PACIFIC BIOSCIENCES OF CALIFORNIA, INC. Q4 FY2024 earnings call

Key Achievements

• Fourth quarter: Shipped 23 Brevio systems and 7 Vega Benchtop platforms.
• Full-year 2024: $154 million revenue, 97 Revio shipments, customer base expanded to nearly 200 Revio instrument customers.
• HiFi sequencing: Output grew 81% in 2024, 12-fold increase since 2020.

Priorities

• Expand HiFi sequencing adoption, accelerate Vega Benchtop platform uptake, enhance Revio with Spark Chemistry, provide bioinformatics solutions.

Operational Actions

• Reduced non-GAAP operating expenses by over $75 million in 2024.
• Executed convertible note exchange, reducing debt by $259 million.
• New leadership: Dave Ruggiero joined as Global Head of Sales and Service; Chris Smith joined the board.

In the fourth quarter of 2024, product, service, and other revenue was $39.2 million, a 33% decrease from $58.4 million in Q4 2023. Instrument revenue in Q4 was $15.3 million, a 56% drop due to lower Revio shipments. Consumables revenue was $18.8 million, roughly flat, and service and other revenue was $5.1 million, up from $4.4 million in Q4 2023. Full-year 2024 revenue was $154 million, with 97 Revio shipments. Consumable revenue grew 11% in 2024 to $70.4 million, a 23% compound annual growth rate since 2020. Application and extraction kit revenue grew 56% in 2024.

Revenue

• 2025 revenue expected $155M-$170M, midpoint 6% growth year-over-year.
• Q1 2025 revenue expected lower than Q4 2024 due to seasonality.

Gross Margin

• 2025 non-GAAP gross margin expected 35%-40%, exiting above 40%.

Expenses

• Non-GAAP operating expenses 2025 expected $270M-$280M, down 3%-7% from 2024.

Cash Flow

• Anticipate turning cash flow positive by 2027.

• Macroeconomic pressures extending sales cycles.
• NIH funding uncertainty affecting academic environment.
• Potential export issues and market competition from other long-read technology entrants.

Q: Tycho Peterson asked about NIH disruption and Vega shipments.

A: Christian Henry discussed monitoring NIH impact, Vega sales funnel growth.

Q: Kyle Nixon asked about Revio shipments and NIH exposure.

A: Christian Henry discussed macroeconomic impact on Revio, Europe offsetting Americas risk.

Q: Dan Brennan asked about NIH exposure magnitude.

A: Christian Henry discussed NIH revenue as ~20% of total, deal-by-deal impact.

Q: Doug Schenkel asked about gross margin and adoption initiatives.

A: Christian Henry discussed gross margin improvement, reagent rental and informatics initiatives.

Q: Tejas Savant asked about China concentration and competition.

A: Christian Henry discussed no local alternatives in China, portfolio driving demand.

Q: Jack Meehan asked about Vega order book.

A: Christian Henry discussed Vega opportunity set, distributor discounts.

Q: Subbu Nambi asked about Roche competition and upside drivers.

A: Christian Henry discussed no Roche impact, pop gen projects, clinical adoption, macro improvement as upside drivers.

Q: Sung Ji Nam asked about clinical revenue growth.

A: Christian Henry discussed clinical revenue doubling in 3 years, rare disease, panel testing, oncology.

Q: Eve Burstein asked about reagent rentals and Revio vs Vega margins.

A: Christian Henry discussed majority CapEx placements, Vega margin outlook.

Q: Mason Carrico asked about cash flow breakeven assumptions.

A: Christian Henry discussed revenue and margin assumptions for cash flow breakeven.

Q: Sam asked about Revio pull through and Spark impact.

A: Christian Henry discussed Q4 air pocket, Spark impact on pull through