Executive Summary / Key Takeaways

• Technological Leadership Driving Market Expansion: 10x Genomics stands as a pioneer in single-cell and spatial biology, with its Chromium, Visium, and Xenium platforms offering unparalleled resolution and scale. Recent innovations like Flex v2 and Xenium Protein are democratizing access, lowering costs, and enabling new, large-scale applications, particularly in translational research and AI-driven biological discovery.
• Strategic Pivot Towards Biopharma and AI: The company is strategically expanding its focus beyond academia, aiming for biopharma to constitute over 50% of its revenue. Partnerships with institutions like the Arc Institute and CLISEQ, alongside the Scale Biosciences acquisition, underscore a commitment to leveraging its technology for AI model development and clinical diagnostics.
• Resilient Performance Amidst Macro Headwinds: Despite a challenging U.S. academic and government funding environment, 10x Genomics reported Q3 2025 revenue of $149 million, exceeding guidance, and demonstrated robust double-digit growth in Chromium reaction volumes and Xenium consumables. Disciplined cost management, including an 8% workforce reduction, is bolstering its strong balance sheet.
• Strong Balance Sheet Fuels Long-Term Growth: With $482.1 million in cash, cash equivalents, and marketable securities as of Q3 2025, the company maintains financial flexibility to invest in its innovation roadmap, pursue strategic acquisitions, and weather market uncertainties, positioning it for sustained long-term value creation.
• Outlook Reflects Cautious Optimism: While the macro environment remains unpredictable, 10x Genomics anticipates Q4 2025 revenue between $154 million and $158 million, reflecting sequential growth driven by product momentum. The company is not factoring in a traditional year-end budget flush, and potential impacts from NIH funding uncertainties remain a key watch factor.

Pioneering Precision Biology: Setting the Scene for 10x Genomics

10x Genomics, Inc. (NASDAQ: TXG) is a life sciences technology company dedicated to building innovative products and solutions that interrogate, understand, and master biological systems. Since its incorporation in 2012 and the commencement of commercial operations in 2015, the company has established itself at the forefront of single-cell and spatial biology, two rapidly evolving fields that are fundamentally transforming biological research, drug development, and diagnostics. The company's overarching strategy centers on democratizing access to these advanced tools, driving higher volumes through competitive pricing, and expanding its footprint in high-growth areas such as biopharma and AI-driven research.

The broader life sciences industry is experiencing a profound shift, with increasing recognition of the power of single-cell and spatial technologies to unlock previously inaccessible biological insights. This trend is further amplified by the emergence of increasingly powerful AI methods, which are "hungry for high-quality data" and accelerating researchers' interest in running larger and larger perturbation studies to build "virtual cells"—AI models designed to simulate the workings of individual cells. This convergence of advanced biological tools and artificial intelligence represents a significant market driver, positioning companies like 10x Genomics at the nexus of future scientific discovery.

Technological Edge: Unlocking Biological Complexity

10x Genomics' competitive advantage is deeply rooted in its proprietary, integrated research solutions, which include instruments, consumables, and software across its Chromium, Visium, and Xenium platforms. These technologies are designed to provide unprecedented resolution and scale in analyzing biological systems, offering tangible benefits that differentiate 10x Genomics from its competitors.

The Chromium platform is central to single-cell analysis, enabling researchers to profile thousands of individual cells. In 2024, 10x Genomics introduced the new GEM-X microfluidic architecture and a suite of products, including the GEM-X Flex assay, which allows for million-cell experiments on a single chip and in a single run at a price point of $0.01 per cell. The on-chip multiplexing products further reduce costs to as low as $600 per sample at any scale. The Chromium Xo instrument provides a low-cost entry point, democratizing access to instrument-powered single-cell analysis. The next generation of Chromium Flex, which began shipping in October 2025, significantly enhances these capabilities, enabling streamlined, automation-friendly plate-based workflows. This product is a "step change in scale," supporting massive perturbation screens and AI-driven initiatives like virtual cell modeling. The company also validated a scalable FFPE dissociation protocol for Flex, improving efficiency and throughput for high-volume translational research. These advancements contribute to 10x Genomics' competitive moat by offering superior data quality, robustness, and ease of use, driving increased customer adoption and volume growth.

In spatial biology, the company's Visium and Xenium platforms provide critical insights into the cellular location of gene activity. Visium HD, launched in 2024, enables whole transcriptome spatial analysis at single-cell scale resolution, increasing the resolution of the Visium platform by over three orders of magnitude through the CytAssist instrument. New Visium customers are overwhelmingly opting for Visium HD, reflecting its advanced capabilities. The Xenium Analyzer is an imaging-based platform that has garnered significant enthusiasm. In Q3 2025, 10x Genomics launched Xenium Protein, a "first-of-its-kind capability" that allows researchers to detect RNA and proteins simultaneously in the same cell and on the same tissue section, all in a single, automated run. This innovation delivers "comprehensive, multimodal insights, streamlining workflows and accelerating translational discovery." The rapid adoption of the Xenium Prime 5K panel, which expands gene detection to 5,000 genes with "excellent per gene sensitivity, specificity and spatial fidelity," has been a significant driver of increased average spend per run for Xenium consumables. Customer feedback increasingly points to Xenium as "the best solution for most of researchers' spatial needs," underscoring its strong differentiation.

These technological differentiators are not merely academic; they translate directly into a robust competitive moat and financial performance. The ability to offer higher resolution, multiomic analysis, and scalable, cost-effective solutions enhances customer loyalty and pricing power, as evidenced by the strong demand for Xenium consumables and the anticipated volume growth offsetting lower per-reaction prices for Chromium. The company's intellectual property, validated by patent settlements with Vizgen and Bruker (BRKR) in 2025, further strengthens its market position.

Strategic Evolution and Market Expansion

10x Genomics' historical journey has been marked by continuous strategic evolution to capitalize on emerging opportunities. A major reorganization of its sales force in 2024 established specialized teams for capital equipment, biopharma, and emerging accounts. This restructuring, expected to be fully operational by mid-2025, aims to improve focus and scalability across its diverse product portfolio and customer base.

A key strategic initiative is the expansion into the biopharma segment, which currently accounts for 15% to 20% of total revenue, with a long-term goal of reaching over 50%. This ambitious target is supported by the maturation of 10x Genomics' products, particularly their FFPE (formalin-fixed paraffin-embedded) compatibility, which is crucial for later-stage clinical work and was not widely available until a couple of years ago. The company is also seeing significant interest in large-scale CRISPR screens within biopharma, a major application for its single-cell tools. The dedicated biopharma sales team, with its specialized expertise, is critical to driving this growth.

Strategic partnerships are also accelerating market expansion. Collaborations with the Chan Zuckerberg Initiative (CZI) on the "Billion Cells Project" and the Arc Institute for the "Virtual Cell Atlas" leverage Chromium Flex assays to generate large-scale perturbational data, fueling AI model development in biology. The PERIBLOOD clinical trial, a collaboration with CLISEQ and the Weizmann Institute, is utilizing Chromium to profile thousands of blood cells for hematologic disorder diagnostics, aiming for "more accessible and less invasive diagnostics and improving clinical decision-making". Furthermore, the acquisition of Scale Biosciences, Inc. in August 2025 for an upfront consideration of $30 million (plus contingent payments) is a technology acquisition designed to "accelerate innovation across our Chromium platform" by integrating foundational inventions in combinatorial indexing and quantum barcoding.

Financial Performance Amidst Headwinds

Despite a challenging macro environment, 10x Genomics has demonstrated resilience and strategic financial management. For the three months ended September 30, 2025, the company reported total revenue of $149 million, exceeding the top end of its guidance range. This represented a 2% year-over-year decrease but a 2% sequential increase when excluding one-time license and royalty revenue from Q2 2025. For the nine months ended September 30, 2025, total revenue was $476.79 million, up 7% year-over-year. Full-year 2024 revenue stood at $610.8 million, a 1% decrease from 2023.

Consumables revenue remains a core driver, increasing by 1% year-over-year to $127.9 million in Q3 2025. Spatial consumables revenue, driven by Xenium, saw robust growth of 19% year-over-year in Q3 2025. While Chromium consumables revenue was down 4% year-over-year in Q3 2025, primarily due to lower average selling prices from the adoption of new, lower-cost products, the company reported double-digit Chromium consumables reaction growth year-over-year. This indicates that the strategy of lowering prices to drive volume is gaining traction, although the revenue impact has a time lag. For the full year 2024, spatial consumables revenue surged by 104%, while Chromium consumables decreased by 11%. Instrument revenue, however, faced significant headwinds, decreasing by 37% year-over-year to $12 million in Q3 2025, largely due to lower average selling prices and cautious capital expenditure (CapEx) spending by customers. Despite this, strategic discounts in Q2 2025 led to an 11% increase in Chromium placements year-over-year, demonstrating the company's flexibility in driving adoption. Services revenue increased by 29% year-over-year to $8.1 million in Q3 2025, primarily from an increase in Xenium service plans. License and royalty revenue saw a substantial increase due to patent settlements, with $16.8 million recognized in Q1 2025 from Vizgen and $27.3 million in Q2 2025 from Bruker.

Gross margin for Q3 2025 was 67%, a decrease from 70% in the prior year, primarily due to changes in product mix and higher inventory write-downs, partially offset by lower royalties and warranty costs. For the full year 2024, gross margin was 68%. Operating expenses decreased by 10% year-over-year to $132.5 million in Q3 2025, driven by lower personnel and outside legal expenses. Research and development expenses decreased by 14% to $57.2 million in Q3 2025, and selling, general and administrative expenses decreased by 8% to $75.4 million. These reductions reflect the company's aggressive cost management initiatives, including an 8% workforce reduction in May 2025 and other non-headcount expense cuts, which are expected to reduce 2025 operating expenses by over $50 million compared to 2024. The company reported a net loss of $27.5 million in Q3 2025, an improvement from a net loss of $35.8 million in Q3 2024.

Liquidity remains strong, with $482.1 million in cash, cash equivalents, and marketable securities as of September 30, 2025, an increase of $35 million from the prior quarter. This robust balance sheet provides the flexibility to fund anticipated capital expenditures of $15 million to $20 million over the next 12 months and a $20 million payment for the Scale Biosciences technology transfer in Q1 2026, along with potential contingent consideration of up to $30 million. Management believes existing cash and cash generated from sales will be sufficient for at least the next 12 months.

Competitive Landscape: A Battle for Biological Insight

The single-cell and spatial biology market is competitive, with several significant players. 10x Genomics consistently asserts its leadership through technological differentiation, product performance, and a broad application breadth.

Against Illumina, Inc. (ILMN), a dominant force in broad genomic sequencing, 10x Genomics offers a more specialized focus on detailed cellular and spatial analysis. While Illumina boasts a broader distribution network and established brand, 10x Genomics' technology provides greater efficiency in handling complex biological samples at the single-cell level, often perceived as offering higher precision. 10x Genomics' innovation speed in niche research applications, particularly with its user-friendly software integration and proprietary microfluidics, gives it an an edge. Financially, 10x Genomics has demonstrated generally faster revenue growth in specialized applications, though Illumina benefits from economies of scale in its more mature sequencing business.

Compared to Bio-Rad Laboratories, Inc. (BIO), which offers a diverse portfolio of life science research and clinical diagnostic products, 10x Genomics' single-cell and spatial tools are generally considered more advanced in providing comprehensive data outputs. 10x Genomics' platforms offer greater performance in epigenetic profiling and multi-omics workflows. While Bio-Rad may have a cost advantage with its broader product lines, 10x Genomics leads in innovation speed for cutting-edge spatial biology. Its integrated ecosystem for single-cell workflows fosters strong customer loyalty, contributing to its generally stronger revenue growth.

Against Standard BioTools Inc. (LAB), a specialist in microfluidic systems and single-cell analysis, 10x Genomics' Chromium platform often provides more comprehensive data. 10x Genomics' strategy emphasizes end-to-end solutions for spatial and cellular analysis, offering superior performance in complex experiments. While Standard BioTools may offer cost-effective options, 10x Genomics' strengths in software integration and ecosystem building enhance customer stickiness and innovation speed. 10x Genomics has exhibited generally stronger revenue growth and better cash flow generation, driven by its specialized offerings.

10x Genomics' competitive advantages, or "moats," include its proprietary microfluidic technology (e.g., Chromium) and imaging platforms (Xenium), which translate into superior data quality, robustness, and ease of use. The company's strong intellectual property portfolio, validated by recent patent settlements, further protects its market position. These advantages foster customer loyalty and enable premium pricing for advanced solutions like the Xenium 5K panel. However, vulnerabilities exist, primarily in the reliance on high-cost instruments and potential supply chain dependencies, which can affect scalability and cost of goods sold. Barriers to entry in this industry, such as high R&D costs and complex regulatory requirements, generally favor established innovators like 10x Genomics.

Outlook and Strategic Resilience

10x Genomics' outlook reflects a blend of cautious optimism and strategic resilience in the face of ongoing macro uncertainties. For the fourth quarter of 2025, the company anticipates revenue in the range of $154 million to $158 million, representing a 5% sequential growth at the midpoint from Q3 2025. This outlook is based on the continuation of positive performance drivers, including momentum in both single-cell and spatial products. Notably, management explicitly stated they do not anticipate the "year-end budget acceleration" previously experienced in Q4, and the impact of any government shutdown is factored in, primarily affecting the small portion of their business tied to intramural NIH funding.

Looking ahead to the first half of 2026, management cautiously anticipates conditions similar to the second half of 2025, but has refrained from providing full-year 2026 guidance due to persistent macro uncertainties and limited customer visibility. The U.S. academic and government funding environment remains a significant challenge, marked by "delays, reductions and outright cancellations of grants" and a "growing threat of future changes such as proposed budget cuts, implementation of indirect NIH funding gaps, and widespread concern over further grant review delays or project cancellations." The company's exposure to U.S. academic and government research funding is approximately 40% to 50% of its revenue. While the Q4 2025 guidance factors in anticipated weakness in NIH-funded research, it does not reflect the potential impact of the recently announced 15% cap on indirect costs, which could lead to an additional $10 million to $15 million revenue impact if fully implemented.

Despite these external pressures, 10x Genomics is executing a disciplined cost management strategy. The May 2025 reduction in force, which cut approximately 8% of the global workforce, along with other non-headcount expense reductions, is expected to reduce 2025 operating expenses by over $50 million compared to 2024. The company's commercial transformation, including the sales force reorganization, is on track to be in full force by mid-2025, which is expected to enhance sales execution, particularly for Xenium instruments. Sales to China, representing about 10% of 2024 revenue, pose the largest tariff-related risk, but mitigation strategies, including manufacturing capabilities in Singapore, are expected to minimize the impact. Zacks Equity Research has recognized 10x Genomics' improving earnings outlook, upgrading the stock to a Zacks Rank #1 (Strong Buy) in October 2025.

Conclusion

10x Genomics is a company at the vanguard of biological discovery, leveraging its innovative single-cell and spatial biology platforms to unlock unprecedented insights into complex biological systems. The core investment thesis is firmly anchored in its technological leadership, exemplified by the Chromium, Visium, and Xenium platforms, which offer superior resolution, multiomic capabilities, and increasingly cost-effective solutions. These technological advantages are not only driving robust adoption and volume growth in consumables but are also strategically positioning the company for significant expansion into the high-growth biopharma and AI-driven research markets.

While the company operates within a challenging and uncertain macro environment, particularly concerning U.S. academic and government funding, its disciplined financial management, strong balance sheet, and strategic initiatives underscore its resilience. The ongoing commercial transformation and targeted investments in R&D and strategic acquisitions like Scale Biosciences are designed to solidify its competitive standing and capitalize on the immense long-term opportunities in precision biology. As 10x Genomics continues to push the boundaries of scientific understanding and translate groundbreaking research into clinical applications, its technological prowess and strategic foresight are poised to create substantial value for investors, making it a compelling proposition for those seeking exposure to the future of life sciences.