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10x Genomics Q3 Revenues Up 17 Percent

NEW YORK – 10x Genomics reported a 17 percent year-over-year increase in third quarter revenues after the close of the market on Tuesday, driven by growth in consumables revenue from its increasing base of installed instruments.

For the three months ended Sept. 30, the company reported $71.8 million in revenues, up from $61.2 million in Q3 2019 and beating the average Wall Street estimate of $61.2 million.

"Our strong performance this quarter demonstrates our ability to execute across all facets of the business," 10x Genomics CEO and Cofounder Serge Saxonov said in a statement. "We remain focused on the frontiers of scientific discovery and we will continue to invest in the vast opportunities that lie before us, both now and well into the future."

On a conference call to discuss the firm's financial results, CFO Justin McAnear said that consumables sales were up 22 percent to $60.6 million, driven primarily by growth in the firm's base of installed instruments. This was partially offset by decreased demand due to laboratory closures related to COVID-19.

Instrument revenues were down 7 percent to $9.7 million due to fewer instrument placements, which were partially offset by a slightly higher average selling price resulting from sales of the Chromium Connect platform.

Service revenues increased 46 percent to $1.6 million as more instruments came off their one-year warranty and switched to paid service contracts.

During the quarter, 10x completed the acquisitions of ReadCoor and Cartana. It also closed a follow-on public offering of 4.6 million shares of common stock, resulting in approximately $482.2 million in net proceeds.

Saxonov said during the call that the company is in the midst of integrating the ReadCoor and Cartana teams and technologies and is "excited about the potential" of their technologies. 10x plans to use them to develop an integrated system that will be "highly complementary" to its Chromium and Visium platforms, he said, but declined to provide details or a timeline. He said that 10x will continue to look for additional acquisitions to innovate its products.

He also commented on recent product launches. The Chromium Single Cell Immune Profiling v2 update, for example, has been well received since its release in July. "Since launch, the rate at which customers have been adopting the new immune profiling solution has been impressive and ahead of our expectations," he said. "Most customers have switched without head-to-head comparisons that are customary during similar upgrade cycles."

Similarly, its single-cell ATAC and gene expression solution for simultaneous epigenome and transcriptome profiling across large numbers of cells, launched in September, has drawn a lot of interest, both from current customers and from epigenetics researchers more broadly. It has "exceeded our expectations to date," he said, adding that it had been "the number one request from our customers over the past two years."

The company's net loss for the quarter totaled $65.8 million, or $.65 per share, compared to a net loss of $9.6 million, or $.33 per share, in Q3 2019. Analysts, on average, had estimated a net loss of $.30 per share. The weighted average shares of common stock used to compute net loss per share were approximately 101.3 million compared to approximately 29.2 million in Q3 2019.

The firm's R&D expenses grew 36 percent to $30.1 million from $22.2 million a year ago, driven primarily by a $5.5 million increase in personnel expenses and a $1.6 million increase in costs related to lab materials, supplies, and equipment.

Its SG&A expenses grew 58 percent to $51.5 million from $32.6 million a year ago, mostly due to a $9.6 million increase in personnel costs and a $7.6 million jump in legal expenses.

As of Sept. 30, 10x Genomics had $768.8 million in cash and cash equivalents.

Due to the continued uncertainties surrounding the coronavirus pandemic, "we will refrain from reinstituting guidance at this time," McAnear said. Orders in the fourth quarter so far have been up 35 percent over the same quarter last year, he said, cautioning that there could either be a further bump in Q4 revenues from year-end spending and more lab reopenings or a reduction in revenues from pandemic-related renewed shutdowns.

In morning trading on the Nasdaq, 10x Genomics' stock was up 5 percent at $136 per share.

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