Earnings Call
Twist Bioscience Corp (TWST)
Earnings Call Transcript - TWST Q4 2024
Operator, Operator
Welcome to Twist Bioscience's 2024 Fourth 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. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Angela Bitting, SVP of Corporate Affairs.
Angela Bitting, SVP of Corporate Affairs
Thank you, operator. Good morning, everyone. I would like to thank you for joining us for Twist Bioscience's conference call to review our fiscal 2024 fourth quarter financial results and business progress. We issued our financial results press release before 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 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 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 SEC. The forward-looking statements in this presentation are based on the 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 as a financial measure that does not conform with 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 on the Investors section of our website. With that, I will now turn the call over to our CEO and Co-Founder, Emily Leproust.
Emily Leproust, CEO and Co-Founder
Thank you, Angela, and good morning, everyone. Today, our team delivered a record quarter in revenue and margin growth, ending the year with a strong cash balance. We exceeded our guidance in every metric, including total revenue, gross margin, capital expenditure and ending cash balance. We increased revenue for the seventh quarter in a row, reporting $84.7 million. This is an increase of 27% year-over-year and 4% sequentially. For the year, we reported $330 million in revenue, an increase of 28% over fiscal 2023. Gross margin for the quarter came in ahead of our guidance at 45.1%. For the year, gross margin was 42.6% compared to 36.6% for fiscal 2023; this demonstrates the leverage of fixed cost with higher volume as well as our ongoing commitment to continuous improvement and margin expansion initiatives. Trends over the quarter and the year came from our Express product portfolio and genes as a whole, alongside continued growth in our NGS tools portfolio. We are also seeing positive traction in biopharma. Overall, the business remains strong and we are confident that this momentum will carry us into fiscal 2025. Before we dive into the details of the quarter, it's worthwhile reflecting on our journey since our IPO just over six years ago. During this time, we have been on a strong upward trajectory, growing our customer base, expanding our product portfolio and capturing market share, all by leveraging our proprietary platform to drive sustainable growth. Our differentiated technology to miniaturize chemistry and manufacture DNA on silicon provide significant advantages for our customers and for Twist. Our platform allows us to deliver high quality products at an affordable price and provide significant sustainability advantages over plate-based approaches. Importantly, we offer custom synthesis at unmet scale, which enables a growing menu of products in different iterations geared for diversification. We have harnessed our innovation engine to strategically and judiciously expand our product portfolio. Today, with our base of more than 3,500 customers across multiple industries and hundreds of SKUs having a wide range of diversifications, increasing market share in multiple markets, we are operating with incredible execution and financial discipline. We are now in the final push towards an incredibly important milestone, crossing the threshold of adjusted EBITDA breakeven. Our disruptive platform has fueled all of our growth to date and we believe there is tremendous potential for further development built on this technology. Once we reach adjusted EBITDA breakeven, we will be laser-focused on becoming cash flow positive, driving revenue while investing in profitable growth through our innovation engine. Our strategy applies this productive R&D with exceptional operational execution and an on-the-ground understanding of our customers' needs. From the frontline teams to the executive leadership, we have the technical expertise and business acumen that will continue to fuel our next phase of growth as a company. Taking a deeper dive into our results, beginning with SynBio, we have an Express portfolio that is differentiated in the industry in terms of price, turnaround time and ability to deliver at scale. One year ago, we launched our Express Clonal genes and over the course of the last year, we have added gene fragments, DNA preps, IgG proteins and this is just the beginning. We have already seen this portfolio bring in new customers and new accounts, taking market share from competitors. And this product line is accretive to our margin. We see our SynBio product groups gaining traction and market share. Revenue from the Express offerings grew quarter-over-quarter as these net new accounts are coming into Twist. Turning to NGS, we saw strong performance driven primarily by customers developing and selling assays for myriad applications from rare disease and cancer diagnostics to liquid biopsy and beyond. These customers include Twist target enrichment panels and other Twist tools in their assays. The revenues from this segment are sticky due to the high switching costs associated with revalidating the test with a different provider. Building on our success in delivering custom-targeted panels quickly, we launched our minimal residual disease offering several years ago. Today, we are seeing significant uptake for tumor-informed MRD panels with thousands of markers. Recall that as customers advance their R&D programs, we benefit as each phase of development for these tests requires more DNA. We expect MRD to follow a similar growth trajectory as liquid biopsy with substantial revenue anticipated in 2026. By maintaining our sequencing agonistic approach – meaning our workflow is compatible with whatever platform our customer prefers – we remain a key partner providing NGS workflows for many different applications beyond liquid biopsy and minimal residual disease. Previously, we have highlighted our collaboration with Illumina, Adicet Bio, and others, and last month, Element announced our inclusion in the Trinity workflow. Looking at growth moving forward, we continue to see customers adding more sequencing tools, including our application-focused Library prep solution as well as bitBiome, UDI, UMIs, Adapter, Enzymes and more. As we prioritize growth sectors moving into fiscal 2025, one area that we believe is underappreciated by investors is our ability to develop proprietary enzymes. Enzymes play a role in so many workflows across SynBio, NGS, and Biopharma, and in fact, entire companies are dedicated to creating enzymes. At Twist, using our proprietary writing platform, we can test thousands of enzyme variations in parallel going through the design, build, test, learn cycle in a matter of weeks. This rapid iteration allows us to tailor enzymes for specific applications, applying our SynBio platform to develop new products for our customers. In the last several quarters, we have identified the proprietary ligase and incorporated it into a CS-DNA Library prep kit specific to the liquid biopsy and MRD market. The data shows it outperforms all peer offerings and the feedback has been positive with customers seeing a significant improvement in sensitivity. Though these ligases were developed specifically for this application, customers that pursue whole genome sequencing can leverage this Library prep kit without enrichment and see improved results in WGS. Importantly, while this new growth vector allows us to tap into new market opportunities, the development of our proprietary ligase resulted from only two R&D employees working for less than one year and what we believe will add an incredible ROI. We intend to pursue several other enzyme classes in a structured and disciplined manner to continue providing value to our customers while tapping into new applications. In addition, making our proprietary enzymes is an example of insourcing that reduces our supply chain risk and improves our margin. Turning to Biopharma services, our revenue increased quarter-over-quarter. More importantly, orders increased. For Biopharma services, we know that orders convert directly to revenue in three to nine months. We believe this marks the turning point for the Biopharma Solutions Group, with solid potential to continue to build the service revenue. Validating our work-to-date, XOMA paid us $50 million in cash for half of the future milestones on royalties as of October 2024. Importantly, we retain half of the upside, which has the potential to be significant in the future. We view the cash today as positive in our drive to adjusted EBITDA breakeven without accessing the equity market. Our data storage team continues to advance the development of the technology and recently converted to water-based enzymatic chemistry to synthesize DNA on our CMOS-based chips. This change applied to our Terabyte scale product under development will mean lower cost and a more sustainable solution. I'd now like to turn the call over to Patty for commentary on some key margin initiatives.
Patrick Finn, President and COO
Thanks, Emily. As we close fiscal 2024, it's remarkable what we've achieved as we remain laser-focused on driving to profitability. For those of you who have had the pleasure of visiting our sites, you've seen the exceptional automation we have in place today. It is through a series of well-executed continuous process improvements along with software implementation that we're able to expand our portfolio capabilities and importantly, our efficiency. While the increase in revenue has and will continue to have the largest impact on margin, we are working diligently to hold costs relatively flat while growing revenue. Through well-executed continuous process improvements, operational efficiency, and a culture focused on operational excellence, we see continued margin growth moving forward. A few examples of our increasing efficiency include a new software distribution process that more than doubles the distribution capacity with the same headcount. Another example implemented over the last year is a new process for our oligo manufacturing that allows us to double the number of oligos to 16 million oligos per day in the same time and footprint. The second example not only increases our efficiency and turnaround time but also allows us to increase our available revenue capacity. Third, we made changes to automate our NGS panel production that resulted in significant savings annually from the reduction of plastic tips and reagents, which also increases capacity. These are just three examples and there are many more. Additionally, we're focused on optimizing our supply chain given our increasing volume and purchasing power, consolidating vendors while maintaining second sourcing optionality. We believe our commitment to automation and continued operational excellence will allow us to march to a 50% gross margin exiting Q4 fiscal 2025 and push beyond. Our larger team continues to surface opportunities for cost and process optimization as we introduce new vectors of profitable growth for Twist. With that, I'll turn the call over to Adam to discuss our financials.
Adam Laponis, CFO
Thank you, Patty. Revenue for the fourth quarter increased to $84.7 million, growth of 27% year-over-year and approximately 4% sequentially. For fiscal 2024, revenue increased to $313 million, growth of 28% year-over-year. Q4 orders were $88.2 million, an increase of 24% year-over-year. Orders for the year were $344.2 million compared to $263.8 million for fiscal 2023. Starting in Q1 '25, we will focus order disclosures on biopharma solutions given the longer lead time for revenue recognition. For the full business, we will focus both on disclosures and guidance for revenue growth, gross margin expansion, and our path to adjusted EBITDA profitability, which we believe are better indicators of performance. Gross margin came in higher than expected at 45.1% for the fourth quarter of fiscal 2024. During the quarter, we shipped to approximately 2,402 bill-to customers, which we define as having a single billable address that may be multiple labs and/or sites. We ended the quarter with cash, cash equivalents, and short-term investments of approximately $276.4 million as of September 30, 2024. Subsequently, in October of 2024, we received $15 million in cash from XOMA for the rights to half of our potential milestone and royalty payments related to selected biopharma programs as of that date. This additional cash is not included in our fiscal 2024 year-end financials. Taking a deeper dive into revenue. SynBio revenue increased to $33.9 million, growth of 28% year-over-year with orders increasing to $36.3 million. For the full year, SynBio revenue increased to $123.5 million compared to $98.2 million in fiscal '23, an increase of 26%. NGS revenue for the fourth quarter grew to approximately $45.5 million compared to $37.1 million in the fourth quarter of fiscal '23, an increase of 23% year-over-year. Orders increased to $46 million, and we see continued sequential growth for NGS in the year ahead. For the quarter, revenue from our top 10 NGS customers accounted for approximately 40% of NGS revenue. For fiscal 2024, NGS revenue increased to $169.1 million compared to $123.7 million for fiscal 2023, exceptional growth of 37%. We served 620 NGS customers in the quarter, with 143 having adopted our products. For biopharma, revenue was $5.3 million with orders of $5.9 million. We had 89 active programs as of the end of September 2024, and we started 68 new programs during the quarter. For fiscal 2024, revenue was $20.3 million. Looking geographically, Americas revenue increased to approximately $52.7 million for the fourth quarter compared to $43.7 million in the same period of fiscal 2023, a growth of 21% year-over-year. For the fiscal year, the Americas accounted for 62% of revenue. EMEA revenue rose to $25.5 million for the fourth quarter versus $17.2 million in the same period of fiscal '23, growth of 48% year-over-year. For the fiscal year, EMEA represented 30% of revenue. APAC revenue increased to $6.5 million in the fourth quarter compared to $6.1 million in the same period of fiscal '23, a growth of 8% year-over-year. APAC accounted for 8% of our revenue. China continues to be a relatively small portion of our revenue at approximately 2% of total revenue for fiscal 2024. Moving down the P&L. Our gross margin for the fourth quarter increased to 45.1%, and for the fiscal year, gross margin increased to 42.6%, an improvement of six margin points versus fiscal 2023. Our Express portfolio, the margin initiatives, including those Patty covered earlier and our commitment to holding overhead and labor costs flat while growing revenue resulted in the margin expansion for both the quarter and the year. Looking towards fiscal 2025, we continue to expect on average 75% to 80% of incremental revenue to drop to the gross margin line. Operating expenses, excluding cost of revenues for the fourth quarter, were $74.3 million compared with $74.6 million in the same period of 2023, highlighting our focus on holding operating expenses relatively flat while continuing to grow revenue and expand gross margin. Operating expenses included approximately $6 million for data storage in the fourth quarter. Operating expenses, excluding the cost of revenues for fiscal 2024 were $354 million, including the impairment charge of $45 million in fiscal Q3, compared with $307 million in fiscal 2023. Looking at our progress on our path to profitability, for the fourth quarter of fiscal '24, adjusted EBITDA was a loss of approximately $17 million, an improvement of $9 million versus the fourth quarter of fiscal '23. For fiscal 2024, adjusted EBITDA was a loss of approximately $93.5 million, an improvement of approximately $54 million versus $147.3 million for fiscal 2023. Cash flow from operating activities continues to improve and we are driving to adjusted EBITDA breakeven. For the 12 months ended September 30, 2024, net cash used in operating activities was $64.1 million compared to $142.5 million for the equivalent 12-month period in 2023. Capital expenditures in fiscal '24 were $5 million, a reduction of $23 million versus $28 million of CapEx in fiscal '23. We ended the year with cash, cash equivalents, and short-term investments of approximately $276.4 million versus $289.4 million as of June 30. A reminder that this does not include the $15 million in cash from XOMA. Turning to guidance. For fiscal 2025, we expect total revenue of $367 million to $377 million, growth of approximately 17% to 20% year-over-year. SynBio revenue of $142 million to $146 million, growth of approximately 15% to 18% year-over-year. We expect NGS revenue of $204 million to $209 million, growth of approximately 20% to 24% year-over-year. For biopharma revenue of $21 million to $22 million, growth of approximately 3% to 8% year-over-year. For Q1 of fiscal 2025, we expect total revenue of approximately $87 million, growth of approximately 22% versus Q1 of fiscal 2024. SynBio revenue of approximately $34 million growth of approximately 26% year-over-year. NGS revenue of approximately $48 million, growth of 22% year-over-year. And biopharma revenue of approximately $5 million. For the full year of fiscal 2025, we expect gross margin of approximately 48%, with quarterly sequential improvements in Q4 fiscal 2025 gross margin of 50%. We expect adjusted EBITDA loss of approximately $60 million to $65 million for fiscal 2025, an improvement of approximately $30 million to $35 million versus fiscal 2024. Q1 fiscal 2025 adjusted EBITDA loss of approximately $20 million with sequential improvements in subsequent quarters. As a reminder, Q1 contains an additional bump in OpEx due to bonus and promotional payouts. With that, I'll turn the call back to Emily.
Emily Leproust, CEO and Co-Founder
Thank you, Adam. As we begin fiscal 2025, we stand at the cusp of a new era for Twist. The past year has been a testament to the power of combining visionary technology, game-changing products and the relentless drive to enable customer success. We have advanced our product portfolio and grown revenue. More importantly, our commitment to providing cutting-edge solutions empowers our customers to tackle some of the world's most pressing challenges. By delivering precision, efficiency, speed, and scalability in our products and services, we have equipped researchers across many other industries to pioneer breakthroughs that improve health, promote sustainability, and drive economic growth. We believe that when our customers succeed, we all succeed, creating a ripple effect of positive change that extends globally. Looking ahead, we are more committed than ever to pushing the boundaries of what's possible. We will continue to invest in research and development, employing fiscal discipline to provide products that generate profitable growth. We will continue to focus on delivering value to all of our stakeholders and implementing financial discipline to hold firm on our march to adjusted EBITDA breakeven. Before I conclude, I'd like to take a moment to thank our incredible employees, who go above and beyond to serve our customers and each other every single day. It's been a banner year for Twist, and our employees deserve recognition for what we have achieved together. Our momentum is building, and we look forward to keeping you apprised of our progress. Operator?
Operator, Operator
Our first question comes from Matt Sykes with Goldman Sachs. Your line is now open.
Matt Sykes, Analyst
Good morning. Thanks for taking my questions. Maybe just I'll ask two questions just upfront and get back in the queue. But can you just give us an idea for how Express Genes and new products trended as a portion of the SynBio mix throughout the course of this year and potentially what it was in Q4? And then secondly, understanding the operational efficiencies that you guys outlined plus the revenue growth, could you just – Adam, could you just give us an idea of OpEx and the trends next year, both for R&D and SG&A and how we should think about the phasing of that spend either in terms of growth versus this year or quarterly phasing next year? Thanks.
Emily Leproust, CEO and Co-Founder
Adam, are you on the line?
Adam Laponis, CFO
Yes, absolutely. Matt, great. Thank you. Good morning. Thanks for the question. I'll start with the second one first and we'll come back to the first one. In terms of the second one, in terms of phasing, we expect very modest increases as I call it inflationary increases in OpEx. A big chunk of it will come in the first quarter as we do our merit annual bonus increases for the year, but it will be pretty modest increases throughout the balance of the year. It's fairly in line with what we saw last year. Matt, in terms of your first question regarding drivers of growth as well as in gross margin, I think Patty hit on some of the really exciting opportunities we have in terms of the projects that we're driving, but we see that continued sequential improvement in gross margin each of the quarters starting in Q1 and going throughout the year and still reiterating the exit of 50% gross margin as we go.
Operator, Operator
Thank you. Our next question comes from the line of Vijay Kumar with Evercore ISI. Your line is now open.
Vijay Kumar, Analyst
Hi, guys. Thank you for taking my question. Emily, on the big picture here, post-elections, a lot of questions on NIH budgets and the competitive landscape. Can you talk about what is your total exposure to NIH budgets and I know customers, I think in the past have asked you where Twist is manufacturing the genes. Have you seen any change in comparative behavior as Twist seeing more share gains?
Emily Leproust, CEO and Co-Founder
Yes. Thank you, Vijay. Good morning. On the NIH, we have very small exposure at probably less than 1%. So actually it's an opportunity for us to do better there. And we know that in the past, anytime budgets were constrained, it was an opportunity for us to take market share because again, our brand is high quality at a very, very good price. So, it's going to be an opportunity, I think for us to lean into that. And then as far as production, yes, 100% of DNA is made in the U.S. and over the last few quarters, there are definitely more questions around where DNA is being made. And so I think our customers are definitely thinking about their supply chain and it's going to be a headwind for our competitors that manufacture outside of the U.S. and I think it's a tailwind for us.
Vijay Kumar, Analyst
Understood. Could you provide clarification on related-party revenue? How much was it in this quarter regarding your EBITDA guidance? Is the implied EBITDA exit rate for the fourth quarter expected to be in the range of minus 10 to minus 13?
Adam Laponis, CFO
Vijay, happy to take the question. In terms of related-party revenue, it was about $12 million in Q4, relatively in line with legacy. And in terms of EBITDA, what we said is $20 million in Q1 with sequential improvement all the way throughout the year and netting out at $60 million to $65 million for the year. So the range you talked about is unreasonable.
Operator, Operator
Thank you. Our next question comes from the line of Sung-Ji Nam with Scotiabank. Your line is now open.
Sung-Ji Nam, Analyst
Hi, thanks for the question. Emily, it's great to see the ongoing collaboration with the NextGen sequencing providers that Twist has. As you review many of these providers, they are creating highly innovative solutions for library preparation. You mentioned Elements, Trinity, and Illumina's constellation Nap3 technology. I'm curious, from Twist's perspective, do these new innovations create more sales opportunities for your products, and how might they impact your overall revenue prospects in the future?
Emily Leproust, CEO and Co-Founder
Thank you for the question. Overall, we see this as a positive development. As technology progresses, there is an increasing emphasis on quality and performance, which aligns with what we offer through our products, enzymes, and our Library prep. Additionally, one of our advantages over competitors is the speed of our research and development. As these technologies advance, we are able to remain at the forefront, using our innovation and commercial execution to drive revenue growth.
Operator, Operator
Thank you. Our next question comes from the line of Subbu Nambi with Guggenheim Securities. Your line is now open.
Subbu Nambi, Analyst
Hi, guys. Thank you for taking my question. Could you elaborate on the different moving parts to the 2025 guide? Which end markets growth are you assuming for NGS growth? Are you baking in any FDA approvals or Medicare reimbursements? And could you also provide additional insights into '25 assumptions for the SynBio market? And last, what are you assuming Express Genes to be? Is it all upside or are you assuming anything in the 48% gross margin target? Thank you for that.
Patrick Finn, President and COO
Thank you for the question. No, it's a great question. And as we're looking at the year, kind of maybe step back and can say first how pleased we are with the progress we've made. Seven quarters of sequential growth in revenue, GAAP gross margin of 850 basis points now, reduction in GAAP OpEx in Q4 versus prior year, minimal CapEx for the year and when I look at the drivers specifically of what was assumed in the modeling. For NGS, we have not assumed an MRD ramp; we assume the continued improvement in liquid biopsy. We can see this continued improvement in expanding our customer base. And then going down to the SynBio side, we're seeing expansion of the number of net new accounts. We're seeing expansion continue in Express Genes, and we're seeing that positive uptick already this year we expect a continuation of that next year. From where we sit down the P&L and into other areas of the business, we do expect to see the continued improvement in gross margin sequentially throughout the year.
Operator, Operator
Thank you. Our next question comes from the line of Luke Sergott with Barclays. Your line is now open.
Luke Sergott, Analyst
Great. Thanks, everyone. Can you provide some information about the DNA storage? Is this related to the century archive solution? I recall discussions about it being commercialized either later this year or early next year. The update in the slides is useful, but are there earn-outs or milestones connected to this? Who are the early access customers? Any additional details you can share?
Emily Leproust, CEO and Co-Founder
Yes. Thank you, Luke. Yes, at the end, DNA storage is the key future vector of growth for us. The market is really, really big. And when we go into it, we need to be competitive with existing technologies that are tape and hard drive. We are fully focused on the terabyte chip and terabyte applications. And so what the team is doing is focusing on that technology development. First, it's a combination of both the chip and the synthesis. At this point, we are fully converged on a water-based enzymatic chemistry approach that is deployed for those chips. The reason for a dramatic focus is from a point of view of both cost and sustainability, that's what we need. So at this point, we are really strongly focused on that development. Therefore, it's a little bit early to speak about our customer, but the team is making great progress.
Operator, Operator
Thank you. Our next question comes from the line of Matt Larew with William Blair. Your line is now open.
Matt Larew, Analyst
Good morning. For Adam, obviously, gross margins above in the quarter, and I think that was despite the top-line upside coming from SynBio. So just curious if that reflects a bias towards Express Gene relative to your expectations and anything else to think about in terms of the scale-up that fact of the future and just maybe help us think about where the gross margin upside came from in the quarter.
Adam Laponis, CFO
Matt, great question. In terms of the gross margin upside, I've mentioned it before that we see whether it be SynBio now or NGS that 75% to 80% of the incremental revenue will drop to the gross profit. I think we're seeing that play out here in Q4. I'd say Express Genes was a tailwind, as it continues to see sequential improvements quarter-on-quarter. But those are not outsized in any way, shape or form. This is more a reflection of as we continue to grow and continue to see growth faster than expectations, we're seeing the gross margin fall in line with that growth. I'd also hit on some of the key points that Patty mentioned on the call. There are a number of operational initiatives that we are working on and have been working on in 2024, all of which are adding to the continued improvement in gross margin. We expect to see more of those improvements as we go into 2025. But the timing of which is a bit uncertain on some of when they'll actually hit the P&L. If you think an improvement that launches in the sixth week of the quarter will be different than when the launches in the tenth week of the quarter. We're no less excited about those improvements, but we will be a bit cautious in the way we look at the timing of when that impact hits.
Operator, Operator
Thank you. Our next question comes from the line of Puneet Souda with Leerink Partners. Your line is now open.
Puneet Souda, Analyst
Thank you for the questions. I appreciate your concerns regarding our exposure to NIH, which is currently low. However, with the ongoing political situation and the pending HHS appointment, I'm wondering if you could provide insight into our pharma and biotech exposure. Additionally, what gives you confidence in the fiscal '25 guidance of 17% to 20%? Are you expecting this growth from taking market share, expanding in NGS and diagnostic assays, or is it more focused on SynBio in E&O? Also, I'd like to ask about the biopharma segment. I see the XOMA deal is now contributing 6% to our revenue. How integral is this sector to our overall business? Given that 50% of the deal was already included and with recent leadership changes in the biopharma division, I'm curious about its importance to us now. Thank you.
Emily Leproust, CEO and Co-Founder
Thank you, Vijay. I'll start with the second question first. The biopharma team has consistently excelled in scientific aspects. We understand that when we receive service orders targeting our capabilities, we can fully utilize our advanced AI technologies in both in vivo and in vitro settings to develop candidate drugs, which demonstrates our strong technological edge. Although we have faced some commercial challenges, I was encouraged by the orders we secured last quarter, particularly in NF1. We need to replicate that success. I believe that the service offerings from biopharma are quite valuable in promoting our SynBio products, as we engage with the same customers. We can provide them with products if they choose to conduct work in their labs or offer services if they prefer to outsource. This dual approach is beneficial when we can cater to both needs. Simultaneously, all business units and product lines need to contribute their fair share, but I am optimistic about an upward trend in biopharma revenue. Regarding our biopharma funding exposure, we report that our healthcare exposure is approximately 60% across both SynBio NGS and biopharma product groups. As you're aware, there have been several years of financial pressures in biopharma, yet we have performed well. Our success over the past few years is no coincidence; our products and services are uniquely positioned, complemented by our aggressive sales strategies. I am looking forward to continued success and remain positive about the future.
Operator, Operator
Thank you. Our next question comes from the line of Tom Peterson with Baird. Your line is now open.
Tom Peterson, Analyst
Hi, thanks, everyone. Good morning. Thanks for taking my questions. Maybe just quickly from me. I think you mentioned share gains on the SynBio side directly related to the Express Genes offering. I mean, can you elaborate on where you're seeing share gains here? Is this conversion of DNA makers? Are you seeing share gains elsewhere? And then maybe just quickly a second question, I don't know if I missed this. Did you disclose what you're expecting to spend from an OpEx perspective in '25 on DNA data storage? Thanks.
Patrick Finn, President and COO
Tom, it's Patty here. Thank you for the question. I'll take the first part of that. I think with the Express Genes, obviously, sequential growth is good, but it's also allowing us to expand downstream for the customer more broadly into our workflows. FastGene enabled us to move down to perhaps protein, IGG works and very positive performance and we think that will continue.
Adam Laponis, CFO
In terms of data storage, if you look at it on a 2024 basis, we spent in terms of OpEx around $25 million on a GAAP basis, cash was probably closer to $20 million. We haven't provided specific guidance in terms of where we're going to be in 2025, but I would expect a relatively stable investment profile.
Operator, Operator
Thank you. Our next question comes from the line of Brendan Smith with TD Cowen. Your line is now open.
Chad Wiatrowski, Analyst
Hi, it's Chad Wiatrowski on for Brendan Smith. Could you just give a little more color on the proprietary enzymes that you mentioned? And sort of why now have there been sort of developments that make this the right time to start launching products there? Or was this just sort of a natural next step area to deploy that technology?
Adam Laponis, CFO
Thank you for that question. It's really a great application of our platform. Our capacity for DNA synthesis gives us a competitive edge in discovering new enzymes. We've achieved significant success with our products aimed at target enrichment, and as they integrate into workflows, developing proprietary enzymes with unique features provides another way to stand out and is well appreciated by customers. The ligase product that Emily highlighted aligns with our goal of maximizing sequencer efficiency. We label each molecule to facilitate their entry into the sequencer, enhancing efficiency and producing favorable results for customers. Our capability to create distinct workflows will be crucial for our customer base moving forward. Thus, the timing is optimal, and we are pleased with the enzyme roadmap we have planned.
Operator, Operator
Thank you. Our next question comes from the line of Thomas DeBourcy with Nephron Research. Your line is now open.
Thomas DeBourcy, Analyst
Good morning. My question is about orders. Reflecting on your fiscal Q2, there was an increase in customer purchase orders with the start of the calendar year. As you look ahead to 2025, do you anticipate a similar trend in purchase orders at the beginning of the calendar year? Also, regarding 2024, how did you perform in executing and converting those open purchase orders? Thank you.
Adam Laponis, CFO
No. Tom, this is Adam, and thank you for the question. We're really pleased with how the business is performing. You look at it as I think hitting on the seven sequential quarters of increased revenue. We are seeing that order pattern with more customers making longer term commitments to us, wanting to use different mechanisms that are easier for procurement perspectives. We expect to see sequential growth in both orders and revenue throughout the next year. As I mentioned on the call earlier, our commentary and disclosures moving forward in orders will be focusing primarily on biopharma and we'll drive home the forecast and expectation of revenue in our disclosures moving forward in 2025. But we are very pleased with the progress we're seeing in the continued expansion, not just on the order side but truly on the revenue up and down the P&L.
Operator, Operator
Thank you. Our next question is a follow-up from Matt Larew with William Blair. Your line is now open.
Matt Larew, Analyst
Thanks for the follow-up. I have two quick ones. The first, a couple of questions about NIH. I think historically, or I guess over the summer, you've done some things to make your offering more streamlined in the academic market. I was just curious how you think that positions you going forward. And then the last one is the cleanup actually on Adam's comment there. So just to confirm, going forward, you will not be providing orders on SynBio and MGS; I think that's what you're saying, but just confirming.
Emily Leproust, CEO and Co-Founder
Adam, you want to cover the second question first?
Adam Laponis, CFO
Sure. I'll take up. I'll take the second part, Matt, yes, I'm confirming that we are going to be focusing our disclosures and orders in the area just in biopharma moving forward for fiscal '25.
Emily Leproust, CEO and Co-Founder
Thank you, Matt, for the first question. We have indeed been concentrating on the workflow and the user experience for academic ordering. It's essential to have excellent products, which we do—they are fast, high quality, low cost, and provide great value. Additionally, we've been prioritizing the user experience with e-commerce, particularly in integrating our e-commerce website with the ordering systems of academic institutions, such as Ariba, Coupa, and Jaggaer, among others. We refer to this internally as B2B or Punch out, and we are working on strengthening the connection between our e-commerce and the institutions. We've observed that as these systems roll out, the revenue growth from those institutions and the number of new users is very encouraging. Traditionally, we've prioritized larger accounts, which has been successful, but we are now also targeting smaller customers. It's a key focus for us, and we believe we have a solid solution; the next step is to get those institutions to engage with our e-commerce platform.
Operator, Operator
Thank you. Our next question comes from the line of Vijay Kumar with Evercore ISI. Your line is now open.
Vijay Kumar, Analyst
Hi, thanks for bringing me back. Adam, could you elaborate on the related-party revenues? It's a term we don't often see with other companies. Can you explain what this is and why Twist is required to disclose it? Thank you.
Adam Laponis, CFO
No, Vijay, happy to. It's quite straightforward here as we have three related parties in our fiscal '2024. One of these was no longer a related party by the end of Q3. All three parties are public U.S.-based companies, one of which has CEOs from our Board, and one is a Board member who is the CEO of that company. We continue to see that business remaining relatively stable, and we will disclose this in our 10-K and 10-Q as required by accounting standards, similar to most other companies. No, Vijay, I appreciate the question. Thank you so much.
Operator, Operator
Thank you. Our next question comes from the line of Rachel Vatnsdal with JPMorgan. Your line is now open.
Rachel Vatnsdal, Analyst
Hi, good morning. Thanks so much for taking the questions. Just squeeze one here in on Express Genes, kind of a three-parter. But first off, could you just quantify for us how meaningful Express Genes was this quarter? And then now that you're a bit further into the launch, I was wondering if you can break down for us what the updated pricing premium is for Express Genes over the past few quarters? And then just lastly, how do you think about contribution from Express Genes into the targets you laid out for '25 today? Thanks.
Emily Leproust, CEO and Co-Founder
Yes, thank you, Rachel. This is a very important topic for us and thanks for bringing it up. And so as a step back as a reminder, now we are not only talking about Express Genes, but we've built on that initial Express Gene launch to build what we call an Express portfolio. So you can get Express fragments, you can get Express Genes, you can get Express prep. Last quarter, we reported being able to do Express IGG, where we're able to ship IGG protein, Express intro in certain genes. So that combination of that Express portfolio is doing a couple of things. The first one is, it's boosting our revenue. Again, we are seeing sequential growth from our Express portfolio. It's adding net-new customers; it's converting makers into buyers. And just as a quick clarification. Some customers used to be buyers of fragments and they were making their own clonal genes. Well now they can buy it or customers will buy clonal genes and then they will make their own prep. Now they can buy the prep or they were buyers of preps, and they would make their own IGG. Now they can buy the IGG. So that conversion of maker to buyer is happening. The last thing that we truly appreciate is the increased contribution to our margin from the Express portfolio. We've reported now it’s multiple quarters in a row where 75% to 80% of our revenue growth drops to the gross margin line. In the past, we had a differential in gross margin between SynBio and NGS, and thanks to our Express Gene portfolio, now it's about the same. If there is a new dollar that comes in, it doesn't really matter if it goes into the SynBio line or the NGS line; the benefit to the gross margin line is the same. We continue to leverage that portfolio; it's very much a winner, and we look forward to benefiting from the revenue growth step and the margin benefit to get us to our goal of getting to adjusted EBITDA breakeven without going back to the market.
Operator, Operator
Thank you. I would now like to hand the call back over to Emily Leproust for closing remarks.
Emily Leproust, CEO and Co-Founder
As we close, let me emphasize this. Twist delivered record-breaking results in fiscal 2024, and we're on a clear trajectory towards profitability and continued long-term growth. Our technology is transforming industries, driving innovation, and delivering value to our customers and shareholders. With momentum at our back, a relentless focus on disruptive innovation and disciplined execution, we are poised to reach new heights in fiscal 2025. I want to thank our employees, customers, and investors for your trust and partnership as we write the future together. Thank you for joining us today.
Operator, Operator
This concludes today's conference call. Thank you for your participation. You may now disconnect.