Welcome to Twist Bioscience's fiscal 2023 first quarter financial results conference call. At this time, all participants are in listen only mode. After the speaker's prepared remarks, we will conduct a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Angela Bitting, Senior Vice President of Corporate Affairs and Chief ESG Officer. Thank you, operator. Good morning, everyone. I would like to thank all of you for joining us today for the Twist Bioscience conference call to review our fiscal 2023 first quarter financial results and business progress. We issued our financial results release this morning, which is available at our website at www.twistbioscience.com. With me on today's call are Dr. Emily Leproust, CEO and co-founder of Twist, and Jim Thorburn, CFO of Twist. Emily will begin with a review of our recent progress on Twist businesses. Jim will report on our financial and operational performance. Emily will come back to discuss our upcoming milestones and directions, and then we'll open the call for questions. We would ask that you limit your questions to a maximum of 2 and then re-queue as a courtesy to others on the call. As a reminder, 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 be making forward-looking statements within the meaning of the U.S. Federal Securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, as well as those more fully described in our filings with the 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. With that, I will now turn the call over to our Chief Executive Officer and Co-founder, Dr. Emily Leproust. Thank you, Angela, and good morning, everyone. For the first quarter of fiscal 2023, we reported revenues of $54.2 million, consistent with our guidance shared on our fiscal year end call in November, and we posted strong orders of $64.7 million. What we saw in the first quarter across SynBio and NGS is a story of an expanding customer base making up for a larger percentage of our revenue, meaning that we are landing more customers with an increasing potential to expand within existing accounts. Beginning with SynBio, we reported revenues of $21.7 million above our guidance of $21 million. In addition, we reported orders of $26.6 million. We continue to ship our Clonal Genes starting at 10 business days, Gene Fragments and Oligo Pools in as few as 5 days. We see this consistent turnaround time benefiting our expanding share of the DNA synthesis market. We shipped our first revenue-generating products out of the Factory of the Future last week, which as we said previously, means that we are now delivering the same products with a turnaround time equivalent to our South San Francisco site. We ship Oligo Pools and Gene Fragments from our Wilsonville site and leverage our load balancing software to send orders to the right location. We expect to begin shipping Clonal Genes next month. We'll be focused on decreasing turnaround time for Clonal Genes significantly with the launch of our Fast Genes offering expected this fall, which will enable us to tap into new markets, specifically the DNA makers market. We shared our competitive advantage across all platforms during our Factory of the Future visit at the end of November. Virtually every product we make builds off our silicon platforms to manufacture synthetic DNA at scale. This front-end proprietary advantage enables a significantly different variable cost profile for Twist oligo synthesis, which then feeds into all of our product lines. Speaking specifically to the cost of making a gene, today our variable cost for oligo synthesis is less than $1 for a Clonal Gene with total variable cost of approximately $35-$40 per gene. This cost profile enables us to continue to serve our customers as the low-cost, high-quality provider while still achieving a contribution margin of 65%-70% for our SynBio products. A key component of our cost advantage is the scale we have built and continue to drive. Moving forward, we expect to continue to leverage this advantage to pursue the customers who currently make their own DNA because they need it faster, a group we call the DNA Maker. We believe we'll be able to command premium pricing for these genes. To provide a bit more context around who makes the makers market, these are medical and academic research scientists who make their own DNA rather than buying. We know from the Bureau of Labor Statistics pure research that as of 2019, there were 270,000 of these scientists in the United States alone. These are all potential customers. We believe the maker market is ripe for disruption with rapid DNA synthesis and a reasonable price offering. We're in the process of price discovery to analyze the way to maximize margin for this particular product. Genes are available today from competitors at a fast turnaround time. Their capacity is limited and the cost can be up to $1 per base, which is cost prohibitive for most researchers. To draw an analogy of a market that has been disrupted in a similar way, it used to be tedious to purify DNA. It was a complicated process that required making buffers and many time-consuming steps. This market was disrupted by offering a kit that contained re-ready-to-use components to make the process simple and seamless. Initially, some scientists hesitated to adopt based on price, but today these kits are used globally to purify DNA. We see a direct parallel here in converting DNA makers into DNA buyers by applying similarly appealing products to convert behavior. Beyond SAGE genes, we believe we have an opportunity to launch additional products out of our Wilsonville facility, including RNA, long fragment, and GMP DNA. Moving to NGS, we reported revenue of $24.4 million, just short of our guidance, and others of $31.2 million for the quarter. As we shared last quarter, we see another back half loaded year with larger customers reordering in the last two quarters of our fiscal year. As expected, we saw a few key customers move orders out from December into the first calendar quarter. We remain confident in our fiscal year guidance that NGS will continue to grow substantially year-over-year. We see this business continue to expand with new sequencing offerings and game-changing clinical applications. Our targeted solution leverage the higher degree of uniformity from our oligos. Therefore, our solution decreases the cost of samples for our customers, and we are essentially selling a growth margin improvement. We continue to work with a variety of existing and new sequencing companies as we are sequencer agnostic. As this cost of sequencing comes down, we believe volumes will continue to increase as we have seen over the last two decades. Importantly, we believe that for indications like oncology, where clinical applications, including liquid biopsy and minimal residual disease require deep sequencing, panel and exome sequencing will continue to be the mainstay. We see the reduction of sequencing costs driving reimbursement across key areas, increasing access by a broader group of patients, which will create subsequent volume increases. In addition, we continue to expand our COVID control offerings in new disease areas as well as cancer, with our latest COVID control released during the quarter. While we see consistent ordering, it is not material due to the evolving nature of the pandemic. As I already did note, we do not plan to file a 510K application for our SARS-CoV-2 panel that received emergency use authorization from the FDA in 2021 as revenue was not material for this product. We believe the opportunity across cancer continues to grow while COVID products are decelerating. For biopharma, we reported $8.2 million in revenue, a bit ahead of our guidance, and $6.9 million of orders. Of note, we signed a multi-target agreement with Astellas that was announced in January. We are now focused on enabling our sales team to sell the integrated offering between our San Francisco and Boston offices. Under one roof, we offer in vitro synthetic library, in vivo discovery and screening, and in silico lead optimization, candidate selection, and optimization with AI and machine learning. We believe this offers a fully integrated antibody discovery engine with a guaranteed deliverable. As we are now operating as an integrated team, our total partners active in competitive programs will include the historical Abveris business. As of December 31st, 2022, we have served 278 partners with 95 active programs and 63 of our programs have milestones and/or royalties associated with the project. We continue to advance many internal candidates through the early discovery stage, and we have several antibodies that have reached the preclinical stage and are close of potential out-licensing by biotech or pharma partners. We continue development work on our third data storage system, which combines our proof of concept chip with a recently assembled proof of concept writer. We have engineered a scalable end-to-end system to store data in DNA and are now writing software to coordinate all the steps required to code, write, store, sequence, and decode digital data. We will begin to run the system in pilot production. All of this work is in support of the release of early access to our first product, the Century Archive, which we expect to be available towards the end of calendar year. I'd like to turn the call over to Jim to talk through our financials. Jim? All right. Thank you, Emily. We had another strong quarter of execution at Twist despite a volatile macroeconomic environment. Revenue for quarter one was $54.2 million, which is year-over-year growth of 29% and a sequential decline of 5%, which is in line with our guidance of $54 million. Orders were $64.7 million for the quarter, a sequential increase of 4% and 30% growth year-over-year. Gross margin for the quarter was 45.7%, and we shipped to approximately 2,100 customers, and that's up from approximately 1,800 customers in quarter one fiscal 2022. We ended quarter one with cash investments of approximately $439 million. Our NGS revenue for quarter one was $24.4 million, slightly below our guidance and 27% year-over-year growth. As we noted in our previous earnings call, we had a strong fourth quarter and a couple of our larger customers pushed shipments from December quarter into January, and we were negatively impacted by the COVID pandemic in China, which continues to impact our China revenue in the current quarter. Our first quarter orders were $31.2 million, which is a record. It represents sequential growth of 10% and 43% growth year-over-year. This growth reflects the strength of our product portfolio, with the top 10 customers accounting for approximately 40% of our NGS revenue, and we served approximately 600 NGS customers in fiscal quarter one. Our pipeline for larger opportunities continues to scale, we're now tracking 264 accounts, that's up from 257 noted in our last earnings call, 130 have now adopted Twist, that's an increase from 121 last quarter. Turning to SynBio, which includes genes, DNA Preps, IgG, libraries, and Oligo Pools. SynBio revenue for the quarter was $21.7 million, that's exceeding our guidance and representing a year-over-year increase of approximately 21%. Orders for the quarter were $26.6 million, which represents 20% growth year-over-year. Some of the highlights include shipping to approximately 1,600 SynBio customers, which has grown from approximately 1,270 in Q1 fiscal 2022. The customer base, as Emily noted previously, includes biotech and large pharma companies. Genes revenue increased to $16.2 million, that's up from $13.5 million in the first quarter of fiscal 2022, and that's year-over-year growth of approximately 20%. We shipped 134,000 genes in the quarter, and that's an increase of 7% year-over-year. Oligo Pools had another strong quarter with revenue of $3.7 million, and demand came primarily from the healthcare segment. Now to Biopharma. We continue to scale our antibody discovery business. Biopharma revenue for the fiscal first quarter 2023 was $8.2 million, and that's year-over-year growth of 70% and is consistent with our prior guidance. Orders for the quarter were $6.9 million, down sequentially from $9.4 million in the fourth quarter. Biopharma orders have been impacted by an overall weaker environment. We did not see the pharma Christmas in the quarter as we've seen in past years. That said, we added 4 more milestone and royalty agreements, which brings the total up to 63, and that's up from the 59 we noted in the previous earnings call. While Emily reported total biopharma metrics, including historical Abveris agreements, solely for the first quarter of fiscal 2023, we had 95 active programs for the combined Twist and Abveris antibody services. I'll give a quick update in terms of breakdown by industry and a quick update on our regional progress. Healthcare for the first quarter was $30 million as compared to $21.1 million in the same period of fiscal 2022. Industrial chemical revenue was $13.6 million in the first quarter of 2023 as compared to $12.5 million in the first quarter of 2022. Academic revenue was $10 million in the first quarter of 2023, compared to approximately $8 million in the same period of fiscal 2022. On a regional basis, EMEA revenue rose to $16.3 million in the first quarter of fiscal 2023, compared to $15.4 million in Q1 fiscal 2022. As we noted earlier, APAC was negatively impacted by the COVID pandemic in China, but had a slight increase in revenue to $4.3 million as compared to $4 million for the same period of fiscal 2022. U.S., including America's revenue, increased to $33.6 million in the first quarter as compared to $22.6 million for the same period of 2022. Moving down to P&L. Our gross margin for Q1 was 45.7% with cost of revenue for the quarter of $29.4 million. Cost of revenue does include $1.1 million of stock-based compensation expenses and $3 million depreciation. Now to operating expenses. Our operating expenses for the fiscal quarter, including R&D, SG&A, and change in fair value and mark-to-market adjustments of acquisitions, were approximately $69.4 million as compared to $70.9 million in Q1 fiscal 2022. To break it down, R&D for the fiscal quarter was $31.2 million, and that's an increase from $22.6 million in the same period of fiscal 2022. This does include DNA storage spend of $6.1 million and Biopharma spend of $7.7 million in Q1 fiscal 2023. The major contributors to the increased R&D spend were primarily increased compensation costs of $5 million associated with increased number of employees, which does include adding an additional 12,000 data storage. Depreciation for R&D in Q1 was approximately $1 million. SG&A in Q1 includes approximately $18 million credit due to the combination of stock forfeitures associated with departing employees and the release of an earn-in holdback as we determine that Abveris missed the earn-in revenue hurdle. The Abveris team came very close to achieving the earn-in, and we look forward to fully integrating the Boston team into Twist organization. We remain very enthusiastic with the team and the potential opportunity for the combined Abveris and Twist organization. Factory of the Future pre-commercialization costs included in SG&A were $12.5 million in the first quarter, which includes compensation costs of $4.3 million, material expenses of $4.7 million associated with pre-commercialization training activities. Facilities and depreciation costs of $1.8 million, as well as outside services of $1.2 million. Stock-based compensation for the quarter was a credit of $2 million due to the aforementioned credits primarily associated with the Abveris acquisition. Depreciation and amortization for the quarter was $5.8 million, and CapEx spend in the quarter was approximately $12 million. We will now cover our outlook for fiscal year 2023. We continue to project fiscal 23 revenue to be in the range of $261 million-$269 million, including SynBio revenue of $104 million-$106 million, NGS revenue of $120 million-$123 million, and Biopharma revenue of $37 million-$40 million. There has been no change to our revenue projections from our previous guidance given in November. For the second quarter of fiscal 23, we anticipate revenue of approximately $56.5 million, which breaks down as follows: SynBio revenue of $24 million, a sequential increase reflecting the higher orders. NGS revenue of $25 million. Although orders were strong at approximately $31 million in quarter 1, we see the beneficial impact of those orders translating into revenue in the second half of our fiscal year. Biopharma revenue approximately $7.5 million. This reflects the lower orders we saw in quarter one. We anticipate gross margin for the quarter to be approximately 30% as we bring on the costs associated with the Wilsonville manufacturing facility. As we scale our revenue in the second half of fiscal 2023, we're projecting our gross margin to be 39%-40% for the year, which is in line with the guidance provided in our previous earnings calls. We decreased our OpEx guidance for the year to approximately $330 million as compared to previous guidance of $365 million, primarily to reflect the expected reduction in stock-based compensation. We're now projecting R&D expense of $130 million as compared to $138 million in our previous guidance. We expect SG&A expense of $204 million, that's a decrease from our previous guidance of $227 million, primarily due to the impact of lower stock-based compensation. Mark-to-market is projected to be a credit of $4 million for the year. Depreciation and amortization is projected to be approximately $29 million. Our projection for stock-based compensation has declined from $83 million to $50 million for fiscal 2023 due to the combination of the aforementioned credits. In addition, we reduced the number of projected shares granted to our executives and employees to approximately 1 million stock awards at a lower share price than originally projected. Net loss for the year is projected to be approximately $225 million, and that's a decrease from $260 million, with CapEx projected to be $50 million, and our ending cash is projected to be approximately $300 million. In addition, there is no change to our fiscal 2024 guidance we provided in November. In summary, we had a robust start to our fiscal year with record orders in quarter one. We shipped our initial commercial products from the Factory of the Future in January, and we're focused on scaling our business to achieve adjusted EBITDA breakeven in our core and our pharma businesses. With that, I'll turn the call back to Emily. Thank you, Jim. In November, we outlined our 3-year plan to adjusted EBITDA breakeven for our core business. This remains our focus. We are in receipt of our shareholders' feedback that achieving profitability is top of mind. This fits with our operating plan that we've been executing in the past few years. Working toward that objective in SynBio, we will ramp our manufacturing capabilities in Wilsonville, Oregon, to increase revenue out of our Factory of the Future, building on our first shipment at the end of January. Within 2 years of the full timeframe, we expect to bring down our current time and offer Fast Genes products for all of our customers. Expand our commercialization effort into the DNA makers market. For NGS, we expect continued expansion of our customer base as well as the few large systems of generating revenue in the back half of the fiscal year. In addition, we are looking towards RNA workflows to augment our DNA workflows with a consistent focus on owning the workflow between the sample and the sequencer. In Biopharma, we are beginning to offer an integrated portfolio of antibody discovery and optimization services, capitalizing on efficiencies between our in vitro, in vivo, and in silico approaches. In data storage, we are making good progress to bring up the chip and our new pilot production unit data storage writer. We plan to launch our Century Archive solution as an early access offering in late 2023. In parallel, we will continue to seek to partner with leaders to set the stage for commercial success while preparing the market for DNA data storage. We remain extremely excited about our opportunities ahead and look forward to keeping you appraised of our progress. With that, let's open the call for questions. Operator? As a reminder, to ask a question, please press star 11. If your question has been answered or you wish to remove yourself from the queue, please press star 11 again. One moment for questions. Our first question comes from Steven Mah with Cowen. Your line is open. Great. Thanks, and thanks for taking the questions. My first question is on the DNA makers market. You know, and there was analogy with prep, you know, this thing that people started branching out into. Given that, you know, the 270,000 commercials, I think a large part of them are gonna be academics, you know, which have cheaper like grads flavor. Can give us a sense of how you're gonna this market, to, you know, try to find, you know, the price to get the adoption in this academic market and give us a sense of how long it'll take for this discovery? Yeah. Thank you. Thank you, Steve. Your line was a little bit choppy, but I think you're asking for the 270,000 gene makers, those that are in academia, how we'll do the price discovery. How we'll convert them. Maybe two things that I'll share. One, in the past, we had a uniform pricing at Twist for academia and industry, meaning that we didn't differentiate pricing between those two groups. We've recently started to differentiate a little bit, and I expect that for Fast Gene, there probably would be a different price, there possibly could be a different price for academia versus industry, just to account for the value of the product to those two different groups. That's number one. Number two, what we've been doing for multiple years now is we've been supporting iGEM. iGEM is a group, and every year they do a competition with thousands of students where they apply synthetic biology. In the past, iGEM teams had to do their own cloning. You know, they'll get parts, and they'll do a Gibson Assembly and mutagenesis. We've given, I think 20,000 bases to every iGEM team for the last few years. Our goal is to, you know, get the best and brightest student early on, get them used to not clone anymore. It will take some time, we think that, similarly right now in academia, nobody does their own DNA prep reagents. They all use kits. I think over time we can drive some transformation. We'll be full on price. We've been already working in changing the frame of mind that, you know, you just don't clone. It's just so much easier to and faster to get the clone from companies like us. Okay. Got it. Yeah, appreciate that. Hmm. Next question on gross margins. This question is for Jim. Yeah, the gross margins in the quarter was maybe a bit lower than we expected. Can you give us some color on that and then also some color on the gross margin recovery in fiscal year 2024 back up to 49%? Steve, if I picked up your question correctly, you said gross margin is a little lower. Gross margin Q1 was 45.7%. We are projecting that to decline to 30% this quarter, as we bring on the costs associated with Factory of the Future. As we scale the business, and you've touched on the makers market, it's a huge opportunity for us, $1.4 billion. We're already seeing strong SynBio growth over this last year. The orders were good in the first quarter and records, so we feel good about the growth in the second half. First half revenue is about, you know, 40 odd percent of the business, which is in line with previous years. We're going to see growth in the second half, driven by continued growth in SynBio, NGS, pharma picking up. We feel good about the $261-$269. As we continue to scale, we're seeing gross margins this year consistent with our previous forecast of 39%-40%. Next year as we continue to scale the business, we see gross margins in the range of 49%, as we've highlighted below. That's driven by, you know, executing and scaling the Factory of the Future, leveraging our fixed costs and continuing to do well in terms of expanding our customer base. Okay. Thanks for the color and apologies for the bad line. I'll get back in the queue. Thanks. Okay. Thank you. Our next question comes from Matthew Sykes with Goldman Sachs. Your line is open. Hi, this is Eve Kozhevnikov on for Matt. realize that you just started shipping commercially from Factory of the Future, and you've talked about Fast Gene being launched in the fall of this year. Could you talk about how you've been able to break into the gene makers market prior to that launch, or will the launch be an inflection point for getting into that market? Yeah, great question. We've been getting into the maker market a little bit over the last few years. What we know is that some customers buy short genes, and then they assemble themselves the short gene into long gene. They buy short genes, but they are makers of long gene. When we offer our long gene offering, it's very fast, very cost effective, and some of our revenue growth comes from us converting some long gene makers. We are a little bit in the DNA makers market. We do miss the speed, which means that, as you pointed out, when we have Fast Gene, that's when we should see an inflection point. Okay, great. That's helpful. What do you think the potential gross margin uplift is for Fast Gene this year? Will it ramp enough for us to see it come through in 2023, or will that mostly come in next year? Overall we see our gross margins, the gross margins in Q1 were just under 46%. This quarter, we see gross margins 30%. We're launching our Fast Genes in fall of this year. Overall this year gross margins in the range of 39%-40%. As Fast Genes pick up next year and we continue to scale our manufacturing operations, we'll leverage fixed costs, and that's primarily gonna be driven by volume and success of Fast Genes. That kicks in in FY 2024. Okay, great. Thank you. Thank you. Our next question comes from Sung Ji Nam with Scotiabank. Your line is open. Hi. Thanks for taking the questions. Just have a couple of high level end market trend questions. Maybe, starting with biopharma. Was wondering, you know, obviously a solid growth there, I'm kind of expecting a bit more muted, I think, growth for the next quarter. You know, was wondering if you might be able to call out kind of the trends you're seeing in the near term, if you know, if there are any kind of differentiated trends, you know, across, you know, different segments within biopharma. You know, also if you expect the weakness to be prolonged throughout the year, any kind of color you could provide there. The second question is in terms of ex-U.S. markets like China, Europe, in terms of whether you kind of called out China continuing to see headwinds from the COVID situation. If, you know, if you might be able to kind of compare whether that has materially worsened in the current quarter versus what you were seeing last quarter. Just also any additional color there would be very helpful. Thank you. Thank you. Thank you, Sung Ji. Maybe I'll answer the first question, and Jim will cover the second question on the global markets. In terms of biopharma, some of the trends we are seeing is definitely, some of our customers have some funding headwinds. Some others are very big companies and, maybe less so. For the companies that have funding headwinds, I think it is an opportunity for us. It may take time to have them see it, but what we offer is more shots on goal, and so we basically extend their budget. I think our offering is very well suited for them. The other trend we see is that people maybe spend a little bit in the balance of the budget, maybe there is a bit less for upfront discovery and maybe they're balancing more towards later stage work, which means that maybe they will do 10 discovery projects a year, and maybe they're shrinking to eight or less. We're barely penetrating into the market and so, you know, if we just get one project or two project, it's a win for us, so it's not necessarily a big issue, but something that we are seeing. I think in general, we are stepping back and relying on the strength of our platform. Our platform is really best in class. We have in vitro, in vivo, in silico. Last year we were playing a little bit with one arm tied behind our back because we're trying to let the Abveris team be as independent as possible to make their earn out. Now we can integrate, we can have one team, we can have one product offering. I think the integration of those three, in vitro, in vivo, in silico, is a very powerful, very powerful offering that will enable us to get more than our fair share in the market, even though the market in general is experiencing some headwinds in biopharma. Jim, you want to take the second question? In terms of China, I actually met with the China team last couple of weeks. It was interesting, China was impacted in the first quarter, i.e., December quarter, October, November, impacted by the lockdowns. Obviously China opened up, and the companies were impacted by COVID. That extended into January and February. China sales in Q1 declined to approximately just over $1 million, $1.4 million. We see modest pickup in the second quarter, our second quarter, which is March. We see significant pickup as things normalize in the last half of the year. If you look at our revenue, you see our first half revenue is about 40%, 42%, 43% of the overall year. You see China having a modest impact on that. Plus, overall, we're seeing some large NGS customers coming in in the second half of the year. Overall, we're doing well in China. We've increased our leadership in China, enhanced our leadership. We continue to win good accounts in China, and we're well-positioned as the economy starts to normalize there and open up after as they're dealing with COVID. Great, thank you. In terms of Europe, we actually had Europe was up year-over-year. In the December quarter is always a tricky one because of the vacations, but continues to be strong in Europe, and we see good opportunities. We see good opportunities in biopharma. We continue to make inroads with our SynBio portfolio in Europe. NGS is looking good. You've seen some announcements there. You know, back to why we're winning is its strength with portfolio. We're excited about launching the Factory of the Future. I think that gives us great opportunities to engage with some of our larger customers and positions as well for next year. Great. Thank you so much. All right. Thank you. Our next question comes from Luke Sergott with Barclays. Your line is open. Great. Thanks for the time here. Good morning, everybody. A couple here from me. Jim, can you just talk about the strength or and Emily, the strength that you guys had on gross margin in the first quarter? Usually expected, like, some type of seasonal step down, but this came in well above, I think everybody, what they were looking for. Yeah. Back to strength of gross margin in the first quarter. You know, came in just under 40%, 46%, which is a great start for the year. That was driven by we've been working in terms of product mix and focusing in terms of continuing to manage our contribution margins. We saw strong actually contribution margins in both SynBio and in NGS. It's driven by a richer mix of products, yeah, we're excited about that. It continues to reaffirm that we're going the right direction. The step down in Q2 down to 30% is purely driven by the impact to bring on fixed costs associated with Factory of the Future. Yeah. Okay. Then on the second quarter guide from a revenue perspective, you know, being relatively flat, is this mostly due to a capacity constraint on the Factory of the Future? I guess what I'm trying to get at is you have a really strong 1Q gross margin, assuming that that's full capacity utilization that you guys are running there. Then as you're bringing the Factory of the Future on, you're not really gonna be selling a lot out of the Factory of the Future in the second quarter. That's why you're taking on all those fixed costs, so your GM steps down massively and your revs kind of stay tight with that first factory going at full capacity. Am I thinking about that right? What's interesting is, if you look at Q1, you know, San Francisco was not actually at full capacity. You know, the genes revenue, genes volume did pick up. You're right in terms of, this step down is driven by bringing the fixed costs on. Well, what's interesting is we continue to build our customers. You saw SynBio pick up, and we continue to see good margin improvement in SynBio and consistent margins in NGS. Part of this is driven by the growth, part of it is driven by the mix and this focus on expanding our SynBio footprints as well. You're absolutely right. Bringing fixed costs on in Q2, margin did down to 30%. As we scale in, Q3, Q4, we see the gross margin for the year in the range of 39%-40%. Okay, great. Lastly, on the bookings, you guys had a really big step up there. Can you talk about what you were seeing from? Is that a lot of the biopharma, 'cause I saw your active program step up really meaningfully? I'm just trying to get the sense of the cadence of the different segments and how they're gonna roll on through the rest of the year. What is interesting is, we had record bookings in NGS. The question's gonna be, okay, why isn't Q2 NGS number higher than revenue much higher than we're projecting? The answer is because those orders impact the second half. We saw good, strong. We continue to do well in SynBio, continues to do well in genes, beginning to see some impact on IGGs. Across the SynBio portfolio, we're doing well, and what's driving that is performance, turnaround time, customer experience, ability to scale and deliver a great value. If you look at the value proposition, NGS gives our customers significant reduction in sequencing. The number of larger customers continue to scale. We keep getting adopted into new assets. In terms of the SynBio portfolio, particularly in genes, you know, we've brought the turnaround time down. We offer terrific pricing in terms of the market. Because of that, we're winning customers. Because of that, we're seeing a number of small customers come in, and that gives us a good platform or springboard for going after the makers market. I would say we're executing according to the strategy. That's great. Yeah. It's gonna be interesting to watch. Thanks. Thank you. Our next question comes from Matt Larew with William Blair. Your line is open. Hi, good morning. Your price per gene has increased meaningfully here over the last four quarters, you know, even more so than what's been a nice trend line over the last few years. Can you just walk through what the key drivers of that increase has been? I think Jim just mentioned IgG had a nice quarter, but what maybe some of the key drivers are ahead of Fast Genes, which I assume will push that trend line even higher. Yeah. Maybe I'll start, thanks, Matt, for the question. You know, I really like looking at price per gene, but sometimes we have to be a little bit careful because it can be a little bit. You can make a good story either way. What happens is, our short genes are priced at $0.09 per base, our long genes are priced at $0.15 per base. When we penetrate more into the DNA makers market where they buy long genes instead of buying short genes, then the ASP goes up because now it's $0.15 per base and it's a long, it's a long gene, so the ASP per gene goes up. From that point of view, that's a great story. That's good. At the same time, when we're doing really well in biopharma, the average gene size goes down because antibody genes are small. From that point of view, the ASP goes down a little bit. It is a little bit of a mix of, you know, is there strength in the long gene business or is there strength in the human size genes that are done. In addition to that, we have been pushing price increases a little bit. On NGS, we did our second annual price increase in January. In SynBio, we've increased prices started last summer. There's a little bit of benefit from that as well. Okay, thank you. As you work towards Fast Genes in the back half, just remind us what else is required on your end to get those on the market? I think particularly you've mentioned software and training on that software, but just kinda get us from here to there. No, no, great question. Yes, there's a couple things. First of all, we need to be able to make Fast Genes. We, you know, developed, designed the Factory of the Future to be able to do it. We have the instruments in place. The instruments in place and the current software enable us to make genes about the same speed as what we do in San Francisco. There's a few more software components we need to deliver and training of the team to have the Factory be able to make genes faster. That's step one. step two, we need to have an e-commerce that is adapted to be able to price and book orders for slow versus Fast Genes. There's a big effort on the customer experience. If people can't afford Fast Genes, we don't want them to feel bad. At the same time, if we want to make it like the Apple website where, you know, you don't know why, but there's money coming out of your wallet and people are incentivized to choose the Fast Genes. There's quite a bit of e-commerce software design that needs to happen, so it's beautiful, frictionless, and intuitive. The last piece is continue to develop and enhance our digital marketing engine. A lot of the Fast Genes customers, those 270,000 customers, we are not going to send an account manager to a lab in a university. It's just not cost effective. We need to reach those customers through a digital approach. There's multiple ways to do that, you know, being at conferences, being part of iGEM, so Twist is already part of the mindset. The goal is through digital teams, get people on the Twist website, get them onto the e-commerce, have a touchless order where, you know, there's no human interaction, then have it ship to them in a way that, again, you know, frictionless. Those are the components that we are still refining. A lot of software, basically. Okay. Thanks, Emily. Thank you. Our next question comes from Vijay Kumar with Evercore. Your line is open. Hey, guys. Thanks for taking my question. Emily, maybe my first question is on the set guidance and revenue assumptions. When I look at your order growth here, 30% in 2Q, excuse me, Q1. In the second quarter, revenue guidance, that's 17%. Is there something going on on the macro front? Apologies if you've commented on this. Was there any China impact or? I know in the past you've spoken about share gains in gene synthesis. Is that still going on? When I look at that order number of $65 million, that annualizes to about $260 million, which is roughly your revenue guidance. Is there some capacity issue here that you're facing as you bring Factory of the Future online? Well, maybe I'll start and Jim can add as needed. Yeah, as you pointed out, the order number trends towards our guidance. The first quarter is 30% above our Q1 last year, which, and 30% is about the growth that we anticipate delivering this year. You know, we've mentioned that it would be a back-half loaded story. If we look at the ratio of first half, second half, you know, the ratio for this year is about the same as last year and the year before. It's somewhere between 40-45% of first half to second half. You know, that's what we... That's the business we've been leading in. The market is there. We have a great technology. We have a sales team that is extremely aggressive, and great products. I think the bases are loaded, but we have to execute, and deliver what we said we would. I don't know, Jim, I don't know if there's anything else you want to add. I think, Vijay, I mean, you're correct, overall strong orders in the first quarter. I mean, particularly in NGS, we've done a number of larger customers come in, place larger orders, getting us well-positioned for the second half. I did mention China earlier on the call, I'll give you the CliffsNotes on China. October, November impacted by lockdown. China was down sequentially from our September quarter down to December. As the economy opened up, with COVID, people got COVID most and some of our some of the weeks in our offices, about 80% of staff were out. That's obviously impacted in January, February. We see a little pickup this quarter in China. As the pandemic works its way through, we see pickup in the second half. In China last year, put in perspective, it was about $7 million. Even with the first half impact of COVID, we still see a pickup in China to about $9 million this year. I mean, overall, happy with the bookings, and there's more opportunity for us. As Emily has highlighted, the commercial organization have got tough quarters to meet this year. They're aggressively going after that. And we keep building our number of customers. We're getting a lot of interest in terms of Factory of the Future and our focus to execute and continue to deliver in terms of our top line and focus on getting to the core business to adjusted EBITDA breakeven at $300. Continuing to focus on growth pharma and get that to adjusted EBITDA breakeven as well. Just maybe one more, Jim, for you on the second half cadence, both on the revenues and gross margins, right? I think from a revenue perspective, I'm looking at perhaps sub 25% in the first half. That would imply, you know, well north of 30%, right, above your annual guidance. Your comps get harder in second half. What is driving that acceleration? The same goes for gross margins, right? I think your first half implied is around 37%, 38%. You need to hit about 40% in back half. What is driving this back half strength in both from a revenue growth perspective and gross margins? Touched on it a little bit with the question. I mean, our bookings in the first quarter, orders for the first quarter were approximately $65 million. You saw the pickup in terms of NGS. NGS is driving the overall growth in the second half. If you look at NGS first half, it's about $50 million in terms of revenue. The growth in the second half to hit say roughly $120 million is $70 million. What's driving that? You can see there that the orders in Q1 for NGS were in excess of $13 million. We continue to see on SynBio, we see sequential pickup in SynBio. What's driving that? Number of customers continue to deliver from a performance point of view. The team in San Francisco have done a fantastic job in terms of aggressively reducing the turnaround time, and that's been well received in the market. Execution. In terms of your question around gross margin improvement in the second half, that's about growing the top line, leveraging our fixed costs. We do bring the Factory of the Future cost online this quarter as the facility is now commercially operational. It's exciting that we actually shipped our first product. You know, the focus is execution. It's going after the makers market, $1.4 billion opportunity. The pipeline for NGS continues to scale. The number of wins in iSpace continues to scale. It's more of execution. There's some obviously some new products impacting us as well. It's continuing to gain share in a growing market. Understood. Thanks, guys. Thank you. Our next question comes from Puneet Souda with SVB Securities. Your line is open. Yeah, hi, Emily, Jim, thanks for taking the question. Just following up on the NGS side, obviously booked a bill higher, but could you elaborate, you know, is this more on the pickup, on, in the second half pickup on the NGS is more RUO driven or more of the liquid biopsy customer demand? Sort of just elaborate a bit on that. Then, you know, how much of that is volume versus pricing? I mean, you're expecting a meaningful pickup here in both, you know, growth and as well as you know, obviously gross margins too. Just trying to understand how much of that is, you know, pricing and volume in the context of NGS and given the sort of the fixed cost that you have now and the 30%, you know, gross margin that you have for the next quarter. I can start, Emily. Let me just address the 30% gross margin this quarter. Puneet, appreciate the question. That's primarily driven by the fixed costs coming online in the Factory of the Future. I mean, we're scaling the Factory of the Future this quarter. We'll give an update in terms of the volumes and in terms of amount of products going through Factory of the Future in the next earnings call. We're commercially bringing it on, fixed costs come on, so we've got an under recovery. That then the consequence of that is our gross margin dips to 30%. As we scale the volume in the second Q3, Q4, we'll see our gross margins improve. In terms of NGS, I mean, we've been working at this for a number of years. We've been providing metrics in terms of the larger NGS customers that we continue to service. We define the larger NGS customers as those customers that are provide revenue in excess of $250,000 a year. That's continuing to scale. We're now tracking, I mean, approximately 264 of them. That's, that's scaled from, you know, less than 100 about 18 months ago. We continue to win in terms of assays. As we continue to win in terms of assays, we see the that impact in terms of bookings, placing orders. We continue to gain share, and that's what's picking up. We see the pickup in the second half of this year. We're well positioned for a strong second half in NGS. As NGS picks up, revenue picks up and gross margins improve. Okay. Got it. That's helpful. Just wondering some or are you reagents peers have talked about softness from the smaller biotechs. Wondering if you're seeing any of that. Lastly, you know, appreciate the comments on the Makers Market. Maybe Emily, just wanted to understand, you know, academic customers, sure, large number of them out there, but more price sensitive. Wondering, you know, what's your expectation on both the sort of, you know, pricing of the product there, and the sort of the quality of product liquid biopsy customers. Could you maybe elaborate a bit on that too? Thank you. You cut off for a second there. Yes, I think, you know, we don't have different quality. It's one grade for academia and it's the same product for academia and companies. We break the revenues for academia and companies for the entire companies, but not for NGS. I think we've seen in the past that the majority of our NGS revenues are around clinical product. On the smaller biotechs, are you seeing any of that in the quarter or in, you know, currently, are you seeing any impact? Some of your peers had commented around weakness in the RUO segment for reagents. Yeah, no, I don't think we have any specific comment around our RUO versus clinical. Okay. Thank you. Thank you. Thank you. Our next question comes from Rachel Vatnsdal with JPMorgan. Your line is open. Hi, this is Noah in for Rachel. First, if I could just potentially get a little additional clarity here. You know, just as it relates to NGS, you know, you mentioned that there is an annual price increase that you pushed through in January. Could we get a little commentary regarding a pricing strategy here? How did you see orders trend in NGS pre-price increase versus post price increase? I have one more. Thank you so much. Yeah, I think we, you know, we try to price on value. You know, I think there's an understanding that costs are going up. You know, Based on the quality of our product, based on the strength of our product, we're able to put in a price increase which has been, you know, quite well received. Awesome. Thanks so much. Just regarding the DNA data storage offering, you know, you've partnered with some big tech giants to bring, you know, DNA data storage, you know, into existence. Can you talk about, you know, conversations you've had with these partners in recent weeks as, you know, we've seen some of the tech industry starting to tighten their belts around investments relating to, you know, non-core businesses, and, you know, do some layoffs. Like how do you expect to push the, you know, adoption curve of DNA storage or what have you been hearing from your customers regarding timelines, for adoption there? Thanks so much. Yeah, no, that's a very, very good question. I think the data storage, we've over the last several years, we've made a concerted effort in creating an industry. It's not just us, but we've created the DNA Data Storage Alliance. That alliance got into SNIA. Now you have data storage conference where on their own they are putting a DNA data storage track. In the industry, it used to be when... I would talk to data storage customers, they would say, "Oh, I've never heard of storing in DNA." It moved to, "Oh, I heard about storing DNA, but I don't believe it." Now it's, "Oh yeah, I've heard about DNA storage in DNA, you know, where can I buy it?" There's definitely storing in DNA sticking mind share because there's such a need for archive, deep, deep archive where tape and hard drive are just not well suited. I think it's becoming in my view, an inevitability just because there's such a strong need on the archiving market to get something that is better than tape and hard drive because people just don't like it. Awesome. Thanks so much. Thank you. There are no further questions. I'd like to turn the call back over to Emily Leproust for closing remarks. Thank you very much for joining us today. Apologies for running a few minutes late, and we're looking forward to seeing you at AGBT next week and at the Cowen Healthcare and Barclays conference in March. Thank you. Thank you. This does conclude the program. You may now disconnect. Everyone, have a great day.