Pacific Biosciences 2025 Q1 Earnings Misses Targets as Net Income Plummets 445%

Pacific Biosciences (PACB) reported its fiscal 2025 Q1 earnings on May 12th, 2025. Pacific Biosciences missed expectations, reporting a net loss of $426.07 million, a 445% increase from the previous year. The company adjusted its guidance, anticipating full-year revenue between $150 million and $170 million, reflecting macroeconomic pressures. Despite challenges, the company's strategic focus on long-read sequencing innovation continues, with efforts aimed at achieving cash flow breakeven by the end of 2027.

Revenue

Pacific Biosciences experienced a 4.3% decline in total revenue for Q1 2025, totaling $37.15 million compared to $38.81 million in Q1 2024. Product revenue decreased to $31.11 million, while service and other revenue rose to $6.04 million, contributing to the overall total.

Earnings/Net Income

Pacific Biosciences reported a significant widening in losses, with EPS falling to $1.44 per share from $0.29 per share in the previous year, indicating a troubling financial performance.

Price Action

The stock price of Pacific Biosciences has dropped 5.98% during the latest trading day, has edged down 0.90% during the most recent full trading week, and has plummeted 24.14% month-to-date.

Post-Earnings Price Action Review

The "Buy on PACB Revenue Beat and Hold" strategy demonstrated effectiveness, yielding a 23.8% return over 30 days, surpassing the S&P 500's 16.5% return. This indicates the strategy's potential for capturing growth following revenue beats. However, given the recent earnings miss, investors may need to reassess its applicability in current market conditions. The strategy emphasizes buying on revenue beat announcements and holding for a month, often outperforming broader market benchmarks. It is crucial for investors to consider market volatility and external factors influencing stock performance when applying this approach. With the recent decline in stock price, the strategy’s historical success suggests potential recovery opportunities post-revenue announcements, yet caution is advised due to prevailing economic uncertainties. This strategy highlights the importance of aligning investment decisions with company performance metrics and broader economic trends.

CEO Commentary

Christian Henry, President and CEO of Pacific Biosciences, expressed a cautious but optimistic outlook on the company's performance, emphasizing strong consumables revenue growth and successful Vega platform shipments. He acknowledged challenges stemming from uncertainties in academic funding and trade policies, which have impacted Revio system placements, particularly in academic markets. However, he highlighted the resilience in consumable demand and the strategic focus on long-read sequencing innovation. Henry underscored the commitment to achieving cash flow breakeven by the end of 2027 through disciplined cost management and targeted investments in high-impact initiatives.

Guidance

Pacific Biosciences expects full-year 2025 revenue to range between $150 million and $170 million, reflecting a cautious adjustment due to macroeconomic pressures. The company anticipates annualized pull-through per Revio system to remain in the low to mid $200,000s. Non-GAAP gross margins are projected to be between 35% and 40%, with operating expenses expected to decline by 14% to 17% compared to 2024, targeting a range of $240 million to $250 million. The company aims to end the year with approximately $270 million in cash and investments.

Additional News

Pacific Biosciences has made several strategic moves recently. The company appointed Jim Gibson as Chief Financial Officer on March 31, 2025, bringing extensive financial leadership experience from leading tech companies. Additionally, PacBio has forged a licensing agreement with The Chinese University of Hong Kong to enhance methylation detection in its HiFi sequencing. This collaboration aims to advance the detection capabilities of its systems, supporting research in cancer and neuroscience. Furthermore, PacBio was selected by the Davos Alzheimer’s Collaborative as a sequencing partner for research initiatives in North Africa, focusing on Alzheimer’s disease and dementia. These developments underscore PacBio's commitment to strengthening its leadership team and advancing its technological offerings in the genomic research field.