Conference Transcript - TWST 2026-02-02

Operator

Ladies and gentlemen, thank you for standing by. Welcome to TWIST Bioscience Fiscal 2026 First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Angela Bidding, Senior Vice President of Corporate Affairs. Please go ahead.

Angela Bitting, Head of Investor Relations

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 first 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 LaProust, CEO and co-founder of TWIST, Adam Loponis, 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 re-queue as a courtesy to others on the call. This call is being recorded. The audio portion will be archived in the investor 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 in 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 the information available to 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 suggested EBITDA, 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 LaProust. Thank you, Angela, and good morning, everyone.

Emily Leproust, CEO

Q1 provided a strong start to fiscal 2026 and expanded the pattern of consistent execution, marking our 12th consecutive quarter of revenue growth. This performance builds directly on the operating momentum established in fiscal 2025 and reflects trends that remain intact as we move through the year. Notably, over the last three years, we have delivered a revenue cager of 24% and increased margin by 20 percentage points on relatively flat OPEX, materially outpacing growth across much of the life science tool industry. We believe the combination of sustained growth and meaningful operational progress clearly differentiates TWIST within our peer group. Going back to basics, at TWIST, our strategy is simple and very deliberate. We built a semiconductor-based DNA synthesis platform that gives us a technology advantage that translate into speed, scale, quality, and affordability for our customers. Everything we do builds on this differentiated and foundational platform. As we load more volume onto our chip, saving more customers with more products, we improve our financial performance, strengthen our competitive position, and expand our dressable markets. This quarter's results reflect that our model is working as intended, and we are building for the opportunities we see that leverage our advantage to accelerate growth. Over the last several years, we have transformed TWIST into what we internally described as an NPI machine. We consistently launched new products that sit on top of the same core manufacturing infrastructure, allowing us to expand into new applications and customer workflows without adding risk or complexity. As a result, our estimated serviceable market has expanded from approximately $2 billion in 2020 to roughly $7 billion today, driven by our current portfolio of products and services. Based on our market growth and customer adoption patterns, we continue to see a clear path to more than $12 billion of sustainable markets by 2030, with additional growth opportunities as we launch new products. Importantly, this sample expansion is occurring while serving some of the most sophisticated customers in licenses across therapeutics, diagnostics, and applied markets. These customers choose to is because we future-proof their supply chains and innovation to enable them to move faster at scale with confidence. Padi will dive deeper into one of the opportunities in the DNA synthesis and protein solutions group to detail how we are planning to win in the AI-enabled discovery market as it forms and scales in real time. For our NGS applications group, we see a serviceable market of over $3 billion, with about 7% market share today. Looking at our serviceable markets within this group, we expect a blended CAGR for the industry Also, approximately 14% across oncology and rare disease diagnostics, microarray, biofarm R&D, and academic markets. Keep in mind, our revenue for NGS comes both through direct sales and other partners who sell our panel and reagents under their brand. Importantly, we expect our growth to outpace industry levels as we leverage our NPI engine and commercial intensity to help perform our peers. We expect to drive growth in NGS applications by expanding volumes with existing diversity customers as their testing scales, particularly in oncology where recurring testing supports sustained demand. In addition, we expect to add new customers in the diagnostic space. TWIST will also pursue market share gains by conducting legacy microarray workflows to sequencing-based solutions in agri-genomics

Patrick Finn, COO

and procreation genetics.

Emily Leproust, CEO

In bioform R&D and academic research, growth will be driven by increasing adoption of TWIST's multi-genomics portfolio and by expanding product offerings to support new applications and workflows. A key to our ongoing success is that over the last decade, we have built deep, long-standing customer relationships that gives us clear insight into undet needs and emerging demand. We pair that customer insight with our proprietary platform to consistently deliver a strong product roadmap and the disciplined cadence of commercial launches. About a year ago, we recognized the early formation of a new category in AI-enabled therapeutic discovery, a market that was effectively non-existent in 2024. But this is called 2025. We had booked more than $25 million in orders, specifically tied to AI discovery. This exemplifies to its ability to help define new categories by listening closely to customers, adapting our roadmap ahead of market inflection points, and investing early to establish leadership. This was done with flat operating expenses through the fourth quarter of last year.

Patrick Finn, COO

Going forward, we see meaningful growth ahead

Emily Leproust, CEO

this category continues to develop in the first quarter we made targeted deliberate transient and structural investments to expand our advantages for all the opportunities we see across the business some of these investments are in the commercial team to amplify our success in the

Patrick Finn, COO

market others are in the infrastructure and operations to support the scale of the full

Emily Leproust, CEO

portfolio importantly we made these investments while remaining focused on our core financial priorities including revenue growth, growth margin, and adjusted EBITDA breakeven. To be clear, we are committed to adjusted EBITDA breakeven in the fourth quarter of fiscal 2026. On top of this, we see an opportunity to increase our growth rate and we have tax rated our operating expenses up by about 10 million dollars per quarter without putting adjusted EBITDA breakeven at risk. As you know, investment in growth is like a turbo on an engine. There is a lag between pushing the gas pedal, and the acceleration. On an ongoing basis, we expect approximately 75-80% of our all incremental revenue growth across all product lines to drop to the growth margin line. We have worked hard to get to this point and will continue to tune the machine. As a team, we are focused on three key performance metrics, revenue, growth margin, and adjusted beta breakeven. We measure many other things within the company and the business, but ultimately these three metrics drive our future growth. Our management team and every employee that we have are measured and incentivized on these three metrics. Overall, we are managing the business, keeping an eye on the gas and the growth like ox. And we expect to become an even more formidable force in the coming years as we sustain growth through disciplined reinvestment of our profits. at this time i'd like to turn the call over to patty to further expand on our growth initiatives

Patrick Finn, COO

around ai enabled discovery thank you emily a twist we're constantly engaged with our customers and key opinion leaders going back to december 2024 within a relatively narrow time window we were in dialogue with several customers bringing forward new ideas for the use of our platform technology expanding beyond DNA synthesis and deeply into protein expression and antibody characterization for thousands of sequences. As you may remember from biology class DNA encodes a sequence for proteins which can then be expressed in a cell. The proteins expressed within the cell can then be purified and run through specific acids to determine the protein's characteristics including stability, developability and more. historically we made dna we've expanded to also expressing proteins from the dna opening up a 700 million dollar market to twist because our semiconductor based platform writes dna sequences at scale ai presents a fabulous use case that incorporates our unparalleled throughput speed quality and cost advantages all customers are engaged in a design build test learn cycle the customer designs the sequences we build the proteins and then we conduct a series of assays to test the proteins once we deliver the products or data the customer learns from the information and optimizes the cycle for the next iteration these customers fall into three different buckets first we are currently working with large pharma companies who are building robust large language models and preparing training sets we receive thousands of sequences to synthesize, but ultimately this customer type does not want the DNA strand. They want TWIST to conduct protein expression and characterize the protein, delivering only a data file with the results of the assay. These customers have a wet lab but cannot handle the volume of sequences they want to test and may not be new to TWIST, with this being an expansion of our work with them. A second customer group includes large tech companies focused on creating or expanding their presence in life sciences they do not have a wet lab and operate as a so-called dry lab company this means they rely on twist to conduct all research experiments and we deliver the data to them for evaluation and next steps these customers are new to twist a third customer group is well-funded biotech companies that need thousands of sequences and data essentially pursuing similar paths to large pharma across all customers the work is custom according to their requirements but the work streams and margin profiles are similar across customer types and we have the capacity to serve all when we launch a new product or service and the work in ai enabled discovery is a series of bullets we complete the work using the best tool spending no expense to ensure the customer receives what they need Once we know the product resonates with customers, we optimize processes, automate and proceed through a series of improvements to rapidly bring the margin profile in line with the rest of the business, where 75 to 80% of incremental revenue drops to the gross margin line. We've done this time and time again with a repeatable process. In fact, we continued this drive in the first quarter with 74% of incremental revenue dropping through to gross margin. What began as exploratory work in early 2025 leveraging our platform the ai enabled discovery market is now transitioning into repeat production level workflows with customers increasingly focused on generating high quality data at scale as models mature the constraint is no longer algorithm development to the speed quality and economics of experimental data generation that shift is driving demand toward platforms that can reliably deliver large volumes of data quickly and cost effectively and twist fits that needs very well our platform is uniquely suited to this customer need allowing customers to move from design to data in days not months we see this as a durable and expanding opportunity that aligns directly with twist's core strength of customization at scale with an immediately serviceable market of 1.5 billion dollars for customers of antibodies discovery services and $700 million for protein expression. With that, I'll turn it over to Adam to discuss our financials for the quarter. Thank you, Patty. Revenue for the first quarter

Adam Laponis, CFO

increased to $103.7 million. Growth is 17% year-over-year and approximately 5% sequentially. Gross margin came in higher than expected at 52.0% for the first quarter of fiscal 2026, An increase of approximately four margin points over the first quarter of fiscal 2025, supported by increasing revenue in our continuous process improvement efforts. DNA synthesis and protein solutions revenue increased to $51.1 million, growth of 27% year-over-year, driven by strength from customers pursuing AI-enabled discovery, whether building models or testing molecules. NGS applications revenue for the first quarter grew to approximately $52.6 million. Excluding one large customer, NGS grew 18% year-over-year. For the quarter, revenue from our top 10 NGS applications customers accounted for approximately 36% of NGS revenue. Looking geographically, America's revenue increased to approximately $58.4 million for first quarter, compared to $53.7 million for the same period of fiscal 2025, growth of 9% year over year. EMEA revenue rose to approximately $38.4 million in the first quarter versus $28.3 million in the same period of fiscal 2025, growth of 36% year over year. APAC revenue increased to approximately $7 million in the first quarter compared to $6.7 million in the same period of fiscal 2025. Looking at revenue by industry. Therapeutics revenue rose to approximately $37.2 million for the first quarter of 2026, compared to $26.8 million in the same period of fiscal 2025, an increase of 39%, reflecting the increased uptake of our products by large pharma and biotech customers in their efforts on therapeutics discovery and including AI-enabled discovery. Diagnostics revenue was approximately $35.3 million for the first quarter of 2026, substantially equivalent to $35.5 million in the same period of fiscal 2025. Excluding one customer, Diagnostics was up 12% year-in-year. Adding to Diagnostics, recall about 75% of our global supply partners' revenue is OEM partners selling TWIST products for NGS applications. Although we We do not always know our OEM partners and customers. We believe the vast majority of their revenue is focused on diagnostics. Industry and applied revenue were $6.1 million in the first quarter of 2026, compared to $5.5 million in the same period of fiscal 25, an increase of 11%. Academic research and government revenue was approximately $12.2 million, relatively equivalent with $12.4 million dollars in the same period of fiscal 2025. We saw less large scale projects compared to the same period of last year, but a large expansion in the number of customers purchasing from us based on our MPI and academic commercialization efforts. We see the academic market returning to growth in Q2 with increased confidence in NIH funding for 2026. Global supply partner revenue was $12.8 million in the first quarter of 2026, compared to 8.5 million in the same period of fiscal 2025, an increase of 50 percent driven by three factors, a significant new partner for NGS coming online, substantive growth in our diagnostics OEM partners, and growth for our distributors in APAC, moving down the P&L. Our gross margin for the first quarter increased to 52.0 percent, an improvement of approximately four margin points versus the same period of fiscal 2025, reflecting our strong revenue growth and customer base as well as continuous process improvements operating expenses excluding cost of revenues for the first quarter were 86.9 million compared with 77.5 million in the same period as 2025. the increase in operating expenses was driven by investment in our commercial groups to drive additional revenue growth as well as digital capabilities looking at our progress in our path to profitability for the first quarter of fiscal 2026 adjusted EBITDA with a loss of approximately 13.4 million dollars an improvement of approximately 2.8 million versus the first quarter of fiscal 25. This improvement demonstrates our ability to scale efficiently even as we front load strategic investments in commercial and digital capabilities. These investments are expected to remain stable or moderate slightly in the second half of the fiscal year. For the first quarter of fiscal 2026 net cash use and operating activities was $24.8 million. Capital expenditures in the first quarter of fiscal 2026 were $10 million. We ended the quarter with $197.9 million in cash, cash equivalents, and short-term investments. Turning to guidance. For fiscal 2026, we expect total revenue of $435 million to $440 million, growth of approximately 16% at the midpoint. We expect the revenue increase versus prior guidance to be generally balanced across DSPS and NGS. For Q2 of fiscal 2026, we expect total revenue of $107 to $108 million, growth of approximately 16% year-over-year at the midpoint. For NGS, we expect strong sequential growth in Q2 behind growth in key accounts, with sequential growth throughout the year as previously discussed. We remain confident in our trajectory and continue to forecast reaching adjusted EBIT that break even for the fourth quarter of fiscal 2026 with that i'll turn the call back to emily

Emily Leproust, CEO

thank you adam as we step back and look across the business what stands out is how consistently the pieces are coming together at twist our growth is being driven by a repeatable model we're expanding our adjustable markets with discipline product innovation loading more volume onto the same silicon-based platform and converting that scale into improving financial performance. This is not dependent on a single product, customer, or market. It is the result of an NPI engine that continues to deliver, paired with operational execution, that scales efficiently. We continue to introduce newer products across both DNA synthesis and protein solutions and NGS applications, with different adoption dynamics but the same underlying outcome. More customers, more applications, and more volume flowing through the same effectoring infrastructure. This is what allows us to support growth while maintaining margin discipline and capital efficiency. Importantly, we have built this platform with significant capacity already in place. We are about to support continued demand without introducing meaningful execution risk. As revenue scales, the economics of the model become increasingly favorable, reinforcing our confidence in the path ahead. This is why we we remain very confident reiterating our expectation to reach adjusted EBITDA break-even in Q4 of fiscal 2026. The drivers of that outcome are already visible in the business today. Confident revenue growth, gross margin above 50%, disciplined investment in operating expenses to accelerate growth, and a scalable cost structure. More broadly, TWIST is increasingly positioned as an enabling infrastructure provider across the biological continuum, from early discovery through diagnostics and into therapeutic development. Whether it is enabling AI-driven growth discovery, supporting precision diagnostics, or scaling production for up-line markets, customers choose to risk because our platform allows them to move faster, reduce risk, and operate at scale. To help investors engage more deeply with our strategy, platform, and long-term opportunities, we plan to host an Investor Day in May. At that time, we will provide a deeper look at how our customers use our products, our product roadmap, market expansion opportunities, and financial frameworks as we continue to scale the business beyond adjusted beta breakeven. We expect to provide more event details in the coming weeks. In closing, TWIST enters the remainder of fiscal 2026 with a differentiated platform, expanding markets, consistent execution, and a clear line of sight profitability. We are focused on doing what we have consistently done, launching products, serving customers exceptionally well, and scaling the business with discipline. With that, we are happy to take your questions.

Operator

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again. We ask that you please limit to one question only. And if you have any additional questions, please return to the queue. Please stand by while we compile the Q&A roster. And our first question is going to come from Matt Leroux with William Blair. Your line is open.

Matt Leroux, Analyst — William Blair

Hi, good morning, and thanks for taking my questions. I want to follow up on the domain reference in terms of AI drag discovery. Emily talked about this being a durable opportunity, opportunity, but when you think about customers trying to build out a foundation model, then building training models, does this demand something you think that's measured in months or years, or is this a reference just a new part of the drug discovery ecosystem would be the first part? And the second part of that was you called out over 50,000 genes manufactured for data characterization in the quarter. I'm curious, you know, what that number was in the prior period and kind of how the economics of delivering data versus delivering DNA work for Twist?

Emily Leproust, CEO

Thanks, Matt. Great question. Yes, so we're very excited about what AI is doing for Twist by pulling volume onto our chips and enabling us to ramp revenue. And definitely this quarter 27% growth in DNA synthesis and protein solution is very much driven by AI. In terms of durability, so it's still early days, but what we're seeing is customers that had big orders over the last few quarters are coming back with other big orders, and so it doesn't seem to be letting down. and at the same time we're adding more and more of the top 20 pharma to our platform as well as the Magnificent Seven as well as the startups that are very well funded but we don't have food penetration so we see there's a lot of growth coming And then long term, what we think is that AI is going to become the first path. Right now, or in the past, in vivo or in vitro was the question you had to ask yourself. And we think AI would be the first path. It would be about probably the same cost of about 250K to discover an antibody. but it would be the data will be delivered in two weeks instead of six weeks with in vivo and in vitro and then in vivo and in vitro are still going to be important but as a second path. As far as the 50,000 genes that we use internally for characterization, I don't want to call it quite an but it is, you know, it is backloaded into our Q4 and Q1. And it's the first quarter we felt we had to share the number because 271,000 genes in a quarter looks good, but actually it's a small number compared to the actual number because we had more than 50,000 genes. So the trend looks good. In terms of cost or price for the data, it kind of depends. But in general, it's $50 for a fragment, $100 for a clonal genes, $200 plus for an antibody. It can be $300 to $400 for the data, depending on what kind of data customers want. So, definitely, as we upsell the customer to data, we get a great benefit to the top line as well.

Operator

Thank you. And our next question will come from Subu Nambi with Guggenheim. Your line's open.

Subu Nambi, Analyst — Guggenheim

Thank you for taking my questions. You raised guidance by more than the fiscal 1Q26 beat. Could you speak to where the increased confidence specifically is coming for both DNA synthesis and NGS? And as we move past the single customer that created the fiscal 4Q, fiscal 1Q air pocket, are there any other single customer dynamics that you're carefully monitoring in your outlook for the rest of this fiscal year? Thank you so much.

Emily Leproust, CEO

Yeah, thanks. Thanks, Dubu. Well, I think you're correct. We raised guidance by more than double the beat at the midpoint. This comes from all across the board confidence. The one customer dynamic that we mentioned in Azure's application, it's passed. That customer is back. The orders are in. So we think we are set up really well in NGS. not just not that one customers but overall when when that that customer now that this customer is back um we think uh there's a great setup um as we look at at more and more data coming from bespoke uh mrd enabled by by twist that super high um high resolution a high sensitivity uh bespoke mrd we think um we think uh there's lots of we need our cell there and then in in in DNA synthesis and protein solution. We have a great, we had a great platform with DNA. Head to head, we win pilots and with great growth, but now that we've added protein and data on top of it, it's really meeting the moment. And we see those big customers coming back for more. uh for for for more uh so we we we um overall um um the the the strategy that we've had uh which was to add great product um that all feed onto the same country platform is is um is working and so uh we'll feed the np engine we'll do it again uh we'll deploy commercial violence we have We have a lot of headcounts open for salespeople when our competitions, they are laying off people and laying off salespeople. It's just we are definitely winning in the field. And we don't expect to have other one-customer dynamics in the future.

Operator

Thank you. And our next question will come from Doug Schenkel with Wolf Research. Your line is open.

Doug Schenkel, Analyst — Wolfe Research

Good morning, and thank you for taking my questions. My first is a follow-up on the over 50,000 genes manufactured for data characterization. I just want to make sure that I'm thinking about it right when I think of that as being almost synonymous in pharma volume. So that's one, and then kind of the follow-up there is I just want to make sure we understand what's in guidance for the balance of the year. So that's one topic sort of related to that. The second is the 271,000 genes shipped in the quarter was quite robust. That grew over 30% year over year. Can you just talk about what you're seeing competitively? And I'll leave it there. Thank you.

Emily Leproust, CEO

Petty, you want to take that one?

Patrick Finn, COO

Yeah, thanks for the question, Doug. Yeah, I mean, the growth you're seeing is primarily driven by, you know, the pharma segment and the interest in AI. You know, I think we're pretty clear on those numbers that the scale of the platform is resonating incredibly well with that customer base. I think I say to my words that when we're being approached, the typical experimental size is a few thousand genes, a few thousand antibodies and a few thousand characterizations run in parallel. and that's where the power of our platform with you know scale and speed and quality and economics is very very enabling so that that's a good start we're starting to understand the reordering pattern of the customers just to echo emily's comments it's early but we can see what's coming next is good then from a competitive standpoint we you know we we have you know we have a healthy paranoia and obsession with what's going on out in the market we're starting to see the the early benchmarking studies when customers in this segment are going to, you know, other vendors. And the data really shows how strong twist is compared to our competitors. We're weeks faster than the competition as it stands today. And just in general, the competitive landscape, you know, we've got our eyes on our competition. We know where they are. We know what they're working on. We know where they're laying off. We know where they're resizing, restructuring. We know them at a very, very intimate level in the hand-to-hand combat of selling. But really for us, we are just relentlessly focused on our own game and we're looking to really scale and accelerate into this opportunity.

Operator

Thank you. And our next question will come from Catherine Schultz with Bayard. Your line is open.

Josh, Analyst — Bayard

Hi, guys. This is Josh on for Catherine. Thank you for taking my question. I was wondering if you could walk through gross margin expectations for 2Q, how that should progress through the rest of the year. Then I was also wondering, should we still bake in sequential improvements for the rest of fiscal 26? Thanks.

Emily Leproust, CEO

Thank you. Adam, do you want to take this one?

Adam Laponis, CFO

Thank you. Thank you, Josh, for the question. We really see Q1 in the 52% performance as proof that our manufacturing engine is working as intended. Our decision to hold the full-year guidance at above 52 reflects really a deliberate choice in accelerating our top-line growth rather than maximizing short-term margin expansion. We do see continued improvements throughout the year coming in terms of the gross margin, but what we're doing now is we're both hiring the operators, adding the additional automation to ensure we can handle the higher capacity and throughput for things like AI drug discovery that Patty talked about in the call. We've also introduced several new characterizations of RapidClip and other new technologies. When we launch these products, we do it with manual process, often gold-plating them to make sure we meet the customer's needs fast. We're now automating those over time, and this investment temporarily moderates the margin expansion. But it's really the right tradeoff for long-term revenue growth. Most importantly, the core engine of our business hasn't changed. We continue to see 75% to 80% of incremental revenue drop through the gross margin line over time. So maintaining our above 52% on gross margin is about giving ourselves the flexibility to aggressively fund the growth we see right in front of us. And we always say it, but we'd much rather build a multibillion-dollar business at a 50-plus percent gross margin than a $500 million business at a 60. So thank you for the question.

Operator

Thank you. And our next question is going to come from Vijay Kumar with Evercore. Your line is open.

MacKenzie, Analyst — Evercore

Hey, guys. Thanks for taking the question. This is Mackenzie on for Vijay. You talked a little bit about the strategic investments you made in the quarter, and I was just wondering if you could talk a little bit more about these investments. Why now and where specifically were the investments made? And the second question is you disclosed that the AI-driven orders were $25 million in fiscal 25. How much of this came in fourth quarter, and what did you see for orders in first quarter?

Emily Leproust, CEO

Yeah, thanks for the question. The $25 million of all the growth that we saw last year were backloaded. So some came in Q4, but some also came in Q1, meaning that the other came in Q4, but they shipped in Q1. So definitely some of the Q1 performance comes from that order growth that we've seen. And those customers are coming back. So there's definitely high confidence. It's not a one-time thing. It's not a flash in the pan. It's coming back. In terms of the investment, we think of the investment in two ways. One are more structural investments, and the other are transient investments. So to give you a flavor, the structural investments are mostly in hiring of sales and commercial people. We've always had the strategy of hiring a little bit ahead, knowing what the business will need. It takes one or two quarters for a salesperson to ramp rapidly, and so we definitely want to do that. And we see a lot of good growth coming our way, and so we want to make sure that we're able to capitalize on it and that we're not short on salespeople. So those are our structural investments that are here to stay. And then there's some transient investment to help improve the business, mostly around our digital infrastructure. So to give you a flavor for what that is, just last week, actually, we launched our first e-commerce or NGS application business. In the past, we've always had a very, very strong e-commerce presence for the DNA synthesis and protein solution, and a very large fraction of our revenue for that product group comes from e-commerce. However, we did not have any e-commerce for NGS applications, so literally 0% of our revenues. But we hired some contractors and we made what we called a transient investment in our digital infrastructure to launch a new channel for e-commerce, and we anticipate that that channel will be a catalyst and complementary to the salespeople we are hiring. And over time, we have the ability to taper off that investment in our digital infrastructure. Again, contractors, we decide when to turn them on and off. There's still more work to do on our e-commerce platform. So it's not totally finished yet, but we're excited in the first phase of the launch. So hopefully that gives you a flavor for what we call the structural investments and the transient investment. But at the end of the day, Q4, the CDB tab, break-even is a given for us now. So now it's all about how much growth can we exit in Q4? And so it's all about that very high confidence in growth, and hopefully the guide reflects that confidence.

Operator

Thank you. And our next question will come from Brendan Smith with TD Co., and your line is open.

Brendan Smith, Analyst — TD Co.

Great. Thanks for taking the question. Maybe just another one on NGS from us. Emily, I think you referenced plans to sign additional partnerships within the diagnostic space moving forward. So I guess first from us, I mean, do you all have kind of a target number of deals you expect to confirm this year? And maybe more importantly, how material do you feel kind of new partnerships will be to growth of NGS and maybe hitting your own internal revenue expectations over the next, just say, one to two years versus really just core execution and advancement of the existing partnerships you already have?

Emily Leproust, CEO

Yeah, thank you. That's a really important question and something that we spend a lot of time on. Actually, Patty is our head of opening those doors for new partners. And so we think about it kind of in two ways. The first is FY2026 growth in NGS is going to come from existing partners. You know, those deals are already signed, the pilots are done, the validation and verification, it's done. And so now it's just being there for them as the volume ramp for our current investors, current partners, make sure that our supply chain is there for them. and however when we look at the growth we're going to need in 2027 and 2028 we do need new partners for that and and we have a very sustained effort and actually you may remember that at GP Morgan we split where Adam and I took investor calls and and paddy and our cto took the the customers call um and um so we we have a dual track where uh we're working actively to get new partners on both for diagnostics um we don't have all all of the volume um but the performance that we have is very very very very strong the supply chain excellence that we bring. We're able to future-proof the supply chain of our partners. And so we are working on bringing more on board. It's going well. But we don't need them for 2026, but we're counting on them for sustained growth in 2027 and beyond.

Operator

Thank you. And our next question comes from Mac Etoc with Stevens. Your line is open.

Mac Etoc, Analyst — Stevens

Hey, good morning. Apologies if you already answered this question. My connection is a little spotty, but just looking at the performance in 1Q and the continuation of the 52% gross margin guide, how are you thinking about the cadence for the rest of the year just given the level of investments that you're making in the business?

Emily Leproust, CEO

Thank you. Adam, you want to cover that question?

Adam Laponis, CFO

No, no. Thank you, Matt. Mac, we did have a chance to address that question. It really reflects our confidence in the business and our ability to drive growth and the choice to invest into that. And so while we do see continued improvement in gross margin throughout the year, it'll be at a more moderated clip as we continue to invest into the CapEx and the infrastructure and the people to accelerate the growth. And, you know, we are maintaining, giving ourselves that flexibility, really would rather, you know, I said it before, build the multi-billion dollar business at a 50% plus gross margin than a $500 million business at a 60% gross margin. So we are excited. We are looking forward to moving forward. And there's no looking back. And as Emily and Patty have also mentioned, within line of sight, we are absolutely committed and focused on making sure that in any scenario, we're at adjusted EBITDA break-even by Q4 this year.

Operator

Thank you. I am showing no further questions at this time. I would now like to turn the call back over to Emily for closing remarks.

Emily Leproust, CEO

Thank you for joining us today. Twist Growth is built on a repeatable, scalable model. Our innovative technology, increased platform volume, operational rigor, and commercial prowess are translating to improving financial performance. This is not driven by one product, customer, or market, but by a durable NPI engine and execution that scales efficiently. We remain confident in our ability to drive sustained growth.

Operator

This concludes today's conference call. Thank you for participating, and you may now disconnect.