Azenta's Q4 2025 Earnings Call Contradictions: Macroeconomic Impact, Multiomics Growth, Automation Stores, Market Growth Rates, and SMS Strategy Shifts

Date of Call: November 21, 2025

Financials Results

• Revenue: $159.0M in Q4, up 6% YOY (4% organic); FY2025 revenue $594M, up 4% reported (3% organic)
• EPS: $0.21 per share (non-GAAP) in Q4; $0.51 for FY2025 (non-GAAP)
• Gross Margin: 46.7% non-GAAP gross margin in Q4, down 20 basis points YOY
• Operating Margin: 13% adjusted EBITDA margin in Q4 (up ~230 bps YOY); full-year adjusted EBITDA margin 11.2% (up ~310 bps YOY)

Guidance:

• Organic revenue growth of 3%–5% for FY2026
• Multi-Omix: low single-digit growth; Sample Management Solutions (SMS): mid-single-digit growth
• Q1 revenue expected to decline ~1%–2% YoY; slower first half with acceleration in second half
• Target ~300 bps year-over-year adjusted EBITDA margin expansion
• Free cash flow expected to improve >30% YoY
• Continued investments in commercial, R&D and targeted tuck-in M&A Investor Day in December for details

Business Commentary:

* Revenue Growth and Operational Efficiency: - Azenta achieved 3% core growth in fiscal 2025, with a 310 basis points margin expansion. - The growth was driven by operational turnaround, disciplined cost management, and a focus on customer-centric strategies.

• Segment Performance and Market Dynamics:
• The Multi-Omix segment delivered a record quarter with $73 million in revenue, up 11% on a reported basis and 10% organically.

• The strong performance was due to continued strength in Next-Generation Sequencing, despite macroeconomic headwinds.

• Challenges and Operational Improvements:

• The Sample Management Solutions (SMS) segment saw flat organic growth, with softness in Cryogenic Stores.
• The challenges were attributed to customer budget constraints and a tough macroeconomic environment, but operational efficiencies helped mitigate the impact.

• Outlook and Strategic Focus:
• Azenta anticipates core revenue growth between 3%-5% for fiscal 2026, with an expected adjusted EBITDA margin expansion of 300 basis points.
• The optimistic outlook is supported by operational improvements, resolved macroeconomic uncertainty, and strategic investments in growth initiatives.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted operational progress and liquidity: “we achieved 3% core growth and delivered meaningful margin expansion of 310 basis points.” CFO: “adjusted EBITDA margin of 13% in the fourth quarter and 11.2% for the full year.” CEO: emphasized a strong balance sheet (~$546M excl. B Medical) and confidence to invest, repurchase shares, and pursue tuck-in M&A.

Q&A:

• Question from David Saxon (Needham): Maybe I’ll start with guidance. Three to five growth. I guess, what do you think the market’s growing at at this point? The decline in fiscal first quarter, down one to two, what’s driving that across businesses or even product categories? I think you’ll lap the NIH funding dynamics in the fiscal first half. Would love to hear what’s baked into guidance in terms of that impact.
  Response: Management: Q1 softness driven mainly by CapEx pullback in automated stores/cryo and ~45‑day government shutdown delaying grant approvals; midpoint 4% contemplates some macro deterioration, market seen at ~1%–2%, focus on delivering full‑year guide.

• Question from David Saxon (Needham): Follow-up on SMS growth for the year. Mid-single digits, you just talked about some weakness in stores and cryo. Last quarter, you talked about the CNI backlog was like two and a half times annual sales. Can we get an update there? How much of that is driving your confidence in the mid-single digit growth? How are you thinking about SRS for the year?
  Response: Management: CNI/backlog strong; mid‑single‑digit SMS guide supported by new commercial hires, reinvestment, price optimization in SRS, and recent large SRS deals—SRS expected to see robust growth as initiatives ramp.

• Question from Mac (Stevens): Would love an update of what you are seeing across your various customer bases at this point. In terms of multi-omics, can you parse out the aspects contributing to the low single-digit guide for the year?
  Response: Management: Strength concentrated in pharma; biotech remains tight on CapEx; academic/government slowed by shutdown. Multi‑omics view reflects NGS normalization—volumes/pricing settling—hence expectation of mid‑single‑digit NGS growth.

• Question from Andrew Cooper (Raymond James): On SMS and price optimization: can you give framework for each segment and how much price is contributing versus volume to the mid-single digit goal?
  Response: Management: SRS has long‑term contracts and high recurring revenue; price optimization initiatives focused in SRS and CNI will contribute meaningfully alongside volume; stores/cryo weakness expected to recover in H2; Plasmid EZ offsetting Sanger declines.

• Question from Vijay Kumar (Evercore ISI): On your CapEx and shutdown comments—what are you assuming for segments in Q1 to get to the -1% to -2% guide? And how should we think about EPS and any below‑the‑line impacts given the 300 bps margin target?
  Response: Management: Q1 drag is primarily CapEx weakness in SMS (~two‑thirds) and government funding delays leaning on multi‑omics (~one‑third); full‑year adjusted EBITDA margin target ~300 bps expansion and EPS expected above $0.50 but company does not provide firm EPS guide.

• Question from Brendan Smith (TD Cowen): Expectations/timing for M&A tuck‑ins this year — what areas are you pursuing and has the macro shifted timing/targets? Also, outlook for automated stores near‑ and long‑term?
  Response: Management: 2026 targeted for executing tuck‑ins focused on SRS, automated solutions (CNI/stores) and synthesis; automated stores positioned for long‑term tailwinds (cell/gene therapies), with R&D investments whose benefits are expected to materialize in 2027–2028.

• Question from Paul Knight (KeyBank): What do you think the market growth rate is for stores/cryogenic, and is that correlated to biologic sales? Is this the key M&A spot?
  Response: Management: Stores/cryo market viewed as low single‑digit growth; value driven by install base and increasing consumable/service attachment rates; stores/cryogenic and attachment economics make it a core M&A focus.

Contradiction Point 1

Macroeconomic Impact and Customer Behavior

It involves differing perspectives on the macroeconomic impact and customer behavior, which are crucial for understanding the company's growth trajectory and strategic focus.

Could you provide an update on the macroeconomic impact on customer segments, specifically in chemical equipment? - Mac (Stevens)

2025Q4: We're seeing strength in pharma with repositioning and clarity around projects. Biotech is more cautious but seeing clarity in the academic and government sectors. The focus remains on pharma investments. - John Marotta(CEO)

What is the pro forma mix in your academic and government segments, and are there delays from recent headlines? - Matt Stanton (Jefferies)

2025Q1: About 16% of revenue comes from academic and 15% from government, with 45% from pharma biotech. Some pauses in government-funded projects are observed, but the company is prepared to pivot if needed. - John Marotta(CEO)

Contradiction Point 2

Multiomics Growth and Pricing Dynamics

It pertains to the growth expectations and pricing dynamics in the Multiomics segment, which is a key driver of the company's revenue and profitability.

What factors are driving the low single-digit guidance for multi-omics this year? - Mac (Stevens)

2025Q4: The normalization of NGS volume and pricing is the primary factor affecting growth. There's confidence in the stabilization of gene synthesis and Plasmid EZ offsetting Sanger declines. - John Marotta(CEO), Lawrence Lin(CFO)

Why did Multiomics growth slow to 6% this quarter despite incoming orders? What's causing the growth slowdown and its impact on margins? - David Saxon (Needham & Company)

2025Q1: Currently, a transformation is underway, and the company is holding guidance for now, aiming to provide more clarity at the upcoming Investor Day. Lawrence Lin: The timing of orders is impacting the growth, but pricing stability in NGS is encouraging. - John Marotta(CEO), Lawrence Lin(CFO)

Contradiction Point 3

Automation Stores Performance and Growth Expectations

It involves the performance and growth expectations for the automation stores segment, which is a critical component of the company's business strategy.

How should we assess automated stores' performance, customer spending, and long-term expectations? - Brendan Smith (TD Cowen)

2025Q4: Stores are expected to perform well as macro conditions improve. We are investing in R&D for future growth, and automation solutions (not just freezers) present significant opportunities. - Lawrence Lin(CFO)

Can you explain the slowdown in Sample Management Solutions and its impact on orders and backlog? - Vijay Kumar (Evercore ISI)

2025Q1: The slow start is due to timing, with large stores down 13%. There is a robust backlog and pipeline, with 75% of 2025 revenue secured. - Lawrence Lin(CFO)

Contradiction Point 4

Market Growth Rate Expectations

It involves changes in expectations regarding market growth rates, which impact revenue projections and strategic planning.

What details can you share regarding the Q1 2026 guidance, specifically the expected decline and factors driving it across business segments? What is your outlook for the market growth rate? - David Saxon (Needham)

2025Q4: We anticipate a market growth rate of 1-2% and focus on delivering the year. - John Marotta(CEO)

How should we assess the growth cadence in H2 compared to H1? Are there other risk factors impacting growth beyond funding? What are the currency assumptions for H2? - David Saxon (Needham & Company, LLC)

2025Q2: Look, in total, the 2025 quarterly revenue profiles shouldn't be significantly different than prior years. We should use a similar profile. The first half of 2025 was a touch ahead of last year. - Lawrence Lin(CFO)

Contradiction Point 5

SMS Growth Drivers and Strategy

It involves changes in the strategic focus and growth drivers for the Sample Management Systems (SMS) segment, which is a key revenue driver for the company.

How is SMS growth progressing given the challenges in stores and cryo? Can you provide an update on CNI backlog and SRS for the year? - David Saxon (Needham)

2025Q4: We're confident about SMS growth due to commercial investments in GeneWiz and price optimization in SRS. - Lawrence Lin(CFO)

Can you provide details on the SMS leadership transition in April? Are you sourcing the new leader internally or externally? - David Saxon (Needham & Company, LLC)

2025Q2: I think we're excited about rolling our sleeves up there and moving that business in the right direction. - John Marotta(CEO)