Twist Bioscience Corporation (NASDAQ:TWST) Q1 2023 Earnings Call Transcript

Vijay Kumar: Emily, maybe my first question is on the set guidance and revenue assumptions. When I look at your order growth here 30% in Q1. In your second quarter revenue guidance at 17%. Is there something going on in on the macro front and apologies if you’ve commented on this — was there any China impact or — and I know in the past, you’ve spoken about share gains in gene . Is that still going on? And when I look at the quarter number of $65 million, that annualizes to about $260 million, which is roughly your revenue guidance. Is there some capacity issues here that you’re facing as you bring Factory of the Future on line?

Emily Leproust: Well, maybe I’ll start and Jim can add as needed. But yes, as you pointed out, the order number trends towards our guidance. The first quarter is 30% above our Q1 last year, which 30% is about the growth that we anticipate delivering this year. And we’ve mentioned that it would be a back half loaded story. And if we look at the ratio of first half, second half, the ratio for this year the — as last year or the year before and the year before, it’s somewhere between 40%, 45% of first half to second half. So that’s what we — that’s the business we’ve been living in. And the market is there. We have a great technology. We have a sales team that is extremely aggressive and great products. So I think the bases are loaded, but we have to execute and deliver what we said we would. And then Jim, I don’t know there’s anything else you want to add?

James Thorburn: I think — so Vijay, I mean, your correct overall, strong orders in the first quarter, I mean particularly in NGS, we’ve done a number of large customers come in, place larger orders, getting us well positioned for the second half. I did mention China earlier on the call. So I’ll give you the Notes in China. October and November impacted by lockdown. China was down sequentially from our September quarter then to December. As economy opened up with COVID, people get COVID, and some of our — some of the weeks in their offices about 8% to staffer out. That’s obviously impacted in January, February. So we see a little pickup this quarter in China. And as the pandemic works its way through, we see pickup in the second half.

In China last year, put in perspective was about $7 million, even with the first half impact on COVID. We still see a pickup in China to about $9 million this year. And overall, happy with the bookings, and there’s more opportunity for us, as Emily highlighted, the commercial organization. I’ve got tough quarters to meet this year and are aggressively going after that. And we keep building our number of customers. We’re getting a lot of interest in terms of the Factory of the Future. Our focus to execute and continue to deliver in terms of our top line and focus on getting to the core business to adjust EBITDA breakeven at $300 million and then continue to focus and grow pharma and get back to adjusted EBITDA breakeven as well.

Vijay Kumar: And just maybe one more, Jim, for you on the second half cadence, both on revenues and gross margins, right? I think from a revenue perspective, looking at perhaps sub 25% in the first half that would imply well north of 30%, right, above your annual guidance. Like what is — like your comps get harder in the second half? What is driving that acceleration. And the same goes for gross margins, right? I think your first half implied is around 37%, 38%. You need to hit about 40% in the back half. Like what is driving this back half strength both from a revenue growth perspective and gross margins?