Twist Bioscience Corp Q4 FY2026 earnings call

• Financial Milestones: The company achieved positive adjusted EBITDA of $2.2 million in Q4 FY26, marking a significant operational milestone after years of investment. Full-year revenue reached nearly $460 million, exceeding initial guidance by over $30 million.
• AI Drug Discovery Acceleration: AI-related orders more than doubled, with revenue jumping 175% to $59.1 million. Management highlighted a recurring customer pattern starting with pilot orders ($10k-$100k), moving to model building (multi-million dollar), and culminating in iterative discovery cycles ($250k-$1M).
• Capacity Expansion: Twist increased protein and antibody manufacturing capacity by nearly 200% and expanded characterization capabilities by 2-5x. They are adding DNA writers to reach a capacity of over 50 million pieces of DNA daily when fully operational.
• Product Innovations: Launched 'Twist X-ray Screening Antibodies' (cell-free offering) delivering proteins in five days. Introduced 'MRD Express' for molecular residual disease testing, leveraging tumor-informed personalized panels.
• Strategic Positioning: Management emphasized that AI drug discovery is not just a trend but a sustainable workflow shift. They noted that while native AI companies were early adopters, traditional pharma and biotech are increasingly integrating AI, broadening the addressable market.
• Infrastructure Investment: Significant capital expenditure is being deployed to automate workflows and connect production steps, aiming to improve speed, efficiency, and economics. The company raised $425 million to fund these expansions and prepare for MRD growth.

Twist Bioscience reported strong growth across its primary segments for the full fiscal year 2026 and Q4.

• NGS Applications: Full-year revenue reached $237.5 million, representing a 14% increase year-over-year. In Q4, this segment generated $65.7 million in revenue, up 24% year-over-year and 6% sequentially. This segment accounted for approximately 51.7% of total full-year revenue.
• DNA Synthesis and Protein Solutions (DSPS): Full-year revenue was $221.9 million, a 32% increase year-over-year. In Q4, DSPS revenue was $61.0 million, up 33% year-over-year and 8% sequentially. This segment represented approximately 48.3% of total full-year revenue.

Within DSPS, Therapeutics revenue grew significantly to $162.3 million for the full year (up 47%), driven largely by AI drug discovery revenues which rose 175% to $59.1 million. Diagnostics revenue grew 13% to $154.3 million.

• FY2027 Total Revenue: Guidance set at $550 million to $560 million, implying approximately 21% growth at the midpoint.
• AI Drug Discovery Revenue: Initial full-year guidance assumes $100 million in AI drug discovery revenue. Management indicated significant upside potential beyond this figure if capacity constraints are resolved.
• Gross Margin: Expected to be approximately 52.5% to 53% for FY2027. Management noted that margin expansion will be moderated by depreciation and costs associated with bringing new capacity online before reaching planned utilization.
• Adjusted EBITDA: Expects to remain positive for the full year FY2027.
• Capital Expenditures: Planned CapEx of approximately $75 million for FY2027 (excluding landlord-funded tenant improvements), part of a two-year plan totaling ~$150 million.
• Q1 FY2027 Outlook: Revenue expected between $130 million and $132 million, with both NGS and DSPS growing roughly 25% year-over-year.

• Capacity Constraints vs. Demand: While demand is accelerating, there is a risk that insufficient capacity could limit the conversion of orders into revenue, particularly in the high-growth AI segment. Management is actively investing to mitigate this.
• Margin Pressure from Expansion: Bringing new capacity online introduces short-term headwinds to gross margins due to depreciation and lower initial utilization rates.
• Blurring Lines Between AI and Traditional Revenue: As traditional pharmaceutical customers integrate AI into their workflows, distinguishing pure 'AI' revenue from traditional drug discovery revenue becomes increasingly difficult, potentially complicating financial reporting and visibility.
• Early Stage Commercialization: New products like MRD Express and nucleic acid therapeutics are in early commercial phases; while growth is expected, they currently contribute modestly to overall revenue.

Q: Analyst asked why FY27 AI revenue guidance ($100M) represents moderation given 175% growth in FY26 and triple-digit order growth expectations.

A: CEO clarified that the $100M figure reflects high-confidence conversions based on current pipelines, but significant upside exists. She emphasized that the business is executing well with accelerating sequential growth (17% to 28% YoY). Upside drivers include adding more capacity (which is within their control) and launching new workflows like cell-free screening, which offers better margins and speed. The guidance is conservative to ensure delivery, but the order backlog suggests potential for higher realization.

Q: Analyst inquired about the composition of the remaining $60M+ revenue growth outside of AI, specifically regarding mRNA, liquid biopsy, and traditional therapeutics.

A: CFO stated that excluding AI, the core business is accelerating, with NGS returning to >20% growth (24% in Q4). DSPS outside of AI also expects double-digit growth acceleration. He noted that while some resources shifted to hyper-growth AI areas, the underlying foundation remains robust. No specific breakdowns for mRNA or liquid biopsy contributions were provided, as these are embedded within broader therapeutic and diagnostic categories.

Q: Analyst questioned whether triple-digit AI order growth is still expected for FY27 and how AI revenue is categorized given the blurring line with traditional pharma.

A: CEO confirmed commitment to reporting AI revenue through FY27 but acknowledged the difficulty in strictly delineating it as traditional pharma adopts AI tools. They will report AI revenue for groups clearly identified as AI-focused, which may slightly undercount total impact. Regarding order growth, she reiterated confidence in triple-digit order growth, noting that while revenue conversion takes time, the pipeline is deepening as customers move from pilot to large-scale discovery programs.

Q: Analyst asked about the dynamics between order volume and revenue recognition, specifically why revenue growth (~70%) lags behind triple-digit order growth, and what triple-digit means numerically.

A: CEO explained that 'triple-digit' refers to percentage growth rates (e.g., last year was 175%). The lag between orders and revenue is due to the time required for complex biological workflows (design, build, test, learn cycles). She affirmed that the $100M target is guaranteed based on current visibility, but the triple-digit order growth indicates a robust pipeline that can convert to higher revenue as capacity expands and cycles complete.

Q: Analyst asked about the mix of gene types driving DSPS growth and pricing trends, and how AI revenue is characterized internally.

A: CFO/CEO explained that gene volume is growing faster than revenue because smaller genes (antibodies, ~600-800 bases) are growing much faster than larger genes (proteins, ~1,500 bases), and since pricing is per base, the mix shifts toward lower average ticket sizes despite higher volume. Regarding AI characterization, they categorize revenue based on customer declaration. If a customer explicitly states they are using the data for AI drug discovery, it is booked as AI. If the use case is ambiguous, it may fall into traditional buckets, though management believes the true AI-driven volume is higher.