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PACIFIC BIOSCIENCES OF CALIFORNIA, INC. (PACB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $39.8M, up 7% sequentially and 10% YoY, driven by strength in APAC (+53% YoY) and EMEA (+35% YoY) and consumables demand; revenue and EPS both beat Wall Street consensus, with revenue $39.77M vs $36.47M* and EPS -$0.13 vs -$0.176* . Values retrieved from S&P Global.
  • Non-GAAP gross margin was 38.0% (38.3% cited on the call), ahead of internal expectations on favorable mix; non-GAAP operating expenses fell to $58.1M (down ~18% YoY), supporting a non-GAAP net loss per share of -$0.13 .
  • FY25 revenue guidance narrowed to $155M–$165M (midpoint maintained), non-GAAP gross margin guidance raised to 37–40%, and OpEx trimmed to $235M–$240M; Q3 revenue is expected to be roughly flat sequentially and YoY .
  • Strategic adoption continued: 15 Revio and 38 Vega shipments in Q2; 60% of Vega shipments were to new PacBio customers and ~70% of Vega use cases are non-WGS, expanding the addressable market .
  • Management cited lower-than-expected tariff headwinds vs last quarter and strong clinical traction (roughly 15% of consumables now in clinical customers), framing a catalyst narrative around estimate beats and improved margin guidance alongside accelerating Vega momentum .

What Went Well and What Went Wrong

What Went Well

  • Consumables strength and margin mix: "Non-GAAP gross margin was 38.3%, ahead of our expectations, driven by a favorable product mix with a better than expected contribution from consumables" .
  • Vega broadening the customer base: “Nearly 60% of Vega shipments were to new PacBio customers… ~70% of Vega customers are using the platform for non whole genome applications” .
  • International momentum: “APAC and EMEA regions combined up 45% YoY; EMEA up 35% and APAC up 53%” underpinned the beat and guidance stability .

What Went Wrong

  • Instrument demand remains pressured in the U.S.: “Funding constraints, particularly with academic and government customers, continued to pressure higher CapEx purchases” (Revio instrument revenue down 4% YoY) .
  • Ongoing macro and NIH uncertainty: Management expects Q3 revenue to be roughly flat and highlighted “extremely dynamic” trade policy and NIH funding risks .
  • Pull-through variability and prior backorders: Annualized Revio pull-through stepped down from Q1 (to ~$219K), with Spark rollout normalizing and prior reagent backorders addressed but still some residual non-material backorder .

Financial Results

Core financials vs prior periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$39.224 $37.153 $39.766
Non-GAAP Gross Margin %31% 40% 38%
GAAP Net Loss ($USD Millions)$(0.0) GAAP net income $3.571; Non-GAAP net loss $(55.343) $(426.075) $(41.930)
Non-GAAP EPS ($USD)$(0.20) $(0.15) $(0.13)

Segment and mix detail

MetricQ4 2024Q1 2025Q2 2025
Instrument Revenue ($USD Millions)$15.3 $11.0 $14.2
Consumables Revenue ($USD Millions)$18.8 $20.1 $18.9
Service & Other Revenue ($USD Millions)$5.1 $6.0 $6.7

KPIs and operational metrics

KPIQ4 2024Q1 2025Q2 2025
Revio Systems Shipped (Units)23 12 15
Vega Systems Shipped (Units)7 28 38
Annualized Revio Pull-through per System ($)—~$236,000 ~$219,000
Cash, Cash Equivalents & Investments ($USD Millions)$389.9 $343.1 $314.7
Regional Revenue ($USD Millions)—Americas $16.3; APAC $11.6; EMEA $9.3 Americas $17.7; APAC $12.6; EMEA $9.5

Estimates vs Actual (S&P Global)

MetricQ2 2025 EstimateQ2 2025 ActualSurprise
Revenue ($USD)$36.47M*$39.77M*+$3.30M; +9.0% (beat)*
Primary EPS ($USD)-$0.176*-$0.13*+$0.046 (less negative; beat)*
EBITDA ($USD)-$49.59M*-$41.15M*+$8.44M (less negative; beat)*

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)FY 2025$150M–$170M $155M–$165M Narrowed range; midpoint maintained
Non-GAAP Gross Margin %FY 202535%–40%; exit >40% 37%–40%; exit >40% Raised low end
Non-GAAP Operating Expenses ($USD)FY 2025$240M–$250M $235M–$240M Lowered
Interest & Other Income ($USD)FY 2025$5M–$7M $6M–$8M Raised
Weighted Avg Share CountFY 2025~299M ~298M Slightly lower
Ending Cash ($USD)FY 2025~$270M ~$270M Maintained
Revenue OutlookQ3 2025—Roughly flat QoQ and YoY Introduced quarterly color

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiatives (Spark chemistry; benchmarks)Q1: Spark adoption ~90% of Revio kits; yields +46% in early adopters; methylation detection roadmap via CUHK licensing Spark increases throughput up to 33%, lowers sample input 4x; Platinum Pedigree benchmark improved AI variant calling (34% fewer errors) Improving
Supply chain/tariffs/macroQ1: Lowered guidance floor due to China tariffs risk; dynamic trade policy; Q2 margin lower vs Q1 on mix Tariff impact lower than expected; guidance narrowed; Q3 flat; surcharge not implemented; monitoring Stabilizing with uncertainty
Product performance (Revio/Vega)Q1: 12 Revio, 28 Vega; Vega manufacturing ramp; strong yields exceeding specs 15 Revio, 38 Vega; ~60% of Vega shipments to new customers; ~70% non-WGS use cases; faster sales cycles Accelerating Vega; Revio steady
Regional trendsQ1: EMEA fastest-growing region outlook; Americas headwinds; APAC stocking in Japan APAC +53%, EMEA +35% YoY; Americas -15% YoY; Q3 sequential APAC decline expected Mixed: Intl strong; U.S. pressured
Regulatory/legalQ1 PR noted independent investigation; no financial impact expected No material updates on the Q2 call Neutral
R&D execution (multi-use SmartCell; high-throughput LR system)Q1: Multi-use SMRT Cells progress; paused high-throughput short-read; ultra-high throughput long-read plan Multi-use SmartCell highlighted as double win (lower customer cost, higher PacBio GM) with automated rollout focus Advancing
Clinical adoptionQ1: Clinical placements growing; PureTarget traction ~15% of consumables from clinical customers; strong use in LDT/hospital labs, rare disease Growing

Management Commentary

  • “PacBio returned to both sequential and year-over-year revenue growth… We’re especially encouraged by Revio’s momentum in clinical settings and Vega’s continued expansion” — Christian Henry, CEO .
  • “Non-GAAP gross margin was 38.3%, ahead of our expectations, driven by a favorable product mix… consumables” — CEO .
  • “We shipped 15 Revio systems and 38 Vega systems… cumulative totals of 297 Revio and 73 Vega systems” — CEO/CFO .
  • “We’re raising our 2025 non-GAAP gross margin guidance range… now expect 37–40% and continue to expect to exit the year above 40%” — CFO .
  • “Reusable SmartCell… lowers the cost per sample for customers [and] substantially increases our gross margin at the same time” — CEO .

Q&A Highlights

  • U.S. macro and NIH: Instruments most impacted; consumables utilization resilient; customers remain cautious pending clarity on funding .
  • Vega adoption and pricing: ~$169K list price; lower run cost than leading low-throughput short-read platforms; faster sales cycles; broad non-WGS use cases .
  • Pull-through dynamics: Q1 boosted by Japan FY-end stocking; Q2 normalized; Spark adoption >90% of runs; normalization expected .
  • Tariffs and pricing: No tariff surcharge implemented; minimal tariff impact so far; monitoring; guidance assumes status quo .
  • International projects: Population-scale and clinical programs (Estonia, Singapore, Thailand) underpin EMEA/APAC growth; potential 2026 upside .

Estimates Context

  • Q2 2025 results beat consensus on revenue, EPS, and EBITDA; revenue was $39.77M vs $36.47M*, EPS -$0.13 vs -$0.176*, EBITDA -$41.15M vs -$49.59M*. Values retrieved from S&P Global.
  • With guidance narrowing and margin targets raised, estimate revisions are likely to trend upward for gross margin and potentially for FY revenue confidence, while Q3 flat commentary may cap near-term top-line expectations .

Key Takeaways for Investors

  • The beat was driven by consumables mix and international strength; Vega’s momentum is a tangible driver of customer base expansion and near-term sales velocity .
  • Margin narrative improving: non-GAAP gross margin guidance raised to 37–40% and exit >40%; multi-use SmartCell could structurally lift margins over time .
  • U.S. academic funding and NIH uncertainty remain headwinds for large Revio placements; Q3 revenue outlook is flat, tempering near-term growth expectations .
  • Clinical traction is building (15% of consumables), providing a more durable, utilization-led revenue stream less sensitive to CapEx cycles .
  • Tariff headwinds are lower than expected this quarter; management has not implemented surcharges, but trade policy remains a risk to COGS and demand .
  • Vega’s lower cost and rapid-cycle sales expand addressable markets; ~60% shipments to new customers and ~70% non-WGS applications diversify use cases .
  • Medium-term thesis: platform innovation (Spark, methylation detection, multi-use SmartCell) plus international and clinical adoption supports margin expansion and the path to cash flow breakeven exiting 2027 .