Q3 2025 10x Genomics Inc Earnings Call
Speaker #1: Thank you for standing by . Welcome to the 10x Genomics, Inc. . Third Quarter 2020 Earnings Conference call . All lines have been placed on mute to prevent any background noise .
Speaker #1: After the speaker's remarks , there will be a question and answer session . If you would like to ask a question during time , simply press the star followed by the number one on your telephone keypad .
Speaker #1: If you would like to withdraw your question , please press star one again . Thank you . I would now like to turn the conference over to Cassie Corneau Senior Director , Investor Relations and Strategic Finance .
Speaker #1: You may begin .
Speaker #2: Thank you , and good afternoon , everyone . Earlier today , 10x Genomics, Inc. released financial results for the third quarter ended September 30th , 2025 .
Speaker #2: If you have not received this news release or would like to be added to the company's distribution list , please send an email to investors at
Speaker #2: 10x Genomics, Inc. . Com . An archived webcast of this call will be available on the investor tab of the company's website , 10x Genomics, Inc. , for at this least 45 days following this call .
Speaker #2: Before we begin , I'd like to remind you that management will make statements during this call that are forward looking statements within the meaning of federal securities laws .
Speaker #2: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated . And you should not place undue reliance on forward looking statements .
Speaker #2: Additional information regarding these risks and and factors that could cause results to differ appears in the press release . 10x Genomics, Inc. issued today and in the documents and reports filed by 10x Genomics, Inc. from time to time with the Securities and Exchange Commission .
Speaker #2: 10x Genomics, Inc. 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 .
Speaker #2: Joining the call today are Serge Saxonov , our CEO and co-founder , and Adam , take our chief Financial Officer . We will host a question and answer session after our prepared remarks .
Speaker #2: We ask analysts to please keep to one question so that we may accommodate everyone in the queue . With that , I will now turn the call over to surge .
Speaker #2: Thanks .
Speaker #3: Katie , and good afternoon , everyone . We exceeded the top end of our guidance range in the third quarter , with total revenue of $149 million .
Speaker #3: Our team delivered a solid quarter , executing well in the midst of continuing macro challenges despite ongoing funding pressures and policy uncertainty . We saw sustained enthusiasm for our products with momentum in both single cell and spatial .
Speaker #3: The positive trends we highlighted in the first half of the year continued this quarter . Spatial consumables had another robust quarter of double digit year over year revenue growth , driven by continued strong demand for consumables .
Speaker #3: We again saw sustained growth in both the number of runs and average spend per run . We frequently hear from customers how much they love new , both for its exceptional performance and for the breadth of applications unlocked by the platform .
Speaker #3: Within single cell . While consumable revenue was down year over year , we again saw double digit chromium consumables reaction growth year over year .
Speaker #3: Our flex and on chip multiplexing assays have been key . Drivers of this growth . Both of them delivered configurations with lower price per sample , which has been opening up new customers and new use cases for single cell on chip multiplexing is particularly well suited for applications requiring fewer cells and for getting started with single cell .
Speaker #3: Because of that , it has been great for bringing new customers into the ecosystem . Flex has many benefits and is becoming the default single cell assay for many of our customers .
Speaker #3: It is also particularly well suited for translational studies and massively scaled experiments , which are two of the most promising directions for single cell growth going forward .
Speaker #3: Finally , we ended the quarter with $482 million on the balance sheet , reflecting our ongoing commitment to cost management and cash generation .
Speaker #3: This strong position provides us with both the flexibility to navigate the current environment and the resources to strategically invest in innovation and long term growth .
Speaker #3: We're staying extra close to our customers as they navigate persistent funding uncertainty. While the pace of news flow has moderated compared to earlier in the year.
Speaker #3: Spending behavior remains cautious , particularly for capital expenditures . We expect these conditions to remain largely unchanged in the near term , and we will stay flexible in how we work with customers to support their ongoing research .
Speaker #3: While the macro environment remains challenging , we remain focused on advancing our innovation roadmap and driving greater adoption of our products . Our latest product launches and partnerships illustrate how we're executing on these priorities .
Speaker #3: Last week , we began shipping the next generation of Chromium Flex . As I mentioned earlier , our flex assay is becoming the default single cell assay for many of our customers .
Speaker #3: It combines exceptional sensitivity , robustness , and scalability . All at a low cost . Our next generation flex further improves these qualities and also enables streamlined , automation .
Speaker #3: Friendly , plate based workflows . The product represents a step change in scale , enabling massive perturbation screens and supporting AI driven initiatives such as virtual cell modeling .
Speaker #3: We also developed and validated our scalable FFP dissociation protocol , which scales easily to 96 well plates . The protocol improves efficiency and throughput for high volume studies and strengthens the assays value in large scale translational research .
Speaker #3: Feedback from early Access customers has been phenomenal , and we're eager to see how more researchers apply the new flex across a wide range of studies .
Speaker #3: We were also excited to start shipping new protein earlier in Q3. It is a powerful new addition to the platform that allows researchers to detect RNA and proteins in the same cell and on the same tissue section, all in a single automated run.
Speaker #3: By reducing the need for separate workflows , technologies or tissue sections , Xeno protein simplifies experimental design and allows researchers to move more quickly from experiment to insight .
Speaker #3: As a first of its kind capability , Xenium protein represents a major leap forward , enabling comprehensive , multi-modal insights , streamlining workflows , and accelerating translational discovery .
Speaker #3: We're also seeing an increasing number of customers use Xenium together with Chromium Flex . The combination of highly precise spatial measurements and robust whole transcriptome analysis provides a powerful approach for biomarker discovery in SFB samples .
Speaker #3: This is a great example of the value that our portfolio strategy delivers to our customers . Now , stepping back , the landscape of spatial biology has evolved significantly over the past few years .
Speaker #3: In the early days, there was broad uncertainty across the field about which applications would be best served by sequencing-based methods like Visium and which by imaging-based approaches like Xenium.
Speaker #3: Now that Xenium has been in the hands of researchers for some amount of time , that picture is becoming more clear . We now see a strong and growing preference for image based analysis .
Speaker #3: This is a reflection of both how well Xenium works and the abundance of insights that scientists are gaining from using the platform . Based on customer feedback and the results we're seeing in the field , we increasingly see Xenium as the best solution for most of researchers spatial needs .
Speaker #3: In addition to advancing our product roadmap , we're focused on unlocking the full potential of our current products by removing barriers to adoption and driving broader access .
Speaker #3: Data analysis has long been one of the biggest bottlenecks in single cell and spatial research . Our recent partnership with anthropic helps address this issue and makes analysis more accessible by integrating it with cloth for life sciences , cloud researchers can now perform common analytical tasks through a conversational interface that complements our existing computational workflows .
Speaker #3: This intuitive approach makes it faster and easier for researchers to engage directly with their data . We believe this partnership is the first step toward addressing the analysis bottleneck to make our technologies more accessible to an ever broader community of scientists .
Speaker #3: Both single cell and spatial have been the transformative engine for scientific discovery . Going forward , we believe there is an especially large and growing opportunity in translational research and ultimately in clinical applications .
Speaker #3: A great example of this is our recent collaboration with and the Weitzman Institute on a clinical trial . Using chromium to profile thousands of individual cells from blood samples .
Speaker #3: This new study , built on a groundbreaking discovery recently published in Nature Medicine , where classic and Wiseman researchers identified a unique circulating cell signature capable of detecting hematologic disorders with remarkable accuracy .
Speaker #3: Their clinical trial uses single cell to validate , refine and amplify that proof of concept , uncovering molecular signals that traditional blood tests may miss and determining whether bone marrow biology can be accurately assessed through circulating cells .
Speaker #3: This work represents a promising step toward more accessible and less invasive diagnostics and improving clinical decision making . Finally , we're continuing to see increasing momentum around virtual cell efforts and large perturbation studies .
Speaker #3: Described as a holy grail of science . The virtual cell is an AI model trained on massive amounts of data meant to simulate the workings of individual cells .
Speaker #3: Multiple groups are now generating large scale single cell data to train algorithms as initial steps toward the virtual cell vision . There's strong reasons to expect that scaling of data will result in vastly more capable models , as it has in just about every other application of artificial intelligence .
Speaker #3: These models hold the promise of transforming science , drug discovery , and ultimately , human health . We believe that virtual cell efforts represent one of the most important trends in biology in the coming years , and we anticipate that our technologies will keep powering these efforts as they keep scaling by orders of magnitude .
Speaker #3: A strong resonance of our innovations with customers and expansion of our tools , translational research and large scale experiments reinforces our conviction in the foundational role of single cell and spatial in advancing science and health .
Speaker #3: We firmly believe that this is still very early days for our technologies. With that, I'll turn the call over to Adam to review the financials.
Speaker #2: Thank you . Serge . I'll start by reviewing .
Speaker #4: Our financial results for the three months ended September 30th , 2025 , and then we'll provide further details on our outlook for the fourth quarter .
Speaker #4: All figures and growth rates provided will be on a year over year . As Serge mentioned , we exceeded the top end of our guidance range and total revenue for the third quarter was $149 million .
Speaker #4: This was down 2% year over year , and up 2% sequentially , excluding one time license and royalty revenue in the second quarter , as anticipated , revenue from scale was not material and accounted for less than $1 million total consumables revenue was $127.9 million , up 1% .
Speaker #4: Chromium consumables revenue was $92.5 million , down 4% . Primarily driven by lower average selling prices . Spatial consumables revenue was $35.4 million , up 19% , primarily driven by Xenium consumables revenue .
Speaker #4: Moving on to instruments , total instrument revenue was $12 million , down 37% . Chromium instrument revenue was $4.9 million , down 36% , and spatial instrument revenue was $7.1 million , down 38% .
Speaker #4: Both driven primarily by lower average selling prices . Services revenue was $8.1 million , up 29% , primarily due to an increase in Xenium service plans .
Speaker #4: Looking at our revenue by geography , Americas revenue was $79.9 million , down 9% from the prior year , driven by continued uncertainty in the US academic and government funding .
Speaker #4: Environment . Excluding settlement impacts from Q2 . Americas was up 1% sequentially . EMEA revenue was $41.6 million , up 10% from the prior year and up 20% sequentially , primarily driven by strong spatial consumables performance .
Speaker #4: APAC revenue was $27.5 million , up 6% year over year and down 14% sequentially due to the previously mentioned Q2 customer driven pull forward in China .
Speaker #4: Turning to the rest of the income statement , gross profit for the third quarter was $100.3 million , compared to $106.4 million for the prior year period .
Speaker #4: Gross margin decreased to 67% from 70% the prior year , primarily driven by changes in product mix and higher inventory write downs . Partially offset by lower royalties and lower warranty costs .
Speaker #4: Total operating expenses for the third quarter decreased to $132.5 million , compared to $147.9 million for the prior year period , driven by lower personnel expenses and lower outside legal expenses .
Speaker #4: Operating loss for the third quarter was $32.2 million, compared to an operating loss of $41.5 million in the third quarter of last year.
Speaker #4: Net loss for the period was $27.5 million , compared to a net loss of $35.8 million for the third quarter of last year .
Speaker #4: We ended the quarter with $482 million in cash . Cash equivalents and marketable securities , up $35 million from the prior quarter . Turning to our outlook for the fourth quarter , we anticipate revenue to be in the range of $154 million to $158 million , representing 5% growth compared to Q3 at the midpoint .
Speaker #4: This outlook reflects the continuation of the key positive drivers of performance that we've seen throughout this year . We do not anticipate a material change in customer purchasing behavior and do not anticipate the year end budget acceleration .
Speaker #4: We have previously experienced in the fourth quarter . Our balance sheet remains strong , providing the flexibility to invest in innovation , advance our strategic initiatives and support long term growth .
Speaker #4: We are confident in our ability to execute with discipline and agility as market conditions evolve , and we remain focused on creating durable value for our customers and shareholders .
Speaker #4: With that , I'll turn the call back to Serge .
Speaker #3: Thanks , Adam . Before we open the line for questions , I'd like to take a moment to thank the entire team . This year has been incredibly tough for our customers , for that reason , it has also been really challenging for our team .
Speaker #3: Yet you have worked relentlessly through the challenges , keeping focus on our customers and on advancing our mission . I deeply appreciate how our field teams work so closely and creatively with researchers , how our R&D teams keep pushing forward with new product development , and how our entire team has stepped up to the challenge with really tight execution .
Speaker #3: When I reflect back on the history of our company , going back to the earliest garage days , the periods of greatest value creation often coincided with the lowest external valuations .
Speaker #3: This feels very much like one of those moments . Through your efforts , we have forged increasingly powerful bonds with our customers , advanced our roadmap , and made tons of progress improving our internal capabilities .
Speaker #3: We're executing from a position of strength with an unmatched innovation engine , expanding adoption , and a strong balance sheet that gives us the flexibility to invest for the long term .
Speaker #3: I'm proud of what we've achieved and confident that our best work and our greatest impact lie ahead . With that , we will now open it up for questions .
Speaker #3: Operator .
Speaker #1: Thank you . We will now begin the question and answer session . If you have dialed in and would like to ask a question , simply press star , followed by the number one on your telephone keypad .
Speaker #1: To raise your hand and join the queue . If you would like to withdraw your question , please press star one again . With that , your first question comes from the line of Brooke Schenkel with with Wolfe Research .
Speaker #1: Please go ahead .
Speaker #2: Hi .
Speaker #5: This is Madeline on for Doug . The guide calls for a 5% sequential pickup . Can you walk through how much of that is expected to come from instruments versus consumables , especially given you're not assuming a year end budget push ?
Speaker #5: And then what are assumptions are built into the Q4 guide regarding the government shutdown . Finally , what does this mean for 2026 , given the Q the quarter over quarter improvement , it seems like you should be able to grow in 2026 , adjusted for the royalties payments .
Speaker #5: Is that the right way to think about things ?
Speaker #4: Great . Thanks for the question . So I think as it relates to instruments versus consumables , we're not anticipating a big year end budget flush , but I would anticipate potentially a little bit more of an uptick on the instrument in Q4 .
Speaker #4: side
Speaker #4: So if you just sort of think about that mix between consumables and instruments , it could be a little bit higher on the instrumentation side in Q4 than versus what we saw in Q3 .
Speaker #4: We've factored the government shutdown into our guide . So to the extent that that does last to the end of this year as it relates to our Q4 guidance that's incorporated .
Speaker #4: As a reminder , the from an intramural perspective , NIH intramural is a fairly low percent of our total overall business . You want to take .
Speaker #3: Those 26 ? Yeah . On 2026 . So fundamentally , it's too early for us to really talk about 2026 . Obviously , we're seeing great trends in the business right now , but there's also a lot of just
Speaker #3: fundamental uncertainty in the macro environment . Visibility among our customers is is quite limited . And there is a lot of uncertainty still around the policy environment .
Speaker #3: You know , so we are we're not giving you a guide , you know , big picture wise at this stage . We are we anticipate the first half of 2026 should look similar to the second half of 2025 .
Speaker #3: And we'll , you know , we'll take it from here .
Speaker #1: Thank you . The next question comes from the line of soda with partners . Please go ahead .
Speaker #6: Yeah . Hi , guys . Thanks for taking my questions . So first one is really on the spatial side . Just wanted to get a sense on how should we think about that in the fourth quarter .
Speaker #6: And then potentially especially the consumables into 2026 , you came in flat to slightly down in the third quarter . So just wanted to clarify on the consumable side , there .
Speaker #6: And then , you know , surge , when we think about the g-mex , the flex V2 product that is you're launching here , I just want to clarify , you have a barcode oligo hybridization step that is built into it .
Speaker #6: That does give significant flexibility , both in terms of the number of samples that can be run . And then the ability to run partial plates as well .
Speaker #6: So when we think about customers doing lesser batching and the price per sample , which seems to be now in the sub $300 range versus the $1,000 before , how should we think about the medium to near-term impact ?
Speaker #6: I mean , I appreciate longer term . This is going to be an elasticity of demand that could play out here . But in the near to medium term , why would why should this not impact the revenue growth .
Speaker #6: And please let me know if any of my assumptions are wrong there . Thank you .
Speaker #3: Yeah . So maybe on the spatial consumable side first , one thing that I would just point out about this quarter is that if you may remember , we had a pull forward in Asia of of spatial consumables into Q2 from Q3 .
Speaker #3: And so if you kind of normalize for that , we actually had a nice sequential step up in Q3 . And as I mentioned , spatial has been doing quite well .
Speaker #3: Spatial consumables have been doing well . And we anticipate that to continue . All the trends are pointing general , like well in that direction .
Speaker #3: As far as you know , the question on flex v2 , I mean , those are definitely astute observations around how the product works and the fact that it gives a lot of flexibility to our customers , maybe like a little bit of a step back just in terms of our overall general strategy here is that we've started talking about this some time ago , about the fact that there's a huge elasticity potential in this market in single cell , and we started lowering our prices per sample in a very kind of careful , staged manner , starting with a GM introduction about a year and a half ago .
Speaker #3: And since then , when the introduction of new products like on chip multiplexing , like the first iteration of G-max flex about a year ago , kind of opening up new use cases , new configurations to drive more volume at lower prices .
Speaker #3: And what we have seen is the consistently over that time , the reaction growth and volume growth has been stepping up as as we've been expanding and and very much in resonance with , with the strategy that we have put , put , put out there .
Speaker #3: So the numbers line up with the strategy , the feedback of customers also lines up with that strategy in terms of new , new use cases opening up new configurations and people running more single cells than they were doing before .
Speaker #3: And the launch of Flex, the next generation Flex, is now also part of that overarching strategy, where we're delivering new configurations into the marketplace to a large extent, where it.
Speaker #3: Went is debated to be particularly impactful is enabling people to learn larger experiments , and it's really at these sort of larger experiments that you do get to lower per sample and per cell prices and , you know , we want to be careful in the sense that the product's this new flex is not doesnt have exactly the same sort of configurations that the previous versions did .
Speaker #3: But overall , if you compare kind of on average , it's probably there's a 20 to 30% drop in the average reaction price .
Speaker #3: And we do anticipate that this will be more than made up in volume, especially over time. And that would be consistent, again, with the feedback that we've been hearing from customers.
Speaker #3: And with the metrics we've been tracking internally . Over the course of the past year and a half .
Speaker #1: Thank you . The next question comes from the line of Dan Arias with steeple . Please go ahead .
Speaker #7: Yeah . Afternoon , guys . Thanks . I'll ask one , since that's what you asked for . I wanted to ask a follow up question on spatial consumables , though .
Speaker #7: Can you , can you just maybe add some color to the contributions from Xenium and Visium ? I mean , I know you don't like talking about persistent pull through , but it is a tough modeling exercise for spatial just given the two product lines .
Speaker #7: So is there anything you can kind of shed light on when it comes to user dynamics per box ? If possible ? Anything there would be helpful just when it comes to keeping our models straight for these two product lines here .
Speaker #7: Thanks .
Speaker #3: Yeah . Dan , thanks for the question . So kind of as I was alluding to , kind of in my prepared remarks , facial in general has been like a very dynamic field .
Speaker #3: And there is also kind of this broad uncertainty around how the application space is going to play out relative to our platform . So relative to our products , especially the Visium and Xenium .
Speaker #3: And, you know, one of the things that I make sure to emphasize early is that we're seeing more and more enthusiasm, in particular, and a kind of very consistent increase in the usage of the platform.
Speaker #3: And not just the broad usage , although we're seeing that in the consumables number , consumable numbers , pretty consistent uptick , but also on a per instrument basis , like the we haven't shared pull through and it's still quite a dynamic kind of for us to be able to do that .
Speaker #3: But it has been trending consistently in the right direction . And also like like I said along , sort of both the vector of more runs and also price price per run and also back to my earlier point in general , the trend has been more toward xenium like when you relative to , to , to visium and multiple products .
Speaker #1: Thank you . And the next question comes from the line of Kyle Nixon with Canaccord . Please go ahead .
Speaker #8: Hey guys . Thanks for the questions . Congrats on the quarter . I want to just address the the acquisition this week from a , you know , a large company bought the instrument free solution company similar to yours in scale , a little bit larger situation .
Speaker #8: Now . So this acquirer is going to provide access to a single cell tech to 500,000 labs globally . They're going to incorporate 100 million cell data set into their software and pathway analysis .
Speaker #8: And they're also going to integrate single cell into pharma containing diagnostics . So just would love to hear if you have an answer to these kinds of aspirations over time .
Speaker #8: Can you do these things organically ? Possibly . Thanks .
Speaker #3: Thanks , Kyle . Yeah . I mean , look , first of all , kind of big picture wise . One way to to look at it is like , it's certainly validates the space .
Speaker #3: Like we've been we've been saying for a long time that that single cell is fundamentally has enormous potential going forward . And along multiple axes .
Speaker #3: Right . It's the fundamental unit of biology . This is where biology needs to go . That's ultimately where a clinical applications and drug development needs to go .
Speaker #3: So you know , we we're glad to see others agree with that assessment . Overall the space has always been competitive . You know , certainly over the past several years .
Speaker #3: But even from the very , very beginning and also , you know , the it has had a lot of , you know , quite a number of large and significant companies operate in that space .
Speaker #3: And we have consistently won with our products by virtue of our technology , leadership , by virtue of performance of our products , data quality , robustness , ease of use , just the wide breadth of applications .
Speaker #3: And we certainly expect that to continue . Customers consistently choose us . You know , there's always this sort of this pattern of as new technologies come in , people trial them .
Speaker #3: But the customers come back to us for all the for all the reasons I just mentioned , and we see that reflecting in a , in a customer service in double blind MPs , which are off the charts , especially relative to our competitors .
Speaker #3: All of these metrics trend in our direction and our leadership . We expect to for our leadership to continue . If anything , the gap in performance between our products and others have has increased over the past .
Speaker #3: Over the past several years . Given all the product launches that we have had . So yeah , so we do anticipate that it's going to stay this way .
Speaker #3: And I fundamentally don't anticipate don't expect that the fundamental fundamentals of the dynamic will change .
Speaker #1: Thank you . And the next question comes from the line of David Westenberg with Piper Sandler . Please go ahead .
Speaker #9: Hi . Thanks for taking the question . And I'll just ask one short one , since you have a lot in line . Can you talk about the strong spatial performance in Europe ?
Speaker #9: Is there any reason to believe that there's sustainability there ? Is there anything to to call out in terms of one time ? Thank you very much .
Speaker #9: Great job on the quarter.
Speaker #3: Thanks . Yeah , I mean , so look , we want to be careful not to overindex particular quarter in any particular region .
Speaker #3: These things tend to be lumpy and there tend to be fluctuations quarter to quarter . You know , that said yeah , for sure .
Speaker #3: We had a great quarter in terms of spatial consumables and in terms of consumables in Europe. I think that's part of the broader trend we're seeing across the world.
Speaker #3: And we do expect that to generally continue .
Speaker #1: Thank you . And the next question comes from the line of Dan Brennan with TD . Q1 . Please go ahead .
Speaker #10: Hey good afternoon . This is Kyle on for Dan . I just wanted to ask about China . You know sort of what you're seeing there .
Speaker #10: I know you had some pull forward in the second quarter that you just talked about earlier , but I
Speaker #10: think year over year you still grew a little bit on any in China off of , you know , not not an easy comp , but I guess what are you seeing over , over in China ?
Speaker #3: Yeah . I mean , good question . So just to kind of step back a little bit , you may remember that we made a number of changes to kind of our go to market in China a couple of years ago , after a number of challenges that we've faced .
Speaker #3: There , and that has yielded great benefits . We have a great team , great organization , great relationship with the distributors and partners over there , which has increased both visibility and execution in , in in that region .
Speaker #3: And so you're seeing some , some of the outcomes of that . We're also seeing quite good robust demand on the ground for our products there as well .
Speaker #3: So that has also been quite gratifying to see overall . Of course , China has a very different dynamics from the rest of the world .
Speaker #3: And so , you know , the we have to be cautious about long term visibility there . But overall right now , we're certainly seeing good business and good progress in the region .
Speaker #1: Thank you . And the next question comes from the line of Tycho Peterson Jefferies . Please go ahead .
Speaker #11: Hey guys . This is Lauren on for Tycho . Congrats on the quarter on the Xenium . Could you maybe elaborate a little bit more on kind of early adoption trends for Xenium protein and kind of how these multi-omic workflows are resonating with customers and kind of maybe which end markets are you seeing the strongest demand ?
Speaker #11: And then in terms of kind of differentiation , you know , there's other competitors kind of talking about spatial offerings and kind of what do you think about that in terms of differentiation for Xenium ?
Speaker #11: And then lastly , just on single cell consumables that were down , what do you think is needed ? Kind of going into the end of the year , into 2026 to see recovery for single cell ?
Speaker #11: Thanks .
Speaker #3: Yeah . So let me start there with with the protein product . So that is something that obviously has been has been a big trend .
Speaker #3: I talked about this earlier in my prepared remarks . Kind of the whole notion of multi-omics and being able to measure multiple analyses from the same sample , from the same cell , from the same sectioned tissue section .
Speaker #3: And I want to kind of emphasize the fact that this is the first product . It's kind that can measure both proteins and RNA expression from the same exact section , using the same integrated workflow .
Speaker #3: And that is something that our customers have been have been asking for and have been very excited to receive . So the initial feedback has been has been very positive , like people really appreciate the really like this capability .
Speaker #3: Early days . So don't you know , don't want to say any more on on that point . But definitely very promising . And I think this is just kind of the first step in long , long , very promising direction .
Speaker #3: I also would say that there's tremendous differentiation , as has relative to other products on the market . And , you know , we've talked about that before , just based on the fundamentals of the technology , based on the workflow , based on the data that we've been seeing coming back .
Speaker #3: And it's not been reflected very consistently with customer feedback . The all kinds of benchmarks that people have run that consistently puts Xenium on top .
Speaker #3: You see that in in the numbers . We see that . And also competitive situations out there . Like with our teams consistently winning in the marketplace really stands out as a platform .
Speaker #3: And as far as the question on on single solid consumables overall , you know , we are really happy with the progress of all reaction , growth , volume growth .
Speaker #3: Obviously , there is some pricing headwinds that I talked about earlier in terms of new products , introductions that are introducing lower price point configurations , and also obviously we can't forget the the macro headwinds , especially when you're looking at year over year comparisons .
Speaker #3: But if you look at sequentially , there has been a really nice and robust step up in both in reaction volumes and in overall revenue for single cell consumables .
Speaker #3: I think that's a very promising sign . And we do expect these trends to continue .
Speaker #1: Thank you . And the next question comes from the line of Lou Li with UBS . Please go ahead . Great . Thank you for .
Speaker #12: Taking my questions . I wanted to go back to the spatial . You mentioned that the scientists increasingly prefer xenium over VCM . I wonder , can you talk a little bit about your kind of like roadmap for VCM going forward ?
Speaker #12: And then second question , you also mentioned that people are starting to using more like flask with the Zenium together . I wonder , can you quantify a little bit in terms of like what percentage of your customers are using the two products at the same time ?
Speaker #12: Thank you .
Speaker #3: Yeah . I mean , in terms of the second question , it's too early to to make quantification . I was I certainly hear that traveling in the field , especially customers , translational customers that have FFP samples that they want to be analyzing and they want to have the most comprehensive possible analysis of those samples .
Speaker #3: And the two products together . The flags , together with Xenium provides kind of the best , the most comprehensive analysis . You get the whole transcriptome , single cell based analysis using flex .
Speaker #3: And then you have this really precise detail spatial analysis from from Xenium . And we see that as , as still very early in that trend .
Speaker #3: But it's a consistent theme that I've now heard . Pretty consistent across multiple customers . And we do expect kind of back to your first question , the sort of trend of people really converging on being enthusiastic about Xenium .
Speaker #3: Again , if anything , this is this is just kind of the beginning of , of of this trajectory . We see this happening more and more as , again , researchers kind of talk to each other where it becomes more and more clear across different applications , across different publications , just how how well xenium works and how quickly you can get from from their samples to , to insights .
Speaker #1: Thank you . And the next question comes from the line of Michael Riskin with Bank of America . Please go ahead .
Speaker #13: Great . Thanks for taking the question . You talked earlier about some of the academic and government trends and end of year budget push .
Speaker #13: I want to dig a little bit more on on pharma behavior . What you're seeing there as you're going into the end of the year , a lot of concern on some budget constraints and just some cautious spending .
Speaker #13: you know , there's
Speaker #13: Just wondering if you've noticed any change on that in the last couple of months . And if you're getting just any more fruitful conversations with with pharma customers , thanks .
Speaker #3: Yeah , thanks . Thanks , Mike . Yeah , it's a bit Pharma has been kind of a challenging segment . You know , we're very happy to have the full biopharma team in place , which again , we made those changes last year and it's
Speaker #3: helpful to have focus teams , especially in this kind of environment . The marker has been challenging . There's just fundamental uncertainty around kind of long term questions for pharma , where to invest because of various policy questions and especially lot of uncertainty for them , investing been very in early discovery , early stage research , which is where our products have been traditionally focused on and and so , you know , as this sort of right now we're it's a little too hard to tell precisely how like the rest of the quarter going to play out , there's definitely areas of positive trends that we're seeing , but also plenty of reasons to be cautious as well .
Speaker #3: Kind of in the longer term , we do see a lot of promise . You know , as I mentioned earlier , there's tons of interest in kind of running very large scale experiments used for kind of some AI driven applications for target discovery , very large kind of screening campaigns using single cell .
Speaker #3: So big trends , still very early in that . And very promising . And then we're also seeing a lot of promise kind of moving downstream in the , you know , drug development process into translational applications , especially given our product sets .
Speaker #3: Now with flex and with seeing a lot of potential there as well . But , you know , that's we'll see how the rest of the quarter plays out .
Speaker #3: We're in a period of a lot of uncertainty at this at this point . Still .
Speaker #1: Thank you . And the next question comes from Justin Bowers with Deutsche Bank . Please go ahead .
Speaker #7: Hi . Good afternoon sir . What's your latest thinking on the elasticity of chromium , especially with the launch of the recent flex assay .
Speaker #7: Have the courage to crossed and in other words , absent the near-term macro headwinds , you know what type of growth are we thinking about for single cell in the interim ?
Speaker #3: Yeah , I mean , good question . Right . And kind of like as as I talked about earlier , we have been consistently encouraged by volume growth and how consistent it has been with our strategy .
Speaker #3: You know , we had several elements of what we embarked on with our product launches , starting about a year and a half with the launch of IMX at a lower price point per sample compared to the previous architecture .
Speaker #3: And the Gen . And that has been kind of proceeding through the conversion through throughout our customer base to the point where by the end of this year , we should be largely finished with that conversion .
Speaker #3: And then , of course , we launch new products last year as well . And about to and also started shipping the new version of flex .
Speaker #3: So on chip multiplexing , which kind of opens up new use cases , new customers , flex opens up also new use cases , large configurations , more usage , high cell volume kind of use cases and so we do anticipate and we have seen that more and more volume growth .
Speaker #3: We do also see some conversion of current users , which creates headwinds on on price . And you know , at this stage it's probably too early to tell where the sort of steady state of new products is relative to kind of our previous existing products .
Speaker #3: This but we're in a the sort of it's been a pretty steady clip at which new products have been entering their market , and we've been very happy with the progress there .
Speaker #3: And , and the volume growth , especially .
Speaker #1: Thank you . The next question comes from Patrick Donnelly with Citi . Please go ahead .
Speaker #14: Hi . This is Brendan on for Patrick . Thank you for taking the question . Congrats on the quarter . I know you guys aren't giving 26 guidance until the next call , but I wanted to touch on the first half of 26 given kind of line of sight into the order funnel and visibility is the first half of 26 kind of looking alike ?
Speaker #14: The first half of 2025 , kind of in that mid-single digit decline area , like similar revenue levels , when excluding royalties . And then just to touch on the government shutdown further , can you mind breaking out exactly what you guys have factored in for the fourth quarter ?
Speaker #14: Thank you .
Speaker #3: So maybe on the government shutdown , I'll , as Adam mentioned , it's factored in into our guide for the quarter . The way to think about it is that at this stage , for Q4 , really the only material effect is likely to be on intramural NIH , which is a very small fraction of our business for this quarter .
Speaker #3: The rest of the business is , you know , sort of is able to proceed independent of the shutdown , where things start to get potentially .
Speaker #3: More challenging to predict is if it sustains , its sort of the funding trends into 2026 . And , and this is where we are certainly refraining from giving guidance on 2026 or how how it's going to play out at this stage .
Speaker #1: Thank you . The next question comes from the line of Casey Woodring with JPMorgan . Please go ahead .
Speaker #15: Hi , this is Jaden on for Casey . Thank you for taking my question . Could you just touch on what impact we can see as Nextgen's end of life is year end as customers make that transition over and may take more time to validate an assay or incorporate it into an existing new project .
Speaker #15: And what does the timeline usually look like for customers before they ramp to gem , and what near-term impact that might have on the PNL , given the lower cost and anticipated ramp in volume ?
Speaker #15: Thank you .
Speaker #3: Yeah . I mean , I think on the specific question of gem to transition at this point , there is not there's not much left for the customer base to transition .
Speaker #3: You know , we've given people end of life notices . And so people have been kind of running experiments with that in mind .
Speaker #3: And we anticipate the bulk of the effects for the effect on , on a PNL on the top line has already we've already gone through it .
Speaker #3: You know , at this point . So what is left is pretty marginal .
Speaker #1: Thank you . The next question comes from the line of Subbu with Guggenheim . Please go ahead .
Speaker #16: Hi , guys . This is Thomas on for Subbu . Thanks for taking our question on chromium instrument discounts . You've mentioned there'll be temporary through the macro uncertainty , but do you anticipate any resistance from customers and purchasing when you return to normalized higher pricing ?
Speaker #16: Or if you can confirm if you'll choose to keep chromium ASPs at these levels longer term ? Thank you .
Speaker #3: Well , yeah , I mean , that's a good question . Like we've said before , we have been intentionally very flexible with customers in terms of giving them , giving them creative deals .
Speaker #3: And , you know , discounts when it makes sense with various products or different payment structures depending on , on their constraints . And there have been a lot of different kinds of constraints that customers have faced .
Speaker #3: The course of this past year . You know , our view is that the situation has been so peculiar and so unique in a lot of instances that really doesn't necessarily translate to sort of the patterns and , and the deals that we've given customers really shouldn't set much of a precedent into kind of as we transition into more stable and more normal times .
Speaker #1: And the last question comes from Mason Carrico with Stephens. Please go ahead.
Speaker #17: Hi . Good afternoon , and thanks for taking the question . This is Ben on for Mason . Could you give us some insight into Xenia's five K panel adoption ?
Speaker #17: How much of a tailwind has this been to Xenium consumable growth this year ? And how much of that growth has just come from the higher pricing ?
Speaker #17: There ? Thank you for taking the question .
Speaker #3: Yeah , good question . So like I said earlier , Xenium consumables have been growing and growing both on terms of the number of runs or number of runs per instrument and also price per run .
Speaker #3: And . You know , a large US , a large part of that increased price per run is precisely what you're referring to here , which is the adoption of the five K panel .
Speaker #3: And we've been it's been going great . Very happy with it . And and we do expect it to to be a good , great driver of our business going forward .
Speaker #1: And this does conclude our question and answer session . I would like to thank our speakers for today's presentation . And we thank you all for joining .