PacBio reported results that were in line with our expectations but slightly ahead of consensus. Revenue was $9.1 million, relative to our estimate of $9.8 million and consensus of $8.8 million, and loss per share was $0.26, relative to our estimate and consensus of loss per share of $0.28.

The company booked orders for 9 PacBio RS systems in the quarter (versus our estimate of 8 systems and all from new customers), which translates to total bookings of 25 for the year (double the bookings of 2012, as the company had guided). The company shipped 5 instruments (versus our target of 8) and thus ended the quarter with a backlog of 13 instruments. PacBio also recognized $1.7 million in revenue from the Roche agreement.

The company expects a 55% increase in revenue but did not provide expected bookings for the year. Guidance includes $6.8 million in revenue from Roche recognized ratably through the year, implying 40% growth excluding Roche. The company expects consumables to flatten sequentially in the first quarter, but to ship 7 of the 13 instruments in backlog. In the first quarter, we expect the company to install seven systems and book eight orders. For the full year, we projected the company to install 29 units, up from 17 in 2013, bringing total installed base to 117 units. Also, we project bookings of 8 to 10 units a quarter and a total of 35 units for the full year.

Total revenue was $9.1 million. Consumable revenue was $2.6 million, up 25% sequentially and double what the company realized a year ago. This compares with our target of $2.1 million. Consumable pull-through per RS is now averaging more than $100,000 per platform (about $121,000 in the fourth quarter). Instrument revenue was $3.2 million (versus our target of $4.5 million) as the company booked five systems as opposed to our projection of eight. New chemistry upgrades now yield read lengths in average of 8,500 base pairs with the C3 reagent kit; the company intends to increase average read length of 20,000 over the next two years.

Gross margin is expected to be 25% to 35% (the Roche revenue is 100% margin and given higher consumable mix). The company plans on maintain operating expenses at about $21 million a quarter. Lastly, management expects $600,000 to $650,000 in net interest expense per quarter for cash interest and non-cash amortization.