Q2 2026 10x Genomics Inc Earnings Call

Speaker #1: After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1* to raise your hand; to withdraw your question, press *1* again.

Speaker #1: I will now hand the conference over to Cassie Corneau, Head of Investor Relations and Strategic Finance. Please go ahead.

Speaker #2: Thank you, and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the second quarter ended June 30, 2026. 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.@10xgenomics.com.

Speaker #2: An archived webcast of this call will be available on the investor tab of the company's website 10xgenomics.com for at 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, uncertainties, and factors that could cause results to differ appears in the press release 10x Genomics issued today, and in the documents and reports filed by 10x Genomics from time to time with the Securities and Exchange Commission.

Speaker #2: 10x Genomics' disclaims any intention or obligation to update or revise any financial projections or forward-looking statements. Whether because of new information, future events, or otherwise.

Speaker #2: Joining the call today are Serge Saxonov, our CEO and co-founder, and Adam Taich, 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 Serge.

Speaker #3: Thanks, Cassie. And good afternoon, everyone. I will start with a brief overview of our second quarter performance. Then provide an update on Atera. And finally, discuss several broader trends that are reshaping biological research and creating new opportunities for our business.

Speaker #3: Revenue for the second quarter was $151 million. During the quarter, we recognized $1.6 million of licensed and royalty revenue, in connection with a settlement with Takara.

Speaker #3: Excluding non-recurring settlement revenue in both this quarter and the prior year period, Q2 revenue was $149 million, and grew 3% year over year. The story of the quarter was the extraordinary customer response to Atera.

Speaker #3: We're highly encouraged by the engagement across the research ecosystem and the very strong early order flow. At the same time, our own market products showed sustained strength.

Speaker #3: We drove robust growth in chromium consumable reaction volumes, reflecting expanding usage across a broad range of applications. In spatial, Xenium utilization continued to perform exceptionally well, reinforcing its position as the leading platform for spatial analysis today.

Speaker #3: Our launch of Atera is still, by far, the biggest highlight of the year. On our last call, I discussed Atera's core capabilities, many of which were not thought possible within a single platform.

Speaker #3: It delivers step-change advances across a range of features, including throughput, flex, and sensitivity. Atera enables spatial whole transcriptome profiling, with single-cell sensitivity, at scale.

Speaker #3: The promise of spatial has always been that it represents the convergence of molecular cell and tissue biology. Atera is poised to deliver on that promise, to provide researchers with a fundamentally more complete view of biological systems, and answers to many questions that were previously out of reach.

Speaker #3: You may remember that we said initial customer reception exceeded our expectations. Which were already very high heading into the launch. Since then, customer enthusiasm has only gotten stronger, this has translated into a strikingly large number of orders in a very short amount of time.

Speaker #3: The momentum we're seeing is remarkable for a platform that was completely unknown to our customers only a few months ago. We believe customers' enthusiasm should only increase as they learn more about the system and see what it is able to deliver in their hands.

Speaker #3: Similarly, we're seeing strong demand for catalyst research services, a program for customers to submit their own samples to be run on Atera in our lab.

Speaker #3: We expect sample processing to begin alongside Atera's commercial availability. Catalyst research services is designed to support a range of customer needs, from generating initial pilot datasets to providing flexible and ongoing access for routine research, to enabling researchers who do not yet have access to an Atera instrument.

Speaker #3: The strong demand for the service is another encouraging leading indicator for the future of the platform and the breadth of its impact. Our vision for Atera was to build the cornerstone platform that enables scientists to interrogate a full spectrum of research questions with the versatility and scale needed to resolve the complexity of biology.

Speaker #3: It is gratifying to see that vision start to come to life, as customers describe how they plan to use Atera. We're seeing engagement from universities, academic medical centers, and biopharma companies pursuing research across nearly every major disease area.

Speaker #3: From oncology across dozens of tumor types to neurodegeneration, autoimmune, and inflammatory disease, cardiometabolic conditions, kidney and transplant biology. The list goes on. That diversity is also evident in a specific research questions being asked.

Speaker #3: Customers are interested in applying the platform for foundational cell and tissue atlasing, mechanistic studies of how disease actually develops, monitoring response to novel immunotherapies and cell therapies, and for early biomarker and translational work.

Speaker #3: Just as importantly, customers are planning to integrate Atera into the routine fabric of their research. Researchers within academic medical centers, for instance, are planning to deploy it across the entirety of their translational oncology programs.

Speaker #3: We're hearing similar conviction from industry, where senior R&D leaders are top biopharmaceutical companies are investing in Atera with a belief that spatial biology will fundamentally change how they approach drug discovery and development.

Speaker #3: We build Atera as a long-duration, upgradable platform with capabilities that will continue to expand over time. Atera's extensive roadmap includes workflow automation, base-by-base spatial sequencing, and the addition of protein multi-omics.

Speaker #1: Trust is importantly. Customers I'm planning to integrate Atera into the routine fabric of their research. Researchers within academic medical centers, for instance, are planning to deploy it across the entirety of their translational oncology programs.

Speaker #3: With that in mind, during the quarter, we took an important step to enhance our proteomics capabilities with the acquisition of protein-tech genomics. Protein-tech genomics brings deep expertise and differentiated technologies for measuring proteins in multi-omic context.

Speaker #1: We're hearing similar conviction from industry, where senior R&D leaders are topped by pharmaceutical companies, are investing in Atera with a belief that spatial biology will fundamentally change how they approach drug discovery and development.

Speaker #3: We believe integrating rich proteomic information alongside spatial transcriptomics will further expand the biological questions Atera can address and continue to strengthen the platform. The intensity of the early interest and the spectrum of customer applications are reinforcing our conviction that Atera is poised to transform how we measure and understand biology.

Speaker #1: We build Atera as a long-duration, upgradable platform, with capabilities that will continue to expand over time. Atera's extensive roadmap includes workflow automation, base-by-base spatial sequencing, and the addition of protein multi-omics.

Speaker #3: When you look back at the history of our industry, every now and again, a new platform comes along that reshapes markets and changes how science is done.

Speaker #1: With that in mind, during the quarter we took an important step to enhance our proteomics capabilities with the acquisition of protein-tech genomics. Protein-tech genomics brings deep expertise and differentiated technologies for measuring proteins in multi-omic contexts.

Speaker #3: This is a very rare, but profoundly exciting occurrence. We built Atera with exactly that ambition, and the early signs suggest it is on that trajectory.

Speaker #1: We believe integrating rich proteomic information alongside spatial transcriptomics will further expand the biological questions Atera can address and continue to strengthen the platform. The intensity of the early interest and the spectrum of customer applications are reinforcing our conviction that Atera is poised to transform how we measure and understand biology.

Speaker #3: Turning to single-cell, I want to highlight a few major trends driving the business. First, our customers are adopting our platforms for larger, more ambitious studies.

Speaker #3: Over the past several quarters, products like eFLEX, APEX, have enabled a new generation of this work, particularly in biopharma and translational research. One way we're supporting the shift is through our recently introduced whole blood workflows that stabilize samples at the point of collection, enabling longitudinal research distributed sample acquisition and access to archived material.

Speaker #1: When you look back at the history of our industry, every now and again, a new platform comes along that reshapes markets and changes how science is done.

Speaker #1: This is a very rare but profoundly exciting occurrence. We built Atera with exactly that ambition, and the early signs suggest it is on that trajectory.

Speaker #3: Second, there's a growing interest in additional modalities and multi-omics, an area that has always been a strength of our portfolio and a focus of our investments.

Speaker #1: Turning to single-cell: I want to highlight a few major trends driving the business. First, our customers are adopting our platforms for larger, more ambitious studies.

Speaker #3: Last quarter was a particularly great example. We launched a new GEMEX version of our multi-om product, significantly improving researchers' ability to measure epigenetics and gene expression from the same cell.

Speaker #1: Over the past several quarters, products like eFLEX and APEX have enabled a new generation of this work, particularly in biopharma and translational research. One way we're supporting this shift is through our recently introduced whole blood workflows that stabilize samples at the point of collection, enabling longitudinal research, distributed sample acquisition, and access to archived material.

Speaker #3: This unlocks new dimensions of biological context and has been met with positive early customer response. Furthermore, our protein-tech genomics acquisition expands and complements our existing multi-omics capabilities.

Speaker #3: It provides us with the largest single-cell protein panels on the market and allows us to offer more complete solutions for customers to measure gene expression and proteins on the same cell.

Speaker #1: Second, there's a growing interest in additional modalities and multi-omics, an area that has always been a strength of our portfolio and a focus of our investments.

Speaker #3: Finally, a significant trend in single-cell has been an increase in large-scale perturbation experiments to map biological mechanisms and resolve causality. We're finding that FLEX, APEX is becoming the standard assay for these experiments because of its scalability, robustness, and sensitivity.

Speaker #1: Last quarter was a particularly great example. We launched a new GEMEX version of our multi-ome product, significantly improving researchers' ability to measure epigenetics and gene expression from the same cell.

Speaker #1: This unlocks new dimensions of biological context and has been met with positive early customer response. Furthermore, our protein-tech genomics acquisition expands and complements our existing multi-omics capabilities.

Speaker #3: While we see significant FLEX, APEX adoption across all customer segments, the uptake of APEX in biopharma has been particularly strong, driven by the application of perturbation screening to target identification.

Speaker #1: It provides us with the largest single-cell protein panels on the market and allows us to offer more complete solutions for customers to measure gene expression and proteins on the same cell.

Speaker #3: The value of these studies is also increasing because of the progress in AI, which helps derive mechanistic insights from the large amounts of data generated by these experiments.

Speaker #1: Finally, a significant trend in single-cell has been an increase in large-scale perturbation experiments to map biological mechanisms and resolve causality. We're finding that FLEX, APEX is becoming the standard assay for these experiments because of its scalability, robustness, and sensitivity.

Speaker #3: As we have discussed before, we believe AI represents a significant and structural tailwind for our business. AI has enormous potential to transform biology and human health, but realizing that potential depends on generating vastly more of the right kinds of data.

Speaker #3: The key bottleneck for AI-driven progress in biology is the same bottleneck we identified when we started the company. Biology is incredibly complex. We understand only a tiny fraction of it, and solving that complexity requires measuring biological systems at massive scale and high resolution.

Speaker #1: While we see significant FLEX, APEX adoption across all customer segments, the uptake of APEX in biopharma has been particularly strong, driven by the application of perturbation screening to target identification.

Speaker #1: The value of these studies is also increasing because of the progress in AI, which helps derive mechanistic insights from the large amounts of data generated by these experiments.

Speaker #3: We build single-cell and spatial technologies for precisely that purpose, which is why they're now being deployed by so many of our customers to train AI models.

Speaker #1: As we have discussed before, we believe AI represents a significant and structural tailwind for our business. AI has enormous potential to transform biology and human health, but realizing that potential depends on generating vastly more of the right kinds of data.

Speaker #3: In fact, AI as an influencer of demand is now becoming pervasive across our customer base. Today, most significant biological data generation efforts are conceived, at least in part, with the goal of training AI models.

Speaker #3: On the academic side, there are multiple well-known pioneering efforts, such as those led by CZI and the ARC Institute, dedicated to building virtual biology models.

Speaker #1: The key bottleneck for AI-driven progress in biology is the same bottleneck we identified when we started the company. Biology is incredibly complex. We understand only a tiny fraction of it, and solving that complexity requires measuring biological systems at massive scale and high resolution.

Speaker #3: But we're also seeing a wider shift, where more of basic scientific research entails training AI models. This shift is driven bottom-up by decisions of individual scientists, as well as top-down by philanthropic and government funding priorities, such as those outlined in recent proposals from the White House.

Speaker #1: We build single-cell and spatial technologies for precisely that purpose, which is why they're now being deployed by so many of our customers to train AI models.

Speaker #1: In fact, AI as an influencer of demand is now becoming pervasive across our customer base. Today, most significant biological data generation efforts are conceived, at least in part, with the goal of training AI models.

Speaker #3: A similar shift is also starting to happen in biopharma with a rapid growth in AI-focused investments. Initially, much of the AI work in drug development has focused on the chemistry side of the process, on creating molecular interventions once a target is known.

Speaker #1: On the academic side, there are multiple well-known pioneering efforts, such as those led by CZI and the ARCA Institute, dedicated to building virtual biology models.

Speaker #3: Going forward, we expect increasing investments to be made in modeling biology, at the cell and tissue level, to unlock new targets and to predict drug responses in patients.

Speaker #1: But we're also seeing a wider shift, where more of basic scientific research entails training AI models. This shift is driven bottom-up by decisions of individual scientists, as well as top-down by philanthropic and government funding priorities, such as those outlined in recent proposals from the White House.

Speaker #3: We believe this is where the biggest bottlenecks are and where there are the greatest opportunities to transform drug development. This work is also precisely what our tools enable and why we anticipate a very large opportunity for our technologies over time.

Speaker #3: Most pharma companies now have strategic mandates to leverage AI to speed up drug development and increase the success. At the same time, there's a rapidly growing number of biotech companies that seek to transform drug development using AI.

Speaker #1: A similar shift is also starting to happen in biopharma, with rapid growth in AI-focused investments. Initially, much of the AI work in drug development has focused on the chemistry side of the process—on creating molecular interventions once a target is known.

Speaker #3: More and more of them are focused on building sophisticated virtual models of human biology. The vast majority of the companies building such models are using 10x single-cell and spatial technologies.

Speaker #1: Going forward, we expect increasing investments to be made in modeling biology at the cell and tissue level, to unlock new targets and to predict drug response in patients.

Speaker #1: We believe this is where the biggest bottlenecks are, and where there are the greatest opportunities to transform drug development. This work is also precisely what our tools enable and why we anticipate a very large opportunity for our technologies over time.

Speaker #3: Customers overwhelmingly choose our products because they deliver the highest data quality the largest scale, the widest biological context, and the most powerful multi-omics capabilities.

Speaker #3: It has become increasingly clear in the field that all of these considerations are critical for building high-quality, generalizable, and useful models. It should be noted that building better models is only a part of the AI story.

Speaker #1: Most pharma companies now have strategic mandates to leverage AI to speed up drug development and increase the probability of success. At the same time, there's a rapidly growing number of biotech companies that seek to transform drug development using AI.

Speaker #3: For years, one of the biggest barriers to broader adoption of single-cell and spatial biology has been the bioinformatics expertise required to analyze increasingly rich data sets.

Speaker #1: More and more of them are focused on building sophisticated virtual models of human biology. The vast majority of the companies building such models are using 10x single-cell and spatial technologies.

Speaker #3: Advances in agentic AI are beginning to remove that bottleneck. Researchers who previously required dedicated computational experts are starting to analyze complex data sets through natural language interactions with AI agents.

Speaker #1: Customers overwhelmingly choose our products because they deliver the highest data quality, the largest scale, the widest biological context, and the most powerful multi-omics capabilities.

Speaker #3: We believe that will make single-cell and spatial analysis accessible to a much broader community of scientists, while increasing the value of the underlying data.

Speaker #1: It has become increasingly clear in the field that all of these considerations are critical for building high-quality, generalizable, and useful models. It should be noted that building better models is only a part of the AI story.

Speaker #3: Together, these trends reinforce our conviction that single-cell and spatial biology are foundational to the future of basic science and drug discovery research. AI is increasing both the demand for high-quality biological data and the ability of researchers to extract insights from that data.

Speaker #1: For years, one of the biggest barriers to broader adoption of single-cell and spatial biology has been the bioinformatics expertise required to analyze increasingly rich datasets.

Speaker #1: Advances in agentic AI are beginning to remove that bottleneck. Researchers who previously required dedicated computational experts are starting to analyze complex datasets through natural language interactions with AI agents.

Speaker #3: We believe those two forces will reinforce one another over the coming years. Now, as we have discussed previously, we envision a significant opportunity to extend our technologies into clinical diagnostics in the future.

Speaker #1: We believe that will make single-cell and spatial analysis accessible to a much broader community of scientists, while increasing the value of the underlying data.

Speaker #3: Realizing that opportunity requires generating robust clinical evidence on large patient cohorts. We're continuing to make progress on our internal efforts to generate such evidence in oncology and in autoimmunity.

Speaker #1: Together, these trends reinforce our conviction that single-cell and spatial biology are foundational to the future of basic science and drug discovery research. AI is increasing both the demand for high-quality biological data and the ability of researchers to extract insights from that data.

Speaker #3: This quarter, we announced new partnerships with the Cleveland Clinic and with the Lausanne University Hospital, to identify biomarkers of response to therapy across multiple oncology indications.

Speaker #3: Taken together, this quarter demonstrates the strength of our strategy and continued execution across our business. We advanced the game-changing new platform Sustained Strong Momentum in our core consumables business and deepened our engagement with customers through high-impact partnerships.

Speaker #1: We believe those two forces will reinforce one another over the coming years. Now, as we have discussed previously, we envision a significant opportunity to extend our technologies into clinical diagnostics in the future.

Speaker #1: Realizing that opportunity requires generating robust clinical evidence on large patient cohorts. We're continuing to make progress on our internal efforts to generate such evidence in oncology and in autoimmunity.

Speaker #3: We continue to build a stronger company operationally and financially, giving long term. Our technologies are at the nexus of some of the most powerful trends transforming biology and medicine.

Speaker #1: This quarter, we announced new partnerships with the Cleveland Clinic and with the Lausanne University Hospital, to identify biomarkers of response to therapy across multiple oncology indications.

Speaker #3: The upcoming years are going to be profoundly exciting, and we're uniquely well-positioned for the opportunity ahead. With that, I will turn the call over to Adam.

Speaker #1: Thanks, Serge. Unless otherwise noted, all growth rates referenced reflect year-over-year comparisons. Revenue for the second quarter was $151 million, as Serge mentioned when excluding the $1.6 million allocated to license and royalty revenue, our second-quarter revenue was $149.4 million.

Speaker #1: Taken together, this quarter demonstrates the strength of our strategy and continued execution across our business. We advanced the game-changing new platform, sustained strong momentum in our core consumables business, and deepened our engagement with customers through high-impact partnerships.

Speaker #1: We continue to build a stronger company operationally and financially, giving us the flexibility to invest for the long term. Our technologies are at the nexus of some of the most powerful trends transforming biology and medicine.

Speaker #1: This represents 3% growth over Q2 2025 when excluding the non-recurring settlement revenue in both periods. These results reflect continued momentum in the key drivers of our business.

Speaker #1: The upcoming years are going to be profoundly exciting, and we're uniquely well-positioned for the opportunities ahead. With that, I will turn the call over to Adam.

Speaker #1: Total consumables revenue was up 7%, with growth in both single-cell and spatial. Single-cell consumables revenue grew 3%, supported by double-digit growth in reaction volumes given accelerating momentum for flex apex.

Speaker #2: Thanks, Serge. Unless otherwise noted, all growth rates referenced reflect year-over-year comparisons. Revenue for the second quarter was $151 million. As Serge mentioned, when excluding the $1.6 million allocated to license and royalty revenue, our second quarter revenue was $149.4 million.

Speaker #1: Spatial consumables continued to perform well in the quarter, with revenue up 16%. We saw sequential consumables revenue growth for both Xenium and Visium, though Xenium continues to be the primary driver of spatial consumables growth.

Speaker #2: This represents 3% growth over Q2 2025 when excluding the non-recurring settlement revenue in both periods. These results reflect continued momentum in the key drivers of our business.

Speaker #1: Total instrument revenue declined 47%, with chromium instrument revenue down 46% and spatial instrument revenue down 48%, both primarily driven by a lower number of units sold.

Speaker #2: Total consumables revenue was up 7%, with growth in both single-cell and spatial. Single-cell consumables revenue grew 3%, supported by double-digit growth in reaction volumes given accelerating momentum for flex apex.

Speaker #1: As anticipated, the decline in spatial instruments reflects customers' moderating purchases of our current spatial products in anticipation of Atera, looking at revenue by geography.

Speaker #2: Spatial consumables continued to perform well in the quarter, with revenue up 16%. We saw sequential consumables revenue growth for both Xenium and Visium, though Xenium continues to be the primary driver of spatial consumables growth.

Speaker #1: Excluding the impact of non-recurring license and royalty revenue in both periods, America's revenue was up 6%. AMEA grew 15%, APAC revenue was down 19%.

Speaker #1: As a reminder, APAC benefited from approximately $4 million of temporary pull-forward in purchasing activity in China in the prior year period, as customers accelerated orders ahead of potential tariff changes.

Speaker #2: Total instrument revenue declined 47%, with chromium instrument revenue down 46%, and and spatial instrument revenue down 48%, both primarily driven by a lower number of units sold.

Speaker #1: Turning to the rest of the P&L, gross margin increased to 74% from 72% the prior year, the increase in gross margin was primarily driven by lower manufacturing costs.

Speaker #2: As anticipated, the decline in spatial instruments reflects customers' moderating purchases of our current spatial products in anticipation of Atera. Looking at revenue by geography, excluding the impact of non-recurring license and royalty revenue in both periods, America's revenue was up 6%.

Speaker #1: Which included $2.6 million of tariff refunds. As well as lower inventory write-downs, partially offset by a decrease in non-recurring license and royalty revenue. Excluding the impact of non-recurring settlement revenue in both periods, gross margins increased to 74% from 67% the prior year.

Speaker #2: AMEA grew 15%, APAC revenue was down 19%. As a reminder, APAC benefited from approximately $4 million of temporary pull-forward in purchasing activity in China in the prior year period, as customers accelerated orders ahead of potential tariff changes.

Speaker #1: Total operating expenses were $132.1 million, for the quarter, as compared to $95 million in the prior year period. The second quarters of 2026 and 2025 included gains on settlements related to patent litigation, of $3.4 million and $40.7 million respectively.

Speaker #2: Turning to the rest of the P&L, gross margin increased to 74% from 72% the prior year. The increase in gross margin was primarily driven by lower manufacturing costs.

Speaker #2: This included $2.6 million of tariff refunds, as well as lower inventory write-downs, partially offset by a decrease in non-recurring license and royalty revenue. Excluding the impact of non-recurring settlement revenue in both periods, gross margins increased to 74% from 67% in the prior year.

Speaker #1: Excluding these gains in both periods, operating expenses were approximately flat year over year. We ended the quarter with $552 million in cash, cash equivalents, and marketable securities, up $105 million year over year, and up $12 million sequentially.

Speaker #2: Total operating expenses were $132.1 million for the quarter, as compared to $95 million in the prior-year period. The second quarters of 2026 and 2025 included gains on settlements related to patent litigation of $3.4 million and $40.7 million, respectively.

Speaker #1: Turning to our outlook for the rest of the year, we are raising our full-year outlook and now expect 2026 revenue to be in the range of $610 million to $630 million.

Speaker #1: Excluding non-recurring revenue related to patent litigation settlements in both 2026 and 2025, this represents 2% to 5% growth over the full year 2025. The increase to our outlook reflects our performance in the first half, together with the benefit of the $1.6 million of settlement revenue recognized during the quarter.

Speaker #2: Excluding these gains in both periods, operating expenses were approximately flat year over year. We ended the quarter with $552 million in cash, cash equivalents, and marketable securities, up $105 million year over year, and up $12 million sequentially.

Speaker #1: As Serge mentioned, order volume for Atera has been very strong. We previously communicated that we expect to sell approximately 40 Atera instruments this year, weighted mostly towards the fourth quarter.

Speaker #2: Turning to our outlook for the rest of the year, we are raising our full-year outlook and now expect 2026 revenue to be in the range of $610 million to $630 million.

Speaker #1: As of the end of the second quarter, booked orders already greatly exceeded that full-year number. That said, our shipment outlook of approximately 40 units for the year remains unchanged, as we continue ramping production.

Speaker #2: Excluding non-recurring revenue related to patent litigation settlements in both 2026 and 2025, this represents 2% to 5% growth over the full year 2025. The increase to our outlook reflects our performance in the first half, together with the benefit of the $1.6 million of settlement revenue recognized during the quarter.

Speaker #1: Looking at our quarterly cadence, Atera demand is driving the transition dynamics we expected. As customers are moderating purchases of existing spatial products in anticipation of Atera, we expect this spatial transition dynamic to continue into the third quarter, resulting in a modest sequential step-down for our total revenue from Q2.

Speaker #2: As Serge mentioned, order volume for Atera has been very strong. We previously communicated that we expect to sell approximately 40 Atera instruments this year, weighted mostly towards the fourth quarter.

Speaker #1: We then expect a significant step up in the fourth quarter, as Atera shipments ramp and begin to contribute more meaningfully to revenue. Atera alone accounts for the large majority of the Q4 sequential increase implied by the midpoint of our full-year guidance, with normal seasonal Q4 strength across the rest of the portfolio closing the remainder of the difference.

Speaker #2: As of the end of the second quarter, booked orders already greatly exceeded that full-year number. That said, our shipment outlook of approximately 40 units for the year remains unchanged, as we continue ramping production.

Speaker #2: Looking at our quarterly cadence, Atera demand is driving the transition dynamics we expected. As customers are moderating purchases of existing spatial products in anticipation of Atera, we expect this spatial transition dynamic to continue into the third quarter, resulting in a modest sequential step-down for our total revenue from Q2.

Speaker #1: As we look to the second half, our priorities are unchanged. Delivering for our customers, executing with discipline, and strengthening our operating profile. That foundation allows us to keep investing across the portfolio, and the early enthusiasm we're seeing for Atera reinforces our conviction in that strategy.

Speaker #2: We then expect a significant step up in the fourth quarter, as Atera shipments ramp and begin to contribute more meaningfully to revenue. Atera alone accounts for the large majority of the Q4 sequential increase implied by the midpoint of our full-year guidance, with normal seasonal Q4 strength across the rest of the portfolio closing the remainder of the difference.

Speaker #1: With that, I'll turn the call back to Serge.

Speaker #2: Thanks, Adam. Before we open it up for questions, I want to thank the entire 10x team. This has been another good quarter of progress across the business.

Speaker #2: And none of it is ever an accident. The value we create in the business and the progress we make toward our mission is entirely a function of the hard work and commitment to excellence you demonstrate every day.

Speaker #2: As we look to the second half, our priorities are unchanged. Delivering for our customers, executing with discipline, and strengthening our operating profile. That foundation allows us to keep investing across the portfolio, and the early enthusiasm we are seeing for Atera reinforces our conviction in that strategy.

Speaker #2: I'm incredibly proud of what we have accomplished, and even more excited about what we're building for the future. Thank you. To everyone at 10x, for making the impossible possible.

Speaker #2: With that, we will now open it up for questions. Operator?

Speaker #2: With that, I'll turn the call back to Serge.

Speaker #3: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #3: Thanks, Adam. Before we open it up for questions, I want to thank the entire 10x team. This has been another good quarter of progress across the business.

Speaker #3: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimal sound quality.

Speaker #3: And none of it is ever an accident. The value we create in the business, and the progress we make toward our mission, is entirely a function of the hard work and commitment to excellence you demonstrate every day.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Kyle Mixon from Canaccord.

Speaker #3: I'm incredibly proud of what we have accomplished, and even more excited about what we're building for the future. Thank you. To everyone at 10x, for making the impossible possible.

Speaker #3: Your line is now open. Please go ahead.

Speaker #4: Hey, guys. Thanks for the questions. Congrats on the quarter. Multi-part question. First, on instruments. So on Atera, great to hear all the demand and the interest and all that.

Speaker #3: With that, we will now open it up for questions. Operator?

Speaker #1: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #4: But maybe why remain conservative with that expectation for the second half there? Is that primarily just the kind of the manufacturing capacity constraints kind of in the near term, or maybe just dive into that?

Speaker #1: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimal sound quality.

Speaker #4: And then thinking about a run rate for a quarterly placements, whatever you do in 4Q, is that a good way to think about kind of the jumping off point into 2027, like Q1 and so forth?

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Kyle Nixon from Canaccord.

Speaker #4: And secondly, just quickly, Serge, on AI, getting a lot of questions on kind of your differentiation. You obviously have a lot of strong push there, but what really set you apart 10x Apart to directly benefit from that?

Speaker #1: Your line is now open. Please go ahead.

Speaker #4: Hey, guys. Thanks for the questions. Congrats on the quarter. Multi-part question. First, on instruments. So on Atera, great to hear all the demand and the interest and all that.

Speaker #4: And can you talk about any tangible revenue that you've kind of recognized so far? Thanks.

Speaker #4: But maybe, why remain conservative with that expectation for the second half there? Is that primarily just kind of the manufacturing capacity constraints in the near term—or maybe just dive into that?

Speaker #1: Thanks, Kyle. So just like to your first question on Atera. So as we talked about in our prepared remarks, the demand has been extraordinary.

Speaker #4: And then thinking about a run rate for a quarterly placements, whatever you do in 4Q, is that a good way to think about kind of the jumping-off point into 2027, like Q1 and so forth?

Speaker #1: And that's not the constraint here, right? The constraint is actually shipping the manufacturing capacity to ship the units in the second half of the year.

Speaker #4: And secondly, just quickly, Serge, on AI, getting a lot of questions on kind of your differentiation. You obviously have a lot of strong push there, but what really set you apart 10x Apart to directly benefit from that?

Speaker #1: And we continue to expect to be able to ship 40, which is what we said last in the last call. And that still continues to be the case going forward.

Speaker #4: And can you talk about any tangible revenue that you've kind of recognized so far? Thanks.

Speaker #3: Your next question is from the line of Luke Sergott from Barclays. Your line is now open. Please go ahead.

Speaker #2: Thanks, Kyle. So just like a few first question on Atera. So as we talk about in our prepared remarks, the demand has been extraordinary.

Speaker #5: Great. Thanks for the question, guys. Just on the 3Q updated guide, you previously thought the 3Q would be roughly flat. Now you're talking about a little step-down here.

Speaker #2: And that's not the constraint here, right? The constraint is actually shipping—the manufacturing capacity to ship the units in the second half of the year.

Speaker #5: Just wanted to know what got pushed out or what changed there. And then secondly, on as you think about the Atera launch and also with, in conjunction with the Apex Flex, I mean, you got a lot of things going on.

Speaker #2: And we continue to expect to be able to ship 40, which is what we said in the last call, and that still continues to be the case going forward.

Speaker #5: So talk about the drivers here outside of Atera instrumentation launch for 4Q. You talked about about half of that coming from the Atera launch, but is that going to come from the Apex Flex on single-cell chromium?

Speaker #1: Your next question is from the line of Luke Sargat from Barclays. Your line is now open. Please go ahead.

Speaker #1: Yeah. So let me take the first sort of pieces of that, Luke. So I wouldn't say that things have changed. In fact, I just remind you that the Q3 that we're talking about here is consistent with what we said in our Q1 call.

Speaker #5: Great. Thanks for the question, guys. Just on the 3Q updated guide, you previously thought the 3Q would be roughly flat. Now you're talking about a little step-down here.

Speaker #5: I just wanted to know what got pushed out or what changed there. And then, secondly, as you think about the Atera launch and also, in conjunction with the Apex Flex, I mean, you've got a lot of things going on.

Speaker #1: So we've always known that Q3, from a transition dynamic perspective, in spatial would be the peak transition dynamics. And that's exactly what we're seeing.

Speaker #1: And part of it's a function of the enthusiasm that we've seen around Atera. So we had originally said back when we gave the original guide, Q1, and then it would be a step-down, and then Q2 and Q3 would look similar from a dollars perspective.

Speaker #5: So talk about the drivers here outside of Atera instrumentation launch for 4Q. You talked about about half of that coming from the Atera launch, but is that going to come from the Apex Flex on single-cell chromium?

Speaker #1: Now what we're saying is Q3 will look the same kind of as what we'd articulated back on the Q1 call. And so we're still anticipating a modest couple million dollars step-down from Q2 to Q3.

Speaker #2: Yeah. So let me take the first sort of pieces of that, Luke. So I wouldn't say that things have changed. In fact, I just remind you that the Q3 that we're talking about here is consistent with what we said in our Q1 call.

Speaker #1: And that really is just a function of what's happening both on spatial instruments, but also some a bit of spatial consumables as people are ramping up and getting prepared to receive their Ateras one thing I would just clarify in your question as it relates to Q4.

Speaker #2: So we've always known that Q3, from a transition dynamic perspective in spatial, would be the peak transition dynamics. And that's exactly what we're seeing.

Speaker #1: If you think about the 40 units that we've committed to get out the door into the hands of customers in RevRec here, and we've talked about sort of where list pricing is, Atera instruments alone get you most of the way.

Speaker #2: And part of it's a function of the enthusiasm that we've seen around Atera. So, we had originally said, back when we gave the original guide, Q1 and then it would be a step down, and then Q2 and Q3 would look similar from a dollars perspective.

Speaker #1: Almost entirely of the way from Q3 to Q4. That doesn't factor in Atera consumables. So if you sprinkle in a little bit of seasonal, what we would normally have anticipated, and I'm not talking about some expectation of a big budget flush.

Speaker #2: Now, what we're saying is Q3 will look the same, kind of as what we'd articulated back on the Q1 call. And so, we're still anticipating a modest, couple-million-dollar step down from Q2 to Q3.

Speaker #1: I'm just saying if you think about our normal Q3 to Q4 industry dynamics, that coupled with but most of it coming from the Atera launch with a little bit of that step-up from Q3 to Q4, I think you'll find it's a fairly reasonable step-up from Q3 to Q4.

Speaker #2: And that really is just a function of what's happening both on spatial instruments, but also some a bit of spatial consumables as people are ramping up and getting prepared to receive their Ateras.

Speaker #2: One thing I would just clarify in your question as it relates to Q4. If you think about the 40 units that we've committed to get out the door into the hands of customers in RevRec here, and we've talked about sort of where list pricing is, Atera instruments alone get you most of the way.

Speaker #3: Your next question is from the line of Tycho Peterson from Jefferies. Your line is now open. Please go ahead.

Speaker #5: Hey, thanks. Serge, what are you willing to say on manufacturing capacity for next year for Atera? I mean, that's a pretty common question. Obviously, 40 systems this year, but how quickly can you scale up manufacturing?

Speaker #2: Almost entirely all the way from Q3 to Q4. That doesn't factor in Atera consumables. So if you sprinkle in a little bit of seasonal—what we would normally have anticipated—and I'm not talking about some expectation of a big budget flush.

Speaker #5: Maybe just the next two to three years, and then how are you thinking about kind of initial pull-through from some of the early adopters?

Speaker #2: I'm just saying, if you think about our normal Q3 to Q4 industry dynamics, that coupled with but most of it coming from the Atera launch with a little bit of that step-up from Q3 to Q4, I think you'll find it's a fairly reasonable step-up from Q3 to Q4.

Speaker #5: How quickly can they get up to full utilization? And then I've got a follow-up. Thanks.

Speaker #1: Yeah, thanks, Tycho. So the team is working really hard to get to the official launch of the platform to start shipping. And like we said, yes, we have 40 that we're planning for this quarter for Q4.

Speaker #1: Your next question is from the line of Taiko Peterson from Jefferies. Your line is now open. Please go ahead.

Speaker #1: For the second half of the year. And as we are kind of moving into next year, we certainly expect to keep kind of building out our capacity.

Speaker #6: Hey, thanks. Serge, what are you willing to say on manufacturing capacity for next year for Atera? I mean, that's a pretty common question. Obviously, 40 systems this year, but how quickly can you scale up manufacturing?

Speaker #1: We're building Ateras on the backs of a lot of investments we made over the years into the operational infrastructure and supply chain expertise. And so all of that will be brought to bear as we scale up and move into next year and beyond.

Speaker #6: Maybe just the next two to three years. And then how are you thinking about kind of initial pull-through from some of the early adopters?

Speaker #6: How quickly can they get up to full utilization? And then I've got a follow-up. Thanks.

Speaker #2: Yeah, thanks, Taich. So the team is working really hard to get to the official launch of the platform, to start shipping. And like we said, yes, we have 40 that we're planning for this quarter, for Q4.

Speaker #1: So we feel really good about being able to scale up capacity over time, to meet the demand as appropriate. So as far as pull-through is concerned, we feel really good about the interest in the platform.

Speaker #2: For the second half of the year. And as we are kind of moving into next year, we certainly expect to keep kind of building out our capacity.

Speaker #1: It's way too early to talk about precise estimates before we even get instruments out there and people actually start running them. That said, of course, we are focused on kind of engaging customers that are in particular eager to use the platform and particularly eager to ramp up sooner rather than later.

Speaker #2: We're building Ateras on the backs of a lot of investments we made over the years into the operational infrastructure and supply chain expertise. And so all of that will be brought to bear as we scale up and move into next year and beyond.

Speaker #1: So yeah, we feel good about the potential of utilization here. Just for kind of calibration, max utilization of Atera is somewhere between depending on the kinds of assays you run, between 1.5 million and 2, 3 million or so, depending on the assays is about 2x that of Xenium.

Speaker #2: So we feel really good about being able to scale up capacity over time, to meet the demand as appropriate. So as far as pull-through is concerned, we look really good about the interest in the platform.

Speaker #1: So there is plenty of room to be for people to make use of these instruments. Again, a little too early to give precise numbers, but feeling quite optimistic about the trajectory at this stage.

Speaker #2: It's way too early to talk about precise estimates before we even get instruments out there and people actually start running them. That said, of course, we are focused on kind of engaging customers that are in particular eager to use the platform and particularly eager to ramp up sooner rather than later.

Speaker #5: Okay. And then follow-up on single-cell. I mean, just thinking next year, the street's got 4% growth in chromium consumables. I mean, pricing stabilized. These are big perturbancy studies.

Speaker #5: Getting underway. Why couldn't it be double digits? Can you just talk a little bit about how you're thinking about the next couple of years for chromium?

Speaker #2: the potential of utilization here. Just for kind of calibration, max utilization of Atera is somewhere between depending on the kinds of assays you run, between 1.5 million and 2, 3 million or so, depending on the assays is about 2x that of Xenium.

Speaker #1: Yeah, I mean, look, a little too early to talk about the next couple of years. We're in the middle of a fairly mature transition year right now because of the Flux Apex dynamic.

Speaker #2: So there is plenty of room to be for people to make use of these instruments. Again, a little too early to give precise numbers, but feeling quite optimistic about the trajectory at this stage.

Speaker #1: Apex has been has had a good momentum. So far since launch, towards the end of Q4. Last year. And it's been having a really nice growth so far this year.

Speaker #6: Okay. And then follow-up on single-cell. I mean, just thinking next year, the street's got 4% growth in chromium consumables. I mean, pricing stabilized. These are big perturb-seek studies.

Speaker #1: Based on the funnel, we expect the Apex to be even higher percentage of reactions as we go into second half. And kind of our expectation as we proceed through this year is by the end of the year, the large majority of people who would convert to Flux from our kind of existing other products will have converted, which should put us in a good spot.

Speaker #6: Getting underway. Why couldn't it be double digits? Can you just talk a little bit about how you're thinking about the next couple of years for chromium?

Speaker #2: Yeah, I mean, look, a little too early to talk about the next couple of years. We're in the middle of a fairly mature transition year right now because of the Flex Apex dynamic.

Speaker #2: Apex has been has had a good momentum. So far since launch, towards the end of Q4. Last year. And it's been having a really nice growth so far this year.

Speaker #1: For subsequent quarters and years, going forward.

Speaker #3: Your next question comes from the line of Dan Arias from Stiefel. Your line is now open. Please go ahead.

Speaker #2: Based on the funnel we expect the Apex to be even higher percentage of reactions as we go into second half. And kind of our expectation as we proceed through this year is by the end of the year, the large majority of people who would convert to Flex from our kind of existing other products will have converted, which should put us in a good spot.

Speaker #4: Yeah, hi guys. Thanks for the questions here. Serge, maybe a bit of a technical question on Atera. When you guys do your assessments of the platform sensitivity, what portion of the time are you finding that sensitivity is higher than Xenium?

Speaker #4: I mean, I'm not trying to geek out here, but I am curious about just the degree to which potential customers are able to appreciate an advantage on performance just in order to get them over the hump on a purchase decision.

Speaker #4: It seems like it varies depending on where in the transcriptom you look. So I guess I'm just curious about what the overall view would be when you compare the two platforms.

Speaker #2: For subsequent quarters and years, going forward.

Speaker #4: And then how that translates to sales messaging.

Speaker #1: Your next question comes from the line of Dan Arias from Stiefel. Your line is now open. Please go ahead.

Speaker #1: Yeah. I mean, there's a lot of nuance, obviously, to these kinds of comparisons. But the high-level picture is unambiguously, like we've sort of not real caveats.

Speaker #4: hi guys. Thanks for the questions here. Serge, maybe a bit of a technical question on Atera. When you guys do your assessments of the platform sensitivity, what portion of higher than Xenium?

Speaker #1: The Atera sensitivity is substantially higher than Xenium's. Now, it's important to be comparing apples to apples when it comes to various assays. And certainly for the very targeted panels, if you care about specific genes, you can really boost your sensitivity on Xenium.

Speaker #4: I mean, I'm not trying to geek out here, but I am curious about just the Yeah, degree to which potential customers are able to appreciate an advantage on performance just in order to get them over the hump on a purchase decision.

Speaker #4: It seems like it varies depending on where in the transcriptom you look. So I guess I'm just curious about what the overall view would be when you compare the two platforms.

Speaker #1: And you can do that on Atera as well. If you're comparing kind of wider-use assays, for example, whole transcriptom, on Atera, you're able to get to single-cell sensitivity, which with large Flux kinds of panels on Xenium is you can't really do that.

Speaker #4: And then how that translates to sales messaging.

Speaker #2: Yeah. I mean, there's a lot of nuance, obviously, to these kinds of comparisons. But the high-level picture is unambiguously, like we've sort of not real caveats.

Speaker #1: So very, very high sensitivity. And you can remember, with Atera, you can also augment it with additional custom content if you need to boost any genes further.

Speaker #2: The Atera sensitivity is substantially higher than Xenium. Now, it's important to be comparing apples to apples when it comes to various assays. And certainly for the very targeted panels, if you care about specific genes, you can really boost your sensitivity on Xenium.

Speaker #1: And overall, yes, we feel really, really strong about this platform. There's going to be some comparisons maybe. This is a kind of early days of the platform.

Speaker #1: We specifically released some early data sets out there to give people a flavor of what the platform is able to accomplish. There is still work that's going on in R&D to keep improving the specs of the platform.

Speaker #2: And you can do that on Atera as well. If you're comparing kind of wider-use assays, for example, whole transcriptome, on Atera, you're able to get to single-cell sensitivity, which large Flex kinds of panels on Xenium is you can't really do that.

Speaker #1: By and large, even based on the data sets that we have released so far, the feedback from the community has been overwhelmingly positive. Both really well for the trajectory of the platform.

Speaker #2: So, very, very high sensitivity. And you can remember, with Atera, you can also augment it with additional custom content if you need to boost any genes further.

Speaker #4: Okay. Thank you.

Speaker #1: Yeah.

Speaker #3: Your next question comes from the line of Subbu Nambi from Guggenheim Securities. Your line is now open. Please go ahead.

Speaker #2: And overall, yes, we feel really, really strong about this platform. There's going to be some comparisons maybe. This is a kind of early days of the platform.

Speaker #4: Hi guys. This is Thomas Von for Subbu. Thanks for taking our question. Given there's normally hiccups with the first iteration of any product launch, what feedback are you hearing from customers who might still be on the sidelines?

Speaker #2: We specifically released some early datasets out there to give people a flavor of what the platform is able to accomplish. There's still work that's going on in R&D to keep improving the specs of the platform.

Speaker #4: And then how are you thinking about the roadmap for the rest of this year after the first placements to make this transition smooth for those customers?

Speaker #4: Thanks.

Speaker #2: By and large, even based on the datasets that we have released so far, the feedback from the community has been overwhelmingly positive. Bodes really well for the trajectory of the platform.

Speaker #1: Yeah, look, obviously, like I said earlier, a lot of demand for the platform. So this has been really, really great to see from the reactions from customers.

Speaker #1: Lots of interest. Lots of eagerness. Very few conversations these days that when I engage with a customer, someone is not trying to lobby to get units earlier rather than later.

Speaker #4: Okay. Thank you.

Speaker #2: Yeah.

Speaker #1: Your next question comes from the line of Subbu Nambi from Guggenheim Securities. Your line is now open. Please go ahead.

Speaker #1: So that from that perspective, from the demand perspective, not really an issue. In terms of product performance, once it's out there in the field, important something, really important question, something we take incredibly seriously.

Speaker #5: Hi guys. This is Thomas Hun for Subbu. Thanks for taking our question. Given there's normally hiccups with the first iteration of any product launch, what feedback are you hearing from customers who might still be on the sidelines?

Speaker #5: And then how are you thinking about the roadmap for the rest of this year after the first placements to make this transition smooth for those customers?

Speaker #1: Obviously, we have had a lot of experience with product development and with delivering game-changing platforms that work really well to the field. And Atera in particular, something that we have been working on for a very long time.

Speaker #5: Thanks.

Speaker #2: Yeah, look, obviously, like I said earlier, a lot of demand for the platform. So this has been really, really great to see from the reactions from customers.

Speaker #1: I talked about that in the last call. We've been talking about that since then. And we do a lot of testing, a lot of buttoning up of all the different elements before we ship our products.

Speaker #2: Lots of interest. Lots of eagerness. Very few conversations these days that when I engage with a customer, someone is not trying to lobby to get units earlier rather than later.

Speaker #1: And particularly true of Atera. And the team has been making tremendous progress. So we feel really good about where things are headed, about the product, and what based on what we're seeing internally as well.

Speaker #2: So from that perspective, from the demand perspective, it's not really an issue. In terms of product performance, once it's out there in the field, that's an important question—really important, and something we take incredibly seriously.

Speaker #1: And so in many ways, we expect it to be very similar to our previous successful launches. Again, it's not better given all the experience that we have, all the work that has gone in, all the investment that has gone into Atera.

Speaker #2: Obviously, we have had a lot of experience with product development and with delivering game-changing platforms that work really well to the field. And Atera in particular, something that we have been working on for a very long time.

Speaker #1: Specifically. And of course, on the roadmap, we've talked about many elements of that, making big investments, going forward as well. There's going to be a lot more coming on the software side, more content, more panels.

Speaker #2: I talked about that in the last call. We've been talking about that since then. And we do a lot of testing, a lot of buttoning up of all the different elements before we ship our products.

Speaker #1: There's going to be additional capability around automation. Proteomics, multiomics, base-by-base sequencing, so yes, there is a lot to be said for the platform right out of the gate, as we're seeing by the reactions.

Speaker #2: And particularly true of Atera. And the team has been making tremendous progress. So we feel really good about where things are headed, about the product, and what based on what we're seeing internally as well.

Speaker #2: And so in many ways, we expect it to be very similar to our previous successful launches. Again, it's not better given all the experience that we have, all the work that has gone in, all the investment that has gone into Atera.

Speaker #1: And there's going to be a lot more to be said over the coming quarters of years as we deliver more capabilities.

Speaker #3: Your next question comes from the line of Michael Riskin from Bank of America. Your line is now open. Please go ahead.

Speaker #2: Specifically. And of course, on the roadmap, we've talked about many elements of that, making big investments, going forward as well. There's going to be a lot more coming on the software side, more content, more panels.

Speaker #4: Hey, thanks guys. I want to go back to Chromium and the single-cell platform. Chromium consumables are kind of flat effectively quarter over quarter, just sequentially start the year.

Speaker #2: There's going to be additional capability around automation. Proteomics, Multiomics, base-by-base sequencing, so yes, there is a lot to be said for the platform right out of the gate as we're seeing by the reactions.

Speaker #4: And instruments were a little bit on the lighter side. I understand a lot of the focus on spatial and maybe Xenium but just we'll have to dug into more into what you're seeing there.

Speaker #4: You've got things like the billion-cell atlas ongoing. You've got things like perturb seek ongoing. You've been talking about AI-driven drug discovery, which I think should tap into single-cell a lot.

Speaker #2: And there's going to be a lot more to be said over the coming quarters of years as we deliver more capabilities.

Speaker #4: Just sort of why are you seeing a lot of it stronger numbers in Chromium? Is it all really tied to Flux or is there anything else going on?

Speaker #1: Your next question comes from the line of Michael Riskin from Bank of America. Your line is now open. Please go ahead.

Speaker #4: And maybe if you could just quantify what you're seeing give us any tangible metrics that we could sort of latch onto for AI-driven demand just so we could sort of figure out how big it is for you right now in QQ.

Speaker #5: Hey, thanks, guys. I want to go back to Chromium and the single-cell platform. Chromium consumables are kind of flat, effectively, quarter over quarter—just sequentially, to start the year.

Speaker #4: Thanks.

Speaker #1: Yeah, Mike, thanks for the question. So yeah, I mean, on single-cell, I would say the first order dynamic by far is that sort of transition that I talked about earlier.

Speaker #5: And instruments were a little bit on the lighter side. I understand a lot of focus on spatial and maybe Xenium but just we'll have to dug into more into what you're seeing there.

Speaker #5: You've got things like the billion-cell atlas ongoing. You've got things like perturb seek ongoing. You've been talking about AI. Driven drug discovery, which I think should tap into single-cell a lot.

Speaker #1: The rise of Flux APACs and transition of some of the other products to that assay. Again, it's been having it's had really nice pickup, a really nice momentum.

Speaker #5: Just sort of why are you seeing a lot of it stronger numbers in Chromium? Is it all really tied to Flex or is there anything else going on?

Speaker #1: We expect that to continue. And as a result of that, yeah, the volume growth has been quite consistent and very robust and very encouraging.

Speaker #5: And maybe if you could just quantify what you're seeing give us any tangible metrics that we could sort of latch onto for AI-driven demand just so we could sort of figure out how big it is for you right now in QQ.

Speaker #1: And a lot of the growth is in fact driven being driven by kind of emergence of AI applications and also more larger-scale experiments that involve larger cohorts and kind of distributed sample collection that Flux is particularly great for.

Speaker #5: Thanks.

Speaker #2: Yeah, Mike, thanks for the question. So yeah, I mean, on single-cell, I would say the first order dynamic by far is that sort of transition that I talked about earlier.

Speaker #1: That also has a bit of an influence in fact on instruments in a sense that because of the capability enabled by Flux of having this distributed sample collection and then centralization of processing, that naturally leads to more centralization to our service providers, to core labs, to big labs.

Speaker #2: The rise of Flex APAX and transition of some of the other products to that assay. Again, it's been having it's had really nice pickup, a really nice momentum.

Speaker #2: We expect that to continue. And as a result of that, yeah, the volume growth has been quite consistent and very robust and very encouraging.

Speaker #1: Which kind of reduces the necessity to be placing instruments at every single lab. And also at this point, we do have a lot of Chromium instruments out there.

Speaker #2: And a lot of that growth is in fact driven being driven by kind of emergence of AI applications and also more larger scale experiments that involve larger cohorts and kind of distributed sample collection that Flex is particularly great for.

Speaker #1: So accessibility is generally not an issue. At all. So yeah, so overall, the dynamics around single-cell are very similar to what we've been describing for the last couple of quarters.

Speaker #2: That also has a bit of an influence, in fact, on instruments, in the sense that because of the capability enabled by Flex of having distributed sample collection and then centralization of processing, that naturally leads to more centralization towards service providers, to core labs, to big labs.

Speaker #1: And we expect that to continue in the over the rest of the year. And I do expect, like I said earlier, yeah, all the people or large majority of the people who intend to transition to APACs, will have largely done so by the end of the year.

Speaker #1: And that should put us in a good position to keep driving that sort of robust reaction growth, but also having it be translated into more top-line impact as well.

Speaker #2: Which kind of reduces the necessity to be placing instruments at every single lab. And also at this point, we do have a lot of Chromium instruments out there.

Speaker #2: So accessibility is generally not an issue. At all. So yeah, so overall, the dynamics around single-cell are very similar to what we've been describing for the last couple of quarters.

Speaker #1: As far as AI question is concerned, so I mean, there's a lot there's a lot of layers to that. And I think it's really, really important to set context here, which is what I did earlier as well with my prepared remarks.

Speaker #2: And we expect that to continue in the over the rest of the year. And I do expect like I said earlier, yeah, all the people or large majority of the people who intend to transition to APAX will have largely done so by the end of the year.

Speaker #1: Like I said earlier, and I think there's a wide sort of recognition of that, that AI is now a major structural tailwind for us.

Speaker #1: And because what these big AI models need is precisely what we have built. Over the years. And AI at this point, one way in one shape or form, it's becoming pervasive across just about all of our customer segments.

Speaker #2: And that should put us in a good position to keep driving that sort of robust reaction growth, but also to have it translate into more top-line impact as well.

Speaker #1: At this point, there isn't really a large project out there where AI isn't either a big driver or at least an important influencer. And even small-scale projects I think in many instances are performed with an eye toward feeding the data into AI models.

Speaker #2: As far as as far as AI question is concerned, so I mean, there's a lot there's a lot of layers to that. And I think it's really a really important to set context here, which is what I did earlier as well with my prepared remarks.

Speaker #1: And so in some cases, AI is a driver of demand. In some cases, it's an influencer. And sometimes an accelerator. And what that means, right, one issue here is that AI can mean a lot of different things.

Speaker #2: Like I said earlier, and I think there's like a wide sort of recognition of that, that AI is now a major structural tailwind for us.

Speaker #2: And because what these big AI models need is precisely what we have built over the years. And AI, at this point, in one way or another, is becoming pervasive across just about all of our customer segments.

Speaker #1: And also the landscape is changing quite fast. And so that's why I want specifically in a bit more detail in explaining how AI, for example, is used potentially in drug in the context of drug development for the parts specifically to measure biology.

Speaker #2: At this point, there isn't really a large project out there where AI isn't either a big driver or at least an important influencer.

Speaker #1: If you think about drug development at the three kind of highest stages of drug development, target ID, to understand the biology, of what targets to go after, the chemistry, the middle part actually making the drug, the molecule, and then figuring out which patients to give the drug to.

Speaker #2: And even small scale projects I think in many instances are performed with an eye toward feeding the data into AI models. And so in some cases, AI is a driver of demand.

Speaker #2: In some cases, it's an influencer. And sometimes an accelerator. And what that means, right, one issue here is that AI can mean a lot of different things.

Speaker #1: That middle part is chemistry, where a lot of current AI sort of investments up to now have been focused. But the big, big opportunity is really around the biology, the target ID and patient selection.

Speaker #2: And also the landscape is changing quite fast. And so that's why I want specifically in a bit more detail in explaining how AI, for example, is used potentially in drug in the context of drug development for the parts specifically to measure biology.

Speaker #1: And that's where our tools are becoming are really, really compelling and are becoming increasingly important. And so there are some parts of our revenue where unambiguously AI revenue is coming from those, like tech bio companies.

Speaker #2: If you think about drug development, that the three kind of highest stages of drug development target ID, to understand the biology, of what targets to go after the chemistry, the middle part actually making the drug, the molecule, and then figuring out which patients to give the drug to.

Speaker #1: Some large academic projects. But there's also others, whether it's a mix. Big pharma companies that are we know are developing these AI models of biology, but also using our products for other goals.

Speaker #1: And same thing in academia. And so there's a mix. So right now, at the stage, I'd say it's still very early. But the opportunity is massive.

Speaker #2: That middle part is chemistry, where a lot of current AI investments up to now have been focused. But the big, big opportunity is really around the biology.

Speaker #1: And our products and technologies are particularly well positioned for this opportunity. And as we go forward and as these categories grow, we'll provide more granular color.

Speaker #2: The target ID and patient selection. And that's where our tools are becoming are really, really compelling. And are becoming inclusively important. And so there are some parts of our revenue where unambiguously AI revenue is coming from those like tech bio companies.

Speaker #1: On them and how to think about sort of numbers around them.

Speaker #2: Sergey, the only thing I think I would just add just to the point you're making around centralization for on Chromium instruments, obviously we're focused on driving every part of our business.

Speaker #2: Some large academic projects. But there's also others, whether it's a mix. Big pharma companies that are we know are developing these AI models of biology, but also using our products for other for other goals.

Speaker #2: But I think that distinguishing between sort of demand for instruments versus demand for the platform and driving the volume and the activity that we're doing for Chromium consumables, I mean, just for context, if you remember that Chromium instruments is about 2% of sales.

Speaker #2: And same thing in academia. And so there's a mix. So right now at the stage, I'd say it's still very early, but opportunity is massive.

Speaker #2: So just kind of important context as we're thinking about the total business.

Speaker #2: And our products and technologies are particularly well positioned for this opportunity. And as we go forward and as these categories grow, we'll provide more granular color.

Speaker #3: Your next question comes from the line of Matt Leroux from William Blake. Your line is now open. Please go ahead.

Speaker #4: I could ask you referenced a number of the larger projects you're working on with respect to AI and also on the translational side. And in some cases, customers adopting or increasing use of multiple platforms.

Speaker #2: On them and how to think about sort of numbers around them.

Speaker #1: Sergey, the only thing I think I would just add just to the point you're making around centralization for on Chromium instruments, obviously we're focused on driving every part of our business, but I think that distinguishing between sort of demand for instruments versus demand for the platform and driving the volume and the activity that we're doing for Chromium consumables, I mean, just for context, if you remember that Chromium instruments is about 2% of sales.

Speaker #4: I'm curious, as you're having these discussions about larger projects, multi-year projects, kind of how important the suite of products that you have and software and analysis tools where there's perhaps some integration or at least familiarity and how that kind of ecosystem might be having an effect as customers think about larger projects versus the merits of the platforms.

Speaker #1: So just kind of important context as we're thinking about the total business.

Speaker #3: Your next question comes from the line of Matt LeRue from William Blitt. Your line is now open. Please go ahead.

Speaker #4: On their own.

Speaker #4: Hi, good afternoon. You referenced a number of the larger projects you're working on with respect to AI and also on the translational side. And in some cases, customers adopting or increasing use of multiple platforms.

Speaker #1: Yeah. A really interesting question. Well, the first order as I would say is that the platforms by themselves, whether you look at single-cell and spatial, have really strong merits just to stand on their own.

Speaker #4: I'm curious, as you're having these discussions about larger projects, multi-year projects, kind of how important the suite of products that you have and software and analysis tools where there's perhaps some integration or at least familiarity and how that kind of ecosystem might be having an effect as customers think about longer-term projects versus the merits of the platforms.

Speaker #1: I would say, and certainly is really appealing in many ways to our customers. If you think about, for example, Flux APACs, really, really high sensitivity, incredible scalability, huge robustness.

Speaker #1: This is actually really important for AI in particular set of point where it works across many different tissue types, many different cell types, many different contexts.

Speaker #1: And increasingly, it's becoming critical. So if you want to build AI models that are useful, that generalize, you really need to be able to measure lots of different contexts.

Speaker #4: On their own.

Speaker #2: Yeah. A really interesting question. Well, the first order and I would say is that the platforms by themselves, whether you look at single-cell and spatial, have really strong merits just to stand on their own.

Speaker #1: You can't be measuring the same cell line over and over again. For example, and Flux is incredibly great for that. We'll also another sort of emerging trend is and maybe it's a little bit your question too here is multi-omics being able to measure other modalities.

Speaker #2: I would say and certainly is really appealing in many ways to our customers. If you think about, for example, Flux APAX, really, really high sensitivity, incredible scalability, huge robustness.

Speaker #1: And again, we have unmatched strengths in that along that dimension. And yeah, certainly there is an attractiveness to be able to do to train your models from a spatial perspective as well as from single-cell.

Speaker #2: This is actually really important for AI in particular saddle point where it works across many different tissue types, many different cell types, many different contexts.

Speaker #1: And we certainly provide kind of these kinds of solutions to our customers. And also yes, on the software side, something we haven't talked that much about, but of course we have invested in software fairly materially from the beginning of really the beginning of the company.

Speaker #2: And increasingly, it's becoming critical. So if you want to build AI models that are useful, that generalize, you really need to be able to measure lots of different contexts.

Speaker #2: You can't be measuring the same cell line over and over again. For example, and Flux is incredibly great for that. We'll also another sort of emerging trend is and maybe it's a little bit your question too here is multi-omics being able to measure other modalities.

Speaker #1: And in particular, it's becoming important here because the data sets with APACs and with Atera are getting to be very large, especially for training AI models.

Speaker #2: And again, we have unmatched strengths in that on along that dimension. And yeah, certainly there is an attractiveness to be able to do to train your models from a spatial perspective as well as from single cell.

Speaker #1: And we have made quite a number of advances specifically to enable people to run larger scale experiments in a straightforward kind of ergonomic manner.

Speaker #1: So all of these pieces together do kind of tie out to provide really compelling solutions for our customers. Certainly, much, much more compelling than any other potential alternative on the market.

Speaker #2: And we certainly provide kind of these kinds of solutions to our customers. And also yes, on the software side, something we haven't talked that much about, but of course we have invested in software fairly materially from the beginning of really the beginning of the company.

Speaker #3: Your next question is from the line of Casey Woodring from JP Morgan. Your line is now open. Please go ahead.

Speaker #2: And in particular, it's becoming important here because the data sets with APAX and with Atera are getting to be very large, especially for training AI models.

Speaker #4: Hi, this is Jaden Onn for Casey. Thank you so much for taking my question. I had one just on the broader market trends. Could you unpack what you're seeing across your academic end market?

Speaker #2: And we have made quite a number of advances specifically to enable people to run larger scale experiments in a straightforward kind of ergonomic manner.

Speaker #4: We've been hearing that some academic customers are beginning to receive grant approvals, but that funding has not yet fully flowed through to purchasing activity.

Speaker #2: So all of these pieces together do kind of tie out to provide really compelling solutions for our customers. Certainly, much, much more compelling than any other potential alternative on the market.

Speaker #4: Is that like consistent with what you're seeing? And how much of that are you thinking about the timing for potential improvement in that end market?

Speaker #4: For the rest of the year and would that be upside to the guide? Thanks.

Speaker #1: Yeah. Good question too. So it's kind of interesting. It almost feels like groundhog that a little bit. Because we've been in this kind of 10 years environment for a while now, where people are hoping and expecting that things will improve.

Speaker #3: Your next question is from the line of Casey Woodring from JP Morgan. Your line is now open. Please go ahead.

Speaker #4: Hi, this is Jaden On for Casey. Thank you so much for taking my question. I had one just on the broader market trends. Can you unpack what you're seeing across your academic end market?

Speaker #1: And to some extent, the sentiment has been in the expectation has been getting somewhat better. But I think the story is largely the same as it was last quarter.

Speaker #4: We've been hearing that some academic customers are beginning to receive grant approvals, but that funding has not yet fully flowed through to purchasing activity.

Speaker #1: Improvement in sentiment, but the environment, again, is still 10 years and the dollars are still not flowing out, at least as far as the spending decisions are concerned.

Speaker #4: Is that like consistent with what you're seeing? And how much of that are you thinking about the timing for potential improvement in that end market?

Speaker #1: So I would say still the same kind of various issues that have been at play for a while. Where even if you see sort of at the very highest level, the dollars are kind of appearing there in terms of funding, they don't actually impact purchasing because of how these dollars are allocated.

Speaker #4: For the rest of the year and would that be upside to the guide? Thanks.

Speaker #2: Yeah. Good question too. So it's kind of interesting. It almost feels like Groundhog Day a little bit. Because we've been in this kind of 10 years environment for a while now, where people are hoping and expecting that things will improve.

Speaker #1: For example, because of multi-year funding or the sort of increased oversight of the review process that kind of puts kind of some sand in the gears.

Speaker #2: And to some extent, the sentiment has been in the expectation has been getting somewhat better. But I think the story is largely the same as it was last quarter.

Speaker #1: And just general shortage of staffing and things like that for grant reviews and order processing that we're hearing and keep hearing from our customers.

Speaker #2: Improvement in sentiment, but the environment again is still 10 years and the dollars are still not flowing out at least as far as the spending decisions are concerned.

Speaker #1: So I would say the environment is roughly similar to what it has been before.

Speaker #2: Yeah. And I would just add to that in the context of the guide, we're not anticipating things get any better. Right? So to the extent that there's some improvement, not just a broader macro comment I would make is that we're anticipating kind of in the guide that we've raised, that the macro sort of stays the same with what we've been seeing.

Speaker #2: So I would say still the same kind of various issues that have been a play for a while. Where even if you see sort of at the very highest level, the dollars are kind of appearing there in terms of funding, they don't actually impact purchasing because of how these dollars are allocated.

Speaker #2: And it's been fairly consistent. And that's the way that we're thinking about our guidance.

Speaker #2: For example, because of multi-year funding or the other sort of increased oversight of the review process that kind of puts kind of some sand in the gears.

Speaker #3: Your next Westenberg from Piper Sampler. Your line is now open. Please go ahead.

Speaker #2: And just general shortage of staffing and things like that for grant reviews and order processing that we're hearing, and keep hearing, from our customers.

Speaker #5: Hi, this is Sky on for Dave. Thanks for taking the question. Could you talk a little bit more about the commercial landscape of Atera and what it might look like going forward?

Speaker #2: So I would say the environment is roughly similar to what it has been before.

Speaker #5: Is it being sold by the existing Salesforce, or is there a specialized team? And do you anticipate needing to expand the sales count there?

Speaker #1: Yeah. And I would just add to that in the context of the guide, we're not anticipating Thanksgiving any better. Right? So to the extent that there's some improvement, that's just a broader macro comment I would make is that we're anticipating kind of in the guide that we've raised that the macro sort of stays the same with what we've been seeing.

Speaker #5: And then also, are there any incentives to in place to kind of steer union or Visium customer prospects towards Matera or Atera, sorry. Thanks.

Speaker #1: And it's been fairly consistent. And that's the way that we're thinking about our guidance.

Speaker #1: Yeah. So yeah, good question. I mean, commercially, if you remember two years ago now, almost two years ago now, we did a major restructuring of our Salesforce.

Speaker #3: Your next question is from the line of David Westenberg from Piper Sampler. Your line is now open. Please go ahead.

Speaker #1: And we specifically created a team focused on CAPEX sales. And that has actually put us in a really good position now with the arrival of Atera, to have a team that specifically focused on Atera instruments, to introduce them to the market and to drive sales.

Speaker #5: Hi, this is Sky on for Dave. Thanks for taking the question. Could you talk a little bit more about the commercial landscape of Atera and what it might look like going forward?

Speaker #5: Is it being sold by the existing Salesforce or is there a specialized team? And do you anticipate needing to expand the sales count there?

Speaker #1: We are also leveraging the rest of our team to reach out to customers much more broadly and have the teams kind of work in concert to drive Atera into the market.

Speaker #5: And then also, are there any incentives in place to kind of steer union or Visium customer prospects towards Atra or Atera, sorry. Thanks.

Speaker #2: Yeah. So yeah, good question. I mean, commercially, if you remember two years ago now, almost two years ago now, we did a major restructuring of our Salesforce.

Speaker #1: I think your other question was any special incentives to drive customers to Atera? No. I mean, look, first of all, our focus is always to make sure that customers are that we satisfy the applications needs that they have and kind of provide them with the right solution.

Speaker #2: And we specifically created a team focused on CAPEX sales, and that has actually put us in a really good position now with the arrival of Atera, to have a team that's specifically focused on Atera instruments, to introduce them to the market and to drive sales.

Speaker #1: And every case, and we've been sales team has been selling all of our solutions and certainly the amount of excitement around Atera is there, but it's driven fundamentally by customer demand.

Speaker #2: We are also leveraging the rest of our team to reach out to customers much more broadly and have the teams kind of work in concert to drive Atera into the market.

Speaker #3: Your next question is from the line of Puneet Soda. From Lerank, your line is now open. Please go ahead.

Speaker #2: I think your other question was any special incentives to drive customers to Atera? No. I mean, look, first of all, our focus is always to make sure that customers are yeah, that we satisfy the applications needs that they have and kind of provide them with the right solution.

Speaker #4: Yeah. Hi, Serge and team. Thanks for taking my questions here. If I could ask on again, Atera, obviously, really powerful instrument, but just wanted to get a sense of how are you incentivizing the broader lapse beyond the top labs and institutes that are already interested in Atera and likely in the first 40 that are likely going to get it?

Speaker #2: In every case. And we've been Sales team has been selling all of our solutions and certainly the amount of excitement around Atera is there, but it's driven fundamentally by customer demand.

Speaker #4: Are you incentivizing them with any discounts? And are there any discounts for the broader labs on Xenium? Just wanted to get that. Are any change in pricing that you're expecting here in the near term?

Speaker #3: Your next question is from the line of Puneet Soda from Leerank. Your line is now open. Please go ahead.

Speaker #4: And then on just given the funding of the capital equipment remains challenging in the current time, so I want to check there. And then on the AI side, I mean, it does appear that the biology foundation models or the virtual cell models were required funding in the scale of 100 million dollars or something closer.

Speaker #4: Yeah, hi, Serge and team. Thanks for taking my questions here. If I could ask on again, Atera, obviously, really powerful instrument, but just wanted to get a sense of how are you incentivizing the broader lapse beyond the top labs and institutes that are already interested in Atera and likely in the first 40 that are likely going to get it?

Speaker #4: In order to build the data for those models, can you maybe just elaborate on what are the line of sight to the major large grants or funding sources right now that you see and the timing for those to land into 10x revenue?

Speaker #4: Are you incentivizing them with any discounts? And are there any discounts for the broader labs on Xenium? Just wanted to get that or any change in pricing that you're expecting here in the near term?

Speaker #4: Thank you.

Speaker #1: Yeah. Thanks, Puneet. So first of all, there's a bunch of those questions. First of all, on the Atera, you look, obviously, early days, but the demand has been really, really strong kind of across the board.

Speaker #4: And then on just given the funding of the capital equipment remains challenging in the current time, so I want to check there. And then on the AI side, I mean, it does appear that the biology foundation models or the virtual cell models were require funding in the scale of 100 million dollars or something closer.

Speaker #1: Not just sort of your kind of early technology people, but much wider than that. And so that's really encouraging. For example, biopharma is a early days, but like a disproportionate customer here.

Speaker #4: In order to build the data for those models, can you maybe just elaborate on what are the line of sight to the major large grants or funding sources right now that you see and the timing for those to land into 10x revenue?

Speaker #1: With Atera. So we feel quite good at this stage about the amount of demand there beyond just the sort of the early customers. And we haven't had to incentivize customers in any way to get in here and to put in their orders.

Speaker #4: Thank you.

Speaker #2: Yeah, thanks, Puneet. So first of all, there's a bunch of those questions. First of all, on the Atera, you look, obviously, early days, but the demand has been really, really strong kind of across the board.

Speaker #1: So very, very encouraging signs. And I would say on the kind of the other side of the business, I mean, certainly, like I said, kind of in the answer to the previous question, we have the sales team that's selling all of our products right now and very focused on that, especially given the Atera, is not yet shipping.

Speaker #2: Not just your sort of early technology people, but much wider than that. And so that's really encouraging. For example, biopharma is still in the early days, but it's a disproportionate customer here with Atera.

Speaker #1: But again, we always run some programs in different territories and different regions where our customers work with customer where our salespeople work with customers to give them kind of the right deals for their sort of budgets and their applications.

Speaker #2: So we feel quite good at this stage about the amount of demand there, beyond just the, again, sort of the early customers. And we haven't had to incentivize customers in any way to get in here and to put in their orders.

Speaker #1: And we're going to continue to do that, but nothing particularly out of the extraordinary last quarter or this quarter or going forward. So yeah, so we feel good.

Speaker #2: So very, very encouraging signs. And I would say on the kind of the other side of the business, I mean, certainly, like I said, kind of in the answer to the previous question, we have the sales team that's selling all of our products right now and very focused on that, especially given the Atera is not yet shipping.

Speaker #1: It feels good about the Atera trajectory. No question. Around that, as far as as far as AI and funding is concerned, I think there's a lot of kind of work at the highest levels happening where I kind of spoke to that, where there's a general kind of reapproach of kind of funding flows.

Speaker #2: But again, we are always run some programs in different territories and different regions where our ur customers work with customer where our salespeople work with customers to give them kind of the right deals for their sort of budgets and their applications.

Speaker #1: I think, in fact, a lot of large-scale projects, anything that has to do with sort of larger-scale science is now having AI as its kind of as a driver.

Speaker #2: And we're going to continue to do that, but nothing particularly out of the extraordinary last quarter or this quarter or going forward. So yeah, so we feel good.

Speaker #1: And if you think about it, kind of the fundamental mental model if you want to understand biology using AI, you have to use single cell and spatial because these are the only scale.

Speaker #2: We feel good about the Atera trajectory, no question. Around that, as far as as far as AI and funding is concerned, I think there's a lot of kind of work at the highest levels happening where I kind of spoke to that, where there's a general kind of reappraisation of kind of funding flows.

Speaker #1: They are the scale technologies to measure biology. And so whether that's whether it's the biopharma kind of world or the world of academia or like various consortia, that's sort of the case.

Speaker #1: And so as people put in their priorities, whether it's sort of from government or from various philanthropic organizations, we anticipate that that will ultimately translate into more deployment of single cell and spatial and ultimately more revenue for us.

Speaker #2: I think, in fact, a lot of large-scale projects, anything that has to do with sort of larger-scale science is now having AI as its kind of as a driver.

Speaker #2: And if you think about it, it's kind of the fundamental mental model—if you want to understand biology using AI, you have to use single cell and spatial, because these are the only scale.

Speaker #3: Your next question is from the line of Dan Brennan from T. Cowan. Your line is now open. Please go ahead.

Speaker #4: Awesome. Hey, guys. Thank you. Thanks for the questions. Maybe just starting just on Atera, good to hear the orders already exceeding the 40. Is there any way just to help think about the placement opportunity?

Speaker #2: They are the scale technologies to measure biology. And so whether that's whether it's the biopharma kind of world or the world of academia or like various consortia, that's sort of the case.

Speaker #4: I know you get asked this, but I'm just trying to frame it. What is the next few years and how purely additive to that to the business is it versus what might take away?

Speaker #2: And so, as people put in their priorities, whether it's from government or from various philanthropic organizations, we anticipate that will ultimately translate into more deployment of single cell and spatial, and ultimately more revenue to us.

Speaker #4: Obviously, Xenium is going to stop shipping, but I'm just wondering on your other products as well.

Speaker #1: Yeah. I think fundamentally, we've talked about Xenium and we've been quite over the past quite some amount of time. We've seen really, really nice growth in Xenium and actually still continue to see it.

Speaker #3: Your next question is from the line of Dan Brennan from T. Cowan. Your line is now open. Please go ahead.

Speaker #1: So Xenium has been growing the spatial market quite like really robustly and it's been really exciting. And as we look forward to Atera, we actually expected to amplify and accelerate that trend.

Speaker #4: Awesome. Hey guys, thank you. Thanks for the questions. Maybe just starting just on Atera, good to hear the 40. Is there any way just to help think about the placement opportunity?

Speaker #1: And also the early signals we're getting. Now, yeah, it is true that, of course, it's going to impact sales of Xenium and certainly starting to moderate that somewhat already.

Speaker #4: I know you get asked this, but I'm just trying to frame it. What are the next few years and how purely additive to that to the business is it versus what might take away?

Speaker #4: Obviously, Xenium you're going to stop shipping, but I'm just wondering on your other products as well.

Speaker #1: And more so going forward. And Visium as well. Our expectation is that Atera demand will more than make up for any diminution in the other platforms.

Speaker #2: Yeah, I think fundamentally we've talked about Xenium, and we've been quite open over the past quite some amount of time. We've seen really, really nice growth in Xenium and actually still continue to see it.

Speaker #4: I would just add to that, Serge, even after the post-Atera launch, both on the consumable side, both Visium and Xenium grew sequentially, grew from prior quarter.

Speaker #2: So Xenium has been growing the spatial market quite like really robustly and it's been really exciting. And as we look forward to Atera, we actually expect it to amplify and accelerate that trend.

Speaker #4: So it's a really good momentum happening there in spatial. With the existing products.

Speaker #2: And also, the early signals we're getting. Now, it is true that, of course, it's going to impact sales of Xenium and certainly it's already starting to moderate that somewhat.

Speaker #3: Your next question comes from the line of Justin Bowers at Deutsche Bank. Your line is now open. Please go ahead.

Speaker #5: Hi. Good afternoon. So I just want to continue in the spirit of the last couple of questions. Can you talk about how you're segmenting the market for Atera versus Xenium and some of the lessons learned from the Xenium launch?

Speaker #2: And more so going forward. And Visium as well. Our expectation is that Atera demand will more than make up for any diminution in the other platforms.

Speaker #5: And really how does this new product cycle expand the time for spatial?

Speaker #4: I would just add to that, Serge, even after the post-Atera launch, both on the consumable side—both Visium and Xenium—grew sequentially, grew from the prior quarter.

Speaker #1: Yeah. Look, we're seeing demand, like I mentioned, kind of from across the board for Atera. Like really a lot of kind of diversity both in terms of like the kinds of customers, whether it's universities, academic, medical centers, biopharma companies, and also from the applications perspective.

Speaker #4: So it's a really good momentum happening there in spatial. With the existing products.

Speaker #3: Your next question comes from the line of Justin Bowers at Deutsche Bank. Your line is now open. Please go ahead.

Speaker #1: Like really broad, we started out with a focus obviously on oncology here, but also tons of interest in neuroscience, autoimmune, cardiometabolic, kidney. I mentioned this earlier, my prepared remarks, just every kind of biological system, therapeutic area.

Speaker #5: Hi, good afternoon. So I just want to continue in the spirit of the last couple of questions. Can you talk about how you're segmenting the market for Atera versus Xenium and some of the lessons learned from the Xenium launch?

Speaker #1: And also the kinds of experiments that people are looking to run, they're also like really, really huge breadth. You have your sort of foundational tissue atlasing, you have all these mechanistic studies of disease, response to drugs, like immunotherapy, cell therapies, and kind of all this biomarker translational work as well.

Speaker #5: And really how does this new product cycle expand the time for spatial?

Speaker #2: Yeah, look, we're seeing demand, like I mentioned, kind of from across the board for Atera. Like really, really a lot of kind of diversity both in terms of like the kinds of customers, whether it's universities, academic, medical centers, biopharma companies, and also from the applications perspective.

Speaker #1: So really strong early science about just like really material market expansion. And we're even at this stage where we didn't really we have not focused at all.

Speaker #1: We're already seeing some new customers coming out of and expressing really strong interest in Atera. And our view is ultimately over time, Atera is the future.

Speaker #2: Like really broad, we started out with a focus obviously on oncology here, but also tons of interest in neuroscience, autoimmune, cardio metabolic, kidney, I mentioned this earlier, my prepared remarks, just every kind of biological system, therapeutic area.

Speaker #1: Obviously, the instrument is not even shipped yet. So Xenium is the best spatial platform right now and will keep being used as Adam just mentioned, really, really continues to show really, really strong growth.

Speaker #2: And also the kinds of experiments that people are looking to run, they're also like really, really huge breadth. You have your sort of foundational tissue atlasing, you have all these mechanistic studies of disease, response to drugs, like immunotherapy, cell therapies, and kind of all this biomarker translational work as well.

Speaker #1: But as we go forward, we do expect that Atera will take up more and more of the spatial market and also drive material expansion of the market.

Speaker #2: So really strong early science about just like really material market expansion. And we're even at this stage where we didn't really we have not focused at all.

Speaker #3: Your next question is from the line of Callum Titmars from Morgan Stanley. Your line is now open. Please go ahead.

Speaker #2: We're already seeing some new customers coming out of coming out and expressing really strong interest in Atera. And our view is ultimately over time, Atera is the future.

Speaker #6: Hi. This is Jason for Callum. Thank you for taking my question. So I appreciate the prior guidance on expectations for Atera instrument placements in the back half.

Speaker #6: I was wondering if you could provide some guidance on how we should think about Atera consumables revenue for 2026. With similar consumables pull through per instrument as Xenium would be a good jumping-off point.

Speaker #2: Obviously, the instrument is not even shipped yet. So Xenium is the best spatial platform right now and will keep being used as Adam just mentioned, really, really continues to show really, really strong growth.

Speaker #6: Thank you.

Speaker #4: Well, I can start maybe I think as Serge articulated, I mean, we don't have any units out in the field as of yet. So we know what max pull-through could be.

Speaker #2: But as we go forward, we do expect that Atera will take up more and more of the spatial market and also drive material expansion of the market.

Speaker #4: And it's 2x from a maximum perspective as compared to Xenium. And I think I would also just add, as Serge noted, I mean, our intent for a wide variety of reasons, is to get the first 40 instruments in the hands because demand is so high, to get the first 40 instruments in the hands of folks that do intend to be running those.

Speaker #3: Your next question is from the line of Callum Titmars from Morgan Stanley. Your line is now open. Please go ahead.

Speaker #6: Hi, this is Jason for Callum. Thank you for taking my question. So I appreciate the prior guidance on expectations for Atera instrument placements in the back half.

Speaker #6: I was wondering if you could provide some guidance on how we should think about Atera consumables revenue for 2026. With similar consumables pull-through per instrument as Xenium be a good jumping off point?

Speaker #4: And in many cases, our service providers that could provide access to those that either don't have the capex, or weren't one of the first lucky 40 to get their hands on one.

Speaker #6: Thank you.

Speaker #4: Well, I can start maybe I think as Serge articulated, I mean, we don't have any units out in the field as of yet. So we know what max pull-through could be.

Speaker #4: I would say there's certainly our intent because I don't think anyone wants to get an instrument of that sort of caliber and cost without the consumables to run through them.

Speaker #4: And it's 2x from a maximum perspective as compared to Xenium. And I think I would also just add, as Serge noted, I mean, our intent for a wide variety of reasons, is to get the first 40 instruments in the hands because demand is so high, to get the first 40 instruments in the hands of folks that do intend to be running those.

Speaker #4: So we are starting to take orders on the consumable side. But it's not something we'll quantify at this time. But it is embedded into that Q3 to Q4 step-up.

Speaker #4: And again, just to articulate that, we've been talking about spatial consumables and the momentum there. So I just want folks to understand logically, we are still anticipating that we'll have good growth year on year from a consumable standpoint in Q3, but there will be a sequential step-down.

Speaker #4: And in many cases, our service providers that could provide access to those that either don't have the capex, or weren't one of the first lucky 40 to get their hands on one.

Speaker #4: Because as we're starting to have conversations with customers about when they will receive their Atera, some of those are very large Xenium users. And so some of them, are already planning ahead.

Speaker #4: I would say there's certainly our intent because I don't think anyone wants to get an instrument of that sort of caliber and cost without the consumables to run through them.

Speaker #4: And won't be running projects. And so won't be placing an order towards the end of Q3 that they would normally that they would normally place.

Speaker #4: So we are starting to take orders on the consumables side. But it's not something we'll quantify at this time. But it is embedded into that Q3 to Q4 step up.

Speaker #4: And we're accounting for that in the guidance that we've given you. And then as you think about that step-up, from Q3 to Q4, most of that is, as mentioned, is covered by Atera instruments alone.

Speaker #4: And again, just to articulate that, we've been talking about spatial consumables and the momentum there. So I just want folks to understand logically, we are still anticipating that we'll have good growth year on year from a consumable standpoint in Q3, but there will be a sequential step down.

Speaker #4: If you think about, we've said, we'll get 40 out the door in the vast majority of those will actually you've got that couple that with some consumables that come through, and then just normal year-end sort of dynamics, and again, it doesn't take a big sort of year-end flush as we've seen in certain years, actually, to bridge yourself from that Q3 number to the Q4 number, if you think about it at the midpoint of our guide.

Speaker #4: Because as we're starting to have conversations with customers about when they will receive their Atera, some of those are very large Xenium users. And so some of them are already planning ahead and won't be running projects, and so won't be placing an order towards the end of Q3 that they would normally that they would normally place.

Speaker #3: There are no further questions at this time. We have reached the end of the Q&A session. This concludes today's call. Thank you for attending.

Speaker #4: And we're accounting for that in the guidance that we've given you. And then as you think about that step up, from Q3 to Q4, most of that is, as mentioned, is covered by Atera instruments alone.

Speaker #4: If you think about, we've said, we'll get 40 out the door in the vast majority of those will actually happen in Q4. And so if you've got that couple that with some consumables that come through, and then just normal year-end sort of dynamics, and again, it doesn't take a big sort of year-end flush as we've seen in certain years actually to bridge yourself from that Q3 number to the Q4 number if you think about it at the midpoint of our guide.

Speaker #3: There are no further questions at this time. We have reached the end of the Q&A session. This concludes today's call. Thank you for attending.