Q3 2025 Azenta Inc Earnings Call
Operator: Greetings, and welcome to the Azenta Q3 2025 financial results. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the star followed by one on your telephone. As a reminder, this conference is being recorded Tuesday, August 5th, 2025. I will now like to turn the conference over to Yvonne Perron, Vice President, FP&A and Investor Relations. Please go ahead.
Greetings and welcome to the center, Q3 2025 Financial results during the presentation, all participants will be in a listen. Only mode afterwards. We will conduct a question and answer session.
At that time, if you have a question, please press the star, followed by 1 on your telephone.
As a reminder, this conference is being recorded Tuesday, August 5th, 2025.
I will now like to turn the conference over to 1 parron, vice president fpna and investor relations. Please go ahead.
Yvonne Perron: Thank you, Operator, and good morning to everyone on the line today. We would like to welcome you to our earnings conference call for the third quarter of fiscal year 2025. Our third quarter earnings press release was issued before the open of the market today and is available on our Investor Relations website located at investors.azenta.com, in addition to the supplementary PowerPoint slides that will be used during the prepared remarks today. Please note that effective the first fiscal quarter of 2025, the results of B Medical Systems are treated as discontinued operations. I would like to remind everyone that during the course of the call, we will be making a number of forward-looking statements within the meaning of the Private Litigation Securities Act of 1995.
Thank you, operator. And good morning to everyone on the line today, we would like to welcome you to our earnings conference call for the third quarter of fiscal year 2025 our third quarter earnings, press release was issued before the open of the market today and is available on our investor relations website located at investors. Azenta.com in addition to the supplementary PowerPoint slides, that will be used during the prepared remarks today. Please note that effective the first fiscal quarter of 2025 the results of B, Medical Systems are treated as discontinued.
Operations.
Yvonne Perron: I would refer you to the section of our earnings release titled Safe Harbor Statement, the Safe Harbor slide on the aforementioned PowerPoint presentation on our website, and our various filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. There are many factors that may cause actual financial results or other events to differ from those identified in such forward-looking statements. We make no obligation to update these statements should future financial data or events differ from the forward-looking statements presented today. We may refer to a number of non-GAAP financial measures which are used in addition to and in conjunction with results presented in accordance with GAAP.
I would like to remind everyone that during the course of the call, we will be making a number of forward-looking statements within the meaning of the private litigation Securities Act of 1995.
There are many factors that may cause actual Financial results or other events to differ from those identified in such forward-looking statements.
I would refer you to the section of our earnings release titled, Safe, Harbor statement, the safe harbor side. On the aforementioned PowerPoint presentation on our website and our various filings with the SEC, including our annual reports on form, 10K, and our quarterly reports on form 10 Q.
Yvonne Perron: We believe the non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial results and the reconciliation of GAAP measures, they provide an even more complete understanding of the Azenta business. Non-GAAP measures should not be relied upon to the exclusion of the GAAP measures themselves. On the call with me today is our President and Chief Executive Officer, John Marotta, and our Executive Vice President and Chief Financial Officer, Lawrence Lin. We will open the call with remarks from John, then Lawrence will provide a detailed look into our financial results and our outlook for fiscal year 2025. We will then take your questions at the end of the prepared remarks, and with that, I would like to turn the call over to our CEO, John Marotta.
We make no obligation to update. These statements should future financial data or events differ from the forward-looking statements presented. Today, we may refer to a number of non-gaap financial measures which are used in addition to and in conjunction with results. Presented in accordance with gaap, we believe the non-gaap measures provide an additional way of viewing aspects of our operations and performance. But when considered with gaap financial results and the reconciliation of gaap measures, they provide an even more complete understanding of the ascent of business.
Non-gaap measures should not be relied upon to the exclusion of the Gap measures themselves.
On the call with me today is our president and chief executive officer, John marada, and our Executive Vice, President and Chief Financial Officer Lawrence Flynn.
We will open the call with remarks from John. Then Lawrence will provide a detailed look into our financial results and our outlook for fiscal year 2025
John Marotta: Thank you, Yvonne. Good morning, everyone, and thank you for joining us today. As we continue to navigate an uncertain and dynamic macro environment, one thing remains crystal clear: Azenta's core capabilities make us the partner of choice for our customers now more than ever. Whether it is navigating funding constraints, supply chain complexities, or market uncertainties, our commitment to operational excellence, innovation, and customer centricity enables us to remain a trusted ally. In times of uncertainty, it is our deep expertise and capabilities that set us apart and ensure we continue to deliver value where it matters most. We are uniquely positioned to help our customers thrive, and we are committed to enabling breakthroughs faster, regardless of the challenges the broader environment may present.
We will then take your questions at the end of the prepared remarks. And with that, I would like to turn the call over to our CEO John marotta.
Thank you, Ivonne, good morning, everyone. And thank you for joining us today.
As we continue to navigate and uncertain. And dynamic macro environment, 1 Thing Remains crystal clear a zentis core capabilities. Make us the partner of choice for our customers now more than ever
Whether it's navigating funding constraints supply chain complexities or Market, uncertainties our commitment, to operational excellence, Innovation and customer centricity enables us to remain a trusted Ally.
In terms of uncertainty, it's our deep expertise and capabilities that sets us apart and ensures. We continue to deliver value where it matters most
John Marotta: On the call today, I will start by providing an overview of our business progress and our financial performance, and then share some comments on the broader macro environment and relevant considerations before turning the call over to Lawrence for the financial review. Despite the ongoing macro challenges, our focus has not wavered. We remain guided by our North Star of long-term value creation, and our operational turnaround is moving us in the right direction.
we are uniquely positioned to help our customers Thrive and we are committed to enabling breakthroughs faster, regardless of the challenges, the broader environment may present
On the call today, I'll start by providing an overview of our business progress, and our financial performance, and then share some comments on the broader, macro environment and relevant considerations before turning the call over to Lawrence for the financial review.
John Marotta: The structural realignment of our organization is allowing us to operate more effectively, reduce G&A costs, and redeploy critical resources into the operating companies so the decisions can be made closest to the customer. We are also advancing our key growth priorities, which include: one, strengthening commercial excellence by expanding regional capabilities and alignment, staffing opening sales territories, and investing in feet on the street; two, funding product management resources to drive innovation and tighter alignment to customers' needs; and three, investing in R&D to bring forward new and transformative solutions to our customers to accelerate growth. The foundation for all that we do is rooted in the Azenta business system. ABS provides the structure and discipline to support and fuel growth through operational excellence and will be a competitive advantage for us.
Closest to the customer. We're also advancing our key growth priorities, which include 1 strengthening commercial Excellence by expanding, Regional capabilities and Alignment Staffing, opening sales, territories and investing in feet on the street 2, funding product management resources to drive Innovation and Tighter alignment to customers needs and 3 investing in R&D to bring forward new and transformative solutions to our customers to accelerate growth.
John Marotta: The business system model will harness the full potential of our talented team, unify our culture, and drive our performance. We are reshaping the company for long-term profitable growth, efficient working capital management, and sustained value creation, all in service of enabling breakthroughs faster. In the fiscal third quarter, we saw clear pockets of strength with growth in next-generation sequencing, sample storage, and product services. Consistent with the broader life sciences tool space, these areas of our business with the most stable and reoccurring revenue streams performed well. This strong performance was partially offset by core products' revenue weakness, as customers were forced to contend with ongoing funding and investment constraints and broader policy and macro uncertainty. Importantly, we have a very robust products funnel. Based on our customers' interactions, we believe that our underlying demand is strong and that the order acceleration is a matter of timing.
The foundation for all that we do is rooted in the aenta business system, ABS provides the structure and discipline to support and fuel growth through operational excellence and will be a competitive Advantage for us.
The Business System model will harness the full potential of our talented team, unify our culture and drive our performance. We're reshaping the company for long-term profitable growth, efficient working Capital Management and sustained the value creation, all in service of enabling breakthroughs faster.
In the fiscal third quarter, we saw a clear pockets of strength with growth in next-gen sequencing, sample storage and product Services. Consistent with the broader Life Sciences tool space, these areas of our business with the most stable and reoccurring revenue streams performed. Well, this strong performance was partially offset by core products. Revenue weakness as customers were forced to contend with ongoing funding and investment, constraints, and broader policy and macro
John Marotta: Against this muted macro backdrop, adjusted EBITDA margin expanded by 260 basis points year over year, a testament to our execution and cost discipline. We remain committed to our full-year 2025 guidance of organic revenue growth between 3% to 5% and adjusted EBITDA margin expansion of 300 basis points. Our geopolitical war room remains actively assessing and responding to external developments, quantifying potential impacts, and working purposefully through countermeasures. Our customer outreach initiative, which began last quarter, remains a priority. Each week, we receive direct feedback from our team on what they hear from customers and how Azenta can be a better partner. This enables us to react and adjust in real time. Consistent with our prior view, we continue to estimate the reductions in NIH funding levels will result in approximately 1% headwind to the full-year 2025 revenue. Countermeasures are in place.
Uncertainty is important. We have a very robust products funnel based on our customers' interactions. We believe that our underlying demand is strong, and that the order acceleration is a matter of timing.
Against this muted macro backdrop adjusted. If it's a margin expanded by 260 basis points year-over-year a testament to our execution and cost discipline. We remain committed to our full year 2025 guidance of organic Revenue growth between 3 to 5% and adjusted e butt down margin expansion of 300 basis points.
Our geopolitical war room remains actively assessing and responding to external developments quantifying potential impacts and working purposely through countermeasures.
Our customer Outreach initiative which began last quarter remains a priority.
Each week, we received direct feedback from our team on what they hear from customers and how his ends are. Can be a better partner.
This enables us to react and adjust in real time.
John Marotta: We believe that the tariffs have a nominal impact on our adjusted EBITDA. The turbulent and changing tariff landscape is challenging to navigate, and we continue to seek alternative supply chain sources and balanced and reasonable cost-sharing options. Thanks to the operational improvements we have made in the business, we are pleased we are able to reaffirm our guidance today despite these impacts. More broadly, we are in a strong position to capitalize on the considerable opportunities we anticipate will materialize from this dynamic environment. We believe we are a valuable outsourcing solution that can also help alleviate the cost pressures for our customers, and we are already seeing this play out. For example, we recently negotiated a new MSA with a core lab where our service offering will deliver to the customer both reduced costs and improved service quality. We anticipate seeing more of these opportunities.
Consistent with our prior view, we continue to estimate, the reductions in NIH. Funding levels will result in approximately 1% headwind to the full year 2025 Revenue. Counter measures are in place we believe that the tariffs have a nominal impact on our adjusted e. But duh the turbulent and changing tariffs landscape is challenging to navigate. And we continue to seek alternative supply, chain sources, and balanced and reasonable cost, sharing options. Thank,
The operational improvements we have made in the business. We are pleased. We are able to reaffirm our guidance today. Despite these impacts more broadly, we're in a strong position to capitalize on the considerable opportunities. We anticipate will materialize from this Dynamic environment.
We believe we are a valuable Outsourcing solution that can also help alleviate the cost pressures for our customers and we are already seeing this play out.
For example, we recently negotiated a new MSA with a core lab where our service offering will deliver to the customer both reduced costs and improved service quality.
John Marotta: Elsewhere, we are seeing green shoots in our stores and instruments products, given the robustness of our funnel. We remain in a strong financial position with $550 million in cash on our balance sheet, equivalent to $12 per share of cash, no outstanding debt, and meaningful free cash flow generation. We will prioritize investment opportunities across key levers, which are gross margin productivity, organic growth offerings, inorganic growth through strategic tuck-in M&A, and repurchasing our stock. Our M&A funnel is robust, and we see a healthy pipeline and high-quality strategic tuck-in opportunities that we believe can help to accelerate revenue growth and profitability. As we previously mentioned, we are planning to host an Investor Day later this calendar year to update the investor community on what we achieve and our outlook for our business.
We anticipate seeing more of these opportunities elsewhere. We are seeing green shoots in our stores and instruments products given the robustness of our funnel. We remain in a strong financial position. With 550 million in cash, on our balance sheet, equivalent to 12 dollars per share of cash. No outstanding, debt and meaningful. Free cash flow generation. We will prioritize investment opportunities across key levers, which are gross margin productivity, organic growth, offerings inorganic growth through strategic, tuck in m&a. And repurchasing our stock, our m&a, funnel is robust, and we see a healthy pipeline, in high-quality strategic, tuck, and opportunities that we believe can help to accelerate Revenue growth and profitability.
John Marotta: Details of this event will be released in the next couple of months. I am proud of the work our team does each day to partner with our customers. I remain excited and confident about Azenta's ability to deliver long-term sustainable value to our customers, our employees, and our shareholders. With that, I am pleased to turn the call over to Lawrence. Thank you.
As we previously mentioned, we are planning to host an investor day later this calendar year to update the investor community on what we achieved, in our outlook for our business.
Details of this event will be released in the next couple of months.
Lawrence Lin: Thank you, John, and good morning, everyone. I will first take you through an overview of our company-wide results before providing you with some more color on our segment performance, and then wrap up with details on our balance sheet and full-year guidance. As a reminder, the results we are referring to today, unless otherwise noted, exclude B Medical Systems, which is reported within discontinued operations. In the third quarter, we recorded an additional non-cash loss on assets held for sale of $69 million on B Medical. We believe the transaction remains on track to be announced in calendar 2025. To supplement my remarks today, I will refer to the slide deck available on our website. We will begin on slide three for a few highlights. Third quarter revenue totaled $144 million, flat year over year on a reported basis, and down 2% on an organic basis.
With that, I'm pleased to turn the call over to Lawrence. Thank you.
Thank you, John. And good morning everyone. I'll first take you through an overview of our companywide results before providing you with some more color on our segment performance. And then wrap up with details on our balance sheet and fully your guidance.
As a reminder, the results we are referring to today. Unless otherwise noted excludes, the medical systems which is reported, within discontinued operations,
In the third quarter, we recorded an additional non-cash loss on assets. L for sale of 69 million on B Medical. We believe the transaction remains on track to be announced in calendar 2025 to supplement. My remarks. Today, I will refer to the slide deck available on our website. We'll begin on, slide 3 for a few highlights.
Lawrence Lin: Strength in next-generation sequencing, growth in sample storage, and solid contributions from clinical biosores and product services helped offset softness in other areas of the portfolio. Non-GAAP EPS for the quarter was $0.19. Adjusted EBITDA margin was 12.3% for the quarter, which represents expansion of approximately 260 basis points year over year. This improvement highlights the continued progress of our operational turnaround efforts and the benefit of increased efficiency and cost discipline. While profitability drivers varied across segments, our overall margin expansion demonstrates our ability to execute in a challenging environment and reinforces our commitment to building a stronger, more scalable business. Year-to-date, adjusted EBITDA expanded 350 basis points year over year. Free cash flow was $15 million for the quarter, including B Medical, driven primarily by improved working capital with a significant reduction in accounts receivable.
Third quarter, Revenue totaled, 144 million, black year-over-year on a reported basis and down, 2% on an organic basis.
Strength in next generation sequencing, growth in sample storage, and solid contributions from clinical biosource and product services helped offset softness in other areas of the portfolio.
Non-gaap EPS for the quarter was 19 cents.
adjusted ibida margin was 12.3% for the quarter, which represents expansion of approximately, 260 basis points, year-over-year
Improvement. Highlights the continued progress of our operational turnaround efforts and the benefit of increased efficiency and cost discipline. While profitability drivers varied across segments, our overall margin expansion. Demonstrates, our ability to execute in a challenging environment and reinforces our commitment to building a stronger more scalable business year to date adjusted Eva expanded, 350 basis points year-over-year
Lawrence Lin: We ended the quarter in a strong position with $550 million in cash, cash equivalents, and marketable securities. Now, let's turn to slide four to take a deeper look at our results in the quarter. Total revenue of $144 million represented flat growth on a reported basis and a decline of 2% on an organic basis. In the third quarter, non-GAAP gross margin was 48.5%, higher 180 basis points year over year. The improvement is largely a result of favorable sales mix, operational efficiencies, and improved cost execution. Adjusted EBITDA was $18 million, and adjusted EBITDA margin was 12.3%. Margin expanded both year over year and sequentially. With that, let's turn to slide five for a review of our segment results, starting with Sample Management Solutions or SMS.
For the quarter, including B, Medical driven, primarily by improved working capital with the significant reduction in accounts receivable. We ended the quarter in a strong position with 550 million in cash, cash equivalents and marketable securities.
Now, let's turn to slide 4 to take a deeper. Look at our results in the quarter.
Total revenue of 144 million represented flat growth on a reported basis and a decline of 2% on an organic basis.
In the third quarter, non-gaap gross margin was 48.5% higher 180 basis points year over year. The Improvement is largely a result of favorable sales, mix operational efficiencies and improved cost, execution,
Adjusted IBA was 18 million and adjusted IBA margin was 12.3%, margin expanded both year-over-year and sequentially.
Lawrence Lin: SMS revenue was $78 million for the quarter, down 4% year over year on a reported basis and down 6% on an organic basis, primarily due to softer bookings for cryogenic stores and timing delays in our automated stores product line. This reflects customers pushing out orders as they delay larger capital investments amid ongoing budget constraints and internal realignment. Consumables and instruments were also down year over year, primarily due to a large order that shifted into the fourth quarter and a slowdown in instrument bookings. The segment was supported by growth in sample storage, along with strong year-over-year performance in product services and clinical biosores. These product lines continue to demonstrate solid execution and customer engagement and highlight the benefit of diversification in our portfolio.
With that. Let's turn to slide 5 for a review of our segment results. Starting with sample Management Solutions for SMS.
SMS Revenue was 78 million for the quarter down 4% year-over-year on a reported basis and down. 6% on an organic basis, primarily due to softer bookings for cryo and timing delays in our automated stores product line. This reflects customers pushing out orders as a delay, larger Capital Investments amid ongoing budget, constraints and internal realignment.
Consumables and instruments was also down year-over-year primarily due to a large order that shifted into the fourth quarter and a Slowdown in instrument bookings.
The segment was supported by growth in Sample storage along with strong year-over-year performance in product services and clinical bio source.
Lawrence Lin: SMS's third quarter non-GAAP gross margin was 53.6%, up 760 basis points year over year, reflecting a favorable shift in product mix and improved operational execution and cost management. Turning next to the Multiomics segment, Multiomics delivered revenue of $66 million, up 4% on a reported basis and up 3% on an organic basis. Growth was led by continued momentum in next-generation sequencing, where pricing has stabilized and volume is growing at sustained double-digit rates. Performance was further aided by large customer deals, particularly in Europe. Despite macro and geopolitical headwinds, China remains a strong market for us, posting 10% organic growth in the quarter. Gene synthesis revenue declined high single digits year over year, reflecting continued softness among key pharma accounts. The decline was primarily driven by delays, as some customers adjusted timelines and are reprioritizing projects and internal resource alignment.
These pipelines continue to demonstrate solid execution and customer engagement and highlight the benefit of diversification in our portfolio.
SMS third quarter. Non-gaap gross margin was 53.6% up. 760 basis points, year-over-year reflecting a favorable shift in product, mix and improved operational execution, and cost management.
turning next to the multi-omic segment, multi-mix delivered, revenue of 66 million of 4% on a reported basis and up, 3% on an organic basis
Growth was led by continued momentum in Next Generation sequencing where pricing has stabilized and volume is growing at sustained, double digit rates.
Performance was further aided by large customer deals, particularly in Europe.
Lawrence Lin: Sanger sequencing revenue declined mid-teens year over year, consistent with trends we've discussed in prior quarters as the industry continues to transition towards newer sequencing technologies. PLAZMID EZ, our ONT-based plasmid services solution, continues to gain traction, with revenue growth remaining strong and well ahead of last year's levels. This momentum is helping to offset the decline in traditional Sanger revenue, and we remain on track for PLAZMID EZ to substantially balance that impact over the full year. Multiomics non-GAAP gross margin for the third quarter was 42.6%, down approximately 500 basis points year over year. The decline was primarily driven by product mix and lower volume in Sanger sequencing and gene synthesis, as well as the impact of certain non-recurring items in the quarter. Next, let's turn to slide six for a review of the balance sheet.
Internal resource alignment.
Sanger sequencing, Revenue declined, mid-teens year-over-year, consistent with Trends. We've discussed in Prior quarters as the industry continues to transition towards newer sequencing Technologies.
Plasmid to EZ are Oxford. Nan reported based solution continues to gain traction with Revenue, growth remaining, strong, and well ahead of last year's levels. This momentum is helping to offset the decline in traditional Sanger revenue, and we remain on track for plasma, DZ to substantially balance, that impact, over the full year.
Multiomics non-gaap gross margin for the third quarter was 42.6% down. Approximately 500 basis points year-over-year.
Decline was primarily driven by product mix and lower volume in phangler sequencing and gene synthesis, as well as the impact of certain non-recurring items in the quarter.
Lawrence Lin: We ended the quarter with $550 million in cash, cash equivalents, and marketable securities, excluding B Medical Systems. We had no debt outstanding. Capital expenditures for the quarter were $11 million, as we continue to invest for growth and scale in our Sample Management Solutions and Multiomics business. Turning to guidance on slide eight. As you saw in our press release, we are reaffirming our full-year 2025 organic revenue growth guidance of 3% to 5%. Previously, we anticipated low single-digit growth in Multiomics and mid-single-digit growth in SMS. While our overall outlook remains unchanged, we now expect Multiomics to grow in the mid-single digits and SMS to grow in the low single digits, reflecting evolving customer dynamics and the impact of budget constraints on product purchasing timelines. We are also reaffirming our commitment to 300 basis points of adjusted EBITDA margin expansion year over year.
Next, let's turn to slide 6 for a review of the balance sheet.
We ended the quarter with 550 million in cash. Cash equivalents and marketable securities. Excluding the medical.
We had no debt outstanding.
Capital expenditures for the quarter were 11 million as we continue to invest for growth and scale in our sample Management Solutions and multiomics business.
Turning to guidance on Friday. As you saw in our press release. We are reaffirming our full year 2025 organic Revenue growth. Guidance of 3 to 5% previously, we anticipated low single-digit growth in multiomics and mid single-digit growth in SMS.
While our overall Outlook remains unchanged, we now expect multiomics to grow in the mid single digits, and SMS to grow in the low single digits reflecting evolving, customer Dynamics in the impact of budget. Constraints on product purchasing, timelines.
Lawrence Lin: To close, our performance this quarter highlights our differentiated portfolio, improving operational execution, and a hardworking team unified around long-term value creation priorities. We are committed to delivering on our full-year objectives and to advancing the initiative that will position Azenta for sustainable term growth. This concludes our prepared remarks, and I will now turn the call over to the Operator for questions.
We are also reaffirming our commitment to 300 basis points of adjusted, even a margin expansion, year-over-year.
To close our performance. This quarter highlights, our differentiate portfolio, improving operational execution, and a hard-working team unified around long-term value creation priorities. We are committed to delivering on our full year objectives and to advancing the initiative that will position ASA for sustainable long-term growth. This concludes our prepared remarks and I will now turn the call over to the operator for questions.
Operator: Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from David Saxon from Needham & Company. Please go ahead.
And our association. Should you have a question please? Press the star followed by then 1 on your touch on phone, you will hear a prompt at your hand has been raised.
Should you wish to decline from the poling process? Please press the star followed by the 2?
If you are using a speaker-phone, please lift the handset, before pressing any keys.
1 moment, please for your first question.
Your first question comes from.
David Saxon from nitham. Please go ahead.
David Saxon: Great. Good morning, John and Lawrence. Thanks for taking my questions. I will have one on guidance and then one product-related question. For guidance, fiscal 2025 guidance implies a step up here in the fiscal fourth quarter. Outside of the easier comp, I guess, what are you seeing across the businesses that give you the confidence in that step up? Then, would love your early thoughts on how you are thinking about fiscal 2026. You started 2025 at 3% to 5% and have maintained it throughout the year. Is that a good way to think about fiscal 2026 or any puts and takes we should consider, particularly around the funding environment? I will have one follow-up. Thanks.
Lawrence Lin: Sure. David, hey, it's Lawrence. Good to be with you. Let's start with the fourth quarter. As you know, Q3 year-to-date organic revenue grew at 3% year to year. To hit the 4% midpoint, there's a step up in the fourth quarter north of $15 million. So we will need to generate about $160 million in revenue in the quarter. A couple of things that are giving us the positive momentum we expect. There is momentum, as you can see, in NGS stores. Additionally, as we look at our stores backlog on hand, we have a sufficient amount in the fourth quarter. Additionally, as you look at CNI demand, we had some of these orders that I mentioned earlier that were pushed into the fourth quarter. We have actually seen that shift, and that was a significant order.
Great. Uh good morning John and Lauren. Thanks thanks for taking my questions. So um I'll have 1 on guidance and then 1 product related question. So for guidance uh fiscal 25 guide implies that stuff up here in the fiscal fourth quarter. So outside of the easier comp I guess what are you seeing across the businesses that give you the confidence and that step up and then you know would love your early thoughts on you know how you're thinking about fiscal 26, you started 25 at 3 to 5% and have maintained it throughout the year. So is that a good way to think about fiscal 26 or and he puts in takes we should consider particularly around the funding environment and I'll have 1 follow up. Thanks.
Sure, David. Hey, it's Lawrence good to be with you. Uh let's let's start with kind of the uh, fourth quarter. So as you know, third quarter year to date, our organic Revenue grew at 3% year-to-year.
To hit the 4%, midpoint, there's a step up uh, in the fourth quarter, north of 15 million.
Uh, so I need to generate about 160 million in Revenue in the quarter, you know, a couple of things that are, you know, giving us, uh, really the positive momentum. We expect, right? There's there's momentum as you can see in NGS stores. Additionally, as we look at our stores, backlog on hand, we have, you know, sufficient amount in the fourth quarter.
Lawrence Lin: So those are a couple of big items that really move us and give us confidence about the fourth quarter. Additionally, one of the things that we have seen a large amount of momentum is our improving on-time delivery around our SMS business. John Marotta and the team there have really done a tremendous effort in order to increase our on-time delivery. We will see the fruits of that labor really flow through in the fourth quarter. Ultimately, David, it is about execution and really looking at ensuring we can basically get to these numbers week to week and ensuring execution. So that is on the fourth quarter. In terms of the outlook for 2026, what we mentioned earlier is we are really committed to the IR day numbers that we had in our LRP, which are 5% to 8% CAGR.
additionally, as you look at cni demand, you know, we had some of these orders that uh, I mentioned during the uh earlier that were pushed into the fourth quarter, we've actually seen that shift and that was a significant or
So those are, those are a couple big items that really move.
Is are improving, on-time delivery, around our SMS business, John and the team there has really done a tremendous effort in order to just kind of increase our on-time delivery. We'll see the fruits of that labor really kind of flow through in the fourth quarter, ultimately David, it's about execution and really looking at uh ensuring we can you know, basically get to these numbers week to week and ensuring uh execution.
So that's that's on the fourth quarter in terms of, um,
Lawrence Lin: As I mentioned, at the end of close to the end of the calendar 2025, we will have another investor day and update everyone on the numbers.
In terms of kind of the outlook for a 2026, you know, really what we mentioned earlier is we're really committed to the IR de uh, you know, numbers that we had and and our lrp which are 5 to 8% kegger. As I mentioned uh, at the end of uh close to the end of the calendar, 2025 we'll have another investor day and update everyone on the numbers.
David Saxon: Okay, great. That is helpful. On SMS specifically, core products talked about weakness there. How much of that is due to order timing versus order cancellations? Are you seeing any cancellations or is it really just orders being pushed out due to customer resource allocation? Thanks so much.
John Marotta: David, good morning. It's John here. We're not seeing any cancellations at this time. Most of this is just pharma and around capital equipment, pausing on some of the capital equipment purchases, consistent with the rest of the market.
Okay, great, that that's helpful. Um and then I guess on on SMS specifically core products, talked about weakness there. So how much of that is due to order timing versus order cancellations? Are you seeing any cancellations or just, uh, you know, it's really just orders being pushed out due to, um, you know, customer resource allocation, thanks so much.
David, good morning.
It's John here. Um, we're not seeing any cancellations at this time. Most of this is just, uh, a Pharma and, uh, around Capitol equipment. Uh, pausing on on some of the Capital Equipment purchases, uh, consistent with the rest of the market.
David Saxon: Okay, thank you.
Okay, thank you.
Operator: Thank you. Your next question comes from Matthew Stanton from Jefferies Group LLC. Please go ahead.
Thank you.
Your next question comes from Mito from Stephen Singh. Please go ahead.
Hannah: Hey, good morning. This is Hannah on for Mac. I just had one question on gene synthesis headwinds that you were talking about, some softness from key pharma accounts. What do you think is kind of causing this softness, and do you expect these timing issues to resolve? Could you elaborate a little bit more on what you're seeing and when you expect this to improve?
since this is headwinds that you were talking about some softness, from Key Pharma accounts,
Uh, what do you think is kind of causing this softness? And do you expect these timing issues to resolve? Could you just like elaborate a little bit more on what you're seeing? And when you expect this to improve,
John Marotta: Hannah, good to be with you. We are seeing just a bit of softness around projects coming in from pharma right now in synthesis. We are seeing some of that kind of coming unstuck here in Q4. We are seeing a little green shoots around that right now. I think we remain pretty consistent on this. This is just a timing issue in North America.
Yeah, it Hannah, good to good to be with you. We're we're seeing, um, just a a bit of uh,
A bit of softness around um projects coming in from farmer right now and synthesis. We are seeing some of that going to get on uh coming on stuck here in Q4 we're seeing a little green shoots around that right now. Um but I I you know, I I think we remain a pretty consistent on this. This is just a timing issue in North America.
Hannah: Okay, great. Thanks. I will leave it there.
John Marotta: Sure. Thank you, Hannah.
Okay, great. Thanks, I'll leave it there.
Sure, thank you.
Operator: Thank you. Your next question comes from Vijay Kumar from Evercore Inc. Please go ahead.
Thank you.
Your next question comes from va, Kumar from evercore. Please go ahead.
Vijay Kumar: Hi guys, thanks for taking my question. Maybe going back to this implied Q4, I think a comment suggests Q4 should be up mid-singles, maybe about 5% organic. What was the, I guess, can you quantify the order push-out in Q3 that gives you visibility on the 5% and how you're thinking about the segments, Sample Management Solutions versus Multiomics in Q4?
Hi guys, thanks for taking my question. Uh, maybe going back to the South implied Q4 nothing in common suggests Q4 should be up off mid singles. Maybe around 5% organic. What was the uh,
I guess can we quantify the the um order push out in in Q3 that gives you visibility on that 5% and and how you're thinking about the segments. Um, SMS versus more mix in Q4
Lawrence Lin: Yeah, hey Vijay. It's Lawrence. How you doing? Look, I think one thing I failed to mention is, seasonally, Q3 to Q4, we always step up. Last year, you saw about a $7 million step up. The factors I mentioned earlier in the call at the top of the Q&A around next-generation sequencing momentum stores and then kind of this large order around CNI going out in the fourth quarter really make up the remaining difference. That's why we feel confident about what we've got looking at fourth quarter, but obviously, we've got to execute. The other thing I think, one of the things to mention, especially around our Sample Management Solutions business, and one of the key things is the strength of our funnel. Usually, I know we don't really talk about this. We talk about backlog, but what we've seen in our funnel has been tremendous.
Yeah. Hey Vijay. It's uh, Lawrence, how you doing? Uh, look I I think 1 thing I I failed to mention is, you know, seasonally Q3 to Q4, we always step up last year, you saw about about a 7 million step up the, the factors I mentioned earlier in the call, uh, at the top of the Q&A around, NGS, momentum stores, and then kind of this large order around. Cni going out in the fourth quarter. Really make up the the remaining, uh, difference. That's why we feel, uh, confident about what we've got, uh, looking at fourth quarter. But obviously, we've got to execute
Lawrence Lin: For instance, in one of our CNI business, we're saying that it is about two and a half times our revenue. To John's point earlier, there's significant pent-up demand. We expect a lot of this to kind of peter out through the fourth and then subsequently into the first quarter.
The other thing I think I, you know, 1 of the things to, to mention, especially around our SMS business and 1 of the key things is the strength of our funnel. Usually, I know we don't really talk about this. We talked about backlog. But what, what we've seen in our funnel has been, uh, tremendous, for instance in, uh,
We're saying that it is about 2 and a half times our Revenue. So to John's Point earlier there's significant pent-up demand. We expect a lot of this to kind of Peter out through the fourth and then subsequently into the first quarter.
Vijay Kumar: Understood. John, for you on the leadership, when you look at the leadership changes you made, any new leadership, sales leadership, which perhaps contributed to the order book cleaning up, which explains Q3 to Q4. I am curious, have leadership changes impacted the business?
Understood and and maybe John uh for you on on the leadership. Um um you know when you look at um leadership changes you made and any any, um,
I guess any any new leadership, uh, sales leadership uh, with Jeff perhaps uh,
um,
You know, contribute to maybe the order book cleaning up, which, which explains security to Q4, I'm curious have, uh, uh, leadership changes impacted at the business.
John Marotta: Hey Vijay, good to be with you. Insightful question. We've got a few things going on commercially that we're pretty excited about. We do have new commercial leadership in North America. As you know, we split out the regions and have gone to a regional model instead of a global model commercially. I think we're seeing green shoots around that. Our sales leaders are out in the field with customers. We're pretty excited about that. Personally, I've spent a lot of time with our customers last quarter. We're very excited, and we do really well when we're in front of our customers, candidly. Secondly, around just sales leadership in general. Joe just joined us in North America. Other than that, I think we've got new sales leadership in SRS. So Albert, who was running our corporate sales organization, has moved over to SRS.
DJ Good To Be With You insightful, question. Um, we've got we've got a few things going on in commercials that we're pretty excited about we we do have new commercial leadership in North America. Uh, as you know we we split out the regions and have gone to a regional model instead of a global model commercially. I think we're seeing green shoots around that. Our sales leaders are out in the field with customers. We're pretty excited about that. Personally, I've spent a lot of time with our customers last quarter. Uh, we're, we're we're very excited that and we do really well when we're in front of our customers, candidly
Uh, secondly around. Um
Uh, just sales leadership in general. So, uh, Joe just joined us, uh, in North America. Um, but other than that, you know, I think, uh,
um,
John Marotta: He's well known in the industry, and he actually grew up in the SRS business in our biorepository business. So we're really excited about him taking the reins there right now.
You know, I think we've got our oh, I'm sorry in SRS. We've got new sales leadership and SRS, so Albert who was running our uh corporate uh, sales organization has moved over to SRS. Um, he's well known in the industry and um, he, he actually grew up in the SRS business in our bio repository business. So we're really excited about him, uh, taking the range there, right now.
Vijay Kumar: Understood. Maybe if I could squeeze one more in, your comments over an M&A funnel seem constructive posture. I am curious, what areas are you looking at, John? Would this be on the product side or service side or anything software-related? Looks like both revenue creation and margin accretion seem like key criteria for targets.
John Marotta: Yeah, the way I would think about our M&A funnel right now is I would think about really us kind of minding our knitting and sticking with our core, and that is specifically around biorepositories automation and how we think about that. We, of course, are evaluating opportunities in the Multiomics business as well. But in general, that is the way I would think about it. I would think about it being accretive and us being very disciplined around these assets in terms of making sure that they are within our core or near product line extensions is the way I would think about it. Just back to the basics here in M&A.
Understood maybe if I could squeeze, 1 more in your comments over on m&a funnel. Um, it seems constructive pasta, I'm curious. Uh, uh, what areas are you looking at? John would this be on the product side or uh, service side, or anything software related looks like, uh, both Revenue, creation and margin. Increasing seem like he criteria for, um, targets.
Yeah, the way I would think about our m&a funnel. Uh, right now is, is I would think about really us kind of minding our knitting and and sticking with our core and that specifically around our bio repositories automation. Uh, and and how we think about that, uh, we're we're of course, are are evaluating opportunities in the multiomics business as well, but in general, that's the way I would think about it. I would think about it be being a creative and um and us being very disciplined around these assets. Uh in terms of making sure that they're within our core or near product line extensions is the way I would think about it. Just back to the basics here in m&a.
Vijay Kumar: Understood. Thank you.
John Marotta: Thank you.
So, thank you.
Thank you.
Operator: Thank you. Your next question comes from Brendan Smith from TD Cowen. Please go ahead.
Thank you.
Your next question comes from Brandon Smith from TV Cowen. Please go ahead.
Brendan Smith: Areas you would highlight that may seem more meaningful strengths in terms of spending trends across end markets?
Any areas you would highlight that may seem more meaningful strengths in terms of spending trends across end markets?
John Marotta: I'm sorry. We missed the first part of the question. Apologies.
Brendan Smith: No worries. I am sorry about that. I just wanted to double-click on the funnel that you mentioned earlier in the Q&A. How much visibility do you have stretching out over the near term? Are there any areas you would highlight that may seem like they might have more meaningful strengths in terms of spend trends across end markets?
I'm sorry. We missed the first. We we missed the the first part of the question. I apologize.
Sorry about that. Um,
so just I
click on the funnel, um, that you mentioned earlier in the Q&A. You know how much visibility do you have stretching out over the near term and are there any areas you would highlight that may seem you know? Like they might have more meaningful strengths in terms of um spend Trends across end markets.
John Marotta: Yeah. Our, you know, our funnel specifically, this goes back to Vijay Kumar's question and Yvonne Perron, a follow-on to this that you are asking specifically around the strength of commercially in our funnel. The teams have done a really good job of reviewing our deals on a weekly basis. We are going very deep into those geographically. Specifically, we have got good visibility in the capital equipment side of the business right now. Everything, the message is pretty clear. No cancellations on orders. But in terms of the funnel, there has been no competitive pressure. I mean, there is always competitive pressure, but we are not seeing misses or losses in the funnel based off of a competitive dynamic. It is just the timing of these in terms of where pharma is right now on CapEx. That is really the message around the funnel.
The Capital Equipment side of the business.
John Marotta: But I am pleased, I am very pleased with the team's visibility and command of where the funnel is, where we are in the process of driving those deals to close specifically in the Sample Management Solutions products business.
Right now, everything, the the message is, is pretty clear. No cancellations on orders. But in terms of the funnel, there's been no competitive pressure. I mean there's always competitive pressure, but we're not seeing misses or losses in the funnel, uh, based off of a competitive Dynamic. It's just the timing of these in terms of where Pharma is right now on Capital expenditures and that's really the message around the funnel. Um, but I'm pleased, I'm very pleased with the teams uh, visibility and and command of
Brendan Smith: No, that is very helpful. Thank you. Just to fit one more in, could you remind us on what the ideal buyer profile you are looking for for the B Medical Systems divestiture? I guess we have updates to timing in the near term.
where the funnel is, where we are in the process of driving, uh, those, those deals to close specifically in in the SMS products business,
John Marotta: Sure. We have been pretty consistent around B Medical Systems. We were surprised at how much demand we had gotten on the process. We are very pleased with where the process is today. Your buyer set is anywhere from private equity to strategics. Again, we are pretty pleased on where we are. We see no reason we should not be hearing about where we are in the coming months.
No, that's very helpful. Thank you. Um, just to fit 1 more in. Could you remind us on what the ideal buyer profile, you're looking for for the bmed divestiture, and um, I guess we have updates the timing uh, in the computer terms.
Sure, we you know, we we've been pretty consistent around the medical. We were surprised at how much demand uh we had gotten.
On on the process, we're very pleased with where the process is today. Your buyer set is is, um, anywhere from, uh, private Equity to strategic. And, um, again, uh, pretty pleased on where we are. We, we see no reason, we shouldn't be, uh, you shouldn't be hearing about where we are in the coming months.
Brendan Smith: Great. Thank you so much.
John Marotta: You bet.
Great, thank you so much.
You bet.
Operator: Thank you. Your next question comes from Andrew Cooper from Raymond James. Please go ahead.
Thank you.
Andrew Cooper: Hey, everybody. Thanks for the question. Maybe I just want to dive in a little bit on the Sample Management Solutions margin dynamics. Can you give a little bit of color as to how much of that is, you know, really mix-oriented with some of the timing dynamics you talked about versus how much is structural cost out that are helping there because you did kind of outperform our number pretty materially on that line?
Your next question comes from Andrew Cooper from Raymond James. Please go ahead.
Hey everybody, thanks for the question. Um,
Lawrence Lin: Yeah, Andrew, good to speak with you. For the SMS margin, we are up 760 bps in the quarter. Generally, I would say a large component is going to be mixed, with favorable mix towards the consumables items. The one thing I would say is, on top of that, we had really good improvements in growth margin, particularly around stores execution and just generally in the overall cost management that was driven by a lot of the restructuring we talked about.
Maybe just want to dive in a little bit on the SMS margin dynamics. Can you give a little bit of color as to how much of that is, you know, really mix-oriented with some of the timing dynamics you talked about versus how much is structural costs out that are helping there? Because you didn't kind of outperform my number pretty materially on that line.
Yeah Andrew uh could speak with you for the SMS margin. You know, we are up somewhere 60 base points in the quarter. Generally I would say a large component is going to be mixed, right? Uh with favorable uh uh with favorable mix towards the consumables items.
The 1 thing I would say is on top of that, we had really good improvements in, in, in gross margin, particularly around stores execution and, and, and just generally in the overall cost management. Uh, that was driven by a lot of the restructuring. We talked about
John Marotta: Andrew, a couple of things on this. You are seeing it, you are starting to see the kind of the fruits of Azenta's business system come to life here around productivity and efficiency. That team has done a really good job of bringing in the business system around specifically that gross margin line and getting some pickup there. We are pleased with that. Very pleased with that.
Andrew Cooper: Okay, helpful. Then maybe just in terms of looking at fiscal Q4 and some of the step up here, what is your visibility today and can you help us think about the comfort level knowing that, yes, you have the timing dynamic that helps you, you have the backlog, but we have seen this quarter a little bit of that backlog push out. So how comfortable are you with that kind of low single digits and the step up in Sample Management Solutions in particular in Q4 relative to kind of sitting here the first week of August and what you know you have in hand?
Andrew Andrew a couple things on this. I mean you're seeing it you're starting to see the kind of the fruits of uh absent. A business system come to life, here around productivity and efficiency that team's done a really good job of bringing in the business system around specifically that gross margin line and and and and getting some pickup there. So we're we're pleased with that. Very pleased with that.
Okay, helpful. And then.
Maybe just in terms of looking at fiscal 4q and and some of the step up here. I mean, what's your visibility today and, and can you help us think about the Comfort level, knowing that? Yes, you have the timing Dynamic that helps you. You have the backlog, but we've seen this quarter a little bit of that backlog, push out. So, how comfortable are you with that? Kind of low single digits? And the Step Up in SMS, in particular, in in 4 q, uh, relative to kind of sitting here, the first week of August and and what, you know, you have in hand
Lawrence Lin: Look, Andrew, I feel good about where we are, the things we talked about with the seasonal aspect of the step in the third to fourth quarter, coupled with the items we just talked about with the visibility on the stores backlog, what the positive momentum we are seeing in NGS. Ultimately, look, it is about execution. We are meeting with the teams weekly to ensure that we can land the fourth quarter.
Andrew Cooper: Okay, I'll stop there. Thanks for the time.
Look, I Andrew feel good about kind of where we are. Kind of the things we talked about with the seasonal aspect of the step and the third to fourth quarter coupled with the items. We just talked about with kind of the visibility and the storage backlog. What the positive momentum we're seeing in NGS. And and ultimately, look, it's about execution and, you know, we're meeting with the teams weekly to ensure that we can kind of land land, the fourth quarter,
John Marotta: Thank you.
Okay, I'll uh I'll stop there. Thanks for the time.
Thank you.
Operator: Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press star followed by the number one. Your next question comes from Matthew Stanton from Jefferies Group LLC; please go ahead.
Thank you.
Lace and gentlemen. As a reminder, if you wish to ask a question, please press star. Followed by the number 1.
Your next question comes from Matt Stanton from Jeffrey. Please go ahead.
David Saxon: Hey, thanks. Maybe on next-generation sequencing, could you just put a finer point on the high double-digit growth you saw in the quarter? What exactly did next-generation sequencing do in Q3? I know you said volume was double digits and pricing stable, but maybe a finer point on the trends there in the quarter. Then I think prior you had noted potential tailwind here from some of the challenges on the ONT-based plasmid services side with funding, especially in core labs and indirect funding. Maybe just talk a little bit more on kind of any traction you are seeing there as folks maybe look to outsource or move some of that volume elsewhere and the durability of that tailwind to your business over time. Thanks.
John Marotta: Yeah. You know, again, I think the story around next-generation sequencing is one around sales execution. The teams have done a really good job of partnering with core labs in academic and in pharma right now, both. We are very pleased with how that team is executing. Commercially, it is again, it is a testament to we are starting to see, you know, the Azenta business system kind of come to life, specifically around targeting customers and driving deals through into the business and just delivering value to our customers. Around Azenta Life Sciences, I mean, there is a bunch of opportunities that we continue to see. I mean, we were pretty consistent with our point of view around NIH funding and that being a 1% headwind. We continue to maintain that point of view.
Tailwind here from some of the challenges on the AMG side with funding, especially in in Core Labs and indirect funding, maybe just talk a little bit more on, kind of any traction you're seeing there. Um, as folks, maybe look to out, uh, Source or move some of that volume, um, elsewhere in the durability of that Tailwind to, uh, to your business over time. Thanks. Yeah. You know, again, I think the story around NGS is is 1 around sales execution, the teams have done, a really good job of partnering with, uh, Core Labs and academic and then farmer right now. Um, both
were very pleased with with how that team is executing commercially. It's again, it's a testament to we're starting to see AB, you know, the azenta business system kind of come to life.
Specifically around targeting customers, driving deals through into the business, and delivering value to our customers.
Around. Uh, Ang, I mean, there's a bunch of opportunities that we continue to see. I mean, we, we were, um, we were pretty consistent.
With.
John Marotta: As we said, we were on, we are on with the team in terms of a weekly war room. We have pushed that out to a different frequency now. We are getting, the team has got a good grip on where we are in terms of funding and how we can meet the needs where there is some pressure on that. We do not, you know, we continue to see these outsourced opportunities. And Matt, I think right now there are two dynamics in academic and government. There is a clear point of view around they are looking for high-quality partners at this point in time.
We were pretty consistent with our, our point of view around NIH funding and that being a 1. 1% headwind. We continue to maintain that point of view, as we said, we were on, we're on with the team in terms of a weekly uh War Room. We've pushed that out to a different frequency. Now we're getting the team's got a good grip on where we are um in in terms of funding and how we can meet the needs, where there's some pressure on that.
We don't, um, you know, we continue to see these outsourced opportunities. And, and Matt, I, I, I think right now there's, there's 2 Dynamics, in in academic, and, and government. There's clear, there's a clear point of view around.
John Marotta: In pharma, what we are seeing is less kind of shrinking the amount of partners they would like to have and going to make sure that, you know, they are partnering with businesses that are putting on-time delivery and quality at the forefront of their needs. And Azenta has been at the top of the list. I mean, I have had a lot of personal conversations with a lot of our big pharma customers, and that has been, that has come over and been made crystal clear to us. So that is really around next-generation sequencing and Azenta Life Sciences there.
Uh, they're looking for high quality Partners at this point in time and Pharma what we're seeing is less.
Uh, kind of shrinking the uh, the amount of uh, Partners. They would like to have in going to
Make sure that.
You know, their partnering with businesses that are putting on time delivery and quality at the Forefront of their their needs and aent has been at the top of the list. I mean, I've had a lot of personal conversations with a lot of our big Pharma customers and that's been that's come over, uh, and, and that made crystal clear to us. So that's really around NGS, and
Ang there.
David Saxon: Thanks. Maybe to go to something you touched on in opening remarks, you talked about the three areas of growth. I think for both product management and on the R&D side, you noted innovation. Maybe just give us an update on how you are feeling about the innovation pipeline and cadence. When could we start to potentially see some of these products in the area of innovation you are putting dollars and time into start to show up and contribute to the top line? Is that 2026, or is it a bit beyond that? Thanks.
John Marotta: Yeah. You know, we will come back to you clearly on when we are going to start to see a lot of that come through and show through the P&L, but let me speak to the, let me give you some specifics in particular around product management and the roadmap and how we are thinking about things in R&D. In R&D, you are going to see those investments. You are seeing some of those investments come in now. You are going to see more of those come in next year. We are really pleased at how the team is getting more disciplined around R&D from an MPI perspective, a sustaining perspective in our POC business specifically. Our CNI business, we have got a brief new life into that business.
Thanks. Um, and maybe you to go to something you touched on the opening remarks. You talked about the 3 areas of growth, I think for both product management. And on the R&D side, you you noted Innovation. Um, maybe just give us an update on kind of how you're feeling about the Innovation Pipeline and Cadence. And then, you know, when could we start to potentially see some of these products and area of innovation your your uh, putting dollars in in time into start to show up and contribute to the uh the top line is that 26 or is it is it a bit beyond that? Thanks.
Yeah.
You know, we'll come back to you clearly on when we're going to start the CL, a lot of that, come through the and show through the pnl. But let me speak to the. Let me give you some specifics, uh, in particular around product management.
Uh, and the road map and how we're thinking about things in R&D.
So,
It R&D, you're going to see those Investments. You're seeing some of those Investments come in. Now you're going to see more of those coming in next year. We're really pleased at how the team is is um
John Marotta: We have not invested in that for quite some time. We are very excited about the investments that we are coming in with that. Product management, the teams are working their roadmaps. We have seen some early indications on that. We are really pleased with how product management is looking at the roadmap in terms of voice of customer, what our customers need and want, and how we can meet their needs. Again, this is around our innovation engine with Azenta business system. Our team, our team is really, our business system team is really supporting those product managers right now in the growth of the business. I am very excited about where we are going to be able to take things.
Is getting more disciplined around R&D from an NPI perspective, a sustaining perspective. In our PC business, specifically our cni business. We've got a brief new life into that business. We have an invested in that for for quite some time, we're very excited about the Investments that we're coming in, uh, with that.
Product management. The, the teams are working their road maps. We've seen, uh, we've seen
Some.
Early indications on that. We're really pleased with how product management is looking at at the roadmap in terms of voice of customer what our customers need and want, how we can meet their needs. Again, this is around our Innovation Engine with zenta business system in our team. Our team is really are a business system. Team is really supporting those product managers right now, in, in the growth of the business. I, I'm
John Marotta: When we did the review of product management, it was clear to myself and the leadership team that was in the room that we have underinvested in these businesses for a long time, and we are really excited about, again, going back to what we said from day one here was we have got to put our resources in the right area, and it is not in G&A. It needs to be in R&D, product management, and sales and marketing. We are really pleased about what the 2026 budget is shaping up to look like to make sure that those investments are there. Again, we want to do what we say we are going to do here, and I think you are going to see that read through. Thanks, Matt.
The leadership team that was in the room that we we have, we have underinvested in these businesses for a long time and we're really excited about again. Going back to what we said from day 1 here was, we've got to put our resources in the right area and it's not in GNA. It needs to be in R&D product management and sales and marketing. And we're really pleased about what the 26 budget is shaping up to look like to make sure that those Investments are there. Again, we want to do what we say we're going to do here. And, and I think you're going to see that read through
David Saxon: If I could just speak one more for Lawrence Lin. On the push-out in the CNI orders, it sounds like it shipped here in Q4. Any more color just on what that was? Was it like a couple million dollars or something? Thanks.
Thanks Matt.
If I could just speak 1 more in for for Lawrence um on the push out in the cni orders, it sounds like it shipped here in 42. Any more color, just on on what that was was it like a couple million dollars or or something? Thanks.
Lawrence Lin: Yeah, look, it was a couple million, and it just literally shipped in July, so hopefully that helped.
Yeah, look, it was a couple million and uh, it just literally shipped in July. So hopefully that helped
David Saxon: Appreciate it.
Appreciate it.
Lawrence Lin: Thank you.
Thank you.
Operator: Your next question comes from Matthew Parisi from KeyBanc.
Your next question comes from Matthew Parisi. From Key Bank.
David Saxon: Hi, yes, this is Matthew Parisi on for Paul Knight. I want to congratulate you on the great quarter. I have a question around the NIH funding. You mentioned a 1% headwind, and I was just wondering if there is going to be possibly, we could expect less of a headwind due to the update that we have seen that funding is actually going to be going up now in the quarter or for 2026.
Hi. Yes, this is Matthew pusy on for Paul Knight. Um I want to congratulate you on the great quarter. Um I have a question around the nah. Funding, you mentioned a 1% headwind um and I was just wondering if there's going to be like possibly. Um, we could expect less of a headwind. Do you do? Um, the update that we've seen that funding is actually going to
Going up now in the quarter or for 2026.
John Marotta: Yeah, you know, Matt, thanks for the question. You know, pretty consistent with our point of view. We were, that was being pressure tested bluntly last quarter, and we had done a lot of homework around this to understand this. With the recent news of on July 31st, it is very positive. That was the Senate appropriations, bipartisan, 1% step up, consistent with what we have been hearing in the field. I think you are seeing a lot of grants coming through more around the chronic disease space. We will see what happens in the house, but we remain pretty bullish on where things are going to be from an NIH perspective next year. Again, our team, that team in Multiomics and gene was, we are able to pivot in pharma or in academic, supporting both. I think the team has done a nice job there.
Yeah. Um, you know, Matt thank, thanks for the question, you know.
Pretty consistent with our point of view. I mean we were that was being pressured bluntly uh, last quarter and we had done a lot of homework around this to understand this and with the recent news of of uh, on July 31st, you know, it's very positive that was the, uh,
Uh, Senate Appropriations bipartisan, uh, 1% step-up, you know, consistent with what we've been hearing in the field. I think you're seeing a lot of grants coming through more around chronic disease.
Um, uh, space. But we'll see what happens in the house. But we, we remain pretty bullish on where things are going to be from an NIH perspective. Next year, again, our team, we're
John Marotta: Around this indirect on 15%, our business is typically not impacted on that. We think with the direct research dollars going in and the need for more data to come out, which is samples, and those samples either get interrogated by our Multiomics business or we help support those assets in the SMS business. Either way, we are well positioned to support that 1% step up.
You know, that team in in multiomics and Gene was, we're we're able to Pivot in Pharma or in uh, academic supporting both. Um, I think the team's done a nice job there, you know, around this indirect, uh, on 15%, you know, uh, our business is typically not impacted on that, we think with the direct research dollars going in and the need to uh, the need for more data to come out, which is is samples. And
No samples.
Either get interrogated by our multiomics business or we help support those assets in the SMS business. Either way. We're well positioned to support that 1% Step Up.
David Saxon: All right. Thank you. That's all for me.
John Marotta: Okay. Sure.
All right, thank you. That's awesome man. Okay, sure.
Operator: Thank you. There are no further questions at this time. I will now turn the call over to management for closing remarks. Please go ahead.
Thank you.
There are no further questions at this time. I will now turn the call over to management for closing remarks. Please go ahead.
John Marotta: Very good. Thank you. I want to thank all of our associates and what they do every day to advance the long-term and profitable growth of Azenta, how they work each day to enable breakthroughs faster for our customers and our shareholders. Thank you all. We really appreciate it.
Very good. Thank you. I want to thank all of our Associates and what they do every day to advance the long-term and profitable growth of aenta, how they work each day to enable breakthroughs faster for our customers and our shareholders. Thank you all. We really appreciate it.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect