10x Genomics(TXG) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenue for Q1 2025 was $154.883 million, a 9.5% increase from $141.006 million in Q1 2024[20] - Gross profit for Q1 2025 was $105.445 million, compared to $92.914 million in Q1 2024, reflecting a gross margin improvement[20] - Net loss for Q1 2025 was $34.358 million, an improvement from a net loss of $59.949 million in Q1 2024[20] - Operating expenses decreased to $144.773 million in Q1 2025 from $154.412 million in Q1 2024, primarily due to lower research and development costs[20] - Total revenue for the three months ended March 31, 2025, was $154.883 million, a 9.5% increase from $141.006 million in the same period of 2024[56] - For the three months ended March 31, 2025, the company reported a net loss of $34.4 million, compared to a net loss of $59.9 million for the same period in 2024[102] - Total revenue for the three months ended March 31, 2025, increased by $13.9 million, or 10%, to $154.9 million compared to $141.0 million for the same period in 2024[103] Revenue Breakdown - Revenue from consumables reached $115.356 million, up from $110.335 million year-over-year, while instruments revenue decreased from $25.453 million to $14.815 million[56] - License and royalty revenue for the quarter was $17.060 million, significantly higher than $1 million in the prior year, attributed to a settlement with Vizgen, Inc.[56][58] - Services revenue increased by $2.4 million, or 47%, for the three months ended March 31, 2025, primarily driven by an increase in service plans for instruments coming off warranty[105] Cash and Assets - Cash and cash equivalents increased to $377.061 million as of March 31, 2025, up from $344.067 million at the end of 2024[18] - The company’s total assets decreased to $903.393 million as of March 31, 2025, from $918.636 million at the end of 2024[18] - Total available-for-sale securities amounted to $402.324 million as of March 31, 2025, compared to $371.329 million at the end of 2024[44] Inventory and Receivables - Accounts receivable decreased to $52.549 million in Q1 2025 from $87.862 million in Q4 2024, indicating improved cash collection[18] - Inventory decreased to $74.710 million in Q1 2025 from $83.107 million in Q4 2024, suggesting better inventory management[18] - Inventory increased from $74.710 million as of December 31, 2024, to $83.107 million as of March 31, 2025[47] Operating Expenses - The company recorded total stock-based compensation expense of $31.1 million for the three months ended March 31, 2025, down from $36.1 million in the same period in 2024[87] - Research and development expenses decreased by $4.4 million, or 6%, to $64.2 million, primarily due to a reduction in personnel expenses[109] - Selling, general and administrative expenses increased by $4.0 million, or 5%, to $89.7 million, driven by higher outside legal expenses[110] Legal Matters - A jury awarded the Company over $31 million in damages from NanoString, including approximately $25 million in lost profits and $6 million in royalties[64] - The Company has not recorded a receivable from NanoString as of March 31, 2025, due to uncertainties in collecting the jury award[64] - The Company is involved in multiple lawsuits against NanoString, including claims related to the GeoMx and CosMx products, with trials scheduled for August 2025 and November 2025 respectively[66][70] - The Company resolved all outstanding litigation with Vizgen, with all claims dismissed with prejudice as of February 5, 2025[78] - The Company filed suit against Parse Biosciences alleging infringement of multiple patents related to transcriptomics products, with discovery currently in progress[80] Future Outlook - The company expects operating expenses to trend lower in 2025 due to cost-reduction measures, including a planned reduction in workforce by approximately 8%[112] - Revenue from products and services is expected to be approximately flat in Q2 2025, excluding the impact of license and royalty revenue[107] - The company anticipates capital expenditures of between $10 million and $15 million over the next 12 months for manufacturing and research and development[117] - The company expects to continue incurring operating losses for the foreseeable future but believes existing cash will meet anticipated cash needs for at least the next 12 months[120] Market and Regulatory Risks - The company faces risks related to fluctuations in operating results due to factors such as changes in U.S. academic and government research funding, competition, and pricing strategies[139] - Changes in U.S. academic and government regulations, such as the NIH's imposition of a standard indirect rate of 15%, could negatively impact customer funding and purchasing behavior[144] - In 2025, the U.S. government proposed a more than 40% cut to the NIH's annual budget starting in the 2026 fiscal year, which could significantly impact funding for research institutions[145] - The NIH terminated approximately 700 research grants totaling over $2.4 billion in March 2025, affecting various scientific research areas[145] Supply Chain and Manufacturing Risks - The company is dependent on the successful manufacturing of its products, which may be impacted by supply chain disruptions and labor shortages[143] - The company relies on a limited number of suppliers for critical components, with some being sole sources, which poses a risk of material shortages due to supply chain disruptions[213] - Supply chain disruptions, including labor shortages and logistics challenges, could significantly harm the company's ability to sell products and meet customer demand[215] - A significant disruption in the supply of raw materials could materially increase operating costs and adversely affect profit margins[216] Competition and Market Dynamics - The company faces significant competition from both established and emerging companies in the life sciences sector, which could affect market share and pricing strategies[150][155] - The company is significantly dependent on revenue from Chromium solutions, particularly Universal Gene Expression solutions[199] - The total addressable market for the company's solutions may be smaller than estimated, and demand for genomics products is evolving, complicating accurate market predictions[170]