Twist Bioscience (TWST) Q3 2025: Gross Margin Surges 10 Points as NGS Revenue Jumps 27%
Twist Bioscience’s Q3 2025 saw a step-change in gross margin, powered by operational leverage and product mix, while NGS revenue growth outpaced expectations and SynBio momentum broadened beyond legacy customers. Management’s disciplined execution and diversified end-market exposure set up a transition from margin expansion to renewed top-line acceleration into FY26, with a clear path to EBITDA breakeven and sustained commercial scaling.
Summary
- Margin Expansion Inflection: Gross margin improvement reflects structural cost leverage and process innovation.
- NGS and SynBio Diversification: New customer acquisition and portfolio extensions are driving future revenue engines.
- EBITDA Breakeven in Sight: Operational discipline and robust cash position underpin a shift toward growth investment.
Performance Analysis
Twist Bioscience delivered record revenue in Q3 2025, with NGS (Next-Generation Sequencing, high-throughput DNA analysis tools) leading the charge at 27% year-over-year growth and accounting for over half of total revenue. The SynBio (Synthetic Biology, engineered DNA and gene products) segment, while reporting just 7% growth, masked underlying momentum due to a tough prior-year comparison—excluding a one-time customer order last year, core SynBio revenue grew more than 20% year-over-year. Biopharma services posted steady 10% growth, reflecting a cautiously expanding pipeline and early synergies with Twist’s broader product suite.
Gross margin surged to 53.4%, up from 43.3% a year ago, as higher volumes, improved product mix, and continuous process improvements drove substantial fixed cost leverage. The company’s top 10 NGS customers contributed 44% of segment revenue, but management emphasized a growing base of smaller accounts—critical for long-term scaling. Operating expenses were tightly managed, with sequential declines and one-time benefits from the Atlas transaction, which also delivered a $48.8 million accounting gain, boosting net income for the quarter. Cash and equivalents remained robust at $250.8 million, supporting both near-term investment and a clear path to adjusted EBITDA breakeven.
- NGS Outperformance: NGS revenue strength was driven by diagnostic test adoption and new customer wins, outpacing SynBio and biopharma.
- Margin Step-Change: Gross margin expanded by over 10 percentage points, reflecting operating leverage and product/process optimization.
- Diversified Revenue Base: Academic and healthcare market share gains offset industrial flatness, underpinning resilience across cycles.
Twist’s Q3 results demonstrate a business shifting from margin repair to growth acceleration, with a diversified customer base and operational discipline now supporting a renewed commercial push.
Executive Commentary
"We reported record revenue of $96.1 million, an increase of 18% year-over-year. Growth margin for the quarter came in very strong at 53.4% compared to 43.3% for the third quarter of fiscal 2024, demonstrating the leverage of fixed costs with higher volume, some benefit from mix, as well as our ongoing commitment to continuous improvement."
Dr. Emily Leproust, CEO and Co-founder
"Gross margin came in higher than expected at 53.4%, primarily due to increased revenue, volume leverage, as well as some order timing and mixed benefits... We are narrowing our total revenue guide to $374 to $376 million for fiscal 2025, indicating growth of approximately 19.7% in the midpoint year-over-year."
Adam Lapona, Chief Financial Officer
Strategic Positioning
1. Margin Expansion as Strategic Foundation
Twist has executed a multi-year margin expansion program, raising gross margin from 31% to above 53% in just over two years. This was achieved through volume-driven fixed cost leverage, product mix optimization, and continuous manufacturing improvements—especially in SynBio, where new internal primer manufacturing unlocked vertical integration and cost control. This margin base now enables a pivot toward growth investment without sacrificing profitability discipline.
2. Customer Base Diversification and New Product Engines
The company’s commercial strategy is shifting from reliance on large, lumpy accounts to a “long tail” of new academic and smaller commercial customers, especially in SynBio and NGS. Hundreds of net new customers were added this quarter, and the launch of adapter-free gene fragments demonstrates the company’s ability to rapidly innovate and capture share in addressable markets. Management sees these smaller accounts as the future pipeline for larger, recurring revenue streams.
3. NGS Clinical Strength and Emerging Adjacencies
NGS remains the core growth engine, powered by clinical diagnostic adoption and early traction in minimal residual disease (MRD) applications. While MRD is still a small contributor, management expects a significant ramp in 2026. Strategic investments in FlexPrep (NGS sample prep automation) and enzyme portfolio are aimed at expanding into agbio (agricultural biology) and research markets, positioning NGS to capture share as microarrays phase out.
4. Operational Discipline and Cash Preservation
Operating expenses were tightly managed, aided by cost synergies from the Atlas data storage transaction and a focus on scalable infrastructure. The company’s $250 million cash reserve provides ample runway to fund growth initiatives, absorb short-term revenue fluctuations, and pursue opportunistic investments as needed.
5. Platform Leverage and AI Tailwinds
Management is positioning Twist as a key enabler for AI-driven drug discovery, leveraging its proprietary DNA synthesis platform to accelerate R&D cycles for pharma and biotech customers. The company sees its platform’s cost, speed, and quality advantages as a durable differentiator, especially as customer needs evolve with the adoption of new computational tools.
Key Considerations
This quarter marks a strategic inflection for Twist Bioscience, with the business model now demonstrating both scale-driven margin leverage and a broadening commercial base. Investors should note the following:
Key Considerations:
- NGS Growth Momentum: Diagnostic and clinical NGS adoption is accelerating, with MRD and new product launches set to drive future upside.
- SynBio Customer Expansion: Hundreds of new accounts are being onboarded, but ramp timing remains variable as smaller customers scale usage.
- Gross Margin Durability: Management expects to sustain and build on 50%+ gross margin, with further gains tied to volume and mix improvements.
- Revenue Normalization Risk: A key NGS customer transition will create a $5 million “air pocket” in Q4, with some impact carrying into Q1 FY26, but management frames this as a setup for multi-year growth.
- Cash and OPEX Discipline: Strong balance sheet and sequential OPEX reductions provide flexibility to invest in growth while targeting EBITDA breakeven.
Risks
Short-term revenue fluctuations remain a risk, particularly as large customer transitions and new account ramp-ups can create quarterly volatility. Competitive intensity in NGS and SynBio, evolving funding dynamics in academic markets, and international tariff uncertainties could also impact growth or margin trajectory. Management’s ability to convert new customers into significant recurring revenue and to sustain gross margin expansion will be critical for valuation support.
Forward Outlook
For Q4 2025, Twist guided to:
- Total revenue of $96 to $98 million
- SynBio revenue of $38 to $39 million
- NGS revenue of $52 to $53 million
- Biopharma revenue of approximately $6 million
For full-year 2025, management raised margin guidance and narrowed the revenue range:
- Total revenue of $374 to $376 million
- Gross margin of 50.5% to 51%
- Adjusted EBITDA loss of $45 to $47 million
Management highlighted:
- Q4 will see a planned $5 million NGS revenue step-down due to a top account transitioning to commercial deployment, with some carryover into Q1 FY26
- Gross margin is expected to remain above 50%, with further year-over-year improvement into FY26
Takeaways
Twist Bioscience’s Q3 2025 results signal a business that has structurally improved its margin profile and is now pivoting to growth.
- Margin and Cash Strength: The company’s ability to deliver 50%+ gross margin and maintain a robust cash position provides a foundation for disciplined growth investment.
- Growth Engines Transitioning: NGS remains the primary driver, but SynBio and biopharma are set up for acceleration as new customers ramp and product innovation continues.
- Forward Focus: Investors should watch for execution on customer conversion, the pace of new product adoption, and the impact of large account transitions on quarterly revenue cadence.
Conclusion
Twist Bioscience exits Q3 2025 with operational momentum, a high-margin platform, and a broadening commercial footprint. The next phase will test the company’s ability to convert its diversified pipeline into sustained, profitable growth and to navigate near-term revenue normalization events with continued discipline.
Industry Read-Through
Twist’s results reinforce several sector-wide trends: Margin expansion is increasingly achievable in synthetic biology and NGS through operational scale and vertical integration. The shift from large, lumpy contracts to a long tail of smaller customers is becoming a key growth lever across genomics and life sciences. Clinical NGS adoption and MRD testing are early-stage but accelerating, with competitive intensity rising as microarrays decline. Companies with broad product portfolios, deep customer engagement, and platform cost advantages are best positioned to weather funding volatility and capitalize on AI-driven R&D shifts. Investors should monitor how peers manage similar customer transitions and margin expansion trajectories.