Pacific Biosciences of California Q1 Earnings Call Highlights

Key Points

• Q1 revenue was $37.2 million, roughly flat year‑over‑year as a record quarter for consumables (up to $21.8M, +9% YoY) and >100% growth in consumable shipments to clinical accounts offset weaker instrument revenue (instrument revenue $9.7M, -12% YoY) and lower ASPs.
• Profitability was pressured with non‑GAAP gross margin falling to 37% from 40% due to higher compute/DRAM costs, a one‑time Vega promotion and inventory/warranty items, though non‑GAAP operating expenses declined 19% to $49.9M and non‑GAAP net loss improved to $35.9M; cash on hand was about $276M (including ~$48.1M from an IP sale to Illumina).
• Management flagged the upcoming commercial launch of SPRQ‑Nx and a large Basecamp Research collaboration (≈100,000 metagenomic samples) as key 2026 catalysts, but trimmed the top end of full‑year guidance to a revenue range of $165M–$175M while assuming no near‑term recovery in academic/government funding.

Pacific Biosciences of California NASDAQ: PACB reported first-quarter 2026 revenue of $37.2 million, roughly flat year over year, as record consumables revenue offset weaker-than-expected instrument performance amid ongoing pressure in academic and government funding, particularly in the U.S.

President and CEO Christian Henry said the quarter was highlighted by “record consumable revenue,” more than 100% year-over-year growth in consumable shipments to clinically focused accounts, and progress on strategic priorities, including a new collaboration with Basecamp Research tied to AI model development. However, Henry said instrument revenue—especially on the Vega platform—came in below the company’s expectations. He also noted that PacBio was “unable to deliver some products to the Middle East because of the conflict in the region.”

Consumables set another quarterly record as clinical mix grows

Henry said PacBio posted its third consecutive record quarter for consumables, supported by strong growth from clinically focused accounts. He said consumable revenue increased 9% year over year and that clinical shipments now represent a “mid-teens percentage” of total consumable shipments, “doubling year-over-year.” Henry added that some customers delayed purchases while waiting for the commercial launch of SPRQ-Nx chemistry, which he said is expected later in the month.

CFO Jim Gibson reported consumables revenue of $21.8 million, up from $20.1 million in the prior-year period. He said annualized Revio pull-through per system was approximately $229,000, which he described as reflecting “consistent utilization across an expanding installed base.” Henry said consumable pull-through remained within the company’s expected range of $225,000 to $250,000 per Revio system.

Instrument shipments steady, but pricing and demand pressure weigh on revenue

PacBio shipped 15 Revio systems in the quarter, up from 12 a year earlier, and 27 Vega systems compared to 28 in the prior-year quarter. Henry said Revio demand remains constrained by the funding environment in the Americas, but noted that half of Revio placements went to new customers globally and that the company continues to see multi-system orders from clinical accounts building capacity. He said cumulative Revio shipments reached 346 systems.

Vega demand and pricing were pressured by a combination of weaker U.S. demand and a limited-time promotional pricing program designed to expand the installed base. Henry said the promotion ended in the first quarter and that average selling prices (ASPs) are expected to “normalize in the second quarter.” He also said more than 85% of Vega placements went to new customers, bringing cumulative Vega shipments to 174 systems.

Instrument revenue totaled $9.7 million, down 12% year over year, according to Gibson. He attributed the decline primarily to lower Revio ASPs as PacBio prioritized placements in strategic accounts and lower Vega ASPs tied to the first-quarter promotion.

On a question about future discounting, Henry said, “There are no additional discount programs that are ongoing or going forward,” adding that the Vega program was “really a one-time promotion.”

Regional trends: EMEA growth offsets Asia Pacific softness

Gibson said revenue in the Americas was $16.7 million, up 2% year over year, driven by consumables growth tied to a larger installed base. Asia Pacific revenue declined 16% to $9.7 million, which he attributed to a weaker academic funding environment and some Chinese service providers waiting for the SPRQ-Nx launch.

EMEA revenue increased 17% year over year to $10.8 million, despite delivery challenges to the Middle East, according to Gibson. Henry described EMEA as a first-quarter highlight and said the region is seeing clinical customers transition from pilot and validation to sustained production-scale sequencing, driving both placements and ongoing pull-through. In response to an analyst question, Henry said EMEA growth is “on the back of rare disease testing” becoming first-line in different countries, supported by single-payer systems and evidence that long-read sequencing can reduce the need for multiple tests versus short-read approaches.

Margins pressured by compute costs and one-time items; operating expenses decline

PacBio reported non-GAAP gross margin of 37%, down from 40% a year earlier. Gibson cited three factors: higher computing component costs (particularly memory), the temporary Vega promotion compressing instrument margins, and one-time impacts including inventory adjustments and warranty-related charges. He said the company expects gross margins to improve in the second quarter and characterized the first-quarter pressure as “primarily driven by non-recurring and timing-related factors.”

Henry also addressed memory and compute costs, saying PacBio’s instruments are “heavy compute instruments” relying on DRAM, storage, and GPUs. He said the company expects these input costs to impact gross margin in 2026, though it has mitigated some risk with supply on hand and is pursuing longer-term R&D solutions.

Non-GAAP operating expenses were $49.9 million, down 19% from $61.7 million in the prior-year quarter, according to Gibson. Non-GAAP net loss was $35.9 million, or $0.12 per share, compared with a non-GAAP net loss of $44.4 million, or $0.15 per share, a year earlier. Headcount ended the quarter at 492 employees, up from 485 at the end of 2025.

PacBio ended the quarter with approximately $276 million in unrestricted cash, cash equivalents, and investments. Gibson said the cash position reflected the January closing of the sale of intellectual property and other assets related to PacBio’s short-read sequencing technology to Illumina, which generated approximately $48.1 million in net cash proceeds. Henry also said the company resolved outstanding litigation with Personal Genomics of Taiwan.

SPRQ-Nx launch and new collaborations frame 2026 outlook

Management pointed to the upcoming commercial launch of SPRQ-Nx chemistry as a key catalyst. Henry said the company will commercialize SPRQ-Nx with the ability to use the SMRT Cell 3x and that beta customers have seen “double-digit improvement in yield.” He said the beta program went well enough that PacBio “significantly expanded the program” in the first quarter. Henry added that SPRQ-Nx is expected to drive demand for both Revio systems and consumables, and that PacBio expects to launch SPRQ-Nx on the Vega platform later in the summer, which he said will enable more throughput and features such as lower DNA input quantities.

PacBio also highlighted several clinical collaborations in rare disease and screening markets. Henry said Ambry Genetics is on track to assess 1,000 patients in its ONCE study, and that work with n-Lorem and EspeRare is advancing across dozens of ultra-rare diseases. He said a University of Washington program studying sudden unexplained death in childhood across 200 families is “well underway.” Henry also discussed a February collaboration with DNAstack to launch a federated HiFi whole genome dataset through the HiFi Solves Consortium, saying members have connected or committed to connect more than 10,000 HiFi whole genome sequences.

In newborn screening, Henry said the “Babies in Focus” project led by Eurofins Genomics U.K. is advancing as planned and that PacBio expects 1,000 samples to be sequenced on its technology between April and September.

Henry also described a newly signed collaboration with Basecamp Research to deeply sequence approximately 100,000 metagenomic samples, calling it “the largest project using HiFi technology in the history of PacBio” and the company’s first scaled use of HiFi for developing a biological foundation model. He said sequencing is expected to begin scaling up over the course of 2026.

For full-year 2026, Gibson said PacBio lowered the high end of its revenue outlook by $5 million and now expects revenue of $165 million to $175 million. He said the outlook assumes consumables remain the primary growth driver, supported by clinical utilization and an expanding installed base, while also assuming “no meaningful recovery in academic and government funding, particularly in the Americas.”

PacBio also expects non-GAAP gross margin improvement for 2026 toward the lower end of its previously communicated 100 to 400 basis-point range. Gibson said higher consumables mix and SPRQ-Nx should help, while rising compute costs are expected to temper improvement in the near term. Non-GAAP operating expenses are expected to be $220 million to $225 million, down from 2025.

In closing remarks, Henry said the company sees progress in record consumables, continued strength in EMEA, increasing clinical adoption, the Basecamp project, and SPRQ-Nx beta results, adding that PacBio remains focused on improving throughput and economics to drive broader adoption of HiFi sequencing.

About Pacific Biosciences of California NASDAQ: PACB

Pacific Biosciences of California, Inc develops, manufactures and sells high-performance DNA sequencing systems for genetic and genomic analysis. The company's proprietary single-molecule, real-time (SMRT) sequencing technology is designed to enable long-read sequencing, offering high accuracy for applications such as de novo genome assembly, transcriptome characterization and structural variation analysis. Pacific Biosciences markets a suite of instruments, including the Sequel and Sequel IIe systems, alongside reagents, consumables and data analysis software to support a range of life science research.

Founded in 2004 and headquartered in Menlo Park, California, Pacific Biosciences has expanded its global reach by serving academic institutions, biotechnology and pharmaceutical companies, and government research centers across North America, Europe and Asia.

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