Twist Bioscience Corporation Q1 FY2026 earnings call

Q1 provided a strong start to fiscal 2026 with twelfth consecutive quarter of revenue growth. The strategy is built on a semiconductor-based DNA synthesis platform. The estimated serviceable market has expanded from ~$2 billion in 2020 to ~$7 billion currently, with a target of over $12 billion by 2030. AI-enabled discovery is a key opportunity, with the DNA synthesis and protein solutions group having a serviceable market. Targeted investments were made in the commercial team and infrastructure. Transformed into an NPI machine, consistently launching new products on the same manufacturing infrastructure.

Revenue for the first quarter increased to $103.7 million, a 17% year-over-year growth and approximately 5% sequentially. DNA synthesis and protein solutions revenue was $51.1 million, a 27% year-over-year growth. NGS applications revenue grew to approximately $52.6 million; excluding one large customer, NGS grew 18% year over year. America's revenue was approximately $58.4 million, up 9% year over year. EMEA revenue was approximately $38.4 million, a 36% year-over-year growth. APAC revenue was approximately $7 million. Therapeutics revenue was approximately $37.2 million, a 39% increase. Diagnostics revenue was approximately $35.3 million. Industry and applied revenue was $6.1 million, an 11% increase. Academic research and government revenue was approximately $12.2 million. Global supply partner revenue was $12.8 million, a 50% increase.

For fiscal 2026, total revenue is expected to be $435 million to $440 million, a growth of approximately 16% at the midpoint. Expect adjusted EBITDA breakeven in 2026. NGS is expected to have strong sequential growth in Q2 and growth in key accounts.

Risks include those set forth in the press release and filings with the SEC, which could cause actual results to differ materially from projected forward-looking statements.

Q: Hi, good morning, and thanks for taking my questions. I want to follow up on the demand you referenced in terms of AI drug discovery. You know, Emily, talked about this being a durable opportunity, but we think about customers trying to build out a foundation model and building training models. Is that demand something you think that's measured in months or years? Or is this a reference just a new part of the drug discovery ecosystem will be the first part? The second part of that was you called out over 50,000 genes manufactured for data characterization in the quarter. Curious what that number was in the prior period and kind of how the economics of delivering data versus delivering DNA work for Twist Bioscience Corporation?

A: Thanks, Matt. Great question. Yeah. So we're very excited about what AI is doing for Twist Bioscience Corporation by, you know, pulling volume onto our chips and enabling us to ramp revenue and definitely, this quarter, 27% growth in DNA synthesis and protein is very much driven by AI. In terms of durability, so it's still early days but, what we are seeing is, a customer that had big orders, over the last year quarters are coming back, with other big orders. And so doesn't seem to be letting down. And, at the same time, we're adding more and more of the top 20 pharma to our platform as well as the magnificent seven as well as the start-ups that are very well funded, but where we don't have full penetration. So we see that there's a lot of growth coming. And then long term, what we think is that AI is going to become the first path. Right now, in the past, in vivo or in vitro was the question you had to ask yourself. I think AI would be the first path. It would be about probably the same cost of about $250,000 to discover an antibody. But the data will be delivered in two weeks instead of six weeks with in vivo and in vitro. And then in vivo and in vitro are still going to be important, but as a second path. As far as the 50,000 genes that we use internally for characterization, I want to call it quite a hockey stick, but it is backloaded into our Q4 and Q1. And it's the first quarter we felt we had to share the number because 271,000 genes in a quarter looks good, but actually, it's a small number compared to the actual number. Because we have more than 50,000 genes. So the trend looks good. In terms of cost, of price for the data, it kind of depends. But in general, it's $50 for a fragment, $100 for clonal genes, $200 plus for an antibody, can be $300 to $400 for the data depending on what kind of data customers want. So, definitely, as we upsell customers to data, we get a great benefit to the top line as well.

Q: Hi, good morning. Thank you for taking my questions. You raised guidance by more than the fiscal 1Q 2026 beat. Could you speak to where the increased confidence specifically coming for both DNA synthesis and NGS? And as we move past the single customer that created the fiscal 4Q, fiscal 1Q air pocket, are there any other single customer dynamics that you're carefully monitoring in your outlook for the rest of this fiscal year? Thank you so much.

A: Yeah. Thanks, Subbu. But I think you're correct. We raised guidance by more than double the beat at the midpoint. This comes from all across the board confidence. The one customer dynamic that we mentioned in NGS applications, where it passed. That customer is back. The orders are in. So we think we are set up really well in NGS. Not just that one customer, but overall. When that customer, now that that customer is back, we think there's a great setup as we look at more and more data coming from bespoke MRD enabled by Twist Bioscience Corporation at super high resolution, high sensitivity bespoke MRD. We think there's lots of need ourselves there. And then in DNA synthesis and protein solution, we have a great platform with DNA. Head to head, we win pilots and with great growth, but now that we've added protein and data on top of it, it's really meeting the moment. And we see those big customers coming back for more. So overall, the strategy that we've had, which was to add great products that all feed onto the semiconductor platform, is working. And so we'll feed the NPI engine. We'll do it again. We'll deploy commercial balance. We have a lot of headcounts open for salespeople when our competitors are laying off people and laying out salespeople. It's just we have essentially meaning in the field. And we don't expect to have other one customer dynamics in the future.

Q: Good morning, and thank you for taking my questions. My first is a follow-up on the over 50,000 genes manufactured for data characterization. I just want to make sure that I'm thinking about it right when I think of that as being, you know, almost synonymous in pharma volume. So that's one. And then, kind of the follow-up there is I just want to make sure we understand what's in guidance for the balance of the year. So that's one topic. Sort of related to that, the second is the 271,000 genes shipped in the quarter was quite robust. That grew over 30% year over year. Can you just talk about what you're seeing competitively? And I'll leave it there. Thank you.

A: Yeah. Thanks for the question, Doug. Yeah. I mean, the growth you're seeing is primarily driven by, you know, the pharma segment and the interest in AI. You know, I think we're pretty clear on those numbers, and that the scale of the platform is resonating incredibly well with that customer base. I think I said in my words that when we're being approached, the typical experimental size is a few thousand genes, a few thousand antibodies, and a few thousand characterizations run in parallel, and that's where the power of a platform with, you know, scale and speed and quality and economics is very, very enabling. So that's a good start. We're starting to understand the reordering pattern of the customers. So just to echo Emily's comment, it's early, but we can see what's coming next. It's good. Then from a competitive standpoint, we, you know, we have a healthy paranoia and obsession with what's going on out in the market. We're starting to see the early benchmarking studies when customers in the segment are going to, you know, other vendors, and the data really shows how strong Twist Bioscience Corporation is compared to our competitors. We're weeks faster than the competition stands today. And just in general, on the competitive landscape, you know, we've got our eyes on our competition. We know where they are. We know what they're working on. We know where they're laying off. We know where they're resizing, restructuring. We know them at a very, very intimate level in the hand-to-hand combat of selling. But really for us, we are just relentlessly focused on our own game and we're looking to really scale and accelerate into this opportunity.

Q: Hi, guys. This is Josh on for Catherine. Thank you for taking my question. Yeah. I was wondering if you could walk through gross margin expectations for 2Q, how that should progress through the rest of the year? And then I was also wondering, should we still bake in sequential improvement for the rest of fiscal 2026? Thanks.

A: Thank you. Adam, do you want to take this one?

A: Thank you, Josh, for the question. We really see Q1 in the 52% performance as proof that our manufacturing engine is working as intended. Our decision to hold the full-year guidance at above 52% reflects a really deliberate choice in accelerating our top-line growth rather than maximizing short-term margin expansion. We do see continued improvements throughout the year coming, in terms of the gross margin. But what we're doing now is we're both hiring the operators, adding the additional automation to ensure we can handle the higher capacity and throughput things like AI drug discovery that Patrick talked about in the call. We've also introduced several new characterizations around the clip clip and other new technologies. When we launch these products, we do it with, you know, manual processes, often cold plating them to make sure we meet the customer's needs fast. We're now automating those over time, and this investment temporarily moderates the margin expansion. That's really the right trade-off for long-term revenue growth. Most importantly, the core engine of our business hasn't changed. We continue to see 75% to 80% incremental revenue drop through the gross margin line over time. So maintaining our above 52% on gross margins is about giving ourselves the flexibility to aggressively fund the growth we see right in front of us. And we always say it, but we'd much rather build a multibillion-dollar business at a 50 plus percent gross margin than a $500 million business at 60. So thank you for the question.

Q: Hey, guys. Thanks for taking the question. This is Mackenzie on for Vijay. You talked a little bit about the strategic investments you made in the quarter, and I was just wondering if you could talk a little bit more about these investments. Why now and where specifically were the investments made? And the second question is you disclosed that the AI-driven orders were $25 million in fiscal 2025. How much of this came in the fourth quarter? And what did you see for orders in the first quarter?

A: Yeah. Thanks for the question. The $25 million of all the growth that we saw last year were backloaded. So some came in Q4, but some also came into Q1, meaning that the orders came in Q4, but they shipped in Q1. So definitely, some of the Q1 performance comes from that order growth that we've seen. And those customers are coming back. So there's definitely a high confidence that it's not a one-time thing. It's not a flash in the pan. It's coming back. In terms of the investment, we think of the investment in two ways. One, a more structural investment and the other are transient investments. So to give you a flavor, the structural investments are mostly in hiring of sales and commercial people. We've always had the strategy of hiring a little bit ahead knowing of what the business will need. It takes one or two quarters for a salesperson to ramp rapidly. And so we definitely want to do that, and we see a lot of good growth coming our way. So we want to make sure that we're able to capitalize on it and that we're not short on salespeople. So those are structural investments that are here to stay. And then there's some transient investments to help improve the business, mostly around our digital infrastructure. So to give you a flavor for what that is, just last week, actually, we launched our first e-commerce for NGS application business. In the past, we've always had a very, very strong e-commerce presence for the DNA synthesis and protein solution. And a very large fraction of our revenue for that product group comes from e-commerce. However, we did not have any e-commerce for NGS application. So literally 0% of our revenues. But we hired some contractors, and we made what we called a transient investment in our digital infrastructure, to launch a new channel for e-commerce, and we anticipate that that channel will be a catalyst and complementary to the salespeople we are hiring. And over time, we have the ability to taper off that investment in our digital infrastructure. Again, a contract of we decide when to turn them on and off. There's still more work to do on our e-commerce platform. So, it's not totally finished yet, but we're excited in the first phase of the launch. So, hopefully, that gives you a flavor for what we call the structural investment and the transient investment. But at the end of the day, Q4 adjusted EBITDA breakeven is a given for us now. So now it's all about growth. We have that very high confidence in growth, and how much growth can we exit in Q4. And hopefully, the guide reflects that confidence.

Q: Great. Thanks for taking the questions. Maybe just another one on NGS from us. Emily, I think you referenced plans to sign additional partnerships within the diagnostic space moving forward. So I guess first from us, I mean, do you all have kind of a target number of deals you expect to confirm this year? And maybe more importantly, how material do you feel kind of new partnerships will be to the growth of NGS and maybe hitting your own internal revenue expectations over the, let's say, one to two years? Versus really just core execution and advancement of the existing partnerships you already have. Thanks.

A: Yeah. Thank you. That's a really important question and something that we spend a lot of time on. And actually, Patrick is our head of opening those doors for new partners. And so we think about it kind of in two ways. The first is, FY 2026 growth in NGS is going to come from existing partners. Those deals are already signed. The pilots are done. The validation and verification, it's done. And so now it's just being there for them as the volume ramps for our current investors, current partners. Make sure that our supply chain is there for them. However, when we look at the growth we're going to need in 2027 and 2028, we do need new partners for that. And we have a very sustained effort. And actually, you may remember that at JPMorgan, we split where Adam and I took investor calls, and Patrick and our CTO took the customer's call. And so we have a dual track where we're working actively to get new partners on board for diagnostics. We don't have all of the volume, but the performance that we have is very, very, very strong. The supply chain excellence that we bring, we're able to future-proof the supply chain of our partners. And so we are working on bringing more onboard. It's going well. But we don't need them for 2026, but we're counting on them for sustained growth in 2027 and beyond.

Q: Hey, good morning. Apologies if you already answered this question. My connection's a little spotty. Just looking at the performance in 1Q and the continuation of 52% gross margin guide, how are you thinking about the cadence for the rest of the year just given the level of investments that you're making in the business?

A: Thank you. Adam, you want to cover that question?

A: No. Thank you, Mac. And we did have a chance to address that question. It really reflects our confidence in the business and our ability to drive growth and the choice to invest into that. And so while we do see continued improvement in growth margin throughout the year, it'll be at a more moderated clip. As we continue to invest into the CapEx and the infrastructure and the people to accelerate the growth. And, you know, we are maintaining, giving ourselves that flexibility. Really would rather, you know, I said it before, build the multibillion-dollar business at a 50% plus gross margin. And a $500 million business at a 60% gross margin. So, we are excited. We are looking forward to moving forward, and there's no looking back. And as Emily and Patrick have also mentioned, within line of sight, we are absolutely committed and focused on making sure that in any scenario, we're at adjusted EBITDA breakeven by Q4 of this year.