10x Genomics, Inc. Q1 FY2025 earnings call

• Macro Environment: U.S. academic and government research funding under pressure with grants delayed/canceled, budget cuts, etc., causing uncertainty in customer spending. - Product Performance: Chromium reaction volumes growing due to Flex and universal on-chip multiplexing; Xenium consumable revenue/volume growing; recent product launches (GEM-X, Visium HD, Xenium 5K assays) resonating with customers. - Cost-Cutting: 8% global workforce reduction, expense reductions across the company. - Partnerships/Use Cases: Collaborations with Chan Zuckerberg Initiative, Arc Institute, Immunai/Parker Institute; publications using 10x Genomics tools for spatial biomarkers in disease research.

Total revenue for the first quarter was $155 million. Excluding the portion of the settlement allocated to license and royalty revenue, first quarter revenue was $138 million, down 2% year-over-year. Consumables revenue was $115.4 million, up 5%. Chromium consumables revenue was $84.1 million, approximately flat. Spatial consumables revenue was $31.2 million, up 18%, driven by Xenium consumables revenue. Instrument revenue was $14.8 million, down 42%. Chromium instrument revenue was $5.9 million, down 25%, primarily due to lower average selling prices. Spatial instrument revenue was $8.9 million, down 49%, primarily due to fewer instruments sold. Geographically, Americas decreased 7% to $73.8 million; EMEA decreased 8% to $31.9 million; APAC increased 22% to $32.4 million.

• Withdrew full-year revenue guidance, now providing Q2 guidance: $138M-$142M, midpoint 1% sequential growth (excluding settlement). - Continued challenges in funding/macro environment impacting instrument and larger consumable orders; but encouraged by core usage trends. - Mitigation strategies for tariffs: limited reliance on China in supply chain, manufacturing in US and Singapore; minimal impact expected from proposed tariffs.

• Uncertainty in U.S. academic and government research funding affecting ~40%-50% of revenue. - Potential impact of proposed tariffs on sales to China (10% of 2024 revenue). - Volatile customer purchasing behavior due to grant delays, program cancellations, reprioritized budgets.

Q: Patrick Donnelly of Citi asked about recent customer conversations and NIH impact.

A: Serge Saxonov discussed uncertain conversations with customers due to NIH funding cuts and procedural issues, leading to withdrawal of full-year guidance.

Q: Kyle Mikson of Canaccord Genuity asked about headcount reduction and spatial instruments.

A: Serge and Adam discussed cost-cutting measures and continued challenges in CapEx environment affecting spatial instruments.

Q: Madeline Mollman of Wolfe Research asked about confidence in sequential growth.

A: Adam Taich explained Q2 guidance is based on visibility into order book and patterns similar to Q1.

Q: Unidentified Analyst of Stephens asked about headcount reduction impact.

A: Serge Saxonov and Adam Taich discussed cost-cutting measures reducing OpEx by over $50M and cash severance costs.

Q: Unidentified Analyst of Stifel asked about EMEA sales decline.

A: Serge Saxonov discussed instrument environment challenges and completed CapEx team in Europe.

Q: Unidentified Analyst of Morgan Stanley asked about APAC consumable sales and price increases.

A: Serge Saxonov discussed strong demand in APAC due to fiscal year end and structural improvements.

Q: Matt Sykes of Goldman Sachs asked about Xenium consumable utilization.

A: Serge Saxonov discussed continued utilization growth among existing customers, including early and new users.

Q: Unidentified Analyst of TD Cowen asked about additional cost cuts.

A: Adam Taich and Serge Saxonov discussed further discretionary spend reductions and nimble approach to costs.

Q: Unidentified Analyst of Barclays asked about niche single cell use cases.

A: Serge Saxonov discussed potential growth in organoid research and drug development using single cell/spatial tools.

Q: Unidentified Analyst of Bank of America asked about ANG outside US.

A: Serge Saxonov discussed relatively healthy environment outside U.S. academia/government funding.

Q: Unidentified Analyst of William Blair asked about tariffs and China demand.

A: Adam Taich discussed minimal impact of tariffs on supply chain and revenue, with manufacturing in Singapore.

Q: Unidentified Analyst of Leerink Partners asked about new product launches.

A: Serge Saxonov discussed new products driving demand, with GEM-X being a large part of Chromium product line.

Q: Unidentified Analyst of JPMorgan asked about gross margins and 2Q placements.

A: Adam Taich discussed margins excluding settlement were 64%, expecting modest improvement in Q2.

Q: Unidentified Analyst of Jefferies asked about biopharma trends.

A: Serge Saxonov discussed biopharma challenges but progress in AI-based drug discovery and sales team focus on biopharma.