10x Genomics, Inc. Q2 FY2025 earnings call

• Q2 performance largely as anticipated, with upside from China due to tariff timing. - Continued focus on cost management, cash balance increased by $40M. - Academic funding landscape challenging with shifting policies, weak grant disbursements. - Product launches: Visium HD 3 Prime, HD cell segmentation, upcoming Visium HD XL and Xenium RNA plus protein; Flex v2 near-term launch. - Acquisition of Scale Biosciences to accelerate Chromium platform innovation. - Collaborations: Genome Institute of Singapore TISHUMAP initiative, Arc Institute Virtual Cell Challenge. - Appreciation for customers and team resilience.

Total revenue for the second quarter was $173 million. Excluding the settlement-related license and royalty revenue, revenue was $146 million. Consumables: Total consumables revenue was $122.2 million, down 1%. Chromium consumables revenue was $85.8 million, down 9% due to lower average reaction prices. Spatial consumables revenue was $36.4 million, up 24% primarily from Xenium consumables. Instruments: Total instrument revenue was $14.5 million, down 39%. Chromium instrument revenue was $5.7 million, down 35% due to strategic discounts, but Chromium placements increased 11% y/y. Spatial instrument revenue was $8.8 million, down 42% from fewer instruments sold. Services revenue was $8.5 million, up 47% from increased Xenium service plans. Geography: Americas revenue ex-settlement was $78.9 million, down 15% y/y but up 7% sequentially; EMEA revenue ex-settlement was $34.7 million, down 7% y/y but up 9% sequentially; APAC revenue was $32 million, up 41% y/y but down 1% sequentially, with ~$4M from pull forward in China purchasing.

• Q3 revenue expected $140-144M, includes ~$4M pull forward in China; ex-pull forward, broadly in line with Q2. - Acquisition of Scale Biosciences not material to 2025 revenue/operating expenses. - Strong balance sheet provides flexibility for strategic priorities and innovation.

• Challenging funding environment with uncertain academic funding, weak grant disbursements, and unclear budgets. - Extended project timelines and cautious customer spending due to macroeconomic uncertainties. - CapEx challenges affecting instrument and spatial consumables sales.

Q: Patrick Donnelly asked about the academic research backdrop, volatility in NIH headlines, and visibility.

A: Serge said Q2 transpired as anticipated, with ongoing uncertainty in NIH funding and budget phases, expecting Q3 to mirror Q2.

Q: Dan Arias asked about the Scale deal rationale.

A: Serge said acquisition aligns with strategy to drive single cell to higher scale, lower costs, and augment innovative foundation with Scale's technology.

Q: Kyle Mikson asked about Scale deal and scaling.

A: Serge said acquisition is technology-focused, integrates with portfolio, and near-term revenue impact minimal.

Q: Madeline Mollman asked about pricing headwind and Scale.

A: Serge said product transitions (Next-GEM to GEM-X, Flex, etc.) with lower prices leading to higher volumes over time, Scale integrates into existing infrastructure.

Q: Mason Carrico asked about Xenium sales force in Europe.

A: Serge said Xenium sales team in Europe is fully in place, funnel management improved but opportunities take longer to close due to funding challenges.

Q: Dan Brennan asked about Scale technology uniqueness.

A: Serge said Scale has foundational inventions in combinatorial indexing and quantum barcoding, fits into existing R&D infrastructure.

Q: Michael Ryskin asked about China pull forward and geo.

A: Adam said $4M pull forward in China due to tariff timing, China doing well with improved go-to-market and market dynamics.

Q: Luke Sergott asked about Bruker royalties and China strength.

A: Adam said details of Bruker royalties not provided, but structure includes cash payment and gain on settlement; China strength expected to bounce back in Q4.

Q: Jacob Krahenbuhl asked about macro and spend unlock.

A: Serge said budget clarity for next year and disbursement of funds are key unlocks, with realistic timeline dependent on policy and funding clarity.

Q: Thomas VonDerVellen asked about base business and cuts.

A: Serge said commercial restructuring is complete, base business fundamentals strong with positive consumable reactions and customer feedback.

Q: Jaden Nyjai Rismay asked about instrument placements.

A: Adam said Q3 instrument sales similar to Q2, Xenium sales team working on robust pipelines.

Q: Lauren asked about Chromium discount visibility.

A: Serge said discounts on Chromium instruments are due to CapEx challenges, expected to continue as long as environment persists, and are accretive to 10x.