Azenta (NASDAQ:AZTA) Beats Q1 Sales Targets

Life sciences company Azenta (NASDAQ: AZTA) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 5.2% year on year to $143.4 million. Its non-GAAP profit of $0.07 per share was in line with analysts’ consensus estimates.

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"We delivered another quarter of strong performance in an evolving and uncertain macroeconomic environment. Our performance in the second quarter and first half of our fiscal year demonstrates the resilience of our portfolio and the dedication of our teams that focus on our customers with our clearly differentiated products and services," said John Marotta, President and CEO.

Company Overview

Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ: AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Azenta struggled to consistently generate demand over the last five years as its sales dropped at a 6.8% annual rate. This was below our standards and is a sign of poor business quality.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Azenta’s revenue over the last two years was flat, sugggesting its demand was weak but stabilized after its initial drop in sales.

We can better understand the company’s revenue dynamics by analyzing its most important segment, Sample Management. Over the last two years, Azenta’s Sample Management revenue averaged 5.3% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company’s performance.

This quarter, Azenta reported year-on-year revenue growth of 5.2%, and its $143.4 million of revenue exceeded Wall Street’s estimates by 2%.

Looking ahead, sell-side analysts expect revenue to grow 4% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Azenta’s high expenses have contributed to an average operating margin of negative 6.5% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, Azenta’s operating margin decreased by 7.9 percentage points over the last five years, but it rose by 3.7 percentage points on a two-year basis. Still, shareholders will want to see Azenta become more profitable in the future.

This quarter, Azenta generated a negative 11.3% operating margin. The company's consistent lack of profits raise a flag.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Azenta, its EPS declined by 10.2% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

Diving into the nuances of Azenta’s earnings can give us a better understanding of its performance. As we mentioned earlier, Azenta’s operating margin improved this quarter but declined by 7.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, Azenta reported EPS at $0.07, up from $0.06 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Azenta’s full-year EPS of $0.53 to grow 39.2%.

Key Takeaways from Azenta’s Q1 Results

It was encouraging to see Azenta beat analysts’ revenue and EBITDA expectations this quarter. Overall, this was a solid quarter. The stock traded up 3.1% to $26.20 immediately following the results.

So do we think Azenta is an attractive buy at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.