Azenta's Q4 2025: Contradictions Emerge on Macroeconomic Impact, NGS Growth, and Government Shutdowns

Date of Call: November 21, 2025

Financials Results

• Revenue: $159.0M in Q4, up 6% YOY reported and up 4% organic; FY2025 revenue $594M, up 4% reported and up 3% organic
• EPS: Non-GAAP EPS $0.21 in Q4; Non-GAAP EPS $0.51 for FY2025
• Gross Margin: Q4 non-GAAP gross margin 46.7%, down 20 bps YOY (SMS 49.3%, up 180 bps YOY; Multi-Omix 43.7%, down 260 bps YOY)
• Operating Margin: Q4 adjusted EBITDA margin 13%, up ~230 bps YOY; FY2025 adjusted EBITDA margin 11.2%, up ~310 bps YOY

Guidance:

• Organic revenue growth expected 3%–5% for fiscal 2026.
• Multi-Omix expected to deliver low single-digit growth; SMS mid-single-digit growth.
• Q1 revenue expected to decline ~1%–2% YOY with a slower H1 and acceleration in H2.
• Targeting ~300 bps year-over-year adjusted EBITDA margin expansion.
• Free cash flow expected to improve by >30% YOY; continued commercial reinvestment and disciplined capital deployment.

Business Commentary:

* Financial Performance and Margin Expansion: - Azenta reported Q4 2025 revenue of $159 million, up 6% year-over-year (YoY) on a reported basis and 4% organically. - The company achieved a meaningful margin expansion of 310 basis points, with an adjusted EBITDA margin of 13% in Q4. - The growth and margin improvement were driven by operational turnaround efforts, disciplined cost execution, and stable financial performance.

• Multi-Omix Segment Growth:
• The Multi-Omix segment delivered record revenue of $73 million in Q4, the highest ever, representing 11% growth on a reported basis and 10% organically.
• Strong performance in Next-Generation Sequencing (NGS) was the primary driver, with sequencing volume rising 50% year-over-year.

• Growth was fueled by large deals in Europe and continued strength in Asia, especially in China.

• Challenges in Sample Management Solutions:

• Sample Management Solutions (SMS) revenue was $86 million for the quarter, up 2% reported but flat organically.
• The performance reflects softness in Cryogenic Stores due to customer budget constraints and a tough compare to last year's record quarter.

• Delays in CapEx decisions and government shutdown impacts on bookings were significant challenges in this segment.

• Impact of Macroeconomic Uncertainty:

• Azenta's growth and margin expansion were achieved amid a volatile macroeconomic backdrop, characterized by softer government and NIH funding, shifting biopharma priorities, and geopolitical uncertainty.
• The company's resilience was supported by its differentiated portfolio's ability to navigate these challenges and capitalize on customer needs for outsourcing and automation.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management emphasized operational progress and cash strength ("over $546M in cash"), cited fiscal 2025 margin expansion ("310 basis points for the full year"), and provided a constructive FY26 outlook ("core revenue growth between 3%-5% and expected adjusted EBITDA margin expansion of 300 basis points").

Q&A:

• Question from David Saxon (Needham): Why guidance of 3%–5%; what drives the Q1 decline of ~1%–2% and how much is NIH/government funding baked in?
  Response: Guidance reflects two main drivers: CapEx weakness in automated stores/cryogenic (~two-thirds of the Q1 headwind) and government-shutdown-related grant delays (~one-third); market growth view ~1%–2% and midpoint 4% assumes gradual improvement through the year.

• Question from David Saxon (Needham): On SMS mid-single-digit growth: update on CNI backlog and SRS outlook?
  Response: Management is confident: CNI backlog remains strong, commercial reinvestment and new leadership should drive demand; SRS expected robust growth supported by recent large deals and planned price optimization beginning late Q1.

• Question from Mac (Stevens): What trends are you seeing across customer bases (pharma, biotech, academic/government) and what components drive the low single-digit Multi-Omix guide?
  Response: Pharma spending is relatively healthy and driving strength; biotech CapEx remains muted; academic/government slowed by the shutdown; Multi-Omix guidance reflects NGS normalization to mid-single-digit growth and stabilizing gene synthesis.

• Question from Andrew Cooper (Raymond James): For SMS mid-single-digit target, how much is price vs. volume; where is price optimization being executed? Also, how does decentralization tie into the 300 bps margin target?
  Response: Growth mix: volume recovery (especially H2) plus price optimization mainly in SRS and CNI; SRS long-term contracts provide stable recurring revenue. Decentralizing into product-aligned regional GMs and embedding R&D/sales should speed decisions and operational leverage to deliver ~300 bps EBITDA expansion.

• Question from Vijay Kumar (Evercore ISI): Why are you seeing more CapEx/NIH shutdown impact than some peers and how does that feed into Q1 and EPS expectations?
  Response: Azenta's customer feedback and 45-day government shutdown produced measurable booking delays, heavier on multi-omics; CapEx softness hit SMS installs; management expects a full-year recovery, EPS above $0.50 is anticipated but emphasis is on EBITDA expansion rather than providing a detailed EPS guide.

• Question from Jacqueline for Brendan (TD Cowen): What is the M&A/tuck-in plan and timing; updates on automated stores near- and long-term?
  Response: M&A focus is tuck-ins in SRS, automated solutions (CNI/stores), and synthesis with execution planned in 2026 after 2025 reset; automated stores are being R&D-invested with payoff expected in 2027–2028 and tailwinds from cell & gene cold-storage demand.

• Question from Paul Knight (KeyBank): What is market growth for stores and cryo and is this a primary M&A target?
  Response: Stores/cryogenic market currently low-single-digit growth; attractive because of a large install base, high consumable/service attachment rates and data/consumable monetization, making it a key M&A and organic growth focus.

Contradiction Point 1

Macroeconomic Impact on Business

It highlights differing perspectives on the impact of macroeconomic conditions on the company's business, particularly regarding capital expenditures.

What is the current market growth rate? What factors are driving the 1-2% Q1 revenue decline across businesses or product categories? - David Saxon (Needham)

2025Q4: A lot of what we're seeing is this slowdown on capital expenditures, which impacts our stores and cryo. We're seeing some green shoots around this particularly in the EU, less traction in the US right now. - John Marotta(CEO)

What drives the increased guidance for Q4 in fiscal 2025? - David Saxon (Needham)

2025Q3: We're not seeing any cancellations at this time. Most of this is pharma pausing on capital equipment purchases due to budget constraints, consistent with broader market trends. - John P. Marotta (CEO)

Contradiction Point 2

NGS Growth and Market Conditions

It demonstrates differing views on the growth trajectory and factors impacting the Next-Generation Sequencing (NGS) business segment.

What factors are driving multi-omics' low single-digit growth this year? - Mac (Stevens)

2025Q4: For multi-omics, mainly NGS, we expect it to be roughly mid-single digits this year. This is a normalization after lapping some price challenges from the prior year. - Lawrence Lin(CFO)

Can you clarify the high double-digit growth in NGS in the quarter? - Matthew Stanton (Jefferies)

2025Q3: Strong NGS growth is due to sales execution and partnering with customers. There is a clear opportunity around outsourcing given the need for high-quality partners. - John P. Marotta (CEO)

Contradiction Point 3

Government Shutdown Impact

It shows differing opinions on the impact of the government shutdown on the company's business, particularly in relation to NIH funding.

What's the market's growth rate currently? - David Saxon (Needham)

2025Q4: The second is the government shutdown, which paused new grant reviews and approvals. We expect this to impact the first quarter, with some bookings pushed out to future quarters. - Lawrence Lin(CFO)

Are there any updates on NIH funding and its impact for 2026? - Matthew Parisi (KeyBanc)

2025Q3: Recent news indicates a 1% step-up in NIH funding, which supports our customers. We remain bullish on NIH funding next year, and our business is well-positioned to support this trend. - John P. Marotta (CEO)

Contradiction Point 4

Market Growth Rates and Dynamics

It involves differing perspectives on the market growth rates and dynamics, which are crucial for investor expectations and strategic planning.

What is the current market growth rate? What factors are driving the 1-2% decline in Q1 across businesses and product categories? What impact from NIH funding dynamics is reflected in the guidance for the first half of the fiscal year? - David Saxon (Needham & Company)

2025Q4: The slowdown on capital expenditures, which impacts our stores and cryo. We're seeing some green shoots around this particularly in the EU, less traction in the US right now. - John Marotta(CEO)

How should we assess the growth cadence for H2 versus H1? Are there risks to growth outside of funding? What are the currency assumptions for H2? - David Saxon (Needham & Company, LLC)

2025Q2: Our 2025 quarterly revenue profiles should be similar to previous years. The first half was slightly ahead, but we expect the third and fourth quarters to be in line with prior years. - Lawrence Lin(CFO)

Contradiction Point 5

Impact of Government Shutdown and NIH Funding

It highlights differing views on the impact of government shutdowns and NIH funding on the company's performance, which can influence investor confidence and financial projections.

What is the current market growth rate? What factors are driving the 1-2% Q1 revenue decline across businesses and product categories? How much of the NIH funding impact is already reflected in the first half guidance? - David Saxon (Needham)

2025Q4: There's some booking softness of course, and the government shutdown from last month is really weighing on some of the guidance. - John Marotta(CEO)

What are the key assumptions behind the 1% headwind from NIH? Is it all in the second half, and where is the offset? - Vijay Kumar (Evercore Inc.)

2025Q2: The 1% headwind is being countermeasured effectively. About 20% of our global revenue comes from the academic market. We've had 30 conversations with academic customers and pivoted to pharma and biotech to offset the impact. - John Marotta(CEO)