Twist Bioscience (TWST) Q4 2026 earnings review
Twist Bioscience reaches operating profit, but stock sales dilute shareholders
Twist Bioscience reached its operating profit target while selling new stock to fund a factory build-out. Fourth-quarter sales at the synthetic DNA maker rose 28% from a year ago to $127 million, beating its own outlook, and operating profit before stock pay, depreciation and one-offs turned positive by cutting overhead expenses. Chief executive Emily M. Leproust set a fiscal 2027 plan that calls for 26% growth in the first quarter and, by our math, 19% growth over the rest of the year.
| Fourth-quarter revenue | $126.6M +28% from a year ago |
|---|---|
| Adjusted EBITDA | $2.2M $(7.8)M a year ago |
| Cash and short-term investments | $582M after $425M net stock sale |
| FY27 revenue outlook | $550–560M middle of the range: 21% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because Twist finally put a $100 million figure on next year's AI drug discovery revenue and proved it can control overhead costs to stay profitable. Sequencing tool sales also cleared the 20% growth mark as diagnostic demand recovered from last year's customer pause. The bad news: management reversed its earlier stance against new stock sales by raising $425 million in equity, lifting the share count by 8% from a year ago.
The question now is whether the $100 million AI revenue plan represents a steep jump from fiscal 2026 or a slower pace after early customers finish training their models. If fiscal 2026 AI revenue was near $50 million, the division is still doubling; if it was already near $80 million, growth in the rest of the business is doing less work. The industry breakdown and AI order commentary on the conference call and in the annual report will tell.
🐂 Bull Case
Twist Put a $100 Million Number on AI Drug Discovery
Twist Bioscience makes synthetic DNA and proteins on silicon chips for medical researchers. For the past year, management cited demand from customers using artificial intelligence to design drugs, but withheld the dollar sales. That missing figure made it hard to judge how much of the company's growth relied on AI projects.
The company gave the number in its new fiscal 2027 outlook, which "assumes $100 million in revenue for AI drug discovery". It also joined Eli Lilly's TuneLab platform as "a provider of antibody characterization services" and launched Twist Express Screening Antibodies to test those molecules.
At the middle of the full-year sales plan, AI drug discovery will supply 18% of total revenue, by our math. DNA Synthesis and Protein Solutions (DSPS), the division that makes custom genes and antibodies, grew 33% from a year ago to $61.0 million in the fourth quarter because customers are buying lab test data alongside raw DNA.
What to watch: first-quarter DSPS sales and any update on actual fiscal 2026 AI revenue from the annual filing. A fiscal 2026 baseline near $50 million would mean the new plan counts on AI sales doubling again this year.
Lower Overhead Costs Delivered the Operating Profit Target
Chief executive Emily M. Leproust said fiscal 2026 delivered "strong top line revenue growth, expanded gross margin and positive adjusted EBITDA in the fourth quarter". Adjusted EBITDA — operating profit before stock pay, depreciation and one-offs — had stayed negative through the third quarter because overhead spending kept rising with sales.
- Fourth-quarter adjusted EBITDA: $2.2 million profit, up from an $11.3 million loss in the third quarter
- Selling, general and administrative (SG&A) costs, which cover sales teams and overhead: 59.0% of revenue, down 5.4 percentage points from a year ago
- Research and development (R&D) costs: 13.4% of revenue, down 3.8 percentage points from a year ago
- Combined SG&A and R&D spending: $91.7 million, down $7.1 million from the third quarter by our math
The fourth-quarter profit and the plan to stay positive in fiscal 2027 ease the concern that Twist could not control its expenses. Gross margin, the share of sales left after the cost of making products, also rose 1.8 percentage points from a year ago to 53.1%.
What to watch: first-quarter SG&A spending when annual employee pay raises take effect. If overhead costs jump back toward the third-quarter level of $80.7 million, adjusted EBITDA will slip back below zero.
Sequencing Tools Rebounded Past the 20% Growth Target
Twist's largest division is NGS Applications, which sells chemical kits that prepare DNA samples for next-generation sequencing machines used in cancer tests. Growth in this unit had slowed to between 8% and 12% during the first three quarters after a major diagnostic customer paused orders while moving its test to commercial use.
Fourth-quarter NGS Applications sales rose 24.0% from a year ago to $65.7 million, and grew 6.3% from the third quarter. The biotech company also launched Twist MRD Express, "custom panels designed for a rapid turnaround time of as little as one day" to track minimal residual disease in cancer patients.
Part of the 24.0% jump came from comparing against last year's fourth quarter, when that customer pause first lowered the baseline. Even so, the $3.9 million sequential gain shows diagnostic demand is expanding beyond the easy comparison.
What to watch: first-quarter NGS Applications sequential growth against the $65.7 million fourth-quarter level. Another sequential gain would prove that new cancer test panels are driving growth after the comparison boost fades.
🐻 Bear Case
A $425 Million Stock Sale Reversed the No-Equity Stance
"We enter fiscal 2027 with a stronger business and the capital to invest in our next phase of growth," Leproust said. Earlier in the cycle, management had told investors that avoiding new stock sales was a guiding goal while the business worked toward operating profit.
Instead, Twist "Raised net proceeds of approximately $425 million through an equity offering and at-the-market sales" during the fourth quarter. That stock sale lifted cash and short-term investments to $581.9 million, up from $166.8 million at the end of June.
The cash removes any funding risk, but existing shareholders paid the price through a larger share count. Diluted shares rose 8.0% from a year ago and 4.6% from the third quarter to 65.3 million, by our math, while stock-based compensation took another 15.4% of fourth-quarter revenue.
What to watch: first-quarter weighted average diluted shares in the next earnings release. Because the stock sales happened part-way through the fourth quarter, the full share count from the offering will show up in the first quarter.
Shipping Shorter Genes Cut the Average Revenue per Gene
Twist tracks the number of physical genes it ships to customers as a measure of factory volume. In fiscal 2026, the DNA maker shipped about 1.3 million genes, up 38.6% from 938,000 in fiscal 2025, as drug researchers ordered more antibody sequences.
Revenue in the DSPS division grew 31.7% for the full year to $221.9 million, trailing the 38.6% jump in gene volume. By our math, fourth-quarter shipments were about 360,000 genes, down slightly from 369,000 in the third quarter, and full-year DSPS revenue per shipped gene fell 5.0% to about $171.
DSPS sales still rose 7.8% from the third quarter because Twist charges extra for protein expression and antibody test data. Still, if raw gene prices keep falling and fourth-quarter gene volume flattens, the company must sell more lab services on every order to keep division growth above 30%.
What to watch: first-quarter genes shipped in the next release or quarterly filing. A second straight sequential drop below 360,000 genes would show that physical DNA volume is slowing even as data services grow.
Risks This Quarter Didn't Answer
Four standing concerns are not yet readable because the earnings release omits the detailed customer and industry tables that live in the annual report and conference call.
- Therapeutics industry revenue and fiscal 2026 AI order growth: Therapeutics sales dipped sequentially in the third quarter to $40.4 million; the annual report's industry table will show whether drug-discovery customers resumed sequential growth or paused after initial orders.
- NGS customer concentration: the top ten sequencing customers grew to 48% of division revenue in the third quarter; the conference call will show whether the fourth-quarter rebound relied on those same ten accounts.
- Academic and government demand: university and government lab sales jumped 32% in the third quarter despite US budget uncertainty; the annual report will show if that rebound held in the fourth quarter.
- Competition in protein services: rivals such as GenScript compete on scale in antibody production; management's call remarks will provide the only read on win rates for the new Express Screening service.
👓 Other Themes
Twist Plans $75 Million in Factory Spending
With $581.9 million in cash on the balance sheet, Twist outlined plans for approximately $75 million in fiscal 2027 capital expenditures "as part of our two-year investment plan, excluding landlord-funded tenant improvements". By our math, that spending equals 13.5% of the middle of next year's revenue plan, as Leproust invests in manufacturing capacity and automation to handle higher gene and protein volumes.
💲 Other KPIs
Inventories — raw chemicals and work-in-process for DNA and sequencing kits — rose 63.9% from a year ago and 32.0% from the third quarter. Stockpiles have grown faster than revenue for three straight quarters as Twist builds raw material buffers ahead of its fiscal 2027 expansion, tying up working capital.
Uncollected customer bills rose 23.1% from a year ago and 7.9% from the third quarter, by our math. That pace stayed below fourth-quarter revenue growth of 27.9%, showing that the synthetic biology group collected cash from its diagnostic and drug-discovery customers on normal payment terms.
The US company shipped products to approximately 4,100 customers in fiscal 2026, up 7.9% from 3,800 in fiscal 2025, matching the 7.0% customer growth rate a year earlier. Because total sales grew 22.0%, most of the top-line gain came from existing customers spending more per account.
🔮 Guidance
New. The plan calls for about 20.8% growth at the middle of the range, compared with 22.0% in fiscal 2026, and includes $100 million from AI drug discovery. By our math, after the first-quarter plan, that leaves 19.2% growth from a year ago for the rest of the year. Twist beat its initial fiscal 2026 outlook by $29.4 million.
New. Management expects about 26.3% growth from a year ago and 3.4% growth from the fourth quarter at the middle of the range. First-quarter DSPS comparisons are tougher because last year's first quarter included spillover from a large AI order, while sequencing comparisons are easier. Twist has beaten its quarterly sales midpoint by an average of 3.0% over the past four quarters.
New. The full-year target improves on fiscal 2026's 52.4% gross margin by up to 0.6 percentage points. However, the range sits slightly below the 53.1% margin Twist just recorded in the fourth quarter, leaving room for higher depreciation as the $75 million factory investment plan begins.
Unchanged. Twist kept its commitment to deliver positive adjusted EBITDA for the full year, improving from a $35.9 million loss in fiscal 2026. The company did not give a dollar range or confirm whether profit will stay above zero in the first quarter when annual employee salary increases take effect.
New. The plan sets capital spending at about $75 million, excluding tenant improvements paid by landlords, as part of a two-year capacity and automation build-out. By our math, that equals 13.5% of planned fiscal 2027 revenue, funded by the $581.9 million cash pile after the fourth-quarter stock sale.
❓ Key Questions
What were actual AI drug discovery sales in fiscal 2026?
Twist assumed $100 million of AI drug discovery revenue in its fiscal 2027 plan, but did not report the fiscal 2026 total. Investors need last year's baseline to know how much of next year's $95.6 million sales increase comes from AI.
Did Therapeutics revenue grow sequentially in the fourth quarter?
Therapeutics sales dipped from $40.8 million in the second quarter to $40.4 million in the third quarter. The industry table in the upcoming annual report will show whether drug-discovery demand resumed sequential growth or slowed after initial model-building orders.
Why did Twist raise $425 million just as it reached breakeven?
Management previously framed avoiding new equity sales as a core goal, yet sold $425 million of stock in the fourth quarter. With $581.9 million in cash and a $75 million capital spending plan, the intended use for the remaining cash is unclear.
Did top-ten sequencing customer concentration rise above 48%?
The top ten NGS Applications customers accounted for 48% of division sales in the third quarter, up from 36% in the first quarter. Investors need to know if the fourth-quarter sequencing rebound broadened across smaller labs or increased reliance on the largest accounts.