Twist Bioscience Corporation

Welcome to TWIS Biosciences' 2024 Fourth Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Angela Bidding, SVP of Corporate Affairs.

Thank you, Operator. Good morning, everyone. I would like to thank you for joining us for TWIST Bioscience's conference call to review our fiscal 2024 fourth quarter financial results and business progress. We issued our financial results press release before the market, and it is available at our website at www.twistbioscience.com. With me on the call today are Dr. Emily LaCroix, CEO and co-founder of TWIST, Adam Loponis, CFO of Twist, and Dr. Patrick Finn, President and COO of Twist. Today, we will discuss our business progress, financial and operational performance, as well as growth opportunities. We will then open the call for questions. We ask that you limit your questions to only one and then reach you as a courtesy to others on the call. This call is being recorded and the audio portion will be archived in the investor section of our website and will be available for two weeks. During today's presentation, we will make forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, as well as those more fully described in our filings with the SEC. The forward-looking statements in this presentation are based on the information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements except as required by law. We'll also discuss adjusted EBITDA, a financial measure that does not conform with generally accepted accounting principles. Information may be calculated differently than similar non-GAAP data presented by other companies. When reported, a reconciliation between GAAP and non-GAAP financial measures will be included in our earnings documents, which can be found on the investor section of our website. With that, I will now turn the call over to our CEO and co-founder, Emily Leprous.

Thank you, Angela, and good morning, everyone. Today, our team delivered a record quarter in revenue and margin growth, ending the year with a strong cash balance. We exceeded our guidance in every metric, including total revenue, gross margin, capital expenditure, and ending cash balance. We increased revenue for the seventh quarter in a row, reporting $84.7 million. This is an increase of 27% year-over-year and 4% sequentially. For the year, we reported $313 million in revenue, an increase of 28% over fiscal 2023. Gross margin for the quarter came in ahead of our guidance at 45.1%. For the year, gross margin was 42.6% compared to 36.6% for fiscal 2023, demonstrating the leverage of fixed costs with higher volume, as well as our ongoing commitment to continuous improvement and margin expansion initiatives. Transport was a quarter and the year came from our express product portfolio and jeans as a whole alongside continued growth in our NGS tools portfolio. We are also seeing positive traction by a farmer. Overall, the business remains strong and we're confident that this momentum will carry us into fiscal 2025. Before we dive into the details of the quarter, it's worthwhile reflecting on our journey since our IPO just over six years ago. During this time, We have been on a strong upward trajectory, growing our customer base, expanding our product portfolio, and capturing market share, all by leveraging our proprietary platform to drive sustainable growth. Our differentiated technology to neutralize chemistry and manufacture of DNA on silicon provides significant advantages for our customers and for Twist. Our platform allows us to deliver high quality products at an affordable price and provides significant sustainability advantages over plate-based approaches Importantly, we also have custom synthesis at unmet scale, which enables a growing menu of products in different iterations geared for diverse applications. We have harnessed our innovation engine to strategically and judiciously expand our product portfolio. Today, with our base of more than 3,500 customers across multiple industries, hundreds of SKUs serving a wide range of diverse applications, increasing market share in multiple markets, we are operating with incredible execution and financial We are now in the final push towards an incredibly important milestone, crossing the threshold of adjusted EBITDA breakeven. Our disruptive platform has shown all of our growth to date, and we believe there is tremendous potential for further development built on this technology. Once we reach adjusted EBITDA breakeven, we will be laser-focused on becoming cash flow positive, driving revenue while investing in profitable growth through our innovation engines. Our strategy applies this proactive R&D with exceptional operational execution and an on-the-ground understanding of our customers' needs. From the frontline teams to the executive leadership, we have the technical expertise and business acumen that will continue to fuel our next phase of growth as a company. Taking a deeper dive into our results, beginning with Sympio, we have an Express portfolio that is differentiated in the industry in terms of price, turnaround time, and ability to deliver at scale. One year ago, we launched our Express clonal genes, and over the course of the last year, we have added gene fragments, DNA preps, IgG proteins, and this is just the beginning. We've already seen this portfolio bring in new customers and new accounts, taking market shares from competitors. And this product line is accretive to our margin. We see our single product groups gaining traction and market share. Revenue from the express offerings grew quarter over quarter, as did net new accounts coming into twist. Turning to NGS, We saw strong performance driven primarily by customers developing and selling assays for myriad applications from rare disease and cancer diagnostics to liquid vaccine and beyond. These customers include twist targets enrichment panels and other twist tools in their assays. The revenues from this segment is sticky due to the high switching costs associated with revalidating a test with a different provider. Building on our success in delivering custom targeted panels quickly, we launched our minimal residual disease offering several years ago. Today, we are seeing significant uptake for tumor-informed MRD panels with thousands of markers. Recall that as customers advance their R&D programs, we benefit as each phase of development for these tests require more DNA. We expect MRD to follow a similar growth trajectory as liquid biopsy, with substantial revenue anticipated in 2026. By maintaining our sequencing agnostic approach, meaning our workflow is compatible with whatever platform our customers prefer, we remain a key partner providing NGS workflows for many different applications beyond liquid biopsy and minimal residual disease. Previously, we have highlighted our collaboration with Illumina, PacBio, and S4 Nalopore, among others, and last month, Element announced our inclusion in the Trinity workflow. Looking at growth moving forward, we continue to see customers adding more sequencing tools, including our application-focused library prep solution, as well as beads buffer, UDI, UMIs, adapters, enzymes, and more. As we prioritize growth sectors moving into Cisco 2025, one area that we believe is underappreciated by investors is our ability to develop proprietary enzymes. Enzymes play a role in so many workflows across Symbio and GSM biopharma, and in fact, entire companies are dedicated to creating enzymes. At Twist, using our proprietary writing platform, we can test thousands of enzyme variations in parallel, going through the design, build, test, learn cycle in a matter of weeks. This rapid iteration allows us to tailor enzymes for specific applications, applying our Symbio platform to develop new products for our customers. In the last several quarters, we have identified the proprietary ligase and incorporated it into a CS DNA laboratory prep kit specific to the liquid biopsy and MRD market. The data shows it outperforms all peer offerings, and the feedback has been positive, with customers seeing a significant improvement in sensitivity. Though this legacy was developed specifically for this application, customers that pursue whole genome sequencing can leverage this library practice without enrichment and see improved results in WGS. Importantly, while this new growth vector allows us to tap into new market opportunities, the development of our proprietary legacy resulted from only two R&D employees working for less than one year and what we believe will have an incredible ROI. We intend to pursue several other ransom classes in a structured and disciplined manner to continue providing value to our customers while tapping into new applications. In addition, Making our own proprietary enzymes is an example of insourcing that reduces our supply chain risk and improves our margin. Turning to BioPharma services, our revenue increased quarter over quarter. More importantly, orders increased. For BioPharma services, we know that orders convert directly to revenue in three to nine months. We believe this marks a turning point for the BioPharma Solution Group with solid potential to continue to build the service revenue. Validating our work to date, ZOMI paid us $15 million in cash for half of the future milestones on world peace as of October 2024. Importantly, we retained half of the upside, which has the potential to be significant in the future. We view the cash today as positive in our drive to adjust the EBITDA break-even without accessing the equity market. Our data storage team continues to advance development of the technology and recently converted to water-based enzymatic chemistry to synthesize DNA on our CMOS-based chips. This change applied to our terabyte scale product under development will mean lower cost and a more sustainable solution. I'd now like to turn the call over to Patty for commentary on some key margin initiatives. Thanks, Emily.