10x Genomics said on Monday after the close of the market that it is lowering its 2022 revenue guidance by approximately $100 million.
The Pleasanton, California-based single-cell and spatial omics analysis technologies firm now expects revenue in the range of $500 million to $520 million, representing growth of 2 percent to 6 percent over the prior year. Previously, the firm had guided to revenue of $600 million to $630 million.
The revised guidance was one of several business updates delivered on a conference call with investors following the release of the firm’s second quarter results. For the three months ended June 30, 10x reported $114.6 million in revenues, down from $115.8 million in the prior-year period. Revenues were in line with preliminary results reported last month and missed the consensus Wall Street estimate of $127.7 million.
The firm attributed its performance to weakness in Asia and Europe, due to a mix of macroeconomic and internal factors.
“We fell short of our expectations as we navigated challenges,” CEO and Cofounder Serge Saxonov said. “While some issues are behind us, others will persist in the back half of the year.”
The lowered guidance is just one sign that the firm is at an inflection point. Last week, 10x announced it will lay off 8 percent of its global workforce, or approximately 100 employees. The company also recently appointed a new chief commercial officer, and Saxonov disclosed that the firm is postponing the launch of its higher-resolution Visium HD spatial transcriptomics platform, previously slated for launch before the end of the year.
“While the delay of Visium HD is not a welcome update, other new products … should still provide some support for a growth reacceleration in 2023,” JP Morgan Analyst Julia Qin wrote in a note to investors.
Consumables revenues for the quarter were $97.9 million, up 1 percent from $97.1 million a year ago. Instrument revenues were $14.7 million, down 13 percent from $16.9 million a year ago. Service revenue was $1.9 million, up 7 percent from $1.8 million a year ago.
Revenues from the Asia-Pacific region were down 15 percent to $18.1 million, impacted by COVID-19 lockdowns in China. Those from Europe, the Middle East, and Africa totaled $25.6 million, down 11 percent from $28.8 million a year ago, due to “unfavorable currency fluctuations,” CFO Justin McAnear said, as well as due to a previously disclosed cold-chain logistics issue and “some execution challenges.” Revenues from North America totaled $70.9 million, up 8 percent from $65.8 million a year ago.
On the call, 10x officials noted that they will implement new commercial processes and systems to make the sales process more efficient, establish metric-driven sales tactics, and provide better analytics to improve the flow of information within the company.
The firm’s net loss for the quarter was $64.5 million, or $.57 per share, compared to a net loss of $11.1 million, or $.10 per share in Q2 2021, missing the average Wall Street estimate of a $.39 loss per share.
The firm’s R&D expenses were $70.7 million, up 32 percent from $53.4 million a year ago. Its SG&A expenses increased 15 percent to $79.3 million from $68.7 million a year ago.
As of June 30, 10x had $274.2 million in cash and cash equivalents, $225.5 million in marketable securities, and $508,000 in restricted cash.
“We see our strong cash position as an important differentiator, especially in this environment,” Saxonov said. “We will be deliberate in protecting it, while also continuing to invest in our strategy and long-term growth.”
In addition to the layoffs, the firm has canceled hiring for a number of open positions, has reduced hiring goals, and is looking to reduce non-headcount-related spending.
Moreover, “our goal is to be free cash flow positive by the end of 2023,” McAnear said, though he predicted “elevated” capital expenditures and cash burn over the next several quarters until 10x completes its new operations facility at the end of the first quarter of 2023.
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