8-K: Twist Bioscience Exceeds Revenue Expectations, Raises Full-Year Guidance

Twist Bioscience reported record revenue of $81.5 million for the third quarter of fiscal year 2024, surpassing previous guidance and increasing its full-year revenue outlook.

Summary

• Twist Bioscience announced its financial results for the third quarter of fiscal year 2024, ending June 30, 2024.
• The company achieved record revenue of $81.5 million, a 28% increase compared to $63.7 million in the same quarter of the previous year.
• Gross margin improved significantly to 43.3%, up from 34.4% in the third quarter of fiscal year 2023.
• Total orders for the quarter reached $85.3 million, compared to $63.8 million in the prior year.
• The company has increased its full-year 2024 revenue guidance to approximately $310 million to $311 million.
• Full-year 2024 gross margin is now expected to be approximately 42.0%, at the high end of the previous range.
• The company shipped products to approximately 2,300 customers and approximately 212,000 genes during the quarter.
• Adjusted EBITDA for the quarter was a loss of $22.0 million, an improvement from a loss of $29.6 million in the same period last year.
• The company expects an adjusted EBITDA loss of $20 million in the fourth quarter of fiscal year 2024.
• Net loss attributable to common stockholders for the quarter was $85.6 million, or $1.47 per share, which includes a $45 million impairment related to Biopharma assets.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong revenue growth, improved gross margins, and increased full-year guidance. While the company is still operating at a loss, the improvements and forward-looking statements suggest a positive trajectory.

Positives

• Revenue exceeded expectations, reaching a record $81.5 million for the quarter.
• Gross margin showed significant improvement, increasing to 43.3%.
• The company raised its full-year revenue guidance to $310-$311 million.
• Adjusted EBITDA loss improved year-over-year, indicating progress towards profitability.
• The company shipped more genes and served more customers compared to the same quarter last year.
• New products were launched, expanding the company's portfolio.
• The company is moving towards a gross margin over 50% by the end of fiscal 2025.
• Cash position remains strong with over $255 million expected by the end of September 2024.

Negatives

• The company reported a net loss of $85.6 million for the quarter, or $1.47 per share.
• The net loss includes a $45 million impairment related to Biopharma assets.
• Selling, general and administrative expenses increased to $56.8 million from $46.1 million in the same period last year.
• Biopharma revenue is expected to decrease by approximately 13% year-over-year for fiscal year 2024.

Risks

• The company's ability to achieve profitability depends on the success of its existing and new products.
• The synthetic DNA market is subject to rapid technological changes and intense competition.
• The company faces risks related to supply chain disruptions and third-party claims of patent infringement.
• The company's proprietary rights may not be sufficient to protect its technologies.
• The company's future GAAP financial results will be significantly impacted by stock-based compensation expense.

Future Outlook

Twist Bioscience expects full-year 2024 revenue to be approximately $310 million to $311 million, with a gross margin of approximately 42.0%. The company anticipates an adjusted EBITDA loss of $20 million for the fourth quarter of fiscal year 2024 and is targeting a gross margin over 50% by the end of fiscal 2025.

Management Comments

• Emily M. Leproust, Ph.D., CEO and co-founder of Twist Bioscience, stated that the company surpassed revenue guidance and exceeded targets for both cash burn and gross margin.
• Dr. Leproust noted strength in NGS and growth in the SynBio product line, particularly the Express Genes portfolio.
• Dr. Leproust highlighted the company's disciplined execution and commercial prowess in expanding its product and service portfolio.

Industry Context

This announcement reflects the continued growth and demand for synthetic biology and genomics products. Twist Bioscience's performance indicates its ability to compete effectively in this rapidly evolving market, particularly in the areas of DNA synthesis and next-generation sequencing.

Comparison to Industry Standards

• Twist Bioscience's 28% year-over-year revenue growth in Q3 FY24 is strong compared to the broader biotech industry, which has seen varied growth rates.
• The improvement in gross margin to 43.3% is a positive sign, indicating better cost management and pricing power, and is comparable to other companies in the synthetic biology space such as Ginkgo Bioworks, which has also been focusing on improving margins.
• The adjusted EBITDA loss of $22 million is an improvement year-over-year, but the company still needs to demonstrate a clear path to profitability, which is a common challenge for growth-stage biotech companies.
• The company's focus on expanding its product portfolio, including Express Antibodies and Multiplexed Gene Fragments, aligns with industry trends towards offering more comprehensive solutions.
• The launch of a synthetic RNA control for H5N1 demonstrates the company's responsiveness to emerging health needs, similar to other companies that are developing tools for infectious disease research.

Stakeholder Impact

• Shareholders will likely react positively to the increased revenue guidance and improved gross margins.
• Employees may be encouraged by the company's growth and progress towards profitability.
• Customers will benefit from the expanded product portfolio and improved services.
• Suppliers may see increased demand for their products and services.
• Creditors may view the company's improved financial performance as a positive sign.

Next Steps

• The company will host a conference call to discuss the financial results and provide a business update.
• The company will continue to focus on expanding its product portfolio and improving its financial performance.
• The company will continue to progress towards an adjusted EBITDA loss of $20 million in the fourth quarter of fiscal year 2024.
• The company will continue to move toward a gross margin over 50% by the end of fiscal 2025.

Key Dates

Keywords

synthetic biology, DNA synthesis, genomics, next-generation sequencing, NGS, antibody libraries, biopharma, revenue, gross margin, EBITDA, financial results