TWST

Welcome to Twist Bioscience's 2026 2nd quarter financial results conference call. At this all participants are in listen only mode. After this speakers presentation there will be question-and-answer session. To ask a question you'll need to press star one one. And interest of time we ask you to please limit yourself to one question. Also note this call is being recorded. I would now like to turn the call over to Angela Bitting, SVP of Corporate Affairs. Please go ahead.

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 2026 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 Leproust, 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 and 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 Securities and Exchange Commission. 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 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 Leproust.

Thank you, Angela, and good morning, everyone. Twist delivered another strong quarter and extended our track record of consistent execution, posting our 13th quarter of sequential revenue growth. We have outperformed the broader life science tools market with a model that scales efficiently and drives increasing value creation. Twist's core technology advantage is a semiconductor-based DNA synthesis platform that provides a structural advantage in cost, scale, and speed that feeds into every product and service we offer. The same platform also enables a highly efficient New Product Introduction engine, allowing us to rapidly translate customer demand into scalable offerings and continuously expand our portfolio. As we increase volume on the silicon chip, we expand our wallet share, accelerate product innovation, and further strengthen our competitive advantage. The model works exactly as designed.

We have delivered sustained revenue growth, expanded gross margin above 50%, invested strategically to drive continued return on that investment, and we remain firmly on track to achieve adjusted EBITDA breakeven in the fourth quarter of fiscal 2026. Focusing on our results for the second quarter of fiscal 2026, we grew total revenue to $110.7 million, up more than 19% year-over-year. DNA synthesis and protein solutions grew 28%, powered by continued strength in AI-enabled drug discovery. NGS applications grew 12% year-over-year and 9% sequentially. Diving deeper into DNA synthesis and protein solutions, we continue to see robust growth. Last month, Amazon Web Services announced Twist as a wet lab partner for Amazon Bio Discovery, its AI-powered drug discovery application.

This is an exciting validation of our DNA synthesis, protein solutions, and biologics capabilities. In advance of the launch, Twist has been working with AWS team for several months, providing wet lab services for the application's scientific launch partners, including Memorial Sloan Kettering Cancer Center and the GrayLab at Johns Hopkins University. The objective for researchers using Amazon Bio Discovery is to deploy AI models to design and optimize antibody candidates faster. We're here to support them with products and services that accelerate that pathway. By staying in close contact with our customers, we identified this emerging category of AI-enabled drug discovery early and invested ahead of the market acceleration, with increasing adoption across pharma, dry lab, and big tech companies. Importantly on balance, the growth of AI-enabled drug discoveries complements our work with customers pursuing traditional drug discovery, which remains a robust area of our business.

Regardless of approach, our customers for DNA synthesis and protein solutions are all working through the same fundamental design, build, test, learn cycle. What differs is how they execute against that framework. There is no one-size-fits-all model. Each program is tailored to the customer's scientific approach, resources, and stage of discovery. What remains constant across every engagement is the foundation, Twist Silicon platform, which enables cost-effective synthesis of hundreds of thousands of unique sequences in parallel. That unique and proprietary capability is what makes speed at scale possible, no matter where the customer enters the workflow. No two orders are identical, though we see consistent patterns in how these campaigns are structured. On slide six, to give you some context, one example is our work with Memorial Sloan Kettering and Amazon, where the team ordered approximately one hundred thousand specific DNA sequences as a pooled library.

This approach is highly efficient precisely because of how our platform is built. Pooled DNA can be manufactured collectively rather than individually cloned and processed, driving down cost per sequence dramatically. At Twist's DNA provider, we can deliver hundreds of thousands of specific sequences pooled at speed and scale. Once they have the pooled DNA, either Twist or the customer then screens that library to identify promising candidates, selects the most relevant sequences, and advances those into individual synthesis, protein expression, and characterization. Through iterative cycles, this process yields validated antibody leads. A second model involves customers ordering hundreds to thousands of gene fragments and executing downstream workflow internally. Here again, Twist platform delivers an edge in the ability to synthesize diverse sequence sets quickly and at accessible cost, meaning customer can explore broader design spaces.

In these cases, customers convert fragments into clonal genes, express proteins, and perform characterization assays within their own laboratories. Others choose to start further downstream, purchasing clonal genes or antibodies and binding proteins such as IgG, Fc/Fv, VHH, and others to focus their internal efforts on functional characterization and validation. Even at this entry point, the advantage traces back upstream. The parallel synthesis capability underpinning our platform ensures the sequences they receive reflect the speed at scale that alternatives cannot match. We have a growing segment of customers who rely on Twist as an end-to-end partner. In these engagements, we handle DNA synthesis, clonal gene constructions, protein expression, and characterizations. Our platform's ability to run large, complex sequence sets in parallel accelerates every stage of that workflow, and we deliver high-quality experimental data that enables customers to focus on critical analysis, decision-making, and iterative design.

We also have a number of customers who give us a biological target and ask us to do all of the work through in vivo, in vitro, and our AI/ML discovery approaches. Across all of these models, cost scales with the scope and complexity of the workflow, ranging from smaller exploratory programs to multi-million dollar discovery efforts. Our role is to provide flexibility across this spectrum. Because our platform was purpose-built for parallel synthesis at scale, we can meet customers where they are, whether they need a pool libraries of hundreds of thousands of sequences or a fully managed discovery program. We support them as their research advances. On slide seven, you'll see our portfolio for DNA synthesis and protein solutions serving customers across the biological continuum.

Building on our success in serving therapeutic discovery customers, in February, we licensed the B-Body bispecific platform to expand our capabilities in this rapidly growing modality. We now enable high-throughput discovery in bispecifics, an area that has historically been limited by scale. We have already received our first orders for this platform with a robust funnel looking forward. Going to slide eight, NGS growth re-accelerated in the second quarter. Our NGS tools business remains a durable and growing part of the portfolio, with particular strength in oncology diagnostics. We operate at the critical part in the workflow between the sample and the sequencer, where our products support precision and customization at scale. Our target enrichment and library preparation solutions deliver the uniformity and on-target performance required for high sensitivity applications.

This is especially relevant in the continuum of cancer care on slide nine, where we are seeing increasing adoption in commercial diagnostic tests, including initial momentum in molecular or minimal residual disease or MRD. These applications demand extremely high accuracy and reproducibility, fast turn-around times, and our chemistry is well-aligned to these requirements. Specifically, on slide 10, as MRD testing transitions from early clinical adoption into scale deployment across oncology diagnostics, the technical and operational requirements become significantly more demanding. These assays are pushing the limit of sensitivity, often requiring detection of variant at extremely low allele frequencies. That places a premium on panel design as well as the entire workflow to ensure uniform coverage and reproducibility across run.

In this environment, success depends on the ability to deliver highly customized target enrichment panels, library preparation enabled by novel enzymes, as well as the buffer, BCDI, UMIs, and other components optimized for specific indications and evolving clinical needs. Equally important is speed. As these tests move into broader clinical workflows, laboratories and diagnostic developers need rapid turn-on panel design, synthesis, and deployment to support assay development timelines and commercial scale-up. At Twist, we combine high-throughput DNA synthesis with precision probe design and manufacturing at scale, enabling fast, reliable delivery of customized panels with consistent performance characteristics. That allows our customers to move quickly from development to validation to commercialization without compromising on data quality, and importantly, securing and future-proofing their stable supply chain.

For Bespoke, our tumor-informed MRD panels, like all of our NGS panels, this is a consumable driven workflow that scales with sales volume, supporting recurring revenue as these applications extend. This time, I'd like to turn the call over to Paddy to expand further on our growth initiative around the coming product offering.

Thank you, Emily. Halfway through our fiscal year, the results are strong, and we believe the road ahead is stronger. Everything we do in protein solutions and AI-enabled discovery runs on one foundation, our DNA synthesis platform. It's a structural advantage for cost, scale and speed, full stop, and we continue to advance and strengthen this platform to enhance customer experience even more. Today, we accept the vast majority of DNA sequences as we know we can manufacture them. We have an algorithm embedded in our e-commerce system to inform a customer immediately if they have uploaded a sequence that may be difficult to manufacture. This notification improves the user experience for customers as some sequences present manufacturing challenges, repeat regions, hairpins, extreme GC content.

Three years ago, we accepted about 96% of Clonal Genes and could manufacture about 97.5% of Clonal Genes and about 98% of DNA sequences more broadly, including Oligo Pools, DNA libraries, gene fragments. Today, we accept about 97% of Clonal Genes and can manufacture approximately 98.5% of Clonal Genes and about 99% of DNA requests more broadly. That's not theoretical capability. That's production reality at scale. We routinely deliver Clonal Genes and fragments up to 5,000 base pairs, Oligo Pools up to 300 bases, Multiplex Gene Fragments up to 500 base pairs across a wide range of formats. If a customer can design it, we are increasingly able to make it.

Even as an acceptance rate for DNA sequences remains very high, we recognize that when a single sequence in a larger set does not meet acceptance criteria, customers may choose to route the full set elsewhere. This dynamic highlights a clear opportunity. Continued improvements in acceptance rates can unlock incremental share gains and expand total order capture. On slide 11, you'll see that we announced this morning that we will soon take a full range of sequences across length and complexity, driving toward accepting approximately 99.5% of Clonal Genes and 99.9% of all DNA products more broadly. This constant drive to improve sets us apart, and importantly, more sequences accepted means more orders won, and we intend to win them. That matters because this is not a standardized market. Every customer is different. Every order is different. Breadth drives share gain.

It's that simple. In contrast to Twist, the competitive landscape has a pattern. Niche players, narrow offerings, limited reach. That is not how customers operate, and it is not how this market is won. We employ a different approach. We anchor their strategy around end applications where performance, scale, and execution are the only metrics that matter. Customers do not want to stitch together multiple vendors. They want one partner who can deliver consistently across a workflow. That is where Twist is differentiated. We offer both depth and breadth across the biological continuum from DNA synthesis through proteins, biologics, and NGS. We support customers increasingly across the entire life cycle of their programs. This is how we continue to take share, expand wallet, and reinforce our position as the leading platform serving therapeutics, diagnostics, industrial, academic, and government markets. With that, I'll turn it over to Adam to discuss our financials for the quarter.

Thank you, Paddy. Turning to slide 12, Q2 is another quarter of consistent execution against the financial model we've laid out. Revenue grew 19.3% year-over-year to $110.7 million, our 13th consecutive quarter of sequential growth. Gross margin expanded to 51.6% versus the prior year, an improvement of approximately 200 basis points. We remain firmly on track for adjusted EBITDA breakeven in Q4. Let me walk you through the details. On slide 13, you'll see DNA synthesis and protein solutions revenue increased to $53.3 million, growth of 28% year-over-year.

On slide 14, we show NGS applications revenue for the second quarter grew to approximately $57.4 million, compared to $51.1 million in the second quarter of fiscal 2025, an increase of 12% year-over-year and up 9% sequentially, driven by growth in top accounts. For the quarter, revenue from our top 10 NGS applications customers accounted for approximately 39% of NGS applications revenue. We served 627 NGS applications customers in the quarter, with 174 having adopted our products. Looking geographically on slide 15. Americas revenue increased to approximately $64.3 million in the second quarter, compared to $55.2 million in the same period of fiscal 2025, growth of 17% year-over-year.

EMEA revenue rose to $37.3 million in the second quarter versus $30.6 million in the same period of fiscal 2025, growth of 22% year-over-year. APAC revenue increased to $9.1 million in the second quarter compared to $7 million in the same period of fiscal 2025, an increase of 30% year-over-year. APAC accounted for 8% of our revenue in the second quarter. China continues to be a relatively small portion of our revenue at approximately 1% of total revenue for the second quarter of fiscal 2026. Looking at revenue by industry on slide 16. Therapeutics revenue rose to $40.8 million for the second quarter of 2026, compared to $26.3 million in the same period of fiscal 2025.

Growth of 55%, reflecting the increased uptake of our products by large pharma and biotech customers in their efforts on therapeutics discovery and including AI-enabled discovery. Diagnostics revenue was $40 million for the second quarter of 2026, compared to $35 million in the same period of fiscal 2025, an increase of 14%. Diagnostics revenue grew 13% versus Q1 of fiscal 2026 based on strong growth from top accounts. Industry and applied revenue was $5.8 million in the second quarter of 2026, compared to $7 million in the same period of fiscal 2025. Academic research and government revenue was $12.8 million for the second quarter of 2026, compared to $12.5 million in the same period of fiscal 2025, an increase of 3%. Sequential growth was 5% versus prior quarter, driven by strength in U.S. accounts.

Global supply partner revenue was $11.4 million in the second quarter of 2026, compared to $12 million in the same period of fiscal 2025, primarily due to order timing. Moving down the P&L on slide 17. Our gross margin for the second quarter increased to 51.6%, an improvement of 2 margin points versus the same period of fiscal 2025. Margin expansion was driven by strong revenue growth and moderated sequentially as we continue to invest in new product offerings and manufacturing capacity that we expect will result in future margin gains as we accelerate growth and implement continuous process improvements. Operating expenses, excluding cost of revenues and litigation settlement costs, were $95.8 million for the quarter, compared to $87.6 million in the prior year.

The increase reflects deliberate investment in our commercial organization and digital infrastructure to support the growth trajectory we are delivering, particularly the 55% growth in therapeutics. These are revenue-generating investments with a clear line of sight to return. We are managing these investments with discipline. In April, we reduced 36 positions to reallocate resources to our highest return opportunities. Combined with additional cost initiatives underway, we expect these actions to contribute to sequential OpEx improvement of $6 million in Q4 of fiscal 2026. Looking at our progress on our path to profitability. For the second quarter of fiscal 2026, adjusted EBITDA was a loss of approximately $13.3 million, an improvement of approximately $1.5 million versus the second quarter of fiscal 2025. We have systematically narrowed that loss through a combination of revenue growth, gross margin expansion, and operating expense discipline.

We expect the actions we've taken, combined with continued revenue momentum, to fully deliver on our targets for Q4. We reached an agreement in principle regarding the securities class action for approximately $17.1 million. In fiscal Q2, we booked $7.2 million for litigation settlement costs, net of recoveries, as we expect the additional cost to be covered by our insurance. We view this as a positive resolution, allowing management to remain fully focused on execution. We ended Q2 with $171.7 million in cash equivalents, and short-term investments versus $197.9 million as of December 31st, 2025. Sequential change reflects $17.6 million in operating cash usage, $7.9 million in CapEx as we continue to invest in manufacturing automation, and $5 million in cash for the Invenra license and equity investment.

On slide 18, turning to guidance. For fiscal 2026, we expect total revenue of $442 million-$447 million, growth of approximately 17%-19%. For Q3 of fiscal 2026, we expect total revenue of $114 million-$115 million, growth of approximately 19% year-over-year at the midpoint. As previously discussed, we expect NGS to be the driver of sequential growth in H2 and return to 20% growth by Q4. We remain confident in our trajectory and continue to forecast reaching adjusted EBITDA breakeven for the fourth quarter of fiscal 2026. With that, I'll turn the call back over to Emily.

Thank you, Adam. On slide 19, as we look ahead, we remain focused on delivering consistent measurable growth designed to scale over time. We see strong momentum across the portfolio with continued growth in DNA synthesis and protein solutions, increasing adoption in AI-enabled discovery, and a return to growth in NGS. We serve large and expanding markets where our platform is increasingly relevant. At the same time, our operating model continues to perform as expected. We have delivered 13 consecutive quarters of sequential revenue growth, expanding growth margins above 50%, and maintain a clear path to adjusted EBITDA breakeven in fiscal 2026. What underpins this performance is the scalability of our platform. As volume increases, we expand wallet share, improve efficiency, and generate operating leverage across the business.

Our ability to serve a wide range of customer workflows from early discovery through clinical and diagnostic applications provide both resilience and opportunity to capture more value over time. Across the business, we invest with discipline. We target high return opportunities, allocate capital deliberately, and align investments with clear growth drivers. We execute with focus and urgency to drive durable growth and build a company with increasing strategic relevance and long-term value creation. With that, we're happy to take your questions. Operator?

Thank you. As a reminder, to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. We also ask that you please limit yourselves to one question. Our first question comes from Mac Etoch with Stephens. Your line is open.

Hey, good morning, and thank you for taking my questions. Maybe just to start, could you just discuss how AI-driven workflows performed in the quarter relative to your internal expectations, and how the change in the outlook for both of the segments is really contributing to the change in the updated fiscal guidance from here? Thanks.

Thanks for the question. Obviously, we're very excited with the performance of the SPS growing 28% year-over-year. For the therapeutics category, we cracked the $40 million for the quarter. A lot of companies in the drug discovery field, you know, they tap out at $50 million a year, now we are way past that. We're almost there every quarter. Obviously, there's strength, there's strength throughout the menu. What we see is that, you know, customers don't want one thing, the NPI engine that we built, that creates a lot of options for people to enter, has been a great driver. Obviously, AI-driven drug discovery has been a big help in that area.

It just increases the number of sequences that people want to look at. You know, if they looked at 100 sequence before, now with AI, they can get thousands. It just increases the overall value of the deals. A lot of companies don't have the capacity to analyze that number of antibodies, and so it enables us to upsell to data and cell characterization. You know, overall, the entire menu is doing well, but AI drug discovery has definitely been, you know, great sales great wins in our ourselves.

Thank you. Our next question comes from Vijay Kumar with Evercore ISI. Your line is open.

Hi, Emily and Adam. Good morning to you, and thank you for taking my questions. Congrats on a nice sprint. Maybe on the prior question, right, related toward, you know, when I look at therapeutics, you know, up 55% in second quarter, that's an acceleration from Q1 growth levels. How much of this acceleration was driven by AI-related programs? I think, you know, in the past, Emily, you called out data characterization genes versus traditional biopharma. When you look at back half, is this 50% kind of growth sustainable when you, when you look at your order book and backlog? Thank you.

That's a great question. Definitely, AI has been a source of strength. Again, the nice thing, as people develop more sequences, whichever flavor of DNA, you know, we can make, if they want a pool library of VHHs, we can make it. If they want even for bispecific now, we can make gene pools. We can make the flavor of their DNA unpooled. So the entry point of whatever they want, that broad menu is very useful. With AI, as I mentioned earlier, there's more need for data characterization.

What has happened is maybe in 2025, there was excitement definitely on our side, but that excitement came from very few number of accounts. Now that we are many quarters into this, now it's dozens of accounts that are driving that growth, right? It's not just a few. We can see that not only it's repeatable with the existing accounts, but we're able to bring more and more people into the fold. Sometimes we, you know, we can enter through AI-driven drug discovery, but a lot of those companies are doing both, AI-driven drug discovery and traditional drug discovery. The fact that we have a full menu, you know, enables us to grow in all areas.

You know, overall it's broad-based. Going forward, we're not guiding per product groups. I think there's very good growth potential within the business. You know, we doubled. The raise is double the beat, right? Obviously there's a lot of confidence, but that confidence is broad-based. We also share some, you know, strong confidence for our NGS business. The business is ripping. The sales team is confident. Customers are happy, we will just have to do it again.

Thank you. Our next question comes from Doug Schenkel with Wolfe Research. Your line is open.

Good morning. Thank you for taking my questions. I wanna just cover two topics, the academic and government end market and then gross margin. In A&G, what are you seeing? Are things stabilizing or improving? Just wanna get a sense for how things are trending. Are you still running the academic promotion on Express Genes? Kind of building off of that, when do we start to lap the headwinds on price per gene from Express Genes fragments? I think that's this summer, just wanna be mindful of that as we're updating our models. A quick one on gross margin. Gross margin was down nominally, sequentially, and a little bit light of our model and street models. That just may be in the noise, but wanted to see if there's anything to call out there. Thank you.

Okay. Yeah. Maybe I'll take the first question and Adam will cover the second one. On, on academic, definitely those, you know, that end market is suffering from funding pressures. Our approach is to take market share. Academic, they, you know, when funding is under pressure they, you know, they're very cautious about their dollars. Especially, you know, that market is basically shrinking right now. The fact that we're growing and growing sequentially is definitely a good thing. It shows that our product offering resonates more than the competition.

Yeah, right now we are very happy to extend the premium discount for what that enables academic people to get Express Genes at the price of standard genes. They get a great value on the DNA they're receiving from us. They're getting great speed. It enables them to go faster and get better at their next grant, knowing that those grants are very competitive. I think our discount is very well received by those customers. Definitely the growth there is smaller than for an industry segment, but we are taking market share. Adam, you want to cover the gross margin question?

No, absolutely. Welcome, everyone. You know, Q2 definitely reflects a deliberate investment specifically for IgG and characterization for our discovery projects, as well as our digital capabilities. We remain confident in our 52% or better guide for the year. This investment is really around adding capacity and people to support the accelerated demand. We see a huge ROI on it, we also see the path to continuously making improvements on those efforts on new products and returning to a 75%-80% average drop through on incremental revenue to gross margin as we move forward and automate workflows.

Thank you. Our next question comes from Luke Sergott with Barclays. Your line is open.

Thanks. Just a couple here. I wanna follow up on Doug's question there. Adam, when you're talking about the gross margin improvement and the kind of the automated workflows. You guys have just built out the new facility. It's pretty state-of-the-art from what you had previously. Talk about further investment or how much more you guys can continue to push that automated workflow. I wanted to follow up and ask more on the data characterization of the AI projects. You guys talked about $25 million in bookings in 4Q coming from some of these AI projects. You know, how much of the revenue in the first six months of the year has been converted from that? Or, like, is that still majority on the comm?

Yeah. Thanks for the question. Maybe I'll start with the first one. You guys are really good to squeeze, squeezing two questions into one at the.

I go that as well.

Yeah, yeah, I see. I see what you're doing there. On the first one, if you remember conceptually, our fab is the front-end and the back-end, right? The front-end is silicon chip. That's where we make the oligos. That's where we get the massive advantage. After the Oligos are made, depending on the flavor, it goes through different back-ends. In general, the back-end for our DSPS is a different back-end than for NGS. In DNA synthesis and protein solution, we first make a fragment and then some stop there, they get shipped. We make Clonal Genes, some stop there, they get shipped. We make IgG expressions, some stop there, they get shipped. Some of the IgG gets characterized.

As you can imagine, as we add flavor, we have to add a little bit of automation to add capacity for that new flavor. It's not a tremendous amount of CapEx. I mean, it's significant, but compared to building a new fab from scratch, it's not comparable. That's the strategy we've been using, is following the demand from customer and adding a little bit of automation on the back end on the branch that's needed. That's one. The other thing we've done is we've been automating the automation.

For those of you that come to our Investor Day, you'll see that there was giant room where now in that one room, we've been able to automate the automation. Now we, you know, we'll be able to have multiple times the capacity that we used to have in that room. In terms of your second question around the $25 million of orders that we had last year, those have all been shipped now. Most of that was shipped, was finished by Q1, there's very little impact of that in Q2. As you remember, one thing that's a key differentiation from us is the speed at which we deliver data. You know, Well, most of the data is delivered 15-20 days after we receive the sequence. It's a quick turnaround to book the revenues.

Thank you. Our next question comes from Subbu Nambi with Guggenheim. Your line is open.

Hey, guys. Thank you for taking my questions. You increased your full year revenue guidance by more than the magnitude of the Q2 beat. Any specific area or areas which drove the increase? Essentially, I'm asking for the bridge. Thank you.

Hi, Subbu. Great to hear you. Yes, what we talked about in the back half, while sequentially, most of the improvements are going to come from NGS, if you look at the full year guide, you can see that that implies that the DSPS is really the strength of the raise in the back half. If you are modeling it out sequentially, we don't expect anything to go backwards in terms of DSPS. We only expect continued increases in the overall revenue, but at a more modest rate. Again, it really is dependent upon the pace of us getting new customers into the DSPS side, and the ability to potentially exceed those expectations will is an area of opportunity for us.

Thank you. Our next question comes from Matt Larew with William Blair. Your line is open.

Hi. Good morning. Wanted to ask on the complex DNA offering, you know, what's the timeline at which you expect to deliver products sort of in line with, you know, the capability you described today? What length do you expect to be able to get up to in terms of manufacturing? Do you have any sense, or can you give us a sense for, you know, what the missed opportunity has been historically? You know, you referenced in some cases losing a whole order because you couldn't make a sequence. What kind of additional opportunity does this unlock by adding these new capabilities? Thanks.

Hey, hey, Matt, it's Paddy here. Thanks for the question. Yeah, we're pretty excited about the product. I think you could hear from my comments that we're virtually we accept, you know, that the vast majority of sequences that come our way across all of the portfolio, it is a few percentage points of sequences we don't take, which, you know, we see some instances where the customer wants to take that total order somewhere else. The trends that emerging nucleic acid therapeutics, plant engineering, of course, AI, you know, they have some special needs or special requirements around then the sequence complexity. So, you know, in true Twist fashion, we're focused on the customer experience. Our goal is to create a one-stop shop, you know.

When you leverage our DNA synthesis platform that can print really high-quality DNA, and just as a reminder, you know, up to approximately 6 billion elements per day, that gives us super quality, speed, and economics at scale, including for complex sequence. Now with a little bit more optimization throughout the entire workflow, you know, it's gonna deliver a product that's best-in-class. Broad sequence acceptance, you know, really strong, predictable, and transparent performance when you're on the Twist platform. Twist reliability. Our platform's industrialized. It's faster, cheaper, strong best-in-class e-com user experience. You've got Twist customer service and support, that's trained scientists that understand the customer's experiment, you know, there to help the customer through any of their challenges.

There's a lot to like with the offering, and we're looking forward to scaling in the coming few quarters. We're, you know, talking about early access. You know, start with this classic Twist, make a few customers happy, and learn as we go, and you'll continue to see the capability ramp up as we go through the quarters.

Thank you. Our next question comes from Catherine Schulte with Baird. Your line is open.

Hey, everyone. Thanks for the question. Maybe on the margin side, you know, still on target to hit adjusted EBITDA breakeven in the fourth quarter. You've been very prescriptive about gross margin incrementals. I guess, as you hit that milestone, you know, how should we think about leverage beyond that point and maybe EBITDA margin incrementals going forward?

Hi, Catherine. Good morning. Thank you for the question. In terms of where we are today, overall, we're laser-focused on making sure we cross the adjusted EBITDA positives here in Q4, while also at the same time ensuring we do it at maximum acceleration of revenue growth. It's really titrating that investment in such a way that we maximize growth rates. As we go forward, we have optionality. We've talked about that before. We'll talk about it more in the future. We're stewards of the market, and we understand that our continued path of not going backwards is very important to us and also ensuring that we continue to sustain the accelerated levels of growth. Those will be the two focus areas, and I think we will spend some more time talking about that at our investor day here coming up in May.

Thank you. Our next question comes from Puneet Souda with Leerink Partners. Your line is open.

Hi, everyone. You have Michael on for Puneet. Congrats on the quarter. I was hoping to get some color on the genes. I saw strong growth in the physical gene shift. Last quarter, you talked about 50K for characterization. I was wondering if you could offer any color on the contribution of gene for characterization this quarter. If you could offer any insight to us on how much of this AI demand is driven by more model building versus incorporation of AI into your ongoing drug discovery, lead generation work at pharma.

Yeah. No, thank you. Great question. We did not share the number today. We were trying to straddle the fine line between being as transparent to investors as possible and not tipping off the competition too much. I'm sure some of them are on the line today. What we can say is that it's more, right? There's definitely growth in how many genes we have used internally to generate data that was sold. Definitely there's growth there. There was a second question?

Yeah. It was around the ability to, how much of the growth is coming from making the models versus.

Oh, yeah. Oh, yeah. Thanks. Thanks. I'm sorry. I was focused on the number. Yeah, very interesting actually. We've seen a lot of customers that have shifted. While the beginning was a building model, I think by now, most of them or a lot of them are now turning the crank. When they turn the crank, what we see is that each order is maybe a little bit smaller. Building model is a big bolus up front. So it's a little bit smaller, but it's more often. We're very pleased to see that people are returning. Yeah, it's working as expected. It's working well.

Thank you. Our next question comes from Brendan Smith with TD Cowen. Your line is open.

Great. Thanks for taking the questions, guys. Maybe just to put a pin in the AI orders questioning here fully. I guess looking at that $25 million from last year, do you have a sense or can you tell us what kind of run rate you're looking at now for 2026, maybe just with the first half under your belt? I guess related to that and within those revenues, I guess, can you give us a sense what the relative breakdown between revs from, you know, oligos versus IgG versus analytical data? Just kind of wondering really how much of the AI revs are mostly done kind of further down that funnel or really where they're shaking out. Thanks.

Brendan, I can start with a little bit of color around how to think about where we're going. If you think about the therapeutic segment as a whole, obviously the AI discovery is falling in there. If you look at the outsized growth versus the average of the business, that delta is predominantly AI discovery work. I will say at times it's hard to know exactly whether it's, you know, AI discovery or classic work. We don't always know exactly the number as well as, you know, whether it's training or building the models. Pretty strong confidence that the vast majority of the outsized growth in therapeutics is AI discovery. Do you want to add to the second half? Yeah. Go ahead. Thank you.

Thank you. Our next question comes from Tom DeBourcy with Nephron Research. Your line is open.

Thanks for taking the question. Diagnostics as a whole and the, you know, double-digit growth and also double-digit sequential growth is sort of you had, I guess, projected before. Just as you think about the rest of the year, do you see incremental sequential growth through Q3, Q4? Just thinking about diagnostics customers and their contribution to NGS.

Thank you. Thank you, Tom. Yeah, definitely, we're seeing growth. I think we in Q4, we're actually seeing at least 20% growth in NGS alone. It's a good reminder. You know, we talked a lot on the call about DNA synthesis and protein solution and AI-driven discovery. You know, we love it all. At the same time, it's a good reminder that dollar growth in NGS or dollar growth in DNA synthesis and protein solution is very similar to us. What we're optimizing for as a management team and for revenue growth for the entire business, you know, growth margin above 50% and getting to adjusted EBITDA breakeven.

The portfolio of panels that is through library prep that we build in the NGS application group enables us to sustain great growth. We are a liquid biopsy customers, our MRD customers are ramping and adopting, so we're very definitely very confident in that part of the business, and we're very much looking forward to return to growth. There were not so long ago, it was flipped where we had, you know, 28-ish% growth in NGS and 12% growth in DNA synthesis and protein solution. It is going to flip-flop back and forth. At the end of the day, what matters to us is the entire business really grow.

If you look back into the, you know, life science tools industry, hopefully we are unique in the kind of growth that we're being able to post, not just this quarter, but you know, by now certain quarter in a row. $110.7 million this quarter. Not so long ago, we had $19 million for the entire year, right? We'll keep doing it and I think the future is very bright.

Thank you. There are no further questions. At this time, I'd like to turn the call back over to Emily Leproust for closing remarks.

As we wrap up, we look forward to continuing the conversation in person at our Investor Day on May 20th in Oregon. This will be an incredible opportunity to go deeper into the drivers behind our performance, hear directly from our customers in Twist across therapeutic discovery and NGS workflow, and participate in a tour that brings our platform to life. You will also have the chance to engage with members of our management team as we discuss how we are scaling the platform, expanding into new applications, and driving long-term value creation. See you there. Thank you.

Thank you for your participation. You may now disconnect. Good day.

Ladies and gentlemen, thank you for standing by. Welcome to Twist Bioscience Fiscal 2026 First Quarter Financial Results Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you would 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 like now to turn the conference over to Angela Bitting, Senior Vice President of Corporate Affairs. Please go ahead.

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 2026 first 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 Leproust, CEO and co-founder of Twist Bioscience Corporation, Adam Laponis, CFO of Twist Bioscience Corporation, and Dr. Patrick Finn, President and COO of Twist Bioscience Corporation. 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 requeue 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 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 Securities and Exchange Commission. 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 Investors section of our website. With that, I will now turn the call over to our CEO and Co-Founder, Emily Leproust.

Thank you, Angela, and good morning, everyone. Q1 provided a strong start to fiscal 2026 and extended the pattern of consistent growth, marking our twelfth consecutive quarter of revenue growth. This performance builds directly on the operating momentum established in fiscal 2025 and reflects trends that remain intact as we move through the year. Notably, over the last three years, we have delivered a revenue CAGR of 24% and increased margin by 20 percentage points on relatively flat OpEx, materially outpacing growth across much of the life science tool industry. We believe the combination of sustained growth and meaningful operational progress clearly differentiates Twist Bioscience Corporation within our peer group. Going back to basics, at Twist Bioscience Corporation, our strategy is simple and very deliberate. We built a semiconductor-based DNA synthesis platform that gives us a technology advantage that translates into speed, scale, quality, and affordability for our customers. Everything we do builds on this differentiated and foundational platform. As we load more volume onto our chip, having more customers with more products improves our financial performance, strengthens our competitive position, and extends our addressable markets. This quarter's results reflect that our model is working as intended and we are building for the opportunities we see that leverage our advantage to accelerate growth. Over the last several years, we have transformed Twist Bioscience Corporation into what we describe as an NPI machine. We consistently launched new products that sit on top of the same manufacturing infrastructure, allowing us to expand into new applications and customer workflows without adding risk or complexity. As a result, our estimated serviceable market has expanded from approximately $2 billion in 2020 to roughly $7 billion today, driven by our current portfolio of products and services. Based on our market growth and customer adoption patterns, we continue to see a clear path to more than $12 billion of addressable markets by 2030, with additional growth opportunities as we launch new products. Importantly, this SAM expansion is occurring while serving some of the most sophisticated customers in life sciences across therapeutics, diagnostics, and applied markets. These customers choose Twist Bioscience Corporation because we future-proof their supply chains and innovation to enable them to move faster at scale with confidence. Javier will dive deeper into one of the opportunities in the DNA synthesis and protein solutions group to detail how we are playing to win in the AI-enabled discovery market as it forms and scales in real-time. For our energy applications group, we see a serviceable market of over $3 billion, with about 10% market share today. Looking at our serviceable markets within this group, we expect a blended CAGR for the industry of approximately 20% across oncology and rare disease diagnostics, microarray, biopharma R&D, and academic markets. Keep in mind, our revenue for NGS comes both through direct sales and also partners who sell our panel and reagents under their brand. Importantly, we expect our growth to outpace industry levels as we leverage our engine and commercial intensity to outperform our peers. We expect to drive growth in NGS applications by expanding volumes with existing density customers as their testing scales, particularly in oncology where recurring testing supports sustained demand. In addition, we expect to add new customers in the diagnostic space. Twist Bioscience Corporation will also pursue market share gains by converting legacy microarray workflows to sequencing-based solutions in agrigenomics and propagation genetics. In biopharma R&D and academic research, growth will be driven by increased adoption of Twist Bioscience Corporation's multiomics portfolio and by expanding product offerings to support new applications and workflows. The key to our ongoing success is that over the last decade, we have built deep, long-standing customer relationships that give us clear insight into unmet needs and emerging demand. We tailor customer insight with our proprietary platform to consistently deliver a strong product roadmap and a disciplined cadence of commercial launches. About a year ago, we recognized the early formation of a new category in AI-enabled therapeutics discovery, a market that was effectively nonexistent in 2024. At fiscal 2025, we had booked more than $25 million in orders, specifically tied to AI discovery. This exemplifies Twist Bioscience Corporation's ability to help define new categories by listening closely, adapting our roadmap ahead of market inflection points, and investing early to establish leadership. This was done with flat operating expenses through the fourth quarter of last year. Going forward, we see meaningful growth ahead as this category continues to develop. In the first quarter, we made targeted, deliberate investments to extend our advantages for all the opportunities we see across the business. Some of these investments are in the commercial team to amplify our success in the market. Others are in the infrastructure and operations to support the scale of the full portfolio. Importantly, we made these investments while remaining focused on our core financial priorities, including revenue growth, gross margin, and adjusted EBITDA breakeven. To be clear, we are committed to adjusted EBITDA breakeven in 2026. On top of this, we see an opportunity to increase our growth rate, and we have accelerated our operating expenses up by about $10 million per quarter without putting adjusted EBITDA breakeven at risk. As you know, investment in growth is like a turbo on an engine. There's a lag between pushing the gas pedal and the acceleration. On an ongoing basis, we expect approximately 75% to 80% of our incremental revenue growth across all product lines to drop to the gross margin line. We have worked hard to get to this point, and we'll continue to tune the machine. As a team, we are focused on three key performance metrics: revenue, gross margin, and adjusted EBITDA breakeven. We measure many other things within the company and the business, but ultimately, these three metrics drive our future growth. Our management team and every employee that we have are measured and incentivized on these three metrics. Overall, we are managing the business, keeping an eye on the gas, and the growth like ox. And we expect to become an even more formidable force in the coming years as we sustain growth through disciplined reinvestment of our profits. At this time, I'd like to turn the call over to Patrick Finn to further expand on our growth initiatives around AI-enabled discovery.

Thank you, Emily. At Twist Bioscience Corporation, we're constantly engaged with our customers and key opinion leaders. Going back to December 2024, within a relatively narrow time window, we were in dialogue with several customers bringing forward new ideas for the use of our platform technology. Expanding beyond DNA synthesis and deeply into protein expression and antibody characterization for thousands of sequences. As you may remember from biology class, DNA encodes the sequence for protein, which can then be expressed in a cell. The proteins expressed within the cell can then be purified and run through specific assays to determine the protein's characteristics, including stability, developability, and more. Historically, we made DNA, but we've expanded to also expressing proteins from the DNA, opening up a $700 million market to Twist Bioscience Corporation. Because our semiconductor-based platform writes DNA sequences at scale, AI presents a fabulous use case that incorporates our unparalleled throughput, speed, quality, and cost advantages. All customers are engaged in a design-build-test-run cycle. The customer designs the sequences, we build the proteins, and then we conduct a series of assays to test the proteins. Once we deliver the products or data, the customer learns from the information and optimizes the cycle for the next iteration. These customers fall into three different buckets. First, we are currently working with large pharma companies who are building robust large language models and preparing training sets. We receive thousands of sequences to synthesize, but ultimately, this customer type does not want the DNA strands. They want Twist Bioscience Corporation to conduct protein expression and characterize the protein, delivering only a data file with the results of the assays. These customers have a wet lab but cannot handle the volume of sequences they want to test and may not be new to Twist Bioscience Corporation, with this being an expansion of our work with them. A second customer group includes large tech companies focused on creating or expanding their presence in life sciences. They do not have a wet lab and operate as a so-called dry lab company. This means they rely on Twist Bioscience Corporation to conduct all research experiments, and we deliver the data to them for evaluation and next steps. These customers are new to Twist Bioscience Corporation. A third customer group is well-funded biotech companies that need thousands of sequences and data, essentially pursuing similar paths to large pharma. Across all customers, the work is custom according to their requirements, but the work streams and margin profiles are similar across customer types, and we have the capacity to serve all. When we launch a new product or service, and the work in AI-enabled discovery is a series of both, we complete the work using the best tools, spending no expense to ensure the customer receives what they need. Once we know the product resonates with customers, we optimize processes, automate, and proceed through a series of improvements to rapidly bring the margin profile in line with the rest of the business, where 75% to 80% of incremental revenue drops to the gross margin line. We've done this time and time again with a repeatable process. In fact, we continued to strive in the first quarter with 74% of incremental revenue dropping through to gross margin. What began as exploratory work in early 2025, leveraging our platform to AI-enabled discovery market, is now transitioning into repeat production-level workflows with customers intrinsically focused on generating high-quality data at scale. As models mature, the constraint is no longer algorithm development, but the speed, quality, and economics of experimental data generation. That shift is driving demand toward platforms that can reliably deliver large volumes of data quickly and cost-effectively, and Twist Bioscience Corporation fits that need very well. Our platform is uniquely suited to this customer need, allowing customers to move from design to data in days, not months. We see this as a durable and expanding opportunity that aligns directly with Twist Bioscience Corporation's core strength of customization at scale, with an immediately serviceable market of $1.5 billion for customers of antibodies discovery services and $700 million for protein expression. With that, I'll turn it over to Adam Laponis to discuss the financials for the quarter.

Thank you, Patrick. Revenue for the first quarter increased to $103.7 million, growth of 17% year over year and approximately 5% sequentially. Gross margin came in higher than expected at 52% for 2026, an increase of approximately four margin points over 2025, supported by increasing revenue and our continuous process improvement efforts. DNA synthesis and protein solutions revenue increased to $51.1 million, growth of 27% year over year, driven by strength from customers pursuing AI-enabled discovery, whether building models or testing molecules. NGS applications revenue for the first quarter grew to approximately $52.6 million. Excluding one large customer, NGS grew 18% year over year. For the quarter, revenue from our top 10 NGS applications customers accounted for approximately 36% of NGS revenue. Looking geographically, America's revenue increased to approximately $58.4 million for the first quarter, compared to $53.7 million for the same period of fiscal 2025, growth of 9% year over year. EMEA revenue rose to approximately $38.4 million in the first quarter, versus $28.3 million in the same period of fiscal 2025, growth of 36% year over year. APAC revenue increased to approximately $7 million in the first quarter compared to $6.7 million in the same period of fiscal 2025. Looking at revenue by industry, therapeutics revenue rose to approximately $37.2 million for 2026, compared to $26.8 million in the same period of fiscal 2025, an increase of 39%, reflecting the increased uptake of our products by large pharma and biotech customers in their efforts on therapeutics discovery, including AI-enabled discovery. Diagnostics revenue was approximately $35.3 million for the first quarter of 2026, substantially equivalent to $35.5 million in the same period of fiscal 2025. Excluding one customer, diagnostics was up 12% year on year. Adding to diagnostics, recall about 75% of our global supply partners' revenue is OEM partners selling Twist Bioscience Corporation products for NGS applications. Although we do not always know our OEM partners' end customers, we believe the vast majority of their revenue is focused on diagnostics. Industry and applied revenue were $6.1 million in 2026, compared to $5.5 million in the same period of fiscal 2025, an increase of 11%. Academic research and government revenue was approximately $12.2 million, relatively equivalent with $12.4 million in the same period of fiscal 2025. We saw fewer large-scale projects compared to the same period last year, but a large expansion in the number of customers purchasing from us based on our NPI and academic commercialization efforts. We see the academic market returning to growth in Q2 with increased confidence in NIH funding for 2026. Global supply partner revenue was $12.8 million in 2026 compared to $8.5 million in the same period of fiscal 2025, an increase of 50% driven by three factors: a significant new partner for NGS coming online, substantive growth in our diagnostics OEM partners, and growth for our distributors in APAC. Moving down the P&L, our gross margin for the first quarter increased to 52%, an improvement of approximately four margin points versus the same period of fiscal 2025, reflecting our strong revenue growth and customer base as well as continuous process improvements. Operating expenses, cost of revenues for the first quarter, were $86.9 million compared with $77.5 million in the same period of 2025. The increase in operating expenses was driven by investment in our commercial group to drive additional revenue growth as well as digital capabilities. Looking at our progress and our path to profitability, for 2026, adjusted EBITDA was a loss of approximately $13.4 million, an improvement of approximately $2.8 million versus 2025. This improvement demonstrates our ability to scale efficiently, even as we front-load strategic investments in commercial and digital capabilities. These investments are expected to remain stable or moderate slightly in the second half of the fiscal year. For 2026, net cash used in operating activities was $24.8 million. Capital expenditures in 2026 were $10 million. We ended the quarter with $197.9 million in cash, cash equivalents, and short-term investments. Turning to guidance, for fiscal 2026, we expect total revenue of $435 million to $440 million, growth of approximately 16% at the midpoint. We expect the revenue increase versus prior guidance to be generally balanced across DSPS and NGS. For 2026, we expect total revenue of $107 million to $108 million, growth of approximately 16% year over year at the midpoint. For NGS, we expect strong sequential growth in Q2 and growth in key accounts, with sequential growth throughout the year as previously discussed. We remain confident in our trajectory and continue to forecast reaching adjusted EBITDA breakeven for 2026. With that, I'll turn the call back to Emily.

Thank you, Adam. As we step back and look across the business, what stands out is how consistently the pieces are coming together. At Twist Bioscience Corporation, our growth is being driven by a repeatable model. We're expanding our addressable markets with disciplined product innovation, putting more volume onto the same silicon-based platform, and converting that scale into improving financial performance. This is not dependent on a single product, customer, or market. It is the result of an NPI engine that continues to deliver, paired with operational execution that scales efficiently. We continue to introduce newer products across both DNA synthesis and protein solution NGS applications with different adoption dynamics with the same underlying outcome. More customers, more applications, and more volume flowing through the manufacturing infrastructure. This is what allows us to support growth while maintaining margin discipline and capital efficiency. Importantly, we have built this platform with significant capacity already in place. We have both continued demand without introducing meaningful execution risk. As revenue scales, the economics of the model become increasingly favorable, reinforcing our confidence in the path ahead. This is why we remain very confident reiterating our expectation to reach adjusted EBITDA breakeven in 2026. The drivers of that outcome are already visible in the business today. Consistent revenue growth, gross margin above 50%, disciplined investment in operating expenses to accelerate growth, and a scalable cost structure. More broadly, Twist Bioscience Corporation is increasingly positioned as an enabling infrastructure provider across the biological continuum from early discovery through diagnostics and into therapeutic development. Whether it is enabling AI-driven drug discovery, supporting precision diagnostics, or scaling production for applied markets, customers choose Twist Bioscience Corporation because our platform allows them to move faster, reduce risk, and operate at scale. To help investors engage more deeply with our strategy, platform, and long-term opportunities, we plan to host an investor day in May. At that time, we will provide a deeper look at our customers with our products, our product roadmap, market expansion opportunities, and financial frameworks as we continue to scale the business beyond adjusted EBITDA breakeven. We expect to provide more event details in the coming weeks. In closing, Twist Bioscience Corporation enters the remainder of fiscal 2026 with a differentiated platform, expanding markets, consistent execution, and a clear line of sight to profitability. We are focused on doing what we have consistently done: launching products, serving customers exceptionally well, and scaling the business with discipline. With that, we're happy to take your questions. Operator?

Thank you. As a reminder to ask a question, please press star 11 on your telephone. To withdraw your question, please press star 11 again. We ask that you please limit to one question only. And if you have any additional questions, please return to the queue. Please stand by while we compile the Q&A roster. Our first question is going to come from Matthew Richard Larew with William Blair. Your line is open.

Hi, good morning, and thanks for taking my questions. I want to follow up on the demand you referenced in terms of AI drug discovery. You know, Emily, talked about this being a durable opportunity, but we think about customers trying to build out a foundation model and building training models. Is that demand something you think that's measured in months or years? Or is this a reference just a new part of the drug discovery ecosystem will be the first part? The second part of that was you called out over 50,000 genes manufactured for data characterization in the quarter. Curious what that number was in the prior period and kind of how the economics of delivering data versus delivering DNA work for Twist Bioscience Corporation?

Thanks, Matt. Great question. Yeah. So we're very excited about what AI is doing for Twist Bioscience Corporation by, you know, pulling volume onto our chips and enabling us to ramp revenue and definitely, this quarter, 27% growth in DNA synthesis and protein is very much driven by AI. In terms of durability, so it's still early days but, what we are seeing is, a customer that had big orders, over the last year quarters are coming back, with other big orders. And so doesn't seem to be letting down. And, at the same time, we're adding more and more of the top 20 pharma to our platform as well as the magnificent seven as well as the start-ups that are very well funded, but where we don't have full penetration. So we see that there's a lot of growth coming. And then long term, what we think is that AI is going to become the first path. Right now, in the past, in vivo or in vitro was the question you had to ask yourself. I think AI would be the first path. It would be about probably the same cost of about $250,000 to discover an antibody. But the data will be delivered in two weeks instead of six weeks with in vivo and in vitro. And then in vivo and in vitro are still going to be important, but as a second path. As far as the 50,000 genes that we use internally for characterization, I want to call it quite a hockey stick, but it is backloaded into our Q4 and Q1. And it's the first quarter we felt we had to share the number because 271,000 genes in a quarter looks good, but actually, it's a small number compared to the actual number. Because we have more than 50,000 genes. So the trend looks good. In terms of cost, of price for the data, it kind of depends. But in general, it's $50 for a fragment, $100 for clonal genes, $200 plus for an antibody, can be $300 to $400 for the data depending on what kind of data customers want. So, definitely, as we upsell customers to data, we get a great benefit to the top line as well.

Thank you. And our next question will come from Subhalaxmi T. Nambi with Guggenheim. Your line is open.

Hi, good morning. Thank you for taking my questions. You raised guidance by more than the fiscal 1Q 2026 beat. Could you speak to where the increased confidence specifically coming for both DNA synthesis and NGS? And as we move past the single customer that created the fiscal 4Q, fiscal 1Q air pocket, are there any other single customer dynamics that you're carefully monitoring in your outlook for the rest of this fiscal year? Thank you so much.

Yeah. Thanks, Subbu. But I think you're correct. We raised guidance by more than double the beat at the midpoint. This comes from all across the board confidence. The one customer dynamic that we mentioned in NGS applications, where it passed. That customer is back. The orders are in. So we think we are set up really well in NGS. Not just that one customer, but overall. When that customer, now that that customer is back, we think there's a great setup as we look at more and more data coming from bespoke MRD enabled by Twist Bioscience Corporation at super high resolution, high sensitivity bespoke MRD. We think there's lots of need ourselves there. And then in DNA synthesis and protein solution, we have a great platform with DNA. Head to head, we win pilots and with great growth, but now that we've added protein and data on top of it, it's really meeting the moment. And we see those big customers coming back for more. So overall, the strategy that we've had, which was to add great products that all feed onto the semiconductor platform, is working. And so we'll feed the NPI engine. We'll do it again. We'll deploy commercial balance. We have a lot of headcounts open for salespeople when our competitors are laying off people and laying out salespeople. It's just we have essentially meaning in the field. And we don't expect to have other one customer dynamics in the future.

Thank you. And our next question will come from Doug Schenkel with Wolfe Research. Your line is open.

Good morning, and thank you for taking my questions. My first is a follow-up on the over 50,000 genes manufactured for data characterization. I just want to make sure that I'm thinking about it right when I think of that as being, you know, almost synonymous in pharma volume. So that's one. And then, kind of the follow-up there is I just want to make sure we understand what's in guidance for the balance of the year. So that's one topic. Sort of related to that, the second is the 271,000 genes shipped in the quarter was quite robust. That grew over 30% year over year. Can you just talk about what you're seeing competitively? And I'll leave it there. Thank you.

Harry, you want to take that one?

Yeah. Thanks for the question, Doug. Yeah. I mean, the growth you're seeing is primarily driven by, you know, the pharma segment and the interest in AI. You know, I think we're pretty clear on those numbers, and that the scale of the platform is resonating incredibly well with that customer base. I think I said in my words that when we're being approached, the typical experimental size is a few thousand genes, a few thousand antibodies, and a few thousand characterizations run in parallel, and that's where the power of a platform with, you know, scale and speed and quality and economics is very, very enabling. So that's a good start. We're starting to understand the reordering pattern of the customers. So just to echo Emily's comment, it's early, but we can see what's coming next. It's good. Then from a competitive standpoint, we, you know, we have a healthy paranoia and obsession with what's going on out in the market. We're starting to see the early benchmarking studies when customers in the segment are going to, you know, other vendors, and the data really shows how strong Twist Bioscience Corporation is compared to our competitors. We're weeks faster than the competition stands today. And just in general, on the competitive landscape, you know, we've got our eyes on our competition. We know where they are. We know what they're working on. We know where they're laying off. We know where they're resizing, restructuring. We know them at a very, very intimate level in the hand-to-hand combat of selling. But really for us, we are just relentlessly focused on our own game and we're looking to really scale and accelerate into this opportunity.

Thank you. And our next question will come from Catherine Schulte with Baird. Your line is open.

Hi, guys. This is Josh on for Catherine. Thank you for taking my question. Yeah. I was wondering if you could walk through gross margin expectations for 2Q, how that should progress through the rest of the year? And then I was also wondering, should we still bake in sequential improvement for the rest of fiscal 2026? Thanks.

Thank you. Adam, do you want to take this one?

Thank you, Josh, for the question. We really see Q1 in the 52% performance as proof that our manufacturing engine is working as intended. Our decision to hold the full-year guidance at above 52% reflects a really deliberate choice in accelerating our top-line growth rather than maximizing short-term margin expansion. We do see continued improvements throughout the year coming, in terms of the gross margin. But what we're doing now is we're both hiring the operators, adding the additional automation to ensure we can handle the higher capacity and throughput things like AI drug discovery that Patrick talked about in the call. We've also introduced several new characterizations around the clip clip and other new technologies. When we launch these products, we do it with, you know, manual processes, often cold plating them to make sure we meet the customer's needs fast. We're now automating those over time, and this investment temporarily moderates the margin expansion. That's really the right trade-off for long-term revenue growth. Most importantly, the core engine of our business hasn't changed. We continue to see 75% to 80% incremental revenue drop through the gross margin line over time. So maintaining our above 52% on gross margins is about giving ourselves the flexibility to aggressively fund the growth we see right in front of us. And we always say it, but we'd much rather build a multibillion-dollar business at a 50 plus percent gross margin than a $500 million business at 60. So thank you for the question.

Thank you. And our next question is going to come from Vijay Kumar with Evercore. Your line is open.

Hey, guys. Thanks for taking the question. This is Mackenzie on for Vijay. You talked a little bit about the strategic investments you made in the quarter, and I was just wondering if you could talk a little bit more about these investments. Why now and where specifically were the investments made? And the second question is you disclosed that the AI-driven orders were $25 million in fiscal 2025. How much of this came in the fourth quarter? And what did you see for orders in the first quarter?

Yeah. Thanks for the question. The $25 million of all the growth that we saw last year were backloaded. So some came in Q4, but some also came into Q1, meaning that the orders came in Q4, but they shipped in Q1. So definitely, some of the Q1 performance comes from that order growth that we've seen. And those customers are coming back. So there's definitely a high confidence that it's not a one-time thing. It's not a flash in the pan. It's coming back. In terms of the investment, we think of the investment in two ways. One, a more structural investment and the other are transient investments. So to give you a flavor, the structural investments are mostly in hiring of sales and commercial people. We've always had the strategy of hiring a little bit ahead knowing of what the business will need. It takes one or two quarters for a salesperson to ramp rapidly. And so we definitely want to do that, and we see a lot of good growth coming our way. So we want to make sure that we're able to capitalize on it and that we're not short on salespeople. So those are structural investments that are here to stay. And then there's some transient investments to help improve the business, mostly around our digital infrastructure. So to give you a flavor for what that is, just last week, actually, we launched our first e-commerce for NGS application business. In the past, we've always had a very, very strong e-commerce presence for the DNA synthesis and protein solution. And a very large fraction of our revenue for that product group comes from e-commerce. However, we did not have any e-commerce for NGS application. So literally 0% of our revenues. But we hired some contractors, and we made what we called a transient investment in our digital infrastructure, to launch a new channel for e-commerce, and we anticipate that that channel will be a catalyst and complementary to the salespeople we are hiring. And over time, we have the ability to taper off that investment in our digital infrastructure. Again, a contract of we decide when to turn them on and off. There's still more work to do on our e-commerce platform. So, it's not totally finished yet, but we're excited in the first phase of the launch. So, hopefully, that gives you a flavor for what we call the structural investment and the transient investment. But at the end of the day, Q4 adjusted EBITDA breakeven is a given for us now. So now it's all about growth. We have that very high confidence in growth, and how much growth can we exit in Q4. And hopefully, the guide reflects that confidence.

Thank you. And our next question will come from Brendan Smith with TD Cowen. Your line is open.

Great. Thanks for taking the questions. Maybe just another one on NGS from us. Emily, I think you referenced plans to sign additional partnerships within the diagnostic space moving forward. So I guess first from us, I mean, do you all have kind of a target number of deals you expect to confirm this year? And maybe more importantly, how material do you feel kind of new partnerships will be to the growth of NGS and maybe hitting your own internal revenue expectations over the, let's say, one to two years? Versus really just core execution and advancement of the existing partnerships you already have. Thanks.

Yeah. Thank you. That's a really important question and something that we spend a lot of time on. And actually, Patrick is our head of opening those doors for new partners. And so we think about it kind of in two ways. The first is, FY 2026 growth in NGS is going to come from existing partners. Those deals are already signed. The pilots are done. The validation and verification, it's done. And so now it's just being there for them as the volume ramps for our current investors, current partners. Make sure that our supply chain is there for them. However, when we look at the growth we're going to need in 2027 and 2028, we do need new partners for that. And we have a very sustained effort. And actually, you may remember that at JPMorgan, we split where Adam and I took investor calls, and Patrick and our CTO took the customer's call. And so we have a dual track where we're working actively to get new partners on board for diagnostics. We don't have all of the volume, but the performance that we have is very, very, very strong. The supply chain excellence that we bring, we're able to future-proof the supply chain of our partners. And so we are working on bringing more onboard. It's going well. But we don't need them for 2026, but we're counting on them for sustained growth in 2027 and beyond.

Thank you. And our next question comes from Mac Etok with Stephens. Your line is open.

Hey, good morning. Apologies if you already answered this question. My connection's a little spotty. Just looking at the performance in 1Q and the continuation of 52% gross margin guide, how are you thinking about the cadence for the rest of the year just given the level of investments that you're making in the business?

Thank you. Adam, you want to cover that question?

No. Thank you, Mac. And we did have a chance to address that question. It really reflects our confidence in the business and our ability to drive growth and the choice to invest into that. And so while we do see continued improvement in growth margin throughout the year, it'll be at a more moderated clip. As we continue to invest into the CapEx and the infrastructure and the people to accelerate the growth. And, you know, we are maintaining, giving ourselves that flexibility. Really would rather, you know, I said it before, build the multibillion-dollar business at a 50% plus gross margin. And a $500 million business at a 60% gross margin. So, we are excited. We are looking forward to moving forward, and there's no looking back. And as Emily and Patrick have also mentioned, within line of sight, we are absolutely committed and focused on making sure that in any scenario, we're at adjusted EBITDA breakeven by Q4 of this year.

Thank you. I am showing no further questions at this time. I would now like to turn the call back over to Emily for closing remarks.

Thank you for joining us today. Twist Bioscience Corporation's growth is built on a repeatable, scalable model. Our innovative technology, increased platform volume, operational rigor, and commercial prowess are translating to improving financial performance. This is not driven by one product, customer, or market, but by a durable NPI engine and execution that scales efficiently. We remain confident in our ability to drive sustained growth. Thank you.

This concludes today's conference call. Thank you for participating and you may now disconnect.