Q3 2022 10X Genomics Inc Earnings Call
Today, our search box and off our CEO and co founder and Justin Macken here, our Chief Financial Officer.
With that I will now turn the call over to search.
Thanks Catherine.
Good afternoon, and thank you for joining us.
Today, I will start with a brief overview of our performance during the third quarter.
First I will discuss our progress and momentum and the exciting opportunities. We have ahead in each of our three platforms.
I'll touch on what we're seeing in the market from a commercial perspective, and then handles and Nicole over to Justin for a more detailed look at our financials business trends and outlook as we get ready to close out the year.
Revenue for the third quarter was $131 million up five.
5% year over year and 14% sequentially.
Our sequential results were driven by a recovery outside of the U S and strong growth in instrument sales fueled by vision sciences in its first full quarter since launch.
Let me share more about our recent progress and pipeline in each of our three platforms, starting with chromium the unambiguous leader in single cell analysis.
In Q3, we once again saw solid demand for chromium X series instruments, among both new and existing customers.
More than a year after the platform's launch researchers continue to value the X series for its expanded capabilities and exclusive menu, including access to the fixed RNA profiling kits.
Turning to consumables, we know the breadth of performance ease of use of our assets is an important differentiator that creates real value for our customers.
This quarter, we saw a continued shift towards our high throughput kits with.
We offer our researchers the flexibility to analyze more samples or more cells at a size and scale previously considered unattainable.
While still early we're really pleased with the initial adoption of positive feedback from both our nuclear isolation kits and our fixed RNA profiling kit.
Both of these recent launches are a testament to our continued innovation around sample preparation of workflow simplification can open up more samples and more sample types for single cell analysis.
The nuclear isolation kits with its simple and scalable workflow country's interest extract cleaning nuclei from their samples it opens up new possibilities for customers working with frozen tissues and other previously challenging sample types.
We're excited by the initial update and traction we're seeing for this product, particularly among module users.
In addition, there is increasing enthusiasm for our fixed RNA profiling kit, which addresses a critical need for many of our customers and helps expand the potential of single cell analysis and largest scale multi site studies in translational research.
This product has a number of greenfield capabilities. It enables researchers to lock himself dates at the point of sample collection, removing diamond transport consumed typical associated with single cell workforce due to the need to work with life tissues.
It also unlocks F&B preserve samples for single cell analysis, and new to world capability that opens up large volumes of archival tissues.
This could include Bolton multiplexing to enable parallel processing of multiple samples within easy workflow and that the lower price per sample.
And it is both our highest sensitivity and more sequencing efficient assay yet.
Together these features make it an incredibly powerful product.
Our customers are starting to experience firsthand as they continue their pilot studies and benchmark against our flagship gene expression assays.
This process takes time as we knew it would.
And there is work to be done to further educate a new pool of residuals and how they too can get so much out of this product's capabilities and expand single cell analysis to previously inaccessible sample types and <unk> questions.
While it's still early with referred from customers. So far has been very positive including comments that this is the best product we've ever launched.
Given this exceptional feedback we believe the fixed RNA profiling. It has the potential to be full truly transformative for the Columbian franchise over the long term.
We're also preparing for the introduction of our new barcode enabled antigen mapping product no. One has been we're on track to begin taking preorders for both beam App and BMT later this month as planned.
This offering which is built on top of our immune profiling assay will enable researchers to analyze up to millions of <unk> T cells to determine their antigen binding of <unk> and high resolution.
Presenting because of the scale throughput and a resolution that we believe <unk> can revolutionize the process of antibody and T cell discovery.
And help researchers.
Translate the power of natural immune response into new therapeutics.
We believe this product will be particularly relevant to our pharma and biotech customers.
Now I'd like to share more about vision, the leading platform for unbiased base oil discovery.
While it's still early from the vision lifecycle, we're proud of our Q3 progress and we're pleased with the initial momentum we are seeing the psychosis.
That assist our first spatial instrument was designed to solve the key challenges our customers are faced with a 1 billion workforce.
We believe the ease of use overall experience and performance of <unk>.
Will enable more routine use of the video platform.
In addition, <unk> will open up the archives of tissue sections previous historical standard glass slide significantly expanding the number of samples that can be around $1 billion.
Again, it's early but we're encouraged by the positive feedback with print so far from customers who have completed their initial launch.
And with exclusive launch of busy F&B version two alongside the surge we saw F&B continues growth trajectory outpacing fresh frozen and sales.
This new version helps researchers take full advantage of Cytosorb ease of use.
<unk> high performance, thanks to a better and more reliable workflow and the added flexibility of larger capture areas.
We finished Q3 with confidence in our leadership and spatial biology, driven by both new customer adoption and record reorders from existing customers.
<unk> has not been decided to more than 365 papers on pre brands demonstrating the growing traction we're seeing with the researchers worldwide is increasingly turned to visit to uncover new biological discoveries.
Last month, we took time to celebrate a few of these key discoveries at our second annual spatial biology symposium.
We had an enthusiastic crowd on hand, as we brought together, leading researchers and pioneers in the field to discuss the future spatial biology and to share more about our upcoming platform for <unk>.
We continue to make great progress on a union platform and expect to begin shipping by the end of the year at a plus.
As we get closer to launch more and more customers are seen as interim data.
We recently made data broadly available on our website for the first time.
Been really pleased with initial customer reviews, and it's clear that the advantages of our platforms are resonating well.
Customers have been impressed with the key capabilities inherent in how we design the system both for launch and longer term.
Backed by a robust pipeline of innovation track record.
Head of launch the bathrooms of damages and sensitivity specificity and throughput very consistently in our conversations.
In addition, our gene panel strategy based on extensive input from customers is increasingly validated in the field.
Our approach combines a broad menu focused channels targeted tissue type of an application with the capability to add in large numbers of customers using.
Coupled with <unk> high sensitivity and specificity. We believe this approach will best enabled customers to answer their specific research questions.
Importantly, <unk> is designed to leave the tissue morphology in fact, a differentiator is resonating well with customers.
This will enable additional insights from the same tissue section post run through <unk> or outstanding researchers can look at correspondence is between the molecular data and the morphological limits.
It is also becoming clear to researchers that Siemens ability to rapidly process substantial numbers of samples will help them use the system routinely and get the answers faster.
Renewables, which are used in two key ways.
First we believe from launch Xenia will have the highest throughput of any incision instrument in its class.
Researchers will be able to use the instrument to analyze the most tertiary single molecule resolution and the least amount of time.
Second <unk> builds on our track record of software leadership to shorten the path from instruments to insight.
We all know the complexity and size of data needed for <unk> analysis is enormous.
Yes. These are precisely the kinds of heart problems with Tenex to address.
Dean will open an instrument primary and secondary data analysis, including cell segmentation in parallel with instrument run into.
It will process data implied so there can be quickly and easily transferred office from them for further analysis and interactive visualization, using our new <unk> explorer desktop obligations.
This approach greatly reduces the company additional burden on the customer.
This is yet another example of how we bring together a multi disciplinary expertise R&D capabilities and relentless customer focus to solve hard challenges and develop solutions that just work.
Together this unique combination of performance advantages gives us full confidence <unk> differentiated position both at launch and as we look ahead or at a comprehensive long term roadmap for the platform.
We will have said that we believe having all three technological approaches chromium and <unk> together will create real value and the impact for the leases commencing.
Last month, we published a preprint on by archive demonstrates this.
The preprint explores the bar of our combined technologies to reveal biological insights not attainable using any one technology or methods alone.
More specifically we show the unique insights that can began when analyzing human breast cancer F&B tissue using chromium fixed RNA profiling vision cytosis MDM annualize them.
Which does hereby deemed a study a trifecta.
This is precisely the kind of work our customers have been looking to do it shows how they can get answers to the exact questions and your interest.
The preference showcases the strikingly powerful GM dealer representative for what customers can expect that launch. It also demonstrates how the high resolution and sensitivity of our combined technologies can uncover additional molecular detail not identified with existing tools.
And that's the thing that's really powerful here with Xenial revealed could've changed while discounts that was classified and perhaps even how the patients were diagnosed and treated.
This is one of many examples showing the long term clinical potential of our technology.
Across our three platforms 2022 is on track to be the most ambitious and exciting product launches in our history.
We built <unk> to be an innovation engine.
We see our team's ability to rapidly build breakthrough products of the core competitive advantage.
Our team has already delivered several major new products this year.
We're looking forward to tapping of 'twenty, two with the launches of beam MGM.
And we're still just getting started.
That's never done.
Been one clear than when we're spending time with customers as ive personally been doing in recent months.
Their enthusiasm for our technologies it's probable.
Credibly energizing to hear all of the exciting things researchers worldwide are planning with our products.
And there was particular validating that have the head of a leading cancer center allocate to me <unk> is the future of clinical diagnostics and that every biopsy will one day needs to be analyzed on a platform.
We continue to see increasing evidence of single cell and spatial methods will ultimately become the standard for a large fraction of life Science research.
One. Notable example is the recent formation of the NIH brand initiatives.
Our new global collaborations formed through $500 million in funding thus.
This five year effort led by the elegance, we'll map out the first comprehensive cell Atlas of the human brain.
September edition of Nature Medicine features. Another example, and joined article we published with the Parker Institute for cancer immunotherapy, and other leaders from academia and industry.
The article outlined a roadmap of single cell and spatial tools to accelerate the development of cell therapies.
Examples like these further strengthen my conviction in the endpoint, but firmly believe in the future just about all tissue samples whether for basic research ortho clinical diagnostics will need to analyze the single cell resolution with spatial context and upscale.
Our goal shared by the scientific and clinical community is to bring those future forward.
We are working to put the commercial systems and infrastructure in place to deliver this future and scale for the next levels of growth and impact.
We're implementing better tools and better processes. So it can be a better partner for our broader base of resources.
We're working rapidly with a solid starting point and a passionate team.
It is a top priority for us and we're excited about how things are shaping up.
I continue to have full confidence in both our vision and our approach to achieving that vision.
Our fundamentals are incredibly strong while navigating a dynamic and uncertain environment right now.
Yet we're doing so from a solid foundation.
Our team are staying fully focused on driving execution excellence and building on our strengths have always differentiate us.
First driving our innovation engine and delivering on our R&D roadmap.
Providing a superior customer experience and finally investing in our long term for both disciplined and focus.
The scope of our ambitions requires us to take the long view, which is what we've always done since the earliest days of the company, but firmly believe our team's relentless pursuit of our mission and our Beaver and commitment of our customers will put <unk> in the best position to get absolutely everything out of the incredible opportunity here.
With that let me turn it over to Justin for more details on our financials.
Thank you Serge.
Total revenue for the three months ended September 32022 was $131 1 million.
Compared to $125 3 million for the prior year period, increasing 5% year over year, primarily driven by higher volume of units sold and growth due to new customers, partially offset by unfavorable foreign exchange fluctuations.
Quarter over quarter revenue increased 14% consistent with the expectations that we shared on our August earnings call.
Consumables revenue was $108 1 million, increasing 2% over the prior year period and up 10% from the second quarter of this year.
Instrument revenue was $20 9 million, increasing 22% from the prior year period and up 42% from the second quarter of this year.
The increase in instrument revenue was mainly driven by Cytosis sales with over 100 placements in its first full quarter of launch <unk>.
Service revenue was $2 $1 million flat year over year.
Looking at our regional results revenue for the Americas was $77 6 million.
Increasing 10% over the prior year period.
EMEA revenue for the third quarter was $27 9 million.
Increasing 8% over the prior year period.
Finally, APAC revenue for the third quarter was down 25 was $25 6 billion decreasing 13% from the prior year period.
While APAC revenue decreased year over year. It was the largest contributor to the quarter over quarter increase with regional revenue increasing 41% over Q2.
As expected this was driven by increased activity levels in China.
The results are encouraging, but rolling Lockdowns travel restrictions and other disruptions are ongoing and may continue to have adverse impacts.
Turning to the rest of the income statement.
Gross profit for the third quarter was $100 7 million compared to a gross profit of $100 8 million for the prior year period.
Gross margin for the third quarter was 77% compared to 80% in the prior year period.
The decline in gross margin was primarily driven by changes in product mix to the newly introduced products and increased manufacturing and supply chain costs.
Total operating expenses for the third quarter were $147 million, an increase of 21% from $116 7 million for the third quarter of 2021.
The increase in operating expenses was primarily driven by higher personnel expenses, including stock based compensation and restructuring costs increased.
Increased research and development expenses and infrastructure costs, partially offset by a decrease in marketing expenses.
R&D expenses for the third quarter were $67 3 million, including $1 4 million of onetime restructuring expenses compared to $54 6 million for the third quarter of 2021.
SG&A expenses for the third quarter were $73 4 million, including two point.
$5 million of onetime restructuring expenses compared to $62 1 million for the third quarter of 2021.
Operating loss for the third quarter was $40 million compared to a loss of $15 9 million for the third quarter of 2021, primarily due to the impact of increased personnel related expenses. This.
This includes $33 5 million of stock based compensation for the third quarter of 2022 compared to $26 million for the third quarter of 2021.
Net loss for the period was $41 9 million compared to a net loss of $17 2 million for the third quarter of 2021.
We ended the quarter with $452 million in cash and cash equivalents and marketable securities net of restricted cash as anticipated in Q3, we had elevated levels of capital expenditures as we continue to build out of our operations facility in Pleasanton.
In the next 12 months, we expect $80 million to $90 million of capital expenditures, mostly frontloaded into the next two quarters with over two thirds of that going to fund the facility construction.
Our goal remains to be cash flow positive by the end of 2023.
Now turning to our revenue outlook for 2022.
We continue to expect our full year 2022 revenue to be in the range of $500 million to $520 million. While this is a wider range than we typically carry going into year end and reflects the uncertainty in the macro environment.
With regards to our gross margin, we expect our existing products gross margin to be relatively flat in Q4, and the overall company gross margin will depend upon how many as indium instruments are sold well.
While we expect Veniam consumables to carry a gross margin that is more comparable to our existing products. The instrument has a lower gross margin products and its mix will have an outsized impact on overall company margins, especially for the initial placements.
Overall, despite the lingering headwinds we remain confident in the opportunity in front of us and in our mission to advance science forward in.
In line with prior years, we look forward to providing our outlook for 2023 on our year end earnings call in February .
At this point I'll turn it back to search.
Thanks, Justin there's a lot to look forward to as we close on the.
Launching xinyuan beam driving towards commercial excellence and hosting our first investor day on December eight.
This is the first time since the IPO.
Walk through in detail what makes the next tenex.
Look forward to engaging and educating the industrial community on how our broad portfolio of leading technologies steel links into the discovery and the opportunity ahead.
We will also share more about our plans from a commercial perspective to deliver on our next phase of growth.
And we will highlight the strengths to continue to differentiate us from our innovation engine and IP position through our manufacturing scale and software expertise to our incredibly talented multi disciplinary team.
You've heard me say, it's the people who make the magic happen.
I'm, so proud of and grateful for our team who are working tirelessly across all fronts for a strong close to the year.
Their passion for our mission and commitment to our customers is truly inspiring.
I want to thank our team for all they do every day to push Tenex in science forward.
With that we will now open it up for questions.
Greater.
Certainly if you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question press Star one as a reminder, if youre using a speakerphone. Please remember to pick up your handset before asking your question.
Also we would ask that you limit yourself to one question and one follow up question.
The first question comes from the line of Edmond <unk> of Morgan Stanley .
Please proceed.
They paid us on.
So maybe two.
Can you hear me.
Yes.
Yes.
So first one on the medium for me here.
Can you just talk to the customer traction Youre seeing post <unk> in terms of qualitative color on the on the preorders and how.
Those stand versus three months ago, and so if you can just comment on your manufacturing readiness at this stage and also the possibility of bundled selling I know youll have highlighted the breast cancer preprint tier, but is that sort of a prelude to making a bigger push we have bundled approach next year when all three.
<unk> our lives.
Yeah. Good question on stages, so starting with the first one with MCM, increasing interest and traction as we kind of exited <unk> been proceeding through the past several months.
A lot of it is actually driven by some of the data the customers have been seeing and which was punctuated by the release of our prevalent on data release.
<unk> talked about on the on the call and so we see them sort of this acceleration of interest and demand has been building up quite a bit.
On a really really good trajectory as we as we are heading towards the end of the year.
We're looking toward next year, so definitely a lot of interest a lot of.
Strong demand people are resonating with the with the data that they're seeing in sort of in the and.
The quality of the platform.
As far as the manufacturing and certainly something that we're aware of.
Getting close to launch.
And also looking into next year. So this is a complicated instrument. It's also complicated environment from <unk>.
Supply chain and logistics side of things are aware.
Certainly working hard to get ahead of all of that special as we look into next year and the amount of demand that we're seeing now for next year.
More work to do but we're feeling good where we stand right now.
And as far as the bundling is concerned we've actually seen quite a bit of interest from customers already on that account and we.
We've got our sales team.
Coming out of the value of our position in fact, we have seen now multiple sales come through as bundles, where customers are coming in and buying.
All three platforms chromium alloy side assistant Xenia them, together and we definitely see that.
Certainly something that we're seeing from our customer side and we are happy to promote that through our commercial efforts as well.
That sets us well for next year as well.
Got it that's helpful and I'll follow up quickly on on the geographic trends that you're seeing and perhaps Justin you can chime in as well.
Europe been trending for you.
The last six weeks or so in terms of instrument placements consumables as well as any signs of decision timelines elongate ing and similarly on China can you just comment on access to academic labs and service providers Youre on a sequential basis.
Hey.
Hey, Justin this is Jeff I'll take that one.
As far as any as far as any recent trends in Europe I would say the biggest impact that we've seen is just the currency.
Issues, no new trends to call out and no comments on incremental trends over the last over the last six weeks.
Currency impacts for us over overall year over year when looking at looking at Q3.
But a few million dollar impact year over year, when we look at the.
When we look at the rates that the transactions were translated in for this year compared to last year in China are there hasnt been any notable.
New trends that we've seen.
Would say that it's.
In line with what we shared last quarter around rolling Lockdowns and travel restrictions.
But just.
Still not back to 100%.
And just some uncertainty there overall on what the.
They're coming.
Yeah.
Got it I appreciate the color. Thank you.
Thank you.
The next question comes from the line of Dan areas of Stifel.
Please proceed.
Afternoon, guys. Thanks for the questions Justin on chromium, how are you thinking about the way that you finished the year on pull through.
It sounds like activity is picking up a little bit so should we expect second half annualized averages to be higher than the first half.
Do you think you might see some sequential improvement to finish the year in <unk> over <unk>.
Hi, Dan so as far as how we're thinking about the end of the year, we've shared before that we know.
We haven't seen anything.
That would say that Q4 would exhibit a different kind of seasonality than we've seen in the past and we don't think so much in terms of pull through more in terms of just what the overall consumable revenue is going to be and if you look at last year. It was about a 15% increase from Q.
Three to Q4, and then thinking about this year.
If you were to go to the midpoint of our range and you were.
You were to assume that the instrument revenue.
Was pretty similar to Q3, maybe a little bit more.
Youre looking at about a 15% 17% increase to get from.
To get from Q3 to Q4 at the midpoint of the range.
And so yeah.
Yes, I would say that.
What we're looking at for the midpoint is similar to what we've seen in the past and we haven't seen any indications that those <unk>.
<unk> trends would be far off.
Okay helpful. And then maybe on the spatial side some questions in the marketplace on visiting them HD and the extent to which that still fits fully into the plans for high rise space will work can you just sort of update us on how important of a product that is the portfolio and then whether you think it might be able to put.
The timeframe on product availability at this point.
Yes, I'll take that yeah. So first of all are definitely seeing a lot of interest from our customers around vision as it is one of the one of those really exciting capabilities and products that people are interested in so it was within the company would have a very strong commitment to that product and the product line in our platform.
Sure on the team is working hard.
On it as well so we're not ready to give an update on the timeline at this point, but we are absolutely committed.
To bring into market and those capabilities very excited and something that we're driving to our.
Okay. Thank you Sir.
Yeah.
Thank you.
Next question comes from the line of Patrick Donnelly of Citi. Please proceed.
Hey, guys. Thank you for taking the questions.
Follow up on Dan's question, there just on the <unk> side.
Obviously, you talked about kind of a wider range of outcomes.
With two months left here, how do you think about kind of the.
The low end and high end the key levers to kind of drive each obviously tend to be a little bit back half loaded in terms of some of the instrument placements, but maybe just talk about I guess the visibility.
On the macro impacts you talked about you can kind of just the moving pieces there.
So as far as.
Just a waiting throughout the quarter goes we are typically more weighted into the third month than the first two.
So and sometimes even with Q4, that's even more so than some of the other quarters.
I think the key variables for Q4.
China is one of them.
Like I said earlier, we're not back to 100% there there is still this lingering level of disruption.
Some level of uncertainty as far as what that.
What that could turn into.
As far as.
Currency fluctuations.
We've basically modeled parity for the Euro that's our that's our biggest foreign currency denomination that.
We saw that we sell in.
In 2021 about 17% of our revenue was in direct foreign currency and it's the euro followed by the by the British pound and so if the dollar strengthens even further there could be additional impacts there as well.
Really what I see is.
APAC in particular, China, and Europe , being the biggest variables as far as as far as how Q4.
Yeah.
Okay. That's helpful. And then maybe just taking that a step further I know you don't want to talk 23, just yet but in terms of some of those moving pieces.
Think about high level kind of next year.
China uncertainty maybe that lingers.
Talk about what the moving pieces, we should think about for next year.
Due to a growth rate by any means.
Obviously, new products come out and mentioned, giving them visiting each day and things like that so.
Maybe just talk again with the moving pieces and where we get a guidance at the analyst day. We will also help boost demand relative to expect that.
But when you're talking about 2023 thinking about 2023.
Not all uncertainty and downside so there's a lot of upsides as well. So I think you hit on some of them, but it's going to be the first four years. The NIM is going to be the first full year of Cytosorb and also for our fixed RNA product and so as <unk> shared on that on the prepared remarks.
There is really some great enthusiasm around those products right now.
As far as 2023 guidance I mentioned earlier that we'll be sharing that in February like we normally do on our Q4 earnings call.
Okay. Thank you.
Thank you. The next question comes from Carl Mixon of Canaccord Genuity.
Please proceed.
Hey, guys. Thanks for the questions I guess on the on the fourth quarter.
Consumables wasn't well, but it wasn't like you know a strong as maybe we could have expected and then in terms of insurance was great given the I guess over 100 hepatitis those placements, maybe just talk about why utilization was pretty soft relative to <unk>, where we would have thought that it was going to be that kind of a large headwind onsite essential I'll give 100 units a run rate going forward and with the ASB close too.
The 75 K with price and then on just given that dynamic I mean chromium placements like how could that progressed in <unk>.
I'm, sorry, how did that progress in <unk>.
What should we expect kind of going forward, given the strong kind of new instruments out there.
Hey, Jeff I'll start I'll start with that I think I'll take your <unk>.
Middle question first on Cytosorb. So that's a 70 $575000 list price instrument.
Like all of our instruments the average selling price is lower than that when we had the chromium controller at a $75000 list ASP.
Was in the 50 to $60000 range.
And this isn't that much different than the chromium controller as far as Asps.
List price as far as dynamics around and ship placements.
Where we are we have pretty much.
<unk> the transition from the chromium controller to the chromium IX and <unk> as far as what's our leading selling instruments down there is still a small amount of chromium controllers in solar but.
By far the placements are chromium IX and X and we showed in the past that about half of those placements are going to existing customers roughly half of those going to new customers. So there hasnt been any notable shift of that to date.
Initially the chromium X was selling at a higher rate than the chromium IX, but.
We're looking at.
A roughly even distribution between those between those two.
Right now.
Okay, and then just I was going.
Maybe I just wanted to.
Yes, you had a first parts of that.
Got it.
One woman repeat any parts of it yeah at the beginning.
Yeah just to begin.
So utilization was probably a little bit soft and.
In the third quarter I'm, just wondering like why that would have been given the second quarter, probably had a big kind of headwind I guess.
Yeah. So I think on that one I think a lot of the dynamics are similar to what we talked about last quarter, you had sort of a tale of three regions, where APAC and EMEA.
Kind of several regional specific effects, especially around currency in some measure of Lockdowns in China.
We saw decent growth in Amman in terms of quarter over quarter, but.
This remains a complex environment and there's not a single factor that has outsized.
Importance.
Right now we're focused on driving like we've talked about before educational excellence through just online to the next phase of growth and fundamentally very strong convention and <unk> are positioned.
Yeah.
Okay. That's great and then just surge one for you on the kind of HD.
I guess not exactly delay, but just kind of waiting forward here how much of that is basically self inflicted like maybe just emphasizing him as.
It's actually like to direct customers towards that instrument rather than like this new busy mm kit given the resolution of the output might be kind of similar between the two platforms recognizing that obviously is not going to be like whole transcriptome flex just yet.
Just piggybacking off the prior question look I mean are you pretty confident both of them kind of coexist once both are commercially available.
So we are confident in all three platforms and we certainly feel very excited and Bob Museum, especially as we're seeing the traction around cytosorb and kind of relieving some of these bottlenecks.
And problems, we've got around the workflow. So I think there is a we're seeing that on the ground and huge potential envision definitely very strong interest in <unk> like I said, we're working hard to deliver that to customers.
As the same diamond barrel and lots of interest in <unk>.
And we do see the two bathrooms coexisting and are they actually goes it's been pretty nicely complementary way than we thought.
Without the customers, we hear that we're driving that through our <unk>.
Listening and what we showed in typically in our preprint as well lithium is really the best.
Visual discovery platform is the best approach for doing that once you're.
Once you have sort of the system the genes that you're interested in once you kind of zeroed in on those.
The name becomes quite compelling and that's what we're seeing there. So we do see as.
Both platforms kind of get out to the market in both mature that they are going to be co existing.
I'm afraid complimentary way.
Oh, great. Thanks, guys.
Thank you.
The next question.
Comes from the line of Dan Brennan of Cowen.
Please proceed.
Great. Thanks for thanks for taking the questions.
Maybe the first one just on <unk>, obviously, you highlighted the preprint and a bunch of questions. Thus far I'm wondering are you taking orders at this point and if so could you give us any color about the order trend number.
And then related to that Serge.
You, obviously talked about the positioning of Xenia, Mike what what type of share you think you name. It can ultimately capture in this market.
And then the third part of the question is there's a lot of other new products coming out and there is some concern that there could be a delay as customers try to evaluate all of these products I'm just thinking you had like what's the ramp potential that you think in 'twenty three and do you think that a customer decision, making could kind of hold back the ramp.
Yeah.
So the first.
This quarters.
Dolores.
<unk>.
We are taking orders.
Dan and we have been as I kind of mentioned, we've been taking them a number four for.
For the last couple of months and it's been it's been.
Accelerating that trajectory has been great and indicative of customer demand our specialist.
Our commercial team is out there spreading the word.
People are getting their hands on more and more data.
So really really encouraging trend as we look through the end of the look into next year as far as a market share question is concern around you know I think it's.
It's way early but the market is not even there yet.
The platform is not there yet, but we feel very confident about its position with buildup to do.
We have a really comprehensive set of features in a comprehensive set of capabilities.
That we are bringing both at launch and as we will roll them out over over the coming quarters and years.
So we do feel really good about where we will take this platform and.
If a biotech and pharma like how long does it take those customers to reevaluate do you need a lot more publications out there just walk us through a little bit.
What the potential is in that customer group and when we could begin to see traction in the numbers.
Yeah, I think that's sort of a almost a multistep process here as we rollout. The initial the initial stage is getting evaluated by a lot of sort of the key opinion leaders people, who do they kind of looking at technology kind of the leasing not single cell core single cell customers because their opinion.
And.
Kind of almost matters the most.
In terms of influencing others do you too.
David just given that we're kind of in that phase right. Now a lot of people are running pilot a lot of people are kind of running benchmarks and all the feedback.
<unk> been getting from those people has been very positive and then it kind of you would imagine.
Bridging those those evaluations you then go to the broader set of customers. Initially for US. It is still kind of academia, but also running item translational customers, we see that happening over the coming quarters and on the heels of that you expect the biopharma now like with that product being sort of validated in the initial stages.
Academic sites.
We'll pick it up in a specialty kind of I think of getting this further kind of downstream on the development pipeline within pharma.
And then we also part of what we need to do is do a.
Good job on marketing on the marketing side to approach them.
Appropriately in terms of the problems, they're looking to solve for this new kit and so that would be kind of a stub three okay.
Great. Thank you.
Thank you.
Next question comes from Julia Qin.
J P. Morgan. Please proceed.
Hey, good afternoon. So I appreciate you highlighting that the new customer traction driven by status yet I'm curious is this next upside assist adoption between new and existing customers in line with your original expectation.
And for the existing user base, how are you thinking about their adoption of status.
How far are those new customers that you are getting with that said I D mutual special customers or are they competitive win.
So Julien a couple of things it is early right now right.
Only been out for one full quarter.
So we have to be careful as you know extrapolating trends going forward a lot of the initial adoption is actually going to existing customers are certainly people who have used lithium before and also a lot of the customers who are single cell users too I think this is where sort of the bulk of the initial placements has been on where a lot of.
The interest has come from like.
Like I mentioned before we also we've had a lot of interest from customers kind of coming at us with interest in all three platforms, and so which we should've been driving bundled sales for us as well. So this is where it's.
Starting.
And those are customers that also have more stuff.
Best setup to evaluate.
The impact on the side of the system put us towards basis pretty quickly and then we see the expanding gone too.
Further within our existing customer base, and then to draw new customers, who have been a little bit maybe before on the sidelines.
Because of workflow constraints.
Got it that's helpful.
And then picking up on the new commercial process that you mentioned last quarter.
Curious if you could provide an update on the implementation here and what would you define success and how do you keep track of the progress there.
Well. So this is the kind of thing that doesn't it's.
It's not an immediate wishes your pool of everything changes.
Some of the changes take time to implement some of them are faster. We're really excited about how things are shaping up and the progress we're making.
Again, the focus is on improving execution execution, implementing new tools and processes.
So what kind of guy that can scale to the next level of growth we've made some changes.
Some of them, having to do with stroke team organization made some leadership changes.
In Europe with the goal of streamlining the structure and bringing closer connection to the.
To the headquarters.
We started making some changes in terms of our online.
Sales process brought on online quoting tools, which is kind of a first step in online ordering a better experience for our customers improve the efficiency internally.
And we're in the process of rebuilding our our processes for managing opportunities sales funnel and forecast and that should have a pretty clear near term impact.
And in terms of bringing just causes our process of forecasting but it's also important as we lay the foundation for.
For improved processes in the longer term.
Great. Thank you I appreciate the color.
Thank you. The next question comes from Michael Rice skin.
Bank of America. Please proceed.
Great. Thanks for taking the question guys.
First I want to follow up on the side of the comment for the quarter.
You called out a pretty big contribution of 100 placements.
More than we thought it would do so congrats on that.
Seems like it drove a big chunk of the instrument revenues.
Way you slice it so I'm just curious was there any sort of big pre.
Pre sales there, maybe some pent up demand.
What I'm trying to get at it.
You know as I said.
Pull forward from <unk> or is this a good jumping off point from where you can grow placements, even further into <unk> and next year on a quarterly basis.
Yes, good question Mike.
Being the first full quarter launch of Cytosis. We knew there was strong demand for this for this product we knew that customers were.
We're eager for it. This was this was an instrument that was developed based upon customer feedback that resulted from our close relationship with customers and helps improve the workflow overall so like.
Like I said, we knew the myth that demand was going to be strong typically with new products. There is there is a spike in the in the FERC in the fourth quarter of launch and then things tend to tend to smooth out after that and then pick back up again so.
It's still early and so we'll see how it trends throughout throughout Q4 as well.
Okay, and then sort of related to that.
It's still obviously very early days.
First quarter, but are you seeing any change in the <unk> revenues with customers. Once they have are they doing more around are they how are they buying more.
More consumable.
Any shortage I don't want you think utilization or the consumption.
But you know what I mean are they becoming more higher volume business customers more quickly.
Yes, I mean, it's too early to say at this stage with people, who have just gotten their instruments and they run they've done their first fronts and come back yeah, well, that's where we're at right now so it's not yet to the point where they.
They've come back with additional whereas wherever we can get any kind of.
Sustainable estimate of their new usage patterns.
Okay, and if I can squeeze a quick follow up on China.
Given the dynamics in <unk> versus <unk>, you called out that the huge jump sequentially.
In China revenues, I think 40% quarter over quarter, 41%.
You go through a distributor in China I believe so anything you can talk about inventory stocking destocking, what this big jump in <unk> sort of a replenishment because I imagine.
If things are.
Quarter, one of those consumables might have expired and then you might have got to replenish supplies. So anything you can talk about inventory level.
Or something like that.
Yes.
And Mike as far as China goes we think this is more activity driven.
Other than you know variances in <unk>.
Stocking up.
If anything we did hear some things towards the end of the quarter of <unk>.
Service providers.
Just with having recession fears in general are wanting to carry less inventory overall so yeah.
Yeah, I think it's more activity driven.
Ben.
<unk> driven.
Alright, thanks, so much.
Yeah.
Thank you next question comes from Mac Sykes of Goldman Sachs.
Please proceed.
Hey, good afternoon. Thanks for taking my questions. Maybe my first one search for you you mentioned in your prepared comments about the solid demand for chromium acts and kind of in conjunction with fixed RNA and nuclear isolation kits could you maybe talk about maybe a change in momentum in chromium Max because of this new case I understand.
There's sort of a catch 22, you kind of have to have the instrument to to run the cat, but just have you seen an inflection in chromium acts with these new kits and do you think we're at the early stages of that potential inflection.
Yes. Good question, Matt So I would hesitate to call. It an inflection I think we're seeing a strong interest and good feedback from the kids and fix our April volumes have been particularly because that's the one that's.
You need to the edge, we are seeing more interest in the IX are relatively speaking, which also kind of goes along with the.
With the interest in the fixed RNA profiling, but again like youre, saying casualty until a little bit deeper on near the instrument and nor that they can't the minions as best they can and north it doesn't give any of the instrument.
And so we're going through that process, we feel optimistic because again all the reviews coming back from the from.
From the from our new products are really positive, which speaks well for the ultimate demand, but I think we're still kind of early on that.
Our innovation cycle.
Got it thanks for that color and then you know in previous quarters, you've talked about trying to drive higher utilization amongst the <unk>.
Well customers and I know Covid was a big obstacle.
Getting into those labs and driving that utilization has there been any progress on that just given some of the COVID-19 headwinds at least in the U S.
Have you have less than a little bit have you been able to drive some higher utilization within that customer base.
Uh huh.
There isn't really anything material and you and I think the sale not a wrong halos and instrumental on Earth. I mean, we are we have been focused.
On both the commercial team has been out there I don't think there's a material change to talk about we've got the new products that are meant to simplify the workflow which should give.
Give us.
Make it easier for new people to be kind of coming in and become a GE. There's a single cell workflows. We're also.
Within UK has been smooth and the nucleic acid and the fixed the RNA profiling kit.
We have we will have now going forward more visibility into some of the hilli users because visa sample prep at least parts of these probably for sample prep products for our customers that happened previously we've been pretty disciplined lying to you.
The brand there.
Core reaction centrally.
So we have some some of these new threats that we will be pulling on as well, but it's still kind of early to comment about any material changes.
Got it thanks helpful color I appreciate it.
Yeah.
Thank you.
That was our final question. So this will conclude the conference call. Thank you for your participation you may now disconnect your lines.
Goodbye.