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10x Genomics Blames Sales Org Restructuring for Shortfall as Q3 Revenues Dip 1 Percent

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NEW YORK – 10x Genomics missed revenue expectations for the third quarter, blaming its results in part on a reorganization of its sales teams. On Tuesday afternoon, the firm reported a 1 percent decrease in Q3 revenues, year over year, attributable to lower instrument revenues that were partially offset by higher consumables revenues.

For the three months ended Sept. 30, the Pleasanton, California-based single-cell and spatial biology technologies firm reported $151.7 million in revenues, down 1 percent from $153.6 million in Q3 2023, in line with preliminary results and missing the average Wall Street estimate of $158.6 million.

"Our results this quarter fell short of our expectations, given greater-than-anticipated disruption from the sales restructuring we implemented in the quarter and cautious customer spending," CEO and Cofounder Serge Saxonov said in a statement. "As these dynamics persist, especially under a difficult macro backdrop, our revenue growth this year will be lower than our previous expectations."

On a conference call with investors following the release of the Q3 results, Saxonov shared the ways in which 10x recently has been reorganizing its sales team.

The firm has chosen to emphasize specialization, he said, seeking to address the "distinct needs" of customers, whether they be academic, biopharma, large-scale, or emerging users. 10x has created a capital equipment team "explicitly focused on driving Xenium instrument placements," a distinct biopharma organization, "which is focused on better serving the unique needs and expansion opportunities in that sector," and a dedicated team "to nurture new and emerging accounts," he said. The company has also "recalibrated territory sizes to make each territory more manageable and to drive more efficient utilization of our sales force," he added, and has not yet filled a "large number" of roles within its biopharma and capital equipment teams.

Disruption accompanied the changes. Over 40 percent of customer accounts in the Americas saw a new sales rep, Saxonov said, while revenues from the Americas were $87.8 million, down 11 percent year over year from $99.0 million. Meanwhile, revenues from Europe, the Middle East, and Africa were $37.9 million, up 18 percent year over year from $32.0 million. Asia-Pacific revenues were $26.0 million, up 15 percent year over year from $22.6 million.

Instrument revenue was $19.1 million, down 46 percent year over year from $34.9 million. Chromium instrument revenues were $7.6 million, down from $12.2 million a year ago, and spatial instrument revenues were $11.4 million, about half of what they were a year ago.

Consumables revenues totaled $126.2 million, up 10 percent year over year from $114.4 million. Of these, Chromium consumables revenues were $96.5 million, down from $100.2 million a year ago, driven by lower average prices but partially offset by higher volumes. Spatial consumables revenues more than doubled to $29.7 million, driven by Xenium 5K and Visium HD assays.

The majority of Visium spatial gene expression profiling customers, including new ones, are ordering the new Visium HD, launched earlier this year, Saxonov said.

New CFO Adam Taich noted that lower Xenium instrument sales drove the overall decrease in revenues. During the Q&A portion of the call, he said 10x placed approximately 30 Xenium instruments in the quarter and expected to place about that many in Q4.

In Q3, 10x launched a new Chromium instrument that only runs its most popular assay, 3' gene expression, but costs only $25,000, lowering startup costs for labs interested in 10x's single-cell sequencing.

Services revenues were $6.4 million, up 48 percent year over year from $4.3 million.

The company's net loss for the quarter was $35.8 million, or $.30 per share, compared to a net loss of $93.0 million, or $.79 per share, in Q3 2023 and beating the consensus Wall Street estimate of a $.34 loss per share.

The firm's R&D expenses were essentially flat, year over year, at $66.2 million. SG&A expenses were down 1 percent to $81.7 million from $82.4 million in Q3 2023, even though outside legal expenses increased.

As of Sept. 30, 10x had $398.2 million in cash and cash equivalents.

10x lowered its full-year revenue guidance to a range of $595 million to $605 million compared to previous guidance of $640 million to $660 million. At the midpoint, that would be a 3 percent decrease from 2023 revenues.

Saxonov suggested that between filling open roles and getting people up to speed, it could take until the middle of next year for the sales to "to be really locked in."

In Wednesday morning trading on the Nasdaq, 10x shares were up 3 percent to $16.25.