Twist Bioscience Q3 Results: Soft Growth and Guidance Amidst Macro Uncertainty and Profitability Focus

Twist Bioscience reported soft Q3 results and provided guidance that suggests growth will moderate further in the coming quarters. This is due to macro uncertainty, concerns around academic funding, and the company's focus on achieving profitability.

Twist Bioscience (NASDAQ: TWST) reported relatively soft Q3 results, with revenue of approximately $96 million, an 18% year-over-year (YoY) increase. The company's guidance suggests that growth will moderate further in the coming quarters due to macroeconomic uncertainty, concerns around academic funding, and the company's focus on achieving profitability. These factors have led to a period of weakness for Twist, with analysts noting that the company's stock has underperformed over the past 12 months [1].

The company's SynBio business, which accounts for around 20% of revenue, continues to grow at a robust rate, with YoY revenue growth of 20% in Q3. However, the NGS business, which has been a significant driver of growth, is expected to face a headwind in Q4 due to a customer scaling up its testing volumes. This weakness is also expected to carry over into the first quarter of FY2026 [1].

Twist has also made several strategic moves to expand its business. The company recently expanded its Express turnaround service to all gene fragments, with pricing starting from seven cents per base. Additionally, Twist has updated its partnership with Ginkgo Bioworks (DNA) and introduced FlexPrep, a service targeting AgBio customers. These moves aim to expand Twist's addressable market and drive growth [1].

Despite these efforts, Twist's Biopharma business remains a concern. While activity levels are increasing, financial performance is still soft. The company recently strengthened its Biopharma offering with the introduction of a Humanized Transgenic Mouse Model, which complements existing antibody discovery services. However, it is unclear what else would reignite the Biopharma business [1].

Twist's gross margin was 53.4% in the third quarter, with the YoY improvement driven by scale, revenue mix, and process improvements. Operating expenses totaled $81.4 million, resulting in an adjusted EBITDA loss of $8 million, or roughly a -8% margin [1].

Looking ahead, Twist expects 374-376 million USD revenue in FY2025, implying 15% YoY growth in the fourth quarter. However, the company's stock has performed poorly over the past 12 months, and analysts expect mid to high teens revenue growth in the coming years. Twist expects to be adjusted EBITDA positive by the end of FY2026 [1].

References:
[1] https://seekingalpha.com/article/4812889-twist-bioscience-stock-q3-headwinds-are-mounting-reiterate-hold