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Azenta, Inc. (AZTA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY25 revenue was $148M (+4% Y/Y; -2% Q/Q), non-GAAP EPS $0.08 (flat Y/Y; down from $0.22 in Q4), adjusted EBITDA $13M (9.0% margin, +400 bps Y/Y) as gross margin expanded 300 bps Y/Y to 46.6% .
  • Segment mix: Sample Management Solutions (SMS) $81M (+3% Y/Y) and Multiomics $66M (+6% Y/Y); adjusted gross margins were 47.8% (SMS) and 47.4% (Multiomics) .
  • FY25 outlook maintained: organic revenue +3%-5% and ~300 bps adjusted EBITDA margin expansion vs FY24; segment outlook reiterated (SMS mid-single-digit, Multiomics low-single-digit) .
  • Liquidity/FCF: $530M in cash/marketable securities, no debt (per call); operating cash flow $30M, capex $8M, FCF $22M in Q1 .
  • Near-term catalysts: execution of transformation/operational excellence, sale process for B Medical (discontinued ops) underway, and an Investor Day planned for summer 2025 .

What Went Well and What Went Wrong

  • What Went Well
    • Gross margin expanded 300 bps Y/Y to 46.6% (adj. 47.6%, +270 bps Y/Y) on mix and efficiency; adjusted EBITDA margin rose 400 bps Y/Y to 9.0% .
    • Multiomics strength: NGS grew 11% Y/Y with double-digit volume growth; China remained resilient (+7% organic) despite macro noise; Plasmid-EZ (ONT) product saw strong uptake .
    • Cash generation improved: operating cash flow $30M and FCF $22M in Q1; cash/marketable securities totaled $530M (includes $27M in discontinued ops) .
    • Management tone: “strong start to fiscal 2025…positive momentum” and confidence tied to transformation benefits and FCF strength (CEO) .
  • What Went Wrong
    • Sequential slowdown: revenue -2% Q/Q (to $148M), SMS -4% Q/Q (timing in large stores, down 13%), non-GAAP EPS fell to $0.08 from $0.22 in Q4 .
    • GAAP losses persisted: operating loss $11M; diluted EPS (continuing ops) -$0.21 (vs -$0.13 LY); net interest income declined to $4M vs $10M LY .
    • Sanger sequencing down 11% Y/Y (technology shift); management still expects ONT/Plasmid-EZ to offset over time .

Financial Results

Headline P&L vs prior year, prior quarter

MetricQ1 FY24 (Dec 31, 2023)Q4 FY24 (Sep 30, 2024)Q1 FY25 (Dec 31, 2024)Notes
Revenue ($M)$142 $170 $148 +4% Y/Y; -2% Q/Q
GAAP Gross Margin %43.6% 40.8% 46.6% Mix/efficiency, lower amortization, non-recurring items LY
Adj. Gross Margin %44.9% 45.0% 47.6% +270 bps Y/Y
GAAP Diluted EPS (Cont. Ops)-$0.13 -$0.10 -$0.21 Lower interest income; tax expense
Non-GAAP Diluted EPS$0.08 $0.18 $0.08 Flat Y/Y; down Q/Q
Adjusted EBITDA ($M)$7 $17 $13 Margin 9.0% (+400 bps Y/Y)
Adj. EBITDA Margin %5.0% 10.2% 9.0%

Segment revenue and margins

SegmentQ1 FY24 Rev ($M)Q4 FY24 Rev ($M)Q1 FY25 Rev ($M)Q1 FY24 Adj. GM%Q4 FY24 Adj. GM%Q1 FY25 Adj. GM%
Sample Management Solutions$79 $85 $81 47.1% 48.0% 47.8%
Multiomics$63 $66 $66 47.1% 47.1% 47.4%
Total/Weighted$142 $170 $148 44.9% 47.6% 47.6%

KPIs and cash flow

KPIQ4 FY24Q1 FY25Commentary
Cash, cash equiv., restricted, marketable sec. ($M)$522 $530 (incl. $27M in disc. ops) No debt (per call)
Operating Cash Flow ($M)n/a (cash flow not included in Q4 PR) $30
Capex ($M)$13 $8
Free Cash Flow ($M)n/a $22

Estimates vs Actuals

S&P Global consensus estimates were unavailable at query time; estimate comparisons could not be retrieved. Values would normally be sourced from S&P Global. We will update upon availability.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthFY2025+3% to +5% (ex B Medical) +3% to +5% reiterated Maintained
Adj. EBITDA Margin ExpansionFY2025 vs FY2024~+300 bps (RemainCo) ~+300 bps reiterated Maintained
Segment OutlookFY2025SMS mid-single-digit; Multiomics low-single-digit SMS mid-single-digit; Multiomics low-single-digit reiterated Maintained
Other items (OpEx, OI&E, Tax, Dividend)FY2025Not quantified in guidance Not quantified; company provides non-GAAP guidance only n/a

Earnings Call Themes & Trends

TopicQ3 FY24 (Q-2)Q4 FY24 (Q-1)Q1 FY25 (Current)Trend
NGS pricing/volumeNGS flat Y/Y; price pressure noted; transformation underway Price stabilization emerging; NGS +25% Y/Y aided by large deals (FinnGen) NGS +11% Y/Y; third quarter of price stabilization; double-digit volume growth Improving volumes; pricing stabilizing
Sanger → ONT shiftSanger declining; offset by other modalities Sanger down; ONT/Plasmid-EZ emphasized Sanger -11% Y/Y; ONT Plasmid-EZ up sharply Technology transition ongoing
SMS stores/capex timingSMS +7% Y/Y; strong large/cold stores Stores down vs tough comp; SMS +4% Y/Y Large stores -13% Q/Q (timing); robust pipeline/backlog; ~75% of 2025 SMS revenue secured Timing noise; backlog supports 2H
Transformation/leanMargin expansion and Ascend 2026 cited Ascend 2026; business system/lean playbook outlined Business system rollout (kaizens, procurement); corporate restructuring; aiming G&A discipline Execution progressing
China/tariffsChina growth continues in Multiomics China +6% organic in Multiomics China NGS ~7%-10% of Multiomics; Illumina UEL impact immaterial; tariff step-up ~$1–$2M max Manageable risk
Portfolio optimizationn/aAnnounced intent to sell B Medical Sale process underway; focus on maximizing value In process
Capital allocationRepurchases ongoing in FY24 Completed $1.5B buyback; returns-based framework Prioritize GM productivity, organic growth, tuck-ins; buybacks last More disciplined

Management Commentary

  • Strategic focus: “Portfolio optimization, operational excellence and value-enhancing capital allocation” with business system/lean tools, kaizens, procurement standardization, and KPI alignment across revenue, profitability, quality/OTD, people, working capital, cash .
  • CEO on Q1 setup and confidence: “Our first quarter results represent a strong start to fiscal 2025… we continue to see the benefit of our transformation initiatives and our free cash flow was strong” .
  • CFO on margins and one-time items: “EBITDA for the first quarter was 9%. Excluding some of those onetime events, we're north of 10% EBITDA… gives us a pathway toward…300 bps [expansion]” .
  • Segment dynamics: NGS growth and stabilization; Sanger pressure offset by ONT/Plasmid-EZ; SMS seeing timing in large stores but strong C&I and backlog .
  • Risk management: Illumina “unreliable entity” in China immaterial to NGS revenue exposure; tariff step-up ~$1–$2M at most, factored into guide .
  • Portfolio: B Medical sale process underway to simplify and refocus on higher-margin core businesses .

Q&A Highlights

  • UK Biocentre BioArc Ultra win: multimillion, customized POC program; accounted for in guidance; operational early 2026 (percentage-of-completion accounting) .
  • China/Illumina designation: Low risk; ability to switch to MGI platform; China NGS ~7%-10% of Multiomics; no material impact expected .
  • Margins cadence: Q1 EBITDA 9%; >10% ex one-timers; corporate restructuring savings within FY25 guide; additional actions planned Q2–Q3 to support ~300 bps expansion .
  • SMS orders/backlog: Large stores down 13% Q/Q on timing; ~75% of 2025 SMS revenue already secured; strong C&I (+9% in Q1) and trade show lead generation .
  • Capital allocation: Emphasis on gross margin productivity, organic growth, selective tuck-ins; share repurchases the lowest priority; need to “earn our way back” on M&A .

Estimates Context

  • S&P Global consensus estimates for revenue/EPS/EBITDA and the number of estimates were unavailable at query time due to data access limits. As a result, we cannot characterize Q1 FY25 as a beat/miss versus consensus. We will update this section when S&P Global data become accessible.
  • Company reiterated FY25 outlook (organic +3–5%; ~300 bps adj. EBITDA margin expansion), implying internal confidence despite macro/timing noise .

Key Takeaways for Investors

  • Execution > narrative: Q1 delivered +4% Y/Y revenue, +300 bps gross margin expansion, and +400 bps adjusted EBITDA margin expansion; non-GAAP EPS flat Y/Y as transformation benefits offset mix and lower interest income .
  • SMS backlog underpins 2H: Despite Q/Q timing headwind (large stores -13%), ~75% of FY25 SMS revenue is already secured, supporting SMS mid-single-digit growth outlook .
  • Multiomics resilient: NGS +11% Y/Y with stable pricing and double-digit volumes; Sanger headwinds continue but ONT/Plasmid-EZ gaining share .
  • Cash/FCF optionality: $530M liquidity and positive FCF ($22M) provide flexibility to fund growth and productivity initiatives while staying disciplined on capital deployment .
  • Guidance held: Reiterate FY25 organic +3–5% and ~300 bps margin expansion; management cites additional operational actions and expects continued margin trajectory improvement .
  • Manageable exogenous risks: China/Illumina list immaterial to revenue, tariff exposure ~$1–$2M at upper bound and embedded in guidance .
  • Watch list of catalysts: B Medical sale process updates, Investor Day in summer 2025 for LRP and margin/ROIC targets, and evidence of sustained NGS growth and ONT/Sanger mix shift .

Appendix: Additional Q1 FY25 Data Points

  • Operating loss (GAAP) $11M; operating margin -7.7% (improved 380 bps Y/Y) .
  • Operating expenses $80M (+3% Y/Y), partially offset by lower R&D and restructuring; net interest income $4M (vs $10M LY) .
  • Segment adjusted operating income (loss): SMS $2.3M (vs $10.1M in Q4 on timing), Multiomics -$2.5M .
  • UK Biocentre announced selection of BioArc Ultra expanding capacity by 16M samples, up to 9M picks/year; supports sustainability and cost efficiency goals .