10x Genomics, Inc. (TXG) is a life sciences technology company at the forefront of revolutionizing the way researchers understand and analyze biological systems. With its integrated solutions spanning instruments, consumables, and software, 10x Genomics has established itself as a dominant player in the rapidly evolving fields of single cell and spatial biology.
Company Background
The company's origins trace back to 2012 when it was incorporated in the state of Delaware. Recognizing the immense potential of single cell analysis to unlock the complexities of biology, the founders set out to develop innovative tools that would enable researchers to interrogate biological systems at unprecedented resolution and scale. In 2015, 10x Genomics began commercial and manufacturing operations, selling its first instruments and consumables. Over the past decade, the company has consistently pushed the boundaries of what's possible in the life sciences, delivering a suite of cutting-edge technologies that have transformed the way scientists approach their research.
Product Offerings
At the heart of 10x Genomics' offerings are its Chromium, Visium, and Xenium platforms. The Chromium platform, launched in 2015, revolutionized single cell analysis by enabling researchers to study individual cells within a complex sample, providing unprecedented insights into cellular heterogeneity and function. The Visium platform, introduced in 2019, further expanded the company's capabilities by allowing scientists to spatially map gene expression patterns within intact tissue samples, bridging the gap between molecular information and tissue architecture.
More recently, 10x Genomics has continued to innovate, introducing the Xenium Analyzer in 2022, which enables high-throughput, high-resolution spatial analysis of cells in their native tissue context. This suite of technologies has firmly established 10x Genomics as a leader in the single cell and spatial biology market, with a growing customer base spanning academic institutions, research hospitals, and biopharmaceutical companies.
Financials
The company's financial performance has been marked by impressive growth, with revenue increasing from $298.9 million in 2020 to $618.7 million in 2023. However, the past year has presented its share of challenges, as 10x Genomics navigated a complex macroeconomic environment and undertook a significant commercial restructuring to better serve its diverse customer base. It's worth noting that the company has faced significant financial hurdles in its early years. In 2020, 10x Genomics recorded a substantial net loss of $542.7 million, which included $450.3 million in unusual items. The following year, in 2021, the net loss improved to $58.2 million, but the company was still navigating a difficult financial environment.
In the most recent fiscal year, 10x Genomics reported revenue of $618.73 million, with a net income of -$255.10 million. The company's operating cash flow (OCF) was -$15.20 million, and free cash flow (FCF) was -$64.72 million.
For the third quarter of 2024, the company reported revenue of $151.65 million, representing a 1% year-over-year decline. This was primarily driven by weaker instrument sales, particularly in the Xenium platform, as well as continued caution among customers in the face of macroeconomic headwinds. The net income for the quarter was -$35.75 million, with an operating cash flow of $21.64 million and free cash flow of $17.75 million.
Breaking down the revenue by product segments, the Instruments segment saw a significant decrease of 45% year-over-year to $19.06 million for the three months ended September 30, 2024. This decline was attributed to lower sales volumes of both Chromium and Spatial instruments. For the nine months ended September 30, 2024, Instruments revenue decreased 20% year-over-year to $68.36 million.
On the other hand, the Consumables segment showed growth, with overall revenue increasing 10% year-over-year to $126.20 million for the three months ended September 30, 2024. This growth was driven by a strong performance in Spatial consumables, which saw a 111% year-over-year increase to $29.67 million, offsetting a 4% decrease in Chromium consumables revenue to $96.54 million. For the nine months ended September 30, 2024, Consumables revenue increased 6% year-over-year to $359.90 million.
The Services segment also showed strong growth, with revenue increasing 48% year-over-year to $6.39 million for the three months ended September 30, 2024, and 68% year-over-year to $17.50 million for the nine months ended September 30, 2024.
In terms of geographic performance, revenue from the Americas was $87.82 million (down 11% year-over-year), EMEA was $37.85 million (up 18% year-over-year), and Asia-Pacific was $25.98 million (up 15% year-over-year) in Q3 2024.
Liquidity
As of September 30, 2024, 10x Genomics had $398.16 million in cash and cash equivalents. The company's debt-to-equity ratio stood at 0.013, indicating a relatively low level of debt. The current ratio of 4.90 and quick ratio of 4.12 suggest a strong short-term liquidity position, with the company having ample resources to cover its short-term obligations.
Strategic Initiatives
To address these near-term challenges, 10x Genomics has taken decisive actions to realign its commercial organization, creating specialized teams focused on driving instrument placements, serving the unique needs of the biopharma sector, and nurturing emerging customer accounts. While these changes have resulted in some short-term disruption, the company believes they will ultimately position it for long-term success by enhancing its ability to engage with customers and capture the vast opportunity in single cell and spatial biology.
Future Outlook
Looking ahead, 10x Genomics remains bullish on the future of its technology platforms. The company has continued to invest in product innovation, launching a series of new offerings designed to lower the cost barriers for single cell analysis and drive broader adoption of its solutions. This includes the introduction of the GEM-X Flex and GEM-X Universal Multiplex assays, which significantly reduce the per-sample and per-cell costs for researchers, as well as the Chromium Xo, a more affordable single cell instrument.
Furthermore, the company has been enhancing the ease of use and functionality of its platforms, with the introduction of automated cell annotation tools and new workflow solutions for sample preparation and analysis. These advancements are aimed at empowering more researchers to incorporate single cell and spatial techniques into their studies, ultimately expanding the addressable market for 10x Genomics' products.
Based on the company's guidance, 10x Genomics expects full-year 2024 revenue to be in the range of $595 million to $605 million, representing a 3% decline from full-year 2023 at the midpoint. This updated guidance implies approximately flat fourth quarter revenue compared to their third quarter results. Within the Chromium segment, the company is assuming a continuation of decreasing price per reaction while anticipating an uptick in volumes. For the Spatial segment, similar results to Q3 are expected.
The drivers behind this updated guidance include ongoing headwinds from the commercial restructuring as the company makes new hires to fill redesigned territories and teams, trains new sales representatives, and solidifies processes. Additionally, the challenging macroeconomic environment continues to put pressure on both capital expenditure purchases and larger consumables projects due to cautious customer spending.
Conclusion
Despite the near-term challenges, the long-term potential of 10x Genomics remains compelling. The company's technological leadership, diverse customer base, and commitment to innovation position it well to capitalize on the growing demand for single cell and spatial analysis tools across a wide range of research fields, from oncology and immunology to neuroscience and infectious disease.
As the life sciences community continues to embrace the transformative power of these technologies, 10x Genomics stands poised to play a pivotal role in accelerating the mastery of biology and advancing human health. While the road ahead may not be linear, the company's resilience, strategic vision, and relentless pursuit of innovation suggest a bright future for this pioneering life sciences technology firm.