10x Genomics Inc - Ordinary Shares - Class A Aktie

Hello, and welcome to the 10x Genomics Inc. Annual Meeting of Stockholders. Please note that this meeting is being recorded. [Operator Instructions].

Good afternoon. It is a pleasure to welcome all of you to the 2026 Annual Meeting of Stockholders of 10x Genomics, Inc. and call this meeting to order. I'm Serge Saxonov, Co-Founder, Chief Executive Officer and a member of the Board of Directors of 10x Genomics, and I will act as Chairperson of the meeting. Adam Taich, our Chief Financial Officer; Randy Wu, our General Counsel; and Cassie Corneau, 10x's Senior Director, Investor Relations and Strategic Finance; James Bryant, 10x's Senior Director, Corporate Legal; and Atticus Belcher from 10x's legal team join me in welcoming you today. James will act as Secretary of the meeting.

I would also like to welcome the members of our Board of Directors who are present at today's meeting. I'm also pleased to welcome Casey Hayes, a representative of Ernst & Young, our external auditing firm, who is here to answer any appropriate questions. In addition, I'd like to welcome John Lundberg, a representative of Equiniti Trust Company, LLC, our transfer agent, who has been appointed to act as our Inspector of Election. Mr. Lundberg has signed an oath of office, which will be filed with the minutes of this meeting. Please note that this meeting is being recorded, and a replay of the audio cast will be posted to the Investor Relations section of our website at investors.10xgenomics.com as soon as practical.

Hi, I'm Cassie Corneau, Senior Director, Investor Relations and Strategic Finance at 10x Genomics. This meeting is the company's seventh Annual Meeting of Stockholders as a public company. We believe in engaging our stockholders and maximizing their ability to meaningfully engage with us. Today's virtual annual meeting allows our stockholders to participate in the meeting regardless of their location. Participants are also permitted to submit questions and stockholders can vote their shares online before the polls close. I will now turn the meeting over to James, who will explain certain procedures for today's meeting.

Thanks, Cassie. Today's meeting has been duly called and is being conducted in conformity with the laws of the State of Delaware and the company's charter and bylaws. The rules of conduct and procedures for this meeting are available by clicking the documents icon at the top of the right side of your screen, then click on the document titled Rules of Conduct and Procedures to you. It is 11:33 a.m. and the polls are open for voting. We'll close after a brief discussion of the proposals scheduled to be voted on today.

If you've already voted and do not wish to change your vote, you do not need to do anything. If you haven't voted or if you voted previously, but want to change your vote, you may do so now by clicking on the Vote My Shares link on the right side of your screen. Momentarily, Serge will introduce each of the 3 proposals scheduled to be voted on today. We'll then pause for questions on the proposals before closing the polls. Polls for each matter upon which stockholders will vote at this meeting will remain open until we announce the polls are closed. No ballots or proxies, revocations or changes of proxies will be accepted after the polls are closed. Under Section 2.03 of our company's bylaws, in order for a stockholder proposal to have been properly brought before this 2026 Annual Meeting of Stockholders, the proposal was required to be submitted to the company's secretary not later than the close of business on the 90th day and not earlier than the close of business on the 120th day prior to June 4, 2026.

Since no such proposals were submitted with respect to this annual meeting, no such proposals will be considered at this meeting. After closing the polls, we will provide the preliminary results of the voting based on the preliminary report from Mr. Lundberg, who, as Serge has noted, has been appointed to act as Inspector of Election and is present at today's meeting. To submit any questions, you may do so by clicking on the questions box on the right side of your screen, typing your question into the text box and clicking submit button below the text box.

in order to ensure that the business of the meeting proceeds in an orderly fashion, we ask that you please observe the meeting rules and only submit questions directly related to the business of the meeting. In the interest of all stockholders, we will only address those questions that are pertinent to the business of this meeting. Following Q&A, we will formally adjourn. Atticus?

It is possible our discussion at today's meeting, including some of our comments and responses to your questions may include forward-looking statements, which are predictions, projections or other statements about future events. These statements are not historical facts and are subject to known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from such anticipated results, performance or achievements expressed or implied by such forward-looking statements. Accordingly, such forward-looking statements should not be relied upon, and except to the extent required by applicable securities law, we undertake no obligation to publicly update or revise any forward-looking statements.

And thus, it should not be assumed that our silence over time means that actual events are occurring as expressed or implied in such forward-looking statements. Please refer to our discussions set forth under the Forward-Looking Statements section of our earnings releases as well as under the caption Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2025, and in our quarterly report on Form 10-Q for the quarter ended March 31, 2026, as such risks, uncertainties and factors may be updated in the company's periodic filings with the SEC. With that, I will now turn it back over to Serge.

Thanks, Atticus. Equiniti has delivered an affidavit of mailing that shows that proper advance notice of this meeting and distribution of these documents was given to our stockholders of record as of the close of business on April 8, 2026, the date fixed by our Board of Directors as the record date for the determination of stockholders entitled to receive notice of and to vote at this meeting. A copy of the notice of this meeting and the affidavit of mailing will be incorporated into the minutes of this meeting. All stockholders of record at the close of business on April 8, 2026, are entitled to vote at this annual meeting, and the list of stockholders of record is available to stockholders read. Our first item of business is to determine whether we have a quorum for the purpose of transacting business. Mr. Lundberg, do you have a report?

Yes. The stockholders' list shows that holders of 118,912,062 shares of Class A common stock and 10,078,872 shares of Class B common stock of the company for a combined total of 219,700,782 votes are entitled to vote at this meeting. They are represented in person or by proxy at this meeting, a combined total of 198,815,518 votes, representing approximately 90.49% of the voting power of the Class A and Class B shares entitled to vote at this meeting.

Thank you. Because holders of a majority of the voting power of the shares entitled to vote at this meeting are present in person or by proxy, we have a quorum for the transaction of business, and this meeting is duly convened.

The next item of business is a description of the matters to be voted on at today's meeting. After all 3 proposals have been presented, we will answer questions. The polls will close after this discussion. The first proposal is the election of 3 Class I director nominees to serve 3-year terms expiring at our 2029 Annual Meeting of Stockholders or until his successor is duly elected and qualified or until his earlier death, resignation, disqualification or removal.

The Board of Directors recommends the election of myself, Ben Hindson and John Stuelpnagel as Class I directors of the company. Because we have an advanced notice provision in our bylaws, all further nominations are closed. The second proposal is the ratification of the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for our fiscal year ending December 31, 2026. The Board of Directors recommends that stockholders vote in favor of this proposal. And finally, the last proposal is to consider a nonbinding advisory resolution, commonly known as a say-on-pay proposal to approve the compensation of our named executive officers. The Board of Directors recommends that stockholders vote in favor of this proposal.

This concludes our presentation of the proposals at this meeting. Does anyone have any questions related to any of the proposals? We will give folks about 1 minute to submit any questions.

Thanks, Serge and Cassie. At this time, no questions regarding the proposals have been submitted. Having not received any questions, I'm now going to proceed with the voting.

Noted previously, if you've already voted and do not wish to change your vote, you do not wish to do -- you do not need to do anything. If you haven't voted or if you voted previously but want to change your vote, you may do so now online by clicking the Vote My Shares link on the right side of your screen. We will give you a moment. The polls will be closing shortly.

Now that time has been given to vote, it is 11:42 a.m., and I hereby declare the polls closed for vote.

At this time, I will ask James to report the preliminary results of the voting.

The preliminary report of the Inspector of Election indicates that Serge Saxonov, Ben Hindson and John Stuelpnagel have been duly elected to our Board of Directors, that the appointment of Ernst & Young LLP as independent registered public accounting firm for fiscal year 2026 has been ratified and that our stockholders have approved on a nonbinding advisory basis, the compensation paid to our named executive officers. The final voting results will be contained in the Form 8-K that will be filed with the SEC within 4 business days following this meeting. This concludes the formal business of the meeting.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Thanks, everyone, for joining us. My name is Mike Ryskin. I'm on the BofA Life Science Tools and Diagnostics team. And for our next fireside chat, we're excited to host 10x Genomics. I'm excited to be hosted by Serge Saxonov, Chief Executive Officer; Adam Taich, Chief Financial Officer. Serge, Adam, thanks so much for being here.

Thank you.

Thank you for having us.

Yes, format will be a fireside chat. If you've got a burning question, raise your hand, and we'll work it in. But other than that, let's kick things off. So Serge, Adam, you guys recently reported your first quarter, a lot of interesting updates for us. Maybe you could just give us a sort of high-level rundown of how the quarter played out, what you found most exciting, most interesting and just sort of how it flows through for the rest of the year?

Yes, totally. So yes, really happy with the quarter, it was actually quite a strong performance along multiple dimensions in the quarter. So first of all, just like the fundamental mechanics of the business, the key drivers that we have been communicating for the past several quarters performed really well. So specifically, reaction growth in the single cell business once again showed double-digit growth.

And in fact, even like revenue growth, so the kind of the pricing declines were more than made up with the volume growth. We also showed double-digit once again, growth in spatial consumables revenue. Again, this is several quarters running. So really kind of strong indications for both parts of the business and the like dynamics of demand. We also showed really nice improvements to our operating profile as well. So like we had focused a lot on cost structure control going back for some time and a great job by the team in delivering that and increasing our cash position, our balance sheet.

But the biggest news of the quarter by far was the launch of our new platform, Atera. So I said that on the call last week, I said that when we first launched the platform, now 3 weeks ago or so. This is the biggest launch in our company's history. Really, really excited. We do -- we fundamentally see it reshaping the industry and really opening up Spatial in a huge way. And it's great to finally kind of open up the platform to the world and also kind of get -- hear from customers and the reception has been really phenomenal as well.

And maybe let's dive right into that then. We have gotten a lot of questions on it and it is stirring a lot of interest. Can you talk about sort of the background of how the platform came about? I know you've been developing for some time, but you also have been in Spatial with Xenium, Visium CytAssist for a while. So just sort of the development path for that fits in the history behind the box.

Yes. So I mean, it actually goes back pretty far. If you think about all the different threads that came together and all the different inventions and developments. In some ways, it goes back to almost the very beginning of the company coming from all the different sort of technology bits from different platforms. The formal program kicked off just about -- right around the time when we launched the Xenium platform. So it really goes back quite a ways.

And the way we look at it is, again, we'd like to approach problems from first principles. We always have strong conviction that spatial biology is a really fundamental direction that's going to be incredibly enabling both for science, translational ultimately clinical applications. This is how we need to measure biology. And we also knew kind of what -- from first principles, what the solution would need to be.

Now we knew the technology wasn't there back 5 years or so ago, but we knew what we needed to get to. And we've been inventing and developing across multiple areas, multiple fields to put it together. And also now having been in the spatial biology world for quite a number of years, we've had a lot of input and feedback from our customers in terms of what was constraining them, what was keeping some people on the sidelines relative to Spatial.

And there's a number of constraints that have been as successful as we have been with our platforms versus the Visium and Xenium. There's clearly fundamental throttles to that market. And we've set out to address every single one of them. And when you look at kind of the spec list for Atera, it really kind of breaks through those constraints in a pretty massive way. And that's why you see this kind of like reaction. No one really quite expected what we were going to announce.

So I mean let's go through that. Maybe I don't know if you want to compare it to Xenium or some of the other platforms out there. Like what are the advantages that Atera brings? And why do you think those -- that solves those key bottlenecks limit or limitations of prior to Xenium?

Yes. So one big thing is people like spatial data, but the systems that have been around, including Xenium, Xenium are still constrained on throughput. And there's a massive increase in throughput that Atera delivers relative to Xenium, in terms of the number of -- whether you look at the number of samples that can run or the amount of tissue area it can analyze. It also increases the plex level, so how many genes you can measure. And that has been a constraint kind of in a few different ways.

Generally, people want to be able to -- like if you're doing unbiased discovery, you want to be able to measure as much as you can, the full transcriptome and the Xenium, for example, relies on targeted panels. So you have to kind of -- it limits sort of unbiased discovery, the discovery that you could do. Also, when people care about their specific genes, it oftentimes becomes quite a project to zero in on the precise panel you want to run that contains your genes. And that was always probably the biggest throttler in terms of people scaling up the Xenium experiments.

Now with the whole transcriptome capability, you don't have to choose. You kind of -- you just go. So that really is another big bottleneck. We delivered high throughput, whole transcriptome, and now we also delivered in conjunction with really high sensitivity, something that no one had thought possible before. In all the previous iterations of all these technologies, there are always trade-offs. So if you try to push on, for example, on plex level, you trade off throughput and you trade off sensitivity.

In this case, we actually increased sensitivity in a massive way. So we push the frontier really far. And that is also really important because it kind of brings in people who've been on the sidelines because they were not sure about spatial biology when you go in and compare it to existing technologies like FISH and so on, they don't seem to see the genes that they expect to see. But now with the sensitivity, you see these cells with just massive numbers of transcripts lighting up and it resonates with the biology they expect to see.

So -- and then there's a number of additional features. Probably the most notable of these is ability to work with off-the-shelf standard glass lines, which feels like a minor detail, but for a lot of people who are looking to do large-scale translational studies and kind of dip into existing Biobank cohorts, this is usually enabling. So kind of a number of these vectors that are really groundbreaking. And also the fact it's all done in a single platform and technology where you get all of those benefits at once.

Now let's talk about how that impacts the model and the business later this year and into future years. You talked about maybe some shipments in 3Q, but not a lot, let's say, heavily biased towards 4Q, 40 in the second half of the year, towards the latter part of the year. Is that reflective of orders you've already received? Is that things you have in hand? I know that there were beta testers and sort of early access users under NDAs. So just sort of talk about how you build that funnel and what gives you confidence in that in the next 6 months?

Yes. Just -- yes, to be clear, the platform has only been kind of in sort of within the knowledge base of our customers for a very, very short time. Even the people with whom we've interacted in the early access manner, it's a relatively recent interactions. Despite of that, like the amount of interest has been tremendous and the order flow is like incredibly encouraging, right out of the gate, not really anything like we've seen before.

And so like when we look to the rest of the year, it's really -- it's the supply constraint, what's going to determine the number, the 40 number and kind of as we go into 2027 as well, we are working hard to scale production, but we want to be rigorous and deliberate around that. And that from what we're seeing with the order flow that's -- supply is going to be the constraint.

Okay. Adam, maybe on that point, anything you'd say in terms of investments to expand capacity? What are you targeting, let's say, a year or 1.5 years out in terms of quarterly production capacity, annual production capacity, anything like that?

Yes. So I guess I would start with from an investment perspective, not a significant investment relative to sort of where we are in manufacturing capacity. So we're going to be leveraging a lot of the same capabilities and experience that we built around Xenium in particular. And we'll be sort of bringing that up. So we've got some dual capability in certain respects, both in Pleasanton, where our headquarters as well as our manufacturing facility in Singapore. still working through exactly where we'll want supply, but we're already procuring ahead, particularly in any long lead time type items, ensuring that we're starting to procure for the first half of next year.

So we feel really confident, as we've been saying around the 40 for this year and starting to buy ahead materials and start to work through production planning for next year. The other thing I would just say just it was part of a thing embedded also in your question, when you think about the margin profile of this, the platform in totality will be margin accretive to where we are as 10x as things start to scale. So what I mean by that is in Q4, it's going to be a very heavy instrument quarter, fairly significant gross margin -- fairly similar gross margins for Xenium instruments to where we've been -- or rather for Atera with where we've been for Xenium. So lower than the corporate average for sure.

On the consumables side, consumables margins, which was fundamentally part of the design that Serge mentioned, we started a couple of years back, will be kind of in that same range where Chromium is. And so as the platform begins to scale, as we get that installed base and start to work through and get high utilization, and those are certainly the customers that we're targeting with those first 40 will be customers that are going to plug them in and start running them. The margin sort of mix over time should actually get better than where our corporate averages have been, and that's part of the design here.

In terms of the order funnel, sales funnel, will you disclose anything in terms of orders? I know you typically don't, but given this is such a big launch, would you give us like an annual order number or anything like that? Just to give us a sense of where this could go? Or what are your thoughts on that, like leading indicators?

I would hesitate to provide specific numbers around orders because we've not done it before. It's not our policy. But it is reasonable to expect some directional kind of indication of the velocity of demand, the way I understand that people want to know.

Okay. And in terms of at least those first 40 later this year, I mean, is it reasonable to think -- just think about who's ordering this, where is that interest highest? Like are all 40 of those Xenium users already? Is there any sort of like new to Spatial or maybe some competing spatial customers there? Just sort of like how does the stack versus what's on the market already?

Yes. So there's definitely interest from people who are new to Spatial, the very least new to 10x Spatial, no question around that and quite intense interest because like I said, there's sort of like now they can step off from the sidelines and like this technology delivers them what they're looking to do and they can go to at scale like run these studies cohorts that they have access to, but there has not been a technology to really kind of go to down at high throughput. So definitely that.

In terms of our priority, though, we do want to place these instruments with people who will be able to run them at scale right from the get-go, right? And that biases things toward people who are currently substantial Xenium users and also those who have kind of centralized players like service providers and core labs who can serve kind of the rest of demand out there as quickly as possible.

So that is kind of our focus in the first place. So that does bias us somewhat toward existing Xenium users. And we're also looking for customers who will naturally kind of become evangelizers for the system and drive further market demand and validation for others, right? Those are the considerations. I mean it's a good spot we're in because we have sort of the luxury of prioritizing people and the demand is really strong.

And then as we proceed, we'll kind of expand into more customers that are new. But again, it's going to be a function as well still in the early days, how quickly they'll be able to scale up and hit the ground running. And I think there's huge potential for new influx. And where the interest is coming from, I guess, it's sort of -- it's hard to point any segments. It is kind of across the board from what we see.

I think maybe on the point you talked about in terms of scaling utilization, scaling throughput, you kind of gave us some broad strokes for calculating max theoretical pull-through on the machine. We always kind of have this debate even going back to the Chromium days of like what is going to be average pull-through on a box like once the installed base gets large enough. Any thoughts on how -- I don't think you've obviously guided to it yet, but just what are your thoughts on how utilization will scale on Atera as it compares to how it scaled for Chromium and how scale for Xenium. Could it be like a faster ramp, slower ramp, just given you already have a market there and like you said, all the advantage of the platform?

Yes. Like Xenium -- sorry, Atera, like we actually built it from the beginning to be a somewhat more centralized system than any of the other systems we have had before. And we believe it is actually like the right approach to the market, to the current market and the way the market is going to be going forward. I don't think we're going back to kind of the time of -- there was a run for 10 years or so where everyone is getting their instruments and every single lab, that's just not going to be the case going forward.

I think a centralized -- a somewhat more centralized model makes the most sense, and that's what Atera is purpose-built for. We -- and again, I like kind of broad strokes of our strategy, it is to put this as much as possible in places that we'll be able to enable others and will kind of -- we'll be able to satisfy that sort of demand. And from the early signals we're getting, what we're seeing is consistent with that. The system itself obviously has a substantially higher ceiling in terms of pull-through per instrument compared to Xenium. And we do expect it to have a materially higher utilization rate pretty quickly out of the gate.

Okay. And then the last one I kind of want to discuss on Atera is that impact on Xenium, maybe even on the Xenium CytAssist, both on the instruments and -- but I would also argue on the consumables. Your -- if you go back to the first quarter, your spatial instruments number was a little bit lighter than we would have expected. And I think you called out a number of times, you believe it was tied to maybe a pause in the market, whatever you want to call it, of customers that knew Atera was coming and then try and go through with the Xenium purchase.

So how do you think about that playing out through the rest of the year? So in our model, we're adding the 40 boxes for Atera in 3Q and mostly in 4Q. We kind of were debating this last week on, okay, what are we doing with our Xenium placements over the course of the year? How much are we trimming it? We had an even bigger debate with investors of what do we do with Xenium consumables, right? Is there -- so I guess, I don't know if you want to comment on that specifically, or maybe another way of asking it would be, let's say, whatever, 3 years from now, 5 years from now, what percent of your spatial revenue is Atera versus Xenium? Is it 0 for Xenium? Is it still 10%, 30%? I mean we're just making up numbers, but any direction you can point us to.

Yes. Like maybe I'll start with that last question first, and then we kind of work backwards to kind of the near term. So in the long run, I do think that things will just consolidate onto Atera. That's what we expect. And as Adam said, there's a lot of benefits to Atera in terms of to the customer, to us as a business, whether it's gross margin profile, whether it's the speed of turnaround, the scaling, it will just -- it will be benefits all around.

So yes, we do expect that in the long run, things will consolidate there. I think in the short run, though, you're always surprised by how sticky things are. People have their ongoing projects. They have comfort with their existing systems, the workflows, the data, the grants, the projects, the collaborations, all of that. And for that reason, we do -- we have expected and we're seeing there's continued momentum with both Visium and Xenium in the marketplace.

And to some extent, both applies to consumables, especially applies to consumables somewhat applies to Xenium, like instruments that have been in the funnel for a long time. These are long cycle, sales cycle items. They are materializing now. And it's not like customers are going to pull back now to go get it back in line for Atera and wait another year or more. So we do see a much reduced number, but we see continued number for Xenium. And again, we saw that evidence of that dynamic in Q1, as you mentioned. You have to remember, we announced that something was coming kind of in the middle of the quarter and the instrument purchases are always kind of back-end loaded.

And so much of that business got delayed and most people expected some kind of a new -- maybe new Xenium version. That was in the air. So we already have kind of a pretty strong kind of predicate to base our projections going forward. And our projections are actually fairly consistent with what we had thought coming into this year. like the -- our expectations, this is something we thought about for a long time. Again, like going back to your earlier question, we have been planning on Atera for a long time, and we'll be planning around this specific transition period for a long time as well.

And so our initial guide coming into the year very much incorporated all this thinking. And what we're seeing so far, what we have seen so far is very much in concordance with the initial guide that we gave. Now we can kind of provide a bit more explanation for the quarterization that we have been expecting. But in general, it's trending all appropriately. Again, there's a step down that we anticipate in Q2 and Q3, kind of similar amount in Q2 and Q3 and then obviously, like a substantial kickup from the placements of Atera's going forward. But all within sort of the general quarterization we see across the year like other years as well. So it all kind of fits and we feel very comfortable where we are with the guide, especially after like what we've seen in Q1.

Okay. I mean, Adam, maybe last one for you on this, and then we'll move on to other topics. So kind of putting all of that commentary together that Serge has laid out, fair to say that in a ballpark, Atera kind of offsets any Xenium slowdown for the next couple of quarters. And then maybe, I don't know if it's a '27 dynamic, '28 dynamic as that consumables ramps, that could really, really take off?

That's exactly right, Mike. I mean I think we -- I think the Atera sort of Q4 dynamic, and I'd just echo what Serge just said, I mean we had a strong Q1 and anticipate Q2 will be low single-digit Q-o-Q sort of reduction from a dollars perspective, from a dollars perspective, Q3 should look fairly like Q2. And then as you sort of build that out and model that even at the midpoint, you end up kind of in the mid-teens from Q3 to Q4 in terms of that step-up, which frankly, it's somewhere around -- it's probably 17%, 18%. I'm just trying to do midpoint math, but that's actually not dramatically different than what we've actually done in the past without a product launch like Atera.

So again, not suggesting any -- nothing is easy. But at the same time, we feel really confident about the guide. And then as Serge mentioned, we've been -- we certainly have known for quite some time when we were launching Atera, we determined we were going to do at AACR like I mean a long, long time ago. And we also made a deliberate decision to reinstate an annual guide. And so all of this was contemplated in there to reinstate annual guide, give folks the parameters, double-digit single cell reactions, double-digit spatial consumables revenue. We did mention at the onset that we thought, maybe back when we gave the guide that the CapEx market is not as if it's tremendously recovered. But all of this sort of still fits into that calculus that we provided back when we gave the guidance in February.

Okay. I just want to make sure we're thinking through that like baton handoff appropriately. Okay. All right. Still plenty to cover. I just -- you just mentioned Chromium. So let's touch on that a little bit, obviously. Serge, you called out the reaction volume in the first quarter holding in very, very healthily. You're seeing revenues start to tick back up. So can you talk a little bit more about that price volume mix conversion? That's been a debate for a while now, I think, over a year. So where are we in that transition process?

Yes. Like a good question. And just stepping back a little bit, right, going back to maybe a couple of years now, there was a big debate whether single cell, there was any sort of market left there, just in general in terms of usage and in fact, there was sort of a thesis that was going down going forward. And we -- our strong belief is that there's tons and tons of market demand. In fact, there's way more volume than people were appreciating. And so our first order of business was to show like increase in volume consistently.

We've done this now for like quite a number of quarters running, double-digit volume growth in single cell despite the fact that the end markets have been just dropping out from under us, especially going back to the first half of last year with the academic kind of disruption. We -- then the next order of business has been to show that the pricing declines can, at some point, start catching up toward volume increases. So volume increases can catch up to the pricing declines.

And the last couple of quarters are showing that we're kind of getting to that ballpark, right? And the next sort of -- the next goal now is to get to the point where pricing does equilibrate and the volume growth, which we expect to continue, translates into now into revenue growth. And I think we're getting closer to that point as we think especially towards 2027. I think that puts us up in a really good position going forward.

Do you think -- is there -- I don't know if there's any way for you to sort of even back this out or demonstrate this. But is the sustained growth you're seeing in the volumes you're seeing, is that sort of from the same project customers have been running before, same old type of workflow? Or is any of this new -- the million Cell Atlas initiative, any things like that? Is that the incremental volume that's driving? I don't know if there's a way to sort of like separate like same project store growth type of dynamic or versus how much is incremental is like driven by large data initiatives maybe with AI angle on it or sort of how that's factoring in yet?

Yes. So unquestionably, like there's -- the big projects and the AI projects are incremental. That would not have happened at like previous price points and with previous sort of generations of products. So that is definitely incremental and it's clearly being enabled by this lower price point. There is also a trend in people kind of running larger studies now, especially with Apex. The -- and we expect that to continue where like the fundamental dynamic is kind of going from where single cell is sort of an esoteric technique where you pick and choose your samples and run a few at a time where you flip it to where the entire cohort runs it.

And I think we're in a transition where people are kind of getting into that mind space and really Flex and especially Apex has been sort of a game changer there. And we're hearing that from customers like now this changes the way we think about things like pretty fundamental.

I mean anything you can say in terms of like where you are in some of those programs kicking off? It's just -- are any of them sort of at steady state yet? Is it still sort of in early testing, early development in terms of like implementing price?

I think a lot of the stuff -- well, are you asking about the AI programs, the large-scale projects?

Yes.

Yes, I mean, look, there's definitely like very large projects that are running that have been run. There's like these PPI models that are getting published. But all of that is like very much early days. Everyone -- every single model that's out there, the conclusion at the end of it is like, okay, the next step is do we need 10x as much data and then we'll see -- we'll really see value come out of that. And so I think everything that we're seeing is in the sort of early stage of that exponential. And if AI broadly, kind of speaking, has taught us anything over the last 10 years is this insatiable hunger for data, right, and the scaling and the fact that scaling just delivers more and more value and more scaling.

And from where you are now, Chromium Flex, does that give your customers enough? Or is there sort of -- are they coming back already like, no, we need even more. You got to give us, no pun intended, 10x more, 10x more data, 10x more samples.

Yes. There's always that kind of feedback. We do see Apex at this point is still very kind of early, like it is very enabling to the next easily nice order of magnitude for what people need. When you start kind of going beyond that to really huge numbers, this is where actually kind of 2 logs of scaling. This is where Atera actually starts becoming compelling because, yes, you could pump like a lot of cells through that. Again, I don't think this is like demand that's currently in single cell, but kind of as we think about the future and like really massive new projects coming in, I could see that some of them will start landing on Atera.

And I mean, whenever we talk about some of these mega projects, there's always a component of it where there's cost beyond 10x cost, right? There's a sequencing cost, there's a lot of back-end work. And there's always that trade-off of you're getting cheaper and then the others getting cheaper, right? And which one is outpacing the other. Is that coming up more? Is that a bottleneck at all the other parts of the ecosystem outside of Chromium or...

Yes. Well, so like I mean, that's the beautiful thing, the really fun thing all of a sudden in this world where with both Ultima and Roche now, the price per read has dropped like hugely. And so yes, it is definitely a huge enabler now. Again, to your question, would these projects have been possible before this massive AI modeling. They would have been constrained by the cost of sequencing if we went back a few years ago, and they're now absolutely possible. I mean this is a massive change in the ecosystem, which is something we absolutely love.

Yes. So $80, $100 a genome so far is not really a problem, sequencing cost?

No. But if you think about it with Roche and Ultima is also like really accessible, the cost per read is actually lower. So the whole genome price does not represent the price because you can use simplex reads and so then it actually becomes even cheaper than the whole genome price would indicate. Yes, so I mean these are massive drops.

Okay. Okay. Maybe a high level one, then I'll sort of rotate you from there. I don't know if you've got any closing remarks you want to make. When we think about 10x over the many years, we've covered you, certainly very, very innovative, starting with Chromium, you know how the portfolio has evolved, and there's always been new and greater products right around the corner. You've got Atera. What's next, right? Is there -- how much further do you want to expand the market opportunity? What are the other areas you're thinking of? Obviously, you now want to do Atera launch first, but just sort of like what else do you have in your back pocket? Or what are you looking at?

And yes, there's a lot of things we're excited about. I do want to caution that Atera is a huge launch. And we've already laid out a road map on top of Atera that's going to be coming out in the next year and beyond. There's a lot of more capabilities that we're looking forward to building there. We mentioned like full end-to-end automation, for example, that instrument is really well suited for that. We mentioned proteins, multiomics and generally measuring proteins, which is very exciting. I don't think ever -- anyone has quite got proteins right yet. And I think there's a huge opportunity there, and we're very excited about that.

There's additional applications around kind of on in-tissue sequencing, base-by-base kind of sequencing, which will also open up new applications. And there's all kinds of really exciting areas now you could do with software and computation, AI that is also enabling and kind of is going to be relieving the major bottleneck that has been in place for all of our platforms, right? All our platforms generate by definition to measure biology, a lot of data, large-scale data. And the bottleneck historically has been ability to analyze and get the insights.

And now we have the means to very efficiently for all of our customers to get the insights. And that is also something that's been absolutely game changing that we see internally and that is going to be very enabling to our customers. So as far as like product development and R&D, plenty ahead of us just based on our current platforms. I do also want to make -- kind of go back to a theme that we started earlier this year. We have now also advanced over the course of last year and kind of look into the future, the potential of clinical diagnostics using these technologies has also come into much sharper focus.

This is a function of a few things, certainly progress on the technologies and especially now you see what Atera is able to provide, which we were obviously talking about that at the very beginning of the year, but now shows scale, like we're at the point where we can really generate clinical evidence at scale with these both like on the Chromium and Spatial side. There's increasing amount of evidence from just scientific literature about the fact that these biomarkers that they affect progression of disease and therapy success. And the world is like rapidly moving in this direction with more and more therapies and increasing need of the right kinds of diagnostics to guide therapy selection. And we see huge opportunities in that, and we're leaning in very intensely and are very excited about these efforts. It's not necessarily a story quite yet in terms of revenue for the near term. But as we think about sort of the future, I think there's potential for really massive businesses to grow out of that.

Okay. Plenty to stay tuned for, really exciting. All right. With that, we're going to have to end it. Thanks so much. Thanks, everyone, for joining us. Serge, Adam, really appreciate it.

Thank you.

Thank you.

Good afternoon, and welcome to 10x Genomics' First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Cassie Corneau, Senior Director, Investor Relations and Strategic Finance. Thank you. Please go ahead.

Thank you, and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the first quarter ended March 31, 2026. If you have not received this news release or would like to be added to the company's distribution list, please send an e-mail to [email protected]. 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.

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. 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.

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. 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.

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. 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.

Thanks, Cassie, and good afternoon, everyone. We had a really nice start to the year, with solid sales momentum, a step change advance in our product roadmap and strong execution across the business. Revenue for the first quarter was $151 million, representing 9% growth over Q1 2025 when excluding the nonrecurring settlement revenue in the prior year period.

In Single Cell, we again saw double-digit growth in consumable reaction volumes, driven by Flex Apex. As we have expected and as we have been seeing over the past several quarters, our new products with more accessible pricing have been unlocking new ways of Single Cell demand.

Similarly, in Spatial, we again delivered double-digit growth in consumables revenue, which was driven by Xenium momentum. Spatial biology remains in the very early stages of adoption and the vast majority of the opportunity is still untapped. The biggest highlight since our last call is without a question, the launch of our new instrument platform, Atera. Atera represents the most significant product introduction in our history. Among many other benefits, it enables, for the first time, Spatial whole transcriptome analysis with Single Cell sensitivity at scale. We believe Atera is poised to redefine how biology is measured and understood. We went into the launch expecting a very strong response from researchers and the broader scientific community. And what we have heard so far has been extraordinary.

Before I talk about what Atera is and what it does, I want to spend a moment on why we built it. The central challenge of biology is that it's very complex. It is complex in just about every system in just about every sample. Biological systems comprise massive numbers of molecules and cells interacting with each other in a bewildering diversity of ways. Addressing this complexity requires tools that can measure biology at large scale and high resolution. And historically, technologies available to researchers have lacked the necessary scale and resolution.

Furthermore, the tool set of biology has been very fragmented. We have used one set of technologies for analyzing tissues, another for measuring cells, and yet another for working with molecules. But that's not how biology works. It works by specific cells expressing specific molecules in specific locations within tissue. That has always been the promise of Spatial biology. It represents the convergence of the different tools for analyzing biological systems. It entails measuring molecules, cells, and tissues together, preserving a full context at massive scale and incredibly high resolution.

However, until now, despite many advances, spatial biology has been fundamentally constrained by limitations of existing technologies. Researchers have been forced into frustrating trade-offs between the critical attributes they care about across throughput, specificity, sensitivity, scale, performance. To gain in one area, they have to compromise in others.

We built Atera to address all of these trade-offs and to unlock the full potential of spatial biology. Atera is the product of a long-held conviction about where biology needed to go and years of deliberate work to get there. It is poised to become the large-scale discovery engine, whether for basic research, AI-driven science, or translational applications.

We believe that now spatial will increasingly become the default approach for analyzing biological samples. It is important to appreciate that Atera brings together a set of capabilities that until recently were not even thought possible for a single platform. It delivers very high levels of plex, including whole transcriptome at sensitivity comparable to Flex Apex, the gold standard for single cell analysis. Enabled by refined probe chemistry, it delivers high specificity and data quality and non-negotiable for researchers and their collaborators to be able to trust the data.

And Atera delivers a step change in throughput, with a single instrument capable of processing up to 800 whole transcriptome, 1 cm2 samples per year, or more than 3,000 if using the targeted Atera Select panels. This increase in throughput now enables large cohort studies at a pace and scale that were not previously feasible.

Equally important is the user experience. Atera builds on the proven Xenium workflow, which is already highly robust, widely adopted, and well-regarded by our customers. Atera runs on standard, off-the-shelf glass slides, which makes the platform inherently scalable across labs and experiments and enables distributed sample collection. Using standard slides also allows customers to access archived samples from biobanks and other repositories. In addition, Atera uses a universal sample preparation approach that works across tissue types, supporting different sample types on the same slide to provide extra flexibility and scalability.

We have also developed powerful computational and software tools, so that customers can effectively work with the data. To handle spatial biology at this unprecedented scale, the most computationally intensive part of the workflow, image processing, is performed directly on the instrument, driven by high-performance onboard GPUs and optimized algorithms. Data is processed efficiently at the source and translated into actionable biology in real time. From there, customers have the flexibility to use their own on-premise infrastructure or leverage our 10x Cloud platform for analysis and collaboration, ensuring that Atera is not just generating more data, but also making that data easy to use.

We built Atera to be a long-duration, upgradeable platform, and we intend to continue delivering new capabilities over the years ahead. The roadmap on the platform includes workflow automation designed to enable true sample-in, data-out capability, protein multiomics, in situ sequencing for spatial mutation and variant detection and continued development of our 10x Cloud platform for multi-sample analysis and collaboration.

As I mentioned, the early customer response has been extraordinary. We had high expectations coming into this launch, and the reception has exceeded even those expectations. One customer told us that this was the largest technology leap they've seen in their career. Another called Atera's capabilities the holy grail. Others, to convey their enthusiasm, have used the kind of language that would not be appropriate for me to repeat in this forum.

And this enthusiasm is translating directly into demand as we take pre-orders ahead of initial shipments expected in the second half of 2026. Even in a challenging capital equipment environment, customer conversations have immediately centered on how to incorporate Atera into their research programs, not whether to buy it. In many cases, the discussion starts from the assumption that this is a must-have platform, and quickly moves to multi-year programs, large cohort studies, and the scale of insight generation that is now within reach.

Atera fundamentally expands our addressable market across 3 high-growth segments. In discovery research, initiatives like the Human Cell Atlas can now map entire organs and tissues at unprecedented scale and speed. In translational research, clinical cohorts can be comprehensively characterized to understand patient response patterns; something our collaborators are already validating, as shown by Carl June at AACR. And critically, large AI models represent an entirely new market where Atera's billion-cell-per-year capability enables creation of virtual models at a new level of scale and sophistication. Each segment unlocks distinct applications while reinforcing our position as the essential platform for spatial biology.

As we have been saying for some time, we believe AI represents a significant and structural tailwind for our business. The potential to transform our understanding of biology is enormous, but progress depends critically on generating vastly more of the right kinds of data. From the beginning, we have built our platforms precisely for that purpose. Products like Flex Apex, and now Atera, exemplify this imperative and are seeing intense interest from customers building AI models of biology.

The partnerships we have announced over the past year reflect and reinforce these trends, including the Chan Zuckerberg Initiative on the Billion Cells Project, the Arc Institute around the Virtual Cell Challenge, and Xaira Therapeutics to build the largest perturbation dataset ever reported.

And just last month, we announced a partnership with Bioptimus, an AI-focused biotech company. Bioptimus is building STELA, a global initiative aiming to profile up to 100,000 patient tissue specimens across 3 continents. The goal is to build the data backbone for a world model of biology. The initiative is starting this effort on our Xenium platform and plans to expand to Atera over time.

And just last week, the Chan Zuckerberg Biohub announced its new $500 million Virtual Biology Initiative. The goal of the effort is to build AI models that can accurately simulate cells and tissues in silico. This initiative is an incredibly ambitious undertaking that would not have been conceivable even a few years ago. Now, because of progress in AI and in technologies for measuring biology, there is a path to that vision. There is increasing evidence that scaling laws apply in biology just like they do in other domains. What we now need is many orders of magnitude more data, specifically of molecules, cells, and tissues across vast numbers of contexts. This initiative is galvanizing the broader scientific ecosystem, with an aligned view that this direction is the next grand challenge for advancing science and medicine, analogous to the Human Genome Project and its role in catalyzing the genomics era.

Taken together, these programs are exactly the type of large, multi-year initiatives our single cell and spatial platforms are built to enable. AI is poised to fundamentally reshape how science is done, and large scale high-quality biological data sits at the center of that transformation. As AI models improve, we expect an exponential increase in the demand for the kind of data our technologies produce. This reinforces our conviction in the importance of what we are building and the vast size of the opportunity ahead.

Building on another theme that has become increasingly prominent in our business, we are seeing growing interest in translational applications across both academia and biopharma. Customers are increasingly focused on identifying human-relevant drug targets and, critically, biomarkers of response for therapies that only work in subsets of patients. There is now a growing body of evidence supporting the value of single cell and spatial approaches in uncovering these signals. At the same time, our recent product advances have made these technologies far more practical to deploy in translational settings.

In Single Cell, Flex Apex has been a game changer for large-scale translational studies, because of strong performance on FFPE samples, streamlined workflows, and a cost profile that enables large cohorts. In Spatial, Xenium has proven to be a robust and powerful platform for extracting meaningful insights from clinical samples. Atera is now poised to extend that momentum by enabling much larger studies with significantly more information content per sample.

While our technologies are relevant across the drug development continuum, a particularly large opportunity lies in later-stage translational settings, where biomarker strategies are essential to understand patient response and potential toxicity. This is where our solutions can meaningfully improve the probability of success, and where we are increasingly focused. Over time, these trends also reinforce the potential for single cell and spatial in diagnostic applications.

To realize that potential, the critical next step is the generation of robust clinical evidence on large patient cohorts. As we have discussed previously, we are pursuing 2 parallel paths. One, we are continuing to support our customers in their studies and will partner with them to enable clinical deployment in the future. And two, we are advancing our own internal efforts to generate clinical evidence for specific high-value applications. We are making progress in the 2 previously announced areas of tissue-based spatial profiling for oncology and blood-based single cell monitoring in autoimmune disease.

Stepping back, this quarter has been emblematic of the great work by the whole 10x team. We launched a game changing new platform, saw continued sales momentum and engaged in powerful partnerships with our customers to drive the future of research and healthcare. All while maintaining laser focus on tight execution. This progress continues to reinforce our strategy and puts us in a great position for the opportunities ahead.

With that, I will turn the call over to Adam.

Thanks, Serge. Before walking through the detailed financials, I want to reflect on the last 12 months. A year ago on our Q1 call, we were operating in a highly uncertain macro environment after drastic changes to government research funding that led us to withdraw our full-year guidance. Since then, and despite persistent challenges in the macro environment, we have consistently executed, improved our operating profile and have grown our cash balance by over $100 million. The business is in a meaningfully stronger position today.

With that, I will now walk through our first quarter 2026 financial results in more detail. Unless otherwise noted, all growth rates referenced reflect year-over-year comparisons.

We had a solid start to 2026. Revenue for the first quarter was $150.8 million. Excluding the impact of non-recurring settlement revenue in the prior year period, revenue for the first quarter was up 9% year over year. This reflects continued momentum in the key drivers of our business as well as some benefit from orders received late in the fourth quarter that shipped in early January.

Total consumables revenue was up 13%, with growth in both Single Cell and Spatial. Single Cell consumables revenue was up 6%, supported by double-digit growth in reaction volumes, and Flex continued to be the most popular assay by volume in the quarter. Spatial consumables continued to perform well in the quarter, with revenue up 31%, driven by Xenium consumables.

Total instrument revenue declined 24%, with Chromium instrument revenue down 12% and Spatial instrument revenue down 32%.

Looking at revenue by geography. Excluding the impact of license and royalty revenue in the first quarter of 2025, Americas revenue was up 9%. EMEA and APAC grew 16% and 5%, respectively.

Turning to the rest of the P&L. Gross margin was 70% for the first quarter of 2026, as compared to 68% for the prior year period. The increase was primarily driven by lower warranty costs and lower inventory write-downs, partially offset by a decrease in license and royalty revenue.

Total operating expenses decreased 15% in the quarter, primarily driven by lower outside legal expenses and lower personnel costs. As a reminder, Q1 2025 included a one-time gain on settlement related to patent litigation. Excluding this impact in the prior year period, operating expenses decreased 20%.

We ended the quarter with $540 million in cash, cash equivalents, and marketable securities, up $113 million year-over-year and up $16 million sequentially.

Turning to our outlook for the rest of the year. We are maintaining our full-year outlook and expect 2026 revenue to be in the range of $600 million to $625 million. Excluding upfront revenue related to patent litigation settlements in 2025, this represents 0% to 4% growth over the full year 2025.

At the midpoint, our outlook remains consistent with what we provided in February, including double-digit growth in both Single Cell consumables reactions and Spatial consumables revenue. We built our initial outlook with the Atera launch in mind, reflecting our expectation that some customers may delay additional purchases of our current Spatial products in anticipation of Atera.

Looking at our quarterly cadence. As previously discussed, first quarter revenue represents a higher proportion of our expected full-year revenue, driven in part by orders received late in the fourth quarter of 2025 that shipped in January. We expect second quarter revenue to step down sequentially from Q1, reflecting lower Spatial sales as customers wait for Atera to start shipping. We anticipate the third quarter to be broadly similar to the second quarter. In the fourth quarter, we expect Atera shipments to begin contributing meaningfully to revenue, though initial production capacity for Atera will be limited in 2026 as we ramp production.

Looking ahead, we remain focused on customer success, disciplined execution, and strengthening our financial position, which support continued investment in innovation across our portfolio.

With that, I will turn the call back to Serge.

Thanks, Adam. Before we open it up for questions, I want to pick up on Adam's earlier remarks and reflect on how much difference a year makes. While our internal conviction never wavered, the external circumstances a year ago put incredible pressure on the 10x team. Yet, we executed with relentless discipline, met every challenge and significantly improved our operating profile, all while launching multiple critical products including Flex Apex, to change the world of Single Cell, and now Atera, the biggest product introduction in our history.

To the 10x team, I could not be more proud or thankful for how you responded and what you have delivered. Thank you. Thank you for everything that you do.

With that, we will now open it up for questions. Operator?

[Operator Instructions] Our first question comes from Patrick Donnelly from Citi.

Maybe on Atera, Serge, a lot of color there. I appreciate it. Can you just talk about the early conversations in terms of the funnel, what end customer you're seeing the highest reception or interest level from? And then secondly, also on Atera, just how we should think about the launch timing, what that impact is on the portfolio? It sounds like you guys are preparing for some customers to delay on their Spatial purchases in 2Q and 3Q. Would love just a little more color on how you're thinking about that.

Yes. Thanks, Patrick. Thanks for the question. Yes, like I said earlier in my prepared remarks, really, really excited about Atera. We had really high expectations going into the launch, and it's been incredibly gratifying to see the response from customers, which I would say even probably exceeded our really high expectations. And as far as how that translates into demand of the preorders, well, that has been really, really encouraging, really strong. And the interest is coming from everywhere. We -- like I can't actually point to any particular area of the market or any particular area of our customers that are not expressing interest in this. And our internal -- like our effort is on customers who can quickly scale, serve demand for others like service providers and generally evangelize that platform for the future. So that's how we're approaching the market and the signal, again, has been just so resounding. It's been really, really, really fun to see.

Now as far as sort of the second part of your question, obviously, Atera is a really compelling product. We've known that since for a long time. We've been anticipating and planning for this launch for a long time. And we also very much anticipated there were going to be some changes to ordering dynamics from our customers. And overall, it's all going really very much in accordance with our expectations. Again, we have lots of experience with past product launches and new kind of versions of things and new capabilities. And so we've been prepared. And of course, there's going to be effect on customer order patterns.

Naturally, customers adjust their thinking about future projects and such in light of Atera, which puts some pressure on some of our spatial business like we talked about earlier. But all of that is incorporated into our guide. So -- because at the same time, while people are starting to contemplate for the future with Atera, right now, our customers are running their experiments because they have established workflows. They have ongoing studies, they have grants budgets. They're really used to the workflows. They really like the data. Remember, these products, our Spatial products are leading in the industry. There is a lot of really great resonance with them among our customers.

And also, realistically, if people are just now deciding whether to go forward with Atera, they probably won't be getting their instruments until well into 2027, right, most of them. So the fact is that existing products, existing Spatial products continue at a robust pace, consistent with our expectations. So we feel really good about that. And I think all of that information has been incorporated into our guide pretty well.

Our next question comes from Matt Larew from William Blair.

Serge, you called out one of the new TAMs around AI. I think last quarter, you mentioned that was a relatively low percentage of revenue, but you referenced today a number of new initiatives you're involved in, both on the Single Cell and Spatial side. So as you've had those discussions and gotten some sense for how customers are going to be building out their plans, what's your sense for what ultimately that TAM could look like and how it might grow over time?

Yes. I mean that is a really good and really important question. I would say -- so a couple of things, is going back to what I said back in my prepared remarks. We fundamentally believe and we are seeing that AI is a structural tailwind to our business. If you think about what is happening now with the progress in AI, it's sort of this emergence of increasingly large models that are increasingly powerful in being able to make predictions and inferences. And what they all universally need is large amounts of data across many different kinds of context and specifically the right kinds of data too, right?

So for biology measuring biology, and I said earlier, the right biology is around molecules, cells, and tissues and being able to measure them at a large scale and high quality is imperative. And that's precisely what we have built. In fact, that is like the central premise of the mission of the company. And so it's a really exciting moment right now for us, the emergence of these kinds of models and the emergence of the AI capabilities because it just resonates so strongly with our mission and with our strategy from day 1 of the company.

And now as to the question of how that translates into revenue and what is the TAM here. The fact is it's so already when you look at our customers and how AI is used and what it is driving, it's actually really pervasive at this point across our customer segments and across applications. I don't think at this stage there isn't a large project where AI isn't a big driver or if not the biggest driver of that project.

And when I look at even smaller scale experiments, in many instances, they are performed with an eye towards feeding the data into AI models and scaling up down the road as well. So when we look at our business, fundamentally, kind of this AI wave of progress is really lifting all of it all across. So I think -- and that's for really good fundamental first principles reasons. And so we do see it as a structural accelerant to -- across our product line and across our application set. And in many ways, that's by design.

Our next question comes from Doug Schenkel from Wolfe Research.

This is Madeline Mollman on for Doug. Gross margin in the quarter, I think, came in a little better than we and the street were expecting. As we think about the full year, are you anticipating any impact to gross margin from increased inflationary pressures related to memory or petroleum-based plastics? And then thinking about Atera ramping up as the year goes on, should there be any dilution to margins from the Atera launch?

Hello, Madeline, Adam here. Thanks for the question. Yes, I mean, we're absolutely monitoring costs closely. The couple that you mentioned, but other input costs that have inflationary pressure, managing -- that team is managing that quite well. So we're still anticipating margins for the year to be in the mid-60s.

To your question on Atera specifically, as that launch, we mentioned that that would be -- we start shipping units in the second half, it will be heavily weighted towards Q4. And as has been sort of typical in our portfolio, the instrument margins will come at margins that are less than that of our sort of standard portfolio.

So I'd anticipate as that starts to move in, particularly in Q4, we start to see a little bit of margin pressure, but still feel highly confident that we'll end up in that mid-60s for the full year.

Our next question comes from Mason Carrico from Stephens.

I was just wondering if you could provide, I guess, a bit more detail on Spatial instrument revenue this year. I mean, how material is the Q1 to Q2 sequential decline? How many Atera instruments do you ultimately expect to place in Q4? And then I guess as a follow-up, how many placements do you think production will be able to support in 2027 as you ramp production?

Sure. So yes, I mean we are, as we mentioned or as I mentioned in the prepared remarks, we're anticipating a step down from Q1 to Q2 and Q3. So we continue to -- we'll continue to sell Xenium, but it will be at a lower rate than what we saw last year and particularly over the next 2 quarters. We certainly built that into the guidance, I think as Serge just mentioned earlier. So that's certainly part of the plan that we have. As it relates to total number of Atera, we're ramping up production right now. Anticipate between Q3 and Q4, we'll sell approximately 40 units, and those will be mostly weighted towards Q4. And again, that's all sort of factored into the guidance range that we've provided.

Our next question comes from Luke Sergott from Barclays.

I just want to talk about the pricing strategy and the positioning there with Atera versus the Xenium and the rest of the spatial portfolio. I understand that this is like you're calling it the biggest launch in the history of the company. I mean, you guys did a pretty good job on Single Cell. But now as you look towards Spatial, is this where you kind of look like, all right, we're just going to launch Atera and then cannibalize or essentially put all the other platforms and applications and customers onto one box? Or are you trying to segment the market here because it seems like there's quite a bit of risk of cannibalization versus Xenium.

Yes. Luke, thanks for the question. I mean there's a lot of questions embedded in that one question. First of all, I will say that, yes, me saying that this is the biggest, most significant launch in our history was -- has been intentional, and I am very keenly aware of our history and the success we had with Single Cell improvement. For sure, I do think this is fundamentally, like I said, a platform to change how we measure biology and will fundamentally redefine many aspects of science. So I feel very, very excited about it and for like really fundamental first principles reasons.

As far as kind of where this is headed, like I said, I mean, if we look at the kind of the short-term impact, we have been -- we have planned for those really, really carefully and all of those dynamics are incorporated into the guide quite carefully. And so we feel really confident about that. And then, yes, we feel really, really good about kind of as we look into next year and what Atera kind of opens up. The way that we see it is that Atera is poised to really kind of really break open a lot of markets, a lot of opportunities, a lot of customer samples and a lot of new customers. If you think about kind of all the different constraints that have kept existing Spatial users from running more or from -- that have cut other people on the sidelines from entering Spatial, we have intentionally built Atera to really remove all those constraints, to address all of them.

And so if you think about just kind of from a perspective of technical enablers, just to kind of list a few, like the whole transcriptome capability really addresses the constraints that were there because of customization, which limited applications, limited tissue types. Now people can sort of go forth with no worries that it's going to work across all these different areas. Throughput was another huge constraint, has been in the past where people have -- where people have had to take a few samples at a time from, if they have a clinical trial, a large cohort could only run a few. Now they can do kind of the full cohort, the full large study they have always wanted to do.

And now also with the off-the-shelf life capability, now you have access to all these archive samples, all these biobanks that just like multiply by a large amount the availability of samples that are available. And this is all consistent with the feedback we are now hearing from customers. So it's just like fundamental huge expansion of the TAM and potential for these platforms. And our thinking as far as to your question on pricing has been consistent with that to enable these very large -- kind of very large expansion of the opportunities that we're seeing ahead of us, whether it's basic discovery, translational research, or all of these AI-driven applications.

Like I said earlier, people really like our existing products, Xenium, Visium, really, really powerful products and capabilities. And for the foreseeable future, we expect them to be really, really robustly used. And kind of as we go forward, kind of further out, there's going to be more and more applications that will migrate toward Atera, more customers and more samples as well. And that's going to be an amazingly great thing for us.

Our next question comes from Dan Brennan from TD Cowen.

This is Kyle on for Dan. I wanted to ask on your OpEx. OpEx was down quite materially year-over-year and Q-over-Q. And I know you mentioned it a few times or a little bit more detail on the call, in the prepared remarks. But can you just talk about sort of where the jumping off point is for OpEx going forward, just given SG&A and R&D were down quite a bit year-over-year.

Yes, sure, Kyle. Yes, I mean, I think as you're aware, we've really been trying to manage our costs in a super disciplined way. And as you noted, we are on a good trajectory here. Keep in mind, last year had that the onetime gain on settlement. So excluding that, OpEx is down 20% year-on-year. We're still anticipating and giving ourselves some flexibility as it relates to continue to invest in the business and anticipate that the business or that OpEx year-on-year will be roughly flat.

Our next question comes from Kyle Mikson from Canaccord.

First, could you talk about the Spatial instruments in the quarter? It seems a little bit weaker than what we had, and I thought I heard you had some like a benefit in January or something like that. So just talk about how we should think about that line going forward, especially with potential market freezing and things like that? And then secondly, Adam, on the guidance for 2Q, are you talking about like a mid-single-digit decline quarter-over-quarter or more like a low single digit?

Yes, sure. Let me take the second part of your question first. So yes, thinking about a low single-digit decline Q-o-Q is really the way that we're thinking about Q2 and then fairly similar as what we would anticipate for Q3, then with the balance getting us there on the guide in Q4. Yes, I think really what -- the way to think about spatial instruments for Q1 is really there was fairly significant anticipation regarding what we were going to announce in April. As you may recall, we did a campaign at AGBT. And certainly, word started to spread. And as you can also imagine, we were working with some of the early access customers under NDA just to make sure we were going sort of down the right track with the customers that would have been adding either a new Xenium or to their Xenium fleet that ultimately have decided in Q1 and will decide to wait for Atera.

The second thing I would just note, we don't see the macro backdrop being any meaningfully different for CapEx than where it's been. But I'd be remiss if I didn't say it's still fairly constrained. But the predominant rationale around sort of Q1 and where we came in on Spatial instruments is really just around the anticipation of the product launch. And then I would just echo what Serge said earlier in the call, the enthusiasm around Atera is extremely high. And what we're finding is even in a constrained capital environment, customers are finding CapEx. We've got orders and folks are -- this is the type of launch where folks and find money. And I'd also just add that the timing, we were thoughtful and tried to work around the timing of our launch just to ensure that it's built into budgets, whether that's for customers that have a year-end sort of come fall customers that need to get this into grant submissions.

And then certainly, we want to make sure that our customers are well-positioned as they start to think here as we move through the year as they start to think about the 2027 budgets, we wanted to make sure that they were earmarking funds for Atera.

Our next question comes from Michael Ryskin from Bank of America.

This is [ Anvika ] on for Mike. On Atera manufacturing capacity, you noted the initial demand would be limited in -- production would be limited in 2026. What are the primary bottlenecks to scaling the output from here? And how quickly do you think you can ramp toward meeting that level of demand you're seeing?

Well, yes. So the question is around just scaling up the production of instruments. The fact is it's always, this is a really sophisticated instrument, as you can imagine. And we want to be very smart and measured around how we build it and how we test it. We are very, very careful with these kinds of launches. And like Adam said, we feel good about what we can do in '26, and we're going to keep ramping production as we exit the year into the next year.

Our next question comes from Subu Nambi from Guggenheim Securities.

This is Thomas on for Subu. A lot of focus on Spatial and maybe one on Single Cell here. Can you just share any color on what pricing headwind you may have experienced, if any, in the quarter from Apex and then what you're anticipating for the second quarter?

Yes. I would say the general trend has been similar to what we saw in Q4 as far as sort of the mix and the pricing dynamics around Flex Apex. It is -- I would point out that it's still like very early here in terms of the launch. We only have a partial Q4 for the launch and then the Q1, so just a bit over 1 quarter. So far, very happy with the progress, really, really great feedback from customers and really large scaling up of volumes of the product.

So overall, I feel good about Single Cell and kind of how it's proceeding. Again, still early time in the launch. But all in all, like really, really strong trajectory.

Our next question comes from Sam Martin from Deutsche Bank.

This is Sam Martin on for Justin Bowers from Deutsche Bank. I just want to ask a couple of quick questions around the Visium platform. So I think last quarter, you mentioned Xenium had become the Spatial platform of choice. And now with the launch of Atera, another launch and, I guess, upgrade really within the Spatial realm. I just want to kind of get your updated thoughts on, a, customer demand for Visium year-to-date with the launch of Visium HD really just over 2 years ago. And then your thoughts on really the future of the Visium platform and whether or not you still think it has a space in your portfolio?

Yes. Good question. So as I've been saying for the past several quarters, there's clearly a trend in the market towards kind of the imaging-based readout and in particular, towards Xenium. It's been huge resonance within sort of Spatial circles of the Xenium platform. And with the launch of Atera, we obviously kind of anticipate that trend to get reinforced going forward. But that said, certainly, Visium has its place as well. There's many customers who absolutely love the platform and running it very robust and very consistent across very large numbers of samples. And we expect that it's going to have its place. It's going to continue to have its place. It's a great assay for many applications and well-regarded by many of our customers. And of course, we'll continue to support it and we'll ensure customer success.

Our next question comes from Puneet Souda from Leerink Partners.

So I don't know if this was already covered, but just trying to think about does this have any additional -- the Atera launch, does it have any impact on the decline or maybe an acceleration in decline in the Visium usage? And if you could talk about how does the -- if there is anything else that you can do to sort of mitigate that or address that before the launch? And wondering if there is a desire from customers to pull the launch forward a bit to address their high level of interest in the instrument here.

Yes. So a few different kind of questions here. I think as far as Visium is concerned, I mean, there's going to be some effect, right? A Spatial platform. And like I kind of I said earlier, there has been a trend of converting towards Xenium. And I think there's going to -- that sort of trend is going to continue with the arrival of Atera. There is definitely a place for Visium. Customers really like the data. They're going to keep running it. And while the launch of Atera is going to put pressure on both Spatial platforms, it's going to put pressure on Visium too, that is all incorporated into our guide.

And I think it's always -- sometimes we have a lot of experience with different product launches. And one thing that's important to appreciate that I think sometimes people kind of underestimate is the amount of kind of built-in stickiness that exists with products, right? People have ongoing projects. They've got their workflows. They have the data that they're used to that they really like. And so that's what's showing up. That's what we're seeing in the field, kind of robust continued use of these products and these capabilities.

As far as kind of Atera and the demand for it, I mean, certainly, people are like very, very interested. And we're going to be -- the team is working really, really hard to deliver the instrument to the world as fast as possible. We're being very deliberate. They're very rigorous and really excited to get it out there and trust me, working as hard as they can to get it done quickly.

Our next question comes from Tycho Peterson from Jefferies.

This is [ Priya ] on for Tycho. Just wanted to hear on like the clinical adoption and scaling there. You mentioned that Atera can analyze up to 3,000 core biopsies per year. So I guess what is the specific feedback from biopharma partners regarding the platform's readiness for integration into large-scale Phase 2 and Phase 3 clinical trials?

Yes. I mean good question. I mean the fact is actually the number -- when I talk about the number of samples that a platform can process, I specifically refer to 1 centimeter squared areas. And in fact, it's possible to put more samples onto if you need to, like if you're doing tissue microarrays and things like that. So there's additional scaling that depending on your format of your biopsies and what you're interested in measuring, that's possible there. And so the platform does enable like really, really massive scaling. And the conversations with biopharma have been really encouraging as both Apex and Atera have been very resonant, both by virtue of opening up translational applications, the sample types, and the scaling, all are very enabling. And so yes, we do feel like this is going to be a big driver, especially as we kind of think about next year and beyond.

Our last question today comes from Dan Arias from Stifel.

This is Paul on for Dan. There's been some messaging of Atera as providing sensitivity at the level of Single Cell sequencing. So I mean, obviously, there will still be lots of use cases for Single Cell. But on the margin, do you expect any Flex volumes over time to potentially move to Atera? And just kind of on that same idea, you mentioned in your prepared remarks that the double-digit Chromium reaction volume growth was driven by Flex Apex. Just wondering if reaction volume is growing at what kind of level, excluding Flex Apex?

Yes. So as far as the sort of Single Cell relative to Atera kind of question, it's a reasonable question to ask, but not something that we're expecting to be an issue in the near term nor is it anything that we're hearing from customers at this stage. If you think about just kind of configuration of the product and the capabilities which you get from it, the pricing, the workloads, everything is sufficiently different. We do expect that in the long run, there's going to be really massive experiments with Single Cell that will be possible with Atera that had not been previously possible before. But we see that as the future. And we're certainly not seeing any effect on the Single Cell business at this stage or in the near term. And yes, in terms of reaction growth, yes, we're seeing it across multiples of our applications.

And also, this is the last question, just before we hand up, I wanted to kind of finish with a couple of closing thoughts. And just personally just how excited am I about the setup we have for 2027 and beyond. If you look at it through the product lens, 2027 will be the first full year of Atera, really the year of Atera. And then if you look at Flex Apex, by that point, it will gain widespread adoption and pricing on the single cell side will have stabilized. And so the growth in volume will naturally then translate into growth in revenue.

And then when you look at it through the market lens, we expect this exponential increase in AI-driven research and all the AI influenced science that's going to be happening out there and then the scaling of translational cohorts is really set to kick in as we look to next year. And then from the macro perspective, at the very least, we will have good compares. And to the extent the conditions improve, we should see an acceleration to all the other trends.

This will conclude today's conference call. Thank you for your participation. You may now disconnect.

Thank you for standing by. My name is Karli, and I will be your conference operator today. At this time, I would like to welcome everyone to the 10x Genomics Fourth Quarter and Full Year 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions]

I would now like to turn the call over to Cassie Corneau, Senior Director, Investor Relations and Strategic Finance. Please go ahead. .

Thank you, and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the fourth quarter and full year ended December 31, 2025. -- if you have not received this news release or would like to be added to the company's distribution list, please send an e-mail to investors @intenomics.com. An archived webcast of this call will be available on the Investor tab of the company's website, tennecgenomic.com for at least 45 days following this call. .

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. 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.

Additional information regarding these risks, uncertainties and factors that could cause results to differ appears in the press release Connect Genomics issued today and in the documents and reports filed by PEMEX Genomics from time to time, with the Securities and Exchange Commission. 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. Joining the call today are Serge Saksena, our CEO and Co-Founder; and Adam Pace, our Chief Financial Officer.

We will host a question-and-answer session after our prepared remarks. We ask analysts to please keep to 1 question so that we may accommodate everyone in the queue. With that, I will now turn the call over to Serge.

Thanks, Cathy, and good afternoon, everyone. Today, I will start with an overview of our Q4 and 2025 performance. I will then talk about some of the key trends driving our business and how they position us well for future growth. Adam will then talk through the financials in more detail. We delivered $166 million in revenue in the fourth quarter, exceeding the high end of our guidance range. and closed the year with $599 million in revenue, excluding $44 million of upfront revenue related to patent litigation settlements. .

In the fourth quarter, the operating environment remained largely unchanged from Q3. Customer spending remains subdued and capital equipment purchases remain particularly constrained. The uncertainty in research funding dynamics continues to impact customer sentiment and timing of purchasing decisions. Despite this challenging backdrop, we saw a modest budget flush towards the end of the quarter, and we continue to be encouraged by the solid underlying demand for our solutions.

As I reflect on 2025 overall, I'm extremely proud of how the team executed throughout the year. While 2025 was challenging and at times highly unpredictable for our customers and the broader life sciences ecosystem. The team delivered consistently quarter after quarter. We made steady progress across the fundamental drivers of the business. advanced our product road map and strengthened our financial position. First, we saw strong momentum in key metrics that are driving the fundamentals of the business. single-cell consumables volumes grew at a double-digit rate each quarter, driven primarily by adoption of our newer lower cost products, including flights and on-chip multiplexing.

These products have expanded access enabled new applications and support increased experimental volume. In spatial, we delivered double-digit consumables revenue growth for the year, driven by Zenium momentum. Strong demand for Zenium translated into meaningful customer expansion throughout the year. At the same time, existing customers, including the earliest and largest users continue to ramp their utilization. We are encouraged to see customers exploring new applications, running more experiments and expanding the scope of their studies.

Second, we delivered multiple product launches across both single cell and spatial compared to even just 2 years ago, we have vastly expanded the capabilities of our platforms through continuous innovation. Within single cell, the launch of our next-generation flex assay in 2025 and now branded as Flex APAC represents a meaningful step change in the capabilities of the Chromium platform. Flex Apex combines exceptionally high performance flexible inputs, including compatibility with SFP and fixed whole blood. It supports both small exploratory experiments as well as 1 with high sample counts and large numbers of cells, making it well suited for massive scale studies.

Flex Apex delivers these features at a lower cost per experiment and as enabling expanded access to single cell driving increased reaction volumes and supporting broader adoption across our customer base. Over a short time, we believe Flex has become a foundational assay for several of the most important growth areas in the field. including large-scale AI and virtual call offs, translational cohort studies and biopharma discovery and development workflows. As a result, Flex became our most popular single cell assay by volume in the fourth quarter.

We continue to hear strong feedback from customers on its ability to enable larger, more ambitious studies that were previously in practical. We look forward to seeing what our customers will accomplish as these studies progress. We also had meaningful launches across our spatial platforms in 2025. Within Visium, we launched Vision HD 3 Prime to enable researchers to conduct all transcriptome analysis across a broader range of applications and sample types. We also launched HG cell segmentation to address a key challenge in spatial analysis, helping customers visualize ftstructure in more precise detail.

Within Zenium, we launched RNA and protein, enabling multimodal analysis on the same traction in a single integrated workflow. Together, these launches significantly expand the capabilities of our spatial portfolio. As I mentioned last quarter, when it comes to spatial, we have seen a strong and growing preference among our customers towards Zenium over other approaches. This trend has continued and will likely accelerate going forward. It is a reflection of both how well the technology works as well as the abundance of insights. The scientists are gaining from the platform.

Based on the feedback from our customers, it's becoming clear, Zenium is the best choice for the vast majority of customers interested in spatial. And finally, we meaningfully strengthened our balance sheet over the course of the year. We grew our cash balance by more than $100 million year-over-year, reflecting disciplined cost management and focused execution across the business. We intend to continue to effectively manage costs and strategically invest in innovation and long-term growth.

As we look ahead to 2026 and beyond, we believe we are well positioned to build on the progress we have made with several trends propelling growth going forward. First, there has been rapid parallel progress in AI and in the technologies used to measure biology. These 2 trends are highly complementary Advances in single cell and spatial technologies have increased scale, lowered costs and made it possible to generate very large high-quality biological data sets. While advances in AI are creating new demand for that data. Importantly, this represents a shift in how research is conducted with the AI increasingly acting as a driver of data generation rather than just a downstream analysis tool.

We're seeing growing interest in large, well-controlled studies, including perturbation based experiments designed to capture complexity and resolve causality in biological systems. The partnerships we have announced over the past year exemplified and validate these trends. We're supporting the Chan Zuckerberg Initiative billion cell project, which is generating unprecedented volumes of single cell data to fuel AI-driven biological discovery. We're also working with Art Institute on the virtual Cell Atlas using large-scale perturbation data generated on our platforms to train to validate next-generation models of cell behavior.

In addition, our collaboration with the Cancer Research Institute is focused on building high-quality, well-controlled data sets to better understand immune responses and accelerate progress in the immuno-oncology. Together, these efforts illustrate how our platforms are becoming foundational for AI applications in biology. Another area that has become increasingly important for us and 1 we see as a meaningful growth driver going forward is translational research. We're seeing growth in translational research for 3 fundamental reasons: First, in multiple therapeutic areas like oncology and autoimmunity, we have an increasing number of therapies, but only a limited understanding of which therapies are appropriate for which patient.

Second, there is increasing evidence from literature that single cell and spatial have very promising approaches for discovering actionable biomarkers and signatures of response. Third, our platforms have made big advances in scale, cost and robustness as well as incompatibility with critical clinical samples, most importantly, FFP and whole blood. It is now straightforward to run large-scale cohort studies. And this is precisely what many of our customers have been doing. We announced a number of initiatives last year with academic medical centers and with industry partners to undertake large-scale translational studies.

Translational research is also an important driver of biopharma adoption. -- single cell and spatial technologies have relevance across the drug development continuum. But the largest opportunity lies in the later translational stages where by and market strategies are essential to understand patient response and potential toxicity. This is where our solutions can meaningfully improve the probability of success and where we expect to increasingly focus our efforts. And finally, as this translational work has been picking up, we're hearing growing interest from customers in applying our technologies to patient care.

Based on that, as well as a growing body of scientific leadership we believe there is a significant potential for single cell and spatial biology in diagnostic applications. Realizing the potential will require the generation of robust clinical evidence and deployment of these technologies in the clinical setting to enable clinical applications of single cell and spatial analysis we're pursuing 2 parallel paths. First, we're continuing to support our customers in generating clinical evidence and we'll collaborate with them to enable clinical deployment in the future.

In parallel, we believe we, ourselves, are in a unique position to accelerate the arrival of some of the highest impact diagnostics, given our technology leadership, understanding of applications and strong position in the research ecosystem. As part of the strategy, we recently announced 2 collaborations with leading academic medical centers to support clinical evidence generation. With Dana Farber Cancer Institute we're focused on tissue-based spatial profiling to support biomarker discovery and therapy selection in oncology. When Brigham in the women's hospital, we're pursuing blood-based monitoring approaches to enable longitudinal assessment of disease activity and treatment response in order immune disease.

We expect to expand this set of collaborations over time as we continue to build programs across various indications. We're also building out a clear laboratory to enable clinical deployment of the resulting tests. Stepping back and setting aside the current macro environment, it's hard not to be excited by our position of the company. We believe we're at the nexus of some of the most important fronts our industry has ever seen. We have a powerful innovation engine, a high-performing organization and a strong balance sheet. We're focused on delivering continuous innovation across our platforms and believe 2026 will be a particularly exciting year as we advance our road map and bring new capabilities to our customers.

I feel incredibly privileged by the position we're in and optimistic about the opportunity ahead. With that, I will turn the call over to Adam.

Thanks, Serge. Before reviewing the fourth quarter results, I want to take a moment to reflect on 2025 as a whole. Despite a highly volatile external environment that drove some variability in quarterly revenue, -- we exited the year in a strong financial position. We remain disciplined on spending, strengthened our operating foundation and meaningfully increased our cash balance positioning the company for a strong future. With that, I will now focus my commentary on our fourth quarter financial results and the related drivers. .

Details of our full year results can be found in today's press release. All growth rates referenced reflect year-over-year comparisons unless otherwise noted. Revenue for the fourth quarter was $156 million. This represents 1% growth over the prior year and exceeded the high end of our guidance range. Our fourth quarter results reflected a challenging operating environment, balanced by continued momentum in the business. As mentioned during our remarks at a recent investor conference, we also saw some unanticipated budget flush late in the quarter, which partially contributed to performance in the period.

Total consumables revenue was up 6% with growth in both single cell and spatial. Single cell consumables revenue was up 3%, supported by double-digit growth in reaction volumes, in part due to our lower priced flex assay. Spatial consumables continued to perform well in the quarter with revenue up 14%, driven by Zenium consumables. Total instrument revenue declined 36% with Chromium instrument revenue down 44% and spatial instrument revenue down 30%. Consistent with the patterns we saw throughout 2025, instrument revenue in the fourth quarter remained under pressure given ongoing funding challenges for capital equipment though we did see a sequential uptick due to year-end capital spending.

Looking at revenue by geography. Americas revenue declined 6% and while EMEA and APAC grew 7% and 9%, respectively. While the Americas region remained muted amid continued softness in the U.S. academic and government funding environment, EMEA performed better than expected, driven by some late quarter orders as customers work through year-end spending. APAC had a solid quarter, consistent with our expectations. Turning to the rest of the P&L. Gross margin was 68% for the fourth quarter of 2025 as compared to 67% for the prior year period. The increase was primarily driven by lower inventory write-downs as well as lower royalty and warranty costs, partially offset by higher manufacturing costs.

On the operating expense side, we continue to execute with a strong focus on operating efficiency and cost discipline. Consistent with this focus, total operating expenses decreased 18% in the fourth quarter, primarily driven by lower outside legal expenses and lower personnel costs. We ended the year with $523 million in cash, cash equivalents and marketable securities, up $130 million from the end of 2024. Turning to our outlook for 2026, while the funding environment continues to be muted, it has reached a measure of stability that we believe supports reinstating full year revenue guidance. We expect 2026 revenue to be in the range of $600 million to $625 million. Excluding upfront revenue related to patent litigation settlements in 2025, this represents 0% to 4% growth over the full year 2025.

At the midpoint, our guidance implies a continuation of the trends we saw throughout 2025, including double-digit growth for both single-cell consumables reactions and spatial consumables revenue. The guidance range also assumes CapEx funding remains constrained, which will continue to put downward pressure on instrument revenue. We expect the overall environment to be consistent with the second half of 2025 with customers remaining cautious in their purchasing decisions. We were encouraged to see the recent NIH budget approval as well as decisions on both indirect funding and multiyear funding as part of the bill.

Notwithstanding this improved clarity, there is still significant systemic turbulence in research funding dynamics that continue to impact customer sentiment and timing of purchasing decisions. Additionally, as we think about the cadence of the year, we anticipate first quarter revenue to be a larger percent of full year revenue as compared to prior years. This is partially driven by orders received late in the fourth quarter that were shipped in January. Moving to the rest of the P&L. We expect our overall financial profile to further strengthen in 2026. The cost discipline we've embedded over the past year has translated into tangible operating efficiencies.

Moving forward, we expect to sustain these productivity gains while continuing to drive improvement across the business and advancing a strong slate of product introductions. With that, I will turn the call back to Serge.

Thanks, Adam. Before we turn it over for questions, I'd like to acknowledge just how tough 2025 was for our customers and take a moment to thank the 10x team. despite all the turbulence, you stay focused on our work, our customers and our mission. It hasn't been easy, but the progress you've made on multiple fronts is nothing short of remarkable. As a company, we're stronger than we've ever been. We're entering 2026 with great momentum and the landscape of profoundly important opportunities ahead of us. Thank you for everything you do. .

With that, we will now open it up for questions.

Operator?

[Operator Instructions] Your first question comes from Tycho Peterson with Jefferies.

I was just wondering, month or so into the year here, if you can maybe just comment on anything on ordering patterns that you're seeing right now? And then give us a quick walk on what you're baking in for academic and pharma, in particular, on some of these larger procure type studies -- and then also clinical. I mean, you're not the first company today to mention single cell and spatial and clinical. So I'm just curious how you think about the time line of that opportunity.

Thanks, Tycho. Yes, several questions embedded in there. So first of all, just the general kind of sentiment out there and the customer orientation. Yes, we would say that it's been -- the environment has been -- is similar to what it has been for the past for the past couple of quarters. The second half of '25 is very similar to what we're seeing now and what we expect to see kind of throughout the rest of the year. Certainly, it's been gradually improving, certainly compared to the first half of '25. But there's a lot of uncertainties still remaining and caution among our customers.

There's a number of issues that are going on in the academic sphere. U.S. academic funding. When it comes to staffing, when it comes to the timing of disbursements criteria by which grants are reviewed and judge, universities are uncertainties around their budgets. Multiyear funding market recessions, things like that. So overall, I think the environment, like Adam mentioned, is generally pretty steady. And not as bad, again, as it was in the first half of last year, but there's still a lot of uncertainty remaining.

On -- as far as this year is concerned and kind of the drivers going forward. Certainly, we're excited. As I mentioned earlier in my remarks, there is a big wave of AI-driven projects [indiscernible] applications and our products, especially Flex are incredibly well suited for that purpose. And you can actually see that now coming out in preprints. [Technical Difficulty]

[Audio Gap] Quarter. And I'm wondering if you can take a minute and talk about how are you thinking about Flex, I mean the Apex product playing out throughout the 2026 our pricing is going to be impacted as the adoption for that growth? And how should we think about the 3 prime Piran GenX kits switching over to potentially to Apex and how to think about the pricing headwind from that because that could be fairly meaningful. So I just want to understand those drivers and sort of the timing of how that plays out.

Yes, Puneet, thanks for the question. Yes. So first of all, yes, in Flex Apex. We launched it last quarter in Q4 and strong -- was really strong out of the gate. It's too early to talk about sort of the breakdown of the different versions of Flex within the larger assay category, but obviously it did really well. and also now getting great feedback as customers are actually running through the experiments, generating data and looking forward to ramping and to increasing their usage. So all kind of great trends. Again, I'll emphasize that it's still very early. It was only partially available in Q4. And so still we are still very much in the early part of that adoption curve.

Now as we think about going forward, I think it's kind of important to delineate the different buckets of single cell use kind of going back to your question around where Flex is going to get adoption. So first of all, there is a lot of new use cases, and it's a bios trend here -- what we hear from customers that this Flextec is now opening up new opportunities, new experiments that the new studies that they weren't contemplating before. And so that is purely additive. And that's where our commodity team is focused on is driving these applications, enabling these new use cases, enabling all this additional volume.

Also, there's a large production of single cell use where people are just not going to switch back to your question about Universal from 3 prime. We have lots of other products that are uniquely necessary for the use cases that researchers are using for. also established workflows where they are not looking to switch. And then finally, there's people that are going to switch either from the earlier versions of Flex or from some of the other products like [indiscernible] and what we're hearing is that some of them will just spend the same amount of money in the same budget that they have, but just run more samples. And some will run same number of samples, but be less per sample. It's definitely kind of a headwind that we are watching carefully.

But 1 thing I just want to emphasize that it's important to appreciate -- that is not just a single price drop across the board. There's multiple dynamics here and multiple categories of customers. And our focus is fundamentally on driving additional extra volume. And clearly, that was a good trend that we saw in Q4. As Adam mentioned, out of the gate, there was a greater than 30% reaction volume growth. And it's not an unreasonable kind of anchor point to think about 2026.

Your next question comes from Dan Arias with Stifel.

Serge, can you maybe just talk about the push into the clinical translational space? -- it sounds like it's going to get going with these institutions that you talked about last month. What are your expectations when it comes to those types of customers using single cell and spatial products -- and then how broad is that push going to be this year? Is it sort of meant to be a pilot program of sorts with those hospitals? Or is it part of a larger commercial effort ?

Thanks, Dan. Yes. So there's actually 2 separate sort of categories of efforts that we have. There is a future-looking set of initiatives that we're undertaking to stand up huge clinical applications for diagnostics in the future using single cell and spatial technologies. We're super excited about them. A lot of it is driven by just the internal customers and from physicians that are out there. And as I mentioned earlier, our goal here is to kind of pursue a hybrid strategy where we enable our existing customers to develop clinical evidence and to ultimately deploy these technologies in a clinical setting. And we're also undertaking our own efforts to build our clinical evidence and build up a clear or to deploy these tests. .

We believe we have -- we can do this particularly efficiently, leveraging our existing assets. I'm very excited about these efforts. They are future looking. That's it, they're also synergistic with their current business because they provide a measure of validation to where this technology is going,to give people customers' comfort in adopting the single cell and spatial in research -- in the current research applications and then drug development applications.

And then kind of the second category of efforts, more and more near term around, again, translational research. This is where our products are already being used. And there's potential for a lot more. Again, there is a fair amount of kind of our single cell products on spatial being used on patient cohorts to look for biomarkers to drive drug discovery. But the promise here is to really scale this up and make it rise and go to more customers with much larger volumes. I would say that the opportunity there is at least as big as what we have seen in basic science, -- and our products now are in a place where they can support these kinds of applications, these kinds of efforts. And it is a big focus for our commercial team this year as well.

Your next question comes from Kyle Mikson with Canaccord.

The comment on consumables and reactions growth was helpful on instruments in this guidance. here. Just could you talk about which franchise you think will experience the largest impact from the CapEx headwinds in '26? And then secondly, -- just on translational revenue with the new biopharma focused commercial team, were there any like proof statements in '25 that give you confidence that biopharma can break through like 30% of revenue in '26 to get to be half of revenue over time?

Well, so yes, so let me pick up that second question first, Kyle. So yes, we're very excited about the potential for translational research, I would say that both in sort of in academia and medical centers, academic medical centers and biopharma. Our eventual goal, you're right, is to drive to a place where some like half of our revenue is driven by biopharma. We're not making a claim about doing this year, clearly, but we expect to take steps in that direction this year. We talked about adoption in large-scale translational research projects last year. quite a few of them publicly announced. And even this year, we've already announced a number of them. And I think it's pretty clear that this is just the beginning. .

When we talk to biopharma customers, there's clearly potential for single cell use and spatial use all across the drug development continuum. We have been very much kind of historically focused on the early discovery stage. And now there's potential to expand downstream into translational use cases into biomarker programs. And both the dollars that are spent there and the size of the cohort, the size of experiments is just much larger. And so that presents a really great opportunity for us, for which there is tangible at this point early evidence of potential. And like I said earlier, our products are not a place where they're perfectly suited for those applications.

I can take the second piece of the question, Kyle, around CapEx. I mean what we're seeing broadly is that -- and anticipating in our guidance that the CapEx funding environment just broadly remains constrained. That said, there is typically more pressure on the higher end side of CapEx. We actually grew Chromium instruments on a unit basis year-on-year from 24 to 25 we did that in large part, and we'll continue to do so as needed in 2026 here by working with our customers, trying to ensure that we're getting any of the capital barriers they may have sort of out of the way. And if we can get package type deals where there's a consumables commitment, it ends up working out well given the margin profile in our consumables. So we'll continue to do that into '26.

Your next question comes from Dan Brennan with TD Cohen. .

Great. Thanks for questions. Maybe 1 on the price volume again for Chromium. So is it fair to think that in the flat Chromium consumable guide, it's kind of a similar math, maybe volumes of 20 price down 20. I know the price is kind of a tricky thing because it's not like-for-like. But I guess that's the first question. Second 1 is just while NIH is still under pressure, albeit hopefully getting better, you put up good numbers overall in China and EMEA. So I'm wondering if you could speak a little bit to how you're thinking about the outlook what's baked into the guide between the different academic customer groups in different regions, even if U.S. is weak, like are there other reasons could they pick it up?

And then final 1 is just the balance sheet, really strong, great cash generation what are the plans with the cash that you're building as we look at in 2016?

Maybe I'll start with that last question. Yes, look, very, very happy about the balance sheet. Obviously, that was a big focus for us last year. for multiple reasons, big one, just to give us a question. The environment was highly, highly unpredictable, and we wanted to make sure that we can execute on our priorities regardless of what happens to the strong environment. And so as part of that as a consequence, we've done a great -- the team has done a great job of increasing efficiencies and driving really tie cost management in a good place now. Also, it gives us like a really strong position and ability to deploy capital as we as necessary as we look at kind of the landscape of opportunities out there. we're always looking at evaluating kind of again, the landscape. I don't have any hard rules around where we might invest, always driven by fundamentally the strategy. looking to where the world is going.

What are the big opportunities, what are the big questions we need answering and then determining what technology needs to be built, what products need to be built in the service of that. and kind of that's what drives our investment philosophy and again, good to be in a place where we have the resources to pursue our strategies.

I can take the -- or at least give you some thoughts, Dan, on the price volume as it relates to Chromium. And again, we thought kind of coming back to our guidance philosophy and trying to provide information that we think is useful for modeling and understand our business, the reason that we provided kind of at the midpoint, we're thinking about chromium consumables as flat. There's a bunch of different combinations and ways that you can get there. I guess what I would share with you sort of again is in Q4, 30-plus percent reaction growth in the Chromium business grew 3%.

And we're not suggesting, obviously, what I'm telling you at the midpoint that the Permian business on the consumables is flat, not suggesting that it's going to be plus 30%, down 30 -- there's a bunch of different ways we can get there. And given the underlying complexity of the portfolio, we certainly have been trying to do our best to communicate that. But Flex Apex just came out. We had fairly a stub of a quarter in Q4, good trends here early in Q1 and a lot of that, both on the price side, given the mix of product and product price as well as the volume is really going to play out during the course of the year. And even on an internal basis, we can see sort of how that could play out. That's really part of the range on the guide that we've provided. .

Your next question comes from Patrick Donnelly with Citi.

Great Adam, maybe some for you just on the guidance. Can you just talk about the confidence on the spatial piece. It sounds like you guys are talking about good growth there. just that shift with Zenium and Visium, it sounds like Zenium is picking up a little bit. So yes, if you could just talk about that, it would be really helpful. Then you did mention the cost profile kind of strengthening up. If you can put anything around the margins, that would be helpful. Appreciate.

Sure. Yes. Let me start sort of on the spatial side. We had a very strong year on spatial consumables in 2025 and driven entirely by the Zenium franchise. So Visium, just full disclosure in 2025 didn't grow. So all of the growth that you're seeing in the spatial consumables side of things comes and more from the Zenium side of the business. customer sentiment is incredibly strong. Utilization rates are fantastic. I think as we've discussed before, we've got customers that run them around the clock and have to go sort of expand their fleet. We've still got new customers buying in. Even in a CapEx-constrained environment, we've been able to do an admirable job. -- sales team is doing a really good job getting instruments out there.

So I feel confident where we are in the spatial consumables number that we can hit double-digit growth again here in 2026. I think just broadly to your question on cost, Yes. It's really important for us just to ensure that we're deploying resources wisely. We spent a lot of time in 2025, really ensuring that we're making moves to strengthen our balance sheet. We were successful in that regard with cash up $130 million from the end of '24 to where we are right now. And you'll continue to see that type of cost discipline here in the company as we move into 2026.

Your next question comes from Mason Cargo with Stephens, Inc.

Last year, you gave full year reaction numbers for Chromium, Visium and Zenium. It seems like you guys chose to not give that this year. Could you just give some color on Zenium reaction growth in 2025 would be helpful to gain some insight in the utilization trends there. And then you guys have answered a handful of questions on Flex. But as you talked about the adoption cadence, I mean, are you expecting the transition to be a more gradual migration or more front-end loaded this year?

It, yes, let me just take the first question first. I mean the short answer is like it's a little too early to tell. Like I said earlier, like Alan just said, we didn't even have a full quarter in Q4 of Flex Apex adoption. Clearly, -- there's a lot of pent-up demand, and that has been really great to see. There's also been great feedback coming back from customers who are actually adopting it and using it. and there's a lot of interest in ramping up and especially ramping up new kinds of experiments that were -- that people weren't contemplating before but again, it's just -- it's too early.

All the early signs are encouraging, but it's too early to talk about like the very specifics of the gas.

And yes, you'll see when we when the 10 pay hits the wire the reaction to your question there, and I think it was specific around enumenium reactions or 14,500 for the year, and that was up about 34% over prior year. And like I said, that will be in the K.

Your next question comes from Subu Nambi with Guggenheim Securities.

Looking ahead to AGBT, how are you thinking about competitive dynamics from some other players launching solutions this year? And what levers can you pull to stay ahead from a share perspective? Are there any competitive pressures baked into guidance at this point?

Yes. So look, we feel really good about our position. business in both in spatial and single cell. We have -- as you look at what has been happening recently, the last several quarters, it's been kind of a similar story. -- pretty consistently where not much when you look at spatial, but really not much an effect on our business. Clearly, Zenium is growing really fast, much faster than sort of other offerings out there much from a much higher base. We -- as we go forward, we feel really good about our competitive position, both with respect to current competition and as well as any potential competition that's out there.

We've been elevating continuously over the past several years and extending the gap between us and other potential offerings. And we certainly -- again, we keep a pretty good pause about what's happening either in the landscape and various products and launches and feel quite good about where we are relative to the landscape.

Your next question comes from Dan Leonard with UBS.

This is Lu on for Dan. I think 1 question given that it didn't grow in 2025, can you just update us in terms of like the go-forward strategy on the platform? Any plan to put it back to positive growth?

Yes. So sum is a good platform for quite a number of applications for customer use cases. And -- we have been very diligent in making sure we support those customers and drive those applications. And we absolutely will continue to do that. But that sounds like I said earlier, we're learning more and more, like with pretty strong definitiveness that Zenium is really the best choice for spatial analysis for the vast majority of use cases.

And we have been investing in the Zeno platform. We expect to keep doing that in the future. And yes, and that's kind of how it's going to, I think, to balance out going forward. a lot of growth going forward in Zenium, and Vision will have its place.

Your next question comes from Michael Ryskin with Bank of America. .

Great maybe a boring one, but your comments about the timing shift or the pacing through 2026, then you called out 1 could be larger compared to prior years because of orders late in the fourth quarter. Could you just expand on that a little bit? Like anything in particular that stood out there, just relative to your comments on budget flush with 1 customer and our product line -- just a little bit unusual if you guys have such a meaningful swing. Just kind of want to get a sense of what that's attributed to. Maybe was there any additional price you gave to capture those orders. Just color around that would be helpful. .

Sure. SP-3 Yes, I can take that one, Mike. Yes, I guess to the last part, not really a pricing dynamic. We did mention, I think, at an investor conference in January that we did see some unanticipated budget flush, which is part of the reason that we ended up beyond the guide that we had set. Some of those orders that came in late December, we weren't able to fulfill until January. So that was a couple of million dollars that essentially carried over and spilled into Q1.

So that's part of what gives us confidence, although it's a fairly small number for Q1. And then again, we're a good way into Q1. So the way we're thinking about the quarter is historically, -- we've been 23-or-so percent in Q1 as you think about sort of the full year, probably about 1 point higher than that. So closer to 24% as we think about Q1 as a percent of where we are if you're thinking about that at the midpoint of the guide.

Your next question comes from Luke Serge with Barclays.

This is Sean Sam on for Luke. Just wanted a quick update on the timing of the scale technology integration. -- are the expectations to kind of retain roughly the same throughput that scale on its own can achieve while retaining the same quality of the legacy 10x technology? And -- are you able to kind of use the proposition of this new sort of integration to win over these new AI customers now with kind of the promise of providing some of the even higher throughput down the line?.

Yes. So yes. So first of all, on the question of sort of AI customers and those applications. The -- like predominantly, the right solution there is flex Apex that's real many really, really well for a number of reasons. It's incredibly scalable. It has huge sense like really, really good sensitivity. It's really robust, works across many different cell types and tissues. There's a lot of kind of technical reasons, but it is just a really, really great product.

And again, there have been papers on it now. Preference have been coming out just validating just that's really perfectly suited for that. As far as the scale technology is concerned, so what is current on the market, as we've said before, like kind of on the spectrum of our overall revenue, it is not really material. And we are obviously excited about the technology that the scale brings to us and incorporating it into future products. We haven't yet talked about what those future products are -- but there is definitely a great potential in due time, that we'll talk about.

Your next question comes from Casey Woodring with JPMorgan.

Great. Maybe first one, I wanted to dig into your plan to set up a CLIA lab. Can you maybe talk more about which indications do you plan to target first and the timing of generating clinical evidence for these diagnostics applications and actually standing up the lab and going through all the certifications and all that? And then how should we think about the CapEx required to build out the lab and that return on investment over time? And -- maybe just as a follow-up to that piece, how should we think about potential impact from diagnostics customers that are seeing 10x enter as a competitor?

Yes, good question. So these are very good thematic questions here. One, maybe to step back, just let me emphasize that how we're excited about this direction. A lot of it driven by the interest from our customers and just generally physicians out there. We believe there's edge potential in clinical applications of single cell and spatial -- it is -- we are starting to make some initial investments and first along this direction. They're early. They're really for the future. .

One great thing is that we have a lot of assets, both in terms of technology, in terms of our position in the research market. in terms of the infrastructure we have here where building up clinical evidence is actually really, really efficient for us. And we can do this in a way that doesn't really materially impact our P&L. Our strategy is a hydro strategy where we absolutely are going to enable customers to develop clinical tolls in the future.

We are working with quite a number of them right now, help them generate clinical evidence, help them deploy those tests, the necessary sees in the future. But again, we also believe we are in a unique position for some applications to really accelerate their arrival and to drive the impact sooner and faster than they otherwise would have been possible. because -- again, because we have these assets that we can deploy in a really, really cost-effective manner to do that.

We talked about 2 big applications. specifically for tissue-based tumor profiling to guide the therapy selection for all these new generations of therapeutics. They're coming -- they are now coming online that are targeting different expression markers and also blood -- we talked about an application of using single cell from blood to guide monitoring a treatment selection for water in new diseases, not a really, really big and exciting application. So again, these are efforts all aimed towards the future.

We have set out to build a clear lab and we're targeting early next year. to stand it up. Again, we believe we can do it very efficiently and make use of a lot of the assets we already have. And in that sense, it's going to be very minor impact on our P&L.

Your final question comes from Matt Larew with William Blair.

I wanted to follow up on AI. One is for Atom, which is if you could quantify at all either revenue orders related to AI and '25 or the expectation of $26 million. The second part, surge is for you, which is, I guess, a bit higher level. It sounds like demand right now is in service of the larger projects, virtual self foundation models. I guess I'm curious if you expect that work that demand to be iterated over time where customers are constantly building models based in part on large pertubation set rather than sort of a 1 and done. That's kind of the first part.

And last year, there were some papers out around the idea of in silico perturbation. So I'm curious how you see that complementing or competing? And then the third, I guess, higher level on surge is you have a network of CRO partners around the world and certainly 10x, you're an expert user of your own product. So just as you have some of these more nontraditional companies or groups of people entering the space and building models, maybe if the customer group might shift at all for your products and maybe if that alleviates the capital constraints that some smaller customers might face if it becomes more outsourced.

So I understand there's a lot there, but I guess 1 is the near-term opportunity. And then the bigger 1 sure how you see the space play out over time.

Yes. So maybe I'll start there. First of all, in terms of kind of providing potential service offerings to customers that they kind of want to generate very large data sets. That's really something that has been on our minds, and then we certainly have people come to us, and we do have some service offerings that could potentially play a larger role in the future. as we think about this. bigger kind of stepping back, the bigger part of your question around potential for AI and how will it evolve? Yes, look.

I think very much at kind of your first framing, where we use the continuous kind of growth in demand and scale I don't think there's any 1 to think that we are anywhere near the scale we need. -- and that there's going to be any less usefulness to generating more and more data where we currently are. So I think we're just at the very early stages of the sort of scaling revolution for generating AI. It's sort of very analogous to what has happened in other domains where AI has been applied and there is good reasons to think why it might be even more relevant and powerful for these kind of biological data sets where the complexity is just enormous.

There is -- and then sort of the second kind of part of your framing there was whether in silico experiments can at some point, replace some of the sort of biological data generation. And yes, I think strong view. I think it's very hard to argue with the fact that biology is just like insanely complex, and we're very, very, very far from understanding it. if we get -- started getting close to the point where we're actually like solving biology, then okay, but we are like very, very far away from it. And so the runway here is enormous. We need to generate lots and lots of data -- and I don't think there's anyone who would materially disagree with that premise.

And maybe I'll just pick up that last -- that first bit of the question was like in terms of how much demand is driving right now. I kind of mentioned earlier, I mean, it's meaningful. We talked about very large projects last year that they have been running, they have been gearing up but still a relatively small percentage of the business. We do expect all this to grow, and a lot of it is actually being driven by Flex bags. It is the perfect assay for all these projects for driving perturbation screening, but doing across many different cell tires and tissues. But it's still very, very early days. And like I said earlier, what's particularly exciting here is that as we look to the future, there is really no capital upside here.

There are no further questions at this time. With that being said, we'll conclude today's conference call. We thank you all for joining. You may now disconnect.

Okay. Thanks, everybody, for joining us today. My name is Casey Woodring from the Life Science Tools and Diagnostics team. Welcome to the JPMorgan Healthcare Conference. Pleased to be joined today by the management team of 10x Genomics. As per usual, with these sessions, we'll do 40 minutes, about half of which will be the corporate presentation and the other half will be Q&A.

So with that, I'll pass it off to Serge.

All right. Thank you. So first, this slide contains important information about forward-looking statements we plan on making today.

So with that, yesterday, we announced our preliminary Q4 and full year 2025 results. We had about $599 million in revenue for the full year and $166 million in Q4, exceeding the high end of our Q4 guide. We also generated about $40 million in cash to bring our balance sheet to over $0.5 billion.

I have to say that I'm really, really proud of the team. Last year was pretty crazy in many ways, major upheavals in a bunch of our end markets. And the team executed really well throughout the whole course of the year. Nice momentum in key metrics that are driving the fundamentals of the business, multiple new product launches and really strengthened our balance sheet. And so as I stand here today, as I look to the future, I would say that we're probably in the strongest position we've ever been as a company.

Stepping back, from the beginning, when we started the company, we started with the premise that this is the century of biology, that there is multiple exponential processes happening that have the potential to transform human health to really advance the human condition. And the key challenge, what we're stymied by is the lack of fundamental understanding of biology. Like what we don't know is much greater than what we do. Maybe we understand something like 10% of biology.

And so our goal at 10x, our mission has been to accelerate the mastery of biology to advance human health. And the key challenge in doing that is that biology is very, very complex, easy to state, but it's still a very underrated fact. You have to think of myriad of molecules and cells and tissues interacting with each other in all kinds of complex dynamic ways, which means to address that complexity, you need tools that can measure it at scale and resolution.

What that means is measuring lots of things, scale and measuring the right things, resolution. And when we started the company, technologies at the time did not really allow you to do that. They were fundamentally lacking. So you would be missing most of the necessary biology, most of the necessary view of what is necessary to drive the understanding.

And so we set up the company to become really good at building technologies, building tools to measure biologies for life sciences. And that entailed building deep expertise across multiple distinct areas of -- in a culture of tight multidisciplinary collaboration to move fast and rapidly develop products. Our philosophy is to think of the future, think about where the world is going, what are going to be the open questions and then work backwards to figure out what products need to be built and what technologies need to be developed in the service of those goals, in the service of those questions.

And so this -- the innovation engine, this ability to build breakthrough products rapidly and also know what products to build, we see this as the foundational capability of 10x. It gives us tremendous sustained advantage and sets us up for many opportunities as the center of biology unfolds.

To start with, we focus very much on the research tools market on basic science research in order to accelerate basic scientific discovery. This has served us really well and also has set us up really in a great position to take advantage of future opportunities that are now starting to emerge, especially ones having to do with advancing human health more directly.

And so our innovation engine has been incredibly productive over the past decade. And the question is what are the products, what are the platforms that it has delivered. And here, like an important thing to appreciate is that the key to understanding biology is to understand what is going on at the cell level. The cell is the fundamental unit of biology. And until recently, we didn't really have the means to measure biology at that level. With previous generations of tools, you take your sample, you mix the contents of all the cells in there together and you measure that mixture, which gives you an average profile but doesn't really tell you what is going on in the underlying system. And sort of like the analogy I've used like shown on the slide is like trying to understand how cars work. But instead of actually looking at individual cars, you kind of -- you munch them all together and then measure how much aluminum, how much glass, how much metal you have in total.

And -- but with our technology now, it has become possible to measure individual cells at really large scale, which effectively gives you the parts list of human biology. And then more recently, with the emergence of spatial analysis, now you can see how cells and molecules are actually arranged with respect to each other in tissue. Essentially, it tells you how all the different parts actually fit together. And so this is actually -- this is really, really foundational because if you think about diseases, almost all diseases, one way or another stem from dysregulation of cell behavior. And if you look at all our medicine, just about all medicines ultimately act by modulating cell behavior.

And so we brought forth onto the market these platforms. We invented, developed and commercialized technologies that now allow researchers to do this highly scaled single cell and spatial analysis. We built instruments, consumables, software to provide customers with end-to-end experience, solutions for analyzing their samples to see biology they could not see before. And these platforms are also reinforced by really powerful capabilities we've built within the company in commercial and within operations.

We have a large direct worldwide sales force. We have best-in-class customer support that's obsessed with customer success. We have really -- which entails really deep expertise across a range of really sophisticated applications, and we consistently hear really great feedback from our customers. Our NPS scores are off the charts.

We also built out really sophisticated manufacturing and operations capabilities to drive quality, robustness, supply chain control and really scalable cost structure. And so we have this awesome set of capabilities now that we have scaled up that we are now leveraging to drive growth and to drive expansion going forward.

And so what is -- one of the best ways to measure the impact that we have been making with all these capabilities we'll build out and the platforms we brought to market is to look at the publications that have come out of our customers' labs. There's now well over 10,000 papers that in high-impact journals across just about every field of biology, every therapeutic area, every disease. It's actually hard to think of an area of biology where our customers have not made fundamental scientific discoveries using these products.

And the reason for that, as I said earlier, just the cell is the fundamental unit of biology. Single cell and spatial are foundational to understanding biology. They are foundational to understanding health, foundational to understanding disease and to ultimately how we're going to figure out how to cure disease.

So now to go a step deeper into each platform. So first, Chromium. Chromium is the unambiguous leader in single cell analysis. It's the platform that catalyzes the single-cell revolution, works on dissociated cells and gives parts list of human biology. And the system is well known for extremely high performance, data quality, ease of use, consistently wins on all the benchmarks, all the rigorous benchmarks out there by, I would say, by a long shot. Now a huge ecosystem of customers, service providers, protocols, papers and supports a wide range of applications and analytes.

The platform has come very far. At the same time, in many ways, it's still just getting started. The vast majority of biological research that could benefit from single cell does not yet. And in fact, over the past year, we've been seeing a new wave of interest in single cell emerging really powerfully, driven by new applications, large-scale AI projects and expansion of translational research. And to a big extent, this has been driven by new products that we brought to market recently. We had a whole set of big launches over the past 24 months, took the platform to a whole new level in terms of performance, in terms of scale, in terms of cost.

And maybe one of the most emblematic examples of these innovations is our latest Flex assay, which delivers on some truly remarkable advances. It's incredibly sensitive, flexible, robust, works across cell types, tissues, sample types, delivers massive scale, both in terms of cells and in terms of samples and also delivers on cost, where the cost is actually getting close to the cost of bulk RNA-seq. And also, it allows distributed and longitudinal sample collection because it has this really robust, really elegant method of sample fixation.

In fact, it works really well in FFPE samples, which is something that was not even possible to contemplate several years ago. It's interesting because until recently, I'd say that this product has been somewhat underappreciated. But last quarter, it became our most popular assay by volume. And it is now, I would say, without a doubt, a revolution in single cell analysis.

Spatial is naturally complementary to single cell, right? Just the same, like I said, single cell tells you the parts list. Spatial tells you how the parts fit together. For us, it comprises 2 platforms, Visium, which is based on next-generation sequencing and Xenium, which uses direct imaging of single molecules directly in tissue. And both platforms have the strength. But increasingly, we're seeing that our customers prefer -- more and more prefer Xenium. And the number of times I've seen customers come up to me with just this visceral delight at the Xenium data they've been seeing is really, really striking. I'm not sure if I've ever seen it for any product, and we've had some really successful products in our history.

As with single cell, there's a large ecosystem of customers, papers, resources. These products have the best performance, best quality of data. It's been shown time and time again in various benchmarks, support a wide variety of applications and also outstanding workflows and ease of use.

The thing to appreciate about spatial is that if you step back, biology is ultimately about measuring molecules, cells and tissues. And in that way, with spatial, for the first time, you can measure all 3 together, which means that it's really kind of a culmination and convergence of what were previously separate fields, molecular biology, cell biology, histology, and it's really the future of how we measure biology. And for many of our customers, the future is already here. They're running their Xenium just around the clock continuously. It's just that the future is not evenly distributed yet.

And we see that as our job, our responsibility to bring that future forward to all the customers, all the potential customers around the world. And we are excited, in particular, to keep pushing on our innovation engine. There's just so much more headroom for innovation in spatial. And going forward, we intend to leverage our R&D capacity to deliver more and more value to our customers to measure more biology, to increase scale, to increase ease of use to keep driving down costs.

Product innovation has always been and will continue to be the foundation of our market growth and expansion. And I would say, if you look at the last 2 years, there's been big step change advances that we have made that have really positioned us well to drive democratization and expansion of our existing customers, existing products, also positions us really well to drive expansion in translational research.

And also, one of the most exciting areas right now of growth is to enable the generation of massive data sets for AI. Indeed, we all know the world is going through a massive revolution because of the advances in AI. What is often less appreciated that there is a parallel revolution that has been happening in our ability to measure, in our ability -- in technologies to measure biology. And the 2 revolutions are actually incredibly complementary. AI has this huge potential to transform the understanding of biology but the key thing it needs is data. And the thing is the potential data, scale of data in biology is essentially inexhaustible. You just need the tools to be able to actually gather that data, to gather that data at scale. And that's precisely what we have done. We've built tools to measure, to generate data, large amounts of data and precisely the right data to measure the right biology. Whereas conversely, for us, the biggest obstacle when we build our technologies build our tools, you can measure lots of critical underlying biology. But going from that -- those measurements to inside is precisely what advances in AI are really geared to do really well.

For now, the greatest success arguably in AI and biology has been in the field of protein folding. And as we go forward, it's becoming clear that the next frontier is going to be cracking the cellular code to learn what determines how cells respond to changes in health and disease. This would be ultimately probably the biggest unlock in science and medicine and has the promise to compress that century of biology into just a couple of decades.

Grand vision, how will this happen? Well, now there have been a number of high-profile publications over the course of the past 2 years kind of laying out this vision for building foundation models for biology with the ultimate goal of fully simulating cells and tissues in silico in the computer. And that's what the term virtual cells refers to. And there's actually deep reasons to think that AI is the right representation for biology. And the fact, the reason we can contemplate these kinds of proposals, these kinds of visions is exactly precisely the progress that we have made in technologies to increase scale, to decrease cost, to be able to generate very large data sets now of the right kinds of data. And I also would point out that this is actually a big shift in how we think about research.

For the first time, AI is actually being the driver of data generation, like instead of being a tool you use at the end once you kind of generate your data to finish your analysis, it is actually the demand generator in itself. to drive science. A lot of the data that's feeding these models is observational in nature, measuring lots of cells, lots of samples, lots of populations. And that gives you a lot of critical information and the models are quite powerful for a number of tasks.

But what becomes a real game changer is data from perturbation experiments. And these perturbations can be anything that affects the state of the cell. And what's shown here is a particularly popular approach, CRISPR-based Perturb-seq, where you target specific genes, you change their expression and you see the effects of those changes in your whole system. You can also use epigenetic modifiers, chemicals, drugs, combinatorial drug libraries. It's an incredibly powerful approach because it not only tells you what the cells are doing but also tells you what causes what, like it resolves causality. It's also incredibly useful practically from the industrial perspective because it enables rapid discovery of high-quality drugs, which is why these methods are also really great interest to biotech and pharma companies, really hold the promise to transform drug development.

And so we've been seeing recently this massive wave of these kinds of projects. They're increasing in number and in scale going from profiling tens of thousands to millions to now assume billions of cells in these experiments. And you see that in the publications, you also see the investments that biopharma, biotech and pharma companies are making. And in fact, because of the power of these perturbation experiments, the term virtual cell oftentimes now refers to specifically AI models built specifically from perturbation data sets.

Now if you consider what you need to actually for -- to make all these efforts a reality, there's a number of things. First of all, you need really massive scale. That's kind of the name of the game in AI, right? Massive numbers of cells and many kinds of cells. And I would say nothing really matches the throughput of Flex and our other solutions. Second, you really need robustness and ease of use. You need to generate vast quantities of data across conditions, types and workflows, and you can't afford to using something that only work kind of part of the time because it undermines the whole purpose of these projects.

And third, you really need high-quality data. This is foundational. High sensitivity to measure your perturbations to measure the effects of those perturbations, high cell recovery to make sure you're actually measuring the cells you're putting in. And as with so many things with AI, garbage in, garbage out. And these are large experiments. These are large undertakings. You can't afford not to have the very best quality of data coming out at the very end.

And specifically, we have worked really hard to build products that emphatically deliver on these needs. Not just us saying it, we've announced multiple partnerships over across this past year, and a lot more customers are scaling up or planning to do more experiments. The feedback has been phenomenal. And we know that more of the stuff is in the works is just the sort of the wave that's starting up. And in fact, today, we are announcing a partnership with the Cancer Research Institute to build a massive data set, what we call discovery engine to accelerate progress in immunotherapy. So the idea is to create a well-controlled, robust high-quality data set as a foundational resource to understand the mechanisms of drug response, to develop new therapies, to ultimately target the right drugs to the right patients. And so we're very excited about this partnership and not just because it's going to enable really sophisticated AI, but it also because it holds the promise of creating a foundation for materially improving patient care.

And this, in fact, brings me to my next point and the next theme that we've been seeing in the market is the adoption of our products in translational research has been a big theme over the past year, and we expect to be a huge growth driver going forward. And that is for 3 reasons. Fundamentally, like in many areas, like immunotherapy for cancer, we have an increasing number of therapies but not a good understanding of which therapies to give to which patient when. And we desperately need biomarkers, we need signatures of response. We need to enable precision medicine.

At the same time, there is increasing evidence coming out of scientific literature. You can also reason from first principles that single cell and spatial is the right technology to find the key biomarkers to develop these signatures. And three, our products have advanced tremendously over the past few years and are now really well suited for this purpose to run these large cohorts of studies in translational areas.

And in principle, single cell and spatial have always been promising for translational research but until recently have been largely confined in their capabilities to basic scientific research, and now a lot of those obstacles have been addressed. Our products work with FFPE samples on whole blood in a distributed sample collection mode. It's now straightforward. Importantly, they have huge scale and cost advantages. Workflows have become much easier. And all of this happened recently. It's now straightforward to run these large cohort studies to uncover drug targets, biomarkers and signatures of treatment response.

And that's what precisely what our customers have been doing. Many translational projects across many different indications, scaling up numbers, scaling up a number of studies, indications. They're looking to understand biology, discover biomarkers and really enable precision medicine, many with an eye toward developing clinical diagnostics.

Translational research is also an important driver of biopharma adoption. There's tons of utility of single cell spatial across the entire drug development continuum from target ID to drug discovery to preclinical to clinical trials, lots of examples of amazing use cases. But so far, we've largely focused in the early stages of discovery. And -- but there is a much larger opportunity to go downstream into later stages, translational stages of drug development, where biomarker strategy becomes important to tell you which patients will respond to the drug, which will have toxicities to dramatically increase the odds of success. And so this is where we see more of our focus going forward, both because there is a need and because the technologies cannot address that need.

And now as this translational wave has been picking up, we are starting to hear more and more interest from our customers in deploying these technologies ultimately for diagnostics, for routine patient care. We actually have physicians coming to us asking for single cell and spatial analysis to run on their patients. And so from everything we're seeing, from first principle, we believe there's a huge potential for diagnostics applications in single cell and spatial in the future.

For that, 2 key things need to happen. You need a generation of robust clinical evidence and you need deployment of those tools, technologies in the clinic. And to make that happen, we will pursue 2 paths. One, we will keep supporting our customers, as we've always been doing to, a, help them generate their clinical evidence; and b, to collaborate with them on the future to enable clinical deployment of technologies in the future.

At the same time, we believe we're in a unique position to accelerate the arrival of some of the highest impact diagnostics ourselves because by virtue of our strength in technology development, understanding of the applications, actual position in the research market where we see where the future is going, and also the efficiency and the cost effectiveness with which we can run these kinds of clinical studies and also the ability to set up a CLIA lab very cost effectively and efficiently. And so going forward, we're going to embark on generating clinical evidence for specific applications and also stand up a CLIA lab over our own as well.

In particular, there are 2 important diagnostics applications that we're really excited by that we're going to develop with partners. First, perhaps most naturally in oncology. Recently, more and more literature where people run single cell and spatial to analyze tumor samples to find biomarkers of drug response. So more and more, we know that the signal is there. And the need is there and growing. We see an analogy to the world of oncology as it was about 10, 15 years ago with the appearance, the arrival of NGS testing modality as a way to support new generation back then of mutation targeting therapeutics.

Now we have this new wave of all these new modalities that target specific expression markers in cells and tissues, ADCs, bispecifics, T cell engagers, immunotherapy drugs, radioligand therapies. And what is needed there is a new generation of tests that can comprehensively assess the levels of all these markers and the state of the tumor microenvironment. And 10x is ideally positioned to provide these tests. So we see a future clinical workflow as kind of outlined here, where patient samples are received at 10x, analyzed using single cell and spatial. And then a clinical report is generated to support oncologists in their optimal selection of these therapies.

Now of course, cancer is only one of many possible areas where there's potential to improve patient care. In particular, autoimmune disease is a huge morbidity, modality -- cause mortality, modality in the U.S. and around the world. Over the past 10, 20 years, there's been tremendous progress in delivering developing therapies to the market, targeting different biological pathways. But at the same time, there's not much in the way of precision medicine in tailoring these therapies to individual patients.

There's a lot of guesswork. The physicians are just flying blind. And again, we see 10x is ideally positioned to address this gap using single cell. And here, the idea, again, as shown in the slide, you have routine sampling with single cell of patient blood. You can measure disease and drug target pathways using single cell during patient care and clinicians would now be able to see the biological basis for what's going on with their patients. And now they'll be able to select the right therapy, see the effects of that therapy and then change course as necessary. Our goal here is to bring forward the new standard of care for autoimmune disease, where this -- all this guesswork, all this uncertainty is replaced with precision and clarity.

And of course, how do we make this future happen? Well, clearly, the main driving factor will be clinical -- robust clinical evidence generation. And so what we're doing is partnering with leading academic medical centers to generate that evidence. Today, we're really excited to announce our first 2 collaborations, one to support each of these 2 applications.

The first, we announced our collaboration with Dana-Farber Cancer Institute to work on oncology applications. And second, we announced our collaboration with Brigham and Women's Hospital to work on autoimmunity. We expect more collaborations in the future to continue to build out the programs across these indications. And as I mentioned, we're going to be building out a CLIA lab to enable clinical deployment of the resulting tests that will come out of these kinds of collaborations.

And now I want to close with 2 thoughts. First, as a company, we're in a really strong and really privileged position. got unrivaled innovation engine, a really great portfolio of products, really exciting markets and scaled organization and a really strong balance sheet. And second, zooming out, the world is in a really unique position and point in time. There's been this rapid parallel progress in AI and in technologies to measure biology. This has created the conditions for rapid acceleration of scientific discovery and the deployment of those discoveries to radically advance human health.

We started the company with the premise that this is the century of biology. And now we have an opportunity to compress a century's worth of progress into the next decade or 2. Thank you.

Great. Thank you for that overview. Maybe we can dig into the pre-announcement from yesterday. You saw solid top line growth driven by both instruments and consumables. So maybe can you just walk us through some of the growth drivers that you saw in the quarter, if you saw any sort of budget flush? And maybe just how customer purchasing behavior progressed relative to your expectations?

Yes. I can at least kick that one off. We did see a bit of budget flush that was unanticipated. So I think when we had our call after Q3 and we gave the Q4 guide, we said, hey, look, we're not anticipating a big budget flush. We definitely saw some, mostly on the CapEx side of our business. So that was a big part of it. And interestingly, a lot of it came really in the last 2 weeks or so. I mean it was kind of a I guess, a more -- a later than normal typical flush. At times, we'll see signs in November, even early December. This was really later in the quarter where we started to see that uptick. So that was a part of it, like I said, predominantly on the CapEx side of our business, which grew close to 30% sequentially, which was in excess of our expectations.

The other thing I would just note is, and Serge just spent some time talking about the single cell portfolio. We're seeing really good customer momentum, really good uptake, particularly in the new Flex assay but across that entirety of that portfolio. And then spatial consumables, which has been growing in the teens during the course of the year, also had a really strong quarter. And again, I think that's more sort of fundamental underlying growth, both there on the spatial side and even what we're seeing in single cell, augmented by some budget flush as well.

Okay. That's helpful. Maybe just double-clicking on the instrument replacement -- I'm sorry, instrument placement dynamic in the quarter. So I guess on the year, you've seen over 6,400 cumulative Chromium instruments sold and 1,500 on the spatial side. So maybe just what's the latest and greatest on customer appetite to add instruments now into 2026?

Well, look, the environment is still very challenging for instruments. I mean I think we've sort of -- we've been talking about this for several years now. And I would say like last year, '25 was substantially worse than the previous years. I think it's actually true kind of around the world. There has been a tightening of budgets for capital equipment. It's obviously very much true in the U.S. in academic markets. It's been very challenging. So the team has done a tremendous job of navigating this environment and being creative and kind of in deploying these instruments. But I think, yes, the environment still remains very, very challenging in that sense when it comes to large CapEx investments for customers.

Okay. Maybe one on visibility, right? So in the first quarter of last year, you stopped providing full year guidance and shifted to only offering guidance 1 quarter ahead, really on that limited visibility piece. When do you expect visibility to improve? And do you expect to reinitiate full year guidance at any point this year?

You're looking for guidance on guidance. I would say we're encouraged by what we're seeing right now in our recent customer conversations. I mean, I think it's one of the things that we talked about when we pulled the full year guide and moved to quarterly was really it's just about the connectivity we have with our customers and sort of the input that we're getting from them. So it's our current plan to reinstate guidance, full year guidance when we do our Q4 call. Now of course, when we did that, I think last year was right when DOGE announcements came out, right? So I mean, of course, the intent is to provide full year guidance, barring any sort of crazy circumstances like we saw early last year.

Okay. And then last quarter, you mentioned that you would expect the first half of '26 to look similar to the second half of '25. You kind of just walked through some budget flush dynamics that maybe you didn't expect when you gave that statement. So can you just provide more detail on what that means? And then I'd be curious to hear the difference between were you referring to revenue there or more speaking broadly about the overall end market dynamics?

Yes, go ahead.

Yes. So we're talking about the broader market dynamics, right, rather than just sort of first half dollars looking like second half dollars. So it's really just -- I think it was our way of just saying, look, we're not seeing any fundamental shifts. Again, we'll see how everything sorts out with the NIH budget. Obviously, we've got a high level of exposure to U.S. academic and government accounts. So our anticipation, again, and you just sort of called out maybe the one exception, which would have been the budget flush that we saw in Q4. Absent that, we anticipate that the first half based on customer visibility, the conversations we're having sort of on a global basis as well as with our biopharma accounts will look pretty similar from a macro perspective in the first half of this year as it did second half of last.

Okay. On that U.S. academic and government piece, right, I think most people are assuming that the NIH budget will be flat but there are dynamics with multiyear funding and grant disbursements that we saw this year kind of being frozen and held up. So what's the customer conversation with academic and government customers at this point? Are -- you're still seeing a lot of hesitation? Are things kind of looking brighter in the year ahead?

Well, I hesitate to say like that things are looking that much brighter. I mean we've been sort of in this situation over the course of the past couple of quarters where things are not as dire as they were when you go back to kind of the first half of last year. But at the same time, there has not yet been sort of a return to stability and clarity with customers, right? So I think the general mood is better than it was before but there's still a lot of uncertainty and kind of not uncertainty around how the sort of around the policy environment and like how the dollars will actually get dispersed.

Okay. Maybe a few on spatial here. So you've noted sustained strength in spatial consumables over the past few quarters. It sounds like that continued in 4Q. Can you just discuss the sources of this interest where you're seeing the most momentum, whether that's Visium or Xenium and what's really driving growth there?

Yes. I mean, for sure, Xenium has been doing really well. And I kind of specifically pointed out in my remarks here. When we first got to market, we -- kind of our philosophy was we want to make sure that customers have a full range of application technologies to support them in their spatial analysis. And the reality was no one really knew what is going to be best for what applications. It has become more and more increasingly clear that sort of the Xenium approach using direct imaging of single molecules in tissue provides the best kind of data for people to drive their research and definitely has been a big driver.

And like I said, there's lots and lots of customers now that are just like running these things like a really, really high velocity and producing -- like generating amazing data from it. So very excited about Xenium, and it is really kind of the engine of spatial growth at this point.

Okay. At AGBT last year, you launched Xenium RNA and protein, which began shipping in 3Q. Just can you discuss the opportunity there with this product and any initial customer feedback so far?

Yes. So it's sort of like our first foray into proteins and RNA on Xenium. We launched great feedback. We launched an immuno-oncology panel. It's a set of proteins, 28 proteins to be measured. Importantly, it's still on the same section. So something that was not really possible before, true multiomics. And I think one of the things that we've been learning, again, great feedback. And what we've emphasized is multiomics that's actually practical and robust, and especially when it comes to translational applications because oftentimes, when people talk about multiomics, it ends up being sort of this grand kind of exciting, maybe scientifically kind of a set of experiments but not really fit for practical use. And so we've optimized really to do something that is like fundamentally has streamlined workflow, gives you amazing data, but it is really practical and really scalable.

And so great feedback from that -- from initial panel. And going forward, I think there's a big opportunity to expand the sort of the range of markers and the range of panels that we can deliver with this capability. So excited about it. It's still just kind of the first step but the initial feedback has been quite positive.

Okay. Maybe turning to single cell. Just one on competition here. So we've seen an increased amount of competition in that market and multiomic markets for that matter, with more entrants buying for similar research dollars. Could you just share how you're addressing that competitive landscape? What gives you confidence in the long-term trajectory of your portfolio in both of those segments?

Yes. So I mean, I would say, look, first, always been competition in single cell and like especially if you go back to sort of the beginning of it. It's easy to kind of forget that now, but it was actually really intense. And over the years, the competitors have come and gone. And our North Star has always been product innovation and delivering best value to customers. And that has -- that's why we won every -- sort of every iteration. And I would say that it's pretty clear now as you look over the last -- sort of the course of the last 2 years, we're clearly winning kind of -- there's been a bunch of new entrants that came to market with sort of big promises and customers have trialed them and so on.

And by and large, I would say we're in a better position now than we've been at any point in the last 2 years when it comes to that sort of landscape and the competitive environment. Our products are materially in advance ahead of competition along multiple axes. And there's really no -- traditionally, there's been sort of a cost argument around our products, and that has been obviated with all the launches that we have had. So we feel really good about our positioning now. Again, product development innovation has always been our North Star, and I think we've got feedback from customers now that is deeply resonant with that. strategy.

Okay. Maybe we have a couple more minutes here left. Just one, you've talked about how AI has the potential to unlock large projects in single cell research with a growing interest in AI modeling and building out large-scale models in biology. You have the collaboration with Anthropic. Maybe can you just elaborate on how you envision AI further increasing demand for single cell? And how will this support the scaling of data and really drive the need for more advanced cell models?

Yes. So there's actually 2 ways, and they're like actually fairly distinct. In the long run, probably they will start converging but kind of pointing to our partnership with Anthropic. Specifically, that's around building out agentic AI to help with the analysis, kind of downstream analysis. So you generate the data. And traditionally, the biggest -- I would say probably the biggest bottleneck in people running experiments and kind of going through that cycle, getting grants and all the rest of it is data analysis. You hear it over and over again, there's only so many bioinformatics people around in the world, and that's the biggest bottleneck. And agentic AI and what we're doing with Claude with Anthropic is kind of the first step in that direction, should actually very much solve that kind of bottleneck. I mean you can see what these agents can do already. It's mind blowing.

So we are pretty excited about the potential here. I think we definitely see that as the future where it becomes an integral part of going from data to insight to paper to ultimately the next experiment. And then separately, as I've touched on earlier, there's this new -- it's a different kind of paradigm where you're now driving progress in science through the creation of these ever more larger and more sophisticated AI models. And those models themselves become drivers of demand of doing science.

And again, their appetite for data is essentially in exhaustible. And our tools stand to benefit tremendously from that because they are the means you can generate vast amounts of data and importantly, the right kinds of data. So we do definitely see this as being a big -- not just sort of a current wave but the start of a huge secular trend.

Okay. Maybe last minute here. I just wanted to touch on the Scale Biosciences deal. You noted the acquisition won't have a material impact on revenue or OpEx for the remainder of last year. But just any current expectations of how to think about Scale's contribution in 2026? And what excites you about the capabilities of that business?

Yes. I mean, look, in terms of the capabilities, as we've talked about before, like so much of what we're doing is about scale ultimately and kind of bringing up the scale of experiments. And the team at Scale, they've invented great technologies. There's some really great capabilities that very naturally belong and integrated into our Chromium portfolio. And so it is a key part of our product development strategy now. There will be more kind of that will unveil with time. As far as financial impact, it's minimal [ for the spatial. ]

All right. Great. Well, it looks like we only have 30 seconds here left. Any closing remarks? What's most misunderstood about the 10x story, I guess, at this point?

Well, I think the fact that I think it's important to appreciate that where we sit right now, like in terms of our technology stack and in terms of our position in the market, but really sort of the intersection of the most important trends that are happening in biology and life sciences and ultimately in clinical care as well. And so when you look at the set of assets that we have and our ability to deploy them, it's a really, really privileged and unparalleled position. And like I said at the beginning, I do think we're in a stronger position now as a company than we've ever been in our history.

Great. We'll have to leave it there. Thank you guys for joining us today. Thank you, everybody. Enjoy the rest of the conference.

Thank you for standing by. Welcome to the 10X Genomics' Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Cassie Corneau, Senior Director, Investor Relations and Strategic Finance. You may begin.

Thank you. And good afternoon, everyone.

Earlier today, 10X Genomics released financial results for the third quarter ended September 30, 2025. If you have not received this news release or would like to be added to the Company's distribution list, please send an e-mail to [email protected]. 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.

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. 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. 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.

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.

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. 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.

Thanks, Cassie. And good afternoon, everyone.

We exceeded the top end of our guidance range in the third quarter with total revenue of $149 million. Our team delivered a solid quarter, executing well in the midst of continuing macro challenges. Despite ongoing funding pressures and policy uncertainty, we saw sustained enthusiasm for our products with momentum in both single-cell and spatial.

The positive trends we highlighted in the first half of the year continued this quarter. Spatial consumables had another robust quarter of double-digit year-over-year revenue growth, driven by continued strong demand for Xenium consumables. We again saw sustained growth in both the number of runs and the average spend per run. We frequently hear from customers how much they love Xenium, both for its exceptional performance and for the breadth of applications unlocked by the platform.

Within single-cell, while consumable revenue was down year-over-year, we again saw double-digit Chromium consumables reaction growth year-over-year. Our Flex and On-Chip Multiplexing assays have been key drivers of this growth. Both of them deliver configurations with lower price per sample, which has been opening up new customers and new use cases for single-cell.

On-Chip Multiplexing is particularly well suited for applications requiring fewer cells and for getting started with single-cell. Because of that, it has been great for bringing new customers into the ecosystem.

Flex has many benefits and is becoming the default single-cell assay for many of our customers. It is also particularly well suited for translational studies and massively scaled experiments, which are 2 of the most promising directions for single-cell growth going forward.

Finally, we ended the quarter with $482 million on the balance sheet, reflecting our ongoing commitment to cost management and cash generation. This strong position provides us with both the flexibility to navigate the current environment and the resources to strategically invest in innovation and long-term growth.

We're staying extra close to our customers as they navigate persistent funding uncertainty. While the pace of news flow has moderated compared to earlier in the year, spending behavior remains cautious, particularly for capital expenditures. We expect these conditions to remain largely unchanged in the near term, and we will stay flexible in how we work with customers to support their ongoing research.

While the macro environment remains challenging, we remain focused on advancing our innovation road map and driving greater adoption of our products. Our latest product launches and partnerships illustrate how we're executing on these priorities.

Last week, we began shipping the next generation of Chromium Flex. As I mentioned earlier, our Flex assay is becoming the default single-cell assay for many of our customers. It combines exceptional sensitivity, robustness and scalability, all at a low cost. Our next-generation Flex further improves these qualities, and also enables streamlined automation-friendly plate-based workflows. The product represents a step change in scale, enabling massive perturbation screens and supporting AI-driven initiatives such as virtual cell modeling.

We also developed and validated our scalable FFPE dissociation protocol, which scales easily to 96-well plates. The protocol improves efficiency and throughput for high-volume studies and strengthens the assay's value in large-scale translational research. Feedback from early access customers has been phenomenal, and we're eager to see how more researchers apply the new Flex across a wide range of studies.

We were also excited to start shipping Xenium protein earlier in Q3. It is a powerful new addition to the Xenium platform that allows researchers to detect RNA and proteins in the same cell and on the same tissue section, all in a single, automated run. By reducing the need for separate workflows, technologies or tissue sections, Xenium protein simplifies experimental design and allows researchers to move more quickly from experiment to inside. As a first-of-its-kind capability, Xenium protein represents a major leap forward, enabling comprehensive, multimodal insights, streamlining workflows and accelerating translational discovery.

We're also seeing an increasing number of customers use Xenium together with Chromium Flex. The combination of highly precise spatial measurements and robust whole transcriptome analysis provides a powerful approach for biomarker discovery in FFPE samples. This is a great example of the value that our portfolio strategy delivers to our customers.

Now stepping back, the landscape of spatial biology has evolved significantly over the past few years. In its early days, there is broad uncertainty across the field about which applications would be best served by sequencing-based methods like Visium and which by imaging-based approaches like Xenium. Now that Xenium has been in the hands of researchers for some amount of time, that picture is becoming more clear. We now see a strong and growing preference for image-based analysis. This is a reflection of both, how well Xenium works and the abundance of insights that scientists are gaining from using the platform. Based on customer feedback and the results we are seeing in the field, we increasingly see Xenium as the best solution for most of researchers' spatial needs.

In addition to advancing our product road map, we're focused on unlocking the full potential of our current products by removing barriers to adoption and driving broader access.

Data analysis has long been one of the biggest bottlenecks in single-cell and spatial research. Our recent partnership with Anthropic helps address this issue and makes analysis more accessible by integrating it with Claude for Life Sciences. With Claude, researchers can now perform common analytical tasks through a conversational interface that complements our existing applicational workflows. This intuitive approach makes it faster and easier for researchers to engage directly with their data. We believe this partnership is the first step towards addressing the analysis bottleneck to make our technologies more accessible to an ever-broader community of scientists.

While single-cell and spatial have been a transformative engine for scientific discovery, going forward, we believe there is an especially large and growing opportunity in translational research and ultimately in clinical applications. A great example of this is our recent collaboration with CLISEQ and the Weizmann Institute on the PERIBLOOD clinical trial.

Using Chromium to profile thousands of individual cells from blood samples, this new study built on a groundbreaking discovery recently published in Nature Medicine, where CLISEQ and Weizmann researchers identified a unique, circulating cell signature capable of detecting hematologic disorders with remarkable accuracy. Their clinical trials use a single-cell to validate, refine and amplify the proof-of-concept, uncovering molecular signals that traditional blood tests may miss and determining whether bone marrow biology can be accurately assessed through circulating cells. This work represents a promising step towards more accessible and less invasive diagnostics and improving clinical decision-making.

Finally, we are continuing to see increasing momentum around virtual cell efforts and large perturbation studies. Described as a holy grail of science, the virtual cell is an AI model trained on massive amounts of data meant to simulate the workings of individual cells. Multiple groups are now generating large-scale, 10X single-cell data to train algorithms as initial steps towards the virtual cell vision. There are strong reasons to expect that scaling of data will result in vastly more capable models as it has in just about every other application of artificial intelligence. These models hold the promise of transforming science, drug discovery and ultimately, human health.

We believe that virtual cell efforts represent one of the most important trends in biology in the coming years. And we anticipate that our technologies will keep powering these efforts as they keep scaling by orders of magnitude.

The strong resonance of our innovations with customers and the expansion of our tools into translational research and large-scale experiments reinforces our conviction in the foundational role of single-cell and spatial in advancing science and health. We firmly believe that this is still very early days for our technologies.

With that, I'll turn the call over to Adam to review the financials.

Thank you, Serge.

I'll start by reviewing our financial results for the 3 months ended September 30, 2025, and then we'll provide further details on our outlook for the fourth quarter. All figures and growth rates provided will be on a year-over-year basis, unless otherwise noted.

As Serge mentioned, we exceeded the top end of our guidance range and total revenue for the third quarter was $149 million. This was down 2% year-over-year and up 2% sequentially, excluding onetime license and royalty revenue in the second quarter. As anticipated, revenue from scale was not material and accounted for less than $1 million.

Total consumables revenue was $127.9 million, up 1% Chromium consumables revenue was $92.5 million, down 4%, primarily driven by lower average selling prices. Spatial consumables revenue was $35.4 million, up 19%, primarily driven by Xenium consumables revenue.

Moving on to instruments. Total instrument revenue was $12 million, down 37%. Chromium instrument revenue was $4.9 million, down 36%. And spatial instrument revenue was $7.1 million, down 38%, both driven primarily by lower average selling prices.

Services revenue was $8.1 million, up 29%, primarily due to an increase in Xenium service plans.

Looking at our revenue by geography. Americas revenue was $79.9 million, down 9% from the prior year, driven by continued uncertainty in the U.S. academic and government funding environment. Excluding settlement impacts from Q2, Americas was up 1% sequentially. EMEA revenue was $41.6 million, up 10% from the prior year and up 20% sequentially, primarily driven by strong spatial consumables performance. APAC revenue was $27.5 million, up 6% year-over-year and down 14% sequentially due to the previously mentioned Q2 customer-driven pull forward in China.

Turning to the rest of the income statement. Gross profit for the third quarter was $100.3 million compared to $106.4 million for the prior year period. Gross margin decreased to 67% from 70% in the prior year, primarily driven by changes in product mix and higher inventory write-downs, partially offset by lower royalties and lower warranty costs.

Total operating expenses for the third quarter decreased to $132.5 million compared to $147.9 million for the prior year period, driven by lower personnel expenses and lower outside legal expenses.

Operating loss for the third quarter was $32.2 million, compared to an operating loss of $41.5 million in the third quarter of last year.

Net loss for the period was $27.5 million, compared to a net loss of $35.8 million for the third quarter of last year.

We ended the quarter with $482 million in cash, cash equivalents and marketable securities, up $35 million from the prior quarter.

Turning to our outlook for the fourth quarter. We anticipate revenue to be in the range of $154 million to $158 million, representing 5% growth compared to Q3 at the midpoint. This outlook reflects the continuation of the key positive drivers of performance that we've seen throughout this year. We do not anticipate a material change in customer purchasing behavior and do not anticipate the year-end budget acceleration we have previously experienced in the fourth quarter.

Our balance sheet remains strong, providing the flexibility to invest in innovation, advance our strategic initiatives and support long-term growth. We are confident in our ability to execute with discipline and agility as market conditions evolve, and we remain focused on creating durable value for our customers and shareholders.

With that, I'll turn the call back to Serge.

Thanks, Adam.

Before we open the line for questions, I'd like to take a moment to thank the entire 10X team. This year has been incredibly tough for our customers. For that reason, it has also been really challenging for our team. Yet you have worked relentlessly through the challenges, keeping focus on our customers and on advancing our mission. I deeply appreciate how our field teams work so closely and creatively with researchers, how our R&D teams keep pushing forward with new product development and how our entire teams have stepped up to the challenge with really tight execution.

When I reflect back on the history of our company, going back to the earliest garage days, the periods of greatest value creation often coincided with the lowest external valuations. This feels very much like one of those moments. Through your efforts, we have forged increasingly powerful bonds with our customers, advanced our road map and made tons of progress improving our internal capabilities. We're executing from a position of strength with an unmatched innovation engine, expanding adoption and a strong balance sheet that gives us the flexibility to invest for the long term.

I've been proud of what we've achieved and confident that our best work and our greatest impact lie ahead.

With that, we will now open it up for questions. Operator?

[Operator Instructions] With that, your first question comes from the line of Doug Schenkel with Wolfe Research.

This is Madeline Mollman on for Doug. The guide calls for a 5% sequential pickup. Can you walk through how much of that is expected to come from instruments versus consumables, especially given you're not assuming a year-end budget flush? And then what assumptions are built into the Q4 guide regarding the government shutdown?

Finally, what does this mean for 2026, given the quarter-over-quarter improvement, it seems like you should be able to grow in 2026 adjusted for the royalties payments. Is that the right way to think about things?

So I think as it relates to instruments versus consumables, we're not anticipating a big year-end budget flush, but I would anticipate potentially a little bit more of an uptick on the instrument side in Q4. So if we just sort of think about that mix between consumables and instruments, it could be a little bit higher on the instrumentation side in Q4 versus what we saw in Q3.

We factored the government shutdown into our guide. So to the extent that that does last to the end of this year as it relates to our Q4 guidance, that's incorporated. As a reminder, from an intramural perspective, NIH Intramural is a fairly low percent of our total overall business.

Serge, do you want to take the second part of the question?

Yes, 2026, so fundamentally, it's too early for us to really talk about 2026. Obviously, we're seeing great trends in the business right now. But there's also a lot of just fundamental uncertainty in the macro environment. Visibility among our customers is quite limited, and there is a lot of uncertainty still around the policy environment.

So we're not giving a guide. Big picture-wise, at this stage, we anticipate the first half of 2026 should look similar to the second half of 2025. And we'll take it from there.

The next question comes from the line of Puneet Souda with Leerink Partners.

So first one is really on the spatial side. Just wanted to get a sense on how should we think about that in the fourth quarter and then potentially, especially the consumables into 2026. You came in flat to slightly down in the third quarter. So I just wanted to clarify on the consumable side there.

And then Serge, when we think about the GEM-X the Flex v2 product that you're launching here, I just want to clarify, you have a barcode oligo hybridization step that is built into it that does give significant flexibility, both in terms of the number of samples that can be run and then the ability to run partial plates as well.

So when we think about customers doing lesser batching and the price per sample, which seems to be now in the sub-$300 range versus the $1,000 before, how should we think about the medium- to near-term impact? I mean I appreciate longer term, this is going to be an elasticity of demand that could play out here, but in the near to medium term, why should this not impact the revenue growth? And please let me know if any of my assumptions are wrong there.

Yes, Puneet. So maybe on the spatial consumables side, first, one thing that I would just point out about this quarter is that you may remember, we had a pull forward in Asia of spatial consumables into Q2 from Q3. And so if you kind of normalize for that, we actually had a nice, sequential step-up in Q3. And as I mentioned, the spatial has been doing quite well. Spatial consumables have been doing well, and we anticipate that to continue. All the trends are pointing generally like well in that direction.

As far as the question on Flex v2, I mean those are definitely astute observations around how the product works and the fact that it gives a lot of flexibility to our customers. Maybe like a little bit of a step back just in terms of our overall general strategy here is merited. We started talking about it some time ago about the fact that there is a huge elasticity potential in this market in single-cell. And we started lowering our prices, for example, in a very kind of careful staged manner, starting with the GEM-X introduction about 1.5 years ago. And since then, with the introduction of new products like on-chip multiplexing, like the first iteration of GEM-X Flex about a year ago, kind of opening up new use cases, new configurations to drive more volume at lower prices.

And what we have seen is consistently over that time, the volume growth has been stepping up, as we've been expanding and very much in resonance with the strategy that we have put out there.

So the numbers line up with the strategy, the feedback of customers also lines up with our strategy in terms of new use cases opening up, new configurations and people running more single-cell than they were doing before.

And the launch of the next generation of Flex now also is part of that overarching strategy, where we're delivering new configurations into the marketplace to a large extent where it needs to be particularly impactful is enabling people to learn larger experiments and it's really at these sorts of large experiments if you do get to lower per sample and per cell prices. And we want to be careful in the sense that the product, this new Flex doesn't have exactly the same sort of configurations that the previous versions did.

But overall, if you compare kind of an average, probably there is a 20% to 30% drop in the average reaction price. And we do anticipate that this will be more than made up in volume, especially over time. And that would be consistent again with the feedback that we've been hearing from customers and with the metrics we've been tracking internally over the course of the past 1.5 years.

The next question comes from the line of Dan Arias with Stifel.

I'll ask one since that's what you asked for. I wanted to ask a follow-up question on spatial consumables, though. Serge, can you just maybe add some color to the contributions from Xenium and Visium? I know you don't like talking about per system pull-through, but it is a tough modeling exercise for spatial just given the 2 product lines.

So is there anything you can kind of shed light on when it comes to user dynamics per box, if possible? Anything there would be helpful just when it comes to keeping our model straight to these 2 product lines here.

Yes, Dan, thanks for the question. So as I was alluding to kind of in my prepared remarks, spatial in general has been like a very dynamic field. And there is also kind of this broad uncertainty around how the application the space is going to play out relative to our platforms and relative to our products, especially between Visium and Xenium.

And one of the things that I make sure to emphasize earlier is that we're seeing more and more enthusiasm for Xenium in particular and kind of very consistent increase in usage of the platform and not just the broad usage, although we're seeing that in the consumable numbers, pretty consistent uptick, but also on a per instrument basis.

We haven't shared pull-throughs and it's still quite a dynamic kind of environment for us to be able to do that. But it has been trending consistently in the right direction. And also like I said, along sort of both the vector of more runs and also price per run. And also back to my earlier point, in general, the trend has been more towards Xenium relative to Visium and more different products.

And the next question comes from the line of Kyle Mikson with Canaccord.

Congrats on the quarter. I want to just address the acquisition this week from a large company bought the instrument-free solution company, similar to yours and scale a little bit larger situation now. So this acquirer is going to provide access to the single-cell tech to 500,000 labs globally. They're going to incorporate 100 million cell data set into their software and pathway, and they're also going to integrate single-cell into pharma companion diagnostics.

So just would love to hear, Serge, if you have like an answer to these kind of aspirations over time. Can you do these things organically possibly?

Yes, I mean, look, first of all, kind of big picture-wise, one way to look at it is that it certainly validates the space. Like we've been saying for a long time that single-cell fundamentally has enormous potential going forward and along multiple axes, right? It's the fundamental unit of biology. This is where biology needs to go. That's ultimately where clinical applications and drug development needs to go.

So we're glad to see others agreed with that assessment. Overall, the space has always been competitive, certainly over the past several years, but even from the very, very beginning. And also it has had a quite a number of large and significant companies operating in that space. And we have consistently won with our products by virtue of our technology leadership, by virtue of performance of our products, data quality, robustness, ease of use, just a wide breadth of applications. And we certainly expect that to continue.

Customers consistently choose us. There's always this sort of this pattern of as new technologies come in, people trial them. But the customers come back to us for all the reasons I just mentioned. And we see that reflecting in our customer surveys in double-blind NPS, which are off the charts, especially relative to our competitors.

All of these metrics trend in our direction under our leadership, we expect for our leadership to continue. We are seeing the gap in performance between our products and others has increased over the past several years, given all the product launches that we have had.

So we do anticipate that it's going to stay this way and I fundamentally don't anticipate, don't expect that the fundamentals of the dynamic will really change.

And the next question comes from the line of David Westenberg with Piper Sandler.

I'll just ask one short one since you have a lot in line. Can you talk about the strong spatial performance in Europe? Is there any reason to believe that there is sustainability there? Is there anything to call out in terms of onetime? Great job on the quarter.

Yes. We want to be careful not to over-index on any particular quarter in any particular region. These things tend to be lumpy and there tend to be fluctuations quarter-to-quarter. Yes, for sure, we had a great quarter in terms of spatial consumables in terms of Xenium consumables in Europe. I think that's part of the broader trend we're seeing across the world, and we do expect that to generally continue.

And the next question comes from the line of Dan Brennan with TD Cowen.

This is Kyle on for Dan. I just want to ask about China and sort of what you're seeing there. I know you had some pull forward in the second quarter that you just talked about earlier. But I think year-over-year, you still grew a little bit in China off of not an easy comp, but I guess what are you seeing over in China?

Yes, I mean it's a good question. So just to kind of step back a little bit, you may remember that we made a number of changes to kind of our go-to-market in China a couple of years ago after a number of challenges that we faced there. And that has yielded great benefits. We have a great team, great organization, great relationship with the distributors and partners over there, which has increased both visibility and execution in that region. And so you're seeing some of the outcomes of that. We're also seeing quite good and robust demand on the ground for our products there as well. So that has also been quite gratifying to see.

Overall, of course, China has very different dynamics from the rest of the world. And so we have to be cautious about long-term visibility there. But overall, right now, like we're certainly seeing good business and good progress in the region.

And the next question comes from the line of Tycho Peterson with Jefferies.

This is [ Lauren ] on for Tycho. Congrats on the quarter.

On the Xenium, could you maybe elaborate a little bit more on kind of early adoption trends for Xenium protein and kind of how these multiomic workflows are resonating with customers? And kind of maybe which end markets are you seeing the strongest demand?

And then in terms of kind of differentiation, there's other competitors kind of talking about spatial offerings and kind of what do you think about that in terms of differentiation for Xenium?

And then lastly, just on single-cell consumables that were down, what do you think is needed kind of going into the end of the year into 2026 to see recovery for single-cell?

So let me start there with the protein product. So that is something that obviously has been a big trend. I talked about this earlier in my prepared remarks, kind of the whole notion of multiomics and being able to measure multiple analytes from the same sample, from the same cell, from the same section, tissue section. And I want to kind of emphasize the fact that this is the first product of its kind that can measure both proteins and RNA expression from the same exact section, using the same integrated workflow. And that is something that our customers have been asking for and have been very excited to receive.

So the initial feedback has been very positive. Like people really appreciate they really like this capability. Early days, so I don't want to say any more on that point, but definitely very promising. And I think this is just kind of the first step -- along a very promising direction.

I also would say that there is tremendous differentiation that Xenium has relative to other products in the market. And we've talked about that before just based on the fundamentals of the technology, based on the workflow, based on the data that we've been seeing coming back, and it's not been reflected very consistently with customer feedback. All kinds of benchmarks that people have run that consistently put Xenium on top. You see that in the numbers. We see that in also competitive situations out there like with our team is consistently winning in the marketplace. Xenium really stands out as a platform.

And as far as the other question on single-cell consumables, overall, we are really happy with the progress of reaction growth, volume growth. Obviously, there are some pricing headwinds that I talked about earlier in terms of kind of new product introductions that are introducing lower price point configurations. And also, obviously, we can't forget the macro headwinds, especially when you're looking at year-over-year compares. But if you look sequentially, there has been a really, nice and robust step-up in both in reaction volumes and in overall revenue for single-cell consumables.

I think that's a very promising sign, and we do expect these trends to continue.

And the next question comes from the line of Lu Li with UBS.

I wanted to go back to the spatial. You mentioned that the scientists increasingly prefer Xenium over Visium. I wonder, can you talk a little bit about your kind of more math for Visium going forward?

And then second question, you also mentioned that people are starting to using more like flash with the Xenium together, I wonder, can you quantify a little bit in terms of like what percentage of your customers are using the 2 products at the same time?

I mean in terms of the second question, it's too early to make quantifications. I certainly hear that [ traveling ] in the field, especially customers, translational customers that have FFPE samples that they want to be analyzing and they want to have the most comprehensive possible analysis of those samples. And the 2 products together, the Flex together with Xenium, provides kind of the best, most comprehensive analysis. You get the whole transcriptome single-cell-based analysis using Flex and then you have this really precise detailed spatial analysis from Xenium.

And we see that as still very early in that trend, but it's a consistent theme that I've now heard pretty consistent across multiple customers.

And we do expect kind of back to your first question, the sort of trend of people really converging and being enthusiastic about Xenium. Again, if anything, this is just kind of the beginning of this trajectory. We see this happening more and more as, again, researchers kind of talk to each other, where it becomes more and more clear across different applications, across different publications, just how well Xenium works and how quickly you can get from their samples to insights.

And the next question comes from the line of Michael Ryskin with Bank of America.

You talked earlier about some of the academic and government trends in end of year budget flush. I want to dig a little bit more on pharma behavior, what you're seeing there as you're going into the end of the year. There is a lot of concern on some budget constraints and just some cautious spending. Just wondering if you noticed any change on that in the last couple of months and if you're getting just any more fruitful conversations with pharma customers.

Pharma has been kind of a challenging segment. We're very happy to have the full biopharma team in place, which, again, we made those changes last year. It has been very helpful to have focused teams, especially in this kind of environment. The macro has been challenging. There's like just fundamental uncertainty around kind of long-term questions for pharma where to invest because of various policy questions. And especially of uncertainty for them investing in early discovery, early-stage research, which is where our products have been traditionally focused on.

It's a little too hard to tell precisely how like the rest of the quarter is going to play out. There is definitely some areas of positive trends that we're seeing, but also plenty of reasons to be cautious as well.

Kind of in the longer term, we do see a lot of promise. As I mentioned earlier, there's tons of interest in kind of running very large-scale experiments for kind of AI-driven applications for target discovery, very large kind of screening campaigns using single-cell. So a big trend, still very early in that and very promising. And then we're also seeing a lot of promise kind of moving downstream in the drug development process into translational applications, especially given our product set now with Flex and with Xenium, seeing a lot of potential there as well.

We'll see how sort of the rest of the quarter plays out. We're in a period of a lot of uncertainty at this point still.

And the next question comes from Justin Bowers with Deutsche Bank.

Serge, what's your latest thinking on the elasticity of Chromium, especially with the launch of the recent Flex assay? Have the curves crossed? And in other words, absent the near-term macro headwinds, what type of growth are we thinking about for single-cell in the interim?

Yes, good question. And kind of like as I talked about earlier, we have been consistently encouraged by volume growth and how consistent it has been with our strategy. We had several elements of what we embarked on with our product launches, starting about 1.5 years with the launch of GEM-X at a lower price point per sample compared to the previous architecture and Next GEM. And that has been kind of proceeding through the conversion throughout our customer base to the point where by the end of this year, we should be largely finished with that conversion.

And then, of course, to launch new products, last year as well and also started shipping the new version of Flex. So on multiplexing, which kind of opens up new use cases, new customers, Flex opens up also new use cases, large configurations, more usage, high sell volume kind of use cases. So we do anticipate that we have seen that more and more volume growth. We do also see some conversion of current users, which creates headwinds on price. And at this stage, it's probably too early to tell where the sort of steady state of new products is relative to kind of our previous existing products. It's been a pretty steady clip at which new products have been entering their market. And we've been very happy with the progress there and the volume growth, especially.

The next question comes from Patrick Donnelly with Citi.

This is [ Brendan ] on for Patrick. Congrats on the quarter.

I know you guys aren't giving '26 guidance until the next call, but I want to touch on the first half of '26. Given kind of line of sight into the order funnel and visibility, is the first half of '26 kind of looking like the first half of 2025 kind of in that mid-single-digit decline area and similar revenue levels when excluding royalties?

And then just to touch on the government shutdown further, can you mind breaking out exactly what you guys have factored in for the fourth quarter?

So maybe on the government shutdown, as Adam mentioned, it's factored into our guide for the quarter. The way to think about it is that at this stage, for Q4, really the only material effect is likely to be on intramural NIH, which is a very small fraction of our business for this quarter. The rest of the business is able to proceed independent of the shutdown, where things start to get potentially more challenging to predict if it sustains sort of the funding trends into 2026. And this is where we are certainly refraining from giving guidance on 2026 or how it's going to play out at this stage.

The next question comes from the line of Casey Woodring with JPMorgan.

This is Jaden on for Casey.

Could you just touch on what impact we can see as NextGen's end of life this year-end as customers make that transition over and may take more time to validate an assay or incorporate it into an existing new project? And what does the time-line usually look like for customers before they ramp to GEM-X? And what near-term impact that might have on the P&L, given the lower cost and anticipated ramp in volume?

So I mean I think on the specific question of NextGen to GEM-X transition, at this point, there is not much left for the customer base to transition. We've given people end-of-life notices. And so people have been kind of running experiments with that in mind. And we anticipate the bulk of the effect or sort of the effect on the P&L on the top line has already -- we've already gone through it at this point. So what is left is pretty marginal.

The next question comes from the line of Subu Nambi with Guggenheim.

This is Thomas on for Subu.

On Chromium instrument discounts, you mentioned they'll be temporary through the macro uncertainty. But do you anticipate any resistance from customers in purchasing when you return to normalized higher pricing? Or if you can confirm if you'll choose to keep Chromium ASPs at these levels longer term?

It's a good question. Like we've said before, we have been intentionally very flexible with customers in terms of giving them creative deals and discounts when it makes sense through various products or different payment structures depending on their constraints, and there have been a lot of different kinds of constraints that customers have faced over the course of this past year. Our view is that the situation has been so peculiar and so unique in a lot of instances that it really doesn't necessarily translate sort of the patterns and the deals that we've given customers really shouldn't set much of a precedent as we transition to more stable and more normal times.

And the last question comes from Mason Carrico with Stephens.

This is Ben on for Mason. Could you give us some insight into Xenium's 5K panel adoption? How much of a tailwind has this been to Xenium consumable growth this year? And how much of that growth has just come from the higher pricing there?

Yes, Ben, good question. So like I said earlier, Xenium consumables have been growing and growing both on -- in terms of the number of runs per instrument and also price per run. And a large part of that increased price per run is precisely what you're referring to here, which is the adoption of the 5K panel. It's been going great. We're very happy with it, and we do expect it to be a good, great driver of our business going forward.

And this does conclude our question-and-answer session. I would like to thank our speakers for today's presentation. And we thank you all for joining.

This now concludes today's conference call. You may now disconnect.

Good morning, everyone. Welcome to day 3 of the Morgan Stanley Global Healthcare Conference. My name is Edmund Tu, and I work on the life science tools team here at Morgan Stanley. And it's my pleasure to be hosting 10x Genomics today. And representing the company, we have Co-Founder and CEO, Mr. Serge Saxonov. Thank you for joining us.

Thank you for having me.

Before we start, I'd just like to remind everyone in the audience, important disclosure information can be found on our research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your MS sales rep.

And with that, maybe to kick things off, Serge. It's been a unique year with various policy and macro headwinds impacting your end markets. Understanding things have changed meaningfully since the start of the year, how would you sum up the past 9 months for 10x Genomics? And what would you say your hardest achievements in this challenging market?

Yes. It has certainly been a pretty eventful year. We started that with a really good momentum. And of course, there has been a lot of news flow, a lot of changes in the macro environment. And I would say at a high level, the things I would want to emphasize is just how proud I am of the team and their execution through all the sort of all the things that kept hitting them and all the challenges and all the changes in the environment, and that's across the board. The people in the field, the sales team dealing with the customers and all the issues and all the problems they are facing, the operations teams, R&D, G&A across the whole company really coming together and kind of navigating and persevering through this environment.

In terms of like the subsequent achievements of the team, there's been a whole number, right? We finished our commercial restructuring, which again, is particularly kind of impressive in light of all the challenges we faced. We made really incredible progress in product development, including some of the products we launched already this year, another one that's about to launch soon, I'm really excited by Flex v2 on the single cell side.

And really importantly, especially in the current environment, but also more generally as we think to the future, huge focus on cost management. And we came into the year with a strong balance sheet, and we have strengthened it further through the year through the actions and just the relentless cost discipline of the team. And so overall, we are -- puts us in a really good position to both navigate this environment and to come out stronger than ever on the outside of it.

Great. Before diving into your segments and products, let's maybe touch upon your end markets really briefly. And maybe starting with the academic end market. Serge, I think you mentioned that the customers in the U.S. are somewhat more optimistic versus earlier in the year, yet they remain cautious given the uncertainty around next year's funding and the slow pace of fund disbursements.

So I guess, has there been any changes in sentiment for customers in this end market over the past couple of weeks? I know this question gets asked all the time, but ultimately, the question of when academic customers will likely to reopen their wallets remain a key focus for investors.

Yes, definitely a fair question. Obviously, a big focus for us. I would say, at the highest level, there's not really been a change, any significant change since the time when we had our call in terms of the customer sentiment and those kinds of patterns. Obviously, things were feeling really dire back in the kind of early in the year. People -- there's a continuous sort of stream of news that kind of made things continuously worse or kind of more dire and that created a lot of uncertainty, increasing uncertainty.

At some point, the news flow kind of changed in the sense that the uncertainties may be stopped increasing, but it's still there, and it has been sort of to the extent that there is stability is a stability of uncertainty. It's still large. And it has been consistent until we see more clarity on what the budget is going to do next year around an age until we see more clarity around the actual cash, like actual money making their way into the bank accounts from the grants, maybe more clarity around sort of the direct versus indirect issues.

People are going to be the academic institutions, the APIs are all going to be similarly cautious around their spending patterns for sure. So we're still kind of in that same state. I would say it hasn't gotten better. It hasn't gotten worse.

Got it. And then how are your OUS academic customers standing?

Yes. I mean certainly much better than in the U.S., right, the situation. I would say it's still -- the current environment is not like awesome, it's not amazing. Like several years ago across the world, there was a lot of investment in biomedical research. I don't think that's kind of the case anymore. So it's relatively subdued. And we're finding it particularly subdued in the capital equipment side of things, where it's doing a fair bit of travel in Europe and in Asia talking to customers.

And yes, there's just materially more scrutiny when it comes to instrument purchases, whereas in the past, you might have a I just go ahead and buy an instrument, buy the sort of piece of equipment. Now the department comes over the top and ask some hard questions like, well, the instrument already exists at another place in the institution, like there's one at the core. Why don't you use that one for now instead of purchasing another one.

And so we're seeing that kind of pattern across the world, just more pressure. Now not universal, obviously, different geographies have all their own sort of pattern. But I would say at a high level, the environment is somewhat subdued, not nearly as bad as what's in the U.S., but also not sort of the high flying days of several years ago.

Got it. That's super helpful. And maybe switching to the biopharma side. I know it's a smaller part of your business, but you guys have been very active in trying to further penetrate the end market. So maybe you can share some color on what you're hearing from your biopharma customers and maybe some updates or progress on how the biopharma commercial team has been progressing so far.

Yes. So I would say, like, first of all, very, very happy to have the biopharma focused team in place, both because it gives us much more clear visibility into kind of what's happening there and also levers much more sort of concentrated levers in terms of like kind of managing that business. So really good to have that, like really glad we did that reorg last year. So we're ready for this environment.

Now in terms of like what is actually happening sort of with the macroeconomic environment, we kind of have our biopharma business is sort of composed of roughly half of biotech and half of larger pharma. And biotech has been in a sort of recession/depression for the past several years. And I would say still kind of is in that mode where companies are really struggling for funding and are really trying to figure out how to kind of make their cash last longer and so on. And so it's been certainly challenging from that perspective.

Not to say that there aren't new companies coming on board or like you do see, you hear about these very large funding rounds and there's quite a few of them who are basing their sort of research programs or their development programs in large part on single cell and spatial foundations, and we certainly get kind of revenue from those. But by and large, on average, the environment within biotech has been very challenging for the past several years, and that has not really changed yet.

On the big pharma side of things, one thing to keep in mind is that we tend to be indexed more toward the early development discovery kind of stage of the pipeline. And this year, so far, again, we saw kind of like really nice momentum at the end of last year, early this year, but then since sort of, again, a lot of news flow in the environment, they've been more cautious like.

And a lot of that is just not like not having necessarily certainty around how things are going to look in the future in terms of pricing, in terms of tariffs, MFN, things like that, makes them cautious right now investing in like early-stage discovery and so on. And so there's kind of what we've seen so far this year is that reticence while they're waiting for things to shake out on the policy front.

Got it. Super helpful. And then I was just thinking about all the pressures that your markets are seeing today, are you seeing any sort of preference shifts for your customers in terms of either doing a single cell project or a spatial project?

Yes. It's kind of an interesting question. I would say, like I can't really say that, that has been the case, right? Again, the current environment is definitely -- so relatively speaking, there's a preference for consumable kind of versus as opposed to instruments and big capital equipment. But in terms of the sort of the applications and sort of these modalities, single cell and spatial, I wouldn't say that there's like relative sort of preference one way or the other.

If you look at what people are actually interested in investing in and where they see their research programs going, where there's particular interest and enthusiasm, I think both single cell and spatial actually figure very, very prominently. I would argue probably at the top of the list. Like if you look at like what are the big areas of growth in tools, spatial is probably the most promising kind of still early emerging franchise and single cell is probably the most promising, relatively mature kind of like segment.

And the cool thing, too, is now with single cell, we're seeing kind of almost a reemergence like these new applications that are kind of accelerating the interest and the intensity of interest in single cell. So both are, I think, are doing quite well at least from an interest perspective. I guess the dollars are somewhat more constrained these days.

Got it. And then maybe looking at your product portfolio, starting with the Chromium franchise. You mentioned Flex v2 earlier, your-based product. Tell us more about this. And I'm not sure if you've disclosed this, but timing for the launch.

Yes. We haven't given more sort of concrete timing. We talked about it at the beginning of the year that it's coming. It's still scheduled for later this year. The team has been doing -- has been making great progress. We're really excited. The product is doing really well. And we've been relatively cautious in terms of promoting it just yet, but we've engaged with a lot of early access customers and the feedback has been just phenomenal.

And it is -- we do see it as -- I'm personally really excited about it, and I think it's going to be a major event for single cell analysis fundamentally. It opens up a whole new sets of workflows. So that is really exciting and especially in the context of running very large-scale perturbation streams, there's a kind of -- this new wave of interest and efforts that are coalescing around building large-scale AI models of biology.

And we see Flex v2 as being the foundational technology for enabling that. In fact, we've heard that from our customers. And so there's this huge potential there. But then also just to step back, that kind of just the benefits of Flex in general that are going to be amplified with this product introduction are really exciting to me, too, like fundamentally has really, really great sensitivity and allows you to really to get the expression of even sort of the lowest expressed genes, which oftentimes are the most important ones like transcription factors and things like that.

So it has really great -- it's incredibly robust by virtue of its fixation and so -- which makes it particularly amenable for broader adoption for people who are kind of new to the world of single cell and it's a lot more forgiving of kind of various sort of workflow deviations maybe. It works with big samples and in particular, works with FFPE and we've -- over the past couple of years have further kind of refined those capabilities and which makes it kind of uniquely amenable for translational and clinical now. And it also is like incredibly flexible in terms of how many samples like now with v2, how many samples or how many cells you want to run through a single cell experiment. So it's going to be a pretty big deal, and we're very excited about it as we're heading toward launch.

Great. Chromium consumables. last quarter, revenue was down, but reaction was up year-over-year and quarter-over-quarter. Where do you stand today in terms of the GEM-X transition? I know you pointed to expectations for it to be completed by around year-end, but you also said some customers mentioned that they would probably not switch to GEM-X because of certain features. Could you elaborate more on this? And are you ultimately expecting a certain percentage of customers to stay on Next-GEM ultimately?

Yes. So first of all, we -- there's not really any real reason substantive reason for people to stick with Next-GEM. It's more the fact that people have studies that are ongoing and they don't want to switch in the middle of a study in the middle of experiments. And then there's sort of a general kind of notion if you're used to running a particular assay and it works well for you, which in a lot of cases, it works really well, right, like you don't want to switch. But like in substance, GEM-X is just monotonically better like along every dimension than Next-GEM.

At this stage, the vast majority of our customers have switched, not everyone. There's definitely kind of a minority that's still sort of the tail of running Next-GEM. We have announced publicly that they were going to be end of lifing Next-GEM, and we're expecting that to now kind of accelerate the last wave of conversion as we're heading towards sort of the end of this year and early next year.

Got it. And I guess the million-dollar question that everyone wants to know is what gives you confidence in the long-term elasticity in the single cell market? And when can we expect to see consumables return to growth?

Yes. The -- I mean there's some slightly different questions here. So the fundamental premise and the timing. The -- I would say the fundamental premise here, like why elasticity -- first of all, I'll just go back to the first principles. When we first launched single cell, it's always very clear to me, look, this is a foundational capability. It's a general purpose kind of technology that applies to just about every area of biology.

Any time you're starting your analysis, you're starting with tissue or cells, you really need to be looking at it at the cell-by-cell level. That's the basis of biology. And I've never heard we've not seen any like argument to the fundamentally, if anything, that has become much like universally recognized, if that's the right way to look at biology. At the same time, we knew from the beginning, if you're charging $1,500 a sample plus more with sequencing, you're in the thousands of dollars per sample, that cannot be kind of a universal technology. And we knew that over time, you need to get into more like hundreds of dollars to drive to that universal ubiquitous adoption.

And so that gives you kind of, again, from first principles kind of a view that there's got to be elasticity. There's huge amounts of money that's not -- that should be being spent on single cell that is currently not being spent. We also had a fair amount of empirical evidence along the way that we've gathered when we did experiments either with particular products when we first launched Flex and see kind of the adoption curve of customers once they kind of get to a lower price per sample, what it happens to their volume, what happens to their dollars and those increase, not immediately, but give it something like 3 quarters and the total revenue you make from that particular customer kind of increases and the reaction growth overwhelms the sort of decline in ASP.

We've seen -- we've done some experiments geographically. And we also have predicates from other technologies that have gone through this as well at similar price points and so on. So that gives us a lot of conviction that there is elasticity. And in fact, I think there's massive amount of elasticity -- and also kind of going back to the point I made earlier, you can see now like as we've been communicating these lower price points, there's new applications that are opening up. We're seeing new use cases. We're seeing new customers taking interest. So at a high level, it's going -- it's all kind of going in that direction. And we're seeing now increase in reaction volumes, pretty significant, pretty consistent.

Of course, it's on the background of ASP declines as well. And I would say that like I think in an environment where that was more normalized, we'd probably see even more like growth -- higher growth in reaction. And so to some extent, the point at which sort of you see true elasticity and the reaction growth leads to revenue increase is also a function of what's happening in the macro environment, right? And so we kind of have to see how that evolves. But in general, we feel optimistic that we are very much on the right path here, and we're set up for a much larger growth going forward.

Got it. And then your recent Scale acquisition announcement, this has also generated a lot of buzz in the investment community. Can you help us better understand the strategic rationale here? I mean, from a tech perspective, I think researchers have shown that if you incorporate one round of barcoding ahead of encapsulation, you can run a lot more cells. So is that the idea here?

I mean that's pretty perceptive. I would say, kind of overall, right, this acquisition, this is a technology -- the scale team, the founding team was -- is incredibly inventive, incredibly creative, and they developed a number of technologies that were -- I mean, they are both like really foundational and fundamental and really cover. And we're really looking forward to integrating them into our product lineup.

If you think about it, like the general notion, like what does it take at the highest level to do single cell analysis, what is the key. You need to be able to separate cells. You need to be able to deliver barcodes within the individual partitions. And then you need to be able to do -- to make massive numbers of barcodes, huge diversity of Scale, right? And Scale presents like a really powerful approach for doing that for kind of pushing the third vector of scale. And yes, we expect to incorporate that into our Chromium product line, it gives us tons and tons of headroom to keep scaling the experiments and to deliver kind of on the road map and all the things that our customers are excited for the future.

Got it. And how big of a lift could that be? And when can we expect to hear something along the lines of the first product that incorporates technology?

Yes. I mean we haven't talked about our product road map beyond the current year. But as -- conceptually, kind of as you mentioned, these are very nicely complementary kinds of things, and it's not a huge lift at all to combine what we have with the scale -- fundamental scale technology.

Got it. And then to the extent that you're comfortable you can talk about this, are you able to provide us with an update on where the Scale and Parse litigation currently stands?

Yes. So Scale brought a patent infringement suit against Parse several years ago. And it's scheduled to go to trial in October, and that's still the timing forward.

Yes. Got it. And then what are your views on the single cell competitive landscape today? And in addition to, I guess, commercialized competitors, I know the preprint of [ Slam ] method last year generated a lot of buzz, and I think it was officially published and sell recently. So what have customers been saying about using spatial imagers for single cell transcriptomics.

Yes. I mean, so first of all, on -- in terms of just like single cell competition more broadly, obviously, the last few years, there has been a number of new entrants. And the dynamic has been largely the same. Our products have just like really -- there's a huge gap in terms of the capabilities of our products relative to what exists out there with competition.

Customers invariably go and try all these products, and there's definitely a lot of trialing going on, and there has been now for the past several years. But also -- yes, just about invariably, they come back to us because, again, the much superior data quality, much better sensitivity, much better like robustness, the range of applications, customer support, all of these things that we've built out over the years to just make our products that much better and much better as a customer for customer experience.

And to the extent that in the past, there was sort of a question of cost and pricing where that was kind of the wedge that people were driving through. That has also been, I would say, in many ways, addressed by virtue of the product introductions we had last year with -- let multiplexing with what Flex is able to do and now with like scale being in our portfolio as well. So that kind of gives us like a really nice breadth of coverage on the cost side as well. So generally, we're feeling really good about our position in single cell.

As far as -- so the stamp approach is concerned, it is very exciting. There's definitely quite a bit of interest, at least conceptually in this approach. And to be clear, this is something that we were -- we have been excited for a long time. Since we first started thinking about spatial, it was like it's very natural to think like, hey, you can take the dissociated cells and put them on that spatial and on a flow cell and do the analysis. So that was always kind of part of our thinking.

In fact, a lot of the very early customers of Xenium did decide to that they would just put individual cells on a flow cell and run these experiments. The fact is it's still like quite early, and there's not really a commercial solution for that. That's really your mind. And there's still a whole lot of trade-offs that you're making and will likely be making for quite some time to come relative to actually doing proper single cell analysis. Like the depth of information you get from individual cells when you're using Chromium is just like far and above what you currently do with the imaging approaches. But it is a really exciting area. And like in principle, it can certainly drive down the cost per cell really fire.

For some applications, it is very compelling, not really the same applications that Chromium is used for. And so for that reason, for us, it's like it's all good. It's just more, right?

Right. Got it. And then I guess speaking of Xenium, your protein co-detection capabilities were launched recently. Just wondering what early traction and customer feedback or reception is sounding like. I think based on our channel checks earlier this year, it seems like a lot of researchers have gravitated towards a separate spatial transcriptomics imager and spatial proteomics imager. So just wondering what the research community is thinking about a co-detection on one platform nowadays.

Yes. So first of all, very early. I mean we just started shipping the product and the initial feedback has been quite positive. It's -- but it's too early to talk with a whole lot of sub yet on that. I think your general question around people kind of converting more towards having separate platforms. I mean I think that's probably true kind of in the current sort of environment. But I think that's more of a function of the technologies that are available as opposed to necessarily customer interest.

I think what customers would ideally want is a single platform that can do from the same section, actually do kind of both modalities or more than that. We've seen it fairly consistently. Remember, Xenium can actually do also low plex protein image has been for -- since just about the beginning. You can take your Xenium -- your section, do the RNA analysis and then do immunofluorescence afterwards in the same section. And people do this all the time.

And so we do expect that there is a fundamental customer need to do both. The issue is that there hasn't yet been a technology that did it in a way that wasn't compromising things of both sides. And so in the absence of that, for sure, I think what we see in the market is that people are going to get like 2 different platforms and do separate analysis. But I don't think that's necessarily what ultimate future is going to hold.

Got it. And can you talk about your approach there? It seems like you guys are using small panels with the option of combining all of them for detecting 20 proteins along with around 500 RNA. What is the thinking behind the strategy here? And when can we expect to see protein detection in 5G?

Yes. So again, I haven't talked about like more details of the road map and when the different things are going to be coming in what sequence. I would say, I mean, maybe I'd just emphasize a couple of points. First of all, there is a lot of -- when you talk to customers around how many proteins they really want and need.

And obviously, the first order, the more the better, right? Like that's what everyone wants to -- but then when you press really like what is the real number that you need given that you can get a pretty comprehensive overview of your sort of biology from RNA something like 20 is like really where there's sort of like particularly kind of where the need really coalesces, right? So beyond that, it's better to have more, but it starts getting more marginal.

So there's sort of one part of the equation. Then the other thing to just consider is that it's not that the platform itself is like limited to those numbers, right? Like with Xenium with this approach, you can do a lot more proteins for sure. But like one of the challenges is usually in these things is actually content where you've got put together the right set of antibodies that work really well together in concert and getting the appropriate validation. And this is the kind of thing where we're showing the capability.

The first panel is very compelling on its merits for immuno-oncology for a number of applications. We've heard that from customers, but we're also giving the means for customers to kind of evolve and build their own as well over time. And so we'll see kind of how that goes, but we do expect that over time, both the Flex level and diversity of panels will increase as we go forward.

Got it. Great. And then on the topic of 5000 Prime, how has the traction been there? And are you starting to see any indications for customers that prefer smaller sized panels given some of the ongoing budgetary pressures?

It's kind of interesting. The panel has been more like it's been consistent in that people like 5k and it's been trending that way. So if you compare like right out of the gate, kind of exceeded our expectations. And then if you look at kind of year-over-year, people are -- the relative sort of utilization has been favoring -- has been trending more towards 5k versus kind of the smaller panels.

Got it. And then I guess one of the interesting things last time on the 2Q call was you talked about the Xenium utilization ramp, and it's coming from both early adopters and new users. So I was wondering if you could share some metrics on like how this is progressing and what's really driving this increase?

Yes. Like yes, it's too early to kind of -- like we haven't shared the specific metrics. I can say qualitatively, it's been very encouraging to see the like patterns, and it's kind of multiple vectors here that are encouraging for us. The average utilization is the number of runs people are kind of scaling up, and that's across both like people who are just kind of ramping up early, which we would expect them to increase their usage as they're learning the system as they're building their necessary panels, but also people kind of in the middle of their life cycle and also kind of our earliest users are still ramping up as well, which is, again, kind of an encouraging sign.

And then also, there's the number of runs across the user base, but then also kind of how much they're spending per run has also been increasing by virtue of people doing more 5,000 relatively speaking. So all those trends are all kind of pointing in the right direction. with utilization, which makes us fundamentally really excited about the future of the platform because again, in the current environment when instruments are really pressured, it's a little hard to tell from the instrument sales, but utilization is all pointing in a really encouraging direction.

That's great. In terms of Xenium placements, I know in the past, before all of this stuff happened in the market, you guys have pointed to a range of about 50 to 70 units placed per quarter. Just wondering once the market recovers, is that something you guys are going forward?

Yes. I mean for now, we're kind of -- we've been in the past few quarters has been sort of in that range, low 30s. And we hesitate to make predictions until there's more clarity on the macro and so on. But first principle, like again, like the signals that we're seeing there from the market, there's a lot of interest in Xenium. And certainly, once the environment is more amenable, we do expect it to -- for things to improve going forward. And again, fundamentally, just got strong -- really, really strong conviction in this platform and the utility that we're seeing with the customers.

Got it. And then in terms of your spatial consumable growth, I think it's primarily driven by Xenium. Maybe we can touch upon how Visium and Visium HD has been doing of late and maybe what the current mix is between standard versus HD?

Yes. I mean Visium has been doing well as well. Like I don't want to kind of again say what's happening there. Like it's a nice set of applications, good resonance with customers. all that, I do think that there is kind of as we look forward because we're seeing what customers are planning to do, Xenium is getting more and more mind share and also in terms of kind of technology development, there's a lot more kind of headroom there as well. And fundamentally -- so Xenium is certainly getting more and more sort of focus. But Visium is doing -- continues to be like a robust platform. By and large, now people have switched over to HD. SD still kind of has a minority of kind of usage, but it's shrinking and more and more high definition, which is kind of what we expected.

Got it. And then in terms of the spatial competitive landscape, with litigation headwinds now lifted for competitors, Visium and NanoString, are you seeing any shifts in the competitive landscape on the spatial side?

No, not really. I would say the pattern has generally -- sort of -- what we've been seeing is a continuation of previous pattern. Like people are increasingly recognizing the -- just the superiority of Xenium relative to other platforms, the data quality, the sensitivity, specificity, the robustness of the workflow, the consistency of the data, all these things are all like really, really strong resonance and feedback from customers. And I think that sort of the awareness of that and recognition of that has been spreading and we feel really good where we are in the market. And I don't think there's been any real change to that sort of trajectory.

Got it. And then on the last call, scaling up of large-scale studies on both your single cell and spatial side. I think on the spatial side, you highlighted the Genome Institute of Singapore and your project with tissue map. Can you share some more color there and Xenium's role?

Yes. No, it's like this is a really exciting project. And like -- and it's a couple of reasons. First of all, the Genome Institute of Singapore is like they very much at forefront of like really deep expertise on single cell and spatial and genomics research in general to some of the best people in the world. They also are really intimately integrated into the health care system in Singapore, which in itself is really, really great in terms of keeping track of all the clinical data and having it all be integrated.

And so it's a really, really great place to do a large -- like a study of the kind that we've been excited to kind of set up the foundation for translational research and ultimately clinical applications. In this case, the study is of 2,500 FFD samples in cancer and autoimmunity to discover biomarker signature for drug response, disease progression and also finding drug targets. So I think it's a really great example of the kind of research that will happen, and we know there's a lot of efforts around the world along similar direction, again, scaling up and kind of pushing towards translational side. You also touched a little bit on the single cell side, and that's another huge wave. both there's on the translational side. We're like running these large-scale experiments. We just set a press release with a company called CLISEQ out of Weizmann Institute in Israel to do this large clinical trial basically to study bone being able to diagnose kind of bone marrow diseases from blood draws instead of bone marrow caps. There's lots of other work like that.

And also, I alluded to mentioned this earlier, this whole big wave of building virtual cells or really AI models of biology, which is necessitating running very, very large-scale experiments. And you're talking about billions, billions, we're talking about tens of billions of those kinds of cells, and that's a huge wave that we see coalescing around the world as well.

Got it. I realize we're close to time, but let's give you another 2 minutes. In closing, what are some things that you want to highlight to investors just to make sure they focus on this amongst all of the noise in the market today?

Yes. I mean it is true. There's certainly not a shortage of news and news flow and kind of macro environmental things one could try to track. But what I always do myself and encourage the team kind of zoom out and think about the fundamentals, right? And the fact is like the fundamentals of the business are incredibly strong. We are the single cell, like I said before, the cell is the fundamental need of biology and single cell and spatial approaches are fundamental to measuring biology.

And I see like ultimately, the future if you're starting with the kind of tissue kind of cell, you really need to be analyzing those approaches, which is why I say it's the future of biological research, ultimately, the future of drug discovery and the future of diagnostics. And those are the technologies. That's why when you look -- when you survey do the customer service where you look at where the sort of people are focusing on where the attention is going to be in research, single cell and spatial feature as the -- probably the most promising franchises in all of tools.

So from that perspective -- and then like when I think about from that perspective, given that, we're like probably in the best strategic position we've been as a company ever, right? We've got a great market position. We've got a full complement of technologies now. And we have an incredibly strong balance sheet and ability to deploy it and to use it to navigate both this current environment and invest for the future to take a full advantage of this, what we see as a massive opportunity going forward.

Great. Thank you very much.

Thank you.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the 10x Genomics Second Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Cassie Corneau, Investor Relations and Strategic Finance. Kathy. Cassie, please go ahead.

Thank you, and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the second quarter ended June 30, 2025. If you have not received this news release or would like to be added to the company's distribution list, please send an e-mail to [email protected]. 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.

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. 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.

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. 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.

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. [Operator Instructions]

With that, I will now turn the call over to Serge.

Thanks, Cassie, and good afternoon, everyone. Today, I'll cover our Q2 performance and share updates on what we're seeing across our customer base. I'll also walk through recent business developments before handing it over to Adam for the financial review and outlook.

Total revenue for the second quarter was $173 million. During the quarter, we settled our worldwide patent litigation with Bruker on favorable terms and recognized an upfront payment of $68 million that we allocated to both operating expenses and license and royalty revenue.

Excluding the portion allocated to license and royalty revenue, our second quarter revenue was $146 million. And as we continue our focus on cost management, we increased our cash balance by $40 million during the quarter, not including any settlement-related payments, which began in Q3. The current funding environment remains challenging and highly uncertain. In particular, the academic funding landscape remains marked by shifting policies, weaker grant disbursements and lack of clarity around future budgets, all of which are contributing to extended project time lines and cautious customer spending.

We're staying closely aligned with our customers to support them and remain flexible as we all navigate the uncertainty. Against this challenging backdrop, the current quarter played out largely as we anticipated. We saw some upside from strong performance in China, which was driven in part by purchasing dynamics associated with the timing of tariffs. Even in this difficult environment, our business fundamentals are solid and the key positive drivers of performance that we've seen recently carried through into Q2. We continue to see solid signs of underlying single-cell demand.

On the consumables side, while revenue was down year-over-year, Chromium reaction volumes grew both year-over-year and sequentially, an indicator of increasing demand for our solutions and single cell more broadly. This growth was driven by robust adoption of our latest products, including GEM-X Flex and Universal On Chip Multiplex, which have been instrumental in lowering cost barriers, enabling larger scaling and opening up new applications.

Additionally, we saw meaningful year-over-year and sequential growth in spatial consumables revenue and volume. Within spatial, Xenium consistently serves as a strong driver of growth and performance. Utilization per instrument continues to grow, reflecting both a higher number of runs and increased spend per run. We're seeing continued ramp across both our earliest adopters and newer customers, and regularly receive strong feedback on Xenium's superior data quality, accuracy, robustness, throughput and ease of use.

Together, these qualities continue to set Xenium apart as a best-in-class platform and are fueling broad adoption across both basic science and translational research.

We continue to monitor customer sentiment closely as the funding environment remains highly uncertain. While the U.S. academic and government funding landscape has not deteriorated further, we also have not seen meaningful improvement in customer behavior. Across many institutions, spending remains conservative and capital equipment spending continues to be a significant challenge, both in the U.S. and more broadly around the world.

Customers are facing increased scrutiny on purchases, longer approval time lines and in many cases, new restrictions on capital spending and staffing within their labs. These challenges are leading to delays in project starts, scale backs in both ongoing and pilot study designs and heightened price sensitivity. With open proposals around next year's federal funding and institutional budgets still in early stages, we expect these uncertainties to continue impacting customer spending behavior until there's greater clarity on policy direction and actual distribution of funding resources.

As customers work through evolving budget time lines and operational planning cycles, we're partnering closely to help them navigate this environment and support continuity of their research. And despite this backdrop, we continue to hear clearly that our tools are essential to scientific progress.

Our conversations with customers reinforce our conviction that single cell and spatial are the most promising areas of growth in life science tools, with researchers increasingly shifting both mind share and funding towards these areas. And as researchers increasingly invest in these technologies, we are prioritizing our efforts to advance our technology leadership, unlock new high-value applications and ensure the long-term financial strength of our business.

Looking across our product road map, our recent and upcoming launches are continuing to resonate with customers. During the quarter, we began shipping Visium HD 3 Prime, which expands the capabilities of the Visium HD portfolio by extending it to more applications. We also launched HD cell segmentation capabilities, which enable researchers to assign transcripts to individual cells with precision, simplify data analysis and uncover new biological insights.

In parallel, we're also preparing for the release of several important innovations across spatial, including Visium HD XL and Xenium RNA plus protein, which will further enhance multiomic spatial analysis and unlock deeper insights from complex tissue samples.

Turning to single cell. I'm really excited about Flex v2, our new plate-based Chromium Flex product that we expect to launch in the near term. Built to dramatically increase throughput and streamline workflows, Flex v2 provides ultimate flexibility for customers when designing their experiments. This next-generation Flex is an important step as we continue driving lower costs across the full spectrum of studies from small to large, while maintaining the highest quality data.

Flex v2 is designed to be the ideal method for large-scale perturbation experiments and biopharma applications from early target discovery to clinical trial integration, delivering higher cell throughput, more flexible workflows, FFPE sample compatibility and the quality needed to train and validate AI models.

In addition to the launches planned for this year, our team is hard at work on future products that will further expand the capabilities of our platforms. We are excited about our road map for the coming years and the opportunity to deliver ever more value to increasing numbers of customers.

As we look at the broader opportunity, we continue to believe that both single cell and spatial are in the early stages of the adoption curve, with large-scale, high-impact applications gaining traction across both platforms. In particular, I'd like to highlight 2 very exciting trends, large translational studies using Xenium and large-scale single cell perturbation experiments to train AI models and build virtual cells.

As an emblematic example of the first trend, we recently announced a collaboration with the Genome Institute of Singapore on the TISHUMAP initiative, aimed at accelerating discovery of drug targets and biomarker signatures in cancer and inflammatory diseases. This study will use Xenium to enable high-resolution spatial mapping of gene activity and cells with an intact FFPE tissue samples paired with detailed clinical data. Its goal is to analyze thousands of samples to discover clinically relevant biomarker signatures and therapeutic targets.

On the single cell front, the emergence of increasingly powerful AI methods that are hungry for high-quality data is accelerating researchers' interest in running larger and larger single cell perturbation studies. For example, this quarter, Xaira Therapeutics used our Chromium Universal 5 Prime assay in its industrialized Perturb-seq workflow to produce the largest publicly available genome-wide Perturb-seq data set to date, capturing transcriptional responses across 8 million perturbed cells.

This quarter, we also extended our partnership with the Arc Institute to support the Virtual Cell Challenge, which is a worldwide competition to incentivize the development of powerful computational models of biology. The challenge has established a rigorous evaluation framework and uses our Chromium Flex assay as the standard. The work being done right now is clearly just the beginning.

Virtual cells and large-scale single cell experiments represent the next frontier at the intersection of AI and biology. To understand biology, to understand health and to understand disease, you need to understand how cells work. If we can model cells and perturbations computationally using AI, we can guide the discovery of new drugs, simulate patient responses and reduce the experimental trial and error that defines so much of biology and drug development today.

Finally, we remain focused on cost management and cash generation. We have a strong balance sheet and the resolve to protect it. Across our business, we continue to carefully evaluate costs to ensure operational efficiency while also continuing to invest in long-term growth. With our strong balance sheet, we have the resources to pursue our strategic priorities and continue to fuel innovation.

To that end, as part of our strategy for continued innovation within single cell, we announced earlier today the signing of a definitive agreement to acquire Scale Biosciences. The acquisition brings us key inventions and technologies that will accelerate innovation across our Chromium platform. It enables us to broaden access to single cell analysis by making it more powerful, more affordable and more accessible to researchers worldwide.

By integrating these technologies into our broader road map, we're strengthening our ability to support larger Scale applications, while continuing to deliver the high-quality multiomic data that researchers expect from us. We're excited by the strategic value of this transaction and its benefits to the scientific community. Adam will share more details on the financials.

Our conviction in the potential of single cell and spatial biology is stronger than ever. As we move forward, we remain focused on staying closely aligned with our customers, executing with discipline and continuing to invest in our technologies to capture the large opportunities ahead.

With that, I'll turn the call over to Adam.

Thank you, Serge. I'll start by reviewing our financial results for the 3 months ended June 30, 2025, and will then provide further details on our outlook for the third quarter. All figures and growth rates provided will be on a year-over-year basis, unless otherwise noted. As Serge mentioned, the quarter unfolded largely in line with our expectations.

Total revenue for the second quarter was $172.9 million, up 13%. Excluding the license and royalty revenue from the settlement, revenue was $145.6 million, down 5%. Total consumables revenue was $122.2 million, down 1%. Chromium consumables revenue was $85.8 million, down 9%, primarily driven by lower average reaction prices. Spatial consumables revenue was $36.4 million, up 24%, primarily driven by Xenium consumables revenue.

Moving on to instruments. Total instrument revenue was $14.5 million, down 39%. Chromium instrument revenue was $5.7 million, down 35%, driven primarily by lower average selling prices. We implemented strategic discounts during the quarter as we partnered with customers who were navigating CapEx constraints. These discounts drove broader instrument adoption and an 11% increase in Chromium placements year-over-year.

Spatial instrument revenue was $8.8 million, down 42%, driven primarily by fewer instruments sold. Services revenue was $8.5 million, up 47%, primarily due to an increase in Xenium service plans.

Looking at our revenue by geography, ongoing CapEx headwinds continued to persist globally. However, solid consumables performance contributed to sequential improvements in most areas. Excluding settlement impacts, Americas revenue was $78.9 million, down 15% from the prior year and up 7% sequentially. EMEA revenue was $34.7 million, down 7% from the prior year and up 9% sequentially. APAC revenue was $32 million, up 41% year-over-year and down 1% sequentially.

As Serge mentioned, APAC benefited from a temporary pull forward in purchasing activity in China, as customers accelerated orders ahead of potential tariff changes. We estimate the revenue impact from that pull forward was approximately $4 million.

Turning to the rest of the income statement. Gross profit for the second quarter was $125.1 million compared to $104.2 million for the prior year period. Gross margin increased to 72% from 68% the prior year, primarily driven by higher license and royalty revenue. Excluding settlement impacts, gross margin was 67%.

Total operating expenses for the second quarter decreased to $95 million compared to $146 million for the prior year period, driven by gain on settlement. Excluding settlement impacts, operating expenses were $135.7 million.

Operating income for the second quarter was $30.1 million compared to an operating loss of $41.7 million in the second quarter of last year. Excluding settlement impacts, operating loss was $37.9 million.

Net income for the period was $34.5 million compared to a net loss of $37.9 million for the second quarter of 2024. Excluding settlement impacts, net loss was $33.5 million. We ended the quarter with $447 million in cash, cash equivalents and marketable securities.

Turning to our outlook for the third quarter. We expect revenue to be in the range of $140 million to $144 million. This outlook takes into account approximately $4 million of revenue in China that was pull forward from Q3 into Q2 ahead of potential tariff changes. Excluding this pull forward, we expect Q3 revenue to be broadly in line with Q2 revenue, given the continuation of cautious customer spending behavior and ongoing capital equipment spending constraints.

As we announced earlier today, we signed a definitive agreement to acquire Scale Biosciences for upfront cash and stock consideration of $30 million, plus contingent consideration that could become payable upon the achievement of certain milestones. This acquisition is subject to customary closing conditions.

As Serge mentioned, we are excited about the strategic value of this acquisition, as Scale brings key inventions and technical capabilities that augment our innovative foundation within single cell. We do not expect this transaction to have a material impact on our revenue or operating expenses for the remainder of 2025.

Our balance sheet remains strong, giving us flexibility to continue executing on our strategic priorities while investing in innovation and long-term growth. We believe we are well positioned to navigate uncertain market conditions and remain committed to staying agile and responsive as the environment evolves.

With that, I'll turn the call back to Serge.

Thanks, Adam. Before we open it up for questions, I'd like to make a note of appreciation to our customers. The last 6 months have been a particularly trying time for many of you. While many of your challenges remain unresolved, your work and continued perseverance are an absolute inspiration to us at 10x. Progress in science is the ultimate public good.

So much new knowledge and so much potential to improve the human condition is coming within our grasp. Your work is more important than ever. We will continue to root for your success and support you any way we can.

And to our team, thank you. The current environment has been incredibly challenging. But it is during times of adversity that you can really tell what the team is made of. And by that measure, I couldn't be more proud of all of you. You have stayed focused, creative and relentless in the pursuit of our mission, regardless of what has been thrown at you.

Remember too, that times of stress build strength. This is not the first time we have faced adversity, and I'm sure it won't be the last. Our team has only gotten stronger through time. I have more confidence than ever that we will solve whatever challenges lie ahead. We have been through a lot together, but there is so much more to do. After all, we're just getting started.

With that, we will now open it up for questions. Operator?

[Operator Instructions] Your first question comes from the line of Patrick Donnelly with Citi.

Serge, maybe one for you just on the backdrop. I mean it sounds like in the prepared remarks, still a little bit constrained, not surprising there, particularly on the academic research side. Can you just talk about how the quarter progressed on that front, what the conversations look like? Obviously, a lot of volatility on the headlines around things like the NIH and what that's going to shake out to be.

Did you sense any improvement as the quarter went? Where are we on the visibility side at this point? Just curious what you're hearing from customers and what the right expectations are on that front as we move forward. And again, if the certainty on the budget as we get closer to that will help a little bit or just how those conversations progressed during the quarter would help.

Yes. Thanks, Patrick. Yes. So as we said, it was certainly a dynamic environment over the past 6 months to say the least. The quarter overall at a high level, Q2 kind of transpired pretty similar to what we were contemplating at the last call. There was certainly a lot of different events. And I would say with customers compared to 3, 4 months ago, there was probably more optimism because there has been some arguably positive developments. At the same time, overall, things held pretty steady. customers when it comes to the substance of their spending, the substance of their grants have been very cautious, because the actual disbursement of funds has been quite slow.

And the budgets are still very much in the early phases, and it's quite uncertain where they're going to be. And there's a continuous -- still continuous news flow of issues just coming out. I mean, just last week, we had a day when it looked like NIH wasn't going to be allocating any funds for an indefinite amount of time. Now that policy got overturned within that day, but that doesn't make people feel particularly confident about the future.

There are things like ongoing files with universities. There's a proposal floating around, around multiyear grant, grant changes, other kinds of years. Again, some positive signs the bipartisan support for NIH, which wasn't clear earlier, is -- seems to be coming through now, but lots of uncertainty at this stage going forward as well. So we're going to have to kind of see how that evolves. And we'll kind of expect that Q3 will roughly evolve the way that Q2 has.

Your next question comes from the line of Dan Arias with Stifel.

Serge, on the Scale deal, what is it that made this the right move and the right time for the move? And for customers that are looking for the lowest cost per sale as a part of a big study, will it be the Chromium kit or the Scale kit that best serves that need? How are you going to position these products for your customers?

Yes. Thanks, Dan. Look, kind of stepping back on the strategic rationale here, like we've long said, there is tons of headroom in single cell, especially if you think about lowering costs and driving to higher scale. And if you look over the course of the past year, past several quarters, recently, the opportunity in a way is actually accelerating because of the emergence of AI and this increasing interest in building larger and larger scale models of biology using single cell, running these very large perturbation screens.

And so that whole vision that we have had since the beginning really to drive single cell to higher scale, more routine use, lower prices, lower costs through that. That's what's driving -- that's kind of the overarching rationale behind the acquisition. It helps us to execute on that strategy.

The acquisition itself is fundamentally a technology acquisition. It's meant really to broaden the capabilities of our existing and future products. And I would also point to that to kind of our track record of previous acquisitions, we've been consistently really good at identifying technologies and bringing them in and making really great products out of them that customers really love. And that's what we expect to see here as well.

As far as the kind of the portfolio here, we are going to keep some of the Scale products on the market and certainly make sure that all of existing customers are satisfied. But in particular, what we're excited by is integrating this technology into our road map and delivering ever more value to our customers.

Your next question comes from the line of Kyle Mikson with Canaccord.

Congrats on the quarter and the acquisition. Congrats again, on Scale as well. Just to follow up on Dan's question about the acquisition. Sounds good about the -- your perspective why you did it. But is this deal like of an instrument-free solution kind of an admission that the Droplet-based architecture is not capable of scaling enough to address the needs of future single cell projects, large projects?

And then secondly, when -- I mean, when will this contribution from Scale these products become more material? Could that become like a dominant technology in your portfolio over time?

So like first of all, on the -- on your first question, like I would say not at all. Like we have really strong -- when it comes to instruments, we have really strong conviction that there is a huge value to having an instrument in a workflow. It affords really high precision, really great workflow, great quality of data robustness, all these things that customers love our products for. So -- and when you look to see what has been actually happening in the market, the instruments have not been at all a barrier for single cell. And we believe the big value here is actually integrating the technologies with our portfolio.

The technologies are highly complementary, and it will allow us to push certainly the Scale technology and the innovations there will allow us to push scaling and the Doral technology further ahead. I would say as far as kind of the revenue impact, the near-term revenue impact is going to be minimal. And really, the kind of the overall vision here is integration of these capabilities into the broader portfolio.

Your next question comes from the line of Doug Schenkel with Wolfe Research.

This is Madeline Mollman on for Doug. Single cell consumables revenue was down in the quarter, but reactions were up. Can you give us any color on how you're thinking about the pricing headwind related to the new lower-cost product road map that you rolled out? And how long you think it will take you to work through that? And then could incorporating the Scale technology into the 10x portfolio exacerbate this?

Yes. So thanks, Madeline. So let me maybe just kind of to zoom out a little bit and give context for the product transitions because we have multiple going on, on the Chromium side. First of all, there is a transition from a Next-GEM architecture to GEM-X, and that's well on its way. By the end of the year, we should be just about finished with that. And that's been going well. Customers are responding really well to GEM-X and all the great benefits from that architecture.

We also have other products that we launched last year that around Flex and around on-chip multiplexing, which has multiple kind of dynamics kind of operating there. Many are opening up new use cases and new customers. So that's obviously accretive. For sure, some customers are converting from kind of higher-priced products to these new solutions. And some customers will never convert because they need the features in the other products. And so we do see those dynamics kind of playing out kind of in concert.

And fundamentally, we believe that lower prices, like I've always said, lead to higher volumes, and there's tremendous amount of elasticity here in this market, in these fields, but this happens with a time lag. And overall, kind of high level, the price per reaction needs to be in the hundred of dollars rather than thousands to really kind of unlock a lot more experiments and a lot more samples. And that is what we're seeing.

I would say that in general, the trends we're seeing are fundamentally encouraging, seeing the growth in reaction volumes. And that is especially given the challenges in the macro environment. And I would also say because of the challenges in the macro environment, actually getting to a net positive revenue net growth would take longer than it might otherwise have in the absence of those challenges. But overall, the fundamental trends are positive, and we do expect this to drive more growth, both ultimately in reaction and revenue.

Your next question comes from the line of Mason Carrico with Stephens Inc.

Could you talk about the maturity or ramp of the Xenium sales force in Europe? How have you seen the sales funnel and conversion rates of new opportunities evolve over the course of 2025 now that, that team is in place?

Yes, Jason. Yes, good question. So the team is fully in place. We had a number of people joined most recently. I would say it's kind of all of our commercial kind of reorganization. The Xenium CapEx team was sort of the last piece to pull in place, specifically in Europe. But now we have everyone in place and the people who are -- who signed up, who joined recently are ramping up nicely.

What we're seeing as far as kind of execution has been -- certainly, it's been a big improvement relative to what we have seen before because of the focus, because of the expertise we now have in the company. The funnel management, the opportunity management have all been great, but all of this is happening on the background of a much more challenging CapEx environment. And so the way -- like what is -- what we end up seeing is that we are adding consistently more and more opportunities to the funnel, but the opportunities are taking longer and longer to close.

And by and large, where they get stuck is funding and kind of in various configurations of funding challenges, whether the customer is just having more restrictions on funding that they thought they had or they need to find more funding than they would have maybe previously or there's just more scrutiny on these budgets. So I would say that's how sort of this dynamic is playing out.

Again, we see both better kind of execution now that we have this focused team in place. And also, we are seeing continuous enthusiasm for the platform itself, what customers are doing, the feedback we're getting. So that -- those factors fundamentally make us quite optimistic, especially for -- as we kind of work ourselves through this environment and for setting us up really well for when we get through these macro challenges and get to the other side of it.

Your next question comes from the line of Dan Brennan with TD Cowen.

This is Kyle on for Dan. I wanted to go back to Scale again. Maybe on the technology side specifically, can you sort of just talk about what you saw as a unique attractive factor of the Scale technology versus maybe some other single cell assets that are out there? I guess what's so unique in your view about Scale? And how much incremental R&D do you think needs to go into that platform?

So Scale, like -- kind of like I said earlier, we do a very thorough assessment of the technology landscape out there. And we have a track record of, I think, being -- having had success being in our assessments and in determining what technologies have particular promise and how they can be built into awesome products.

In the case of Scale, there's really some really great inventions, really foundational inventions around combinatorial indexing, around quantum barcoding that make that company stand out that we're really looking forward to bringing into our portfolio. As far as R&D expenses to develop, integrate these products. I think this fits really nicely into our existing infrastructure and into our existing innovation engine. So we don't expect there to beat any material incremental costs.

Your next question comes from the line of Michael Ryskin with Bank of America.

I want to dig into a little bit some of the geo comments you made. You called out $4 million pull forward in China. Just always a question of how do you size that? How do you estimate that? What makes you confident, it's not a little bit less, a little bit more? And then beyond that, China overall, even if you back that out, still did really well, one of the better quarters you've had there for a while or I think better than any quarter you've had since 2023. So just what are you seeing there that's spurring this recovery?

Yes, Mike, thanks for the question. So yes, a couple of things. You may remember that over the last couple of years, we've talked quite a bit about kind of changing our go-to-market model in China. And we did a lot to get closer to the customers, kind of change -- get closer to our service providers, their distributors, change the business structures there. And that has been bearing fruit. The business we're really close to customers. We have a really good pulse on both their decision-making and inventory levels.

And we feel really good that we do have a really strong -- really tight pulse on their decision-making and in particular, sort of the issue around the tariffs. We heard from the customers specifically that they wanted to get those products into their hands ahead of any potential tariffs. It was -- and yes, we do think that $4 million is a very good solid estimate of that. We have very good visibility to the end market.

And yes, I mean, on your other point, China is doing well. And again, I think partially it's a function of all the changes and all the work that we have made, that the team has made, and the team is doing really well over there. The underlying market dynamics there also are favorable, at least relative to what they were a couple of years ago.

Your next question comes from the line of Luke Sergott with Barclays.

This is Salem Salem on for Luke. Just one on royalties from Bruker. Could you just talk about the structure of those royalties and the settlement? What's the percent or dollar amount that you'll get paid per unit of sales on that side, whether it's instruments or consumables and which instruments and consumables there, if you could clarify? Are there any potential minimum or maximum payment thresholds as well?

And any other dynamics there would be helpful. And then kind of lastly on China, just piggybacking off of Mike's question there. Wondering if you expect this type of strength going forward into 3Q and 4Q. And that's it for me.

Yes. Let me take the Bruker question. First, in terms of the details, the rates and sort of that level of detail, we're not providing. But let me just give a little bit of a high level on sort of the structure and how this worked its way through the P&L. So first, $68 million cash payment. That's coming, $17 million over 4 quarters. It's important to note that the cash that you see in Q2 doesn't include the first of those 4 installments. So that is due here in Q3. $27.3 million of that $68 million was recognized in revenue in Q2.

Of course, that came through at 100% margin. This is why we provided an adjusted gross margin number for you in the detail. And then there was close to $41 million that was recognized as a gain on settlement. So it's essentially a credit to OpEx. And again, part of the reason we transparently wanted to provide an adjusted number, so you could really see what baseline OpEx was looking like.

It's also, I guess, the last thing I would note on that, when you think about the Q3 guide that we provided, it does not include the ongoing royalties, which is sort of the root of your question. It doesn't include that for Q3. And that is an area as you start to look at the tables in our financial reporting, license and royalty revenue is something that's specifically called out. So you can see sort of the onetime effects that are called out, but you'll also be able to see transparently where that running royalties or those running royalties from this settlement with Bruker and various other things that we've done along the way.

I think just quickly on your question on China. Yes, it was close to 40%, roughly a 40% growth in China, even excluding the customer-driven acceleration of business related to tariffs. The team is executing -- just reinforcing what Serge said, team is executing very well. We're competing very well in those markets. I would expect, and that's part of the reason that we called it out as it related to our Q3 guidance that we are lower as a result of that pull forward in Q3, not just at the overall level, but obviously, that will be -- that's focused in China.

But as Serge mentioned, we really think that's a 1-quarter dynamic from an inventory perspective, and we should see that business bounce back kind of the strength that we've been seeing as we work our way into Q4.

Your next question comes from the line of Lu Li with UBS.

I wanted to -- wondering if you can comment a little bit on the order book in the quarter? And what is the order pattern that you have been seeing? And what is the visibility into the second half?

Yes, I can take that. I mean I think for our business, given that we're providing quarterly guidance, I can speak to you about what we're seeing here in Q3. At the simplest level, we have confidence here as we're whatever, 5 weeks into the quarter, providing the number that we did. We're seeing mostly really a continuation of where we were in Q2.

So continuing to see really good strength in spatial consumables, continuing to see really nice reaction volume growth as it relates to the Chromium consumables business and ongoing pressures are persisting on CapEx, more pronounced in the spatial side of things with the higher-priced Xenium analyzer, but also even on Chromium. And it's one of the things that we commented on in my script earlier was just the discounting and the work that we were doing in Q2 to get Chromium instruments into the hands of customers who are really excited to get kind of into our single cell ecosystem. But yes, I think at the simplest level, order book is looking consistent with the guide that we provided.

Your next question comes from the line of Matt Larew with William Blair.

This is Jacob Krahenbuhl on for Matt. Maybe just a more high-level one on the macro. It sounds like things have held fairly stable since last quarter in terms of the demand and funding environment. Maybe on margin, slightly better, but just wondering, as you've talked to customers in the field, what have you learned or heard from them that could provide the biggest unlock in spend?

Is it just more clarity on the NIH budget for 2026, a release or pickup in certain paused funding or grants, maybe a green light from department heads on new project starts? And I mean, what do you think a realistic time line for an unlock like this is in the market? And what are customers telling you that they're kind of assuming for their budgets next year?

Yes. So I mean, there's a range of input that we're getting from customers, depending on geography, depending on the particular institution. Different institutions have different issues, they are dealing with. But if I kind of synthesize at the very highest level, I would say probably 2 things are most important. One is budget clarity for next year. People are certainly waiting for that, and I think that has a lot of downstream effects.

And then second, while the general kind of orientation, emotional orientation has gotten -- has been getting marginally better. The thing that has been particularly -- has been holding people back is that the disbursement of funds the actual money landing with people. And that has been held up across the board in a lot of instances. And I think kind of that seeing the grant, seeing the money actually go to customers would be another important variable that would give them comfort and give them confidence to start spending.

Your next question comes from the line of Subbu Nambi with Guggenheim.

This is Thomas on for Subbu. You're a quarter into the headcount reduction and a few quarters removed from commercial restructuring. Now you have the Scale acquisition. Can you just talk about how you feel about the base business at this point heading into the second half? Is it where you want it to be? Or are there more cuts coming? And then what will 10x look like exiting this year or maybe into 2026?

Yes. So there's multiple elements to the question. So first of all, kind of touching on the commercial restructuring, yes, we feel really good about where the team is now. We've made the structural changes. We have filled the roles and folks have been ramping up quite nicely that have joined more recently. So overall, when we look at the business, have really strong signs of just the fundamentals like I talked about in terms of Chromium consumable reactions, spatial consumable reactions and spatial consumable revenue. Those are all good, strong indications for the future.

The feedback from customers is consistently positive, both in terms of the kind of the performance of the products, their excitement of the products and the new applications that they see emerging that require kind of more and more of these products at larger scale. So those fundamentals are strong. And as we've been saying now, last quarter, this quarter, we've been -- we've had a really strong focus on cost and cash management and are in a really good position now with -- as far as our balance sheet is concerned and as far as our spending profile is concerned. So the team has done a really great job of this.

We generated cash last quarter and feel really good about kind of the trajectory going forward. And of course, we'll continue to be really, really focused on cost discipline because the environment is still very uncertain. But from where we sit right now, I think we're in really good shape.

Your next question comes from the line of Rachel Vatnsdal with JPMorgan.

This is Jaden on for Rachel. Just a quick one for me. Digging into the placement assumptions, what are you assuming for placements between Visium, Xenium and Chromium next quarter and the full year, even if it's just higher-level comments? And what are the drivers on each of these franchises, that would be really helpful.

Sure. I can take that one. I mean the reality is we don't break those 2 out specifically. What I can tell you, though, as it relates to Q3, given what we've embedded in guidance is that from an instrument perspective, from a spatial instrument, given that's where your question lies, we're anticipating that Q3 is going to look fairly similar to Q2. And I guess even though we haven't given a Q4 guide, we don't have any reason to believe that Q4 would look meaningfully different from where Q3 is. other than the fact that there typically is an uptick from Q3 to Q4 in CapEx. Again, not something in this environment, we've got great visibility into at this moment, but that has been more of a historical pattern.

The CapEx environment continues to be challenged. But as Serge has mentioned, we've got a fantastic Xenium sales team that's out there selling. They've got really good robust disciplined pipelines. We continue to work those things through. So we feel very confident that we're out there competing for each of the placements out there in the market, and we'll continue to be aggressive to ensure we're winning business.

Your next question comes from the line of Tycho Peterson with Jefferies.

This is [ Lauren ] on for Tycho. Congrats on the quarter. Going back to the discount on Chromium during the quarter that you talked about, do you see maybe some visibility into kind of 2H and into 2026 if you're going to be continuing this discount or how the price overall is going to look evolving over time?

Yes. So in terms of the discounting on Chromium instruments, like really, this is a function of the environment we're in, right? Customers have been dealing with all kinds of challenging challenges when it comes to purchases, especially around CapEx, all kinds of new limits, all kinds of new scrutiny on buying instruments. And we have been working creatively with our customers to allow them to buy instruments as long as there is also a material commitment in reagents to go along with it.

And we do expect that as long as this kind of environment continues, we expect to keep working with our customers to keep doing that. And I also would want to emphasize that all of these kinds of interactions and deals are ultimately accretive to 10x as well. So it's in our interest -- economic interest as well to keep pursuing the strategy.

That concludes our question-and-answer session. Ladies and gentlemen, this will conclude today's call. We thank you all for joining. You may now disconnect.