Q1 2023 Twist Bioscience Corp Earnings Call
Speaker 2: Thank you, operator. Good morning, everyone. I would like to thank all of you for joining us today for the Twist Bioscience Conference call to review our fiscal 2023 risk-quarter financial results and business progress. We issued our financial results release this morning, which is available at our website at www.twistbioscience.com.
Speaker 3: With me on today's caller, Dr. Emily LeProust, CEO and co-founder of Twist, and Jim Thorburn, CFO of Twist.
Speaker 4: Emily will begin with a review of our recent progress on twist businesses. She will report on our financial and operational performance. Emily will come back to discuss our upcoming milestones and directions, and then we'll open the call for questions. We would ask that you limit your questions to a maximum of two, and then re-cure the courtesy to others on the call.
Speaker 5: As a reminder, this call is being recorded. The audio portion will be archived in the investor section of our website and will be available for two weeks. OK, few minutes left to pace, folks.
Speaker 6: During today's presentation, we will be making forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance.
Speaker 7: Our expectations and beliefs regarding these matters may not materialize in actual results in some ageal periods or subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, as well as those more fully described in our filings with the Securities and Exchange Commission.
Speaker 8: The forward-looking statements in this presentation are based on information available to us as of the date hereof and we disclaim any obligation to update any forward-looking statements except as required by law.
Speaker 9: With that, I will now turn the call over to our chief executive officer and co-founder, Dr. Ameline LaProust.
Speaker 10: Thank you Angela and good morning everyone. For the first quarter of fiscal 23, we reported revenues of 54.2 million dollars consistent with our guidance shared on our fiscal year and calendar and we posted strong orders of 68.7 million dollars.
Speaker 11: What we saw the first quarter across InBio and NGS is the story of an expanding customer base making up for a larger percentage of our revenue, meaning that we are landing more customers with an increasing potential to extend within existing accounts.
Speaker 12: Beginning with Symbio, we reported revenues of 21.7 million dollars above our guidance of 21 million dollars. In addition, we reported all those of 26.6 million dollars. We continue to ship our chronologies, starting at 10 p.m. in a day. Gene Freeman and Oligo Pools in S-US 5 days.
Speaker 13: and we see this consistent runtime benefiting our expanding share of the DNA bias market.
Speaker 14: We shift ourselves, revered, and generating products out of the future of last week, which as we said previously means that we are now delivering the same products with a turnaround time equivalent to the 12,000 CISC, right.
Speaker 15: We shift origopools and gene primates from our Wilsonville site and leverage our low balance in software to strengthen others to the right rotation.
Speaker 16: And we expect to be in shipping chronology in next month.
Speaker 17: In addition, we'll be focused on decreasing turn-on time for clonal genes significantly, with the launch of our fast genes offering expected in this fall, which will enable us to tap into new markets, specifically with genomic just markets.
Speaker 18: We share our competitive advantage across all platforms during our future of the future visit at the end of November . We actually, every corner we make, build of our silicon platforms to manufacture a synthetic DNA at scale. This front-end proprietary advantage enables a significantly different viable cost profiles for twist, polygots.
Speaker 19: our margin. This cost profile enables us to continue to serve our customers as the low-cost, high-quality provider while still achieving a contribution margin of 65 to 70% for our In-Value products. In addition, a key component of our cost advantage is the scale we have built and continues to drive.
Speaker 20: Moving forward, we expect to continue to leverage this advantage to pursue the customers who currently make their own DNA because they need it faster, a group we call the DNA maker.
Speaker 21: We believe we will be able to command premium pricing for these games.
Speaker 22: To provide a bit more context around who makes the makers market, these are medical and academic research scientists who make their own DNA rather than buying. We know from the Bureau of Labor Statistics pure research that as of 2019, there were 270,000 of these scientists in the United States alone.
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Speaker 24: We believe the maker market is ripe for disruption with rapid DNA synthesis and a reasonable price offering.
Speaker 25: when the process of transit covering.
Speaker 26: to analyze the way to maximize margins for the start-scare app product.
Speaker 27: Genes are available today from competitors at a faster runtime, but their capacity is limited and the cost can be up to $1 per day which is cost prohibitive for most researchers.
Speaker 28: To draw an analogy of the market that has been disrupted in a similar way, it used to be used to create a GNA. It was a complicated process that required making butter and many time consuming steps. This market was disrupted by offering a kit that contained a ready-to-use confidence.
Speaker 29: to make the process simple and seamless. Initially, some scientists exited it to adopt based on price, but today these kits are used globally to glorify DNA.
Speaker 30: We see a direct parallel here in converting DNA makers into DNA buyers by applying similarly appealing products to DNA buyers. We see a direct parallel here in converting DNA buyers by applying similarly appealing
Speaker 31: All convert is?1iser
Speaker 32: Beyond phagene, we believe we have an opportunity to launch additional products out of our Wilsonville facility, including RNA, long-premium, and GMP DNA.
Moving to NGS, we will market revenue of $24.4 million just short of our gallons and others of $31.2 million for the quarter.
As we shared last quarter, we see another back-house through the year, with larger customers weathering in the last two quarters of our fiscal year.
As I explained, we saw a few key customers move orders out from December into the first calendar quarter. We remain confident in our field career guidance that NGOs will continue to grow substantially year over year.
We see this video is continuing to extend.
with new sequencing of her rings and game-changing technique roll application.
Our targeted solution leverages the higher degree of uniform humidity from our oligos. Therefore, our solution decreases the cost of samples for our customers and we are essentially selling a gross margin improvement.
We continue to work with the various existing and new sequencing companies as we are sequencing our own mistakes.
As the curse of sequencing comes down, we believe volumes will continue to increase, as we have seen over the last two decades. Importantly, we believe that for indications like oncology, where clinical applications, including liquid biopsy and minimal residual disease require deep sequencing.
Panel and exome sequencing will continue to be the mainstay.
And we see the reduction of sequencing cost driving reimbursement across key areas, encouraging access by a broader group of patients, which will create subsequent volume increases.
In addition, we continue to expand our COVID control offerings in new disease areas, as well as cancer, with our latest COVID control release during the quarter.
While we see consistent ordering, it is not material due to evolving nature of the pandemic.
As a related note, we do not plan to file a size 10k application for our SARS-CoV-2 panel that received emergency use authorization from the VA in 2021, as revenue was not material for this product.
We believe the opportunity across cancer continues to grow while COVID products are decelerating.
So by a farmer, we reverted 8.2 million dollars in revenue, a bit higher of all guidance, and 6.1 million dollars of orders. Of note, we find a multi-target agreement with Estelas, that was announced in January .
We are now focused on enabling our sales team to sell the integrative offering between our South San Francisco and Boston offices. In the one roof, we offer in vitro synthetic libraries, in vivo discovery and screening, and in silico lead optimization, candidate selection, and optimization with AI and machine bipedal.
We believe this author of a fully integrated database discovery engine was a guarantee from Onchome University and technology fueron.
As we are now operating as an integrated team, our total partners, active and competitive programs will include the historical adverts business.
As of December 31, 2022, we have served 278 partners, with 95 IT programs, and 63 of our programs as milestones and our royalties associated with the project.
In addition, we continue to advance many internal candidates through the early recovery stage and we have several entities that have reached a pre-clinical stage and are close of potential out licensing by biotech or FMA partner.
Turning to data storage, we continue development work on our first data storage system, which combines our proof-of-concept chip with the recently assembled proof-of-concept writer.
We have engineered a scalable N2N system to store data in DNA and are now writing software to coordinate all the steps required to code, right? So sequence N2N2N2 data. What's completed? We will begin to run the system in parallel production.
All of this work is in support of the release of early access to our first product, the Central Archive.
which we expect to be available towards the end of calendar year. With that, I'd like to turn the call over to Jim to talk through our financials. Jim
All right, thank you Emily. We had another strong quarter of execution at twist despite a volatile microeconomic environment. Revenue for quarter one was $54.2 million which is year over year growth of 29% and a sequential decline of 5%.
which is in line with our guidance of $54 million.
Orders were 64.7 million for the quarter, a sequential increase of 4% and 30% growth year over year. Gross margin for the quarter was 45.7% and we shipped to approximately 2100 customers. That's up from approximately 1800 customers in Quadrant 1 fiscal 22.
And we ended quarter one with cash investments for approximately 400 and debt to 9 million.
RNGS revenue for quarter one was 24.4, slightly below our guidance and 27% year-old year growth. As we know it is in our previous earnings call, we had a strong fourth quarter and a couple of our larger customers pushed shipments from December quarter into January .
and were negatively impacted by the COVID pandemic in China, which continues to impact return on revenue in the current quarter.
Our first quarter orders were 31.2 million, which is our record. The year represents sequential growth of 10% and 43% growth year over year.
This growth reflects the strength of our product portfolio, with the top 10 customers accounting for approximately 40% of our NGS revenue and we served approximately 600 NGS customers in fiscal quarter one.
Our pipeline for larger opportunities continues to scale and we're now tracking 264 accounts. And that's up from 257 noted in our last earnings call and 130 have now dropped to twist. And that's an increase from 121 last quarter.
Now turning to send file, which includes genes, DNA preps, IgG, libraries and all of theligh toothbrush files and all of those has been véhica?? I have motorised data on it
10 bio-revenue for the quarter was 21.7 million and that's exceeding our guidance and representing a year-over-year increase of approximately 21%.
Orders for the quarter were 26.6 million which represents 20% growth year over year.
Some of the highlights include shipping to approximately 1600 SYN Bio customers, which has grown from approximately 1270 in Q1 fiscal 2022.
The customer base, as Emily noted previously, includes biotech and large pharma companies.
genes revenue increased to 16.2 million and that's up from 13.5 million in the first quarter of fiscal 22 and that's year over year growth of approximately 20% and we shift 134,000 genes in the quarter and that's an increase of 7% year over year.
All of the goals and in our strong quarter with revenue of 3.7 million and demand came from primarily from the healthcare segment.
Now to buy a farmer, we continue to scale our antibody discovery business, buy a farmer revenue for the fiscal first quarter at 23 with 8.2 million and that's year-over-year growth of 70% and is consistent with our prior guidance.
Orders for the quarter were 6.9 million.
That's the quenched from 9.4 million in the fourth quarter.
Piafarma orders have been impacted by an overall weaker environment and we did not see the pharma Christmas in the quartiers we've seen in past years.
That's it.
We added four more milestone and royalty agreements, which brings the total up to 63 and that's up from the 59 We noted in the previous earnings call While Emily reported total biopharma metrics including historical at various agreements solely for the first quarter of fiscal 23
We had 95 active programs for the combined TWIST and the various antibody services.
I'll give a quick update in terms of breakdown by industry and a quick update in our regional progress. Healthcare for the first quarter was 30 million as compared to 21.1 million in the same period of fiscal 2022. The chemical revenue was 13.6 million in the first quarter.
of 23 as compared to 12.5 million in the first quarter of 22 and I today my revenue was 10 million in the first quarter of 23 compared to the first of 8 million in the same period of fiscal 22.
On a regional basis, EMEA revenue rose to 16.3 million in the first quarter of fiscal 23 compared to 15.4 million in Q1 fiscal 22.
As we noted earlier, the effect was negatively impacted by the COVID pandemic in China.
but had a slight increase in revenue to 4.3 million as compared to 4 million for the same period of fiscal 2022.
US, including America's revenue, increased to 33.6 million in the first quarter as compared to 22.6 million for the same period of 2022.
Now moving down to P&L, our gross margin for Portrait 1 was 45.7% with costs of revenue for the portrait of 29.4 million.
Cost of revenue does include 1.1 million, or stop-based compensation expenses and street million depreciation.
Now to operating expenses. Our operating expenses for the fiscal quarter including R&D
SG&E and change in fair value and mark-to-market adjustments of acquisitions were approximately 69.4 million as compared to 17.9 million in Q1 fiscal 22.
To break it down, R&D for the fiscal quarter was 31.2 million and that's an increase from 22.6 million in the same period, fiscal 22.
This doesn't include DNA story spend of 6.1 million and biopharmus spend of 7.7 million in the first quarter of fiscal 23.
The major contributors to the increased R&D spend were primarily increased compensation costs of 5 million associated with increased number of employees, which does include adding additional 12,000 data storage.
The appreciation for R&D in quarter-1 was approximately £1 million.
SG&A, Q1, includes approximately 18 million credit due to the combination of stock for features associated with departure employees and the release of an Arnand holdback as we determine that various missed Arnand-Ragnet-Hardole.
The VARES team came very close to achieving the RNN and we look forward to fully integrating the Boston team into a twist organization.
We remain very enthusiastic with the team and the potential opportunity for the combined of VRAS and TWIST organization.
Back to the future, pre-commercialization costs included in SG&E were 12.5 million in first quarter, which includes compensation costs of 4.3 million, material expenses of 4.7 million associated with pre-commercialization training activities.
Facilities and depreciation costs of $1.8 million as well as outside services of $1.2 million.
Stock-based compensation for the quarter was a credit of 2 million due to the aforementioned credits primarily associated with the bearish acquisition.
depreciation and amortization, the quarter was 5.8 million and catapults.
As Span in the quarter was approximately 12 million.
We will now cover our outlook for fiscal year 23. We continue to project fiscal 23 revenue to the range of $261 million to $269 million, including SINbio revenue of $104 to $106 million, NGS revenue $120 to $123 million.
and buy our formal revenue of £7-14 million.
and there has been no change to our revenue projections from our previous guidance given November .
For the second quarter of fiscal 23, went to state revenue of approximately 56.5 million, which breaks down as follows. So in via revenue of 24 million, sequential increased reflect in the higher orders, NGS revenue of 25 million, although orders were strong to approximately 31 million in 2-1
we see the beneficial impact of those orders translating into revenue in the second half of our fiscal year.
by a farmer revenue approximately $7.5 million, and this reflects the lower arduous with so in portrait one.
We anticipate cross-margin for the quarter to be approximately 30% as we bring on the cost associated with the Wilsonville Manufactured Facility.
As we scale our revenue in the second half of fiscal 23, we are projecting our gross margin to be 39-40% for the year, which is in line with the guidance provided in our previous earnings calls. We decreased our operating expense guidance for the year to approximate 330 million as compared to previous guidance of 365 million.
primarily to reflect the expected reduction of stock-based compensation.
We are now projecting R&D expense of $130 million as compared to $138 million in our previous guidance.
With SPAP SGA, the expense of 204 million, and that's a decrease from our previous value of 227 million, primarily due to the impact of lower stock-based compensation, market market is protected by a credit of 4 million for the year.
Depreciation and amortization is projected to be approximately 29 million. Under projection for stock-based compensation, the decline from 83 to 50 million for fiscal 23 due to the combination of the aforementioned credits. In addition, we reduced the number of projected shares, granted to our investors and ploys to approximately 1 million stock awards.
guidance we provided in November . In summary, we are robust starts to our fiscal year with record orders and quarter one. We shipped our initial commercial products from the factory future in January and we're focusing on scaling our business to achieve a just ebit.
break even in our core and our pharma businesses. And with that, I'll turn the call back to Emily.
Thank you, Jim. In November , we outlined our two-year plan to adjust the Invisi break-even for our core business, and this remains our focus. When we see the front-shoulder feedback that achieving profitability is top of mind.
This fits with the operating plan that we have been executing in the past few years.
Working toward this objective in Synbio, we will ramp our manufacturing capabilities in Wilson Means, Oregon to increase revenue out of our factory of the future, building on our first shipment at the end of January . Looking toward the full timeframe, we expect to bring down our current time and offer fast-gene products for all of our customers and expand our commercialization efforts into the maker's market.
For NGS, we expect continuous expansion of our customer base, as well as the few last system of generating revenue in the back half of the fiscal year. In addition, we are looking towards RNA workflows through the Matau DNA workflows with a consistent for use on owning the workflow between the sample and the sequencer.
In Biopharma, we are beginning to offer an integrated portfolio of antibody discovery and optimization services, capitalizing on efficiencies between our in vitro, in vivo and in silico approaches. In data storage, we are making good progress to bring up the chip and our new pilot production DNA data storage writer.
We plan to launch our Fantuer Actiles solution as an early access offering in lead Canada 2020. In parallel, we will continue to seek to partner with leaders to set the stage for commercial success while preparing the market for DNA test storage.
We remain extremely excited about our opportunities ahead and look forward to keeping your praise of our progress.
With that, let's open the call for questions. O sometime until lunch.
As a reminder, to ask a question, please press star 11. If your question hasn't answered or you wish to remove yourself in the queue, please press star 11 again. One moment for questions.
And our first question comes from Steve Ma with Cohen. Your line is open.
Great, thanks and thanks for taking the questions.
My first question is
on the TNA makers, you know, and there's analogy within this prep.
you know this thing that people started branching out into but you know given that you know the 270,000 commercial I think a lot part of them are going to be academics you know which have cheaper like grads to labor. Give us a sense of how you're gonna add.
this market to try to find the price to get the adoption in this academic market and give us a sense of how long it will take for this discovery.
Thank you, Steve. Your line was a bit choppy, but thank you. You're asking for the 270,000 gene makers, those that are in academia, how we do the price discovery. So, and how we will convert them. So, two things that I'll share. One, I'm going to share today is a dynamical example of exactly what I talked about earlier, about working across
In the past, we had a uniform pricing at twist for academia and industry, meaning that we did a differentiating pricing between those two groups. We recently started to differentiate a little bit.
And I expect that for a fast gene, there probably would be a different price. There possibly could be a different price for academia versus industry, just to account for the value of the product to those two different groups.
That's number one. And number two, what we've been doing for multiple years now is we've been supporting iGEM. iGEM is a group and every year they do a competition with thousands of students.
where they apply synthetic biology and in the past iGEM teams had to do their own cloning, you know, they'll get parts and they'll do Gibson assembly and mutagenesis and we've given I think 20,000
basis to every every iGEM team for the last few years and our goal is to you know get the best and brightest students early on get them used to not clone anymore and and it will take some time but we think that
Similarly, right now in academia, nobody does their own prep reasons. They all use kits. I think over time we can drive the same transformation. So we'll be full of surprise. And we've been already working in changing the frame of mind.
that you just don't close just so much easier to, and faster to get the plume from companies like us.
Okay got it. I appreciate that. And the next question on gross margins, this question for Jim. So yeah the gross margins in the quarter was maybe a bit lower than we expected. Can you give us some color on that and then also some color on the gross margin recovery in fiscal year 24.
to 30% this quarter as we bring on the cost associated with Factory Future. As we scale the business and you've touched on the makers market, it's a huge opportunity for us, $1.4 already seen strong sin bio growth over this last year.
The orders were good in the first quarter records. We feel good about the growth in the second half. First half revenue is about 40 odd percent of the business, which is in line with previous years. So we can see growth in the second half.
driven by continued growth in bio, NGS, pharma, pharma picking up. We feel good about the 261 to 269 and as we continue to scale we see cross margins this year consistently previous forecast in 39 to...
40% in next year as we continue to scale the business we see cross margins and the range of 49% as we've highlighted below. And that's that's driven by executing and scaling the factory future leveraging our fixed costs and continuing to...
to do well in terms of expanding our customer base. Okay, thanks for the color and apologies for the bad line. I'll get back in the queue. Thanks. Okay.
Thank you. Our next question comes from Matt Sykes with Goldman Sachs. Your line is open.
Hi, this is Evie Kozlowski on for Matt. I realize that you just started shipping commercially from Factory of the Future, and you've talked about FastGene being launched in the fall of this year. Could you talk about how you've been able to break into the gene makers market prior to that launch, or will the launch be an inflection point for getting into that market?
Great question.
getting into the maker market a little bit over the last few years with our long long So with what we know is that Compute them by short jeans and then they assemble themselves the shortening to long jeans So the buy short jeans with their makers of long jeans
And when we have heard our long-chain notarring, it's very fast, very cost effective, and some of our revenue growth comes from us converting some long-chain makers. So we are a little bit in the DNA makers market.
but we do miss the speed, which means that as you pointed out, when we are passing, that's when we should see an inflection point.
Okay, great, that's helpful. And then, what do you think the potential gross margin uplift is for fasting this year? Will it ramp enough for us to see it come through in 23 or will that mostly come in next year?
Overall, we see our gross margins. So gross margins in Q1 are just under 46%. This quarter, we see gross margins 30%. We're launching our fast genes in the fall of this year. So overall, this year gross margins in the range is actually 90-40%.
And as fastgames pick up next year, we continue to scale our manufacturing operations. We'll leverage fixed costs and that's primarily going to be driven by volume and success of fastgames. So that kicks in in FY24.
Okay, great. Thank you.
Thank you. Our next question comes from Sung Ji Nam with Scotiabank. Your line is open.
Hi, thanks for taking the questions. Just to have a couple of high-level and market trend questions, maybe starting with Biopharma. I was wondering, you know, obviously solid growth there, kind of expecting a bit more muted, I think.
growth for the next quarter and was wondering if you might be able to call out the trends you're seeing in the near term, if there are any kind of differentiated trends across different segments within biopharma and also if you expect the weakness to be...
from the COVID situation. And if you might be able to kind of compare whether that has materially worsened in the current quarter versus what you were seeing last quarter, there's also any additional color that would be very helpful. Thank you.
Thank you, thank you, Sanji. Maybe I'll enter the first question and Jim will cover the second question on the global markets. So in terms of by a format of some of the trends we are seeing is definitely some of our customers have some funding headwinds.
some other very big companies and maybe less. For the companies that have found something headwinds, I think it is an opportunity for us. It may take time to add them to it, but what we offer is more shots on goal and so we basically extend their budget. So I think our
are offering it very well suited for them. The other trend we see is that people maybe spend a little bit
In the balance of the budget, maybe there is a bit less of a front discovery and maybe there are balancing more to a later stage work, which means that maybe they will do 10 discovery project a year and maybe they're shrinking to 8 or all.
We are barely penetrated into the market. If we just get one project or two projects, it's a win for us. It's not necessarily a big issue, but something that we are seeing.
And so I think in general we are stepping back and relying on the strength of our platform. And our platform is really best in class. We have InVivo, InSilico. And last year we were playing a little bit with one arm tied behind our bag because we were trying to let the other team.
being as independent as possible to make their own out. But now we can integrate. We can have one team. We can have one product offering. I think that the integration of those three in between Devoid and Silico is very powerful.
very powerful offering that will enable us to get more than our fair share in the market, even though the market in general is experiencing some headwinds from a farmer.
Do you want to take the second question? Yeah, so in terms of China, I actually met with the China team last couple of weeks. So it was interesting. China's impacted in the first quarter, i.e. December quarter to November .
impacted by the lockdowns. Then obviously China opened up and then the companies were impacted by COVID. That's extended into January , February . China's sales in Q1 declined to approximately just over 1.4 million.
We see modest pickup in the second quarter, which is March. Then we see significant pickup as things normalize in the last half of the year. If you look at our revenue, you see our first half revenue is about...
42% to be over all year. You see China having a modest impact on that plus overall. We're seeing some large NGS customers coming in second half of the year. So overall, we're doing well in China. We've had an increased, we've increased our leadership.
China and Hans Sturt leadership and we continue to win in good accounts in China and we're well positioned as the economy starts to normalize there and up after as they're dealing with COVID.
In terms of Europe , Europe was up year over year. The December quarter is always a tricky one because of the vacations. It continues to be strong in Europe and we see good opportunities.
in Biopharma. We continue to make endroids with their symbiopropole in Europe . NGS is looking good. You've seen some announcements there. And you know, back to why we're winning, it's strength with portfolio. And we're excited about launching the factory future. I think that gives us great opportunities to engage with...
some of our larger customers and positions as well for next year.
larger customers and positions as well for next year. Great, thank you so much. All right.
Thank you. Our next question comes from Luke Sergut with Barclays. Your line is open.
Great, thanks for the time here. Good morning everybody. So a couple here for me. Jim, can you just talk about the strength, or, and Emily, the strength that you guys had on gross margin in the first quarter? Usually expected like some type of seasonal step down, but this came in well above I think everybody what they were looking for.
Part of this is driven by the growth, part of it is driven by the mix and this focus on expanding our soon bio footprints as well. You're absolutely right, bring fixed costs on in Q2, margin dips down to 30%. Then as we scale in Q3, Q4, we see the gross margin for the year in the range of 39 to 40%. And then lastly on the bookings, you guys had a really big step up there. Can you talk about what you were seeing from, is that a lot of the biopharma? Because I saw your active program step up really meaningfully. I'm just trying to get the sense of the cadence of the different segments and how they're going to roll on through the rest of the year.
And what's driving that is performance, turnaround time, customer experience, the ability to scale and deliver a great value. So if you look at the value proposition, NGS gives our customers significant reduction in sequencing. A number of larger customers continue to scale. We keep getting adopted into new assets in terms of the symbiote.
or springboard for going after the makers market. So I would say we're executing according to the strategy. Great yeah it's gonna be interesting to watch. Thanks!
Thank you. Our next question comes from Matt LaRue with William Blair. Your line is open. Hi, good morning. The price for gene has increased meaningfully here over the last four quarters, even more so than.
What's been a nice trend line of the last few years? Can I just walk through what the key drivers of that increase has been? I think Jim just mentioned IGG out of nice quarters. What many of the key drivers are at O's? Fast genes, which I assume will push that trend lighting in higher.
last few years. Can I just walk through what the key drivers of that increase has been? I think Jim just mentioned IgG at a nice quarter, but what are some of the key drivers are ahead of TRAS genes, which I assume will push that trend lighting in higher? Yeah.
Maybe I'll start. Thanks so much for your question. I really like looking at at price margin but sometimes we have to be a little bit careful. You can make a good story either way. So what happens is
Our short jeans are priced at 9 cents per day, our long jeans are priced at 15 cents per day. And so when we penetrate more into the the makers market where they buy long jeans instead of buying short jeans then
the ASP goes up because now it's 15 cents per day and it's a long gene so the ASP per gene goes up. So from that point of view that's a great story that's good. At the same time when we're doing really well in biopharma the average gene size goes down because antibody genes are...
And then in addition to that we have been pushing price increases a little bit. And so on NGS we did our second annual price increase in January and then in In Symbio we increased prices.
the last summer, so there's a little bit of benefit from that as well.
Okay, thank you. And then as you work towards fasten in the back half, just remind us what else is required on your end to get those on the market. I think particularly you mentioned.
software and training on that software but just kind of get us from here to there. No, no great question. So yes there's a couple things. So first of all we need to be able to make fast genes and so we developed, designed...
the factor of the future to be able to do it. And so we have the instrument in place. And so the instrument in place and the current software enable us to make genes that are the same speed as what we do in SAS and Cisco. And then there's a few more software components. We need to deliver.
and training of the team to have the factory be able to make genes faster.
So that's step one step two we need to have an e-commerce that is adapted to be able to price and book orders for slow-versus-faging and there's a big effort on the customer experience
If people can't afford fast genes, we don't want them to feel dead. At the same time, if we want to make it like the Apple website where, you know, you don't know why but there's money coming out of your wallet and people are incentivized to choose the fast genes. So there is quite a bit of e-commerce.
So, to design that needs to happen, so it's beautiful, frictionless and intuitive. And then the last piece is continue to develop and enhance our digital marketing engine. A lot of the fashion systems, the 270,000 customers, were not going to send an account manager.
to a lab in a university is just not cost effective. And so we need to reach those customers through a digital approach. And there's multiple ways to do that, being at conferences, being part of iGEM, so TWiST is already.
part of the mindset. But the goal is through the digital teams, get people on the Twiis website, get them onto the e-commerce. I have a touchless order where...
no human interaction and then add it ships ship to them in a way that's again frictionless. So those are the components that we are still refining. A lot of software basically. Okay, thanks, I'm I.
Thank you. Our next question comes from VJ Kumar with Evercore. Your line is open.
Hey guys, thanks for taking my question. Emily, maybe my first question is on the said guidance and revenue assumptions and I look at your order of growth here 30% in Q1. In a second quarter revenue guidance that's 17%
Is there something going on on the macro front, and apologies if you've commented on this, was there any China impact or, and I know in the past we've spoken about share gains in gene synthesis, is that still going on? And when I look at that quarter number of 65 million, that annualizes to about 260 million, which is roughly our revenue.
The first quarter is 30% above Q1 last year, which 30% is about the growth that we anticipate delivering this year. We've mentioned that it would be a back health load.
have. So, you know, that's what we, that's the business we've been living in. And the market is there, we have a great technology, we have a sales team that is extremely aggressive and great product. So I think the bases are loaded, but we have to execute.
and deliver what we said we would. And on GMM, I don't know if there's anything else to add.
I think, so Vijay, you are correct. Overall strong orders in the first quarter. I mean, particularly in NGS, we saw a number of larger customers come in, place larger orders, get in as well positioned for the second half.
I did mention China earlier on the call, so I'll give you the clips and let's see China. October and November , impacted by lockdown, China was down to quenchedulate from our September quarter to December . As the economy opened up, people got COVID, most times.
through we see pickup in the second half. In China last year, it's been in perspective for about seven million even with the first half impact in COVID we still see a pickup in China too but nine million this year. In overall, happy with the bookings and there's more opportunity for us as Emily's highlighted.
commercial organization. I've got top quotas to meet this year. They're aggressively going after that and we keep building our number of customers. We're getting a lot of interest in terms of factory future and our focus to execute.
and continue to deliver in terms of our top line and focus on getting to the core business to adjust DEBA to breakeven at 300 and then continue to focus on GrowPharma and get that to adjust DEBA to breakeven as well.
And just maybe one more, Jim, for you on...
The second half, Kate, is both on revenues and growth margins, right? I think from a revenue perspective, I'm looking at perhaps sub 25% in the first half. That would imply well north of 30% right above your annual guidance. What is your...
Like you're comps get harder in second half. What is driving that acceleration? And the same goes for gross margin, right? I think your first half implied is around 37, 38. You need to hit about 40% in back half. What is driving this back half? Strength in both from a revenue growth perspective in gross margins.
Yeah, so to touch on it, I touched on a little bit with the question. Our bookings in the first quarter, our orders for the first quarter were approximately 65 million. You saw the pickup in terms of NGS. So NGS is driving the...
the overall growth in the second half. You look at NGS first half, it's about 50 million in terms of revenue. So the growth in the second half, it's roughly 120 million, 70 million. So what's priming that? You can see there that the arduous and Q1 for NGS were...
and excess of $30 million. We see, continues to see on SinBio, we see sequential pickup in SinBio, was driving that number of customers, continued to deliver from a performance point of view. The team in San Francisco had done a fantastic job in terms of a press release in turnaround time, and that's being well received in the market. So it's so spectacular.
commercially operational. It is exciting that we actually shipped our first product. The focus is execution. It's going up to the maker's market, 1.4 billion opportunities. The pipeline for NGS continues to scale. The number of wins in ICES continues to scale.
It's more of execution. Obviously, there are some new products impacting us as well. We continue to gain share in a growing market. Thank you.
Our next question comes from Puneet Sudha with SDB Securities. Your line is open. Hi, Emily Jim. Thanks for taking the question. So just following up on the NGS side, obviously booked to bill higher, but could you elaborate is this more on the pickup in the second half pickup on the NGS is more R U O driven or more of the liquid biopsy customer demand?
in volume in the context of NGS and given the sort of the fixed cost that you have now and the 30 percent gross margin that you have for the next quarter. I can start, Emily. So let me just address the 30 percent gross margin this quarter, cause it will be the 6.4 billion.
That's primarily driven by the fixed cost coming, coming online in the factory future. I mean, we're scaling the factory future this quarter. So we're given updates in terms of the volumes, in terms of products going through factory future in the next earnings call. But...
We're commercially bringing it on fixed costs to come on. So we've got an under-retrovery. And that then the consequence of that is our gross margin dips to 30%. Then as we scale the volume and second Q3, Q4, we'll see our gross margin.
provide revenue in excess of $250,000 a year, that's continued to scale. We're now tracking approximately 264 of them. That's scaled from less than 100 about 18 months ago. We continue to run in terms of assets.
And as we continue to win in terms of asses, we see the impact in terms of bookings, placing orders, we continue to gain share. That's what's picking up. We see the pickup in the second half of this year. So we're well positioned for a strong second-top NGS and NGS.
And lastly, I appreciate the comments on the makers market. Maybe Emily, just wanted to understand, academic customers, sure, large number of them out there but more price sensitive. So wondering what's your expectation on both the pricing of the product there and the quality of products.
for academia and it's the same product for academia and companies and we break the revenues for academia and companies for the entire companies but not for NGS.
But I think we would say in the past that the majority of our NGS revenues are around a clinical product.
And on the smaller biotechs, are you seeing any of that in the quarter? And currently, are you seeing any impact? Some of the few peers had commented around weakness in the REO segment for reagents.
Yeah, no, I don't think we have any specific comment on REO versus clinical.
know I don't think we have any specific comment around REO versus clinical. Thank you. Thank you.
Thank you. Our next question comes from Rachel Vattenstall with JPM. Your line is open.
First, if I could just potentially get a little additional clarity here. As it relates to NGS, you mentioned that there is an annual price increase that you pushed through in January . Could we get a little commentary?
regarding the pricing strategy here. How did you see orders trend in NGS pre-price increase versus post-price increase? And then I have one more, thank you so much. Yeah, I think we tried to price on value. And I think there's another funding that.
quite well received.
Awesome, thanks so much. And then just regarding the data storage offering, you know, you've partnered with some big tech giants to bring DNA data storage into existence. Can you talk about conversations you've had with these partners in recent weeks as we've seen some of the tech industry starting to tighten their belts around investments relating to non-core businesses?
and do some layoffs. So, how do you expect to push the adoption curve of DNA storage or what have you been hearing from your customers regarding timelines for adoption there? Thanks so much. Yeah, that's a very, very good question. I think the data storage we've over the last several years.
We made a concerted effort in creating an industry. And so it's not just us, but we've created the DNA Data Storage Alliance, the Alliance got into sneer. Now you have data storage conference where on their own, they are putting a DNA Data Storage track.
And so in the industry, it used to be, when I would talk to data storage customers, they would say, oh, I've never heard of storing in DNA. And then it moved to, oh, I've heard about storing DNA, but I don't believe it. And now it's, oh yeah, I've heard about the storage in DNA, where can I buy it? And so there's definitely,
stirring in DNA-sticking mindshare because they search a need for deep archives where tape and hard drive are just not well suited. And so I think it's becoming, in my view, an inevitability just because there is such a strong need on the archiving market to get something that is better.
than tape and hard drive because people just don't like it. Awesome, thanks so much. Thank you. There are no further questions. I'd like to turn the call back over to Emily Laprous for closing remarks. Thank you very much for joining us today. I apologize for running a few minutes late and we're looking forward to seeing you at LGBT next week in the current healthcare.