Q2 2025 Twist Bioscience Corp Earnings Call
Speaker Change: To twist Bioscience second quarter financial results conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer.
To ask a question.
Speaker Change: You will need your westar one one on your telephone you will then hand, the automated messages and Johan please.
Speaker Change: Please note that today's conference is being recorded.
Angela: I would now like to turn the call over to Angela bidding SVP of corporate Affairs. Please go ahead.
Angela: Thank you operator, good morning, everyone I'd like to thank you for joining us for twist Biosciences Conference call to review, our fiscal 2025 second quarter financial results and business progress.
Angela: We issued our financial results press released before the market and it is available at our website at Www Dot twist Bioscience dotcom.
Speaker Change: With me on the call today are Dr. Emily the Proust, CEO and co founder of twist, Adam Laconia CFO of twist and Dr. Patrick Flynn, President and C. O L. A twist today, we will discuss our business progress financial and operational performance as well as growth opportunities. We will then open the call for questions. We ask that you limit your questions to only.
Angela: One and then rich you 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 forward looking statements generally relate to future events or future financial or operating performance.
Speaker Change: Expectations and beliefs regarding these matters may not materialize and actual results and 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 forth in our press release, we issued earlier today as well as those more fully described in our filings with the SEC.
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 statement, except as required by law. 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. When we reported a reconciliation between GAAP and the 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 will now turn the call over to our CEO and co founder and only the roost.
CEO: Thank you Angela and good morning, everyone.
Speaker Change: We look across to the global landscape. It is clear that we're operating in silos.
Speaker Change: Accelerating change from policy shifts and adjustments to evolving Finnish market and structural traditions.
Speaker Change: The world is transforming.
Speaker Change: Precedented pace.
Speaker Change: We're responding proactively.
Speaker Change: We recognize that such dynamic conditions require both vigilance and vision will continue to stay on that I think the broader environment.
Speaker Change: Do you find that any changes, but this was a strategic opportunities that can strengthen our long term position.
Speaker Change: Our approach is going to be in agility supported by rigorous execution and driven by our commitment to delivering lasting value.
Speaker Change: I think into a single chip news release. This morning, I am very excited to announce that we have spun out.
Speaker Change: As an independent company, the new company called Atlas because storage is a pure play company for Keystone and to win the storage as many of you know now nearly endless applications of synthetic DNA since treatment sessions, we have prioritized opportunities, where there is a significant market potential and while pigment yourself.
Speaker Change: Our competitive advantage and differentiation.
Speaker Change: The market for the search remains long trend of technology for this application that's been proven.
Speaker Change: However, since may of 2023 web internationally constraint I was studying DNA data storage to keep twist overinvestment in this business to less than 25 million.
Speaker Change: Randy.
Randy: Because you know that the search is a specialized area. The business gets to know too. Many investors will look different to drive to commercialization a dedicated team would be needed, which can be more easily accomplished by a pure play <unk> company.
Randy: We have now reached a point, where we believe increased investment is central to accelerate development with a significant $155 million investment from our potential partner Deerfield management business expeditions.
Randy: Capital in Q tell foundry ask where do you see in other undisclosed investors as a pure play unit attached storage company that says the tester is without significant capital that will enable the new company to accelerate towards commercialization and drive success.
Randy: As part of this transaction twist will receive consideration of approximately 24% equity interest net loss on a fully diluted basis as well as royalties on future commercial sales and up to $75 million.
Randy: So milestones payments, ensuring we continue to participate in future upside opportunities.
Randy: We will receive $2 5 million upfront cash payment and a $2 million secured promissory note.
Randy: Twins will benefit from technology investments made by Atlas waste supplies to our programs.
Randy: By operating as two separate companies were able to maintain a sharp focus with each organization dedicated to developing and commercializing disruptive products and services, while prioritizing exceptional customer engagement.
Randy: At last will be led by CEO, who brings extensive data storage experience, including co funding and leading nimble storage, which was acquired by <unk>.
Randy: Did it pick up.
Randy: While at HP.
Randy: To define storage strategy and introduce new products, including an entirely new product category.
Killefer: Shows Killefer.
Killefer: Managing director of similar equity partners.
Killefer: More than three decades of technology operating experience.
Speaker Change: As executive chairman of the bulb for Atlas.
Speaker Change: Bill Bennett with being the general manager of the genetic test risk team at twist will serve as Chief Technology Officer of Atlas.
Speaker Change: Turning to our financial results I am pleased to report another quarter of strong sequential growth and a record performance across revenue gross margin and adjusted EBITDA.
Speaker Change: For the second quarter of fiscal 2025, we reported a record revenue of $92 8 million, an increase of 23% year over year.
Speaker Change: Four 6% sequentially gross margin for the quarter came in ahead of our guidance at 49, 6%.
Speaker Change: What do you want to go with it.
Speaker Change: Second quarter of fiscal 2024.
Speaker Change: Taking the leverage of fixed cost with higher volume as well as our ongoing commitment to continuous improvement and margin expansion initiatives.
Speaker Change: In addition, this is another quarter of showing that on average 75% to 80% of incremental revenue drops to the gross margin line.
Speaker Change: Revenue increased to 36 million over the course of 'twenty one.
Speaker Change: Or are you.
Speaker Change: Over the course of the quarter, we have implemented programs to streamline consumer experience and several customers I'd like to share two of these programs to give you a sense of how we are meeting our customers where they are today.
Speaker Change: We introduced a twist well at the wafer customers to put money into an account that the credit and then although again that credit over a period of time.
Speaker Change: Our customers flexibility for timing of the auto and lessens the administrative burden for POC.
Speaker Change: In addition, given the new normal for Academy kicks in us today.
Speaker Change: So promotional program to enable these customers to the express genes without paying the extra premium for a limited period of time.
Speaker Change: Doesn't that stuff and we have found that when guests try the extra speed they do get hooked on receiving their products on the extra time line. This promotion allows marketers to try expertise and we believe they may continue even after the promotional period ends.
Speaker Change: Already this promotion has resulted in many new customers exiting our products and importantly, it's something sensible, we can do to support our customers as they navigate through these times.
Speaker Change: I'd like to note that both programs illustrate our innovative approach to everything we do at twist with innovation drives our product lines. It also feeds into our approach to reaching customers.
Speaker Change: The user experience and a commitment to play the long game.
Speaker Change: Turning to Ngls, we reported $51 $1 million in revenue, an increase of 25% year over year with strength coming primarily from our customers' commercial assays for diagnostic test.
Speaker Change: The quarter, we partnered with an additional software vendor to further enable the adoption of <unk> workflows in the antibody space.
Speaker Change: While the conversions from NCS will take time.
Speaker Change: <unk> opportunities could bring some certainty of revenue in the $500 million market, where today, we have close to the market share.
Speaker Change: Turning to Biopharma services revenue was $5 7 million growth of 21% year over year with orders increasing to $6 4 million, we remain cautiously optimistic as the funnel of opportunities continues to build.
Speaker Change: By leveraging our strategic fit across all <unk> and Biopharma services portfolio.
Speaker Change: We continue to remain focused on delivering valuable services for our customers.
Barry: I would now like to turn the call over to Barry.
Speaker Change: Terry on operations and innovation.
Speaker Change: Thanks Edwin.
Speaker Change: Underscore what we said earlier twist was intentionally designed to thrive in an evolving conditions, our foundation restaurant diversified strategy, including differentiation of product lines customer categories in international markets.
Speaker Change: What that looks like today is we're employing real time operational agility.
Speaker Change: We are actively monitoring and refining our commercial and supply chain strategies to ensure continuity speed and responsiveness across all regions.
Speaker Change: We are deepening customer relationships, we are engaging closely with customers and partners to reinforce trust in our platform sustained momentum, leaving co create solutions.
Speaker Change: We are investing judiciously in strategically to ensure we deliver on our innovative roadmap to continue to expand our reach our scalability and our long term competitive positioning of our offering.
Speaker Change: We are relentless in driving execution of disciplined we're prioritizing quality efficiency and innovation to maximize value for our customers, while improving operational performance.
Speaker Change: We are optimizing cost to increase our operational leverage across the company while in parallel fueling long term growth.
Speaker Change: Automation and scale continue to unlock meaningful cost savings across production, while maintaining the highest quality and value as well as R&D velocity for new product introductions.
Speaker Change: To dive into specific example that illustrates our focus for our NGF product line, we noticed as our customers begin to launch bespoke MRV asses, we will need additional capacity for this product line.
Speaker Change: We've been working with many customers over the course of the last few years, if we move to the pilot stage to verification and validation to clinical studies.
Speaker Change: While some smaller tests are already commercial we expect others to advance clinical studies next year and more to be available in the broader commercial market in 2026.
Speaker Change: We also know that the workflow for this product line must be very fast incredibly efficient and the highest quality of our customers test literally support life or death decisions.
Speaker Change: With this input we used twist approach to web whopper automation within the same footprint upgrading hardware and software and leveraging of exceptional engineering and software teams.
Speaker Change: With a fixed head count we increased capacity by about 200% on lower turnaround time by approximately 20% and.
Speaker Change: In other words, we did what we are known to do we see the ramp coming the plan and we prepare for our customers can count up consistently and then we execute.
Speaker Change: Execute to ensure we are delivering.
Speaker Change: Turning to enzyme development, we recently developed a proprietary high fidelity preliminaries that we've deployed into select internal standby of workflows.
Speaker Change: In addition to reducing supplier dependency by using this internally developed product in our own manufacturing processes, we enable enhance performance and reduce cost.
Speaker Change: This also opens up differentiated workflow opportunities within our NGF product group, we're actively exploring.
Speaker Change: At this time I'd like to turn the call over to Adam to discuss our financials.
Speaker Change: Okay.
Adam: Thank you Patty.
Adam: Revenue for the second quarter of 2025 increased to $92 8 million growth of 23% year over year and approximately four 6% sequentially.
Adam: Gross margin came in higher than expected at 49, 6%, primarily due to increased revenue volume leverage and faster than anticipated gain to continuous process improvements within operations.
Adam: <unk> revenue increased to 36 million growth of 21% over $29 8 million for the second quarter of fiscal 'twenty four.
Adam: And GFS revenue for the second quarter grew to approximately $51 1 million, an increase of 25% over $40 8 million for the same period last year.
Adam: For the quarter revenue from our top 10, mgs customers accounted for approximately 43% of NGL revenue.
Adam: We served 610 NGL customers in the quarter with 150, having adopted our products.
Adam: For Biopharma revenue was $5 7 million growth of 21% over $4 7 million for the same period of fiscal 2024.
Adam: Orders of $6 4 million, we had 95 active programs as of March 31, 2025, and we started 64 new programs during the quarter.
Adam: Looking at revenue by industry Health care revenue rose to $52 8 million for the second quarter of <unk> 25, compared to $40 9 million in the same period of fiscal 'twenty four an increase of 29%, reflecting the increased uptake of our products by pharma biotech diagnostic customers.
Adam: Industrial chemical revenue rose to $22 8 million in the second quarter up 12% from $20 3 million in the same period of fiscal 'twenty four.
Adam: Academic revenue was $16 5 million for the second quarter of <unk> 25 up 20% from $13 7 million from the same period of fiscal 'twenty four with growth coming from both <unk> and NGL customers.
Adam: Looking geographically.
Adam: <unk> revenue increased to approximately $55 2 million in the second quarter of.
Adam: 20% compared to $45 9 million in the same period of fiscal 'twenty four.
Adam: EMEA revenue rose to $30 6 million in the second quarter versus $22 3 million.
Adam: Up 38% compared to the same period of fiscal 'twenty four strong growth year over year.
Adam: APAC revenue was $7 million in the second quarter compared to $7 2 million in the same period in fiscal 'twenty for China continues to be a relatively small portion of our revenue at approximately one 5% of total revenue for the second quarter of fiscal 2025.
Adam: Moving down the P&L.
Adam: Our gross margin for the second quarter increased to 49, 6% an improvement of almost nine margin percentage points versus the second quarter of fiscal 2024, reflecting our strong revenue growth as well as a continuous process improvements, while holding expenses relatively flat year over year.
Adam: With the evolving landscape, we expect our supply chain to be minimally impacted by tariffs at this time. In addition to sourcing our raw materials, primarily from U S. Based providers are technology miniaturize, the chemical synthesis process for making DNA. So we use significantly less material than traditional well played.
Adam: <unk> approach to DNA synthesis.
Adam: Importantly, we continue to expect improvements in gross margin after comprehending supplier price increases from tariffs.
Adam: Even after the 90 day parts.
Adam: All of these assumptions are included in our guidance.
Adam: Operating expenses, excluding cost of revenues for the second quarter were approximately $87 6 million compared to approximately $79 8 million in the same period of 2024, driven by a $5 $5 million increase in noncash stock based compensation.
Adam: Operating expenses included approximately $6 1 million for data storage in the second quarter.
Adam: Looking at our progress on our path to profitability.
Adam: For the second quarter of fiscal 2025, adjusted EBITDA was a loss of approximately $14 8 million an improvement of about $11 9 million versus the second quarter of fiscal 2024.
Adam: Cash flow from operating activities continues to improve and we are driving to adjusted EBITDA breakeven.
Adam: We ended the quarter with cash cash equivalents and short term investments of approximately $257 1 million.
Adam: Turning to guidance.
Adam: We are reiterating our total revenue guide of 372 million to $379 million for fiscal 2025, indicating growth of approximately 20% at the midpoint year over year, which comprehensive NIH funding and tariff impacts and the expectation that we will continue to take share in <unk> as we have in the first half of the fiscal year.
Adam: Sure.
Adam: <unk> revenue guidance of 144 to 147 million growth of approximately 18% at the midpoint year over year, reflecting the continued share gains we saw an H one driven by the express portfolio.
Adam: And <unk> revenue guidance of 205 to 209 million growth of approximately 23% at the midpoint year over year.
Adam: Biopharma revenue guidance of $23 million growth of approximately 13% year over year.
For Q3 fiscal 2025, we expect total revenue of approximately <unk> 94 to 97 million growth of approximately 17% versus Q3 of fiscal 2004 at the midpoint.
Adam: <unk> revenue of approximately 37% to 39 million growth of approximately 15% year over year at the midpoint.
Adam: And GFS revenue of approximately $51 million to $52 million growth of 19% year over year at the midpoint.
Adam: Biopharma revenue of approximately $6 million growth of 18% year over year.
Adam: For the full year fiscal 2025, we now expect gross margin of approximately 49, 5% with quarterly sequential improvements. In addition, we expect the margin above 50% in the back half of the fiscal year.
Adam: We now expect adjusted EBITDA loss of approximately $48 million to $53 million for fiscal 2025, an improvement of approximately 41% to $46 million versus fiscal 2024.
Adam: This improvement includes the expected impact of the Atlas data storage transaction.
Adam: Starting in Q4 fiscal 2025, we expect a $5 million per quarter improvement to adjusted EBITDA and cash burn.
Adam: We expect Q3 fiscal 2025, adjusted EBITDA loss to be approximately $13 million as improvements from the Atlas data storage transaction will be partially offset by transaction related expenses in the current quarter with sequential improvements in subsequent quarters.
Adam: In addition, with the announcement made today regarding data storage, we expect to reach adjusted EBITDA breakeven on an accelerated timeline by the end of fiscal 2026.
Adam: With that I'll turn the call back to Emily.
Speaker Change: Thank you Adam I think you can see we are not standing still we're leaning in with.
Speaker Change: We view this environment, not just as something to manage through but the chance to accelerate our impact and strengthen our competitive position. Our leadership team is focused on what we can control we will make decision backpack data and grounded in a culture that has always defined twist.
Speaker Change: We focus on innovation resilience and customer impact.
Speaker Change: Adding principles of grid impacts service Amtrust resonates in this and in <unk>.
Speaker Change: Any enrollment twist.
Speaker Change: Swift ability to adjust quickly and operate with discipline gives us an edge over our competitors were larger and less nipple. Our leadership team is actively prioritizing the variables, we can control while tracking global shifts to stay ahead of the curve.
Speaker Change: We continue to take market share leveraging our differentiated platform with our customers at the forefront of our attention.
Speaker Change: Team platform and mission remains our greatest asset and we are leveraging all suites to support sustainable growth. We know creative ability is on everyone's mind, including all of us at Twitter <unk>.
Speaker Change: The thing that gives us confidence moving into the second half of our fiscal year is that we booked more than $100 million of hotel in each of the last two quarters. In addition, our sales teams is trends in the funnel and opportunities ahead.
Speaker Change: Our view of the future is clear and optimistic.
Speaker Change: Im clear twist is aligned around our high impact goals and empowered by a team committed to seek advancement and market leadership.
Speaker Change: We are moving forward with confidence prepared to withstand volatility and where possible to turn that volatility into opportunity.
Speaker Change: At this time, let's open the call for questions operator.
Speaker Change: Thank you.
Speaker Change: Awesome reminder, to ask a question you will need to press star one on your telephone and wait to be announced.
Speaker Change: To withdraw your question simply press Star one again.
Amanda: And Thats Amanda.
Amanda: To accommodate all participants in the queue. Please limit yourself to one question only please standby, while we compile the Q&A roster.
Speaker Change: Our first question coming from the line of Luke startup with Barclays. Your line is now performing.
Luke: Hey, great. Thanks for the question.
Luke: And a big news on their DNA storage.
Luke: So just wanted to kind of figure out what you guys are are given all the uncertainty around tariffs.
You guys are baking in there from within the within your guide given the kind of how the quarter played out what you guys are seeing there.
Luke: And if you're also seeing any demand starting to come over from competitors that manufacturer in China. Ultimately this the tariff situations, serving as a catalyst to push forward potential there for bio secure.
Luke: Yeah.
Luke: Hey look this is Adam thanks for the question.
Luke: A couple of comments here, we did see strong share gains in this quarter across the business.
Our team's innovation and our ability to remain nimble and match we act quickly to some of the macro challenges we highlighted in the call where a big part of this.
Luke: As I look to the.
Luke: What's baked into the guide as we.
Luke: We do see opportunity for upside in 2025 guidance.
Luke: 20% growth at the midpoint, but we never want to be in the wrong side of the guidance.
Luke: With today's announcement.
Luke: Data storage, we're more focused than we've ever been and we see that path to profitability, but we also want to be understanding and respectful of the fact that.
Luke: There is uncertainty and we have baked in.
Luke: What we know today around the tariffs.
Luke: In terms of the.
Lou: Lou discussed in terms of the Q3 and beyond.
Lou: We know we're lapping some tougher numbers in Q3 were last quarter.
Lou: <unk> had a bump in revenue.
Lou: The key the key for US is we're going to win by win.
Lou: We view any market disruption as an opportunity to take share and for the last few years, even with constrained budgets and biotechnology, we were able to take share.
We see this similar opportunity Dave academic research and really encouraged by the performance in Q2, where we saw 20% growth year over year with our academic customers across the board.
Lou: So we're confident moving forward, but we're also understand there is.
Lou: Certainly in the market, but we will take advantage of that.
Lou: Okay.
Speaker Change: Thank you and our next question coming from the line of Matt <unk> with Goldman Sachs. Your line is now open.
Speaker Change: Hey, good morning, Thanks for taking my questions.
Speaker Change: Maybe just one on the promotions that you guys are doing in <unk> I know earlier. This year you rolled out a promotion for academic customers given the stress they're under an at.
Speaker Change: It sounds like if I heard it right youre broadening that out across the business. So I guess my question would be one.
Speaker Change: Is that 20% growth you saw in the academic market. This quarter, partly a result of that promotional activity and were there any kind of visible market share shifts that.
Speaker Change: We are helped by that promotion and two do you expect a similar kind of dynamic if that is the case for the rest of your customers.
<unk> bio and how long do you believe that Youll stick with this promotional period and what are the impacts on gross margins for that thank you.
Speaker Change: Thank you Matt.
Speaker Change: Great Great question.
Speaker Change: So one of the reason why we we pushed for the promotion is really anchored in the performance of the product.
Speaker Change: When we said that.
Speaker Change: We can ship GNC in five to six days it does what it says on the we do do it and we do it not just for <unk>, but it began to do it for all of our genes.
Speaker Change: Very high throughput and we.
And we saw that.
Speaker Change: There was some confusion.
Speaker Change: India can exceed around funding and so it was a way to do one two punch.
Speaker Change: One to assist our customers and to making sure that the express.
Into more Mohan.
Speaker Change: And we believe that.
Speaker Change: That does kind of help us long term to conserve the economic markets, where as you know Phil.
Speaker Change: At the beginning of the conversion to <unk>.
Speaker Change: Our long is going to last we said it would at least less than 10.
Speaker Change: Hopefully the next until the end of our fiscal year.
Speaker Change: And we.
Speaker Change: We want to make sure that our Christmas no debt.
Speaker Change: In terms of impact on margin I think.
Speaker Change: It's.
Speaker Change: Dave.
Speaker Change: Sure.
Speaker Change: As you know from from the math.
Speaker Change: If we if the sales prices.
Speaker Change: <unk>, 5%.
Speaker Change: Lower than average, but your volume increased in all multi.
Speaker Change: He is positive.
Speaker Change: And as far as the impact on the quarter.
Speaker Change: Yes.
Speaker Change: And not complete.
Speaker Change: In fact, since we started about midway through the quarter, but at the end of the day.
Speaker Change: A lot more I can make gifts and I would like to have a mix with James and Doug gating.
Speaker Change: They're seeing the value of it.
Speaker Change: Doing the reordering and so are we.
Speaker Change: She does.
Speaker Change: As a windfall to customers.
Speaker Change: A windfall.
Speaker Change: Thank you.
Super lumpy: Next question coming from the line of Super lumpy with Guggenheim Securities. Your line is now open.
Super lumpy: Hey, guys. Good morning, Thank you for taking my questions.
Super lumpy: You have been reporting the question of Ngl's revenues from your top 10 customers each quarter.
Super lumpy: Much of the second half guidance is from Destocking customers, especially in lgs.
Super lumpy: Typically this is Adam Thank you for the question and if I look at the guidance for Ngls I'd say, the we expect to see growth from both the existing customers and the top 10 as well as other customers Werent in the top 10 today one thing we do.
Super lumpy: Talk about a lot is it's not always the same top 10 customers every quarter. So we do see rotation there.
Super lumpy: We are seeing new customers launching.
Super lumpy: Haven't baked in any.
Super lumpy: Assumed increases for things like MRV.
Super lumpy: In that back half guidance, but we do see the top 10 growing at about the same rate as the.
Super lumpy: <unk>.
Doug Schenkel: Thank you and our next question coming from the line of Doug Schenkel with Wolfe Research. Your line is now open.
Doug Schenkel: Good morning.
Speaker Change: Thanks for taking my question.
Doug Schenkel: Just.
Doug Schenkel: Take a little deeper into guidance.
Doug Schenkel: So the first.
Doug Schenkel: Is on the spin co are you planning to reinvest some of that spend savings into higher priority R&D initiatives. If we're interpreting guidance right. It seems like that might be the case. So that's the first part.
Doug Schenkel: The second is on the marquee launches that you referenced you talked about customers moving into clinical studies when would they start to build inventory and how is that contemplated in guidance and then the third part is on pacing guidance implies about 28% of sales in the fourth quarter at the midpoint.
Doug Schenkel: It's more backend loaded compared to the last two years is there anything to read into that thank you.
Doug Schenkel: Okay.
Doug Schenkel: Hi, Doug. This is that this is Adam here I'll see if I can hit all three parts of many to help me out a bit because I'll forget them as I start talking.
Doug Schenkel: So in terms of the last one first.
Speaker Change: I think the pacing is we've said consistently that we're going to see sequential growth and we feel confident in that growth.
Doug Schenkel: Do you look at it year on year.
Doug Schenkel: The impact of growth in both quarters.
Doug Schenkel: It's slower than it was in the front half, but are you seeing that sequential increase and we're seeing that.
Doug Schenkel: Set up nicely and in terms of the continued adoption Cherokee Wilkinson bio and <unk>.
Doug Schenkel: The growth in our existing and new customers in GFS.
Speaker Change: Stepping back into the first two questions and you can repeat them for me I appreciate it.
Doug Schenkel: Pete.
Doug Schenkel: Absolutely, yes, sorry to rattle through those so quickly. So the first was on reinvestment of spend savings in R&D initiatives. It looks like Thats, what youre doing at least partially a small amount and then the second was on the marquee launches you talked about customers moving into clinical studies.
Doug Schenkel: Just wondering when they would build inventory and how is that contemplated in the guidance.
Doug Schenkel: Question. So in terms of the in terms of the.
Doug Schenkel: The launch of Atlas data storage.
Doug Schenkel: Did raise our adjusted EBITDA at the midpoint.
Doug Schenkel: About $7 million in this quarter that does reflect most of the savings from not having data storage, which is about a $5 million a quarter cash burn in.
Doug Schenkel: In our P&L, so that that is.
Doug Schenkel: Contemplated in Q4, and Q3, given the timing of it as well as some transaction related costs the impact will be partial.
Doug Schenkel: But we are we are assuming that most of that.
Doug Schenkel: That savings is dropping to the bottom of the P&L.
Doug Schenkel: And then in terms of the <unk>, we're not assuming any material launches.
Doug Schenkel: To ramping in the back half of 2026.
Doug Schenkel: Thank you.
Doug Schenkel: Next question coming from the line of Vijay Kumar with Evercore ISI. Your line is now open.
Vijay Kumar: Hey, guys. Thanks for taking my question.
Doug Schenkel: I guess.
Doug Schenkel: Just to clarify one on the macro here, Adam or Andrea if you will.
Speaker Change: On tariffs are you assuming no impact at all.
Doug Schenkel: Is there any impact, but you're offsetting those impacts.
Doug Schenkel: And sort of sticking to that macro team.
Speaker Change: Academic and Colin can you just remind us where does U S LNG as a percentage of revenues.
Speaker Change: Proposal, four NIH budgets being down 37%.
Speaker Change: Are you assuming second half growth to moderate or should that sustained at second quarter levels. Thank you.
Speaker Change: Thanks for the question.
Speaker Change: As far as the tariff so obviously the tariffs on closed now.
Speaker Change: Even when when the tariffs were.
Speaker Change: Nothing pause.
Speaker Change: The vast majority of our products were exempt.
Speaker Change: In iteration two into Europe.
Speaker Change: <unk>.
Speaker Change: China tariffs.
Speaker Change: First of all China is a very small number for us.
Speaker Change: And similarly, even now.
Speaker Change: These tariffs on most.
Speaker Change: S product into China.
Speaker Change: <unk> products are exempt as well now so.
Speaker Change: Overall.
Speaker Change: We think that the.
Speaker Change: Alright.
Speaker Change: I'll back it would be modest headwinds for our competitor than for us.
Speaker Change:
Speaker Change: Again, as Ed mentioned earlier, we will.
Speaker Change: Wind by winning a profile.
Speaker Change: Better.
Speaker Change: A bit of scans little higher quality better user experience and so.
Speaker Change: Paris.
Speaker Change: And again as a.
Speaker Change: Two insurers and.
Speaker Change: The headwind for competitions, but.
Speaker Change: We will win by women.
As far as academia.
Speaker Change: Hey, good growth next year.
Speaker Change: 20%.
Speaker Change: In the last quarter.
Speaker Change: Over a year.
Speaker Change: So.
Speaker Change: Great great growth.
Speaker Change: Massively underpenetrated in.
Speaker Change: So we have we have.
Speaker Change: So peak opportunity.
Ahead of us, it's a very similar opportunity to which we had extensive over the last few years with Biopharma Biopharma funding was under pressure.
Speaker Change:
Speaker Change: Product.
Speaker Change: <unk> the value of our products from our own created.
Speaker Change: Equated to cliffs point of view was so positive that we have grown significantly and we think the same.
Speaker Change: The same opportunities will happen.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of Matt <unk> with William Blair. Your line is now open.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Good morning, maybe just following up on the question on the environment.
Speaker Change: You referenced a couple of times on the call that the guidance assumes continued share taking in the back half Kieran and clearly this has been a story of sure taking for many years. So maybe it's not that unusual but just the emphasis on that.
Speaker Change: Can we read into that that youre observing softer market conditions are softer customer wallet in April versus March and moving on and thus the share today taken aspect is more important.
Speaker Change: Maybe just speak a little bit to what you're seeing broadly for some of your customers their spend and behavior relative to what youre seeing in terms of your own activity levels with your customers.
Speaker Change: Yes, Thank you Matt.
Speaker Change: A broad question.
Speaker Change: We have.
Speaker Change: Okay.
Speaker Change: A lot of.
Speaker Change: Queues in many different applications many front.
Speaker Change: Geographies.
Speaker Change: In terms of academia.
Speaker Change: For sure it's clear that Dave.
Speaker Change: Dave.
Speaker Change: Pressure in academia however.
Speaker Change: In a world with.
Speaker Change: Funding pressure.
Speaker Change: I think I think we're.
Speaker Change: We are a bank.
Speaker Change: A very strong value proposition.
Speaker Change: Jean NGF diagnostics.
Speaker Change: We don't have the same.
Speaker Change: The same dynamic at all that.
That liquid biopsy and Bobby.
Speaker Change: Broadly GMP <unk>.
Speaker Change: Doing really well.
Speaker Change: So.
Speaker Change: It's a completely different dynamic.
Speaker Change: In terms of Biopharma.
Speaker Change: I think there is.
Speaker Change: It can be difficult situation.
Speaker Change: Dynamic from from the past where behalf on behalf.
Speaker Change: In terms of funding.
Speaker Change: And so for the customers that don't have tight funding.
Speaker Change: As an edge, we will even with the company that did that.
Speaker Change: Good funding.
Speaker Change: We're cautious about budgets and so.
Speaker Change: In this environment, where all brand.
Speaker Change: <unk> high quality high speed and low cost I think between the <unk> plus.
Speaker Change: First we've launched a number of new products.
Speaker Change: The last few quarter.
Speaker Change: To extend our architecture.
Speaker Change: Flex grip.
Speaker Change: Early days, but.
Speaker Change: It seems to be doing really well in AG bio.
Speaker Change: <unk>.
Speaker Change: All new library prep.
Speaker Change: Doing great.
Speaker Change: Overall.
Speaker Change: Yes.
Speaker Change: Different different.
Speaker Change: Most macro environment.
Speaker Change: For each of.
Speaker Change: The different markets we serve.
Speaker Change: But nothing.
Speaker Change: That's where we're good at.
Speaker Change: We are not tier one sites Utah.
Speaker Change: Sure.
Speaker Change: I'm, just a musician of biology.
Speaker Change: Company.
Speaker Change: And really be concerned with in terms of defending what they need.
Speaker Change: And our products such as Beijing innovation of.
Speaker Change: Speed quantity.
Speaker Change: Very competitive if not leading heating costs.
Speaker Change: I think that makes us.
Speaker Change: In any environment.
Speaker Change: We can win but we adjust and ADEPS.
Speaker Change: It takes for each of the products in the markets we serve.
Speaker Change: Thank you.
Speaker Change: Next question coming from the line of Puneet <unk> with Leerink partners. Your line is now open.
puneet: Yeah, Hi, guys. Thanks for taking my questions.
Speaker Change: Just a couple of share if I could.
Speaker Change: First I don't know if you provided the U S academic growth I think you've provided the international or the worldwide growth.
Speaker Change: And what are you assuming in the second half for the U S academic.
Speaker Change: Growth.
Speaker Change: On the order side, you had more than $100 million you said in the orders in the last two quarters can you elaborate a bit into whats what is the assumption there what's growing within that Ngls versus <unk> versus other.
Speaker Change: Segment and then.
Speaker Change: Was there any pull forward due to tariffs.
Speaker Change: European customers, so assuming tariffs.
Speaker Change: <unk> retaliatory tariffs.
Speaker Change: And did you see any impact from that thank you.
Speaker Change: Yeah. So let me start on that was that the U S. Academics, we did not disclose the use academics, but we did see strong growth.
Speaker Change: Across the board, but then GSM and bio and we expect to.
Speaker Change: The growth to continue in the second half.
Speaker Change: With orders more than $100 million in the each of the first two quarters, we did see significant growth across all of our platforms Sym bio mgs and biopharma products and services.
Speaker Change: We expect that to continue.
Speaker Change: Did not see any meaningful pull forward some tariffs, we see demand continuing to grow.
Speaker Change: I'm confident that we'll continue to see sequential share gains.
Speaker Change: Thank you and our.
Speaker Change: Next question coming from the line of <unk>.
Speaker Change: Genome with Scotiabank. Your line is now open.
Speaker Change: Alright, Thanks for taking the question maybe on the U S. Academic one well did you talk about how important is the academic market for the DNA makers market and.
Speaker Change: In terms of.
Speaker Change: Based on all of the policy discussions going on do you have.
Speaker Change: Have your assumptions in terms of that.
Speaker Change: DNA They express gene growth opportunity has that changed at all especially targeting the U S academic market. Thank you.
Speaker Change: Yes, good question.
Speaker Change: Look I think that the value proposition is really starting to resonate.
Speaker Change: No that's about a $1 $4 billion opportunity.
Got it that make us into buyers, it's underpinned by economics and speed.
Speaker Change: From an academic standpoint, and a constrained budget environment, then twist value proposition resonates very very strongly again, either as more shots on goal, but then secondly in the situations, where you maybe want to focus on higher value research.
Speaker Change: Ascending towards more total what to do more clothing and delivering more product to the customer base. That's a very very favorable offering. So we continue to be very very optimistic and bullish looking forward.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of Tom Peterson with RW Baird. Your line is now open.
Speaker Change: Yeah.
Speaker Change: Hey, everyone. Congrats on the quarter, thanks for taking our question.
Speaker Change: Adam maybe just a follow up on the adjusted EBITDA commentary I appreciate the color on the Opex spend for the DNA data storage business.
Speaker Change: Guess, what other assumption underpinned fiscal 'twenty six adjusted EBITDA breakeven target you put out how.
Speaker Change: How should we be thinking about kind of core opex growth over the medium term.
Speaker Change: Tom Thanks for the question and happy to talk about so we did announce that we expect to be adjusted EBITDA positive by the end of fiscal 2026.
Speaker Change: I think given the with the <unk>.
Speaker Change: Atlas announcement we.
Speaker Change: We can see a clear path to that what we've said previously is that we see continued sequential improvements.
Speaker Change: Not just in revenue and gross margin, but also adjusted EBITDA moving forward.
Speaker Change: And is that would that trend will continue in terms of investment level, what we've talked about in the past is inflationary levels with investment.
Speaker Change: In opex across the business I think we'll see a general trend similar to that moving forward.
Speaker Change: On the path to adjusted EBITDA positive.
Speaker Change: Thank you.
Speaker Change: Our next question coming from the line of Brendan Smyth with TD Cowen. Your line is now open.
Brendan Smyth: Alright, great. Thanks for taking my questions guys. Congrats on all the progress.
Brendan Smyth: Back to you on that last question I guess with that adjusted EBITDA breakeven now by the end of next year I just wanted to ask.
Brendan Smyth: Maybe how do your expectations for profitability of each revenue segment with this new guidance kind of compare to your prior adjusted EBITDA issuance and I guess I'm really just wondering if you can give any additional color on where you see the profitability bar for each segment, just given all the new product launches and kind of internal initiatives that you've implemented since that prior ratios.
Brendan Smyth: Thank you for the question and we do look at the business in aggregate single segment.
Brendan Smyth: I've talked about a lot in the past I think it will continue on average in the future moving forward is.
Brendan Smyth: Sure.
Brendan Smyth: As with the gross margin continues to expand.
Brendan Smyth: Above 50, we won't be happy we want to continue marching.
Brendan Smyth: We see about 75%, 80% of incremental revenue drop into the gross margin line on all of our product lines across the business.
Brendan Smyth: And we will continue to adapt and adjust.
Brendan Smyth: The investment levels in the Opex line to.
Brendan Smyth: To meet the growth that we want her team across cross different products. So we're pretty pleased with all three.
Brendan Smyth: Yeah.
The growth in that.
Brendan Smyth: Contribution to the.
Brendan Smyth: The growth in gross margin as well.
Brendan Smyth: That trend to continue.
Brendan Smyth: Beyond just 2025.
Brendan Smyth: Thank you.
Brendan Smyth: And I'm showing no further questions in the queue. At this time I will now turn the call back over to Dr. Emily <unk> for any closing.
Emily: Thank you for your questions and Flushing yesterday at twist, we remained committed to transparency disciplined growth and long term value creation, we recognized that the world around us is shifting but our focus is steady.
Emily: <unk>, we stop us investing in innovation and continuing to be in the business designed not just 'twenty of complexity, but to lead through it.
Emily: We appreciate your continued confidence in our team and our mission.
Emily: And we can follow up to a bit to you on our progress in the next quarters ahead. Thank you.
Emily: Yeah.
Emily: Thank you. This concludes today's conference call. Thank you for your participation and you may now disconnect.
Emily: Okay.
Emily: [music].
Emily: Okay.
Emily: Okay.
Emily: [music].
Emily: Yes.
Emily: [music].
Emily: Yes.
Emily: [music].