Twist Bioscience (TWST) Q2 2026 earnings review
Record Revenue and Margin Expansion, But Bottom-Line Profitability Still Waits
Twist Bioscience delivered its 13th consecutive quarter of sequential growth, with Q2 revenue jumping 19% YoY to $110.7M and beating guidance. The company’s core growth engine is fully operational: DNA Synthesis and Protein Solutions (DSPS) accelerated 28% YoY, buoyed by rising AI-driven drug discovery demand. Operational efficiency is improving, pushing gross margins to 51.6%. However, top-line success hasn't yet reached the bottom line. Net loss widened to $44.0M (from $39.3M a year ago), dragged down by a $7.2M litigation settlement charge and a 19% surge in SG&A expenses. Despite the cash burn, management raised full-year revenue guidance and firmly reiterated their target to achieve adjusted EBITDA breakeven by Q4 FY26.
🐂 Bull Case
The DSPS segment continues to outpace company averages, growing 28% YoY to $53.3M. The new AWS partnership for Amazon Bio Discovery validates Twist's platform as critical infrastructure for the booming AI drug discovery market.
Gross margins expanded ~200 basis points YoY to 51.6%. With FY26 guidance maintaining margins above 52%, the company is successfully proving its operational leverage and pricing stability.
🐻 Bear Case
SG&A expenses jumped to $76.1M, offsetting the $4.2M reduction in R&D spending. If commercial investments fail to yield long-term accelerated growth, the Q4 adjusted EBITDA breakeven target could be jeopardized.
Cash and short-term investments fell sequentially from $197.9M in 26Q1 to $172M. While sufficient to reach the projected Q4 breakeven, any execution missteps leave a narrowing margin of safety.
⚖️ Verdict: 🟢
Bullish. The top-line momentum is undeniable, and the structural gross margin improvements are real. The widening net loss is largely a function of a one-time litigation charge and telegraphed commercial investments. If management executes on the Q4 breakeven promise, the stock's operational narrative is fully validated.
Key Themes
AI Drug Discovery Driving DSPS Breakout
Accelerating. The newly combined DNA Synthesis and Protein Solutions (DSPS) segment is proving to be a formidable growth engine, surging 28% YoY to $53.3M (up 4% sequentially). Twist's strategy to capture the AI-enabled design-build-test-run cycle is working. The newly announced partnership with Amazon Web Services—making Twist a wet lab partner for the AI-powered Amazon Bio Discovery application—cements Twist's position in this rapidly expanding macro market.
NGS Rebounds from Customer Headwinds
Reversing. After a sluggish Q1 caused by a specific large customer's assay transition, the NGS segment posted a solid 9% sequential jump (and 12% YoY growth) to $57.4M. This indicates that the Q1 'air pocket' was indeed temporary. The launch of the Twist TrueAmp Library Preparation Kit and PCR-Free WGS Library Prep Kit should further support NGS traction in clinical research and complex sample processing.
Gross Margin Leverage Taking Hold
Stable. Twist has successfully transformed its margin profile over the last two years. Q2 Gross margin clocked in at 51.6%, a ~200 bps improvement YoY. By keeping fixed production costs steady while scaling volume, management's claim that 75-80% of incremental revenue drops to the gross margin line remains intact. They reiterated guidance to hold gross margin above 52% for the full fiscal year.
SG&A Expense Expansion Neutralizes R&D Cuts
A clear contradiction to the profitability narrative emerged in Q2 operating expenses. While R&D expenses decelerated by 18% YoY to $19.7M (showing product maturity), SG&A expenses ballooned 19% YoY to $76.1M. Management telegraphed a ~$10M quarterly increase in commercial/digital spend in Q1 to capture market share, but this heavy operational footprint is actively suppressing the bottom line despite the excellent top-line beat.
Securities Litigation Takes a Toll
Twist booked a $7.2M charge (net of recoveries) in Q2 related to an agreement in principle to settle a securities class action for ~$17.1M. While resolving this overhang is a long-term positive, it resulted in Net Loss actually widening YoY (-$44.0M vs -$39.3M) and highlights legal risks that can disrupt the financial trajectory.
Other KPIs
Stable. Improved from -$14.8M in the same period last year and slightly better than -$13.4M in 26Q1. Excludes the $7.2M litigation settlement charge and $18.9M in stock-based compensation. The steady sequential progress keeps the Q4 breakeven goal mathematically feasible if top-line growth persists.
Decelerating. Down from $197.9M at the end of Q1 and $232.4M at the end of FY25. The company continues to burn cash to fund its commercial expansion. With ~$172M left, Twist has runway, but crossing the EBITDA breakeven threshold in Q4 is critical to avoid future dilution.
Guidance
Accelerating. Management raised the full-year outlook from the prior $435-$440M range. The midpoint ($444.5M) implies an impressive 18% YoY growth rate, signaling extreme confidence in the H2 demand pipeline across both DSPS and NGS.
Accelerating. Implies ~19% YoY growth at the midpoint and continued sequential expansion from Q2's $110.7M. Management expects NGS to be the primary driver of sequential growth in the back half of the year.
Stable. Reiterated from prior guidance. With Q1 at 52.0% and Q2 at 51.6%, achieving the full-year target will require slight margin acceleration in the second half, likely driven by fixed-cost leverage on higher revenue volumes.
Stable. Management has staked significant credibility on achieving this milestone. Given the current -$13.3M quarterly deficit, getting to breakeven will require Q4 revenue to hit the ~$120M+ mark to generate the necessary gross profit dollars to cover the elevated $76M+ SG&A run rate.
Key Questions
SG&A Expense Trajectory
SG&A jumped significantly this quarter to over $76 million. Is this the new quarterly run-rate, or were there front-loaded commercial investments in Q2? How does this expense line need to trend to hit Q4 EBITDA breakeven?
AWS Partnership Economics
Regarding the Amazon Bio Discovery partnership, how will the economics work? Will this act primarily as a lead-generation funnel for DSPS, or is there a direct revenue-sharing model integrated into AWS?
Antibody Discovery Upside
You announced a co-exclusive provider agreement for Invenra's B-Body bispecific platform. How quickly can this extend your antibody discovery services, and is this baked into the raised FY26 revenue guidance?