Twist Bioscience Q1 2025 Earnings Call Transcript

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Provided by Quartr
February 3, 2025
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Operator

Good day. Thank you for standing by. Welcome to Twist Biosciences 20 25 First Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

Please note that today's conference may be recorded. I would now like to turn the conference over to Angela Bidding, SVP of Corporate Affairs. Please go ahead.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

Thank you, operator. Good morning, everyone. I would like to thank you for joining us for Twist Biosciences' conference call to review our fiscal 2025 Q1 financial results and business progress. We issued our financial results press release before the market and it is available at our website at www.twistbioscience.com. With me on the call today are Doctor.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

Emily Leproust, CEO and Co Founder of Twist Adam Liponis, CFO of Twist and Doctor. Patrick Finn, President and COO of 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 1 and then re queue as a courtesy to others on the call.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

This call is being recorded. The audio portion will be archived in the Investors section of our website and will be available for 2 weeks. During today's presentation, we will make forward looking statements within the meaning of the U. S. Federal securities laws.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

Forward looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize and actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forward in the press release we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward looking statements except as required by law. We'll also discuss adjusted EBITDA, a financial measure that does not conform with generally accepted accounting principles.

Angela Bitting
Angela Bitting
SVP - Corporate Affairs & Chief Corporate Responsibility Officer at Twist Bioscience

Information may be calculated differently than similar non GAAP data presented by other companies. When reported, a reconciliation between GAAP and non GAAP financial measures will be included in our earnings documents, which can be found on the Investors section of our website. With that, I'll now turn the call over to our CEO and Co Founder, Emily Leproust.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Thank you, Angela, and good morning, everyone. We are pleased to report yet another quarter of strong sequential growth in both revenue and gross margin, demonstrating our unwavering progress towards the milestone of adjusted EBITDA breakeven and subsequent growth. Driving our success is our cutting edge in Essentive platform, a breakthrough innovation that not only powers our business, but also positions us to capitalize on a wide array of market opportunities. This platform is proprietary, differentiated, scalable and adaptable. Importantly, the platform serves as the foundation for every product group across the company.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Years ago, we set an ambitious yet clear path to profitability and today we are proud to be delivering on that promise. Through disciplined execution and the momentum we have built across our initiatives, we remain firmly on course to achieve adjusted EBITDA breakeven without raising capital, while continuing to invest in profitable growth opportunities for the future. Getting into the financials. We exceeded our guidance for revenue and margin, reporting another quarter of record revenue of CAD88,700,000 an increase of 24% year over year and 5% sequentially. Gross margin for the quarter came in ahead of our guidance at 48.3% compared to 40.5% for Q1 of fiscal 2024, demonstrating the leverage of fixed costs with higher volume as well as our ongoing commitment to continuous improvement and margin expansion initiatives.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

In addition, this is another quarter of showing that 75% to 80% of incremental revenue on average drops the gross margin line. Revenue from Syn Bio increased to $34,400,000 an increase of 28% year over year with the growth in this product group reflecting a diverse global customer base. We continue to see sequential growth in our Express portfolio both in revenue and number of net new accounts. We continue to push our turnaround time with the majority of gene fragments shipped within 2 days and clonal genes shipped within 4 days with the full express portfolio benefiting from this speed. Our ability to deliver product quickly at a reasonable cost expands our customer base and also is extending our wallet share within existing accounts.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

With our speed and price, we have seen new applications and innovations from researchers across the globe and we continue to be inspired by their drive to improve health and sustainability. For NGS, we reported CAD48.6 million in revenue, an increase of 23% year over year. The continued strength was driven primarily by customers commercializing liquid biopsy and rare disease assets. In addition, we see initial uptake in emerging applications of our differentiated library prep products along with other workflow components as customers choose to supply all reagents between the sample and the sequencer. And during the quarter, we saw our 3rd very significant conversion from macronary to TWIS plus sequencing, this one in human health.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

By maintaining our sequence diagnostic approach, meaning our workflow is compatible with different sequences based on our customers' preference, we remain a key partner providing NGS workflows for many different applications in addition to liquid biopsy and minimal residual disease. Turning to biopharma services, our revenue increased to $5,500,000 with orders of $5,900,000 We remain cautiously optimistic as the funnel of opportunities continues to build. By leveraging our strategic fit across our Syn Bio and Biofrontera Services portfolio, we continue to remain focused on delivering valuable services for our partners. Our data storage team continues to advance development of the technology working with water based enzymatic chemistry to synthesize DNA on our CMOS based chips for the terabyte scale product. I would now like to turn the call over to Paddy for commentary on gross margin and innovation.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

Thanks, Emily. As we look at where we've improved margin, we continue to see a majority of the improvement driven by revenue growth, while holding our fixed operating expenses relatively flat. In addition, we continue to identify incremental areas of improvement in COGS. One example implemented in the Q1 is related to plastic tips. With our extreme automation, we use a large number of tips in our processes.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

In 2024, we identified an alternative technology that was compatible with our processes and allowed us to maintain performance and sample quality, while significantly decreasing our cost. We implemented a new approach towards the end of the calendar year and we are now seeing the pull through of those savings as one more sequential step in our positive gross margin trajectory. Looking forward, we have a pipeline of activities that we anticipate will add to our gross margin incrementally while maintaining or improving the product benefits. In addition, we've talked about enzymology as the future growth driver for the business. We're applying our innovative platform to identify proprietary enzymes that deliver performance advantages within a specific product that we offer or that optimize our workflow for a particular application.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

We also expect gross margin leverage from these internally developed enzymes. Importantly, we see significant runway to leverage our synthesis portfolio to screen, optimize and implement new enzymes used within our current and future offerings minimal investment required and significant resulting ROI. As we approach adjusted EBITDA breakeven, our focus will shift seamlessly to achieving cash flow positivity, maintaining our momentum while strategically investing in profitable growth opportunities powered by our relentless innovation engine. At this time, I'd like to turn the call over to Adam to discuss our financials.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Thank you, Patty. Revenue for the Q1 of 2025 increased to $88,700,000 growth of 24% year over year and approximately 5% sequentially. Gross margin came in higher than expected at 48.3%, primarily due to increased revenue and volume leverage on our platform. Synbio revenue increased to $34,400,000 growth of 28% year over year. NGS revenue for the Q1 grew to approximately 48,600,000 dollars an increase of 23% year over year and 7% sequentially.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

For the quarter, revenue from our top 10 NGS customers accounted for approximately 39% of NGS revenue. We served 606 NGS customers in the quarter with 147 having adopted our products. For biopharma, revenue was $5,700,000 with orders of 5,900,000 dollars We had 89 active programs as of the end of December 2024 and we started 67 new programs during the quarter. Looking geographically, Americas revenue increased to approximately $53,700,000 in the Q1 compared to $44,000,000 in the same period of fiscal 2024, growth of 22% year over year. EMEA revenue rose to $28,300,000 in the first quarter versus $21,200,000 in the same period of fiscal 2024, growth of 33% year over year.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

APAC revenue increased to $6,700,000 in the Q1 compared to $6,300,000 in the same period of fiscal 2024, growth of 6% year over year. China continues to be a relatively small portion of our revenue at approximately 2% of total revenue for the Q1 of fiscal 2025. Moving down the P and L. Our gross margin for the Q1 increased to 48.3 percent, an improvement of almost 8 margin points versus the Q1 of fiscal 2024, reflecting our strong revenue growth as well as our continuous process improvements while holding expenses relatively flat year over year. 81 percent of revenue growth compared to Q1 FY 2024 dropped to the gross margin line.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Operating expenses excluding cost of revenues for the Q1 were approximately 77,500,000 dollars compared with approximately $75,900,000 in the same period of 2024. Operating expenses included approximately $6,600,000 for data storage in the Q1. Q1 FY 2025 includes annual merit increases as well as payment of FY 2024 cash balances. Looking at our progress on our path to profitability. For the Q1 of fiscal 2025, adjusted EBITDA was a loss of approximately $16,300,000 an improvement of about $11,500,000 versus the Q1 of fiscal 2024.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Cash flow from operating activities continues to improve and we are driving the adjusted EBITDA breakeven. We ended the quarter with cash, cash equivalents and short term investments of approximately $270,800,000 inclusive of the $15,000,000 from Zoma during the quarter versus $276,000,000 as of September 30. We are increasing our guidance for fiscal 2025. We are increasing the total revenue guide to $372,000,000 to 3 79,000,000 dollars up from $367,000,000 to $377,000,000 now indicating growth of approximately 20% at the midpoint year over year. We are increasing synbio revenue guidance to $144,000,000 to 147,000,000 dollars growth of approximately 17% to 18% year over year.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

We are increasing revenue guidance for NGS revenue to the top of the range of $205,000,000 to $209,000,000 growth of approximately 21% to 24% year over year. We are increasing biopharma revenue guidance to $23,000,000 growth of approximately 13% year over year. For Q2 fiscal 2025, we expect total revenue of approximately $91,000,000 to $93,000,000 growth of approximately 21% to 24% versus Q2 of fiscal 2024. Synbio revenue of approximately $35,500,000 to $36,000,000 growth of approximately 19% to 21% year over year. NGS revenue of approximately $50,000,000 to $51,000,000 growth of 23% to 25% year over year biopharma revenue of approximately $5,500,000 to $6,000,000 For the full year fiscal 2025, we expect gross margin of approximately 49% with quarterly sequential improvements in Q4 fiscal 2025 gross margin over 50%.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

We expect adjusted EBITDA loss of approximately $55,000,000 to $60,000,000 for fiscal 2025, an improvement of approximately $35,000,000 to $40,000,000 versus fiscal 2024. We expect Q2 fiscal 2025 adjusted EBITDA loss to be approximately $16,000,000 with sequential improvements in subsequent quarters. With that, I'll turn the call back over to Emilie.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Thank you, Adam. At Twist, we're often asked what makes us successful in this difficult market environment. I love this question because I get to talk about all the things that makes Twist different. Our success is not attributed to a single factor, but a combination of groundbreaking innovations and strategic investments. At the core is our pioneering technology, which miniaturizes chemistry and enables in a synthesis on a silicon chip, giving us a cost and scale advantage unparalleled in the industry.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

To date, we've invested more than $1,000,000,000 to create infrastructure, team and platform necessary to support our current achievements and propel future goals. Our innovative platform not only provides the foundation to launch differentiated products, but also empowers us to industrialize custom solutions at scale. Our relentless focus on innovation, paired with a deep understanding of our customer needs and end markets, shapes the product roadmap that delivers meaningful impact. We've built efficient and scalable sales channels, standardized and automated processes for operational excellence and digitized workflow to ensure agility and efficiency across our supply chain. This commitment to excellence extends to a diversified product group, market and revenue channels, which mitigates risk while maximizing opportunity.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

By embracing customer diversity and market resilience, we have established a robust and adaptive revenue base. Our forward thinking operations group complements our commercial prowess by focusing on continuous process improvements to expand capacity and drive gross margin growth. Importantly, the heartbeat of Twist is our incredible team. Our employees bring together expertise from diverse disciplines: chemistry, biology, physics, bioinformatics, silicon engineering, chemical engineering, hardware engineering, electrical engineering, software development, finance, legal, human resources and more. Our interdisciplinary collaboration fuels our mission to deliver products that improve health and sustainability.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Guided by a shared vision and a deep commitment to serving our customers, we continually overcome challenges and break barriers. Looking ahead, we remain steadfast in our mission to push the boundaries of where it's possible. We will continue investing in research and development in a fiscally responsible manner, creating products that not only drive profitable growth, but also deliver values to our stakeholders. With discipline and determination, we are firmly committed to achieving adjusted EBITDA breakeven and delivering long term growth. Together, we move forward innovating, growing and building a better future.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

At this time, let's open up the call for questions. Operator?

Operator

Thank you. And And our first question coming from the line of Matt Sykes with Goldman Sachs. Your line is now open.

Matthew Sykes
Matthew Sykes
Analyst at Goldman Sachs

Hi, good morning. Thanks for taking my questions. Maybe just to start out, could you just talk about some of the mix shift you're seeing in SymBio towards Express Genes and what your expectations are for the contribution over the course of the year? Any progress you've made with that product, specifically with gene makers?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Hey, Matt, this is Adam. Thanks for the question. Happy to chat about it. We are seeing sequential improvement in the Express Gene revenue quarter on quarter. And what we're also seeing as we've hit on it, I think previously, is it's not longer just Express Gene.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

It's the Express portfolio. And so what we're seeing really is, where in past someone might have bought fragments from us and now they're buying Express Genes or they might have bought clonal genes from us and now they're buying preps or IgG Express. And so having that full Express offering is really enabling us not only to expand our wallet share with existing customers, but really move folks up where they might have been a previous buyer of jeans and the maker of IGG, where now they are a buyer of IGG. So we're seeing that shift as well as we're seeing the continued improvement in the number of new customers coming into the business for the Express offering.

Matthew Sykes
Matthew Sykes
Analyst at Goldman Sachs

Got it. And then just for a follow-up, just given the adjusted EBITDA beat, how are you thinking about the path to profitability in terms of timing? When do you plan on revisiting that view, just in terms of what you've put up in terms of adjusted EBITDA and gross margin expansion?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Matt, great question. And then we are committed to being sequential improvements as we move forward. And we've talked about being ahead of the 50% gross margin by Q4 and continuing to march down that path. I think coupling our growth in revenue and that expansion in gross margin, with discipline on the OpEx line like we've had for the last number of years, it can pretty much back and do where things may end up, but we have not given that exact timeline and we're but we are steadfast in our North Star of not going back to the market for any additional equity.

Operator

Thank you. Our next question coming from the line of Luke Szarkat with Barclays. Your line is open.

Luke Sergott
Luke Sergott
Analyst at Barclays Capital

Great. Thanks guys. Couple here. Can you first talk about, I get a lot of hits on this one, on your Canada, Mexico exposure and how you're thinking about potential tariff impacts there. I know that there's some chatter on like an $800,000,000 less than $800,000,000 loophole being closed and you guys I assume they have less than a lot of your jeans are shipped at less than 800.

Luke Sergott
Luke Sergott
Analyst at Barclays Capital

So just help frame how you guys are thinking about that with the policy?

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Yes. Thank you, Luc. So just to set the fact that we know, so now there's a 25% tariffs on G and A on goods coming from Canada and Mexico and there's an additional 10% tariff on goods coming from China. And there is, like you said, a removal of the de minimis rule where if you have a package that comes into the U. S.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

That's worth less than $800 it's not in the past, it was not subject to tariffs, but now it is. What that means for us is since we manufacture 100 percent of our products in the USA, that means that the price for our products in the USA stayed the same. But our competitors that produce outside of the U. S, they will have to it really comes through directly from China. They will have to pay the 10% tax on D and A from China, plus the 6.5% tax that was there before and without the de minimis rules.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And so but that means if there was a package coming from China from a competitor that was worth $500 they used tariff and now there's a 16.5% tariff on it. So definitely a headwind for them. We mentioned it before that we'll win by winning. Our products are better, faster, higher quality and so we win by winning, but it probably will be a headwind for them as price is a significant consideration for customers. So I mean, it's customers that want to buy DNA.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Frankly, they have 2 questions for me. When and how much, right? And so the speed is very important. We are best in class with Express. And in terms of price, we were leading, but I think there's some headwinds for them.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

In terms of retaliation, we have a very, very limited exposure to Mexico. As far as our exposure to Canada, it's a slow small, it's a couple of percent. And as far as we know, in the Canadian retaliatory tariffs, there are no tariffs on D and A. So our D and A going into Canada is not subject to a Canadian tariff. So in the U.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

S, we're fine and potentially some headwinds for our competition. And as far as our Canadian exposure for now, we're also fine. We'll follow closely. At the end of the day for us again, just the headline I'll say is, Harry, for that, we're going to win. Our flights are better, and so we'll win by winning.

Operator

Thank you. And our next question coming from the line of Subbu Nambi with Guggenheim Securities. Your line is now open.

Subbu Nambi
Senior Analyst at Guggenheim Securities

Hey, guys. Thank you for taking my question. My question is how much of this Express dynamic was responsible for better than expected margins, fully realizing that this dynamic is likely to stay for the long term? And then I have a follow-up.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Subbu, I think what we said is clearly expressed as having a contribution to the margins. What we're seeing primarily is as we continue to expand revenue and grow revenue, that's the majority of the driver of the gross margin expansion. And so when we talk about it 75% to 80% on average of the revenue growth dropping to the gross margin, that's the primary driver of the gross margin expansion independent of whether it's coming from the symbios side or the NGS side of the business. It's about equal. Obviously, the Express and also some of the initiatives Paddy is talking about for process improvement are adding to that and we see it being sustainable and robust moving forward.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

So we're excited about where we are and we expect it to continue.

Operator

Thank you. And our next question coming from the line of Catherine Schulte with Baird. Your line is open.

Catherine Schulte
Senior Research Analyst at Baird

Hey guys, thanks for the questions. Maybe just to continue on that topic. Can you just talk to gross margin progression throughout the year? And for the process change around tips that Patti mentioned, how much could that benefit margins in your fiscal Q2? And any other projects like that planned throughout the year that you could talk about?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

I'll start and then maybe Patty can talk to some of the operational activity that's going on. In terms of the gross margin forecast and expectations, we expect our revenue to sequentially improve every quarter and with it we expect our gross margin to continue to sequentially improve. We raised the midpoint of the guide to 49% for the year and we expect to be ahead of the 50% mark by Q4. So I think that we should be seeing sequential improvements throughout the rest of the year. Where I think the opportunity lies, we are seeing the benefit of some of the initiatives Paddy is talking about in terms of the Q1 performance and we expect those benefits to continue into Q2 and beyond.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Patty, anything you'd add?

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

I'll add to Matt to stay on.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

I mean, the team continues to execute well on gross margin activities. It's part of our culture, which has been spectacular to watch that grow and expand across the organization. I'd say that there's more or multiple small midsize opportunities to continue to improve, including the use of our own enzymes, which first of all, we're thinking about that for new and innovative products. We can get some leverage internally to help us with margin expansion.

Operator

Thank you. And our next question coming from the line of Brendan Smith with TD Cowen. Your line is now open.

Brendan Smith
Director - Senior Analyst at TD Cowen

Great. Good morning. Thanks for taking the questions. That's actually a perfect lead into my questions just because I wanted to ask a little bit more about kind of just double click on the proprietary enzyme production that you all talked about now. Just wondering if you can speak a little bit more to the extent of GM leverage we might expect from this ongoing work.

Brendan Smith
Director - Senior Analyst at TD Cowen

And I guess I'm really just looking to understand a bit better maybe which processes internally this could apply to more specifically and which you see as prime to improve with this and potentially thoughts on timing to some of those synergies that we might see just as we kind of model out the next few quarters? Thanks.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

Good question. I mean, we are very, very high throughput synthesis company. And so there are some standard procedures internally that will really benefit from the internally manufactured enzymes. On. In addition, obviously, supply chain security and that being vertical there is incredibly useful.

Patrick Finn
Patrick Finn
President & COO at Twist Bioscience

We also see leverage into our products with hotline growth driving new and innovative products out to market that really serve the customer base well. In terms of timing, it really is all baked into our guidance. So I think that we would be consistent with that. We've got good portfolio of products coming. We're excited about that future in that product offering.

Operator

Thank you. And our next question coming from the line of Vijay Kumar with Evercore ISI. Your line is now open.

Vijay Kumar
Senior Managing Director at Evercore ISI

Hey, guys. Good morning and thanks for taking my question. I just had one, I guess, guidance P and L related question. The gross margin here in Q1, when you look at the sequential performance, even if sequential revenues drop down at 100%, I think we're having a hard time getting to 48%. Were there any one offs that drove that 48% gross margin in the quarter in the related sort of guidance question?

Vijay Kumar
Senior Managing Director at Evercore ISI

The beef mostly came from NGS and biopharma, but I think the guide raise is more coming from SymBio and Biopharma. So any I know you stopped disclosing order activity levels, but anything from a customer activity levels that gives you confidence in why SymBio should be better and NGS perhaps is in line with your prior guide?

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Vijay, thanks for the question. I'll try to hit on each of the points, but I'll ask others here to jump in. In terms of the gross margin, it was accelerated this quarter to step up. We almost see roughly 3 points of improvement quarter on quarter. When you look at it, I think there is obviously we're starting to see the real benefits of the continuous process improvements along with the revenue growth.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Nothing in it that's one time in nature, other than as we continue to activate the cost improvement programs, we expect more of that moving forward. But I'd say the step up we saw was outsized this quarter, but it should be sustainable. In terms of the products in the guide, yes, we did see, we're encouraged by the progress, not just in terms of revenue, but also on orders on the biopharma side of the business. And while it's still early and the business is still we're finding our early shoots of opportunity, we definitely see some more confidence in that side of the business. So that's what we're stepping up the guidance.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

And on the synbio side, I think what we're seeing is better visibility into the later quarters of the year. I think as we initiated the guide, we were appropriately had less visibility to how things are progressing, particularly on some of our new innovation launches. And as we're seeing that take hold and traction, we're adjusting the guidance accordingly. So a lot of confidence across all three areas of product lines, and we expect to continue to see that sequential improvement across them in subsequent quarters.

Operator

Thank you. Our next question coming from the line of Matt Larew with William Blair. Your line is now open.

Matt Larew
Research Analyst - Healthcare at William Blair

Hi, good morning. I want to get back to the Express portfolio. You're now about 1 year a little over 1 year since you launched starting with Express Jeans. Just curious if there's any data points you can share around sort of new customers relative to legacy customers converting retention rate or wallet share conversion for those that were initial early adopters? And then obviously you've had a couple of competitors since you launched come out with sort of products in response.

Matt Larew
Research Analyst - Healthcare at William Blair

And so maybe just anything around win rate or what you've observed in the market as customers have been able to compare your Express offerings versus others?

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Thank you, Matt, for the question. Yes, it's a little bit more than a year. It's been a great year. The Express portfolio broadly has been definitely one for the record books at risk. The most important thing I think

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

to

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

start is that it does what it says on the 2nd. So it's all about at the end of the day customer satisfaction and we try to be very clear in what our products will do and we want to make sure that the experience that the guests is what we had told them, which is not always the case more broadly in the industry. So that's number 1. It says what it does on the system. It does what it says on the system.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

The second thing is everything we do is express. So it's not just that we are worth keeping the line, it's not just that for a small fraction of the capacity, it's everything is made explicit to lifestyle. And that leads me to the 3rd is that because of those two things, customer satisfaction has been really, really high. And so we were able to achieve all of our objectives, which was ramp revenue to ramp gross margin. Now we're very pleased that 75% to 80% of revenue growth has been dropping to the gross margin in line for many quarters in a row and Xplatin has been a contributor to that.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Actually this year not this quarter, we did 81%, but don't hold us to it. We're going for 75% to 8% quarter over quarter. And it brought net new customers. So overall, a great success. In terms of competitor response, we saw the press release like everybody else.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

I think our competitors had expressed offerings before, but their express offering was limited in terms of capacity and we don't think that has changed. And the price point that we offer is very differentiated. And so frankly, we don't really see them. So it probably made for a good press release. But at the end of the day, you're only as good as a number of people you are.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And when we study their earnings report, I don't think the numbers are going the same direction as ours.

Operator

Thank you. Our next question coming from the line of Puneet Souda with Leerink Partners. Your line is now open.

Puneet Souda
Senior MD at Leerink Partners

Yes. Hi, guys. Thanks for the questions here. So appreciate the gross margin comments

Puneet Souda
Senior MD at Leerink Partners

and it's good to see

Puneet Souda
Senior MD at Leerink Partners

the improvement there. But my question is more about the overall growth given the backdrop of

Puneet Souda
Senior MD at Leerink Partners

the

Puneet Souda
Senior MD at Leerink Partners

market and what you're hearing from your customers. I mean, is it fair to say that the NGS and liquid biopsy remains important growth driver for you? And I mean, when we look at that guide, you didn't raise the top end of the guide, you raised you narrowed the guide on the bottom end. So just wondering, I mean, when you look at the backdrop of the academic market, was it under pressure, the clean tech markets and bio, some of that is under pressure too. And just given the challenges there, the fact that you have divested assets in biopharma already, how should we think about the growth in the NGS and diagnostic customers, just given the context of the guide?

Puneet Souda
Senior MD at Leerink Partners

Is it just, I mean, are we early in the year that's why you want to be prudent there? Or is there, could you elaborate a little bit more on the NGS guide that and how you thought about it?

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Yes.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Thanks for the question. A quick clarification. I don't think we divested BioPharma assets. I think the way we saw it is we monetized it. And so we sold half of the future milestones and royalties in exchange of $15,000,000 which we've received.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

So that was a prudent thing to add a little bit of execution and make sure that we can achieve our goal of achieving EBITDA breakeven without raising capital. In terms of the guide, we always want to be prudent. And you are correct that there is some uncertainty. But I think if we look back to the last few years, we believe in the uncertainty of biopharma funding. I think we've done really well there.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And I don't think it's by accident. We just have over the year build products that are highly differentiated, thanks to our technology. So that technology plus the combination with our commercial violence means that in any market will do well and in a market where there is turbulence, maybe we have the opportunity to do better. So I think that's how we are going into this. Again, we fundamentally we have great products with very low viable cost structure.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And I think we'll use our differentiation in products and our channels to be able to ramp top line. And as we ramp top line, we see now it's always in the road that gross margin goes up. And the last thing for us to do is to exercise protect discipline, which we've done. So the goal is to frankly do more of the same and use our winning recipe.

Operator

Thank you. Our next question coming from the line of Doug Schenkel with Wolfe Research. Your line is now open.

Doug Schenkel
Managing Director at Wolfe Research LLC

Hey, good morning everybody. Thank you for taking my questions. So just two things I want to talk about real quick. First, your number of customers increased by 11% year over year, which in itself is impressive. What I think potentially gets lost in that number is the possibility of more deeply moving into customer accounts.

Doug Schenkel
Managing Director at Wolfe Research LLC

And what I'm getting at there is I believe the way you define a customer is something like a total university or a total company. And I think what gets lost in that metric is the opportunity to penetrate multiple labs or so called sub customers within each customer. Are we thinking about that right? And if so, where are you in more deeply penetrating accounts and capturing share after you establish a beachhead? Is that a metric you track?

Doug Schenkel
Managing Director at Wolfe Research LLC

And I guess the second thing I just wanted to ask is given the geopolitical backdrop, NIH uncertainty, all those sorts of things, how are you kind of drawing the the error of ours around guidance, especially in the face of uncertainty? How are you capturing that in guidance that's maybe a little bit different than in years past? Thank you.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Thanks, Doug. Great question. So I'll handle the first question and Adam will cover the second one. In terms of the customer count, you're thinking about it exactly right. That's what's happening.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

I'll take the example of Stanford because they're in our backyard. Stanford for us comps as one customer. But as our commercial results progresses, we are gaining more and more labs within Stanford, but in terms of our reported numbers, the number stays the same. And so the way we look at it internally is number 1, applying growth, right. So it's sort of a revenue growth within an account and that's very important.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And then second is bringing new users from that one account and so that number is not reported, but that is something that we're definitely tracking internally. So I think you said it very eloquently. We have to do 2 things. 1, we have to land on new accounts, so get on more beaches. And then once we're on the beach, we want to penetrate that account as quickly as possible.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And specifically, we get in through one lab, but as we delight on customers to our product, we are able to get recommendations to have auto labs buy from us and that's where we get more wallet share.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

Here. To discuss the guidance portion of it, I think it's important to take a step back and think about where is our customer mix. And so when we were building our guidance and we're thinking about it, one of the things we recognize is academics, although an extremely important element of the business is a relatively small portion of the business. Globally, about 20% of our volume is in academia and only a fraction of that is in the U. S.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

And so what we are looking at and we're seeing is, while there is some uncertainty with the short term in funding, I think Emily said it really well. We see that uncertainty as an opportunity to take market share and specifically I'll look at something like NIH where we know we are very under indexed in NIH funded activity. And so therefore we are actually seeing an opportunity to take share and given we offer the opportunity for at lower price, higher speed and higher quality, we offer the opportunity for more shots on goal. So the science won't stop and we'll continue to take market share. And I think if you look at our guide, our confidence in these uncertain times is that our vast array of offerings across the wide type spectrum of customers is inherently protects us and insulates us from some of the noise, but also any uncertainty we see as a long term opportunity to take share.

Adam Laponis
Adam Laponis
Chief Financial Officer at Twist Bioscience

And so we're very bullish on the outlook, but we also recognize that in any given week, as things move, we've got to be able to respond to that as well.

Operator

Thank you. Our next question coming from the line of Sung Ji Nam with Scotiabank. Your line is now open.

Sung Ji Nam
Managing Director, Senior Equity Research Analyst at Scotiabank

Hi, thanks for taking the question. Sorry if I missed it, but are there specific milestones anticipated for the DNA storage segment over the next 12 to 24 months? Thank you.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Yes. Thank you, Sanjay for the question. So the detectable milestone that I expected are all related to being able to store data at a terabyte scale using our technology. So there's a few components to that and doing that in a data in, data out manner. So the first one is definitely the CMOS chip, the silicon chip.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

So we've demonstrated the technology for the gigabyte scale, but now we're working on the terabyte scale. 2nd one second aspect to it is developing the enzymatic synthesis method to build DNA on the silicon chip. We are the leader of chemistry for DNA synthesis, but for data storage, we do need an enzymatic approach such that our synthesizer would be able to sit in the data center. So there is no flammable liquid. And we're making very, very good progress on the entomology there.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

We have a great team doing that. So those, I'll say, are probably the 2 most prominent milestones. But in addition, we also need a writer of an instrument. So our hardware, our writer, where the silicon chip sits on and where the enzymatic chemistry happens. And so we're working on that.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And then maybe the last element is the software. Based on the manufacturing system that we have for the rest of our operations, we do need software to keep track of the data, the information, the tube where the DNA ends up being. And there's always a question of do you buy a software like that? How do you make it yourself? I think historically we've done the analysis that our needs are so custom that it is better to build it.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

That's what we've done. Our manufacturing efficiency system is a key component of our success. And so we also have to work on the integration of those four things, silicon, chemistry, the hardware and then the software together. So those are the milestones. It sounds daunting, but it's not just really hard engineering, hard engineering is what we do.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

And maybe the last thing I'll say is that because we are very disciplined in our spending, we're at the point where progress in that storage is proportional to the amount invested in that. If we were as you know, there are some time in projects, you spend more money, you don't go faster, but we are past that. So now in data storage, if we could spend more money, we will be able to go faster. But we make the decision as management around capital allocation is probably one of the most important decisions we have to make. And right now, we are not allocating as much capital to data storage as they could use.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

I think it's the right decision to do. There is no fast follower. But that means that progress is not as fast as it needs to be. However, I think all in all, that's what we need to make sure that we achieve our goal of achieving breakeven.

Operator

Thank you. That concludes our Q and A session. I will now turn the call back over to Doctor. Emilie LeProusse for any closing remarks.

Emily Leproust
Emily Leproust
Chief Executive Officer & Co-Founder at Twist Bioscience

Thank you for your time and thoughtful questions today. We're excited about the opportunities ahead as we continue to innovate, execute and drive value for our customers and shareholders. Thank you.

Operator

Thank you for your participation in today's conference. This does conclude today's call and you may now disconnect.

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Executives
    • Angela Bitting
      Angela Bitting
      SVP - Corporate Affairs & Chief Corporate Responsibility Officer
    • Emily Leproust
      Emily Leproust
      Chief Executive Officer & Co-Founder
    • Patrick Finn
      Patrick Finn
      President & COO
    • Adam Laponis
      Adam Laponis
      Chief Financial Officer
Analysts
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Earnings Conference Call
Twist Bioscience Q1 2025
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