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Avid Bioservices, Inc. (CDMO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 delivered steady execution: revenue rose 6% YoY to $40.2M with gross margin improving to 14% as process development drove growth; bookings were strong at $66M, lifting backlog to $219M .
  • Management reiterated FY2025 revenue guidance of $160–$168M; the quarter’s mix skewed slightly toward earlier-phase work, which should modestly accelerate backlog conversion, while two PPQ wins (one for a commercial product) provide medium-term visibility .
  • Operating expense pressure remained a headwind (SG&A +30% YoY), and net loss widened to $5.5M (-$0.09) as depreciation and higher personnel costs weighed; cash ended at $33.4M .
  • Key near-term catalysts: continued large-pharma penetration, PPQ-to-commercial ramp, and potential onshoring tailwinds from the Biosecure narrative; management noted about half of China-sourced leads being Biosecure-related in the current pipeline view .

What Went Well and What Went Wrong

  • What Went Well

    • Bookings and backlog strength: $66M net new orders (highest since Q3 FY2023), backlog up to $219M (+16% YoY), with a healthy mix of new customers and two PPQ campaigns (one for a commercial product) .
    • Margin improvement and positive EBITDA on non-GAAP basis: gross margin improved to 14% (from 11% LY) and adjusted EBITDA reached $3.0M for the quarter, reflecting revenue growth and lower material costs .
    • Large pharma traction and diversification: management highlighted addition of another large pharma customer and confidence in broadening the customer base to support growth .

  • What Went Wrong

    • Operating expense inflation: SG&A rose 30% YoY to $8.2M on compensation, audit, legal and consulting fees, pressuring operating income .
    • Net loss widened: GAAP net loss was $5.5M (-$0.09), vs. $2.1M (-$0.03) in Q1 FY2024, with depreciation and other costs offsetting gross profit gains .
    • Cell & gene therapy (CGT) lagging: bookings contribution remains small and demand is still trailing mammalian; management sees CGT momentum tracking a few quarters behind .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$33.8 $43.0 $40.2
Gross Profit ($M)$2.4 $5.5 $5.7
Gross Margin (%)7% 13% 14%
SG&A ($M)$6.4 $6.8 $8.2
Operating Income (Loss) ($M)$(4.0) N/A$(2.5)
Net Income (Loss) ($M)$(6.0) $(123.1) (includes $118.5M valuation allowance) $(5.5)
Diluted EPS ($)$(0.09) $(1.94) $(0.09)
Adjusted Net Income (Loss) ($M)$(5.07) $(4.6) (excl. $118.5M tax allowance) $(1.63)
Cash & Equivalents ($M)$30.7 $38.1 $33.4

KPIs and Commercial Metrics

KPIQ3 2024Q4 2024Q1 2025
Net New Orders/Bookings ($M)$41 $30 $66
Backlog ($M)$206 $193 $219
Backlog Recognition Horizon“Significant amount over next five fiscal quarters” N/A“Significant amount over next five fiscal quarters”
Adjusted EBITDA ($M)$(1.12) N/A$3.03

Notes: Q4 GAAP net loss includes a non-cash $118.5M valuation allowance; management provided adjusted net loss for comparability .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY2025$160–$168 (initiated/provided at Q4 FY2024) $160–$168 (reiterated at Q1 FY2025) Maintained

Subsequent event: In December 2024, in light of a proposed acquisition, the company suspended its practice of providing guidance going forward (post-Q1 timing) .

Earnings Call Themes & Trends

TopicQ3 2024 (two quarters ago)Q4 2024 (prior quarter)Q1 2025 (current)Trend
Bookings & BacklogBookings $41M; record backlog $206M; pipeline improving incl. early-stage Bookings $30M; ended year with $193M backlog Bookings $66M; backlog $219M; healthy mix inc. new customers Improving bookings; backlog building
PPQ CampaignsFirst PPQ on new line completed; more slated Several PPQs to drive utilization; pre-commercial ramp takes 1–2 years Two PPQ wins this quarter; one is commercial product, one Phase 3 Expanding PPQ footprint
Large Pharma StrategyAdded another big pharma customer; pipeline strengthening Growing interest; capacity onboarding; optimism for FY25 Another large pharma added; strategy on track (long cycle) Steady progress
Onshoring/BiosecureTailwinds from Biosecure/Catalent discussions emerging Increasing onshoring interest cited ~Half of China-sourced leads Biosecure-associated; mixed urgency Potential tailwind building
CGT vs. MammalianCGT facility opened; CGT demand lagging mammalian by ~1–2 qtrs CGT capacity ~$80M; lag ~4–5 months behind mammalian CGT bookings small; demand still lagging Gradual, lagging recovery
Margin & UtilizationPath to ~40% GM over time; operating leverage to help Q4 GM ~double Q3; utilization drives margins GM up to 14%; EBITDA positive; quarters can be lumpy Improving but uneven
Customer Concentration—Majority of growth expected outside key customer Avoided specifics; relationship remains strong, diversification ongoing Diversifying base

Management Commentary

  • Strategic positioning: “The investments of the last few years…continue to attract new business…better equipped to support the needs of large pharma…primary focus is on filling our remaining capacity” .
  • Commercial momentum: “Signed $66 million net in new project agreements…backlog of $219 million…significant majority are projects with new customers…2 PPQ programs…one Phase III and the other a commercially approved product” .
  • Financial execution: “Revenues…$40.2 million…gross margin 14%…SG&A $8.2 million…net loss $5.5 million or $0.09…adjusted EBITDA of $3 million…cash…$33.4 million” .
  • Market tailwinds: “We compete against Asian competitors…about half…from China are probably Biosecure associated…difficult to say it’s a bad thing for a U.S.-based CDMO with capacity” .

Q&A Highlights

  • Backlog conversion cadence: Mix slightly more early-phase this quarter should “probably [be] slightly more accelerating” but not dramatically so .
  • PPQ wins detail: One PPQ is for a commercial product being outsourced from internal manufacturing; the other a Phase 3 transfer from another CDMO; no second-supplier role .
  • Large pharma demand: No changes in large pharma demand; strategy progressing roughly in line with expectations despite long sales cycles .
  • Biosecure Act dynamics: Roughly half of China-origin opportunities show some Biosecure linkage; decision timing remains uncertain; could be a tailwind for U.S.-based CDMOs .
  • Seasonality/maintenance: Despite newer facilities, expect typical shutdown maintenance this year; don’t model less seasonality yet .
  • Margin model: As top line grows, expect EBITDA to continue to improve, but quarters can be lumpy; drop-through consistent with prior commentary .

Estimates Context

  • S&P Global consensus estimates for CDMO were unavailable via our tool for Q1 FY2025; as a result, we cannot quantify revenue/EPS beats or misses vs. consensus for the quarter. We attempted to retrieve consensus for revenue, EPS, and EBITDA but no mapping was available for CDMO in the S&P Global dataset used by our tool at this time.

Guidance Changes

See “Guidance Changes” table above—FY2025 revenue guidance maintained at $160–$168M during Q1 FY2025 (initially provided at Q4 FY2024) . Subsequent to Q1, guidance commentary was suspended in December 2024 due to the pending acquisition transaction process .

Key Takeaways for Investors

  • Bookings momentum is real: $66M in Q1 bookings and a $219M backlog indicate healthy demand and improved pipeline mix; expect modestly faster backlog conversion due to more early-phase work while PPQ wins underpin medium-term visibility .
  • Margin trajectory intact: Gross margin improved to 14% and adjusted EBITDA turned positive; utilization gains and PPQ activity should further support margins, with quarterly variability likely .
  • OpEx discipline needed: SG&A grew 30% YoY; watch for normalization of legal/audit spend and operating leverage to offset depreciation as growth resumes .
  • Large pharma strategy progressing: New large pharma adds broaden the base and can de-risk revenue over time, albeit with elongated sales cycles .
  • Biosecure/onshoring is a potential incremental tailwind: Management sees a meaningful share of China-sourced leads tied to Biosecure concerns, which could redirect programs domestically .
  • CGT is a call option, not the near-term driver: Demand continues to lag mammalian; contribution likely to build later .
  • Watch the execution cadence: With guidance maintained at $160–$168M for FY2025, sequential ramps and backlog conversion in 2H will be key markers to track .

Additional Documents Reviewed

  • Q1 FY2025 8‑K 2.02 and press release (full): revenue, bookings/backlog, margin, non-GAAP reconciliations, and guidance reiteration .
  • Q1 FY2025 earnings call transcript (full): qualitative drivers, PPQ detail, large pharma traction, Biosecure and CGT commentary -.
  • Prior quarters for trend analysis:
    • Q4 FY2024 call: $43M revenue, GM ~13%, bookings $30M, FY2025 revenue guide $160–$168M, backlog $193M .
    • Q3 FY2024 8‑K and call: $33.8M revenue, GM 7%, bookings $41M, backlog $206M, early-stage signs improving .