$Pacific Biosciences(PACB)$
instrument revenue同比下降情有可原，Consumable revenue增长强劲 [看多]

Susan K. Barnes - Chief Financial Officer and Executive Vice President

Thank you, Mike, and good afternoon, everyone. I will begin my remarks today with financial overview of our fourth quarter that ended December 31, 2013. I will then provide details on our operating results for the quarter with a sequential comparison to third quarter of 2013, a year-over-year comparison to the fourth quarter of 2012 and a full year 2013 to 2012 comparison. I will conclude my remarks with a brief discussion of our balance sheet.

Starting with our fourth quarter financial highlights. During the fourth quarter, we recognized revenue of $9.1 million, incurred a net loss of $17.2 million. We ended the quarter with $113 million in cash and investments, a decrease of $14 million from the balance at the end of Q3.

Breaking down our revenue. Total revenue from the quarter was $9.1 million, up $1.7 million from the $7.4 million of revenue realized in Q3 and up $3.2 million from the $5.9 million recognized in Q4 of 2012.

For the year, revenue in 2013 was $28.2 million, an increase of $2.2 million from 2012. For instrument revenue, in Q4 of 2013, we recognized $3.2 million on 5 instruments installed compared to $3.7 million on 6 instruments in Q4 and $3 million from 5 instruments recognized in Q4 of 2012.

For the year, instrument revenue was $11.5 million in 2013, a reduction from the $15.5 million recognized for instruments in 2012. As a reminder, higher instrument revenue 2012 was a result of working off an early commercial backlog of 16 systems coming into 2012 compared to 5 systems in backlog coming in through 2013. Consistent with the momentum we've been describing in our last earnings calls, our backlog coming into 2014 has grown to 13 systems.

Consumable revenue was again strong this quarter. Consumable revenue for the quarter totaled $2.6 million, up 25% from the $2.1 million recognized in Q3 and up 97% over the $1.3 million recognized in Q4 of 2012. For the full year of 2013, consumable revenue was $8.5 million, an increase of $3.9 million or 84% over revenue recognized in 2012.

Service and other revenue is primarily composed of service and grant revenue and with $1.6 million in both Q4 and Q3 of 2013. For the full year, our service and other revenue was $6.4 million in 2013 compared to $5.9 million in 2012.

However, to understand the growth in this area, it's important for me to break out the service revenue. In Q4 2013, service revenue was $1.6 million, an increase of 9% over the $1.5 million recognized in Q3, an increase of 24% over the $1.3 million recognized in Q4 2012. Year-over-year, service revenue increased 22% to $5.8 million for the full year 2013 versus $4.7 million recognized in 2012.

And finally, this quarter, we recognized $1.7 million of revenue associated with the Roche agreement that we announced last quarter.

Gross profit was $3.2 million in Q4, representing a gross margin of 34.5%. This included the $1.7 million of profit related to the Roche agreement as that revenue has no associated cost of goods sold. The gross profit in Q4 is $2 million higher than the $1.2 million of gross profit recognized in Q3 and $2.6 million higher than the $600,000 we recorded in Q4 of 2012. For the year, gross profit was $6.4 million, a $5.5 million increase over the $900,000 recognized in 2012. These significant improvements are not only driven by the Roche contribution, they also include the benefits of strong growth in higher-margin consumable sales and continually improving service margins. Our increase in service margins is a direct benefit of our improvements in system reliability. Uptime for our system are now in excess of 97%.

Moving to operating expenses. Operating expenses in the fourth quarter totaled $20.2 million compared to $21.2 million for the previous quarter and $22.3 million incurred in Q4 of 2012. For the full year of 2013, operating expenses totaled $84 million, a reduction of $11.3 million from the $95.3 million expense recorded in 2012.

Breaking down our operating expenses. R&D operating expenses in the quarter were $11.1 million, up $700,000 from the $10.4 million recognized in Q3 of 2013 and were $600,000 below $11.7 million of expense in Q4 of 2012.

Expense variances reflects a normal expense fluctuation associated with product development. For the full year 2013, R&D expenses were $45.2 million, a $2.5 million decrease from 2012 levels. Main drivers from reduction -- related to reductions of supporting infrastructure costs such as those associated with IT expenses and asset depreciation. R&D expenses this quarter included $1 million of noncash stock-based compensation expense.

Sales, general and administration expenses for the quarter were $9.1 million, $1.7 million lower than the $10.8 million incurred in Q3. This decrease was primarily a result of $2 million of expense recognized in Q3 associated with the Roche agreement.

Year-over-year, sales, general and administrative expenses decreased by $1.6 million from $10.7 million in Q4 2012. And for the full year, SG&A expenses were $38.7 million, a $9 million decrease from the $47.7 million recognized in 2012. The expense reductions realized year-over-year reflect both lower legal expenses in 2013, as we incurred settlement expenses of 2 patent disputes and a class action lawsuit in 2012, as well as continued operation of efficiencies realized throughout the organization.

Ben will provide further guidance on our ongoing expense rate later in the call. SG&A expense for the fourth quarter includes $1.3 million of noncash stock-based compensation expense. Also, in the area of other income and expense, this quarter, we reported approximately $200,000 of net other expense, primarily weighted to the interest and derivative expense associated with our debt, which we took on in Q1 of this year. This is a $300,000 reduction from the net expense realized in Q3, as the reevaluation of the derivative associated with the debt financing can cause fluctuations in recognized quarterly expense. For the year of 2013, we incurred $1.8 million of net other expenses versus $100,000 of net expense recognized in 2012.

Now turning to our balance sheet. Cash and investments totaled $113 million at the end of the fourth quarter, down $14 million from the previous quarter. Cash used in the quarter was $14.4 million, reflecting our fourth quarter net loss of $17.2 million with $4 million in noncash expenses from stock-based compensation expense and depreciation, offset with the end-of-year reductions to our liability balances.

Among other accounts, accounts receivable decreased $1.1 million from $3.8 million at the end of Q3 to $2.7 million at the end of Q4. This quarter variance is due to the normal fluctuations associated with the instrument installed and collection timing. And inventory balances remain relatively flat, increasing $200,000 from $9.8 million at the end of Q3 to $10 million as of December 31, 2013.