Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pacific Biosciences of California Inc (PACB, Financial) reported $39.2 million in revenue for Q4 2024, driven by the shipment of 23 Revvio systems and the successful early shipment of 7 Vega benchtop platforms.
- The company saw a significant expansion in its customer base, with nearly 200 customers using the Revo platform by the end of 2024.
- Consumable revenue grew 11% year-over-year in 2024 to $70.4 million, representing a 23% compound annual growth rate since 2020.
- The company anticipates sustained double-digit revenue growth in the medium term as long-read sequencing expands into new genomic applications.
- PACB successfully reduced annualized non-GAAP operating expenses by more than $75 million in 2024, aligning spending with strategic priorities.
Negative Points
- Instrument revenue in Q4 2024 was $15.3 million, a 56% decrease from the same quarter in 2023, primarily due to lower Revvio system shipments.
- The company faces an uncertain funding environment, particularly in the United States, due to macroeconomic pressures and recent NIH funding announcements.
- PACB recorded non-cash impairment charges totaling $90 million in Q4 2024, driven by macroeconomic headwinds and a revised outlook on future cash flows.
- The company expects 2025 revenue growth to be modest, with a forecasted range of $155 million to $170 million, reflecting only a 6% year-over-year growth at the midpoint.
- PACB has pushed out its timeline to become cash flow positive to exiting 2027, citing continued macroeconomic uncertainty and recent NIH announcements.
Q & A Highlights
Q: What impact has the uncertain funding environment, particularly NIH disruptions, had on your guidance for 2025?
A: Christian Henry, CEO, explained that the funding environment in the U.S. is dynamic, with significant headwinds expected, especially in the first half of the year. The company has factored in these challenges into their guidance, expecting revenues to be down in Q1 versus Q4 due to uncertainty and typical seasonality. They have assessed each opportunity and believe they have provided responsible guidance, considering potential funding freezes and pauses. Growth in Europe and expansion in the clinical side of the business are expected to offset some risks in the Americas.
Q: Can you provide an update on the Vega platform's production and shipment plans?
A: Christian Henry, CEO, stated that they have some backlog and are scaling up production. The first half of the year will see production on the R&D pilot line, with full production expected in the second half. By then, they anticipate being able to fulfill the majority of demand.
Q: Why are Revvio shipments expected to decline in 2025, and is there further downside to the guidance?
A: Christian Henry, CEO, noted that the decline in Revvio shipments is not due to product fading or cannibalization by Vega but rather the challenging macroeconomic environment affecting capital equipment purchases. The guidance considers these challenges, and while Revvio shipments are expected to be modestly down, there is potential for upside if macroeconomic conditions improve.
Q: What progress is being made on gross margins, and how can they improve further?
A: Christian Henry, CEO, highlighted that they are making significant progress in lowering per-unit costs for both chips and instruments. Insourcing more manufacturing has driven substantial savings. They expect to exit the year with gross margins above 40%, with potential for higher margins if revenue exceeds current guidance due to increased consumable sales.
Q: How is customer concentration risk being managed, and what impact does the situation in China have on your business?
A: Christian Henry, CEO, explained that while there are large-scale programs with certain customers, they are expanding their customer base, particularly in clinical settings, to mitigate concentration risk. In China, there are no alternatives to their technology, reducing risk from geopolitical tensions. However, potential export restrictions could pose challenges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
