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01/11 03:08
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Total Revenue $172.9 million, up 13% year-over-year. Excluding the license and royalty revenue from the settlement, revenue was $145.6 million, down 5%. The increase was driven by a settlement payment, while the decline excluding this was due to cautious customer spending and capital equipment constraints.
Consumables Revenue $122.2 million, down 1% year-over-year. Chromium consumables revenue was $85.8 million, down 9%, primarily due to lower average reaction prices. Spatial consumables revenue was $36.4 million, up 24%, driven by Xenium consumables revenue.
Instrument Revenue $14.5 million, down 39% year-over-year. Chromium instrument revenue was $5.7 million, down 35%, due to lower average selling prices and strategic discounts. Spatial instrument revenue was $8.8 million, down 42%, due to fewer instruments sold.
Services Revenue $8.5 million, up 47% year-over-year, primarily due to an increase in Xenium service plans.
Gross Margin 72%, up from 68% in the prior year, primarily driven by higher license and royalty revenue. Excluding settlement impacts, gross margin was 67%.
Operating Expenses $95 million, down from $146 million in the prior year, driven by a gain on settlement. Excluding settlement impacts, operating expenses were $135.7 million.
Operating Income $30.1 million, compared to an operating loss of $41.7 million in the prior year. Excluding settlement impacts, operating loss was $37.9 million.
Net Income $34.5 million, compared to a net loss of $37.9 million in the prior year. Excluding settlement impacts, net loss was $33.5 million.
Cash Balance $447 million in cash, cash equivalents, and marketable securities, reflecting a $40 million increase during the quarter, excluding settlement-related payments.
GEM-X Flex and Universal On Chip Multiplex: These products have been instrumental in lowering cost barriers, enabling larger scaling, and opening up new applications.
Visium HD 3 Prime: Expands the capabilities of the Visium HD portfolio by extending it to more applications.
HD cell segmentation capabilities: Enables researchers to assign transcripts to individual cells with precision, simplify data analysis, and uncover new biological insights.
Visium HD XL and Xenium RNA plus protein: Upcoming launches to enhance multiomic spatial analysis and unlock deeper insights from complex tissue samples.
Flex v2: A new plate-based Chromium Flex product designed to increase throughput, streamline workflows, and lower costs for large-scale experiments.
China market performance: Strong performance driven by purchasing dynamics associated with the timing of tariffs, contributing to revenue growth.
Collaboration with Genome Institute of Singapore: Aimed at accelerating discovery of drug targets and biomarker signatures in cancer and inflammatory diseases using Xenium.
Cost management: Increased cash balance by $40 million during the quarter and focused on operational efficiency.
Acquisition of Scale Biosciences: Acquired for $30 million to broaden access to single-cell analysis and strengthen the Chromium platform.
Focus on single-cell and spatial biology: Prioritizing technology leadership and unlocking high-value applications in these areas.
Integration of AI in biology: Supporting large-scale single-cell perturbation experiments to train AI models and build virtual cells.
Academic Funding Environment: The academic funding landscape is marked by shifting policies, weaker grant disbursements, and lack of clarity around future budgets. This is contributing to extended project timelines and cautious customer spending.
Customer Spending Behavior: Customers are facing increased scrutiny on purchases, longer approval timelines, and new restrictions on capital spending and staffing within their labs. This is leading to delays in project starts, scale backs in study designs, and heightened price sensitivity.
Capital Equipment Spending Constraints: Capital equipment spending remains a significant challenge globally, with conservative spending behavior and ongoing constraints impacting customer purchasing decisions.
Geopolitical and Tariff Uncertainty: Temporary pull-forward in purchasing activity in China due to potential tariff changes indicates uncertainty in geopolitical and trade policies, which could impact future revenue.
Revenue Decline in Key Segments: Chromium consumables revenue decreased by 9% year-over-year, and Chromium instrument revenue fell by 35%, driven by lower average reaction prices and strategic discounts.
Market Conditions in the Americas and EMEA: Revenue in the Americas and EMEA regions declined by 15% and 7% respectively, reflecting ongoing market challenges and cautious spending behavior.
Operational Efficiency and Cost Management: The company is focused on cost management and operational efficiency to navigate the challenging funding environment, but this could limit flexibility in scaling operations or investing in growth areas.
Revenue Expectations: The company expects Q3 2025 revenue to be in the range of $140 million to $144 million, reflecting cautious customer spending behavior and ongoing capital equipment spending constraints. This includes a $4 million pull-forward in revenue from Q3 to Q2 due to purchasing activity in China.
Market Trends and Customer Behavior: The funding environment remains uncertain, with cautious customer spending, extended project timelines, and conservative capital equipment spending. The U.S. academic and government funding landscape has not shown meaningful improvement, and customers face increased scrutiny on purchases and longer approval timelines.
Product Launches and Strategic Plans: The company is preparing for the release of several innovations, including Visium HD XL and Xenium RNA plus protein, to enhance multiomic spatial analysis. Additionally, the launch of Flex v2, a new plate-based Chromium Flex product, is expected to increase throughput and streamline workflows for large-scale experiments.
Growth Expectations in Single Cell and Spatial Biology: The company believes single cell and spatial biology are in the early stages of adoption, with large-scale applications gaining traction. They highlight trends such as large translational studies using Xenium and large-scale single cell perturbation experiments to train AI models.
Acquisition of Scale Biosciences: The acquisition of Scale Biosciences is expected to accelerate innovation in the Chromium platform, making single cell analysis more powerful, affordable, and accessible. The transaction is not expected to materially impact revenue or operating expenses for the remainder of 2025.
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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