Twist Bioscience Corporation (NASDAQ:TWST) is a leading, rapidly growing synthetic biology company that has developed a disruptive DNA synthesis platform to industrialize the engineering of biology. With its proprietary technology, innovative products, and strategic initiatives, Twist Bioscience is poised to capitalize on the vast and expanding opportunities in the biotechnology and life sciences sectors.
Business Overview and History Twist Bioscience was incorporated in the state of Delaware on February 4, 2013, with the vision of revolutionizing the field of DNA synthesis. The company's core technology is a proprietary method of manufacturing synthetic DNA by writing DNA on a silicon chip, which enables high levels of quality, precision, automation, and manufacturing throughput at a significantly lower cost than traditional methods. This breakthrough innovation has positioned Twist as a pioneer in the synthetic biology industry.
In its early years, Twist faced significant challenges as it worked to commercialize its disruptive DNA synthesis technology. The company had to build out robust manufacturing capabilities, develop scalable commercial infrastructure, and create an integrated technology platform to achieve its goals. This required substantial investments, with Twist raising over $1 billion to support its growth and innovation initiatives.
Despite these challenges, Twist made steady progress, gradually expanding its product offerings beyond synthetic genes to include tools for next-generation sequencing, antibody libraries for drug discovery, and more. The company leveraged its innovative platform to establish a diverse customer base across industries including healthcare, chemicals/materials, food/agriculture, and academic research.
Key milestones for Twist include launching its e-commerce platform to better serve its growing customer base, opening a state-of-the-art manufacturing facility in Wilsonville, Oregon, and expanding its footprint into adjacent markets like synthetic RNA and data storage. Through disciplined execution and continuous process improvements, Twist was able to steadily improve its financial performance, increasing revenue and gross margins over time.
The company serves a diverse customer base of approximately 3,560 customers annually across a range of industries including healthcare, chemicals/materials, food/agriculture, and academic research. Twist employs a multi-channel strategy, including a direct sales force, an e-commerce platform, and business development efforts for its Biopharma Services, to reach this diverse customer base across its target industries.
Financials Over the years, Twist has steadily expanded its product portfolio and market reach. In fiscal year 2024, the company reported total revenue of $313 million, a 27.7% increase from the previous year. Its SynBio segment, which includes synthetic genes, oligo pools, and DNA libraries, generated $276.7 million in revenue, a 28.2% year-over-year increase. The NGS (Next-Generation Sequencing) tools segment brought in $69.1 million, up 28.1% from the prior year. The Biopharma services division, which provides antibody discovery, optimization, and development services, contributed $22.2 million in revenue, a 23.0% year-over-year increase.
Twist's financial performance has been marked by strong revenue growth and improving profitability. In fiscal year 2024, the company's gross margin expanded to 42.7%, up from 36.4% in the previous year. However, the company has continued to invest heavily in research and development (R&D) and sales and marketing, resulting in a net loss of $208.7 million for the year. The company's annual operating cash flow was -$64.1 million, and annual free cash flow was -$69.2 million.
In the first quarter of fiscal year 2025, Twist Bioscience reported record revenue of $88.7 million, a 24% increase compared to the same period in the prior year. Gross margin improved significantly to 48.3%, up from 40.5% in the first quarter of fiscal 2024. The company's SynBio and NGS segments experienced strong growth, with revenue increasing by 28% and 23% year-over-year, respectively. The net loss for Q1 FY2025 was $31.6 million.
For the three months ended December 31, 2024, revenues from the Synthetic Biology Tools segment totaled $68 million, representing 77% of the company's total revenues. Within this segment, revenues from NGS tools grew by $9.2 million year-over-year, while synthetic genes revenues increased by $6.8 million. The number of genes shipped during the quarter increased by 20% to approximately 205,000 compared to the prior year period. The Biopharma Services segment generated $5.7 million in revenue, representing 6% of total revenues.
The company continues to invest in research and development, with R&D expenses of $21.3 million in Q1 FY2025, as it looks to develop new products and applications for its synthetic biology platform. Selling, general, and administrative expenses increased by 6% year-over-year to $56.2 million, reflecting investments in the company's commercial infrastructure and operations.
Twist Bioscience has focused on expanding its customer base, which reached approximately 2,380 customers in the first quarter of fiscal 2025, up from 2,140 customers in the prior year period.
In terms of geographic performance, the company generates the majority of its revenue from the Americas (61% in Q1 FY2025), followed by EMEA (32%) and APAC (8%).
Recent Developments and Outlook Twist's management has continued to execute on its strategic initiatives, including the expansion of its Express portfolio, which offers faster turnaround times for synthetic genes and other products. The company has also made progress in its data storage business, working on developing a terabyte-scale product using its proprietary DNA synthesis technology.
For the full fiscal year 2025, Twist Bioscience has increased its guidance to $372 million to $379 million in total revenue, up from the prior range of $367 million to $377 million. This represents growth of approximately 20% at the midpoint compared to the prior year. The company expects to achieve adjusted EBITDA breakeven without the need for additional capital raises, underscoring its commitment to disciplined financial management and profitability.
Twist has provided segment-specific guidance for FY2025: - SynBio revenue is expected to be $144 million to $147 million, growth of approximately 17% to 18% year-over-year. - NGS revenue is expected to be $205 million to $209 million, growth of approximately 21% to 24% year-over-year. - Biopharma revenue is expected to be $23 million, growth of approximately 13% year-over-year.
For Q2 FY2025, Twist expects total revenue of approximately $91 million to $93 million, representing growth of 21% to 24% versus Q2 FY2024. The company anticipates full year FY2025 gross margin of approximately 49%, with quarterly sequential improvements reaching over 50% in Q4 FY2025. Twist expects an adjusted EBITDA loss of approximately $55 million to $60 million for FY2025, an improvement of $35 million to $40 million versus FY2024. For Q2 FY2025, the adjusted EBITDA loss is expected to be approximately $16 million, with sequential improvement in subsequent quarters.
Liquidity As of December 31, 2024, Twist Bioscience had $221.4 million in cash and cash equivalents and $49.4 million in short-term investments. The company has no outstanding debt, resulting in a debt-to-equity ratio of 0.18. Twist's current ratio stands at 4.96, and its quick ratio is 4.62, indicating a strong liquidity position. This financial stability allows the company to continue investing in R&D and expansion while projecting adjusted EBITDA breakeven.
Risks and Challenges Despite Twist Bioscience's impressive growth and technological advancements, the company faces several risks and challenges that investors should consider. The synthetic biology industry is highly competitive, and Twist may face increasing competition from larger, more established players. The company's reliance on a limited number of customers, particularly in the Biopharma services division, also presents a risk.
Additionally, Twist Bioscience's significant investments in R&D and expansion may continue to impact its profitability in the near term. The company's success is also dependent on its ability to protect its intellectual property and navigate the complex regulatory landscape in the biotechnology industry.
Conclusion Twist Bioscience Corporation has established itself as a pioneer in the synthetic biology industry, leveraging its proprietary DNA synthesis technology to develop innovative products and services. The company's strong revenue growth, improving profitability, and strategic initiatives position it well to capitalize on the numerous opportunities in the life sciences and biotechnology markets. While the company faces some risks and challenges, Twist's commitment to innovation, customer service, and financial discipline suggest that it is well-equipped to navigate the path ahead and continue its trajectory of success.