NEW YORK – 10x Genomics said Thursday after the close of the market that it has laid off approximately 8 percent of its workforce as part of its cost-saving strategy to weather the unfavorable macroeconomic environment resulting from recent US policy changes.
Given the wider economic uncertainties, the Pleasanton, California-based single-cell and spatial genomics firm also decided to withdraw its previously issued revenue guidance for the year, replacing it with short-term guidance for the second quarter.
"We have implemented a reduction in both headcount and non-headcount-related expenses across the company," 10x CEO and Cofounder Serge Saxonov told investors in a conference call recapping the firm's Q1 financial results. "While these changes are never easy, they will allow us to be a more efficient organization, better positioned to navigate today's environment, while continuing to invest in our highest priorities."
Saxonov said the layoffs happened "across the company," affecting pretty much every department. The R&D team lost more staff than the direct sales department, he noted.
Together with the "significant reductions" in other spending, the company anticipates reducing operating expenses by more than $50 million for 2025 compared to 2024, CFO Adam Taich told investors. The company also estimates incurring between $5.5 million and $6.5 million in costs associated with these measures, primarily cash severance costs, which will be paid by the end of the third quarter.
Saxonov said the need for these cost-saving measures stems from the "rapidly evolving macro environment" in the US, particularly relating to the cuts in research funding across US academic and government labs, where "the environment kept getting worse as we proceeded through the quarter."
Specifically, the company is observing two dynamics regarding US public funding. Some changes — such as delays, reductions, and outright cancellations of grants — are having a real-time impact on the company's customers, Saxonov noted. Additionally, there is a growing threat of future changes, such as proposed National Institutes of Health budget cuts, implementation of NIH indirect cost cuts, and widespread concern over further grant review delays or project cancellations.
"Taken together, these pressures are creating a climate of deep uncertainty," Saxonov said. "We are increasingly hearing from customers that the combination of actual cuts and looming risks is making them hesitant to initiate new projects or invest in capital purchases."
In the meantime, 10x is "highly exposed" to US government funding, Taich said, given that approximately 40 percent to 50 percent of the company's revenue is supported by such funding, half of that from the NIH.
"The uncertainty for our customers is driving increasingly unpredictable purchasing behavior and reducing visibility on our outlook for the year," Saxonov said. As a result, the company is withdrawing its previously issued full-year guidance, which anticipated 2025 revenues to be in the range of $610 million to $630 million, representing flat to 3 percent growth over 2024.
"While the change to our guide reflects the current macro funding environment rather than company-specific performance, we believe it is prudent to take this step to ensure transparency and avoid setting expectations with the significantly limited visibility we have under these evolving conditions," Taich explained.
Looking at Q1 financial results, for the three months ended March 31, 10x booked $154.9 million in revenues.
According to Saxonov, during the quarter, the company reached a settlement agreement with Vizgen on "very favorable terms" regarding the patent infringement suit between the two firms. Under the settlement, the company received a $26 million payment, which it recognized in part as reduced operating expenses related to obtaining the settlement and in part as license and royalty revenues.
Excluding the $16.8 million license and royalty revenue from the settlement, the company's revenues were $138.1 million, down 2 percent from the $141.0 million in the prior-year period but beating the consensus Wall Street estimate of $132.5 million. The revenue decline during the quarter was primarily driven by "a significant decrease in instrument revenue, offset by continued strength in consumables," Saxonov said.
10x's Q1 instrument revenues were $14.8 million, declining 42 percent from $25.5 million a year ago. Spatial instrument revenues dropped 49 percent to $8.9 million from $17.6 million last year, driven primarily by fewer instruments sold. Chromium instrument revenues declined 25 percent year over year to $5.9 million from $7.9 million, driven primarily by lower average selling prices, Taich said.
Consumables revenues were $115.4 million, up 5 percent from $110.3 million a year ago. By platforms, Chromium consumables revenues were $84.1 million, almost flat compared to $83.9 million a year ago, while spatial consumables revenues increased 18 percent to $31.2 million from $26.4 million in Q1 2024.
Service revenues were $7.7 million, up 48 percent from $5.2 million in Q1 2024.
By geography, revenues from the Americas totaled $90.6 million, up 14 percent from $79.6 million for the same period a year ago. Revenues in the US were $86.8 million, a 15 percent increase from $75.6 million in the prior year.
Revenues from Europe, the Middle East, and Africa were $31.9 million, down 8 percent from $34.7 million a year ago. Lastly, revenues from the Asia-Pacific region totaled $32.4 million, a 21 percent increase from $26.7 million in Q1 2024. Looking at China alone, revenues were 16.9 million, up 22 percent year over year from $13.9 million.
In regard to the evolving tariff landscape, Taich said the company is "tracking developments very closely." The company has "a limited reliance on China" for its supply chain and "has a global manufacturing footprint," he said, with manufacturing sites in both the US and Singapore.
China accounted for approximately 10 percent of 10x's revenues in 2024, "but given our ability to manufacture many of our products in Singapore and other mitigation strategies, we believe the impact from currently proposed tariffs is likely to be minimal," Taich said.
The firm's net loss for the quarter was $34.3 million, or $.28 per share, compared to a net loss of $59.9 million, or $.50 per share, in Q1 2024, narrowly beating the consensus Wall Street estimate of a $.29 loss per share.
10x's R&D expenses for the quarter dropped 6 percent year over year to $64.2 million from $68.6 million. The change was mainly driven by lower personnel expenses, partially offset by higher lab material and supply costs, Taich said.
Its SG&A expenses grew 5 percent to $89.7 million from $85.8 million a year ago. The change was primarily driven by an increase in outside legal and personnel expenses, partially offset by a decrease in marketing expenses.
As of March 31, 10x had $377.1 million in cash and cash equivalents and $49.8 million in marketable securities.
For the second quarter, 10x expects revenues to be in a range of $138 million to $142 million, representing 1 percent sequential growth at the midpoint, excluding the impact of the one-time Q1 license and royalty revenue.
"We anticipate that the funding and macro environment will remain challenging, and that ordering patterns will continue to be impacted, particularly for instruments and larger consumable orders, as customers work through grant delays, program cancellations, and reprioritized budgets," Taich told investors.
During the call, Saxonov openly criticized current US policies while calling for an end to the attacks on US academic and government research institutions.
"Our university system is the global engine of scientific discovery and the envy of the world; the NIH is the foundational jewel of biomedical progress. We should certainly endeavor to reform … but recent federal actions are not doing that. Instead, they are severely undermining these enterprises and run the risk of fundamentally dismantling their ability to support research, and that would be a tragedy," Saxonov said. "My exhortation to those who are listening, let's not squander a great inheritance, let's work to defend and improve our greatest institutions."
In light of the company's Q1 results and future outlook, investment bank JP Morgan on Friday lowered its price target for 10x's shares from $12 to $9.
"[W]hile we are constructive on 10x's positioning in single-cell and spatial as evidenced by the solid consumables growth in a challenging market, the limited visibility in US academic and government spending gives us pause, as does the impact of the recent commercial reorg on Xenium placement improvement," JP Morgan analyst Rachel Vatnsdal wrote in a research note to investors.
In morning trading on the Nasdaq, 10x Genomics' shares were up 5 percent at $9.05.