PACB Q2 Deep Dive: International Demand, Consumables Growth, and Clinical Adoption Drive Results

Genomics company Pacific Biosciences of California (NASDAQ:PACB) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 10.4% year on year to $39.77 million. Its non-GAAP loss of $0.13 per share was 21.5% above analysts’ consensus estimates.

Is now the time to buy PACB? Find out in our full research report (it’s free).

StockStory’s Take

PacBio’s second quarter was marked by robust international demand and higher consumables usage, which helped the company surpass Wall Street’s expectations. Management attributed the revenue growth to strong performance in the Asia-Pacific and Europe, Middle East, and Africa (EMEA) regions, with CEO Christian Henry highlighting a 45% year-over-year increase across these markets. The company noted that adoption of its long-read sequencing platforms, particularly through the new Vega system and recently introduced SPRQ chemistry, was a key driver of increased gigabase output and broader customer uptake.

Looking ahead, PacBio’s guidance is shaped by ongoing macroeconomic uncertainty, especially surrounding U.S. academic funding and the impact of tariffs in China. Management expects mid-teen growth in consumables revenue as HiFi sequencing adoption accelerates, partially offset by anticipated declines in instrument sales. CEO Christian Henry emphasized expanding clinical and translational research initiatives, stating, “We remain on track towards our plan to achieve positive cash flow by the end of 2027 and believe our $315 million in cash and investments as of June 30 will fund us through this transition.”

Key Insights from Management’s Remarks

Management cited international growth, consumables strength, and expanding clinical applications as central to Q2 results, while also noting cost discipline and product innovation.

• International expansion led growth: Management called out 45% year-over-year growth in Asia-Pacific and EMEA combined, driven by new Revio and Vega placements, as a primary source of outperformance relative to prior quarters.
• Consumables momentum: The introduction of SPRQ chemistry, which increases throughput and reduces sample costs, led to record gigabase output and higher consumable revenues. CEO Christian Henry reported that over 90% of runs now use SPRQ chemistry, supporting steady utilization across the installed base.
• Clinical and translational adoption: 15% of consumable usage now comes from clinical customers, including new placements in diagnostic and hospital labs. The company highlighted adoption by Quest Diagnostics and collaborations in China as evidence of growing clinical relevance.
• Vega expands customer base: Nearly 60% of Vega shipments went to new customers, broadening PacBio’s reach into smaller labs and new market segments. Management described Vega as enabling applications like small amplicon sequencing and targeted panels, previously less accessible to long-read sequencing.
• Cost discipline and restructuring: The company reduced non-GAAP operating expenses by 18% year-over-year through restructuring and lower stock-based compensation, contributing to improved operating margins despite ongoing investment in product development.

Drivers of Future Performance

Management expects continued consumables growth, further clinical adoption, and disciplined spending to drive results, while acknowledging persistent macro and regulatory headwinds.

• Consumables growth opportunity: Management projects mid-teen percentage growth in consumables revenue, underpinned by increasing Revio utilization and broader HiFi sequencing adoption in both research and clinical settings.
• Instrument sales pressured by macro factors: Ongoing uncertainty in U.S. academic funding and trade policy, particularly regarding NIH appropriations and China tariffs, are expected to result in mid-teen declines in instrument revenue. Management is closely monitoring these risks.
• Margin improvement through cost controls: The company aims to exit the year with non-GAAP gross margins above 40%, supported by reductions in unit costs, restructuring benefits, and higher consumables mix. Management also highlighted innovation like the upcoming multi-use SMRT Cell as a future lever for both customer value and margin enhancement.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be watching (1) whether consumables growth continues to outpace instrument sales declines as clinical adoption accelerates, (2) funding trends and clarity around U.S. NIH appropriations and their impact on instrument demand, and (3) the pace of new customer wins and expansion in international markets—especially as Vega and Revio platforms gain traction. Progress on SMRT Cell innovation and cost reductions will also be key markers of execution.

PacBio currently trades at $1.38, up from $1.27 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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