Azenta's 2025 Q3 Earnings Call: Navigating Contradictions in NIH Funding, Revenue Guidance, and Gross Margins

NIH funding impact and business strategy, SMS core products weakness and order timing, revenue guidance and visibility, order timing and pushout, gross margin recovery are the key contradictions discussed in Azenta's latest 2025Q3 earnings call.



Revenue and Financial Performance:
- Azenta reported third quarter revenue totaled $144 million, which was flat year-over-year on a reported basis and down 2% on an organic basis.
- The company maintained an adjusted EBITDA margin of 12.3% for the quarter, reflecting an expansion of approximately 260 basis points year-over-year.
- This financial performance was attributed to operational efficiency and cost discipline.

Segment Performance Variability:
- Sample Management Solutions (SMS) revenue decreased by 4% year-over-year, primarily due to softer bookings for cryo and timing delays in automated stores.
- The Multiomics segment delivered revenue growth of 4% on a reported basis and 3% on an organic basis, driven by strong performance in next-generation sequencing and large customer deals.
- The performance variations were impacted by macroeconomic factors, including budget constraints and internal realignment.

Organizational Realignment and Strategic Investments:
- Azenta is advancing its operational turnaround through structural realignment, allowing for more effective decision-making and resource allocation.
- Strategic investments are being made in product management resources and R&D to drive innovation and alignment with customer needs.
- These initiatives are part of the company's long-term strategy to enhance operational excellence and financial stability.

Pipeline and Market Dynamics:
- Azenta's robust order funnel and strong customer engagement are suggesting a rebound in demand, with growth expected in next-gen sequencing and sample storage.
- The company anticipates green shoots in its stores and instruments products, supported by a strong funnel and significant pent-up demand.
- The dynamic macro environment presents opportunities for Azenta as a valuable outsourcing solution, alleviating cost pressures for customers.