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Azenta, Inc. (AZTA)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue beat but EPS miss: Q2 revenue from continuing operations was $143.4M, +5% YoY and ahead of consensus, while non-GAAP EPS was $0.05 vs consensus ~$0.07; adjusted EBITDA margin expanded to 10.0% (+400 bps YoY) .
  • Guidance reiterated: Management reaffirmed FY25 organic revenue growth of 3–5% and ~300 bps adjusted EBITDA margin expansion; cadence implies stronger H2 driven by stores backlog and restructuring savings .
  • Segment mix: Sample Management Solutions (SMS) grew 8% YoY to $80M; Multiomics grew 2% YoY to $64M with strength in NGS offset by Sanger and gene synthesis softness; China delivered 5% organic growth .
  • Balance sheet optionality: $540M cash and marketable securities, $7M Q2 free cash flow; management open to tuck-ins and opportunistic buybacks given valuation .

What Went Well and What Went Wrong

  • What Went Well

    • SMS strength and margin uplift: SMS revenue +8% YoY to $80M; non-GAAP gross margin 49.7% (+340 bps YoY) driven by mix and efficiencies .
    • NGS momentum: NGS grew ~20% YoY with price stabilization for the fourth consecutive quarter and double-digit volume growth; Plasmid‑EZ adoption more than doubled YoY .
    • Transformation progress and cash generation: Adjusted EBITDA margin reached 10.0% (+400 bps YoY); free cash flow was $7M; cash and securities stood at $540M .

    Management quotes:

    • “Organic revenue grew 6% and adjusted EBITDA margin expanded by 400 basis points.” — John Marotta, CEO .
    • “We are reaffirming our commitment to 300 basis points of adjusted EBITDA margin expansion year‑over‑year.” — Lawrence Lin, CFO .

  • What Went Wrong

    • EPS miss despite revenue beat: Non-GAAP EPS was $0.05 vs consensus ~$0.07; GAAP diluted EPS from continuing ops was ($0.40), pressured by tax and restructuring items .
    • Multiomics headwinds: Gene Synthesis declined ~10% YoY amid pharma program pauses and Sanger -18% YoY industry transition; segment non-GAAP gross margin down ~140 bps YoY .
    • Macro/tariff/NIH funding uncertainties: Management cited tariff exposure and anticipated ~1% revenue headwind from NIH funding cuts, albeit with countermeasures to protect EBITDA .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue from Continuing Ops ($M)$136.4 $147.5 $143.4
GAAP Gross Margin %44.5% 46.6% 45.9%
Adjusted Gross Margin %46.3% 47.6% 47.5%
GAAP Diluted EPS – Continuing Ops ($)($0.29) ($0.21) ($0.40)
Non-GAAP Diluted EPS – Continuing Ops ($)$0.06 $0.08 $0.05
Adjusted EBITDA ($M)$8.2 $13.3 $14.3
Adjusted EBITDA Margin %6.0% 9.0% 10.0%
Operating Cash Flow ($M)—$30.6 $14.0
Capex ($M)—$8.6 $7.0
Free Cash Flow ($M)—$22.0 $7.0

Segment breakdown

SegmentQ2 2024 Revenue ($M)Q1 2025 Revenue ($M)Q2 2025 Revenue ($M)
Sample Management Solutions$74 $81 $80
Multiomics$62 $66 $64

Segment margins (non-GAAP gross margin)

SegmentQ2 2024Q1 2025Q2 2025
SMS Non-GAAP Gross Margin %46.3% 47.8% 49.7%
Multiomics Non-GAAP Gross Margin %44.9% 47.1% 44.9%

Actuals vs Consensus (S&P Global)

MetricQ2 2025 ActualQ2 2025 ConsensusSurprise
Revenue ($M)$143.418 $140.756*+$2.662M (+1.9%)*
Non-GAAP EPS ($)$0.05 $0.07333*Miss (~$0.02333)*
EBITDA ($M)$14.287 $12.793*+$1.494M*

Values with asterisks retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue Growth (%)FY 20253%–5% 3%–5% Maintained
Adjusted EBITDA Margin Expansion (bps)FY 2025~300 ~300 Maintained
Segment GrowthFY 2025—Multi-Omics low single digits; SMS mid-single digits New detail (qualitative)

CFO added cadence context: $38M adjusted EBITDA implied for H2 ($10M acceleration vs H1) driven by stores deliveries and restructuring savings .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AI/Tech initiativesTransformation program; focus on margin expansion GENEWIZ + Form Bio AI partnership to accelerate AAV gene therapy workflows Positive; capability expansion
Supply chain & tariffsAcknowledged macro volatility, cost actions Tariffs and NIH funding headwinds; war room and countermeasures; ~1% revenue headwind neutralized at EBITDA Managed risk; EBITDA protected
Product performance (NGS/Sanger/GS)FY’24 Multiomics +3% YoY NGS +20% YoY; Sanger −18% YoY; GS −10% YoY on pharma program pauses; Plasmid‑EZ >2x YoY Mixed; NGS up, Sanger/GS down
Regional trendsNo specific China call‑out in Q4 PRChina +5% organic; NA softness in GS; EU strength China resilient; NA mixed
Organizational executionCFO transition; Ascend 2026 ABS rollout; ~10% workforce restructure; focus on on‑time delivery and margin Execution ramping
Capital deploymentRepurchased 30M shares in FY’24; $1.5B program completed Open to tuck-ins; buybacks if valuation gap persists; disciplined VCC process Optionality intact

Management Commentary

  • “We delivered a solid second quarter... Organic revenue grew 6% and adjusted EBITDA margin expanded by 400 basis points.” — John Marotta, CEO .
  • “Adjusted EBITDA margin was 10%... up 400 basis points year‑over‑year.” — Lawrence Lin, CFO .
  • “We are reaffirming our guide for 2025... Multi‑Omics to grow low single digits and sample management solutions to grow mid‑single digits.” — Lawrence Lin, CFO .
  • “We benefit from having $540 million of cash... and are starting to see interesting potential tuck‑in acquisitions become available… we remain open to buying back our own stock.” — John Marotta, CEO .
  • “We’ve countermeasured [NIH] risk and exposure completely... very confident in the level of detail... also analyzed tariffs.” — John Marotta, CEO .

Q&A Highlights

  • Guidance cadence: H2 adjusted EBITDA implied ~$38M, driven by stores volume timing and partial-year restructuring savings; quarterly revenue profile similar to prior year .
  • NIH/tariffs: ~1% revenue headwind from NIH; countermeasures neutralize margin impact; outsourcing trend from core labs a share opportunity .
  • Free cash flow/margins: YTD FCF ~$26M; long‑range plan target ~$100M FCF reiterated; tariff impacts contemplated in guidance .
  • Segment leadership: CEO directly stepping into SMS leadership amid transition; granular lens across biorepository vs C&I vs stores/cryo to optimize go‑to‑market .
  • China and NGS: China +5% organic; local/regional GTM drives resilience; NGS price stabilizing with strong volumes; Plasmid‑EZ scaling rapidly .

Estimates Context

  • Q2’25 results vs consensus (S&P Global): Revenue $143.418M vs $140.756M* (beat); non‑GAAP EPS $0.05 vs ~$0.07333* (miss); EBITDA $14.287M vs $12.793M* (beat). Prior quarter Q1’25 revenue also beat ($147.510M vs $145.962M*), EPS beat ($0.08 vs $0.06*) .
  • Implications: Street likely to trim EPS near term given tax and segment mix, while maintaining revenue trajectory and margin expansion given reiterated guidance and SMS strength. Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Mixed print likely: revenue beat but EPS miss; margin trajectory intact with adjusted EBITDA margin at 10% and FY25 ~300 bps expansion reiterated .
  • SMS is the growth/margin engine: +8% YoY revenue and rising non‑GAAP gross margin; backlog supports H2 cadence .
  • Multiomics bifurcation: NGS accelerating with stabilization; watch Sanger decline and GS recovery as pharma program pauses abate (early green shoots noted) .
  • Macro risks managed: Tariffs and NIH funding headwinds monitored via “war room”; countermeasures aim to protect EBITDA; expect more outsourcing tailwinds .
  • Cash optionality: $540M cash/securities and positive FCF enable tuck‑ins; buybacks remain on the table if valuation dislocation persists .
  • Near‑term trading lens: Stock likely to respond to EPS miss and macro headlines, but revenue/margin resilience, China performance, and NGS momentum are supportive drivers .
  • Medium‑term thesis: Transformation execution (ABS), mix shift toward higher‑margin SMS/NGS, and disciplined capital deployment underpin improved profitability and growth .