Q1 2025 Twist Bioscience Corp Earnings Call
Thank you operator, good morning, everyone I would like to thank you for joining us for twist Biosciences Conference call to review, our fiscal 2025 first quarter financial results and business progress.
We issued our financial results press release before the market and it is available at our website at Www Dot twist Bioscience dotcom.
With me on the call today are Dr. Emily law.
Speaker Change: Yellow and co founder of twist, Adam upon us CFO of twist and Dr. Patrick <unk>, President and C O L twist.
Speaker Change: We will discuss our business progress financial and operational performance as well as growth opportunities.
Speaker Change: We will then open the call for questions. We ask that you limit your questions to only one and then re queue as a courtesy to others on the call.
Speaker Change: 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.
Speaker Change: During today's presentation, we will make forward looking statements within the meaning of the U S Federal Securities laws.
Speaker Change: Forward looking statements generally relate to future events or future financial or operating performance.
Speaker Change: 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.
Speaker Change: These risks include those set forward 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 Change: 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 Change: We will also discuss adjusted EBITDA financial measure that does not conform with generally accepted accounting principles.
Speaker Change: Information may be calculated differently than similar non-GAAP data presented by other companies.
Speaker Change: When we recorded a reconciliation between GAAP and non-GAAP financial measures will be included in our earnings documents, which can be found on the investors section of our website.
Speaker Change: With that I'll now turn the call over to our CEO and cofounder Emily liquors.
Emily liquors: Thank you Angela and good morning, everyone. We are pleased to report yet another quarter of strong sequential growth in both revenue and gross margin demonstrating unwavering progress.
Emily liquors: Adjusted EBITDA breakeven and subsequent book.
Emily liquors: Driving our success is our kitchen, where she lives into this platform a breakthrough innovation that not only powers all business, but also positions us to capitalize on a wide array of market opportunities.
Emily liquors: That's always preparatory differentiated scalable and adaptable.
Emily liquors: The platform serves as a foundation for every product groups across the company.
Bill: Hey, Bill we set an ambitious yet clear path to profitability and today, we're proud to be delivering on that promise.
Bill: So the shipping institution at the momentum we have built a cross sell initiatives. We remained firmly on course to achieve adjusted EBITDA breakeven without raising capital, while continuing to invest in profitable growth opportunities for the future.
Bill: Turning to the financials, we exceeded our guidance for revenue and margin reporting another quarter of record revenue of $88 7 million, an increase of three 4% year over year and 5% sequentially gross margin for the quarter came in ahead of guidance at 48, 3% compared to 45% for first quarter fiscal 2024.
Bill: Demonstrating the leverage of fixed cost with higher volume as well as our ongoing commitment to continuous improvement and margin expansion initiatives.
Bill: This is another quarter of showing that 75% to 80% of incremental revenue on average drugs to the gross margin line.
Bill: Revenue.
Bill: Increased to $34 4 million an.
Bill: An increase of 28% year over year with this first group, reflecting a diverse global customer base with.
Bill: We continue to see sequential growth through the express portfolio. Both in revenue and then Bill Smith.
Bill: We continue to push out the time with the majority of gene friend shifts within two days include genes shipped within four days with the food Express portfolio benefiting from these people.
Bill: <unk> to deliver quickly at a reasonable cost expands our customer base and also is extending our wallet share within existing accounts with.
Bill: We got speed on price with new applications and innovations from researchers across the globe.
Bill: Sure to be inspired by their drive to improve health and sustainability.
Yes, we reported $48 six net revenue an increase of 23% year over year.
Bill: The continued strength was driven primarily by cost the rest commercializing liquid biopsy in rare disease assays.
Bill: We see initial uptake in emerging applications without differentiated library prep products, along with other workflow components ask as terrestrial twist to supply all regions between the central and the sequencer.
During the quarter, we saw facing it became question from Macquarie to twist plus sequencing. This one in human health.
Bill: Nothing else sequencer agnostic approach, meaning a workplace compatible with different sequences beds on our customers' preference we remain a key partner, providing nzf's workflows for many different applications. In addition to liquid biopsy and minimal residual disease.
Bill: Turning to Biopharma services revenue increased two five roughly the order of about $5 $9 million, we remain cautiously optimistic as the funnel of opportunities continues to build by leveraging our strategic fit or cross sell.
Bill: From the services portfolio, we continue to remain focused on delivering valuable services for our Butler.
Bill: Other territories team continues to advance development.
You're working with water based multi chemistry to synthesize DNA.
Bill: He must based chips put a terabyte scale product.
Terry: I would now like to turn the call over to Terry.
Terry: All commentary on gross margin and innovation.
Terry: Thank you gentlemen.
Terry: As we look at the where we've improved margin we continue to see a majority of the improvement driven by revenue growth, while holding our fixed operating expenses relatively flat.
Terry: In addition, we continue to identify incremental areas of improvement in Cogs.
Terry: One example implemented in the first quarter is related to plastic tips.
Terry: With an extreme automation, we used a large number of picks and our processes.
Terry: In 2024, we identified an alternative technology that was compatible with our processes.
And allowed us to maintain performance and sample quality, while significantly decreasing our cost.
Terry: We implemented the new approach towards the end of the calendar year. We are now seeing the pull through of those savings as one more sequential step and a positive gross margin trajectory.
Terry: Looking forward, we have a pipeline of activities, we anticipate for auto gross margin incrementally, while maintaining or improving the product benefits.
Terry: In addition, we've talked about enzymology, as a future growth driver for the business.
Terry: We are applying our innovative platform to identify proprietary enzymes that deliver performance advantages within a specific product that we offer are the optimize their workflow for a particular application.
Terry: We also expect gross margin leverage from these internally developed enzyme.
Terry: Importantly, we see significant runway to leverage a synthesis portfolio to screen optimize and implement new enzymes used within our current and future offerings with minimal investment required and significant resulting ROI.
Terry: As we approach adjusted EBITDA breakeven, our focus will shift seamlessly to achieving cash flow positivity.
Terry: Maintaining our momentum while strategically investing in profitable growth opportunities powered by our relentless innovation engine.
Terry: At this time I would like to turn the call over to Adam to discuss our financials.
Adam: Thank you Patty.
Adam: Revenue for the first quarter of 2025 increased to 87 million growth of 24% year over year and approximately 5% sequentially.
Adam: Margin came in higher than expected at 48, 3%, primarily due to increased revenue and volume leverage on our platform.
Adam: <unk> revenue increased to $34 4 million growth of 28% year over year <unk> revenue for the first quarter grew to approximately $48 6 million, an increase of 23% year over year and 7% sequentially.
Adam: For the quarter revenue from our top 10, NGF customers accounted for approximately 39% Ngls.
Adam: We serve 606 mgs customers in the quarter with 147, having adopted our products.
Adam: For Biopharma revenue was $5 $7 million with orders of $5 9 million.
Adam: We had 89 active program as of the end of December 2024, when we started 67 new programs during the quarter.
Adam: Looking geographically.
Adam: Americas revenue increased to approximately $53 7 million in the first quarter compared to 44 million in the same period in fiscal 2024.
Adam: Growth of 22% year over year.
Adam: EMEA revenue rose to $28 3 million in the first quarter versus $21 2 million in the same period in fiscal 2020 for growth of 33% year over year.
Adam: APAC revenue increased to $6 7 million in the first quarter compared to $6 3 million in the same period in fiscal 2020 for growth of 6% year over year.
Adam: China continues to be a relatively small portion of our revenue at approximately 2% of total revenue for the first quarter of fiscal 2025.
Adam: Moving down the P&L.
Adam: Our gross margin for the first quarter increased to 48, 3% an improvement of almost eight margin points versus the first quarter of fiscal 2024, reflecting our strong revenue growth as well as our continuous process improvements, while holding expenses relatively flat year over year.
81% of revenue growth compared to Q1, FY 'twenty four dropped to the gross margin line.
Adam: Operating expenses, excluding cost of revenues for the first quarter were approximately $77 5 million compared with approximately $75 9 million in the same period of 2024.
Adam: Operating expenses included approximately $6 6 million for data storage in the first quarter.
Adam: Q1, FY 'twenty five includes annual merit increases as well as payments FY 'twenty for cash bonuses.
Adam: Looking at our progress on our path to profitability for.
Adam: For the first quarter of fiscal 2025, adjusted EBITDA was a loss of approximately $16 three months, an improvement of about $11 5 million versus the first quarter of fiscal 2024.
Adam: Cash flow from operating activities continued to improve.
Adam: Driving the adjusted EBITDA Bridge.
Adam: We ended the quarter with cash cash equivalents and short term investments of approximately $270 8 million inclusive of the $15 million in summit during the quarter.
Adam: Versus $276 million as of September 30.
Adam: We are increasing our guidance for fiscal 2025.
Adam: Increasing our total revenue guidance to $372 million $379 million up from $367 million to 377 now.
Adam: Now, indicating growth of approximately 20% year over year.
Adam: We are increasing some buyout revenue guidance to 144 to 147 million growth of approximately 17% to 18% year over year.
Adam: We are increasing revenue guidance for Ngls revenue to the top of the range of 205 to 209 million growth of approximately 21% to 24% year.
We are increasing biopharma revenue guidance 23 million growth of approximately 13% in Europe.
Adam: For Q2 fiscal 2025, we expect total revenue of approximately <unk> $91 million to $93 million growth of approximately 21% to 24% versus Q2 fiscal 2024.
Adam: <unk> revenue of approximately 35, 5% to 36 million growth of approximately 19% to 21% year over year.
Adam: <unk> revenue of approximately 50 to 51 million growth of 23% to 25% year over year.
Adam: Biopharma revenue of approximately $5 $5 million to $6 million.
Adam: For the full year fiscal 2025, we expect gross margin of approximately 49% with quarterly sequential improvements in Q4 fiscal 2025 gross margin over 50%.
Adam: We expect adjusted EBITDA loss of approximately $55 million to $60 million for fiscal 2025, an improvement of approximately $35 million to $40 million versus fiscal 2024.
Adam: We expect Q2 fiscal 2025, adjusted EBITDA loss to be approximately $16 million.
Adam: Improvements in subsequent quarters.
Emily: With that I will turn the call back over to Emily.
Emily: Thank you Adam.
Emily: Wilson as West, Texas successful in this difficult market environment.
Emily: <unk> question, because I get to talk about all the things that mixed with different.
Emily: Success is not that related to a single factor, but the combination of a groundbreaking innovations and strategic investments.
Emily: Our pioneering technology, which munis right. This chemistry in April in incentive fees on a silicon chip keeping us at cost and scale advantage unparalleled in the industry to date, we've invested more than $1 billion to create the infrastructure team and platform necessary to support our current achievements and prepare for future growth.
Emily: Our innovative platform not only provides the foundation to launch differentiated products puts us the power to industry like custom solution at scale, a relentless focus on innovation has a deep understanding of our customer needs and end market shifts the product roadmap that delivers meaningful <unk>.
Emily: We've built our Fisher Thats cable channels standardized and automated processes for operational excellence and digitized workflow to ensure agility and efficiency across our supply chain.
Emily: Equipment to extend to a better satisfied product groups market and revenue channels, which mitigates risk while maximizing opportunity.
Emily: By embracing customer divestiture market resilience, we have established a robust.
Emily: Revenue base.
Emily: Forward thinking operational group complement our commercial prowess, that's what you're seeing on continuous process improvements to expand capacity and drive gross margin growth.
Emily: Importantly, the heartbeat of twist is our incredible team.
Please bring together extended from diverse disciplined chemistry biology, physics, bioinformatics Silicon Engineering Chemical engineering hardware engineering daily to co engineering software development finance legal human resources and all.
Emily: Our interdisciplinary collaboration shields, our mission to deliver a product that has improved the health and sustainability.
Emily: Guided by a shared vision and a deep commitment to serving our customers with continually overcome challenges and great value. Looking ahead, we remain steadfast in our mission to push the boundaries of what's possible. We will continue investing in research and development in a fiscally responsible manner.
<unk> product that not only drive profitable growth business to deliver value to our stakeholders.
Emily: With discipline and elimination, we are firmly committed to achieving adjusted EBITDA breakeven.
Emily: <unk> long term growth together, we move full up innovating growing and building a better future.
Emily: At this time, let's open up the call for questions.
Emily: Operator.
Emily: Thank you.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Emily: A question simply press Star one again.
Emily: In order to accommodate all participants in the queue. We ask you. Please limit your questions only one question. Please standby, while we compile the Q&A roster.
Matt: And our first question coming from the line of Matt <unk> with Goldman Sachs. Your line is now open.
Matt: Hi, good morning, Thanks for taking my questions, maybe just to start out could you just talk about some of the mix shift you're seeing in some bio towards express genes and what your expectations are for the contribution over the course of the year and any progress you've made with that product specifically with gene makers.
Matt: Hey, Matt This is Adam Thanks for the question happy to chat about it.
Matt: We are seeing sequential improvement in the express gene revenue quarter on quarter and we're also seeing is we've hit on it I think previously it is not longer just express genes. It's the express portfolio and so what we're seeing really is.
Matt: Where in past somebody might've thought.
Matt: Fragments from us and now they're buying express genes or they might've button clonal genes for months now theyre buying perhaps <unk> express and so having that full express offering is really enabling us not only to.
Matt: And our wallet share with existing customers, but really move folks up where they might have been a previous buyer of genes in the maker of IGT right. Now they are a buyer of Igt's, we're seeing that shift as well as we're seeing the continued improvement in.
Matt: The number of new customers coming into the business for the express offering.
Speaker Change: Got it and then just for a follow up just given the adjusted EBITDA B. How are you thinking about the path to profitability in terms of timing when do you plan on revisiting that view just in terms of what you've put up in terms of adjusted EBITDA and gross margin expansion.
Matt: Hey, Matt Great question, and then where we.
Matt: Are committed to being sequential improvements as we move forward and we've talked about being ahead of the 50% gross margin by Q4.
Matt: And continuing to March down that path I think coupled with our growth in revenue and that expansion in gross margin with disciplined on the Opex line like we've had for the last number of years.
Matt: You can pretty much.
Matt: Back in do where things may end up, but we have not given that exact timeline, but we are steadfast in our northstar of not going back to the market for any additional equity.
Matt: Thank you.
Matt: Yes.
Luke <unk>: Our next question coming from the line of Luke <unk> with Barclays. Your line is open.
Speaker Change: Great. Thanks, guys.
Luke <unk>: Couple here can you first talk about getting a lot of hits on this one on.
Luke <unk>: Youre, Canada, Mexico exposure.
Luke <unk>: Youre thinking about potential tariff impacts there.
Luke <unk>: I know that Theres, some theres some theres some chatter on like an 800 less than $800 million loophole being closed and you guys I assume that have less than a lot of your genes or <unk>.
Luke <unk>: They're less than 800, <unk>. So just help frame how you guys are thinking about that with the policy.
Luke <unk>: Yes, Thank you Luke.
Luke <unk>: So just to set the.
Luke <unk>: The fact that we know.
Luke <unk>: Thanks, guys.
Paris on.
Luke <unk>: Yes.
Luke <unk>: On goods coming from Canada.
Luke <unk>: Mexico.
Luke <unk>: An additional 10% tariff.
Luke <unk>: From China and.
Luke <unk>: You said the removal of the de Minimis rule.
Luke <unk>: Package that comes into the U S. That's with less than 800 rollout.
Luke <unk>: It's it's.
Luke <unk>: No.
Luke <unk>: It was not subject to Paris, but now it is.
Speaker Change: What that means.
Speaker Change: Thanks, Lee <unk> Ju, 100%.
Speaker Change: Products in India.
Speaker Change: In the USA that means that the price fall product in the USA Davidson.
Speaker Change: Our competitors.
Speaker Change: Our produce outside of the U S.
Speaker Change: It would have to.
Speaker Change: Usually they come through thank you from China, we would have to pay the 10%.
Speaker Change: Tax.
Speaker Change: And then from China close the six 5% tax that was.
Speaker Change: Yes, before and with that with the Dominion routes and so what that meant there was a pet goods coming from China from a competitor.
Speaker Change: With $500.
Speaker Change: Eric.
Speaker Change: Ill say that 16, five Paris on it.
Speaker Change: So is it into your headwinds for them.
Speaker Change: I mentioned it before that we'll win by winning.
Speaker Change: Products out faster.
Speaker Change: The high liquidity.
Speaker Change: So we know we need.
Speaker Change: It probably will be.
Speaker Change: We saw them.
Speaker Change: Yes.
Speaker Change: Thanks, Jim.
Speaker Change: Significant consideration pockets.
Speaker Change: The comps by DNA.
Speaker Change: Thats two questions from me.
Speaker Change: And how much and so the speed is important.
Brett: Thanks, Brett.
Speaker Change: In terms of price we were leaving.
Brett: I think there's some headwinds for them.
Brett: In terms of.
Brett: Retaliation.
Brett: We have a very very limited exposure to.
Brett: To Mexico.
Brett: Mexico.
Brett: As far as the.
Brett: Canada.
Brett: It's still small.
Brett: <unk>.
Brett: And as far as we know.
Brett: Canadian retail.
Brett: Chris.
Brett: No Terry.
Brett: Yes.
Brett: Our DNA going into Canada.
Brett: Not.
Brett: Doug.
Brett: Subject to a Canadian Harris.
Brett: So the U S. We're fine.
Brett: And.
Brett: Potentially some headwinds for competition.
Brett:
Brett: Okay. Thanks.
Brett: Well so.
Brett: <unk> will follow.
Brett: We follow closely.
Brett: At the end of the day for US again, just the <unk>.
Brett: Headline I would say.
Richard: Hi, Richard.
Brett: Okay.
Brett: Better.
Brett: So it would've been by region.
Brett: Thank you.
Brett: Next question coming from the line of.
Speaker Change: Suba Nandan <unk> with Guggenheim Securities. Your line is now open.
Suba Nandan: Hey, guys. Thank you for taking my question. My question is how much of this express dynamic was responsible for a better than expected margins fully realizing that this dynamic is likely to stay for the long tail and then I have a follow up.
Speaker Change: Okay.
Speaker Change: What we've said is is it clearly expressed its having a contribution to the margins what we're seeing primarily as we continue to expand revenue and grow revenue. That's the majority of the driver of the gross margin expansion and so when we talk about it at 75% to 80% on average of the revenue growth dropping to the gross margin.
Speaker Change: That's that's the primary driver of the gross margin expansion independent of whether it is coming from Tim biocide or the NGL business.
Speaker Change: It's about equal obviously, the express and also some of the initiatives Pat he's talking about process improvement or adding to that and we see it being sustainable and robust moving forward. So.
We are excited about where we are and we expect that to continue.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line up.
Speaker Change: Catherine Schulte with Baird. Your line is open.
Catherine Schulte: Hey, guys. Thanks for the questions maybe just to continue on that topic can you just talk to your gross margin progression throughout the year and for the process change around chipset Patty mentioned.
Catherine Schulte: How much could that benefit margins in your fiscal second quarter and any other projects like that planned throughout the year that you could talk about.
Catherine Schulte: I'll start and then maybe Pat.
I can talk to some of the operational activity thats going on in terms of the.
Pat: The gross margin forecast and expectations.
Pat: We expect our revenue to sequentially improve every quarter and with it we expect our gross margin to continue to sequentially improve.
Pat: We've raised the midpoint of the guide to 49% for the year.
Pat: We expect to be ahead of the 50% Mark.
By Q4.
Pat: So I think that we should be seeing sequential improvements throughout the rest of the year.
Pat: I think the.
Pat: The opportunity lies we are seeing the benefit of some of the initiatives Pat He's talking about.
Pat: In terms of the Q1 performance and we expect those benefits to continue.
Pat: Into Q2 and beyond at any time.
Pat: Alright.
Pat:
Pat: The team continues to execute well on gross margin activities part of our culture.
Pat: Which has been spectacular to watch that grow and expand across the organization.
Pat: Say that there is more.
Pat: Multiple small midsize opportunities to continue to improve.
Pat: Including the use of our own enzymes, which.
Pat: Well first of all we're thinking about that for new and innovative products, but we can get some leverage and timely to to help us.
Pat: Margin expansion.
Pat: Thank you.
Speaker Change: And our next question coming from the line of Brent.
Pat: Brendan Smyth with TD Cowen Your line is now open.
Brendan Smyth: Great. Good morning, Thanks for taking the questions.
Speaker Change: Perfect lead in to my questions, just because I wanted to ask a little bit more about kind of just double click on the proprietary enzyme production that you all talked about now.
Speaker Change: Was wondering if you can speak a little bit more to the extent that can leverage we might expect from this ongoing work and I guess I'm really just looking to understand a bit better.
Speaker Change: Maybe which processes internally this could apply to you more specifically.
Speaker Change: In which there was there could you see as prime to improve with this.
Speaker Change: And potentially thoughts on timing to some of those synergies that we might see it just as we kind of model out the next few quarters. Thanks.
Speaker Change: Good question.
Speaker Change: Very very high.
Speaker Change: Synthesis company.
Speaker Change: And so theres some standard procedures internally that will really benefit from it internally manufactured.
Speaker Change: In addition, obviously supply chain security and <unk> Colbert is incredibly neutral.
Speaker Change: We also see leveraging our products top line growth driving new and innovative products to market.
Speaker Change: Really felt the customer base well.
Speaker Change: The timing it really it's all baked into our guidance.
Speaker Change: That said, we would be consistent with that.
Speaker Change: We've got good portfolio of products coming and we're excited about that future in that product offering.
Speaker Change: Thank you and our next question coming from the line of.
Speaker Change: Vijay Kumar with Evercore ISI. Your line is now open.
Vijay Kumar: Hey, guys. Good morning, Thanks for taking my question.
Speaker Change: I just had one I guess.
Speaker Change: Guidance P&L related question.
Speaker Change: The.
Speaker Change: The gross margins here in Q1.
Speaker Change: When you look at the sequential performance, even if sequential revenues dropped down at 100% I think we're having a hard time getting to 48%.
Speaker Change: Were there any one offs.
Speaker Change: That drove.
Speaker Change: 48% gross margin in the quarter and the related sort of guidance question.
Speaker Change: The beat most of it came from.
Speaker Change: Ags and Biopharma, but I think the guide raise is that more coming from sym bio <unk>.
Speaker Change: <unk> biopharma and any any.
Speaker Change: Any.
Speaker Change: I know you stopped disclosing order activity levels, but any anything from our customer activity levels that gives you confidence in why <unk> should be better in Ags, perhaps is.
Speaker Change: Is perhaps are in line with our prior guidance.
Speaker Change: Yeah. Thanks for the question I'll try to Tonys point, but.
Speaker Change: I'll ask others to jump in in terms of the gross margin. It was accelerated this quarter to step up to almost a roughly three points of improvement quarter on quarter when.
Speaker Change: When you look at it I think there is obviously, we are starting to see the real benefits.
Speaker Change: The continuous process improvements along with the revenue growth nothing and if it's onetime in nature.
Speaker Change: And other than these we continue to activate the cost improvement programs, we expect.
Speaker Change: More of that moving forward.
Speaker Change: But I would say.
Speaker Change: Step up we saw was outsize this quarter.
Speaker Change: But it should be sustainable.
Speaker Change: In terms of the.
Speaker Change: Products and the guide yes.
Speaker Change: Yes, we did see.
Speaker Change: What we're encouraged by the progress not just in terms of revenue, but also on orders on the Biopharma side of the business.
Speaker Change: And while it's still early and the business is still.
Speaker Change: We're finding our early shoots of opportunity.
Speaker Change: Definitely see.
Speaker Change: Some more confidence in that side of the business. So that's what we're stepping up the guidance and the <unk> side.
Speaker Change: I think what we're seeing is better visibility into the into the later quarters of the year.
Speaker Change: As we initiated the guide we were appropriately.
Speaker Change: Less visibility to how things are progressing, particularly on some of our new innovation launches and as we were seeing that take hold and traction.
Speaker Change: We're adjusting our guidance accordingly, so a lot of confidence across all three areas and product lines.
Speaker Change: We expect to continue to see that sequential improvement across them.
Speaker Change: Subsequent quarters.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Matt <unk> with William Blair. Your line is now open.
Speaker Change: Hi, Good morning, I wanted to get back to the express portfolio.
Speaker Change: How about one year, a little over one year since launch starting with express genes. Just curious if there's any data points you can share around sort of new customers relative to legacy customers converting retention rate or wallet share conversion for those that were initial early adopt.
Speaker Change: <unk> and then obviously you've had a couple of <unk>.
Speaker Change: Erez since you launched come out west.
Speaker Change: Products in response, and so maybe just anything around win rate or what you've observed in the market.
Speaker Change: As customers have been able to compare your express offerings versus others.
Speaker Change: Thank you Matt for the question yes.
Speaker Change: Yes.
Speaker Change: And maybe more than that.
Speaker Change: Great.
Speaker Change: The express portfolio brought it has been difficult Q1, one for the record books.
Speaker Change: The most important thing.
Speaker Change: That.
Speaker Change: It does what it says on the chip.
Speaker Change: And so it's sort of at the end of the day.
Speaker Change: Yes.
Speaker Change: Ken.
Speaker Change: We tried to be very.
Speaker Change: Peter.
Speaker Change: Our price will do and we want to make sure that the expense.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: We are told them.
Speaker Change: No not always the case more broadly in the industry.
Speaker Change: So that's number one.
Speaker Change: It does it does.
Speaker Change: Within citizens.
Speaker Change: The other thing is everything we do at express.
Speaker Change: So it's not just <unk>.
Speaker Change: With keeping the line.
Speaker Change: Most fraction of the capacity.
Speaker Change: It's everything.
Speaker Change: As expected the lifestyle.
Speaker Change: And.
Speaker Change: And that leads me to the third.
Speaker Change: <unk>.
Speaker Change: Because of those two things.
Speaker Change: This exercise has been really really high.
Speaker Change: And so we were able to achieve all of hall switch.
Speaker Change: Revenue.
Speaker Change: Who.
Speaker Change: <unk> gross margin.
Speaker Change: What is that.
Speaker Change: 75% to 80% of revenue growth has been dropping to the gross margin line for many quarters in the room.
Speaker Change: Hopefully that helps.
Speaker Change: This year this quarter.
Speaker Change: We did 81 person, but don't hold us to.
We're going from 75 to eight quarter over quarter.
Speaker Change: And then in Europe.
Speaker Change: Net new customers so overall.
Speaker Change: Great success.
Speaker Change: The in terms of competitor response, we saw the press release.
Speaker Change: Yes.
Speaker Change: I think.
Speaker Change: Our competitors add express offerings before.
Speaker Change: But.
Speaker Change: The swing was limited in terms of.
Speaker Change: And we don't think that has changed and the price point its workflow.
Speaker Change: Differentiate it and so I think we don't treaty.
Speaker Change: You bet.
Speaker Change: So it probably made for.
Speaker Change: A good press release, but.
Speaker Change: At the end of the day it is in.
Speaker Change: Adjusted for you all.
Glenn: Thanks Glenn.
Speaker Change: Yeah, Yeah earnings.
Speaker Change: I don't think the numbers are going the same direction.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of <unk>.
Speaker Change: <unk> with Leerink partners. Your line is now open.
Speaker Change: Yeah, Hi, guys. Thanks for the questions here. So I appreciate the gross margin comments.
Speaker Change: And.
Speaker Change: Good to see the improvement there, but my question is more about the overall growth given the backdrop of the market.
Speaker Change: What youre hearing from your customers I mean is it fair to say that the Ngls and liquid biopsy remains.
Speaker Change: Important growth driver for you.
Speaker Change: I mean, when we look at that guide you didn't raise the top end of the guide you raised.
Speaker Change: Narrowed the guide on the bottom and so just wondering I mean, when you look at the backdrop of the academic market is under pressure the clean tech markets and Biosimilar if that is under pressure to end.
Speaker Change: Just given the challenges there.
Speaker Change: Now that you've divested assets in Biopharma already.
Speaker Change: How should we think about the growth in Ngls and diagnostic customers.
Speaker Change: Given the context of the guide is it just I mean RV early in the year that's why.
Speaker Change: You want to be prudent there or is there.
Speaker Change: Could you elaborate a little bit more on the Ngls guide and how you thought about it.
Speaker Change: Yeah. Thanks, Thanks for the question.
Speaker Change: A quick clarification.
Speaker Change: I don't think we.
Speaker Change: One last thing.
Speaker Change: If we monetize it.
And so with all the health of the future milestones and royalties makes sense of $15 million, which.
Speaker Change: We have received.
Speaker Change: Thank you.
Speaker Change: Add a little bit.
Speaker Change: Yes.
Speaker Change: Thanks for that.
Speaker Change: We can execute on our growth.
Speaker Change: The breakeven without raising capital.
Speaker Change: In terms of the guide, we always want to be prudent.
Speaker Change: You are correct that there is some uncertainty.
If we look back the last few years, we believe India.
Speaker Change: If I missed something.
I think we've done really well there.
Speaker Change: And.
Speaker Change: I don't think.
Speaker Change: Thanks, Jeff.
Speaker Change: For the year yield product with a highly differentiated.
Speaker Change: Thanks.
Speaker Change: So.
That technology, plus inflammation without actual violence.
Speaker Change: In.
Speaker Change: Any market.
Speaker Change: That will do well.
Speaker Change: In a market, where there's 2 billion.
Speaker Change: Amy.
Speaker Change: We have the opportunity to do better I.
Speaker Change: I think that.
Speaker Change: Okay.
Speaker Change: We are going into this.
Speaker Change: Okay.
Speaker Change: And then month anyway.
Speaker Change: Great products.
Speaker Change: Hey, Lou viable.
Speaker Change: Viable cost structure.
Speaker Change: I think we will use our differentiation product.
Speaker Change: In all channels.
Speaker Change: EBIT.
Speaker Change: Ram.
Speaker Change: And as we ramp up line.
Speaker Change: Now, it's one of those in the room.
Speaker Change: Got that.
Speaker Change: Gross margin goes up.
Speaker Change: And.
Speaker Change: The last thing for us.
Speaker Change: Right.
Speaker Change: Great.
Speaker Change: Which we've done.
Speaker Change: Frankly, all of the same.
Speaker Change: We need message.
Speaker Change: Thank you.
Speaker Change: Next question coming from the line of Doug.
Speaker Change: Doug Schenkel with Wolfe Research your line is now open.
Speaker Change: Hey, good morning, everybody. Thank you for taking my questions. So.
Speaker Change: Just two things I want to talk about real quick first your number of customers increased by 11% year over year, which in itself is impressive.
Speaker Change: But I think potentially gets lost in that number is in the possibility of more deeply moving into customer accounts and what im getting out there with I believe the way you define a customer is something like a total university for a total company guidance.
Speaker Change: What gets lost in that metric as the opportunity to penetrate multiple labs are so called sub customers within each customer.
Speaker Change: Are we thinking about that right and if so where are you and more deeply penetrating accounts and capturing share after you establish.
Speaker Change: The chat as a metric to track.
Speaker Change: I guess the second thing I just wanted to ask is given the geopolitical backdrop IHI uncertainty all of those sorts of claims.
Speaker Change: How are you kind of drawing the error bars around guidance, especially on the face of uncertainty.
Speaker Change: How are you how are you capturing that guidance thats, maybe a little bit different.
Speaker Change: Years past thank you.
Doug Schenkel: Thanks, Doug Great question.
So the first question.
Doug Schenkel: Adam will cover the San Juan.
Doug Schenkel: Get some account.
Doug Schenkel: Thinking about I think you're right.
Doug Schenkel: That's what's happening.
Doug Schenkel: So because of that and I'll, let kelvin.
Doug Schenkel: As far as comp there's one customer.
Doug Schenkel: But.
Doug Schenkel: As our commercial results.
Doug Schenkel: It's.
Doug Schenkel: We are gaining more and more of that.
Doug Schenkel: But.
Doug Schenkel: In terms of the bottom number.
Doug Schenkel: A number of stays stays the same.
Doug Schenkel: And so do we look at it internally is number one top line growth right. So it's sort of a revenue growth within that account.
That's the end product.
Doug Schenkel: And then second on is bringing.
Doug Schenkel: Bringing you.
Doug Schenkel: From.
Doug Schenkel: So thats not really its not reported.
Doug Schenkel: What the CMP.
Doug Schenkel: The TNT tracking Kennedy.
Doug Schenkel: Thank you.
Doug Schenkel: You said it.
Doug Schenkel: Eloquently.
Doug Schenkel: We have seen since when we asked to land on your account so get multi chip and then the ones who are on the beach, we want to.
Doug Schenkel: Yeah.
Doug Schenkel: And iterate that account as quickly as possible at the beginning we get in through one lab.
As we delight our guests.
Doug Schenkel: Product yes.
Doug Schenkel: Nations.
Doug Schenkel: Although labs.
Doug Schenkel: Alright.
Doug Schenkel: So we get leverage.
Doug Schenkel: As discussed the guidance portion of it I think it's important to take a step back and think about where is our customer mix and so when we were building our guidance and we're thinking about it one of the things we recognize with academics, although an extremely important element of it.
Doug Schenkel: <unk> is a relatively small portion of the business.
Doug Schenkel: Globally about 20% of our volume is in academia and.
Doug Schenkel: Only a fraction of that is in the U S.
Speaker Change: And so what we are looking at and we're seeing is is while there is some uncertainty with with the short term and funding I think Emily said, it really well, we see that uncertainty has an opportunity to take market share and specifically I'll look at something like NIH, where we know we are very under indexed in NIH funding.
Doug Schenkel: Activity.
Doug Schenkel: And so therefore, we are actually.
Doug Schenkel: An opportunity to take share and given we offer the opportunity for lower price higher speed and higher quality, we offer the opportunity for more shots on goal.
Doug Schenkel: Science won't stop and we will continue to take market share and I think if you look at our guide.
Doug Schenkel: Confidence.
Doug Schenkel: These uncertain times is that.
Doug Schenkel: Our vast array of offerings across a wide spectrum.
Doug Schenkel: Spectrum of customers.
Doug Schenkel: Inherently protects us and Insulates us from some of the noise, but also any uncertainty we see as a long term opportunity too.
To take share and so we're very bullish on the.
Doug Schenkel: The outlook, but we also recognize that in any given week things move we've got to be able to respond to that as well.
Doug Schenkel: Thank you.
Speaker Change: Our next question coming from the line of.
Some genome with Scotiabank. Your line is now open.
Speaker Change: Hi, Thanks for taking my question I'm, sorry, if I missed it but are there specific milestones anticipated for the DNA storage segment.
Speaker Change: Over the next 12 to 24 months. Thank you.
Speaker Change: Yes. Thank you.
Speaker Change: Thank you for the question so.
Speaker Change: The technical milestones.
Speaker Change: Thanks, Dave.
Speaker Change: Alright.
Speaker Change: Being able to.
Speaker Change: So data at a terabyte scale.
Speaker Change: Using our technology.
Speaker Change: So there's a few components to that.
Speaker Change: And in doing that.
Speaker Change: At the end.
Speaker Change: Motto.
Speaker Change: The first one.
Speaker Change: It does.
Speaker Change: Cmos chip Silicon chip.
Speaker Change: No.
Speaker Change: <unk>.
Speaker Change: Demonstrating the technology for the gigabyte, SKU, but nowhere, where he had a terabyte scale.
Speaker Change: On San Juan kind of aspect to it is developing the enzymatic method.
Speaker Change: <unk>.
Speaker Change: Two <unk> silicon chip.
Speaker Change: We are the leader inventory for some business, but.
Speaker Change: Well rich, we do need an estimated to approach such that they'll send.
Speaker Change: Synthesize those would be booked.
Speaker Change: So there is no discernible liquid.
Speaker Change: And we're making very good progress on the metallurgy.
Speaker Change: With a great team doing.
Speaker Change: Doing that.
Speaker Change: Until the two.
Speaker Change: The most prominent milestones but.
Speaker Change: In addition, we also need to Raptor.
Speaker Change: Instrument.
Speaker Change: Hardware right, where the silicon chip sits on.
Speaker Change: And where.
Speaker Change: I think chemistry.
Speaker Change: And so we're working on that and then maybe the last.
Speaker Change: The software.
Manufacturing.
Speaker Change: We'd have.
Speaker Change: For the rest of our operations, we do need some.
Speaker Change: We have to keep track of.
Speaker Change: That are the inflammation.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: And.
Speaker Change: There's always a question of do you I guess, that's what I bet.
Speaker Change: Ill make it yourself. Thank you.
So we've done the analysis.
Speaker Change: Yes.
Speaker Change: I'll need to look at them.
Speaker Change: It is better.
Speaker Change: That's what we've done that's a transit system is a key component of loss.
Speaker Change: So.
Speaker Change: Okay.
Well work.
Speaker Change: The integration of those four things CP Chem chemistry hardware and then the subscale.
Speaker Change: Those are the milestones.
Speaker Change: It sounds daunting, but.
Speaker Change: It's just maybe hard to generic.
Speaker Change: Hardly any sharing of what we do.
Speaker Change: And maybe the last thing I'll say is that.
Speaker Change: Because we are.
Speaker Change: Disciplined spending.
Speaker Change: We're at the point, where.
Speaker Change: Progress in <unk>.
Speaker Change: It's proportional.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: If we were.
Speaker Change: As you know.
Speaker Change: Sometime in projects and.
Speaker Change: It's been more money you don't go faster, but we're past that now that the stores. If we could spend more money, we will be able to go faster.
Speaker Change: But we make the decision that the management.
Speaker Change: Capital allocations by being one of the most important.
Speaker Change: The decisions we have to make.
Speaker Change: Right now we.
Speaker Change: Not as much capital to deploy.
Speaker Change: We could use.
Speaker Change: I think it's the right decision to do no blowout.
Speaker Change: But that means that progress.
Speaker Change: Excuse me.
Speaker Change: Alright, well I think all in all.
Speaker Change: What we need to make sure that we.
Speaker Change: We achieved our goal.
Speaker Change: Breakeven.
Speaker Change: Thank you.
Speaker Change: That concludes our Q&A session I will now turn the call back over to Dr. Emily spoke for any closing remarks.
Speaker Change: Thank you for your time and thoughtful questions today.
Speaker Change: We're excited about the opportunities ahead as we continue to innovate.
Speaker Change: And drive value for customers.
Speaker Change: Sheldon.
Speaker Change: Thank you.
Speaker Change: Thank you for your participation in today's conference. This does conclude today's call and you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].