Q1 2025 Earnings Summary
- Azenta is experiencing strong growth in its cell and gene therapy business, with their auto cryo business increasing by 67% last year, and continued positive trends this year.
- The company demonstrated strong performance in its Multiomics segment, with Next-Generation Sequencing (NGS) revenue growing 11% in the quarter, indicating positive momentum.
- Azenta has strong revenue visibility with 75% of 2025 revenue secured, indicating a robust pipeline and backlog in their Sample Management Solutions business.
- The Sanger sequencing business declined by 11% year-over-year due to a shift in technology, and it faces challenges that may not be fully offset by growth in new products like Plasmid-EZ, potentially impacting future revenues.
- Large store revenues in the Sample Management Solutions segment decreased by 13% in the first quarter, indicating potential challenges or delays in this business line, which may affect overall performance if not resolved.
- The company's guidance for the Multiomics segment implies a deceleration in growth in the latter half of the year, raising concerns about future growth prospects and the sustainability of recent positive trends.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | ~4.5% decline (from $154.32M in Q1 2024 to $147.51M in Q1 2025) | The modest decline in revenue indicates a contraction in sales volume or pricing pressures compared to Q1 2024. This suggests that while the company's revenue generators maintained operations, external market or competitive pressures likely affected top-line performance. |
Operating Income (EBIT) | 57% improvement in loss (from a $26.68M loss in Q1 2024 to an $11.35M loss in Q1 2025) | A significant reduction in operating losses reflects improved cost management and streamlined expenses. Despite lower revenue, the company’s efforts to control restructuring costs and operating expenditures have effectively narrowed the operating gap relative to Q1 2024. |
Net Income | Approximately a 15% improvement (loss reduced from $15.72M in Q1 2024 to $13.34M in Q1 2025) | Improvement in net income is linked to the better operating performance and controlled non-operating expenses. This indicates that operational efficiencies and cost controls executed in the current period partially offset the revenue decline observed compared to Q1 2024. |
Basic EPS | Slight decline (from ($0.28) in Q1 2024 to ($0.29) in Q1 2025) | The minor deterioration in Basic EPS despite improved operating results suggests that factors such as share repurchases or adjustments in net loss per share played a role. The EPS metric indicates that while overall cost improvements were achieved, dilution or other per-share factors slightly eroded the gains. |
Net Change in Cash | Reversal to a positive shift (+$93.45M in Q1 2025 vs. negative cash flows in Q1 2024) | The dramatic improvement in cash position is driven by significantly enhanced operating cash flows and reduced financing outflows. This turnaround from negative cash in the previous period highlights effective working capital management and a strategic focus on liquidity improvements. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Organic Revenue Growth | FY 2025 | 3% to 5% year-over-year (excluding the B Medical Systems business) | 3% to 5% for the full fiscal year 2025 | no change |
Multiomics | FY 2025 | Expected to grow in the low single digits | Low single-digit growth | no change |
Sample Management Solutions (SMS) | FY 2025 | Expected to grow in the mid-single digits | Mid-single-digit growth | no change |
Adjusted EBITDA Margin Expansion | FY 2025 | Committed to approximately 300 basis points of expansion year-over-year, with margin expected to be above 11% | Targeting an expansion of 300 basis points year-over-year | no change |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Next Generation Sequencing | Q4 2024: Reported 25% YoY growth with strategic deals and stabilization; Q3 2024: Emphasis on volume growth and recovered pricing; Q2 2024: Transition challenges with NovaSeq X Plus impacting margins | Q1 2025: 11% YoY growth with the third consecutive quarter of price stabilization and continued support from large deals | Consistent growth with moderated figures and established price stabilization. |
Sample Management Solutions | Q3 2024: Highlighted order delays, robust revenue growth, and operational challenges; Q2 2024: Noted revenue visibility with supply chain timing issues | Q1 2025: 75% of 2025 revenue secured, yet order delays persist due to timing, while consumables grew 9% | Continues showing a strong pipeline with persistent timing/order issues. |
Multiomics | Q2–Q4 2024: Mixed signals with steady organic revenue but marked declines in Sanger sequencing (8–12% drop) offset by robust new product (Plasmid‑EZ) growth | Q1 2025: NGS growth of 11% contrasts with an 11% decline in Sanger sequencing while Plasmid‑EZ surged nearly 300% | Ongoing technological shift with recurring concerns over Sanger sequencing offset by emerging product successes. |
Automated Cryogenic Storage | Q3 2024: Praised for nearly 40% growth and multiple system orders in the cell and gene therapy market; Q4 2024: Mentioned within SMS with strong growth (67%) | Q1 2025: Delivered 11 units with a reported 67% YOY increase, highlighting progress in cell and gene therapy | Consistently strong adoption with positive momentum in automation. |
ASCEND 2026 | Q2 2024: Outlined cost‐cutting measures targeting high‑teen EBITDA margins; Q3 2024: Reported 260–440 bp margin improvements via site and IT optimizations; Q4 2024: Focused on site rationalization and organization simplification | Q1 2025: Continues driving margin expansion with a 9% adjusted EBITDA margin and further operational efficiencies | Steady progress with consistent cost optimization and transformation outcomes. |
Revenue Guidance | Q2 2024: Lowered guidance for B Medical segment with unpredictable order timing; Q3 2024: Revised full‑year forecast to down 2% to down 1% due to order delays; Q4 2024: Maintained 3%–5% organic growth outlook amid macro uncertainty | Q1 2025: Full‑year organic revenue growth remains at 3%–5%, though timing issues and market uncertainty continue to weigh in | Guidance remains cautious and consistent, reflecting persistent market and timing uncertainties. |
Consumables & Instruments | Q2 2024: Noted strong consumables bookings (highest in 8 quarters) though instrument cycles were slow; Q3 2024: Reported 17% YoY and 20% sequential growth; Q4 2024: Grew 14% within SMS | Q1 2025: Bookings increased by 9% despite recovery headwinds, underscoring resilience | Continued robust performance with slightly lower incremental gains amid steady demand. |
Emerging International Markets (China) | Q2 2024: Achieved double‑digit growth for four consecutive quarters; Q3 2024: Delivered 4% organic growth; Q4 2024: Reported 10%–12% growth even with global challenges | Q1 2025: Reported 7% organic growth in Multiomics, showcasing resilience despite broader macroeconomic challenges | Persistently strong market performance with moderate variability in growth rates. |
B Medical | Q2 2024: Faced unpredictable pipeline conversion and revenue timing challenges; Q3 2024: Pipeline conversion delays led to a $5M shortfall, prompting a strategic shift; Q4 2024: Revenue down 35% YoY with the decision to exit non‑core areas | Q1 2025: No mention as the segment is now reported under discontinued operations and is in the process of being sold | Largely de‑emphasized as the focus shifts away from the segment. |
Sales Force Turnover | Q4 2024: CEO highlighted turnover and open territories as potential distractions impacting transformation | Q1 2025: No mention of sales force turnover or related execution challenges | Previously noted concerns are no longer mentioned, suggesting reduced focus on this topic. |
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Illumina China Impact
Q: Any impact from Illumina being added to China's unreliable entity list?
A: Management stated that they anticipate minimal risk from Illumina being added to China's unreliable entity list. Their NGS business in China does not own Illumina products like NovaSeq. Instead, they primarily partner with BGI in China and run both Illumina and MGI platforms. The revenue from NGS in China is roughly 7% to 10% of Multiomics, and they see no material risk due to the Illumina issue. -
Margin Outlook
Q: Will margins plateau in the back half, and what's driving that?
A: Management reported Q1 EBITDA of 9%, and over 10% when excluding one-time events. They anticipate a pathway towards 300 basis points improvement in margins. They are confident in their guidance based on actions taken this quarter and planned initiatives in the second and third quarters. -
Multiomics Guidance Deceleration
Q: What's causing the implied deceleration in Multiomics growth?
A: Management emphasized that they are focusing on the full year and are holding their guidance despite a strong quarter where NGS was up 11%. They attribute any apparent deceleration to timing issues and significant changes happening within the company. -
Tariff Impact Exposure
Q: Any risks related to tariffs on China, Mexico, or Canada?
A: Management believes the impact of increased tariffs on China is immaterial, estimating a potential incremental cost of $1 million to $2 million at most, which is already factored into their guidance. They have minimal risk related to Mexico and Canada. -
B Medical Divestiture Timing
Q: Is the B Medical sale taking longer than expected?
A: Management confirmed that they are focused on maximizing the value of the B Medical sale and that the process is ongoing with active involvement from the Board's value creation committee. They are pleasantly surprised by the number of interested parties. -
Share Buyback and M&A Strategy
Q: Is there still a share buyback program, and will you consider M&A?
A: Management is prioritizing capital allocation towards gross margin improvement, growth initiatives in R&D, and potential M&A before considering share buybacks. They believe there are more opportunities in these areas and do not view share repurchases as a priority at this time. -
Sample Management Solutions Timing
Q: Was the slow start in SMS due to timing or customer caution?
A: Management attributed the slow start in SMS to timing issues, noting that large stores were down 13% in Q1 but have a robust pipeline with 75% of 2025 revenue secured. They are confident in the back half of the year and see strong demand in Consumables and Instruments, up 9% in the quarter. -
Post-COVID ULT Capacity Impact
Q: Are you affected by the post-COVID overcapacity in ultra-cold storage?
A: Management believes they are not impacted by the ULT glut as their stores are sophisticated asset management units for pharma and biotech, focusing on compound management, sample management, and antibodies. They are not seeing overlap with standard ULT freezers and have been growing well over the ULT glut. -
Gene Synthesis Capacity Plans
Q: How are you addressing Gene Synthesis capacity and China tariffs?
A: Management stated that their Gene Synthesis business is a mid-single-digit grower, serving biotech and pharma customers with complex, long reads. They are cautious about capacity expansion and will not rush decisions until they have clarity. They feel comfortable with the business despite China tariffs. -
Sanger Sequencing Shift and Pricing
Q: Are there pricing pressures in Multiomics beyond NGS?
A: Management observed price stability in NGS with 11% growth but noted challenges in Sanger sequencing due to a technology shift, leading to an 11% decline. However, they are seeing significant growth in Plasmid-EZ technology, up nearly 300% year-over-year. -
Academic and Government Exposure
Q: Any impact from NIH funding uncertainties?
A: Management's end market exposure includes 16% academic and 15% medical government sectors. They have seen some project delays in government-funded areas but believe these will resume once funding decisions are made. They can adjust focus to pharma and biotech if needed. -
Cell and Gene Therapy Progress
Q: What progress are you seeing in cell and gene therapy?
A: Management reported that their auto cryo business increased by 67% last year and they delivered 11 units this quarter. They are bullish on the cell and gene therapy market and see the positive trend continuing. -
BioArc Ultra Opportunity
Q: Can you frame the BioArc Ultra opportunity and revenue timing?
A: Management confirmed that the BioArc Ultra project in the U.K. was included in guidance and is a continuation of their partnership with the bio center, involving multimillion-dollar, highly customized solutions. They expect the bio center to be operational in early 2026.