Twist Bioscience Q2 Earnings Preview: Innovative Products, Not Enough Buyers

Investors, let’s talk about Twist Bioscience (NASDAQ: TWST)—a company that’s all about turning DNA into data, drugs, and maybe even the future of storage. But here’s the rub: are they selling enough of it?

The biotech sector is a wild ride right now, but Twist has always been a standout. They’re the pioneers of synthetic DNA, and their Q2 earnings preview is shaping up to be a tale of two halves: breakthroughs in innovation versus lingering doubts about market adoption. Let’s dissect the numbers.

The Innovations: A DNA-Driven Machine

Twist isn’t just playing around with genes—they’re building a platform that could redefine industries. Their SynBio division is on fire, with Express genes and IgG Express products driving a 28% revenue jump in Q1. These products let customers go from fragments to full-length genes, boosting wallet share and attracting new buyers. CFO Adam Laponis called this a “tipping point,” and I’m inclined to agree—this segment’s momentum could push Q2 sales higher.

Then there’s DNA storage, a moonshot that Twist is turning into a moon base. They’re aiming for terabyte-scale milestones within two years, using silicon chips and enzymatic synthesis. Picture this:

This isn’t just sci-fi—it’s a $10 billion addressable market. But here’s the catch: storage won’t pay off in Q2. It’s a long game, requiring patience.

The Financials: Growth vs. Profitability

Twist’s top line is roaring. They’re guiding for $91–93 million in Q2 revenue, a 21–24% year-over-year surge. Full-year revenue is now expected to hit $372–379 million, up 20% from 2024. But here’s the problem: they’re still losing money. Q1’s adjusted EBITDA loss was $16.3 million, though that’s a $11.5 million improvement from last year.

The path to profitability hinges on gross margin expansion. Management aims for over 50% by Q4 2025, citing proprietary enzymes and scale. Let’s check the math:

If they hit 50%, that’s a game-changer. But until then, the red ink keeps flowing.

The Risks: Buyers, Buyers, Buyers!

Jim’s Rule #1: Revenue growth means nothing without margin growth. Twist’s sales are up, but profits? Not yet. The academic market is a ticking time bomb—NIH funding delays and geopolitical squabbles (like Canada/Mexico tariffs) could crimp demand. Competitors using cheaper Chinese imports are still a threat, but Twist’s U.S. manufacturing gives it a 16.5% tariff-free edge.

Then there’s the Biopharma segment, which is stuck in neutral. Q1 orders were only $5.9 million, and management is “cautiously optimistic.” Let’s see:

This segment needs to catch fire—fast.

Q2 Outlook: Can They Close the Gap?

The earnings call on May 5 will be a litmus test. Look for these signs:
1. SynBio dominance: Is Express gene revenue growing sequentially?
2. Margin momentum: Are gross margins ticking toward 50%?
3. Cash flow: With $270.8 million on the books, they’ve got runway—but how long?

Conclusion: Buy the Dip, but Watch the Margins

Twist Bioscience is a genius in innovation, but investors need to see if they’re converting that genius into cash. The stock trades at $38.32, near its 52-week low of $30.32, with a market cap of $2.29 billion.

If Q2 shows sustained gross margin expansion and Biopharma orders pick up, this could be a steal. But if the EBITDA loss widens or adoption stalls, brace for volatility.

Final Take: Twist is a buy for the long-term vision of DNA storage and synthetic biology—but only if the margins catch up. For now, this is a hold until May’s earnings prove they’ve cracked the code on turning buyers into believers.

Disclosure: This article is for informational purposes only and does not constitute financial advice. Always do your own research before investing.