10x Genomics, Inc.

Good evening, and thank you for attending today's 10X Genomics Third Quarter 2022 Earnings Conference Call. My name is Don Yeo, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to our host, Cassie Corneau, Head of Investor Relations and Strategic Finance. Cassie, please proceed.

Thank you, and good afternoon, everyone. Earlier today, 10X Genomics released financial results for the third quarter ended September 30, 2022. If you have not received this news release or if you would like to be added to the company's distribution list, please send an email to investors at 10xgenomics.com. An archived webcast of this call will be available on the investor tab of the company's website 10xgenomics.com for at least 45 days following this call. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties, and factors that could cause results to differ appears in the press release 10X Genomics issued today and in the documents and reports filed by 10X Genomics from time to time with the Securities and Exchange Commission. 10X Genomics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Joining the call today are Serge Saxinov, our CEO and co-founder, and Justin McInerney, our chief financial officer. With that, I will now turn the call over to Serge.

Thanks, Kathy. Good afternoon, and thank you for joining us. Today, I will start with a brief overview of our performance during the third quarter. Next, I will discuss our progress, momentum, and the exciting opportunities we have ahead in each of our three platforms. I'll touch on what we're seeing in the market from a commercial perspective and then hand the call over to Justin for a more detailed look at our financials, business trends, and outlook as we get ready to close out the year. Revenue for the third quarter was $131 million, up 5% year-over-year and 14% sequentially. Our sequential results were driven by recovery outside of the U.S. and strong growth in instrument sales fueled by vision site assist in its first full quarter since launch. Let me share more about our recent progress and pipeline in each of our three platforms, starting with Chromium, the unambiguous leader in single-cell analysis. In Q3, we once again saw solid demand for Chromium X-Series instruments among both new and existing customers. More than a year after the platform's launch, researchers continued to value the X-Series for its expanded capabilities and exclusive menu. including access to the fixed RNA profiling kit. Turning to consumables, we know the breadth, performance, and ease of use of our assays is an important differentiator that creates real value for our customers. This quarter, we saw a continued shift toward our high throughput kits, which offer researchers the flexibility to analyze more samples or more cells at a size and scale previously considered unattainable. While it's still early, we're really pleased with the initial adoption and positive feedback on both our nuclear isolation kit and our fixed RNA profiling kit. Both of these recent launches are a testament to how our continued innovation around sample preparation and workflow simplification can open up more samples and more sample types for single cell analysis. The nuclei isolation kit with its simple and scalable workflow helps researchers extract clean nuclei from their samples. It opens up new possibilities for customers working with frozen tissues and other previously challenging sample types. We're excited by the initial uptake and traction we're seeing for this product, particularly among multi-owned users. In addition, there's increasing enthusiasm for our fixed RNA profiling kit, which addresses a critical need for many of our customers and helps expand the potential of single-cell analysis and large-scale multi-site studies and translational research. This product has a number of breakthrough capabilities. It enables researchers to lock in cell states at the point of sample collection, removing time and transfer constraints typically associated with single-cell workflows due to the need to work with live tissues. It also unlocks FFP-preserved samples for single-cell analysis, a new-to-world capability that opens up large volumes of archival tissues. This can include bulk and multiplexing to enable parallel processing of multiple samples with an easy workflow and at a lower price per sample. And it is both our highest sensitivity and most sequencing efficient assay yet. Together, these features make it an incredibly powerful product. Our customers are starting to experience this firsthand as they continue their pilot studies and benchmark against our flagship gene expression assays. This process takes time, as we knew it would. And there's work to be done to further educate a new pool of researchers on how they, too, can get so much out of this product's capabilities and expand single-cell analysis to previously inaccessible sample types and research questions. While it's still early, what we've heard from customers so far has been very positive, including comments that this is the best product we've ever launched. Given this exceptional feedback, we believe the fixed RNA profiling kit has the potential to be truly transformative to the Chromium franchise over the long term. We're also preparing for the introduction of our new barcode-enabled antigen mapping product, known as BEAM. We're on track to begin taking pre-orders for both BEAM-AB and BEAM-T later this month as planned. This offering, which is built on top of our immune profiling assay, will enable researchers to analyze up to millions of B or T cells to determine their antigen binding at high-flex and high-resolution. Precisely because of this scale, throughput, and resolution, that we believe BEAM can revolutionize the process of antibody and T cell discovery and help researchers quickly translate the power of natural immune response into new therapeutics. We believe this product will be particularly relevant to our pharma and biotech customers. Now, I'd like to share more about Visium, the leading platform for unbiased spatial discovery. While it's still early in the Visium lifecycle, we're proud of our Q3 progress and we're pleased with the initial momentum we're seeing with SiteAssist. SiteAssist, our first spatial instrument, was designed to solve the key challenges our customers have faced with the Visium workflow. We believe the ease of use, overall experience, and performance of SiteAssist will enable more routine use of the Visium platform. In addition, Cytosys will open up the archives of tissue sections previously stored on standard glass slides, significantly expanding the number of samples that can be run on Visium. Again, it's early, but we are encouraged by the positive feedback we've heard so far from customers who have completed their initial runs. And with exclusive launch of Visium FFP version 2 on Cytosys, we saw FFP continue its growth trajectory, outpacing fresh frozen and sales. This new version helps researchers take full advantage of Citus' ease of use and achieve higher performance thanks to a better, more reliable workflow and the added flexibility of larger capture areas. We finished Q3 with confidence in our leadership in spatial biology, driven by both new customer adoption and record reorders from existing customers. Visium has now been cited in more than 365 papers and preprints, demonstrating the growing traction we're seeing with researchers worldwide as we increasingly turn to Visium to uncover new biological discoveries. Last month, we took time to celebrate a few of these key discoveries at our second annual Spatial Biology Symposium. We had an enthusiastic crowd on hand as we brought together leading researchers and pioneers in the field to discuss the future of spatial biology and to share more about Visium, our upcoming platform for in situ analysis.