10X Genomics ((TXG)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
In the recent earnings call, 10X Genomics presented a neutral sentiment as it balanced significant product innovations and customer adoption with challenges such as revenue decline and market uncertainties. While there were strides in product development, concerns about market conditions and funding uncertainties loomed large.
Spatial Product Revenue Growth
10X Genomics reported a 33% year-over-year increase in spatial product revenue, primarily driven by the successful launch of new products like Visium HD and Xenium Prime 5K. This growth reflects the company’s ability to innovate and meet market demands effectively.
Gross Margin Improvement
The company’s gross margin improved significantly, rising to 67% in Q4 2024 from 63% the previous year. This improvement was largely due to a change in product mix, showcasing efficient cost management and strategic product offerings.
Successful Product Launches
2024 was marked by the launch of major new products across all three platforms, including the introduction of a new microfluidic architecture, GEM-X. Additionally, the company released products at lower prices to boost volume, indicating a strategic focus on market penetration.
Positive Customer Response
The launch of new products, such as Visium HD and Xenium Prime 5K, was met with exceptional feedback and growing customer adoption, highlighting the company’s success in aligning its innovations with customer needs.
Reduced Operating Loss
10X Genomics achieved a reduction in operating loss, decreasing to $194.6 million in 2024 from $265.3 million in 2023. This indicates improved operational efficiency and cost management over the year.
Strong Balance Sheet
The company concluded 2024 with a robust balance sheet, boasting $393.4 million in cash and marketable securities, an increase from the previous year. This financial stability provides a solid foundation for future growth initiatives.
Overall Revenue Decline
Despite successes in certain areas, the company experienced a 1% decline in total revenue for 2024, amounting to $610.8 million. The fourth quarter saw a more pronounced 10% year-over-year revenue decrease, indicating challenges in sustaining growth.
Chromium Consumables Revenue Decline
The revenue from Chromium consumables faced a 17% decline in Q4 2024, attributed to lower reaction prices, reflecting challenges in maintaining pricing power and demand.
Decreased Instrument Revenue
Instrument revenue dropped significantly by 37% in Q4 2024, with spatial instrument revenue declining by 51%. This points to difficulties in the instrument segment, impacting overall revenue.
NIH Funding Uncertainty
The guidance did not account for potential impacts from changes in NIH funding, which could affect future revenue streams. This uncertainty adds a layer of complexity to the company’s financial outlook.
Losses in Key Markets
The company faced revenue losses in key markets, with a 16% decrease in the Americas and a 5% decrease in the APAC region during Q4 2024. These declines underscore the challenges faced in maintaining market share.
Potential Impact of Indirect Cost Cap
The recent NIH-mandated 15% cap on indirect costs is not reflected in the current guidance, but it could impact future revenue by $10-15 million, posing another potential challenge for the company’s financial planning.
Forward-Looking Guidance
Looking ahead to 2025, 10X Genomics anticipates full-year revenue to range from $610 million to $630 million, reflecting modest growth of 0% to 3% over 2024. The company expects double-digit growth in both Chromium reactions and overall spatial revenue, despite challenges from NIH funding uncertainties. The focus remains on democratizing single-cell analysis, expanding biopharma revenue, and leveraging product innovations.
In conclusion, while 10X Genomics showcased impressive product innovations and customer response, the earnings call highlighted a balanced sentiment due to revenue challenges and market uncertainties. The company’s strategic focus on innovation and efficiency offers a promising outlook, albeit tempered by external funding concerns.
