Good afternoon, everyone. This is Rachel Vatnsdal from the Life Science Tools and Diagnostics team here at J.P. Morgan. I'm joined by Christian Henry on stage, CEO of PacBio. So as you've typically seen with most of these sessions, it'll be 40 minutes, roughly 20 minutes of a presentation, followed by 20 minutes of Q&A. If any of you in the room do have questions, feel free to either submit them via the portal, or you can ping them to me directly. With that, I will pass it off to Christian.
All right. Thank you, Rachel, and thank you, JPM, for the opportunity to present in front of all of you today. Also, thank you to all of you for your attention and your interest in PacBio. Before we get started, I want to remind folks that we might be making some forward-looking statements, so please refer to our SEC filings as well as our website to learn more about the risks and uncertainties associated with PacBio and our business. With that said, let's get started. Our mission at PacBio is to enable the promise of genomics to better human health. We do this by developing cutting-edge technologies that enable researchers and clinicians to do things and see parts of the genome that they could never see before.
To give you some perspective, for those of you that don't know much about PacBio, we've had products on the market for over a decade at this point. We've shipped over 1,200 sequencers globally, and we have thousands upon thousands of peer-reviewed publications. Our business model is a razor-razor blade business, where we sell instrumentation to customers, and those customers use our proprietary consumables on those systems. We also sell the entirety of the workflow from sample preparation kits through analytical tools. And that, what's really important and a hallmark of the company, is that our technologies are highly differentiated from others to give our customers a better view into the biology. Today, I want to leave you with five key takeaways. First of all, 2023 absolutely exceeded our expectations.
Revio, the system that we launched, our new flagship long-read sequencer that we started shipping in March, exceeded all expectations and has really given the customers a new level of capability to break the 1,000-dollar genome barrier and scale their science. Onso, our short-read sequencer, we started shipping in August, and so we launched two major platforms this year. The hallmark of Onso is unprecedented accuracy, and we're in the process of scaling that product up. The two of the platforms, as well as our pipeline, you know, have increased the interest in PacBio, and the interest of the company is higher than it's ever been in our history. The good news is that we are financially very well positioned for the future.
We ended the year with over $630 million in cash, so plenty of capital to fund our growth initiatives as we move towards being a cash flow positive entity. The markets that PacBio serve are large and they're growing. Today, we estimate the market to be greater than $7 billion a year and growing at roughly 10%-15% per year. And if you look at the panel on the right, you can see the composition of the market based on the different types of technology, whether that's high-throughput, short-read sequencing, mid and low-throughput, short-read sequencing, or long-read sequencing, which is where PacBio has historically played a very significant role.
But with the acquisition of Omniome and the subsequent development of the Onso product, we now have the opportunity to participate in the entirety of the market. So not only are we growing the long-read portion of the market, we can now participate in the entirety of the market, which gives us access to that entire $7 billion market. The reason why this is so important is we can enable the entire breadth of all of the applications in the sequencing market. On the long-read side, we use our technology is called HiFi, and HiFi sequencing is really best suited for germline-driven genomics, things like complex disease research, clinical whole genomes, plant and animal biology, where the genomes are actually quite complicated, immunology, et cetera.
But we span the spectrum, and our SBB technology, which stands for Sequencing by Binding technology, allows us to drive into therapy selection and really those oncology applications where you're looking for a needle in a haystack. So our strategy is to span the entire market with best-of-breed, best-of-breed technologies that serve our customers. I want to spend just a second talking about our two flagship products, Revio and Onso. So Revio, as I said, started shipping in March of this past year, and the hallmark of Revio is its unprecedented scale. It's 15 times more powerful than any sequencer that PacBio had launched in its history. This gives us the ability to sequence over 1,000 human genomes per year on the system at a price of under $1,000 a genome.
So we're finally unlocking the scalability and affordability required to do population-scale research from telomere to telomere. The system is highly accurate, which is very important when you start to think about the level of accuracy required to understand the complexity of the entire genome. We started shipping this, as I said, in March, and we shipped 173 systems in 2023. Onso is our mid-range short-read sequencer and our first foray into the short-read sequencing market. What makes Onso so unique is the unprecedented accuracy, and it's quite extraordinary. Over 90% of the bases are Q40 or better, and in fact, when you look at a particular read, you can see the accuracy from the first base being nearly as high, or the accuracy of the last base being nearly as high as the first base.
No other sequencer on the market's been able to show that. In fact, we're so excited about this SBB technology that we're developing a high-throughput system based on an acquisition of a company called Apton that we acquired in August of this past year. And this will allow us future high-throughput applications and capabilities with short-read sequencing. I want to dive into HiFi a little bit more because I wanna help everyone understand why long reads are so important and why HiFi, in particular, is creating an incredible transition in the market. In 2023, long-read sequencing was the Method of the Year , so to speak, and this is on the back of completing the first telomere to telomere genome. So really, truly, the first fully sequenced genomes.
And what we're seeing is based on all of that discovery, that now our customers and researchers around the world are really focusing on: how do we build long-read pangenomes across all of the different sample types of human diversity? And this will give our researchers a much deeper insight into the fundamental biology of all of us. But also, HiFi sequencing enables, for the first time, really full isoform and full transcriptome research. So taking RNA analysis to the next level, where you can really understand each splice variant and its impact on a particular sample. And finally, with every single Revio run, you get the methyl-C calls or the epigenome, and it's becoming more and more apparent that epigenetics is absolutely fundamental to our understanding of how DNA is actually regulated.
When you think about our short-read sequencer, Onso, accuracy is really what matters. And there's really the reason why it matters so much is it gives our customers choice. Either they can sequence less at lower cost, or they can sequence more to see at resolution that is really unprecedented, looking for variants, those needles in a haystack, from 0.1% to 1%, where most technologies are kind of looking in the 1%-5%. It allows our customers to characterize, you know, highly complex regions of the genome, and also have the confidence that when they get an answer, it is the right answer. And I think that's really what's interesting about this technology. Onso has started shipping, and our customers are getting fantastic results. Here's just a couple of customers that we recently shipped to.
Queen's University Belfast is using the technology for a broad range of applications. You know, everything from looking at cell-free DNA to environmental applications. A major hospital in Ecuador is using the system to look at liquid biopsy, focus on those oncology applications. And this is really indicative of our core strategy with the short-read portfolio. We're not trying to build a sequencer to do every single application. What we wanna do is focus on that extraordinary accuracy to drive into those liquid biopsy and oncology applications, where looking for that needle in the haystack can make a fundamental difference in a particular patient.
The Onso platform itself is over 800 million paired-end reads with Q40+ accuracy, up to 150 gigabases per run, and that means it puts it on par with the other mid-throughput kind of sequencers in the market. So now I want to just recap 2023 quickly as we get into 2024. We really had five key objectives: driving adoption of Revio, demonstrating the extraordinary accuracy of Onso, driving innovation so that we continue to develop new platforms into the future and create a scaled organization, expanding our partnerships particularly in rare and undiagnosed disease, to ensure that all of our customers really start to understand the results they're getting with their long-read sequencers, and finally, leveraging our infrastructure as we push towards becoming a cash flow positive organization.
I'm happy to report we made progress on every single one of those fronts this year. We achieved record revenues, our first $200 million a year, 56% revenue growth, 173 units shipped for Revio, record consumable growth. This was one of the big questions I had going into the year is: moving from Sequel II, the Sequel II platform, which was really not very capable relative to Revio, would we have a problem with our customers finding samples to run Revio? I'm pleased to report that was certainly not the case at all. We ended with a strong balance sheet, $631 million in capital, which gives us the ability to keep investing and pushing the growth in this company.
Just to kind of look at Revio a little bit deeper by the numbers, if you look in totality of our long-read sequencing portfolio, we have over 700 systems installed at this point in 2023. We saw sequential growth really starting in Q2 through the end of the year in consumable revenue, and we've had over 10% sequential growth just in the fourth quarter alone. So customers are adopting Revio, and they're using their systems, which is so exciting. When we see the amount of data being generated, that's fundamentally changing everything. And I actually think the amount of data, if you look at this chart here, you can see how many petabases were generated just in the fourth quarter alone.
That is fundamental to driving the flywheel, 'cause our customers are the ones that come up with the new applications, they leverage the data, and it, it really pushes the field forward. And so I expect to see this continue to grow significantly in 2024. But we're also continuing to drive innovation and making Revio even more robust. We launched our first major update to Revio in December, and it added several new features that our customers were looking at, and particularly I wanted to highlight our adaptive loading capability. So long-read sequencing is new to many people, and so we have to make the process as easy as possible. And with adaptive loading, it makes loading the DNA onto the system easier and more consistent, which gives you better results time in and time out. We also started shipping in December, our Kinnex kits.
These kits are really RNA sequencing, looking at the whole transcriptome. We now have a kit to look at bulk RNA, single-cell RNA, and also 16S. So we can look at full-length 16S sequences, which is really important in microbial applications. In the first half of 2024, we'll be launching, you know, high-throughput DNA preps to match the sample prep with the powerful capabilities of the Revio system. But we're also launching new native DNA kits that allow us to drive the input quantities of DNA down even further, so that we can reach more samples and different sample types than ever before to help drive the growth of the Revio system. And Revio is enabling our customers to sequence thousands of highly accurate genomes.
In fact, you can see on this page several customers that are doing multi-thousand level, multi-thousand-level projects. For example, the GREGoR Consortium, we did that-- we were able to achieve that deal in Q4. They're going to be doing thousands of samples, looking at improving our understanding of rare and undiagnosed disease. The precise, PRECISE Health Initiative in Singapore, where they're-- where the phase two study, they've adopted Revio to drive really a population-scale program in Singapore, and we're excited to be part of that. But I'd also like to highlight Children's Mercy Kansas City, where earlier this year, they implemented Revio in their CLIA lab, as a first-line test for pediatric, rare, and undiagnosed disease. This is the first example of this and is really indicative of what's going to come.
We've already seen several other customers implement Revio in their CLIA labs, principally focused around rare disease, but really opening it up to a number of different applications. So that's 2023. We're really proud of what we got accomplished. You know, we're really excited about our financial performance, but here we go for 2024. You're only as good as your last year, so they say. Our priorities in 2024 are all about increasing technology adoption and driving scale. In fact, I believe that we're going to place more Revio systems in 2024 than we did in 2023, and that will help continue to grow both our instrument revenue, but importantly, our consumable revenue as well.
We're going to build upon that clinical momentum that I was talking about, for example, with Children's Mercy in 2024, continuing to help connect our customers so that as all of the new variants in long-read sequencing come to light, structural variation, epigenetics, people can collaborate to drive our deeper understanding of the biology, which ultimately pushes more and more sequencing. We'll also continue to drive innovation. We have several new platforms in development. We're going to continue improving the Revio system, improving Onso, but what's really exciting is we are well on our way to building out a multi-product portfolio, which I'll share with you in just a moment. And all of this is really to help us drive to become a sustainable company, drive towards positive cash flow.
This will be focused principally on our efforts to improve gross margins in 2024. To double-click on that just for a second, you know, we have incredible opportunities to drive gross margin up, and I would expect us to be sequentially improving gross margin from 2023 levels throughout the year. There's several levers in which we can pull. Investors ask me all the time, "What are the levers?" Some of those are just lowering the production costs of making the instruments. We continue to innovate and value-engineer the Revio so that we can take cost out of the system, which will help us drive our gross margins. We have lots of opportunity to optimize supply chain, and so we're really focused on projects around optimizing the supply chain, improving our working capital, you know, utilization, and also driving costs down.
On consumables, we have all kinds of initiatives in place to drive gross margins through improving the yield, improving all aspects of the chip, increasing the density of the chips. All of those will help us drive our gross margin over time. Perhaps, you know, most exciting is really as we ship more and more Revios and they drive a high level of consumables, our consumable revenue will become greater than our instrument revenue, and consumables carry a higher gross margin, so we will get a natural lift. So you could see there's a lot of proactive things that we can do to improve our gross margin. And in 2024, even in the first quarter, you're gonna start to see some of these improvements take place. But as I said, this is only the beginning.
When I laid out the strategy when I joined the company, we were gonna build a multi-omic, multi-product portfolio, and we now have Revio and Onso on the market to great reception. But now we're deep in development on a benchtop HiFi system, and that will be an important product for us to get to market so that we can make HiFi long-read sequencing ubiquitous throughout the community and serve as a feeder into the Revio platform. We're also working on a population-scale HiFi system, so ultra-high throughput long reads, and a lot of the core technologies for that system will be finished in 2024, so that we can launch a product that can do perhaps more than an order of magnitude more throughput than the Revio system. So we're really excited about that.
And then finally, on the back of our Apton acquisition, we're developing a high-throughput short-read sequencer to focus on scaled liquid biopsy applications, and that product is in development now, and I'm pleased to report that we're already sequencing over, you know, billions of reads at Q40+ accuracy with over 100 base pair long read lengths. And so we've made a lot of progress in the development on that in just a very short time, and so we're really encouraged that we're going to be able to bring this product to market really quickly as well. So when you think about, we didn't give guidance for 2024, we will do that on our earnings call.
But when you start to think about our accomplishments in 2023 and our forecast and our outlook for 2024, you know, we continue to believe that we can achieve a 40%-50% CAGR from 2022, and we use 2022 because that's when we initially gave this long-term guidance at our Analyst Day. We still believe that we can achieve a 40%-50% CAGR, which would result in greater than $500 million of annualized revenue in 2026. In 2023, we grew 56%, so we're well on our way. And when you start to think about, when I start to think about, "Okay, where do we get to cash flow breakeven?" We still believe that we can achieve cash flow breakeven in 2026.
So we won't be cash flow breakeven for the whole year, but during that year, we expect to be cash flow breakeven. We expect gross margins to expand significantly, and so we've really put ourselves into a position to be, you know, to be well on our way to achieving these numbers. And so hopefully, in a very short amount of time, I gave you some perspective on how the strength of 2023 is going to propel us into 2024 and beyond. Revio is truly a game changer in the long-read and in the sequencing community. We're taking share from short-read sequencing through the Revio system.
Onso and SBB chemistry has unique applications that allows us to change the nature of the conversation that we have with our customers and drive in very, in a very unique and specialized way into the short-read sequencing market. There's incredible interest in the company right now, and we're really taking advantage of that by delighting our customers and serving them with the solutions that will change the game for them. And finally, we are very well positioned to achieve our goals. They're ambitious, but we have an incredible team in place, and I'm just thankful that they're part of the, part of the team. And I—with that, I thank you for your attention, and I'll step over to the Q&A.
Perfect. Thank you, Christian. So first up, I just wanted to touch on the pre-announcement that you guys did earlier this week. So 4Q results beat the street on top line. So can you just walk us through what really drove the strength there? Also, just touch on the macro backdrop. You had called out on your 3Q call that the macro environment was getting a little bit more difficult. So how did you see the impact from that, and was there any type of 4Q budget flush at all in the numbers as well?
Yeah, look, I think the fourth quarter was a really strong quarter. It was a record quarter, the company, it exceeded our budgets internally, it exceeded the street expectations. And it was really driven off of continued interest in Revio and continuing to grow the order book there and shipments. But when you really look at it, the consumables were really surprising. At $18.9 million, that was a very strong result, and bodes well, really. You know, we're almost at a $20 million run rate already as you go into 2024, and I think that really sets us up well. When you think about the macro environment, the macro environment still is...
You know, we made those comments on the Q3 call that we're seeing maybe kind of delays in purchasing, and it's not coming from a lack of interest, it's coming from purchasing agents being, you know, cautious with their spending, and I think a lot of institutions are still in that mode. When you have a new technology like Revio, you know, that helps you overcome things a little bit, and I think we did that. We also ended with a healthy backlog going into Q1, and so that always is, you know, nice to get a head start on the year. So overall, I think the Q4 strength was driven off of consumables, continued interest in Revio. Our sales funnels continue to strengthen, and so we see our outlook as really strong for 2024.
Of course, in any particular quarter, you know, the number of instruments you place are gonna vary. They're gonna go up, and they're gonna go down, and really, that's, you know, it's really important to take a bit of a macro view, and, you know, we firmly believe we're gonna ship more instruments in 2024 than we did in 2023, Revio in particular. We believe that Onso is gonna scale in 2024, and so we'll certainly ship a lot more instruments. We've seen a lot of good demand and opportunity for that. And so, you know, I do think the macro backdrop is.
is tougher certainly than, you know, than it's been, but I do feel like we've had strong execution and be able to make—we believe we're gonna make this a strong 2024 as well.
Great, that's helpful. Then I wanted to follow up on the placement comment. Obviously, that's been a key investor question that we've had. You placed 44 Revios in the quarter. That was a modest sequential step down from the 3Q placements of 52. So can you kinda walk through, if we look at the year-to-date number, you placed 173. Obviously, that's more than the Sequel II launch in the first year of launch. So walk us through, how should we think about that placement number and some of that sequential step down into 4Q, and how does that set you up for 2024 as well?
Yeah. Well, I think the first thing you need to think about is you really need to take a broader view of, you know, what does the future hold? And we really believe that we're gonna ship more instruments in 2024 than 2023. When you look, you know, kind of at the micro level, you know, we had a very strong shipment number in Q3, and part of that was by design. You know, we've been fortunate enough to carry significant backlog throughout the year, and we've been trying to whittle that backlog down, and I've been saying that on each of our calls all year.
And in the third quarter, we shipped a few more because what we wanted to do is make sure those customers, you know, got a head start going into year-end, 'cause we know people slow down at year-end. And so, you know, I don't believe people should read into, you know, fourth quarter versus third quarter versus second quarter. I think they should take a little bit more of a view of, you know, between Q4 and Q3, how did we do? And then, what is our outlook, what is our outlook going forward and how is the first half of the year? And when I look at Revio placements specifically in the first half of the year, I still think we're gonna have a strong placement.
But I do think if you look at first half versus second half of 2024, Revio placements in the second half of 2024 are certainly gonna be higher than Revio placements in the first half of 2024. Now, will first quarter be higher than second quarter, or second quarter be higher than first quarter? You know, that will depend on the situation. But when you look, you know, kind of in 6-12 month increments, it's certainly moving up and to the right.
Great. That's helpful. Just kinda sticking on some of the 4Q trends, I wanted to talk about China. You know, can you walk us through how did China perform during 4Q? What's your updated exposure to the region? And then, how should we think about some of the rebound here, just given the weakness that even some of your peers have also called out in the region?
Yeah, you know what? We've been really fortunate in China, and we actually had a very nice Q4 in China, above our expectation. I was worried that it would be, you know, a little bit challenged, but the reality is, our largest Chinese customer placed a significant multisystem order. We shipped a few of them. We'll ship some more in the first part of this year. But, you know, obviously, that order was useful, but we are seeing our Chinese customers run at high pull-through levels. So they're using their systems. The revenue, you know, the revenue grew nicely during the quarter, and so we really weren't subject to that. Now, you might ask yourself, "Well, why?
Mm-hmm.
I mean, the reality is, is that we have a very concentrated customer base in China, and those customers are principally service providers. So they're the ones that really are the direct sellers into the Chinese end user, and they actually have... It's crazy 'cause they actually have a sales force, you know, 2,200 folks, like, dramatically different than what we do. And so the ability for us to kind of we're a little bit insulated because these service providers actually are doing the hard selling-
Mm-hmm
... has been something that has, I believe, helped us. But overall, for the year, China did grow slower than we grew overall. So our growth rate, you know, the rest of the world grew faster than China. China was still healthy growth, but I do think that we're kind of in a unique situation, so we've been a little bit insulated. It will be interesting to see how the Chinese government drives academic funding, 'cause we're still heavily driven from academic funding in China, and we'll see how that goes.
Got it. That's helpful. And then just in terms of 2024, appreciate that we're gonna get formal guidance in a few weeks here, but just can you help us think of the framework for top line heading into this year, especially in the context of your long-term guidance of 40%-50% revenue CAGR? Can you walk us through, really, what are the range of outcomes that we could see for next year?
Yeah, well, as we're, I'll reiterate, we're not giving guidance, so no one write this down. But the way we're looking at the market, we do think there's significant opportunity to continue growing on a global basis. And on the Q3 call, I said I expect us to grow significantly. I still stand behind that. I had lots of investors ask me: "Well, what does significantly mean?" And so we will give more specific color on that. But when I think about the setup and the way the framework people should be thinking, is that the second half will probably be bigger than the first half. And so you'll probably see some back half loading of the revenue.
And the reason for that would be, you know, we do believe there are several very large projects that are out there, and if as they come to fruition, you know, they'll start to actually get sequencing kind of at perhaps midyear, maybe some start in, you know, Q1. But for the most part, they'll be ramping up, so this, that will help drive the second half to be bigger than the first half. I don't think it will be dramatically different than any out of the ordinary, you know. I'm not signaling an extraordinary delta.
But I do think, you know, I do think you're gonna see placement variability from quarter to quarter, but when we all kind of look at the end of the year, we should be in a place where we're much higher, where we're higher than we are, for 2024, or 2023, excuse me. On the consumable side, I think we're gonna see a continued ramp of consumables. In fact, we see a sign—we are, we are working on significantly expanding our production capability, for SMRT cells, you know, the core component of our, of our cons—um, HiFi sequencing consumable. And so you'll see, you'll see that. So we expect to see strong consumable revenue, which will help drive, you know, will help drive our gross margin expansion as well.
So that, you know, that's the basis of the setup, but we'll provide more in February when we do our earnings.
Great. That's helpful. Then I wanted to ask a few more questions on Revio here. So just on ASP, you know, ASP in 4Q for Revio is pretty solid. So wondering, how should we think about that as we head into 2024? You know.
Mm-hmm.
Could ASPs potentially step up, stay down, stay the same? How should we think about that?
Well, I do think the Revio ASP in Q4 was especially high, and so I don't think I would use, you know, use the Q4 Revio ASP as kind of the fundamental ASP to model the business going forward. I think some combination of looking at Q3 ASPs and Q4 ASPs is probably right. I don't see a massive step down when you start to look at Q3 and Q4 together of ASP. As we move through 2024, the product is still really, really unique and in high demand, and so I don't think I see that dramatically. What might impact that is we get large projects.
Those large projects, if you, if they buy, let's say they buy 6 sequencers or 10 sequencers or 5 sequencers, you know, those multi-system orders typically carry a bigger discount, and so they could have an impact on the ASP at some level. But strategically, you know, I think our ASP is in a good place, and as we drive production costs down, you know, we actually have, we actually have flexibility to on how to think about the relationship between driving, the elasticity of instrument demand.
You know, most of the time we talk about elasticity of consumables, but there's real opportunities to potentially drive elasticity of instruments, and so perhaps in some situations, we may strategically decide to run experiments to see where those curves actually optimize the total revenue and the total adoption of the platform. But for now, in 2024, I don't see us... I see as Q4 being higher than, like, what's likely to occur, Q3 probably being closer to what where I would normally be expecting.
Okay, that's helpful. Then just on placements and kind of expectations there as we head into 2024. You said that you expect placements to step up, so I was wondering if you could spend a minute talking about your order book and backlog and how that kind of supports that thesis. How much backlog will you really have as we head into this year, and what will that kind of carry you through as well?
Yeah. So we're not going to comment on the specific backlog today, but what I did say in my remarks is that, you know, we did have a healthy backlog to get us off to a great start for the year. You know, part of the strategy here, right, is to get those Revios out as quickly as you can so that they can start generating consumable revenue so that you can get a greater lifetime revenue from the particular customer. And so the objective is to carry some backlog from quarter to quarter, but in reality, you know, as we kind of move through 2024, I would expect us to be shipping the majority of what we book in a quarter and having, you know, some spillover, but not so material that you're leaving dollars on the table.
So we certainly wanna try not to leave dollars on the table. And so as you get into 2024, you know, we have a nice backlog to get started for the year. I would expect that backlog to kind of maintain, to maybe go down a little bit over the course of the year. But I still think, I still firmly believe that we're gonna grow shipments of Revio on a year-over-year basis. Each quarter is gonna be... you know, is gonna vary for lots of different reasons. And so, you know, I really encourage investors to kind of look at the whole trend over a few quarters and not really be so focused on, you know, any 13-week period, 'cause we're certainly not.
We're focused on, you know, how we build this business for the long term.
Perfect. That's helpful. And then just on pull-through. So pull-through for Revio, you ended the year at an annualized pull-through of around $385,000 for Revio. So first, can you kind of walk us through where do you think the high end of the range could be for Revio's max pull-through potential? And then how should we think about that trending throughout 2024 as you transition from some of, you know, the initial power users early access to more of the run-of-the-mill customers?
Yeah, it's actually a complicated equation to get exactly right. You know, my belief is that pull-through's gonna probably land between $300K and $400K, when you start to think about all of the customers, and there's really a few different components. The first component is the high-throughput users. Now, those high-throughput users are using them, their instruments 80%-90% of the time, and but they get significant discounts, and so there's some balancing there that you need to think about. And then the number of new customers that we have coming. We've been talking this year, what's been so remarkable is 40% of our orders are from brand-new customers. That's what's propelling, you know, that's what's encouraging and will propel our growth as we move into 2024 and 2025 and beyond.
But those customers could take as much as 6 months to get up to speed. What we've seen so far is customers have generally had samples available, and so it's not like 10 or 15 years ago where the samples weren't there yet. Samples are generally in the market, so people can get up to speed, but the workflow is different than short-read sequencing, and you, you know, there are things that they have to learn. They have to put informatics in place. And so for new customers, you know, you could- they would negatively impact pull-through, you know, probably for the first couple of quarters and, you know, we'll see how that goes. But I think $300K-$400K is certainly a reasonable range. We've had, you know, we had $385K this quarter. We had, I believe, $483K last quarter.
The truth is, we're still so early in this launch, the denominator has a really big impact on what the consumable pull-through looks like. And so as we continue to, you know, get our install base to kind of a more consistent level, which will be sometime next year, I suspect, where it'll start to truly normalize. But 300-400 is kind of at least where I'm thinking right now.
Great. That's helpful. And then I just wanted to touch on this market dynamic between long-read and short-read. So, you know, given Revio's strong traction since launch, the improved capabilities, lowered price, how are you thinking about that long-term interplay between the long-read and short-read sequencing markets? And then how much do you think the current short-read sequencing volume could potentially move towards long-reads in the next 3-5 years?
Yeah. So, this is a great question, and I appreciate the opportunity to talk about it. I believe that you're gonna see an incredible bifurcation of the sequencing market over the next five years. You're gonna see perhaps up to half the market move to long-reads, and the other half of the market really continue on short-reads. And the reason for that is all of the germline genomics, virtually all of the germline genomics applications can benefit from a more comprehensive view of the genome. It's just that simple. You can see parts of the genome that you can't see with short-reads. So you, for the same, for equivalent you know, you get more value per dollar by moving to long-reads.
Now that we have higher throughput systems, lower costs, we can be competitive even with the highest throughput systems that are out in the market, because you can see things that you can't see. You can see methylation, you can see structural variation. You have, you know, you have the ability to go from telomere to telomere, so you can see the dark regions of the genome. All of those are gonna become highly valuable to the market. And so at some point, it doesn't matter if short-reads are a little bit cheaper than long-reads, it's the value of what you get. On the other hand, there's still gonna be a very significant opportunity for short-reads in the market as liquid biopsy and other oncology applications and areas where you're looking...
You know, where you can't get those long fragments of DNA to begin with, and therefore, the utility of long-reads is somewhat limited. And I think that could be almost as much as a half, 50/50 split. Now, could it end up being 60/40 or something like? Sure, none of us have a crystal ball. But I think the message is that you're going to see long-reads take a very significant swath of the market over the next five years. That's why some of the short-read competitors have tried to develop synthetic long-read, you know, capabilities. They see it, too. I mean, this is a biology thing. It's not a... It's really not, it's nothing other than that. And so that's how I see it playing out.
For us, we want to be able to play in the entirety of the market because we can do things that others can't. We can bundle products. We can actually have a different conversation with our customer. We can talk about selling solutions rather than selling a product, and that's where I want us to be. I want us to stand beside our customer. I want us to stand with them as they pursue the biology, and we help them achieve that.
Perfect. With that, unfortunately, we are out of time. Thank you so much for helping us today, Christian. Thank you, everyone, for joining.
Thank you, Rachel.