Q1 2021 10X Genomics Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and walk and did a 10 X genomics free score.
2021 and earnings conference call at this time, all participant lines are in a listen only mode.
And speakers presentation, there will be a question and answer session to ask a question. During the session you will need to press on one on your telephone keypad.
We used to be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Mr average Cheskey director of Investor Relations and strategic finance. Thank you. Please go ahead Sir.
Thank you.
Earlier today connection and mixed released financial results for the first quarter ended March 31 2021.
If you've not received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investors and extra non this dot com and.
An archived webcast of this call will be available and investors tab of the Companys website, and tennis genomics 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 and that our 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 different differ from those anticipated and you should not place undue reliance on forward looking statements and it's.
Information regarding these risks uncertainties and factors that could cause results to differ appears in the press release and extra Nymex issued today and and the documents and reports filed by 10 extra non it from time to time with the Securities and Exchange Commission and I.
And Alex 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 are search sector and off our CEO and cofounder and Justin Macken here, our Chief Financial Officer and.
In addition, Brad Crutchfield, our chief commercial officer and be available for Q&A.
With that I'll now turn the call over to search and search.
Thanks, Aaron and good afternoon, and thank you for joining us.
On today's call and we'll start with a brief review of our performance and execution during the first quarter and that's.
I will discuss our views on current market dynamics, our vision for the century of biology, and our investment and of course the business, but she is and this vision.
I will then turn the call over to Justin for a more detailed look at our financials and outlook for the year.
We've got a strong start to 2021, but first quarter revenues growing 47% year over year to $106 million as we continue to drive adoption of our chromium and vision platforms.
While we saw good results. This quarter, there are many indications and our customers and nausea and back to normal productivity.
This was due in large part and COVID-19 related protocols, which have a disproportionate impact from decentralized bench experiments.
That said, our conviction and the Dallas opportunity.
It remains as strong as ever.
The frontiers of biology, and continued to expand with 10, and that's leading the way our rapid pace of innovation has continued as we have launched a breakthrough products from both our chromium and vision platforms and.
And our and all growth experienced with them, we were inspired by and global customer community and their intense engagement and our technology applications and profit product Roadmaps.
It is precisely this engagement and defines the urgency of our mission and commitment to our customers.
Now moving to our quarterly results and starting with Colombian demand from instruments and consumables remained strong and the first quarter and it is clear that our diverse product set is resonating and of course, a wide range of applications and use cases.
Adoption of our gene expression solution continues to expand and single cell gene expression is increasingly becoming the standard for measuring biological system across most areas of life Sciences.
While early in its lifecycle, our immune profiling solution is also on and encouraging trajectory from COVID-19 and infectious disease applications to immuno oncology and autoimmunity.
The solution enables a detailed and comprehensive view of the immune system and it's now becoming an essential tool for discovery and validation experiments.
We're also excited by the strong interest and our gene expression and plus a taxi and multi owned solution, which began shipping last September. This product is a game changer for understanding that the rules of epigenetic programming.
But simultaneously measure and chromatin and accessibility and gene expression, but didn't see himself researchers able to link individuals' epigenetic programs to their outputs of course, there and use of cells tissues and experimental conditions.
We're now beginning to see publications from our early adopters and the recent preprint researchers used our gene expression and attack solution and subsequently multi arm to profile, the developing human cerebral cortex and to better understand the pathogenesis of newer developmental disorders, such as autos.
The team created an adolescent and various gene regulatory element and the developing brain, which will help understanding the programs governed and human development and disease.
We remain focused on increasing access to chromium and bringing more customers into the single cell ecosystem.
During the first quarter, we launched our self likes and more throughput kits and open general access to our 10 X cloud solution lowering barriers to adoption.
We're pleased with the response to these products and capabilities since launch and they are progressing in line with our expectations.
Now moving to lithium we're encouraged by the speed of adoption and the pace of discoveries from our customers.
Approximately 100 publications and preparing to date featuring vizio.
For example, just recently and cell researchers use lithium and concert with chromium to characterize the development of the human intestine, identifying and mapping to function and what were 100 different cell states links to major developmental milestones.
These researchers were able to describe specific discretion.
Programs and defined sales and locations linked to rare developmental intestinal disorders, providing the scientific community with an important resource to felt to facilitate further states.
These and as early and in flight and lifecycle and we will continue to bring additional enhancements to its platform.
Our product roadmap and laid out earlier this year and featured new foundational capabilities that will help fulfill its potential.
It starts with the launch of volume from S&P, which is now available for preorder.
This product gives researchers access to the full transcriptome across the entire tissue and they.
And for the first time true unbiased discovery and S&P samples.
While we're seeing significant interest from our existing volume customers. The majority of interest thus far is coming from translational customers new to <unk> X.
And while it remains very early we're pleased with the reception and the market, thus far but anticipate shipping this product later this quarter.
As we look to the future.
And Theres, a vast universe of opportunities ahead of us.
This is the century of biology, and our goal is to develop technologies like celebrate and mastery of biology and to help researchers develop precision diagnostics targeted therapies and cures and used to solve humanity's most pressing health challenges.
And this pandemic striking demonstration of the importance of our mission.
Due to the massive and and relentless effort by scientists across the globe, we have seen incredible adjustments and our understanding of the Sars COVID-19 two hires and under.
Operating income legit and approaches to project and that's all culminating and the rapid development of multiple but effective vaccines.
There's an increasing recognition of the importance of investing and the life sciences, among the publicly industry and the policymakers.
For example, the latest U S. Federal budget proposals have called for large increases and the resources allocated to science related agencies and the creation of a new agency aimed at driving transformational innovation with and biomedical research.
If approved the proposed 2020 two budget would represent one of the largest annual increases from the NIH and record. These.
These trends are not limited to the U S alone around the world, We're seeing calls for and increased investment and science and general research and and wildly strong and proposals, but things are emblematic of increased support for life Sciences research and a favorable funding environment for our customers going forward.
We believe these trends will accelerate the progress of our customers have been making further building on the large number of scientific discoveries that have been enabled by our platforms.
And then there has been more than 2500 publications using our products across a wide variety of research areas equally and cancer autoimmunity and infectious disease.
These publications have uncovered one and the key research findings of recent years.
And the cell heterogeneity intertwined with complex gene networks is a pervasive feature of all tissues.
Ultimately this means that every tissue samples will need to be analyzed with single cell and spatial context.
Mother for basic research ortho clinical diagnostics.
We have laid the foundation for the future by investing and our three complementary platforms chromium vision, and our and Ctrip platform, which is under development.
Together and will provide a comprehensive set of solutions for researchers and clinicians.
And for example, significant elements on those future could be gleaned from ACR and major cancer Conference, which took place last month, where our products were featured prominently.
From identifying and rare progenitor cell types, so understanding the biology of sub clonal populations to measuring immune infiltration.
And tumor microenvironment to discovering and analyzing potential tissue based biomarkers and so.
Benefits of single cell and spatial multi omics approaches are becoming increasingly clear.
Since inception, we have focused on innovation and building new technologies to enable our customers to make breakthroughs and discoveries and accelerate the understanding of biology.
We're not investing nearly $1 billion and product development and innovation and launched more than 15 pioneering products since 2015.
These products have won multiple awards kicked off at the single cell and Revolution and catalyze the emergence of spatial genomics.
Our research and development work has resulted in a broad intellectual property portfolio with 1100 patents and patent applications covering the breadth of our products as well as many important application areas.
Moving forward, we intend to protect our existing and future innovations as we continue to invest in creating and revolutionary and products.
We're now and an incredible position to capitalize on the immense value creation opportunities ahead, and we will continue to invest broadly to ensure that we have the necessary resources to achieve these goals.
This starts with continued investment and the X gene our employees have laid the foundation of the company's successful day.
As we look to achieve our ambitious ambitious goals preserving our collaborative culture and sense of urgency. While also massively scaling the organization is going to be essential.
We will remain intensely focused on finding hiring and developing top talent across the organization.
Within R&D, and we're investing and our team's scanning pleasant and Singapore, Stockholm, and Copenhagen and drive product innovation across all three of our platforms with chromium, we're investing to remove <unk> from those new the genomics, while also adding powerful new capabilities vision is early in its lifecycle and we're focused on it and.
And the core features necessary to make this platform per standard for spatial genomics research.
And finally within <unk>, we're focused on building the right solutions with the user experience and quality of our customers accompanying stuck.
Consistent with our investment and R&D, we're expanding our commercial organization and our response to the strong demand, we're seeing and the market.
But their extensive roadmap of new products and capabilities.
Shifting to support our entry into new markets and application areas and finally, we're expanding our global infrastructure operations and manufacturing capabilities to support growth across all of these doctors.
We have a deep conviction, it's very little and biology can be fully understood except through the lens of single cell analysis.
This conviction has materialized and our chromium and vision platforms and and regarding the development of R&D and Ctrip platform.
Unequivocally see a future where every tissue sample should be analyzed using at least one of these three approaches.
And we look forward to realizing the future as we pursue our mission of Master and biology to advance human health.
Yeah.
With that I will now turn the call over to Justin from one detail on our financials.
Thank you Sir.
Total revenue for the three months ended March 31, 2021 was $105 8 billion.
<unk> to $71 $9 million for the prior year period.
Presenting a 47% increase year over year.
Consumables revenue was $93 1 million, which increased 52% over the prior year period.
Instrument revenue was $11 $1 million, which increased 22% over the prior year period.
Service revenue was $1 6 million, which increased 21% over the prior year period.
The increase and consumables revenue this quarter was primarily driven by the growth and the instrument installed base and the.
The increase from instrument revenue was driven by increased instrument placements during the quarter.
Service revenue increased due to a larger number of instruments coming off from their initial one year warranty and other paid service contracts.
North America revenue for the first quarter was 51 $8 million, which increased 30% over the prior year period.
EMEA revenue for the first quarter was $19 2 million, which increased 46% over the prior year period.
APAC revenue for the first quarter was $34 8 million, which increased 83% over the prior year period.
Now turning to the rest of the income statement.
Gross profit for the first quarter was $88 8 million compared to a gross profit of $56 $8 million from prior year period.
Gross margin for the first quarter was 84% compared to 79% from the prior year period.
The gross margin increase was driven primarily by lower accrued royalties related to ongoing litigation.
Total operating expenses for the first quarter were $99 million.
And increase of 29% from $76 $7 million for the first quarter of 2020 the.
The increase in operating expenses was driven by increased personnel related expenses due to ongoing expansion within the R&D and the commercial organizations, including stock based compensation increased costs related to facilities expansion and increased information technology spend and supportive general expansion of our operations and expenses.
Weighted to our ongoing COVID-19 employee testing program.
R&D expenses for the first quarter were $41 9 million.
Compared to $26 million for the first quarter of 2020.
The increase was driven by $10 $3 million and increased personnel related expenses, including stock based compensation and a $1 $8 million increase and expenses related to elaborate cereals supplies and equipment.
SG&A expenses for the first quarter were $56 9 million compared.
Compared to $50 4 million for the first quarter of 2020.
The increase was driven by $9 $9 million and increased personnel related expenses, including stock based compensation and.
And a $2 $1 million increase and expenses related to it and facilities. These were partially offset by decreased legal expenses.
Yeah.
Operating loss for the first quarter was $10 2 million compared to a loss of $19 $9 million for the first quarter of 2020.
This includes $16 $2 million and stock based compensation from the first quarter of 2021.
Compared to $6 $7 million and stock based compensation for the first quarter of 2020.
Net loss for the period was $11 $6 million compared to a net loss of $21 $1 million from the first quarter of 2020.
We ended the quarter with $617 $2 million from cash and cash equivalents net of restricted cash and.
The decrease in cash from the prior quarter includes the impact of our $28 million and land purchase and Pleasanton, and which we will construct our future operations Center.
No.
Turning to our outlook for the remainder of 2021 and.
And our last call we disclosed that we ended Q4 with about 90% of customer labs operational at varying degrees of capacity and that we were seeing a wide range of efficiencies with and that open capacity.
We noted that we did not expect much improvement in Q1 or Q2, and so far this has transpired as we had expected.
Unlike bulk sequencing approaches, which are typically centralized and batched and performed and core Lab's 10 X experiments are performed at the lab bench, where the samples are.
Customer labs are continuing to be impacted by overall capacity available prioritization of COVID-19 related experiments and over general research and limited access to our sales and support staff to go onsite and COVID-19 related protocols.
There is also a variation within geographic regions.
We continue to expect full year revenue for 2021 to be in the range of $480 million to $500 million representing growth of 61%, 67% over full year 2020.
Thus far into Q2, we have seen little change and lab efficiency from Q1, and and we expect our Q2 revenues to be slightly up sequentially and.
At this point I'll turn it back to search.
Thanks, Justin.
And in 'twenty, one is off to a strong start.
I want to thank our employees for their continued dedication and excellence and execution. So far this year.
You are the reason for our success and are the foundation for our successes and the future.
I would also like to thank our customers for their incredible response to our inaugural experience events, they're engagements or bathroom and our.
Highest expectations and.
And reaffirms our vision for the future and the vast opportunities ahead.
But and that we will now open it up for questions operator.
Yeah.
Thank you and as a reminder.
To ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
First question will be coming from the line of dog Schenkel with Cowen Your line is open.
Good afternoon, and thank you for taking my questions.
My first one is just building off of one of the last things that Jonathan talked about.
His remarks on lab activity remaining at about I think 90% of norm.
I'm just wondering if there's instances that you could detail where.
Certain parts of the World are maybe more open than others and you know as we've moved into the second quarter.
What parts of the world or what types of labs, maybe have opened up more than others and thinking about other parts of the world where there are there's a little bit of a resurgence.
You are seeing a change and activity. So that's the first question just trying to dig a little bit deeper on that 90%.
And then the second topic is on lithium.
Great to hear that busy MF FTE and I think HD are on track for a first half commercial launches.
F FTE were pretty clear HD I, just want to make sure and.
You indicated that most of the early FTE interest is from new to 10 X translational customers on that I'm wondering what youre doing commercially to support those customers that you haven't necessarily gone after as aggressively and the past and I'm wondering if you're hearing anything in terms of large retrospective.
And I'm just wondering if you have any visibility from partners or customers that the busy and technology is increasingly going to be used and.
And this context with a quick path to peer reviewed publications and thank you.
Well done and that's a lot and I'll start with the sort of a reasonable highlight.
Yes, it's pretty dynamic and it's changing quite of all the time to say the least and.
Certainly in Europe, we saw the UK balance really bounced back nicely.
And equal or some of the additional headwinds with Brexit and some new import regulations and and processes, but that was the man with nice and strong out of there and we've seen.
Approaching some level of normalcy, maybe similar and Scandinavia, but France, specifically is where we've seen some real slowdowns and even more specifically and just recently so that's been a little more of a challenge. If we were to go over to Asia Pac Obviously, China.
Korea, and Japan are really.
Essentially back to is what is the new normal a little bit more.
Issues and southern Europe, obviously, very topical right now with India, but we don't typically do a tremendous amount of business in India, So not as big and issue.
And then U S and privately we found a well actually let's start with North America, Canada was.
Very slow specifically and acutely based on the government did not release their typical budget in the first quarter and in fact, they released it towards the end of the quarter, but that was what's hard to get some of the orders booked and then as far as the U S and.
Again, we started the year with lot of slowness, and southern California, and more on the West coast, but that's really changed and the last few weeks. So there's a lot of things that are working and improving and there are some.
Sort of Internet and headwinds I think we're moving quickly to.
Improving situation and the back half of the year, but theres been.
Some level of headwinds and the first half.
Yeah, Doug and that so there's a surge and then on the video question. So just a point of clarification lithium H D is coming in the first half of next year. That's all indicators are experiencing early in the ER visit and Mesothelin and strive for this this quarter.
So just just as you suggested.
And yes, we're very excited about the growth are about the product.
Most of the customers and new.
Average based on and pre orders, but I would want to reemphasize that it's very early.
And just started taking preorders.
And and it'll be somewhat of a time before there's sort of a transition from large retrospective studies first customers are going to be something out the product and.
And then they'll start collecting the samples for two more COVID-19.
As far as.
So I think that's.
Yeah, I think it was good.
The last thing was just the retrospective.
And I was just wondering about kind of the support of translational customers and any insight as to whether we have retrospective studies are going and get going quickly here.
Yes.
It wouldn't be careful in terms of assuming how.
How quickly that can happen because customers need to first buy the product and get a get on board with us and tested which are which obviously, we feel pretty optimistic about and they have great.
Great performance that we've seen so far and Frontally and.
And as far as our commercial execution.
Bill and building up our team over the course of the past year with this in mind first of all the.
Original vision, but nowadays M F N B, we're building out the overlays with the non commercial function.
Our.
And science and technology advisors, which are like specialists within the sales force.
And also on our support organization, Russia, and investing pretty intentional and aggressively to where it would be from.
People with expertise will help our customers would've works on Brazil, yeah, Okay, maybe.
Just to add you add and you also had is there anything special for F. N P and it's kind of interesting because the net FTE. These.
Traditional customers that are used to tissue.
It's really not going to be the issue, which has been more of a challenge as we've been onboarding, our traditional customers, which I haven't worked with tissue for F. N B E.
Gearing up to help on the data side of it because a lot of these customers had not worked with high content data that you get off at a sequencing application in this case. They are so we have a.
Fairly extensive and we've increased the ability to provide that sort of computational support on the back half and experiment.
Okay. Thanks, so much guys.
Yes.
And our next question will be coming from the line of Tycho Peterson with JP Morgan Your line is open.
Hi, Good afternoon. This is Julia on for Tycho and thanks for taking my question and so I wanted to follow up on and Louisiana assets.
How much of the you know.
Translational opportunity can you address with FSP I mean does that give you access to the majority of translational users or do you still need and broader probably clean pad and many are maybe or and automated instrument. Besides the status and its front and instrument to further enhance right.
And also a deal and you just get them the major points here. So.
Look we have a pretty robust pipeline, Oh, and William and flip. The you were expecting the product side. We're also seeing great great feedback.
Feedback and initial response from our customers. So we do see that this product will you know over the coming.
Over the coming upcoming future progressive the market.
And I'm really well, we will put on and there's only protein because the dose is coming which will help and cytosis will help as well. So I think that's kind of the way we're looking at and does it over the course of the net.
Yeah, so there's going to be sort of a.
Comment together all these capabilities to really round out the solution flow translational and transactional.
Translational customers, but again as we've seen with chromium and <unk>.
See this as a platform with many products in the future. Our many applications to address all the different kinds of ways that the customers will end up using as possible.
And Julien this is Brad.
Just to also add the world has not been able to do true unbiased gene expression across tissues until just in fact, not really because we haven't hit the product yet and I think this is something that people are really excited for regardless of what other products are using today. So I think and this becomes clear I think this is going to be and important.
Growth assets for FTE.
Got it and that's helpful. And then also I was wondering and I'm curious, what's your thoughts on the clinical side of spatial and obviously this is Michael would take time to develop and mature, but I think that's encouraging signs that you know spatial biomarkers and things are all up and starting to be lifted and guidelines.
And Oh kids, what's your expectations around the timeline of clinical and patient market development and clinical and market something that you can address with theirs and HD or is that really for a day in search of technology.
Well I mean the transition.
The clinical markets generally speaking when you look at them they tend to develop somewhat.
Slower than people expect and as we you know our focus and our near term focus is still and sort of the research and translational applications because those will form the foundation for clinical applications dominant road and yes, when we think about the clinics and just from first principles about what are the best like what is the best platform.
For the clinic.
And you ended up thinking in terms of in situ and that is not to say the chromium and vision will not have applications that are going to be very powerful and useful but.
And Ctrip approach lends itself, particularly well to the clinical context by virtue of it being an integrated system by virtue of it being explicitly target and and a.
A format that the clinicians and pathologists already used to it.
Got it very helpful and last one from me last quarter, you mentioned and you're adding 100, Oh employees from low this.
Here with particular focus on on the sales force side, So could you give us and a progress update on that.
And so we've.
We've got very ambitious hiring plans this year, we actually plan to add.
About 400 employees over the course over the course of this year and and the year around 1300 employees and so.
We did frontload, our hiring and our and our internal plans.
And have more of the hires in Q1 and Q2.
And we're running slightly behind that aggressive internal plans.
But I'd say, we're pretty much on a straight line pace right now overall.
Got it very helpful. Thank you.
Yeah.
Next question will be coming from the line of question of <unk>.
And so with Morgan Stanley Your line is open.
Hey, guys and.
Good evening Sir.
Just one quick question for you on the on the guide here I know you talked about sort of lap capacity still being a little bit depressed sort of spotty rebound across the geos as Brad mentioned as well.
Ah you seek any sort of are you baking and perhaps any conservatism into those expectations.
Particularly as you launch you know chromium X and you're seeing the possibility of you know customers pushing out orders for the current version and the chromium and later the X coming online and the back half and.
And similarly, I mean, obviously the HD launch is still it's still.
And so way, but ahead of that I mean any shift in and in demand that you are detecting at this stage.
So let me start with the.
The the latter parts of your question and then maybe adjustment and kind of talk about the guidance. So in terms of the chromium demand we're not seeing any.
Sort of any waiting on and on the part of customers for chromium nuts, with just coming and our second half and all these are major D. A.
And maybe marginal but not really meaningful.
People are waiting.
And because it's still you know as you said and so what are your way. So I would say those are not really having a material impact are those dynamics right now on the revenue and in terms of the guy that will adjust and.
Comment and.
And in terms of guidance, our new product launches on the schedules that we've previously communicated have all been contemplated in the range of $40 million to $500 million that we've put out as far as instrument placements people waiting on those for the chromium X that's not something that we've that we've seen placements were strong.
This quarter and and we expect continued demand going forward.
Got it very helpful and one quick follow up on the on the <unk> side.
Can you share some feedback on the card kind of early access.
Launch that you had you know what our costs.
Some are saying two day, particularly around specs are areas for potential improvement now I know that this is not a straight line between China and the eventual Lindsay to a solution that will bring to market, but any sort of like key learnings and then if you can walk us through what remains to be done in terms of those specs evolving on the on the final version of the platform.
And I think that would be very helpful.
Yeah. So in terms of the program and then.
And then the croissant for them as it is a couple of things. So first of all it is fully subscribed and so there's definitely and one of the key learnings is just a lot of interest and there's definitely a lot of interest and our interest, particularly in the satellite solutions and by virtue of our reputation and I think those field in general and the customers are excited but I.
I think youll be and it's something that resonates as well we are investing.
You mentioned it correctly that it's not going to be what.
And the weather we are the chemistry that we're using right now is not Ah.
It is not representative of what the final product is going to be which is going to be a sort of a combination of our internal developments and and acquisitions.
Acquisitions that we made and we are definitely investing pretty.
Pretty aggressively and that means and we're learning learning from all of these.
Or at least collaborators.
And like when they were ready to talk about the actual roadmap and we'll talk about the roadmap, we're not yet ready.
Got it got it and one final one from me and then.
Any thoughts on the evolving competitive landscape I mean, obviously a lot of folks are looking at space Youre looking at the in situ are there's a couple of platform as it normally access et cetera.
Love to get your thoughts on how.
Do you see the competitive positioning evolving for for busy them and then eventually for you know you're in situ platform and is that something that you're baking into sort of the platform development efforts as well as Ford and Sito.
So in terms of the sort of the competitive positioning and like we've talked about we've got the three platforms. The museum the chrome the chrome and the vision and the upcoming and see who we are we do see them as being fundamentally complementary and especially if you want to sort of draw the difference between volume and where and Ctrip approaches are going ahead and vision.
And is especially with the economy with the arrival of HD as is the ultimate discovery platform and I think it's going to be very very challenging.
And as you know, maybe evercore and CTO approaches to do to get to their and so we are we have items that Shannon and visit them and what is going to do in terms of enabling discovered in terms of enabling translational research and potentially with some clinical applications as well.
And we it is as Brad mentioned.
The F with zoom and <unk>, the only and.
And by Us hold tissue solution and the market.
And it is you know and it is giving customers something that is not really possible and many other.
And with any other means and.
Terms of and feature I think there's definitely a lot of interest there is definitely a lot of companies out there that are working on this.
On this area. It is very early for a lot of them. So hesitate to comment on any particular states where and in particular.
A particular competitor given how you absorbed but there was a and informational specificity out there I do want to say that we're investing aggressively we do have a pretty by virtue of our scale and by virtue of our relationships with our customers. We have a pretty good handle on what people are and you.
Once and when people, we like and we're guiding our development and now whatever the track records of building great products.
With a really innovative features and that's how we see this from playing up as well.
Super helpful. Thank you guys.
Alright, and then our next question will be coming from the line of Derek Brown with Bank of America. Your line is open.
Hey, Serge Justin it's Mike on for Derik. Thanks for taking the question I wanted to sort of.
I'll go back to your comments on.
Pace of reopening and sort of the status of labs around the world, where expectations were going into the year and sort of where they are now.
As we look forward over the over the rest of the year I imagine you'll get that and.
And 90% of various levels of capacity up to 95, and 100 can you give us an update on sort of your internal thinking of when that will happen. If this sort of a <unk> event in your mind now <unk> I imagine that a vaccine and the rollout.
And Europe that number is going to creep higher. So just why are you anticipating getting back to normal operating environment.
And thanks, Mike This is Justin.
And going back to last quarter's call our.
Our view Hasnt changed much from then and during that call we talked about.
Q1.
Being and that roughly 90% of lab capacity and available at varying degrees of efficiency, we expected that to carry forward from Q1 into Q2 and that is what we've seen to date, we mentioned that we expected things to start getting better in Q3.
And then not really feeling the full impact of that until Q4 and.
And so Q4 is normally.
Big quarter for us just due to customer seasonality, but we expect to be Q4 of this year to be outsized compared to a normal compared to a normal quarter.
But overall, our expectations haven't changed from last quarter and things are progressing like we expected.
Okay, Alright, and then.
And some of these labs reopen and I realize there's a lot of moving pieces here, but for example, you called out, California started the year slow and sort of ramped back up and you got and to wait out a quarter, but is it a gradual reopen or is there a burst of orders and I'm not I'm not talking about instrument purchases and necessarily but more about chromium consumables busy.
Imagine that what labs, where we're shut down they may have drawn down the inventory a little bit when they're reopening are you seeing sort of a bolus of orders as people stocked back up to sort of running at full speed.
Hey, Mike This is Brad I'll I'll take that.
And it's interesting because we.
We certainly have seen a level of conservatism with our customers in terms of potentially and they come back into the lab. There's always the concern that there may be some either systematic or even momentary limitations to access.
Examples of somebody testing positive and the lab and then Atlanta has to shut down for a period of time and of course biology doesn't wait for anybody and then the other thing that we're starting to see what we've seen and the first quarter is and then we.
And we thought maybe in the fourth quarter as well is that people are and they come back and the lab. They are a little bit more conservative Navy only ordered and the four reactors and kit versus 16 reaction kit because there is a shelf life issue and obviously people don't want it and be caught out. So yeah. There are various degrees of that.
We can certainly look as we've seen labs come back online and through starting.
Mid last year and it's it's it's usually a fairly typical pattern.
A little bit slow initially as they get the biology of the.
Whether it needs to be and then obviously, we will see the orders come in but what we have seen not on the consumable side, but the instruments, we had great engagement and even prospects for people wanting to onboard and get into single cell gets their own instrument and the case of chromium, but certainly interesting to onboard into the technical.
And <unk>.
Okay. That's helpful. And then one last one from me, obviously busy and the other piece, though and very very early stages, but anything you can comment on in terms of cross.
Cross sell between chromium and busy sort of overlap between our customers is that they're getting a little bit higher or are you getting older and incremental pull as you go into some of these more translational customers realize it's early but just wondering sort of how we should be thinking about that.
So I would say look at it in terms of like one the flow from coming to visit and it's obviously, it's there it's very clear and you can look at publications and local customers the flow and the other way I think is minimal.
I'm not sure if we can really expect material throw a comment Burgess was day the debone those translational customers they used to working with tissue right. That's the thing.
I think wisdom is really the blood flow for them.
Yes.
Yeah.
Next question will be coming from the line of Patrick Donnelly with Citi. Your line is open.
Great. Thanks, guys Serge maybe following up on Mike's question Merrill and Vizio and can you just talk about kind of a repeat customer reorder rate whatever you want to call. It on video and obviously you guys have a pretty nice initial user base here and how have you seen the customer activity on the reorder rates up.
Yeah.
That's a good question and it's something that we've been looking at and paying attention to and it's been it's been robust it's been quite sales team increasing consistently and so.
Since launch.
So definitely happy with that and you can sort of see it and are in terms of publication ready to because that's that tends to correlate those are the people that are reordering and are able to get through their experiments and.
And the one sort of looked at that I would add is that people who've onboard it wants to buy them and said have been have had more difficulty getting going and want the people. The initial bolus that goes on and creep I've done that because is doing particularly well relative to the once growth.
And kind of have to join upwards.
Understood. Okay, and then on the low throughput kits can you just talk through the rest of the initial reception. There. Obviously you guys lowered the bar to get into the market for your customers, just wondering where you're seeing the most uptake where you're seeing the interest in and how the reception has been there so far.
And.
So there's upside there, especially the husband and a robust and grades.
According to what our expectations and it's been going well.
Pretty consistently and I would say.
Most of our existing customers, which we sort of saw that dynamic, especially initially people who are trying to kind of start up new kinds of studies or just sort of experiment to try and try out new potential it's simple types.
It's kind of and expand.
The the use cases for the existing platform.
And we do expect that this is the kind of thing that accrues to the platform over time and shows the benefits apart from overtime and not so much counting on selling that particular kit, but it's what follows that kept and sportswear.
And chemo.
And labeling and I think the it doesn't seem to be playing out that way.
Okay, Great and then one for Justin and and maybe Brad you can chime in as well just in terms of the 400 employees this year.
You know how many is it 100 that are kind of sales reps customer facing and then in terms of those ones. How long does it take them to kind of flip productive or whatever you want to call. It in terms of their ramp to become productive sales reps is it a quarter or two or is it quicker than that and would love some color on that from.
Yeah. Patrick this is Brad so a week, we kind of set out I think I've said earlier the year that we would hire roughly 100 people in the commercial organization, we're well and are on a waiting to doing that.
And so that's kind of on and overall basis I don't know what was the second part of your question.
Hello, everyone.
And the ramp I'm sorry, yeah.
And we work, it's just we're hiring somebody and people just kind of a big issue for us it's usually about six months.
Less so on the sort of the technical side, because we're generally hiring our customers. So that's been great with our Fas is and some of our support people. So they come and they come up really come up fast actually but on the sales side does it by about six months, we tend to try to find more experienced people that know the territories and fully and these tab.
And that capability, but selling for 10 X is not for everybody and we have to be very selective and who we can pick up.
And on the team.
Okay.
Next question will be coming from the line of Dan Arias with Stifel. Your line is open.
Afternoon, guys. Thanks for the question Serge on the cell Plex kit it sounds like you've been in the field for a little bit there.
I'm curious if you're seeing any dampening effect on consumables as you have lab, taking advantage of the lower pricing, but to brad's point and maybe not scaling up fully and just on the size of the experiment.
And then maybe looking out a bit and Conversely, if you're if you're starting to get a sense that there's a percentage of the user base that might take advantage of the capabilities. There and are you seeing some signs that you can actually drive platform placements on the back of that.
And so so on the first question around sell flex.
The demand has been quite robust so all of the gas, it's quite strong and definitely happy with that whether that's having a dampening effect on both the rest of and interesting question and certainly something that.
We are we are interested in and were sort of expecting it's hard to tell explicitly right now I think it would need to kind of wait and.
And not a quarter or two and stores started correlating those patterns and people who order those sell flex since what the how does the users change. So it is conceivable that is having some dampening effect, but again the whole rationale of this product and greatly.
Greatly extends the reach of single cell ecosystem, and ultimately has a much greater impact by pulling them. All these other experiments into onto the platform and so so far we haven't seen anything that would.
That would be conscious of that thesis and Todd that's all day.
And if anything it's been sort of reinforced by just the rate of initial orders.
Yep Okay.
Alright, and then maybe just on busy and H D. I don't know whether you mentioned this and one of the other calls that you've had but can you just remind us if you have what the economics per 10 X will be there or is there a higher cost per sample that the HD workflow drives or is it more or less in line with what you have now with the with the one point okay.
So we haven't talked about visa and that's deemed not and all the economics and what the pricing.
So it's a bit early for that.
Okay.
Okay.
Yeah.
Yeah.
Next question will be coming from the line of much like what 12 months Goldman Sachs. Your line is open.
Hey, guys. This is Dave Delahunt on for Matt You know Theres been a lot of interest and in situ clearly a huge opportunity for you guys. I was wondering if you could talk a bit about what fields of study you expect to see the most interest between oncology neuro and <unk>.
And developmental and those areas.
Yeah, well so you hit on are the right ones and I went there.
And.
Yeah look I think all of them.
Certainly have a there's a lot of interest.
There's going to be as well and we're looking at sort of sell out low seen projects. That's a natural its and ourselves fifth bullet technology as a complement to continental and vizio and kind of says used from validates the markets. They get discovered and initially and kind of run them on the largest set of tissue, so suddenly and that's kind of brinci.
It's a developmental biology, and those those applications neuroscience, I mean and for sure.
The big one and and certainly and you know oncology and immuno oncology.
It's hard for me to pick between those I could rank order them, but they would I'm not sure if I would.
Convincingly and be able to say that one is significantly higher and then the.
Others.
And ultimately I was kind of it.
I guess I would say one thing and ultimately just because it's such a such a grid.
This tool technology for clinical applications down the road and I would imagine and those will emerge on the side of woods and sort of the general oncology immuno oncology space, but it's important to notice and seafood and they're gonna be targeted applications, it's gonna be sorted and practical to do unbiased discovery given the amount of data that you would pull and.
And on individual molecules. So a big part of the next year or two is really finding out and understanding. These biomarkers. So you can curate those panels on and <unk>. So there it's kind of a whole connections that started with some of the early discovery work with chromium moved and busy and ultimately paying off to in situ and in clinics.
Yeah.
Great Alright, thank you.
And and we've seen and.
Among the explosion, and Oh man and increasing interest and the study of proteomics, notably number of the companies have gone public and that space recently.
So can you talk about the demand for protein expression platforms and any correlation there.
Yeah. So we do definitely see them a lot of protein and measurement and work going on on the.
And on our products and chromium and yeah.
And very large fraction of the single cell experiments is actually whether it's measuring expression of other analysts has actually done and the protium <unk> proteins as well and using our feature Barcoding technology. So it's a pretty substantial part of the application space and then.
And then essentially growing part as well and rapidly growing lots of interest and people who have not previously been actually measuring protein and so it kind of genomics. So it's got a biologic people who are coming into us.
And so it definitely and good are growing and.
Growing opportunity for us growing application space, what do you think that for our single.
Single cell and spatial type applications, using Aldo conjugated antibodies, where general like those and those kinds of regions as the way to go.
Because it gives you that gives you the best kind of way and maybe the only way to really measure and these are otherwise for single cell resolution, that's very high plex.
Great, Thanks, and last one and the gene expression.
And panels.
Could you talk about which panels have seen the most customer interest between the fixed gene panels and the custom panel designs.
Yeah, so that was a bit of a scatter shot maybe going back to your first question and it is kind of a neuroscience is definitely up there and.
So the.
Development and biology.
And in oncology and yeah. So I'm not sure if I can say that one is again significantly higher than the other because those are the areas.
That does get picked up generally where single cell and because he used.
Yeah.
Next question will be coming from the line of Matthew <unk> with William Blair. Your line is open.
Yeah.
Hey, good afternoon, and thanks for taking my question Serge you alluded to experience event. So maybe just you were Brad could you just comment on what metrics youre using to judge the success of that event and that particularly in light of some of the reduced lab activity and when.
Budget Ashish mentioned.
Yeah I'll take that yeah. This was a great success for US. We we initially position. This is somewhat of an alternative to what we would typically do and <unk>, it's really growing into a much bigger event for us and something we will.
Proceed with.
First you know it's about numbers, we had 3000 over 3000 people consume this on the two day that we put it out and it's obviously people because we've made that available to them.
To download off of our watch Austin.
The web site.
But the other side and it is.
Engagement and that's the other metrics, we add and we that blew away.
We are always a question of how many questions when we get and how do we do this well.
And over to over 200, almost 300 questions come in and that you know over those several hours at that level of intensity and the level of engagement with our internal teams. It was incredibly motivating and reaffirming and then the other specs that we like to look at and net new people that we would and not we have not seen before.
And what about.
But those populations, which of those should we have seen and we had a high percentage over a thousand of those almost a third of those people were new to new to 10 X. So again overall I think we checked all the boxes here and something we want to evolve and again I think the thing that we were particularly impressed with again this was focused on our customers and it would and.
It created a really nice venue for us that we probably couldn't you didn't do any in person of that so this is something that it's been great like everything else. We do at this company will do better next year and the year after that but.
And we were very happy with the results.
Okay, and then on the APAC with gene expression product launch lots of temporary mentioned and complete with uptick just curious if there's any sort of data points or trends you could give us relative to other our other product launches.
And that sort of are supporting or your bullish view on it.
Yeah, I mean, it's up there we don't break out the individual products, but there's certainly.
Is trending well and.
It kind of seems to one and one of those probably hit the sweet spot of the customer base being ready and the product having the right and feature set to that's kind of.
The response has been great and responsible just in terms of and feedback what you see from customers. The signs, we see coming out of them and you know.
Numbers seem promoters and the other thing just to add we were fortunate enough we were able to launch a precursor to that product with the and taxi and so this market was well set up because we wanted the tax seek and first announced that the very first question and the first five second is when can I do gene expression and attack and the same cell and say nuclei.
And we delivered that roughly two years after that point and then people were definitely ready for it.
Okay. Thank you.
Next question will be coming from the light of day.
David Westenburg with Guggenheim Securities. Your line is open.
Yeah.
Good afternoon, and this is John on for Dave.
Thanks for taking my question. So as we're looking at and see to I realize that you're not able to comment too much on the R&D effort, but can you talk about what's necessary and what's nice to have like a two day versus 30.
Proteins, RNA and DNA and results sequencing on the platform. Thank you.
Yeah, I mean, a lot of and the question of when and not a not what I think these buffers the capabilities that we have.
And internally and so we built out we can certainly be lethal.
All of this sort of only what's necessary over time.
We are focused on making sure we get when we get them to market with the first product to have.
The right set of features.
Or what the market needs right now.
Out of the gate.
We haven't really talked to them and them.
And I'm really talking about the specific features forthcoming and that's part of the learning and what we're doing and collaborating with our customers right now as we're building out this road map.
Okay, and when we're looking at how the chromium growth, it's new customers new applications and a.
Like larger applications can you pretty rank, how you think of those three levers arguably drop and the revenue growth.
So I would say.
There are and they're all important driving new customers. Those are the things that are the draws ultimate the long run growth right and so we're focused on that although adding every new customer there was one month around before they do the other.
Revenue contribution becomes meaningful.
But on a long run basis, obviously the engine that drives the overall business.
We're always we're focused on adding applications and capabilities.
Because our existing customers certainly more budgets that they can spend and they have to keep getting kept increasing their budgets by virtue of running our products as well. So I wouldn't classify that any of those three are like more important than a relative to others and were certainly pressing and all of those hum.
Imperatives to drive revenue growth.
Yeah.
Okay. Thank you.
Yeah.
And no further questions from the line of centers back to you.
And thanks for everyone participating on the call and we reported and the future. Thank you.
Yeah.
Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now and that's the north.
Okay.
[music].
[music].
[music].
[music].