8-K: 10x Genomics Announces Preliminary Third Quarter 2024 Results, Revenue Declines Slightly

10x Genomics reported preliminary third-quarter revenue of $151.7 million, a 1% decrease year-over-year, with significant declines in instrument sales offset by growth in consumables and services.

Summary

• 10x Genomics announced preliminary third-quarter 2024 revenue of approximately $151.7 million, which is a 1% decrease compared to the same period last year.
• Instrument revenue saw a significant drop of 46%, totaling about $19.1 million, with Chromium instruments contributing $7.6 million and Spatial instruments $11.4 million.
• Consumables revenue grew by 10% year-over-year, reaching approximately $126.2 million, with Chromium consumables at $96.5 million and Spatial consumables at $29.7 million.
• Services revenue experienced substantial growth of 48%, amounting to approximately $6.4 million.
• Geographically, revenue in the Americas decreased by 11% to $87.8 million, while EMEA and APAC regions saw increases of 18% and 15%, respectively, reaching $37.9 million and $26.0 million.
• The company's cash and cash equivalents stood at approximately $398 million as of September 30, 2024.
• The company attributes the revenue shortfall to disruptions from commercial process changes and customer caution, particularly regarding capital expenditures.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the revenue decline and significant drop in instrument sales, despite growth in consumables and services. The company acknowledges challenges and disruptions, which adds to the negative outlook.

Positives

• Consumables revenue grew by 10% year-over-year, indicating continued demand for the company's products.
• Services revenue saw a significant increase of 48%, suggesting growing adoption of their service offerings.
• EMEA and APAC regions showed strong revenue growth of 18% and 15% respectively, demonstrating international market strength.

Negatives

• Total revenue decreased by 1% year-over-year, indicating a slowdown in overall growth.
• Instrument revenue experienced a substantial decline of 46%, which significantly impacted overall results.
• Revenue in the Americas region decreased by 11%, suggesting challenges in their largest market.

Risks

• The company's recent changes to commercial processes and organization caused more disruption than anticipated, particularly in the Americas.
• Customers are exhibiting caution with their spending, especially on capital purchases, which negatively impacted instrument sales.
• The preliminary results are subject to change as the company completes its financial statements, and final results may differ materially.

Future Outlook

The company will discuss its full year 2024 guidance when it reports its full financial results for the third quarter 2024 in connection with its earnings call on Tuesday, October 29.

Management Comments

• Third quarter revenue fell short of our expectations, said Serge Saxonov, Co-founder and CEO of 10x Genomics.
• The transition was more disruptive than we anticipated, especially in the Americas.
• Our customers continue to be cautious with their spending, particularly around capital purchases, which notably impacted instrument sales during the quarter.
• Despite these near-term headwinds, we are confident in the opportunity ahead and believe the steps we are taking will enable us to reach more customers, execute consistently across the portfolio and drive the broad democratization of our technologies.

Industry Context

The results reflect a challenging period for life science companies, with customers being cautious about capital expenditures. The growth in consumables and services suggests a continued demand for research tools, but the decline in instrument sales indicates a potential shift in spending priorities within the sector.

Comparison to Industry Standards

• Competitors like Illumina and Bio-Rad have also reported mixed results recently, with some seeing similar slowdowns in instrument sales, indicating a broader trend in the industry.
• The 10% growth in consumables is a positive sign, as this is a recurring revenue stream, and is comparable to other companies in the life sciences sector that have seen growth in this area.
• The 46% decline in instrument sales is a significant concern, and is worse than some competitors who have seen smaller declines or even growth in this area, suggesting 10x Genomics may be facing specific challenges.

Stakeholder Impact

• Shareholders may be concerned about the revenue decline and the significant drop in instrument sales.
• Employees may be affected by the organizational changes and the company's performance.
• Customers may be impacted by the changes in commercial processes and the company's focus on different product areas.
• Suppliers may see changes in demand based on the company's performance and product focus.

Next Steps

• The company will host a conference call on October 29, 2024, to discuss the full financial results for the third quarter and provide 2024 guidance.
• The company will continue to implement changes to its commercial processes and organization to improve effectiveness.

Key Dates

Keywords

10x Genomics, single cell biology, spatial biology, genomics, revenue, instruments, consumables, services, financial results, preliminary results