0001770787-25-000051
SEC filingRevenue grew 13% to $172.9M, driven by $27.8M license/royalty revenue, but core products declined; net income turned positive.
For the three months ended June 30, 2025, total revenue increased 13% year-over-year to $172.9 million, driven almost entirely by $27.8 million in license and royalty revenue from the Vizgen and Bruker patent settlements. Excluding these non-recurring items, products and services revenue declined 5% to $145.2 million. Instruments revenue fell 39% to $14.5 million, with Chromium down 35% and Spatial down 42%, reflecting lower capital equipment spending by customers. Consumables revenue dipped 1% to $122.2 million, as growth in Spatial consumables (+24%) was offset by a 9% decline in Chromium consumables. Services revenue surged 47% to $8.5 million, benefiting from an expanding installed base of instruments coming off warranty.
Gross profit rose 20% to $125.1 million, and gross margin expanded to 72% from 68% in the prior year. The margin improvement was primarily due to the high-margin license/royalty revenue, lower royalty and warranty costs, partially offset by higher inventory write-downs and manufacturing costs. Operating expenses decreased 35% to $95.0 million, largely because of a $40.7 million gain on the Bruker settlement recorded within operating expenses. Excluding this gain, operating expenses still declined modestly, driven by reduced outside legal costs and lower stock-based compensation. Research and development expenses fell 3% to $61.2 million, and selling, general and administrative expenses dropped 10% to $74.4 million.
Net income was $34.5 million compared to a net loss of $37.9 million in the prior year quarter, reflecting the settlement gains and improved operational leverage. Total other income increased to $6.9 million, mainly from favorable foreign exchange movements.
The MD&A breaks revenue into instruments, consumables, services, and license/royalty, with further detail for Chromium versus Spatial. Spatial consumables continued its strong momentum, growing 24% to $36.4 million, as customers adopt the Visium and Xenium platforms for spatial biology research. Conversely, Chromium consumables, the largest revenue contributor, slipped 9% to $85.8 million, indicating potential market saturation or competitive pressure. Instruments revenue remains challenged, with both Chromium and Spatial instruments declining sharply year-over-year. Management attributed this to a cautious capital spending environment. Services revenue growth of 47% highlights a growing installed base and the propensity for customers to purchase post-warranty support. License and royalty revenue, while significant this quarter, is non-recurring and tied to litigation settlements.
Management expects products and services revenue (excluding license/royalty) to decline slightly sequentially in the third quarter of 2025, reflecting continued headwinds in instrument sales and consumables demand. Gross margin is expected to fluctuate in the remainder of 2025, as the first-half benefit from high-margin license/royalty revenue fades and product mix, pricing, and cost changes take effect. Operating expenses are anticipated to trend lower year-over-year following a May 2025 reduction in force that eliminated approximately 8% of the global workforce and additional cost-reduction initiatives. The company believes its existing cash ($447.3 million) and cash generated from operations will be sufficient to meet its needs for at least the next 12 months. No formal guidance on net income or EPS was provided.
As of June 30, 2025, 10x Genomics holds $397.7 million in cash and cash equivalents plus $49.5 million in marketable securities, totaling $447.2 million in liquid assets. The company has no interest-bearing debt, with total liabilities of $206.7 million consisting primarily of operating lease liabilities ($86.7 million), deferred revenue ($32.7 million), and accrued expenses. Stockholders' equity stands at $773.3 million. Inventory decreased to $69.0 million from $83.1 million at year-end 2024, driven by reductions in purchased materials.
The company's primary contractual commitments are operating leases with total undiscounted payments of $107.6 million as of June 30, 2025. These include $6.6 million due within 12 months, $31.5 million due within 1-3 years, and $69.5 million due beyond 3 years. The weighted-average remaining lease term is 7.2 years at a weighted-average discount rate of 5.9%. Additionally, product warranty reserves totaled $8.5 million. No other material purchase commitments were disclosed.
Capital expenditures were $3.5 million for the six months ended June 30, 2025, representing 1.1% of total revenue. The company did not repurchase shares or pay dividends. Debt activity was limited to lease payments; no new borrowings or repayments occurred. The company also recorded a $6.0 million restructuring charge in Q2 2025, primarily for severance.
The company operates as a single operating segment. Revenue by product line (from Note 4) shows consumables drove 73% of total revenue ($237.5M in H1 2025), led by Chromium consumables ($169.9M) and Spatial consumables ($67.6M). Instruments contributed $29.3M, with Spatial instruments ($17.7M) outpacing Chromium ($11.6M). License and royalty revenue surged to $44.8M from $0.1M in the prior year due to litigation settlements. Geographically, the Americas accounted for 60% of revenue, with the U.S. representing 58%. Asia-Pacific grew to 20% (China 12%), and Europe, Middle East & Africa contributed 20%.
The company generated $52.1M in operating cash flow (OCF) during H1 2025, a significant turnaround from $(8.2)M in the same period last year. Net income improved to $0.2M from $(97.8)M, indicating strong cash flow relative to earnings. Key non-cash add-backs include stock-based compensation ($58.6M), depreciation ($15.8M), and amortization of right-of-use assets ($3.6M). Working capital was a net positive driver, notably a $37.9M decrease in accounts receivable and a $15.1M reduction in inventory, offset by a $68.5M increase in other receivables and a $7.8M decline in accrued compensation.
Capital expenditures totaled $3.5M, down from $5.8M in H1 2024, reflecting disciplined spending. The company also invested $49.4M in marketable securities but partially offset with $50.0M in maturities. Financing activities provided $3.9M from stock issuances, with no share repurchases or dividends.
Overall, OCF comfortably covers capex, yielding a substantial free cash flow. The absence of debt or significant capital returns suggests a conservative financial policy. The large swing in other receivables warrants monitoring but appears tied to normal operations.