Yahoo Finance Twist Bioscience Corp (TWST) Q2 2024 Earnings Call Transcript Highlights: Key Financial ...
Revenue: Increased to $75.3 million, up 25% year-over-year.
Net Income: Net loss of $45.5 million, improved from a net loss of $59.2 million year-over-year.
Gross Margin: Rose to 41%, up from previous year, with a future target above 50% by end of fiscal 2025.
Earnings Per Share (EPS): Loss of $0.79 per share, improved from a loss of $1.04 per share year-over-year.
Orders: Reached a record $93.2 million, driven by significant blanket purchase orders.
Free Cash Flow: Improvement noted with net cash used in operating activities at $42.4 million, down from $98.4 million in the prior year.
Synthetic Biology (Synbio) Revenue: Grew to $29.8 million, up 24% year-over-year.
Next-Generation Sequencing (NGS) Revenue: Increased to $40.8 million, a 40% rise year-over-year.
Biopharma Revenue: Reported at $4.7 million.
Adjusted EBITDA: Loss reduced to approximately $27 million from $46 million year-over-year.
Forecast Revenue: Expected to be between $300 million to $304 million for fiscal 2024, indicating a 22% to 24% growth year-over-year.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Revenue for the second quarter increased to $75.3 million, a growth of 25% year-over-year.
Orders for the quarter reached a record level of over $93 million, indicating strong demand for Twist Bioscience Corp's products.
Gross margin improved significantly to 41%, up from 31% in the same quarter the previous year.
Introduced new products like the cell-free DNA library prep, enhancing the company's competitive edge in liquid biopsy research.
Expansion into regulated markets with CE-marked products in Europe, preparing for future regulatory changes in the U.S.
Negative Points
Net loss for the quarter was $45.5 million, indicating ongoing challenges in achieving profitability.
Biopharma revenue guidance was reduced, reflecting slower growth in this segment compared to others.
Dependence on a few large customers, as the top 10 NGS customers accounted for approximately 36% of NGS revenue.
Operational expenses increased to $124.2 million from $121.8 million in the same period last year, driven by higher costs in several areas including stock-based compensation.
The company is still in the process of ramping up new business development hires, which may delay expected revenue growth from the biopharma segment.
Q & A Highlights
Q: Can you discuss the contribution of margin expansion from express genes and expectations for expression revenue growth or volumes for the balance of the year? A: Adam Laponis, CFO of Twist Bioscience, highlighted the excitement around the Express Gene launch and its contribution to gross margin improvements. He noted that while specific data on express genes volume isn't broken out in the guidance, it has aided in the gross margin movement observed this quarter. However, details on the exact contribution to margin expansion from express genes specifically were not provided.
Q: What is the market share opportunity in the industrials business for Twist Bioscience, and what is the runway for accelerating growth given the market structure and current penetration? A: Emily Leproust, CEO of Twist Bioscience, explained that the company is actively taking market share in the industrials business, driven by product quality and innovation. She mentioned the significant potential in liquid biopsy markets and the goal to capture about 10% of the COGS of all customers. Leproust also highlighted opportunities in mRNA and ag-bio markets, estimating the ag-bio market potential alone could be around $500 million.
Q: Were there any one-time factors influencing the 45% increase in orders, or can you characterize the order trends as the quarter progressed? A: Emily Leproust addressed the significant increase in orders, attributing it to a higher number of blanket PO orders than usual, reflecting growing customer confidence in Twist's offerings, particularly the express genes. She emphasized that this is a reflection of the strength of their product offerings and not a one-time occurrence.
Q: Can you provide insights into the customer feedback on dynamic pricing for express genes and the profile of the 100 net new accounts ordering express genes? A: Emily Leproust shared that there has been no negative feedback regarding the premium pricing of express genes, with customers understanding the value provided. She also noted that the 100 net new accounts were a mix of big pharma, smaller pharma, and academic groups, with a majority being academic groups, indicating broad market penetration.
Q: How is the onboarding of new BD hires impacting the biopharma segment, and what contributed to the change in biopharma guidance? A: Adam Laponis explained that while the BD team is fully staffed, they are not yet fully ramped up. He expressed confidence in the market potential and the strength of Twist's biopharma offerings, attributing the current lower growth in this segment to timing rather than market conditions.
Q: What does success look like for the Express Genes offering in the medium term, and how do you define targets for this product line? A: Emily Leproust stated that success for Express Genes, like all product lines at Twist, is measured by revenue and gross margin impact. She emphasized the importance of leveraging all highly differentiated products to contribute to the company's overall success.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
