Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 10x Genomics Inc (TXG, Financial) launched new products and capabilities aimed at lowering the cost of single-cell analysis, such as GEM-X Flex and GEM-X Universal Multiplex, which offer significant cost reductions for researchers.
- The company reported a 10% increase in consumables revenue, driven by strong demand for new spatial consumables products like Visium HD and Xenium 5K.
- 10x Genomics Inc (TXG) has implemented a restructured commercial organization to better serve diverse customer needs, including creating specialized teams for capital equipment and biopharma sectors.
- The company has maintained comparable gross margins for its new products, indicating efficient cost management despite price reductions.
- 10x Genomics Inc (TXG) is focused on advancing its capabilities with new products, workflows, and software to enhance ease of use and drive more adoption, positioning itself as a leader in both technology and cost.
Negative Points
- Revenue for the third quarter declined 1% year-over-year, primarily due to disruptions from sales restructuring and cautious customer spending.
- The company expects full-year revenue to decline by 3% compared to the prior year, with flat fourth-quarter revenue anticipated.
- 10x Genomics Inc (TXG) is facing ongoing headwinds from its commercial restructuring, with a significant number of open sales roles impacting performance.
- The macroeconomic environment remains challenging, with cautious customer spending affecting both capital expenditures and larger consumables projects.
- The company experienced a 45% decrease in total instrument revenue, particularly impacted by weaker sales of Xenium instruments.
Q & A Highlights
Q: Can you confirm if the commercial reorganization in the Americas was the main driver for the revenue guidance cut, and how should we think about gross margin dynamics and cash flow?
A: Adam Taich, CFO, explained that the revenue guidance cut was about half due to macroeconomic factors and half due to internal commercial reorganization. The company is not expecting the usual Q4 seasonal step-up due to cautious customer spending. Regarding gross margins, the new products have comparable margins to existing ones, and the company remains focused on cash management, aiming to be close to cash flow positive for the year.
Q: Can you clarify the impact of the sales transition on order funnel and address concerns about potential share loss?
A: Serge Saxonov, CEO, acknowledged that the sales transition caused disruptions, but emphasized that the company is not losing market share. The pricing strategy, including promotions, is part of normal business operations. The company believes in the elasticity of demand and expects volume growth to offset price reductions over time.
Q: How can we be assured that 10X Genomics is on track to improve and not remain in a challenging position?
A: Serge Saxonov stated that while 2024 has been disappointing, the company is making comprehensive changes to its commercial structure to address past challenges. The company is confident in its strategy and expects to see improvements, although it will take time for the changes to fully materialize.
Q: What is the timeline for the commercial reorganization to be fully effective, and what are the key elements involved?
A: Serge Saxonov mentioned that filling open sales roles and training staff in new processes are key elements. The company expects the reorganization to be fully effective by mid-next year, with improvements in execution and visibility.
Q: How are the new Chromium products and pricing strategy expected to impact growth, and could there be another year of flat or declining Chromium revenue?
A: Serge Saxonov explained that while new products with lower prices may initially pressure top-line revenue, the company expects volume growth to offset this within three to four quarters. The strategy aims to drive market expansion and long-term growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
