Twist Bioscience Corp Q2 FY2026 Earnings Call

Welcome to Twist Biosciences 2026 Second Quarter Financial Results Conference Call. Also note, this call is being recorded. I would now like to turn the call over to Angela Bitting, SVP of Corporate Affairs. Please go ahead.

Thank you, operator. Good morning, everyone. I would like to thank you for joining us for Twist Biosciences conference call to review our fiscal 2026 second quarter financial results and business progress. We issued our financial results press release before the market, and it is available at our website at www.twistbioscience.com. With me on the call today are Dr. Emily Leproust, CEO and Co-Founder of Twist; Adam Laponis, CFO of Twist; and Dr. Patrick Finn, President and COO of Twist. Today, we will discuss our business progress, financial and operational performance as well as growth opportunities. We will then open the call for questions. We ask that you limit your questions to only one, and then requeue as a courtesy to others on the call. This call is being recorded. The audio portion will be archived in the Investors section of our website and will be available for 2 weeks. During today's presentation, we will make forward-looking statements within the meaning of the U.S. 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 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, a financial measure that does not conform with generally accepted accounting principles. Information may be calculated differently than similar measures 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 on the Investors section of our website. With that, I will now turn the call over to our CEO and Co-Founder, Emily Leproust.

Thank you, Angela, and good morning, everyone. Twist delivered another strong quarter and extended our track record of consistent execution, posting our 13th quarter of sequential revenue growth. We have outperformed the broader life-science tools market with a model that scales efficiently and drives increasing value creation. Twist's core technology advantage is a semiconductor-based DNA synthesis platform that provides a structural advantage in cost, scale and speed that feeds into every product and service we offer. This same platform also enables a highly efficient new product introduction engine, allowing us to rapidly translate customer demand into scalable offerings and continuously expand our portfolio. As we increase volume on the silicon chip, we expand our wallet share, accelerate product innovation and further strengthen our competitive advantage. The model works exactly as designed. We have delivered sustained revenue growth, expanded margin above 50%, invested strategically to drive continued return on that investment, and we remain firmly on track to achieve adjusted EBITDA breakeven in the fourth quarter of fiscal 2026. Focusing on our results for the second quarter of fiscal 2026, we grew total revenue to $110.7 million, up more than 19% year-over-year. DNA synthesis and Protein Solutions grew 28%, powered by continued strength in AI-enabled drug discovery. NGS applications grew 12% year-over-year and 9% sequentially. Diving deeper into DNA synthesis and Protein Solutions, we continue to see robust growth. Last month, Amazon Web Services announced Twist as a wet lab partner for Amazon BioDiscovery, its AI-powered drug discovery application. This is an exciting validation of our DNA synthesis, protein solutions and biologics capabilities. In advance of the launch, Twist has been working with the AWS team for several months providing wet lab services for the application's scientific launch partners, including Memorial Sloan Kettering Cancer Center and the GRAIL lab and other launch partners. The objective for researchers using Amazon BioDiscovery is to deploy AI models to design and optimize antibody candidates faster. We are here to support them with products and services that accelerate that pathway. In close contact with our customers, we identified this emerging category early and invested ahead of the market acceleration with increasing adoption across pharma, dry labs and big tech companies. Importantly and on balance, the growth of AI-enabled discovery complements our work with customers pursuing traditional discovery, which remains a robust area of our business. With our flexible approach, our customers for DNA synthesis and Protein Solutions are all working through the same fundamental design-build-test-learn cycle. What differs is how they execute against that framework. There is no one-size-fits-all model. Each program is tailored to the customer's scientific resources and stage of discovery, but the foundation that remains constant across every engagement is the Twist silicon platform, which enables cost-effective synthesis of hundreds of thousands of unique sequences in parallel. That unique and scalable capability is what makes speed at scale possible, no matter where the customer enters the workflow. No two orders are identical, so we see consistent patterns in how these campaigns are structured. On Slide 6, to give you some context: one example is our work with Memorial Sloan Kettering and Amazon, where the team ordered approximately 100,000 specific DNA sequences as a pooled library. This pooled-library approach is highly efficient and is precisely why our platform is built the way it is. Pooled DNA can be manufactured collectively rather than individually cloned and processed, driving down cost per sequence dramatically. And Twist is a unique provider: we can deliver hundreds of thousands of specific sequences pooled at speed and scale. Once there is a pooled DNA library, either Twist or a customer then screens that library to identify promising candidates, selects the most relevant sequences and advances those into individual synthesis, protein expression and characterization. Through iterative cycles, this process yields validated antibody leads. The second model involves customers ordering hundreds to thousands of fragments and executing downstream workflows internally. Here again, the Twist platform delivers an edge in the ability to synthesize diverse sequence sets quickly and at accessible costs, enabling customers to explore broader design spaces. In these cases, customers may fragment to clone genes, express proteins and perform characterization assays within their own laboratories. Others choose to start further downstream, purchasing clonal genes or antibodies and binding proteins to focus their internal efforts on functional characterization and validation. Even at this entry point, the advantage Twist can streamlining the parallel synthesis capabilities underpinning our platform means the sequences they receive reflect speed at scale that alternatives cannot match. We also have a growing segment of customers who rely on us as an end-to-end partner. In these engagements, we manage DNA synthesis, cloning and construction, protein expression and characterization. Our platform's ability to run large, complex sequence sets in parallel accelerates every stage of that workflow, and we deliver high-quality experimental data that enables customers to focus on critical analysis, decision-making and iterative design. We also have a number of customers who give us a biological target and ask us to do all of the work through in vitro and in vivo studies and our AI/ML discovery approaches. Across all of these models, cost scales with the scope and complexity of the workflow, ranging from smaller exploratory programs to multi-million dollar discovery efforts. Our role is to provide flexibility across the spectrum. Because our platform was purpose-built for parallel synthesis at scale, we can meet customers where they are, whether they need pooled libraries of hundreds of thousands of sequences or a fully managed core program. We support them as their research advances. On Slide 7, you'll see our portfolio for DNA Synthesis and Protein Solutions, serving customers across the vertical continuum. Building on our success in serving therapeutic discovery customers, in February we licensed a bispecific-specific platform to expand our capabilities in this rapidly growing modality. We will enable high-throughput discovery in bispecifics, an area that has been limited by scale. We have already received our first orders for this platform and see a robust funnel looking forward. Moving to Slide 8 and NGS: growth reaccelerated in the second quarter. Our NGS business remains a durable and growing part of the portfolio with particular strength in oncology diagnostics. We operate at a critical part in the workflow between the sample and the sequencer, where our products support precision and customization at scale. Our target enrichment and library preparation solutions deliver the uniformity and on-target performance required for high-sensitivity applications. This is especially relevant in the continuum of cancer care, where we are seeing increasing adoption in commercial diagnostic tests, including tissue molecular MRD or minimal residual disease assays. These applications demand extremely high accuracy and sensitivity, faster turn times, and our chemistry is well aligned to these requirements. Specifically, as MRD testing transitions from early clinical adoption into scaled deployment across oncology diagnostics, the technical and operational requirements become significantly more demanding. These assays are pushing the limit of sensitivity, requiring detection of variants at extremely low allele frequencies. That places a premium on panel design as well as the entire workflow to ensure uniform coverage and reproducibility across runs. In this environment, success depends on the ability to deliver highly customized target-region panels and library preparation enabled by novel enzymes as well as buffer formulations, UMIs and other components optimized for specific indications and evolving clinical needs. Equally important is speed. As these steps move into broader clinical workflows, laboratories and diagnostic developers need rapid turnaround on panel design, synthesis and fulfillment to support asset development, panel validation and commercial scale-up. At Twist, we combine high-throughput DNA synthesis with precision panel design and manufacturing at scale, enabling fast delivery of customer panels with consistent on-target statistics. That allows our customers to move quickly from development to validation to commercialization without compromise on data quality and, importantly, secures and future-proofs the supply chain. For bespoke, tumor-informed MRD panels, like all of our NGS panels, this is a consumable-driven workflow that scales with stable volume, supporting recurring revenue as these applications extend. At this time, I'd like to turn the call over to Paddy to expand further on our growth initiatives around the product offering.

Thank you, Emily. Happy to report our fiscal quarter results are strong, and we believe the road ahead is stronger. Everything we do in Protein Solutions and AI-enabled discovery runs on one foundation: our DNA synthesis platform. It's a structural advantage for cost, scale and speed, full stop. And we continue to advance and strengthen this platform to enhance the customer experience even more. Today, we accept the vast majority of daily sequence requests because we can manufacture them. We have an algorithm embedded in our e-commerce system to inform a customer immediately if they have uploaded a sequence that may be difficult to manufacture. This improves the user experience for customers as some sequences present manufacturing challenges, such as repeat regions or extreme GC content. Three years ago, we accepted about 96% of clonal gene orders. We could manufacture about 97.5% of clonal genes and about 98% of DNA sequences more broadly including oligo pools, DNA libraries and gene fragments. Today, we accept about 97% of clonal gene uploads and can manufacture approximately 98.5% of clonal genes and about 99% of DNA requests more broadly. That's not theoretical capability. That's production reality at scale. We routinely deliver clonal genes and fragments up to 5,000 bases, oligo gaps up to 300 bases, novel gene fragments up to 500 bases across a wide range of formats. If a customer can design it, we are increasingly able to make it. Even as the acceptance rate for DNA sequences remains very high, we recognize that if a single sequence in a larger set does not meet acceptance criteria, customers may choose to route the full set elsewhere. This dynamic highlights a clear opportunity. Continued improvements in acceptance rates can unlock incremental share gains and expand total order capture. On Slide 11, you'll see that we announced this morning that we will soon accept a full range of sequences across length and complexity, driving towards accepting approximately 99.5% of clonal genes and 99.9% of all DNA products more broadly. Our constant drive to improve sets us apart and, importantly, more sequences accepted means more orders won and we intend to win them. And that matters because this is not a standardized market. Every customer is different. Every order is different. Breadth drives share gain. It's that simple. In contrast, the competitive landscape has a pattern: niche players with narrow offerings and limited reach. That is not how customers operate and it is not how this market wins. We employ a different approach. We anchor our strategy around end applications where performance, scale and execution are the only metrics that matter. Customers do not want to stitch together multiple vendors. They want one partner who can deliver consistently across the workflow. That is where Twist is differentiated. We offer both depth and breadth across the biological continuum from pre-synthesis through proteins, biologics and NGS. We support customers increasingly across the entire life cycle of their programs. This is how we continue to take share, expand wallet and reinforce our position as a leading platform, serving therapeutics, diagnostics, industrial, academic and government markets. With that, I'll turn it over to Adam to discuss the financials for the quarter.

Thank you. Turning to Slide 12. Q2 is another quarter of consistent execution against the financial model we've laid out. Revenue grew 19.3% year-over-year to $110.7 million, our 13th consecutive quarter of sequential growth. Gross margin expanded to 51.6% versus the prior year, an improvement of approximately 200 basis points, and we remain firmly on track for adjusted EBITDA breakeven in Q4. Let me walk you through the details. On Slide 13, you'll see DNA synthesis and Protein Solutions revenue increased to $53.3 million, growth of 28% year-over-year. On Slide 14, we show NGS applications revenue for the second quarter grew to approximately $57.4 million compared to $51.1 million in the second quarter of fiscal 2025, an increase of 12% year-over-year and up 9% sequentially, driven by growth in top accounts. For the quarter, revenue from our top 10 NGS applications customers accounted for approximately 39% of NGS applications revenue. We served 627 NGS applications customers in the quarter with 174 having adopted our products. Looking geographically on Slide 15: Americas revenue increased to approximately $64.3 million in the second quarter compared to $55.2 million in the same period of fiscal 2025, growth of 17% year-over-year. EMEA revenue rose to $37.3 million in the second quarter versus $30.6 million in the same period of fiscal 2025, growth of 22% year-over-year. APAC revenue increased to $9.1 million in the second quarter compared to $7 million in the same period of fiscal 2025, an increase of 30% year-over-year. APAC accounted for 8% of our revenue in the second quarter. China continues to be a relatively small portion of our revenue at approximately 1% of total revenue for the second quarter of fiscal 2026. Looking at revenue by industry on Slide 16: Therapeutics revenue rose to $40.8 million for the second quarter of 2026 compared to $26.3 million in the same period of fiscal 2025, growth of 55% and reflecting the increased uptake of our products by large pharma and biotech customers in their efforts on therapeutic discovery, including AI-enabled discovery. Diagnostics revenue was $40 million for the second quarter of 2026, compared to $35 million in the same period of fiscal 2025, an increase of 14%. Diagnostics revenue grew 13% versus Q1 of fiscal 2026 based on strong growth from top accounts. Industry and applied revenue was $5.8 million in the second quarter of 2026 compared to $7 million in the same period of fiscal 2025. Academic research and government revenue was $12.8 million for the second quarter of 2026 compared to $12.5 million in the same period of fiscal 2025, an increase of 3%. Sequential growth was 5% versus the prior quarter, driven by strength in U.S. accounts. Global Supply Partner revenue was $11.4 million in the second quarter of 2026, compared to $12 million in the same period of fiscal 2025, primarily due to order timing. Moving down the P&L. Our gross margin for the second quarter increased to 51.6%, an improvement of 2 margin points versus the same period of fiscal 2025. Margin expansion was driven by strong revenue growth and moderated sequentially as we continue to invest in new product offerings and manufacturing capacity that we expect will result in future margin gains as we accelerate growth and implement continuous process improvement. Operating expenses, excluding cost of revenues and litigation settlement costs, were $95.8 million for the quarter compared to $87.6 million in the prior year. The increase reflects deliberate investment in our commercial organization and digital infrastructure to support the growth trajectory we are delivering, particularly the 55% growth in therapeutics. These are revenue-generating investments with a clear line of sight to return. We are managing these investments with discipline. In April, we reduced 36 positions to reallocate resources to our highest-return opportunities. Combined with additional cost initiatives underway, we expect these actions to contribute to sequential OpEx improvement of $6 million in Q4 of fiscal 2026. Looking at our progress on our path to profitability: for the second quarter of fiscal 2026, adjusted EBITDA was a loss of approximately $13.3 million, an improvement of approximately $1.5 million versus the second quarter of fiscal 2025. We have dramatically narrowed that loss through a combination of revenue growth, gross margin expansion and operating expense discipline. We expect the actions we've taken, combined with continued revenue momentum to fully deliver on our targets for Q4. We reached an agreement in principle regarding the securities class action for approximately $17.1 million. In fiscal Q2, we booked $7.2 million for litigation settlement costs net of recoveries as we expect the additional costs to be covered by our insurance. We view this as a positive resolution allowing management to remain fully focused on execution. We ended Q2 with $171.7 million in cash, cash equivalents and short-term investments versus $197.9 million as of December 31, 2025. The sequential change reflects $17.6 million in operating cash usage, $7.9 million in CapEx as we continue to invest in manufacturing automation and $5 million in cash for the Invenra license and equity event. On Slide 18, turning to guidance. For fiscal 2026, we expect total revenue of $442 million to $447 million, growth of approximately 17% to 19%. For Q3 of fiscal 2026, we expect total revenue of $114 million to $115 million, growth of approximately 19% year-over-year at the midpoint. As previously discussed, we expect NGS to be the driver of sequential growth in H2 and return to roughly 20% growth by Q4. We remain confident in our trajectory and continue to forecast reaching adjusted EBITDA breakeven for the fourth quarter of fiscal 2026. With that, I'll turn the call back over to Emily.

Thank you. On Slide 19, as we look ahead, we remain focused on delivering consistent, measurable growth designed to scale over time. We see strong momentum across the portfolio with continued growth in DNA synthesis and Protein Solutions, increasing adoption in AI-enabled discovery and a return to growth in NGS. We serve large and expanding markets where our platform is increasingly relevant. At the same time, our operating model continues to perform as expected. We have delivered 13 consecutive quarters of sequential revenue growth, expanded gross margins above 50% and maintain a clear path to adjusted EBITDA breakeven in fiscal 2026. What underpins this performance is the stability of our platform. As volume increases, we expand or improve efficiency and generate operating leverage across the business. Our ability to serve a wide range of customer workflows from early discovery through clinical and diagnostic applications provides both resilience and opportunity to capture more value over time. Across the business, we invest with discipline in high-return opportunities and allocate capital deliberately, underwriting investments with clear growth drivers. We execute with focus and urgency to drive durable growth and build the company with increasing strategic relevance and long-term value creation. With that, we're happy to take your questions. Operator?

Our first question comes from Mac Etoch with Stephens.

Maybe just to start, could you just discuss how AI-driven workflows performed in the quarter relative to your internal expectations? And how the change in the outlook for both of the segments is really contributing to the change in the updated fiscal guidance from here?

Yes. Thanks for the question. Obviously, we're very excited with the performance of DNA Synthesis and Protein Solutions growing 28% year-over-year. And for the therapeutics category, we cracked $40 million for the quarter. A lot of companies in the drug discovery field they top out at $50 million a year, and now we're well past that mark on a trailing quarterly basis. So obviously, there is a strong trend throughout the portfolio. What we see is that customers don't want one single offering — and so the NPI engine that we built that creates many options for people to enter has been a great driver. AI-driven drug discovery has been a big help in that area. It increases the number of sequences that people want to look at. If before they looked at hundreds of sequences, now with AI they can generate thousands, and so it increases the overall value of deals. Many companies don't have the capacity to analyze that number of antibody candidates, which enables us to upsell to data and cell characterization. So overall, the entire menu is doing well, but AI-enabled discovery has definitely driven significant wins in our sales pipeline.

Our next question comes from Vijay Kumar with Evercore ISI.

Congrats on a nice quarter. Maybe on the prior question related to AI: when I look at the up 55% in the second quarter, that's an acceleration from Q1 growth levels. How much of this acceleration was driven by AI-related programs? I think in the past you called out data characterization gains versus traditional biopharma. And when you look at the back half, is this 50% kind of growth sustainable when you look at your order book and backlog?

That's a great question. Definitely, AI has been a source of strength. Again, the nice thing is as people develop more sequences, which require levels of DNA, we can synthesize them whether they want a pooled library or clonal genes. For bispecifics now we can support pooled libraries as well. So the entry points across the menu are useful. With AI, there is more need for data characterization. What has happened is that in 2025 there was excitement on our side from a few accounts, but now, many quarters in, it is dozens of accounts driving the growth. It is not just a few. So we can see that is repeatable with existing accounts, and we're able to bring more customers into the fold. Many companies run both AI-driven and traditional discovery workflows; having a full menu enables us to grow in all areas. Going forward, we are not providing product-level guidance, but we see very good growth potential within the business. We doubled the rate of growth, so there is a lot of confidence. That confidence is broad-based, and we also see strong confidence in our NGS business. The sales team is executing and customers are adopting, so we just have to continue to do it.

Our next question comes from Doug Schenkel with Wolf Research.

I want to cover two topics: the academic and government end market and gross margin. So in A&G, what are you seeing? Are things stabilizing or improving? I also want to get a sense for the academic promotion on express genes and when we start to lap the headwinds on price per gene from express gene fragments. I think that's this summer? And then on gross margin, gross margin was down nominally sequentially and a little light versus models. Anything to call out there?

Okay. On academic, that end market is under funding pressures. Our approach is to take market share. When funding is constrained, academic customers are cautious. The market is shrinking right now. The fact that we are growing there and growing sequentially is a positive signal: our product offering resonates versus the competition. We are extending a targeted academic discount on express genes that enables researchers to get higher-quality genes at accessible prices. They receive great speed and value, enabling them to move faster and be more competitive in grant cycles. So while growth there is smaller than in industry segments, we are taking market share. Adam will cover the gross margin question.

No problem. Q2 margin reflects deliberate investment, specifically for IgG and characterization for discovery projects as well as our digital capabilities. We remain confident in our full-year guide of 52% or better. These investments are around adding capacity and people to support accelerated demand. We see a high ROI on these investments, and we also see a path to continuously improve as we introduce new products and automation, returning to a 75% to 80% average drop-through on incremental revenue to gross margin over time as we automate workflows further.

Our next question comes from Luke Sergott with Barclays.

When Adam was talking about gross margin improvement and automated workflows, what more can you continue to push on the automated workflow? You built out a new facility; how much more can be automated? And on the data characterization for AI projects: you talked about $25 million in bookings in Q4 coming from some of these AI projects. How much of that revenue has converted in the first six months of the year?

Thanks for the question. On automation: think about front end and back end. The front end is where we make oligos on the chip — that's where we have a massive advantage. After the pools or vials are made, depending on the product flavor, the workflow branches to different back-end processes. For Protein Solutions the back end is different than for NGS. As we add product flavors, we invest incrementally in automation at the back end to add capacity for that flavor. That CapEx is significant but not comparable to building a new factory from scratch; it is targeted automation additions based on demonstrated customer demand. We have also been 'automating the automation' — optimizing the layout and orchestration in our large production rooms — which lets us multiply the effective capacity within the same footprint. Regarding the $25 million of orders you referenced from last year, most of those have now been shipped; the bulk was completed by Q1 and had very little impact in Q2. A key differentiation for us is speed: most data deliveries are completed 15 to 20 days after we receive the sequences, enabling quick booking and recognition.

Our next question comes from Subhalaxmi Nambi with Guggenheim.

You increased your full year revenue guidance by more than the magnitude of the Q2 beat. Any specific area or areas which drove the increase? Essentially, I'm asking for color on what is driving the raise.

Yes. What we discussed is that sequential improvements in the back half are expected to be driven by NGS, and if you look at the full-year guide, it implies DNA Synthesis and Protein Solutions (DSPS) will remain a strength through the back half. Sequentially, we don't expect DSPS to decline; we expect continued increases, but at a more measured rate. The guide reflects confidence in NGS reaccelerating in H2 while maintaining DSPS momentum. Essentially the incremental guide lift is a combination of sustained strength in DSPS plus an expected reacceleration of NGS later in the year.

Our next question comes from Matt Larew with William Blair.

I wanted to ask on the complex DNA offering. What is the timeline at which you expect to deliver products in line with the capabilities you described today? What lengths do you expect to be able to manufacture? And do you have any sense of the missed opportunity where you might have lost whole orders because you couldn't make a sequence? What additional opportunity does this unlock by adding these new capabilities?

Matt, thanks. We're excited about this product. As I mentioned earlier, we accept the vast majority of sequences that come our way across the portfolio. There are a few percentage points of sequences we don't accept today, and in some instances customers will take the whole order elsewhere if even one sequence is out of spec. Emerging applications — nucleic acid therapeutics, plant engineering and AI-enabled discovery — have special needs with more complex sequences. We're focused on the customer experience and our goal is to be a one-stop shop that can print really high-quality DNA. As a reminder, we can routinely produce high-quality sequences up to several kilobases and deliver best-in-class speed and economics. With additional optimization across the workflow, we'll deliver products that are best-in-class for complex sequence acceptance. We'll start with early access to a small set of customers, learn from those deployments and scale capability over the coming quarters. You'll continue to see the capability ramp as we go through the quarters.

Our next question comes from Catherine Schulte with Robert W. Baird.

Maybe on the margin side: still on target to hit adjusted EBITDA breakeven in the fourth quarter? You've been prescriptive about gross margin incrementals. As you hit that milestone, how should we think about leverage beyond that point and maybe EBITDA margin incrementals going forward?

Thanks for the question. We are laser-focused on crossing to adjusted EBITDA positive while simultaneously ensuring maximum acceleration of revenue growth. It is about titrating investments to maximize growth rates. Going forward, we have optionality: we can continue to invest to accelerate revenue at the expense of near-term margins, or we can harvest more of the margin expansion to deliver stronger profitability. We'll be disciplined and consider the market dynamics; maintaining growth without going backwards is important to us while also sustaining accelerated growth levels. We'll share more detail at our upcoming Investor Day.

Our next question comes from Leerink Partners. We have Michael on for Puneet Souda.

Congrats on the quarter. I was hoping to get some color on genes. I saw strong growth in physical gene shipments. Last quarter you talked about 58% for characterization. Could you offer any color on contribution of gene productization this quarter? And how much of the demand is driven by model building versus incorporation of AI into ongoing drug discovery and lead generation work at pharma?

Great question. We did not provide granular product-level numbers today to balance transparency and competitive considerations. What we can say is that gene productization and characterization have both contributed meaningfully to growth. There's been definite growth where customers order genes to generate data. On the second part: early on much of the activity was model-building and training work, but now many customers have turned the crank and are in ongoing discovery cycles. When they move from initial model building to routine use, orders may be somewhat smaller per order but occur more frequently, creating a recurring demand pattern. So you see both model-building work and ongoing discovery work contributing, and it's working as expected.

Our next question comes from Brendan Smith with TD Cowen.

Maybe to follow up on the AI questioning: looking at that $25 million from last year, do you have a sense of the run rate you're looking at now for 2026, with the first half on the books? Within those revenues, can you give a sense of the breakdown between oligos versus IgG versus analytical data? How much of the AI-driven area is further down the funnel?

I can add color on how to think about the therapeutics segment. If you look at the outsized growth in therapeutics relative to the company average, the delta is predominantly AI-discovery work. It is sometimes hard to precisely allocate every order to a single use case — we don't always know whether an order is for training, model-building, or downstream characterization — but we have strong confidence that the majority of the excess growth in therapeutics is AI-driven discovery work. Over the course of 2026 we expect continued growth in this area as more customers move from pilots to routine discovery workflows.

Our next question comes from Tom DeBourcy with Nephron Research.

Diagnostics as a whole showed double-digit growth and double-digit sequential growth as you had projected. As you think about the rest of the year, do you see incremental sequential growth through Q3 and Q4? Specifically thinking about diagnostics customers and their contribution to NGS.

Yes. We are seeing continued growth in diagnostics, and we expect sequential improvement in NGS into Q3 and Q4 with NGS being the driver of H2 sequential growth. It's an important reminder that dollar growth in NGS and DNA synthesis and Protein Solutions both matter to our overall financial model, and we are optimizing for total revenue growth, sustained gross margin above 50% and reaching adjusted EBITDA breakeven. Our MRD and liquid biopsy customers are ramping and adopting our panels and library prep solutions. The portfolio we have built for NGS applications supports recurring consumable revenue as panels scale. Over time the relative contributions can flip between segments, but what matters is consistent growth across the business.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Emily Leproust for closing remarks.

As we wrap up, we look forward to continuing the conversation in person at our Investor Day on May 21 in Oregon. This will be an incredible opportunity to go deeper into the drivers behind our performance, hear directly from our customers and see Twist's platform across therapeutic discovery and NGS workflows and participate in a tour that brings our platform to life. We will also have the chance to engage with members of our management team as we discuss how we are scaling the platform, expanding into new applications and driving long-term value creation. See you there. Thank you.

Thank you for your participation. You may now disconnect. Good day.