10x Genomics, Inc.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the 10x Genomics Second Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Kathy Kornow, Investor Relations and Strategic Finance. Kathy, please go ahead.

Thank you, and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the second quarter ended June 30th, 2025. If you have not received this news release or 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 Issues Today, and in the documents and reports filed by 10x Genomics from time to time with the Securities Exchange Commission. 10x Genomics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements. They're because of new information, future events, or otherwise. Joining the call today are Sir Saxonoff, our CEO and co-founder, and Adam Teich, our Chief Financial Officer. We will host a question and answer session after our prepared remarks. We ask analysts to please keep to one question so that we may accommodate everyone in the queue. With that, I will now turn the call over to Serge.

Thanks, Cassie, and good afternoon, everyone. Today, I'll cover our Q2 performance and share updates on what we're seeing across our customer base. I'll also walk through recent business developments before handing it over to Adam for the financial review and outlook. Total revenue for the second quarter was $173 million. During the quarter, we settled our worldwide patent litigation with Brooker on favorable terms. And recognize an upfront payment of $68 million that we allocated to both operating expenses and license and royalty revenue. Excluding the portion allocated to license and royalty revenue, our second quarter revenue was $146 million. And as we continue our focus on cost management, we increased our cash balance by $20 million during the quarter, not including any settlement-related payments which began in Q3. The current funding environment remains challenging and highly uncertain. In particular, the academic funding landscape remains marked by shifting policies, weaker grant disbursements, and lack of clarity around future budgets, all of which are contributing to extended project timelines and cautious customer spending. We're staying closely aligned with our customers to support them and remain flexible as we all navigate the uncertainty. Against this challenging backdrop, the current quarter played out largely as we anticipated. We saw some upsides from strong performance in China, which was driven in part by purchasing dynamics associated with the timing of tariffs. Even in this difficult environment, our business fundamentals are solid and the key positive drivers of performance that we've seen recently carried through into Q2. We continue to see solid signs of underlying single-cell demand. On the consumable side, while revenue was down year over year, chromium reaction volumes grew both year over year and sequentially, an indicator of increasing demand for our solutions and single-cell more broadly. This growth was driven by robust adoption of our latest products, including GEMEX, Flex, and Universal On-Chip Multiplex, which have been instrumental in lowering cost barriers, enabling larger scaling and opening up new applications. Additionally, we saw meaningful year over year and sequential growth in spatial consumables revenue and volume. Within spatial, Xenium consistently serves as a strong driver of growth and performance. Utilization per instrument continues to grow, reflecting both a higher number of runs and increased spend per run. We're seeing continued ramp across both our earliest adopters and newer customers and regularly receive strong feedback on Xenium's superior data quality, accuracy, robustness, throughput, and ease of use. Together, these qualities continue to set Xenium apart as the best in-class platform and are fueling broad adoption across both basic science and translational research. We continue to monitor customer sentiment closely as the funding environment remains highly uncertain. While the U.S. academic and government funding landscape has not deteriorated further, we also have not seen meaningful improvement in customer behavior. Across many institutions, spending remains conservative and capital equipment spending continues to be a significant challenge, both in the U.S. and more broadly around the world. Customers are facing increased scrutiny on purchases, longer approval timelines, and in many cases, new restrictions on capital spending and staffing within their labs. These challenges are leading to delays in project starts, scale-backs in both ongoing and pilot-side designs, and heightened price sensitivity. With open proposals around next year's federal funding and institutional budgets still in early stages, we expect these uncertainties to continue impacting customer spending behavior until there's greater clarity on policy direction and actual distribution of funding resources. As customers work through evolving budget timelines and operational planning cycles, we're partnering closely to help them navigate this environment and support continuity of their research. And despite this backdrop, we continue to hear clearly that our tools are essential to scientific progress. Our conversations with customers reinforce our conviction that single-cell and spatial are the most promising areas of growth in life science tools, with researchers increasingly shifting both mindshare and funding toward these areas. And as researchers increasingly invest in these technologies, we are prioritizing our efforts to advance our technology leadership, unlock new high-value applications, and ensure the long-term financial strength of our business. Looking across our product roadmap, our recent and upcoming launches are continuing to resonate with customers. During the quarter, we began shipping Vizium HD 3 Prime, which expands the capabilities of the Vizium HD portfolio by extending it to more applications. We also launched HD cell segmentation capabilities, which enable researchers to assign transcripts to individual cells with precision, simplify data analysis, and uncover new biological insights. In parallel, we're also preparing for the release of several important innovations across spatial, including Vizium HD XL and Xenium RNA Plus protein, which will further enhance multi-omics spatial analysis and unlock deeper insights from complex tissue samples. Turning to single cell, I'm really excited about Flex V2, our new plate-based chromium flex product that we expect to launch in the near term. Built to dramatically increase throughput and streamline workflows, Flex V2 provides ultimate flexibility for customers when designing their experiments. This next-generation flex is an important step as we continue driving lower costs across the full spectrum of studies, from small to large, while maintaining the highest quality data. Flex V2 is designed to be the ideal method for large-scale perturbation experiments and biopharma applications, from early target discovery to clinical trial integration, delivering higher cell throughput, more flexible workflows, FFP sample compatibility, and the quality needed to train and validate AI models. In addition to the launches planned for this year, our team has hard at work on future products that will further expand the capabilities of our platforms. We are excited about our roadmap for the coming years, an opportunity to deliver ever more value to increasing numbers of customers. As we look at the broader opportunity, we continue to believe that both single cell and spatial are in the early stages of the adoption curve, with large-scale high-impact applications gaining traction across both platforms. In particular, I'd like to highlight two very exciting trends, large translational studies using Xenu and large-scale single cell perturbation experiments to train AI models and build virtual cells. As an emblematic example of the first trend, we recently announced a collaboration with the Genome Institute of Singapore on the TissueMap initiative, aimed at accelerating discovery of drug targets and biomarker signatures in cancer and inflammatory diseases. This study will use Xenu to enable high-resolution spatial mapping of gene activity and cells within intact FFP tissue samples, paired with detailed clinical data. Its goal is to analyze thousands of samples to discover clinically relevant biomarker signatures and therapeutic targets. On a single cell front, the emergence of increasingly powerful AI methods that are hungry for high-quality data is accelerating researchers' interest in running larger and larger single cell perturbation studies. For example, this quarter, Zyrin Therapeutics used our Chromium Universal 5-prime assay in its industrialized PerturbSeq workflow to produce the largest publicly available genome-wide PerturbSeq dataset to date, capturing transcriptional responses across eight million perturbed cells. This quarter, we also extended our partnership with the ARC Institute to support the Virtual Cell Challenge, which is a worldwide competition to incentivize the development of powerful computational models of biology. The challenge has established a rigorous evaluation framework and uses our Chromium Flex assay as the standard. The work being done right now is clearly just the beginning. Virtual cells and large-scale single cell experiments represent the next frontier at the intersection of AI and biology. To understand biology, to understand health, and to understand disease, you need to understand how cells work. We can model cells and perturbations computationally using AI. We can guide the discovery of new drugs, simulate patient responses, and reduce the experimental trial and error that defines so much of biology and drug development today. Finally, we remain focused on cost management and cash generation. We have a strong balance sheet and the resolve to protect it. Across our business, we continue to carefully evaluate costs to ensure operational efficiency while also continuing to invest in long-term growth. With our strong balance sheet, we have the resources to pursue our strategic priorities and continue to fuel innovation. To that end, as part of our strategy for continued innovation within single cell, we announced earlier today the signing of a definitive agreement to acquire scale biosciences. The acquisition brings us key inventions and technologies that will accelerate innovation across our current platform. It enables us to broaden access to single cell analysis by making it more powerful, more affordable, and more accessible to researchers worldwide. By integrating these technologies into our broader roadmap, we're strengthening our ability to support larger scale applications while continuing to deliver the high quality, multi-omic data the researchers expect from us. We're excited by the strategic value of this transaction and its benefits to the scientific community. Adam will share more details on the financials. Our conviction in the potential of single cell and spatial biology is stronger than ever. As we move forward, we remain focused on staying closely aligned with our customers, executing with discipline, and continuing to invest in our technologies to capture the large opportunities ahead. With that, I'll turn the call over to Adam.