | NM | | Non-GAAP Diluted EPS | 0.19 | 0.05 | 0.14 | NM | 31% | | Adjusted EBITDA ($ millions) | 18 | 14 | 14 | 24% | 27% | | Adjusted EBITDA Margin | 12.3% | 10.0% | 9.7% | | | - B Medical Systems results are treated as discontinued operations following the company's intention to pursue a sale, impacting total diluted EPS[2] Management Commentary The CEO highlighted significant organizational changes and operational turnaround progress, achieving meaningful margin expansion through cost management despite a challenging macro environment. The company maintains a strong balance sheet and solid cash flow, remaining on track for full-year goals and confident in its long-term strategy - Operational turnaround is progressing as planned, driving meaningful margin expansion through disciplined cost management and focused execution[4] - Strong balance sheet and solid cash flow position the company to capitalize on future opportunities[4] - Company remains on track to meet full-year goals for fiscal 2025, confident in the foundation for long-term strategy[4] Financial Performance (Continuing Operations) Azenta's Q3 FY2025 saw flat revenue but improved GAAP operating loss and strong Non-GAAP earnings, reflecting effective cost management and operational efficiencies Q3 FY2025 Revenue Breakdown Total revenue from continuing operations was flat year-over-year at $144 million, with organic revenue declining 2%. This was due to a decrease in Sample Management Solutions revenue, offset by growth in Multiomics revenue - Total revenue was $144 million, flat year over year, with organic revenue declining 2%[5] - Sample Management Solutions Revenue: $78 million, down 4% year over year[5] - Organic revenue declined 6%, primarily due to lower revenues in Core Products (Automated Stores and Cryogenic Systems), partially offset by growth in Sample Storage, Clinical Biostores, and Product Services[5] - Multiomics Revenue: $66 million, up 4% year over year[5] - Organic revenue grew 3%, mainly driven by growth in Next Generation Sequencing, partially offset by declines in Sanger Sequencing and Gene Synthesis[5] GAAP Earnings Results GAAP operating loss improved significantly to $0.7 million, with operating margin increasing 440 basis points year-over-year. Gross margin also saw an increase, driven by favorable sales mix and operating efficiencies. Diluted EPS from continuing operations was positive, but total diluted EPS was negatively impacted by a non-cash impairment charge from discontinued operations - Operating Loss: $0.7 million, with operating margin at (0.5%), an improvement of 440 basis points year over year[12] - Gross Margin: 47.1%, up 170 basis points year over year, driven by favorable sales mix, operating efficiencies, and improved cost execution[12] - Operating Expenses: $68 million, down 6% year over year, due to lower selling, general and administrative expenses, R&D costs, and restructuring charges[12] - Diluted EPS from Continuing Operations: $0.01 (vs. ($0.00) in Q3 FY2024)[12] - Diluted EPS from Discontinued Operations: ($1.17) due to a $50 million non-cash impairment charge[12] - Total Diluted EPS: ($1.15) (vs. ($0.12) a year ago)[12] Non-GAAP Earnings Results Non-GAAP adjusted operating income and margin showed strong year-over-year improvements, reflecting effective cost management and operational efficiencies. Adjusted EBITDA and Non-GAAP Diluted EPS also increased significantly, indicating a positive trend in underlying business performance - Adjusted Operating Income: $7.9 million, with adjusted operating margin at 5.5%, an improvement of 340 basis points year over year[12] - Adjusted Gross Margin: 48.5%, up 180 basis points compared to Q3 FY2024, primarily due to favorable sales mix, operating efficiencies, and improved cost execution[12] - Adjusted Operating Expense: $62 million, down 4% year over year, driven by lower selling, general and administrative expenses and R&D costs[12] - Adjusted EBITDA: $18 million, with Adjusted EBITDA margin at 12.3%, an improvement of 260 basis points year over year[12] - Non-GAAP Diluted EPS: $0.19 (vs. $0.14 one year ago)[12] Financial Position & Liquidity Azenta maintained a strong liquidity position with $565 million in cash and generated positive operating and free cash flow during Q3 FY2025 Cash and Liquidity as of June 30, 2025 Azenta maintained a strong liquidity position with $565 million in cash, cash equivalents, restricted cash, and marketable securities. The company generated positive operating cash flow and free cash flow during the quarter - Total Cash, Cash Equivalents, Restricted Cash, and Marketable Securities: $565 million as of June 30, 2025, including $15 million of cash held in discontinued operations[12] - Operating Cash Flow: $26 million in the quarter[12] - Capital Expenditures: $11 million[12] - Free Cash Flow: $15 million (operating cash flow less capital expenditures)[12] Fiscal Year 2025 Guidance Azenta reiterated its full-year fiscal 2025 guidance, projecting organic revenue growth and significant Adjusted EBITDA margin expansion for continuing operations Guidance for Continuing Operations for Full Year Fiscal 2025 Azenta reiterated its full-year fiscal 2025 guidance for continuing operations, projecting organic revenue growth and significant Adjusted EBITDA margin expansion - Total Organic Revenue Growth: Expected to be in the range of 3% to 5% relative to fiscal 2024[12] - Adjusted EBITDA Margin Expansion: Expected to be approximately 300 basis points relative to fiscal 2024[12] - The company does not provide GAAP forward-looking guidance due to the inherent difficulty in forecasting various adjusting items without unreasonable effort[8] Company Overview & Forward-Looking Statements Azenta, a global leader in life sciences solutions, provides cold-chain sample management and multiomics services, with forward-looking statements subject to various risks About Azenta Life Sciences Azenta, Inc. is a global leader in life sciences solutions, providing cold-chain sample management and multiomics services to accelerate breakthroughs and therapies. The company serves top pharmaceutical, biotech, academic, and healthcare institutions worldwide through its industry-leading brands - Azenta, Inc. is a leading provider of life sciences solutions worldwide, enabling organizations to bring impactful breakthroughs and therapies to market faster[14] - Offers a full suite of reliable cold-chain sample management solutions and multiomics services across drug development, clinical research, and advanced cell therapies[14] - Serves top pharmaceutical, biotech, academic, and healthcare institutions globally through brands like GENEWIZ, FluidX, Ziath, 4titude, Limfinity, Freezer Pro, and Barkey[14] Safe Harbor Statement The report includes forward-looking statements that involve known and unknown risks and uncertainties, which could cause actual results to differ materially from expectations. Azenta disclaims any obligation to publicly update or revise these statements - Statements in the release are forward-looking and involve known and unknown risks and uncertainties that could cause actual financial and business results to differ materially from expectations[13] - Factors that could cause results to differ include global political and economic conditions, cost reduction effectiveness, market volatility, supply chain issues, price competition, and intellectual property disputes[13] - Azenta expressly disclaims any obligation to release publicly any updates or revisions to forward-looking statements[13] Consolidated Financial Statements Azenta's Q3 FY2025 financial statements show a net loss due to discontinued operations, a decrease in total assets, and increased operating cash flow for the nine-month period Consolidated Statements of Operations For the three months ended June 30, 2025, Azenta reported total revenue of $143.9 million, a slight decrease from the prior year. Gross profit increased, but a significant loss from discontinued operations led to a net loss of $52.8 million Consolidated Statements of Operations (Three Months Ended June 30) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Total Revenue | $143,942 | $144,292 | | Total Cost of Revenue | $76,182 | $78,814 | | Gross Profit | $67,760 | $65,478 | | Total Operating Expenses | $68,474 | $72,584 | | Operating Loss | $(714) | $(7,106) | | Income (Loss) from Continuing Operations | $680 | $(158) | | Loss from Discontinued Operations, net of tax | $(53,486) | $(6,424) | | Net Loss | $(52,806) | $(6,582) | | Diluted Net Loss Per Share | $(1.15) | $(0.12) | Consolidated Balance Sheets As of June 30, 2025, Azenta's total assets decreased to $2.02 billion from $2.10 billion at September 30, 2024. Current assets decreased, primarily due to lower short-term marketable securities and accounts receivable, while total liabilities saw a modest increase Consolidated Balance Sheets (as of) | Metric (in thousands) | June 30, 2025 | September 30, 2024 | | :-------------------- | :------------ | :----------------- | | Total Current Assets | $678,478 | $832,807 | | Total Assets | $2,019,135 | $2,100,041 | | Total Current Liabilities | $245,435 | $204,839 | | Total Liabilities | $345,501 | $331,074 | | Total Stockholders' Equity | $1,673,634 | $1,768,967 | Consolidated Statements of Cash Flows For the nine months ended June 30, 2025, net cash provided by operating activities significantly increased to $70.0 million from $32.2 million in the prior year. Investing activities resulted in a net cash outflow, while financing activities also used cash, leading to an overall decrease in cash and cash equivalents Consolidated Statements of Cash Flows (Nine Months Ended June 30) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Net Loss | $(106,602) | $(159,186) | | Net Cash Provided by Operating Activities | $70,011 | $32,151 | | Net Cash (Used in) Provided by Investing Activities | $(91,287) | $26,732 | | Net Cash Used in Financing Activities | $(10,408) | $(411,661) | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(27,174) | $(337,182) | | Cash, Cash Equivalents and Restricted Cash, End of Period | $293,816 | $346,863 | Non-GAAP Financial Measures Reconciliation Azenta provides non-GAAP reconciliations to offer a clearer view of operational performance, highlighting improvements in adjusted earnings and gross profit by excluding specific non-recurring items Notes on Non-GAAP Financial Measures Azenta supplements GAAP financial measures with non-GAAP measures to provide a clearer perspective on business operations, believing these are more comparable to peer analyses. These adjustments exclude items like amortization of intangibles, restructuring charges, M&A costs, transformation costs, and other non-recurring gains/charges - Non-GAAP financial measures are used to provide investors a better perspective on business operations, comparable to peer analyses, and are not a substitute for GAAP[23] - Adjustments to GAAP results include amortization of intangible assets, restructuring charges, purchase price accounting adjustments, M&A costs, non-recurring business transformation initiatives, and share repurchases[23] - Management also excludes special charges and gains such as impairment losses, gains/losses from asset sales, and certain tax benefits/charges not representative of normal operations[23] Non-GAAP Diluted EPS Reconciliation The reconciliation shows a significant positive adjustment from GAAP net income/loss to Non-GAAP adjusted net income for continuing operations, primarily driven by the exclusion of amortization, transformation costs, and restructuring charges. This resulted in a Non-GAAP Diluted EPS of $0.19 for Q3 FY2025 Non-GAAP Diluted EPS Reconciliation (Quarter Ended June 30, 2025) | Metric (in thousands, except per share) | June 30, 2025 | per diluted share | | :-------------------------------------- | :------------ | :---------------- | | Net income / loss from continuing operations | $680 | $0.01 | | Adjustments: | | | | Amortization of completed technology | $2,068 | $0.05 | | Amortization of other intangible assets | $4,123 | $0.09 | | Transformation costs | $1,542 | $0.03 | | Restructuring charges | $754 | $0.02 | | Tax effect of adjustments | $(742) | $(0.02) | | Non-GAAP adjusted net income from continuing operations | $8,521 | $0.19 | Non-GAAP Diluted EPS Reconciliation (Nine Months Ended June 30, 2025) | Metric (in thousands, except per share) | June 30, 2025 | per diluted share | | :-------------------------------------- | :------------ | :---------------- | | Net income / loss from continuing operations | $(26,926) | $(0.59) | | Adjustments: | | | | Amortization of completed technology | $5,876 | $0.13 | | Amortization of other intangible assets | $12,499 | $0.27 | | Transformation costs | $9,771 | $0.21 | | Restructuring charges | $4,765 | $0.10 | | Tax effect of adjustments | $748 | $0.02 | | Non-GAAP adjusted net income from continuing operations | $14,227 | $0.31 | Non-GAAP Adjusted EBITDA Reconciliation Adjusted EBITDA for continuing operations significantly improved, reaching $17.7 million for Q3 FY2025 and $45.3 million for the nine months ended June 30, 2025. This adjustment primarily excludes interest, taxes, depreciation, amortization, stock-based compensation, restructuring, and transformation costs Non-GAAP Adjusted EBITDA Reconciliation (Quarter Ended June 30) | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------- | :------------ | | GAAP net income / loss from continuing operations | $680 | $(18,185) | $(158) | | EBITDA - Continuing operations | $13,055 | $(1,065) | $7,296 | | Adjustments: | | | | | Stock-based compensation | $2,215 | $8,031 | $3,691 | | Restructuring charges | $754 | $3,580 | $1,701 | | Transformation costs | $1,542 | $5,183 | $1,174 | | Adjusted EBITDA - Continuing operations | $17,662 | $14,287 | $13,936 | Non-GAAP Adjusted EBITDA Reconciliation (Nine Months Ended June 30) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | GAAP net income / loss from continuing operations | $(26,926) | $(23,552) | | EBITDA - Continuing operations | $15,391 | $(3,651) | | Adjustments: | | | | Stock-based compensation | $15,119 | $12,102 | | Restructuring charges | $4,765 | $5,915 | | Transformation costs | $9,771 | $5,310 | | Adjusted EBITDA - Continuing operations | $45,270 | $29,155 | Non-GAAP Adjusted Gross Profit Reconciliation Non-GAAP adjusted gross profit and margin showed consistent improvement across both the quarter and nine-month periods, driven by adjustments for amortization of completed technology and minor transformation costs. This indicates enhanced operational efficiency and favorable sales mix Non-GAAP Adjusted Gross Profit Reconciliation (Quarter Ended June 30) | Metric (in thousands) | June 30, 2025 | % | March 31, 2025 | % | June 30, 2024 | % | | :-------------------- | :------------ | :---- | :------------- | :---- | :------------ | :---- | | GAAP gross profit | $67,760 | 47.1% | $65,886 | 45.9% | $65,478 | 45.4% | | Adjustments: | | | | | | | | Amortization of completed technology | $2,068 | 1.4% | $2,308 | 1.6% | $2,047 | 1.4% | | Non-GAAP adjusted gross profit | $69,853 | 48.5% | $68,185 | 47.5% | $67,399 | 46.7% | Non-GAAP Adjusted Gross Profit Reconciliation (Nine Months Ended June 30) | Metric (in thousands) | June 30, 2025 | % | June 30, 2024 | % | | :-------------------- | :------------ | :---- | :------------ | :---- | | GAAP gross profit | $202,317 | 46.5% | $187,885 | 44.5% | | Adjustments: | | | | | | Amortization of completed technology | $5,876 | 1.4% | $5,970 | 1.4% | | Non-GAAP adjusted gross profit | $208,270 | 47.9% | $194,087 | 46.0% | Non-GAAP Adjusted Operating Income (Loss) Reconciliation Non-GAAP adjusted operating income for total segments showed a positive trend, reaching $7.9 million for Q3 FY2025, a significant improvement from the GAAP operating loss. This was achieved by adjusting for amortization, transformation costs, and restructuring charges, reflecting the company's operational turnaround Non-GAAP Adjusted Operating Income (Loss) Reconciliation (Quarter Ended June 30, 2025) | Metric (in thousands) | Sample Management Solutions | Multiomics | Total Segments | Corporate | Total | | :-------------------- | :-------------------------- | :--------- | :------------- | :-------- | :---- | | GAAP operating income (loss) | $9,834 | $(4,191) | $5,643 | $(6,357) | $(714) | | Adjustments: | | | | | | | Amortization of completed technology | $1,208 | $860 | $2,068 | — | $2,068 | | Amortization of other intangible assets | — | — | — | $4,123 | $4,123 | | Transformation costs | $168 | — | $168 | $1,374 | $1,542 | | Restructuring charges | — | — | — | $754 | $754 | | Non-GAAP adjusted operating income (loss) | $11,248 | $(3,331) | $7,917 | $(46) | $7,871 | Non-GAAP Adjusted Operating Income (Loss) Reconciliation (Nine Months Ended June 30, 2025) | Metric (in thousands) | Sample Management Solutions | Multiomics | Total Segments | Corporate | Total | | :-------------------- | :-------------------------- | :--------- | :------------- | :-------- | :---- | | GAAP operating income (loss) | $11,963 | $(13,710) | $(1,747) | $(26,471) | $(28,218) | | Adjustments: | | | | | | | Amortization of completed technology | $3,296 | $2,580 | $5,876 | — | $5,876 | | Amortization of other intangible assets | — | — | — | $12,499 | $12,499 | | Transformation costs | $2,877 | — | $2,877 | $6,894 | $9,771 | | Restructuring charges | — | — | — | $4,765 | $4,765 | | Non-GAAP adjusted operating income (loss) | $18,177 | $(11,127) | $7,050 | $(10) | $7,050 | Organic Revenue Reconciliation Organic revenue for Q3 FY2025 declined by 2% for Azenta Total, with Sample Management Solutions seeing a 6% organic decline and Multiomics achieving 3% organic growth. For the nine months, total organic revenue grew 3% Organic Revenue Reconciliation (Quarter Ended June 30) | Metric (in millions) | Sample Management Solutions (2025) | Sample Management Solutions (2024) | Change | Multiomics (2025) | Multiomics (2024) | Change | Azenta Total (2025) | Azenta Total (2024) | Change | | :------------------- | :--------------------------------- | :--------------------------------- | :----- | :---------------- | :---------------- | :----- | :------------------ | :------------------ | :----- | | Revenue | $78 | $81 | (4)% | $66 | $64 | 4% | $144 | $144 | (0)% | | Currency exchange rates | $(2) | — | (2)% | $(1) | — | (1)% | $(2) | — | (2)% | | Organic revenue | $76 | $81 | (6)% | $65 | $64 | 3% | $142 | $144 | (2)% | Organic Revenue Reconciliation (Nine Months Ended June 30) | Metric (in millions) | Sample Management Solutions (2025) | Sample Management Solutions (2024) | Change | Multiomics (2025) | Multiomics (2024) | Change | Azenta Total (2025) | Azenta Total (2024) | Change | | :------------------- | :--------------------------------- | :--------------------------------- | :----- | :---------------- | :---------------- | :----- | :------------------ | :------------------ | :----- | | Revenue | $239 | $234 | 2% | $196 | $189 | 4% | $435 | $422 | 3% | | Currency exchange rates | $(1) | — | (1)% | $(0) | — | (0)% | $(2) | — | (0)% | | Organic revenue | $237 | $234 | 2% | $196 | $189 | 4% | $433 | $422 | 3% |