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PACIFIC BIOSCIENCES OF CALIFORNIA, INC. (PACB)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue of $38.4M missed S&P Global consensus ($40.2M*) as instrument sales under-ran plan, but non-GAAP EPS of -$0.12 beat (-$0.15*), driven by record consumables and mix; non-GAAP gross margin rose to 42% (highest since 2022). Management expects ~10% sequential revenue growth in Q4 and narrowed FY25 revenue guidance to $155–$160M (low end of prior range).
  • Operational positives: record consumables ($21.3M), Revio pull-through ~$236k/system, and continued OpEx discipline (non-GAAP OpEx $53.9M).
  • Strategic milestones: introduced SPRQ‑Nx chemistry (multi‑use SMRT cell) targeting long‑read genomes for <$300 at scale; first regulatory clearance for a clinical‑grade long‑read sequencer in China via Berry Genomics (Sequel II CNDx).
  • Watch items: weaker instrument ASPs and EMEA Vega procurement delays pressured revenue; academic funding in the U.S. remains challenged; APAC down YoY.

What Went Well and What Went Wrong

  • What Went Well

    • Record consumables revenue ($21.3M, +15% YoY) with Revio annualized pull‑through ~$236k/system; CEO: “another all‑time record for consumable revenue, expanded gross margins and continued to reduce our operating expenses.”
    • Gross margin inflected: non‑GAAP GM 42% (benefited from mix to consumables, manufacturing cost reductions, SmartCell yield gains). CFO: “consumables … represented ~55% of total revenue.”
    • Technology and clinical milestones: SPRQ‑Nx aims to cut costs up to 40% and enable <$300 per genome at scale; China Class III registration for Sequel II CNDx via Berry Genomics opens clinical channel.

  • What Went Wrong

    • Revenue “slightly below expectations” on fewer Vega shipments in Europe and lower Revio ASPs; 13 Revio and 32 Vega systems shipped (one Revio slipped to Q4 due to installation failure).
    • U.S. academic funding headwinds persisted (elongated procurement, muted fiscal year‑end spend); APAC down 11% YoY and 24% QoQ.
    • EMEA Vega demand strong but procurement delays pushed several units beyond quarter end; Revio ASPs below list due to strategic placements.

Financial Results

Headline metrics vs prior periods and estimates

MetricQ3 2024Q2 2025Q3 2025 (Actual)Q3 2025 (Consensus*)
Revenue ($M)$40.0 $39.8 $38.4 $40.25*
EPS (GAAP diluted)-$0.22 -$0.14 -$0.13 n/a
EPS (Non‑GAAP/Primary)-$0.17 -$0.13 -$0.12 -$0.152*
Gross Margin % (Non‑GAAP)33% 38% 42% n/a

Revenue composition and trends

Revenue Component ($M)Q3 2024Q1 2025Q2 2025Q3 2025
Instrument revenue$16.8 $11.0 $14.2 $11.3
Consumable revenue$18.5 $20.1 $18.9 $21.3
Service & other revenue$4.7 $6.0 $6.7 $5.8

Selected KPIs and operating metrics

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Revio systems shipped (units)22 12 15 13
Vega systems shipped (units)— 28 38 32
Annualized Revio pull‑through/system~$255k ~$236k ~$219k ~$236k
Cash & investments ($M)$471.1 $343.1 $314.7 $298.7
Operating expenses (Non‑GAAP, $M)$62.4 $61.7 $58.1 $53.9
Gross margin % (Non‑GAAP)33% 40% 38% 42%

Non‑GAAP adjustments and effects

  • Non‑GAAP results exclude amortization of acquired intangibles, restructuring costs (including inventory and purchase commitments), and fair value changes in contingent consideration; reconciliations provided in 8‑K exhibit.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$155M–$165M (maintained midpoint; narrowed) $155M–$160M (narrowed to low end) Narrowed lower end
Revenue growthQ4 2025n/a~10% sequential increase expected New (positive)
Gross margin (Non‑GAAP)FY 202537%–40%; exit >40% Exit >40% reiterated Maintained exit target
Operating expenses (Non‑GAAP)FY 2025$235M–$240M No update provided in Q3Maintained (implied)
Ending cash & investmentsFY 2025~+$270M >$270M Raised slightly
Cash burnFY 2025≈$115M (ex‑$5M license) ≈$115M reiterated Maintained
Interest & other incomeFY 2025$6M–$8M No update provided in Q3Maintained (implied)
Weighted avg sharesFY 2025~298M No update provided in Q3Maintained (implied)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q‑2 and Q‑1)Current Period (Q3 2025)Trend
Consumables strength & pull‑throughQ1: record consumables; non‑GAAP GM 40% . Q2: $18.9M, pull‑through ~$219k .Record $21.3M; pull‑through ~$236k near high end .Improving
Instruments: Revio & VegaQ1: Revio 12, Vega 28 shipped . Q2: Revio 15, Vega 38; 60% of Vega to new customers .Revio 13 (lower ASPs), Vega 32; EMEA procurement delayed several units; some POs received post‑quarter .Mixed near‑term; Q4 rebound expected
Academic funding/NIHCautious; restructuring to offset macro . Q2: maintained uncertainty, guidance embeds headwinds .Americas remain challenged; U.S. gov shutdown had no material impact yet but could if prolonged .Persistent headwind
TariffsQ2: tariff risk embedded conservatively .Minimal impact in Q3; some Vega tariffs not material; monitoring .Easing/monitoring
Clinical adoption & regulatoryQ1: focus on long‑read; clinical partnerships/licensing . Q2: 1/3 of Revio placements to LDT/hospital labs .China NMPA Class III approval (Sequel II CNDx via Berry); PureTarget expansion; clinical use cases growing .Strengthening
SPRQ‑Nx (multi‑use SMRT)Q2: previewed multi‑use SmartCell initiative .Unveiled; beta starting Nov 2025; targets <$300 per genome at scale; improves GM .Accelerating
Cash burn pathQ1: restructuring to reduce OpEx; breakeven target exit 2027 . Q2: improved burn; year‑end cash ~$270M .Q3 burn ~$16M; full‑year burn ≈$115M; reiterated breakeven exiting 2027 .Improving
Regional trendsQ2: EMEA +35% YoY; APAC +53% YoY .EMEA +18% YoY; APAC -11% YoY (seq -24%) .EMEA strong; APAC mixed

Management Commentary

  • “While revenue came in slightly below our expectations this quarter, we achieved another all‑time record for consumable revenue, expanded gross margins and continued to reduce our operating expenses.” — Christian Henry, CEO
  • “We expect to ship more Revio and more Vega instruments in Q4 than we did in any other quarter this year… we expect total fourth quarter to grow… with approximately 10% sequential growth.”
  • “We believe that SPARQ‑Nx will help dramatically lower the cost of the human genome sequencing to less than $300 per genome at scale… [and] improve our gross margins simultaneously.”
  • “This marks the first known regulatory approval of a clinical grade long read sequencer anywhere in the world” (China Class III for Sequel II CNDx via Berry Genomics).

Q&A Highlights

  • Instruments/ASPs: Revio ASPs were lower due to strategic placements; expected to recover in Q4; ~half a dozen Vega units in EMEA delayed in procurement but many converted to POs post‑quarter; one high‑ASP Revio slipped to Q4 after installation issue.
  • Gross margin drivers: Outperformance driven by consumables mix, improved SmartCell yields, lower per‑unit costs on Vega and Revio; limited tariff impact in Q3.
  • Spark/SPRQ‑Nx rollout: Multi‑use SmartCell shows consistent throughput/quality across uses with minimal carryover; starting with a small paid beta (>100 customers expressed interest), expanding into 2026 early access.
  • Funding outlook: U.S. academic environment likely challenged into 2026; pivoting go‑to‑market toward clinical and commercial accounts.
  • Macro/Shutdown: U.S. government shutdown had no material Q3 impact; longer duration could affect 1H26 timing; Q4 guide does not assume upside from a catch‑up.

Estimates Context

PACB vs S&P Global consensus (revenue and EPS)

MetricQ1 2025 (Consensus*)Q1 2025 (Actual)Q2 2025 (Consensus*)Q2 2025 (Actual)Q3 2025 (Consensus*)Q3 2025 (Actual)
Revenue ($M)$36.90*$37.15 $36.47*$39.77 $40.25*$38.44
EPS (Primary/Non‑GAAP)-$0.2007*-$0.15 -$0.176*-$0.13 -$0.152*-$0.12

Values marked with * retrieved from S&P Global.

Interpretation:

  • Q3: revenue miss vs consensus by ~$1.8M; EPS beat by ~$0.03. Consumables strength and margin expansion offset instrument softness.
  • Q2: revenue/EPS both beat; Q1: largely in‑line on revenue with EPS beat.

Key Takeaways for Investors

  • Mix and margin inflection: Record consumables and 42% non‑GAAP GM show the model’s operating leverage as instrument cycles remain choppy; Q4 guide implies continued momentum.
  • Near‑term catalyst density: Q4 sequential growth (~10%) plus SPRQ‑Nx beta, with <$300 genome target and multi‑use SMRT cell, can expand TAM and improve unit economics.
  • Clinical validation and regulatory unlock: China Class III clearance via Berry Genomics enables clinical HiFi use cases at scale, with follow‑on assay expansion; supports durable consumables pull‑through.
  • Instruments to recover but funding a headwind: EMEA demand remains solid; APAC mixed; U.S. academic spend remains constrained—company is leaning into clinical/commercial channels to drive placements.
  • Cash discipline extends runway: Ending cash expected >$270M; FY25 cash burn ≈$115M; path to cash flow breakeven exiting 2027 reiterated.
  • Estimate revisions: Expect modest revenue trims for Q4/FY on instrument cadence, but EPS trajectory supported by mix and cost actions; watch for upside from late‑quarter procurement releases and population‑scale wins.

Appendix: Additional Details

Selected P&L (GAAP) snapshots (for reference)

Metric ($M)Q3 2025Q2 2025Q3 2024
Revenue$38.441 $39.766 $39.967
Gross Profit$15.901 $14.684 $10.004
Total OpEx$54.778 $59.537 $74.081
Net Loss-$38.000 -$41.930 -$60.725

Segment/units backdrop for Q3 2025

  • Revio shipments 13; Vega 32; consumables $21.3M (record); instrument revenue $11.3M; service/other $5.8M.
  • EMEA +18% YoY; Americas -10% YoY; APAC -11% YoY and -24% QoQ; Revio ASPs below list due to strategic placements; Vega ASPs flat seq.

Non‑GAAP definitions and reconciliation are provided in the company’s 8‑K exhibit.