Twist Bioscience (TWST) Q3 Profit Surges

Twist Bioscience (TWST -14.01%), a synthetic DNA manufacturer serving healthcare, research, and industrial sectors, reported its third quarter fiscal 2025 results on August 4, 2025. The most notable news was a swing to profitability, as the company achieved $0.33 in GAAP diluted earnings per share, compared to an expected loss of $0.53. This sharp improvement was partially due to a one-time gain on the sale of its Atlas Data Storage business. Revenue (GAAP) totaled $96.1 million, topping the $95.61 million analyst estimate (GAAP) and rising 18% from the prior year. The quarter demonstrated consistent customer growth, significant gross margin expansion, and improved operational efficiency, though the pace of revenue growth in synthetic biology slowed. Overall, the results suggest notable progress on profitability, margin structure, and strategic execution.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.

Company Overview and Business Focus

Twist Bioscience specializes in synthetic DNA production, providing gene fragments, next generation sequencing (NGS) tools, and antibody discovery platforms to research, diagnostic, pharmaceutical, and agricultural customers. Its unique technology uses a silicon chip platform to miniaturize the chemical synthesis of DNA, which allows for reduced chemical usage and cost-efficient production compared to conventional well plate approaches.

Over recent years, the company has focused on expanding its product portfolio and growing its addressable market. It has targeted customer groups in academic research, biopharma, diagnostics, and agriculture, emphasizing speed, scalability, and sustainability. Key factors for its ongoing success include continued technological innovation, broad adoption across industries, strong strategic partnerships, regulatory compliance, and environmental responsibility.

Quarterly Highlights and Segment Performance

The latest quarter saw total revenue climbed 18% to $96.1 million (GAAP), compared to $81.5 million in Q3 FY2024, with all segments contributing to growth. Next Generation Sequencing tools—the reagents and sample preparation kits used for high-throughput genetic analysis—grew 27% to $55.3 million. Management noted that this segment’s momentum was driven by diagnostic test adoption and expanding partnerships, including collaborative launches that integrated Twist’s products into partner sequencing platforms.

Synthetic Biology, which includes manufactured gene fragments and clonal genes used by academic labs, pharma, and industrial researchers, rose 7% to $35.2 million—a much slower rate compared to the prior quarter’s 21% growth. This deceleration stemmed partly from funding constraints in academic research and a promotional strategy aimed at onboarding net new customers through discounted Express turnaround service (faster gene delivery). Despite these headwinds, the company served approximately 2,484 customers, up from approximately 2,300 in Q3 FY2024, and shipped about 237,000 genes.

Biopharma, which supplies antibody discovery tools and services, contributed $5.6 million in revenue, up 10%. The launch of a new humanized mouse model was a notable product milestone, supporting demand from biopharma partners who need advanced platforms for antibody development. Management highlighted robust activity in ongoing and new customer drug discovery programs as well.

Gross margin (GAAP) improved to 53.4% from 43.3% versus Q3 FY2024, exceeding prior guidance. The expansion reflected higher factory utilization and process improvements. The significant margin increase helped narrow adjusted EBITDA losses to $(8.0) million, a marked improvement from $(22.0) million in Q3 FY2024. A $48.847 million one-time gain from the sale of Atlas Data Storage, a spun-out DNA data storage unit, had a large impact on GAAP net income. Excluding this, profitability gains were still apparent but less dramatic. Operating expenses showed mixed trends: research and development costs fell after the divestment, while selling, general and administrative expenses increased, driven by higher stock-based compensation.

Strategic Actions, Product Launches, and Key Developments

The company spun out its DNA data storage business as Atlas Data Storage, retaining a minority equity stake and potential royalties and milestone payments from future commercialization. The spin-out allowed Twist to sharpen its focus on its core bioscience products, while benefiting from ongoing technological breakthroughs in data storage that might transfer to its primary offerings.

On the product innovation front, the company introduced Express service options in both its gene fragment and clonal gene product families. These offerings now deliver synthetic genes within as little as two business days, positioning Twist favorably against industry peers. The humanized transgenic mouse model, used for antibody discovery in drug development, went to market this quarter.

Strategic partnerships further broadened market reach. Expanded integration with Element Biosciences’ sequencing platforms allowed for deeper partnership in the NGS segment. Collaboration with Curio Genomics also advanced the use of its library preparation tools in agricultural genomics, helping to diversify the customer and application base.

No material one-time impairment expenses were recorded in the quarter, and the company continued to highlight its sustainability credentials, noting that its platform uses significantly less chemical input and generates less waste compared to traditional methods. The margin improvements were notable as management seeks to achieve adjusted EBITDA (non-GAAP) breakeven in fiscal 2026.

Financial Outlook and What to Watch

Management updated its full-year revenue guidance to $374–$376 million for FY2025, narrowing the range while keeping the midpoint nearly flat. Gross margin outlook was raised to 50.5–51% for FY2025, reflecting better-than-expected operational results. Adjusted EBITDA loss is now forecast at $(45.0)–$(47.0) million for FY2025, an improvement from the previous $(48.0)–$(53.0) million range. For Q4 FY2025, revenue is expected to be between $96 million and $98 million, with gross margin of 51–52%. Leadership reiterated its target of achieving adjusted EBITDA breakeven by the end of FY2026.

Looking ahead, investors will be watching for sustained momentum in NGS, management’s response to slower Synthetic Biology growth (7% year-over-year SynBio revenue growth, compared to 21% in Q2 FY2025). Performance in core product uptake, progress on margin, and the pace at which operational improvements translate to bottom-line profitability will all be in focus. A key watchpoint is that the step-change in net income (GAAP) was boosted by a nonrecurring gain on the sale of a business, so future progress will depend more on underlying trends in sales, margin, and expense control.

TWST does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.