Good afternoon, everybody. I appreciate you joining us today. On today's call, I'll provide an update on our 2022 revenue outlook, highlight our results for the second quarter of 2022, discuss some of the recent business and commercial successes, and then last, get into our financial results and guidance in much more detail. September will mark the two-year anniversary of PacBio, and in that time, we have undergone a remarkable transformation. First, we've been able to build a talented and experienced team to lead the company and execute a strategy that will leverage our technology and commercial scale to serve our customers around the globe and drive growth. We also acquired Omniome and Circulomics, adding core products and technologies to our portfolio.
As a result of these acquisitions and through our aggressive product development investments, we expect to be the first company to commercialize both highly accurate long-read and short-read technologies, providing our customers with the right product for their application of interest, and as a result, serving the entire genomic sequencing landscape. Additionally, we believe that our portfolio will create significant value for our customers as we provide them with the capabilities required to discover novel biology with unprecedented detail at compelling scale and economics. We have not only invested in developing new technologies, we've also continued to improve our highly accurate Sequel IIe platform to provide even more customer value. For example, just this past quarter, we launched the ability for our customers to look at epigenetic markers with each sequencing run for no additional cost.
Compared to various short-read sequencing technologies, this feature dramatically simplifies the ability to see epigenetic markers because the workflow doesn't require multiple sequencing runs with different sample preparations to capture all of the data. We've also collaborated with leading organizations to show how highly accurate long reads can transform clinical research. I think you'll agree that PacBio today looks a lot different than it did two years ago. There is no question, though, that we're operating in an uncertain macroeconomic environment. These macro issues do not change our nor our customers' enthusiasm for PacBio sequencing. However, we are finding that these factors broadly play a role in customer purchasing patterns and their ability to operate at scale, especially as our business is currently dependent on large capital purchases. As a result, we have reevaluated our current outlook for the year to take these macroeconomic factors into account.
Specifically, we expect EMEA to be lower than our original forecast as we see the region to be most affected by longer purchasing cycles. In addition, foreign exchange headwinds and increased competition are expected to have a greater impact there than in other parts of the world. We're also seeing that some of our larger customers in the region are ramping their utilization to pre-Omicron levels at a slower than anticipated pace due to staffing shortages, among other things. We believe that this has and will continue to have an impact on our consumables revenue for the remainder of the year. In China, the second quarter was impacted by more than we expected from COVID lockdowns, and we expect it to take longer for our customers to ramp back to pre-lockdown levels, in addition to the ongoing risk of localized lockdowns that could be reintroduced.
For example, lockdowns at certain customer locations prevented us from installing newly acquired Sequel IIe systems, which had an impact on consumable revenue in China. Excluding China, we are quite pleased with the performance of the rest of APAC, especially in Japan, where commercial investments made in 2021 are driving significant opportunities and growth for the region. As China returns to a more normal operating environment, we believe our strengthened commercial team will be able to drive diversified growth throughout APAC. In the Americas, recession fears, volatile capital markets, and a growing number of sequencing entrants are slowing purchasing patterns as well. However, the region remains mostly resilient as it posted record revenue and grew over 50% compared to the second quarter of last year, as we're growing in multiple markets from human genome to gene editing to microbiome.
The strength and diversity of our customers in the U.S. market gives me confidence that other regional headwinds are only temporary, and we will re-accelerate going into the next year and beyond. Considering these broader issues, we have reexamined our full year forecast, and we are now expecting 2022 revenue to be in the range of $138 million-$145 million, or about 8% year-over-year growth at the midpoint. We expect an improving environment through the balance of the year, with both third and fourth quarter growing sequentially, both in total revenue and instruments placed. In fact, consumable shipments are off to a strong start for the quarter, with July being the strongest month of any quarter this year.
While lower than previously forecasted, I want to reiterate that we believe this is primarily due to macroeconomic factors, particularly outside of the United States, which we do believe will be transitory. Our market opportunity has not changed, and we remain committed to our strategy to become a multi-platform company, enabling the most complete and accurate view of the genome. I'm confident in our strategy, and I am excited about our progress in developing revolutionary long and short-read platforms, which we believe will be key drivers of our growth. Also, our balance sheet remains strong. At quarter end, we had $899 million in cash and investments.
Today I'm reaffirming our belief that even in spite of the short-term macroeconomic challenges we've seen, we have the capital required on our balance sheet to execute on our current development and commercialization plans, which we believe will enable us to reach positive cash flow. This is a top priority for the company. Susan will expand further on the guidance a little later, but first I'd like to highlight the results of our second quarter. We reported $35.5 million in revenue in the second quarter, representing 16% year-over-year growth, which was in line with our guidance for sequential growth. Q2 was the sixth consecutive quarter of double-digit year-over-year growth. As I previously mentioned, our Americas region posted record revenue.
In Q2, we were pleased to see that about 1/3 of our Sequel IIe placements were brand new PacBio instrument customers across all of our target markets. This demonstrates that we continue to grow even amidst higher comps, a maturing product cycle, and broader macroeconomic factors. We've continued to see momentum in human applications as well, with over 40% of our revenue in the first half to customers working on human genomics, compared to just over 1/3 of our revenue in 2021. This includes applications in genetic disease research, where highly accurate long reads can help better understand complex genomic variation. For example, another top-tier children's hospital in the United States received its first Sequel IIe in the second quarter to accelerate its studies into genetic disease.
Notably, the customer cited our newly released methylation detection capability as a key differentiator in deciding to purchase these systems. Additionally, we shipped Sequel IIe to multiple genome centers in the second quarter in support of whole genome research initiatives in the United States. In Japan, we provided Sequel IIe to a large-scale service provider in support of ongoing and upcoming cancer research initiatives in the country. Our customers continue demonstrating the power of PacBio HiFi sequencing through numerous publications and preprints. Notably, the Human Pangenome Reference Consortium, or the HPRC, posted several preprints describing the first human pangenome reference this past quarter. HiFi directly assembled this reference from 47 genetically diverse individuals. The transition from the single linear reference commonly used today to a pangenome reference represents a paradigm shift in human genetics.
It improves variant calling and resolution of complex regions such as tandem repeats, segmental duplications, and is more representative of a diverse population. Before building this reference, researchers first benchmarked the best sequencing approaches and determined that highly accurate long reads were best-suited technology. Further, this is a shifting of the sequencing paradigm towards a fully phased 6-gigabase genome versus the commonly used 3-gigabase genome, which the HPRC shows HiFi is uniquely suited to assemble. In plant and animal genomics, studies showed a sustained use case for HiFi as accurate long reads are best suited for assembling highly complex genomes.
In a preprint last month, researchers from Utah State University and other universities compared long read technologies and showed that HiFi reads, and I quote, "HiFi reads consistently outperform all other data types for both plants and animals and may represent a particularly valuable tool for assembling complex plant genomes." Moving to microbiology, Biopark, a service provider in Korea, purchased a Sequel IIe in the second quarter to advance human microbiome and drug resistance microbial research with funding from a Korean government agency. Other emerging applications like AAV gene vector sequencing with our latest protocol on instrument workflow continue to drive placements as we delivered multiple Sequel IIe to customers working on vector validation and research. In the second quarter, we've progressed our product development to enable more applications, better data, and higher levels of automation and standardization, all while making great progress towards future product launches.
We've released custom targeted enrichment capabilities as part of our collaboration with Twist Bioscience. These panels can provide customers a cost-effective and high throughput way to sequence particular genes of interest, delivering comprehensive detection of single nucleotide variants, structural variants, and indels for any genomic interval, including difficult to sequence or difficult to map regions of the genome. We also reformatted and relaunched our Nanobind extraction technology from our Circulomics acquisition to be integrated with HiFi, allowing for more seamless sequencing workflow. As it was only launched a few years ago, most of our instrument customers have not yet used the Circulomics Nanobind extraction. This integration opens up the opportunity to get the differentiated product into more customers' hands and fully recognize the synergies between the two technologies.
Also, on the workflow side, we've partnered with iLAC and the Robotic Biology Institute to develop fully automated end-to-end workflows for PacBio Sequel II and IIe HiFi long-read sequencing systems by employing advanced robotics. In the backdrop of these enhancements, our field performance of SMRT Cells continues to improve as part of our most recent chemistry and software release earlier this year. In fact, the average yield per SMRT Cell is hitting records with over 30% more gigabases of output per cell than we saw in 2021. This on-market improvement enables customers to do more sequencing with Sequel II than ever before. We made excellent progress towards the launch of new products such as our kitted MAS-ISO-s eq solution, which remains on track for commercial release in the fourth quarter. Early access customer sites have been identified and will begin using the product later this year.
The commercialized kit is expected to have higher and more robust throughput than the original MAS- ISO-seq method outlined in a preprint last year, with reduced library preparation time and reagent use. The solution will come with a SMRT Link workflow to produce isoform-level single-cell data compatible with tertiary analysis tools and will enable the size and scope of experiments that have driven the breakout growth we've seen in single-cell genomics. Meanwhile, early adopters of the MAS-ISO-seq method, particularly in the oncology and neurodisease research space, tell us that they can now see critical full-length isoform information missing from their short-read single-cell data. If we move to our sequencing by binding platform development, we shared some exciting data at AGBT around SBB's exquisite accuracy and variant calling performance.
After speaking with customers, we left the conference feeling even more invigorated about how SBB's unparalleled accuracy can accelerate genomic discoveries. Our team remains on track for commercial launch in the first half of next year. We're in active discussions with potential beta sites, and we anticipate beginning our full beta program in the next few months. We are also engaging with potential partners across the ecosystem to ensure the system is user-friendly and compatible at launch. Meanwhile, our in-house systems continue to sequence incredibly well, achieving accuracy scores with over 90% of the bases at or above Q40, and the system has demonstrated both single end 200 base pair read lengths and 2 x 150 paired end read lengths.
Lastly, I'm pleased that we reached an agreement with Invitae in June that provides a roadmap and incentives for them to accelerate their sequencing on PacBio HiFi and still leverages their expertise in our development of our ultra-high throughput sequencers. I believe these new technologies will be even more important in Invitae's refocused business as they aim to deliver the most comprehensive genomes. Turning to other organizational updates, today we unveiled our first ESG highlights report. The report showcases our approach to environmental sustainability, social justice, and responsible governance, and outlines our progress in these areas. Over the coming years, we expect to continue to invest in our ESG program as a key component of our long-term business strategy. Finally, we look forward to welcoming our new Chief Commercial Officer, Jeff Eidel, later this month.
I've personally worked with Jeff for over a decade, and his knowledge and experience in genomics will drive significant value across PacBio. Now, with that, I'll hand the call over to Susan to talk about our financial results in more detail. Susan?
Thank you, Christian. As discussed, we reported $35.5 million in product and service revenue in the second quarter of 2022, which represented an increase of 16% from $30.6 million in the second quarter of 2021 and 7% sequential growth compared to $33.2 million in the first quarter of 2022. Interest revenue in the second quarter was $15.6 million, an increase of 9% from $14.3 million in the second quarter of 2021. In the second quarter, we modified our agreement with Invitae and recognized $3.7 million in interim revenue related to Sequel IIe systems delivered to Invitae in the quarter. We delivered a total of 36 Sequel II and IIe systems during Q2, growing the install base to 460 systems as of June 30, 2022.
Turning to consumables, revenue of $14.6 million in the second quarter grew 19% from $12.2 million in the second quarter of last year, and Sequel II and IIe consumables represented approximately 86% of total consumable revenue in the second quarter, with the rest from older systems and other consumables. Annualized pull-through per system on the Sequel II and IIe install base in the second quarter was approximately 120,000. Headwinds from pandemic-related lockdowns in China continued through most of the second quarter. Additionally, new customers have been taking longer to get up to full speed as supply chain constraints have affected other inputs in customers' workflow, such as servers and automation equipment.
Finally, service and other revenue grew to $5.3 million in the second quarter compared to $4.1 million in the second quarter of 2021, reflecting our growing install base. From a regional perspective, Americas had a record quarter with revenue of $21.7 million and grew 51% compared to the second quarter of 2021. We shipped Sequel IIe to a growing and diverse set of customers in the quarter, including AnimalBiome, which is implementing PacBio HiFi and has plans to leverage concatenation for 16S sequencing in their industry-leading direct-to-consumer pet microbiome test. Human germline applications, though, were the primary driver, with nearly half the region's instruments delivered to customers in this focus area.
Asia-Pacific revenue of $8.0 million reflected an 18% decline over the prior year period, primarily due to China, which was 30% lower compared to the second quarter of 2021. We were pleased to see that revenue growth in other APAC countries helped to offset some of the lower revenue in China. Finally, EMEA revenue of $5.8 million was 12% lower compared to the prior year period and was impacted by broader macro dynamics, which slowed customers' capital purchases. In addition, the region had an FX headwind of approximately 7% when compared to Q2 2021. Moving down the P&L, GAAP gross profit of $16.2 million in the second quarter of 2022 represented a gross margin of 45.7%.
Excluding amortization of intangible assets, second quarter 2022 non-GAAP gross profit of $16.4 million represented a gross margin of 46.2% compared to a GAAP and a non-GAAP gross profit of $13.8 million or 44.9% in the second quarter of last year. The increase compared to the second quarter of last year was primarily driven by multi-instrument order at higher ASPs, as well as greater consumable and service revenue volumes due to a growing install base of Sequel II, IIe in Q2 2022. GAAP operating expenses were $84.2 million in the second quarter of 2022. Excluding change in fair value of contingent consideration of $5.4 million, non-GAAP operating expenses were $89.6 million.
This represents a 74% increase from non-GAAP operating expenses of $51.3 million in the second quarter of last year, reflecting growth in headcount, operating expenses related to the acquisition of Omniome, increased R&D spend, and increased travel as we transition out of the pandemic remote environment. In terms of headcount, we ended the quarter with 782 employees compared to 728 at the end of 2021. GAAP and non-GAAP operating expenses in the second quarter included a total non-cash stock-based compensation of $18 million, compared to $13.9 million in the second quarter of last year. GAAP net loss in the second quarter of 2022 was $71.4 million or $0.32 per share.
Excluding amortization of acquired intangibles and change in fair value of contingent consideration, non-GAAP net loss was $76.6 million, representing $0.34 per share, compared to a GAAP and non-GAAP net loss of $41 million or $0.21 per share in the second quarter of 2021. Now, turning to our balance sheet. We ended the second quarter with $899 million in unrestricted cash and investments, compared with $963 million at the end of the first quarter of 2022. Inventory balances increased in the second quarter to $36.1 million, representing 2.3 inventory turns, compared with $29.6 million at the end of the first quarter of 2022, representing 2.8 inventory turns.
Similar to last quarter, the decline in inventory turns reflects our strategy of increasing safety stock levels to manage global supply chain risk, to continue to ensure we have the necessary materials on hand to meet our customer demand. Accounts receivable decreased in the second quarter to $27.1 million, reflecting a DSO of 70 days, compared with $27.9 million at the end of the first quarter of 2022, reflecting a DSO of 71 days. Long-term deferred revenue declined approximately $23 million, and current deferred revenue increased approximately $21 million, for a net change of approximately $2 million in Q2, primarily as a result of a multi-instrument order from Invitae in the quarter, as well as future credits awarded to Invitae via the amendment to the co-development agreement.
Moving to guidance, we are updating our expectation for full year 2022 revenue to be approximately $138 million-$145 million, or 8% growth at the midpoint. While we continue to see increasing customer enthusiasm for our technology and products, broader macroeconomic dynamics, including rising inflation, global supply chain constraints, volatile capital markets, and lockdown restrictions associated with COVID-19, have lengthened customers' sales cycles, particularly for capital purchases. Therefore, we expect to ship fewer instruments this year than we originally expected. With respect to consumable revenue, lockdowns in China have led to lower than previously anticipated consumable revenue in the region as customers have difficulty accessing labs, as well as lower sample volumes from which to sequence.
In addition, placing instruments with more new customers has lowered our average consumable pull-through, and a lower than previously forecasted install base has lowered consumable revenue estimates for the year. On a quarterly basis, we expect the third quarter revenue to be slightly higher sequentially as we expect higher Sequel IIe placements and pull-through to be partially offset with lower ASPs. We expect non-GAAP gross margin to be 44%-45%, slightly lower than our previous guidance range, reflecting lower revenue volume and increasing costs associated with ongoing global supply chain constraints and rising inflation. For OpEx, we have significantly reduced the pace of hiring in the second half of the year relative to our previous forecast. However, we continue to make excellent progress on our next generation platforms and will continue to prioritize these investments.
As such, we now expect non-GAAP operating expenses to be between $350 million and $360 million. We expect that slowing our pace of hiring will translate into lower run rate of operating expenses entering 2023, while still giving us flexibility to make appropriate investments in R&D and commercial to fuel our growth in 2023 and beyond. Interest and other expenses unchanged and expected to be approximately $15 million for the full year, reflecting interest expense and amortization of debt issuance costs for our convertible notes issued in 2021. We expect the weighted average share count for purposes of EPS for the full year to be approximately 225 million shares. With that, I will turn the call back to Christian. Christian?
Thank you, Susan. I hope your takeaway from our prepared remarks today is that PacBio remains extremely well capitalized and well-positioned to execute on our strategy despite the short-term volatility and uncertainty we see in the market. We sit in front of a huge multi-billion-dollar market opportunity with multiple technologies that we believe will uniquely position us to provide customers with products capable of delivering genomics insights unimaginable with the current status quo of sequencing. We look forward to engaging with our customers at ASHG in late October. With investors, we hope to connect at the many conferences lined up in Q3. We're hosting our first Analyst Day in November, which we'll be sharing details about next month. Now, with that, I'd like to turn it back to the operator so that we can begin the Q&A.
Thank you. We'll now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble a roster. Our first question comes with Ross Osborn with Cantor Fitzgerald. Please go ahead. It appears Ms. Osborn has disconnected. Our next question comes with Kyle Mikson with Canaccord. Please go ahead.
All right, great. Thanks, guys, for the questions. I hope you're doing well. You know, just wanna talk about the guidance. Not a huge surprise. I thought a lot of the factors that you called out, Christian, make sense. Maybe could you just break down the guidance assumptions, maybe like quantitatively, when you think about the macro factors like China lockdowns, FX, inflation, supply chain. Just wanna understand how you're thinking about that maybe in the near term here. Maybe for Susan, like the product breakdown, you didn't really quantify that, instruments and pull-through, how could that really trend in the second half of the year as well? Thanks.
Sure, Kyle. So, you know, I'm not gonna break down the delta in guidance based on, you know, I'm not gonna try to ascribe a value specifically to each macroeconomic factor. Qualitatively, you know, what we're seeing is that the Americas is actually doing extremely well. We did lose, you know, in the first half, the first part of the year, we had, you know, COVID impacting consumable pull-through, which we saw the numbers have been lower than what they've been historically. Overall, the Americas has done extremely well and compensated and will continue to compensate primarily for the weakness in Europe. That's actually the area where we have the most, where we've had the most impact, and it's a number of different things.
It you know absolutely the currency headwind is significant. We had I believe over a half million, like a half million dollars of currency impact in the quarter principally driven and if you look at that on a year-over-year basis, principally driven from EMEA. We also have COVID still having an impact in EMEA and the inflation, fears of recession you know kind of the situation in Ukraine, all of those different factors are just slowing the purchasing process down. The good news is that you know our demand and our funnel looks very encouraging.
You know, if you look at the balance of our written remarks, on balance, you know, all things considered, the company is actually doing. I'm pretty happy with how the company is doing. I do think Europe is gonna continue to be challenged for the rest of this year, and I think that's really the big driver of why we think we wanted to reduce the guidance going forward. China continues to be, I think, a bit choppy. I do think we saw in the quarter some at the end of the quarter, like we expected to see some improvements in China.
You know, we talked about that on our last call last quarter about the notion that, you know, we thought the lockdowns would maybe start to subside in the June-ish timeframe. I think that's true, but what we're finding is a bit lumpy, and I think that what's interesting is the knock-on effect of not being able to get into the labs. I talked about it in my written remarks, the whole concept of we had several instruments that we had shipped to customers in China at the end of Q1 that we just couldn't install in Q2 because they were locked down. Now those instruments are installed. People are starting to ramp back up a little bit, and so to, you know, I think the back half is encouraging.
The balance of all these factors, you know, made it prudent for us to reduce our outlook for the rest of this year. Hopefully, that helps, Kyle.
Yeah. I mean, that was a great question. Susan, did you wanna talk about, like, instruments first pull-through maybe, how that could trend? Or if not, it's fine. We can just move on.
Oh, no, happy to, Kyle. I was trying to unmute. Just to give you an idea, we've talked a lot about the fact that there's a lot of enthusiasm by our customers in terms of our technology, which is great. Our pipelines continue to be strong. Mostly because of the macroeconomic dynamics that we talked about, sales cycles have lengthened. Having said that, some of the orders that we had forecasted in Q2 is pushing into Q3 for capital purchases. Then in Q3, you do have the government fiscal year end, which is gonna help on the back end. We do see that instrument placements in Q3, we expect to be sequentially higher in Q3 relative to Q2. You also have the fiscal year end associated with the calendar year end.
We further believe that Q4 will be higher instrument placements relative to what we had seen in Q2. You can model that out in terms of what it means for instrument revenue. Also, based off of consumable shipments, especially for what we had seen in July, we're off to a great start. While I don't believe that consumable pull-through will return to the levels we saw in 2021, I do believe that the second half consumable pull-through will be sequentially higher than what we had seen in the first half, just based off of how we're tracking for the month of July. Again, probably lower than what you're used to seeing at the end of 2021.
Okay. That was great. Thank you so much, guys. I guess, Christian, I'm just thinking about, like, the issues that could be, maybe internal or, like, specific to PacBio. You didn't really mention anything there, which was obviously positive, but some of your, you know, peers in this sector have had some leadership changes on the commercial team in recent quarters. Those have kind of appeared to lead to inconsistent execution in some cases. Your execution's been pretty good recently, but I'm just kind of wondering what gives you confidence you can, like, basically smoothly transition with Jeff as the new Chief Commercial Officer. Is there any, like, structure or strategy change of the new kind of commercial leadership, now that he's been appointed?
You know, that's a great question, Kyle. I think the one reason why I have a lot of confidence is, first, I know Jeff, and Mark knows Jeff, and we've worked with Jeff for, you know, a very long time, so we know what kind of leader he is and what kind of capabilities he brings to the table. Then on top of that, the other thing is that, you know, I'm a former chief commercial officer, Mark is a former chief commercial officer, and we're still in, you know, we're about 800 people, but we're not that big a company. We are intimately involved in all aspects of the business.
I think we will be important to that transition in the sense that, you know, we were very closely tied to our prior CCO and helping to manage the activities of the business and, you know, to the point of even negotiating larger deals and really being engaged with the team. That will continue with Jeff. The other thing I would say is Jeff also knows all of the general managers of the different regions and has worked with the general managers in the different regions for many years as well. He comes in as a highly respected, capable executive. You know, he will come in and evaluate the organization as he sees it.
You know, we may or may not make any changes. I really like the fact that we have created a scaled commercial organization that can operate all around the world. We talked about, you know, sales in Korea. We talked about expansion in Japan. Our European business is covered better than ever, although the performance isn't quite what we wanted. Then in Americas, you know, we're growing at 50%, and that's because we have a highly capable team. When you think about the backdrop of emerging competition, you know, we're extremely well-positioned there because we have great products already. We have new products on the horizon. We have a team in place, and when we launch products that we can launch immediately at scale. I just think that gives us a significant leg up. Jeff, as an executive, is going to fit right in.
That was great. I almost forgot, Christian, your background. He has two great sequencing CCOs to learn from. That's great. I'll ask a final one here, just kind of lumping two thoughts in at the end here. The first being, you mentioned, Christian, there's a growing number of new sequencing entrants that pressured the Americas results. You know, from what I understand, there's no, like, you know, pure play long-read companies that are, you know, going to market anytime soon. Could you just talk about that a bit? Is that more on the short read side, I guess? And then secondly, ASP was obviously pretty high this quarter. In the past, public labs, trade-in programs, those dragged down ASP. What should we expect going forward, I guess?
Those are good questions. I think that regardless of whether the entrants are long and short reads, the excitement about, you know, and buzz about the sequencing industry and space is encouraging everyone to stop and look at the totality of what problems they're trying to solve and what technologies can help them solve them. I think the emerging entrants definitely create some conversations. What's so great is that we've been. You know, we have what we believe is the best long-read platform in the market, and the data is becoming more and more clear every day that our short-read technology that we'll bring to market next year have some serious advantages over these emerging competitors and the existing incumbents.
I've been in several sales discussions just this quarter already, where we're talking about bundled sales. I want to buy the long-read sequencer because I want to do a highly accurate whole genome sequencing. I want to buy the short-read sequencer because it goes you know I can look exquisitely deep with exquisite sensitivity and therefore I you know I can find the answers, the needles in a haystack. I do think that's going to serve us really well. Going forward, you know, we continue to have some trade-ins from Sequel I to Sequel IIs, which impact ASPs. That'll change in any given quarter. The APAC region's been extremely successful with some promotional programs to make those conversions.
I think EMEA and the U.S. and AMR are trying to emulate some of that. There'll be probably some of that. But you're right, ASPs in the quarter were generally pretty strong. You know, I think that has to do somewhat with product mix as well. We're selling to commercial customers in some places, for example, in AAV, they typically have more capacity to buy the equipment and so that helps. I think it's the customer mix in any given quarter that will help or hurt the ASP.
What's really important is that we build the install base and, you know, as Susan pointed out, we have 460 units out there now, which is, I think a real accomplishment, in the short time that I've been the CEO. I'm looking forward to, you know, cracking through the 500 barrier soon. So hopefully that helps a little bit, Kyle.
Yep. Perfect. Thanks, Christian. Thanks, Susan.
Thank you. The next question comes with Julia Qin with JP Morgan. Please go ahead.
Hi, thank you for taking a question. This is Amy calling on Julia. I have a couple questions. The first one is related to the guidance. I want to go back to the China market. Do you guys have any idea, like, what's the outlook for the China market? Do you have any signs that when will the market be bounced back?
Well, I know. You know, Julia, I don't think we have a crystal ball and so therefore we're taking more conservative views on China. As I think folks on the phone know, we historically, China's been a significant part of our revenues. You know, as we grow globally, that way we'll be less reliant on China. But we do see, you know, lots of opportunity going forward in the second half of the year and into next year. But you know, the timing of potential lockdowns and, you know, other facts, other macroeconomic factors, I think, you know, we can't predict that. We've taken a conservative view. We didn't break out.
You know, we're not giving guidance by region, and so I don't want to move down that pathway, but we have taken a pretty conservative view on China and APAC as a whole. As we said, APAC as a whole, though, is getting buoyed by improvements in Japan and the rest of, you know, the rest of APAC. What's so encouraging about that, if you look at, you know, the growth in the U.S. plus the growth outside of China, you know, you're really starting to see a step up whereas China improves, we can accelerate our revenue growth. Then if we can, you know, if we can see Europe return to some sense of normalcy, you know, then I think we're really positioned well for long-term growth.
On top of that, the product just keeps getting better. I think the Sequel IIe platform, although it's been around for quite a while, you know, as I said, we've improved the output of that platform with our latest release by 30% in the actual output and throughput of the system. Customers are getting more value. They're getting the validation capability for free with every single run. They get, you know, more data than ever before and more types of data that positions us very well against competitors and encourages others to get engaged with us on the long-read platform. I think overall, you know, the outlook looks really, you know, I think strong for the company.
We do have to recognize that we are in a pretty uncertain environment and therefore, you know, from a guidance perspective, we would rather be thoughtful and considerate of these, you know, headwinds. If we do a little bit better because the headwinds are less, you know, then we'd be sure to tell you. I think we're trying to take a pretty conservative view on how we think about the world right now.
Okay. Yeah, that's very helpful. Thank you very much. My next question is relating to the pipeline. First is for those, the new high-throughput platform, right? What kind of updates are we going to see and when, and how should we think about those updates? The second is with the short-read platform, the Omniome platform. The specs looks very impressive. Like, I'm very impressed by the accuracy. I'm just curious, like, based on your, you know, initial market research and market intelligence, what's the customer's appetite to pay a premium for this higher accuracy in their day-to-day work? Yeah, thanks.
Yeah. Okay. Well, maybe I'll address the short-read platform first, and then I'll talk about the long-read platform. You know, with respect to SBB, we were quite frankly enthusiastic about the response at AGBT and how customers you know, really came up to us and really were excited about getting involved, getting in the beta program, seeing the data for themselves because they see this as the next paradigm in short-read sequencing. The accuracy matters a lot. You know, the reality is that accuracy can actually make costs more effective because it's not about the cost per gigabase, which is the traditional way in which sequencing companies have talked about you know, the consumable cost. What's your cost per gig?
The reason why they've had that is everyone's accuracy has kind of been in the same range. If your accuracy is 15-fold better than the incumbents in the world, you know, the discussion needs to turn to price per answer. Because with higher accuracy, you need less coverage. With less coverage, you can turn a mid-throughput sequencer into a higher throughput sequencer, and therefore you can operate at higher multiplex and lower price per answer. I think that's gonna be an important message for us to drive as we get these products into the market. I'm really excited about that. In other words, I don't believe our pricing is going to be, you know, higher than others when you look at all the factors of getting to an answer, not just processing some sequencing.
If you move to the short-read side, and of course, you know, stay tuned because we'll be getting into the beta phase of our development program, you know, in the next couple of months. I suspect we'll likely have some updates at ASHG, which is at the end of October. You know, we're well on our way to getting this product out the door. I'm very excited about that. If you look at the long read side, you know, the Sequel IIe, as I said in the last, you know, couple minutes, has really made dramatic improvements over the last few years. You're right, we do have new, you know, new products and new ideas and new technologies and developments.
You know, we haven't said publicly when those would launch, and I'm not gonna do that on this call. We will do that in good time. But what I can tell you is that, you know, when I joined the company, I said that we would embark on a strategy to drive product development so that we could get, you know, kind of on the range of orders of magnitude of improvements in terms of throughput on long-read sequencing so that our customers could operate at higher scale and leverage the power of long reads across larger sample cohorts. I also said that we would be going for, you know, achieving the $1,000 genome or better.
You know, I'm happy to report today that our development programs and our research is definitely showing us that we have the capabilities to do that. At the right time, we will, you know, we will talk about these next generation research programs in much more detail, and we'll share it then. For now, you know, we keep focused on the Sequel IIe platform. It's a great platform. Like I said, we're not that far away from having 500 units in the installed base, and we keep adding value to it. That's what's gonna be front and center commercially here over the next couple of quarters.
Okay. Yeah, that's very helpful. Thank you very much.
Thank you. Your next question comes from Tejas Savant with Morgan Stanley. Please go ahead.
Hey guys, good evening. Christian, just following up on your remarks there on the product pipeline. Obviously, it's a point of investor focus here. I know you don't want to commit to, you know, specific timelines just yet, but is there an interim instrument that you think needs to be launched before you get to that sub-1K price point? Or do you feel confident just given what you said about your internal efforts, that you can get there with the next version of the Sequel?
Yeah, I do think at a fundamental level, Tejas, that we have the technology now to deliver the $1,000 genome and without incremental steps. You know, one of the strategies here, of course, is to develop a multi-product portfolio on the long read platform side that offers customers much more flexibility than we have historically. That, you know, customers that are sensitive to the capital cost, offering a low capital cost offering with high value consumables. Customers that are doing extremely large cohorts, you know, having the capability to run lots of samples with a reasonably sized lab at under that $1,000 genome quote-unquote price point.
You know, that middle ground where you're doing a diversity of applications or you're looking at lots of reads, but you have high multiplex, and you can use kind of that mid-throughput system. That's still, you know, fundamental to our strategy long term. The good news is that, you know, we're thinking much more modular than we've ever thought about before. I think that will give us a range of products and capabilities and also improve, you know, lower the cost to the customer, but also improve the company's ability to serve those customers and drive growth in gross margin, which ultimately drives us to cash flows.
Got it. Super helpful. One on the you know, instrument and consumable side of things. On the instrument side, Susan, just a quick point of clarification. That $3.7 million you mentioned, I think on Invitae, was that for instruments placed in this quarter, or was that sort of a payment for instruments in past quarters? On the consumable side of things, Christian, to your point around you know, higher throughput applications coming through as you launch you know, the new version of the Sequel here, do you expect sort of getting back to that you know, 175,000+ pull-through range at perhaps the back half of 2023? Is that a reasonable assumption? Do you think it's really contingent on the new box being launched and getting some decent traction with customers?
Yeah, maybe Susan.
Maybe I can quickly insert.
Yeah.
Real quick. On the $3.7 million for Invitae, that is because of a handful of Sequel IIe that Invitae purchased in Q2 that they took delivery in Q2.
Right. Tejas, with respect to, you know, pull-through expectations, you know, it's probably not appropriate for me to speculate on that yet. You could imagine if we had platforms that had more throughput and you could do more runs per year, for example, or many more samples per year, that you would be able to drive the consumable pull-through number up. I'm not gonna speculate as to the timing or the level yet because I think it's premature. You know, with the Sequel IIe, if we get specific on the Sequel IIe, you know, we've been running what? 115, 120. You know, kind of in the low 115-120 range.
We are expecting to see that improve a little, particularly as, you know, some of the instruments that have shipped in the last six months finally start getting ramped up to speed. Some of our customers that have had, you know, significant staffing challenges are finally starting to resolve some of those. I think it'll improve. I think as Susan said, we don't necessarily expect it to get back to the levels it was at a Q4, and that's partially because the mix of customers. We're reaching more customers than ever before because of our commercial scale. Not every customer is gonna be running the sequencer, you know, 24 hours a day, seven days a week. It will, you know.
As you tend to get towards the end of a product cycle, you're reaching the lower edge of those customers, so to speak, that may not be high. They may need the technology and wanna use the technology, but they may not be thinking of the same scale of projects. I do think it's likely to be better in the second half than the first half, but I don't think it's gonna return to, you know, Q3, Q4 levels of last year anytime soon.
Got it. Appreciate the color, guys. Thank you.
Thank you. Your next question comes from Dan Brennan with Cowen. Please go ahead.
Great. Thank you. Thanks for taking the questions. I had one on Europe and China and then one on the pipeline. Maybe Christian, just to start on Europe and China. On Europe, could you just unpack a little bit more of kind of what the issues are there? You kind of talked about staffing, competition, macro utilization, and things like that, but could you just give us a sense of, you know, what were the kind of biggest issue, if you will? I know you talked about the issues being transitory. I believe you also talked about utilization being pressured for the year. Then the similar question on China as well. It sounded like you're flagging mostly the inability to get into labs to do installations. Presumably this improves.
I'm wondering if you can give some flavor on maybe what the exit rate is and kind of how things are paced in July. I have a follow-up on the pipeline.
Yeah, sure. With respect to EMEA, you know, when you look at, if you just kind of dive into Q2, we had several instruments, you know, in the near term funnel that were in what we call our commit bucket that ultimately, for whatever reason, the purchasing cycles got extended. As a result, the revenues didn't happen. The deal didn't go away, but the deal didn't get across the finish line in June. You know, that's what we mean by extended purchasing cycles. I do think that was an impact in EMEA. Another impact in EMEA has been in some of our flagship accounts, they've had significant turnover and as a result, haven't been running the sequencers as much.
That affects the consumables. In other parts of both, you know, you know, on the continent and in the U.K., you know, we've had purchasing agents or tenders extend longer than we expected or purchasing folks just taking more time because, quite frankly, there's a lot of uncertainty with respect to, you know, government funding and the actual cost of the sequencer because of the FX changes. They've moved a lot in a very short window. Those are the things that have impacted us in EMEA. That's why, you know, when you look at those each individually, you know, don't give me significant concern that this is a systemic long-term problem.
This is a problem, you know, because of the environment we sit in. You know, we think it will resolve itself. In fact, you know, the customer I was referring to with lots of turnover, they've actually started running their sequencers again in July. We saw, and I said in my general comment, I'm not gonna make, you know, July specific comments about any particular region, but we did see a strong July in consumables, and we're off to the best start of any first month of any point this year. You know, that's an encouraging sign that things are going okay. In China, I don't wanna give you the impression the sole reason was we didn't get some systems installed that could have been running consumables.
That's more of an illustrative example of the totality of the lockdowns, how they not only impact, you know, our customers acquiring samples, 'cause most of our business in China is through service providers who rely on their customers to provide them with sequencing, you know, with samples so that they can sequence them. The lockdowns had a pretty far-reaching effect. You know, they weren't able to get samples from their customers. They weren't even able to go into the lab to run the sequencer. Our sales folks weren't able to get out into the, you know, into the community to be, you know, selling. The impact of COVID is pretty broad. It's not just one little piece. Lastly, you know, I think, and it was either.
Maybe it was Kyle actually, who talked about supply chain. You know, the one thing I do wanna give a shout-out to is our, you know, our internal, supply chain folks have worked really hard to keep us with, product to ship. You know, as you saw, Susan pointed out, we have a little bit higher inventory, levels than we've had. That's because, partially because of pricing of, the inflationary impact on us, but also because we have really worked hard to make sure that we have product for our customers. As a result, we're carrying a little bit more inventory. You know, I said a lot there, Dan. Hopefully, that helps you a little bit. Then, you said you had another question.
Yeah. No, thanks, Christian. That was helpful for sure. Maybe just one on the pipeline. Obviously, we'll hear more about it next year in terms of, you know, getting below $1,000 on a, you know, long-read genome. How do we think about, you know, as the pace of the price cuts on the short read side, you know, continues, we'll see what happens this fall with Illumina. Like, as that gap really widens, even though you're gonna shrink it again, like, is the gap still gonna be wide enough such that that dilutes maybe the uptake or the impact of, say, an $800 or $900 on long-read genome?
You know, I mean, we'll have to see how the world unfolds, but I believe very strongly that it won't. The reason is, today, not only is the price per genome, you know, significantly different on our platform versus a short-read platform, but also the throughput is a lot lower than what you can do on a short-read platform. Really, it's a combination of not just the pricing, but the throughput. As we narrow the gap on both, I do think you see accelerated adoption because, one, you can do the large projects using long read. Two, everyone is seeing now, we talked about the pangenome, the HPRC in my written remarks.
The reality is that the reference genome now is changing such that it will demonstrate that short reads are insufficient for whole genome sequencing. They just are. I think that as we get the economics and throughput improved, it will completely change the paradigm. On top of that, if we can continue to deliver epigenetic information, telomere to telomere sequencing with SNVs and indels and all the structural variation at very highly accurate levels, you know, you would have to do multiple assays. Even if the short read sequencer was charging $100, let's say, for their sequence, you'd still have to run another sample prep to get, you know, to get the epigenetic data, for example. All this.
The second you do that, you're actually more expensive than what we're talking about here as we kind of break through the $1,000 genome barrier. For us, I am very encouraged about the progress we're making in R&D, about the state of the market and the state of the market being the proof points of why long reads matter. One of the core strategies that I had coming into the company was to, you know, do enough collaborations so that everyone could see the power of HiFi sequencing and the power of long reads versus short reads.
I think all of those proof statements are becoming overwhelming, quite frankly, and now it comes. It's incumbent for us to get the products to market that will enable, you know, the scale and the economics that will, you know, make a dent in that short read market, so to speak.
Got it. Thanks, Christian.
Yeah.
This concludes our question and answer session. I would like now to turn the conference back over to Todd Friedman for any closing remarks. Please go ahead.
Thank you. As a reminder, a replay of this call will be available in the investors section of our website. Thank you all for joining us today. This now concludes our call, and we look forward to updating you on our progress in the third quarter.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Have a great day.