10x Genomics, Inc. (TXG) Earnings

Management highlights

- Atera Platform Launch Progress * Early customer demand for Atera, 10x Genomics' new end-to-end spatial whole-transcriptome profiling platform with single-cell sensitivity, has vastly exceeded already high expectations, with booked orders already exceeding the full-year 2026 shipment target. * Strong demand is also seen for Catalyst Research Services, which allows customers to run samples on Atera in 10x's lab for users that do not yet have their own instrument, serving as a positive leading indicator for future platform adoption. * Atera has attracted broad engagement across universities, academic medical centers, and biopharma customers, with planned use across nearly all major disease areas and research applications including foundational cell and tissue atlasing, disease mechanism studies, therapy response monitoring, and early biomarker development. * Atera is built as a long-duration, upgradable platform with an extensive roadmap including workflow automation, base-by-base spatial sequencing, and integrated protein multiomics. 10x acquired Protein Tech Genomics in Q2 to expand the platform's proteomics capabilities and add the largest single-cell protein panels on the market. - Core Single-Cell Business Trends * Adoption of single-cell platforms is shifting toward larger, more ambitious studies, particularly in biopharma and translational research, supported by new products like Flex Apex and whole blood sample stabilization workflows that enable longitudinal research and distributed sample collection. * Multi-modal and multiomics capabilities continue to drive growth: a new GemX version of Multium launched last quarter that improves combined epigenetics and gene expression measurement from single cells, and the Protein Tech Genomics acquisition further complements 10x's existing multiomics offerings. * Flex Apex has become the standard platform for large-scale perturbation experiments used for target identification, with particularly strong adoption in biopharma. - AI Tailwind for Long-Term Growth * Management identifies AI as a major structural tailwind: AI-driven progress in biology requires high-quality, large-scale, high-resolution biological data, which is exactly what 10x's single-cell and spatial technologies are built to generate, and 10x tools are already widely used to train biological AI models. * While early AI drug development investment focused on chemistry, 10x expects future growth will come from investments in cell and tissue level biological modeling to identify new targets and predict patient drug response, which is the largest current bottleneck in drug development and a large long-term opportunity for 10x. * AI-powered natural language analysis tools are also making 10x's single-cell and spatial data accessible to a broader base of researchers, increasing the value of 10x's products. - Clinical Diagnostics Pipeline * 10x continues to progress toward long-term clinical diagnostics expansion, generating clinical evidence in oncology and autoimmunity. In Q2, the company announced new partnerships with Cleveland Clinic and Lausanne University Hospital to identify therapy response biomarkers across multiple oncology indications.

Guidance

- Management raised full-year 2026 revenue guidance to a range of $610 million to $630 million. Excluding non-recurring patent settlement revenue in both 2025 and 2026, this represents 2% to 5% full-year growth over 2025. - The full-year 2026 Atera shipment target of approximately 40 units remains unchanged, due to ongoing manufacturing ramp constraints, despite stronger than expected order demand. - Management expects Q3 2026 total revenue will see a modest sequential decline from Q2 2026, as customers continue to hold off purchases of existing spatial platforms in anticipation of Atera shipments. This is consistent with prior guidance provided on the Q1 2026 call. - A significant sequential revenue step-up is expected in Q4 2026, as Atera shipments ramp and begin contributing meaningfully to revenue. Atera alone accounts for the large majority of this sequential increase, with normal seasonal Q4 strength across the rest of the portfolio accounting for the remainder. - Full-year guidance does not assume any improvement in the tenuous academic funding environment, so any improvement would represent upside to guidance.

Segment performance

Total Q2 2026 revenue was $151 million, including $1.6 million in non-recurring patent settlement royalty revenue. Excluding non-recurring settlement revenue in both the current quarter and prior year period, Q2 revenue was $149.4 million, representing 3% year-over-year growth. By product category: 1) Consumables: Total consumables revenue grew 7% year-over-year. Single-cell consumables revenue grew 3%, with double-digit growth in reaction volumes driven by Flex Apex momentum. Spatial consumables revenue grew 16% year-over-year, with Xenium as the primary growth driver, and both Xenium and Visium delivered sequential consumables revenue growth. 2) Instruments: Total instrument revenue declined 47% year-over-year. Chromium instrument revenue fell 46% and spatial instrument revenue fell 48%, primarily due to lower unit sales, as customers pulled back purchases of existing spatial platforms in anticipation of the new Atera launch. By geography, excluding non-recurring settlement revenue: Americas revenue grew 6% year-over-year, EMEA revenue grew 15% year-over-year, and APAC revenue declined 19% year-over-year (driven by a $4 million temporary pull-forward of orders in China in the prior year period ahead of potential tariff changes). Gross margin increased to 74% from 72% in the prior year, or 74% from 67% excluding non-recurring settlement revenue, driven by lower manufacturing costs (including $2.6 million in tariff refunds) and lower inventory write-downs. Total operating expenses were $132.1 million, and were approximately flat year-over-year after excluding one-time patent litigation gains in both periods. The company ended the quarter with $552 million in cash, cash equivalents, and marketable securities, up $105 million year-over-year and $12 million sequentially.

Risks & headwinds

- The tenuous academic research funding environment persists: while sentiment has improved, funding approvals have not yet translated to increased purchasing activity, due to multi-year funding timelines, increased regulatory oversight, and staffing backlogs in grant processing that delay spending decisions. - Near-term Atera shipments are constrained by manufacturing capacity, limiting near-term revenue contribution from the high-demand new platform. - Atera cannibalization is expected to moderate sales of 10x's existing spatial platforms (Xenium and Visium), though management expects new market expansion from Atera will more than offset any cannibalization impact.

Analyst Q&A

• Q: Why is 10x maintaining conservative 2026 Atera shipment guidance despite strong demand, and how is 10x positioned to benefit from AI tailwinds with tangible revenue to date? /

  A: The 40 unit 2026 shipment target is unchanged due to near-term manufacturing capacity constraints, not weak demand. Management notes AI is a pervasive structural tailwind across all customer segments, as large AI biology models require the high-quality, large-scale data 10x products generate. While AI is already driving or influencing demand across many projects, particularly for large target identification and patient selection efforts in pharma, it is still early and 10x will provide more granular revenue data as the market grows.\n\nQ: How quickly can 10x scale Atera manufacturing capacity for next year and beyond, and what is the expected utilization ramp for early Atera units? / A: 10x is leveraging years of prior investment in supply chain and operational infrastructure to scale Atera capacity to meet demand moving into 2027 and beyond. It is too early to provide precise utilization estimates before the first units ship, but management is focused on supporting early customers that want to ramp utilization quickly. Max Atera utilization is roughly 2x that of Xenium, ranging from 1.5 million to 3 million per instrument depending on assay type, so there is significant room for strong consumables pull-through.\n\nQ: What is Atera's performance advantage over Xenium, and how does this translate to customer purchase decisions? / A: Atera's sensitivity is substantially higher than Xenium for most use cases, especially when comparing apples-to-apples for broad assays. Atera delivers whole-transcriptome profiling with single-cell sensitivity, which cannot be achieved with broad panels on Xenium, and also allows for custom content augmentation to boost sensitivity for specific genes of interest. Early customer feedback on released Atera data has been overwhelmingly positive, supporting strong demand for the platform.\n\nQ: How additive is Atera to 10x's total business versus cannibalizing existing spatial product sales? / A: Atera will moderate sales of Xenium and Visium over time, as expected, but existing spatial products continue to deliver sequential growth in consumables even ahead of full Atera launch. Management expects the overall spatial market growth driven by Atera's expanded capabilities and new customer adoption will more than offset any cannibalization of existing product sales, and Atera will materially expand the total addressable market for spatial biology.