Participants

Angela Bitting; Senior Vice President of Corporate Affairs and Chief ESG Officer; Twist Bioscience Corp

Emily Leproust; Chief Executive Officer & Co-Founder; Twist Bioscience Corp

Patrick Finn; President, Chief Operating Officer; Twist Bioscience Corp

Adam Laponis; Chief Financial Officer; Twist Bioscience Corp

Matt Sykes; Analyst; Goldman Sachs

Luke Sergott; Analyst; Barclays

Subbu Nambi; Analyst; Guggenheim Securities

Catherine Schulte; Analyst; Robert W. Baird & Co. Incorporated

Brendan Smith; Analyst; TD Cowen

Vijay Kumar; Analyst; Evercore ISI

Matt Larew; Analyst; William Blair

Puneet Souda; Analyst; Leerink Partners

Doug Schenkel; Analyst; Wolfe Research

Sung-Ji Nam; Analyst; Scotiabank

Presentation

Operator

Good day. Thank you for standing by. Welcome to Twist Biosciences 2025 first quarter financial results Conference Call. (Operator Instructions) Please note that today's conference may be recorded.
I would now like to turn the conference over to Angela Bitting, SVP of Corporate Affairs. Please go ahead.

Angela Bitting

Thank you, operator. Good morning, everyone. I would like to thank you for joining us for Twist Biosciences conference call to review our fiscal 2025 first quarter financial results and business progress. We issued our financial results press release before the market, and it is available at our website at www.twistbioscience.com.
With me on the call today are Dr. Emily Leproust, CEO and Co-Founder of Twist; Adam Laponis, CFO of Twist; and Dr. Patrick Finn, President and COO of Twist. Today, we will discuss our business progress, financial and operational performance as well as growth opportunities. We will then open the call for questions. We ask that you limit your questions to only one and then requeue as a courtesy to others on the call. This call is being recorded. The audio portion will be archived in the Investors section of our website and will be available for two weeks.
During today's presentation, we will make forward-looking statements within the meaning of the US Federal Securities Laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forward in the press release we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission.
The forward-looking statements in this prediction are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements, except as required by law. We'll also discuss adjusted EBITDA, a financial measure that does not conform with generally accepted accounting principles. Information may be calculated differently than similar non-GAAP data presented by other companies. When reported, a reconciliation between GAAP and non-GAAP financial measures will be included in our earnings documents, which can be found on the Investors section of our website.
With that, I'll now turn the call over to our CEO and Co-Founder, Emily Leproust.

Emily Leproust

Thank you, Angela, and good morning, everyone. We are pleased to report yet another quarter of strong sequential growth in both revenue and gross margin, demonstrating our unwavering progress towards the milestone of adjusted EBITDA breakeven and subsequent growth.
Driving our success is our cutting edge incents platform, a breakthrough innovation that not only powers our business, but also positions us to capitalize on a wide area of market opportunities. This platform is proprietary, differentiated, scalable and adaptable.
Importantly, the platform sales as the foundation for every product groups across the company. Years ago, we set an ambitious yet clear path to profitability. And today, we are proud to be delivering on that promise. Through discipline education and the momentum we have built across our initiatives, we remain firmly on course to achieve adjusted EBITDA breakeven with [gross margin] capital while continuing to invest in profitable growth opportunities for the future.
Getting into the financials, we exceeded our guidance for revenue and margin reporting another quarter of record revenue of $88.7 million, an increase of 24% year-over-year and 5% sequentially. Gross margin for the quarter came in ahead of our guidance at 48.3% compared to 40.5% for the first quarter of fiscal 2024, demonstrating the leverage of fixed cost with higher volume as well as our ongoing commitment to continuous improvement and margin expansion initiatives. In addition, this is another quarter of showing that 75% to 80% of the incremental revenue on average drops to the gross margin line.
Revenue for SynBio increased to $34.4 million, an increase of 28% year-over-year with the growth of [deferral] group reflecting a diverse global customer base. We continue to see sequential growth in our Express portfolio, both in revenue and number of net new accounts. We continue to push our total time with the majority of gene fragments shipped within two days and clonal genes shipped within four days with the full Express portfolio benefiting from this speed.
Our ability to deliver product quickly at a reasonable cost expand our customer base and also is expanding our wallet share within existing accounts. With our speed and price, we have seen new applications and innovations from researchers across the globe and will continue to be inspired by their drive to improve health and sustainability.
For NGS, we reported $48.6 million in revenue, an increase of 23% year-over-year. The continued strength was driven primarily by customers commercializing liquid biopsy and rare disease assets. In addition, we see initial uptake in emerging applications of our differentiated library prep products along with other workflow components, as customers of Twist supply all reagents between the sample and the sequence. And during the quarter, we saw our first very significant conversion from microarray to Twist plus sequencing, this one in human health. By maintaining our sequential agnostic approach, meaning our workflow is compatible with different sequences based on our customers' preference. We remain a key partner providing NGS approach for many different applications in addition to liquid biopsy and minimal residual disease.
Turning to biopharma services. Our revenue increased to $5.7 million with orders of $5.9 million. We remain cautiously optimistic as the funnel of opportunities continues to build. By leveraging our strategic fit across our SynBio and biopharma services portfolio, we continue to remain focused on delivering valuable services for our partners. Our data storage team continues to advance development of the technology working with water-based enzymatic chemistry to synthesize DNA on our CMOS-based chips for the terabyte scale product.
I would now like to turn the call over to Patrick for commentary on gross margin and innovation.

Patrick Finn

Thanks, Emily. As we look at the firm wide improved margins, we continue to see a majority of the improvement driven by revenue growth, while holding our fixed operating expenses relatively flat.
In addition, we continue to identify incremental areas of improvement in COGS. One example implemented in the first quarter is related to plastic tips. With an extreme automation, we use a large number of tips in our processes. In 2024, we identified an alternative technology that was compatible with our processes and allowed us to maintain performance in sample quality while significantly decreasing our cost.
We implemented a new approach toward the end of the calendar year, and we are now seeing the pull-through of those savings as one more sequential step in our positive gross margin trajectory. Looking forward, we have a pipeline of activities that we anticipate will add to our gross margin incrementally while maintaining or improving the product benefits.
In addition, we've talked about enzymology as a future growth driver for the business. When applying our innovative platform to identify proprietary enzymes that deliver performance advantages within a specific product that we offer or to optimize their workflow for a particular application. We also expect gross margin leverage from these internally developed enzymes.
Importantly, we see significant runway to leverage our synthesis portfolio to screen, optimize and implement new enzymes used within our current and future offerings with minimal investment required and significant resulting ROI.
As we approach adjusted EBITDA breakeven, our focus will shift seamlessly to achieving cash flow positivity, maintaining our momentum while strategically investing in profitable growth opportunities powered by our relentless innovation engine.
At this time, I'd like to turn the call over to Adam to discuss our financials.

Adam Laponis

Thank you, Patty. Revenue for the first quarter of 2025 increased to $88.7 million growth of 24% year-over-year and approximately 5% sequentially. Gross margin came in higher than expected with 48.3%, primarily due to increased revenue and volume leverage on our platform.
SynBio revenue increased to $34.4 million, growth of 28% year-over-year. NGS revenue for the first quarter grew to approximately $48.6 million, an increase of 23% year-over-year and 7% sequentially. For the quarter, revenue from our top 10 NGS customers accounted for approximately 39% of NGS revenue. We served 606 NGS customers in the quarter with 147 having adopted our products.
For biopharma, revenue was $5.7 million, with orders of $5.9 million. We had 89 active programs as of the end of December 2024 and we started 67 new programs during the quarter. Looking geographically, Americas revenue increased to approximately $53.7 million in the first quarter compared to $44 million in the same period of fiscal 2024, growth of 22% year-over-year.
EMEA revenue rose to $28.3 million in the first quarter versus $21.2 million in the same period of fiscal 2024, growth of 33% year-over-year. APAC revenue increased to $6.7 million in the first quarter compared to $6.3 million in the same period of fiscal 2024, growth of 6% year-over-year. China continues to be a relatively small portion of our revenue at approximately 2% of total revenue for the first quarter of fiscal 2025.
Moving down the P&L. Our gross margin for the first quarter increased to 48.3%, an improvement of almost 8 margin points versus the first quarter of fiscal 2024, reflecting our strong revenue growth as well as our continuous process improvements while holding expenses relatively flat year-over-year. 81% of revenue growth compared to Q1 FY24 dropped to the gross margin line.
Operating expenses, excluding cost of revenues for the first quarter were approximately $77.5 million compared with approximately $75.9 million in the same period of 2024. Operating expenses included approximately $6.6 million for data storage in the first quarter. Q1 FY25 includes annual merit increases as well as payment of FY24 cash balances.
Looking at our progress on our path to profitability. For the first quarter of fiscal 2025, adjusted EBITDA was a loss of approximately $16.3 million, an improvement of about $11.5 million versus the first quarter of fiscal 2024.
Cash flow from operating activities continues to improve and we are driving the adjusted EBITDA breakeven. We ended the quarter with cash, cash equivalents and short-term investments of approximately $270.8 million, inclusive of the $15 million of [fees earned] during the quarter versus $276 million as of September 30.
We are increasing our guidance for fiscal 2025. We're increasing the total revenue guide of $372 million to $379 million, up from $367 million to $377 million, now indicating growth of approximately 20% at the midpoint year-over-year.
We are increasing SynBio revenue guidance to $144 million to $147 million, growth of approximately 17% to 18% year-over-year. We are increasing revenue guidance for NGS revenue to the top of the range of $205 million to $209 million, growth of approximately 21% to 24% year-over-year. We are increasing biopharma revenue guidance to $23 million, growth of approximately 13% year-over-year.
For Q2 fiscal 2025, we expect total revenue of approximately $91 million to $93 million growth of approximately 21% to 24% versus Q2 of fiscal 2024. SynBio revenue of approximately $35.5 million to $36 million, growth of approximately 19% to 21% year-over-year. NGS revenue of approximately $50 million to $51 million, growth of 23% to 25% year-over-year. Biopharma revenue of approximately $5.5 million to $6 million.
For the full year of fiscal 2025, we expect gross margin of approximately 49% with quarterly sequential improvements in Q4 fiscal 2025 gross margin over 50%. We expect adjusted EBITDA loss of approximately $55 million to $60 million for fiscal 2025, an improvement of approximately $35 million to $40 million versus fiscal 2024. We expect Q2 fiscal 2025 adjusted EBITDA loss to be approximately $16 million with sequential improvement in subsequent quarters.
With that, I'll turn the call back over to Emily.

Emily Leproust

Thank you, Adam. At Twist, we often ask what makes you successful in this difficult market environment? I love these questions because I get to talk about all the things that makes Twist different. Our success is not riveted to a single factor, but a combination of groundbreaking innovations and strategic investments. At the core is our pioneering technology, which miniaturizes chemistry and enable genes synthesis on a silicon chip giving us a cost and scale advantage unparalleled in the industry.
To date, we've invested more than $1 billion to create infrastructure team and platform necessary to support our current achievements and propel future growth. Our innovative platform not only provides the foundation to launch differentiated products but also empowers us to industrialize custom solutions at scale.
Our relentless focus on innovation paired with deep understanding of our customer needs and end markets shapes the product road map that delivers meaningful impact. We've built efficient and scalable sales channels, standardized and activity processes for operational excellence and digitized workflow to ensure agility and efficiency across our supply chain.
This (inaudible) extend to a diversified product groups, market and revenue channels, which mitigates risk while maximizing opportunity. By embracing customer diversity and market resilience, we have established a robust and adaptive revenue base. Our forward thinking operations group complement our commercial progress by focusing on continuous process improvements to expand capacity and drive gross margin growth.
Importantly, the habit of Twist is our incredible team. Our employees bring together expertise from diverse discipline, chemistry, biology, physics, bioinformatics, silicon engineering, chemical engineering, hardware engineering, electrical engineering, software development, finance, legal, human resources and more.
Our interdisciplinary collaboration fuels our mission to deliver products that improve health and sustainability. Guided by a shared vision and a deep commitment to serving our customers, we continually overcome challenges and great [buyers].
Looking ahead, we remain steadfast in our mission to push the [bar] as far as possible. We will continue investing in research and development in a fiscally responsible manner, creating products that not only drive profitable growth, but also deliver value to our stakeholders.
With discipline and elimination, we are firmly committed to achieving adjusted EBITDA breakeven and delivering long-term growth. Together, we move forward, innovating, growing and building a better future.
At this time, let's open up the call for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Matt Sykes, Goldman Sachs.

Matt Sykes

Maybe just to start out, could you just talk about some of the mix shift you're seeing in SynBio towards Express genes? And what your expectations are for the contribution over the course of the year and any progress you've made with that product, specifically with gene makers?

Adam Laponis

Matt, this is Adam. Thanks for the question. Happy to chat about it. We are seeing sequential improvement in the Express gene revenue quarter-on-quarter. And what we're also seeing, as we've hit on it, I think, previously, it is not longer just expressed genes, it's the Express portfolio. And so what we're seeing really is where in past someone might have bought fragment from us, and now they're buying Express genes or they might have bought clonal genes from us, and now they're buying perhaps or IgG Express.
And so having that full express offering is really enabling us not only to expand our wallet share with existing customers but really move folks up where they might have been a previous buyer of genes and the maker of IgG, where now they are a buyer of IgG. So we're seeing that shift as well as we're seeing the continued improvement in the number of new customers coming into the business for the Express offering.

Matt Sykes

Got it. And then just for a follow-up, just given the adjusted EBITDA beat, how are you thinking about the path to profitability in terms of timing? When do you plan on revisiting that view just in terms of what you've put up in terms of adjusted EBITDA and gross margin expansion?

Adam Laponis

Matt, great question. And then we are committed to being sequential improvements as we move forward. And we've talked about being ahead of the 50% gross margin by Q4 and continuing to march down that path. I think coupled our growth in revenue and that expansion in gross margin with discipline on the OpEx line, like we've had for the last number of years, you can pretty much back and where things may end up, but we have not given that exact timeline, and we -- but we are steadfast in our north star of not going back to the market for any additional equity.

Operator

Luke Sergott, Barclays.

Luke Sergott

A couple here. Can you first talk about -- I get a lot of hits on this one on the -- your Canada, Mexico exposure and how you're thinking about potential tariff impacts there. I know that there's some chatter on like an 800 -- less than $800 million loophole being closed, and you guys, I assume they have less than a lot of your genes are shipped at less than $800 million. So just help frame how you guys are thinking about that with the policy.

Emily Leproust

Yes. Thank you, Luke. So (inaudible) to set the facts that we know. So now there's a 25% tariff on G&A -- on goods coming from Canada and Mexico, and there's an additional 10% tariff on goods coming from China. And there is, like you said, a removal of the de minimis rule where if you have a package that comes into the US, that's worth less than $800. It's -- in the past, it was not subject to tariffs, but now it is.
What that means for us is since we manufacture 100% of our products in the USA, that means that the price for our products in the US is stayed the same, but our competitors that produce outside of the US, they will have to really come through -- directly from China.
So we'll have to pay the 10% tax on NDA from China, plus the 6.5% tax that was there before and without the de minimis roots. And so what that means if there was a package coming from China from a competitor that was worth $500, they used in tariffs. And now there's a 16.5% tariff on it. So definitely a headwind for them.
We mentioned it before that we'll win by winning, our products are better, faster, higher quality. And so we win by winning, but it probably will be a headwind for them as price is a significant consideration for customers.
These customers that want to buy DNA, frankly, they have two questions for me, when and how much, right? And so the speed is important, best in class with Express. And in terms of price, we were leading, but I think there's some headwinds for them.
In terms of retaliation, we have a very, very limited exposure to Mexico. As far as if we go to Canada, it's a slow small couple percent. And as far as we know, in the Canadian retaliatory tariffs, there are no tariffs on DNA. So our DNA going into Canada is not subject to a Canadian tariff.
So in the US, we're fine and potentially some headwinds for our competition. And as far as our -- many thanks for now (inaudible). We will follow closely. At the end there -- for us, again, just the headline, I would say, is heavy from that economy. Our products are better. And so we'll win by winning.

Operator

Subbu Nambi, Guggenheim Securities.

Subbu Nambi

My first one is, how much of this express dynamic was responsible for better-than-expected margins, fully realizing that this dynamic is likely to stay for the long term? And then I have a follow-up.

Adam Laponis

So I think -- what we said is it clearly expresses having a contribution to the margins. What we're seeing primarily is as we continue to expand revenue and grow revenue, that's the majority of the driver of the gross margin expansion.
And so when we talk about at 75% to 80% on the average of the revenue growth dropping to the gross margin, that's the primary driver of the gross margin expansion, independent of whether it's coming from the SynBio side or the NGS side of the business. It's about equal.
Obviously, the Express and also some of the initiatives Patti's talking about the process improvement are adding to that and we see it being sustainable and robust moving forward. So we're excited about where we are, and we expect it to continue.

Operator

Catherine Schulte, Baird.

Catherine Schulte

Maybe just to continue on that topic, can you just talk to gross margin progression throughout the year? And for the process change around -- that Patti mentioned, how much could that benefit margins in your fiscal second quarter? And any other projects like that planned throughout the year that you could talk about?

Adam Laponis

I'll start, and then maybe, Patty can talk to some of the operational activity that's going on. In terms of the gross margin forecast and expectations -- we expect our revenue to sequentially improve every quarter. And with it, we expect our gross margin to continue to sequentially improve.
We raised the midpoint of the guide to 49% for the year, and we expect to be ahead of the 50% mark by Q4. So I think that we should be seeing sequential improvement throughout the rest of the year, where I think the -- opportunity-wise, we are seeing the benefit of some of the initiatives Patty's talking about in terms of the Q1 performance, and we expect those benefits to continue into Q2 and beyond.
Patty, anything you'd add?

Patrick Finn

All right. That was bang on. I mean, the team continues to execute well on gross margin activities. It's part of our culture, which has been spectacular towards that grow and expand across the organization. I'd say that there's more -- are multiple small, midsized opportunities to continue to improve and including the use of our own enzymes, which first of all, we're thinking about that for new and innovative products, but we can get some leverage internally to help us with margin expansion.

Operator

Brendan Smith, TD Cowen.

Brendan Smith

That's actually a perfect lead into my question, just because I wanted to ask a little bit more about -- kind of just double-click on the proprietary enzyme production that you all talked about now. Just wondering if you can speak a little bit more to the extent of GM leverage we might expect from this ongoing work? And I guess I'm really just looking to understand a bit better maybe which processes internally this could apply to more specifically and which was the -- you see as prime to improve with this and potentially thoughts on timing to some of those synergies that we might see just as we try to model out the next few quarters.

Emily Leproust

Good question. I mean we're a very, very high throughput synthesis company. And so there's some standard procedures internally that will really benefit from the internally manufactured enzyme. In addition, obviously, supply chain security and the ertical there is incredibly useful. We also see leverage into our product's top line growth, driving new and innovative products out to market that really serve the customer base well.
In terms of timing, it really is all baked into our guidance. So I think that said, we would be consistent with that. We've got a good portfolio of products coming. We're excited about that future and that product offering.

Operator

Vijay Kumar, Evercore ISI.

Vijay Kumar

I just had one, I guess, guidance, P&L-related question. The gross margins here in Q1, when you look at the sequential performance, even if sequential revenues dropped down at 100%, I think we're having a hard time getting to 48%. Were there any one-offs that drove the 48% gross part in the quarter and the related sort of guidance question.
The beat mostly came from NGS and biopharma, but I think the guide raise is more coming from SynBio and biopharma. So any -- I know you stopped disclosing order activity levels, but anything from a customer activity levels that gives you confidence in why SynBio should be better and NGS perhaps is perhaps in line with your prior guidance?

Adam Laponis

Vijay, thanks for the question. I'll try to hit on each of the points, but I'll ask others to jump in. In terms of the gross margin, it was accelerated this quarter, a step up. We almost see roughly 3 points of improvement quarter-on-quarter. When you look at it, I think there is -- obviously, we're starting to see the real benefits of the continuous process improvements along with the revenue growth. Nothing in it, it's onetime in nature. And other than as we continue to activate the cost improvement programs, we expect more of that moving forward. But I'd say the step-up we saw was outsize of this quarter, but it should be sustainable.
In terms of the products in the guide, yeah, we did see what -- we're encouraged by the progress, not just in terms of revenue but also on orders on the biopharma side of the business. And while it's still early and the business is still -- we're finding our early shoots of opportunity, we definitely see some more confidence in that side of the business. So that's why we're stepping up the guidance.
And the SynBio side, I think what we're seeing is better visibility into the later quarters of the year. I think as we initiated the guide, we were appropriately had less visibility to how things are progressing, particularly on some of our new innovation launches. And as we're seeing that take hold and traction, we're adjusting the guidance accordingly. So a lot of confidence across all three areas of product lines, and we expect to continue to see that sequential improvement across then in subsequent quarters.

Operator

Matt Larew, William Blair.

Matt Larew

I want to get back to the Express portfolio. You're now about one year -- a little over one year since you launched, starting with Express genes. Just curious if there's any data points you can share around sort of new customers relative to legacy customers converting retention rate or wallet share conversion for those that were initial early adopters?
And then obviously, you've had a couple of competitors, since you launched, come out with sort of products in response and so maybe just anything around win rate or what you've observed in the market as customers have been able to compare your Express offerings versus others?

Emily Leproust

Thank you, Matt, for the question. Yeah, it released more than a year, been a great year. The Express portfolio broadly has been definitely one for the record books at this. The most important thing I need to start is that in those what it says on the (technical difficulty) And so it's all about, at the end of the day, customer satisfaction, and we try to be very clear in what our products will do, and we want to make sure that the experience that we get is what we had told them, which is not always the case more broadly in the industry. So that's number one. It says what it does and it does what it says.
The second thing is everything we do is Express. So it's not just that we are skipping the line. It's not just that for a small fraction of the capacity, it's -- everything, it's made Express to fit the lifestyle. And that leads me to the third is that because of those 2 things, customer satisfaction has been really, really high. And so we were able to achieve all of our objectives, which was ramp revenue, to ramp gross margins. We're very pleased that 75% to 80% of revenue growth has been dropping to the gross margin line for many quarters in a row and Express gene has been a contributor to that. Actually, this year or this quarter, we did 81%. But don't hold us to it, we are going for 75% to 80% quarter-over-quarter and in broad net new customers.
So overall, a great success. In terms of competitor response, we saw the press release like everybody else. I think our competitors had Express offerings before. But their Express offering was limited in terms of capacity, and we don't think that has changed. And the price point that we offer is the differentiated. And so frankly, we don't really see that. So it's probably made for a good press release. But at the end of the day, we are only as good as best (inaudible) And when we study their earnings report, the numbers are going the same direction as ours.

Operator

Puneet Souda, Leerink Partners.

Puneet Souda

Thanks for the questions here. So appreciate the gross margin comments and it's good to see the improvement there, but my question is more about the overall growth given the backdrop of the market and what you're hearing from your customers.
I mean, is it fair to say that the NGS and liquid biopsy remains a important growth driver for you. And I mean, when we look at that guide, you didn't raise the top end of the guide, you raised -- you narrowed the guide on the bottom end. So just wondering, I mean, when you look at the backdrop of the academic market, which is under pressure, the clean tech markets and Bio (inaudible) some of that is under pressure, too.
And just given the challenges there, the fact that you have divested assets in biopharma already. How should we think about the growth in the NGS and diagnostic customers, just given the context of the guide? Is it just -- I mean, are we early in the year that's why you want to be prudent there? Or is there -- could you elaborate a little bit more on the NGS guide and how you thought about it?

Emily Leproust

A quick clarification. I don't think we divested biopharma asset, I think the way we referred to it is we monetized it. And so we sold half of the future (inaudible) and royalties in the exchange of $15 million, which we've received. So that was presenting to add a little bit of exclusion and make sure that we can achieve our goal of EBITDA breakeven without trading capital.
In terms of the guide, we always want to be prudent. And you are correct that there is some uncertainty. But I think if we look back to the last few years, we believe in the uncertainty of biopharma funding. I think we've done really well there. And I don't think it's by accident we just have, over the year, field products that are highly differentiated, thanks to our technology. So the technology plus the formation with our commercial balance means that in any market we'll do well and in a market where there is turbulance, maybe we have the opportunity to do better. So I think that's how we are going into this.
Again, we -- fundamentally, we have great products with very low viable cost structure. And I think we'll use our differentiation in these products and our channels to be able to ramp topline. And as we ramp topline, we see now it's always in the road that gross margin goes up. And the last thing for us to do is to exercise -- protect this thing which we've done. So the goal is to, frankly, do more of the same and use our winning readily.

Operator

Doug Schenkel, Wolfe Research.

Doug Schenkel

Just two things I want to talk about real quick. First, your number of customers increased by 11% year-over-year, which in itself is impressive. What I think potentially get lost in that number is the possibility of more deeply moving into customer accounts. And what I'm getting at there is, I believe the way you define a customer is something like a total university or a total company and I think what gets lost in that metric is the opportunity to penetrate multiple labs or so-called sub customers within each customer.
Are we thinking about that right? And if so, where are you in more deeply penetrating accounts and capturing share after you establish a beachhead. Is that a metric you track and I guess the second thing I just wanted to ask is, given the geopolitical backdrop, NIH uncertainty, all those sorts of things, how are you kind of drawing the error bars around guidance is essentially in the face of uncertainty, how are you capturing that in guidance that's maybe a little bit different than in years past.

Emily Leproust

Thanks, Doug. Great question. So I'll handle the first question and Adam will cover the second one. In terms of some accounts, you're thinking about it exactly right. That's what's happening. I'll take the example of (inaudible) because they're in our backyard. That's also a [important] customer.
But as our commercial results progresses we are gaining more and more labs in Central. But in terms of our reported numbers, the number stays the same. And so the way we look at it internally is number one, applying growth, right? So it's sort of a revenue growth within an account, and that's important. And the second is bringing new users from that one accountant.
So that number is not important, but that is something that we are definitely tracking internally. I think you now said it eloquently, we have seen two things. One, we have to plan on new accounts, so get on more [digits] and then the ones were on each, we want to penetrate that account as quickly as possible. And particularly, we get in through one lab, but as we delayed our customers to our products, (technical difficulty) auto labs buy from us, and that's how we get more wallet share.

Adam Laponis

To discuss the guidance portion of it, think it's important to take a step back and think about where is our customer mix. And so when we were building our guidance, and we're thinking about it, one of the things we recognize is academics, although an extremely important element of the business, is a relatively small portion of the business.
Globally, about 20% of our volume is in academia and only a fraction of that is in the US. And so what we are looking at and we're seeing is while there is some uncertainty with the short term in funding, I think Emily said it really well, we see that uncertainty as an opportunity to take market share and specifically, I'll look at something like NIH, where we know we are very under indexed in NIH-funded activity. And so therefore, we are actually seeing an opportunity to take share and given the opportunity for -- at lower price, higher speed, we offer the opportunity for more shots on goal.
So the science won't stop, and we'll continue to take market share. And I think if you look at our guide, our confidence in these uncertain times is that our vast array of offerings across a wide type spectrum of customers is inherently -- protects us and insulates us from some of the noise, but also any uncertainty we see as a long-term opportunity to take share. And so we're very bullish on the outlook, but we also recognize that in any given week, if things move, we've got to be able to respond to that as well.

Operator

Sung Ji Nam, Scotia Bank.

Sung-Ji Nam

Sorry if I missed it, but are there specific milestones anticipated for the DNA storage segment over the next 12 to 24 months?

Emily Leproust

Yeah. Thank you, Sung Ji, for the question. So the technical milestone that I expected are all related to being able to sort data at a terabyte scale using our technology. So there's a few components to that -- and doing that in a data in, data out manner. So the first one is definitely the CMOS silicon chip. So we demonstrated the technology for the gigabyte scale, but now we're here in the terabit skin.
Second one, second aspect to it is developing the enzymatic business method to build DNA on the silicon chip. We are the leader of chemistry for gene synthesis, but for data storage, we do need an enzymatic approach such that our synthesizer would be able to sit in data center. So there is no reliability. And we're making very, very good progress on the technology there, we have a great team doing that.
So those I'd say are probably the two most prominent milestones. But in addition, we also need a ladde of a [additional] instrument. So our hardware are right there where the silicon chip sits on and where the enzymatic chemistry happens. And so we're working on that.
And then maybe the last element is the software, placing the manufacturing with system that we have for the rest of our operations, we do need -- first we have to keep track of the data, the information, the tumor where the DNA ends up in. And there's always a question of you (inaudible) or do you make it yourself. And historically, we've done the analysis that our needs are focused on the -- that are needed, it is better to build it. That's what we've done.
Our manufacturing system is a key component of our success. And so we also have to work on the integration of those four things. Silicon, chemistry, the hardware and then the software. So those are the milestones. It sounds daunting, but it's not -- it's just really hard engineering -- hard engineering in what we do.
And maybe the last thing I'll say is that because we are quite discipline in our spending, we are at a point where progress in data storage is proportional to the amount invested. If we were -- as you know, there are some time in projects, you spend more money, you don't go faster, but we are past that. So now in data storage, if we could spend more money, we will be able to go faster. But we make the decision as management around capital allocation, is probably one of the most important decisions we have to make. And right now, we are not allocating as much capital to data storage as they could use. I think it's the right decision to do. There is no fast follower. And -- but that means that progress is in fact expedite. However, I think all in all, that's what we need to make sure that we had [seen our product] breakeven.

Operator

Thank you. That concludes our Q&A session. I will now turn the call back over to Dr. Emily Leproust for any closing remarks.

Emily Leproust

Thank you for your time and thoughtful questions today. We're excited about the opportunities ahead as we continue to innovate, execute and drive value for our customers and shareholders. Thank you.

Operator

Thank you for your participation in today's conference. This does conclude today's call, and you may now disconnect.