Life sciences tech specialist 10x Genomics (TXG -0.55%)reported third-quarter earnings on Tuesday, Oct. 29, that highlighted several key challenges it faces. The company's total revenue of $151.7 million fell short of analyst consensus expectations as well as falling 1.2% year over year. Notably, the net loss per share was $0.30, better than the expected loss of $0.34.
Overall, the company managed to narrow its net loss, reporting a more favorable financial outcome compared to prior periods, even as it navigates revenue growth challenges.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $151.7 million | $158.8 million | $153.6 million | (1.2%) |
| Net income (loss) | ($35.8 million) | N/A | ($93 million) | N/A |
| Gross margin | 70% | N/A | 62% | 8 pps |
| EPS | ($0.30) | ($0.34) | ($0.79) | N/A |
Source: 10x Genomics. Note: Analyst consensus estimates for the quarter provided by FactSet. (YOY = Year over year.
Overview of 10x Genomics' Business
10x Genomics stands as a pioneer in the life sciences sector, focusing on developing cutting-edge technologies that facilitate high-resolution biological analysis. Its key platforms, including Chromium, Visium, and Xenium, allow researchers to explore biological systems with unparalleled detail. The company's commitment to innovation is evident from its robust intellectual property portfolio and the global recognition of its products.
Recently, 10x Genomics has prioritized technological advancement, introducing products that strive to deliver cost-effective and versatile solutions to researchers. This includes instruments like the GEM-X Flex and innovative product lines designed to meet evolving research demands. Continuously enhancing technological offerings is critical for its competitive edge and market capture.
Q3 Highlight: Financial and Product Perspective
10x Genomics total Q3 revenue fell 1.2% year over year, marking a challenging period for revenue growth. This drop was partly driven by lower instrument sales, despite strong demand for consumables which helped the company achieve a notable gross margin improvement of 70% compared to last year's 62%.
The quarter's net loss was reduced to $35.8 million from $93 million the previous year. This improvement resulted from significant reductions in operating expenses from $147.9 million in Q3 2024 compared to $176.6 million in Q3 2023. Still, the company revised its full-year 2024 revenue guidance to $595 million to $605 million from $640 million to $660 million in response to prevailing market challenges affecting instruments revenue.
The company successfully launched several new products, including the GEM-X Flex, which seeks to lower research costs. The release of Chromium Xo and GEM-X Universal Multiplex highlights its focus on democratizing single-cell analysis, emphasizing scalability and affordability, although these developments have not yet fully translated into expected revenue growth.
CEO Serge Saxonov attributed the quarter's performance issues to unexpected disruptions caused by sales restructuring and cautious customer expenditures. An internal transition affected the company's ability to maintain momentum during rapidly changing market conditions.
Outlook: Financial Projections and Focus Areas
Looking ahead, 10x Genomics management outlined its strategic focus on strengthening sales execution and expanding market outreach. Management lowered full-year guidance to range from $595 million to $605 million. The prior range was $640 million to $660 million. Despite cutting its revenue expectations, it remains committed to technological leadership and innovation, which are vital for long-term success. The ongoing transition within sales and notable product introductions are expected to stabilize revenue streams gradually.
Management's revised guidance reflects macroeconomic pressures and the need to adapt business strategies under current conditions. Investors should keep an eye on how the company navigates its sales restructuring and scales technology adoption. Continued emphasis on cost-effective research tools and market penetration will be crucial in aligning with its growth ambitions and returning to its previous growth trajectory.
