2025 Q3 Earnings Call Contradictions Emerge on Academic Spending, Macroeconomic Uncertainty, and Government Shutdown Impact

Date of Call: November 6, 2025

Financials Results

• Revenue: $149.0M, down 2% YOY and up 2% sequentially (excluding one-time license and royalty revenue in Q2)
• Gross Margin: 67%, compared to 70% in the prior year

Guidance:

• Q4 revenue expected to be $154M–$158M (midpoint ≈ 5% above Q3), with no assumed year-end budget flush.
• Government shutdown impact is incorporated into the Q4 guide; expected to be limited and primarily affect NIH intramural (a small portion of sales).
• Management is not providing 2026 guidance now and will remain flexible as macro/policy uncertainty evolves.
• Strong balance sheet ($482M) to support strategic investments and execution.

Business Commentary:

* Revenue and Market Conditions: - 10x Genomics reported total revenue of $149 million for Q3 2025, which exceeded the top end of their guidance range. -

- Despite ongoing macroeconomic challenges and funding pressures, the company's strong execution and customer enthusiasm contributed to the revenue growth.

• Spatial Biology Growth:
• Spatial consumables revenue reached $35.4 million, up 19% year-over-year, driven primarily by strong demand for Xenium consumables.

• The growth was sustained by both increased runs and average spend per run, reflecting customer satisfaction and expanding applications for the Xenium platform.

• Single-Cell Segment Dynamics:

• While Chromium consumables revenue was $92.5 million, down 4% year-over-year, growth in Chromium consumables reactions was sustained at double-digit rates.

• The use of Flex and On-Chip Multiplexing assays, offering more cost-effective configurations, opened new customer segments and use cases.

• Financial Performance and Balance Sheet:

• The company ended the quarter with $482 million in cash, reflecting ongoing cost management and cash generation.
• Despite a decline in gross margin due to product mix and inventory write-downs, the strong balance sheet supports strategic investment and growth plans.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted exceeding the top end of guidance: "total revenue of $149 million"; called out "robust" double-digit YOY growth in spatial consumables and sustained Chromium reaction volume growth; emphasized a strong balance sheet of $482M and continued product momentum (next-gen Flex, Xenium protein).

Q&A:

• Question from Madeline Mollman (Wolfe Research): The guide calls for a 5% sequential pickup. Can you walk through how much of that is expected to come from instruments versus consumables, especially given you're not assuming a year-end budget flush? And then what assumptions are built into the Q4 guide regarding the government shutdown? Finally, what does this mean for 2026, given the quarter-over-quarter improvement, it seems like you should be able to grow in 2026 adjusted for the royalties payments. Is that the right way to think about things?
  Response: Q4 guidance includes a modest instrument-weighted uptick, incorporates the government shutdown impact (limited, mainly NIH intramural), and management is not providing 2026 guidance now.

• Question from Puneet Souda (Leerink Partners): How should we think about spatial in Q4 and into 2026 (consumables)? On Flex v2 (GEM-X/Flex), the barcode oligo step gives flexibility for partial plates and lower price per sample — with price per sample now sub-$300 vs ~$1,000 before — why shouldn't this affect near- to medium-term revenue growth?
  Response: Spatial momentum is expected to continue; Flex v2 reduces average reaction price (~20–30% decline) but management expects volume expansion over time to more than offset price decline.

• Question from Daniel Arias (Stifel): Can you add color on contributions from Xenium vs Visium and any user dynamics per system (pull-through) to help model spatial given two product lines?
  Response: Management won't disclose per-system pull-through, but says Xenium is showing consistent increases in both runs and price per run and is trending favorably versus Visium.

• Question from Kyle Mikson (Canaccord Genuity): In light of a large company acquiring an instrument-free single-cell solution and scaling access broadly, can 10x do similar things organically?
  Response: The acquisition validates the market; 10x expects to maintain technology leadership and continue winning based on data quality, performance and broad application support.

• Question from David Westenberg (Piper Sandler): Can you comment on the strong spatial performance in Europe — sustainability or one-time factors?
  Response: Spatial strength in Europe reflects a broader trend (noted Xenium strength) but regional results can be lumpy; management expects the trend to generally continue.

• Question from Kyle Boucher (TD Cowen): What are you seeing in China following the Q2 pull-forward and prior go-to-market changes?
  Response: Improved go-to-market execution in China has driven better demand and outcomes, though management remains cautious on long-term visibility due to different regional dynamics.

• Question from Unknown Analyst (Jefferies - Lauren): Early adoption trends for Xenium protein and multiomic workflows, competitive differentiation for Xenium, and what is needed for single-cell consumables to recover into year-end/2026?
  Response: Xenium protein initial feedback is very positive and differentiating (first-of-its-kind multimodal run); Xenium has strong competitive differentiation; single-cell reaction volumes are growing but pricing headwinds and macro uncertainty persist — management expects continued sequential improvement.

• Question from Lu Li (UBS): You mentioned scientists increasingly prefer Xenium over Visium — what does that imply for Visium math? Also, what percent of customers use Xenium and Chromium together?
  Response: Too early to quantify co-usage, but management sees a growing, consistent trend of customers using Xenium alongside Flex/Chromium for comprehensive FFPE/translational workflows.

• Question from Michael Ryskin (BofA Securities): What are you seeing from pharma customers as year-end approaches — any change in behavior or more fruitful conversations?
  Response: Pharma is cautious amid macro and policy uncertainty; management sees promising long-term interest in large-scale AI-driven experiments and translational applications but near-term visibility is mixed.

• Question from Justin Bowers (Deutsche Bank): Thoughts on elasticity of Chromium with recent Flex launches — have curves crossed and what growth to expect absent macro headwinds?
  Response: Lower-price product introductions (GEM‑X, Flex) have driven volume growth; conversion to GEM‑X largely complete by year-end, but steady-state pricing/volume balance remains too early to precisely quantify.

• Question from Unknown Analyst (Citi - Brendan for Patrick): Given order funnel visibility, is H1 2026 likely to look like H1 2025 (mid-single-digit decline) excluding royalties? And can you break out what you've factored for the government shutdown in Q4?
  Response: Q4 guide incorporates shutdown effects (mainly a small NIH intramural impact); management is refraining from 2026 guidance and will monitor how funding trends evolve.

• Question from Jaden Rismay (JPMorgan): What impact should we expect from NextGen end-of-life as customers transition to GEM‑X — validation timelines and near-term P&L impact?
  Response: The NextGen→GEM‑X transition is largely complete; remaining top-line impact from the transition is expected to be marginal.

• Question from Thomas VonDerVellen (Guggenheim): Chromium instrument discounts described as temporary — will customers resist when you normalize pricing, and will you keep lower ASPs long term?
  Response: Discounts and creative deals were temporary accommodations for unique macro conditions; management does not expect those deals to set long-term precedent as conditions normalize.

• Question from Benjamin Mee (Stephens): How has adoption of Xenium's 5K panel driven consumable growth and how much is due to higher pricing?
  Response: 5K panel adoption has materially contributed to Xenium consumables growth and higher price per run; management expects it to remain a strong driver.

Contradiction Point 1

Academic Research Spending Environment

It directly impacts expectations regarding the academic research spending environment, which is crucial for understanding the company's revenue outlook and market conditions.

How much of the 5% sequential increase in the guide is attributed to instruments versus consumables? What assumptions are in the Q4 guidance about the government shutdown? How does the quarter-over-quarter improvement impact the 2026 outlook? - Madeline Mollman(Wolfe Research)

2025Q3: The academic spending environment remains cautious due to funding uncertainties. There is some optimism with positive developments, but overall spending substance didn't change significantly. Grant disbursements are slow, and budgets are still in early stages, leading to uncertainty. - Serge Saxonov(CEO)

Update on academic research spending environment and improvements this quarter? Budget clarity visibility and optimism about spending unlocks? - Patrick Donnelly(Citi)

2025Q2: The academic spending environment remains cautious due to funding uncertainties. There is some optimism with positive developments, but overall spending substance didn't change significantly. The Q3 is expected to evolve similar to Q2. - Serge Saxonov(CEO)

Contradiction Point 2

Macroeconomic Uncertainty and Customer Behavior

It involves differing assessments of macroeconomic uncertainty and its impact on customer behavior, which is crucial for strategic planning and financial forecasting.

How is the first half of 2026 projected? Are government shutdown impacts included in Q4 guidance? - Brendan(Citi)

2025Q3: In the first half of 2026 is expected to look like the second half of 2025. - Serge Saxonov(CEO)

What impact did customer conversations have on guidance removal? What are the next steps to regain visibility? - Patrick Donnelly(Citi)

2025Q1: We are seeing increasing uncertainty regarding the spending environment with a recent focus on budget cuts both from U.S. and international governments, also include private enterprises. And it's not just about the money. It's about the uncertainty. - Serge Saxonov(CEO)

Contradiction Point 3

Impact of Government Shutdown on Revenue

It involves changes in assumptions about the impact of a government shutdown, which could have significant implications for revenue projections and investor confidence.

What portion of the 5% sequential growth is projected to come from instruments versus consumables? What assumptions underlie the Q4 guidance related to the government shutdown? How does the quarter-over-quarter improvement impact 2026 outlook? - Madeline Mollman (Wolfe Research)

2025Q3: The government shutdown is factored into Q4 guidance, but its impact is limited to intramural NIH, a small fraction of the business. - Adam Taich(CFO)

With the proposed 15% indirect cost cap for NIH funding, how will academic spending be impacted, and how should post-risk funding be structured? - Patrick Donnelly (Citi)

2024Q4: Adam Taich: Due to macroeconomic uncertainty, we are uncertain as to when a new budget will be approved. If a shutdown were to occur, it could incur a $15 to $20 million impact. We've incorporated a mid-single-digit decrease in NIH-funded projects into our guidance. - **Traceability:** (2025Q3-1, 2024Q4-2)