Twist Bioscience Corp Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Record Performance: Delivered record revenue and margin growth in Q4 2024, exceeding guidance in all metrics. Revenue for Q4 was $84.7 million, up 27% YOY and 4% sequentially. Full-year 2024 revenue was $330 million, up 28% from fiscal 2023.
• Gross Margin: Q4 gross margin was 45.1%, ahead of guidance. Full-year gross margin was 42.6%, an improvement from 36.6% in fiscal 2023, driven by volume and margin expansion initiatives.
• Product Portfolio: SynBio's Express portfolio saw growth with new products like Express Clonal genes, gene fragments, etc., gaining market share. NGS performance was strong with customers developing assays for various applications. Biopharma services revenue increased, with XOMA paying $50 million for future milestones.
• Margin Initiatives: Focus on automation, process improvements, and operational efficiency. Examples include a new software distribution process and optimized oligo manufacturing, aiming for 50% gross margin by Q4 2025.

Segment Performance

• SynBio: Q4 2024 revenue was $33.9 million, up 28% year-over-year with orders at $36.3 million. Full-year 2024 SynBio revenue was $123.5 million, an increase of 26% from fiscal 2023. The Express portfolio within SynBio is accretive to margin and has brought in new customers and market share.
• NGS: Q4 2024 NGS revenue was $45.5 million, up 23% year-over-year. Full-year 2024 NGS revenue was $169.1 million, a significant increase of 37% from fiscal 2023. Revenue from top 10 NGS customers accounted for ~40% of NGS revenue in Q4.
• Biopharma: Q4 2024 biopharma revenue was $5.3 million with orders of $5.9 million. Full-year 2024 biopharma revenue was $20.3 million.
• Geographic: Americas accounted for 62% of revenue in fiscal 2024, EMEA 30%, and APAC 8%.

Guidance

• Fiscal 2025 Total Revenue: Expected $367 million to $377 million, a growth of ~17% to 20% YOY.
• Segment-wise: SynBio revenue expected $142 million to $146 million (15%-18% YOY growth), NGS revenue $204 million to $209 million (20%-24% YOY growth), biopharma revenue $21 million to $22 million (3%-8% YOY growth).
• Q1 2025: Total revenue expected ~$87 million, growth of ~22% YOY. SynBio ~$34 million (26% YOY growth), NGS ~$48 million (22% YOY growth), biopharma ~$5 million.
• Gross Margin: Full-year 2025 expected ~48%, with Q4 2025 gross margin target of 50%.
• Adjusted EBITDA: Expected loss of $60 million to $65 million for fiscal 2025, an improvement from fiscal 2024's $93.5 million loss.

Risks

• Market Uncertainties: Risks related to future events or financial/operating performance not materializing as expected, as per U.S. federal securities laws.
• Supply Chain Risks: Insourcing proprietary enzymes to reduce supply chain risk, but any disruptions could impact operations.
• Biopharma Funding Pressures: Healthcare exposure is significant, and pressure on biopharma funding could affect revenue and growth.

Question and Answer

• Q: Give an idea for how Express Genes and new products trended as a portion of the SynBio mix throughout the course of 2024 and potentially what it was in Q4? And secondly, understanding the operational efficiencies that you guys outlined plus the revenue growth, could you just give an idea of OpEx and the trends next year, both for R&D and SG&A? A: Adam Laponis stated Express Genes and new products showed sequential growth within SynBio. On OpEx, modest increases expected, with a big chunk in Q1 due to merit bonuses, but fairly modest throughout the rest of the year.
• Q: What is related party revenue? How much was it in this quarter in your EBITDA guidance? Is the implied fourth quarter EBITDA exit rate of -- in the minus 10 to minus 13 kind of range? A: Adam Laponis said related-party revenue was about $12 million in Q4, and the range mentioned was unreasonable as adjusted EBITDA guidance was $60M-$65M loss for fiscal 2025.
• Q: Can you talk about a little bit about the DNA storage? Any details on earn-outs, early access customers? A: Emily Leproust mentioned DNA storage is a key future growth vector, focusing on terabyte chip development with water-based enzymatic chemistry, but details on earn-outs and early access customers were early in development.