Fiscal 2026 Q4 earnings call, November 12, 2026

AI drug discovery more than doubles, but the FY2027 guide implies deceleration

Twist Bioscience reported AI drug discovery revenue of $59.1 million for fiscal 2026, up 175% from $21.5 million a year earlier, with orders more than doubling. The company's initial fiscal 2027 guidance assumes $100 million in AI drug discovery revenue, or roughly 67% growth. That became the focal point of the Q&A, with analysts from Guggenheim, Leerink and Stephens questioning why growth would moderate given the company's description of the opportunity.

CEO Emily Leproust framed the $100 million as a floor built only on visible programs. "What we can take to the bank today guaranteed is $100 million," she said, adding that the figure reflects "programs that we can forecast with high confidence today" and that there is "meaningful upside on top of that assumption." She said the company remains confident in triple-digit percentage order growth for AI drug discovery in fiscal 2027 and in converting more of those orders into revenue within the year. Asked whether order timing explained the gap between order growth and guided revenue growth, she said there is no such dynamic and that "by triple-digit percent growth, we mean triple-digit percent growth."

Leproust said realizing the upside is largely within the company's control and depends on two things: adding capacity and adding workflows. "Capacity is being added every week," she said, calling the expansion "a well-oiled machine." Orders momentum is expected to accelerate through the year, and AI drug discovery should remain one of the fastest-growing product groups.

One implication raised by Stephens is that the guide points to roughly mid-single-digit growth in underlying DNA Synthesis and Protein Solutions outside AI. CFO Adam Laponis said Twist forecasts double-digit growth for the business excluding AI drug discovery and expects that growth to accelerate year over year. He also acknowledged a cost: "many of our reps are focusing on the hyper growth that's happening in AI drug discovery. So that does have an impact on the pace of growth elsewhere."

How AI customers buy, and how revenue is counted

Management laid out a consistent pattern across customer cohorts over the last 18 months. Customers start with pilot orders of $10,000 to $100,000, then place model-building orders, often multiple millions of dollars, largely for characterization data. After digesting the data for a quarter or more, they return for actual discovery, with recurring orders typically ranging from $250,000 to $1 million in iterative cycles until antibodies are ready for preclinical development, after which they begin again with a new target. Leproust said run-rate revenue for a given customer generally exceeds model-building revenue.

She also described a shift toward pooled discovery. Customers want more data points at lower prices per data point, moving from one sequence per well to thousands, hundreds of thousands or potentially millions of sequences in a single tube, which she said matches how Twist makes DNA. The company launched Twist Express Screening Antibodies in late October, a cell-free offering delivering proteins in as few as 5 days and characterization data in as few as 8 business days. Leproust said the cell-free workflow carries better margins, is faster for customers, and that Twist is the only provider able to do cell-free for longer proteins such as IgG.

Reported AI revenue only includes customers the company can clearly identify. Laponis said traditional pharma and biotech customers are adding AI programs, and that drawing the distinction "will become much more difficult." Leproust said Twist is committed to reporting AI revenue through fiscal 2027, acknowledging it may be "a little bit under counted," and said the company does not "really care" how an AI-derived order is categorized so long as revenue, gross margin and profitability grow.

On customer breadth, Laponis said each cohort has expanded the number of customers, now extending to some large hyperscalers, though the base remains predominantly existing drug discovery customers. He said the company referred to "dozens of customers" last year, so some concentration exists, but he expects it to diffuse. Asked about customers building their own labs, Leproust said that is fine because they will still need DNA and protein, adding that "all roads have to go through Twist."

Margin expansion slows as new capacity comes online

Fiscal 2027 guidance calls for revenue of $550 million to $560 million, about 21% growth at the midpoint, with gross margin of 52.5% to 53%, compared with 52.4% in fiscal 2026. Adjusted EBITDA is guided positive for the full year. Fiscal 2027 capital expenditures are expected at about $75 million, part of roughly $150 million over fiscal 2027 and 2028, plus more than $30 million in landlord-funded tenant improvements.

Baird noted that the guide implies roughly 55% incremental gross profit conversion against the 75% to 80% drop-through framework discussed previously. Laponis said that framework is unchanged and has held since the Portland Factory of the Future opened, but that about $15 million per year of depreciation on the new spending represents roughly 2 to 3 points of gross margin headwind in fiscal 2027, offsetting the drop-through. Gross margin should still expand, but not at the pace of prior years. He said Twist still sees a path to 60% gross margin over time, while prioritizing gross profit dollars: "We'd rather run a $2 billion business at a 50% gross margin than a $1 billion business at a 60% gross margin."

The first quarter outlook is revenue of $130 million to $132 million, about 26% growth at the midpoint, with both DNA Synthesis and Protein Solutions and NGS applications each growing above 25% year over year.

Fourth quarter results: 28% growth and first positive adjusted EBITDA

Q4 revenue was $126.6 million, up 28% year over year and 7% sequentially, marking the 15th consecutive quarter of sequential growth. Full-year revenue of $459.4 million grew 22% and came in more than $30 million above initial guidance. Leproust noted quarterly growth accelerated through the year, from 17% in Q1 to 19% in Q2, 23% in Q3 and 28% in Q4. Q4 gross margin was 53.1% versus 51.3% a year ago, and full-year gross margin was 52.4% versus 50.7%.

Adjusted EBITDA was positive $2.2 million in Q4, the milestone management had committed to, though the full year was a loss of $35.9 million. Operating expenses excluding cost of revenue were $91.7 million in the quarter and $380.3 million for the year. Management said it intends to reinvest profits in capabilities, capacity and people while remaining adjusted EBITDA positive.

DNA Synthesis and Protein Solutions revenue was $61 million in Q4, up 33%, and $221.9 million for the year, up 32%. Twist shipped 401,000 genes in the quarter and about 1.3 million for the year, up 43%, while genes used internally to produce proteins and data more than doubled. Gene volume is growing faster than revenue because Twist prices per base and antibody genes of 600 to 800 bases are growing faster than protein-encoding genes averaging 1,500 bases.

NGS applications revenue was $65.7 million in Q4, up 24% year over year and 6% sequentially, driven by diagnostic customers, and $237.5 million for the year, up 14%. The top 10 NGS customers accounted for about 40% of the quarter's NGS revenue, and Twist served over 700 NGS customers. By end market, therapeutics revenue was $43.9 million in Q4, up 44%, and $162.3 million for the year, up 47%. Diagnostics was $45.2 million, up 23%, and Academic and Government was $16.1 million, up 21%. By geography, the Americas grew 38% to $78.8 million, EMEA grew 12% to $38.7 million and APAC grew 28% to $9.2 million.

MRD Express launches; mRNA is a long-dated option

Twist launched MRD Express commercially two weeks ago, a product for tumor-informed minimal residual disease tests, which require individualized panels. Leproust said recent studies show tests with thousands of probes improve sensitivity, and the company believes thousands of variants will be needed to succeed in the broader market. Customers had indicated that a 5-day turnaround for a bespoke panel was too long, so Twist developed a process that delivers within 24 hours. Management expects MRD Express to drive growth next year and beyond.

Laponis said MRD contributed the 1 to 2 points of growth guided for fiscal 2026 and that the percentage growth rate is not expected to slow in fiscal 2027, meaning dollar growth expands more quickly. He noted that new DNA writers take 12 to 18 months to install and build out, so investments are being made for demand beyond 2027.

In nucleic acid therapeutics, including personalized mRNA cancer therapies, Leproust said "very little is embedded in '27." Twist currently serves ongoing clinical trials with DNA templates and siRNA, offers research-grade mRNA through early access, and has a high-throughput offering in development. She described it as a medium- to long-term opportunity that the company does not need to deliver its growth in the coming years.

Capacity build-out and balance sheet

Twist ended the year with $582 million in cash and short-term investments, including $424.8 million of net proceeds from a public offering and at-the-market sales. COO Patrick Finn said the company has 10 DNA writers operating, 2 installations planned in coming months and 4 more on order. With all 16 running, capacity would rise from about 32 million oligonucleotides per day to more than 50 million. Over the past 12 months protein and antibody manufacturing capacity rose almost 200% and characterization capability grew 2 to 5x depending on the assay. A new characterization lab in Oregon is expected to add another 5x for many assays versus where the company exited fiscal 2026. Management said the planned investments should support more than $1 billion in annual revenue within existing facilities.

Management said its serviceable addressable market has grown from $2 billion to $7 billion, with line of sight to $13 billion by 2030. Finn said the company has capacity available today for additional customers.