10-Q: Twist Bioscience Q1 Revenue Jumps 17%, Narrows Loss

Twist Bioscience Corporation reported a 16.9% increase in first-quarter revenue to $103.7 million, driven by growth in NGS Applications and DNA Synthesis and Protein Solutions, while narrowing its net loss to $30.5 million.

Summary

• Revenue increased by 16.9% to $103.7 million for the three months ended December 31, 2025, compared to $88.7 million in the prior year period.
• Net loss improved to $30.5 million, down from $31.6 million in the same period last year.
• Gross margin expanded to 52.0% from 48.3% year-over-year, attributed to increased revenues and continuous process improvement initiatives.
• Loss from operations decreased to $32.9 million from $34.6 million.
• Research and development expenses decreased by 20% to $17.1 million, largely due to the sale of the DNA digital data storage business in fiscal year 2025.
• Selling, general and administrative expenses increased by 24% to $69.7 million, reflecting investments in commercial organization and corporate infrastructure.
• Cash and cash equivalents stood at $148.6 million, with short-term investments of $49.4 million, totaling $198.0 million in liquid assets as of December 31, 2025.
• The company shipped approximately 271,000 genes, a 32.2% increase from 205,000 genes in the prior year period.
• The customer base grew to approximately 2,538 from 2,376 customers for the three months ended December 31, 2025 and 2024, respectively.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, highlighting strong revenue growth and improved gross margins, indicating operational efficiencies. While cash burn increased and the company remains unprofitable, the narrowing net loss and strategic R&D reduction are favorable signs for future financial health.

Positives

• Revenue growth of 16.9% to $103.7 million, indicating strong demand for products.
• Improved net loss, decreasing from $31.6 million to $30.5 million.
• Significant gross margin expansion to 52.0% from 48.3%, reflecting operational efficiencies and cost savings.
• Loss from operations decreased to $32.9 million from $34.6 million, showing improved operating performance.
• Strong growth in DNA Synthesis and Protein Solutions revenue (27.4%) and NGS Applications revenue (8.2%).
• Therapeutics revenue increased by 39.0% to $37.2 million and Global Supply Partners revenue increased by 50.2% to $12.8 million.
• Number of genes shipped increased by 32.2% to 271,000, demonstrating increased production and customer adoption.
• Customer base expanded to approximately 2,538 customers.
• Research and development expenses decreased by 20% to $17.1 million due to strategic divestment of the DNA digital data storage business.

Negatives

• Net cash used in operating activities increased to $24.8 million from $21.4 million, indicating higher cash burn from operations.
• Net cash used in investing activities increased significantly to $9.9 million from $1.5 million, primarily due to increased purchases of property and equipment.
• Net cash provided by financing activities decreased substantially to $0.3 million from $17.9 million, largely due to the absence of a prior year's sale of future revenue.
• Interest income decreased by 33% to $2.2 million due to lower cash equivalents and short-term investments balances and lower interest rates.
• Selling, general and administrative expenses increased by 24% to $69.7 million, outpacing revenue growth.
• The company continues to incur net losses and has an accumulated deficit of $1,350.1 million as of December 31, 2025.

Risks

• Ability to increase revenue and revenue growth rate.
• Ability to accurately estimate capital requirements and needs for additional financing.
• Estimates of the size of market opportunities.
• Ability to increase DNA production, reduce turnaround times, and drive cost reductions for customers.
• Ability to effectively manage growth and maintain and improve operational efficiency, cost control, and gross margin as the company scales.
• Ability to successfully enter new markets and manage international expansion, including compliance with evolving international regulatory requirements.
• Ability to develop and commercialize additional products in the synthetic biology and biologic drug industries, including the portfolio of Express products.
• Ability to leverage investment in the manufacturing facility in Wilsonville, Oregon.
• Ability to protect intellectual property, including the proprietary DNA synthesis platform.
• Costs associated with defending intellectual property infringement and other claims.
• Effects of increased competition in the business and ability to keep pace with rapid changes in technology and evolving competitive dynamics.
• Ability to integrate and leverage artificial intelligence and machine learning technologies to improve operational efficiency, product development, and customer solutions.
• Ability to successfully identify, evaluate, and manage any future acquisitions of businesses, solutions, or technologies.
• The success of marketing efforts.
• A significant disruption in, or breach in security of information technology systems and resultant interruptions in service and any related impact on reputation.
• Ability to attract and retain qualified employees and key personnel.
• The effects of natural or man-made catastrophic events or public health emergencies.
• The effectiveness of internal controls.
• Changes in government regulation affecting the business.
• Uncertainty as to economic and market conditions and the impact of adverse economic conditions.
• Ongoing legal proceedings, including a securities class action and derivative lawsuits, which could result in significant costs or unfavorable outcomes.

Future Outlook

Management expects current cash, cash equivalents, and short-term investments to be sufficient to fund operations for at least one year. Future profitability is dependent on the success of existing products, development and commercialization of additional products in synthetic biology and biologic drug industries, and leveraging the Wilsonville, Oregon manufacturing facility. The company also aims to increase revenue, manage growth, enter new markets, comply with regulations, protect intellectual property, and integrate AI/ML technologies.

Management Comments

• Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of our existing products and the development and commercialization of additional products in the synthetic biology and biologic drug industries as well as leveraging our investment in our manufacturing facility in Wilsonville, Oregon.
• The increase in revenues primarily reflects growth in NGS Applications and DNA Synthesis and Protein Solutions revenues.
• Gross margin increased... primarily due to increases in revenues and driving additional cost savings through continuous process improvement initiatives.
• Loss from operations decreased... primarily due to an increase in both revenues and gross profit. Additionally, contributing factors were a decrease in research and development expenses, offset by an increase in selling, general and administrative expenses.
• The decrease [in R&D expenses] is largely attributable to the sale of our DNA digital data storage business in fiscal year 2025.
• The increase [in SG&A expenses] is primarily attributable to a $7.7 million increase in personnel costs... and a $5.4 million increase in outside services costs as we continue to scale our commercial organization and invest into our corporate infrastructure.

Industry Context

StockSavvy.ai notes that Twist Bioscience's strong revenue growth in DNA synthesis and protein solutions, alongside NGS applications, indicates robust demand within the synthetic biology and genomics sectors. The company's strategic shift to combine synthetic biology tools and biopharma services into 'DNA synthesis and protein solutions' aligns with a broader industry trend towards integrated solutions that accelerate drug discovery and development. The growth in therapeutics and global supply partners revenue suggests increasing adoption of synthetic DNA technologies in pharmaceutical R&D and large-scale manufacturing, positioning Twist favorably against competitors like Ginkgo Bioworks or Danaher's life sciences tools segment, which also focus on enabling biological engineering and research.

Comparison to Industry Standards

• Twist Bioscience's 16.9% revenue growth is strong, especially compared to the broader biotechnology tools sector which often sees high single-digit to low double-digit growth. For example, companies like Illumina (NGS leader) or Thermo Fisher Scientific (diversified life science tools) typically report growth rates that vary based on market cycles and specific product segments, but Twist's specialized focus allows for higher growth in its niche.
• The gross margin expansion to 52.0% is a positive indicator of operational efficiency, moving closer to the higher end of the life science tools industry, where gross margins can range from 40% to over 60% depending on product complexity and scale.
• The increase in gene shipments by 32.2% and customer count by approximately 7% demonstrates strong market penetration and adoption, comparable to the rapid scaling seen in other innovative biotech platforms during their growth phases.
• The decrease in R&D expenses following the divestment of the DNA digital data storage business suggests a strategic focus, which could lead to more efficient resource allocation compared to diversified players who might spread R&D across many ventures.

Legal Proceedings

• **Securities Class Action (Peters v. Twist Bioscience Corporation, et al.):** A lawsuit alleging violations of federal securities laws based on a Scorpion Capital report. The court granted in part and denied in part the motion to dismiss, and the company is engaged in discovery and intends to vigorously defend the remaining claims.
• **Derivative Action (Shumacher vs. Leproust et al.):** A shareholder derivative suit based on similar allegations as the Securities Class Action, currently stayed pending further proceedings in the Securities Class Action.
• **Derivative Action (Sell v. Leproust, et al.):** Another derivative lawsuit filed with similar claims, consolidated with the Shumacher Action and stayed pending the Securities Class Action.

Related Party Transactions

• Revenues from related parties, including a Variable Interest Entity (VIE), totaled $1.4 million for the three months ended December 31, 2025, down from $4.0 million in the prior year period.
• Accounts receivable balances with related parties, including a VIE, were $1.3 million as of December 31, 2025.
• Received sublease income from a related party of $0.7 million for the three months ended December 31, 2025.
• Investment in a related party equity security was $53.9 million as of December 31, 2025.
• Promissory note receivable from a related party was $1.8 million as of December 31, 2025, generating $0.1 million in interest income.

Stakeholder Impact

• **Shareholders:** Potential positive impact from revenue growth, gross margin expansion, and narrowing net loss. However, ongoing legal proceedings introduce uncertainty and potential financial liabilities. Directors' 10b5-1 plans indicate potential future share sales.
• **Employees:** Increased personnel costs in SG&A suggest continued investment in the workforce, but R&D personnel costs decreased due to the divestment of the DNA digital data storage business. Stock-based compensation remains a significant component of compensation.
• **Customers:** Increased gene shipments and customer count indicate growing satisfaction and adoption of products. The expansion of the South San Francisco facility could lead to improved service or capacity.
• **Creditors:** The company's liquidity position with $198.0 million in cash and short-term investments, and management's expectation of funding operations for at least one year, provides some assurance.

Next Steps

• Continue to vigorously defend remaining claims in the Securities Class Action.
• Evaluate the incremental disclosures required by ASU 2024-03 (Income Statement) and ASU 2025-06 (Intangibles Internal-Use Software).
• Potentially expand South San Francisco premises by an additional 33,000 square feet on or before December 31, 2026.
• Focus on generating product revenue sufficient to achieve profitability.
• Develop and commercialize additional products in the synthetic biology and biologic drug industries.
• Leverage investment in the manufacturing facility in Wilsonville, Oregon.
• Directors Melissa Starovasnik and Robert Chess may sell shares under their 10b5-1 plans by November 25, 2026, and December 11, 2026, respectively.

Key Dates

Recommendation

Twist Bioscience demonstrates strong top-line growth and significant gross margin improvement, indicating positive operational momentum and market demand for its synthetic biology products. The narrowing net loss is a step in the right direction. However, the increased cash burn from operations and investing activities, coupled with a substantial decrease in financing cash, raises concerns about long-term liquidity without further capital raises. The ongoing securities class action and derivative lawsuits also present unquantified risks. Given the mixed financial signals and legal uncertainties, a 'hold' recommendation is appropriate, suggesting investors monitor the company's progress towards profitability and resolution of legal matters before making further investment decisions.

Keywords

Synthetic Biology, DNA Synthesis, NGS Applications, Antibody Discovery, Biologic Drugs, Genomics, Biotechnology, Life Sciences, TWST, SEC Filing, 10-Q, Financial Results, Revenue Growth, Gross Margin, Research and Development, Operating Loss, Cash Flow, Legal Proceedings