PacBio announces preliminary Q1 2024 revenue

PacBio announced preliminary, unaudited revenue for the quarter ended March 31, 2024.

Preliminary first quarter results

• Preliminary revenue of $38.8 million, roughly flat compared with $38.9 million in the prior-year period.
• Instrument revenue of $19.0 million compared with $20.7 million in the prior-year period.
• Consumables revenue of $16.0 million compared with $14.0 million in the prior-year period. Expect Revio consumables in the first quarter of 2024 to be approximately $11.0 million.
• Service and other revenue of $3.8 million compared with $4.2 million in the prior-year period.
• Instrument revenue included 28 RevioTM sequencing systems in the first quarter of 2024, bringing the ending installed base to 201 systems as of March 31, 2024. Of the 28 Revio systems shipped, 16 were shipped to new customers. Onso shipments increased sequentially as PacBio continued to ramp up its manufacturing capacity, achieving steady-state production levels at the end of the quarter.
• Total preliminary cash, cash equivalents, and investments balance as of March 31, 2024 of approximately $562 million.

Preliminary revenue for the first quarter was below the company’s expectations due to an increasing number of customers delaying instrument purchases and softness in consumable shipments.

All regions underperformed, with 13 Revio systems falling out of the forecast in the last couple of weeks in the first quarter, which the company believes primarily resulted from elongated customer purchasing cycles. The median sales cycle for Revio instrument purchases increased more than expected in the first quarter of 2024. PacBio believes that these instruments continue to be strong sales opportunities that are likely to close in 2024. PacBio believes additional reasons for the shortfall include:

• The uncertainty surrounding the funding for new capital equipment, particularly in the U.S. and China;
• Procurement delays;
• Small-to-mid-size existing customers yet to increase their sample volumes to drive an upgrade to Revio; and,
• An increasing proportion of the sales pipeline was comprised of new customers in the first quarter of 2024, which have shown they have longer sales cycles compared to existing PacBio customers.
• Consumable revenue was also below expectations, which the company believes was primarily attributed to: `
• Slower-than-expected ramp-up in sequencing by our small- to mid-sized customers, many of whom are new to PacBio. The time for new Revio customers and new projects to reach full capacity has been slower than previously anticipated;
• Sample delays impacting sequencing volume in the quarter at certain large customers; and,
• Some service providers in China operating at lower utilization as a result of the difficult funding environment.

Commentary by Christian Henry, President and CEO of PacBio:
“Following the successful launch of the Revio system and a record 2023, we entered the year with optimism regarding our growth prospects. As we reached the last couple of weeks of the first quarter, however, we saw an increasing number of customers delay instrument purchases and we experienced some unexpected softness in consumable shipments. As a result, the first quarter came in below our original expectations. We expect these factors to have an impact on our 2024 performance, and we expect to provide further details on our full year outlook on our earnings call scheduled for May 9, 2024.”

“Looking ahead, we are focused on four strategic priorities. First, improving commercial execution to drive adoption of both the Revio and Onso platforms; second, continuing the development of our benchtop long read and high throughput short-read platforms; third, implementing projects to improve our gross margin and drive manufacturing efficiencies; and finally, reducing annualized run-rate operating expenses on a non-GAAP basis by $50 million to $75 million by the end of 2024 in relation to our prior guidance of 5% operating expense growth. ”

“Despite these near-term headwinds, we remain highly encouraged by PacBio’s long-term growth potential. We are continuing to see new customers adopt Revio as evidenced by the fact that nearly 60% of our Revio placements in the quarter were to new customers. We are also starting to see significant traction with large-scale projects, such as the Estonia National Biobank project announced last month, the first Revio in Latin America to be used for a 1,000-sample whole genome project, and pediatric genome initiatives at hospitals in Canada and Korea. Additionally, we expect consumables to return to sequential growth going forward this year as we continue to grow the Revio installed base and see encouraging trends that point toward increased sequencing on the Revio system. It should be noted that March Revio utilization was at an all-time high – including some of our top customers exceeding our expectations. We have expanded the capabilities of the Revio platform through the roll-out of v13 software upgrade which has enabled our customers with more functionality and better performance. We’ve also recently launched new reagent kits that improve our customer workflows and launched our new Kinnex kits to continue to drive new customer adoption.”

“I am confident in our ability to create value for all our stockholders and stakeholders. PacBio has some of the world’s most advanced sequencing technology and our customers continue to uncover insights into the genome unimaginable with other technologies.”

Updated guidance and financial outlook
Revenue in the first quarter was significantly lower than expected, and as a result, PacBio now expects 2024 revenue to be in the range of $170 million to $200 million. The company believes that second quarter revenue will improve over the first quarter and that the second half of the year will improve sequentially as consumables return to sequential growth and the company closes some of the deals that were delayed in the first quarter. At the midpoint of $185 million, the company believes that total Revio shipments for 2024 will be around 120 systems. At the midpoint of the revised guidance, the company expects that consumable revenue will be around $80 million and consumable pull-through on the Revio system will be around $290,000 per system.

Given the company’s lowered outlook for 2024, PacBio believes it is unlikely to achieve its long-term revenue guidance of at least $500 million in 2026 and is reevaluating the timing of achieving it. The company expects to provide more details on its financial performance and outlook on its earnings call scheduled on May 9, 2024.

With the reduced revenue forecast and the planned cost reduction initiatives, PacBio currently expects to end 2024 with cash, cash equivalents, and investments balance in the range of $435 million to $450 million.

The preliminary unaudited financial information set forth above is subject to revision and is anticipated to be finalized in May 2024. PacBio’s financial results could differ materially from the preliminary estimates above, which are not a comprehensive statement of PacBio’s financial results and are not necessarily indicative of the results to be expected as of or for the fiscal period ended March 31, 2024, or any future period. Accordingly, you should not place undue reliance on these preliminary estimates.
MB Bureau