Twist Bioscience’s Q2 Earnings Show Profitability Progress Amid Loss Widening

Twist Bioscience (NASDAQ: TWST) reported its fiscal Q2 2025 results, posting a net loss of $0.66 per share—wider than the $0.58 loss expected by analysts. However, beneath the headline loss lies a story of accelerating revenue growth, margin expansion, and strategic progress toward its long-term profitability goals. Let’s dissect the numbers.

Revenue Growth Outperforms, But Profitability Remains the Prize

Total revenue rose 24% year-over-year to $88.7 million, driven by strong performances across all three core segments:
- SynBio (Synthetic Biology): $34.4 million (+28% YoY), fueled by its Express portfolio, which offers rapid-turnaround gene fragments and clonal genes.
- NGS (Next-Gen Sequencing): $48.6 million (+23% YoY), boosted by commercialization of liquid biopsy and rare disease assays.
- Biopharma Services: $5.7 million, with 89 active programs and 67 new programs initiated in the quarter.

The Americas region continued to dominate sales at $53.7 million (+22% YoY), but EMEA surged 33% to $28.3 million—a sign of Twist’s expanding global footprint. APAC lagged at $6.7 million (+6% YoY), with China contributing just 2% of total revenue.

Margin Expansion Accelerates—A Key Turning Point

The star of the quarter was gross margin, which rose to 48.3%—up from 40.5% a year earlier. Management cited two primary drivers:
1. Operational efficiencies: Automation and process improvements, particularly in reducing costs for plastic tips.
2. Volume leverage: 75–80% of incremental revenue contributed directly to margin expansion.

This bodes well for future profitability. Twist now projects full-year 2025 gross margins of ~49%, with Q4 margins exceeding 50%.

Strategic Initiatives: Building a Moat for the Future

Twist is doubling down on initiatives that could cement its leadership in synthetic biology:
- DNA Data Storage: Developing terabyte-scale storage using enzymatic chemistry on silicon chips—a potential game-changer for long-term data archiving.
- Enzyme Production: Manufacturing proprietary enzymes internally to reduce costs and improve product performance.
- Trade Policy Advantage: U.S. tariffs on imported DNA (10–25% duties on Chinese, Canadian, or Mexican imports) favor Twist, as 100% of its production is domestic.

Path to EBITDA Breakeven: Progress, Not Perfection

The company reaffirmed its goal to achieve adjusted EBITDA breakeven without equity financing, projecting a loss of $55–$60 million for 2025—down from $89–$95 million in 2024. With $270.8 million in cash, CFO Adam Laponis emphasized “disciplined OpEx management,” suggesting the path to profitability is clear but gradual.

Risks and Challenges

• Market Volatility: Biotech stocks remain sensitive to macroeconomic and funding trends.
• APAC Underperformance: Weakness in Asia-Pacific could limit geographic diversification.
• Breakeven Timeline: While the path is clearer, hitting EBITDA breakeven hinges on sustained margin improvements.

Conclusion: A Strong Foundation for Long-Term Growth

Twist Bioscience’s Q2 results highlight a company making deliberate strides toward profitability. With revenue growth accelerating (24% YoY) and gross margins climbing past 48%, the core business is firing on all cylinders. The raised revenue guidance ($372–$379 million for FY2025) and margin targets suggest management’s confidence is well-placed.

Crucially, strategic bets like DNA data storage and in-house enzyme production could create significant competitive advantages over the next few years. While the net loss per share was wider than expected, the focus on cash flow management and operational leverage positions Twist to weather near-term challenges.

Investors should monitor two key metrics:
1. Margin Expansion: Will Q4 gross margins hit 50% as projected?
2. Cash Burn: Can adjusted EBITDA losses shrink to $55–$60 million?

If Twist continues executing, its silicon-based DNA synthesis platform could become the backbone of a profitable biotech powerhouse. For now, the stock (TWST) remains a high-risk, high-reward play—but the latest numbers suggest the reward potential is growing.