Twist Bioscience Charts Profitable Path Amid Strong Growth

Twist Bioscience ((TWST)) has held its Q2 earnings call. Read on for the main highlights of the call.

Twist Bioscience’s latest earnings call painted a largely upbeat picture, with management leaning into strong revenue growth, expanding margins and clear progress toward profitability. Executives acknowledged ongoing losses, rising operating costs and macro headwinds, but reiterated confidence in their strategy, underscored by higher guidance and detailed cost and efficiency plans.

Consistent Revenue Growth

Twist posted Q2 FY2026 revenue of $110.7 million, up 19.3% year over year and marking its 13th straight quarter of sequential growth. The steady top‑line trajectory suggests the company’s platform is gaining traction across customer segments despite uneven funding in parts of the market.

Strong DNA Synthesis & Protein Solutions Performance

DNA synthesis and Protein Solutions revenue climbed 28% year over year to $53.3 million, making this a standout engine of growth. Management credited AI‑enabled drug discovery demand and expanded new product introduction offerings for pulling through higher volumes from pharma and biotech customers.

NGS Revenue Reacceleration

NGS applications revenue reached about $57.4 million, rising 12% year over year and 9% sequentially, signaling a return to healthier growth. Management expects NGS to be the primary driver of second‑half sequential gains and to accelerate back toward roughly 20% growth by the fourth quarter.

Therapeutics Segment Outperformance

Therapeutics revenue surged to $40.8 million, up 55% from a year ago, highlighting strong uptake among large pharma and advanced biotech customers. The company emphasized that AI‑enabled discovery programs are increasingly turning to Twist’s platform, reinforcing this segment as a strategic growth pillar.

Gross Margin Expansion

Gross margin improved to 51.6% in Q2, roughly 200 basis points higher than last year, keeping the business solidly above the 50% threshold. Management stressed that they achieved this while still investing in growth and additional capacity, signaling room for scale‑driven profitability over time.

Improving Manufacturing Acceptance Rates

Manufacturability and acceptance metrics continued to climb, with about 97% acceptance for clonal genes, 98.5% producible clonal genes and 99% of DNA requests overall. The team is targeting around 99.5% clonal and 99.9% total acceptance, arguing that each incremental gain directly boosts revenue capture and customer loyalty.

Strategic Partnerships and Product Expansion

Twist was chosen as a wet lab partner for Amazon’s BioDiscovery efforts, adding a notable cloud and AI ecosystem tie‑up. The company also licensed a bispecifics discovery platform and has already received initial orders, broadening its reach in complex biologics and expanding its long‑term addressable market.

Raised Guidance and Path to Profitability

Full‑year fiscal 2026 revenue guidance was lifted to a range of $442 million to $447 million, implying roughly 17% to 19% growth. Management again pointed to a path to adjusted EBITDA breakeven by Q4 FY2026, backed by efficiency measures, higher drop‑through on new revenue and tighter operating discipline.

Adjusted EBITDA Still Negative

Despite progress, Twist remains loss‑making on an adjusted EBITDA basis, with Q2 generating a loss of about $13.3 million. Even so, this represented an improvement of roughly $1.5 million versus the prior year, suggesting that scaling revenue and better margins are slowly narrowing the gap.

Operating Expense Increase

Operating expenses, excluding cost of revenue and litigation, rose to $95.8 million from $87.6 million a year earlier, reflecting deliberate spending. The company is channeling these dollars into commercial expansion and digital infrastructure, framing them as necessary investments to support future, higher‑margin growth.

Cash Decline and Uses of Cash

Cash, cash equivalents and short‑term investments fell to $171.7 million from $197.9 million at the end of December, as the company consumed capital to fund growth. The quarter included $17.6 million of operating cash use, $7.9 million of capital expenditures and $5 million for licenses and equity stakes in strategic technologies.

Litigation Settlement Expense

Twist recorded $7.2 million of settlement costs in Q2 tied to a securities class action that is being resolved. Management indicated that the total settlement is expected to be largely covered by insurance, aiming to remove an overhang without materially derailing the operating plan.

Certain End Markets Facing Headwinds

The academic and government sector remains pressured by funding constraints, which management said is causing the overall market to shrink. Even with targeted promotions to capture share, Twist’s academic revenue grew only about 3% year over year, underscoring the limits of company‑specific execution in a weak macro niche.

Some Revenue Channels Declined or Timing‑Driven

Industry and applied revenue slipped to $5.8 million from $7.0 million a year ago, while Global Supply Partner revenue eased to $11.4 million from $12.0 million. Executives framed these declines as largely timing related, but they also highlight the lumpiness that can still show up in certain channels.

Sequence Acceptance Gaps and Lost Orders

Management admitted that a small but meaningful share of sequences still fail acceptance, which can prompt customers to redirect entire orders elsewhere. Closing this gap is a priority, as tighter acceptance rates could recapture missed opportunities and translate directly into higher, more consistent revenue.

Gross Margin Moderation from Investments

While margins expanded year over year, management noted that gross margin moderated sequentially as new product introductions and capacity investments weighed on near‑term profitability. They argued these pressures are temporary and necessary to underpin future volume, positioning the business for higher incremental margins.

Forward Guidance and Outlook

Looking ahead, Twist expects Q3 revenue of $114 million to $115 million, about 19% growth at the midpoint, with NGS leading second‑half acceleration toward roughly 20% growth by Q4. The company targets full‑year gross margin of about 52% or better, sees 75% to 80% incremental margin on new revenue, plans around $6 million of OpEx improvement by Q4 and continues to aim for adjusted EBITDA breakeven in Q4 FY2026.

Twist Bioscience’s earnings call balanced strong growth and expanding margins against persistent losses, elevated spending and specific market pockets under strain. For investors, the story hinges on whether the company can sustain its revenue momentum, execute its efficiency plan and convert today’s strategic investments into durable, profitable scale over the next several quarters.