Q4 2023 Twist Bioscience Corp Earnings Call
Welcome to twist Biosciences fiscal 2023 fourth quarter financial results conference call at this time.
Listen only mode.
Later, we will conduct a question answer session and instructions will be given at that time.
Please be advised that this call is being recorded.
I would like to turn the conference call over to Angela bidding Senior Vice President Corporate Affairs, and Chief ESG Officer.
Thank you operator, and good morning, everyone I'd like to thank all of you for joining us today for twist Biosciences Conference call to review, our fiscal 2023 fourth quarter and full year financial results and business progress we issued our financial results released this morning, which is available at our website at www Dot twist.
Bioscience Dot com.
On today's call are Dr. Emily <unk>, CEO and co founder of twist and Jim Thorburn CFO of twist, Emily will begin with a review of our recent progress and Jim will report on our financial and operational performance and when they will come back to discuss our upcoming milestones and direction. We will then open the call for questions. We would ask that you read.
And at your questions to only one and then re queue as a courtesy to others on the call.
As a reminder, this call is being recorded the audio portion will be archived in the investors section of our website and will be available for two weeks during.
During today's presentation, we will make 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.
Our expectations and beliefs regarding these matters may not materialize and actual results in financial periods are 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.
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.
With that I will now turn the call over to our Chief Executive Officer Doctor ethylene occurs.
Thank you Angela and.
Good morning, everyone. She could 2023, while the yield growth and strong execution for twist, we grew our business with revenues, increasing 20% year over year.
We completed integration of our Biopharma group, and we implemented strategic action to align our cost structure.
And at optimizing our operations with a clear focus on increasing gross margin alone all accelerated path to profitability.
Did you know best in class innovation to set the stage for near and long term success and now <unk>.
<unk> is on profitable and scalable growth moving to fiscal 'twenty 'twenty four and beyond.
Getting into the specifics for the fourth quarter, we grew revenue to $66 nine Handoffs and $245 1 million. There also are.
Full year exceeding our updated guidance for.
For the quarter and the year our.
Gross margin was approximately 37% for both the quota and the yield and we ended the year with approximately $336 million of cash cash equivalents and investment.
Across the business.
First over the last 24 months in building the Wilsonville facility, extending our production line and streamlining workflows are now benefiting both our <unk> LNG is for our clients to allow us to deliver though with our kitchen as need be.
Victor in Wilsonville, we've analyzed each process.
Workflow remove excess time and approach that that shows that we are able to turn genes, Iran. In six business days consistently.
This is an incredible feat and one that required all hands on deck to optimize every process and procedure.
This robust workflow now allows us to make more snow products in less than half the time, we couldn't even one year ago.
On Tuesday, we launched expertise what we previously called <unk>. This is the first product that will directly benefit from and that has been made possible by the time, an infrastructure investment Wilsonville facility, who has expressed gene we have the opportunity to increase contribution margin for the sym bio product group as well.
As our overarching growth margin.
Alex note four important things are the launch of expirations impacts our business.
This is al Clonal gene service, our bread and butter of the sundial products about half of a clonal genes audio qualify for this extra <unk> services today with an eye towards extending the maturity of Kronos is audio that moving forward. The genes that do not qualify for express service, we continue to be order of standup speed and we'd be price talking at night.
Sensitive batesville for expertise. It is the same great productivity, a lot faster and so we charter premium price for that speed up the <unk>.
Price will be dynamic based on our full of hobbies.
Origins, where those standards are experts will be manufactured on the same manufacturing line. This is a streamlined highly automated process. We're all just goes through the same steps standup genes, we either wait before after synthesis.
We will use <unk> to maximize chip utilization.
Similar to our airlines Houston by passengers to run planes at that are as full as possible.
Filled with higher revenues for premium pricing for <unk>, we expect to see margin improve our objective with pricing is to expand our market opportunity significantly into the makers market as with capturing additional customers within a buyer's market.
Means that our offering with resonate as a cost effective alternative to customers, making including the genes themselves working with pressing experts. Our initial dynamic price range is designed to optimize our pricing in a way that will not eliminate existing customers.
We expect to increase our margin from these differentiated proclaim we're serving a large unmet need for our current and future customers.
Because we're making all the genes that X with speed.
Genes capacity for always have each site is now closer to double compared to the 10 days to on time production timeline that's.
That's the strategic and key point that allows us to continue to scale.
Also note that we have implemented improvements in turnaround times throughout this entire product line. So Jean fragrance can now be delivered in as few as two business days and Uber pools in as your three business days for a friendly political pools. We are pleased to offer these products at competitive pricing without the premium the N.
Speed and efficiency of our operations allowed us to gain a stronger foothold in the market, while maintaining healthy contribution margins for these growth rates.
With the successful launch of <unk>, our aim is twofold.
Caleb our gene volume with existing customers and to attract new customers.
By expanding our market reach in the initial phase of launch we are directing our efforts towards our current customer base. Once we know the workflow is tried and true we will enter it on marketing efforts targeting customers conversions from competitors as well as new customers, who have not yet you use twist for their <unk> needs as we don't Express gene.
We expect the book to Bill ratio will essentially approach one of the our sushi days between order and delivery.
Such orders for <unk> becomes less intuitive the trend to watch will be a revenue growth in <unk>.
Importantly, the speed of explorations unlocks additional applications, including long genes complexities additional IGT antibodies as well as MRI production.
So not only Alex christiansen opportunity to increase margin and take market share, but it also lay the foundation for growth into the future.
Moving to Ags over the course of the year and particularly in the fourth quarter. We saw the work we have done weeks customers to optimize their workflow overtime begin to pay off several key customers on those keeping production for validation and commercialization. In addition, with these trends driving into the middle of the market we couldnt.
Increasing number of customers using our rns equal flow and several customers by implementing a minimal residual disease or <unk>.
R&D workflow, we believe both of these product groups validate our innovative approach to develop and commercialize products that our customers need.
At a high level, our licensing by you on NCS products grew at more than 23% year over year production is ramping as.
As we think about our trajectory towards profitability. We believe we have set ourselves up for success with momentum going into fiscal year with the launch of <unk> and the ability to unlock future proclaims with NGL extraction squeezed the top end of the market as well as the initial R&D seek and MLB uptake and in Italy.
<unk> team that is committed to driving the business for one towards profitability and cable growth.
As a management team, we have a strong track record for executing against our strategy growing our customer base and driving best in class for innovation, we have.
Now laser focused on increasing our gross margin and driving towards profitability.
Right.
Turning to Biopharma with effectively addressed our internal integration challenges and as of early October our commercial team was fully staff.
With all territories covered with share that it typically takes about six months for in Europe, Presentative described as Peter and orders for Biopharma directly translate into revenue in the three to six months timeframe for the fourth quarter, although the increase quarter over quarter for the first time. This fiscal year. We see this uptick is a positive sign of health for the <unk>.
Average in Biopharma services business of note. The majority of our orders came from large pharma that as humans, we announced agreements with Ono Pharmaceuticals, Bayer and more and we are cautiously optimistic that the fourth quarters of 2023 will represent the low point for Biopharma revenue.
The spectrum foreseen by all the way through Biopharma services is gaining traction.
The <unk> group continues to private strategic advantage, allowing us to utilize our entire products, including genes framework, we will pull celebrities and Iga antibodies.
All the way through to antibody discovery optimization annual installation services differentiating us from our competition and providing upside through potential milestones and royalties.
Our acquisition of Advair is broaden our offering beyond synthetic collaborate and enabled in vivo discovery through animal models. This has been integral in extending our comprehensive offering.
Now fully integrated Biopharma provides a human you have in vivo in vitro and in Citicorp services to our customers. This means that we have a powerful comprehensive offering and if you're able to meet varying customer needs under one roof. For example, our large pharma and biotech customers often peak interest from a broad menu based on their needs, while a smaller comp.
And it often benefit from a full end to end offering.
Our <unk> service has enabled us to provide more sequences and hit for kitchen of in vivo and <unk> projects, which maximizes their chances of success.
But at this stage we are in progress in our approach to enzymatic synthesis for this application we're working to implement an industrial grade critic the encoding and decoding algorithm with a large industry partner.
We remain on track with our plan to demonstrate an end to end gigabyte century archive workflow by the end of December with the early access launch of a terabyte centrally archive solution expected in calendar 2025.
On the corporate side, we added key operational leader in MA book.
<unk> operations here.
He brings a military background as well as deep expertise in supply chain quality and production.
As for our company. He was responsible for 'twenty, one production facilities and we look forward. The perspective, he brings with respect to optimizing the operations further for scale and improving gross margin because that I'll turn it over to Jim.
Alright. Thank you Emily we're happy to report we had another record in orders and revenue for our fourth quarter and full fiscal year 2023, I want to thank all our twist your customers and partners who made this possible.
Revenue for quarter, four grew to $66 9 million, which brings our revenue for fiscal year, ending September 30 to $245 1 million.
Compared to two or $3 6 million in fiscal 'twenty, two nice year over year growth of approximately 20%.
Orders increased to $71 1 million for the quarter, bringing the year to approximately 264 million last year over year growth of 17% and gross margin for the quarter increased six 6% and was 36, 6% for the year. We also increased our customer base to approximately three <unk>.
450, and Thats up from 3300 in fiscal 'twenty, two and we ended the year with cash and investments of approximately $336 4 million.
Now I'll provide a deeper dive starting with Ngls and gas revenue for the fourth quarter grew to approximately $37 1 million.
$29 2 million in the fourth quarter of fiscal 'twenty, two and that's an increase of 27% year over year and for the full year revenue increased to $123 7 million for fiscal 'twenty.
As compared to $99 3 million in fiscal 'twenty, two and that's year over year growth of 25% the retro revenue through fiscal 'twenty three.
Primarily to an increase in rebate from our top 10 customers, which accounted for approximately 10%.
Sensor revenue for the year.
We served approximately 1020 mgs customers in fiscal 'twenty, three and we believe our MTS products are a compelling competitive advantage to save our customers' past gene sequencing costs unless advantage as reflected in our August 4th quarter at $9 1 million and 131 5 million for the year and Thats really sick.
Percent year over year growth as we've noted in our previous calls we track the larger account opportunities that as accounts, we believe the potential to be larger $250000 per year and the overall count remains at 279 with 131 CMS.
<unk> quarter at this stage, we believe we identified the vast majority of players in this market will be focused on landing expanding these accounts now turning to soon byproducts, which includes genes DNA, perhaps ITG DNA libraries, and I'll get calls we had another strong year and excited about leveraging our investments in <unk>.
Our wilsonville facility.
<unk> revenue for the quarter was $26 5 million, bringing revenue for fiscal 'twenty three to $98 2 million up from $80 million in fiscal 'twenty.
Need to expand our customer base and product offering.
<unk> for quarter four of $6 2 million, which brings our fiscal 2003 or just $210 9 million up from $19 7 million in fiscal 'twenty, 222% year over year growth. Some of the highlights include growing our customer base to approximately 2700 <unk> customers in fiscal 'twenty three.
As compared to 2300 in fiscal 'twenty, two we increased our genes revenue to <unk> 5 million versus $61 5 million, which is year over year growth of approximately 20%.
Shipped 600, Patrick for patent genes in fiscal 'twenty, three as compared to 550 Madison.
Fiscal 'twenty chip all get pools revenue grew to $14 5 million and that's up from $12 4 million in fiscal 'twenty, two mainly due to strong growth in academic and large pharma customers and language revenue was $10 2 million and that's up from $6 1 million predominantly due to growth in large pharma and industrial biotech.
For Biopharma revenue for the fourth quarter. It was $3 4 million, bringing the total revenue for Biopharma, it's trying to cheat 2 million in fiscal 'twenty, three and that's a decline from $24 2 million in fiscal 'twenty. Two unfortunately artists for the quarter rose sequentially to $5 8 million from three $5 billion market.
And the number of active programs to clients for media two to six nine of our new project starts.
The increase from that two four in quarter $3 44 in the fourth quarter.
And that's associated with recovering in R&R and the total number of completed programs as of September 30 was 806 with six to eight including milestones and royalties I will now briefly cover our revenue breakdown by industry.
<unk> provides a regional update health.
Healthcare revenue growth to 100 practices by $1 million in fiscal 'twenty, three compared to $106 4 million in fiscal 'twenty two.
<unk> chemical revenue rose to $59 3 million and that's up from 57 9 million in fiscal 'twenty, two and academic revenue was $45 $8 million and that's up from <unk>.
$100 million fiscal trying to cheer on res.
Zero basis, EMEA revenue rose to 71 4 million versus $62 1 million in fiscal 'twenty to APAC increased.
To $22 5 million compared to $19 1 million in fiscal 'twenty, two including China revenue out so marine which.
Which is flat with the previous fiscal year.
You asked including Americas revenue increased to $151 3 million in fiscal 'twenty three versus $122 5 million for fiscal 'twenty, two and moving down the P&L, our gross margin for the fourth quarter increased six 6%, bringing our overall gross margin to six 6% for the year.
Cost of revenues increased from 119 3 million in the prior year.
And $55 4 million in the year ended September 32023.
The major factors contributing to the increase in cost of sales.
At $14 $7 million increased material costs due to higher volume.
$9 9 million payroll and approximately $12 million depreciation and amortization costs.
Our operating expenses for fiscal 'twenty, three which includes R&D SG&A and change in fair value Mark to market adjustments of acquisitions decreased to approximately $206 8 million as compared to approximately $319 million in fiscal 'twenty two.
To break it down R&D for the year was $106 9 million a decline from $122 million previous fiscal year, primarily due to the conclusion of ramp of our depreciation included in R&D was 4 million for fiscal 'twenty three SG&A for the year with $190 million unless a decline from $212 nine.
<unk>, which includes a $43 million reduction in stock based compensation expense.
Set by increases in pre commercialization costs facilities payroll and related service costs.
<unk> includes approximately $38 million for data storage spend in FY2023 change in fair value of contingent considerations of indemnity hold backs. The year resulted in a gain of $6 million gain of $14 million in fiscal 'twenty two.
For restructuring and other costs, we invested approximately $16 2 million for the strategic initiatives, we announced in May with $9 4 million to support our valued employees severance packages as well as asset impairment charges of $6 8 million stock based compensation for the year was approximately $33 million.
Hard to $80 million in fiscal 'twenty two.
<unk> costs were $29 million for fiscal 'twenty, three and a loss from operations of approximately $217 2 million in fiscal 'twenty, three as compared to 200 and Patrick for $8 million in fiscal 'twenty two other.
Other income and expense was a gain of $14 3 million associated with interest income capex for the year declined significantly to approximately $28 million from $101 9 million in fiscal 'twenty two.
The year was $2 1 million room shake down from $59 million at the end of fiscal 'twenty, two and concluded the year with cash investments of approximately $336 million.
I will now provide updated financial guidance for fiscal 'twenty four.
We enjoyed record bookings in quarter four and are excited about launch of our express genes.
Our wilsonville facility is doing well and we took actions during the year to manage our cost structure as we transition soon by activities to Wilsonville.
For fiscal 'twenty four we expect total revenues to increase in the range of approximately $285 million $219 million.
<unk> revenue of approximately $113 million to $116 million.
And GFS revenue of $147 million to $149 million in Biopharma revenue approximately $25 million.
Most margin of approximately 9% 40%.
Operating expense of approximately $294 million to $298 million, which includes 100 to 102 million R&D expenses.
$194 million to $196 million SG&A expenses.
Loss from operations guidance, where taxes of approximately $180 million to $188 million, which includes stock based compensation of $58 million to $60 million depreciation and amortization of approximately $40 million data storage operating expense, the prostate that $7 million to $9 million.
Tax for FY 'twenty of course projected to be approximately $20 million ending cash of approximately $245 million.
For the first quarter fiscal 'twenty four we expect overall revenue of $67 million to $68 million.
And by our revenue of $27 million Ngls revenue of $67 million.
Our pharma revenue of $4 million gross margin.
At 9% Opex of $73 million and loss from operations of <unk> $48 million in summary, we continue to maintain financial discipline throughout the organization and make progress on reducing our operating losses.
We expect to exit the fourth quarter of fiscal 'twenty $478 million revenue Andrew.
Estimated loss from operations to be $38 million to $40 million, which excludes any onetime adjustments include stock based compensation of $15 million depreciation of $10 million and data storage cash operating expenses of $8 million.
We continue to make decisive corrective actions to achieve profitable growth.
To achieve this we are focused on scaling express genes.
Offering and leveraging our investments in new Wilsonville facility.
Managing our costs and continuing to execute by growing revenue expanding our gross margin. We are incredibly excited about the future and confident in the year ahead will bring many exciting milestones achievements with that I'll turn the call back to Emily.
Thank you Tim I would like to take a minute to thank all of the twisters for their dedication commitment and excellence for the last fiscal year, the year requires perseverance and discipline across the book and our financial results reflect the hard work of the team.
<unk> groups are stronger than ever demonstrating consistent and sustained growth in revenue customer and market share.
We expect our strategic investments in this area will fuel our next leg of growth and path to profitability.
In the months ahead, we look forward to reporting on the uptake of our <unk> launch and the resulting impact on gross margin, we've given guidance for fiscal 2024 and in that guidance, we assume that <unk> will grow over time with some current customers transitioning to these new products, but primarily new opportunities moving forward as we lever.
Our digital marketing infrastructure and tools to reach new customers and our own.
Taylor beginning makers.
Based on our service groups booked increasing order in the fourth quarter and we expect the positive comp momentum to continue.
<unk> will continue to advance our solutions for the unit that <unk> has the potential to be a valuable asset longer term.
In summary, we exited fiscal 2023 with a solid cash position growing revenues reduce cost structure and incredible opportunities ahead, we have built a diversified and complementary portfolio of products services and future opportunities that puts the company in a strong position to achieve consistent and sustained growth.
While minimizing risk on gross margin for fiscal 212, and three with just under 37% and this is an area of all current and future focus.
In May we implemented strategic adjustments aimed at optimizing our operations with a clear focus on enhancing gross margins. Our objective is to set the positive trajectory to our financial performance moving towards profitability as a business. We can at the financials. We can exceed this target if we grow the same rate as the.
The market and we believe we're positioned to take market share exceeding market CAGR.
We look forward to delivering increasing value to each of our shareholders. As we continue to a contributor for customers. We inspire us each and every day to go faster and harder and truly make a difference in the world with that let's open the call for questions.
Operator.
Thank you if you'd like to ask a question. Please press star one one.
Your question has been answered and you'd like to remove yourself from the queue. Please press star one again.
Our first question comes from Luca <unk> with Barclays. Your line is open.
With Barclays.
Okay.
Hey, guys.
Thanks again for the time here I guess when I look at the guide can you talk about how much.
The guidance implies.
Or bakes in the fast genes.
The margin step up here from 38 in <unk> and ending of the year.
At $4 39, 40 kind of give us a sense of the cadence there and how the fascia or how much of your guide bakes in the.
This business and the revenue and margins.
I want to thank you, Jim Yes, I'll start.
Thanks for the question Yeah, so in terms of.
Okay.
Questions.
That launch this week.
The main highlights in the call.
We're going through the price discovery.
Factory future is going well.
Thank you.
We're excited about the endpoints in terms of exiting this year margins revenue increased sequentially.
From quarter three quarter four.
By roughly $3 million and our gross margin dollars increased by $3 million.
Highlights the leverage from Q3 to Q4 as we're thinking about.
Our next year fiscal year, 'twenty, which we're now.
We've got some macroeconomic.
The environment is.
Is that worth taking into account.
We're seeing an MLA can talk about the early days of express genes.
We're seeing.
Good good feedback from the marketplace.
As usual as we look at in terms of the future.
We were prudent in terms of forecast.
<unk> going well.
And by Us doing well.
The added boost from express genes.
To be thoughtful in terms of.
The guidance, we're giving.
So biopharma last departure, we saw pickup in Biopharma.
So so we feel that.
As we look next year, good solid growth in gross margin.
As we continue to scale the factory.
The upside in terms of that gross margin as we execute.
We're very focused on having strong cash position.
It's focused on operational excellence small kind of across the and like to talk a little bit more about the express genes.
Thank you Jim Yes, so one week in FY <unk>.
However.
We have nice told us so far.
We've tested premium pricing.
Starting Monday of <unk>, the 60% and then it would drop to 40% went back to.
40, and then today, we are 20%.
We are in that the exploration of the price runs in.
It's great to see that.
We're getting orders and on Monday, which will have the first shipment of Expressjet. So it's early days, but.
Quite optimistic in the India uptake.
Great and then can you talk about the feedback Youre getting four express genes now I guess.
And where this is coming from and from the makers market.
Are you getting most interest from pharma or is it pretty broad based.
And then within that maker's Mark a lot of these people a lot of these companies and businesses had internal.
Our teams there so talk about like the the.
Patients that you are having with them and what their plans are.
And some of the.
Great.
How theyre thinking about ramping on the express gene platform.
Yes, so maybe a quick clarification.
So.
So far we've done onsite gene on the website and we can go and look at it.
And then we.
We only did a press release, so it's a little bit of a muted launch on purpose.
Right now we want to focus on existing customers, who want to give existing customer a choice when they all do to upgrade two too fast.
No we're not.
Yet trying to beat all the drums in the.
<unk> balloons and do the marketing launch that will happen early in Kennan and Canada.
2025.
And the reason is again, we want to make sure that the.
The process is fully baked and for any net new guests tomorrow, we wanted to be.
And deny or really an amazing platform out of the first time, so we want to bake it in a little bit.
So far the.
It's doing great but.
We've learned that.
Better to try new products with existing customers.
And so we are not yet trying to reach out to the.
Today, two day net new.
<unk>.
Being said.
In in <unk>, so far we have a great mix of.
<unk>.
The spectrum of the customers, who expect from from Big pharma small pharma, even even academic.
Right.
Yes.
Okay.
Thank you. Our next question comes from Matt <unk> with Goldman Sachs. Your line is open.
Great. Good morning, Thanks for taking my questions.
Maybe just to follow up on the express genes.
Just one point of clarification I know you said that youre going to do the marketing launch in calendar year 'twenty five did you mean 24 and then.
Okay. Thank you.
And then just on your current penetration of the makers market with your standard genes can you give US a reminder of where you are today and what's the potential white spaces to to expand into that market. I think just given that context of sizing would be helpful. In terms of what the opportunity is.
Yes, Thank you and thank you for doing via the proofreading.
The play I appreciate it.
So.
And then it just shows that the.
The make those markets some people to do cleaning themselves.
That is a $1 4 billion dollar market that people that buy.
Enzymes and PCI, primarily than we do.
<unk>.
Kits and competent seldon.
And I got plates and so on and so that that is the bogie that we.
We think we can convert to.
The DNA biocide.
So far.
We have a very very tiny slice of the DNA molecules.
Once we have people that need to make very long genes. So they are making a very long genes.
They do is they buy shorter gene so one one a.
<unk> five <unk> from us.
So they are a buyer of those genes small genes and then they assemble the small ones and to <unk> themselves. So that that is.
A small slice of the pie we have.
The opportunity.
Is to really go after the bulk of.
The DNA makers market and that the people that do need chill genes, they need a <unk> <unk>, but they need them fast right now.
The only choices to go Q&A yourself and.
We.
Our experts you launched we I think we have opportunity to go after them.
Got it and then just to follow up on an express genes.
I think it would be helpful. Just for us to understand how you are going to communicate.
The express team either revenue or margin contribution over the course of next year just to give us a sense of how that's going I think following up on <unk> question about the gross margins I guess I would've expected there to be a little bit more gross margin expansion given the premium pricing.
Should we kind of think about tracking that and whats your kind of level of disclosure on a quarterly basis for that business specifically.
Yes, I think you've touched on that if you look at our Q.
You look at the K.
Youll see that we do.
Good color.
The gene revenue engine shipments.
If you look over the last last few years, you'll see that.
<unk> pricing has in fact increased.
Over the last two or three years and so every quarter you will see right, what's the gene revenue and how many genes with ships and what's the average price per gene so you'll be able to track it that way.
Great. Thank you very much.
We will start giving more insight on that in our earnings call last week as we go forward.
Got it thank you very much okay.
Thank you. Our next question comes from Vijay Kumar with Evercore ISI. Your line is open.
Hey, guys. Thanks for taking my question I had back to both for layered on guidance here.
Q1.
Pretty solid Frontloaded guidance.
The guide implies kind of mid Twenty's kind of.
Eric.
But if you look at the components here I think NPS is up like 50% implied by the guide.
<unk> bio perhaps.
But software and I think the guide the annual guide implies lexeme buyer too.
Growth rates to further diesel also maybe if you can just talk about the year.
The assumptions here between those segments and what Youre seeing from end markets.
Yes.
I can start Vijay thanks for the question so Ngls.
Okay doing extremely well.
Ended the year.
Very very strong and yes orders.
Just under.
$14 million.
Making great progress on Ngls.
Obviously some of that is driven by <unk>.
Some of our liquid biopsy customers marquee customers.
So we feel well positioned.
In terms of Syn <unk>.
Another strong year of growth.
The overall business.
You step back and looking at.
Excluding biopharma and given us familiar with farmers.
Farmer issues could see biopharma recurring but year over year.
NDS products and bio products I mean, the artisan rapid unfortunately, 5%.
We feel good.
Express genes.
The guidance for this quarter reflects the fact that we get.
<unk> and its year end for some of our customers.
So.
So we ended the year good solid position tomorrow in terms of both lgs and bio.
At the same time, when we're looking at the guide as in previous years.
There is always some microeconomic environment issues that would need to comprehend.
I was thrilled to see that.
In terms of margins sequentially.
Well, it's actually is up two 7%.
The revenue growth last quarter, almost 100% of that fell through to the margins.
So that gets back to the point in terms of leverage we talked about.
We're going to manage our cost structure going forward.
We're very focused on profitability.
We're excited about the opportunity to express genes brings in terms of margin enrichment as I highlighted some months.
We will be we will be giving you an update on.
On a quarterly basis in terms of pricing for jeans.
So.
Taxes, staying well, we're well positioned and at the same time when we are building a forecast.
Take comprehend any potential macroeconomic impacts.
Understood and one for Jim maybe on the operating leverage you brought it up.
When you look at the cadence here.
Washington, It seems like.
More modest ramp.
Sure, Rob Q1 versus Q4 exit rate I think implied numbers. Your opex is going to step down while your revenues are up from Q1 to Q2, two four I think are up like $10 million.
Opex is down.
If there is some incremental cost actions coming and what is driving that opex and why are we assuming a mall.
Gross margin ramp.
Yes.
In terms of.
The gross margin ramp.
If you look at the revenue on a go forward basis.
The.
The revenue is almost flat to Q4.
The gross margin ramp will come later in the year as we continue to leverage.
The.
Fixed costs.
For the future I think it was interesting as you would do take a look there.
Forward forward guidance.
The.
The loss from operations.
This coming quarter.
47 $48 million.
Sure.
Revenue <unk> 68.
If you look at the guidance we gave.
Q4.
Sure.
Projected revenue and roughly $7 million to $8 million.
The loss from operations of <unk>. So revenue is up by roughly $10 million in loss from operations.
Youre down by roughly eight or $9 million so.
Focus is as we scale reduce the loss.
And that loss from operations also includes stock based comp with 15.
Depreciation of Tam.
And as we as we continue to scale Youll see the loss from operations declined so cash loss declines.
This year the numbers are fairly noisy.
This step up in stock based comps so.
The thing to focus on next year is what is our cash operating loss as we go forward and that's going to decline sequentially.
The year.
Thanks, guys.
Thank you. Our next question comes from Puneet <unk> with Leerink partners. Your line is open.
Yes, hi.
Jim Thanks for taking the question so.
Maybe Emily I'll turn to the one sort of high level question for you I mean youre seeing.
Ngls growth here your orders are up on Ngls your.
Your top end of your fiscal 'twenty for guidance, just sort of slightly shy of where street was.
And revenue and you just delivered 20% growth you were expecting what implies somewhere around 17%, 18% next year.
Mid 20% for Q December ending quarter. So again all of this looks like.
Youre doing.
Better or worse as what the backdrop is.
Youre expecting significant pickup from express genes I mean, it seems like your production ready. So I think the question is really you know.
The demand in the market, which according to most of the lifestyle tools peers is weak.
To put it briefly so maybe just help us understand how twist is seeing the market sort of differently versus the other Ngls Ali go peers and overall, what we're hearing from the broader market just help us contextualize, where you think you.
Youre going to continue to win.
Despite the despite the market backdrop.
Yes, no. Thank you that's a very thoughtful question.
I think it is.
At the end of the date all comes down to the platform.
We have always.
Said that there was a success.
We have comes from two <unk>, one is the innovation and the silicon.
The city can think you can see that we have and the second is the very violent commercial execution that we have.
And I think you see it.
<unk>.
For next year.
Hi.
I can see that I agree with you that.
When you look at our peers it seems like the demand is weak.
However, we just have very very differentiated product.
And I think.
In a difficult environment.
That form just shines should think.
About Ngls.
Our <unk> customers.
What they need as they.
Their own funding environment is difficult as their own reimbursement is difficult they need.
Really.
The improved margin and Thats, what we sell it in Ngls is if you switched to twist because of liquidity of the product.
We provide.
Because we have all the regions from a to Z.
We're able to provide a comprehensive solution.
That debt expense margins for our customers.
The lower cost of sequencing.
So that that resonates really well now in some of our casinos that we'd been working with for years finally go into commercialization.
As those.
Panels and test cell.
Sell through around commercially.
We benefited because we probably be patient <unk>.
<unk> that is being burned.
In pharma.
On the <unk> side.
Definitely some funding pressure and at the <unk>.
Sometime that means that the researchers the bear island, though.
Now the pressure so you get the latest and greatest technologies.
To get to discover and develop their therapies and that is exactly what we provide is more shots on goal and.
Now without huge investment in improving the speed, we're able to enable them to.
Again do that work.
Not any better because it can take they can get access to margins, but this little faster, which is very useful for them. So I think what youre seeing is.
Just the combination of.
The great work that the twister that done and leveraging the technology.
It's a real differentiator, though based on technology, we've heard competitor trying to two.
Emulate our marketing, but at the end.
It's not about marketing it's about really.
Our capabilities and I think we would just shine things to the platform.
Yeah.
Got it.
And then if I could touch on Biopharma I mean, you were implying.
High single digit growth here.
Could you maybe outline how much of that is.
<unk> services or any other sort of milestone payments that you're that you're expecting here.
Because when we look at some of the antibody discovery our peers, obviously the market is pressured by the emerging biotechs.
Pulled back meaningfully maybe.
Maybe can you talk a little bit about how much of the mix of large pharma versus those emerging biotech.
What does that mean for the source of new projects that you expect to receive in Biopharma in 2020 fiscal 'twenty four.
Yes, maybe I'll just.
So.
The guide implies no milestones and royalties, it's all a fee for service.
Good.
And.
I agree with you that that if you look year over year the growth.
Luke's.
No not however.
Actually if you look at the low point of Biopharma in 'twenty, three compared to the higher points to Q4 2024, we're going to see some some substantial growth we had.
Building commercial application and so we.
We add a few quarters of Biopharma services going down.
But now we've we've rebuilt the commercial team.
And.
Sequential growth in the in our Aldo as we say inside the company we have done it one quarter in a row and then we have to just just go do it again and.
I expect to see some some since you can growth when you look from from the low point to Q4, and that's the direction we want to see.
Okay got it and then if I could ask one brief one to Jim.
What are you expecting for the spend on data storage in fiscal 'twenty four and then maybe if you can provide.
How should we think about the cash burn.
As we go into and sort of over the next.
Two years.
Yes.
Overall operating.
Expense for data storage is going to be.
And the range of $7 million to $9 million.
Sure.
This.
This year.
A cash burn.
Approximately about $32 million in terms of cash burn.
Firstly the story.
Thank you. Our next question comes from Catherine Schulte with Baird. Your line is open.
Hi, Thanks for the questions may be first.
Looks like you are but can you just confirm that you're still expecting to achieve adjusted EBITDA breakeven for Ngls from bio in the fourth quarter.
As for pricing on DNA data storage spend but how should we be thinking about adjusted EBITDA loss for biopharma for the year.
Yes, yes.
As we as we highlighted our focus is getting to adjusted EBIT breakeven for Biopharma Ngls.
Asset suite.
As quickly as possible.
I looked at the guidance, we've given loss from operations in Q4 next year roughly 30 to 40.
Comprehensive stock based comp 15 depreciation of 10.
Data storage.
Cash.
<unk> costs in Q4, approximately $8 million.
You can see from those numbers that were striking point of getting too.
Breakeven from a cash position.
And as we continue to scale our focuses as highlights of the call to get to profitability as fast as possible.
Having a very solid balance sheets for growth going into 'twenty right.
Okay and then.
Just to your point on the ramp for Biopharma throughout fiscal 'twenty four I guess, just how much visibility do you have in that 25 million number maybe how much it's already accounted foreign current programs fresheners assumptions around winning new products because.
Does it does imply a pretty steep ramp throughout the year and is there any way to quantify the impact of our new Behr partnership.
Yes, so great question.
As we've.
As we've mentioned previously in Biopharma.
For services, we get <unk> and <unk>.
We can convert those orders into revenue in two to three quarters and so the the great.
<unk> that we had in Q4, we'd be converting from on the order front of you would be converted into revenue in the coming two quarters. So in terms of visibility we have the visibility of the order. This is this is.
Pretty much as much as we have.
And then to get to that number we have definitely a funnel and so we do measure the strength of the tunnel and now that we have.
Commercial the commercial team on in every territory.
We can track and push each of those business managers to make sure that the edge.
<unk> quarter.
Yeah.
Thank you. Our next question comes from Steven Mah with TD Cowen Your line is open.
Great. Thanks for taking the questions.
Three part follow up question on express genes.
One on the existing customers are you doing a dynamic pricing model with them.
And if so what's been the early reaction to that pricing models is that something that's new to them and then second how long do you expect to be in this early launch mode. And then third given that express genes that turnaround time seem to be a little bit faster is there a new annual revenue capacity for the fact of the future we should keep in mind.
Thank you.
Yes. Thank you. Thank you.
<unk>.
So.
The way the dynamic pricing works.
We design, our equinox to be.
To have two carrier.
Characteristic one is very subtle but at the same time.
So which means that.
People, although the jeans the regular way.
Total debt as an option to get fast Jean however, at the point of ordering.
<unk>.
Very strong in your face and very clear differentiation in terms of for that extra data you can get that extra benefit.
And customers have to make a yes or no decision and so on the one hand.
Oh, yes, we have been steadily but.
But.
Customers are asked to make a decision.
And so the thought.
The early reaction that you you asking now we can look at any percent of customer chose the the express gene option.
As a function of different prices.
That's ongoing.
So your second question, our long when we read that.
Early launch phase.
It would be until early calendar 2024.
Matt is going to have to correct me at this time. So early 'twenty four that's when we'll do the full launch to all the <unk>.
Customers and then what it was.
Your third question.
I think that was the first question that I.
Entre and bill.
After you factor in the future given the turnaround times faster for our express genes.
Yes, yes, yes.
Yes. Thank you. Thank you, Steve so, but yeah in terms of capacity yes.
Because now all the others.
Were all the obsessed.
Yes, we basically doubled the.
Capacity.
We have.
So.
We have not quantified that with the dollar at this point, but.
We will over time, thank you.
Okay.
Thank you. Our next question comes from sung <unk> Nam with Scotiabank. Your line is open.
Alright, Thanks for taking the question just to pile on one more question on Biopharma just for that customer base.
Kind of curious whether you're seeing any signs of improvement and obviously there are definitely macro factors that everyone is talking about.
But do you think the growth next year is largely due to twist.
Our integration efforts and restructuring efforts that are bearing fruit or are you kind of seeing any signs of improvement whether it's.
On the rebar case, Jason Stat standpoint from large pharma.
Jack at this point.
Thank you.
Yes, thanks for the question.
I know that some definitive days of funding pressure in Biopharma.
The few quarters that we add dawn.
On Ics was that it was a self inflicted wound.
We're not suffering.
Market headwinds towards more from a commercial execution headwinds.
And we have a very very strong offering within vivo in vitro <unk> with I think the only company that offers very wide breadth of opportunity and so.
We think that we can if we execute commercially we can be very successful in the current market.
Lately, we have been focusing on larger companies in.
That's been working quite well so of course, we're open for business for all customers, but we have a.
Especially focused effort on launch.
Pharma companies.
Great we will get back into queue. Thank you.
Thank you. Our next question comes from Matthew <unk> with William Blair. Your line is open.
Hi, This is not a lin on for Matt just a quick one from me on the express genes I know it's early stages now that I was just wondering if there is sort of an optimum proportional breakdown between express genes and the more standard clonal genes that youre targeting long term or that allows the factory of the future to be added.
Maximum efficiency, if there was sort of a.
Ideal breakdown between the two pricing points.
That's a great question so.
As a point of clarification, what we have with <unk> something that is actually quite unique because.
Is the same production line for express and standup means.
Meaning that.
If all our customer decided to peak.
Spreads genes.
We wouldn't be able to make them all express.
And that is very different from what.
What was the can.
Let me just Ken can do.
Maybe if we can do a few.
Jean SaaS by basic.
Hitting the Q and skipping ahead.
And managing the backlog.
For us we don't have to do that we've built something that is intrinsically SaaS for 100% of the genes and so to go back to your question around the optimum pricing.
Our goal will be to maximize our gross margin dollars.
And so making sure that the fab is fully utilized.
And the <unk>.
The pricing that.
That maximize the.
The penetration into the.
DNA Nikhil.
And.
And ultimately really delight, our customers enable them to do their science faster I think.
That would be a win win because they'll get facile science, and we would get more of those and we think we'd be able to take the space.
There is significant market share so.
The intrinsic technology really enables us to be very flexible on what the ultimate price is going to be.
And if need be we can make all of auto express.
<unk>.
And that is huge differentiation.
Great. Thank you.
Yes.
Yes.
Thank you there are no further questions at this time I'd like to turn the call back over to Emma Li for any closing remarks.
As we've shared today it is a very exciting time for Twitter.
We've launched extra gene. This week that is further differentiating our sundial product offering and we have taken steps to position the company for enduring and consistent growth in fiscal 2024, we have the opportunity for expanded margin and we look forward to keeping you appraised of progress. Thank you.
Yes.
Thank you for your participation in today's conference. This does conclude the program and you may now disconnect everyone have a great day.
Okay.
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Okay.
Okay.
Yes.
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