Good morning, ladies and gentlemen. Welcome to Twist Bioscience's fiscal 2023 second quarter financial results conference call. Later, we will conduct a question-and-answer session. To ask a question during the session, you will need to press star 11 on your touchtone telephone. You will then hear an automatic message advising your hand is raised. I would now like to turn the conference call over to Angela Bitting, Senior Vice President of Corporate Affairs and GPSG Officer. Please go ahead. Thank you, Operator. Good morning, everyone. I'd like to thank all of you for joining us today for Twist Bioscience's conference call to review our fiscal 2023 second 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, and then Emily will come back to discuss our upcoming milestones and direction. We will open the call for questions. We would ask that you limit your questions to a maximum of 2 and then requeue 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 make forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in our 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 financial measures that do not conform with generally accepted accounting principles, including adjusted EBITDA. Information may be calculated differently than similar non-GAAP data presented by other companies. When reported, a reconciliation between these GAAP and non-GAAP financial measures will be included in our earnings documents, which can be found on our investor relations website at www.twistbioscience.com. With that, I'll now turn the call over to our Chief Executive Officer and Co-founder, Dr. Emily Leproust. Thank you, Angela. Good morning, everyone. This is a busy time for Twist. I'm very pleased with our performance through the first half of the fiscal year. In Q2, we delivered our first quarter over $60 million in revenue. In addition, this morning we announced that we have taken strategic actions to accelerate our path to profitability. I am happy to share that we expect to achieve a quarterly run rate that is adjusted EBITDA breakeven for both the Core and Biopharma businesses as we exit the September 2024 quarter in about 15 months. Today, I will focus on three main things. First, our confidence in our near-term revenue growth. Second, our decisive actions designed to achieve adjusted EBITDA breakeven in the near term. Third, the drivers of growth in all businesses moving forward. Beginning with top-line growth for our revenue-generating businesses, I am pleased to share very strong results for the second quarter of fiscal 2023, with reported record revenue of $62 million, exceeding our guidance of $56.5 million. Strength in the Core business, particularly NGS, drove the beat. Orders came in at $64.2 million indicating solid growth moving into the second half of our fiscal year. In the quarter, we began commercial shipments out of our Wilsonville, Oregon facility, the Factory of the Future, which we believe will deliver manufacturing efficiencies leading to margin improvements going forward. We continue to see increasing enthusiasm for our genes, gene fragments, Oligo Pools, and library products with our consistent rapid turnaround time driving that demand. I'd like to note that this is for our standard Speed Genes. We have not yet taken orders for Fast Genes, which we expect to launch in the fall with premium pricing. We continue to take market share from our peers and remain far ahead of emerging players because of our consistent turnaround time together with our perfect quality genes at a scale and price unavailable elsewhere, which continues to resonate with our customers. Our reliable products and exceptional customer service has been key to creating loyalty with our customers, which then facilitates reorders and quarter-over-quarter revenue growth. In addition, our customer surveys continually state that we are their preferred provider because ordering is easy, and we over-deliver on turnaround time. For NGS, we see customers advancing development of their tests and also gaining traction within the market. Our NGS revenue is significantly linked to the commercial ramp of our customers' tests. While there can be quarter-to-quarter lumpiness, we have confidence that revenue will grow year-over-year. The point to remember is our business is sticky. We grow with our customers, and our customer base continues to expand. In Biopharma, we began integrating the Boston team at the end of the calendar year, following the contractual limitations of the acquisition. We continue to see opportunities ahead, particularly as we now have an integrated team and portfolio of services. While it's true that the funding environment for emerging biotech companies has been constrained, our share of the Biopharma services market is small and largely untapped by our commercial team. That said, we are facing some internal headwinds as we replatform systems and integrate commercial territories. We've made changes to address these challenges and expect the revenue lift will come within 6 months. We continue to sign collaborations and agreements with customers, and we're expanding our wallet share with existing partners. As an example, we announced another agreement with Astellas in April, our third collaboration with this pharmaceutical company. We do expect fewer milestone royalties or collaborations as we move forward, as we are now prioritizing near-term top line revenue growth. Our commercial team for SynBio, NGS, and Biopharma is now firing on all cylinders, and we are seeing large opportunities ahead. I will now move from top line to operating expenses and our significant actions to accelerate our path to profitability. As you know, the Factory of the Future outside of Portland, Oregon, is now shipping products to customers. In fact, all of our genes fragments, and the vast majority of Oligo Pools have been made in Oregon for more than a month. To accelerate our top line to reach profitability, we conducted a comprehensive review to re-engineer our cost base and achieve this goal more quickly. We have made difficult decisions, resizing many teams throughout the organization, which will result in the elimination of approximately 270 positions to operate more efficiently while still continuing to support our high-growth focus areas. It is difficult to say goodbye to the many talented and committed Twisters who have been integral in our success to date. We wish them well. We will support them as they identify their next opportunities, and we look forward to what they will achieve as they bring their experience from Twist to the larger ecosystem. To provide a bit more color on the shape of the organization moving forward, the sales force will remain largely intact to drive top-line growth. We'll remove the duplication of SynBio production across San Francisco and Portland, significantly lowering our fixed cost structure. In addition, we will size the biopharma teams to focus on revenue-generating partnerships, deprioritizing the majority of our internal assets. Throughout the organization, we streamline teams, including R&D, to focus on programs where Twist has a clear competitive advantage and to selectively deploy our platform in areas where we see the greatest potential for long-term value creation. In data storage, we remain integrally involved in market development and continue to advance our technology. We do not see a near-term competitor close to a commercial launch at this time, and that's significant. It enables us to substantially reduce our operating expenses for data storage while continuing our effort at a more modest level, yet still remain ahead of the competition. We will focus our efforts on the storage-as-a-service business model and plan to delay the distributed on-premise approach until after the service business has proven to be a success. We expect to demonstrate an end-to-end gigabyte century archive service by the end of calendar 2023. Following on this, in early calendar 2025, we expect to launch a terabyte century archive solution. As I said, we believe we will deliver on all of this while reducing the overall cash burn. Moving into our future growth, we see many opportunities ahead. As we look forward, the planned launch of Fast Genes in SynBio this fall, we will be targeting the $1.4 billion DNA makers market. These are scientists and researchers in large pharmaceutical companies and academia that currently make their own DNA instead of buying it, as they need it faster and more cost-effectively than we believe it can be delivered from virtually any source today. This is one area that we are confident will increase our SynBio contribution margin, as we believe we'll be able to command a premium price that leverages dynamic pricing for rapidly delivering these products. Additionally, we do not expect to add commercial headcount to pursue this large market, as we believe our e-commerce portal and digital marketing capabilities enable us to acquire customers cost-effectively. For NGS, our customers continues to increase, particularly in the oncology space. We have several large commercial customers and a growing mid-tier group of development stage customers with the potential for compounding growth. In both instances, Twist is poised to grow with them. We continue to be included in more and more assets, and we believe the growth of our NGS opportunity will be sustainable for the foreseeable future. In the near term, we plan to run RNA workflow tools through our NGS portfolio. Scientists often run RNA assays multiple times for the same samples, as RNA changes at different time points in different tissues in both normal and disease states, providing a large market opportunity that complements our DNA workflow tools. RNA workflows are used primarily within the research market, an area where we have a significantly smaller footprint to date, but believe we can grow and expand. We expect to launch several RNA tools in the near future. In biopharma, we continue to see opportunities for our competitively priced high-value services, even more so with the integration of the offerings. We will focus on selling services that drive top-line revenue while we digest the resizing of the organization. The largest shift will be away from R&D on our internal assets until we see some momentum in out licensing antibody leads where we have done the most work. For data storage, the very large opportunity remains within our sights. Because we are not seeing direct competitors at this time, we are slowing our investment. Therefore, we have revised our commercial plans while we advance at the more modest rate without losing our first mover best-in-class competitive advantage. With that, I'll turn it over to Jim. All right. Thanks, Emily. We had another quarter of robust execution at Twist despite the volatile macroeconomic environment. Revenue for quarter two was $60.2 million, which is year-over-year growth of approximately 25% and a sequential increase of 11%. Orders were $64.2 million for the quarter, an increase of approximately 17% year-over-year, and gross margin for the quarter is 30.8%. We shipped to approximately 2,100 customers as compared to 2,000 in quarter two fiscal 2022, and we ended quarter two with cash investments of approximately $388 million. Our NGS revenue for quarter two was $29 million, which is year-over-year growth of 26%. As we noted in our previous earnings call, we had a couple of larger customers push shipments from the December quarter into January. Our second quarter orders were $28 million, a sequential decline of 10%. Growth of 19% year-over-year. As Emily stated, revenue growth in NGS is linked to the ramp of our customer tests, which can drive some quarter-to-quarter lumpiness in revenues. The top 10 customers account for approximately 38% of our NGS revenue. We served approximately 600 NGS customers in fiscal quarter 2. Our pipeline for larger opportunities continues to scale. We're now tracking 270 accounts up from 264 noted in our last earnings call. 131 have adopted Twist as compared to 130 last quarter. Turning to SynBio, which includes genes, DNA preps, IgG, libraries, and Oligo Pools. SynBio revenue for the quarter rose to $24.1 million, representing a sequential growth of 11% and a year-over-year increase of approximately 31%. Orders for the quarter were $30.9 million, which represents a 16% sequential increase and a 31% year-over-year growth. Some of the highlights include shipping to approximately 1,660 SynBio customers, which has grown from approximately 1,400 in the second quarter of fiscal 2022. The customer base includes many biotech and large pharma companies. Gene's revenue increased to $18 million, which is year-over-year growth of approximately 27%. We shipped approximately 152,000 genes in fiscal quarter two, which is an increase of approximately 23% year-over-year. Oligo Pools had another strong quarter with revenue of $3.3 million, with demand primarily coming from the healthcare segment. Now to Biopharma. Our Biopharma revenue for the second quarter of fiscal 2023 was $7 million, down sequentially from $8.2 million. Orders for the quarter, $5.3 million, down sequentially from $6.9 million in the first quarter, primarily due to integration challenges Emily described. That said, we had 93 active programs at the end of the quarter and added 3 more milestone and royalty agreements, which brings the total to 66, up sequentially from 63. I'll now cover our revenue breakdown by industry and our regional progress. Healthcare revenue for the second quarter of fiscal 2023 was $33.8 million, as compared to $24.1 million in the same period of fiscal 2022. Industrial chemical revenue was $14.4 million in the second quarter of fiscal 2023, as compared to $14.1 million in the second quarter of fiscal 2022. Academic revenue was $11.1 million in the second quarter of fiscal 2023, as compared to $9.5 million in the same period of fiscal 2022. EMEA revenue rose to $18.8 million in Q2 fiscal 2023 versus $15.2 million in Q2 fiscal 2022. APAC continued to see recovery in China, with our revenue in China increasing to approximately $2 million, up from $1.4 million the prior quarter. For APAC, overall revenue increased to $6.5 million compared to $4.5 million for the same period of 2022. U.S., which includes Americas, revenue increased to $34.9 million in the second quarter versus $28.5 million for the same period of fiscal 2022. Now moving down the P&L. Our gross margin for quarter two was 30.8% with cost of revenue for the quarter of $41.7 million. The change in gross margin was expected as the cost of revenue increased sequentially from $29.4 million, primarily due to approximately $5 million associated with the commercialization of the SynBio labs in Factory of the Future. We had approximately $1 million scrap associated with the Factory of the Future in the quarter. Our operating expenses for fiscal quarter, including R&D, SG&A, change in fair value, and mark-to-market adjustments of acquisitions was approximately $80.1 million as compared to $79.2 million in Q2 fiscal 2022. To break it down, R&D for this fiscal second quarter was $27.4 million, a decline from $31.2 million in the same period of fiscal 2022, primarily due to the conclusion of Revelar. This includes DNA storage R&D spend of $5 million and Biopharma R&D spend of $4.7 million in the second quarter of fiscal 2023. SG&A in quarter two was approximately $54 million. Factory of the Future pre-commercialization costs included in SG&A were approximately $6 million for the first months of the quarter when the factory was not yet commercial. In addition, we have a number of labs that are still in pre-commercial phase and will transition to COGS as they are qualified in the second half of fiscal 2023. Stock-based compensation for the quarter was approximately $10 million. Depreciation and amortization for the quarter was $7.1 million, an increase from $5.8 million in the previous quarter and associated with the commercialization of the Factory of the Future. CapEx, cash investment in the quarter two was approximately $9 million, which brings total CapEx cash spend for the first six months of the fiscal year to $21 million. As we've highlighted, the launch of the Factory of the Future is going very well. We had a strong quarter of operational performance. As noted, we continue to see year-over-year growth in SynBio and NGS businesses. We're focused on achieving adjusted EBITDA break even and then profitability as we scale. We are resizing the organization by approximately 25%, with reductions aimed at managing our operation cost structure, lowering our revenue break-even point, and limiting our investment in data storage as we transition to break even. Note the reductions outside of the U.S. may be delayed as we work through the required regulatory processes. About 60% of the staff reductions affect the COGS line and 40% affect OpEx. In particular, we have resized the Biopharma group to achieve break even at $40 million instead of revenue of $80 million. For the core business, we have streamlined the organization across the board in order to achieve break even of $285 million instead of $300 million. The cash restructuring costs are estimated to be approximately $9 million-$11 million. We anticipate cash savings of approximately $9 million-$11 million per quarter on a go-forward basis beginning in the first quarter of fiscal 2024. The savings primarily impacting our operations as we exit gene manufacturing in South San Francisco and ramp up the Factory of the Future, as well as moderate our investment in R&D, with the majority of the spend reductions in Biopharma and DNA storage. We've taken actions to address our cost structure, we do believe it is prudent to revise our revenue for fiscal 2023 as we digest these changes. We are revising this guidance to approximately $235 million-$238 million versus our prior guidance of $261 million-$269 million. SynBio revenue range is $96 million-$98 million, and that's down from $104 million-$106 million. NGS revenue range is $113 million-$114 million, down from $120 million-$123 million. Biopharma revenue is $26 million, and that's down from $37 million-$40 million. For the second half of fiscal 2023, we anticipate revenue of approximately $60 million-$61 million in Q3 and $62 million-$63 million in Q4, and gross margin to be approximately 30% in Q3 and 36% in Q4. For the full fiscal year, we're projecting gross margins of approximately 35%-36%. We are decreasing OpEx guidance for the year to approximately $313 million-$319 million as compared to our previous guidance of $330 million. We're now projecting R&D expense of $112 million-$114 million as compared to our previous guidance of $130 million. We expect SG&A to be $197 million-$200 million, and that's a decrease from our previous guidance of $204 million. Mark to market is projected to be a credit of $5 million. One-time separation costs from a reduction in force are projected to be $9 million-$11 million. Depreciation and amortization is projected to be approximately $29 million. Our projection for stock-based compensation has declined to approximately $43 million from $50 million. Operating expense for DNA storage is expected to be approximately $40 million compared to the previous guidance of $46 million. For fiscal 2024, we also expect $40 million operating expense for data storage compared to our previous guidance of $57 million. Net operating loss for the year is projected to be approximately $230 million-$234 million, which includes one-time charges of approximately $9 million-$11 million for separation costs. CapEx for the year is projected to be $40 million, a decrease from the previous guidance of $50 million. Ending cash is projected to be $320 million compared to previous guidance of $300 million. In summary, we had record revenue in quarter two. We're commercially shipping from the Factory of the Future. We're focused on managing the business and our cost structure as we scale. Importantly, we expect to exit fiscal 2024 with a fourth quarter adjusted EBITDA break even for the core and biopharma business. We define adjusted EBITDA as EBITDA plus add back for stock-based compensation. We're also projecting ending cash balance of $220 million as September 30, 2024, and that's up from our previous guidance of $170 million. With that, I will now turn the call back to Emily. Thank you, Jim. We continue to have aggressive goals. We have aligned the business to pursue significant opportunities. As importantly, we announced decisive and proactive actions to accelerate our path to profitability, preserving cash and mitigating risk, all while leveraging our outsized opportunities in the marketplace. We always evaluate the business from every lens. We remain laser-focused on achieving adjusted EBITDA break even for our core and biopharma businesses while maintaining optionality on investments for the incredible upside we see in data storage. Our core business in SynBio and NGS continue to scale. We have near-term opportunities for each with an energized commercial team to deploy. We are resizing and refocusing the biopharma organization from an integrated service offering that we believe will drive top line revenue growth. We have moderated our spend for data storage while ensuring we maintain our competitive edge. We revise our guidance to a cautious level with potential for upside. We've been strategic in our action this quarter, positioning us as a leaner, meaner organization specifically focused on disruptive market opportunities for profitable and scalable growth. With these substantive changes, we believe we are operating from a position of strength in the current environment, accelerating our projecting timeline to adjusted EBITDA breakeven for both the core and biopharma businesses as we exit the September 2024 quarter, or about 16 months from now. We remain extremely excited about driving the future. With that, let's open the call for questions. Operator? Thank you. Ladies and gentlemen, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. As a reminder, to accommodate all participants in the queue, we ask that you please limit yourself to one question and follow-up. If you have additional question, you may reenter the queue if time permits. Please stand by while we compile the Q&A roster. Our first question coming from the line of Vijay Kumar with Evercore ISI. Your line is open. Hey, guys, congrats on the revenue beat in the quarter. Thanks for taking my question. I guess my first question is on the guidance here. It makes sense for the guidance to be a reset given the environment. The back half year, I think, implied as high single digits. It looks like all segments were cut, but perhaps biopharma a little bit more than the others. Mm-hmm. Can you just talk about the macro environment? What has changed versus 3 months ago from a macro perspective? How much of this is Twist specific versus the general environment that you're seeing? How comfortable are you in this high single-digit dab growth for the back half? Thanks, Vijay. Thanks for the question. If we step back, there's a number of things going on. In terms of biopharma, we feel very good about where we're at. The challenges we've had in biopharma is just purely integration, so that's an execution issue. We acquired Abveris last year. We had an earn in. It was important that we supported Abveris to be positioned to achieve that earn in. Consequently, we had this independence between Twist and Abveris. As we started to integrate, we realized we had some integration challenges. We're launching the new offering, we feel good about where we're positioned. Because of the internal challenge there, we reduced the revenue outlook for biopharma. It's a large market. We've got a great service offering. We feel very well positioned. In terms of the other two areas, SynBio and NGS, we've just reduced the organization by approximately 25%. We believe it's going to take some time to digest that reduction. The overall order growth rate is solid. We continue to see an NGS growth in large customers. We're launching new products. At the same time, you know, taking 25% out of the organization, we believe we need to be prudent in terms of our outlook in terms of top line. I think the advantage is that we're positioning the company to get to adjusted EBITDA break even earlier and come out with a stronger balance sheet. This is internal, but we really believe that we're well positioned from the platform. We're seeing large customer growth, so it's more prudence on our part. Understood. Sorry, Jim, on just to clarify that point, what you're saying is, 25% headcount reduction, and did that come from the commercial side? I think what you're saying is orders and customers, you know, the market seems to be healthy, but this is more a function of the restructuring actions you've taken and hence the guide cuts here in the back half. That's correct. Yeah, the market's strong. We're up as we highlighted year-over-year. We're growing faster than the market. We're focused on launching new products. This is just about pure internal issue in terms of digesting such a large change. I mean, we've done a great job in terms of launching Factory of the Future. It's going exceptionally well. Turnaround times are excellent. Customer feedback's great. At the same time, we believe for the next six months, we're going to be prudent in terms of our outlook due to the reduction by of the organization by 25%. Understood. Then one on the gross margins, Jim. If I look at your 3rd quarter and 4th quarter commentary here, 4th quarter revenue is up $2 million, but I think the implied gross profit dollars are up $4 million. Would rise that, you know, gross margin, that 36% gross margin strength in Q4, and is that the right jump-off point for next year? How should we think about gross margins for RAD 2024? Yeah, good question. I mean, as we continue to scale, you can imagine we've adjusted the cost structure. We're going to digest that, continue to grow and launch Fast Genes. That 36% is a starting off point for next year. As we continue to scale, we're going to see incremental improvements in gross margin. I mean, our focus is get to adjusted EBITDA to break even for the core business by Q4 next year. We want to leverage the Factory of the Future. We want to drive in the new products, Fast Genes. Want to drive in the new products in NGS. We're very well positioned to see gross margins improvement next year. Thank you. Our next question coming from the line of Matt Sykes with Goldman Sachs. Your line is now open. Hi, this is Evie on for Matt. Are you feeling any weakness from the biotech funding environment? What does your exposure as a percentage of revenue look like for that? In terms of the biotech funding environment, I mean, clearly it's having an impact on the overall industry. I mean, we see it as an opportunity. In terms of where we're at with Abveris and our Biopharma integration, we're going to be launching our integrated offering. We've taken adjustments in terms of the organization. We're very focused on streamlining the business. We anticipate getting to adjusted EBITDA break even at 40 for Biopharma. At the same time, there's this huge market for us. As you saw last quarter, you know, the number of customers dealing with us is solid. strong growth in terms of the number of projects or the number of projects. The outlook with the offering, we're feeling good about that outlook. So I think overall and maybe there is issues, however, our issues have been internal. Sorry, I missed the second question you asked just what was the% exposure, as a percentage of your overall revenue to the biotech environment? We haven't disclosed that overall. You know, our healthcare revenue is about 50 odd% of our overall business. That's been growing year-over-year. I mean, it gets back to the strength of our product offering. NGS, we provide our customers reduced sequencing costs, fast time from sample to sequencer. SynBio, we continue to scale into biotech. With the biopharma business, we'll have integrated offerings. We see ourselves moving into the large pharma customers. That continues to be a good trend for us. Overall, if you look at our orders, our orders are up year-over-year. Revenue's up year-over-year. This is I mean, we're focused on execution. We believe that, due to our platform, we can provide significant value to our customer base. Okay, great. That's helpful. Thank you. Then where is the cost reduction mostly weighted towards? Is it, like, towards one specific segment, or is it pretty equal across the board? Cost reductions are, yeah, across the board. We're managing our data storage investment. We've adjusted the biopharma cost structure. For the core business, we've migrated our gene business to Factory of the Future. We're leveraging the Factory of the Future and investment made there and taking advantage of the fast turnaround time. It's across segments. I mean, the outcome is for the core business, i.e. NGS and SynBio and biopharma, the goal is to get to adjusted EBITDA break even by Q4 next year. Exit next year with a strong cash position. Great. Thank you. Thank you. Our next question coming from the line of Matthew Lare with William Blair. Your line is open. Hey, good morning. one about data storage. You mentioned you're moderating expenses there, but then you also mentioned that you feel like you have a significant lead. Just curious why that level of reduction in spend was the right one. Did you contemplate perhaps more or pausing or maintaining the investment? Just sort of given that it's a modest reduction, just want to get a sense for what was contemplated and why you end up settling on sort of that level of investment. Yeah. Thank you, Matt. A very, very great question. I think, we see a tremendous opportunity in data storage for long-term value creation. At the same time, we have also have to deliver short-term value creation. We have to make some very thoughtful capital allocation decisions. What we are seeing is that the market for data storage is, the more we sense it, the more certain we are about it. At the same time, as I mentioned, we were a head and shoulders ahead of the competition. We see our data storage investment as a lever that we have in managing the business. As we are focusing on adjusted EBITDA break even for the core and biopharma business and ending, getting there with as much cash in the bank as possible, we're able to lower our investment in data storage without losing our competitive edge. What that means is we'll have to do less. We'll do a bit less of market development. We are not going to do the early access with the gigabyte chip. Instead, we'll show the end-to-end demonstration, which is important that it's a system, so it's going to show us we can do data in, data out, but we don't have to go commercial with that system. Instead, we're going to focus on going commercial with the next chip, the terabyte chip, which is going to be disruptive from a total cost of ownership point of view. That, that's a significant change. The gigabyte chip was more for demonstration. We're not going to commercialize something that's a demonstration. Instead, we're going to focus on commercializing a chip that is a service based on a chip that is disruptive from the one where we can get revenue growth and really good margin from day one. Okay, understood. You know, if we sort of look at your quarterly result, I think those bear out that in SynBio and NGS, you enter those market disruptors and, you know, taking share, growing above market. I think it's more challenging on the outside looking in to look at biopharma and assess how that has been going, just given the number of acquisitions that you've made there. You know, from the outside looking in, that market seems to be a bit more crowded and certainly evolving. What's your assessment of kind of, you mentioned sort of the right assets, but you're also going through some internal changes? What's your assessment for the offering you have there relative to your assessment of competition and how you think you've been growing, perhaps either measured by win rate or pitches or revenue? What's sort of the right metrics you're looking at internally that give you confidence that that asset is really competitive and differentiated? Yeah, no, that's a very good question. From a technology point of view, our technology, our in vitro technology from the original Twist, we know that that is very strong, best in class, technology. We have scientific data that the mouse that we got from Abveris is a slope head-to-head with other mouse is best in class as well. The combination together plus the addition of Infinico that we added, our belief is that that is the best set of tools, comprehensive gold standard that you can have for antibody discovery. From a technology point of view, we are extremely confident. From a commercial point of view, we, it's a different story. In the change that we made, the decisive action that we did, the sales team is untouched, basically. However, in Biopharma, we had to completely retool our sales team. We're in a situation where we have a fantastic technology that we strongly believe in, disruptive in the Twist spirit, where when we go in, we go in with an unfair advantage. We just now put in place the commercial team that is going to monetize that technology. In terms of metric to look at, you know, what we will report to the Street is orders, right? Orders have been down. What we're going to look for is a reversal of orders. Orders is the first step to getting to revenues. And in biopharma is all the orders are upfront payments, usually there's a 100% conversion to revenue. What we're looking at is orders. And then in terms of from internal metric, you know, it's a classic sales business development metrics is, you know, what are the activities and really how many new customers we get in. We have a secret weapon with our CSO, Aaron Sato, he's our door opener, and then we can have the sales team to come mop up. And then we are extending the scientific level of our sales team to be able to do more of that. At this point, we're very confident in the technology we have, and it's a sales business development, execution from now on. Okay. Thank you. Thank you. Our next question coming from the line of Steven Mah with Cowen. Your line is now open. Great. Thanks for the question. A question for Jim. Could you give us some color on the CapEx pullback in 2023 from $50 million-$40 million? A follow-up on that, is there going to be any impact on the Factory of the Future build-out and the Fast Gene and RNA launches and other launches out of the Factory of the Future because of that? Yeah, thanks for the question, Steve. In terms of the CapEx pullback, it's just fiscally managing our CapEx. We see no impact. You know, the key thing for us over the next, you know, four or five months is to execute in terms of taking into account the impact of the reduction in headcount. As part of this, we have an ongoing focus in terms of managing both our CapEx, managing our net working capital and continuing to drive growth and at the same time manage the balance sheet. Just part of prudent management. There'll be no impact in terms of the Factory of the Future. Okay. Thanks for that color. And then a question for Emily. On the enhanced, the whole genome sequencing and e-enhanced whole exome sequencing, early access programs, can you give us some color on how the response has been and how the traction has been there? Secondly, you know, I noticed that the press release on Aster Insight, could you give us a little bit of color on how the economics and revenue share work with a partner like Aster Insight? Thank you. You know, great questions. On EW-EWGS, the initial customer feedback has been very, very positive. We are going to leverage that technology to the agricultural business, where cost per sample is extremely tight. You know, internally, we say that that's where price is king. The technologies that we've developed internally is really going to enable those ag bio customers to do thousands, hundreds of thousands, millions of samples at a very low cost with a very high resolution on the genotype that they are looking for. Those are big contracts. When they land, it's going to be big lumps. That means it's going to take a little bit of time. The initial technology assessment is extremely positive. What's the second question? I'm sorry. Yeah. It was about the economic share with Astellas Pharma Inc. on your kits, where you're using some of their content on your platform. Yeah. Yep. No. I mean, what we can say is that it's built with our design expertise with some custom NGS tools. And they have a great channel. But yeah, we're not sharing the economics. Okay. All right. Thank you. Thank you, Steve. Thank you. Our next question coming from the line of Sung Ji Nam with Scotiabank. Your line is open. Hi. Thanks for taking the questions. Just to expand on Matt's question earlier, with regards to just, you know, if you could provide more color, around kind of the rationale and your thought process, in terms of the timing and the magnitude of the restructuring. What gives you confidence that this, you know, this might not be overly aggressive or I guess not sufficient enough, you know, to drive growth in the future? Just kind of if you could, you know, give us a bit more information there. I mean, Why don't you go, Emily? Well, maybe I'll start and with the high level and Jim will keep filling the details. The general principle was that from a company morale point of view, we wanted to do it, you know, once and done. We didn't want a drip, drip, we cut, you know, really deep so that we didn't have to do it. At the same time, we also know that we have some strategic hires that we have to make. We cut deep enough to make sure that we left room for the those strategic hire that have to happen. That was the high level guiding principle, and I'll let Jim fill in the details. In terms of timing, we launched the Factory of the Future in the middle of the quarter from commercialization. It's going really well. We've invested significantly over the last, you know, 18 months. And in terms of the, you know, the timing right now, we're seeing the benefit of our investment, and we're seeing the opportunity in the marketplace. We've got a lot of interest in terms of Factory of the Future. We're getting well positioned to launch Fast Genes. What's important to us also is maintaining a strong balance sheet to support the business as we move from losses to adjusted EBIT to break even by Q4 next year. This gives us the runway for our core business to get there. At the same time, we see opportunity for top line growth and continued opportunity for our R&D organization to innovate. This restructuring supports the balance sheet, supports the company, and supports our focus on innovation and growth. Okay. Got it. In terms of the Fast Genes, could you remind us kind of where the key remaining steps in terms of, you know, from the market development standpoint or manufacturing capability standpoint, that are remaining before your launch? Yeah. No, thank you. Great question. All of the genes as of late March, genes, gene fragments, and most of the Oligo Pools are being made in Wilsonville, Oregon. We now have stress tested that factory under high volume, and we're very happy with the performance. The turnaround time and the final yields are equivalent to what we were getting in the San Francisco fab. The current time right now, is blazing fast. I think our average is about 10 days and 90th percentile of genes shipping in 14 days. It's really great performance. Now, in terms of Fast Genes, to your questions, there's two avenues that we're still working on, and they are both on software. The first avenue is, we have internally some software tools that we are finalizing to enable Fast Genes. The process is the same, but we're adding more software tools such that there's less human intervention, less human thinking in terms of what has to happen next. That means that genes will spend less time waiting in the freezer about where, what do I-- has to happen next. That's, that's the software tools. The software team's doing fantastic. It's, it's on track. The second piece is also a software tool. That is the external tool, the e-commerce tool that needs to be updated. We're adding a key feature of dynamic pricing, that would be, in our view, very critical in extracting the most value out of the speed that will be created. Great. Thank you so much. Thank you. Our next question coming from the line of Luke Sergott with Barclays. Your line is open. Hey, guys. morning. couple things here. I just wanted to follow up on Doug's question about, you know, the step-up in the margins there in 4Q with the minimal step-up in revs, and you provided some early color there. I thought that the Factory of the Future and the Fast Genes coming online, that was all going to be incremental. Talk about kind of the dynamic there about maybe cannibalizing some of your past work with the Fast Genes and how the Factory of the Future is coming online. Just in terms of the step-up in margin from quarter three to quarter four, that's driven by top-line revenue growth as we continue to leverage the Factory of the Future. In terms of the impact to restructuring, we see our cost benefits really coming in Q1 2024. The step-up you're seeing there is partial impact of the cost benefits and the leverage Factory of the Future in Q4 this year. As you move into Q1, you see the full benefit of the cost improvements, and then you get the impact of the Fast Genes as we launch them in the fall. The Fast Genes benefit is all fiscal 2024. You see also the full benefit of the cost reductions in starting Q1 of 2024. In the short term, you see partial benefit for the cost reductions. You see the benefit of leveraging the fixed cost as we scale revenue sequentially. As you move into next year, we'll anticipate moving towards adjusted EBITDA breakeven by Q4 of fiscal 2024. All right. I mean, just to follow up on that. I get that you're recognizing a lot of those cost benefits, but on the guide down, is it that the Fast Genes and the Factory of the Future is taking longer to ramp? No. No, the guide down is, yeah, so two key components. One is the guide down is on the biopharma business. Why is the biopharma business guide down? It's because we've had internal integration issues, Yeah. From a commercial point of view. In terms of both SynBio and NGS, the only reason we've taken a guide down is, we see some potential risk of digesting a 25% reduction in our organization. It's not because of any market issues. It's because of our own internal prudence in terms of managing such an organizational transition. All right, great. Last here for Emily. On the internal candidates and the decision there, you said you're going to stop the internal development. I thought when you guys had those, it was basically, and this might be oversimplifying it, but I thought when you had those, it was basically the code that you could just store or, like, keep on ice. Talk about the incremental spend that those required. Just I guess the lack of, you know, what was driving, I guess, the lack of interest among partnerships there for those candidates. Great, great question. Yes, we've been developing some internal candidates, those where those were R&D investments. We are not throwing away the investment that we've done. What we are doing is slowing further investment into those assets. We are focusing now on monetizing those assets. As we monetize them, as that creates upside, we'll decide then how we allocate the capital. That could be the trigger to further develop other assets. At this point, it's prudent for us to set the biopharma business such that it can be adjusted EBITA breakeven at $40 million revenue instead of $80 million. There'll be less R&D effort on our own assets. We are not stopping the monetization as effort of the assets. That's where we've been doing. I wouldn't say that there's no interest. We only have limited capabilities on outsourcing antibodies. We've done at least we have an N of 1. We've had a out-licensing last year. We have limited time and resources inside the company to do it. We don't want to get the R&D development ahead of the monetization skis. That's what we're doing. Okay, thanks. Thank you. Our next question coming from the line of Puneet Souda with SVB Securities. Your line is now open. Yeah. Hi, Emily, and Jim, thanks for taking the question. First one really is, you know, why is this guide cut the last one? Just given the situation in the macro, the biotech funding and the DX moderations, which I think everyone on this call is aware of, those things are not necessarily immediately improving in the market. We have seen guide reductions from a number of companies multiple times. At this point in time, sort of, you know, workforce reductions are also happening at diagnostic companies, and they're cutting spend. Your reduction of 25% is one of the most meaningful in this space. Given all that dynamic, I mean, just help us understand what gives you confidence in this, you know, in the guide overall, for 2023 and for FY 2024. There was a $350 million guide before with 49% gross margin. Can you just update us on that FY 2024 guide too? Thank you. All right, Puneet. I can start, and Emily can polish off what I say. In terms of what gives us confidence, we highlighted our orders were strong in this last quarter. We continue to, on the NGS side, continue to build out the portfolio, continue to build out the customer base. On the SynBio side, Factory of the Future commercialization in this last quarter has gone extremely well. As Emily's highlighted on the call, our turnaround times are excellent. Number of customers continues to increase. In terms of the guide outlook for NGS and SynBio, we're looking at the reduction just purely due to digesting the reduction in headcount. As you said, it's very meaningful. It's meaningful because we've invested significantly in the Factory of the Future. That's going well. We're seeing opportunities in terms of upside. At the same time, because we have such a meaningful reduction in headcount, we're going to be prudent in terms of outlook. In terms of biopharma, this is purely internal execution issue with the absorption of Abveris. Execution in terms of being able to integrate commercial organizations, we could not do that for the last year. We're launching the integrated offering, and we feel good in terms of the number of active projects. We're 95 last quarter. We're seeing strong interest from our customer base. At the same time, because of the meaningful reductions, we want to be prudent in terms of outlook. In terms of where we're going next year, as we continue, as you see the margin, increase from Q3 to Q4, as we continue to leverage the Factory of the Future, we see the benefits of the cost reductions. We'll see the launch of the Fast Genes. Our outlook for next year is to get to adjusted EBITA breakeven, by Q4. We will continue to give updates in terms of our progress on each of the quarterly earnings call. I'll maybe turn it over to Emily to round that out. I think, Jimmy, you covered it well. Yeah. Okay. On pricing of the products, can you just update us, do you expect to raise any pricing on the NGS or SynBio products? Overall, competition in the market, just can you sort of give us a sense of what you're seeing from some of the larger competitors, the competitive dynamics changing in the market? Thank you. Great question. We did our second annual price increase on NGS that was well received. In SynBio, we did do a price increase last summer, but there's none planned at this point, except for launching the Fast Gene. You know, in SynBio, our strategy is to increase the value of the product, in addition to the amazing scale and quality and ease of ordering. We're going to add speed and using an approach of dynamic pricing, we're confident we'll be able to get the premium pricing. That's the price increase that's coming into SynBio, but it's in exchange to providing better value to the customer. Thank you. Our next question coming from the line of Thomas Peterson with Baird. Your line is open. Yeah, thanks for the questions, Tom. One for Catherine, was just wondering if you could provide any more color on the revenue expectations by product line for fiscal 3Q and 4Q, given the overall reductions in the guide for the year. Jim, can you take that? Yeah, sorry, I forgot to hit unmute. Apologies. Tom, thanks for the question. Overall, I mean, we've given the guide for both SynBio, NGS, and also for Biopharma for the year. We didn't break it out because of just the quarter transition. We've given overall outlook that for, you know, for Q3, revenue is going to be $60 million-$61 million, Q4, $62 million-$63 million is the range. For SynBio, the range for the year is $96 million-$98 million. NGS revenue $113 million-$114 million, and Biopharma, $26 million. In terms of the outlook, we believe it's prudent. Why is it prudent? We've just taken a 25% reduction in the organization. Overall, our business is up 25% year-over-year for total business. The pipeline looks good. We continue to launch new products. We continue to get great feedback, strong feedback from the marketplace. At the same time, we've made a meaningful reduction in our headcount. I really appreciate the contribution of everybody who's supported Twist in the growth. At the same time, as we go forward, we're very focused on getting to profitability, and the first milestone there is getting to adjusted EBITDA Q4 next year, and we're positioned to do that. You know, the overall environment, we get comments, overall environment's tough, however, we got a great portfolio and we're growing faster than the market. We're going to leverage our investments, and we're going to deliver solid results as we continue to scale and get to adjusted EBITDA to break even. Got it. Thanks. That's, that's helpful. Then, maybe just one more from me, on the OpEx guidance reduction. I mean, obviously appreciate the significance of the headcount reduction. As we look forward towards that, adjusted EBITDA target for fiscal 4Q of next year, you know, how should we think about, you know, if there's any more room for additional OpEx reductions? I guess how much flexibility do you still see left within the business? Thanks. So in terms of business, you know, nobody can predict the future. However, what we're going to do is manage the business based on the environment. So couple of key metrics. You know, what does the environment look like overall? I would say it's tough. However, we're growing significant in that environment. We've made investments in the Factory of the Future. We'll manage our investments, and we'll manage our investments to get to adjusted EBITDA to break even, and then we'll focus on getting to profitability. As Emily's highlighted, we've moderated our investment in DNA storage. Based on the environment, we are going to make our, take the decisions to ensure that we're delivering value for our shareholders, our customers, and our employees. Part of that is having a strong balance sheet. Another part of it is we've got to continue strong execution and innovation that Twist culture is known for. We're focused on supporting that and transitioning to the growth opportunities and delivering Fast Genes in Q4 calendar this year. Got it. Thanks. Thank you. Our next question coming from the line of Rachel Vatnsdal with JPMorgan. Your line is open. Great. Thanks for taking the question. A few questions here on Biopharma. It looks like active partnerships between Legacy, Biopharma, and Abveris was roughly 112 active programs during fiscal 4Q. That stepped down to 95 during fiscal 1Q, and then it looks like today you have 93 active programs. Can you just walk us through how much of that step down was really due to programs being cut? Do you expect additional declines in program count throughout the year? As a follow-up to that, you've mentioned that challenges from Biopharma are purely just integrational and executional related. Can you just help us understand what exactly was the breakdown there from the integration issues? Yes, thank you. Great question. In terms of number of active program, the way it works is, we get an order for a program. We report it as an order, and then probably it's either the next quarter or the one after, that is done, we've provided the answers to the customers, and then that gets booked to revenue, and then that program goes down, right? It's not that those programs were cut. There may have been a very small number of cancellation, but most likely those are programs that have been completed and moved to revenue. That's why revenue is the lagging metric and order is the leading metric. Then in terms of the commercial integration, we had to let Abveris run on its own. So there were territories conflict, and there's technology that had to be learned. So that took a bit more time than we wanted, and it happened a bit later than we wanted. At this point, the territories have been rationalized. We have re-platformed all the systems, and the I'm confident that the BD sales team is having high activities, and we have the right cadence of getting in front of new customers and closing them. Thank you. Great. Maybe just a follow-up quick here. There's been quite a few questions on guidance and macro backdrop, so maybe I'll just shift gears over to DNA data storage. Appreciate that you're rationalizing some of the spend to that offering just given the macro backdrop. Can you just talk about what are your plans for your enzymatic offering? If I recall, you were planning on getting that fully online to support that DNA data storage offering, which is going to be, you know, kind of key to the thesis in terms of the competitive positioning as peers have entered with their own enzymatic products. Can you walk us through, does that timeline shift at all for your enzymatic offering? Can you give us a tech update in terms of how that's trended as well? Thank you. Anna, it's a great question. Yes, we are delaying the on-premise technology development. We 100% needed an enzymatic synthesis for that on-premise. We had said too that we could use enzymatic in-house. That we'll have the choice of chemical or enzymatic. In the current decisive actions that we've made, we have not touched the enzymatic program. We think, even though the first product for data storage is going to be an in-house machine, right now we saw that there is some potential advantage for us to use the enzymatic program that we have been pursuing. We have optionality that the first product could be enzymatic or chemicals. We are pursuing both. I'm optimistic that we may leverage the enzymatic technology for that first data storage launch. Thank you. I will now turn the call back over to Emily Leproust for any closing remarks. Thank you very much for joining us today. Appreciate us getting a little bit beyond schedule. We look forward to seeing some of you at Goldman Sachs, William Blair, and Scotiabank in the next few months ahead. Thank you. Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.