Earnings call transcript Q4 2022

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Operator

Hello, and welcome to the PacBio Fourth Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Todd Friedman, Director of Investor Relations. ahead. go please Todd,

Todd Friedman

call, welcome or today, fourth Commission release we we available of Securities on financial and on the which conference Investor on furnished the outlining XXXX at on call. website results section today’s discussing be Earlier issued website, will Exchange copy to afternoon, www.sec.gov. of quarter is www.pacb.com, PacBio’s our earnings the a as Good and a X-K press Form

Executive are Officer; Officer. today Henry, Christian Chief and Chief Susan me Financial and With President Kim,

will Before intentions, coverage, remind benefits we or regarding begin, or systems. you advantages, or including benefits that I Revio Revio using including plans, making of our of, quality the Onso would system and guidance, like in on to accuracy, commercialization today’s performance expected their forward-looking regarding call, be estimates, expectations products statements including statements, Onso timeframe, our or PacBio others, predictions, technology, progress, we uses, future availability,

place undue differ materially statements uncertainties discussed, our commercializing to results should new assumptions, developing because actual in that those could products. You projected and inherent to subject reliance including from or risks, not and are cause they forward-looking those on

to the We recent actual and results documents we refer uncertainties SEC, or cause could required better differ. these and forms update that by release that revise except you as understand recent to including disclaim to XX-K file to most press with our forward-looking our obligation any law. the XX-Q and statements the We risks

used information should measures, supplement benchmark not competitors. prepared Management strategic compare believes the of and under to plans and measures, comprehensive reported a our our present and financial useful combined provide US financial company's on against performance as results relative performance forecasts GAAP US is financial to understanding basis. with we to accounting only non-GAAP non-GAAP that of GAAP. externally Non-GAAP set also call, information a will be certain the rules and operating During under information

results within US presented Reconciliations between release. in non-GAAP GAAP tables and historical are our earnings

unable operating effort reconcile our non-GAAP items are For non-GAAP indicated future the without margin unreasonable we release. and gross periods earnings to due to in the expenses

note on for call. section are website made In may to call. replay Investor today's on Investors being statements of be replay shortly change after audio materially completion please that use recorded live call the available call the after will forward-looking of our and cautioned addition, the is the today’s differ or electing the that audio

to that that accommodate be the question-and-answer after limit please hosting themselves question, we analysts We Finally, a one we session so ask queue. will prepared could our remarks. in everybody

now And to call Christian. with that, I’ll over turn the

Christian Henry

to joining and for Thank Todd. welcome us highlights and business our Good you, call. today. quarter results afternoon Thanks fourth

on update the off some exciting we've an revenue. We Susan results kick months past few have share a exciting on up guidance. quick our and with and segmentation. I'll fourth news a things wrap XXXX, in-depth more our to developments and then But seen the our recap I'll at look with performance update our then will market quarter in provide of lot on financial an a delve into first, in and

point, next Our constraints. Park weeks commercial which manufacturing few this facility. we any a dozens broad we availability floor see instruments most sequencer month. from the scheduled don't of chain are we in on long-read And transformative serious away is supply Menlo at today, Revio, have for just of Currently, our

prior end customers expect we'll As to Revio at ship quarter. to a the XX result, of systems the I that least

to end on our planned thousands of XXXX Ravio as production tens our good believe take the the customers of platform continue by will is be manufacturing scale through This I our for enables thousands the the samples. to up will QX. we news second We of quarter and rate projects at in

With even fraction clinical or in sequencing and platform. taken with researchers. this Revio time the and would in years long-read What scale, of a believe the with have scientists completed now be decades a be for Revio cost will changer the game we past can

exomes, has For genome. community years, the relied on the short-read scientific genomes insights valuable yielding and into human

determined However, genome is despite our cause being certain we in genomes still now role cancers. as sequenced, non-coding Further, plus our limited. genes regions quite by millions and understanding driving XX,XXX short-read know unactionable phenotype much mutations not of that and disease their is today, the of remains of can solely genes, in

recognize both Our understanding disorders also earliest repeat of genetic length stages. by of that caused impact accuracy the of And importance its understanding tandem and expansions. methylation sequence disease we in the is on in

be It’s the must able with interrogate human accuracy. to understand clear better complexity full that researchers its genome high to

We most assay. single that and Revio sequencing with platform expect the will provide with genome complete researchers the of view accurate in a the

epigenetic will and profiles, to researchers at genome all variants, single able information, Revio, and required phasing be obtained affordability telomere the course, With of for interrogate projects. to the from scale variation, large nucleotide structural telomere,

we compound belief around rate revenue early Revio support to XX% XX% of can annual for immense XXXX. possibility growth excitement The towards goal and our through our that grow genomic the our of a

transition. As targets, XXXX of our to growth see achieve we as work a we revenue product year

we precisely over year. II a IIe predict revenue. Revio expect These to Sequel over consumable as see We respect temporary transitions migrate will are course difficult many to the variability to may with result, and some the and of users

our strength of year. side for to throughout expect Revio we instrument see the business, continued the On

QX commercial to track expect IIe systems shipment of remains do a Sequel in number and modest our also we Additionally, XXXX. course, on of sequencer of place for short-read

XXX guidance to to revenue, represents growth between that As we which achieve is for initial XX%. from result, XXX XXXX million to XX% in million expect our a

achieved Sequel to our installed a the the quarter, to driven Now, revenue of turning base We for and In was II to impacted our in Sequel IIe of December in XXX delivered fourth as systems shipments XX and during fourth systems revenue compared orders IIes million, IIe. $XX.X The the primarily by total fourth bringing Sequel XX. quarter, Sequel year's the PacBio of quarter, results. the the XX% which decrease previous quarter. revenue decline launch announcement of

However, past this that for surpassing start apart quarter PacBio record-breaking received Revio and XX our what a a expectations. systems, is far for truly launch we orders sets

and the could Conference, a at have potential Revio indicated as customers. excitement the growing seen At unprecedented scale how us positive Revio customers help received levels. We their our around of from AGBT told genome have by we the the recent them research interrogate feedback many

the January, a researchers packed advances biodiversity, sequencing for sequencing how enthusiasm plant sequencing from PacBio UCLA, and & and We workshop in At of the HiFi HudsonAlpha we genomics, and the higher Plant community. Corteva, importance hosted saw work where in agri deep the long Genome read evolution. in for Conference appreciation their a discussed output

thrilled first early to that is are the announce access in Institute. Revio researchers We route the to Broad at

first few team on March, perform Institute Broad full commercial sequencing to their internal weeks, the platform, Over the the and in shipments. will at next the runs we expect begin

initiatives has project sequencing Revio that the XX to Us scale come. the systems read programs supporting Broad XXX ordered in this and program. XX To We systems like equivalent look for has long forward Sequel research power to IIes. sequencing of put perspective, NIH's population The Revio scale already more to All of

accurate noted topic and reads in long the the read and the call I HiFi authors utility value for the generating a complete "long that for and program of results involved variant most have All on of of researchers Us, reads large discuss which The sequencing. that recent accurate both wanted for variants, highlights to small produced While widespread preprint concluded calls".

human in genomes At XX per other list The study can PacBio hours, best-in-class that sequence variants belief a This $XXX PacBio coverage at per XX price genome even can our projects. genome of research genomes than year sufficient X,XXX or also many more than coverage, at be calling methylation for for with at showed that approximately technologies. lower a is XX-fold Revio XX-fold a coverage almost supports included. even

Vertebrate Revio The its Telomere for year of evidenced and effectiveness. as Project innovative Reference read throughput reads Pan increasing nature Human cost Consortium accurate discovery with believe can reads Consortium, drive methods, from the sequencing long PacBio's has Genome demand of enhanced highly utilizing method the further American by studies Genome we the long with and is the recognition

have accelerate their potential research. the also recognized to customers of existing Revio Our

For and or Mohammed Medicine fourth Sciences, in Revios for multiple to MBRU ordered Bin and in year Rashid a project Health University the scale sequence Of last research purchased example, large Sequel quarter IIe very Dubai.

to transcriptomics and And of a as long-reads variant the longtime of research and applications, its for power added Sanger plans increase detection now of use in plant with such cell Wellcome the Revio. single user human animal PacBio Institute,

how can accuracy been Agriscience, partner so be excellent, our beta far program benefit Broad extremely accurate levels Cornell, accuracy applications. Onso, impressed by in another genomic they've genomic evaluating has each the one various to Onso’s Corteva Onso’s at on been full many thing how extraordinary Moving reads swing and Weill transformative of highly their Feedback Institute, oncology. applications, for including with will that sharing and is

kits. with XXX and XXX with system set on XXX approved specification Onso short-read short-read will QXX any to to directly Onso through of XXX competitive expected the onto has bases preparation Plus current accuracy at The reach provide price specification workflow list begin at the a We're Plus potential launch announce kit scheduled conversion of so prep move XXX,XXX cycle Onso for to ecosystem pleased will second that the in kits, the and XXX the the commercialization over $X,XXX. cycle we're The we and can a collaborating believe We're in the standard across partners new with and platform. quarter, cycle assay library to library million listed of that a industry. of of XX% reads QXX

two in duplex Internal sequencing performance capabilities, variant that Agilent and is coverage its sensitivity methods, SAR-Seq prep applying X.X allele with DNA short-read detecting the more Regarding X.X% higher with capture [indiscernible] library times is frequency validated and have four technologies. other our demonstrate we conversion various of results including control times at the times kit. when Onso’s cell-free Onso testing even sensitive and through

value bring highlight accuracy that can Onso applications, and of genomic sensitivity DNA offering research. metrics performance to various meet market, to including These high the demands the the exceptional cell-free

in In bases single-cell addition QXX ultra RNA high or at achieved the with XXx of XX.X% DNA use accuracy to potential for better Onso reads the workflows. showing of collaboration cell-free genomics single-cell in

comprehensive automation workflows. are and We with that preparation success, are and our from sequencing designed customers of range dedicated This providing and for their to a streamlined sample includes support solutions offering to to workflows tools their informatics.

this Our on Sequel Iso-Seq single-cell for technology include success year. isoform our II Revio systems. new the and of and bulk program on MAS-Seq build includes later MAS-Seq These kits sequencing to expanding IIe concatenation will sequencing the initiatives which be and year's assays support recent last available and XXS

interpretation tool Additionally, improving bioinformatics the that recently characterize the linked genome helps spinal atrophy. team dark our launched is the continuously paraphrase such tools, muscular to of as regions

our of we're more and play. it top ecosystem internally the make tools, throughout partnering to On developed plug products and

As from the sequencing accessible, of to partners and such, we compatible make prep, analysis program the designed introduced recently and secondary across which and PacBio includes to tools. sequencing ends more all library PacBio workflow, automation sample tertiary

of the an and with whole on, Revio to to XXXX, difficult revenue. previously share on internal from of was sequence In previous recently include year. a segment GenDx, genomics diseases, Customers I our XX% human want our accounting for update largest inconclusive portion our business, genes nearly genomes rare for to Moving market results. ordered in the who this human segmentation sequence target

technology In to using genetic thousands numerous ramp-up University plans of PacBio hundreds make Revio. to from leveraged genomes and discoveries Radford has to

be XXXX. human of animal Beyond applications, our and XX% plant which like to expect in applied in utilized genomics, we made Revio up revenue about markets

and progress XXX and eukaryotic In towards the infectious they Darwin market are plant crop this Britain PacBio identify Corteva Ireland, Revio Plant also to of this sequencing improve we goal. recently researchers diseases genome. like organisms the Life drive XX,XXX HiFi which research to and Project, include that sustainability. these customers enable Tree programs The celebrated animal and can sequence plants, genomics species and like yields of to agricultural microbial study affect to expect in utilizing aims its Agriscience genomes program so

microbes customers like disease infectious includes and who characterize communities XXXX Lab, of microbiology, applications. represented for and Additionally, XX% Ravio industrial plans to discover our and biomedical use which of metagenomics Bioengineering to for revenue in

isoforms, revenue was accuracy. researchers of highly with with applications, uncover long accurate XXXX novel reads, XX% our structural PacBio’s from variants allowing About and oncology to fusions exceptional

includes from to revenue expect address applications. therapy gene comes extraordinary potential The we ahead, editing market other applications. sensitivity this with our of of more Looking liquid in remaining and portion biopsy emerging for large This and applications. Onso's gene

proceeds, an pleased $XXX XXXX. raise towards ability last further the In during million from in flows upsized positive we Finally, drive to we equity of business will goal with our in month. are gross our grow and interest offering, support and our raised investors bolster cash which our

With that, the I'd financials in turn more over our call guidance to and detail. like Susan to to Susan? discuss

Susan Kim

Thank you, Christian.

million decrease million fourth As of revenue $XX of $XX.X discussed, the reported a fourth Other in and XXXX. Product, the we quarter represented in XXXX, quarter which from in of XX% Service

in revenue in December Revio X.X Sequel XXX XX Entrant decrease of and which IIe impacted quarter from shipments revenue XXXX. systems announcement the driven Sequel growing fourth by during systems $XX.X decline quarter, XX% the in fourth IIe in the primarily launch of and install We of million, IIe. of as XX, Sequel was of to delivered quarter QX the orders million II base was the a the XXXX. fourth The for

Turning to systems fourth the revenue the XX% year. and was XX% of from $XX.X last represented with million IIe consumable consumables record our from of quarter, II revenue rest million in in the of a other And PacBio. fourth older approximately grew Sequel and quarter total the consumables. in fourth consumables, quarter $XX.X for

and through XXX,XXX. quarter in fourth Sequel pull approximately system per II Annualized on the installed IIe base was the

XXXX, new II and Sequel system. decline to as pull to throughout the and begin Revio expect shipping We customers through IIe we transition

XXXX. other Finally, to $X.X in fourth million revenue the quarter quarter, fourth service $X.X of and million compared the in was

fourth the XXXX, driven of primarily declined From IIe $XX.X launch. Sequel of a replacements, announcement million to recent revenue of compared the by with lower the quarter regional II, Revio XX% perspective, America's

of and Sequel both the region period. to year revenue Pacific from the with Asia XX% The $XX.X growth million sales over year. grew compared to IIe prior consumables continued prior system recover, to

with Revio to their of Sequel expand progress the further HiFi several plans the Revio. their bundle to purchased Revio volume, receipt also or the upon With launch customers IIe sequencing first

million prior Also, II, $X.X Sequel of revenue XX% by was primarily the lower than AMEA lower placements. Finally, driven year period. IIe

X% In sterling the a headwind. record In fluctuations pound the addition, in currency drove quarter. euro contrast, posted another and consumables region

compared of Moving of XX%. $X.X margin down the of profit of gross which in profit fourth fourth GAAP the the XX% to represented gross million margin $XX.X quarter million XXXX a GAAP P&L, of a represented of quarter XXXX, in gross gross a

GAAP margin to million in compared XXXX non non-GAAP XX% GAAP $XX.X profit last quarter represented gross million gross $X.X of profit quarter Fourth the fourth or a XX% of of gross of a non year.

loss GAAP non a primarily II, demand, and inventory, purchase than excess upon and adjustments in Revio. Revio expected decline in in Sequel $X.X launch profit of million, to results approximately GAAP than the gross ramp the fourth commitments faster related totaling reflects which demand expected on quarter for IIe and faster

million were quarter in XXXX, million million GAAP of operating operating of expenses. sales XXXX. GAAP the GAAP fourth in operating non-GAAP expenses $XX.X quarter marketing Non XX.X increase higher expenses expenses in and were quarter XXXX, expenses the compared primarily GAAP in and fourth for XX% fourth Increase the to fourth $XX.X $XX.X of XXXX. related of reflect the operating representing a million non quarter

last to the headcount, million XXX fourth total $XX.X we In compared XXX QX, the compensation expenses XXX employees fourth the Operating terms non-cash $XX.X end end of with to in of compared and ended year. at included quarter the last of in the of quarter. share-based year's fourth of quarter at XXXX quarter million

fourth fourth XXXX per GAAP compared net $X.XXX was XXXX loss in share. representing a million per quarter the million loss the fourth $X.XX XXXX of representing compared fourth to of GAAP share the $X.XX XXXX. net non-GAAP $XX.X of Non-GAAP loss quarter of share million, or in loss per net of million, of $X.XX per $XX.X in to quarter $XX.X in quarter net or the was $XX.X share

XXXX. to with unrestricted we turning fourth million investments, quarter cash with of our million third balance quarter Now end at of $XXX compared sheet, ended the in the $XXX and the

gross the exclude $XXX cash our a shares of of proceeds resulting public and in Our million follow-on offering ending stock January investments of and common sale XXXX. approximately from

X.X compared Inventory inventory the consumables inventory instrument The the representing $XX.X reflects inventory. $XX.X turns, to end in third Onso XXXX, fourth million increased quarter turns. with X.X representing primarily in the of million, purchases Revio and of of inventory quarter balances and at increase

Accounts to compared fourth days end receivable XX quarter million, of decreased DSO of with a quarter million of in $XX.X the XXXX, at a day. the the reflecting third reflecting $XX.X XX DSO of

to Moving guidance.

a $XXX and later XXXX. expect we a a faster $XXX full in II expected XX% than compared end lower representing the than of range the of IIe million, million Revio in a more rate revenue from ramped Sequel growth year. year to ramp For to offsets of range in assumes XX% revenue consumables XXXX, that in reduction consumable The approximately the I down the to

flat customers to Revio the assumes year. revenue range, of Sequel ends to IIe. greater high-end consumable decommission we compared their The as XXXX the slightly In revenue decline to and to compared higher expect service and II is XXXX and both shipments low high in

For the instruments ramp ship to XX first we quarter we Revio expect build at and of least as manufacturing XXXX, capacity.

a manufacturing we of expect that production do by through guidance place, second expect planned regular Please forward. in reaching order rate We not instruments XXXX to backlog capacity with our scale the the quarter or note basis share end annual QX. the numbers going for on

margin at lower to with with the platform of a costs customer launch. XX% coupled assets. discounts, higher down which instruments the margin Lower XX%, towards Moving weighted gross loyalty combination to exclude intangible revenue of early higher we Revio results amortization margins of ASP due from shipments concentration new and will lower during from P&L, the non-GAAP a be the expect between of XXXX

to our of expansion beyond maintain margin XXXX. plus XX% in long-term and guidance XX% expect We XXXX

therefore will X% expenses in operating long-term guidance be less to and with expenses compared to grow operating line XXXX. non-GAAP in XXXX expect We than

We the common million year. this sale issued full and expect reflecting for of for to average the as XXX weighted the recent Omniome EPS to later year shares expected milestone approximately share the be count shares, part be of shares

Christian? turn I that, back Christian. will With to the call

Christian Henry

Thank Susan. you,

Healthcare JPMorgan results conference, stakeholders. I delivering strategic month's last for focusing our During on goals to our outlined year, this

by approximately priority and Sequel year to adoption year IIe start as consisting PacBio Our II of sales XX new our widespread customers pipeline attracting We're off customers. of drive converting sequencer strong a in our end, with of new first our of as and customers and end. Revio to backlog is systems XX% of existing

unparalleled aim in hands and we Second, to several transform show demonstrate the research in Onso applications. of accuracy ability customer’s its genomic to

discussed, and our SPS As variants having internal an that greater shows far Onso’s data beta accuracy sharing at user that detect partners experience. are than depth can they're excellent

multiple Third, our next-generation and develop SBB high-throughput for our systems, continuing in and technology, spectrum offering across and year benchtop step ultra sequencer. leading the Onso including the journey we're to This the committed systems to a with way. Revio first sequencing marks sequencing long-read

infrastructure Next, positive will drive to we leverage cash the current towards flow.

OpEx Susan on most. we're the and prioritize on matter going that focus areas the shared with our to guidance, As spending

plan ecosystem HiFi. to adoption our workflow and SBB the partnerships across expand we Finally, and to of increase customer

With the PacBio partners framework workflow. sequencing the a onboard the have we program, launch compatible of place best to the in in

believe XXXX our revenue all goal look is term Our in towards the to in year. throughout is this. achieving updated forward million keeping on year I XXX XXXX. you story progress a growth long multi that And start of the to exceed we

Q&A start call. you would please with our portion And of operator, the that,

Operator

Yes, of course.

comes ahead. will [Operator Please this Instructions] begin Kyle Mikson go evening First We the with Canaccord. now question-and-answer question session. from

Kyle Mikson

Hey, taking Susan, Christian for questions. the thanks and

Christian Henry

Hi.

Kyle Mikson

one the does assumption of about the beyond second and a like maybe like the the going questions talk cadence for that, guess kind within assume I there's maybe so just and the On what terms quarter? shipment March going here. curious instruments, of instrument the an guidance. you is of half. XX kind we're bolus Hey, inventory, of the kind the to This in I I'm this in streamlining Revio’s I'm Yes. first Better. the like lot if be your forward. orders guess rec and about could the this, like, my Two expecting. June, the shipments shipments probably and May recommencement of the And within or and range rev

there be that's just XXk could On dynamics to – pulled that, XQ, Susan, decline? curious that you I Revio about instruments. XXk be pull there. I curious Thanks, that? Sequel just in maybe you're the mean, are for some assuming think end like the through for XXXk, quickly I What consumables, thinking Could I'm year? you by IIe of how consumables it think mentioned guys. about So through that could about

Christian Henry

pack in back lot Kyle, there, thanks. saddle. A right. and I the All of am

a the We So at throughout basis, everyone do I'm we on guidance let's quarter-by-quarter sorry, the week. But I revenue. guidance expect talk about little revenues and bit it. – a year. how quarterly give last that, missed about don't AGPT on thought will We improve on

XX we're that, probably think start produce at want that that So quarter. shipments, to I'm more we to just we there. and shipped not customer and the a early for experience because up. of starting to incredible With sure shipments, do as other what with say than course an XX, have and than these make us scale We're we prepared grow the Revio I year, to see to really the going over to you're going is respect stop

and So outlay to is how that, also, I good a would of really But of IIe, start starting for the with kind assume system get see quarter-after-quarter-after-quarter. linear out wouldn't Sequel in utilization linear, us that I it the say both it's point – consumables, Revio impacts field get a to the XX itself. a but

dynamics, as of a I've the With couple respect times. said to pull-through

aren't We to what quarters. the look dynamics for going like really know, pull-through several

Revio. to going adopters early is customers what of of largest do our try try know some And so, to speculate that, is, guess, we – or truth not the we're are

it those will certainly it may go Revio, to to move slow and they will cost so use of decline to the, that, scale assumption with as will Sequel IIe, they effectiveness – they have start zero is will customers. that Revio. not And our down totally the But and of usage

on, an next we're to Sequel probably where to it's over through impact And could an – settles a XXk think this going going to But on that We have today, so, how quarters. pull it likely out, we're that, the and I you've of course – unfolds will ultimately the impact IIe going couple and that not that see year. have XXk. over quoted of not make course over don't try guess to of know, to we're the the the at

on utilization – particularly what do that we start normalization will of that the shift out. the to where will will suspect, I going see or and think experiences, settles probably Revio to will four of then likely it's to see grow over of year – I customers start to quarters three past take the And that. we we really larger some sort us to first. based course see as is

with So the respect your thinking consumables. hopefully, and a the Kyle instruments that, you questions, of that guidance we're to about how answers sense gives and

Kyle Mikson

great, I'll queue. Yeah. That was Christian. in back hop the

Operator

Qin JPMorgan. Julia from ahead. go is question next with Please The

Julia Qin

Hi, good afternoon.

So, for ramped Revio, XQ. in a terms XX capacity of shipping XQ you said and up fully by the in manufacturing

in stand terms of expect you rate volume. the And distribution terms barbell the pull-through you of second think you the year? a then So previously customer that of round in mentioned where ramp, do supply the will a I believe the half Revio in in at

and dynamic? year, this it that's do think is a onboard or to fair XXXX of will more lower expect throughput you So beyond the later that customers

Christian Henry

good get and to you talk to Julia, it's to questions the you. for thank

the is, scale not end production run our QX steady You produce a one lot to doesn't going situation to or state. by beyond. us to know, we're in news thinking the time, with outcomes that satisfy we trying QX mean first respect manufacturing, today And But is a our steady put that we is very the range what couldn't capacity to of rate where we all instruments of on QX. to state production about of we do the demand. get a then enough are at and and reduce But have good scale and of further in wide

of a be over Revio we'll We'd we'll little gross not margin. efficiency COGS this And customers, over and also best Part because much much rather new of us margin mix. the higher out both the that's pull-through only consistent and which but the our especially because know but lowest gross a to get how how of itself it instrument enablement it's also get plant. can for time time, improvement through technology will our the that's you improve be best, more for instrument, drive the product is the bit drive

about high distribution think very lower barbell a when markets, maybe And that, throughput you very with to end respect as you're about we talking customers you're bimodal with of typically consumables, up utilization, and with right, high in customers. these distribution then throughput

throughput which high get projects customers to of throughput sets we because the as we the customers, the be going to, come a be mostly our Our really we this serve course, large throughput we're expectation and hard and tomorrow, really And, it's -- our is probably can. QX, lower customers, and of provide even of through business. with lot technology through to try going build important Revio that, all of sure and large be of enable they the think to QX we're highest going large we're throughputs, higher system earliest to to will to that'll next really the projects, shipments you to that will but soon the customers probably know, some and of our as to very to be so

expect on in And distribution so, customers would over it'll the broad I XXXX. pretty see this a of and continue to course XXXX of

Julia Qin

there management think because very And volatilities customers I orders That's have early may, expected maybe then of, guidance? supply inventory one legacy if embedded how Sequel you. utilization. Sequel of fulfilled, worst an the initial I follow-up through the their pull-through they has in of to, to might but these I'm helpful. that in destocking, of, tied just expectation being of Got case near-term and is customers initial your Revio there case inventory to rebound be of communicated in or the and smooth attempt in that, year, best II if and an curious, does mentioned might kind constrained pull some Sequel a on wave you scenario that that's aren't kind reasonable utilization, your out just Sequel

Christian Henry

Yes.

our have -- them is, the we utilize are our when when we values one that's customers clear II trying consumables. Sequel are focused understand, things with and of -- helping of IIe they receive customers, of very IIe Revio are been consumable timing utilization core laser do on and we our and one and to to So they're of we going

We each at really so they level, customer, working tried that experience. the optimize their grassroots can to

Some going a have while, their to likely say so they're ordered, that not for recently, continue to get projects to customers on it's their Revio IIe. Sequel that run that going they're

make So we're sure help manage to we going want to transition. them that

volatility and said volatility The the we're like, have really, And news of by scaling prepared we transition. likely some our is -- could it there the remarks, year, Revio. that by my in -- utilization as on the through or the this behind consumable this around is could end variability good I be revenue go us,

is understand and the what see it like the have we're look We're best be and can. sense. next managing to more But starting pull-through the you're starting to quarters, we that from those And Revio. few to numbers consumable going transition just

really position we're -- XXm inventory in of we done that good the -- on piece we’ve good The news other excellent already. job an is good and smart a news is cells have producing

we -- year actually the were most if you at ago if XXm you completed over smart And sell recall, this a point. of

experience already manufacturing of up lot Yields the with a are got coming in we've So plant. it.

of really ability we're seeing already is our is level super effectively, so, in at that exciting. place any which demand kind supply of market to the And

Operator

Morgan comes Tejas question next go ahead. from The Savant with Please, Stanley.

Tejas Savant

good and voice. to a sun I'm guys, missed went Hey, it's evening sure. good told Christian, of at hear especially after you the AGBT, you, as down, your people We lot

XX Revio got us off, orders things the in On to for you've kick backlog.

the we Mark a essentially you've about as AGBT, in But standpoint. You're April shipping the here, particularly see of impactful month from XX is a -- backlog but situation? well, quarter, of third could quarter pause you do numbers of and here a as not talked got that at third a all or ship end the orders you quarter current by the see second mid more you or actually

second here And on then my is question Onso.

you back Perhaps, guide the easy exactly first, color of here for what any into Susan, shipments baking Onso? in on the for the So, number are one half?

And I good data AGBT. really showed think you at

I range. think million XXX reads, XXX of, to, XXX it something your was, higher like XXX than to target sort million

So over the the some learnings months? exactly done there few beta just be Other users? to what of next your from remains incorporating than

Christian Henry

Yeah.

Tejas. Thank there, A to for the Okay. you unpack questions. lot

we all, at But in – at of backlog We backlog want than have the orders First truth to right. XX the had December end we you're orders end did more I in is, the of today. December. of

we, that reason the the expect orders by So, start over is continue and to and reality course that getting the I you why year. is the we of that know, more more

carry to actually. I a the And backlog think expect so would XX quite demand substantial. is the the do Because for you product it's of time, while know, the us order, amount for I shipping quite a certain by

In the manufacturing we're ship doing And right. all to April. we're started. you're said what then so what systems is to at least XX quarter is going to still XX, be get this working units April, I we're And through specifically,

in that, doing it deliver not satisfied the anything with when sure is up don't and focused what just does field like, that and kind all is has it has how it will clear, with do on on – crystal is Revio. some, how seem part out an It than really making exceptionally And these ability that on nothing incredible do analysts we have drilled I to well. zero impact ramping know, of you that pause, because So QX, into we're some are things we're plan want to it's customers to so having like we're to revenue you launch. other make exactly that's very our I say of

is book partially really order say not to but strong when XX all in all this the is to to do And year. I'm we're year. several so shipped, quarters – going not expect run this because backlog the – going think that's I be that, I gets what going am to very say for I And all

so And that. think about we that's how

comment a in respect With great we the pass consistently we You the broad pause. sure do? What phase produce Onso, our sure instrument, work, the making guidance to But in what with working customers we so we've to chemistry some that is so it production about customers from making respect have have to the we and do customers the now that do at are see, sec. on is that results – that seen Let's make of deliver can sure making to just right, hardened beta the the a scale, flow to talked scale. I'll the can can our Susan cells left we very to can to we're of really of we density. right, diversity on, at our get instrument to get sure

do, to really there so – as work it is still And software there's to is. some always

get customers. do even a the work the perform, commercialization. the you're seeing, So seeing seeing densities specifications incredible getting to of seeing getting you're of starting good that full the the hands know, commercial you're news chemistry commercial our you But there's the – you're to that improving, accuracy beta in to to the lot is still

So that. the seeing on you're field out samples, in customer

So all us. really encouraging signs for of those are

product. doesn't the and sure and launch you development, we leadership making It'll Revio you us of the because are, community. to forward, make comment grow sure on really from And just speak want interfere think well to also exceptionally too. about guidance? finalizing a do it the this those the both is really, the part in with allow critical position into that take ramp, pushing And, customers that launches want and the both to state that Susan, this taking scale, do to We products we into community feedback of integrating the know, Onso beta launch Onso

Susan Kim

Sure.

we what of Revio interest terms guidance, customer feedback the in So customer on by Onso, excited year, is of in terms a I this terms But – is our this the of in year think I that positive super are revenue with shipments a in guidance the backdrop, of number of into year guess to number Onso perspective our modest year, contribution by again is baked terms basically Onso, is is provide driven as material mostly Revio. but it's in some to the overall not revenue bundle. Onso the this a

Christian Henry

of most growth. particularly the Yeah,

Susan Kim

exactly. growth, the of Most

Operator

Please The next question Dan ahead. Cowen. from comes with go Brennan

Dan Brennan

I guess, Thanks easier. with but a taking Great. one, that's multiproduct, the stick for questions. maybe I if guess I'll

color consumable? a really guide high consumable how it's the guide? while the in total was of hear you appreciate on consumables Sequel terms hard end. predict the what IIe any think thing Like, to about within to I Can that year give like. color some stop guidance but the to barriers that end didn't can appreciate then, roll of helpful In certainly b, Christian, off, at are IIe more range? Sequel And that at the us the And orders

us new order about as discussed quarter. Thanks. early You XX% January? countries the from XX book evolved it of and some I'll just XX color there. orders the the give maybe of fourth And Can leave end since customers. goes from how That has was you

Christian Henry

lots to, snap, the since to I to Yeah. of, end. conference try order our labs. labs realistically, going but in We've a the customers strengthening at anything, samples customers what's have the our funnels mean, and out I in year applications run going very, try now to we're inside very, mean, of of are in if two conferences, plant our backlogs had very – And books AGBT. stay the successful happened looking and or I actually to perspective think, color, we're many animal genome

that's it are more really around, getting say it we that's I And – really really customers what So, think is confidence is. exciting.

not continues lot customers. to and It these all our really a really Revio, that's It it And us is the new scale up is And only of important do new funnel, technology. think strengthen. global. to so is and customers are a that's there a one with important engaged new of is, to we show but with the, to to get for me want get thing customers global existing I customers see the funnel is it

internally, that lot and far, a is the are customers to seen maybe I So scale in we've people the think about of our I before starting of the PacBio. history interestingly with think than ever most – perhaps different talk is

larger – sample And sample scale, people transcriptomic so starting project, are genome projects, people projects, large-scale XX,XXX projects. whole XX,XXX contemplating, are large-scale

needed the thesis to that of going we that's be to encouraging think to, I throughput, that to enable to get we -- the that to that's needed – through enabled economics And get extremely kind and higher now that and most prove out most we all do and HiFi showed, -- with already has is preprint We us complete right the to accuracy scale. and of you get. accurate continue can the frankly, sequencing sequencer best quite

per well, feel really know you a that help been se, doesn't all makes that's but so And it us build model anecdotally, better. I your lot

Dan, you question maybe didn't question again? barriers II, your on understand, ask I could Sequel that on really guidance

Dan Brennan

presume you’re talked the be to plus referring high at that Susan that, think up, itself about guide? but of the the trying and I of on IIe Sequel, guide guidance the end the about so the and to I wanted I just I was, think end how to consumables through flat just to Revio would total clarify high it if Sequel within color any Sequel was end thinking consumables and at low on we're consumable,

Christian Henry

Yeah.

number, yeah, to because makes was numbers to So the actually the predict, Susan is which fast II -- about know hard talking total don't consumable decline. how the you going total number is Sequel

You is yet how don't that to it'll But that Revio throughout know know year. transpire will exactly. accelerate we do going continue the accelerate and to really

range guidance, think about why, different we our outcomes. we of in that's have contemplated the so when volatility that And

the to easiest probably I that's think put it. way

Operator

David from ahead. go comes with Piper question next Sandler. Westenberg Please The

David Westenberg

taking Thank everybody's echo sentiment I for AGBT. at really Hi. when you I you missed the question. we said,

they're Is be customers if this that describe and looking that because are be reads, would to the maybe read or with, cost, XX% all got number customers? short whether start O&T, maybe XX% of at? offers to using I then it looking for think read there way willing any you've to for really discuss that projects might long that would customers be at long they accuracy PacBio, you for looking a So they're let's lower new existing

Christian Henry

Yeah, I can't in the have -- I front me. of breakout don't

at the is half AGBT, unfortunately, second the conversations I'm But can't been I that AGBT reality but the wasn't paradigm, lot a long-read where specifics. So at their of there from completeness. give they I has the existing you their and move to because sequencing because they of conversations need see there see were lots accuracy, because were customers Revio expressing to getting

doing the IIe, robustness of And their will be but bring to is other customers to the with given realize so phenotype predominant market in that's in and Sequel portion the know, And platform you still believe that's is a is, we've or to shortly has every lab that long-reads. short-read the sequencer predominant virtually thing and today, experience has that sequencing everyone moving they that, bear what we world. the seen the

to out and of And over their see see straight is without and completeness, lot bring what into to you will away start so start variation, projects lab what's happening a to and people a long-reads machine exactly you're structural move to Revio benefits they'll looking gate for to any much of starting tricks, in from epigenetics, so to most switch at just that that the move apparent said, that the that being forward. they long-reads phasing able you of just, know, there's make applications, short-reads, advantage become there's it's short-reads

be Revio many scale our that's we think customers. and the dollars existing think competitive the more machines sitting at to applications, see, in going right to I capturing significant clearly now I machines sequencers, economics advantage. we – the enable Revio to are have And know, short-read more you different where and have alongside going you're and And the

Operator

ahead. next The Please Nam Sung Scotiabank. with from go question Ji comes

Sung Ji Nam

more rate, in if I I point? in of in terms what the curious really your of about that customers if for at looking for and the the the for will, really data also my kind of This what appreciate and order might – also the you kind Onso that. the be short-reads Onso feedback adapting terms in attachment other offering, this bundles platforms, think comparing was on could Revio. to But Are in totally you the year they barrier you Thanks thoughts would outer positive those? can biggest talk attractive years given of just Onso is taking you are Hi. were really question.

Christian Henry

with unique solutions answer and provide the becoming to Yes, no space because, lot have pricing of questions. I them see the strategy one else really ask ability excitement our time only exactly This accurate highly and answer very in that to us really of and are there for and customers them gives can first There's with think see is offering company a Onso we you their – and the a – bundle that space the the talk customer time. what is And to short-read as long so about provide you're Onso. right. in in long and why the every – know differentiation that the short-read something significant they that they questions technologies trying

differentiation. our do. more which the it's create know, the ever increase through And technology that then increases value driving And than to can density, reads power see ability what you powerful, it going would really watching of more out to And get we of are excited in next customers into gate really Onso that's about I the And be to think only getting here, is several over going but as to not the particular. years run, per in driving more, before. that the lab be what

to I that's is. get market we in think biggest are it really little have a tongue the product barriers today the maybe to what be to cheek, the probably barriers but

of highly lot need launch development, amazing We excitement the make a product. to do and here we're over a it the is to finalize going an what neck. have and there really around robust the that think I that's

year customers. increase that's about guidance mean, are Onso a enthusiastic the from to we that's of perspective. see to next we focus get with And performance attack year how and you're second then and prepare quite the Onso, how the to on and here. out the bundles, you I'm our As going – plan door Revio frankly, very and really half integrate of value then increase Revio continue you the for the of both us over and I into it.

taking we we But sure financial want market. we that, differentiated make have responsible there's are choice a lot we how the know a this We want right. modest believe We get a we We be and also because about to view, offering. our highly guidance. to practical of in give

Operator

next Sourbeer ahead. is Please with go from The question John UBS.

John Sourbeer

Broad in than for in the greater those taking can just for question revenue running? installation actually revenue Revio shipped and shipment? Thanks it and sounds how if shipments early Maybe up is on you has there Susan, the us or And think Thanks. the it first for they follow-up, the door, question been then And quarter. the and you the the the up you on received can like Hi. Do software? recognize recognition feedback on the any XX so, remind here. and have

Susan Kim

Yeah.

recognized the prime delivery. recognized So John is instruments we be XX revenue, the that customers to are will of – predominance as shipments upon because those of deliver the our elements

revenue is So in quarter. that for is recognition meant – the that

Christian Henry

now the it's days. minute sent And it – the then on going actually arriving next trucks Revio Broad, we the in next was via to of truck, I think arriving – couple so it the

Susan Kim

Yeah.

Christian Henry

and will very they'll very, arrive install truck – And – And then it week. so capable. next the they'll they'll they're

the We're end installation goes assuming the the of come runs the before see to off if – surprised, starting machine be wouldn't of I of So month. off well.

Operator

from The go Cantor this Ross Fitzgerald. final Osborn with comes evening question Please ahead.

Ross Osborn

a long squeezing Hi. call. it's in. know, me I Thanks for been

quick, to just on I'll So so curious hear China. your be view

increasing borders would cases demand. activity said overall any instrument opening, into insight You be the relatively But strong but appreciated.

Christian Henry

yeah. – Yeah. I'll

So Revio Chinese will going And help right us We for activities quarter. have that's that our think good. had pretty the to, been in China. overall demand now very strong I in revenue with

– I we really lot Revio. is itself when play completely guidance, that, What a orders is how for out. the cycle itself one and of will ready have fact that of the know buoys a and because all right, are product confidence how my enthusiasm, new give of us do out of none China we is, worry play I does year, things You're about this lot a

we so will of are There's expect that, headwinds operations as the when COVID, our right, still But now through think view far, out we through is concerned those it trying thinking are That were watching, on you're in potential about with sitting – but China So we're face things. right market, headwinds guidance, still to that to that, help. we that closures, and and our be there there. we kinds normal.

We will be shifting some China quarter. Revio's this to

our will those will that get customers help will the and competitors several quarters? that all unfold to now, started. as that how report, is – there's so, And we and extraordinary next But I'm right sure but are of over peers, watching nothing

Operator

question-and-answer This Todd over Friedman conference I to like concludes session. our closing for back to any remarks. the would turn

Todd Friedman

quarter you right. with Thank forward our you We All to this look industry updating of us on connecting our today. you all at this and year. several for later many events progress joining

you. will And this reminder, website. a now be Thank As on our replay our available concludes a call.

Operator

presentation. you Thank concluded. today's attending now for has conference The

now may You disconnect.

Pacific Biosciences of California (PACB) 16 Feb 232022 Q4 Earnings call transcript