10x Genomics Inc (TXG) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic Initiatives

Despite a challenging macro environment, 10x Genomics Inc (TXG) showcases resilience with strong consumables growth and strategic cost-saving measures.

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May 09, 2025
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  • Total Revenue: $154.9 million for Q1 2025.
  • Adjusted Revenue: $138.1 million, down 2% year-over-year, excluding license and royalty revenue.
  • Consumables Revenue: $115.4 million, up 5% year-over-year.
  • Chromium Consumables Revenue: $84.1 million, approximately flat year-over-year.
  • Spatial Consumables Revenue: $31.2 million, up 18% year-over-year.
  • Instrument Revenue: $14.8 million, down 42% year-over-year.
  • Chromium Instrument Revenue: $5.9 million, down 25% year-over-year.
  • Spatial Instrument Revenue: $8.9 million, down 49% year-over-year.
  • Gross Profit: $105.4 million, with a gross margin of 68%.
  • Adjusted Gross Margin: 64%, excluding license and royalty revenue.
  • Operating Expenses: $144.8 million, decreased from $154.4 million year-over-year.
  • R&D Expenses: $64.2 million, decreased from $68.6 million year-over-year.
  • SG&A Expenses: $89.7 million, increased from $85.8 million year-over-year.
  • Operating Loss: $39.3 million, compared to a loss of $61.5 million in Q1 2024.
  • Net Loss: $34.4 million, compared to a net loss of $59.9 million in Q1 2024.
  • Cash Position: $427 million in cash, cash equivalents, and marketable securities.
  • Geographical Revenue: Americas: $73.8 million (down 7%), EMEA: $31.9 million (down 8%), APAC: $32.4 million (up 22%).
  • Workforce Reduction: Global workforce reduced by approximately 8%.
  • Q2 Revenue Guidance: Expected to be within a range of $138 million to $142 million.

Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • 10x Genomics Inc (TXG, Financial) reported total revenue of $155 million for Q1 2025, with strong performance in consumables indicating robust core demand.
  • The company settled worldwide patent litigation with Vizgenerate on favorable terms, receiving a $26 million settlement.
  • Increased usage of products driven by price elasticity and new applications supports long-term growth potential.
  • Recent product launches, including GEM-X technology and Visium HD, are resonating well with customers, enhancing technology leadership.
  • Strong cash position and cost-saving measures, including an 8% workforce reduction, are being implemented to navigate current challenges.

Negative Points

  • First quarter revenue, excluding settlement-related revenue, was $138 million, down 2% year-over-year, primarily due to a significant decrease in instrument revenue.
  • The macro environment, particularly US academic and government research funding, is creating deep uncertainty and impacting customer purchasing behavior.
  • 10x Genomics Inc (TXG) withdrew its full-year revenue guidance due to unpredictable customer purchasing behavior and reduced visibility.
  • Instrument revenue was down 42% year-over-year, with significant declines in both Chromium and spatial instrument sales.
  • The company is exposed to ongoing uncertainty in the US academic and government research funding environment, which supports 40% to 50% of its revenue.

Q & A Highlights

Q: Can you provide insights into recent customer conversations and how the NIH and broader academic volatility have impacted your guidance?
A: Serge Saxonov, CEO, explained that the environment worsened throughout the quarter, with increasing uncertainty around funding sources. This uncertainty has led to cost-cutting measures by institutions, impacting spending patterns. Adam Taich, CFO, added that the unpredictability of the external environment led to the suspension of full-year guidance, as the range of possible outcomes is unusually wide due to these uncertainties.

Q: Could you elaborate on the expected performance of instrumentation versus consumables for the year, and was there an NIH pull forward in Q1?
A: Adam Taich, CFO, stated there was no NIH pull forward in Q1. He noted that Q2 is expected to resemble Q1, with pressure on CapEx and stable consumable sales. The second half of the year remains uncertain, with potential for both improvement and further deterioration in trends.

Q: What factors are contributing to the sequential revenue increase from Q1 to Q2, despite the challenging environment?
A: Adam Taich, CFO, mentioned that the Q2 guidance reflects a 1% sequential growth at the midpoint. The company has good visibility into the order book and expects Q2 to mirror Q1 in terms of customer segmentation and product mix.

Q: How will the recent headcount reduction and OpEx initiatives impact your ability to grow and hire commercial teams?
A: Serge Saxonov, CEO, explained that the cost cuts were across the company, with R&D seeing a larger impact. The direct sales roles were less affected, as the team is now well-positioned for growth. Adam Taich, CFO, added that the measures are expected to reduce operating expenses by over $50 million in 2025 compared to 2024.

Q: Can you discuss the regional performance, particularly in EMEA and APAC, and any potential pull forward of consumables?
A: Serge Saxonov, CEO, noted that while EMEA faced timing effects and a challenging CapEx environment, the fundamental business remains strong. In APAC, strong demand, particularly in China and Japan, drove performance, with no significant pull forward observed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.