10-Q: Twist Bioscience Reports Q2 2025 Results: Revenue Up 23% Driven by NGS Tools and Synthetic Genes

Twist Bioscience's Q2 2025 revenue increased by 23% year-over-year, driven by growth in NGS tools and synthetic genes, while net losses decreased.

Summary

• Twist Bioscience reported a 23% increase in revenue for the three months ended March 31, 2025, reaching $92.8 million compared to $75.3 million in the same period of 2024.
• The revenue growth was primarily driven by a $10.4 million increase in NGS tools revenue and a $5.9 million increase in synthetic genes revenue.
• Gross margin improved to 49.6% from 41.0% due to increased revenues and efficient cost management.
• The loss from operations decreased to $41.6 million from $48.9 million year-over-year.
• Net loss decreased to $39.3 million from $45.5 million, with a corresponding decrease in net loss per share to $0.66 from $0.79.
• Net cash used in operating activities decreased to $13.0 million from $19.4 million.
• For the six months ended March 31, 2025, revenue increased 24% to $181.5 million compared to $146.8 million for the six months ended March 31, 2024.
• The company shipped approximately 227,000 genes in the three months ended March 31, 2025, compared to approximately 193,000 genes in the three months ended March 31, 2024, an increase of 18%.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While the company is still operating at a loss, there is significant revenue growth and improved gross margins, indicating progress towards profitability. The spin-out of the DNA data storage application could allow the company to focus on its core strengths.

Positives

• Significant revenue growth driven by NGS tools and synthetic genes.
• Improved gross margin due to increased revenues and efficient cost management.
• Decreased loss from operations and net loss.
• Increased number of genes shipped, indicating strong product demand.
• The company has a solid cash position with $257.1 million in cash, cash equivalents, and short-term investments.
• The company has a multi-channel strategy comprised of a direct sales force targeting synthetic DNA customers, a direct sales force focusing on the NGS market and an e-commerce platform that serves both commercial channels.

Negatives

• The company has an accumulated net deficit of $1,312.8 million as of March 31, 2025.
• The company has recognized annual losses from operations since inception.
• The company incurred net losses of $39.3 million and $45.5 million for the three months ended March 31, 2025 and 2024, respectively, and $70.9 million and $88.5 million for the six months ended March 31, 2025 and 2024, respectively.

Risks

• Adverse global economic conditions and U.S. policy changes could negatively affect the business.
• The company may not achieve the anticipated benefits from the spin out of its DNA data storage application.
• The company's ability to generate product revenue sufficient to achieve profitability will depend heavily on the success of its existing products and the development and commercialization of additional products in the synthetic biology and biologic drug industries as well as leveraging its investment in its manufacturing facility in Wilsonville, Oregon.
• The company is subject to litigation, claims and disputes in the ordinary course of business.

Future Outlook

The company expects that its current cash, cash equivalents, and short-term investments will be sufficient to fund its operations for a period of at least one year from the date the condensed consolidated financial statements are issued.

Industry Context

Twist Bioscience operates in the rapidly evolving synthetic biology market, competing with companies offering DNA synthesis, NGS tools, and biopharma services. The reported growth in NGS tools and synthetic genes revenue reflects the increasing demand for these products in healthcare, industrial chemicals/materials, and academic research.

Comparison to Industry Standards

• It is difficult to compare Twist Bioscience directly to industry standards without specific competitor data within each of its product categories.
• However, companies like Illumina (in NGS), Thermo Fisher Scientific (in synthetic biology and biopharma), and Agilent Technologies (in genomics) are key players in related markets.
• Twist's gross margin of 49.6% is a key metric to watch against these competitors, as it reflects the efficiency of its silicon-based DNA writing technology.
• The company's ability to reduce net losses while growing revenue is also a critical factor in assessing its long-term viability compared to industry peers.

Corporate Governance

Legal Proceedings

• The company is involved in a securities class action lawsuit and a shareholder derivative suit, both related to allegations made in a report by Scorpion Capital.
• The company intends to vigorously defend itself against the claims asserted against them.

Related Party Transactions

• The company had revenues from related parties of $2.8 million and $6.8 million for the three and six months ended March 31, 2025, respectively.
• As of March 31, 2025 and September 30, 2024 receivable balances with related parties were $1.1 million and $0.5 million, respectively.

Stakeholder Impact

• Shareholders: The improved financial performance may positively impact shareholder value, but ongoing legal proceedings and accumulated deficit remain concerns.
• Employees: The company's continued growth and development of new products may create opportunities for employees.
• Customers: The company's focus on synthetic biology, NGS, and biopharma products and services may lead to improved offerings for customers.
• Suppliers: The company's increased revenue may lead to increased demand for raw materials and services from suppliers.

Next Steps

• The company will continue to focus on growing its revenue in NGS tools and synthetic genes.
• The company will continue to manage its costs to improve its gross margin and reduce its losses.
• The company will monitor the global economic conditions and U.S. policy changes to assess their potential impact on its business.
• The company will work to achieve the anticipated benefits from the spin out of its DNA data storage application.

Key Dates

Keywords

synthetic biology, NGS tools, synthetic genes, antibody discovery, biopharma, revenue growth, gross margin, DNA synthesis, Twist Bioscience