Executive Summary

Q4 FY2024 delivered record revenue of $43.0M with gross margin improving to 13% (approximately double Q3), and adjusted EBITDA turning positive; GAAP EPS of ($1.94) was driven by a $118.5M deferred tax valuation allowance .
Backlog ended at $193M, with $30M net new bookings in the quarter; management expects a significant amount of backlog to be recognized as revenue over the next five fiscal quarters .
FY2025 revenue guidance initiated at $160–$168M (midpoint +17% YoY), supported by rising capacity utilization across new mammalian and CGT facilities; management expects positive cash flow in FY2025 .
Strategic narrative emphasized larger and later-stage programs, PPQ campaigns, and onshoring tailwinds; margin recovery to be driven primarily by utilization and efficiency rather than cost cuts .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue: “We recorded our highest ever quarterly revenue of $43.0 million in Q4” and doubled gross margin vs Q3 as utilization improved .
Strong commercial momentum: $30M of net new bookings and a backlog of $193M, with late-stage mix supportive of future commercial revenues .
Expansion completed; capacity now >$400M: “Increased the company’s annual revenue generating capacity from approximately $120 million…to more than $400 million” across mammalian and CGT facilities .

What Went Wrong

GAAP loss driven by tax valuation allowance: Q4 net loss ($123.1M) and EPS ($1.94) reflect the $118.5M valuation allowance on deferred tax assets due to cumulative losses across the three-year period amid expansion costs .
Gross margin still subdued YoY: Q4 GM 13% vs 21% in Q4 FY2023 due to fewer manufacturing runs and higher costs tied to capacity additions .
Bookings lumpiness and early-stage softness: Q4 bookings ($30M) below Q3 ($41M); management reiterated variability quarter-to-quarter and noted early-stage programs are recovering but remain mixed .

Financial Results

Quarterly Trend (Oldest → Newest)

Metric	Q2 FY2024	Q3 FY2024	Q4 FY2024
Revenue ($USD Millions)	$25.395	$33.815	$42.975
Gross Profit ($USD Millions)	($4.665)	$2.383	$5.500
Gross Margin %	(18%)	7%	13%
SG&A ($USD Millions)	$6.557	$6.382	$6.794
Operating Income (Loss) ($USD Millions)	($11.222)	($3.999)	($1.294)
Net Income (Loss) ($USD Millions)	($9.509)	($6.006)	($123.104)
Diluted EPS ($USD)	($0.15)	($0.09)	($1.94)
Adjusted EBITDA ($USD Millions)	($5.972)	($1.117)	$3.885
CapEx – Purchases of PP&E ($USD Millions)	$7.323	$4.488	$5.693

Year-over-Year (Q4 FY2023 vs Q4 FY2024)

Metric	Q4 FY2023	Q4 FY2024
Revenue ($USD Millions)	$39.799	$42.975
Gross Profit ($USD Millions)	$8.391	$5.500
Gross Margin %	21%	13%
Net Income (Loss) ($USD Millions)	($0.335)	($123.104)
Diluted EPS ($USD)	($0.01)	($1.94)
Adjusted EBITDA ($USD Millions)	$6.264	$3.885

KPIs

KPI	Q2 FY2024	Q3 FY2024	Q4 FY2024
Backlog ($USD Millions)	$199	$206	$193
Net New Bookings ($USD Millions)	$35	$41	$30
Cash & Equivalents ($USD Millions)	$31.424	$30.708	$38.106
Convertible Senior Notes, Net ($USD Millions)	$141.154	$141.421	$153.593

Notes:

Q4 adjusted net loss was ~$4.6M or $0.07 per share (excludes $118.5M tax valuation allowance) .
Management anticipates “a significant amount” of backlog recognized over the next five fiscal quarters .

Segment breakdown: not applicable (company reports as a single CDMO business in filings) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2024	$145–$165M	$137–$147M	Lowered
Revenue	FY2024 (Q3 update)	$137–$147M	$137–$147M	Maintained
Revenue	FY2025	N/A	$160–$168M	Initiated
Cash from Operations	FY2025	N/A	Expect positive cash flow	Initiated commentary

Management commentary on margins: gross margin improvement expected as utilization rises; not formal numerical guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY2024)	Previous Mentions (Q3 FY2024)	Current Period (Q4 FY2024)	Trend
Capacity utilization & margins	Expansion costs depressing margins; utilization key to recovery; mid-teens GM target for H2 at guidance midpoint	GM improved with revenue ramp; operating leverage from new facilities	GM ~double vs Q3; margin lift expected primarily from utilization and efficiency	Improving
Backlog mix & PPQ campaigns	Late-stage heavy backlog; PPQ deferral across shutdown; early-stage bookings begin to return	Record backlog $206M; first PPQ on Line 3 completed; late-stage mix persists	Multiple PPQs underway; backlog $193M; significant recognition over five quarters	Converting
Onshoring/BIOSECURE & macro	Early signs of improvement; CIRM partnership; cautious optimism	Positive tone; BIOSECURE/Catalent events increasing opportunities; timelines 3–6 months+	More inbound interest and customer visits; onshoring conversations rising	Tailwind building
CGT traction	CGT suites completed; early-stage CGT contract; CIRM partnership	CGT grand opening; engagement building	CGT capacity ~$80M of ~$400M total; lagging mammalian by ~4–6 months but picking up	Gradual build
Balance sheet/refinancing	Revolver maturity extended; CapEx nearing completion	$160M 7% converts due 2029; 2026 notes repaid; restatement for classification/interest	Expect positive FY2025 cash flow; depreciation rising ~40–45% YoY	Stabilizing

Management Commentary

“We generated the highest quarterly revenues in Avid’s history…we are looking ahead to a promising 2025, and are providing 2025 full fiscal year revenue guidance of between $160 million and $168 million, representing 17% growth year-over-year at the midpoint.”
“With the completion of this three-year construction program, the company has…increased the company’s annual revenue generating capacity from approximately $120 million annually in fiscal 2021 to more than $400 million annually.”
“Our gross margin for quarter 4 is approximately double that reported for quarter 3…as new bookings remain strong and capacity utilization increases.”
“We expect the commercial momentum and margin improvements to continue…Importantly, we expect to generate positive cash flow during fiscal 2025.”
“We recorded our highest record backlog of $206 million in quarter 3…We are encouraged by the…onshoring of drug manufacturing back to the U.S.”

Q&A Highlights

Backlog coverage and bookings cadence: Management indicated FY2025 guidance coverage is “not markedly different” from prior years; bookings remain lumpy but pipeline and negotiations support confidence .
Margin recovery drivers: Emphasis on utilization and efficiency rather than cost cutting; gross margins expected “plus or minus where we ended in the fourth quarter” as top line grows; depreciation to rise ~40–45% over FY2024 .
PPQ/late-stage progression: Second PPQ completed in new facility; multiple PPQs ongoing; conversion from PPQ to commercial revenue follows regulatory timelines .
CGT capacity and demand: CGT capacity ~$80M of ~$400M total; interest picking up, lagging mammalian by ~4–6 months .
Backlog conversion dynamics: Late-stage programs elongate backlog to ~15 months; mix shift toward earlier-stage projects can improve drop-through timing .

Estimates Context

Wall Street consensus (S&P Global/Capital IQ) for Q4 FY2024 EPS and revenue was unavailable via our S&P Global feed due to a mapping issue for CDMO; as a result, we cannot quantify a beat/miss vs consensus this quarter. Values that would have been retrieved from S&P Global are unavailable; we default to company-reported actuals .
Given the record revenue and margin improvement, and FY2025 guidance initiation, sell-side models may adjust upward for revenue trajectory and margin fall-through, while GAAP EPS will be affected by non-recurring tax valuation allowance in Q4 (non-GAAP provides better operational view) .

Key Takeaways for Investors

Record Q4 revenue and positive adjusted EBITDA signal operational inflection; watch utilization ramp and PPQ-to-commercial conversions as margin catalysts in FY2025 .
FY2025 revenue guidance ($160–$168M) at +17% YoY midpoint is a potential stock catalyst; evidence of backlog conversion and sustained bookings will be critical near-term checkpoints .
Non-cash tax valuation allowance distorted GAAP EPS; use adjusted metrics to track core performance while monitoring path to restoring GAAP profitability .
Onshoring and large-pharma engagement are credible tailwinds; the company’s expanded capacity and quality track record position it to benefit from BIOSECURE-related reshoring .
CGT facility adds optionality; expect gradual but growing contribution, lagging mammalian by a few months .
CapEx cycle is complete; rising depreciation is a near-term headwind, but free cash flow should improve with utilization and management expects positive cash from operations in FY2025 .
Trading lens: Monitor quarterly bookings/backlog conversion updates and gross margin trajectory; upside risk from larger late-stage wins, downside risk from bookings variability and regulatory timing on PPQ-to-commercial .

Avid Bioservices, Inc. (CDMO)·Q4 2024 Earnings Summary