10X Genomics (TXG) Wolfe Research Healthcare Conference 2024 summary

State of the business and 2024 challenges

• 2024 has been a difficult year due to intensified macroeconomic pressures, especially on CapEx and customer budget uncertainty.

• Major product launches across all lines created friction and transition challenges for customers.

• A significant restructuring of the commercial organization was undertaken in Q3 to address internal scaling and better serve biopharma segments.

• The transition has been disruptive but is seen as necessary, with strong conviction in the new direction and leadership.

• Optimism about market opportunity has increased, with new application areas and larger-scale projects emerging.

Market outlook, election impact, and funding

• Exposure to NIH direct spending is single-digit percent, while indirect exposure via grants is about 20-25% of total revenue.

• Science funding uncertainty has already impacted customer spending, but NIH support is expected to remain stable due to bipartisan backing.

• Growth within single-cell and spatial omics is robust, even if overall NIH funding fluctuates.

• China exposure is limited, with business in China having shrunk and local competition already factored in.

• Sourcing from China is well managed, minimizing risk.

Q3 update, product launches, and commercial strategy

• Q4 revenue guidance assumes no year-end budget flush, reflecting a conservative stance due to macro headwinds.

• Upside could come from increased instrument sales or a more typical year-end spending pattern.

• New pricing promotions, especially for Xenium, are being tested to address high list prices and meet customer needs.

• Recent launches include the lower-cost Xo instrument and new consumables, aimed at reducing per-cell and per-sample costs to drive adoption.

• Early feedback on new products is positive, changing the narrative around affordability and value.