Azenta, Inc. Misses Revenue and EPS Estimates, Signals Continued Softness in Multiomics

Azenta, Inc. reported a revenue of $144.8 million for Q2 FY2026, missing the street estimate of $148.3 million by -2.4%. This marks a 1% increase year-over-year (YoY) and a 2.6% decline quarter-over-quarter (QoQ). The company's revenue has been volatile over the past few quarters, with a noticeable decline in the Multiomics segment and a slight improvement in Sample Management Solutions.

The gross margin for the quarter was 42.8%, down 110 basis points compared to the prior year. CFO Lawrence Lin noted, "We delivered 44.3% for the quarter, down 110 basis points versus the prior year." The decline in gross margin was primarily driven by lower North America volumes, a noncash inventory charge, and quality costs associated with automated storage rework.

Non-GAAP EPS for the second quarter was a loss of $0.04, significantly missing the street estimate of $0.10, resulting in a surprise of -140.0%. The company also recorded a $6 million noncash loss related to assets held for sale and noncash impairment charges of $112.4 million for Multiomics and $36.6 million for Sample Management Solutions.

Adjusted EBITDA for the quarter was $7.8 million, or 5.4% of revenue, down 320 basis points year-over-year. This decline reflects the ongoing challenges in the Multiomics segment and the impact of lower volumes in North America.

Azenta, Inc. has revised its guidance for FY2026, reflecting a more cautious outlook. The company now expects total reported revenue to be in the range of $603 million to $621 million, including the contribution of UKBC. On an organic basis, revenue is expected to range from a decline of approximately 2% to a growth of up to 1%. CFO Lawrence Lin explained, "On an organic basis, we expect revenue to range from a decline of approximately 2% to a growth of up to 1% compared to the prior guidance of 3% to 5% growth."

The company also expects adjusted EBITDA margin to range from down approximately 125 basis points to flat year-over-year, compared to prior expectations of approximately 300 basis points expansion, excluding UKBC.

Despite the revenue miss and earnings decline, Azenta, Inc. reported positive free cash flow of $5 million for the quarter, driven by improvements in working capital and higher deferred revenue.

The company ended the quarter with $565 million in cash, cash equivalents, and marketable securities. Capital expenditure for the quarter was approximately $7 million, reflecting continued investment in automation, capacity expansion, and technology to support scalable growth.

Sample Management Solutions delivered revenue of $81 million for the quarter, up 2% on a reported basis and down 3% organically. The segment's gross margin was 47.4%, up 40 basis points versus the prior year.

Multiomics revenue for the quarter was $64 million, flat on a reported basis and down 2% organically. The segment's performance was impacted by a decline in global Sanger and lower volumes in North America, driven by softer demand and increased competitive intensity.

Azenta, Inc. has taken actions to address the challenges in the Multiomics segment, including partial restructuring that will yield $7 million in annualized savings and $3 million in the year.

The company has also maintained nearly $20 million in growth investments, reflecting its commitment to long-term strategic initiatives. CEO John P. Marotta noted, "We've kept nearly $20 million of growth investments in the business right now."

The tone of Azenta, Inc.'s earnings call reflects a more cautious and less optimistic outlook compared to the previous quarter. The sentiment score for Q2 FY2026 was 0.02, down from 0.05 in Q1 FY2026. The guidance tone also declined significantly, from 0.32 to 0.10. CFO Lawrence Lin acknowledged the challenges, stating, "In terms of guidance, Matt, when you look at the overall guide, right, as I mentioned earlier, the low end of the range of down 2% on revenue really just going to reflect the greater softness in Multiomics in North America."

Full call-over-call delivery metrics are in the tone history.

The prepared sentiment score remained neutral, while the QA sentiment improved slightly. The company's AI optimism increased significantly, indicating a more positive outlook on future growth opportunities. CEO John P. Marotta highlighted the company's strong position in gene synthesis, stating, "I mean if you look at what we talked about in IR Day in terms of you've got gene synthesis north of $1 billion end market growing double digit, very high margins, we have that in our hands today, and we're executing well, specifically in that in Europe and in China."

Azenta, Inc.'s performance has implications for its key customer, TSMC, which relies on the company for wafer handling and automation equipment. The softness in Multiomics and the decline in North America volumes could indicate a slowdown in TSMC's capital expenditure plans, particularly in the North American market. CFO Lawrence Lin noted, "The decline was primarily driven by lower North America volumes, which reduced fixed cost leverage as well as a noncash inventory charge and approximately $2 million of quality costs associated with automated storage rework, which was in line with our expectations."

Compared to its peers in the Fab_Subsystems subsector, Azenta, Inc. is facing more significant challenges in terms of revenue growth and profitability. For example, 6856.T reported a 17.6% increase in revenue YoY, while 6370.T saw an 8.1% decline. Azenta's gross margin of 42.8% is lower than some of its peers, such as 6856.T at 43.8% and 6368.T at 38.9%.

In conclusion, Azenta, Inc.'s Q2 FY2026 earnings report highlights the ongoing challenges in the Multiomics segment and a more cautious outlook for the year. The company's strategic actions and continued investment in growth initiatives suggest a focus on long-term value creation, but the near-term financial performance and guidance indicate a need for careful management of costs and market conditions.