10x Genomics Inc (TXG) Q2 2024 Earnings Call Highlights: Navigating Growth Amidst Macroeconomic ...
Total Revenue: $153.1 million, up 4% year-over-year.
Consumables Revenue: $123.4 million, up 10%.
Spatial Consumables Revenue: $29.3 million, up 150%.
Chromium Consumables Revenue: $94.1 million, down 7% year-over-year.
Instrument Revenue: $23.9 million, down 23%.
Chromium Instrument Revenue: $8.8 million, down 32% year-over-year.
Spatial Instrument Revenue: $15.1 million, down 17%.
Services Revenue: $5.9 million, up 74%.
Gross Margin: 68%, flat compared to the previous year.
Operating Expenses: $146 million, down from $163 million in the prior year.
R&D Expenses: $62.9 million, down from $71.5 million.
SG&A Expenses: $83 million, down from $91.5 million.
Operating Loss: $41.7 million, compared to a loss of $63.4 million last year.
Net Loss: $37.9 million, compared to a net loss of $62.4 million last year.
Cash and Cash Equivalents: $380.1 million, generating $8.3 million of cash in the quarter.
Full Year Revenue Guidance: $640 million to $660 million, representing 5% growth at the midpoint.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Total revenue for the second quarter grew 4% year-over-year and 9% quarter-over-quarter to $153 million, with the company being free cash flow positive.
Strong demand for spatial consumables, particularly Visium HD and the newly launched Xenium Prime 5K, contributed to revenue growth.
The GEM-X transition has progressed faster than anticipated, with customers appreciating its superior sensitivity, throughput, and cost advantages.
10x Genomics Inc (NASDAQ:TXG) has built a significant technology leadership position, with solutions several years ahead of competitors.
The company has a strong commercial and sales channel, with a focus on tailoring solutions to specific customer needs and reducing costs for researchers.
Negative Points
10x Genomics Inc (NASDAQ:TXG) is experiencing headwinds from a challenging macroeconomic environment, leading to budget pressures and elongated purchase cycles for customers.
Instrument revenue, particularly for Xenium, has been impacted by cuts to CapEx budgets and cautious customer spending patterns.
The company has lowered its revenue guidance for the year, now expecting it to be in the range of $640 million to $660 million.
The transition to GEM-X, while progressing well, is expected to continue driving some revenue pressure due to its lower price.
The company is undergoing a commercial restructuring, which may cause near-term disruption as new roles and responsibilities are implemented.
Q & A Highlights
Q: Can you provide more details on the forecast for the second half of the year, particularly regarding Xenium and Chromium instrumentation? A: The updated guidance reflects macroeconomic factors and commercial restructuring. Most of the impact is on capital expenditures, particularly affecting Xenium and, to a lesser extent, Chromium. This results in fewer instruments sold and consequently fewer consumables. We are also allowing for some disruption due to the commercial restructuring.
Q: Are there any changes in ASP trends for Xenium due to customer CapEx sensitivities or competitor pricing models? A: ASP for Xenium has been stable over the last few quarters, with no major changes. For Chromium, there's been a shift towards the iX model due to CapEx constraints, affecting the weighted ASP between the X and iX models.
Q: Can you quantify the impact of the GEM-X transition this quarter and its outlook for the rest of the year? A: The GEM-X transition is progressing faster than expected, with a longer tail than anticipated. We are considering ways to help customers transition from NextGen to GEM-X sooner.
Q: How are Xenium instrument placements expected to perform for the rest of the year, and what is the impact of macroeconomic factors versus competition? A: Xenium placements are impacted by macroeconomic factors, particularly CapEx budget cuts and elongated sales cycles. We still see a large number of opportunities in the funnel for the second half of the year, with an average of about 50 instruments expected per quarter.
Q: What is the impact of Visium HD on customer usage of standard Visium and Xenium? A: The impact on standard Visium has been less than expected, with continued demand for both existing and new projects. Visium HD has been largely incremental, and there is strong performance in Xenium consumables despite some customers evaluating between products.
Q: What is the path towards profitability and cash flow positivity, especially with the new commercial restructuring? A: We were free cash flow positive this quarter and have a setup to drive cash flow positivity for the rest of the year. The commercial restructuring involves redeployment of resources rather than an increase, setting us up for efficient scaling and growth.
Q: Why is Xenium more impacted by the macro environment compared to Chromium, and what is the rationale behind the commercial restructuring? A: Xenium is a higher-priced instrument, making it more susceptible to CapEx constraints. The commercial restructuring is based on learnings over the past two years, aiming for a holistic approach to optimize roles and responsibilities for strategic growth.
Q: How do you view the competitive landscape following a recent acquisition in the single-cell space, and how is Chromium positioned? A: We have strong conviction in our market position and have always anticipated new entrants. Our strategy focuses on product development and commercialization to drive growth and counter new competition. We have the best products, strong roadmaps, and a capable commercial team.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.