Hello, Todd Friedman, Head of IR. Thanks guys for joining us today. Maybe you guys just walk through your second quarter results. You just announced them last Thursday. Good, good quarter, better than most thought. Stock did pretty well. Maybe do a little overview. Yeah, great. Kyle, thanks. First, let me thank you for having us. This has been a great conference for us so far. Second, for giving us a chance to talk about PacBio. This quarter, we were really happy with how things finished this quarter. I think, like a lot of companies entering this quarter, there was a lot of uncertainty with what was going on with the NIH, what was going on potentially with tariffs. We felt like we navigated that really well. Came out with a solid $39.8 million, kind of right in line where we thought we would do, a little bit better than what everybody else thought we were going to do. Some of the things we were really excited about were, you know, over 60% of our placements were with new customers to PacBio, showing just the versatility and demand that exists as people see the value of long-read. We had 45% growth in the rest of the world, which we were really happy about, an area we really started to focus on. We saw gross margins continue to improve, quarter- over- quarter, another area we've had extreme focus on as we mature our products and see our SMRT Cells get better yield. A great quarter, really happy with how things finished up. I don't know, Todd, if you want to add anything? That was great. Continuing our path to cash flow positivity, another quarter with a reduced cash burn, and we expect that to come down even further in the second half of the year. We're driving towards that goal of being cash flow positive exiting 2027, and it was a major step in Q2 on that path. That's great. Maybe you kind of refined the guidance range a little bit. How are you thinking about the key, like, international markets, you know, APAC, China, as well as, you know, EMEA and stuff going forward? It did really well, obviously, in the quarter too. Yeah, I mean, we're still looking and anticipating EMEA being our strongest growth region. We've made great inroads there with some of the pop-gen studies and some of the hospitals, and we continue to see that type of progress for the rest of the year. We also saw continued improvement in Asia-Pac, this second half of the year. We're still anticipating that. We did see some modest pull aheads with China, but that offset some of the pull aheads they had in Q1. Part of the reason we're showing kind of flat revenue, quarter- over- quarter, is because anticipating some of those pull ahead in orders in China, but otherwise we're really excited with how things are going in the rest of the world. That's really helping us offset some of the headwinds we've been seeing here in the U.S. In China, what exactly was pulled forward? Was that, you know, instruments or consumables? Mostly consumables. I think it's, you know, we have a lot of tools over there. I think our distributors there want to make sure that they have the consumables available for our customers in China. They wanted to make sure they had those in stock. Gotcha. Maybe just since we're on the topic, talk about why you kind of narrowed the guidance range and why you literally have more confidence that you're going to be at that midpoint, basically, more and more visibility. It's in a time when it's pretty uncertain, especially with the U.S. academic side. Why are you more certain, I guess, of the outlook in the second half of the year? Yeah, I think it's a couple of reasons. I think number one is there were two reasons we were concerned with the second half of the year. First was the tariffs in China, and second was the NIH and the potential decline in funding there. I think right now we're feeling pretty good and pretty confident about the second half in China and the rest of the year. I think from the standpoint there, we feel like we've taken the risk out of the bottom of our forecast. On the high side, we were hoping that potentially things would clear for the NIH funding in the second half of the year. We might see some of that upside return. Right now we're still cautious on that, which is why we brought the top end of the guidance down. Maybe your U.S. academic customers, what was their activity like in the second quarter? In terms of savings, spending, things like that, how are they? I know we got this update last week from you guys, but basically, what's the current perspective from them and how do you anticipate they're going to be using their funds, if at all, going forward? Sure. There are sort of three dynamics to our academic customers. First is the ones that already have tools and how are they doing? They're still spending, they're still running their studies, they're still buying consumables. We're excited about that. There's still demand, there's still scientific discovery happening with those academics. Two is, some of the customers that we're potentially hoping or the academics that we're potentially hoping to have bigger budget amounts didn't have the funds available or probably wouldn't have had the funds available and have actually been buying Vegas. We're excited to see that because we're still getting these folks to convert to long-read. Three is on the Revio. We only sold two Revio s in the first- half of the year to academics, and that's down dramatically from previous years. That's part of the reason we took the high end of the guidance down in the second half of the year. We just anticipate that not changing. What we have heard from a lot of these academics is if they get clarity and if things happen, they still want the Revio. They're still talking. When we talk to our sales force and they're talking about these opportunities, they're right now pushing them into 2026. They're saying until people feel more certain about the funding environment, they don't want to commit to a $500,000+ tool. Yeah, on the Revio, you know, is that, I mean, just confirm, like that is definitely like the instrument of the future for the company that's going to drive a lot of the, you know, financial performance for the next couple of years, I guess, until the next, you know, the next ultra-high throughput longer, let's say, whenever that comes out. It's very important. Placements have been, you know, I guess tougher. I think it was like what, 15 or so in the last quarter and two of them year to date in academics. Is there like a backlog or like a pipeline or maybe to actually just talk about the funnel, what it's like, you know, are you pretty confident that you'll get some, you know, shipments at some point next year if the, again, like the funding environment kind of is a little bit, you know, better than feared, I guess? Yeah, so once again, I think right now, one of the things we're excited about is the Revios are still selling and they're selling into areas we historically not sold as much into: clinics, hospitals that are running larger studies, hospitals that are using it for diagnosis. That's the area that's been sort of making up the shortfall for us in the academic environment. Right now, I think we talked about it for the second half of the year, we're not seeing or not forecasting any pickup in academic demand. I think everybody hopes based on what we're hearing from a lot of the folks in academics, the academic environment is they do want to buy the Revio s and they are indicating once they get clarity in 2026, they'd like to place those orders. Right now we're not bringing those opportunities into the sales funnel. There's upside for us if they decide if there's a budget flush, you know, we can build the tools and sell them to them. What's great about the fact that we've had to focus on areas other than academics is we're actually building a muscle to sell to biopharma, to sell to clinical. I think historically the company has had a huge reliance on academics, and now we're learning how to sell into these new markets, which I personally believe are the bigger growth markets for us, as well as the fact we have some of our clinics now that are actually launching some of the LDTs and other things right now. We haven't actually seen those consumables get into our run rate yet. We're excited as they get up to, they're going, or they're going run rates, how that's going to benefit us going forward. We're actually developing and becoming more than just an academic research use only company. We're becoming a company that's a valuable partner with clinics, with hospitals, and around the world. Our sales team is doing that because the sales to the academics right now are not happening. When they do come back, we've got that sales channel built, plus this new sales channel we've built. Perfect. I want to get to the non-research side in one second, but just on the pull-through, for the Revio, you have this range where I think it's like low to mid $200,000 or so is the pull-through range for the year. You have, you know, the product has been out there since 2022, really. I mean, people have it for at least two years. How were those cohorts trending in terms of utilization? Are they operating at a pretty high utilization, like, you know, well above that, kind of like $219,000, that you saw in the second quarter? What's going on with the utilization? Why is it kind of like a little bit modestly growing? It's accelerating a little bit. I think our mature customers are utilizing as we expected. That's remained steady. I think part of the thing now is we're selling to more of these clinics and hospitals that are ramping up. That's artificially decreasing utilization because there's more tools in the base. I think we're hoping it'll return more to the high to low mid $200,000s as these clinics and hospitals get up to speed. What we're really excited about is potential utilization with some of the things we have coming in the future with multi-use. I think with some of these customers that have higher throughput needs or want to compete with lower cost, because they're being reimbursed, our foray into multi-use is going to be hugely beneficial to those high-use customers. We believe that will actually increase utilization because of the requirements that are needed to run the chips multi-times. Yeah, and when we think about pull-through too by customer base, this is why it's so important getting into the clinical run rate business. The research customers, you know, they tend to be project-based. What we'll see sometimes is, you know, certain customers will have pull-through well above our company average for several months. Then they'll go, they'll analyze the data, they'll stop sequencing for a little bit, and then pull-through drops. Research in academia tends to be a bit more lumpy, whereas getting into the LDT and the genomic testing labs, as they get their labs up and running on their tests, that tends to be more steady volume. We're still in the early days of these customers really starting to ramp, but when they do, it will be nice because that's a more predictable, steady volume. We're working towards getting to that state. Okay. On clinical, that's like 15% of the consumables, I think. I think that does not include translational, right? That's correct. That 15% is genomic testing labs, it's LDT labs, it's children's hospitals who are using it to return results. It's not these research programs in cancer or in genetic disease. That's right. Okay. Would you guys characterize that as kind of inflecting that research, that clinical business? If so, or if that inflection point is kind of in a somewhat near term, what, I know Revio is like the catalyst that kind of helped that, but what is it exactly about your customer base or your go-to-market strategy that really helped you get to 15%, which is a pretty material mix for clinical? I think Todd can give the details. It's two things. I think one is some of our chemistry around Pure Target. We've been working with them specifically to bring solutions that are easier for them to use, that work with automated tool sets that they have. Number two is seeing the pathway to decreasing whole genome sequencing pricing through a multi-use as we talk to them about that. They see a path where we as a partner will help them not only be more effective in their diagnosis or in their discovery, but more cost-effective. I think you've got all the specifics. It's really just what the Revio h as enabled. Revio has been on the market for about two and a half years. Before Revio, you know, the Sequel II platform was great, but it was $3,000-$ 4,000 a genome. You could only do 80 genomes a year. The cost wasn't there, the throughput wasn't there. That really means PacBio HiFi was, you know, really set aside for just research-only activities. Revio really changed the game in terms of what it could do in that clinical setting, with bringing the cost down now to $500 a genome, throughput up to 2,500 genomes a year. That really opened the eyes to a lot of these LDT labs that, hey, I could bring this into my lab and I could have a production mode test off of PacBio sequencing, in a way that didn't exist just a couple of years ago. Revio is really, along with things like Pure Target, has really enabled these labs to start seeing the potential of putting HiFi and PacBio into their run rate manufacturing production test. The fact we're combining what used to be multiple tests onto one test means a lot of the legacy tests that some of these labs had to do to get a diagnosis, we can now do with one test. They're also saving time from a labor standpoint and how much they have to perform. Okay. In the clinical portfolio of customers that you have, let's say, on the conference call you brought up last week, you brought up Gene Gx, Variantics, you have the Ataxia test, you have a bunch of partners. Are any of these going to be a material revenue driver anytime soon? Or are these just proof statements for that clinical business for HiFi? I think over the next couple of years they have potential to be a meaningful revenue driver to our business. Not significant in 2025. They're still building out their panels and they're in the early stages of putting them into production mode. Especially when we release our multi-use SMRT Cells, I think that's going to really enable more volume to come onto our platform. These customers keep telling us if the cost were just X amount lower, or if it was just a little bit closer to where short-read is, we would migrate tens of thousands of samples over. We're heading in that direction. We believe when we get there over the next couple of years, that's going to really drive a lot of these samples onto PacBio from legacy technologies. Okay, on the multi-use SMRT Cell technology, the thought is, first of all, this can be just used over and over again, like the yield does not decrease with each use, like if you wash it and stuff. Is that true? That's correct. It's going to have the same specifications as our current multi-use SMRT Cells. Yeah, which is really, really important. In theory, like, you know, who would, let's say this is launched in the next several quarters, who's going to be like an early adopter of this? It sounds like it's great for clinical, but are research people going to be using it as well? Oh yeah, anybody that's sequencing any meaningful amount, you know, this is going to instantly give them a lower cost per genome and really accelerate their research. If they're a research customer doing a project, it's going to allow them to move more tests onto PacBio if they're in, you know, a DX or LDT lab. We're going to likely roll this out in phases and we'll likely target the highest throughput customers first as being potentials to adopt this new feature. It's going to significantly reduce their cost per genome at the same time, help our gross margins as well because the SMRT Cell is the most expensive part in our manufacturing of the consumable. Being able to ship that once and have the customer use it multiple times is going to help our cost profile and our margin profile as well. Yeah, I mean, how is the revenue payment you receive for these SMRT Cells that can be used multiple times? How can you kind of even that out given, you know, yeah, exactly. It depends on, you know, we haven't disclosed any pricing yet and we're still working through the final details on what we expect pricing to be. At the end of the day, it does assume that customers will move, migrate samples over to long-read and increase their utilization. For this to really be revenue accretive, it doesn't have to, you know, we're talking about a couple of points of utilization increase to really be accretive to revenue. The assumption is that with a lower cost that the customers are getting, they will move and migrate more samples over to the platform. All right. The per SMRT Cell cost would be maybe higher than right now. That's right. Exactly. If you get a, depending on the number of uses you get out of it, you would increase that cost of the SMRT Cell. It would come with the reagents necessary to do the wash and the reuse, but you're getting more uses out of that. It has higher value, so you'll pay more for it, but it will be less of a multiple than just the number of uses. Part of that is because in order to utilize and get the reuse, there's a time clock. You've got to schedule your runs and schedule your samples because once you start using the SMRT Cell, you have a certain amount of time you need to use it in. One of the things we're excited about is it'll bring more volume on because these larger customers will be scheduling more samples and running more samples. In many respects, it encourages higher utilization because if you don't use it in a certain amount of time, you can't use the chip. One, two, three runs will be scheduled ahead of time, and that's why we'll be targeting the highest utilization customers, the ones that understand that need and can actually plot out how their pricing and their cost is going to be benefited by that. There will be a lot of customers who still want the single cell. I think there's going to be a lot of demand for that still too. We are going to still offer both, single use and multi-use. Depending on the application and customer, they'll buy the consumable that's right for their project. Okay. Just in terms of pricing though, so Revio SMRT Cell initially was like $9.95 per genome. That's right. Now with Spark, I think it's like around $500 or so. With this next iteration, the launch of the multi-use chips or SMRT Cells, maybe there's going to be a little bit of a per genome or per GB decrease. Again, there are all these other economics that are going on too. That's a good way to think about it, given we're talking about a future time point. Yeah, it will bring the cost down below $500. Right now we're at $500 a genome. It will bring it below that. All right, got it. All right. In terms of the gross margin impact, I assume recycling is part of this too, right? Were they like, you know, customers can like return these SMRT Cells as well? No. No, it's just, yeah, multi-use. The cost profile is a little bit more attractive, I guess that'll help maybe? Yeah. It's the largest percent of our cost is the SMRT Cell by far. Selling a kit that has all the reagents for a higher price for us that gets used two, three times will bring in a much higher gross margin for us than currently, and much lower cost per genome for our customers. Okay. Given you have all these large, you know, epoxy projects going on now, do you think you can get big bulk orders for these multi-use SMRT Cells right away? Possibly. Yeah. Will discuss that. Yeah, that's part of our strategy to determine what the impact and price elasticity is. Are we now competing for much larger projects because we have an offering that allows us to price more competitively, and we'll be able to figure that out in a way we couldn't before. Right. Okay. Yeah. Just on the, going back to kind of like the financial stuff. You have the cash flow break even target of 2027, exiting 2027, I guess. What are the, you know, levers that you have to pull that will help you get there? We hope that there isn't another flat revenue year, but we've seen the macro get tough in the past. Talk about the levers that you have to pull and also just try to, like, give us some comfort that the debt that you have is, you know, it can either be paid off or refinanced or some, you know, whatever you think about that. Yeah, I think there's a number of things we've spent some time talking about. Just crisp execution for our gross margin line, whether that's holding ASPs on our equipment, which we believe we can do, delivering on multi-use, which for our highest utilization customers will give us better gross margins and them better whole genome costs, will dramatically increase our gross margin, continue to execute and work with our suppliers on things like chip supply, you know, the things that are one of the highest cost components of ours, which are the CPUs. We've been working with them to get better compute. There's a number of areas and levers we're already working to get the cost down. I think number two is just being really effective on what we're spending our R&D on. We know what our customers are telling us exactly what they want from us. They want multi-use SMRT Cells and they want higher throughput machines that give them a better whole genome pricing. We know exactly from a vision standpoint where we want to go from an R&D standpoint. Where we're executing right now is de-risk from the standpoint of demand, we believe. We're spending money in an area that we know we're differentiated and that our customers have indicated if we deliver, they are encouraged and would move over to that. I think number three is, and the thing that makes me the most comfortable coming in new to the company, is just the market that already exists that's waking up to the value of long-read, meaning we are a couple percentage point player in an existing market right now. It doesn't take us a lot of market share gain to get the revenue we need to be cash flow positive. What we feel we need to do is successfully execute, successfully get the whole genome pricing closer to parity with short-read, and give people that want it the throughput. When we do that, we think it's very realistic for us to increase our market share a couple hundred basis points, which when you think about it, these are companies that are already spending money to do these tests. We think they're just better on ours for certain indications, better on our tools. Okay. Just to be clear, the program to develop the ultra-high throughput long-read platform, like the actual, I assume a large box, is that slowing down? Is that on hold or is that just a future at some point? We stepped away from short read. That was the high throughput box that we paused on. We did that for the very reason we wanted to focus on high throughput for long read. What we want to deliver and what our customers have indicated to us is the two things I said. If you can get the whole genome pricing closer, be the combination of multi-use, and then get your next box out that gives us the throughput, we believe there's no reason why we wouldn't want to do sequencing using long read. Okay. Yeah, it just sounds like you kind of pivoted to, you know, the lower, the relatively easiest thing to do would be make a consumable rather than a big box and sell that, because given this environment, no one's going to buy a huge, you know, refrigerator that's brand new. It's a tougher environment for that. I was, you know, given the macro, just thinking, it makes sense though. That's where we're excited about Vega. I think what Vega is doing is it's the perfect product for the capital constrained environment we have right now. It's $169,000 and allows you to do long read. That's the perfect tool for this funding environment, we feel. We're hoping when we deliver the high throughput tool and people see the value of long read, they'll start converting and opening up their purse strings again to sort of move into that, especially when the overall cost per run is what we believe will be on parity with short read. Okay. I guess, and then finally, you just, you know, what's like the most exciting thing about PacBio that people aren't really like paying attention to or underappreciating? This is my background coming from running data teams at Apple and other places. I think the big inflection point for our company is really when customers start interrogating their data using some of the new tools through AI and compute power and start realizing they're going to need much richer data sets to come up with better answers. I think we are going to be one of the fundamental tool providers for the next generation of the data that's needed to really drive life science. I think the complete data sets that we provide with the multi-layer, through, methylation, is going to be incredibly valuable to companies two, three, four, five years from now when they're sort of unleashing the new power that AI brings, as well as the new compute power that we're going to do to build to support that. I think the companies that have those data sets are going to be much better positioned to execute on whatever their research, their diagnostics, or other things are than people that are using legacy tools and much smaller data sets and what I believe are incomplete data sets. Okay. That's great. Thanks, guys, for joining us. Appreciate it. Thanks.