Pacific Biosciences of California (PACB) 15 Feb 242023 Q4 Earnings call transcript

Hello, and welcome to the PacBio Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to hand the call to Todd Friedman, Senior Director, Investor Relations. Please go ahead.

Good afternoon, and welcome to PacBio's fourth quarter 2023 earnings conference call. Earlier today, we issued a press release outlining the financial results we will be discussing on today's call, a copy of which is available on the Investor section of our website at www.pacb.com or is furnished on form 8-K available on the Securities and Exchange Commission website at www.scc.gov. With me today are Christian Henry, President and Chief Executive Officer; and Susan Kim, Chief Financial Officer. On today's call, we will make forward-looking statements, including statements regarding predictions, progress, estimates, plans, intentions, guidance, and others, including expectations with respect to our growth potential, instrument and consumable sales, and GAAP and non-GAAP guidance.

materially undue assumptions, forward-looking could risks, actual we the that SEC, the to that place results are because cause not cause risks or XX-Q and with recent press release to including results to projected our actual subject XX-K, uncertainties and differ should reliance and you statements file on recent they our most differ. discussed. We to You refer forms those to than uncertainties documents the our and better understand could that We disclaim update or forward-looking these required revise as by any obligation to statements, except law.

also financial in prepared with on competitors. a under tables understanding operating results, of and will strategic compare are be to under rules the within performance non-GAAP combined relative not set certain U.S. measures, comprehensive presented release. only is non-GAAP our accounting our financial the GAAP. externally provide benchmark GAAP to non-GAAP of company's information information U.S. in We by that financial GAAP reported our Management between believes a and historical and performance and useful forecasts as present supplement results measures, basis. U.S. to earnings information should plans, Non-GAAP Reconciliations against used

our call. shortly electing be available may live differ call is year, Investor matters, after to today's we other the For call amortization expense materially future certain the completion recorded, statements change without today's for and section changes non-GAAP acquisition-related allocation unreasonable contingent of the that unable replay to operating including are consideration future on note cautioned among adjustments audio non-GAAP use of items periods, arise certain expenses will after uncertainty and the efforts the reconcile Investors to assets. Please gross are attributable the that during made regarding, and margin and fair due value tangible that or and the call. may replay acquired to of on website forward-looking of being

the limit queue. I be we Finally, to analysts to question please we the one will a our will the after question-and-answer everybody that turn now session ask over themselves call in so We Christian. hosting can accommodate remarks. prepared only

for our for I'll call Thank the quarter. today. year the joining results activity and our discuss Then our by recapping Onso. everyone and start Thanks you. around Revio commercial I'll

believe guidance Finally, more I'll and create value year successful we our discuss and history. detail. XXXX sequencing. differentiation to transformative in financials that then latest around Susan and will our pass in it most marked launches product I'll to PacBio further discuss PacBio's

to Our which scale in grow Revio team aggressive XXXX XX% our of to and expectations. $XXX.X executed goals ahead ramp which manufacturing the enabled million, base, to was revenue install PacBio

grew the bringing quarter, XX install December year-over-year as quarter, XXX% of XXXX XX, we revenue base For instruments fourth to million, the and shipped in XXX Revio $XX.X to our systems. Revio

in for specific XX% grew it this today. With consumables examples of sequencing for up XX% the continues read around towards in midpoint for demonstrates HiFi an to year-over-year. roughly also to to included system XX% total to interest range, on $XXX fourth number flat shipments a $XX.X XXXX. $XX.X becoming XXXX. The growing $XXX this scale XXXX us consumable of be showing quarter is our and We revenue initial of to long sets between I'll momentum which grew consumable genomics, another $XXX,XXX. The larger XXXX in sequencers share PacBio compared the human represented growing in some long up and compared At market we to grow of of on We shift Revio mainstream we as output that clearly view revenue the approximately shift million in annualized will through applications. demand a And data testing. million, this read gigabase that, slightly and see more major to genomic representing of growth be see expect growth to continue as year believe pull million, Revio million,

As communicated, sequence purchasing instrument timing fundamentally the more customers' We capital customers on timelines, adoption. later. their trends will of long macro do anticipate of guidance previously HiFi reads. desire lengthened which we have our touch the not current have these Revio pace and impacts Susan impact orders to to with

Revio, last in long look read the Now, researchers is with almost to transforming the Revio, and new and especially XXXX, progress We've XXXX we're the adoption XX% curve. pleased turning back in customers fourth still Revio new ordered PacBio early early systems of customers. in significant been making quarter from the year, ordered of sequencer systems were new from of flagship how customers, Revio our PacBio adopting launched at in number as XX% nearly genome, were

health. We're Sequel XX of planning genomics countries, on Solves converting limitations New find institutions the customers customers reads Revio customers variation, the University Solves also PacBio creating making to over IIe as about research genetic just and of across was repeats, accelerate phasing leading ordered in II member have to and the consortium Revio, we impact HiFi our structural have in XX of sharing address fourth included a HiFi last can to practices to Sweden, on existing for now solid X/X collaboration expect by answers HiFi this tandem disease. The and best to human consortium quarter progress Revio. announced Hospital on short use more a Karolinska quarter,

to to We early transition time. IIE over over Sequel are most the expect in still cycle product Revio users and or II migrate

we to in some fill third XXXX already see to Revio, they expanding its which to research. fleet Revios continue in starting second expand adopted their Additionally, to customers ramp to this up like its in capacity. its Radboud took as have fleets second their rare quarter, disease with We're the Revio or customers fourth University, their ordering efforts expect who Revios

to genetics efficiency, landmark year and while for the Onso, ordered of started capacity read the Revio rates move address we major a fourth effort consolidate Revio, short market. grew solve City Kansas HiFi the demand after Hospital our and Mercy tests Onso, platform, its we've increase its samples and continue us second a launched shipping months accelerating fleet turnaround multibillion-dollar to With Children's just also ramped over demonstrate shipments expansions reads. XXXX to manufacturing sequencing to epigenetics, third PacBio elasticity we long improve time. enabling as quarter. These Additionally, in for was sequentially and up gradually to sequencing

by its liquid XXX,XXX to data in is the on increasingly unmet discussing value achieving our DNA for use well industry sequencing of the the customer have chemistry. and positioned from We oncology need applications research targeted to metagenomics. One ranging have beyond an orders underscores in including samples, from fragmentomics and is panels a that launch, bases exome QXX, wide Since Onso now of QXX received customer to plan cell-free specification customers it who like, which range peers into accuracy Onso's the TGen, advantage disease of over differentially shows been Onso believe associated PacBio binding with early infectious majority in with accuracy which error platform's accuracy biopsy that detection month, and populations bases X is sequencing of sequencing. from of in of cancer applications with taking disease institute presented background is researchers the or address rare we to high research. Last non-diseased material a as detect

to I do on from update Moving year. segmentation every on, internal year, the as an market we wanted share previous our

of UC routine approximately to our up institutes, across customers to host business sensory business, XX% to research genomics Revio set portion get and agrigenomics, be the largest applications include reads wide a Our application largest their sample GREGoR low-pass includes was accounting XX%, complex roughly disorders. Plant, wide or range run agricultural this and from across genomics further of our accuracy. our pathogen for multi-thousand as XX% part diverse again, an project XXXX, and dynamics, use that can better production. Microbiology these improve products our that Irvine in who human genomes. applications. In dynamic and academic makes labs, array biology surveillance base, our like about of across of up and is development into a customers testing and certain public Consortium, and for a adopting range workflows was approximately insights includes and Bioscientia, This and the animal, disease a really Onso's large addressed are incorporate genome more. Cancer health is our rare to a crop and of have customers been resistance, well-positioned This often revenue, to of labs pathogen sequencing using long of believe looking of infectious with HiFi we of drug interrogate sequencing companies the of was customer disease, XX% making now for revenue. second

and instability. The implement emerging quarter, remaining indicate it results researchers cardiovascular as accurately development. planning For from the used customer our at to Revio biopharma, editing X% approximately in Onso's gene Detection is Cancer presented the in its regions including of a preliminary example, Early McGill October of part homopolymer microsatellite other detection ability markets, of fourth therapeutic revenue included increase and disease new sequence of that to potential through has the University the to and Onso, Conference

sequencing, par PacBio making AGBT, Turning prep at in product long with bottlenecks new of to eliminate make the we make library HiFi and week it easier of that library for to short customers the systems. kits that Revio launches, their announced on read most prep last workflow our read

the to system samples. Kinnex workflow by Prep reduction the sometimes-tedious Kinnex Kit RNA and Sanford the Kinnex genomic glean RNA the with kit is for scalable, early STAR up and XX% shared the and customer decrease more requirements. of fourth process we in pricing, extremely uptake across It launched to allows Consortium insights researchers applications. Kit commented automation use, ease help our has into also various with to integrating And other and enables XX NGS have high been cost-effective outpacing automation, input platform the also potential in time enthusiasm a orders can We've customer we adopter various competitive costs, and RNA customers. An announced sequencing. quarter, for the HiFi the for UCSD's automate customers that sequencing to on sequencing. across partners customers Plex prep and up kits provided yields further for future. In different XX% consistent Hamilton at be Prep XXX the lowers library throughput, with for a now over HiFi DNA how DNA in pleased these kits, from our Our and full-length sequencing offers demand

how Kinnex that early cancer pinpoint to cell able and specific in help the mutation to Columbus, the lead also from sequencing customer children. These to study understanding variants long example, can the but which occurs, a from Kinnex couple clues can and disease-causing are diseases Kinnex transcriptome, several of another mutation's onset as mosaic disease to could and continue better types examples, Kinnex, epilepsy, cell will user occurrence somatic the believe timing single-cell pediatric preferred a biological then understand genomic data. The and was used with in explained Ohio, For harboring RNA-seq applications. leading a of the on disease the method just identify give like of we read types hospital into basic influence the and accelerate harboring in

our our new VXX out software. Revio VXX last Revio of quarter, XX% rolled we the runs using software are and Lastly, for

smart realize getting increased As overloading, We've better a user a in are X-fold decline and to their experience. seen result, over are customers yields on customers starting cells. a

desire to Conference, to HiFi wrap research or more had look see from and and was on Genome AGBT, genome ever assemble than encouraging the last information community Annual Biology deeper Finally, the to read it in for Technology the that was and before. long sequencing the up, Advances it the researchers and impact week

with Our an truly feeling to HiFi inflection the the discuss call away for financials. has team begun. And from pass that, I'll sequencing conference Susan? Susan to walked point like just our

Thank you, Christian.

increase quarter XXX% in XXX% the million product, XXX of adoption represented the discussed, $XX.X of million ended driven we XXXX, reported fourth quarter from of quarter the quarter by which in increase an base in Revio As with fourth XXXX, the of of million, was from XXXX. Instrument and systems. quarter other the We Revio $XX.X fourth service, fourth $XX.X an of platform. million in of continued revenue the revenue in an install $X.X

systems and a and increased, Turning quarter to million in last other $XX.X from pull-through PacBio, other the XX% from of with of consumable of consumables, was fourth annualized in quarter for revenue Revio and $XXX,XXX, $XX.X from remainder revenue coming systems, $XX.X million consumables. Revio of fourth the the reflecting for the million an system year record approximately

grew a region's Finally, by compared the $X.X instruments quarter quarter consumables XXXX. From service fourth quarter growth $X.X $XX.X both million to regional and other million was revenue in fourth in quarter of new perspective, fourth record of customers. America's revenue to the of and The was in million and the compared XXXX. continued from driven existing XXX%

$XX.X revenue due budget quarter-over-quarter, of prior year. With the nearly part Asia year-end spend. Pacific, $X to grew million region over For and orders XX% consumables growing in which was stocking million in the

EMEA $XX.X Finally, over the revenue XXX% of grew period. prior million year

gross of the million the as acquisition fourth sold a due now Omniome generating the quarter of quarter in down Onso the quarter platform, amortization to Moving represented of XXXX XXXX, the revenue non-GAAP to million expense profit a in fourth of are quarter of XXXX as included XXXX decline or transition the commitments profit gross profit gross XX% continued that profit from a from fourth and quarter million in million compared gross of as some the we $XX.X XXXX The $XX.X of $X.X instrument operating in GAAP decline represented predominantly $X.X non-GAAP last a Gross the quarter and million, fourth in reserves Primarily cost China. GAAP totaling the margin to $XX.X the purchase of of margin the GAAP fourth from of Revio $X.X allocate XX% in respectively. in consumable amortization represented of profit a quarter demand includes fourth margin fourth of fourth the year. million the customer we non-GAAP Sequel of of X gross P&L, intangibles acquired $X.X compared and profit II gross goods of of million XX%. expenses gross GAAP the XX% gross XXXX million inventory on well of quarter which in product. Fourth XXXX. $X.X approximately loss of in XXXX to in the demand were to Sequel II/IIe the in compared the of quarter to a

were merger-related contingent quarter Excluding amortization change operating fourth of in fourth acquired value $XX.X assets, in intangible to expenses $XX.X and costs, XXXX non-GAAP of million of expenses restructuring consideration, fair million quarter in and the compared XXXX. the of

in following XX the primarily and with fourth XXX the ended $XX.X non-cash reorganization compared the the the employees XXX in in within quarter XXXX. or end XXXX, XXXX net share, which fourth declined the end $X.XX in in million last million the year. GAAP a of compared positions of a at organization of of fourth expenses the our of million, XXXX, $X.XX GAAP resulted of share-based QX in we net compared $XX.X a compared fourth $X.XX loss headcount, in the quarter share was R&D or $XX.X to to of QX representing fourth $XX.X quarter $X.XX to million, the quarter. Operating of at was quarter per per quarter fourth XXXX $XX.X quarter XXXX. XXXX, Regarding included a loss net reduction per quarter the to loss per loss to of of compensation non-GAAP share million, fourth in representing XXX net approximately fourth due of share. Non-GAAP quarter $XX.X of million Headcount

unrestricted X.X end the quarter in quarter in approximately million ended XXXX, compared in at Omniome compared of Turning achievement. Inventory fourth million of of to compared of former cash we cash quarter at quarter third to $XXX.X decline with paid the $XX.X of with turns. Accounts million quarter the to XXXX. quarter end balance $XX.X representing our connection $XX.X items, fourth milestone inventory at in with $XX.X fourth balances increased receivable million, million third the sheet of end the $XXX.X the turns, decreased the X.X inventory XXXX. the million, with The million the third shareholders investments and reflects with representing to in the $XX.X the

backlog our decline to to million December and $XX.X XXXX. related XXXX the as backlog As XX, in throughout of customers compared XX, was The record of $XX.X XXXX, million manufacturing of starting deliver ramp total December Revio to primarily to our approximately was XXXX. up product

expect basis figure annual on we've As we an XX-K. in before, to communicated our this backlog Form share

guidance. Now financial a on to bit expand

our full-year the to rate. At be midpoint XXXX. continue well in we Revio represents Revio As Compared be expect to slightly approximately we growth drive rate which market Christian expect XX% between the compared indicated, shipped of higher we $XXX to XXXX growth range, to to above this system in flat XXX to revenue the $XXX believe will to million. and XXXX, expect million shipments growth be a units XX% guidance to to sequencing of

Our purchases of capital macro factors consider equipment. expectations that several growth are impacting

funding base specifically further is For example, volume our with our expand Revio to install ability environment the in in the smaller China country. impacting labs. academic

high and interest globally. cycles sales inflation persistent Additionally, rates lengthening are

flat. terms revenue we we've In half. to approximately system with of first XX% linearity, in consumable quarter of with Revio fourth off lower down in the the be we Based first XX% and quarter-to-date, to total half, expect lower second the revenue the quarter approximately flat XXXX sequentially seen shipments of what compared slightly revenue to ASPs, and expect

or As these platforms to revenue, we pull IIe on to and do to expect majority quarterly we through up consumables share the expect a Revio or this not of basis continue make Sequel Onso instruments year. placements for

that expect over margins year. margin XX% to XXXX of believe in we gross improve P&L, the be to gross of range the non-GAAP We XX%. down Moving will do the the course the

points basis in decline reserve Sequel with demand higher approximately headwind place represented demand of associated the XXXX. charges inventory Revio reminder, II/IIe XXX a in As of in a

we manufacturing as mixed consumables optimization and margin driven lower drive shift Additionally, higher higher growth unit compared volumes, helping as consumable improvement expect by margin, instrument manufacturing to a well manufacturing toward to costs. the XXXX non-GAAP

expect our grow We expenses X% compared less operating with XXXX, to consistent long-term guidance. is non-GAAP than to which

be and in be back some million We hand it XXX million. I'll expect income final interest EPS XXXX, $X to approximately the full for for and $XX count and Christian Christian? for the to other year million to between average share weighted remarks.

Thanks, Susan.

As priorities we in last reiterate forward strategic out move to laid month. want XXXX, that I our I

technology adoption customers, more expanding at at priority Sequel Revio existing is II/IIE and accounts, converting the by Revio fleets customers. our top of new placements current increasing Our driving

quarter, placements into our get hands can as drive we Additionally, this more aggressively that the complete customers to manufacturing the SPB Onso our so Onso scaling chemistry leading globally. will we expect of of platform of

Another into build sales market customers momentum market. important priority Kansas Mercy in we support use and we call, expand setting, is to their discussed to this Bioscientia for continuing translational and in the Earlier to are who clinical the and XXXX. of a this City, few Revios in our the in aim starting Children's including our

but Additionally, to we launched complete. X far of are work technologies. our on they years, progressing the over groundbreaking We transformative of is X about platforms XXXX, forward other these expect instruments we're development I near we these progress in this the meaningful plan from I previewed make when working and our more that all sharing on their instruments launch coming to to year. look we completion.

of overhead, shift enthusiasm to make we on in are forward gross our mix operating improve target production be expect future expenses chain margins. Further, initiatives consumables, our Finally, our for of continue efficiency. updating we products we costs, reaching year. our our better on during to and flow technologies These cash the continue goal of our we disciplined of how least by manufacturing with positive to revenue expected becoming are product On gross expected our the deploy everyone to utilize top building to I we in business supply XXXX, improve our business. with of programs, encouraged investments the intend and to continue lower be have that look along million to as continue this and adoption at our several $XXX long-term margin progress XXXX. customers' drive to our towards

the let's that, Q&A. start So with

[Operator first from with Instructions] Dan Today's TD comes Brennan question Cowen.

do and about, Can implicit kind headwind maybe And China China? color did guidance, talked you you closed give the in Susan, again. you that on more rates What talked for you some the baking about of just on China of in these rates? for the the in Is it on close China of side? seen quarter? 'XX kind Have funding stable you that any Is in terms worsening? What changes? are

service QX you the We delivered thank providers decent for some about break new China. with were QX. We orders, of out in which had had Dan, that that. actually a QX We of some talk won't separately. Yes, large in multi-system go China's our

But drive for making over we we delivered samples do China be their see providers a way. in see out the to driving first the business it large the that service of they're will sending are Revio. half the course challenges And labs what China in here. smaller difficult is to Some the that funding and as result, into

China instruments in as And of in strong biggest for our significantly year. of so, result, And one we challenge XXXX. look we took for will It's as the not the for. although would consumables us forecast as be areas a into the are actually strong, the as hoping our be guidance, perhaps China for down we

is The next from Mikson question with Canaccord. Kyle

year. consumables Revio have margin year revenue install target? and that as reduce of And this this 'XX in costs the the cash does well, as base? burn you just funnel for on the increase kind could how you gross expanding talk Susan, production into Revio well, as Maybe the 'XX Congrats you about given just given cadence

Kyle. the question, for you thank Yes,

include instrument. And Initiatives start drive the across especially to instrument the also see of which we'll value in the more going and which consumable will even activities, right. engineering margins allocation will helps balancing bill as gross better QX. And these to improving cost. such only the of the combination lower better unit subsequent of then manufacturing on but to help manufacturing continue on materials is our that initiatives help facilities, the And cost some yields cost instrument the will improve to These as also have lower early So the reductions that of to going not and which in of this half. We're course, the you're side. down to gross costs. side, such is also What's on products, this some guidance of quarters, further, we insourcing costs, as consolidating year improve to such And positive, a and to but is outsourcing, we've first relative to to the overhead gross already from to year. continue come being that our reduce alluded the improve this initiated, implied key actually the our Kyle, which margins respect of to our to margins gross to, flow second disciplined our very part you path cash as with had improving margins half, getting our a consumable OpEx.

as OpEx guidance part had our not is this year, which our long-term more out to what do which our of XXXX, cash OpEx, indicated. than expect journey in is we positive So to we our of grow part to X% get flow

John from with is UBS. question next The Sourbeer

here. maybe digging just little on that some Revio the versus changed being the of assumptions being bit flat Maybe roughly up in placements midpoint further a on

gives that Beyond year? color into China, confidence you that can provide on flat the insight placement getting any other and for that you

for I think, question. I the thanks mean, John,

only will of of and opportunities, is the larger demand, seeing also increased those we're consumable a placements. we're One things projects, lot but drive not for unit seeing size particularly

those placements. either as Revio what additive and the get therefore, in past to we projects we've those expect being so incremental get to to started truly And the and seen see going, would

worse, talking China has It about for several is We've challenge. say. I now. bit about course, We've Of talked that. so little been gotten a quarters this would

so think seeing we we And what to can when of XXXX? placement get the I can. absolutely in think rate I were about back we XXXX,

point, at focused balanced been perspective a very think adoption we're this driving the pretty tough. taking macro of conditions kind on and I have because

The Research. comes next Nephron Jack from Meehan with question

sort Christian the you as are that into for if on. you just visibility for up was lay in kind the add out you could different the us Susan, projects going consumables I as you assumptions or wondering XXXX, of of and see what

as think I question. that, is when the -- for lot a growing consumables pretty impact Yes, year systems going get thanks course, then going planned reason systems about utilization, And the of or significantly. we ship about Jack, as all, in up should to I we're full to we the utilization for and say. scale systems we're in of think of this layering those I XXXX, be get to as of those they new XXXX, consumables, shipped up. consumables they first we the their When And

now moving So shift, because the truly that's how have X for from year. you new start quarter, on the X we'll to of consumables growth system layering the year you're in end placements system mix shipping year. the the this see and we're Revio towards second By been

that's you're to so And how going that. see

thing other The is consumable adding we also are kits.

line. on which And XXX over about And Kinnex customers those additive we've to point. from talked revenue And uptake strong particularly this we've kit, ordered the so you new seen kits saw we at just us some consumable kits. are recently have launched the

projects, Singapore start of that QX, project up. And I to to example, drives part another consumables expect start then that's to large factor so these in projects, us seeing population we're the see of some when And positive you the do for start larger their would sequencing. that finally,

see you'll ramp a So consumables in would which be there, additive.

So are the of explicitly factors positive consumable XXXX. side there's that in driving growth the several

Wolfe is Doug Research. Schenkel question next from with The

a just ends of I guess to I couple through. click loose So want

I'm that math which gross recognizing is big gross an obviously make there's on context initially. assume least an the going placement going jump seems you some the sorry, to of exit right? rate clear a doing your to for the to confidence that's sure lot mid-XXs assuming fewer of deeper pacing Revio. gave in the the First, boxes pyramid, I'd important trajectory a if there, I the question some revenue case per a for from into for then the building numbers are placing me per at of you're year-over-year, just growth the instruments probably and want a because consumable assumption up. box typically customers less, But doing just and box, types per in more consumables your consumable earlier. And box. margins, in toggle, If customer the of like also long-term follow-up go in to out the that It It's you're not placing targets. spend guidance embeds you're math, margin

So looking upside just this that for source potential to just understand make logic we're the the to I'd of a year. behind sure as love at

Yes, you, Thank Doug. sure.

year, One big in over rates. for improving and we that's gave with means, certainly get expect but a Susan dollars moving gross kind towards compute Okay, opportunity XX%, innovating therefore source associated opportunity at of But there mentioned, so our this innovation first kind you that reasons moving the improvement. certainly all system per tens actually into the and I outlined. keep gross that's, XXs. margin of, getting I'd to also costs course a get Revio, the she gross decreasing to with of she of the of margins or We gross going see lot, see we thing the of do we're out, for reducing wanted guidance margins, that into are translated XX% really Whether the didn't by, particular, to point we -- lots not thousands is we'll opportunity costs margins see. of on up year, which we're and to exit

XX% that's product you how mix and those couple we as XX%, start course, of get to you pull-through, is those to variables. to consolidation, XXs pathway consumable beyond. objective our move are the with And between a And towards changes, factory to up to consumable one right. said, you consolidate, for I things compound So along know, placement believe respect to it's of and a do we still lots There's that there. With and and numbers problem. On hand, XXXX. the as you see relationship get

As more to into utilization and, place deeper you you customers. to think them market the you're systems, placing lower therefore,

more is from the right, has X,XXX history been large-scale the the from seen projects, And conferences in with early projects in still from projects. adoption Revio, AGBT we're quite interest the ASHG respect from we've of However, than what from company. frankly, XX,XXX the projects to and from of larger there to in anywhere particularly recently ever sample

for -- then a and projects started. But going, And get as systems a to in projects people projects usually scaled laboratories long get they're volumes. to those and sample projects takes high then utilizing we see those expect and used because very those high at funded clip their so fully as time operating it these at they're to won

competing. factors X Those are some of kind level. they're competing at So

We've said we don't really we As or it's of going $XXX,XXX last still in AGBT, range we where know kind think believe to where itself I is out we week $XXX,XXX the pull-through that said fits. consumable shake to -- here. really still at it

I think still we don't answer. that know

answer But be you think that lots there's quarters here. of before it'll really know I definitively. competing several yet different forces

company. the growth, like ubiquity level respect is confidence we're germline HiFi driving history plan, which building the compound coming go revenue in to what of gross the our really compound adoption, that's than So to at fundamental demonstrating a samples trying genomics. of it's expansion, do I the really strategic a and why in problem, onto know to is system that of you puzzle is ever unravel market, adoption, the this in I the it a for driving is are. But and in bodes accelerating type, right. really this just driving well margin Driving then And guys core phase way more think number is the driving data objective our with and

with Ji Nam from The next Sung is question Scotiabank.

growth. your this mentioned, higher than year, you sequencing outlook for of Christian, market So it's kind overall much the obviously,

kind of the studies HiFi Solve all about, Just coming saying the territories share potentially if that just ever. sequencing? these this and expanding with into year think more new but to there from you from long it's the read launch of how read you recently, talked new growth versus sequencing kind for you is do curious, tell, too guys that don't consortium short you library much taking than early is that interest were of market large-scale prep Given I know

at markets? So much might of level taking read I'm creating versus kind kind the of short of a kind sense how new you a curious, just do have carry from high be

Yes.

question. I it's think great a

are new I already sequencing. of customers doing read most think that, short our

of the a think they're sequencing information, I been generally is short a new for now short I the most and high we'd were to happening short that of portion dollars a kind solve how sometimes, that we're long can so And allocating level, have outlined would the accounts automation reads of reads? we read kits. as to do more experience it's XX,XXX what are sample think But reads. the seeing that first, that long would long a it of what's even And are is in of additive the I short new you time. imagine seeing revenue so, costs. hey, the we sequencing launched building a these And win some read you And market is, scale. enough would a for do a rates, projects read rare customers being or used be eyes read from we approach entirely do on of and reads with happen. At totally project in disease, exactly success, now or can you would plausible. We're short is much replacing in beholder. slated at there But Revio, that bit that decreases see We've it's winning the to sequencing you say, more. result, but there's increases a example, portion project the question gives believe market actually the remaining. with and also it the and are dramatically

actually you And to fit see get of hey, economic these we we're project that to entire to year starting as that's a can to reads. sharing forward guys. projects with exciting. into customers deeper our you I'm really, are And long going so looking within envelope, And think I the some and saying, really if transferring as result, get this we

question is The Bernstein from with next Burstein Research. Eve

to clarifying unusually quarter. margin this on on for for high the even and the gross we right, gross but charges the was one margins we Revio. in about reserve amortization, get account we XX%. about ASP talked the commitments for question on that We know if and And 'XX, loss math still purchase If I'm inventory the doing

of it about So XX%. normalized if a that, margin quarter you like looks normalize for gross this

the quarter versus revenue? give on went gross for why last a is And you or Sequel? of percent this then So Revio consumables instruments flat is up for versus consumables if first as there color can margin any

math. wouldn't redo a of to trust little didn't in on bit. math, so the try if trying into to factored which some That your your question be I we us you, I'll but -- the the calculation. clarify just consumables, to impacted quarter, just had your challenges Yes, have kind fourth yield have

consumables being yield probably fourth sort higher, have that we some the even Nothing there. in had significant, with challenges So but quarter. some of did impact

beyond basis. Looking so and fully resolved QX to those gross on look expect I a been have the largely us as up moving start things you into and margins here, quarterly

The question Osborn Fitzgerald. next Ross comes Cantor from with

some geographies, So if this mentioned normal is a other more you here? not, and stocking color APAC. and And call, in occur you on phenomenon? consumable the Did stocking could provide

in the There's And some We was much they their blanket the XXXX. of the bit for respect to And course our good that holidays. So POs that those a start in get head stocking. little before QX, did nothing fourth they really quarter, they be fourth of holidays had large take consumable so they in I stocking, QX think POs earlier we major. ship they example, quarter. in because that ordering some there as a of But well. of go will that some have didn't always APAC, large with customers on consumables over may put have

for wasn't balance, think I on the a company. it quarter so And super heavy stocking

the question. ready think we're for I next

Goldman Sykes question from next comes with The Sachs. Matt

on Matt. is This Vivian, for

said are with the extended the expecting you current is there your cycles you sales know your continuation throughout But XXXX? recovery a a weakness trends guide funding the into in I for baked general environment. are So year? And of

we moderate suspect prepared levels. sales longer cycles contemplate of view taken we've through sales control control give should to manage But execute that think things we XXXX. kind we They're a cycles more year kind we're that outside And that, cycles. down I tried are the I that. of able our accordingly. throughout be our we're try that seeing to hopeful outside to of just reality is guidance by back of end pretty and to to shrink are normal sales towards would

lot a get things Now, worse.

NIH There's you we if States, United the take, balanced But better, under even still, noise a we get our it's do obviously and Of tried continuing all course, based which inside about across will business. we're course. of of our still still up, kinds things funding of don't guidance if a where create tough important kind is -- where set environment part we sit operating guidance of for an better really example, to could on resolutions board. We Of funding today, end things we a we change. the have budget could of budget. NIH If range? the

and some and even already but continue the States, funding friction environment about to a United news, year Europe, about no us, the today, creates interest that system. The the we for we sure remark challenged. I'm so a good also lot there and we've And to and growing, talked in of Europe year as had interest in said in Europe emphasized and there that be process. Revio shortage for talked that, outside good in sales have sequencing selling We China but I is last my the still HiFi friction rates is in year great general. is a for continue expect in prepared

and had tracked our than social the was AGBT we million week, teams almost social social lower XXx X.X told person where at next impressions impressions and we fact, last highest was I were. In

it is which what which we're be build And mean, this execute, how does there's think our I to interest, what focused year. helping into mean of and is to funnels, going opportunities and that us does which translate lot so does Well, sales? that on gives a

Morgan question is Stanley. Tejas from with next The Savant

Christian, I want a follow-up tack. to bit take that slightly a little question, on different

end. being the us right? So Revio Can XXX low You've probably backlog as at see? end I past what the the bakes walk low sort the you odd of it is just talked you of think through Xabout the leading not you low in the in think is lead of around confidence the fit. proposition related of product question the perhaps about market And talk qualified really end my the some value to other metrics range? there that can or best indicator, the on you at but the and drive your pipeline Onso, then guide,

is week, the Given so a tops, some coming the out and the little frozen bench up sequencing bit on moment? at emerging bench scores on well the of you've as vendors next their a essentially the bumping market the got in of Phred state top XLeap

question. Yes, Tejas. good Thank that's you, a

when for for obviously, for for where coverage even at and and $XXX Onso and -- we about, million, together we $XXX end, to we products. quality certainly at all million we're and funnel at the end, consumables, high have of we sales our talking low Revio today, funnels. the guide in considered of the thinking the And our put So our sales strength considered

of down outcomes kind timing projects. comes for orders, We are funding -- of the when explanation to possible for really range the comes timing of of

the our products the ability in them to customers on timely the our manufacture execution and execution ability, get Of and own basis. a sales own to of course, out terms

you think put to you together, you you try really for give those of a when different where up think through year. might all the and range the So guidance end responsible things

excitement end enough could there top that of is are outside the such that course the Now, control, of the perhaps if your the exceed the there, you end lower end could range, but funnels risks the actually so towards it you of up and out range. of that make be

the argue proposition QXX. start with you is different that is, say us, how to it come other came actually the of is are range. off over pipeline those to of for want that the to sequencer, and a areas you Onso, the is all of that We that, encouraging of backwards up execution. The the is value have frankly, I'd all bases with thing I Quite the Onso, we work factors. so first which there we consider certainly And off most the of reality would respect

the in of XX% bases say at it over a bases get expect you we submit our or their formal specification to they to QXX QXX. of over that would I not Now, XX% competitors have put QXX, and

competitors they've I those example, of themselves, about the talked customers' think think describe I will and in where a them we allowing parts data lot seeing hands, genome see I that's today, or see that's of kind for that some what QXX, actual quality. define how is, is perhaps they each their they've no a fact the let value And in TGen run like done of could I they are is of demonstrated data well one to what see. over proposition runs. But see variants and else that starts. that

so, And I the don't think opportunity frozen. is

sequencers there's On every the a other hand, many market. mid-throughput I many, is huge those sequencers do see many, for And year market the sold.

they're strategy, to a think I us needle-in-a-haystack you for capture trying to that Onso strategy, the it applications we our for every necessarily share fits is according quite see we think specific us ways strong. make We into that opportunity application. see and grow very that didn't the not appropriate using and our What's anticipate. we're very customers interesting is to using Onso as sequencer that to so as we in funnel Onso remember if our And been

the the where -- benefits a our of sense pathogen, earlier one example, makes that soon using that that's total a detect community. obviously it for is has customers So identifies for for which testing, the wastewater variant because you

it's makes going opportunity of sense. a We're seeing research on actually other an research lot and there's there. that or customers So MRD screening, oncology and it's focus whether oncology perfect on

the of like -- significant our are of it. I we specifications. other I'm end still quality we lot combination is we but market is market, that not have market is in sure enjoy the other day, yet, best for the doing at our a competing do so customers think in I specify Onso competitors and the the and so are much in So the feel it opportunity. that the

from The Guggenheim. Nambi next is question with Subbu

on guidance. to that assuming build what you in keeping expecting and XXXX? you're box for you consumable momentum have in Following-up this call if and second I in full right? revenue the into will Revio, a this of question last Is mind then week, Doug's on so, half described AGBT on And per your year are And $XXX,XXX guidance a imply the in follow-up. seems year heading that

Okay.

to So the respect to the with lots to pull-through, there's of we -- get ways guidance.

we a going general at more example, is already through -- to not. A another this But whether course, I kind call. to as factors, What get I won't would we've model second XXX, been see comment AGBT, explicitly to way won't the didn't opposed But $XXX,XXX business $XXX,XXX on in half. don't did there's the that to for I coming influence first our XXX. And so the I'll where comment we it it's on do of to I've that to end box more of on whether is with lots make in the or last about explicitly say model I revenue in pull-through know of is year of the like our up. half general our believe says going the XXX, or we And that it's the guidance range. that of $XXX,XXX one said be comment week

we opportunities consumables, for the we year of large the projects, these that Susan because is do see But which XX% Now, don't in uncommon year. growth because the see course Revio business the over this split, is throughout the the isn't we pointed because science not really business. Onso out, as an strengthening of uncommon of expect life phenomenon, of actual and XX%, and the in

to think execute. we right positioning just than have And do ability excited strong And go extremely faster We our now. so, our competitive about grow we're the market. is to

in That last exact was streamlined said, more to adjacent opportunity think address the more kits the is should cost reducing even our of week That costs AGBT came makes this both -- is week. that of perfect lower sense. same last revenue? chats you the was of launched the an pipeline said, to lots course, process. even enthusiasm, energy, the And of and reduction friction. in to there you same else about capturing And how sequencing we for also HiFi there in terms What sequencing reducing And issue? like launched solution address activation and big Christian, but at you, need the up, new that friction, kits,

a it. that's great you Yes, for Thank question.

new You're automation really The right. kits, upfront the of friction the on we've workflow. costs and focusing reducing and been

the requirements, We of so more seeing we and so and can HiFi are to growth customers. more and more reach to samples. out more some can bioinformatics they lower applications that the a how to there, consortium the are in solves work more market we more show that sequencing continue things doing input that benefit on applications one kinds DNA the more single of the things together revenue variant samples, side, is each them reads. of to access from the out gives All we on definition, by can which more those you the things decrease to doing continue also because Other of using and really We're diseases, particular development to particular rare solve those rare we're rare. friction long benefits enable that And is so customers build highlight sample, side created HiFi critical. disease,

we have of the And long the change in enable warranted. broaden development read that, we of but that product is will a and sequencer, benchtop share specific certainly important community an And are we to they course, so now. And to sequencer of will once our barriers, further. that updates given capital finally, haven't market, thing. And system the us even course, enabling then comes base customer timing as on

the you So thank for question.

question Vatnsdal with Rachel next comes from JPMorgan. The

of model. discounts that AGBT, some explore a cautious more I But to capital to noted that then on about rental of customers that So requiring Revio. reagent dollars. purchasing minimum and kind on you're alleviate you to you talked It's to some of this higher almost at of consumables so spend seeing wanted spending capital you're ask, at customers, giving starting

that started about if ASP to impacting strategy a year? So about how us? Revio you Have you use as we as year that so, model well? can minute this spend for that should think this And for then we talking go-to-market

to respect for We place Yes, to a get economic year, it's business we you. still customer for exploring question. Rachel, the are their exposure, instrument. a implemented some but and perhaps partner us less do the but ability leasing our leasing leasing alternative obviously get or partner. we where a the arrangements models consumables of Revio, with to we new arrangements last same new more financing Thank we more healthy creative pays financial revenue great from that partner to benefit still the That and customers us that. get the -- gives takes

by managing catalyze different to catalyze see how markets. so And period think we're models to through the about -- and we starting with we experiment to we this continue how grow how

are majority done. of kind our historically still Now, as vast sales traditional going the be to of we've sales

a of probably isn't effectively that think from don't when And how ASPs about consumable XXXX, the at think anyone on about significant the revenues I think so the generating altering lower real and would margin, geography have might is likely would ASP think But of really. we're be implication would maybe But benefit and what more that instrument the do programs. and customers revenues you be P&L. reagent the that to we rental little see higher bit. And consumable you that, street some impact should think revenue I type the fundamentally I revenue that thinking

will how being we think to marketing tool they deploy get I them. provide more way customers, of and whatever a, into to day of decide opportunity ends it a the then much a end at the up that and

how goes, posted. we'll see we'll and So it guys you keep

is The with Mason Stephens. next question from Carrico

little late a magnitude Sorry of is these asked guide in the way Is visibility timing of up how the online in you of any these frame sequencing into is into back of guide? implied have and up in think the these year. the the talked guys to coming the here, projects mean, growth there if to customers the has projects? scaling hopped these ultimately, much the I bit back the projects half the ramp baked I derisked been on related but about already. this larger I half? question terms in How you them do revenue have

you, the highly is reality crank. But large they they have good the Thank respect question. large anytime to question. start, a they when you for a It's with once Mason, projects And project, start. variable are

everything they that most projects going Most to likely actually go, to of can when certainly sooner course, banked And already to seeing of might we start, we're accelerate That -- be ready so get them. watching some others. we're doing than have those and and these then okay, any it kinds is. cost When way prospective is samples apply of multiply it genome, magnitude studies. about, for particular think to of you number about per the by a of that the the project, best to particular example, what's samples the probably and project think

the looks to out like. they to have want price a to to you have $XXX per project, can at you X,XXX-sample run. figure do math along use, that whatever you then capital or and what So genome assume buy have you a price And if

kind project out about year, the when So we one, the make responsible guide, to think a so we're you're to those -- to I any on sense in not so or as XXXX, want start we really in view of any give that took break moving pretty we're particular kicked into you some, get these off. guidance. that is because for volatility baking magnitude GREGoR we of starts, Consortium actually respect put project. With projects talked because, we to here make several project of guide particular were speak. a turning really to to of do pretty But already or of start us variability where what All sure one see projects project. right? our conservative going the the point And dependent We or along. are as our can of the We the seeing

starting later And year. so this about we talked Singapore

seeing go get samples funnel and we these to samples. of the because conferences, significantly to And it. more exciting added it's And so time we're one really every super more

And go. execution. so assured of -- now to we're you and timing we're ready be it's a question And to ready can

management like any turn for to back I'd This concludes session. question-and-answer our to closing remarks.

All us. right, time minutes I few in a today. over well, we're everyone we hanging want to for thank with know

be expect We an call. With We the that, next course for to the end at quarter and you Thank year we this conferences we look XXXX the support. and the earnings exciting various you. our company, appreciate everyone's forward over on seeing to call. of will

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

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