Twist Bioscience's Q4 2025: Contradictions Emerge on NGS Growth, Margins, and Customer Transitions

Date of Call: November 14, 2025

Financials Results

• Revenue: $99.0M for Q4 (up 17% YOY, +3% sequential); FY2025 $376.6M (up 20% YOY)
• Gross Margin: Q4 51.3%; FY2025 50.7% (vs 42.6% in FY2024)

Guidance:

• Total revenue FY26 guide $425M–$435M (≈13%–15.5% YOY)
• DNA Synthesis & Protein Solutions: $194M–$199M (≈15%–18% YOY)
• NGS Applications: $231M–$236M (≈11%–13.5% YOY); path to 20% YoY by Q4
• Gross margin expected >52% for FY26; target Q4 FY26 adjusted EBITDA breakeven
• Q1 FY26 revenue $100M–$101M (≈13%–14% YoY); NGS guidance assumes ~1–2 pts MRD contribution and a large diagnostic customer ramping in Q2

Business Commentary:

* Revenue and Growth: - Twist Bioscience reported revenue of $99 million for Q4 2025, representing a 17% year-over-year increase and marking the 11th consecutive quarter of growth. - The growth was driven by increased demand in SynBio and NGS products, particularly from customers pursuing AI-enabled therapeutics discovery.

• SynBio and Biopharma Division:
• SynBio revenue reached $39.5 million, showing a 17% year-over-year growth, while Biopharma services revenue was $6.4 million, up 22% year-over-year.

• Growth in these segments was driven by customers utilizing Twist's platform for therapeutics discovery initiatives and the rapid expansion of AI-enabled drug discovery.

• NGS Applications:

• NGS revenue increased to $53 million, up 16% year-over-year, primarily due to successful commercial success in diagnostic customers' clinical assays.

• The company continues to support minimal residual disease (MRD) customers and expects significant growth from the upcoming MRD Express product.

• Gross Margin and Profitability:

• Gross margin for the quarter was 51.3%, with an annual margin of 50.7%, showing an 8 margin point increase from the previous fiscal year.
• This improvement was attributed to leveraging fixed costs due to higher volume and continuous margin improvement initiatives.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management called it a "record quarter with $99 million in revenue, exceeding our guidance" and noted 11 consecutive quarters of growth; gross margin improved to 51.3% (FY50.7% vs FY24 42.6%); management repeatedly cited margin expansion and said "adjusted EBITDA breakeven within our reach by the end of fiscal 2026" and expects to exit FY26 at adjusted EBITDA breakeven.

Q&A:

• Question from Catherine Ramsey (Robert W. Baird & Co. Incorporated, Research Division): On gross margins — is guide pricing-driven or are you making manufacturing investments, and when do you get back to the 75%–80% incremental margins?
  Response: Expect continued high incremental flow of revenue to gross profit (targeting ~75%–80% on average over time) but quarter-to-quarter noise will occur due to customer mix and lapping tough comps; focus remains on growing revenue and optimizing gross profit dollars.

• Question from Catherine Ramsey (Robert W. Baird & Co. Incorporated, Research Division): The NGS guide was below Street — drivers, timing for the customer ramp, and how should we think about long-term growth for NGS?
  Response: Near-term NGS guide reflects a temporary air pocket from a customer transitioning to commercial; expect NGS to return to ~20% YoY growth by Q4 and modest MRD contribution (~1%–2%) in FY26.

• Question from Puneet Souda (Leerink Partners LLC, Research Division): Regarding SynBio and the Biopharma AI-driven order — how sustainable is this momentum and what are customer development signals for AI contribution in FY26?
  Response: AI-driven demand appears sustainable and is validated by large orders; Twist's throughput and scale uniquely position it to support AI-enabled discovery and capture ongoing demand.

• Question from Brendan Smith (TD Cowen, Research Division): Can you describe gross margin sequencing from Q4 into FY26 and anything in the NGS portfolio that drives assumptions toward the upper vs lower guide bound?
  Response: Gross margin expansion will parallel revenue growth plus continuous process improvements while management continues to invest in capabilities; overall path is toward continued margin expansion but they are optimizing for gross profit dollars rather than margin percentage alone.

• Question from Vijay Kumar (Evercore ISI Institutional Equities, Research Division): Why would Q1 NGS growth be below Q4 given the Q4 customer transition, and on MRD Express—can tumor-naive sensitivity match tumor-informed and is there supporting data and interest?
  Response: Q1 softness is continuation of the customer transition air pocket with a ramp expected starting in Q2; recent conference data indicate tumor-informed approaches yield higher sensitivity and Twist's scale/speed aim to enable that market.

• Question from Subhalaxmi Nambi (Guggenheim Securities, LLC, Research Division): For MRD Express who is the end user — Twist running assays or supplying panels to customers/hospitals?
  Response: Twist is a supplier/enabler; it supplies panels and materials to customers and partners but does not run clinical tests itself.

• Question from Subhalaxmi Nambi (Guggenheim Securities, LLC, Research Division): How will you approach pricing and expected margins for MRD Express?
  Response: Pricing is not set; it will be value-based reflecting speed (12-hour turnaround), scale, and supply-chain derisking, and the company will share value with customers.

• Question from Matthew Larew (William Blair & Company L.L.C., Research Division): Given a slower start to the year how much breathing room do you have to hit Q4 adjusted EBITDA breakeven and what macro assumptions are baked into the guide?
  Response: Guide assumes a stable macro (conservative stance) with only 1–2 pts of MRD contribution assumed for FY26; timing uncertainty exists but management still expects to exit FY26 at adjusted EBITDA breakeven.

• Question from Douglas Schenkel (Wolfe Research, LLC): Is the academic promotion (removing Express premium) still in place and for how long; is Q1 pacing or a demand change for NGS; and can you better define market size/penetration and revenue per assay?
  Response: Academic promotion remains in place and is commercially successful; Q1 softness is a pacing/timing issue (not lower demand); management acknowledged investors' desire for clearer market sizing and is working to provide better metrics offline.

• Question from Unknown Analyst (covering for Luke Sergott, Barclays): For the new DNA Synthesis & Protein Solutions segment, what's the rough split between Biopharma and synthetic genes in the FY26 guide and is the upside driven by the large AI program?
  Response: The segment was combined because customer workflows overlap; growth reflects integrated demand and synergies (including AI orders), and management did not provide a detailed split, saying the combined performance matters more than an exact split.

• Question from Steven Etoch (Stephens Inc., Research Division): Can you frame MRD revenue proportion in FY25?
  Response: MRD was a relatively small portion of NGS in FY25 but is growing significantly faster than the overall NGS business.

• Question from Puneet Souda (Leerink Partners LLC, Research Division): What is underlying NGS growth excluding the large customer in Q1 and FY26?
  Response: Neutralizing the large customer, NGS growth in 2025 would be closer to ~20% and management expects a similar underlying dynamic in 2026.

• Question from Vijay Kumar (Evercore ISI Institutional Equities, Research Division): Is the customer headwind in Q1 worsening vs Q4 and what's driving the NGS assumption?
  Response: The air pocket that affected Q4 continues into Q1 but should reverse with a commercial ramp beginning in Q2.

Contradiction Point 1

NGS Growth Expectations

It involves changes in financial forecasts, specifically regarding NGS growth expectations, which are critical indicators for investors.

What are the key drivers for the NGS growth guidance for fiscal '26 and the customer production ramp expectations? - Catherine Ramsey (Robert W. Baird & Co. Incorporated, Research Division)

2025Q4: We expect 20% NGS growth in fiscal 2026. The NGS guide reflects a customer transitioning from verification to commercial ramp, impacting Q4 and Q1. We expect to be back to 20% year-over-year growth by Q4. - Adam Laponis(CFO)

How have NGS assay launches progressed in 2025, and what are expectations for 2026? - Subhalaxmi T. Nambi (Guggenheim Securities)

2025Q3: We expect NGS growth in fiscal 2026 to be in the low teens, driven by growth from our MRD products and new product introductions. - Adam Laponis(CFO)

Contradiction Point 2

Gross Margin Guidance and Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

Why is the FY gross margin guidance indicating lower incremental margins for 2025, and when will incremental margins return to 75-80%? - Catherine Ramsey (Robert W. Baird & Co. Incorporated, Research Division)

2025Q4: The 20% growth in gross margin has been extraordinary, but we are lapping tough comps. We expect 75% to 80% average incremental gross margins, with some noise due to specific customer mix in any given quarter. - Adam Laponis(CFO)

Could you provide financial guidance for fiscal '26? What is the expected gross margin trend in fiscal '26? - Subhalaxmi Nambi (Guggenheim Securities, LLC, Research Division)

2025Q2: As we continue to scale our operations, our gross margin in Q2 of fiscal '26 is expected to expand 20 basis points. We expect our gross margin for Q3 to be around 75% with full-year guidance in the mid-70s. - Adam Laponis(CFO)

Contradiction Point 3

NGS Customer Dynamics

It involves changes in customer dynamics and growth expectations, which are critical for understanding market penetration and competitive positioning.

Why is NGS growth lower than expected, and is the sensitivity of a tumor-naive assay as good as a tumor-informed one with MRD Express? - Vijay Kumar (Evercore ISI Institutional Equities, Research Division)

2025Q4: We continue to expect NGS to grow though, obviously, the guide doesn't reflect some of the underlying momentum that we have from new product introductions or some of the customers coming through the queue. - Adam Laponis(CFO)

Could you share updates on SynBio growth trends, customer feedback, and product launch expectations? - Matthew Richard Larew (William Blair)

2025Q3: We are monitoring this closely with our customers and we'll continue to adjust our guidance as appropriate. For the reasons I mentioned, we continue to expect NGS to grow by double-digit percentages in fiscal 2026. - Adam Laponis(CFO)

Contradiction Point 4

NGS Growth and Customer Dynamics

It involves differing expectations and impacts due to customer transitions, which directly affects revenue growth and market expectations.

Could you clarify the drivers behind the NGS growth guidance for fiscal '26 and expectations regarding customer production ramp-ups? - Catherine Ramsey (Robert W. Baird & Co. Incorporated, Research Division)

2025Q4: The NGS guide reflects a customer transitioning from verification to commercial ramp, impacting Q4 and Q1. We expect to be back to 20% year-over-year growth by Q4. - Adam Laponis(CFO)

How much of the margin improvement is due to the Express portfolio? - Subbu Nambi (Guggenheim Securities)

2025Q1: As we discussed on the call, we expect NGS to return to growth in fiscal '26 as a new customer ramps to commercial production volumes. We believe we'll exit fiscal '26 at $300 million run rate. - Adam Laponis(CFO)

Contradiction Point 5

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

How are you modeling gross margin trends from Q4 to fiscal 2026, and what specific NGS customer dynamics are driving these assumptions? - Brendan Smith (TD Cowen, Research Division)

2025Q4: We expect gross margins to improve throughout the year, supported by continuous process improvements and investments in new capabilities. The NGS growth is impacted by a customer transitioning from validation to commercial, with expected sequential growth starting in Q2. - Adam Laponis(CFO)

Could you clarify the gross margin trends for the year and the impact of process adjustments such as plastic tip modifications? - Catherine Schulte (Baird)

2025Q1: We expect gross margins to improve sequentially throughout the year, with midpoint guidance raised to 49% for the year, exceeding 50% by Q4. Operational improvements like the plastic tips are contributing significantly to margin benefits. - Adam Laponis(CFO)