Pacific Biosciences of California, Inc. Q1 FY2026 earnings call

• Record consumable revenue with over 100% y-o-y growth in clinical accounts. • Instrument revenue impacted by academic funding pressure and Vega promotions. • Progress in strategic objectives like collaboration with Basecamp Research and clinical opportunities in rare disease. • EMEA showing 17% y-o-y growth with clinical customers moving to production scale. • Closure of sale of short-read assets to Illumina and resolution of litigation. • SPARC Next beta program successful with expansion, set to launch later this month, and Spark Next chemistry to launch on Vega later in summer.

Total revenue was $37.2 million, roughly flat compared to Q1 2025. Instrument revenue was $9.7 million, a 12% decrease, with Revio shipments at 15 and Vega at 27. Consumable revenue reached a record $21.8 million, up 9%, with clinical shipments growing over 100% y-o-y. Service and other revenue declined 7% to $5.6 million. Americas revenue increased 2% to $16.7 million. Asia Pacific revenue decreased 16% to $9.7 million. EMEA revenue increased 17% to $10.8 million. Non-GAAP gross profit was $13.8 million, 37% margin, down from Q1 2025's $15 million and 40% margin. Non-GAAP operating expenses were $49.9 million, a 19% decrease. Non-GAAP net loss was $35.9 million.

• Lowered high end of 2026 revenue outlook by $5 million, expecting $165 to $175 million. • Expect non-GAAP gross margin improvement toward lower end of 100-400 basis points range due to compute costs. • Non-GAAP operating expenses expected to be $220 to $225 million, down from 2025 levels.

• Pressure on academic funding, particularly in the Americas affecting instrument revenue. • Uncertainty around inventory adjustments and warranty-related charges impacting gross margin. • Fluctuations in Vega demand due to funding environment and promotional program effects. • Impact of rising compute costs on gross margin in the near term.

Q: What does your guide for instruments imply and what sort of visibility do you have going forward?

A: Guide for instruments involves balancing Revio and Vega, with Revio platform improving and Vega sensitive to academic funding. Have funnels for both platforms.

Q: Can you discuss clinical traction, including U.S. versus outside U.S.?

A: Strong traction in EMEA with Vega for rare disease, U.S. clinical accounts ramping in full commercial production.

Q: On input costs, what is your exposure to memory pricing and impact on margin?

A: Instruments are heavy on compute, input costs impact gross margin, expecting impact in 2026 but R&D solutions to help long term.

Q: On discounting, where did ASPs for Revios and Vegas land in the quarter and plans for rest of year?

A: Vega had one-time promotion, Revio ASPs consistent, Vega expected to normalize in Q2.

Q: Any plans to launch additional peer target panels and clinical revenue percentage?

A: Developing variations of peer target panels, expect clinical to make up substantial portion of consumable revenue.

Q: On ultra-high throughput sequencer and product portfolio?

A: Believe three platforms will find place, Revio improved, ultra-high throughput for large scale, Vega to improve with Spark Next launch.

Q: On EMEA growth and clinical applications driving it?

A: EMEA growth from rare disease testing, single-payer systems enabling long-read sequencing.

Q: Visibility into consumable revenue and Vega promotional program feedback?

A: Consumable guide mostly from existing installed base, Vega promotional program successful in APAC, Vega demand volatile.