Welcome to Twist Bioscience's 2025 Fourth 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. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please note, this conference is being recorded. I would now like to turn the call over to Angela Bitting, Senior Vice President of Corporate Affairs. Please go ahead. Thank you, operator. Good morning, everyone. I would like to thank you for joining us for Twist Bioscience's conference call to review our fiscal 2025 fourth quarter and full year 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 Dr. Emily Leproust, CEO and co-founder of Twist, Adam Laponis, CFO of Twist, and Dr. 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 one and then requeue as a courtesy to others on the call. This call is being recorded. The audio portion will be archived in the investor section of our website and will be available for two weeks. During today's presentation, we will make forward-looking statements within the meaning of the U.S. Federal securities laws. 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 forth in our press release we issued earlier today, as well as 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. 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 document which can be found on the Investors section of our website. With that, I will now turn the call over to our CEO and Co-founder, Dr. Emily Leproust.

Thank you, Angela, and good morning, everyone. Today, our team delivered a record quarter with $99 million in revenue exceeding our guidance. This represents an increase of 17% year over year, and our eleventh quarter of consecutive growth. For the year, we reported $376.6 million in revenue, a growth of 20% over fiscal 2024. Gross margin for the quarter came in at 51.3%. For the year, gross margin was 50.7%, up from 42.6% for fiscal 2024, demonstrating the leverage of fixed costs with higher volume and reflecting our focus over the last two years on continuous margin improvement. I'd like to underscore that over the course of fiscal 2025, we grew our business 20%, leveraging our proprietary silicon chip-based technology platform to deliver high-quality products and services rapidly to our growing customer base. Importantly, through the addition of new products and solutions, we expanded our market share with an eye towards addressing new service in the market in the year ahead. Our commitment to commercial excellence continues to ensure we meet and exceed our customers' expectations. Today, with our differentiated manufacturing technology, our innovative R&D for the continuous introduction of new products, our base of more than 3,800 customers across multiple industries, our hundreds of SKUs having a wide range of DevOps applications, and an increasing market share in the market, we are operating with incredible execution and financial discipline. And with adjusted EBITDA breakeven within our reach by the end of fiscal 2026, this year, we focus on setting the stage for future growth acceleration. Turning to our results, Synbio revenue came in at $39.5 million, up 17% year over year. Our growth in Synbio continues to be led by the Express portfolio, which remains best in class in terms of price, turnaround time, and scalability. Two years after…

While my comments during earnings throughout the last year focused on margin initiatives, we have now crossed the important threshold of 50% margin, almost 20 margin points increase over the last two years. We expect to continue to remain above 50% margin moving forward. And this year, my remarks will focus on our growth plan. Today, I'd like to talk about a remarkable and differentiated product introduction for our NGS product line aimed at empowering our customers in an area of increasing importance for cancer diagnosis monitoring, and treatment. I'm pleased to share that we're in the final stages of optimizing an express product for minimal residual disease or MRD, which we expect to introduce commercially in early calendar 2026. As you know, MRD for therapy selection, cancer monitoring, and early treatment of recurrence offers tremendous promise. We already work with many MRD customers providing library prep and target enrichment panels for tumor-informed and tumor-naive panels as well as whole genome sequencing approaches. And we continue to hear from customers developing tumor-informed assays that they gain better sensitivity and specificity using hundreds or thousands of sequences specific to a patient's tumor. The data presented at recent medical meetings backed up these beliefs. Importantly, recent studies also show that physicians desire the capability to sequence the cancers present and have a test in hand for a patient with cancer within a four-week window. While we currently manufacture enrichment panels within about five business days, we see the desire for delivery of a tumor-informed panel as fast as twelve hours. Using our proprietary DNA synthesis platform, we developed a process to do just that. Manufacture and ship an individualized panel as fast as twelve hours after receiving the sequence data. Our MRD Xpress solution provides the speed and simplicity of a tumor-naive…

and approximately 3% sequentially. For fiscal 2025, revenue increased to $376.6 million, growth of 20% year over year. Gross margin came in at 51.3% for the 2025, with the margin for full year of 50.7%. An increase of eight margin points versus fiscal 2024. With approximately 90% of revenue growth in FY 2025 dropping to the gross margin line supported by our continuous process improvement efforts. Taking a deeper dive into revenue, Synbio revenue increased to $39.5 million, growth of 17% year over year. For the full year, Synbio revenue increased to $145 million compared to $123.5 million in fiscal 2024. An increase of 17%. NGS revenue for the fourth quarter grew approximately $53 million compared to $45.5 million in 2024. An increase of 16% year over year. For the quarter, revenue from our top 10 NGS customers accounted for approximately 39% of NGS revenue. For fiscal 2025, NGS revenue increased to $208.1 million, growth of 23% year over year. We served 588 NGS customers in the quarter with 159 having adopted our products. For biopharma, revenue was $6.4 million for the quarter, growth of 22% over the same period of fiscal 2024. With orders of $11.5 million. We had 84 active programs as of September 2025, and we started 47 new programs during the quarter. Compared to last quarter, these programs are more substantive as we see a shift to AI discovery-driven projects. For fiscal 2025, revenue was $23.5 million, growth of 15%. Looking geographically, Americas revenue increased to approximately $57.3 million in the fourth quarter. Compared to $52.7 million in the same period of fiscal 2024. Growth of 9% year over year. For the fiscal year, the Americas accounted for 60% of revenue. EMEA revenue rose to $34.6 million in the fourth quarter versus $25.5 million in the…

Into 2027.

We expect gross margin to be above 52% for fiscal 2026. And we expect to exit fiscal 2026 with our fourth quarter achieving adjusted EBITDA breakeven. For the 2026, we expect revenue of $100 million to $101 million, growth of 13 to 14%, compared to the 2025. Our guidance includes the expectation that our Q1 revenue will be impacted by a large cancer diagnostics customer who is transitioning their assay from research to commercial. With a reacceleration of purchasing in the 2026.

We also see significant revenue

from the record AI drug discovery order. Such that our two product groups will be relatively equivalent to the first quarter. With that, I'll turn the call back to Emily.

Thank you, Adam. Our team executed exceptionally well for 2025, delivering strong results and building the foundation for what comes next. At Twist, we have a strong finish. We go again. We see substantial opportunity ahead across all our markets. Staying close to our customers continues to be our greatest competitive advantage. It allows us to anticipate emerging needs and identify the next set of products that would move the needle for growth. Like our customers, we have an unidentified idea of and a disciplined approach to prioritization. Over the past two years, we deliberately focused on gross margin expansion with growth launches now above 50%, we have successfully positioned the business for continued profitable growth. As we reallocate our and the resources towards growth, we're investing in innovation that we believe would drive sustained top line acceleration. Aramab premade robust and well-sequenced deliver growth over the next several years. Looking forward, we expect balanced growth across our DNA synthesis and protein solutions and NGS applications. With some normal quarterly variation. We have been seeing new products that support customers leveraging AI and drug discovery as well as those using traditional therapeutics development methods. Fiscal 2026 is about translating our margin strengths into durable revenue growth. We know where we need to go, and we are already on our way. With that, let's open the call for questions. Operator?

Thank you so much. And as a reminder, to ask a question, press 11 on your telephone. And wait for your name to be announced. To remove yourself, press 11 again. One moment for our first question. And it comes from Catherine Schulte with Baird. Please proceed.

Hey guys, thanks for the questions. Maybe first on gross margins, guidance for the fiscal year implies, I think, low 60s incremental margins off of '25. So you know, it would be in that 75 to 80 range if we did it off of '24. But, you know, I think the expectation was flow more of the 25 upside through. So I guess the question is, you know, is this pricing driven? Do you have some manufacturing investments that you're making? And know, when do we get back to the kinda 75 to 80% incrementals?

Hey, Catherine. This is Adam. Thanks for the question. Very much encouraged by the progress of the team over the last two years. The 20% growth in gross margin has been extraordinary. While we can expect to continue to see the 75 to 80% on average, we are lapping some tough comps, particularly given what we saw in Q3 of this year. For the last quarter, we dropped, I think it was over over over 80% of gross of gross revenue growth drop to gross margin line. And, generally, I'd expect that continue to hold in the future. And if you look at that two-year metric, it absolutely will. But there will be some some noise. And I'd say it is more around, the specific customer mix that we see in any given quarter that drives it more than anything else. But we we expect it to continue to expand. That said, you know, we will continue to focus on revenue growth as well as gross margin. And optimize for the gross profit.

Okay. Great. And then for NGS, I think that guide came in a little bit below, street for fiscal 2026. Can you just talk through the drivers there and maybe get a little more granular on that expectations for that customer ramping that moving into production. And, you know, I think the guide implies 11 to 13% or 14% growth for NGS. How should we think about long-term growth for that business? Is this kind of the new baseline that we should be thinking about?

I'm happy to take that one. In terms of growth for NGS, we we're we're very excited about the the prospects. We mentioned it on the call last quarter. That we have a customer transitioning from their verification and validation, that there would be an air pocket in Q4, and that would continue through Q1. We expect that that customer will ramp as well as well as other customers. A couple points of commentary and color that we, we provided. We expect to be back to 20% growth by fourth quarter, in the NGS business as well as we expect to continue to see growth from MRD and other new product introductions. And we've, assumed about one to 2% of overall growth from the MRD business products in 2026.

Thank you. Our next question comes from the line of Puneet Souda with Leerink Partners. Please proceed.

Yes. Hi, guys. Thanks for taking my question. Wondering if you can

yeah. Thanks. So wondering if you can provide a view into Instant Bio and the then with the new segmenting, can you elaborate a bit on the biopharma order? What what you know, obviously, that's driven by AI, but just trying to understand how sustainable this is. How much of a momentum? What are you hearing from the customer development teams? You know, how meaningful the AI contribution could be in fiscal year 2026.

Hey, Puneet. Thanks for the question. We'll be talking for a few quarters about strategic how important the biopharma business is, and and the close ties to the the Synbio product offering. And I think you're starting to see real validation of that with the order described in our comments today. It leverages everything that we're good at. You know, our knowledge from a single gene all the way through to discovery what we're seeing with the the the AI potential is it's our throughput and scale that that really enables and supports that offering. So we we continue to be very optimistic in that space and see a fantastic lineup of the total Twist offering. All the way through from one gene all the way through to full discovery, and that that basically puts us in a good spot for our future opportunities.

Thank you. One moment for our next question. It comes from Brandon Smith with TD Cowen. Please proceed.

Great. Thanks for taking the questions, guys. I also wanted to ask a little bit more about guidance into next year. Maybe just quickly, for I know you're not guiding to GMs during Q1, but can you give us a sense of how you're thinking about gross margins sequentially from Q4 and then over the course of next year to really get to that 52% plus on the on the full year 2026. And then maybe just

quickly on the NGS portfolio, Any anything that you're hearing specifically from customers really, that kind of driving some of your assumptions to get to maybe the upper versus lower bound of the guide there? Thanks.

Yeah, Brandon. Happy to take the question. In terms of gross margin in the guide, you know, we do see improvements throughout the year. I'd say it is gonna it is gonna parallel with revenue growth being the primary driver of our gross margin expansion. As we are continuing to see, our efforts from continuous process improvements play out, but we're also continuing to invest in new capabilities across the business, to drive our new product initiatives and growth. And as mentioned in the call, a lot a lot of focus on the AI drug discovery capabilities to support, those customers. In terms of the exit point and also where to go from here, we do see a path to continue gross margin expansion, just in 2026, but well into 2027 and beyond. But, again, optimizing for that gross profit dollar, necessarily just the gross margin now that we're above 50% and not looking backwards.

Thank you.

Our next question comes from Vijay Kumar with Evercore ISI. Please proceed.

Hi, guys. Thank you for taking my question. I had a two-part question on NGS. NGS, I think,

your Q1 guidance

it looks like it's gonna be down sequentially. Maybe revenue is up mid-singles. And I understand that Q4 had the customer transition impact. Right? So why would Q1 growth be below Q4? Is there some additional timing elements on on Q1 NGS and and sort of related on this MRD Express. Did I hear you correctly that sensitivity on a tumor-naive assay would be as good as tumor-informed and and

is there any data that that you highlighted? What kind of interest are you seeing in this product?

Alright. Well, maybe I can start with the the the NGS guidance, and I'll let Patty talk to the MRD element of it here. In terms of the NGS guidance, we thank you for the question on We gave the update back in Q3's call. That we had a customer transitioning from commercial validation to commercial ramp, and that impacted Q1, and it's gonna continue to impact Q4. And we expect to see a sequential growth from that point forward for the NGS business. And starting in Q2. So, we will continue to see that pocket continue in Q1, and then in Q2 and beyond, we'll see the sequential growth such that by the time we get to Q4, we're expecting to be back at 20 year over year growth in the NGS business. I'll let Patty's talk to the MRD portion of question.

Yeah. Vijay, thanks for the question. I think when we look at you know, medical conferences, I think you've seen that the tumor-informed approach is leading to increased sensitivity in in the assay. That that's got us excited about potential and the clinical endpoint and for the patients that, you know, are going through a tough time. We see sensitivity enhancements from tumor-informed. And again, our scale and speed, we think, is really going to help enable the segment of the market that's focused on that approach.

Thank you. One moment for our next question, please. And it's from the line of Subbu Nambi with Guggenheim. Please proceed. Hey, guys. Good morning. Thank you for taking my questions.

Patti, just a follow-up on that MRD. MRD is an exciting launch next year. Could you speak to who the end user is? Is it almost sounded in your description that Twist is executing the MRD assay for the physician. Or delivering the panel to a hospital to run-in house. Or is it the same customer as your NGS diagnostics?

Subbu, great question, and thank you for the opportunity to clarify. Twist's role in the community is an enabler. Okay? We don't run the test. We supply our customers and our partners to enable them to drive their assays to the clinic. So again, our role will be to supply and enable them.

Perfect. So how will you approach pricing for the MRD Express? What are the expected margins here? And I'll hop back in the queue. Yeah. Good question. So pricing has not been set at this point. It will go from our our basic principles, Subbu, which is we're here to enable our customers at scale to truly drive their product to market. And we think with this product in particular truly impact the, you know, the impact of MRD to health care.

We've listened closely to the customer base. I mean, we understand the value to this market segment of speed and that's twelve-hour turnaround time. And I think our operating scale and quite frankly, derisking any vulnerabilities and supply chain is good value. We'll we'll we'll share that value with our customers as we go forward and enable them to drive your best in class differentiated assays out to the market.

One moment for our next question. That comes from Matt Larew with William Blair. Please proceed.

Hi, good morning.

You reiterated the expectation to hit EBITDA breakeven in the fiscal fourth quarter. Obviously, the year is starting a little bit lower on the top line. Given growth is contingent on the expectation of an NGS customer ramp and MRD contribution, how much breathing room do you expect to have in the fiscal fourth quarter? And I guess, how airtight are you going to hold yourselves to hitting that mark? I guess that's the first question. And the second is, Adam, just what does the guide include in terms of the the macro picture given we've seen perhaps some recent positive updates relative to your pharma and biotech customers and and perhaps there may be some more certainty for your academic customers coming over the next few weeks or months.

Thanks, Matt. And I I I say I never wanna predict the macro environment, so we always will be on the on the side of caution and assuming things don't improve from where we are today. So we've got we've obviously left ourselves the assumption that the environment stays stable. And in terms of the growth opportunities, we do assume that acceleration of the commercial customer the customer's ramping its commercial product today. We also have only assumed one to two points of growth for the year from our MRD products. We know that that ramp is going to come, We're extremely excited about it. The difficulty is always in timing that. We wanna make sure we're on the right side of that timing. But we are extremely excited for that ramp and the opportunity it brings to the business, not just in '26, but in many years to come.

Our next question comes from the line of Doug Schenkel with Wolfe Research. Please proceed.

Hey. I got a few questions. So

thanks for I guess, getting us in.

So, first, on Synbio, you had an academic

promotion that removed the XpressGene pricing premium for academic customers. In response to funding pressure. Is that promotion still in place? And if so, how much longer do you plan on running it? And then building off of that how should we be thinking about price per gene, you know, 26 versus 25? So that's that's the first topic. The second is there's obviously been a lot of focus on Q1 guidance specific to NGS and the sequential step down. As you have pointed out to others, you have repeatedly noted over the course of the last several months a pacing dynamic within h within NGS, Is the is the guidance simply a function of that? Or is there any change in underlying trends or demand? The third topic, which I I think is a pretty important one, and I'm not sure this is the right forum. And if it's not, we can certainly come back to this at our conference next week. But I believe one of the challenges that have with Twist is defining the market opportunity. In the newly named DNA synthesis segment, what is the size of the market opportunity, and how penetrated are you? And on the NGS side, specific to MRD and MZED, what is the market size? How penetrated are you? And what is average Twist revenue per assay? I think that would make this you know, those are questions that I think if people have answers to, it would help with modeling and, frankly, help people basically develop some more conviction in the long-term growth trajectory of the business. Thank you.

Thanks, Doug. Great question. This is, Emily Leproust. And and good job three question in in one. Maybe briefly, on Synbio, you're correct that we had an academic promotion where we got customers express for the the price of stand out. That has been widely successful. We're in the New Year. And and the price has not changed. It it is just working for for for us commercially. And you can see, in the number of gene that the the growth in in genes from in Q4. Was really strong, thanks to that. So we we we are we are not announcing whether or not it will close, but as long as it's working, we'll keep doing it. And and, and and and it is working. As far as the Q1 guide, yes, it's It's it's purely a pacing dynamic in in Q1. There's a lot of excitement and and we're winning on on many fronts. Of course, we we've been very, very strong in in liquid biopsy. And and the MRD, bespoke that we're enabling now, with adding twenty twelve to twenty-four hour express delivery. I think that would be a long-term catalyst. Our FlexPrep, launch is starting to to work well, for the ag biomarker and the population genetic market. So that that's another source of of longer long-term strength. We've we've worked really hard, to integrate into a number of sequences the the the workflow of of twist and the element ABT really, shortens the the time, between the sample and being on the sequencer. And since you're doing all the washes after the capture on the sequencer, you can be on the sequencer in in as low as at five hours. So there's lots lots of of of good things. That are happening in in NGS,…

Our next question comes from the line of Luke Sergott with Barclays. Please proceed.

This is Sam on for Luke. Thanks for taking our questions. Could you talk a little bit about the new DNA and protein solution segment and the rough split between biopharma and synthetic genes in the 26 guide. The combined segment guide came in above Street expectations. I'm just wondering, where, that's coming from and if it's driven by that large, AI program.

Yeah. Thanks for the question. I think the the the the impetus was was twofold. One, there there was, I think, some confusion with with our custom base around Synbio. Sorry. And maybe an underappreciation of how much we are doing. In therapeutic discovery and and and development. So that's that's number one. Number two, more and more as our sales team go to talk to customers. There is there was in practice very little separation. From someone who buys a piece of DNA. So a DNA synthesis, or someone who wants the protein or the characterization. And so as, you know, it's it's one continuous workflow. Some customers stop at fragrance, some stop at gene, some stop at protein. Some want the full characterization. Is it made sense to put them, to together. And and as far as the the the the numbers, yes, maybe we, you know, we're getting a little bit ahead of of of what people thought. I think it's just a reflection of this this business is doing is doing quite well. And there are a lot of synergies, between between the the DNA synthesis piece and the protein piece. A few years ago, some people were asking us, well, why why don't you you spin off biopharma? And, and we knew that it had strategic benefit, and and we're seeing it now. It's it's it's not the one plus one equal equals two. It's the one plus one equals three. As far as your question, around where is the growth coming, is it coming from DNA and protein? Frankly, the reason we're putting it together is because

we we

one, we don't know, and two, it it kind of doesn't matter. What's important is is that that that growth is there, and and we meet customers where they are. And customers may may change from quarter to quarter. Some quarters, they buy the DNA, and some quarters, they buy the protein. And and and we'll meet them where they are, and we provide great value. Our products are differentiated. We win no matter where they want to be. And and and and we're looking forward to to capturing that growth.

Our next question comes from the line of Mark Etok with Stephens. Please proceed.

Hey, good morning, and thank you for taking my questions. Maybe just a few quick ones for me. Just given this one to two points of growth from MRD, is it possible to frame up

the

proportion of MRD revenues in

2020 fiscal 2025? And I'll stop there and follow-up in a second. Happy. Matt, great to hear you. And happy to share. What we've said in the past is our MRD business is relatively small. It's a lot of small numbers, and that we are growing significantly faster than the overall. You know, kind of applying that rule, it's a relatively small percentage of our overall NGS business in 2025, but it is growing much faster than the overall NGS business, and we expect that trend to continue not just in 2026, but well beyond.

Our next question is from Puneet Souda with Leerink Partners.

Thanks for the follow-up again. I appreciate you providing a lot of input, but we just wanna boil down to a key question. What is the real NGS underlying growth ex this large customer in the first quarter and the fiscal year 2026? Thank you.

Yeah. Pandit, if you if you step back a bit and look at where we were in 2025, the overall growth of NGS being around 23%. Neutralizing for the growth from the one customer, it would be closer to 20. And and if you go into 2026, I'd say the same general dynamic applies as well.

And we have a question from the line of Vijay Kumar with Evercore ISI. Adam, hey. Sorry. On on this Q1 NGS question, the the is the customer headwind I I know you've had the

customer headwind in back half. Right? Is is that worsening in Q1? Is that what's driving the end user assumption? And because we already had the headwind in in that

'4. Right? Like, why would it worsen sequentially?

Vijay, you're you're asking the the right question. The air pocket from Q4 is continuing into Q1. But then it will significantly reverse as we expect the ramp to begin starting in 2026.

And ladies and gentlemen, this concludes our Q and A session. I will pass it back to Emily Leproust for final comments.

Thank you for your questions and for your continued support. With our strong execution in 2025 and a clear path to profitable growth in 2026, we will remain focused on delivering differentiated products and services for our customer, and sustained value for our shareholders. Thank you.

And this concludes our conference. Thank you for participating.

You may now disconnect.