Twist Bioscience Corporation (TWST) Q3 2026 Earnings Report, Transcript and Summary

Welcome to Twist Bioscience's 2026 Third Quarter Financial Results Conference Call. [Operator Instructions] Please 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'd like to thank you for joining us for Twist Bioscience's Conference Call to review our fiscal 2026 third 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'll 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, and the audio portion will be archived in the Investors section of our website and will be available for 2 weeks. During today's presentation, we will make forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today as well as those more fully described in our filings with the 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 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. On Slide 3, you will see that this morning, we reported our 14th quarter of consistent growth with record revenue of $118.4 million, growth of 23% year-over-year. This growth reflects the diligence and execution we have employed over the last several years, building for opportunities we see ahead. Sometimes those opportunities are clearly visible many years in advance and others require us to be nimble and engage with our customers in real time to ensure we build and deliver what they need to be successful. On Slide 4, you'll see that at Twist, we sit at a unique junction where we have spent the last decade building the infrastructure to enable our customers to advance the therapeutics, diagnostics and industrial breakthroughs resulting from the innovation. As biology becomes increasingly computational, our ability to deliver precision and speed at scale becomes even more valuable. On Slide 5, I'm sure you agree that AI is shifting workflows across multiple industries. And we see an inflection point in drug discovery with more and more groups leveraging AI as their first antibody discovery screen. Where 1 year ago, just a handful of organizations were pursuing this path. Now we have seen large pharma, dry lab biotech, traditional biotech and even major technology companies all employ AI through [indiscernible] approaches, following the pattern of design, build, test loop. Our customers can now design more sequences, test more hypotheses and iterate faster than ever before. In parallel, we also see the benefit of data and genetic information resulting in diagnostic assays that monitor, select and determine next steps for a wide variety of diseases. Turning to our product groups. Over the past year, we've talked about AI-enabled discovery as an important emerging opportunity. Today, we are seeing that opportunity mature into a durable growth engine. We continue to support customers in building new models, while others are using Twist to conduct discovery for specific therapeutic targets and to iterate models. This combination of repeat business, new customer acquisition and new organizations forming or expanding into the life sciences area gives us increasing confidence in the durability and longevity of AI-enabled discovery as a growth driver for the short, medium and long term. On Slide 6, the promise of AI-enabled drug discovery is straightforward: identify better drug candidate faster, reduce the cost of bringing new medicines to market and improve the probability that candidates entering development ultimately succeed. On Slide 7, you'll see the workflow where our customers use AI to computationally generate thousands to millions of potential DNA sequences and iteratively refine those designs to identify the most promising therapeutic candidates for a specific disease. Twist quickly translate those digital designs into physical biology through high throughput DNA synthesis of individual or pool DNA followed by protein expression. Many customers then leverage our downstream capabilities to evaluate those proteins across assays measuring binding, developability, characterization and other properties associated with successful drug candidates. We enable rapid design, build, test and learn cycles at the earlier stage of discovery, supporting our customers' ultimate objectives. When seeking a partner for this work, every customer needs a trusted provider capable of manufacturing increasingly complex DNA sequences, accessing protein, generating high-quality characterization data and delivering consistent results at the speed modern drug discovery requires. This combination of capabilities has become one of Twist's most important competitive advantages. At our Investor Day in May, we guided to triple-digit percentage order growth for AI-enabled discovery in fiscal 2026 versus fiscal 2025. Now that we are through the third quarter of the year, we're increasingly confident that we will meet or exceed that target. Our confidence reflects durable demand signals as existing customers return for iterative design, build, test learn cycles, reflecting growing recognition that our platform is well suited to support AI-enabled drug discovery programs as well as traditional drug discovery. Importantly, our funnel of opportunities continues to expand meaningfully, and we believe that we have the potential to again post triple-digit percentage order growth for AI-enabled drug discovery in fiscal 2027 when compared to fiscal 2026. Turning to Slide 8. During the quarter, our platform again demonstrated its importance in supporting global public health. On May 15, 2026, public health officials in the Democratic Republic of Congo announced a developing outbreak of hemorrhagic fever. The outbreak went undetected for at least a month, escaping standard PCR assays, a gap that allows the virus to spread further before it could be identified and contained. As of July 1, the virus has been confirmed in both the DRC and Uganda with an estimated spread to several thousand people and at least 399 confirmed death. Approximately 1 month into the outbreak, researchers used Twist comprehensive viral panel to identify the pathogen as the Bundibugyo Ebola virus, underscoring the value of whole viral genome enrichment to catch emerging infectious diseases that standard testing missed. Separately, we also synthesized hantavirus material in less than 24 hours to support rapid response efforts during the cruise ship outbreak in May. These are powerful examples of the breadth, speed and reliability of our platform and of our role in the global research and public health communities. On Slide 9, we continue to see strong accelerating momentum for our NGS applications group, driven primarily by diagnostic customers, many of whom are focused on growing their commercial volumes with others advancing towards commercialization. We have our eyes on several new opportunities as the pipeline remains rich for next-generation assays tumor-informed molecular residual disease tests to optimize workflows using proprietary enzymes and more. During the quarter, we increased customer adoption, strengthened our commercial pipeline and continue to execute on new product introductions to reinforce our position as a trusted partner for next-generation sequencing workflows. As sequencing volumes continues to grow globally, we believe our differentiated technology and expanding portfolio positions us well for continued growth. We continue to see customers come to Twist when scientific precision and rapid execution matter most. This holds true when we are supporting academic research, cancer diagnostic, agricultural biotech responding to emerging infectious diseases or many other work streams. On Slide 10, one of the highlights of the quarter was hosting our Investor Day at our fab in Wilsonville, Oregon. Many of our customers shared how Twist products and services play a critical role in their internal workflows, providing tangible examples across multiple markets and applications. In addition, several Twist leaders showcased their expertise and leadership throughout different areas of the business. As Twist has grown, we have built an organization designed to repeatedly convert scientific innovation into commercial success. Great science creates opportunity. Operational excellence turned that opportunity to durable revenue growth, expanding profitability and long-term value creation. That requires manufacturing discipline, commercial execution, digital capabilities and above all, an exceptional team. Investor Day gave us the opportunity to demonstrate the strength of that foundation through our leadership bench, differentiated technology, highly automated manufacturing, expanding capacity and the proprietary software that powers our business. The consistent feedback we received was that investors left with a broader appreciation of the scale of our opportunities, the strength of our execution and the depth of our organization we have built as well as the reality of the growth opportunities that lie ahead to drive confidence in our long-term trajectory. For me, Investor Day reinforced something I've believed since founding Twist. We do things the Twist way, and this is not easy path. When someone says it's hard, I say, "Yes, that's the point." If it were easy, everyone will be doing it. Building what has never existed before requires relentless innovation, disciplined execution and clear communication. What began as a funding principle has become how Twist operates. It's embedded in our systems, our processes and more importantly, our people. That's how we scale innovation consistently, build trust with customers and investors, strengthen our competitive advantage and create long-term shareholder value. With that, I'd like to turn the call over to Paddi, who will discuss our competitive moat, how we are executing against our priorities and why we believe the operational foundation we've built positions Twist for its next phase of growth.

Thanks, Emily. Good morning, everyone. One of the things I enjoyed most about Investor Day is that people got to see Twist from the inside. We didn't just see the products, we saw how we operate. Twist's core technology differentiation 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. However, as Twist has grown, one thing has become increasingly clear to me. You'll see on Slide 11, our competitive moat expands well beyond our robust IP position around the chip into a complex infrastructure for manufacturing, automation, software, commercial execution, product development, customer engagement, scientific innovation and critically, the customer experience all reinforce one another. Every improvement we make strengthens the platform. Every new capability benefits multiple parts of the business. Every automation project improves quality, productivity and throughput and every customer we add helps make the platform stronger. It's something we've been building deliberately for years. It's also why I believe our advantage continues to expand. Customers are looking for a partner that can help them move faster, and we're becoming more deeply embedded in our customers' research and development activities. That creates more durable relationships and over time, a stronger business, and that doesn't happen without exceptional and consistent execution. Every day, our teams are focused on delivering exceptional quality, increasing productivity, expanding capacity and reducing turnaround time. These priorities don't change. There's no finish line, and we measure ourselves by how consistently we improve. On Slide 12, I talked earlier about our silicon chip shown on the left. It's been the foundation of our commercial manufacturing platform since 2015. By miniaturizing known phosphoramidite chemistry and dramatically reducing reagent consumption, our economics have always been strong as we created structural advantages in cost, scale and throughput that extend across our entire portfolio. Just as importantly, we continue to improve that platform, as shown on the right side of the slide. Over the last 3 years alone, we've reduced manufacturing costs by 60%, reduced waste by 70%, reduced turnaround time by roughly 73% and increased oligonucleotide capacity fourfold. Those gains improve our economics, strengthen our competitive position and create additional capacity to support future growth. Over the past several years, VC firms invested heavily in alternative DNA synthesis technologies. The marketing is compelling, but commercial success depends upon much more than chemistry. It requires molecular quality, reproducibility, manufacturing scale and continuous operational improvement. We believe our platform and our track record continue to set the standard. Our leadership in the field is one of the many things that gives us confidence in the long-term opportunity. Our investments aren't tied to one product cycle. They're strengthening the foundation for everything we build next. That's how we think about creating long-term value. We do not optimize for a single quarter. We focus on building a stronger company every quarter. On Slide 13, another tangible example of continued improvement leading to a specific product launch. Last quarter, I talked about an early access launch of our complex genes offering, extending the range of DNA sequences, researchers can order from Twist. Complex genes are highly challenging constructs that have historically been out of reach for most platforms to synthesize consistently because of high GC content, repetitive elements or other complex characteristics. Today, we manufacture these sequences with the same automation, the same manufacturing line as part of our standard and express gene production workflow with the consistent speed, scale and quality customers expect from Twist. Early customer adoption has been very encouraging. During early access, we've worked with a select handful of customers who have ordered more than 1,800 complex genes across well over 100 orders and the execution has been superb. We've completed the overwhelming majority of these highly complex constructs in 12 days within our expected delivery window. That matters because it's one thing to produce a complex sequence once in an R&D environment. It's something entirely different to manufacture thousands of highly complex constructs repeatedly at commercial scale with consistent quality. While complex genes represent a relatively specialized market today, our execution demonstrates that we continue to expand the boundaries of what customers can manufacture on the Twist platform using the same highly automated production infrastructure. Each new capability increases the value of our platform, expands wallet share with existing customers and further differentiates Twist from competitors. At Twist, we focused on automating and operationalizing any new product offering within our manufacturing workflow so that what we can do for one customer, we can deliver for thousands of customers with consistent quality, speed and precision at scale. Two weeks ago, we launched our complex offering formally, expanding availability broadly across the market. In summary, we believe our silicon platform, automation, software and manufacturing infrastructure uniquely position us to serve a wide range of customers across industries, creating a competitive moat that would be exceptionally difficult to replicate. With that, I'll turn the call over to Adam to review our financial results.

Thank you, Paddy. Turning to Slide 14. Q3 was another quarter of consistent execution against the financial model we've laid out. Revenue grew 23% year-over-year to $118.4 million, our 14th consecutive quarter of sequential growth. We focused on growing the top line while maintaining our commitment to adjusted EBITDA breakeven for the fourth quarter of fiscal 2026, and we understand that growth of 20% or more significantly differentiates Twist among our peers. Gross margin was 52.8%, growth of 120 basis points sequentially, with 70% of incremental revenue dropping to the gross margin line. Let me walk you through the details. On Slide 15, you'll see DNA synthesis and Protein Solutions revenue increased to $56.6 million compared to $40.8 million in the third quarter of fiscal '25, growth of 39% year-over-year and 6% sequentially. We shipped 369,000 genes in the third quarter, plus consecutive quarter-over-quarter growth in genes manufactured for data characterization. On Slide 16, we show NGS applications revenue for the third quarter grew to approximately $61.8 million compared to $55.3 million in the third quarter of fiscal 2025, an increase of 12% year-over-year and up 8% sequentially, driven by growth in top accounts. For the quarter, revenue from our top 10 NGS applications customers accounted for approximately 48% of NGS applications revenue. We served 657 NGS applications customers in the quarter with 182 having adopted our products. Looking geographically on Slide 17. Americas revenue increased to approximately $77.3 million in the third quarter compared to $59.4 million in the same period of fiscal 2025, growth of 30% year-over-year. EMEA revenue rose to $33.6 million in the third quarter versus $30.7 million in the same period of fiscal 2025, growth of 9% year-over-year. APAC revenue increased to $7.5 million in the third quarter compared to $5.9 million in the same period of fiscal 2025, an increase of 26% year-over-year. On Slide 18, looking at revenue by industry. Therapeutic revenue was $40.4 million for the third quarter of 2026 compared to $27 million in the same period of fiscal '25, growth of 49%, reflecting the increased uptake of our products by pharma, dry lab biotech and large tech companies in their efforts on therapeutic discovery and including AI-enabled drug discovery. Diagnostics revenue was $43.8 million in the third quarter of 2026 compared to $38.1 million in the same period of fiscal 2025, an increase of 15%. Diagnostics revenue grew 10% sequentially based on strong growth in top accounts. Industry and applied revenue were $5.7 million in the third quarter of 2026 compared to $6.1 million in the same period of fiscal '25. Academic and government revenue were $15.5 million in the third quarter of fiscal '26, an increase of 32% year-over-year and 21% sequentially, driven by strength in U.S. accounts where we saw several large customers return during the quarter. The environment remains dynamic and order patterns may fluctuate, but importantly, our outperformance this quarter for academic and government demonstrates the resilience of our business, the depth of our customer engagement and the growth of this customer group. Global supply partner revenue was $12.9 million in the third quarter of 2026 compared to $13 million in the same period of fiscal 2025. This revenue stream continues to provide a stable recurring revenue base while our faster-growing therapeutics and diagnostics product groups drive overall company growth. Moving down the P&L to Slide 19. You'll see our key financial metrics. Our gross margin for the third quarter was 52.8%, up sequentially and driven by strong revenue growth even as we continue to make deliberate investments in new product offerings and manufacturing capacity that we expect to result in future margin gains as we accelerate growth and implement continuous process improvements. Operating expenses, excluding cost of revenues, were $98.7 million for the quarter compared to $81.4 million in the prior year, which includes approximately $2 million in employee transition costs as well as other onetime expenses that will result in more than $5 million reduction in OpEx in the fourth quarter. Looking at our progress on our path to profitability and progress towards breakeven on Slide 20. For the third quarter of fiscal 2026, adjusted EBITDA was a loss of approximately $11.3 million, reflecting planned onetime investment. We ended Q3 with $166.8 million in cash, cash equivalents and short-term investments versus $171.7 million as of March 31, 2026. On Slide 21, turning to guidance. For fiscal '26, we are increasing our revenue guidance and now expect total revenue of $456 million to $457 million, up $12 million at the midpoint, representing growth of approximately 21% year-over-year. In the third quarter, total revenue growth reflected above 20%. Based on customer demand, our current funnel and order growth, we expect momentum to continue and look forward to sharing full year guidance for fiscal '27 in November. For Q4 of fiscal 2026, we expect total revenue of $123 million to $124 million, growth of approximately 25% year-over-year at the midpoint. We expect sequential growth from both DSPS and NGS. We expect DSPS sequential growth to be driven by therapeutics and NGS to return to growth above 20% year-over-year. While into our final quarter of the fiscal year, we remain confident in our trajectory and continue to expect to achieve adjusted EBITDA breakeven this quarter. Our focus is now on sustaining that performance and continuing to execute against long-term financial objectives throughout fiscal 2027. With that, I'll turn the call back to Emily.

Thank you, Adam. I'd like to give you with one final thought. When Twist was founded more than 13 years ago, our goal wasn't simply to build a better way to synthesize DNA. It was to remove barriers that slow scientific discovery. That vision is working. Today, our platform is enabling advances across cancer diagnostic, AI-enabled drug discovery, synthetic biology and academic research. We have translated the mission into durable business performance, delivering 14 consecutive quarters of revenue growth, expanding gross margin and remaining on track to achieve adjusted EBITDA breakeven this quarter. And yet, I believe we are still in the early chapters. Biology is becoming increasingly digital, data-driven and AI-enabled. Scientists are asking bigger questions, designing more complex molecules and moving faster than ever before. Those trends play directly to Twist's strength and reinforce our confidence that the opportunity ahead is substantially larger than the one we set out to address 13 years ago. Importantly, we continue to execute against our plan to deliver sustainable profitable growth. As we look ahead, we are confident not only because of the opportunities in front of us, but because of the foundation we have built to capture them. And we continue to see multiple durable drivers of growth, as you'll see on Slide 22. AI-enabled drug discovery continues to expand. Molecular residual disease continues to grow in application with the reimbursement environment expanding. We see opportunity to introduce proprietary enzyme in our workflows and our internal processes to optimize performance and cost as well as reduce our dependence on suppliers. And in the longer term, we believe nucleic acid therapeutics provides a personalized diagnostic and therapeutic approach that will improve patient outcomes and positively impact the health care system. With the growth across the market we serve expanding, our serviceable addressable market is projected to be $13 billion by 2030. In addition, our innovation engine will continue introducing new capabilities that we haven't mentioned here today, expanding that upside opportunity. On Slide 24, you will see that we feel confident in our ability to drive continued growth moving forward. Specifically, we've just delivered our 14th consecutive quarter of revenue growth at 23% growth year-over-year. We believe we have a strong growth trajectory to more than double revenue from organic growth in 2031. We guided to $123 million to $124 million for the fourth quarter of fiscal 2026, growth of approximately 25% year-over-year. Based on customer demand, our current funnel and order growth, we expect momentum to continue. We expect to meet or exceed our guidance of triple-digit percent order growth for AI-enabled drug discovery in fiscal 2026. Based on our robust funnel, we expect to again deliver triple-digit percent growth for orders from AI-enabled drug discovery in fiscal 2027. We expect gross margin above 52% for fiscal 2026 with a goal of margins of more than 60% as the business matures. We expect to achieve adjusted EBITDA breakeven for the fourth quarter of fiscal 2026, and we expect to maintain this commitment for fiscal '27. And we will continue to meet our customers where they are, enabling them to truly change the world for the better. At this time, let's open the call for questions.

[Operator Instructions] Our first question comes from Brendan Smith with TD Cowen.

Congrats on the quarter. I wanted to first ask actually just about the relative breakdown of FQ3 revenues. I know you talked a little bit about this already, but it looks like therapeutics revenues were incrementally down sequentially. The volumes do look good. So I guess just any additional color there on some of the ordering dynamics we should maybe be aware of? And then on the new FY '27 outlook, repeating triple-digit AI growth next year, I appreciate all that as well. I guess, is that based on -- I know you said the funnel, but is this kind of based on some visibility into orders already coming in? Is this kind of reflective of ongoing conversations you're having, any particular inflections in the type of quality of orders over the next year or so? Just kind of any color you can give us to support durability on that scale would be great.

Thank you, Brendan. So we're very excited about this quarter. We're seeing a lot of strength from existing customers as well as new customers coming in. Obviously, we had a growth of more than 20%, and we are guiding growth of more than 20%, almost 25% for Q4. So things are going really well. In AI-enabled discovery in particular, there's a few things happening. First, customers that have built their model are turning the crank. And then we are seeing new customers coming on top of that. And then even the existing customers that have been turning the crank now are starting to look at new modalities. So you might see people coming in with just a VHH and then expanding to a full IgG. And people are not quite broadly talking about AI for bispecific, but we know its coming. So talking to customers looking at the quotes we are giving them, the number of sequences that they have in mind that they want to build either as full DNA or array DNA give us very, very strong confidence that triple-digit percentage growth that we see in AI-enabled drug discovery that we know we're going to be able to deliver in 2026. We see it continuing again from those...

Our next question comes from Puneet Souda with Leerink.

I'll wrap my questions in one. So look, on the gene shipped, you're seeing quite a bit of acceleration here, 56% growth. But wondering why is the protein segment growing only 39%. Just wondering if there is any pricing or ASP compression that you're seeing. And I think the bigger question here is that you're pointing out triple-digit growth this year, next year triple-digit order growth again for AI. But how is the AI order to revenue conversion? I think that's a key question we're getting. And for Adam, on adjusted EBITDA, if you could, could you double-click on that and provide us how do we get to adjusted EBITDA breakeven in fourth quarter and keep that sustained or higher in fiscal '27?

Yes. Thanks, Puneet, for the great question. the number of genes is growing massively, which is great, right? I think for us, we can process them easily on our automated systems and be very hard for anybody else to absorb that kind of revenue growth. So the therapeutics business grew 49% year-over-year, so very much in line with the growth of genes. It's correct that DSPS grew 36%. I think that as the volume growth comes primarily from antibody type sequences. As you know, those sequences are shorter than maybe plant genes. And so as we see the growth coming primarily from Human Therapeutics, there is a shift to smaller genes, which is totally fine with us. But the key is AI is doing exactly what we thought it would do. It just creates more sequences. And I mentioned is that biology is becoming more digital, more data-driven and more AI enabled. And that just brings more demand for more and more sequences, and we're absolutely seeing it in our data. Adam, do you want to take the second question?

No, absolutely. So thanks for the question, Puneet. In terms of order to revenue recognition, we're noticing, particularly with AI-drug discovery that the time line for projects are usually measured in weeks. So at the end of last year, when we had a pretty significant order step-up towards the end of the fiscal year, we saw there was some separation there. But as we go into '26 and look towards '27, the 2 metrics converge pretty nicely. The other question in terms of adjusted EBITDA and the path and the bridge to Q4 and beyond. No, great question. And we've been very disciplined over the last number of years with how we've managed the business and our investments and we continue to do so. And so as we look into Q4, we had the one-timers associated with some of the employee transitions in Q3 as well as some continued investment in our new digital capabilities that we've here launched in Q4. So we expect to see sequential improvements in the OpEx moving forward starting in Q4 just that we see the path to adjusted EBITDA positive in Q4 and then being able to continue to make progress on that in '27 and beyond. Thank you very much.

Our next question comes from David Westenberg with Piper Sandler.

And maybe I'll just add on to Puneet's question on the EBITDA bridge. I appreciate the color there. Do you expect 2027 to have continued momentum in 2027 with that EBITDA bridge, i.e., do you think that you could stay EBITDA positive throughout? Or do you think it's going to be quarter-on-quarter, but the year you're really focusing on that EBITDA? And then kind of for a second question, I was hoping you can give maybe some color on the new product mix in NGS, particularly around some of your new whole genome offering and then maybe some of the more expansive or faster-growing new products from customers in NGS. I mean I'm thinking about SHIELD, but any other ones like that, that could be just incredibly high growth potential and how they did?

Thanks, David. Great to have you. Thanks for initiating and for your third double questions. I'll extend it to Adam for your first one on the adjusted EBITDA momentum and then Paddy for the new in NGS.

David, great to hear you on the call. In terms of our commitment, we've said we're going to give full year guidance in November, and we plan to give a robust outlook. We're not in the business typically of going backwards, that being said. And so we look at our full year adjusted EBITDA this year, improving year-on-year to being positive for the year, and we look to make sequential improvements wherever possible. We also recognize we love our employees and give them a raise at the beginning of every fiscal year. So we're going to balance that. We'll give a full guidance in -- as we approach November. And then also in terms of how we look at the business long term, very positive progress on both the growth trajectory as well as the commitment on continued progress and profitability.

Just building off what Adam was saying, just coming over to your questions on product in the NGS space. From a workflow standpoint, it's a good time just as a reminder on how we've built out some really well differentiated enzymes using AI-driven discovery and development methods. They're critical in whole genome and other workflows is high-performing ligase and high-fidelity, high-performing polymerase, both of which are featuring in our kits, which are benchmarking incredibly well, both internally and in our customers' hands. So that's a long-term commitment to enhance our customers' success in their experiments, and it's going to be an ongoing drive into the market. And if I move across into the emerging applications that we're excited about, I'll just call out MRD again, so molecular residual disease. Obviously, we have workflows for any approach. But in particular, maybe just spend 30 seconds on the tumor-informed platform. What you're seeing there, obviously, is a correlation between increasing probe count derived from knowledge gain from sequencing the patient's tumor leading to higher sensitivity tests and therefore better patient outcomes. And we see demand continue to increase. And if I just go way, way back to talking about something like our current capacity of something like 72 million oligos per day, if you can imagine a situation of hundreds of thousands to millions of tests in the future, all demanding thousands of probes tumor informed delivered to a patient in -- sorry, delivered to a service lab or to a hospital or wherever a customer is in a very, very short period of time. And by that, I mean a couple of days max, we're pretty excited about where that segment is going. It's another beautiful application of our synthesis platform. [

Our next question comes from Subbu Nambi with Guggenheim.

AAs we get closer to 2027 fiscal year, do you have any preliminary thoughts on '27 growth outlook? I know you said you'll provide us full guidance. But then you touched on this a little bit about 20% growth for both NGS and DSPS. Is that reasonable? And if yes, this would be above your LRP of mid-teens growth? And then I had a clarifying question. You had $25 million AI-related orders in '25, even assuming 100% as bare minimum triple digit, that would be $50 million. And now you're confident that $50 million growing to $100 million. Did I get that right?

Yes. Thank you, Subbu. Yes, you got that right. That's some sort of clarifying comment. In terms of long-term growth, we think that overall the trends are in our favor. Paddy just mentioned the trends in MRD where I won't fully repeat his comment, but basically what we're hearing is for high sensitivity, people want more probes. And in order to be able to be fit in the window, for the therapeutics, it needs to be delivered fast. That's basically what we've built is the speed of delivering thousands of probes with in vitro expression. We think that trend there is going to be a very, very strong sell into new win. In terms of AI story, it's just incredible the business is peaking through on all the cylinders. What last year or a year ago was a big order in DSPS and now, they're a regular model. And really, we've seen a change in the order pattern, where we are seeing just big chunky orders and then speakingto customers in what they need going forward. We've heard about the model for those AI bots needing more and more data points. It's the same for every story. There's a growing number of data points are needed, and we can feel that hunger for data points. That's great for us to deliver. We deliver high throughput synthesis, expression, and characterization, and so we're going to be there to serve our customers. overall -- and we're not guiding to 2027. But Q4, we're guiding to a very, very strong Q4. We're guiding to fiscal '26 year above 20% growth. We're guiding to adjusted EBITDA breakeven in Q4, and we couldn't be more excited about what's to come. Again, the Twist platform is really meeting the moment of what our customers need both on the NGS and the DNA Synthesis and Protein Solutions side.

Our next question comes from Kyle Mikson with Canaccord Genuity.

Congrats on the 49% growth in therapeutics, very impressive. However, as was mentioned earlier, the revenues were down or kind of flat quarter-to-quarter. There was some competitive actions taken by other vendors in the field. There was some discounting, I believe. Is that having any impact on the therapeutics and the AI for discovery business at all? And then secondly, Adam, you raised the guidance by $10 million or so. The beat was $4 million. Where are you expecting this outperformance in fiscal fourth quarter to come through among the different industries and the products?

Yes. Thanks, Kyle, for initiating and the question. Yes, 49% growth quarter-over-quarter is outstanding. We are raising the guide by $12 million, which is 3x the beat. So obviously, there's a lot of confidence. Maybe I'll step back to one sentence that Paddy said in his remarks, which really encompasses the Twist, which is that we do not optimize for a single quarter. Instead, what we're doing is we are focusing on building a stronger company every quarter. So we have our eyes firmly looking ahead. Frankly, no worries about competition at all. The kinds of numbers in terms of thousands of sequences that people need in an array format, or the millions that people need in a pool format, I don't know if there's any other platform that actually can deliver that kind of numbers. So for us, we're not really worried about competition. It's about being there for our customers, hearing what they need, and meeting their flexible data point target. And we think we're doing really well. And as people start to expand to new modalities, again, a lot of the AI so far has been done for VHH, and we're starting to see IgG. As people are going to new modalities, as more customers that maybe a year ago were on the sideline, now squarely engaged. Again, we would not guide to a triple-digit percent growth on AI-driven discovery for 2027 again, as I've leaned on in 2026, without very strong comparable customers. So full speed ahead.

Our next question comes from Matt Larew with William Blair.

You provided some details on customers who have sort of progressed from model building to crank turning and then expansion of their overall work. I'm curious if you can maybe speak more to the new customer activity that you've seen over the last 12 months. And if there's any way you can help us put a number or a direction on the number of customers still sort of just starting or getting into AI-drug discovery as part of their workflow today. That's the first part. The second is related, which is when we were at the Investor Day, it was clear that one area of physical investment you were making was broadening the data -- the capabilities to serve data characterization. And would just be curious if you could, again, sort of put any numbers on how that business is growing, demand, what kind of services you're going to ask for there, that would be helpful to contextualize the order growth for next year.

Yeah, thank you. Thank you, Matt. The growth for next year is anticipated to be very broad-based. We are actually adding capacity now ahead of the demand in the data characterization. As you know, the capacity that we have on the DNA synthesis and protein expression is really outstanding and ahead of what people need. And so we know that the data piece is very exciting for our customers. They don't have to be the lab. They don't have to worry about maintenance, about calibration, about machine-to-machine reproducibility. We take care of all of that. So being able to have a one-stop shop where you give sequences, thousands of sequences, and the target that you're interested in, and being able to get data is very appealing. At the same time, we are a custom business. Our customers want different things, different blend of tests, different conditions, different buffer, different solution. And so our platform is built for that as well. To your question in terms of where will the growth come from, frankly, it doesn't really matter. We don't really care. We will be there for wherever the science takes our customer. At the same time, we anticipate that a lot of it will come from the data side.

Our next question comes from Mac Etoch with Stephens.

Maybe just to clarify, sorry my connection's maybe a little bit spotty, so if you answer this, I apologize already, but the change in expectations from 3Q to 4Q implying a sequential step up in DSPS now. Can you just double tap on the drivers that you're looking at there and what's changed in how you're looking at that from the past quarter and now in 3Q?

Adam?

Thanks for the question. So in terms of the guide for Q4, we are expecting sequential growth in both DSPS and NGS applications. We continue to see both strength continuing in the diagnostics space sequentially as well as in the therapeutics, often driven by the AI-drug discovery. As we look at that strength continuing, it's really a testament to the pipeline of opportunities we see. We see growth both in terms of the new customers coming in as well as in the repeat business across the DSPS and the AI-drug discovery space.

Our next question comes from Vijay Kumar with Evercore ISI.

Emily. My first question was, getting back to those AI orders, I think in the past Twist has necessarily had its short order cycle, right? Shorter duration order cycle. I'm curious on commenting on fiscal 2027 triple lead AI orders. That implies a lot of visibility. Maybe could you elaborate what is different about AI that gives you this longer-term visibility versus the typical order book, which seems to be more shorter cycle?

Yes. That's a great comment. It's true that you're 100% correct that in the past, we talk to pharma companies, and they will send us some sequences, and we will not -- we will ship them very quickly, we'd get paid. We didn't always have visibility as to when the next batch would be. I think for AI, it's a little bit different, because now we are thinking about very, very big numbers. Now we have all from the DNA Synthesis and Protein Solutions side that's similar from what we are getting in the NGS side. When you're thinking about big numbers, millions of dollars, and now you need an MSA and there's some discussion up front of what do they need, in a way it's more our customers making sure that convincing themselves that we have the capacity to do. So they are a lot more transparent in what they need. And then once the order comes in, again, those are our big numbers. There's a lot more engagement and transparency on their side with what they're going to do with it, what the next batch is coming in. And so in some ways, we have been much more engaged in the science of what our customers are doing than we were before, where we were, "Just a DNA provider or just a sequence provider." Now we've moved to the next level of providing a solution. And they're talking to our CSO, probably start with a drug discoverer, right? It's a much higher level of engagement, and that's why we have more visibility than we had before.

Our next question comes from Luke Sergott with Barclays.

Just a couple cleanups. Did you already call out the amount of AI revs you guys had in the quarter, or what's embedded for the full-year guide? That's my first one. The second one is more, we're getting more, I guess more, not pushback from the market, but just more interest in the market from GenScript TurboCHO. We're hearing about that side as we're doing more work on the AI labs and like what this could mean for you guys, but we're also hearing them come up more in conversations given the cost. And they have a different scale than you guys. Talk about where you see the competitive dynamic shaking out, what you would need to do from a scale or turnaround time, anything that you guys can do there to continue to win share and own the market.

So I'll start and then I'll pass the question to Adam on the financial question. We don't worry too much about the competition, frankly. We try to hear what customers want and then do that. But at the same time, having a healthy paranoia and looking over the shoulder is important. I think in this case, it's a bit different. We started as a DNA company. And we didn't have 18 months ago, we didn't have a big presence in protein. And through the engagement with customers, we understood that they needed protein and data. And so over the last 18 months, we built something that we think is pretty unique. And in some ways, we are leaping ahead of GenScript because we don't believe they have the same data capacity and capabilities as we are. So in some ways, we are the disruptor, not the other way around. TurboCHO has been around for a long time. And frankly, our customers don't care what kind of CHO you use. They want to know what data capability we have? What capacities we have? And what speed we can deliver that data? And so it's not the differentiation is not around the CHO that we're using, the differentiation is around the breadth of the menu, the flexibility in the condition that those datasets are being produced. And then very importantly, the end, how many sequence can I take? If you're talking about millions of data points in a pooled assay, I think we are unbeatable there. If you're talking about tens of thousands of sequences in an array format, I think we're also pretty unbeatable. If you want 5, 10 sequences, you have a choice of supplier. But for large numbers, I think we're in a very, very good position. Adam?

In terms of AI orders and revenue, I hit on it earlier, but if you look back a year ago at this time, in Q4 of 2025, we had a record order from an AI-drug discovery project that really made the cutover at the end of the fiscal year, some of that order drifted into revenue recognition into Q1 fiscal '26. Looking at '26, the time lines are much more lined up just that the progress has been smoother, and we've had a broader base of customers upon which to grow on. And we're seeing that the orders and the revenue are much more lined up with each other. We -- although we haven't given specific breakouts for AI-drug discovery quarter-on-quarter. I point everybody to the progress in therapeutics and really the outsized growth in therapeutics, primarily being driven by AI-drug discovery. So looking forward into '27 and beyond, we'd expect the revenue and the orders to be more lined up like they are in '26.

Our next question comes from Robert Bamberger with Baird.

Academic and government went from 3% growth last quarter to 32% this quarter, and up pretty nicely sequentially. So any change in what you're seeing in academic, and I guess what caused those outsized gains? And then any commentary on the academic promotions as well?

Paddy?

The academic segment, good quarter. Team executed well. It remains a dynamic environment, and we'll continue to execute well into that segment. And our value proposition continues to resonate. You imagine a budget-constrained environment, cost, speed, quality tends to more shots on goal for your budget and resonates well. It's something that it's a segment we've underserved through the history of Twist. And Express Genes and promotions into the segment continue, and we're just focused on, like all of our customers, delivering a really fantastic customer experience, because once you're on the platform, you're not going to go back to pay more for slower product. We'll continue to execute day by day, and we'll look to continue our strength in that segment.

Thank you. I'm showing no further questions at this time. I'd like to turn the call over to Emily Leproust for closing remarks.

Thank you for your questions. The story this quarter is simple. Customer demand continues to strengthen. Our execution continues to deliver and the platform we've built over more than 10 years that we've been doing this is creating an advantage that continues to widen. We remain confident in our trajectory and excited about the opportunities ahead. Thank you.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.