Pacific Biosciences ((PACB)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Pacific Biosciences’ latest earnings call painted a cautiously optimistic picture, balancing clear progress in its core consumables and clinical strategy with persistent revenue and margin headwinds. Management highlighted record consumable sales, growing clinical adoption, and strategic moves in long-read sequencing, yet also acknowledged flat top-line performance, weaker instrument demand, and pressure on profitability.
Record Consumables Mark Third Straight High
Consumable revenue climbed to a record $21.8 million in the first quarter of 2026, up 9% from $20.1 million a year earlier and marking a third consecutive record. This steady growth underscored the shift toward a more recurring, consumables-driven model even as overall revenue held flat.
Clinical Shipments More Than Double
Clinically focused consumable shipments more than doubled year over year and now account for a mid-teens share of total consumable volume. That mix is roughly twice last year’s level, signaling accelerating clinical adoption that could provide a more durable demand base over time.
Revio Pull-Through Holds in Target Range
Annualized Revio pull-through per system reached about $229,000, squarely within the company’s $225,000 to $250,000 target band. Revio shipments rose to 15 units in the quarter, up from 12 a year ago, bringing cumulative placements to 346 systems in the field.
Vega Expands Installed Base with New Customers
The company shipped 27 Vega systems in the quarter versus 28 in the prior-year period, maintaining a stable cadence of placements. Notably, more than 85% of Vega units went to new customers, broadening the reach of its HiFi long-read technology.
EMEA Delivers Double-Digit Growth
EMEA revenue rose 17% year over year to $10.8 million, driven by strong consumable demand and expanding clinical accounts. Management noted that many customers in the region are moving from validation into production, supporting more consistent usage.
Portfolio Streamlined and Balance Sheet Bolstered
Pacific Biosciences completed the sale of its high-throughput short-read assets to Illumina, generating about $48.1 million in net cash proceeds. The transaction, together with the resolution of related litigation, allows the company to sharpen its focus on long-read sequencing while reinforcing its cash position.
AI Collaboration Signals Ambition in Large-Scale Biology
The company announced a major collaboration with Basecamp Research to deeply sequence roughly 100,000 metagenomic samples as part of the Trillion Gene Atlas project. Management billed this as the largest HiFi project in its history and a potential showcase for using PacBio data to train large-scale AI models in biology.
SPRQ-Nx Poised to Lift Yields and Economics
Beta customers for the SPRQ-Nx chemistry reported double-digit yield gains and the ability to reuse SMRT Cells multiple times, effectively tripling usage. A full commercial launch is expected later this month, with deployment on Vega planned for later in the summer, and is anticipated to improve throughput and cost per run.
Operating Expenses Trend Lower
Non-GAAP operating expenses fell 19% year over year to $49.9 million from $61.7 million, reflecting disciplined cost control. Noncash share-based compensation was also reduced significantly, dropping to $3.8 million from $8.0 million in the prior-year quarter.
Non-GAAP Net Loss Narrows
The company’s non-GAAP net loss improved to $35.9 million, or $0.12 per share, compared with $44.4 million, or $0.15 per share, a year earlier. That progress suggests the path toward smaller losses is intact even amid flat revenue and gross margin pressure.
Revenue Flat and Guidance Trimmed
Total revenue held steady at $37.2 million in the first quarter of 2026, unchanged from the prior year, highlighting the tension between consumable growth and weaker instruments. Management modestly reduced the high end of its full-year revenue outlook by $5 million to a range of $165 million to $175 million.
Instrument Revenue Under Pressure
Instrument revenue fell 12% year over year to $9.7 million from $11.0 million, reflecting softer demand and pricing. The decline was driven by lower Revio average selling prices, promotional discounting on Vega systems, and constrained demand in certain geographies.
Gross Margin Feels the Squeeze
Non-GAAP gross profit slipped to $13.8 million with a 37% margin, down from $15.0 million and a 40% margin in the year-ago quarter. Rising compute and memory costs, promotional pricing on Vega, and one-time inventory and warranty adjustments all combined to compress margins.
Compute Costs Seen as Ongoing Headwind
Management cautioned that higher memory and compute expenses will likely keep gross margin gains at the lower end of its previously stated 100 to 400 basis point improvement range for 2026. These costs are tied to the increasingly data-intensive nature of long-read sequencing workflows.
Asia Pacific Dragged by China and Funding Weakness
Asia Pacific revenue declined 16% year over year to $9.7 million, as several key customers in China delayed purchases pending the SPRQ-Nx launch. Weaker academic funding in the region further weighed on orders, reinforcing management’s cautious stance on near-term demand.
Service and Other Revenue Softens
Service and other revenue slipped about 7% to $5.6 million from $6.0 million in the prior-year period. The decline added to the overall flat revenue profile, underscoring that growth is currently concentrated in consumables rather than services or new systems.
Middle East Logistics Disrupt Execution
Some products could not be delivered to the Middle East due to ongoing regional conflict, impacting instrument revenue and execution in that territory. Management framed these issues as external and episodic but acknowledged the near-term drag on growth.
Vega Pricing Promotions Skew Metrics
A temporary promotion on Vega systems during the quarter reduced average selling prices and made Vega margins and unit revenue more volatile. The company expects Vega pricing to normalize in the second quarter but warned that demand remains sensitive to academic and government funding, especially in the Americas.
Cash Levels Stable Despite Heavy Use
Unrestricted cash, cash equivalents and investments totaled around $276 million at quarter end, nearly flat versus $280 million at the end of 2025. That stability came even after the $48.1 million of Illumina-related proceeds, highlighting the ongoing cash consumption required to fund operations and growth initiatives.
Guidance Points to Consumables-Led Growth
PacBio now guides 2026 revenue to $165 million to $175 million and expects consumables to be the primary growth engine, with non-GAAP operating expenses forecast at $220 million to $225 million, lower than 2025 levels. The outlook assumes no major rebound in academic funding, SPRQ-Nx commercialization later this month to lift Revio and consumables, normalization of Vega pricing in the second quarter, and gradual gross margin improvement tempered by higher compute costs.
PacBio’s earnings call leaves investors weighing strong momentum in consumables, clinical uptake, and strategic partnerships against flat revenue, shrinking instrument sales, and persistent margin pressure. With cost controls tightening and new technologies like SPRQ-Nx and the Basecamp collaboration on deck, the story hinges on whether recurring consumables can offset macro and pricing headwinds over the coming quarters.