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01/11 03:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company shows strong product development with new launches and acquisitions, optimistic guidance in spatial biology, and positive market trends. Despite cautious spending and macroeconomic uncertainties, management is confident in their leadership and growth potential, especially in China and Europe. The Q&A session highlighted enthusiasm for new products and strategic positioning against competitors. The market cap suggests moderate sensitivity, leading to a positive stock price prediction.
Total Revenue $149 million, down 2% year-over-year and up 2% sequentially. The decline was attributed to lower average selling prices and macroeconomic challenges.
Consumables Revenue $127.9 million, up 1% year-over-year. Chromium consumables revenue was $92.5 million, down 4%, due to lower average selling prices. Spatial consumables revenue was $35.4 million, up 19%, driven by strong demand for Xenium consumables.
Instrument Revenue $12 million, down 37% year-over-year. Chromium instrument revenue was $4.9 million, down 36%, and spatial instrument revenue was $7.1 million, down 38%, primarily due to lower average selling prices.
Services Revenue $8.1 million, up 29% year-over-year, primarily due to an increase in Xenium service plans.
Geographical Revenue - Americas $79.9 million, down 9% year-over-year, due to continued uncertainty in the U.S. academic and government funding environment.
Geographical Revenue - EMEA $41.6 million, up 10% year-over-year, driven by strong spatial consumables performance.
Geographical Revenue - APAC $27.5 million, up 6% year-over-year, but down 14% sequentially due to a Q2 customer-driven pull forward in China.
Gross Profit $100.3 million, down from $106.4 million in the prior year. Gross margin decreased to 67% from 70%, primarily due to changes in product mix and higher inventory write-downs, partially offset by lower royalties and warranty costs.
Operating Expenses $132.5 million, down from $147.9 million in the prior year, driven by lower personnel and outside legal expenses.
Operating Loss $32.2 million, compared to $41.5 million in the prior year, reflecting improved cost management.
Net Loss $27.5 million, compared to $35.8 million in the prior year, reflecting improved cost management.
Cash Position $482 million, up $35 million from the prior quarter, reflecting strong cost management and cash generation.
Xenium consumables: Achieved double-digit year-over-year revenue growth driven by strong demand. Customers appreciate its exceptional performance and broad applications.
Chromium Flex: Launched next-generation version with improved sensitivity, scalability, and automation-friendly workflows. Supports AI-driven initiatives like virtual cell modeling.
Xenium protein: New addition to Xenium platform enabling detection of RNA and proteins in the same cell and tissue section. Simplifies workflows and accelerates translational discovery.
FFPE dissociation protocol: Developed scalable protocol for high-volume studies, improving efficiency and throughput for translational research.
Geographical revenue performance: Americas revenue declined 9% year-over-year due to funding uncertainty. EMEA revenue grew 10%, driven by spatial consumables. APAC revenue increased 6% year-over-year but declined sequentially due to prior pull-forward in China.
Customer spending behavior: Spending remains cautious, particularly for capital expenditures, due to persistent funding uncertainty.
Revenue performance: Total revenue for Q3 2025 was $149 million, exceeding guidance. Consumables revenue grew 1%, while instrument revenue declined 37%.
Cost management: Operating expenses decreased to $132.5 million, driven by lower personnel and legal expenses. Ended the quarter with $482 million in cash, reflecting strong cost management.
Partnership with Anthropic: Integrated Claude for Life Sciences to address data analysis bottlenecks, making analysis more accessible through conversational interfaces.
Collaboration with CLISEQ and Weizmann Institute: Focused on translational research and clinical applications, using Chromium to identify cell signatures for hematologic disorders.
Virtual cell initiatives: Supporting AI-driven virtual cell modeling, which is expected to transform science and drug discovery.
Macroeconomic Challenges: The company is navigating persistent macroeconomic challenges, including funding pressures and policy uncertainty, which are impacting customer spending behavior, particularly for capital expenditures.
Revenue Decline in Key Segments: Total revenue for the third quarter was down 2% year-over-year, with significant declines in instrument revenue (down 37%) and Chromium instrument revenue (down 36%), primarily due to lower average selling prices.
Geographic Revenue Pressures: Revenue in the Americas declined by 9% year-over-year, driven by uncertainty in the U.S. academic and government funding environment.
Gross Margin Decline: Gross margin decreased to 67% from 70% in the prior year, primarily due to changes in product mix and higher inventory write-downs.
Customer Spending Caution: Customer spending behavior remains cautious, with no anticipated year-end budget acceleration, reflecting ongoing funding uncertainties and economic pressures.
Operational Losses: The company reported an operating loss of $32.2 million for the third quarter, though this was an improvement from the prior year's loss of $41.5 million.
Inventory Write-Downs: Higher inventory write-downs contributed to the decline in gross margin, indicating potential inefficiencies or challenges in inventory management.
Revenue Outlook for Q4 2025: Anticipated revenue range of $154 million to $158 million, representing 5% growth compared to Q3 at the midpoint.
Customer Purchasing Behavior: No material change in customer purchasing behavior is anticipated, and no year-end budget acceleration is expected.
Balance Sheet and Investment Strategy: Strong balance sheet with $482 million in cash, providing flexibility to invest in innovation, advance strategic initiatives, and support long-term growth.
Market Conditions: Continued cautious spending behavior, particularly for capital expenditures, due to persistent funding uncertainty.
Product Development and Adoption: Focus on advancing the innovation roadmap, driving greater adoption of products, and removing barriers to access.
Virtual Cell and AI-driven Initiatives: Anticipation of significant growth in virtual cell efforts and large perturbation studies, with technologies expected to scale by orders of magnitude.
Translational Research and Clinical Applications: Increasing focus on translational research and clinical applications, including collaborations like the PERIBLOOD clinical trial for hematologic disorder detection.
The selected topic was not discussed during the call.
The company shows strong product development with new launches and acquisitions, optimistic guidance in spatial biology, and positive market trends. Despite cautious spending and macroeconomic uncertainties, management is confident in their leadership and growth potential, especially in China and Europe. The Q&A session highlighted enthusiasm for new products and strategic positioning against competitors. The market cap suggests moderate sensitivity, leading to a positive stock price prediction.
The earnings call presented mixed signals. Strong financial metrics, such as improved gross margins and a shift from loss to net income, were overshadowed by the withdrawal of revenue guidance and ongoing macroeconomic challenges impacting customer spending. The Q&A revealed cautious optimism but highlighted uncertainties in funding and spending, particularly in the academic sector. The Scale acquisition and product roadmap offer potential, but immediate impact is limited. The market cap suggests moderate stock movement, leading to a neutral prediction.
The earnings call reveals a mixed financial performance with declining instrument revenue and flat guidance. The Q&A highlights concerns about funding uncertainties and declining CapEx, particularly in academia and government sectors. While gross margins improved, the lack of a share repurchase program and weak guidance with possible headcount reductions point to ongoing challenges. The market cap suggests a moderate reaction, resulting in a negative sentiment prediction of -2% to -8% over the next two weeks.
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