Q4 2020 10X Genomics Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to this index genomics fourth quarter 2020 earnings Conference call.

This time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Just a question during the session you will need to press star one on your telephone if you require any further assistance gross stars here. Thank you I'll now like to hand, the call over to your speaker today, Ms Gassy Cournot Investor Relations and strategic Finance. Please go ahead.

Thank you.

Good afternoon, everyone.

Earlier today on X genomics.

The net.

Fourth quarter and year ended December 31st.

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Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements within the meaning of federal securities laws.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those interest and you should not place undue reliance on forward looking statements.

Additional information regarding these risks uncertainties and factors that could cause results to differ appears in the press release for next day.

Issue for them and in the documents and reports filed by tenants genomics.

Thanks for your time with the Securities and Exchange Commission.

Kenneth genomics disclaims any intention or obligation to update or revise any financial projections or forward looking statements.

Whether because of new information future events or otherwise.

Joining the call today, our third stock now, our CEO and co founder and Justin Macken here, our Chief Financial Officer.

In addition, Brad Crutchfield, our chief commercial officer will be available for Q&A.

With that I will now turn the call over to Serge.

Thanks Kathy.

Good afternoon, and thank you for joining our call to review, our fourth quarter and 'twenty to 'twenty results.

During today's call I will provide a brief summary of our fourth quarter and full year results.

Next I will discuss the opportunities that lay ahead and how we're focusing our efforts of course, the three technology platforms to build great products that deliver amazing insights for our customers.

I will then turn the call over to Justin for a more detailed look at our financials, including our outlook for the year.

I would like to start by thanking our employees for their hard work and dedication from extraordinary difficult year 'twenty.

'twenty 'twenty brought significant challenges change and sacrifice, but a continued to be impressed by and grateful for our team's resilience and commitment from our customers and to each other.

Despite all the challenges we made important progress across our business in 2020 to start total revenue grew 22% over the prior year to $299 million.

In the fourth quarter revenue grew 49% over the prior year as our business continued to recover from the impact from Covid.

We grew our installed base by 45% selling 746 additional instruments.

We continue to expand our customer reach and our products have now been adopted by all of the top 100 research institutions and top 20 pharmaceutical companies.

Our customers published more than 1500 peer reviewed papers, bringing the total to over 2200 more than doubling the number of total publications over the course of the year.

And we will continue to invest in developing and defending our patent portfolio and added more than 300, new guidance and patent applications.

Spending our coverage of enabling technologies.

We now have more than 1000 patents and patent applications.

We also reached important operational milestones at the onset of the pandemic. We acted quickly to implement a number of protocols for safety measures to ensure the health and safety of our team members who needed to remain on site to support the central operations.

This included creating a program to provide recurring Sars COVID-19 two ducting onsite for all employees at our headquarters.

And from additional safeguards, we made use of special powered respirators, which filter out particles in aerosols with very high effectiveness.

We supplied this equipment for employees, who needed to work on site in close proximity to each other.

These and other safety measures have facilitated the safe return to work of most of our research and development manufacturing and other operations personnel.

With these measures in place, we're able to continue on boarding new customers shifting products building out infrastructure, including the implementation of a new ERP system.

And executing on an incredibly ambitious product roadmap that we laid out at the beginning of the year.

We launched for new products for our customers. This started with our targeted gene expression solution, which allows researchers to target the jeans, most relevant to their research validate their hypotheses faster and reduce sequencing costs.

Second our single cell multi arm attacked plus gene expression solution, which allows researchers to read both gene expression and epigenetic programming in the same sales across thousands to tens of thousands of cells in a single experiment.

Third our visual spatial gene expression solution with immuno fluorescence, which allows whole transcriptome spatial analysis of protein detection and the same tissue section and.

And finally, a new version of our single cell immune profiling solution offers increased opportunity reduce sequencing cost and access to rare gene signatures.

Reflective of the excitement for these new products are single cell Multihomer tax plus gene expression solution and their vision spatial gene expression solution were named US two of the top 10 life Sciences innovations of 2020 by the scientist magazine.

We also significantly expanded our global operations in the fourth quarter, we opened our Singapore manufacturing and distribution center, which was done completely virtually.

We will use the center as a hub to support our growing sales in APAC through improvements in our global supply chain and our customer service across the region.

We believe these investments will be critical to support our long term plans to scale the company.

We made two key acquisitions in record EMCORE, China, which together with our early stage initial research and development efforts are forming the foundation of our third product platform in the margin in Ctrip field.

The building products in this field has been on our strategic roadmap for some time.

These two acquisitions remain with that overarching strategy in mind interest.

Help us deliver incredible new capabilities for our customers.

With these acquisitions, we gained important technologies, enabling IP and added amazingly talented people.

Our team is the foundation of our company and they are ultimately the source of all of our success.

Throughout the year, we added more than 250 employees, the vast majority of which were onboard with virtually.

Over 70 of these hires were in our commercial organization, bringing our total to 290 commercial employees at year end.

I am so proud of the brilliant passionate hardworking individuals who continue to be drawn to our mission at kind of X.

And as always working intensely motivated by our customers work, but other discoveries and by their progress.

Last year, the Covid pandemic presented an unexpected and acute challenge to the scientific community.

Many of our customers responded with great determination to understand the disease and to develop ways of fighting it.

As an example, I'd like to highlight two major papers published in just the last few weeks.

The first published in nature came from the University of California at San Francisco, where researchers do single cell sequencing to compare mild and severe COVID-19 patients.

They discover the patients with mild disease display a specific pattern of gene expression that coordinates the immune system's fight against the virus and contrast, and severe disease. The patients are producing rogue antibodies that interfere with that pattern and with appropriate functioning of the immune system.

This points to targets for potential immune therapy immunotherapies in severe patients to reengage viral defense.

The second paper published in cell came from a single cell consortium for COVID-19 in China made up of researchers from 36 institutes and hospitals.

This grille brand and massive study performing in depth analysis on hundreds of samples from nearly 200 patients.

They were able to link key changes of course large numbers of different cell types to clinical features including age sex severity and disease stage.

The study revealed multiple features of the immune responses that were previously non I appreciate it.

The <unk> provides a rich resource for understanding the pathogenesis of COVID-19, and for developing such a therapeutic strategies going forward.

Now while we are still navigating this pandemic our customers have adapted to work with us within this new environment.

We believe labs have reached a steady operating state, which will continue until the pandemic is brought under control.

Demand for chromium instruments remains strong in the fourth quarter customer engagement drove pull through back to pre COVID-19 levels.

From usage and Biosafety labs continues to drive incremental instrument placements.

Importantly, during the quarter, we booked our first multinational coral new biomarker study involving clinical samples from 12 collection sites.

We're excited about the opportunity for using the chromium platform to improve the yield of the drug development process.

Turning to visit them the platform continued to grow during the fourth quarter and there have been more than 80 publications from preference to date.

We're highly encouraged by the pace of adoption and growing use cases, we believe these papers provide critical validation across a number of exciting areas of research and will accelerate market adoption in our existing markets, especially in constellation all settings.

Previously, we have talked about lithium applications in oncology and neuroscience. While these continue to be the major drivers of wisdom adoption. We're also excited by the range of new use cases for our customers have been exploring for example, <unk> is being used in studies hard biology to understand congenital heart conditions and atherosclerosis.

There is a study to understand the progression of liver fibrosis to identify targeted arguable pathways for anti fibrotic therapies and to better understand kidney disease customers are using lithium tucked in spatial and temporal profiles of chronic kidney injury and compare them to those from the normal kidney.

Now even with our commercial success over the past several years. It is still very early days looked.

Looking ahead for 'twenty to 'twenty one.

Investments are focused around four key priorities for.

First building out our organizational and operational infrastructure second driving broader chromium adoption.

Third establishing <unk> as the standard for spatial genomics research.

And finally developing day in Ctrip platform.

Starting with our organization, we are strategically scaling our business to build ahead of demand and to drive future initiatives.

As I mentioned earlier, we ended the year with close to 300 commercial employees and we plan to hire at least 100 more throughout 2021 to support global expansion and new product launches.

We're also making investments across the company and our global it infrastructure operations R&D and G&A.

As a part of these investments we have acquired land nearby to bring our sophisticated manufacturing capabilities closer to our R&D to support the rapid pace of product development.

We're also hiring top talent across our company to grow every part of our organization with plans to increase our employee base by approximately 50% over the course of the year.

As we scale for a focus on preserving and nurturing our mission driven culture that drives us to achieve things that have never been done before.

These core values have been and will continue to be a critical part of our long term success.

Turning to chromium, we remain very early in its adoption cycle and in the impact of the single cell Revolution.

Since its launch in 2016, the platform has quickly scaled to more than 2400 instruments.

And while impressive it is still a very small fraction of our total opportunity.

Our products are already starting to sweep away many of the conventional tools of standard biology.

And they're doing this across all of the life Sciences of course water conventionally viewed as distinct market categories, whether its molecular biology cell biology protein biology.

And from the continuing interest we're seeing from new customers. It is clear that this is just the beginning we.

We expect the single cell approaches will become the standard for many types of biological experiments across tens of thousands of labs around the world.

Our goal for chromium is to keep driving broad adoption and expanding from early technologists and genomics leaders to the tens of thousands of biologists focus from answering specific biological questions.

We're investing to remove barriers for those new to high Khan from genomics and to keep increasing the utility for our more established users.

We're accelerating customers along an adoption curve with new product integrations, allowing the total cost of experiment to be optimized across a wide range of chromium use cases.

The following capability is coming to the market. This year at <unk> launching in the first quarter because it will enable cell multiplexing for large experiments, reducing the cost by as much as 60%.

Lower throughput kit also launching in the first quarter that will reduce startup cost for single cell experiments and enable efficient proof of concept studies before scaling.

In the back half of 'twenty to 'twenty, one we will launch a fixed RNA profiling kit to allow fixation at points of tissue collection unlocking access to large sample cohorts.

And Caribbean X and new high throughput instrument that will enable <unk> experiments of 1 million sales.

And finally, the 10 X cloud is now live for North American users to enable streamlined data handling and computation.

Moving onto Vizio.

This platform remains even earlier in this overall adoption and lifecycle compared for chromium visit.

<unk> is incredibly powerful for elucidating spatial biology and is the highest resolution spatial genomics product on the market.

This plot from has been on the market for less than five quarters, but has already gained broad adoption.

We're now focused on establishing it as the standard for spatial genomics research and expanding its core capabilities in response to market demand.

We're very excited about future product launches, starting with <unk>, which we expect to begin shipping in the second quarter of this year.

Our single biggest requests for translational customers inside of a necessary condition for most of their research is the compatibility with F&B samples. This is the predominant way that patient samples are collected and stored is the standard part of pathology workflows.

We're launching a complete solution comprising all ready to use reagents and software. It is the first technology to enable true discovery and SSP samples delivering the full transcriptome across the entire tissue.

What's especially remarkable is the sensitivity of this product is on par with what we see with analyzing fresh tissues with standard Museum.

This performance exceeded even our aggressive internal expectations and is very exciting to our customers.

In addition to <unk> capabilities are key requests we have received from our visiting customers is to help the sample handling and logistics and most importantly, our customers would like to analyze archived samples that have already been mountain non conventional non <unk> slides.

To answer this need in the first half of 2022, we plan for launching new instrument growth type assist we expect the psychosis will really simplify the work for for many of our customers will significantly expand the number of samples that could then be run on volume.

And finally.

We expect to launch <unk> HD in the first half of 2022 to deliver single cell resolution.

Image <unk> is based on big fundamental advances in the underlying microwave technology. It will come with a resolution that's 400 times higher than the current museum and over 500 times higher than the original previously in technology.

We believe that this to get together with all the other investments, we're making will establish museum is the single best platform for scientific discovery and translational research.

We're at the very beginning of the visit story the enthusiasm from our initial customers and the pace of variety and breadth of early publications represent a significant opportunity for the provision platform and spatial biology as a whole.

To keep driving market adoption and help our translational customers make the most of the platform.

We will expand our clinical translational network. This year ahead of launching <unk> and highly multiplex protein assays.

And finally with the addition of in situ capabilities. We have added the foundation for a new platform.

We expect will help us address another long term growth vector for <unk>.

Promise of in situ is the ability to measure large numbers of molecules directly in their native states in tissue at sub cellular resolution.

This is different from chromium museum or most current analytical techniques, where our molecules are removed from tissue before measurement.

We expect to build an integrated system, which can be viewed as analogous to IHG.

Based approaches commonly used in pathology, but scale to vastly greater multiplex levels and information content.

These capabilities laid the foundation for an ideal clinical instrument for tissue based analysis and.

And Theres more insights and translational work gets done with chromium and vizio in situ will provide the natural formats for many of these applications to be adopted in the clinic.

In the long run we expected just to just about every tissue will be analyzed using at least one of these three approaches whether for basic science research or for medical applications.

Okay.

Moving beyond 2021, let me discuss for a review on the market opportunity. We previously outlined our near term opportunity within the research tools market as those areas where people are looking to do high throughput research. This currently represents approximately $15 billion for the more than $60 billion Global life Science research tools.

Market as.

As more research most of the high resolution large scale approaches more of the total life Science research tools markets will become available to us over time.

In addition, there will eventually be many powerful clinical applications based on single cell and spatial analysis of tissues.

We expect our on Ctrip platform will be well positioned to bring many of those applications to the clinic, if we make modest assumptions around the numbers of potential samples and pricing we estimate the size of those opportunities around an additional $10 billion.

Perhaps the greatest revelation in biology over the past several years is the pervasive cellular complexity that underlies just about every biological system.

It turns out that every tissue harbors module greater diversity of cells and cell types than would have previously thought all of them interacting with each other in a complex interplay of massive gene expression networks.

Going forward it is clear to us that in the future. The vast majority of biological tissue samples will need to be analyzed with single cell context at large scale and at high resolution.

And we have been investing in three core platforms that together will enable precisely this future for our customers.

They write their stories of the century of biology.

And looking ahead in 'twenty to 'twenty one.

Now, we expect our revenues to grow more than 60% over 2020.

Overall, I could not be more proud of our team for their execution. This past year their talent expertise and hard work as latest for strong foundation for long term growth.

With that I will now turn the call over to Justin for more details on our financials.

Thank you Serge.

Total revenue for the three months ended December 31, 2020 was $112 2 million compared to $75 3 million for the prior year period, representing a 49% increase.

Similar to prior years, our revenue in 2020 was more heavily weighted to the back half of the year, particularly Q4 due to the typical budgetary cycles of our customer base in.

In addition, there was a concentration of orders during the month of December is more labs opened up and customers are assumed experiments.

Consumables revenue was $96 5 million, which increased 49% over the prior year period.

Instrument revenue was $14 million, which increased 49% over the prior year period.

Service revenue was $1 7 million, which increased 48% over the prior year period.

North America revenue for the fourth quarter was $57 million.

Representing 34% growth over the prior year period.

EMEA revenue for the fourth quarter was $32 9 million representing.

Representing 54% growth over the prior year period.

APAC revenue for the fourth quarter was $22 3 million rep.

Representing 95% growth over the prior year period.

Gross profit for the fourth quarter of 2020 was $93 3 million compared to a gross profit of $58 7 million for the prior year period.

Gross margin for the fourth quarter was 83% compared to 78% for the fourth quarter of 2019.

The gross margin increase was driven primarily by favorable product mix due to the next gem transition, which did not carry the same level of royalty accruals as legacy gem products.

As the transition to next gem products is now substantially complete we see this level of gross margin as a high point and expect that future quarters will have a slightly lower gross margin as our newly introduced products expand to become a larger percentage of our overall revenue.

Total operating expenses for the fourth quarter of 2020 were 500, $502 9 million compared to $66 8 million for the fourth quarter of 2019.

Our fourth quarter operating expenses included $406 $9 million of in process R&D expense due to the acquisition of <unk> Corp.

R&D expenses for the fourth quarter of 2020 were $39 7 million.

Compared to $27 9 million for the fourth quarter of 2019, excluding in process R&D expenses related to the acquisitions the.

The increase was primarily attributable to increased personnel related costs.

SG&A expenses for the fourth quarter were $56 million compared to $38 8 million for the fourth quarter of 2019. The increase was primarily due to increased personnel related costs.

Operating loss for the fourth quarter was $409 6 million compared to a loss of $8 1 million for the fourth quarter of 2019. This includes $14 3 million of stock based compensation for the fourth quarter of 2020 compared to $5 1 million for the fourth quarter of 2019.

Net loss for the period was $415 6 million.

Compared to a net loss of $7 1 million for the fourth quarter of 2019.

Now turning to our full year results.

Total revenue for the full year ended December 31, 2020 was $298 $8 million.

Compared to $245 $9 million for 2019, representing a 22% increase.

Consumables revenue was $252 7 million.

An increase of 22% over the prior year.

Instrument revenue was $40 1 million, an increase of 15% over the prior year.

Service revenue was $6 million, an increase of 48% over the prior year.

As of year end, we have sold a cumulative total of 2000 and 412 chromium instruments up 746 instruments from 1666 instruments at the end of 2019, which represents a 45% increase in the ending installed base.

Our customers have historically averaged approximately $150000 a year in consumable orders per instrument outside of the impact of the pandemic.

Q4 was above that rate on an annualized basis, but due to COVID-19 impacts earlier in the year, our 2020 through averaged $124000 per instrument for the for year.

North America revenue for the full year was $159 $3 million, representing 14% growth over the prior year.

EMEA revenue for the for year was $73 3 million Rep.

Representing 26% growth over the prior year.

APAC revenue for the full year was $66 2 million.

Representing 38% growth over the prior year.

Gross profit for 2020 was $240 4 million.

Compared to a gross profit of $184 $9 million for 2019.

Gross margin for 2020 was 80% compared to 75% for 2019.

The increase in gross margin was driven primarily by lower accrued royalties related to ongoing litigation, partially offset by higher costs from newly introduced products.

Total operating expenses for 2020 were $774 5 million compared to $215 4 million for 2019.

Inclusive of $447 5 million of.

And in process R&D expenses related to the acquisitions of Cortana and recon.

R&D expenses for 2020 were $123 4 million compared to $83 1 million for 2019, excluding $447 $5 million of in process R&D expenses related to the acquisitions of Cartagena and recall.

The increase was primarily attributable to increased personnel and stock based compensation expenses.

SG&A expenses for 2020.

For $202 3 million compared.

Compared to $138 million for the prior year. The increase was primarily due to increased personnel and stock based compensation expenses and increased litigation expenses.

Operating loss for 2020 was $534 1 million compared to a loss of $30 $6 million for 2019.

Net loss for 2020 was $542 7 million compared to a net loss of $31 3 million for 2019.

We ended 2020 with $664 million in cash and cash equivalents.

Now turning to our outlook for 2021.

We expect full year revenue for 2021 to be in the range of $480 million to $500 million.

Representing growth of 61% to 67% over for year 2020.

As in prior years, we expect revenue to be heavily weighted towards the back half of 2021, particularly in the fourth quarter.

We ended Q4 with about 90% of customer labs operational at varying degrees of capacity and are still seeing a wide range of efficiencies within the COVID-19 operating environment.

Going forward, we expect this capacity to fluctuate in the near term and we view the percentage of labs open as a less important metric compared to the available capacity per lap.

We don't expect much improvement in lab capacity in Q1.

Yes.

In Q1 will also lack the seasonality benefit of Q4.

As a result, we expect our Q1 revenues will be sequentially down from Q4.

While the most visible impact of COVID-19 on our business has been customer lab closures and reduced capacity. We are also managing supply chain and logistics risks.

These are not caused significant disruptions to date, but our customers are subject to similar risks, which could limit our customers' ability to perform experiments.

It's an ever evolving situation that we are tracking closely.

As we enabled essentially biology, we will continue to aggressively scale the company.

In 2021, we are focusing our investments on.

R&D to continue our rapid pace of product development and innovation.

Intellectual property to protect our products and scientific advancements.

Our commercial organization to continue to build our sales and support teams and adequately address the interest we're seeing from the Biopharma and translational markets.

And finally on our operational capabilities to ensure we have a solid foundation to enable our future growth.

At this point I'll turn it back to search.

Okay.

Thanks, Justin.

I'm so proud of our team I know var achievements in what turned out to be an incredibly challenging 2020.

While the pandemic is not over who anticipate that it will be brought under in increasing measure of control as we progress through the year.

Next week, we're hosting an inaugural virtual event called experience, where we will share details about the work of our customers and upcoming products.

I look forward to seeing you all there.

Overall, there are many reasons to be optimistic as we look for the coming years and beyond.

<unk> brought into sharp relief the need to accelerate the mastery of biology, and the importance of our mission.

And looking beyond the current pandemic examples in our life Sciences are poised to transform the world and massive ways.

We anticipate vast long term opportunities ahead of us and intend to keep scaling the company and are investing aggressively to capitalize on them.

With that we will now open it up for questions operator.

Alright, so as a reminder to ask a question you will need to press star one on your telephone tourism. All your question Christopher Please.

Please limit yourself to only one question and one follow up question. Please standby, while we compile the Q&A roster.

Our first question comes from the last auction sales from Cowen you are in our lives.

Hey, good afternoon guys.

Actually in the office, but on my cell phone hopefully the receptions okay.

<unk> has always been a company that's done a fantastic job balancing high gross margins, which is of course attractive to investors with innovation that makes new technologies accessible via ease of use quality and oftentimes reduced price per unit for the customers.

Recognizing that you noted in your prepared remarks that you are close to a high watermark with gross margin as you rollout newer products with often lower price points and add new products organically and Inorganically. How do you think about the longer term outlook for maintaining gross margin at levels seen over the past few quarters meeting at least in the mid seventy's or so.

Even as we factor in what you said about this being kind of a high watermark quarter.

Yeah.

Hey, Doug This is Justin I'll take that one.

Our high consumables gross margin is a core strength of our business model and helps enable the deep investments that were.

Making to develop new products.

In our product development process, we typically target gross margins of about 80%.

Some of our newer products have lower gross margins than our previously existing products, but they're mostly in that range. So I think 80% is a good number to think about for the near to mid term.

And what you propose I don't think is unreasonable to think about in the in the longer term.

Okay. Thanks for that Justin.

I think this is another one for you.

I believe you talked about $150000 in consumables per box on an annualized basis as the assumption baked into guidance.

On the surface that seems a little low to me I mean back in Q4 19, you generated 165000 annualized consumable pull through.

Yes, I think that the full year number was a little bit lower than that but still north of 150000.

Points for those numbers, because obviously 2019 was pre pandemic and I recognized on one hand, Q4 is seasonally a strong consumable quarter as we look back to Q4 of that year, but on the other hand, you have a higher mix of higher pull through of chromium connect is out there and you also have more busy I'm users out there which of course, because we don't have a <unk>.

Great way of modeling it those consumables revenue typically get baked into that number.

So it's just not clear that your 2021 revenue guidance Embeds an assumption that.

Debt.

That is kind of consistent with what we've seen trend wise absent COVID-19 and what we've seen.

In terms of increased visits from adoption.

Can you just kind of walk us through what I might be missing here as I think about it is that number looks a little bit low.

Yes, it's a good question, Doug I think starting with debt at the beginning around.

Q4, and seasonality. So Q4 is seasonally quite a bit stronger in total and the other three quarters and you are right that for Q4 19 pull through was.

Was a large quarter over quarter increase from the previous quarters and in fact Q3 dollars 19 was well below the 150000 per year. So thats why we focus on annual pull through and not quarterly pull through.

For our 2021 guidance, we contemplate it.

Existing customers continuing to increase their usage, while we're adding a large number of new customers at the same time and those new customers take some time to ramp.

We've previously said that around 150000 or slightly above that is a good pull through number to use as we balance.

The increasing utilization of existing customers against this ramp up of the new placements.

And as far as the connect goes that's that is having some impact on the asps. When we look at the Asps between the chromium controller in the chromium connect but thats a niche product in its very early on and so that isn't making a material difference in our average pull through as of yet.

Alright, Thanks, again gentlemen.

Thanks, Doug.

Okay.

Thanks, one on acuity Tycho Peterson from Jpmorgan you are now.

Yes.

Hi, Good afternoon. This is Julia on for Tycho, Thanks for taking a question for.

So staying on the poll for question.

I know you know that other conference that our.

Our next customer that $1 million annual poll true and you also have museum FRP in silence force coming true.

Unlock sample volume, but at the same time as you add new customers for way on throughput.

Initially so I know you said 150, K getting number for 2021, but as we look longer term what do you say is the total potential of calm in the out years are you still thinking about.

John J K by 2020 to me, which is I believe a data point previously provided waking now think theres significant upside for that.

Yes.

This is.

This is Justin I'll take that I'll take that one as well.

It's a great question Theres, a number of factors that are going to contribute to that.

As we're adding an ever increasing number of new customers each year and introducing new products.

<unk>, the new capabilities on Vizio, the chromium connect the chromium X, it's going to take some time for those products to ramp up in.

For us to see how they actualize in reference to our expectation.

But the thing that I think is remarkable is that our pull through.

Has maintained outside of the impact of the pandemic, but.

Has maintained itself in that high $140.

150 range, even as we.

Like this year increase the instrument installed base by over 40%.

So I think.

It's yet to be seen how that flow through metric will materialize for 150000 is the best estimate that we can that we can give you right now for the near to medium term.

But at some point the focus is going to be just on overall consumable application spend within the three platforms that we've defined.

Got it.

And then separately regarding the sales force.

Yeah.

800 more sales people.

How should we think about the pace of that hiring and the cadence of revenue ramp this year and then.

What's the relative resource allocation the true silver Bay shore.

Nick versus Biopharma customers, if that's a better way to think about it.

And then are there any geographic focus that you previously noted China is a big opportunity and that would be for.

How significant will China be.

As Jeff.

Jeff.

It looks at the total revenue.

Juan This is Brad why don't I start on the at least the sales force side.

Adjusted.

But.

In general for trying to hire those people.

Is prudently and fastest possible. So typically in our sales organization do you want to sort of front loaded.

Growing so much and we're adding some new people.

And we're also really having to make up for the fact that we had a little bit of a pause as we were trying to understand that.

The course of the pandemic and what it will ultimately impact.

Our business so in general we will add.

At least 100 people this year expanding pretty much across the organization, but you called out China as a real opportunity for us and there we continue to add commercial partners as well as our own team members. So that we have a very good view of what's going on in China, and overall, China is going to be a major growth axis.

You already saw him for.

Third quarter numbers and it's been this way for last couple of years and will continue to be that way a major major growth access for us.

I think that covenant Brad.

Was there any more to that true.

The resource allocation between academic and Biopharma customers.

Maybe I'll just touch on that I mean, we are building out a focused strategic accounts sales force to deal with pharma and biotech, but mostly pharma and large pharma on their validation side of the house in other words outside of the discovery realm.

Certainly can handle so in that sense, we're building a lot more capacity and indeed in internal capabilities to understand and really provide the right kinds of products and documentation that's needed to see that trend regional into the drug discovery validation process.

Got it very helpful. Thank you.

Okay.

Next question comes from cash event from Morgan Stanley You are now live.

Hey, guys good evening and thanks for the time here today.

I'll start with one on chromium for.

Are you perhaps.

<unk> got the connect launch underway the chromium X I believe comes with non <unk>.

ESP launching in the back half of the.

So how do you think about upside to that 50 to 55 kv instrument ESP I mean should we be thinking of closer to sort of 60 day come year end and then in terms of distinguishing the value proposition.

Spoken about sort of walkaway automation as being the defining feature on the connect and then you've got the high throughput Bob seek users is the target for for chromium X.

How are you thinking about sort of reinforcing that messaging with your customers and then have you had any early discussions with your BOP seek sort of potential user base just yet following the launch announcement in January.

Thanks, David So.

I'll start with the questions focused on the X and so we certainly have been talking to customers I would emphasize that it's not just sort of the BOP seek.

Obligation that is aimed at in fact, probably mostly as other things in there so there's plenty of applications.

<unk>.

Like immune profiling like looking at.

Scaling up addressing efforts looking at Marcellus combinatorial drug screens combinatorial crisper screens. This is where like some of the most intense current demand is coming from.

Sure.

So.

And so we certainly have been talking to customers about these and they're I think there is.

There is debt that was the interest that motivated the development of the instruments in the first place and we have.

If anything have grown more excited by the potential and what we're hearing from customers.

So I think that's that's the drug index.

In terms of cannot I mean, it's the same story and an adjusted alluded to this before but you will walk away automation has been the.

The rationale for the connect and specific biopharma customers by again during Covid. There is like an expanded use of.

Set of cases that have emerged around.

Because people are constraints around one that can actually be in the lab when they can run things so.

Chromium connect because of the advantages that our debt.

Particularly.

Relevant now.

So thats kind of Thats. All of these are the instruments are evolving I'll, let Justin touch on the ASP part of it.

So for the Permian for the chromium X the pricing isn't isn't final yet and as far as the ASP range goes $50 to 55000 is what we've talked about in the past for.

For chromium.

The average ASP, including chromium and chromium connect for 2020 is still in that $50 to 55 range I would say in light of the what we would.

Back to sell in Q4 of this year.

With the legacy instruments.

I wouldn't I wouldn't recommend making any adjustments to that until until we get closer.

Got it Thats helpful.

And then third any color to share on new versus repeat customers in the quarter for <unk> I know in the last quarter, you had highlighted repeat orders as the key sort of customer constituency, where you saw a strong performance.

Yeah. Good question I think that trend has continued again our focus internally on what we're seeing from customers is really that is the reorder rate of getting the customers through their workflows to there for answers and you see that again reflected in the increasing number of publications break rooms that are coming out.

So overall I think interest trending positive for Knight as the kind of the important area of focus for US now that we've established.

Initial user base.

Got it perfect and then one final one for Justin.

In light of your comments just in around sort of this 50% increase in head count.

Should we be sort of just extrapolating from that too.

Sort of a $120 million per quarter sort of Opex run rate with a $40 60 R&D versus SG&A split.

Is the math sort of right at a high level on that or could it be.

So a similar but more front end loaded more backend loaded through the year, how are you thinking about that.

Yes, so good good question.

We are planning to grow head count by 50%. This year most of the hires are going to be in R&D for.

Led by commercial and then G&A in our operations and G&A after that.

I would more heavily weighted towards the front half towards.

Towards the front half of the year and more heavily weighted towards R&D.

Perfect Super helpful. Thanks, guys.

Excellent online is Derek de Bruin from Bank of America, you are now live.

Hey, good afternoon.

So a couple of questions. So can we talk about the new multiplex application I mean, you say, it's sort of sales.

Customers, 60% in cost how does that 50% debt, 50% of sequencing cost of debt, 50% on your on to you.

Basically the question is like.

Are you expecting just the higher volume experiments to makeup.

Any sort of potential price erosion on your end.

Yes, yes.

Question and answer it and then final question on that with US a lot about so.

Yes.

This is an average estimate for like what we expect customers who are using it to save.

Inclusive like overall on their experiments.

It is definitely the case, where.

They will end up.

Spending less per sample, but our expectation is borne out by.

But what we have seen our customers doing.

Using kind of homegrown homebrew solution previous solutions previously is that this will lead to more usage overall and more dollars flowing into the single single cell experiments in total so.

So of the debt.

It's sort of a drop per sample.

Gordon.

The reduced gross per sample will should materialize some higher overall spend maybe not immediately but certainly overtime.

Got it and can you talk a little bit about the forward monthly order growth rate.

You provided on the last couple of calls.

Just some clarity on what I just.

Color on what you're sort of seeing.

Derik This is Justin so in the in the past couple of quarters I think in net in the in the midst of.

Covid.

Without guidance in place we were trying our best to give to give color on what we're seeing in real time.

Now that we've now that we've reinstated guidance and we've.

Given some color around the waiting as far as you know mostly in the back half of the year and particularly in Q4.

We won't be giving any kind of mid quarter update at least at this time.

Fair enough.

I would ask and finally, one last question.

Can you talk a little bit about how much of.

How much do you have embedded into your current guidance for recent new product launches in 2021.

Jonathan.

What that it is there any sort of cannibalization that could happen I think there's just some general thoughts on how you're thinking about new products contributing to the topline.

Yes, so the guidance for 480 to 500 range incorporates all of the new product launches.

It's our it's our best view taking into account for those different factors that you mentioned like cannibalization how.

How we expect those products.

We expect the adoption curve to look like based upon what we've learned on on past launches, but it's all incorporated in that range that we've given.

Great. Thank you.

Thanks, one on a curious David question Bert from Guggenheim Securities.

Yes.

And thank you for taking the question. So in terms of the new product launch in that low throughput area. How should we think about the transition speed of your customers in terms of dabbling their day.

Addling their toes into single share Alta for.

Believers of single cell.

How should we think about the impact of of that low throughput kit on that transition speed just based on your early customer experiences.

Hey, David This is Brad I'll take that.

As we've not launched the kit right now, we really don't know, but we.

We do think we havent very good kind of view of the two reasons that this kits important one as you've already pointed out and that gives people an opportunity that are new to 10 X to try and do so in a pilot studies and those usually can be used to help in grants and funding and in some cases, even budget allocation within our laboratory.

The other side of it for US is is and this is where I am.

Cautiously optimistic this could be very important is getting customers that are more experienced customers.

<unk> Testbed test spend.

Paramount workflow workout sample prep procedures.

All of the all of the time course of the way the harvest sample all of that can be worked out in a very a much more lower cost environment to measure that.

The likelihood of success of an experiment. So those are really the two things that will drive that.

<unk>, probably and then for your questions. How quickly if you take that first group of people.

We're hoping that we can run people through that adoption cycle certainly within a year from.

Typically when we we have a lot of experience launching products.

Months, a lot of them and ultimately just understanding adoption cycle, but in this case, it's just it's kind of a new use case and just understanding how that models out.

We'll keep an eye on it but as we launched that product, which will be next few months.

Got it now that was very helpful. And then in terms of are you getting any kind of number in terms of percent of your visit from customers.

Per cent of chromium customers that.

Are starting to use <unk>.

And then just in terms of.

Are you seeing a pickup in chromium when you see.

Customers pickup vizio.

How much do you think that is actually on account of museum versus just these are high users of genomics platforms period.

And that's my last question.

Well, so maybe I'll start here I will say this that you have to appreciate that the current members are pretty.

Has now large established user base, especially the number of customers.

Is actually larger than just the number of instruments because of the kind of the comparable halo user surround each instrument.

And then if you look just look at the map the number of video customers very large structure all of them are existing chromium.

So as well so the fraction of.

Permian people, who are using museum is.

Not trivial, but it's also not very large right that's how the math works out.

I would say as far as it being a driver I'm not sure. If that's material right now probably on the margin there is some sort of.

Some additional chromium usage that might happen.

Vice versa, but I don't think thats, the sort of the cross reinforcement is that material at this stage.

Thank you.

Thanks for non acute is Dan areas from Stifel, you will normalize.

Hey, good afternoon, guys. Thanks, Serge maybe just on a few of the new products and thinking about the <unk>.

The range of capability that youre kind of looking to enable here with the X instruments and also the lower throughput kit.

Are you able to give us sort of a rough cut on the customer base just in terms of.

How many or what percentage you want to look at 10000 sales at a time versus 100000 versus $1 million I.

I know, that's probably hard but it would just be helpful to understand the buckets a bit if possible and we just think about who these products are targeting at this point and how many of them will really be.

Once they have access to them.

Yeah, I mean, it's a good question I would like you said, it's a hard number to pin down and in fact, it's a moving number to pin down. If you went back just a few years ago. The number of people interested among non so experiments would've been essentially zero, maybe one or two in the world. It certainly has increased now like.

Referencing the applications I mentioned earlier immune profiling combinatorial screening for special with the rise of sort of CRISPR screening applications that has been significant I would say that number of people who are at the cutting edge.

And would be interested in.

Many hundreds of thousands of cells or million dollars.

It exists is not huge but its not triple either right and we expect that kind of looking at the pattern of single cell usage and are scaling up over the last five years.

We anticipate that people will keep moving up that certainly.

Certainly we will help them along as well.

Okay, and then maybe just on the fixed RNA profiling kit. That's coming later this year is the idea to launch targeted and whole transcriptome at the same time.

Or will one be in the market before the other and then I guess relatedly will be both be launched at some point this year. Thanks.

The other question specific before fixed RNA profiling kit.

Please yes, so we haven't.

Talked about the detail so.

<unk>.

That guidance, it's a good question, but we haven't talked about those details yet.

Okay. Thanks.

Thanks for the Q&A as Patrick Donnelly from Citi Your non life.

Hey, thanks for taking the questions guys.

Just and maybe just on the full year guide can you just talk through I guess the assumption you've made on the end market recovery certainly exited <unk> in a good position I guess, what are you thinking we get back to kind of normal state and maybe for Brad on the back of that.

Obviously, you saw a nice budget flush as you guys mentioned at the end of <unk> have you seen any slowdown I guess in January you kind of.

Spend kind of played out was there kind of everyone's taking a breath of January to the strength kind of continue so far this year.

Hey, Patrick good good question, when we thought about guidance for for this year.

We really looked at the first half in the back half and I think for the first half.

As we shared in detail at least for for Q1.

We really don't expect much improvement as far as the lab capacity is going really I think that's the case for for Q2 as well.

I think we're optimistic around the back half of the year and Thats why we talked around about the weighting and more in the second half of the year, particularly Q4.

But this assumes that things will.

Start to turnaround in Q3, but won't really be felt until Q4.

Yeah, and Patrick as far as the.

Started the year typically.

January.

It's slow.

I think this year it was a little bit.

Larger because.

Let's face it.

And December was pretty dire and we certainly saw some some headwinds and <unk>.

These accounts were spiking.

And again some of them.

<unk> gloom was the prevailing.

Billing.

Certainly we've seen that improve in the last three or four weeks.

Three weeks, probably and ultimately.

There will there is probably and as Jeff described there is some.

<unk>.

Poland and that's contemplated in our guidance.

No that's helpful.

And then just maybe on the FSP launch that's nearing maybe.

Maybe can you just talk through the potential customer conversations there I mean has there been a part of the market kind of holding off on adoption until this was available I'm just curious what the conversations been like around this are ahead of the launch.

Yeah.

So on <unk>. Thanks.

It is.

Product that we've been.

I'm pretty excited by for for some amount of time I think the feedback from customers on what.

It is able to do has been very positive and we're very excited to get it to like a broad set of launch it.

For.

Wait for the market later in the first in the first half of this year.

Just everything is looking good and we're excited about yes, and I'll just add I mean, the world didn't really get a good sense of how good these products going to be just only maybe in the last six weeks and Thats really sparked a lot of interest.

Okay.

Yeah, that's helpful and maybe last one just on the <unk> side obviously.

Obviously, a big investment year more than certainly the revenue side, obviously, but what has feedback been from customers since the deal just in terms of interest in using it complementary with lithium and then anything we can look out for as we progressed through the year in terms of milestones or is it kind of going to be.

Behind the curtain and we'll see a couple of years.

Well, yes interest.

Question right because they answered instrument.

Interest has certainly been there just like you guys have been asking a lot of questions, but anesthesia for the deals customers have certainly been very interest as well for similar.

Similar results there everyone has been saying, what we're going to be able to do I think partially the speaks of our reputation for built great products before so I think people are expecting big things from us as far as.

Going forward.

We are we're focused right now on developing the platform. There's a lot to do this as a very challenging.

Generally technology area too.

To build products and we are investing to build to build awesome products for our customers. That's our focus right now on where.

Further along with them.

We'll talk about it.

Alright, I appreciate it Sir.

Next along the line of Matt <unk> from Goldman Sachs. You are now live.

Thanks for taking my question.

And just a more high level question I know, we've talked a lot about the head count increase you guys plan to do over the course of the year I'm just curious more on the qualitative side, how competitive is that market both on commercial and R&D and has it gotten tighter over the course for the last year and do you expect it to to get tighter over the course of this year.

Okay.

So yes, it's a good question so I'll ask.

I'll answer it broadly for the company.

<unk> might be able to have more color on the commercial side on the sales side.

So look John like I said during my opening remarks down to the kind of it has been a focus for us from the very beginning that's the foundation of the company. So always top of mind concern and we're always.

We're always trying to get the very best people in the company so as far as we're concerned it's all listen some simple type market.

Kind of regardless of what happens there right now.

It varies by area.

Back in the early days it was particularly more challenging for US for example to hire more like software developers.

Yeah.

People out of the sort of tech industry has gotten relatively.

<unk>.

Year for multiple reasons.

We in general I think we're doing.

Especially compared to sort of start up this.

From an easier and we're doing quite well and we're very happy with the level of talent that is.

That is coming for the company.

And I'll, just add a little bit on the debt.

Commercial side I mean.

Generally been somewhat easier at like third bed overall, because people know who we are.

In a commercial there is always that sort of.

The competitive aspect and people like to be part of a winning team and we've tried to make sure that 10 X as a winning team so overall.

It's improved but we also have a very high standard. So the yield is not very high getting people through the interview process.

Great. Thanks for that color and just one last one I know you guys have talked about.

Lab capacity I'm just wondering.

As you look out regionally, where you guys are there any differences in the cadence of capacity within labs across different regions or is it pretty much. The same cadence that you are expecting as we get towards the back half of the year the capacity to go up.

Yeah, maybe I'll just take that.

There is a complete range in places like China.

Kind of back to what I would consider normal.

In Eden generally across Asia, we've seen that stabilize fairly quickly.

Europe is is with the exception of the U K as is.

<unk> dot.

Open up an ocean.

Okay.

Increasingly improved capacity and in <unk>, we see it.

It's kind of all over the board.

Early on in the quarter or.

Towards the end of the quarter I should say you saw certainly some issues in southern California, There was a spike there, but overall, we kind of reached that point, where there is some level of attenuation, but.

I think Jeff pointed out we're going to have to see the impact of the vaccine before we see any material change going forward.

Great. Thanks, very much for the color appreciate it.

So there are no further questions at this time. This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

Okay.

Yes.

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[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to day.

Index genomics fourth quarter 2020 earnings conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.

For any further she says for Starz here. Thank you Oh don't like to hand, the call over to your speaker today, Ms Gassy, Cornell Investor Relations and strategic Finance. Please go ahead.

Thank you.

Good afternoon, everyone.

Earlier today and that's true.

It's really unusual they fell for the fourth quarter and year ended December 31st 2020.

If you have not received this news release or if you would.

I'd like to be added to the company's distributions net.

Please send an email from investors for NAV.

Scott.

An archived webcast of this call will be available on the investor tab on the company's website and action on the Dot com for at least 45 days following this call.

Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements within the meaning of federal securities laws.

These statements involve material risks and uncertainties that could cause actual results or is that net.

Curious differ from those anticipated.

And you should not place undue reliance on forward looking statements.

Additional information regarding these risks uncertainties and factors that could cause results to differ appears in the press release announced genomics.

Good day and in the documents and reports filed by tenants genomics from time to time with the Securities and Exchange Commission.

Kenneth.

Any intention or obligation to update or revise any financial projections or forward looking statements.

Whether because of new information future events or otherwise.

Joining the call today are search box.

Our CEO and cofounder and adjusted not been here, our Chief Financial Officer.

In addition, Brad Crutchfield, our chief commercial officer will be available for Q&A.

With that I will now turn the call over to search.

Thanks Kathy.

Good afternoon, and thank you for joining our call to review, our fourth quarter and 2020 results.

During today's call I will provide a brief summary of our fourth quarter and full year results.

Next I will discuss the opportunities that lay ahead and how we're focusing our efforts of course, the three technology platforms to build great products that deliver amazing insights for our customers.

I will then turn the call over to Justin for a more detailed look at our financials, including our outlook for the year.

Okay.

I would like to start by thanking our employees for their hard work and dedication from extraordinary difficult year 'twenty.

<unk> brought significant challenges change and sacrifice, but I continue to be impressed by and grateful for our team's resilience and commitment to our customers and for each other.

Despite all the challenges we made important progress across our business in 2020 to start total revenue grew 22% over the prior year to $299 million.

In the fourth quarter revenue grew 49% over the prior year as our business continued to recover from the impact from Covid.

We grew our installed base by 45% selling 746 additional instruments.

We will continue to expand our customer reach on our products have now been adopted by all of the top 100 research institutions and top 20 pharmaceutical companies.

Our customers published more than 1500 peer reviewed papers, bringing the total to over 2200 more than doubling the number of total publications over the course of the year.

And we will continue to invest in developing and defending our patent portfolio and added more than 300, new guidance and patent applications.

Banding, our coverage of enabling technologies.

We now have more than 1000.

And patents applications.

Yeah.

We also reached important operational milestones and they also out of the pandemic. We acted quickly to implement a number of protocols and safety measures to ensure the health and safety of our team members who needed to remain on site to support the central operations.

This included creating a program to provide recurring Sars COVID-19 two adjusting onsite for all employees at our headquarters.

As an additional safeguards, we made use of special powered respirators, which filter out particles in aerosols with very high effectiveness.

We supplied this equipment for our employees for needed to work on site in close proximity to each other.

These and other safety measures have been facilitated the safe return to work.

Most of our research and development manufacturing and other operations personnel.

Yes.

With these measures in place, we're able to continue on boarding new customers shipping products building out infrastructure, including the implementation of a new ERP system.

And executing on an incredibly ambitious product roadmap that we laid out at the beginning of the year.

We launched for new products for our customers.

Started with our targeted gene expression solution, which allows researchers to target. The gene is most relevant to their research validate their hypotheses faster and reduce sequencing costs.

Second our single cell multi arm attack plus gene expression solution, which allows researchers to read both gene expression and epigenetic programming in the same sales across thousands to tens of thousands of cells in a single experiment.

Third our visual spatial gene expression solution with immuno fluorescence, which allows whole transcriptome spatial analysis and protein detection and the same tissue section.

And finally, a new version of our single cell immune profiling solution offers increased from facility reduced sequencing cost and access to rare gene signatures.

Reflective of the excitement for these new products are single cell multiyear metallic plus gene expression solution and their vision spatial gene expression solution were named as two of the top 10 life Sciences innovations of 2020 by the scientist magazine.

We also significantly expanded our global operations in the fourth quarter, we opened our Singapore manufacturing and distribution center, which was done completely virtually.

We'll use the center as a hub to support our growing sales in APAC for ing.

<unk> and our global supply chain and our customer service across the region.

We believe these investments will be critical to support our long term plans to scale the company.

We made two key acquisitions in record Amcor, Kona, which together with our early stage initial research and development efforts are forming the foundation of our third product platform and main margin in <unk> field.

The building products in this field has been on our strategic roadmap for some time.

These two acquisitions remain with that overarching strategy in mind and true.

Help us delivering incredible new capabilities for customers.

With these acquisitions, we gained important technologies, enabling IP and added amazingly talented people.

Our team is the foundation of our company and they are ultimately the source of all of our success.

Throughout the year, we added more than 250 employees. The vast majority of which were onboard is virtually.

Over 70 of these hires were in our commercial organization, bringing our total to 290 commercial employees at year end.

I'm so proud of the brilliant passionate hardworking individuals who continue to be drawn to our mission iconix.

And as always working intensely motivated by our customers work by their discoveries and by their progress.

Last year, the Covid pandemic presented an unexpected an acute challenge to the scientific community.

Many of our customers responded with great determination to understand the disease and to develop ways of fighting it.

As an example, I'd like to highlight two major papers published in just the last few weeks.

The first published in nature came from the University of California, San Francisco, where researchers do single cell sequencing to compare mild and severe COVID-19 patients.

They discover the patients with mild disease display a specific pattern of gene expression. The coordinates the immune system's fight against the virus and contrast, and severe disease. The patients are producing rogue antibodies that interfere with that pattern and with appropriate functioning of the immune system.

This points to targets for potential immune therapy immunotherapies in severe patients to re engage viral defense.

The second paper published in cell came from a single cell consortium for COVID-19 in China made up of researchers from 36 institutes and hospitals.

This group random massive study performing in depth analysis on hundreds of samples from nearly 200 patients.

They were able to link key changes of course large numbers of different cell types to clinical features including age sex severity and disease stage.

The study revealed multiple features of the immune responses that were previously non I appreciate it.

The <unk> provides a rich resource for understanding the pathogenesis of COVID-19, and for developing <unk> therapeutics strategies going forward.

Now, while we're still navigating this pandemic our customers have adapted to work with us within this new environment.

We believe labs for reached a steady operating state, which will continue until the pandemic has brought under control.

Demand for chromium instruments remained strong in the fourth quarter customer engagement drove pull through back to pre COVID-19 levels.

And usage in Biosafety labs continues to drive incremental instrument placements.

Importantly, during the quarter, we booked our first multinational coral the biomarker study involving clinical samples from 12 collection sites.

We're excited about the opportunity for using the chromium platform to improve the yield of the drug development process.

Turning to <unk> the platform continued to grow during the fourth quarter and there has been more than 80 publications in preference to date.

We're highly encouraged by the pace of adoption and growing use cases, we believe these papers provide critical validation across a number of exciting areas of research and will accelerate market adoption in our existing markets, especially in translational settings.

Previously, we have talked about lithium applications in oncology and neuroscience. While these continue to be the major drivers of wisdom adoption. We're also excited by the range of new use cases for our customers have been exploring for example vision is being used in studies hard biology to understand congenital heart conditions and atherosclerosis.

There.

For the study to understand the progression of liver fibrosis to identify targeted arguable pathways for anti fibrotic therapies and to better understand kidney disease customers are using lithium to obtain spatial and temporal profiles of chronic kidney injury and compare them to those from the normal kidney.

Now even with our commercial success over the past several years. It is still very early days.

Looking ahead for 'twenty to 'twenty one investor.

Investments are focused around four key priorities.

First building out our organizational and operational infrastructure.

Driving broader chromium adoption.

Third establishing <unk> as the standard for our spatial genomics research and finally developing the in Ctrip platform.

Starting with our organization, we are strategically scaling our business to build ahead of demand and to drive future initiatives.

As I mentioned earlier, we ended the year with close to 300 commercial employees and we plan to hire at least 100 more throughout 2021 to support global expansion and new product launches.

We're also making investments across the company and our global it infrastructure operations R&D and G&A.

As a part of these investments we have acquired land nearby to bring our sophisticated manufacturing capabilities closer to our R&D to support the rapid pace of product development.

We're also hiring top talent across our company to grow every part of our organization with plans to increase our employee base by approximately 50% over the course of the year.

As we scale, we're focused on preserving and nurturing our mission driven culture that drives us to achieve things that have never been done before.

These core values have been and will continue to be a critical part of our long term success.

Turning to chromium, we remain very early in its adoption cycle and the impact of the single cell Revolution.

Since its launch in 2016, the platform has quickly scaled to more than 2400 instruments and while impressive. It is still a very small fraction of our total opportunity.

Our products are already starting to sweep away many of the conventional tools of standard biology.

And they're doing this across all of the life Sciences of course, what are conventionally viewed as distinct market categories, whether its molecular biology cell biology protein biology.

And from the continuing interest we're seeing from new customers. It is clear that this is just the beginning.

We expect the single cell approaches will become the standard for many types of biological experiments are gross tens of thousands of labs around the world.

Our goal with chromium is to keep driving broad adoption and expanding from early technologies and genomics leaders to the tens of thousands of biologists focus from answering specific biological questions.

We're investing to remove barriers for those new to high Khan from genomics and to keep increasing the utility for our more established users.

We're accelerating customers, along and adoption curve with new product configurations, allowing the total cost of experiment to be optimized across a wide range of chromium use cases.

The following capability is coming for the market. This year at <unk> launching in the first quarter that will enable self multiplexing for large experiments, reducing the cost by as much as 60%.

Lower throughput kits also launching in the first quarter that will reduce startup costs for single cell experiments and enable efficient proof of concept studies before scaling.

In the back half of 'twenty to 'twenty, one we will launch a fixed RNA profiling kit to allow fixation at point of tissue collection unlocking access to large sample cohorts.

And Caribbean X and new high throughput instrument that will enable <unk> experiments of 1 million sales.

And finally, the 10 X cloud is now live for North American users to enable streamline data handling and computation.

Moving onto <unk>.

This platform remains even earlier in this overall adoption and lifecycle compared to chromium vision.

<unk> is incredibly powerful for elucidating spatial biology and is the highest resolution spatial genomics product on the market.

This plot from has been on the market for less than five quarters, but has already gained broad adoption.

We are now focused on establishing <unk> as the standard for spatial genomics research and expanding its core capabilities in response to market demand.

We're very excited about future product launches, starting with <unk>, which we expect to begin shipping in the second quarter of this year.

Our single biggest request for translational customers in fact, the necessary conditions for most of their research is the compatibility with F&B samples. This is the predominant way that patient samples are collected and stored it's the standard part of pathology workflows.

We're launching a complete solution comprising all ready to use reagents and software. It is the first technology to enable true discovery and FSP samples delivering the full transcriptome across the entire tissue.

What is especially remarkable is the sensitivity of this product is on par with what we see with analyzing fresh tissues with standard Museum.

This performance exceeded even our aggressive internal expectations and is very exciting to our customers.

In addition to S&P capabilities, a key requests we have received from our visiting customers is to help the sample handling and logistics and most importantly, our customers would like to analyze archived samples that have already been monitored non conventional non <unk> slides.

So this need in the first half of 2022, we plan for launching new instruments called <unk> assist we expect the Stratasys will really simplify the work for for many of our customers and will significantly expand the number of samples that could then be run on volume.

And finally, we expect to launch <unk> HD in the first half of 2022 to deliver single cell resolution.

<unk> is based on big fundamental examples in the underlying microarray technology. It will come with a resolution that's 400 times higher than the current museum and over 500 times higher than the original previous in technology.

We believe that this day.

Together with all the other investments, we're making will establish museum is the single best platform for scientific discovery and translational research.

We're at the very beginning of Division story, the enthusiasm from our initial customers and the pace of variety and breadth of early publications represent a significant opportunity for the provision platform and spatial biology as a whole.

To keep driving market adoption.

And help our translational customers make the most of the platform.

We will expand our clinical translational network. This year ahead of launching <unk> and highly multiplex protein assays.

And finally with the addition of in situ capabilities. We have added the foundation for a new platform that we expect will help us address another long term growth vector.

The promise of in situ is the ability to measure large numbers of molecules directly in their native states in tissue at sub cellular resolution.

This is different from chromium museum or most current analytical techniques, where our molecules are removed from tissue before measurement.

We expect to build an integrated system, which can be viewed as analogous to IAC of fish based approaches commonly used in pathology, but scale to vastly greater multiplex levels and information content.

These capabilities laid the foundation for an ideal clinical instrument for tissue based analysis.

And as more insights and translational work gets done with chromium and vizio in situ will provide the natural formats for many of these applications to be able adopted in the clinic.

In the long run we expect it just to just about every tissue will be analyzed using at least one of these three approaches whether for basic science research or for medical applications.

Okay.

Moving beyond 2021, let me discuss our view on the market opportunity. We previously outlined our near term opportunity within the research tools market as those areas where people are looking to do high throughput research. This currently represents approximately $15 billion for more than $60 billion Global life Science research tool.

Market.

As more research most of the high resolution large scale approaches more of the total life Science research tools markets will become available to us over time.

In addition, there will eventually be many powerful clinical applications based on single cell and spatial analysis of tissues.

We expect our on Ctrip platform will be well positioned to bring many of those applications to the clinic.

If we make modest assumptions around the numbers of potential samples and pricing we estimate the size of this opportunity is around an additional $10 billion.

Perhaps the greatest revelation in biology over the past several years is the pervasive cellular complexity that underlies just about every biological system.

It turns out that every tissue harbors much greater diversity of cells and cell types than we had previously thought all of them interacting with each other in a complex interplay of massive gene expression networks.

Going forward it is clear to us that in the future. The vast majority of biological tissue samples will need to be analyzed with single cell context at large scale and at high resolution.

And we have been investing in three core platforms that together will enable precisely this future for our customers.

They write their stories of the century of biology.

And looking ahead in 2021.

We expect our revenue to grow more than 60% over 2020.

Overall, I could not be more proud of our team for their execution. This past year their talent expertise and hard work has laid a strong foundation for long term growth.

With that I will now turn the call over to Justin for more details on our financials.

Thank you Serge.

Total revenue for the three months ended December 31, 2020 was $112 2 million compared to $75 3 million for the prior year period, representing a 49% increase.

Similar to prior years, our revenue in 2020 was more heavily weighted to the back half of the year, particularly Q4 due to the typical budgetary cycles of our customer base in.

In addition, there was a concentration of orders during the month of December is more labs opened up and customers are resumed experiments.

Consumables revenue was $96 5 million, which increased 49% over the prior year period.

Instrument revenue was $14 million, which increased 49% over the prior year period.

Service revenue was $1 7 million, which increased 48% over the prior year period.

North America revenue for the fourth quarter was $57 million.

Representing 34% growth over the prior year period.

EMEA revenue for the fourth quarter was $32 9 million reps.

Representing 54% growth over the prior year period.

APAC revenue for the fourth quarter was $22 3 million, representing 95% growth over the prior year period.

Gross profit for the fourth quarter of 2020 was $93 $3 million compared to a gross profit of $58 $7 million for the prior year period.

Gross margin for the fourth quarter was 83% compared to 78% for the fourth quarter of 2019.

The gross margin increase was driven primarily by favorable product mix due to the next gem transition, which did not carry the same level of royalty accruals as legacy gem products.

As the transition to next gem products is now substantially complete we see this level of gross margin as a high point and expect that future quarters will have a slightly lower gross margin as our newly introduced products expand to become a larger percentage of our overall revenue.

Total operating expenses for the fourth quarter of 2020 were 500, $502 $9 million compared to $66 8 million for the fourth quarter of 2019.

Our fourth quarter operating expenses included $406 $9 million of in process R&D expense due to the acquisition of <unk>.

R&D expenses for the fourth quarter of 2020 were $39 7 million.

Compared to $27 9 million for the fourth quarter of 2019, excluding in process R&D expenses related to the acquisitions the.

The increase was primarily attributable to increased personnel related costs.

SG&A expenses for the fourth quarter were $56 million compared to $38 8 million for the fourth quarter of 2019. The increase was primarily due to increased personnel related costs.

Operating loss for the fourth quarter was $409 6 million.

Compared to a loss of $8 1 million for the fourth quarter of 2019. This includes $14 3 million of stock based compensation for the fourth quarter of 2020 compared to $5 1 million for the fourth quarter of 2019.

Net loss for the period was $415 6 million.

Compared to a net loss of $7 1 million for the fourth quarter of 2019.

Now turning to our full year results.

Total revenue for the full year ended December 31, 2020 was $298 $8 million.

Compared to $245 9 million for 2019, representing a 22% increase.

Consumables revenue was $252 7 million.

An increase of 22% over the prior year.

Instrument revenue was $40 1 million, an increase of 15% over the prior year.

Service revenue was $6 million in.

An increase of 48% over the prior year.

As of year end, we have sold a cumulative total of 2000 and 412 chromium instruments up 746 instruments from 1666 instruments at the end of 2019, which represents a 45% increase in the ending installed base.

Our customers have historically averaged approximately $150000 a year in consumable orders per instrument outside of the impact of the pandemic.

Q4 was above that rate on an annualized basis, but due to COVID-19 impacts earlier in the year, our 2020 through averaged $124000 per instrument for the for year.

North America revenue for the full year was $159 3 million, representing 14% growth over the prior year.

Media revenue for the full year was $73 3 million, representing 26% growth over the prior year.

APAC revenue for the full year was $66 2 million.

Representing 38% growth over the prior year.

Gross profit for 2020 was $244 million.

Compared to a gross profit of $184 $9 million for 2019.

Gross margin for 2020 was 80% compared to 75% for 2019.

The increase in gross margin was driven primarily by lower accrued royalties related to ongoing litigation, partially offset by higher costs from newly introduced products.

Total operating expenses for 2020 were $774 5 million compared to $215 $4 million for 2019.

Inclusive of $447 5 million of.

And in process R&D expenses related to the acquisitions of Cartagena and recourse.

R&D expenses for 2020 for $123 4 million compared to $83 1 million for 2019, excluding $447 $5 million of in process R&D expenses related to the acquisitions of Cartagena and recall.

The increase was primarily attributable to increased personnel and stock based compensation expenses.

SG&A expenses for 2020.

For $202 3 million compared.

Compared to $138 million for the prior year. The increase was primarily due to increased personnel and stock based compensation expenses and increased litigation expenses.

Operating loss for 2020 was $534 $1 million.

Compared to a loss of $30 6 million for 2019.

Net loss for 2020 was $542 7 million <unk>.

Compared to a net loss of $31 3 million for 2019.

We ended 2020 with $664 million in cash and cash equivalents.

Now turning to our outlook for 2021.

We expect full year revenue for 2021 to be in the range of $480 million to $500 million.

Representing growth of 61% to 67% over for year 2020.

As in prior years, we expect revenue to be heavily weighted towards the back half of 2021, particularly in the fourth quarter.

We ended Q4 with about 90% of customer labs operational at varying degrees of capacity and are still seeing a wide range of efficiencies within the COVID-19 operating environment.

Going forward, we expect this capacity to fluctuate in the near term and we view the percentage of labs open as a less important metric compared to the available capacity per lap.

We don't expect much improvement in lab capacity in Q1.

In Q1 will also lack the seasonality benefit of Q4.

As a result, we expect our Q1 revenues will be sequentially down from Q4.

While the most visible impact of COVID-19 on our business has been customer lab closures and reduced capacity. We are also managing supply chain and logistics risks.

These have not caused significant disruptions to date, but our customers are subject to similar risks, which could limit our customers' ability to perform experiments.

It's an ever evolving situation that we are tracking closely.

As we enable the century biology, we will continue to aggressively scale the company in.

In 2021, we are focusing our investments on.

R&D to continue our rapid pace of product development and innovation.

Intellectual property to protect our products and scientific advancements.

Our commercial organization to continue to build our sales and support teams and adequately address the interest we're seeing from the Biopharma and translational markets.

And finally on our operational capabilities to ensure we have a solid foundation to enable our future growth.

At this point I'll turn it back to search.

Okay.

Thanks, Justin.

I am so proud of our team and all of our achievements in what turned out to be an incredibly challenging 2020.

While the pandemic is not over who anticipate debt it will be brought under in increasing measure of control as we progressed through the year.

Next week, we're hosting our inaugural virtual event called experience wherever we will share details about the work of our customers and upcoming products.

I look forward to seeing you all there.

Overall, there are many reasons to be optimistic as we look for the coming years from beyond the pandemic brought into sharp relief, we need to accelerate the mastery of biology and the importance of our mission.

And looking beyond the current pandemic examples in the life Sciences are poised to transform the world and massive ways.

We anticipate vast long term opportunities ahead of us and intend to keep scaling the company and are investing aggressively to capitalize on them.

With that we will now open it up for questions operator.

Alright, so as a reminder to ask a question you will need for star one on your telephone tours of all your question Christopher Please.

Please limit yourself to only one question and one follow up question.

<unk> composite Q&A roster.

Our first question comes from the line of dogs for <unk> from Cowen you are in our lives.

Hey, good afternoon guys.

Actually in the office, but on my cell phone hopefully the receptions okay.

<unk> has always been a company that's done a fantastic job balancing high gross margins, which is of course attractive to investors with innovation that makes new technologies accessible via ease of use quality and oftentimes reduced price per unit for the customers.

Recognizing that you noted in your prepared remarks that you are close to a high watermark with gross margin as you rollout newer products with often lower price points and add new products organically and Inorganically. How do you think about the longer term outlook for maintaining gross margin at levels seen over the past few quarters meeting at least in the mid <unk> or so.

Even as we factor in what you said about this being kind of a high watermark quarter.

Yes.

Hi, Doug This is Justin I'll take that one.

Our highest consumables gross margin is a core strength of our business model and helps enable the deep investments that work.

Making to develop new products.

In our product development process, we typically target gross margins of about 80%.

Some of our newer products have lower gross margins than our previously existing products, but they're mostly in that range. So I think 80% is a good number to think about for the near to mid term.

And what you proposed I don't think is unreasonable to think about in the in the longer term.

Okay. Thanks for that just that and I think this is another one for you.

I believe you talked about $150000 in consumables per box on an annualized basis as the assumption baked into guidance.

On the surface that seems a little low to me I mean back in Q4 19, you generated 165000 annualized consumable pull through.

Yes, I think that the full year number was a little bit lower than that but still north of 150000.

Points of those numbers, because obviously 2019 was pre pandemic and I recognized on one hand, Q4 is seasonally a strong consumable quarter as we look back to Q4 of that year, but on the other hand, you have a higher mix of higher pull through of chromium connect out there and you also have more busy I'm users out there which of course, because we don't have a.

Great way of modeling.

Those consumables revenue typically get baked into that number.

So it's just not clear that your 2021 revenue guidance Embeds an assumption that.

Debt.

That is kind of consistent with what we've seen trend wise absent COVID-19 and what we've seen.

In terms of increased visits from adoption.

Can you just kind of walk us through what I might be missing here as I think about it is that number looks a little bit low.

Yes, it's a good question, Doug I think starting at the at the beginning around.

Q4, and seasonality so Q4 is seasonally.

Right a bit stronger in total and the other three quarters and Youre right that for Q4 19 pull through was.

Was a large quarter over quarter increase from the previous quarters and in fact Q3 dollars 19 was well below the 150000 per year. So that's why we focus on annual pull through and not quarterly pull through.

For our 2021 guidance, we contemplate it.

Existing customers continuing to increase their usage, while we're adding a large number of new customers at the same time and those new customers take some time to ramp.

We've previously said that around 150000 or slightly above that is a good pull through number to use as we balance.

The increasing utilization of existing customers against this ramp up of the new placements.

And as far as the connects goes.

That is having some impact on the Asps when we look at the Asps between the chromium controller in the chromium connect.

That's a niche product in its very early on.

So that isn't making a material difference in our average pull through as of yet.

Alright, Thanks, again gentlemen.

Thanks, Doug.

Thanks, one on acuity Tycho Peterson from Jpmorgan your non life.

Hi, Good afternoon. This is Julia on for Tycho, Thanks for taking the question.

So staying on the poll for question.

I know you know that other conference that.

Our next customer that 1 million dollar annual pull through and you also have museum FRP Insider Smith coming.

For example, volume, but at the same time.

New customers for way on throughput.

Initially.

I know you said 150, K getting number for 2021, but as we look longer term what do you say is the total potential of Tom yen in the out years are you still thinking about.

John J K by 2020 to me, which is I believe the data point you previously provided weighted now think theres significant upside for that.

This is.

This is Jeff I'll take that I'll take that one as well.

It's a great question Theres, a number of factors that are going to contribute to that.

As we are adding an ever increasing number of new customers each year and introducing new products.

<unk>, the new capabilities on <unk>, the chromium connect the chromium X. It is.

We're going to take some time for those products too to ramp up and for us to see how they actualize in reference to our expectation.

But the thing that I think is remarkable is that our pull through.

Has maintained outside of the impact of the pandemic, but has maintained itself in that high $140.

150 range, even as we.

Like this year increase the instrument installed base by over 40%.

So I think.

It's yet to be seen how that flow through metric for materialized 150000 is the best estimate that we can that we can give you right now for the near to medium term.

But at some point the focus is going to be just on overall consumable application spend within the three platforms that we've defined.

Got it.

And then separately regarding the sales force expansion.

Yeah.

800 more sales people.

How should we think about the pace of that hiring and the cadence of revenue ramp this year and then.

What's the relative resource allocation the true silver Bay shore.

Biopharma customers, if that's a better way to think about it.

Are there any geographic focus you previously noted China's a big opportunity and that would be for for.

For manufacturing housing and other kind of will China be.

As the World Cup.

Jeff.

We look for that total revenue.

Juan This is Brad why don't I start on the at least the sales force side.

Adjusted peak there.

But.

In general for trying to hire those people.

Is prudently in the fastest possible. So typically in our sales organization, you want to sort of front loaded.

Growing so much and we're adding some receivable.

And we're also really having to make up for the fact that we had a little bit of a pause as we were trying to understand that.

The course of the pandemic and what it will ultimately impact.

Our business so in general we will add.

At least 100 people this year expanding pretty much across the organization, but you called out China as a real opportunity for us narrow, we continuing to add commercial partners as well as our own team members. So that we have a very good view of what's going on in China, and overall, China is going to be a major growth axis.

You already saw him for.

Our quarter numbers and it's been this way for last couple of years, and we will continue to be that way a major major growth access for us.

I think that covered it Brad.

Was there any more to that true.

The resource allocation between academic and Biopharma customers.

Well maybe.

I'll just touch on that I mean, we are building out a focused strategic accounts sales force to deal with pharma and biotech, but mostly pharma and large pharma on their validation side of the house in other words outside of the discovery realm, which we certainly can handle so and Thats net we're building a lot more capacity.

And even internal capabilities to understand and really provide the right kinds of products and documentation that's needed to see that trend regional into the drug discovery validation process.

Got it very helpful. Thank you.

Yes.

Next question comes from cash from Morgan Stanley Your non life.

Hey, guys good evening and thanks for the time here today.

I'll start with one on chromium for.

Are you perhaps.

<unk> got the connect launch underway the chromium X I believe comes with non risk.

ASP launching in the back half of the.

So how do you think about upside to that 50 to 55 kv instrument DSP I mean should we be thinking of closer to sort of 60 day come year end and then in terms of distinguishing the value proposition.

Spoken about sort of walkaway automation as being the defining feature.

Feature on the connect and then you've got the high throughput Bob <unk> zone.

For for Chromium X.

How are you thinking about sort of reinforcing that messaging with your customers and then have you had any early discussions with your biopsy.

<unk> user base just yet following the launch announcement in January.

Thanks, Dave.

I'll start with the questions focused on the X.

So we certainly have been talking to customers I would emphasize that it's not just sort of the pops seek.

Obligation that ad sales.

And in fact, probably mostly as other things and Theres, a theres plenty of applications like.

Like immune profiling like looking at.

Scaling up Atlas seen efforts looking at Marcellus combinatorial drug screens combinatorial crisper screens. This is where like some of the most intense current demand is coming from.

<unk>.

So.

And so we certainly have been talking to customers about this.

There is.

There is debt.

The interest that motivated the development of the instruments in the first place and we have.

For anything have grown more excited by the potential and what we're hearing from customers.

So I think that's that's the chromium.

In terms of Canada, I mean, it's the same story I mean, Justin alluded to this before but you will walk away automation has been the.

The rationale for the connect.

And specific biopharma customers, but again during COVID-19. There is like an expanded use of set of cases that have emerged around.

Because people are constraints around one that can actually be in the lab when they can run things so.

Program for that because the advantages that our debt.

Particularly.

Relevant now.

So that's kind of that's how all of these are the instruments are evolving I'll, let Justin touch on ASP part of it.

So for the chromium for the chromium X the pricing.

Isn't isn't final yet.

And as far as the ASP range goes $50 to 55000 is what we've talked about in the past for.

For chromium.

The average ASP, including premium in chromium connect for 2020 is still in that $50 to 55 range I would say in light of the.

We would expect to sell in Q4 of this year.

With the legacy instruments.

I wouldn't I wouldn't recommend making any adjustments to that until until we get closer.

Got it Thats helpful.

Then third any color to share on new versus repeat customers in the quarter for <unk> I know in the last quarter, you had highlighted repeat orders as the key sort of customer constituency, where you saw a strong performance.

Yeah. Good question I think that trend has continued again our focus internally on what we're seeing from customers is really that is the reorder rate of getting the customers through their workflows to there the answers and you see that again reflected in the increasing number of publications fragrance.

Great firms that are coming out.

So overall I think it is trending positive for Knight as the kind of the important area of focus for US now that we've established.

Initial user base.

Got it perfect and then one final one for Justin.

In light of your comments just around sort of this 50% increase in head count.

Should we be sort of just extrapolating from that too.

$120 million per quarter sort of Opex run rate with a 40 60 R&D versus SG&A split is the math sort of right at a high level on that or could it be.

So similar but more front end loaded more backend loaded through the year, how are you thinking about that.

So good good question.

We're planning to grow head count by 50%. This year most of the hires are going to be in R&D.

Followed by commercial and then G&A in our operations and G&A after that.

I would more heavily weighted towards the front half of <unk> towards the front half of the year and more heavily weighted towards R&D.

Perfect Super helpful. Thanks, guys.

Excellent online is day gift brewery from Bank of America.

Lives.

Hey, good afternoon.

So a couple of questions. So can we talk about the new multiplex application.

Say its sort of sales customers.

Customers, 60% in cost how does that 50% that's 50% of the sequencing costs is that 50%.

To U S. Basically the question is like.

Are you expecting just higher volume experiments to makeup.

Any sort of potential price erosion on your end.

Yes, yes, and I would say it's a good.

A question and answer and then final question on that with US a lot about so.

This is an average estimates for like what we expect customers who are using it to save.

<unk> like overall on their experiments.

It is definitely the case where they.

They will end up.

Spending less per sample, but our expectation is borne out by.

But what we have seen our customers doing.

Using kind of homegrown homebrew solution previous solutions previously is that this will lead to more usage overall and more dollars flowing into the single single cell experiments in total so.

The.

That sort of a drop per sample.

Gordon.

The reduced gross per sample will should materialize from higher overall spend maybe not immediately but certainly overtime.

Got it and can you talk a little bit about the forward monthly order growth rate.

You provided on the last couple of calls.

Just some clarity on just some color on what your sort of thing.

Derik this is Justin so.

In the past couple of quarters I think in net in the in the midst of.

Covid.

Without guidance in place we were trying our best to give to give color on what we're seeing in real time, but.

But now that we've now that we've reinstated guidance and we've.

Given some color around the waiting as far as you know mostly in the back half of the year and particularly in Q4.

We won't be giving any kind of mid quarter update at least at this time.

Fair enough.

Just thought I would ask and finally, one last question.

Can you talk a little bit about how much of.

How much do you have embedded into your current guidance for recent new product launches in 2021.

Jonathan.

<unk>.

What's additive the range of a cannibalization that could happen on some debt.

Thoughts on <unk>.

How youre thinking about new products contributing to the top line.

Yes, so the guidance for 480 to 500 range incorporates all of the new product launches.

It's our it's our best view taking into account for those different factors that you mentioned like cannibalization.

How we expect those products.

We expect the adoption curve to look like based upon what we've learned on on past launches, but it's all incorporated in that range that we've given.

Great. Thank you.

Thanks, one on the curious David question Berg from Guggenheim Securities Your non lives.

Thank you for taking the question. So in terms of the new product launch in net low throughput area. How should we think about the transition speed of your customers in terms of dabbling their.

Dabbling in their toes into single shelter for.

Yes.

Believers of single cell.

Should we think about the impact of of that low throughput.

On that transition speed just based on your early customer experiences.

Hey, David This is Brad I'll take that as we've not March the current right now, we really don't know but.

We do think we have a very good kind of view of the two reasons that this kits important one as you've already pointed out is it gives people an opportunity that are new to <unk> X to try and do so in a pilot studies and those usually can be used to help in grants and funding and in some cases, even budget allocation within the laboratory.

The other side of it for US is is and this is where I am.

Cautiously optimistic this could be very important is getting customers that are more experienced customers a testbed test experimental work flow and workout sample prep procedures.

All of that all the time course of the way the harvest sample all of that can be worked out in a very a much more lower cost environment to measure that.

And likelihood of success as an experiment. So those are really the two things that will drive that.

Probably and then for your question is how quickly if you take that first group of people.

We're hoping that we can run people through that adoption cycle certainly within a year.

Typically when we we have a lot of experience launching products.

Months, a lot of them and ultimately just understanding adoption cycle, but in this case.

It's kind of a new use case and just understanding how that models out.

We'll keep an eye on it but as we launched that product, which will be next few months.

Got it no that was very helpful. And then in terms of are you getting any kind of number in terms of percent of your visit from customers.

Sorry per cent of chromium customers that are.

Starting to use <unk>.

And then just in terms of are.

Are you seeing a pickup in chromium when you see.

Customers pick up <unk> and then how much do you think that is actually on account of visa them versus just these are high users of genomics platforms period.

And that's my last question.

Well, so maybe I'll start here I will say this that you have to appreciate that the current minimum.

Pretty.

<unk> has now large established user base, especially the number of customers.

Is actually larger than just the number of instruments because of the kind of the comparable halo user surround each instrument.

So the other.

And then if you look just look at the map the number of video customers very large structure all of them are existing chromium.

As well so the fraction of.

<unk> people, who are using <unk> as.

Not trivial, but it's also not very large right that's how the math works out.

I would say as far as it being a driver I'm not sure. If that's material right now probably on the margin there is some sort of.

Some additional chromium usage that might happen.

Vice versa, but I don't think thats, the sort of the cross reinforcement is that material at this stage.

Thank you.

Thanks for non acute is down areas from Stifel. You are now live.

Hey, good afternoon, guys. Thanks, Serge maybe just on a few of the new products and thinking about the <unk>.

Our range of capabilities that you are kind of looking to enable here with the X instruments and also the lower throughput kits are you able to give us sort of a rough cut on the customer base just in terms of.

How many or what percentage you want to look at 10000 cells at a time versus 100000 versus $1 million.

I know, that's probably hard but it would just be helpful to understand the buckets a bit if possible. When we just think about who these products are targeting at this point and how many of them will really be.

Once they have access to them.

Yes, I mean thats a good question I would like you said, it's a hard number to pin down.

In fact, it's a moving number to pin down if you went back just a few years ago. The number of people interested among non so experiments would've been essentially zero, maybe one or two in the world. It certainly has increased now like.

Referencing applications I mentioned earlier immune profiling combinatorial screening for special with the rise of sort of CRISPR screening applications that has been significant so I would say that number of people for the cutting edge.

It would be interested in.

Many hundreds of thousands of sales or million dollars.

It exists is not huge but its not sure at all either right and we expect that kind of looking at the pattern of single cell usage and the scaling up of the last five years, we anticipate that people will keep moving up that.

Certainly, we'll help them along as well.

Okay, and then maybe just on the fixed RNA profiling kit. That's coming later this year is the idea to launch targeted and whole transcriptome at the same time.

For one be in the market before the other and then I guess Relatedly, we'll be both to be launched at some point this year.

Yes.

The question is specifically for fixed RNA profiling kit.

Please yes, so we haven't done.

Talked about the detail so.

All of them that cadence, it's a good question, but we haven't talked about those details yet.

Okay. Thanks.

Q is Patrick Donnelly from Citi you were in our lives.

Yes.

Hey, thanks for taking the questions guys.

Adjusted maybe just on the full year guide can you just talk through I guess the assumption you've made on the end market recovery certainly exited <unk> in a good position I guess, what are you thinking we get back to kind of normal state and maybe for Brad on the back of that.

So you saw a nice budget flush as you guys mentioned at the end of <unk> have you seen any slowdown I guess in January you kind of that spend can played out was there kind of everyone taking a breath in January for the strength kind of continues so far this year.

Hey, Patrick good good question, when we thought about guidance for for this year.

Really looked at the first half in the back half and I think for the first half.

We shared in detail at least for for Q1.

We really don't expect much improvement as far as that capacity is going really I think that's the case for for Q2 as well.

I think we're optimistic around the back half of the year and Thats why we talked around the about the weighting and more the second half of the year, particularly Q4.

But this assumes that things will.

To start to turnaround in Q3, but won't really be felt until Q4.

Yeah, and Patrick as far as the start of the year typically.

January.

It's slow.

I think this year it was a little bit.

Larger because I mean.

Let's face it.

And December was pretty dire and we certainly saw some some headwinds and Keith counselors spiking.

And again sort of.

Doom and gloom was the prevailing.

Billing.

We certainly have seen that improve in the last three or four weeks.

Three weeks probably and.

Net lease.

There will probably and as Jonathan described there is some.

Picked up.

And that's contemplated in our guidance.

No that's helpful.

And then just maybe on the SSP launched you index nearing.

Maybe can you just talk through the potential customer conversations there I mean has there been a part of the market kind of holding off on adoption until this was available I'm just curious what the conversations been like around this ahead of the launch.

So on <unk>. Thanks.

It is.

Product that we've been.

Pretty excited by for tour for some amount of time I think the feedback from customers on what it was.

It is able to do has been very positive and we're very excited to get it to like a broad set of launch it.

Fully for the market later in the first in the first half of this year.

Just everything is looking good and we're excited about it and I'll just add I mean.

For the World didn't really get a good sense of how good these products going to be only maybe in the last six weeks and Thats really sparked a lot of interest.

Yes, that's helpful and maybe last one just on the <unk> side obviously.

Obviously investment year more than certainly the revenue side, obviously, but what are the feedback been from customers. Since the deal just in terms of interest of using it complementary with museum and then anything we can look out for as we progress through the year in terms of milestones or is it kind of going to be.

Behind the curtain and we will see a couple of years.

Yes.

Great question right, because they answered instrument.

The interest has certainly been there just like you guys have been asking a lot of questions, but in CJR for the deals customers have certainly been very interest as well for similar reasons. There everyone has been trained with we're going to be able to do I think partially the speaks for our reputation for <unk>.

Both great products before so I think people are expecting big things from us as far as.

Going forward.

We're focused right now on developing the platform there's a lot to do this as a very challenging.

Generally technology area to build.

Build products and we are investing to build to build awesome product for our customers. That's our focus right now when we're further along with them.

We'll talk about it.

Alright, I appreciate it Sir.

Next along the line of Matt <unk> from Goldman Sachs. You are now live.

Thanks for taking my question.

Just a more high level question I know, we've talked a lot about.

Count increase you guys plan to do over the course of the year I'm just curious more on the qualitative side, how competitive is that market both on commercial and R&D and has it gotten tighter over the course of the last year and do you expect it to to get tighter over the course of this year.

Okay.

So yes, it's a good question so I'll ask.

I'll answer that broadly for the company and Brad might be able to have more color on the commercial side on the sales side.

Look like I said during my opening remarks down just the economy has been a focus for us from the very beginning that's the foundation of the company. So always top of mind concern and we're always.

We're always trying to get the very best people in the company so as far as we're concerned it's all listen to some central type markets.

Kind of regardless of what happens there right now.

It varies by area.

Back in the early days it was particularly more challenging for US for example to hire more like software developers.

People out of the sort of tech industry has gotten relatively.

<unk>.

Asia for multiple reasons.

We in general I think we're doing.

Especially compared to sort of start up dates.

Got an easier and we're doing quite well and we're very happy with the level of talent that is.

That is coming to the company.

And I'll, just add a little bit on the <unk>.

Commercial side I mean there.

Generally been somewhat easier at mic third bed overall, because people know who we are.

In a commercial there is always that sort of.

The competitive aspect and people like to be part of a winning team and we've tried to make sure. The 10 X is the winning team so overall.

It's improved but we also have a very high standard. So the yield is not very high giving people through the interview process.

Great. Thanks for that color and just one last one I know you guys have talked about.

Lab capacity I'm just wondering.

As you look out regionally.

Are there any differences in the cadence of capacity within labs across different regions or is it pretty much. The same cadence that you are expecting as we get towards the back half for the year the capacity to go up.

Yes, maybe I'll just take that.

There is a complete range in places like China, it's kind of back to what I would consider.

Consider normal.

<unk> and Eden generally across Asia, we've seen that stabilize fairly quickly.

Europe is with the exception of the UK.

Continued.

Open up an ocean.

At Canadian <unk>.

Increasingly improved capacity and in <unk>, we see it.

It's kind of all over the board.

Early on in the quarter or.

Towards the end of the corner I should say you saw certainly some issues in southern California, There was a spike there, but overall, we kind of reached that point, where there is some level of attenuation, but.

I think Justin pointed out we're going to have to see the impact of the vaccine before we see any material change going forward.

Great. Thanks, very much for the color appreciate it.

So there are no further questions at this time. This concludes today's conference call. Thank you for participating you may now disconnect.