10x Genomics Q1 2025: Navigating Contradictions in Customer Uncertainty, NIH Funding, and Margin Expectations

Uncertainty and customer behavior, NIH funding impact, gross margin expectations, commercial restructuring and sales force headcount, and gross margins and impact of restructuring are the key contradictions discussed in 10x Genomics' latest 2025Q1 earnings call.



Challenging Macro Environment Impacting Revenue Outlook:
- 10x Genomics withdrew its full-year revenue guidance and implemented quarterly guidance due to uncertainties in U.S. academic and government research funding.
- The decline in research funding, including delays, reductions, and cancellations, as well as proposed budget cuts, has created unpredictability in customer purchasing behavior.
- Approximately 40% to 50% of 10x Genomics' revenue is supported by U.S. academic and government research funding, making it vulnerable to funding fluctuations.

Product Demand and Utilization Trends:
- Despite the macroeconomic pressures, 10x Genomics observed robust growth in Chromium reaction volumes and increased Xenium consumable revenue and volume.
- The demand was driven by strong adoption of Flex and universal on-chip multiplexing products, which reduce costs per cell and per sample, enhancing affordability.
- Increased customer usage of Xenium was driven by its ability to elucidate complex biological samples and its superior data quality, leading to significant traction among new and established users.

Cost Management and Workforce Reduction:
- The company implemented an 8% reduction in its global workforce to manage costs amid macroeconomic uncertainties.
- This decision was part of a broader cost-reduction strategy aimed at protecting the company's balance sheet and adjusting expenses, with expected savings exceeding $50 million in 2025 compared to 2024.
- The organization is focused on maintaining efficiency and retaining key talent, while accepting the need for additional cost reductions if necessary.

Product Launches and Market Dynamics:
- Recent and upcoming product launches, such as GEM-X technology, Visium HD, and Xenium RNA proteins, have strengthened 10x Genomics' technology leadership and market position.
- The company's sales reorganization has improved coverage and focus, enhancing customer engagement despite macroeconomic pressures.
- Success in new product adoption, particularly in the biopharma sector, is expected to contribute to future growth as 10x Genomics focuses on expanding its customer base.