Executive Summary

Q4 revenue declined 33% year over year to $39.2M on sharply lower instrument placements, but consumables were flat and service grew; GAAP EPS was $0.01 aided by a $154.4M gain on debt restructuring, while non-GAAP EPS was ($0.20) .
Gross margin improved versus last year (GAAP 26%, non-GAAP 31%), though management flagged a ~120 bps sequential non-GAAP GM headwind from temporary SMRT cell yield issues and select Revio ASP deals; those yield issues were largely resolved post-quarter, per management .
2025 guidance: revenue $155–$170M, non-GAAP GM 35–40% exiting >40%, non-GAAP OpEx $270–$280M, end-2025 cash ~$260M, and cash flow positive now targeted for exit-2027 (pushed out one year); Q1 2025 revenue expected below Q4 2024 .
Strategic positives include the early shipment of 7 Vega benchtop units and SPRQ chemistry enabling sub-$500 long-read human genomes; however, macro funding/NIH uncertainty, lower Revio shipments, and impairment charges ($90.1M) weighed on the print and outlook .

What Went Well and What Went Wrong

What Went Well
- SPRQ chemistry and product roadmap improved value: “With Spark, the Revio system could sequence up to 2,500 complete phased HiFi human genomes a year at a cost below $500 per genome… DNA input requirements… to just 500 nanograms” .
- Vega ahead of schedule with strong early demand funnel; 7 units shipped and priced around $160K per unit in Q4 .
- Non-GAAP OpEx down to $68.6M (vs. $88.4M LY) from restructuring, with headcount -28% y/y; management emphasized ongoing cost discipline .
What Went Wrong
- Instruments under pressure: instrument revenue fell to $15.3M (from $35.1M LY) on macro-driven slower CapEx cycles; Revio shipments were 23 in Q4 .
- Impairment charges (~$90.1M) and temporary yield issues impacted results (gross margin seq. headwind ~120 bps); management cited macro headwinds and revised cash flow outlook .
- Outlook risks: management called out NIH funding uncertainty (Americas -41% y/y) and potential export/tariff risks not contemplated in guidance .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	$58.4	$40.0	$39.2
GAAP Gross Margin %	16%	25%	26%
Non-GAAP Gross Margin %	19%	33%	31%
GAAP Operating Expenses ($M)	$97.1	$74.1	$161.9
Non-GAAP Operating Expenses ($M)	$88.4	$62.4	$68.6
GAAP Net Income (Loss) ($M)	($82.0)	($60.7)	$3.6
GAAP Basic EPS ($)	($0.31)	($0.22)	$0.01
Non-GAAP Net Loss ($M)	($72.5)	($46.0)	($55.3)
Non-GAAP Basic EPS ($)	($0.27)	($0.17)	($0.20)

Revenue breakdown

Revenue Detail ($M)	Q4 2023	Q3 2024	Q4 2024
Instrument	$35.1	$16.8	$15.3
Consumables	$18.9	$18.5	$18.8
Service & Other	$4.4	$4.7	$5.1

KPIs (selected, Q4 2024 unless noted)

KPI	Value
Revio systems shipped (Q4)	23
Vega systems shipped (Q4)	7
Annualized Revio pull-through (Q4)	~$240,000
Cumulative Revio shipments (end-Q4)	270
GAAP gross margin	26%
Non-GAAP gross margin	31%
Cash, cash equivalents & investments (12/31/24)	$389.9M
Gain on debt restructuring (Q4)	$154.4M
Impairment charges (Q4)	~$90.1M

Estimate comparison

S&P Global consensus estimates could not be retrieved at this time due to access limits; as a result, we are not presenting vs-consensus comparisons in this recap. We will update when available (S&P Global).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	N/A	$155–$170M	New
Non-GAAP Gross Margin %	FY 2025	N/A	35–40%; exit >40%	New
Non-GAAP Operating Expenses	FY 2025	N/A	$270–$280M	New
Interest & Other Income	FY 2025	N/A	$5–$7M	New
Weighted Avg Shares	FY 2025	N/A	~299M	New
Year-end Cash	FY 2025	N/A	~$260M	New
Cash Burn	FY 2025	N/A	~$130M	New
Cash Flow Positive	Target	Exit-2026	Exit-2027	Lowered (timing pushed out)
Q1 Revenue cadence	Q1 2025	N/A	Below Q4 2024	New
Revio pull-through	FY 2025	N/A	Low-to-mid $200Ks	New
Revio shipments	FY 2025	N/A	Modestly down y/y	New

Notes: Management emphasized macro/NIH uncertainty embedded in guidance; APAC funding dynamics and potential tariffs/export risks are not assumed; EMEA expected to be fastest-growing region in 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Product innovation (SPRQ; cost/throughput)	Announced SPRQ; <$500 genome trajectory; lowered DNA input; SMRT Link Cloud planned	SPRQ shipping; <$500 genome and 2,500 genomes/year reiterated; roadmap includes higher-density SMRT cells, 300mm wafers, faster chemistries	Improving
Vega benchtop platform	Unveiled; set to ship early 2025; price $169K	Shipped 7 units; strong funnel; scale from pilot to full production in H2’25	Improving
Gross margin and manufacturing	Q2/Q3 focus on insourcing and BOM reductions; non-GAAP GM mid-30s	Non-GAAP GM 31% with temporary yield/scrap headwind; issues largely resolved; exit ’25 >40% targeted	Improving, with transient hiccup
Macro/NIH funding	Capital environment tough; elongated cycles	Explicit NIH freeze/overhead cap uncertainty baked in; Q1 lower vs Q4	Worsening near-term
Regional dynamics	EMEA consumables strong; APAC weak; sequential China improvement in Q3	Americas -41% y/y; EMEA record consumables (Estonia, Radboud, Dubai); APAC -33%	Mixed: EMEA strength offsets U.S./APAC headwinds
Clinical adoption	Growing LDT/diagnostics adoption; Quest/Myriad examples	~15% of 2024 revenue from LDTs/children’s hospitals; potential to double mix over 3 years	Increasing

Management Commentary

“2024 was a challenging yet transformative year… Looking ahead to 2025… I believe PacBio can return to growth and expand market share as the Vega benchtop platform and SPRQ chemistry enable more researchers, clinical labs, and smaller institutions to harness the power of HiFi sequencing.” — Christian Henry, CEO .
“We expect the 2025 non-GAAP gross margin to be between 35% and 40%… and we expect to exit the year above 40%.” .
“We now anticipate turning cash flow positive exiting 2027… we remain focused on lowering our cash burn and believe our approximately $390 million in cash and investments… will bridge us to becoming cash flow positive.” .
On Vega demand and pricing: “Seven units in the $160,000 range… we haven’t done any discounting on the Vega system.” .
On macro and NIH: “We fully contemplated some pretty significant headwinds… we expect revenues to be down in Q1 versus Q4… and we’ve lowered kind of the pull-through expectations.” .

Q&A Highlights

NIH/macro risk embedded: Management reviewed each Americas opportunity and lowered pull-through expectations (low-to-mid $200Ks) to reflect potential freezes/pauses; Q1 revenue expected below Q4 .
Vega scaling: Backlog exists; H1’25 on pilot line, full production in H2’25; likely manufacturing-limited near-term .
Gross margin trajectory: Temporary yield issues weighed on Q4, but insourcing and cost actions support exit >40% in 2025; higher revenue mix lifts GM via consumables .
Financing models: Majority of sales remain CapEx; company offers reagent rental and leasing to reduce friction in a tough capital environment .
China and regulatory/export risk: No long-read alternatives in China; customer demand intact; export/tariff changes would be a risk not in guidance .
Cash flow timing: Breakeven pushed to exit-2027, reflecting 2024 shortfall and a more conservative 2025 macro setup; pathway relies on GM expansion, disciplined OpEx, and consumable mix .

Estimates Context

S&P Global consensus (revenue and EPS) for Q4 2024 could not be retrieved due to access limits at the time of this analysis; therefore, beat/miss versus Street is not assessed here. We will update the recap with consensus comparisons when S&P Global data becomes available (S&P Global).

Key Takeaways for Investors

Mix resilience amid CapEx pressure: Instruments remain weak, but consumables held flat y/y and service grew; EMEA consumables and clinical LDT exposure (~15% of 2024 sales) help buffer macro headwinds .
2025 hinges on execution and macro: Guidance embeds NIH/CapEx caution and APAC funding/tariff unknowns; watch Q1 seasonal dip and Vega scaling cadence into H2 .
Gross margin is the near-term lever: Structural COGS reductions, insourcing, and product mix should drive GM to >40% exiting 2025—key to narrowing losses and the path to cash flow breakeven .
Platform breadth expanding TAM: SPRQ (<$500 genome, 75% lower DNA input) and Vega (benchtop at ~$160K/unit) should broaden adoption, especially among smaller labs and clinical applications .
Balance sheet improved, optics mixed: Note exchange reduced debt by $259M and produced a $154.4M GAAP gain; cash ended at ~$390M, but breakeven pushed to exit-2027, implying another year of prudent cash management .
Regional divergence persists: Expect EMEA to outgrow Americas/APAC in 2025 as population programs scale; monitoring NIH developments is crucial for U.S. demand .
Upside catalysts: New population-genetics awards, faster-than-expected clinical scaling (carrier screening, rare disease), and a quicker macro/NIH resolution could lift Revio demand and consumables; Vega manufacturing ramp execution is also a swing factor .

Additional detail and source materials:

Q4 2024 press release and financial statements .
8-K (Item 2.02) with Exhibit 99.1 .
Q4 2024 earnings call transcript (prepared remarks and Q&A) .
Prior quarters for trend analysis: Q3 2024 PR and call ; Q2 2024 PR and call .
SPRQ chemistry (Oct 29, 2024) and Vega launch (Nov 7, 2024) press releases .
Vega early access shipments to Berry Genomics (Jan 8, 2025) .

PACIFIC BIOSCIENCES OF CALIFORNIA, INC. (PACB)·Q4 2024 Earnings Summary