Twist Bioscience Corporation (TWST) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong revenue growth, particularly in DNA Synthesis and NGS, driven by AI drug discovery demand and new partnerships. Despite a Q1 EBITDA loss, the year-over-year improvement reflects strategic investments and efficient scaling. The company's raised guidance and confidence in future growth, alongside a solid liquidity position, suggest a positive outlook. However, ongoing investments may moderate margin improvements in the short term. Given the market cap, the stock is likely to react positively, with a 2%-8% increase expected over the next two weeks.
Key Financial Performance
Revenue for Q1 FY 2026 $103.7 million, a growth of 17% year-over-year. This growth was driven by strength in DNA Synthesis and Protein Solutions, particularly from customers pursuing AI-enabled discovery.
Gross Margin for Q1 FY 2026 52.0%, an increase of approximately 4 margin points year-over-year. This improvement was supported by increasing revenue and continuous process improvement efforts.
DNA Synthesis and Protein Solutions Revenue for Q1 FY 2026 $51.1 million, a growth of 27% year-over-year. This was driven by strength from customers pursuing AI-enabled discovery.
NGS Applications Revenue for Q1 FY 2026 $52.6 million. Excluding one large customer, NGS grew 18% year-over-year, driven by expanding volumes with existing diagnostic customers and new customer additions.
Americas Revenue for Q1 FY 2026 $58.4 million, a growth of 9% year-over-year. This growth reflects increased uptake of products in the region.
EMEA Revenue for Q1 FY 2026 $38.4 million, a growth of 36% year-over-year. This growth was driven by strong demand in the region.
APAC Revenue for Q1 FY 2026 $7 million, a growth of 4.5% year-over-year. This growth reflects increased distributor activity in the region.
Therapeutics Revenue for Q1 FY 2026 $37.2 million, a growth of 39% year-over-year. This increase reflects the uptake of products by large pharma and biotech customers, including AI-enabled discovery.
Diagnostics Revenue for Q1 FY 2026 $35.3 million, relatively flat year-over-year. Excluding one customer, Diagnostics was up 12% year-over-year, driven by growth in diagnostic OEM partners.
Industry & Applied Revenue for Q1 FY 2026 $6.1 million, a growth of 11% year-over-year. This growth reflects increased adoption of products in applied markets.
Academic Research and Government Revenue for Q1 FY 2026 $12.2 million, relatively flat year-over-year. There was less large-scale project activity but an increase in the number of customers.
Global Supply Partner Revenue for Q1 FY 2026 $12.8 million, a growth of 50% year-over-year. This growth was driven by a significant new partner for NGS, growth in diagnostic OEM partners, and distributor growth in APAC.
Adjusted EBITDA for Q1 FY 2026 A loss of $13.4 million, an improvement of $2.8 million year-over-year. This improvement reflects efficient scaling and strategic investments in commercial and digital capabilities.
Net Cash Used in Operating Activities for Q1 FY 2026 $24.8 million. This reflects ongoing investments in growth and operations.
Capital Expenditures for Q1 FY 2026 $10 million. This reflects investments in infrastructure and capacity expansion.
Cash, Cash Equivalents, and Short-term Investments at the end of Q1 FY 2026 $197.9 million. This reflects the company's liquidity position.
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Operating Highlights
New Product Launches: Twist has transformed into an NPI (New Product Introduction) machine, consistently launching new products that leverage the same core manufacturing infrastructure. This has allowed the company to expand into new applications and customer workflows without adding risk or complexity.
AI-Enabled Discovery: Twist has booked over $25 million in orders tied to AI discovery in fiscal 2025, and this market is transitioning into repeat production-level workflows. The company is leveraging its platform for AI-enabled discovery, which is now a $1.5 billion market for antibody discovery services and $700 million for protein expression.
Market Expansion: Twist's estimated serviceable market has expanded from $2 billion in 2020 to $7 billion today, with a clear path to $12 billion by 2030. This growth is driven by the current portfolio of products and services, particularly in Therapeutics, Diagnostics, and Applied markets.
NGS Applications: The serviceable market for NGS (Next-Generation Sequencing) applications is over $3 billion, with Twist holding about 7% market share. The company expects to outpace the industry CAGR of 14% by expanding volumes with existing diagnostic customers and converting legacy workflows to sequencing-based solutions.
Revenue Growth: Twist achieved its 12th consecutive quarter of revenue growth, with Q1 fiscal 2026 revenue at $103.7 million, a 17% year-over-year increase.
Gross Margin Improvement: Gross margin improved to 52% in Q1 fiscal 2026, up 4 percentage points from the same period in fiscal 2025, driven by revenue growth and process improvements.
Adjusted EBITDA: The company is on track to achieve adjusted EBITDA breakeven by Q4 fiscal 2026, with a Q1 fiscal 2026 adjusted EBITDA loss of $13.4 million, an improvement of $2.8 million year-over-year.
Strategic Investments: Twist has made targeted investments in commercial teams, R&D infrastructure, and operations to support growth opportunities, particularly in AI-enabled discovery and NGS applications.
Focus on Key Metrics: The company is focused on three key performance metrics: revenue, gross margin, and adjusted EBITDA breakeven, which drive its future growth and operational strategy.
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Risk or Challenges
Market Growth and Customer Adoption: The company is heavily reliant on market growth and customer adoption patterns to achieve its projected $12 billion addressable market by 2030. Any slowdown in these areas could adversely impact revenue growth and strategic objectives.
AI-Enabled Discovery Investments: Significant investments in AI-enabled discovery and related infrastructure are being made. If these investments do not yield the expected returns or if the market for AI-enabled discovery does not develop as anticipated, it could negatively affect financial performance.
Revenue Concentration: A substantial portion of revenue comes from top customers, particularly in NGS applications. Any loss or reduction in business from these key customers could materially impact financial results.
Operating Expenses: The company has increased operating expenses by $10 million per quarter to drive growth. If revenue growth does not materialize as expected, this could strain profitability and delay adjusted EBITDA breakeven.
Supply Chain and Scalability: While the company claims to have significant capacity in place, any disruptions in the supply chain or scalability issues could hinder operational efficiency and financial performance.
Regulatory and Compliance Risks: Operating in the life sciences sector involves stringent regulatory requirements. Any failure to comply with these regulations could result in financial penalties and reputational damage.
Economic and Funding Uncertainties: The company’s growth in academic markets is tied to NIH funding, which is subject to economic and political uncertainties. Any reduction in funding could impact revenue from this segment.
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Guidance & Outlook
Revenue Expectations: For fiscal 2026, the company expects total revenue of $435 million to $440 million, representing approximately 16% growth at the midpoint. For Q2 of fiscal 2026, total revenue is expected to be $107 million to $108 million, reflecting approximately 16% year-over-year growth at the midpoint.
Adjusted EBITDA Breakeven: The company reiterates its expectation to reach adjusted EBITDA breakeven in the fourth quarter of fiscal 2026.
Market Expansion: The company projects its addressable market to grow from $7 billion today to more than $12 billion by 2030, driven by new product launches and market adoption.
NGS Applications Growth: The company expects to outpace the industry’s blended CAGR of approximately 14% in NGS applications, driven by oncology and rare disease diagnostics, microarray, biopharma R&D, and academic markets. Growth will also come from converting legacy microarray workflows to sequencing-based solutions and expanding the multiomics portfolio.
AI-Enabled Discovery: The company sees meaningful growth in AI-enabled discovery, with an immediately serviceable market of $1.5 billion for antibody discovery services and $700 million for protein expression. This market is expected to expand as customers increasingly focus on generating high-quality data at scale.
Gross Margin and Revenue Growth: The company expects approximately 75% to 80% of incremental revenue growth across all product lines to drop to the gross margin line, supporting profitability.
Capital Expenditures: Capital expenditures for fiscal 2026 are expected to remain stable or moderate slightly in the second half of the fiscal year.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is the duration of demand for AI drug discovery, and how does it integrate into the drug discovery ecosystem?
A:Emily Leproust stated that AI is driving significant growth in DNA Synthesis and Protein Solutions, with 27% growth this quarter. Customers with large orders are returning, and more top pharma companies are joining the platform. AI is expected to become the first path in drug discovery, reducing the time to deliver data to 2 weeks compared to 6 weeks with traditional methods. AI-driven data costs range from $50 for a fragment to $300-$400 for detailed data.
Q:What is the source of increased confidence in the raised guidance for DNA Synthesis and NGS?
A:Emily Leproust explained that the raised guidance reflects confidence across the board. The customer dynamic in NGS has stabilized, and orders have resumed. Growth in DNA Synthesis and Protein Solutions is driven by the addition of protein and data to the platform. The company is hiring more salespeople to capitalize on growth opportunities and does not anticipate further single-customer dynamics.
Q:What is the significance of the over 50,000 genes manufactured for data characterization, and how does it relate to guidance and competition?
A:Patrick Finn highlighted that the growth is primarily driven by the pharma segment and AI interest. The platform's scale, speed, and quality are resonating well with customers. Twist is weeks faster than competitors and is focused on scaling and accelerating opportunities. The 271,000 genes shipped in the quarter grew over 30% year-over-year, reflecting strong competitive positioning.
Q:What are the gross margin expectations for Q2 and the rest of the fiscal year?
A:Adam Laponis stated that Q1's 52% gross margin demonstrates the manufacturing engine's efficiency. The company is prioritizing top-line growth over short-term margin expansion, with continued improvements expected throughout the year. Investments in automation and digital infrastructure are moderating margin expansion temporarily, but the core business remains strong with 75%-80% incremental revenue drop-through to gross margin over time.
Q:What strategic investments were made in the quarter, and what is the status of AI-driven orders?
A:Emily Leproust explained that $25 million in AI-driven orders were backloaded, contributing to Q1 performance. Structural investments include hiring sales and commercial staff, while transient investments focus on digital infrastructure, such as launching e-commerce for NGS Applications. These investments aim to support growth and capitalize on opportunities.
Q:What are the plans for additional partnerships in the Diagnostics space, and how do they impact growth?
A:Emily Leproust stated that FY 2026 growth in NGS will come from existing partners, while new partnerships are being pursued for growth in 2027 and beyond. The company is actively working to onboard new partners, leveraging strong performance and supply chain excellence to secure sustained growth.
Q:How is the company addressing the cadence of gross margin improvements given ongoing investments?
A:Adam Laponis reiterated that while gross margin improvements will continue, they will be moderated due to investments in CapEx, infrastructure, and personnel. The focus remains on building a multibillion-dollar business with a 50%+ gross margin rather than a smaller business with higher margins.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact number of new partnerships expected in the Diagnostics space or the precise breakdown of AI-driven orders between Q4 and Q1. Additionally, while they expressed confidence in growth and investments, they did not provide granular data on the impact of these investments on short-term financial performance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI discovery
DNA sequence
DNA synthesis
Diagnostics
NGS application
NPI
OEM partner
Paddy
Protein Solutions
Therapeutics
Twist semiconductor
antibody
application customer
assay protein
biopharma RD
capability
discovery market
effort
lab
life science
machine
margin profile
market Twist
model
oncology
peer
period customer
protein cell
protein expression
sequence protein
series
thousand sequence
work
TWST Transcript
Twist Bioscience Corporation (TWST) Q2 2026 Earnings Call Transcript
Positive5-4
The earnings call revealed strong growth in AI-driven workflows and therapeutics, with sustainable growth potential. Despite some declines in specific segments, the company increased its full-year revenue guidance and expects to achieve adjusted EBITDA breakeven. Management's confidence in gross margin improvement and market expansion further supports a positive outlook. The market cap suggests a moderate reaction, leading to a 'Positive' sentiment rating.
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Twist Bioscience Corporation (TWST) Q1 2026 Earnings Call Transcript
Positive2-2
The earnings call highlights strong revenue growth, particularly in DNA Synthesis and NGS, driven by AI drug discovery demand and new partnerships. Despite a Q1 EBITDA loss, the year-over-year improvement reflects strategic investments and efficient scaling. The company's raised guidance and confidence in future growth, alongside a solid liquidity position, suggest a positive outlook. However, ongoing investments may moderate margin improvements in the short term. Given the market cap, the stock is likely to react positively, with a 2%-8% increase expected over the next two weeks.
Twist Bioscience Corporation (TWST) Presents at 44th Annual J.P. Morgan Healthcare Conference Transcript
Neutral1-12
TWST Slides
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Frequently Asked Questions
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