Twist Bioscience(TWST) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q1 increased to $103.7 million, representing a growth of 17% year-over-year and approximately 5% sequentially [21] - Gross margin improved to 52.0%, an increase of approximately four margin points compared to Q1 of Fiscal 2025 [21][25] - Adjusted EBITDA loss was approximately $13.4 million, an improvement of about $2.8 million versus Q1 of Fiscal 2025 [25] Business Line Data and Key Metrics Changes - DNA synthesis and protein solutions revenue rose to $51.1 million, a growth of 27% year-over-year, driven by demand from customers pursuing AI-enabled discovery [21] - NGS applications revenue grew to approximately $52.6 million, with an 18% year-over-year growth when excluding one large customer [21] - Revenue from therapeutics increased to approximately $37.2 million, reflecting a 39% increase year-over-year [22] Market Data and Key Metrics Changes - Americas revenue increased to approximately $58.4 million, a growth of 9% year-over-year [22] - AMEA revenue rose to approximately $38.4 million, a growth of 36% year-over-year [22] - Global supply partner revenue increased by 50% to $12.8 million, driven by new partnerships and growth in diagnostics OEM partners [24] Company Strategy and Development Direction - The company aims to leverage its semiconductor-based DNA synthesis platform to enhance speed, scale, quality, and affordability for customers [6] - The estimated serviceable market has expanded from approximately $2 billion in 2020 to roughly $7 billion today, with expectations to exceed $12 billion by 2030 [8] - The company is focused on disciplined product innovation and expanding its addressable markets while maintaining margin discipline and capital efficiency [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching Adjusted EBITDA break-even by Q4 of Fiscal 2026, supported by consistent revenue growth and disciplined investment in operating expenses [29][30] - The company is well-positioned to capitalize on the growing demand for AI-enabled drug discovery and precision diagnostics [30] - Management noted that the growth is driven by a repeatable model and operational execution that scales efficiently [28] Other Important Information - The company plans to host an investor day in May to provide deeper insights into its strategy, product roadmap, and market expansion opportunities [30] - The company has made targeted investments in commercial teams and digital infrastructure to support growth [11][52] Q&A Session Summary Question: Demand for AI-driven discovery and its duration - Management noted that demand is expected to be durable, with customers returning for larger orders and the potential for AI to become the first pass in drug discovery [34] Question: Increased guidance confidence for DNA synthesis and NGS - Management indicated that confidence comes from overall strong performance across the board, with a specific customer dynamic in NGS applications having improved [39] Question: Gross margin expectations for Q2 and beyond - Management expects continued improvements in gross margin throughout the year, but at a moderated pace due to ongoing investments in capacity and automation [48] Question: Strategic investments made in the quarter - Investments were made in hiring sales and commercial personnel, as well as transient investments in digital infrastructure to enhance e-commerce capabilities [52] Question: New partnerships in the diagnostic space - Management is actively working on securing new partnerships for sustained growth in 2027 and beyond, while current growth in 2026 will primarily come from existing partners [58]