Twist Bioscience Corporation

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. Please note that today's conference is being recorded. I would now like to turn the call over to Angela Bidding, SVP of Corporate Affairs. Please go ahead.

Thank you, Operator. Good morning, everyone. I'd like to thank you for joining us for TWIST Bioscience's conference call to review our fiscal 2025 second 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 LaProuste, CEO and co-founder of TWIST, Adam Laponis, 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 re-queue as a courtesy to others on the call. This call is being recorded. 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 our 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 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 the 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 The Roost.

Thank you, Angela, and good morning, everyone. As we look across today's global landscape, it's clear that we're operating in a time of accelerated change, from policy shifts and trade adjustments to evolving financial markets and structural transitions in health care and academia, the world is transforming at an unprecedented pace. At UIST, we are responding proactively. We recognize that such dynamic conditions require both vigilance and vision. We are continuously analyzing the broader environment, identifying not only challenges, but also the strategic opportunities that can strengthen our long-term position. Our approach is grounded in agility, supported by rigorous execution and driven by our commitment to delivering lasting value. Diving into our significant news released this morning, I am very excited to announce that we have spun out DNA Data Storage as an independent company. The new company, called Atlas Data Storage, is a pure-play company focused on end-to-end data storage. As many of you know, there are nearly endless applications of synthetic DNA. Since its inception, we have prioritized opportunities where there is a significant market potential and where our technology offers a clear competitive advantage and differentiation. The market for data storage remains large and our technology for this application has been proven. However, since May of 2023, we have intentionally constrained our spending in DNA data storage to keep twist over our investment in this business to less than $25 million annually. Because DNA data storage is a specialized area, the business, customer, team, and investors will look different. To drive the commercialization, a dedicated team will be needed, which can be more easily accomplished by a pure-play DNA data storage company. We have now reached a point where we believe increased investment is essential to accelerate development. With a significant $155 million investment from our differential partners, Deerfield Management, Bezos Expeditions, Tower Capital, In-Q-Tel, Earth Foundry, R-Square VC, and other undisclosed investors, As a pure-play DNA data storage company, Atlas Data Storage will have significant capital that will enable the new company to accelerate towards commercialization and drive success. As part of this transaction, Twist will receive consideration of approximately 24% equity interest in Atlas on a fully diluted basis, as well as royalties on future commercial sales and up to $75 million in future milestones payments, ensuring we continue to participate in future upside opportunities. In addition, we will receive $2.5 million upfront cash payment and a $2 million secure promissory note. Importantly, Twilts will benefit from technology advancement made by Atlas, where it applies to our product groups. By operating as two separate companies, we are able to maintain sharp focus with each organization dedicated to developing and commercializing disruptive products and services while prioritizing exceptional customer engagement. Atlas will be led by Varun Mehta, a CEO, who brings extensive data storage experience, including co-funding and leading Nimble Storage, which was acquired by Hewlett-Packard. While at HP, he helped to define storage strategy and introduce new products, including an entirely new product category. George Khalifa, Managing Director of Semuru Equity Partners, brings more than three decades of technology operating experience and will serve as Executive Chairman of the Board for Atlas. Bill Banier, who has been the general manager of the DNA data storage team at WIS, will serve as chief technology officer of ATLAS. Turning to our financial results, I am pleased to report another quarter of strong sequential growth and record performance across revenue, gross margin, and adjusted EBITDA. For the second quarter of fiscal 2025, we reported a record revenue of $92.8 million, an increase of 23% year-over-year, and 4.6% sequentially. Gross margin for a quarter came in ahead of our guidance at 49.6%, compared to 41% for the second quarter of fiscal 2024, demonstrating the leverage of fixed costs with higher volume, as well as our ongoing commitment to continuous improvement and margin expansion initiatives. In addition, this is another quarter showing that, on average, 75% to 80% of incremental revenue drops to the gross margin line. Revenue for Symbio increased to $36 million, growth of 21% year-over-year. Over the course of the quarter, we have implemented programs to streamline customer experience and serve our customers. I'd like to share two of these programs to give you a sense of how we are meeting our customers where they are today. First, we introduced the Twist Wallet, a way for customers to put money into an account as a credit and then order against that credit over a period of time. This allows our customers flexibility for timing of their order and lessens the administrative burden for purchasing. In addition, given the new normals for academic customers today, we offer a promotional program to enable these customers to order express jeans without paying the express premium for a limited period of time. Science does not stop, and we have found that when customers try the express speed, they do get hooked on receiving their products on the express timeline. This promotion allows more customers to try express speed and we believe they may continue even after the promotional period ends. Already, this promotion has resulted in many new customers accessing our products, and importantly, it's something tangible we can do to support our customers as they navigate through these times. I'd like to note that both programs illustrate our innovative approach to everything we do at Twist. While innovation drives our product lines, it also feeds into our approach to reaching customers, our user experience, and our commitment to play the long game. Turning to NGS, we reported $51.1 million in revenue, an increase of 25% year-over-year, with trends coming primarily from our customers' commercial assays for diagnostic tests. During the quarter, we partnered with an additional software vendor to further enable the adoption of our NGS workflows in the ag biospace. While the conversions from an array to an NGS workflow take time, the resulting opportunities could bring substantive revenue in this $500 million market where today we have close to no market share. Turning to biopharma services, our revenue was $5.7 million, growth of 21% year-over-year, with orders increasing to $6.4 million. We remain cautiously optimistic as the funnel of opportunities continues to build. By leveraging our strategic fit across our SinBio and biopharma services portfolio, we continue to remain focused on delivering valuable services for our customers. I would now like to turn the call over to Patti, for commentary on operations and innovation.