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Good day, and thank you for standing by. Welcome to Twist Bioscience Fiscal 2024 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference call over to Angela Bitting, SVP of Corporate Affairs. Please go ahead.

Thank you, operator. Good morning, everyone. I would like to thank all of you for joining us today for Twist Bioscience's conference call to review our fiscal 2024 third quarter financial results and business progress. We issued our financial results release before market and the release is available at our website at www.twistbioscience.com. With me on today's call are Dr. Emily Leproust, CEO and Co-Founder of Twist; and Adam Laponis, CFO of Twist. Dr. Patrick Finn, President and COO of Twist will join us for the Q&A. Today we will discuss our business progress, financial and operational performance, as well as growth opportunities. We will open up the call for questions. We ask that you limit your questions to only one and then re-queue as a courtesy to others on the call. This call is being recorded and the audio portion will be archived in the Investors section of our website and will be available for two weeks. During today's presentation, we will make forward-looking statements within the meaning of the US Federal Securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, as well as those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements except as required by law. We'll also discuss adjusted EBITDA, which is a financial measure that does not reform with the generally accepted accounting principles. Information may be calculated differently than similar non-GAAP data presented by other companies. When reported a reconciliation between GAAP and non-GAAP financial measures will be included in our earnings documents, which can be found in our investor relations website at www.twistbioscience.com With that, I'll now turn the call over to our Chief Executive Officer and Co-Founder, Dr. Emily Leproust.

Thank you, Angela, and good morning, everyone. I am pleased to report another record-breaking quarter of revenue growth for Twist. This quarter we surpassed our revenue, margin, and cash burn targets by employing disciplined execution and operational excellence. We have been diligent in our pursuit to serve our customers, introducing differentiated products that build on our proprietary technology and leveraging our unique competitive advantage to position the company for profitable growth. For the third quarter, we increased revenue 28% year-over-year to $81.5 million, with orders coming at $85.3 million. The strong quarter was driven by growth in our synthetic biology product line including Express Genes along with robust growth in NGS. We reported a 43.3% gross margin for the quarter, an increase of approximately 900 basis points versus 34.4% for the same period last year. For SynBio, revenue increased to $33 million, with orders of $33.8 million. SynBio revenue grew 27% year-over-year and 11% sequentially. We see growing interest and engagement for our Express Genes product line which together with our expanding portfolio of high-quality differentiated products, build on our Express infrastructure continues to drive new customer growth and net new accounts. Our Express Genes provide a differentiated and important offering for our customers and potential customers. With this offering, we ship clonal genes in five days at a reasonable cost. And we manufacture and ship all Express Genes from our site just outside of Portland, Oregon in the US where we make all of our SynBio products with the exception of DNA libraries which are made in our South San Francisco site. Importantly, we continue to launch new products that build off of our Express Genes portfolio and infrastructure. In May, we launched Multiplexed Gene Fragments with direct synthesis of DNA up to 500 base pairs. This direct synthesis length along with pooling of fragments enable our customers to pursue myriad applications. Some examples include encoding entire viable regions for antibody discovery and encoding entire functional domains of proteins for enzyme engineering, both of which are very useful for parallel screening of AI or ML-generated sequences. In addition, two important applications of this 500 base pairs length enable customers to encode mRNA sequences for personalized therapy or encode multiple guide RNA sequences within a single framework for complex CRISPR screens. These are just four examples of diverse applications for this innovative product that showcase how we augment our processes continuously to drive innovation and for new products while expanding our infrastructure capacity. Also building onto the Express workflow, in July, we introduced Express Antibodies, both for CHO and HEK293, the two most commonly used cell lines for the antibody discovery and optimization cycle. Multiplexed Gene Fragments and Express Antibodies illustrate the benefit of making all of our DNA on the Express timeline as we do not need to cut the line for particular customers. In addition to growth for our existing portfolio of products, including Express Genes, we will continue to add products that leverage our rapid manufacturing. These products will target areas of the life science market that we do not serve today and have the potential to expand our share of wallet with existing customers as well as open up new market opportunities. Express Genes continues to perform well, showing ongoing sequential growth that contributes not only to revenue and growth margin expansion but also a key driver for our over-increasing net new customers. As we indicated at the time of launch, our long-term intent is to convert gene makers into gene buyers as well as convert customers from competitors. We expect our market share and the category as a whole to continue to grow as we expand our Express offerings. Moving forward, because we continue to add more and more products building on the Express infrastructure, we will report all express product revenue in our overall SynBio numbers, primarily for competitive reasons. Moving to NGS, we posted another very strong quarter as revenue grew to $43.4 million, an increase of 31% year over year and $46.7 million in orders. Strength in the quarter came primarily from clinical customers, many of whom are in the liquid biopsy and rare disease spaces. Moving forward, we see continued strength in these areas as well as several additional avenues of growth. Starting with Minimal Residual Disease or MRD, our products generate minimal revenue today. However, we expect revenue to expand a bit in 2025 with more substantial growth beyond 2025, similar to what we have seen with growth coming from liquid biopsy customers in the last year. In MRD, we provide three workflow offerings for customers with the ability to adapt to three distinct types of customer assays. When our customers pursue low pathogen sequencing for the assay, we offer a unique cfDNA library prep kit that extracts more rare mutations and to also library prep, a competitive advantage for this application. Second, customers developing tumor-agnostic assays use Twist to build a customized target enrichment panel of genes and variants related to a particular type of cancer that applies to all samples. This is similar to the custom target enrichment panels we provide for liquid biopsy customers. Third, customers developing tumor informed workflow or an assay test for individualized mutations can leverage Twist MRD 500 panels where we incorporate up to 500 different mutations for an individualized assay at the same speed and cost as a handful of probes produced by our competitors. In fact, some customers want many more than 500 mutations and we have the ability to scale into multiple thousands of variants to meet their needs. Importantly, this third avenue shines a light in Twist's ability to partner with our customers to deliver personalized and customized panels rapidly and at scale. [indiscernible] we see growth coming from our RNASeq workflow. We differentiate our RNA products on key benefits, including the elimination of bias through whole RNA transcription [indiscernible] a transcription. Our RNA solution offers the potential to capture fusions and gene expression that could be missed by other workflows. In addition, it effectively generates results from degraded samples and our simplified and efficient workflows allow customers to save time and run more samples on the sequencer in a cost-effective manner. We also see customers expanding beyond our original flagship NGS offering of target enrichment to include our differentiated library prep kits, both on UDI, UMI barcodes, and more when placing orders expanding our share of wallet while supporting better results for our customers. For biopharma, revenue increased to $5.1 million with orders of $4.9 million. We continue to deliver on programs for our partners across a spectrum of offerings. A few weeks ago, we announced that the first patient has been dosed in Pure Biologics' Clinical study of PBA-0405, a fully human Igg 1 antibody discovered using Twist Biopharma solutions Synthetic antibody phage display libraries. This advancement of PBA-0405 into human studies validates the potential of our synthetic antibody libraries to be used to discover antibiotic candidates for how to treat cancer indications. We expect at least one of their partners to initiate human studies within the next year. Additionally, during the quarter, we announced a key publication detailing data for adenosine A2A antibody which is available for out licensing. We continue to work diligently to increase revenue and orders for biopharma, and in this fragmented market, we know our offering resonates. In addition, the Biopharma Solutions Group provides a spectrum of products and services that fit strategically with our SynBio product line. We do believe the revenue ramp will take time and we will continue to analyze and manage the overall business to ensure this group continues to provide value. For Data Storage. We remain focused on technology development and enablement of the Terabyte Century Archive workflow for early access before the end of calendar 2025. Progress continues and we see this area of our business as a valuable asset with optionality at multiple points of development. Turning to operations, we reported a gross margin of 43.3% exceeding our guidance, and a significant increase of approximately 900 basis points over the same quarter last year increased revenue growth, the majority of margin growth, and included contribution from Express Genes as well as NGS mix. I'd like to note that while we expect fluctuation in any given quarter due to mix and other adjustments, more than 75% of the revenue growth year-over-year dropped to gross profit for the third quarter of fiscal 2024. On average, we expect to continue to see 75% to 80% of revenue growth drop to gross profit moving forward. Looking ahead, we will continue to focus on margin improvement initiatives, including continuous process improvements, supply chain optimization, operational excellence, and in-sourcing. We remain on track to improve our margin by several percentage points, with a path to a gross margin north of 50% by the end of fiscal 2025. With that, I'll turn it over to Adam to discuss our financials.

Thank you, Emily. Revenue for the second quarter increased to $81.5 million, growth of 28% year over year and approximately 8% sequentially. Orders were $85.3 million, an increase of 34% year over year. While we received blanket purchase orders, as we do every quarter, we saw our order patterns in line with historical trends. As Emily said, gross margin came in higher than expected at 43.3% for the third quarter of fiscal 2024. During the third quarter, we shipped to approximately 2,300 customers. We ended the quarter with cash, cash equivalents, and short-term investments of approximately $289.4 million, a reduction of $4 million versus the $293.3 million balance as of March 31, 2024. Taking a deeper dive into revenue. SynBio revenue increased to $33 million, growing 27% year over year, with orders increasing to $33.8 million. We shipped 212,000 genes in the quarter. Synthetic Genes revenue, which includes both clonal genes, gene fragments, and IgG, increased to approximately $24.9 million, growth of approximately 29% year-over-year. Within the SynBio umbrella, oligo pool revenue increased to $4.2 million and DNA libraries revenue increased to $3.8 million, year over year growth of 12% and 34%, respectively. NGS revenue for the third quarter grew approximately $43.4 million, compared to $33.2 million in the third quarter of fiscal 2023, an increase of 31% year-over-year. For the quarter, revenue from our top 10 NGS customers accounted for approximately 39% of NGS revenue. Orders increased to $46.7 million, which we anticipate sets the stage for further NGS growth. We served 570 NGS customers in the quarter, with 141 having adopted our products. For biopharma, revenue was $5.1 million with orders of $4.9 million. We had 61 active programs as of the end of June 2024 and we started 43 new programs during the quarter. In the third quarter, we took an impairment charge of approximately $45 million as we revisited the long-term growth forecast for biopharma, and we believe the outlook shifted from our original view. We continue to mature the business development team and just as our commercial teams for SynBio and NGS took time to accelerate, we are finding that the biopharma team is taking time to perform at the expected level. Looking at revenue by industry, healthcare revenue rose 26% to $42.8 million for the third quarter of 2024, compared to $34 million in the same period of fiscal 2023, reflecting the increased uptake of our products by pharma, biotech, and diagnostic companies. Industrial chemical revenue rose 38% to $23.2 million in the third quarter, up from $16.8 million in the same period of fiscal 2023 strong growth year over year. Academic revenue rose 20% to $14.9 million for the third quarter of 2024, up from $12.4 million in the same period of fiscal 2023. Looking geographically, America's revenue increased to approximately $51.4 million in the third quarter compared to $39 million in the same period of fiscal 2023, growth of 32% year over year. EMEA revenue rose to $23.6 million in the third quarter versus $19.1 million in the same period of fiscal 2023, growth of 24% year over year. APAC revenue increased to $6.5 million in the third quarter compared to $5.7 million in the same period of fiscal 2023, growth of 15% year over year. China revenue was $1.8 million, a small percentage of our total revenue for the quarter. Our gross margin for the third quarter increased to 43.3%. We saw strength from Express Genes revenue lifting margin offset by a contracted SynBio customer who received a large order with their discounted terms in Q3. Of note, we expect this customer to take a step back in the fiscal 2024 fourth quarter and we have factored this into our SynBio guidance. Our NGS offerings continue to have strong gross margin performance and as we said last quarter, we do expect to continue to see puts and takes in our gross margin based on contracted customer mix. Our margin fluctuates based on the individual customer orders in a given quarter. While we expect quarterly volatility, on average, we expect 75% to 80% of revenue to drop the gross profit for the foreseeable future as we continue our margin initiatives, the primary focus across the Executive team and throughout the company. In total, operating expenses for the third quarter were $170.4 million, which includes the $45 million non-cash impairment charge, compared with $124.5 million in the same period of 2023. On a non-GAAP basis excluding stock-based compensation and the Q3 FY 2024 impairment charge, operating expenses were $111.7 million, compared with $110.3 million in the same period of 2023. Breaking this down, cost of revenues increased to $46.2 million in the third quarter of 2024, compared with $41.8 million in the same period of fiscal 2023, primarily due to higher product volume as well as increased depreciation and amortization expense, mostly due to prior year capital investments for the new manufacturing facility in Wilsonville, Oregon. R&D decreased to $22.5 million, compared with $24.5 million in the same period of fiscal 2023, primarily due to the reduction in headcount as well as a decrease in outside services and lab supply. SG&A was $56.8 million for the third quarter, compared with $46.1 million in the same period of fiscal 2023. The increase was driven largely by stock-based compensation and bonus accruals as the business is performing above forecast this time. Non-cash impairment charges on biopharma, intangibles, and other assets were $45 million in the third quarter of fiscal 2024. Operating expenses included approximately $6 million for data storage. Stock-based compensation for the quarter was approximately $13.7 million. Depreciation and amortization were $8.3 million for the quarter. For the third quarter of fiscal 2024, adjusted EBITDA was a loss of approximately $22 million, an improvement of $8 million versus the third quarter of fiscal 2023, and an improvement of $5 million versus the second quarter of fiscal 2024. We ended the quarter with cash, cash equivalents, and short-term investments of approximately $289.4 million, a reduction of $4 million versus the $293 million balance as of March 31st. Our strong cash position was driven by continued strong operational performance as well as one-time gains from improvements in accounts receivable collection and other working capital improvements, as we continue to evolve our G&A capabilities. Cash flow from operating activities continues to improve and we are driving the break even. For the nine months ended June 30th, 2024, net cash used in operating activities was $48.8 million, compared to $121.8 million through the equivalent nine-month period in 2023. Turning to guidance. For fiscal 2024, we now expect total revenue to increase by $8.5 million at the midpoint of the range to approximately $310 million to $311 million, with anticipated growth of approximately 27% year over year. Increased SynBio revenue of approximately $121 million, up from previous guidance of $118 million to 120 million with anticipated year-over-year growth of 23%. NGS revenue of $169 million to $170 million, an increase of $6 million to $7 million across the range, an anticipated growth of 36% to 37% year over year. Biopharma revenue of approximately $20 million, consistent with prior guidance. We expect the gross margin to be at the high end of the range and approximately 42% for the year. Our expected loss from operations before taxes in the range of $227 million to $230 million, including the $45 million impairment change. Excluding the impairment charge, loss from operations before taxes is expected to be in the range $182 million to $185 million on a non-GAAP basis, a slight decrease from our previous guidance of $183 million to $188 million. CapEx is projected to be approximately $13 million for fiscal 2024, a decrease of $2 million from prior guidance. We project ending cash of more than $255 million at the end of fiscal 2024. For the fourth quarter, we expect overall revenue of approximately $82 million to $83 million, an increase from previous guidance of $77 million to $80 million. Gross margin for the fourth quarter of approximately 44% at the high end of the range of previous guidance of 43% to 44%. Adjusted EBITDA loss of $20 million and we expect gross margin for the fourth quarter of fiscal 2025 to be 50%. We have been working on capacity planning and we believe that between the manufacturing facilities we have today, the revenue capacity of these facilities can go significantly above the previous estimate of $500 million in revenue. With sustaining levels of capital investment, we believe the capacity for our sites in Oregon and California can deliver over $700 million of revenue per year in the future. This is a very exciting time to be a part of the growth of the company. We will continue to march toward adjusted EBITDA breakeven while serving our customers every single day. With that, I'll turn the call back to Emily.

Thank you, Adam. As we are now in the final quarter of our fiscal year, the momentum continues to grow. We are often asked by investors why our SynBio and NGS groups continue to outperform when others in the space show little to no growth. It begins with our unique platform for writing DNA on the silicon chip. Our team leverages this platform to generate innovative products that meet customer needs. Our platform and products pair very well with our customer prowess, bringing pricing and quality along with the expanding portfolio of products and services. While these are key to our success, it's truly our Twisters who turn our vision to improve health and sustainability into a reality. Our strong financial performance quarter after quarter, coupled with our expanding portfolio of products and services, positions us well for sustained growth and value creation. Looking ahead, we're excited about the vast potential of our proprietary technology and the transformative impact it is already having across multiple industries. We will continue to drive towards adjusted EBITDA breakeven pursuing profitable growth fast to capitalize on the immense opportunities presented by a proprietary silicon-based synthesis capability. With that, let's open up the call for questions. Operator?

Thank you. [Operator Instructions] And our first question coming from the line of Matthew Sykes with Goldman Sachs. Your line is open.

Hi, this is [Evia] (ph) on for Matt. Congrats on the strong quarter. For my first question, what are you seeing in NGS market overall? We've seen from peers, they've noted weakness in the market, but given your strength, are you taking share? And then what's the feedback from customers been?

Yes, thank you. It's a great question. Like you noted, we -- it's a great quarter. We are definitely taking share. I think we've been very focused in our technology development to focus on first, application -- first and then moving to others. And a big bet that we did around the time of the IPO actually was our focus on methylation and liquid biopsy. And right now, we're seeing the fruit of that investment where in some ways it's a little bit overexposed in a good way to liquid biopsy. And as we have a very dominating technology and the market is growing, we are benefiting from that and we're very excited that we're trying to do the same thing in other markets. We've launched a RNASeq portfolio that is also ramping. We mentioned our MRD focus. As I mentioned in my remarks, we don't expect MRD to be a big revenue contributor this year. However, similarly to liquid biopsy, as we gain customer now, we gain pilots, and as they ramp, we see it as a future opportunities for growth. So very excited about NGS. I think, again, it's a combination of the commercial strategy we've chosen as well as a very strong technology that really brings value to our customers and we're being rewarded for it.

Great. And then given your strong growth in Express Genes, have you been able to unlock the gene makers market at this point, or is it still mostly growth stemming from market share gains among players that we're already outsourcing?

Yes, right now it's still mostly buyers that we're converting. However, we're seeing the beginning of conversion. The product does what it says on the tube. There's excitement with customers. We are seeing consecutive growth. And so at the same time, we said it will take some time. It's a very long tail, but we are very, very pleased with the performance of Express Gene and the Express infrastructure which enables us to launch new products at the same time.

Great, thank you.

Thank you.

Thank you. And our next question coming from the line of Steven Mah with TD Cowen. Your line is open.

Great, thanks. Congrats on the quarter and thanks for the questions. So, a couple questions on Express Genes. So now that you have another quarter of market data, can you give us a sense for the customer acceptance of the dynamic pricing model and how close you are to optimizing the pricing algorithm to maximize margins? And then second part of the question, can you give us a sense of the push by larger accounts wanting to trade this -- trade at fixed pricing in a subscription-like manner versus this dynamic pricing?

Adam, do you want to take that question?

Yes, absolutely. Steve, thanks for the question. The team continues to execute well. So the product is doing exactly what it says in the label, which is giving us tremendous confidence taking that forward. The value proposition is resonating across all segments. And so we continue to see good adoption that's captured by obviously sequential growth in the organization. And we do continue to see the trade of volume for committed price. That does continue. It's still very early since launching the product. And this is a product that is a platform for us and it's going to be quarter by quarter execution. Again, we continue to see it with sequential growth, and that will continue as we execute into the opportunity. So customers continue to adopt more shots on goal at the price point we have with the scale that we have is very, very compelling.

Thank you. And our next question coming from the line of Matt Larew with William Blair. Your line is open.

Hi, good morning. Obviously a couple quarters index for Express Gene, but Emily, you alluded to some newer express products as well, including most recently Express Antibodies on CHO lines. I understand it would be early days there, but in terms of what you're hearing from customers on an Express type offering for other obviously more complex products, would just be kind of curious to get any -- your early take and any metrics you're tracking around successful launches.

Yes, no, thank you for the question. For us, the Express product has always been an infrastructure play. We make now clonal genes in five days. And we always ask the questions for customers, hey, what do you do with the genes? And some customers use it as CRISPR tools, some they use it to express IgG -- since they use it to make mRNA for personalized therapy. And we're always looking for ways to add value. And we've had an IgG product line for a while, which were received and at the same time, was relatively slow compared to what customers could do themselves. And so when we launched the Express Gene, we always knew that we will shortly, thereafter, launch an express IgG because that is what our customers will do. And we've heard from many of them that they rather have someone else do that work than themselves. And so it's a great opportunity for the customers to free up some of their resources to do other things like the testing of IgG. And it's a great thing for us to leverage our infrastructure to do market more wallet share and be able to grow our revenue. And in addition to launching the Express IgG, we also launched a CHO expression. Up until now, all of our expression was done in HEK slides -- HEK cell, sorry. And a lot of our customers were telling us that CHO will be well received. And so we keep increasing what we call the flavor of DNA or protein that we sell. And that really is one of the key things that is enabling us to just reach into more applications that are happening in the life science and be able to enable the customers to offload to us more of their work so that they can focus on the testing.

Thank you. And our next question coming from the line of Luke Sergott with Barclays. Your line is open.

Great, thanks. I just wanted to touch on the blanket orders and how those kind of progressed in the quarter, if you guys can quantify how many you had? And then it's kind of a more long-term or medium-term question. As you progress on these blanket orders, can you give us an idea of what the conversion rate from your legacy order book is? And the fear is that you could have the conversion of the absolute dollar come in faster than the overall order book growing, and this could lead to an air pocket. So just kind of walk us through the different dynamics that you guys are seeing on the blankets.

Hey, Luke, this is Adam. Thank you for the question. Happy to talk through it. So just kind of taking a step back, what occurred earlier this year. I mean, obviously, we're extremely excited. We've always had blanket purchase orders in the business, and we're extremely excited to see that continue to evolve. In Q2 fiscal, for us, I call it the January effect. We did see that step up in blanket purchase orders. And I've articulated roughly an extra $10 million in blanket purchase orders versus the normal run rate of the business. What we saw here in fiscal Q3 was a much more return to normal in terms of it being a normal historical trend of blanket purchase orders. So a step back from what we saw in that January effect, which, to be fair, I expect the January effect to continue in years forward because it really just shows that customers are committing to Twist long-term. In terms of conversion orders, it's not a matter of so much of if we're seeing the conversion rates, extremely high numbers, it's a matter of timing. And so one of the things that we talk about, our reps aren't incentivized for orders, they're incentivized mainly in revenue. So what we see is this is really a lead generation capability and a customer support opportunity. What we really want to do is get the first blanket purchase order and complete it and go to the next one. It's really that more of a signal of a long-term commitment. So we don't see any risk of a revenue air pocket. We've seen the sequential growth every quarter in 2024, and we expect that to continue in perpetuity here, but thanks for the question.

Thank you. And our next question coming from the line of Vijay Kumar with Evercore ISI. Your line is open.

Hey, guys. Congratulations on the nice print here. Just one on the Q4 and sort of jumping off into fiscal 2025 kind of questions. Adam, you mentioned blanket orders for normal trend levels in third quarter. Does that imply we need to be a little bit more prudent on Q4. And sort of related to that, street's modeling about 20% revenue growth for fiscal 2025. Your comps get harder. Some of your peers have spoken about macro being a little bit tougher and markets being below trend. Any preliminary thoughts on whether the street needs to be a little bit more prudent about the 20% growth for fiscal 2025? Thank you.

Vijay, thanks for the question. And no, it's definitely something we're talking a lot about right now internally, we're building our plans for 2025. But let's talk about 2024. I know we just gave the print on the full-year guidance and the Q4 guidance. We have a step up across the range in terms of our guides for the quarter. We're expecting sequential growth across the business, Q3 to Q4. So I think the strength continues and the momentum continues as we're ending out our fiscal year. I'm not going to give a lot of color on 2025, we're still working through the plans. But I can say when we are feeling very confident about the business, we expect to see sequential growth continue in the business. And really what it comes down to is, Emily, talking to, it's the dynamic of we expect to continue to take share and where we see low to mid-single-digit category growth in certain areas and we're significantly exceeding that. We don't expect a trend to decrease in terms of our sequential growth. We expect that to continue. Obviously, we'll give more color as we get into fiscal 2025 when we sit down in November. But thanks for the question.

Thank you. And our next question coming from the line of Sung-Ji Nam with Scotiabank. Your line is open.

Hi. Thanks for taking the question and congrats on the quarter. Just following up on an earlier question for your next-generationsequencing, or NGS business obviously doing well there. But given that there has been kind of capital spending constraints across the NGS players, delays in some large-scale projects, et cetera, I was just kind of curious if you're starting to see any [Technical Difficulty] funnel at all. And then just a quick follow-up after that. In terms of your -- for the liquid biopsy-based business, if you're continuing to see a lot of smaller early-stage players target? Or do you feel the market has kind of stabilized to kind of the large players?

Thanks for the question. It's Patty here. I think what we're seeing is really the power of our platform in the market segment. I think when budgets are tough, Twist value resonates even stronger than anybody else out there. And it really is about maximizing the use of your sequencing platforms. I think that's what we truly enable. And so, therefore, I think that's allowed us to execute well into the opportunity. I think in the second part, just continuing to talk about scale and the opportunity to work with new customers, I think it's a feature that's often overlooked in our platform. It scales in many, many directions. For the R&D scientists, they can quickly do work to develop new product, new panels, and then we'll be there with the customer as the new panel or new product scales up towards the manufacturing or their future goals. So we like our position. And yes, although the market is tough, there's always opportunity to execute into. And when you partner that with excellence in commercial execution for every touch point for the customer, then we continue to be optimistic and confident going forward.

Thank you. And our next question coming from the line of Subbu Nambi with Guggenheim Securities. Your line is open.

Hey, guys, thank you for taking my question. Realizing book to bill is an intra-quarter metric, if I have this right, SynBio book to bill decreased from 1.5 to 1.0. Is this just seasonality, something else, or the large order you mentioned, is it related to China softness? And which segment is China revenue most concentrated in? Thank you.

Adam?

Yes, and Subbu, thank you for the question. I'm excited to take it. In terms of book to bill, that seasonality of orders that we talked about from the, I'll call it the January effect, is real. So you're going to see some noise coming there, particularly on the SynBio side of the business, because that's where most of that step-up in blanket purchase orders occurred. So we'd expect that seasonality to continue every year moving forward. In terms of the China business, and you'll see this in Q from last quarter and you'll see it again when we put the printout this quarter. It's less than $2 million of revenue a quarter for us in China. It's relatively stable. Obviously, there's a lot of folks dealing with headwinds, but when it's low to mid-single digits a percent of the business, it's not something we're terribly concerned about. We do see an opportunity long term, but we aren't seeing significant effects of the headwinds. I will say most of our business in China, it is spread across both sides of SynBio and NGS, but there's definitely a propensity towards the NGS side. But thanks for the question.

Thank you. And our next question coming from the line of Puneet Souda with Leerink Partners. Your line is open.

Yes, hi, Emily and team. Thanks for taking my questions. I appreciate the comments that you have on the overall growth with Express Genes, that's in SynBio. You're building more products on top of that in your guide. But when we look at your guide, it does imply a step down in the fourth quarter for SynBio. You talked about blanket purchase orders last quarter in SynBio, and there was a significant pickup in those orders last quarter. So, I mean, I hear some of the comments are on that, that it is more -- going to be more normalized. So just sort of trying to understand given that backdrop, why are these blanket purchase orders or the order momentum stepping down so quickly in the quarter? Is there a different pattern you're seeing from the customers or competitive response in the market?

No, Puneet, this is Adam. I'm happy to take the question here. And I think we mentioned it on the pre-record, but really the dynamic we're seeing in this quarter, particularly when we go into Q4, is one particular contracted customer had a pretty significant set of order volume in Q2 and Q3. That customer is taking a step down in Q4. It's factored into my guide. And for me, I just don't want to get over my skis on any particular quarter. So we're factoring that in. We're seeing sequential growth across the business from customers. We're seeing a step up in the total number of customers ordering each quarter. We're also seeing a step up quarter-on-quarter in the SynBio business in terms of the revenue excluding for that one customer. So we're feeling pretty good about it. But obviously, given the nature of our base, there will be customers that have challenges and we're here to support them. But it's not going to affect the overall growth.

Thank you. And our next question coming from the line of Tom Peterson with Baird. Your line is open.

Hi, everyone, congrats on solid print, and thanks for taking my questions. Maybe just one from me. Given the guide for the adjusted EBITDA loss of about $20 million here in the fiscal fourth quarter, can you just give us some sense to think about how we should be thinking of adjusted EBITDA loss in fiscal 2025? Would you expect quarterly improvements off that $20 million figure? And just think about -- help us think about pacing on the adjusted EBITDA trajectory.

This is Adam and thanks for the question. Yes, we're very laser-focused on our north star of the path to profitability. It's been for me, about six months in the chair now, it's really important as an organization that we're focused on our three key priorities, driving growth, driving gross margin, and ensuring that we have that path to profitability without needing to ever go back to the market for a future equity raise. That's been kind of the standing mantra and the charge of the organization. We've been looking at the $20 million adjusted EBITDA loss as an important marker in Q4. We don't see that as a stopping point, but really a jumping off point for continued sequential improvements as we move forward. Again, I mentioned earlier in the call we'll spend more time talking about the 2025 guide, but I expect that path to profit focus and that the organizational energy to continue to just be laser-focused on that moving forward. So more to come as we get together at the end of the year. Thanks.

Thank you. And our next question coming from the line of Tom DeBourcy from Nephron Research. Your line is open.

Hi. Thanks for taking the question. Just going to combine two questions here. So the first one is on BioSecure and we've heard from both academic and pharma customers that -- can you hear me? I'm sorry.

We can hear you.

Okay. Sorry. We've heard from academic and pharma customers that there is concern about moving proprietary products for synthesis into China. And so whether that's a tailwind for you, being based in the United States. And the second question is just on CapEx of $13 million, and just is this approximately the level of maintenance CapEx that you would expect going forward? That's it for me. Thanks.

Thank you. I'll take the first question, I'll let Adam answer the CapEx question. On the BioSecure, we've expressed in the past that, yes, it's probably a geopolitical headwind for our competitors that are not building DNA in the US. At the same time, it is hard to predict an act of Congress. So our view is that we will be on the merits, our products and on their own, for speed, scale, quality, price, added features, and so on, the entire user experience. So our views that we will take market share and we'll win, and it is possible that BioSecure headwinds for competitors will accelerate the timeline. We already saw it. And at the same time we are very strongly focused on execution and providing the best user experience to our customers. Adam, you want to take the CapEx question?

Absolutely, no, and Tom, thanks for the question. We are seeing a pretty light year in CapEx this year. So far. I think we're running just north of $3 million year to date. I do see a potential step up beyond the $13 million in 2025 and beyond. But the modest amount of I think we guided the beginning of this year closer to $20 million. So those kind of numbers wouldn't surprise me. That being said, we currently have about $30 million to $35 million a year in depreciation today. I don't expect that to increase. I expect that to be roughly holding flat or stepping down as we move forward over the long run.

Thank you, Adam. And to add to my previous answer, so just a quick clarification that BioSecure is actually nothing focused on DNA synthesis. It's focused on genetic analysis and bioprocessing. There was a letter from the Select Committee in China to asking the FBI to investigate some of our Chinese competitors. So there is some geopolitical headwinds. But to be clear, DNA synthesis itself is not part of BioSecure at this point.

Thank you. And I'm showing no further questions in the queue at this time. I will now turn the call back over to Dr. Emily Leproust for any closing remarks.

In closing, we are very confident in the continued impact and growth opportunities generated from our proprietary DNA synthesis platform. Our growing customer base, our increasing revenue profile, our defining product portfolio, and, of course, our exceptional employees positively move the needle for our customers across multiple industries. Thank you.