10x Genomics, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Product Innovations in 2024:
  • Chromium platform: Launched GEM-X with new microfluidic architecture, lower prices, and capabilities for million-cell experiments.
  • Spatial platform: Launched Visium HD and Xenium Prime 5K, driving growth in spatial consumables.
  • Sales Force Reorganization: Created specialized teams (capital equipment, biopharma, emerging accounts) to support product portfolio and customer mix.
• 2025 Priorities:
  • Finish commercial transformation and transition researchers to new product portfolio.
  • Drive volume and use of single cell through lower prices.
  • Leverage single cell and spatial for biopharma, translational studies, and large-scale projects.
  • Manage costs and maintain balance sheet strength.

Segment Performance

• Chromium:
  • Fourth quarter 2024: Consumables revenue $97.7 million (down 17%), Instruments revenue $10.9 million (down 2%).
  • Full year 2024: Consumables revenue $372.3 million (down 11%), Instruments revenue $35.2 million (down 26%).
• Spatial:
  • Fourth quarter 2024: Consumables revenue $35.8 million (up 61%), Instruments revenue $13.4 million (down 51%).
  • Full year 2024: Consumables revenue $121.1 million (up 104%), Instruments revenue $57.5 million (down 24%).
• Services:
  • Fourth quarter 2024: $7.1 million (up 35%).
  • Full year 2024: $24.6 million (up 57%).

Guidance

• Full Year 2025 Revenue: $610 million to $630 million (0% to 3% growth vs 2024).
• Assumptions:
  • Anticipate mid-single digit decrease in NIH funded projects (~$7 million impact).
  • Chromium consumables revenue modestly down due to lower-priced products.
  • Lingering impact from 2024 commercial changes in first half of 2025.

Risks

• NIH Funding Uncertainty: Indirect cost cap not fully incorporated in guidance, potential $10 million to $15 million impact if fully implemented.
• Macro Environment: Uncertainty around funding affecting customer spending patterns.
• China and Competitive Dynamics: Potential impact from Illumina-related issues and competitive landscape.

Question and Answer

Q: On single cell pricing, where is the evolution and gap vs competition?

A: Serge discussed product mix, value propositions, and focus on growing the market by unlocking price barriers.

Q: NIH funding indirect cuts not in guidance, impact on customers?

A: Adam explained the bounded impact and uncertainty around funding changes.

Q: On Chromium volumes and growth expectations, where is the confidence?

A: Serge mentioned new products, price points, and large projects like CCI driving volume growth.

Q: Impact of China and competitive dynamics?

A: Serge noted products are compatible with other sequencing tech and no major expected impact.

Q: Gross margin cadence and large projects impact?

A: Adam discussed mix impact and potential variability from large projects.