Prepared remarks
Welcome to Twist Bioscience's 2026 Third Quarter Financial Results Conference Call. Operator Instructions. Please note, this call is being recorded. I would now like to turn the call over to Angela Bitting, SVP of Corporate Affairs. Please go ahead.
Thank you, operator. Good morning, everyone. I'd like to thank you for joining us for Twist Bioscience's conference call to review our fiscal 2026 third quarter financial results and business progress. We issued our financial results press release before the market, and it is available at our website at www.twistbioscience.com. With me on the call today are Dr. Emily Leproust, CEO and Co-Founder of Twist; Adam Laponis, CFO of Twist; and Dr. Patrick Finn, President and COO of Twist. Today, we will discuss our business progress, financial and operational performance as well as growth opportunities. We'll then open the call for questions. We ask that you limit your questions to only one and then requeue as a courtesy to others on the call. This call is being recorded, 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 in future financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available 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, 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.
Thank you, Angela, and good morning, everyone. On Slide 3, you will see that this morning, we reported our 14th quarter of consistent growth with record revenue of $118.4 million, growth of 23% year-over-year. This growth reflects the diligence and execution we have employed over the last several years, building for opportunities we see ahead. Sometimes those opportunities are clearly visible many years in advance and others require us to be nimble and engage with our customers in real time to ensure we build and deliver what they need to be successful. On Slide 4, you'll see that at Twist, we sit at a unique junction where we have spent the last decade building the infrastructure to enable our customers to advance the therapeutics, diagnostics and industrial breakthroughs resulting from innovation. As biology becomes increasingly computational, our ability to deliver precision and speed at scale becomes even more valuable. On Slide 5, I'm sure you agree that AI is shifting workflows across multiple industries. We see an inflection point in drug discovery with more groups leveraging AI as their first antibody discovery screen. Where one year ago, just a handful of organizations were pursuing this path, now we have seen large pharma, dry lab biotech, traditional biotech and even major technology companies all employ AI through computational approaches, following the pattern of the design, build, test loop. Our customers can now design more sequences, test more hypotheses and iterate faster than ever before. In parallel, we also see the benefit of data and genetic information resulting in diagnostic assays that monitor, select and determine next steps for a wide variety of diseases. Turning to our product groups. Over the past year, we've talked about AI-enabled discovery as an important emerging opportunity. Today, we are seeing that opportunity mature into a durable growth engine. We continue to support customers in building new models, while others are using Twist to conduct discovery for specific therapeutic targets and to iterate models. This combination of repeat business, new customer acquisition and new organizations forming or expanding into the life sciences area gives us increasing confidence in the durability and longevity of AI-enabled discovery as a growth driver for the short, medium and long term. On Slide 6, the promise of AI-enabled drug discovery is straightforward: identify better drug candidates faster, reduce the cost of bringing new medicines to market and improve the probability that candidates entering development ultimately succeed. On Slide 7, you'll see the workflow where our customers use AI to computationally generate thousands to millions of potential DNA sequences and iteratively refine those designs to identify the most promising therapeutic candidates for a specific disease. Twist quickly translates those digital designs into physical biology through high-throughput DNA synthesis of individual or pooled DNA followed by protein expression. Many customers then leverage our downstream capabilities to evaluate those proteins across assays measuring binding, developability, characterization and other properties associated with successful drug candidates. We enable rapid design, build, test and learn cycles at the earlier stage of discovery, supporting our customers' ultimate objectives. When seeking a partner for this work, every customer needs a trusted provider capable of manufacturing increasingly complex DNA sequences, accessing protein, generating high-quality characterization data and delivering consistent results at the speed modern drug discovery requires. This combination of capabilities has become one of Twist's most important competitive advantages. At our Investor Day in May, we guided to triple-digit percentage order growth for AI-enabled discovery in fiscal 2026 versus fiscal 2025. Now that we are through the third quarter of the year, we're increasingly confident that we will meet or exceed that target. Our confidence reflects durable demand signals as existing customers return for iterative design, build, test, learn cycles, reflecting growing recognition that our platform is well suited to support AI-enabled drug discovery programs as well as traditional drug discovery. Importantly, our funnel of opportunities continues to expand meaningfully, and we believe that we have the potential to again post triple-digit percentage order growth for AI-enabled drug discovery in fiscal 2027 when compared to fiscal 2026. Turning to Slide 8. During the quarter, our platform again demonstrated its importance in supporting global public health. On May 15, 2026, public health officials in the Democratic Republic of Congo announced a developing outbreak of hemorrhagic fever. The outbreak went undetected for at least a month, escaping standard PCR assays, a gap that allowed the virus to spread further before it could be identified and contained. As of July 1, the virus has been confirmed in both the DRC and Uganda with an estimated spread to several thousand people and at least 399 confirmed deaths. Approximately one month into the outbreak, researchers used Twist's comprehensive viral panel to identify the pathogen as the Bundibugyo Ebola virus, underscoring the value of whole viral genome enrichment to catch emerging infectious diseases that standard testing missed. Separately, we also synthesized hantavirus material in less than 24 hours to support rapid response efforts during the cruise ship outbreak in May. These are powerful examples of the breadth, speed and reliability of our platform and of our role in the global research and public health communities. On Slide 9, we continue to see strong accelerating momentum for our NGS applications group, driven primarily by diagnostic customers, many of whom are focused on growing their commercial volumes with others advancing towards commercialization. We have our eyes on several new opportunities as the pipeline remains rich for next-generation assays, tumor-informed molecular residual disease tests, workflows to optimize using proprietary enzymes and more. During the quarter, we increased customer adoption, strengthened our commercial pipeline and continued to execute on new product introductions to reinforce our position as a trusted partner for next-generation sequencing workflows. As sequencing volumes continue to grow globally, we believe our differentiated technology and expanding portfolio positions us well for continued growth. We continue to see customers come to Twist when scientific precision and rapid execution matter most. This holds true when we are supporting academic research, cancer diagnostics, agricultural biotech responding to emerging infectious diseases or many other work streams. On Slide 10, one of the highlights of the quarter was hosting our Investor Day at our fab in Wilsonville, Oregon. Many of our customers shared how Twist products and services play a critical role in their internal workflows, providing tangible examples across multiple markets and applications. In addition, several Twist leaders showcased their expertise and leadership throughout different areas of the business. As Twist has grown, we have built an organization designed to repeatedly convert scientific innovation into commercial success. Great science creates opportunity. Operational excellence turned that opportunity to durable revenue growth, expanding profitability and long-term value creation. That requires manufacturing discipline, commercial execution, digital capabilities and above all, an exceptional team. Investor Day gave us the opportunity to demonstrate the strength of that foundation through our leadership bench, differentiated technology, highly automated manufacturing, expanding capacity and the proprietary software that powers our business. The consistent feedback we received was that investors left with a broader appreciation of the scale of our opportunities, the strength of our execution and the depth of our organization we have built as well as the reality of the growth opportunities that lie ahead to drive confidence in our long-term trajectory. For me, Investor Day reinforced something I've believed since founding Twist. We do things the Twist way, and this is not an easy path. When someone says it's hard, I say, "Yes, that's the point." If it were easy, everyone would be doing it. Building what has never existed before requires relentless innovation, disciplined execution and clear communication. What began as a founding principle has become how Twist operates. It's embedded in our systems, our processes and more importantly, our people. That's how we scale innovation consistently, build trust with customers and investors, strengthen our competitive advantage and create long-term shareholder value. With that, I'd like to turn the call over to Patrick Finn, who will discuss our competitive moat, how we are executing against our priorities and why we believe the operational foundation we've built positions Twist for its next phase of growth.
Thanks, Emily. Good morning, everyone. One of the things I enjoyed most about Investor Day is that people got to see Twist from the inside. We didn't just see the products, we saw how we operate. Twist's core technology differentiation is a semiconductor-based DNA synthesis platform that provides a structural advantage in cost, scale and speed that feeds into every product and service we offer. The same platform also enables a highly efficient new product introduction engine, allowing us to rapidly translate customer demand into scalable offerings and continuously expand our portfolio. As we increase volume on the silicon chip, we expand our wallet share, accelerate product innovation and further strengthen our competitive advantage. However, as Twist has grown, one thing has become increasingly clear to me. You'll see on Slide 11, our competitive moat expands well beyond our robust IP position around the chip into a complex infrastructure for manufacturing, automation, software, commercial execution, product development, customer engagement, scientific innovation and, critically, the customer experience. All of these elements reinforce one another. Every improvement we make strengthens the platform. Every new capability benefits multiple parts of the business. Every automation project improves quality, productivity and throughput and every customer we add helps make the platform stronger. It's something we've been building deliberately for years. It's also why I believe our advantage continues to expand. Customers are looking for a partner that can help them move faster, and we're becoming more deeply embedded in our customers' research and development activities. That creates more durable relationships and over time, a stronger business, and that doesn't happen without exceptional and consistent execution. Every day, our teams are focused on delivering exceptional quality, increasing productivity, expanding capacity and reducing turnaround time. These priorities don't change. There's no finish line, and we measure ourselves by how consistently we improve. On Slide 12, I talked earlier about our silicon chip shown on the left. It's been the foundation of our commercial manufacturing platform since 2015. By miniaturizing known phosphoramidite chemistry and dramatically reducing reagent consumption, our economics have always been strong as we created structural advantages in cost, scale and throughput that extend across our entire portfolio. Just as importantly, we continue to improve that platform, as shown on the right side of the slide. Over the last three years alone, we've reduced manufacturing costs by 60%, reduced waste by 70%, reduced turnaround time by roughly 73% and increased oligonucleotide capacity fourfold. Those gains improve our economics, strengthen our competitive position and create additional capacity to support future growth. Over the past several years, venture capital firms invested heavily in alternative DNA synthesis technologies. The marketing is compelling, but commercial success depends upon much more than chemistry. It requires molecular quality, reproducibility, manufacturing scale and continuous operational improvement. We believe our platform and our track record continue to set the standard. Our leadership in the field is one of the many things that gives us confidence in the long-term opportunity. Our investments aren't tied to one product cycle. They're strengthening the foundation for everything we build next. That's how we think about creating long-term value. We do not optimize for a single quarter. We focus on building a stronger company every quarter. On Slide 13, another tangible example of continued improvement leading to a specific product launch. Last quarter, I talked about an early access launch of our complex genes offering, extending the range of DNA sequences researchers can order from Twist. Complex genes are highly challenging constructs that have historically been out of reach for most platforms to synthesize consistently because of high GC content, repetitive elements or other complex characteristics. Today, we manufacture these sequences with the same automation, the same manufacturing line as part of our standard and express gene production workflow with the consistent speed, scale and quality customers expect from Twist. Early customer adoption has been very encouraging. During early access, we've worked with a select handful of customers who have ordered more than 1,800 complex genes across well over 100 orders and the execution has been superb. We've completed the overwhelming majority of these highly complex constructs in 12 days within our expected delivery window. That matters because it's one thing to produce a complex sequence once in an R&D environment. It's something entirely different to manufacture thousands of highly complex constructs repeatedly at commercial scale with consistent quality. While complex genes represent a relatively specialized market today, our execution demonstrates that we continue to expand the boundaries of what customers can manufacture on the Twist platform using the same highly automated production infrastructure. Each new capability increases the value of our platform, expands wallet share with existing customers and further differentiates Twist from competitors. At Twist, we focus on automating and operationalizing any new product offering within our manufacturing workflow so that what we can do for one customer, we can deliver for thousands of customers with consistent quality, speed and precision at scale. Two weeks ago, we launched our complex offering formally, expanding availability broadly across the market. In summary, we believe our silicon platform, automation, software and manufacturing infrastructure uniquely position us to serve a wide range of customers across industries, creating a competitive moat that would be exceptionally difficult to replicate. With that, I'll turn the call over to Adam to review our financial results.
Thank you, Patrick. Turning to Slide 14. Q3 was another quarter of consistent execution against the financial model we've laid out. Revenue grew 23% year-over-year to $118.4 million, our 14th consecutive quarter of sequential growth. We focused on growing the top line while maintaining our commitment to adjusted EBITDA breakeven for the fourth quarter of fiscal 2026, and we understand that growth of 20% or more significantly differentiates Twist among our peers. Gross margin was 52.8%, growth of 120 basis points sequentially, with 70% of incremental revenue dropping to the gross margin line. Let me walk you through the details. On Slide 15, you'll see DNA Synthesis and Protein Solutions revenue increased to $56.6 million compared to $40.8 million in the third quarter of fiscal 2025, growth of 39% year-over-year and 6% sequentially. We shipped 369,000 genes in the third quarter, plus consecutive quarter-over-quarter growth in genes manufactured for data characterization. On Slide 16, we show NGS applications revenue for the third quarter grew to approximately $61.8 million compared to $55.3 million in the third quarter of fiscal 2025, an increase of 12% year-over-year and up 8% sequentially, driven by growth in top accounts. For the quarter, revenue from our top 10 NGS applications customers accounted for approximately 48% of NGS applications revenue. We served 657 NGS applications customers in the quarter with 182 having adopted our products. Looking geographically on Slide 17. Americas revenue increased to approximately $77.3 million in the third quarter compared to $59.4 million in the same period of fiscal 2025, growth of 30% year-over-year. EMEA revenue rose to $33.6 million in the third quarter versus $30.7 million in the same period of fiscal 2025, growth of 9% year-over-year. APAC revenue increased to $7.5 million in the third quarter compared to $5.9 million in the same period of fiscal 2025, an increase of 26% year-over-year. On Slide 18, looking at revenue by industry. Therapeutic revenue was $40.4 million for the third quarter of 2026 compared to $27 million in the same period of fiscal 2025, growth of 49%, reflecting the increased uptake of our products by pharma, dry lab biotech and large tech companies in their efforts on therapeutic discovery and including AI-enabled drug discovery. Diagnostics revenue was $43.8 million in the third quarter of 2026 compared to $38.1 million in the same period of fiscal 2025, an increase of 15%. Diagnostics revenue grew 10% sequentially based on strong growth in top accounts. Industry and applied revenue were $5.7 million in the third quarter of 2026 compared to $6.1 million in the same period of fiscal 2025. Academic and government revenue were $15.5 million in the third quarter of fiscal 2026, an increase of 32% year-over-year and 21% sequentially, driven by strength in U.S. accounts where we saw several large customers return during the quarter. The environment remains dynamic and order patterns may fluctuate, but importantly, our outperformance this quarter for academic and government demonstrates the resilience of our business, the depth of our customer engagement and the growth of this customer group. Global supply partner revenue was $12.9 million in the third quarter of 2026 compared to $13 million in the same period of fiscal 2025. This revenue stream continues to provide a stable recurring revenue base while our faster-growing therapeutics and diagnostics product groups drive overall company growth. Moving down the P&L to Slide 19. You'll see our key financial metrics. Our gross margin for the third quarter was 52.8%, up sequentially and driven by strong revenue growth even as we continue to make deliberate investments in new product offerings and manufacturing capacity that we expect to result in future margin gains as we accelerate growth and implement continuous process improvements. Operating expenses, excluding cost of revenues, were $98.7 million for the quarter compared to $81.4 million in the prior year, which includes approximately $2 million in employee transition costs as well as other one-time expenses that will result in more than $5 million reduction in OpEx in the fourth quarter. Looking at our progress on our path to profitability and progress towards breakeven on Slide 20. For the third quarter of fiscal 2026, adjusted EBITDA was a loss of approximately $11.3 million, reflecting planned one-time investment. We ended Q3 with $166.8 million in cash, cash equivalents and short-term investments versus $171.7 million as of March 31, 2026. On Slide 21, turning to guidance. For fiscal 2026, we are increasing our revenue guidance and now expect total revenue of $456 million to $457 million, up $12 million at the midpoint, representing growth of approximately 21% year-over-year. In the third quarter, total revenue growth reflected above 20%. Based on customer demand, our current funnel and order growth, we expect momentum to continue and look forward to sharing full year guidance for fiscal 2027 in November. For Q4 of fiscal 2026, we expect total revenue of $123 million to $124 million, growth of approximately 25% year-over-year at the midpoint. We expect sequential growth from both DNA Synthesis and Protein Solutions and NGS. We expect DSPS sequential growth to be driven by therapeutics and NGS to return to growth above 20% year-over-year. While into our final quarter of the fiscal year, we remain confident in our trajectory and continue to expect to achieve adjusted EBITDA breakeven this quarter. Our focus is now on sustaining that performance and continuing to execute against long-term financial objectives throughout fiscal 2027. With that, I'll turn the call back to Emily.
Thank you, Adam. I'd like to give you one final thought. When Twist was founded more than 13 years ago, our goal wasn't simply to build a better way to synthesize DNA. It was to remove barriers that slow scientific discovery. That vision is working. Today, our platform is enabling advances across cancer diagnostics, AI-enabled drug discovery, synthetic biology and academic research. We have translated the mission into durable business performance, delivering 14 consecutive quarters of revenue growth, expanding gross margin and remaining on track to achieve adjusted EBITDA breakeven this quarter. And yet, I believe we are still in the early chapters. Biology is becoming increasingly digital, data-driven and AI-enabled. Scientists are asking bigger questions, designing more complex molecules and moving faster than ever before. Those trends play directly to Twist's strength and reinforce our confidence that the opportunity ahead is substantially larger than the one we set out to address 13 years ago. Importantly, we continue to execute against our plan to deliver sustainable profitable growth. As we look ahead, we are confident not only because of the opportunities in front of us, but because of the foundation we have built to capture them. And we continue to see multiple durable drivers of growth, as you'll see on Slide 22. AI-enabled drug discovery continues to expand. Molecular residual disease continues to grow in application with the reimbursement environment expanding. We see opportunity to introduce proprietary enzymes in our workflows and our internal processes to optimize performance and cost as well as reduce our dependence on suppliers. And in the longer term, we believe nucleic acid therapeutics provide personalized diagnostic and therapeutic approaches that will improve patient outcomes and positively impact the health care system. With the growth across the markets we serve expanding, our serviceable addressable market is projected to be $13 billion by 2030. In addition, our innovation engine will continue introducing new capabilities that we haven't mentioned here today, expanding that upside opportunity. On Slide 24, you will see that we feel confident in our ability to drive continued growth moving forward. Specifically, we've just delivered our 14th consecutive quarter of revenue growth at 23% growth year-over-year. We believe we have a strong growth trajectory to more than double revenue from organic growth by 2031. We guided to $123 million to $124 million for the fourth quarter of fiscal 2026, growth of approximately 25% year-over-year. Based on customer demand, our current funnel and order growth, we expect momentum to continue. We expect to meet or exceed our guidance of triple-digit percent order growth for AI-enabled drug discovery in fiscal 2026. Based on our robust funnel, we expect to again deliver triple-digit percent growth for orders from AI-enabled drug discovery in fiscal 2027. We expect gross margin above 52% for fiscal 2026 with a goal of margins of more than 60% as the business matures. We expect to achieve adjusted EBITDA breakeven for the fourth quarter of fiscal 2026, and we expect to maintain this commitment for fiscal 2027. And we will continue to meet our customers where they are, enabling them to truly change the world for the better. At this time, let's open the call for questions.
Questions and answers
Operator Instructions. Our first question comes from Brendan Smith with TD Cowen.
Congrats on the quarter. I wanted to first ask actually just about the relative breakdown of fiscal Q3 revenues. I know you talked a little bit about this already, but it looks like therapeutics revenues were incrementally down sequentially. The volumes do look good. So I guess any additional color there on some of the ordering dynamics we should maybe be aware of? And then on the new fiscal 2027 outlook, repeating triple-digit AI growth next year, I appreciate all that as well. I guess, is that based on— I know you said the funnel, but is this kind of based on some visibility into orders already coming in? Is this kind of reflective of ongoing conversations you're having, any particular inflections in the type or quality of orders over the next year or so? Just any color you can give us to support durability on that scale would be great.
Thank you, Brendan. We're very excited about this quarter. We're seeing a lot of strength from existing customers as well as new customers coming in. We had growth of more than 20%, and we are guiding growth of more than 20%, almost 25% for Q4. So things are going really well. In AI-enabled discovery in particular, a few things are happening. First, customers that have built their model are turning the crank. We are seeing new customers coming on top of that. And existing customers that have been turning the crank now are starting to look at new modalities. For example, you might see people coming in with just a VHH and then expanding to a full IgG. People are not broadly talking about AI for bispecifics yet, but we know it's coming. Talking to customers and looking at the quotes we are giving them, the number of sequences that they intend to build either as full DNA or array DNA give us very strong confidence that the triple-digit percentage growth that we see in AI-enabled drug discovery that we expect to deliver in 2026 is achievable. We see it continuing into the future.
Our next question comes from Puneet Souda with Leerink.
I'll wrap my questions in one. On the genes shipped, you're seeing quite a bit of acceleration here, 56% growth. But wondering why is the protein segment growing only 39%. Just wondering if there is any pricing or ASP compression that you're seeing. And the bigger question is that you're pointing out triple-digit growth this year, and next year triple-digit order growth again for AI. How is the AI order-to-revenue conversion? I think that's a key question we're getting. And for Adam, on adjusted EBITDA, could you double-click on that and provide how we get to adjusted EBITDA breakeven in the fourth quarter and keep that sustained or higher in fiscal 2027?
Thanks, Puneet, for the great question. The number of genes is growing massively, which is great. We can process them efficiently on our automated systems and it's difficult for others to absorb that kind of revenue growth. The therapeutics business grew 49% year-over-year, very much in line with the growth of genes. It's correct that DSPS grew 36%. As the volume growth comes primarily from antibody-type sequences, those sequences are shorter than some other gene types. As we see the growth coming primarily from human therapeutics, there is a shift to smaller genes, which is fine. The key is AI is doing exactly what we anticipated: it creates more sequences. Biology becoming more digital, data-driven and AI-enabled brings more demand for sequences, and we're seeing that in our data. Adam, do you want to take the second question on adjusted EBITDA and order-to-revenue conversion?
No, absolutely. Thanks for the question, Puneet. In terms of order-to-revenue recognition, we're noticing, particularly with AI-drug discovery, that project timelines are usually measured in weeks. At the end of last year, when we had a significant order step-up toward the end of the fiscal year, some of that order recognition separated across periods. But as we go into fiscal 2026 and look towards fiscal 2027, the two metrics converge more closely. Regarding adjusted EBITDA and the path to Q4 and beyond: we've been disciplined over the last several years in how we've managed investments and we continue to do so. As we look into Q4, we had one-time items associated with employee transitions in Q3 as well as some continued investment in new digital capabilities that we launched in Q4. We expect to see sequential improvements in OpEx moving forward starting in Q4, and we see the path to adjusted EBITDA positive in Q4 and continuing progress into fiscal 2027 and beyond.
Our next question comes from David Westenberg with Piper Sandler.
I appreciate the color on the EBITDA bridge. Do you expect 2027 to have continued momentum with that EBITDA bridge, i.e., do you think you could stay EBITDA positive throughout next year? Or do you think it'll be quarter-on-quarter, but the year you're really focusing on that EBITDA? Second, could you give color on the new product mix in NGS, particularly around your new whole genome offering and other expansive or faster-growing new products in NGS? I'm thinking about SHIELD and any others that could be high-growth.
Thanks, David. Great to have you. I'll extend this to Adam for the first question on adjusted EBITDA momentum and then to Patrick for the NGS product color.
David, great to hear you on the call. In terms of our commitment, we've said we'll provide full-year guidance in November, and we plan to give a robust outlook. We're not in the business typically of going backwards. That being said, we look at our full-year adjusted EBITDA this year improving year-over-year to being positive for the year, and we expect to make sequential improvements wherever possible. We also recognize we value our employees and give them raises at the beginning of every fiscal year, so we'll balance that. We'll give a full guidance as we approach November. In terms of how we view the business long term, we see very positive progress on both growth trajectory and the commitment to continued progress and profitability.
Just building off what Adam was saying, on the product side in the NGS space, from a workflow standpoint, it's a good time to remind how we've built differentiated enzymes using AI-driven discovery and development methods. They're critical in whole genome and other workflows: high-performing ligase and high-fidelity, high-performing polymerase, both of which are featured in our kits and are benchmarking very well both internally and in our customers' hands. That's a long-term commitment to enhance our customers' success in their experiments. Emerging applications we're excited about include molecular residual disease. In particular, the tumor-informed platform: increasing probe count derived from sequencing the patient's tumor leads to higher sensitivity tests and therefore better patient outcomes. We see demand continuing to increase. If you imagine hundreds of thousands to millions of tests in the future, all demanding thousands of tumor-informed probes delivered to a service lab or hospital in a couple of days, our synthesis platform is well suited for that need. It's another strong application of our platform.
Our next question comes from Subbu Nambi with Guggenheim.
As we get closer to fiscal 2027, do you have any preliminary thoughts on 2027 growth outlook? I know you said you'll provide full guidance later. You touched on 20% growth for both NGS and DSPS— is that reasonable? Would that be above your long-range plan of mid-teens growth? Also, you had $25 million AI-related orders in fiscal 2025; assuming a bare minimum triple-digit increase, that would be $50 million. Now you're confident that $50 million grows to $100 million. Did I get that right?
Yes. Thank you, Subbu. You got that right for the clarification. In terms of long-term growth, we think overall trends are in our favor. Patrick mentioned trends in MRD where higher probe counts, derived from knowledge gain from sequencing the tumor, lead to higher sensitivity tests. Customers want more probes delivered quickly, and that's what our platform does: speed of delivering thousands of probes with in vitro expression. For the AI story, the business is performing across multiple dimensions. A year ago a big order in DSPS was a one-off; now it's become regular. We've seen a change in order patterns, with big chunky orders and clearer customer communications about needs. Models need more data points, and we can deliver those data points through high-throughput synthesis, expression and characterization. We are not giving guidance for fiscal 2027 today, but we are guiding to a very strong Q4, a fiscal 2026 year above 20% growth, and adjusted EBITDA breakeven in Q4. We are excited about what's to come and believe the Twist platform is meeting customer needs on both NGS and DNA Synthesis and Protein Solutions.
Our next question comes from Kyle Mikson with Canaccord Genuity.
Congrats on the 49% growth in therapeutics, very impressive. However, revenues were down or flat quarter-to-quarter. There were some competitive actions taken by other vendors in the field and some discounting. Is that having any impact on the therapeutics and AI-discovery business at all? Secondly, Adam, you raised guidance by about $10 million. The beat was $4 million. Where are you expecting this outperformance in fiscal Q4 to come through among industries and products?
Thanks, Kyle. We are focused on building a stronger company every quarter rather than optimizing for a single quarter. We aren't particularly worried about competition. The thousands-to-millions of sequences customers need in array or pooled formats—it's hard to match those volumes. We're focused on listening to customers and meeting their needs. We're seeing expansion to new modalities: AI work that started with VHH is expanding to IgG. Customers who were on the sidelines a year ago are now engaged. We wouldn't guide to triple-digit percent growth for AI-driven discovery for fiscal 2027 without strong customer visibility and demand. So we're confident and moving full speed ahead.
Our next question comes from Matt Larew with William Blair.
You provided some details on customers who have progressed from model building to crank turning and then expansion of their overall work. I'm curious if you can speak more to new customer activity over the last 12 months. Is there any way to quantify the number or direction of customers just starting AI drug discovery as part of their workflow today? Second, at Investor Day you highlighted physical investments to broaden data characterization capabilities. Can you provide any numbers on how that business is growing, demand and the kinds of services customers are asking for to contextualize order growth for next year?
Thanks, Matt. Growth for next year is anticipated to be broad-based. We are adding capacity now ahead of demand in data characterization. Our DNA synthesis and protein expression capacity is strong and ahead of what customers need. The data piece is very appealing: customers do not have to maintain machines or worry about calibration; we handle reproducibility and throughput. A one-stop shop where customers submit thousands of sequences and a target and receive data is compelling. We are a custom business; customers want different blends of tests, conditions, buffers and solutions, and our platform supports that. We will be there wherever the science takes our customers. We anticipate a lot of growth will come from the data side.
Our next question comes from Mac Etoch with Stephens.
To clarify, the change in expectations from Q3 to Q4 implies a sequential step up in DSPS now. Can you double-tap on the drivers you're looking at there and what's changed in how you're looking at that from the past quarter and now in Q3?
Adam?
Thanks for the question. For Q4, we are expecting sequential growth in both DSPS and NGS applications. We continue to see strength across diagnostics sequentially as well as in therapeutics, often driven by AI-drug discovery. That strength reflects our pipeline of opportunities: growth from new customers as well as repeat business across DSPS and AI-drug discovery.
Our next question comes from Vijay Kumar with Evercore ISI.
Emily, on AI orders: in the past Twist has had shorter order cycles. Comment on fiscal 2027 triple-digit AI orders—what gives you longer-term visibility versus the typical shorter-cycle order book?
That's a great point. Historically, pharma might send some sequences and we would ship and recognize revenue quickly without visibility on the next batch. With AI, it's different because customers are ordering very large numbers. For large orders, customers often establish master service agreements and discuss needs up front, which creates more transparency. Once the order comes in, there is more engagement and clarity on subsequent batches. We're more engaged with customers on the science and are providing a higher level of solution than solely sequence provision. That higher engagement gives us more visibility than we had before.
Our next question comes from Luke Sergott with Barclays.
Did you already call out the amount of AI revenue in the quarter or what's embedded for the full-year guide? Also, we're hearing more about GenScript TurboCHO in conversations. They have different scale and cost structure. Talk about where you see the competitive dynamic shaking out and what you need to do on scale or turnaround time to continue to win share.
We don't worry too much about competition. We listen to customers and deliver what they need. We hadn't had a big presence in protein 18 months ago, and through engagement we've built capabilities that are unique. We believe we are advancing ahead because of our data capacity and capabilities. Customers care less about which CHO system is used and more about data capability, capacity and speed of delivery. For very large numbers—millions of data points in pooled assays or tens of thousands in array format—we believe our position is very strong. For small numbers, customers have choices, but for large-scale needs, our platform is well suited.
Regarding AI orders and revenue, as I mentioned earlier, a year ago we had a record order in Q4 that shifted some revenue recognition timing. In fiscal 2026, orders and revenue are lined up more smoothly and we have a broader base of customers. We haven't provided a specific AI-drug discovery breakout quarter-to-quarter, but the progress in therapeutics demonstrates the outsized growth primarily driven by AI-drug discovery. Looking into 2027 and beyond, we would expect orders and revenue to remain more closely aligned as in 2026.
Our next question comes from Robert Bamberger with Baird.
Academic and government went from 3% growth last quarter to 32% this quarter, and up nicely sequentially. Any change in what you're seeing in academic that caused those outsized gains? Also any commentary on academic promotions?
The academic segment had a good quarter and the team executed well. It remains a dynamic environment. Our value proposition of cost, speed and quality resonates, particularly in budget-constrained settings where more shots on goal matter. It's a segment we've historically underserved. Express Genes and promotions into the segment continue, and our focus remains delivering a strong customer experience. Once customers are on the platform, they tend to stay because they receive faster results at better cost. We'll continue to execute day by day and look to maintain strength in that segment.
Thank you. I'm showing no further questions at this time. I'd like to turn the call over to Emily Leproust for closing remarks.
Thank you for your questions. The story this quarter is simple. Customer demand continues to strengthen, our execution continues to deliver and the platform we've built over more than ten years is creating an advantage that continues to widen. We remain confident in our trajectory and excited about the opportunities ahead. Thank you.
Thank you for your participation. This concludes the program. You may now disconnect. Everyone, have a great day.