Twist Bioscience: AI Drug Discovery Orders to Double Again in Fiscal 2027 as Therapeutics Revenue Surges 49%
Q3 fiscal 2026 earnings call, August 3, 2026
Twist Bioscience delivered its fourteenth consecutive quarter of revenue growth, posting $118.4 million in the third quarter of fiscal 2026, up 23% year-over-year, and raised full-year guidance to $456 million to $457 million, three times the size of the quarter's revenue beat. The more consequential disclosure came on the outlook for artificial intelligence-driven drug discovery, where CEO Emily Leproust told investors the company now expects to repeat triple-digit percentage order growth in fiscal 2027, on top of the triple-digit growth already guided for fiscal 2026.
AI Discovery Orders Set to Double Again, With Longer Visibility Than Usual
The most significant new information from the call was management's confidence that AI-enabled drug discovery orders will not just sustain but repeat their explosive growth trajectory into fiscal 2027, a call that goes beyond what Twist had guided at its Investor Day in May. Analyst Vijay Kumar of Evercore ISI pressed management on how a company known for short order cycles could offer such long-dated visibility. Leproust's answer offered a window into how the AI drug discovery relationship differs from Twist's legacy pharma business. "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... 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. It's a much higher level of engagement, and that's why we have more visibility than we had before," she said.
CFO Adam Laponis added color on the order-to-revenue conversion dynamic that analysts have flagged as a risk given the lumpiness of prior AI-related orders. He noted that a year ago, a record AI-drug discovery order landed at the tail end of fiscal 2025 and spilled into fiscal 2026 revenue recognition, creating a timing mismatch. Going into fiscal 2027, he said, "the orders and the revenue are much more lined up with each other," a sign that the AI discovery business is maturing from one-off deals into a repeatable, forecastable revenue stream.
Therapeutics Revenue Jumps 49%, But DSPS Growth Decelerates on Mix Shift
Therapeutics revenue reached $40.4 million in the quarter, up 49% year-over-year, reflecting pharma, dry-lab biotech and large technology companies expanding their use of Twist's platform for AI-enabled discovery. However, analysts including TD Cowen's Brendan Smith and Canaccord's Kyle Mikson flagged that overall DNA Synthesis and Protein Solutions revenue grew a slower 39% year-over-year, or 36% by Leproust's own reference, and was roughly flat sequentially in some segments despite gene shipment volumes rising 56%. Leproust attributed the gap to product mix, explaining that antibody sequences driving the AI discovery boom are shorter than the plant genes that previously made up more of the volume base. "As we see the growth coming primarily from human therapeutics, there is a shift to smaller genes, which is totally fine with us," she said, framing the mix shift as a natural consequence of AI models generating more, shorter sequences rather than a sign of pricing pressure.
Management Dismisses Competitive Threat from GenScript's TurboCHO
Barclays analyst Luke Sergott raised a competitive question that has been circulating among investors: whether GenScript's TurboCHO platform, with its different cost structure and scale, poses a threat to Twist's protein and antibody discovery business. Leproust's response was notably direct, framing Twist as the disruptor rather than the incumbent under attack. "We started as a DNA company. Eighteen months ago, we didn't have a big presence in protein... 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," she said. She argued that differentiation lies not in the CHO cell line used but in the breadth of assay menu and the ability to handle large sequence volumes: "If you're talking about millions of data points in a pooled assay, I think we are unbeatable there... 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."
Complex Genes Launch Expands Addressable Manufacturing Envelope
President and COO Patrick Finn detailed the commercial launch, two weeks prior to the call, of Twist's complex genes offering, which extends synthesis capability to highly challenging DNA constructs with high GC content or repetitive elements that have historically been difficult to manufacture consistently. During early access, customers ordered more than 1,800 complex genes across over 100 orders, with the "overwhelming majority" delivered within a 12-day window. Finn framed this less as a standalone product opportunity and more as evidence of the platform's expanding manufacturing envelope, arguing each new capability increases wallet share with existing customers and widens the moat versus competitors attempting to replicate Twist's silicon-based synthesis chip.
Path to Adjusted EBITDA Breakeven Reaffirmed, Full Fiscal 2027 Guide Coming in November
Adjusted EBITDA loss was $11.3 million in the quarter, which management attributed to planned one-time investments including roughly $2 million in employee transition costs. Laponis reiterated that operating expenses should fall by more than $5 million in the fourth quarter, supporting the long-standing commitment to reach adjusted EBITDA breakeven in fiscal fourth-quarter 2026 and sustain it through fiscal 2027. Guidance for the fourth quarter calls for revenue of $123 million to $124 million, growth of approximately 25% year-over-year, with both DNA Synthesis and Protein Solutions and NGS Applications expected to grow sequentially. Full fiscal 2027 guidance will be provided in November, though Laponis pushed back on an analyst suggestion that growth could settle near the company's long-range plan of mid-teens, calling the current trend lines favorable across therapeutics, diagnostics and molecular residual disease testing.
Diagnostics and NGS Steady, Academic Segment Rebounds Sharply
NGS Applications revenue grew 12% year-over-year to $61.8 million, with diagnostics revenue up 15% to $43.8 million and growing 10% sequentially on strength in top accounts. Academic and government revenue swung from roughly flat growth last quarter to 32% year-over-year growth this quarter, which Finn attributed to Twist's cost, speed and quality proposition resonating in a budget-constrained research environment rather than any structural change in funding. Finn also highlighted molecular residual disease testing as a longer-term growth vector, noting Twist's tumor-informed platform benefits from increasing probe counts that improve test sensitivity, an application he said plays directly to the company's manufacturing speed given current capacity of roughly 72 million oligonucleotides per day.