10x Genomics, Inc. (TXG) Q4 2025 Earnings Report, Transcript and Summary

Thank you for standing by. My name is Karli, and I will be your conference operator today. At this time, I would like to welcome everyone to the 10x Genomics Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Cassie Corneau, Senior Director, Investor Relations and Strategic Finance. Please go ahead.

Thank you, and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the fourth quarter and full year ended December 31, 2025. If you have not received this news release or would like to be added to the company's distribution list, please send an e-mail to investors@10xgenomics.com. An archived webcast of this call will be available on the Investor tab of the company's website, 10xgenomics.com, for at least 45 days following this call. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties and factors that could cause results to differ appears in the press release issued today and in the documents and reports filed by 10x Genomics from time to time with the Securities and Exchange Commission. 10x Genomics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. Joining the call today are Serge Saxonov, our CEO and Co-Founder; and Adam Taich, our Chief Financial Officer. We will host a question-and-answer session after our prepared remarks. We ask analysts to please keep to one question so that we may accommodate everyone in the queue. With that, I will now turn the call over to Serge.

Thanks, Cassie, and good afternoon, everyone. Today, I will start with an overview of our Q4 and 2025 performance. I will then talk about some of the key trends driving our business and how they position us well for future growth. Adam will then talk through the financials in more detail. We delivered $166 million in revenue in the fourth quarter, exceeding the high end of our guidance range; and closed the year with $599 million in revenue, excluding $44 million of upfront revenue related to patent litigation settlements. In the fourth quarter, the operating environment remained largely unchanged from Q3. Customer spending remains subdued, and capital equipment purchases remain particularly constrained. The uncertainty in research funding dynamics continues to impact customer sentiment and timing of purchasing decisions. Despite this challenging backdrop, we saw a modest budget flush towards the end of the quarter, and we continue to be encouraged by the solid underlying demand for our solutions. As I reflect on 2025 overall, I'm extremely proud of how the team executed throughout the year. While 2025 was challenging and at times highly unpredictable for our customers and the broader life sciences ecosystem, the team delivered consistently quarter after quarter. We made steady progress across the fundamental drivers of the business. advanced our product road map and strengthened our financial position. First, we saw strong momentum in key metrics that are driving the fundamentals of the business. Single-cell consumables volumes grew at a double-digit rate each quarter, driven primarily by adoption of our newer lower cost products, including Flex and On Chip Multiplexing. These products have expanded access enabled new applications and support increased experimental volume. In spatial, we delivered double-digit consumables revenue growth for the year, driven by Xenium momentum. Strong demand for Xenium translated into meaningful customer expansion throughout the year. At the same time, existing customers, including the earliest and largest users, continue to ramp their utilization. We are encouraged to see customers exploring new applications, running more experiments and expanding the scope of their studies. Second, we delivered multiple product launches across both single cell and spatial. Compared to even just 2 years ago, we have vastly expanded the capabilities of our platforms through continuous innovation. Within single cell, the launch of our next-generation Flex assay in 2025, now branded as Flex Apex, represents a meaningful step-change in the capabilities of the Chromium platform. Flex Apex combines exceptionally high performance with flexible inputs, including compatibility with FFPE and fixed whole blood. It supports both small exploratory experiments as well as one with high sample counts and large numbers of cells, making it well suited for massive-scale studies. Flex Apex delivers these features at a lower cost per experiment and is enabling expanded access to single cell, driving increased reaction volumes and supporting broader adoption across our customer base. Over a short time, we believe Flex has become a foundational assay for several of the most important growth areas in the field, including large-scale AI and virtual cell efforts, translational cohort studies and biopharma discovery and development workflows. As a result, Flex became our most popular single cell assay by volume in the fourth quarter. We continue to hear strong feedback from customers on its ability to enable larger, more ambitious studies that were previously impractical. We look forward to seeing what our customers will accomplish as these studies progress. We also had meaningful launches across our spatial platforms in 2025. Within Visium, we launched Visium HD 3 Prime to enable researchers to conduct all transcriptome analysis across a broader range of applications and sample types. We also launched HD cell segmentation to address a key challenge in spatial analysis, helping customers visualize tissue structure in more precise detail. Within Xenium, we launched RNA and protein, enabling multimodal analysis on the same traction in a single integrated workflow. Together, these launches significantly expand the capabilities of our spatial portfolio. As I mentioned last quarter, when it comes to spatial, we have seen a strong and growing preference among our customers towards Xenium over other approaches. This trend has continued and will likely accelerate going forward. It is a reflection of both how well the technology works as well as the abundance of insights that scientists are gaining from the platform. Based on the feedback from our customers, it's becoming clear Xenium is the best choice for the vast majority of customers interested in spatial. And finally, we meaningfully strengthened our balance sheet over the course of the year. We grew our cash balance by more than $100 million year-over-year, reflecting disciplined cost management and focused execution across the business. We intend to continue to effectively manage costs and strategically invest in innovation and long-term growth. As we look ahead to 2026 and beyond, we believe we are well positioned to build on the progress we have made with several trends propelling growth going forward. First, there has been rapid parallel progress in AI and in the technologies used to measure biology. These two trends are highly complementary. Advances in single cell and spatial technologies have increased scale, lowered costs and made it possible to generate very large, high-quality biological data sets, while advances in AI are creating new demand for that data. Importantly, this represents a shift in how research is conducted with AI increasingly acting as a driver of data generation rather than just a downstream analysis tool. We're seeing growing interest in large, well-controlled studies, including perturbation-based experiments designed to capture complexity and resolve causality in biological systems. The partnerships we have announced over the past year exemplify and validate these trends. We're supporting the Chan Zuckerberg Initiative's Billion Cells project, which is generating unprecedented volumes of single cell data to fuel AI-driven biological discovery. We're also working with the Arc Institute on the Virtual Cell Atlas using large-scale perturbation data generated on our platforms to train and validate next-generation models of cell behavior. In addition, our collaboration with the Cancer Research Institute is focused on building high-quality, well-controlled data sets to better understand immune responses and accelerate progress in immuno-oncology. Together, these efforts illustrate how our platforms are becoming foundational for AI applications in biology. Another area that has become increasingly important for us and one we see as a meaningful growth driver going forward is translational research. We're seeing growth in translational research for three fundamental reasons. First, in multiple therapeutic areas like oncology and autoimmunity, we have an increasing number of therapies, but only a limited understanding of which therapies are appropriate for which patient. Second, there is increasing evidence from literature that single cell and spatial have very promising approaches for discovering actionable biomarkers and signatures of response. Third, our platforms have made big advances in scale, cost and robustness as well as in compatibility with critical clinical samples, most importantly, FFPE and whole blood. It is now straightforward to run large-scale cohort studies. And this is precisely what many of our customers have been doing. We announced a number of initiatives last year with academic medical centers and with industry partners to undertake large-scale translational studies. Translational research is also an important driver of biopharma adoption. Single cell and spatial technologies have relevance across the drug development continuum, but the largest opportunity lies in later translational stages, where biomarker strategies are essential to understand patient response and potential toxicity. This is where our solutions can meaningfully improve the probability of success and where we expect to increasingly focus our efforts. And finally, as this translational work has been picking up, we're hearing growing interest from customers in applying our technologies to patient care. Based on that, as well as a growing body of scientific literature, we believe there is a significant potential for single cell and spatial biology in diagnostic applications. Realizing that potential will require the generation of robust clinical evidence and deployment of these technologies in the clinical setting. To enable clinical applications of single cell and spatial analysis, we are pursuing two parallel paths. First, we're continuing to support our customers in generating clinical evidence, and we'll collaborate with them to enable clinical deployment in the future. In parallel, we believe we ourselves are in a unique position to accelerate the arrival of some of the highest impact diagnostics, given our technology leadership, understanding of applications and strong position in the research ecosystem. As part of this strategy, we recently announced two collaborations with leading academic medical centers to support clinical evidence generation. With Dana-Farber Cancer Institute, we're focused on tissue-based spatial profiling to support biomarker discovery and therapy selection in oncology. With Brigham and Women's Hospital, we're pursuing blood-based monitoring approaches to enable longitudinal assessment of disease activity and treatment response in autoimmune disease. We expect to expand this set of collaborations over time as we continue to build programs across various indications. We're also building out a CLIA laboratory to enable clinical deployment of the resulting tests. Stepping back and setting aside the current macro environment, it's hard not to be excited by our position as a company. We believe we're at the nexus of some of the most important trends our industry has ever seen. We have a powerful innovation engine, a high-performing organization and a strong balance sheet. We're focused on delivering continued innovation across our platforms and believe 2026 will be a particularly exciting year as we advance our road map and bring new capabilities to our customers. I feel incredibly privileged by the position we're in and optimistic about the opportunity ahead. With that, I will turn the call over to Adam.

Thanks, Serge. Before reviewing the fourth quarter results, I want to take a moment to reflect on 2025 as a whole. Despite a highly volatile external environment that drove some variability in quarterly revenue, we exited the year in a strong financial position. We remained disciplined on spending, strengthened our operating foundation and meaningfully increased our cash balance, positioning the company for a strong future. With that, I will now focus my commentary on our fourth quarter financial results and the related drivers. Details of our full year results can be found in today's press release. All growth rates referenced reflect year-over-year comparisons unless otherwise noted. Revenue for the fourth quarter was $166 million. This represents 1% growth over the prior year and exceeded the high end of our guidance range. Our fourth quarter results reflected a challenging operating environment, balanced by continued momentum in the business. As mentioned during our remarks at a recent investor conference, we also saw some unanticipated budget flush late in the quarter, which partially contributed to performance in the period. Total consumables revenue was up 6%, with growth in both single cell and spatial. Single-cell consumables revenue was up 3%, supported by double-digit growth in reaction volumes, in part due to our lower-priced Flex assay. Spatial consumables continued to perform well in the quarter with revenue up 14%, driven by Xenium consumables. Total instrument revenue declined 36%, with Chromium instrument revenue down 44% and spatial instrument revenue down 30%. Consistent with the patterns we saw throughout 2025, instrument revenue in the fourth quarter remained under pressure given ongoing funding challenges for capital equipment, though we did see a sequential uptick due to year-end capital spending. Looking at revenue by geography, Americas revenue declined 6%, while EMEA and APAC grew 7% and 9%, respectively. While the Americas region remained muted amid continued softness in the U.S. academic and government funding environment, EMEA performed better than expected, driven by some late quarter orders as customers work through year-end spending. APAC had a solid quarter, consistent with our expectations. Turning to the rest of the P&L. Gross margin was 68% for the fourth quarter of 2025 as compared to 67% for the prior-year period. The increase was primarily driven by lower inventory write-downs as well as lower royalty and warranty costs, partially offset by higher manufacturing costs. On the operating expense side, we continue to execute with a strong focus on operating efficiency and cost discipline. Consistent with this focus, total operating expenses decreased 18% in the fourth quarter, primarily driven by lower outside legal expenses and lower personnel costs. We ended the year with $523 million in cash, cash equivalents and marketable securities, up $130 million from the end of 2024. Turning to our outlook for 2026. While the funding environment continues to be muted, it has reached a measure of stability that we believe supports reinstating full year revenue guidance. We expect 2026 revenue to be in the range of $600 million to $625 million. Excluding upfront revenue related to patent litigation settlements in 2025, this represents 0% to 4% growth over the full year 2025. At the midpoint, our guidance implies a continuation of the trends we saw throughout 2025, including double-digit growth for both single-cell consumables reactions and spatial consumables revenue. The guidance range also assumes CapEx funding remains constrained, which will continue to put downward pressure on instrument revenue. We expect the overall environment to be consistent with the second half of 2025, with customers remaining cautious in their purchasing decisions. We were encouraged to see the recent NIH budget approval as well as decisions on both indirect funding and multiyear funding as part of the bill. Notwithstanding this improved clarity, there is still significant systemic turbulence in research funding dynamics that continue to impact customer sentiment and timing of purchasing decisions. Additionally, as we think about the cadence of the year, we anticipate first quarter revenue to be a larger percent of full-year revenue as compared to prior years. This is partially driven by orders received late in the fourth quarter that were shipped in January. Moving to the rest of the P&L. We expect our overall financial profile to further strengthen in 2026. The cost discipline we've embedded over the past year has translated into tangible operating efficiencies. Moving forward, we expect to sustain these productivity gains while continuing to drive improvement across the business and advancing a strong slate of product introductions. With that, I will turn the call back to Serge.

Thanks, Adam. Before we turn it over for questions, I'd like to acknowledge just how tough 2025 was for our customers and take a moment to thank the 10x team. Despite all the turbulence, you stayed focused on our work, our customers and our mission. It hasn't been easy, but the progress you've made on multiple fronts is nothing short of remarkable. As a company, we're stronger than we've ever been. We're entering 2026 with great momentum and the landscape of profoundly important opportunities ahead of us. Thank you for everything you do. With that, we will now open it up for questions. Operator?

[Operator Instructions] Your first question comes from Tycho Peterson with Jefferies.

Serge, just wondering 1.5 months or so into the year here, if you can maybe just comment on anything on ordering patterns that you're seeing right now? And then give us a quick walk on what you're baking in for academic and pharma, in particular, around some of these larger [ Perturb ] type studies and then also clinical. I mean, you're not the first company today to mention single cell and spatial and clinical. So I'm just curious how you think about the timeline of that opportunity.

Thanks, Tycho. Yes, several questions embedded in there. So first of all, just the general kind of sentiment out there and the customer orientation. Yes, we would say that it's been -- the environment has been -- is similar to what it has been for the past couple of quarters. The second half of '25 is pretty similar to what we're seeing now and what we expect to see kind of throughout the rest of the year. Certainly, it's been gradually improving, certainly, compared to the first half of '25. But there's a lot of uncertainty still remaining and caution among our customers. There's a number of issues that are going on in the academic sphere, the U.S. academic funding when it comes to staffing, when it comes to the timing of disbursements, criteria by which grants are reviewed and judged. Universities are uncertain around their budgets, multiyear funding pocket decisions, things like that. So overall, I think the environment, like Adam mentioned, is generally pretty steady and not as bad, again, as it was in the first half of last year, but there's still a lot of uncertainty remaining. On -- as far as this year is concerned and kind of the drivers going forward, certainly, we're excited. As I mentioned earlier in my remarks, there's a big wave of AI-driven projects for [ Perturb-seq ] type applications. And our products, especially Flex, are incredibly well suited for that purpose. And you can actually see that now coming out in preprint on the publications validating the premise. And so we have -- we certainly have a lot of excitement that we see around this application around these trends. They were meaningful, a relatively small percentage of our business last year, and we expect it to keep growing going forward. And I think what's particularly exciting to us is that there is -- as you look to the future, the upside is enormous. There's like really no credible ceiling to how much data people are looking to generate and how much data would be useful to generate for these AI models.

Your next question comes from Doug Schenkel with Wolfe Research.

First, on pricing, it sounds like single cell consumable revenue grew and reaction volume was up. What I'm having a hard time figuring out is was volume growth enough to offset pricing? I guess in a long-winded way, what I'm trying to get at is, how should we think about how volume and price trended into year-end? And then how are you contemplating those factors in guidance?

Yes. So let me take that one, Doug. So yes, I think maybe starting with Q4. So when we think about the full year, full year 2025 reaction growth was [ 22% ]. In Q4, in part due to the launch of Flex Apex, we had 30%-plus volume growth. So really nice trend sort of rounding out the year. So when we're thinking about that balance for 2026, I think the best way to think about it is Chromium consumables, if you think about the midpoint of our guide, it's flat, right? So essentially at about flat. And there's a bunch of different combinations and permutations that could get you there, depending on sort of the mix of product and various volumes. But that's the way that we're thinking about the guide and the components of the guide. So we talked about continued pressure as it relates to CapEx. We talked about double-digit ongoing strength in our spatial consumables. And if you sort of think about the Chromium consumables business at 0% growth, that's sort of roughly where we are. There's a couple of different ways you can probably get there based on product uptake, particularly around the Flex franchise, but that's really where we're thinking about 2026.

Your next question comes from Puneet Souda with Leerink.

Let me ask mine on Flex Apex. Serge, it appears that Flex V2 is rebranded as Apex. Maybe just a quick clarification there. What was the mix of Flex V1 versus V2 in the fourth quarter? And I'm wondering if you can take a minute and talk about how are you thinking about Flex, I mean, the Apex product playing out throughout the 2026? How pricing is going to be impacted as the adoption for that growth? And how should we think about the 3 Prime, Prime GEM-X kits switching over to potentially to Apex? And how to think about the pricing headwind from that? Because that could be fairly meaningful. So I just want to understand those drivers and sort of the timing of how that plays out.

Yes, Puneet, thanks for the question. Yes. So first of all, yes, I think Flex Apex, we launched this last quarter in Q4 and strong -- was really strong out of the gates. It's -- yes, it's too early to talk about sort of the breakdown of the different versions of Flex within the larger assay category. But obviously, it did really well and also now getting great feedback as customers are actually running through the experiments, generating data and looking forward to ramping and to increasing their usage. So all kind of great trends. Again, I would emphasize that it's still very early. It was only partially available in Q4. And so we are still very much in the early part of that adoption curve. Now as we think about going forward, I think it's kind of important to delineate the different buckets of single cell use, kind of going back to your question around where Flex is going to get adoption. So first of all, there's a lot of new use cases, and it's an ambiguous trend here when we -- what we hear from customers that this Flex Apex is now opening up new opportunities, new experiments that they -- new studies that they weren't contemplating before. And so that is purely additive. And that's where our commercial team is focused on, is driving these applications, enabling these new use cases, enabling all this additional volume. Also, there's a large fraction of single cell use where people are just not going to switch, back to your question about universal 5 Prime, 3 Prime, we have lots of other products that are uniquely necessary for the use cases that researchers are using for. We also established workflows where they're not looking to switch. And then finally, there's people that are going to switch either from the earlier versions of Flex or from some of the other products like 3 Prime. And what we're hearing is that some of them will just spend the same amount of money, the same budgets that they have, but just run more samples. And some will run the same number of samples, but pay less per sample. That's definitely kind of a headwind that we are watching carefully. But one thing I just want to emphasize that it's important to appreciate that it's not just a single price drop across the board. There's multiple dynamics here and multiple categories of customers. And our focus is fundamentally on driving additional extra volume. And clearly, that was a good trend that we saw in Q4. As Adam mentioned, out of the gate, there was a greater than 30% reaction volume growth. And it's not an unreasonable kind of anchor point to think about 2026.

Your next question comes from Dan Arias with Stifel.

Serge, can you maybe just talk about the push into the clinical translational space? It sounds like it's going to get going with these institutions that you talked about last month. What are your expectations when it comes to those types of customers using single cell and spatial products? And then how broad is that push going to be this year? Is it sort of meant to be a pilot program of sorts with those hospitals? Or is it part of a larger commercial effort?

Thanks, Dan. Yes. So there's actually two separate sort of categories of efforts that we have. There is a future-looking set of initiatives that we're undertaking to stand up future clinical applications for diagnostics in the future using single cell and spatial technologies. We're super excited about them. A lot of it is driven by just the interest we see from customers and from physicians that are out there. And as I mentioned earlier, our goal here is to kind of pursue a hybrid strategy where we enable our existing customers to develop clinical evidence and to ultimately deploy these technologies in a clinical setting. And we're also undertaking our own efforts to build up clinical evidence and build up a CLIA lab to deploy these tests. We believe we have -- we can do this particularly efficiently, leveraging our existing assets. I'm very excited about these efforts. They are future looking. That said, they're also synergistic with our current business because they provide a measure of validation to where this technology is going, they give people, customers comfort in adopting the single cell and spatial in research -- in the current research applications and in drug development applications. And then kind of the second category of efforts are more near term around, again, translational research. This is where our products are already being used, and there's potential for a lot more. Again, there's a fair amount of kind of our single cell products and spatial being used on patient cohorts to look for biomarkers to drive drug discovery. But the promise here is to really scale this up and make it routine and go to more customers in much larger volumes. I would say that the opportunity there is at least as big as what we have seen in basic science. And our products now are in a place where they can support these kinds of applications, these kinds of efforts. And it is a big focus for our commercial team this year as well.

Your next question comes from Kyle Mikson with Canaccord.

The comments on consumables and reaction growth was helpful. But on instruments and this guidance here, just could you talk about which franchise you think will experience the largest impact from the CapEx headwinds in '26? And then secondly, just on translational revenue with the new biopharma-focused commercial team, were there any like proof statements in '25 that give you confidence that biopharma can break through like 30% of revenue in '26 to get to maybe half of revenue over time?

Well, so yes, so let me pick up that second question first, Kyle. So yes, we're very excited about the potential for translational research. And I would say that's both in sort of in academia and medical centers, academic medical centers and in biopharma. Our eventual goal, you're right, is to drive to a place where something like half of our revenue is driven by biopharma. We're not making a claim about doing this this year, clearly, but we expect to take steps in that direction this year. We talked about adoption in large-scale translational research projects last year, quite a few of them publicly announced. Even this year, we've already announced a number of them. And I think it's pretty clear that this is just the beginning. When we talk to biopharma customers, there's clearly potential for single cell use and spatial use all across the drug development continuum. We have been very much kind of historically focused on early discovery stage. And now there's potential to expand downstream into translational use cases into biomarker programs. And both the dollars that are spent there and the size of the cohorts, the size of the experiments is just much larger. And so that presents a really great opportunity for us, for which there is tangible yet at this point, early evidence of potential. And like I said earlier, our products are now at a place where they're perfectly suited for those applications.

I can take the second piece of the question, Kyle, around CapEx. I mean what we're seeing broadly is that -- and anticipating in our guide that the CapEx funding environment just broadly remains constrained. That said, there is typically more pressure on the higher-end side of CapEx. We actually grew Chromium instruments on a unit basis year-on-year from '24 to '25. But we did that in large part, and we'll continue to do so as needed in 2026 here by working with our customers, trying to ensure that we're getting any of the capital barriers they may have sort of out of the way. And if we can get package-type deals where there's a consumables commitment, it ends up working out well given the margin profile on our consumables. So we'll continue to do that into '26.

Your next question comes from Dan Brennan with TD Cowen.

Maybe one on the price volume again for Chromium. So is it fair to think that in the flat Chromium consumable guide, it's kind of a similar math, maybe volumes up 20, price down 20? I know the price is kind of a tricky thing because it's not like-for-like, but I guess that's the first question. The second one is just while NIH is still under pressure, albeit hopefully getting better, you put up good numbers overall in China and EMEA, so I'm wondering if you could speak a little bit to how you're thinking about the outlook, what's baked into the guide between the different academic customer groups in different regions, even if U.S. is weak, like those other regions, could they pick it up? And then final one is just the balance sheet, really strong, great cash generation. What are the plans with the cash that you're building, as we look ahead in '26?

Maybe I'll start with that last question. Yes, look, we're very, very happy to have the balance sheet. Obviously, that was a big focus for us last year for multiple reasons, big one just to give us a cushion. The environment was highly, highly unpredictable. And we wanted to make sure that we can execute on our priorities regardless of what happens to the external environment. And so as part of that as a consequence, we've done a great -- the team has done a great job of increasing efficiencies and driving really tight cost management and in a good place now. Also, it gives us like a really strong position and ability to deploy capital as we -- as necessary as we look at kind of the landscape of opportunities out there. We're always looking and evaluating kind of the landscape. I don't have any hard rules around where we might invest, always driven by fundamentally kind of the strategy, looking through where the world is going, what are the big opportunities, what are the big questions that need answering and then determining what technology needs to be built, what products need to be built in the service of that. And kind of that's what drives our investment philosophy. And again, good to be in a place where we have the resources to pursue this -- our strategies.

I can take the -- or at least give you some thoughts, Dan, on the price, volume as it relates to Chromium. And again, we thought kind of coming back to our guidance philosophy and trying to provide information that we think is useful for modeling and understand our business, the reason that we provided kind of at the midpoint, we're thinking about Chromium consumables as flat. There's a bunch of different combinations and ways that you can get there. I guess what I would share with you sort of again is in Q4, 30-plus percent reaction growth in the Chromium business grew 3%. We're not suggesting, obviously, what I'm telling you at the midpoint that the Chromium business on the consumables is flat, not suggesting that it's going to be plus 30%, down 30%. There's a bunch of different ways we can get there. And given the underlying complexity of the portfolio, we certainly have been trying to do our best to communicate that. But Flex Apex just came out. We had fairly a stub of a quarter in Q4, good trends here early in Q1 and a lot of that, both on the price side, given the mix of product and product price as well as the volume is really going to play out during the course of the year. And even on an internal basis, we can see sort of how that could play out. That's really part of the range of the guide that we've provided.

Your next question comes from Patrick Donnelly with Citi.

Adam, maybe some for you just on the guidance. Can you just talk about the confidence on the spatial piece? It sounds like you guys are talking about good growth there. Just that shift with Xenium and Visium, it sounds like Xenium is picking up a little bit. So yes, if you could just talk about that, it would be really helpful. And then you did mention the cost profile kind of strengthening up. If you could put anything around the margins, that would be helpful. I appreciate it.

Sure. Yes. Let me start sort of on the spatial side. We had a very strong year on spatial consumables in 2025, driven entirely by the Xenium franchise. So Visium, just full disclosure, in 2025 didn't grow. So all of the growth that you're seeing in the spatial consumables side of things comes and more from the Xenium side of the business. Customer sentiment is incredibly strong. Utilization rates are fantastic. I think as we've discussed before, we've got customers that run them around the clock and have to go sort of expand their fleet. We still got new customers buying in even in a CapEx-constrained environment, we've been able to do an admirable job. Sales team is doing a really good job getting instruments out there. So we feel confident where we are on the spatial consumables number that we can hit double-digit growth again here in 2026. I think just broadly to your question on cost, yes, it's really important for us just to ensure that we're deploying resources wisely. We spent a lot of time in 2025, really ensuring that we're making moves to strengthen our balance sheet. We were successful in that regard with cash up $130 million from the end of '24 to where we are right now. And you'll continue to see that type of cost discipline here in the company as we move into 2026.

Your next question comes from Mason Carrico with Stephens Inc.

Last year, you gave full year reaction numbers for Chromium, Visium and Xenium. It seems like you guys chose to not give that this year. Could you just give some color on Xenium reaction growth in 2025? It would be helpful to gain some insight in the utilization trends there. And then you guys have answered a handful of questions on Flex, but have you talked about the adoption cadence? I mean, are you expecting the transition to be a more gradual migration or more front-end loaded this year?

Mason, yes, let me just take the Flex question first. I mean the short answer is like it's a little too early to tell. Like I said earlier, like Adam just said, we didn't even have a full quarter in Q4 of Flex Apex adoption. Clearly, there's a lot of pent-up demand, and that has been really great to see. There's also been great feedback coming back from customers who are actually adopting it and using it. And there's a lot of interest on ramping up and especially ramping up in new kinds of experiments that were -- that people weren't contemplating before. But again, it's just -- it's too early. All the early signs are encouraging, but it's too early to talk about like the very specifics of the cadence.

And yes, you'll see when we -- when the 10K hits why are the reactions, to your question there, and I think it was specific around Xenium. So Xenium reactions were 14,500 for the year, and that was up about 34% over prior year. And like I said, that will be in the K.

Your next question comes from Subbu Nambi with Guggenheim Securities.

Looking ahead to AGBT, how are you thinking about competitive dynamics from some other players launching solutions this year? And what levers can you pull to stay ahead from a share perspective? Are there any competitive pressures baked into guidance at this point?

Yes. So look, we feel really good about our position in the business in both in spatial and single cell. We have -- as you look at what has been happening kind of recently, the last several quarters, it's been kind of a similar story, pretty consistently where not much when you look at spatial, but really not much effect on our business. Clearly, Xenium is growing really fast, much faster than sort of other offerings out there from a much higher base. We -- as we go forward, we feel really good about our competitive position, both with respect to current competition and as well as any potential competition that's out there. We've been innovating continuously over the past several years. and extending the gap between us and other potential offerings. And we certainly -- again, we keep a pretty good pulse about what's happening out there in the landscape and various products and launches. And again, I feel quite good about where we are relative to the landscape.

Your next question comes from Dan Leonard with UBS.

This is Lu on for Dan. I think one question on Visium. Given that it didn't grow in 2025, can you just update us in terms of like the go-forward strategy on the platform? Any plan to put it back to positive growth?

Yes. So Visium is a good platform for quite a number of applications for customer use cases. And we have been very diligent in making sure we support those customers and drive those applications. And we absolutely will continue to do that. But that said, like I said earlier, we are learning more and more, like with pretty strong definitiveness that Xenium is really the best choice for spatial analysis for the vast majority of use cases. And we have been investing in the Xenium platform. We expect to keep doing that in the future. And yes, and that's kind of how it's going to, I think, to balance out going forward. A lot of growth going forward in Xenium and Visium will have its place.

Your next question comes from Michael Ryskin with Bank of America.

Maybe a boring one, but your comments about the timing shift or the pacing through 2026, I think you called out 1Q to be larger compared to prior years because of the orders late in the fourth quarter. Just could you just expand on that a little bit, like anything in particular that stood out there, just relative to your comments on budget flush? Was it one customer, any particular product line? Just a little bit unusual if you guys have such a meaningful swing. Just kind of want to get a sense of what that's attributed to. Maybe was there any additional price you gave to capture those orders? Just color around that would be helpful.

Sure. Yes, I can take that one, Mike. Yes, I guess the last part, not really a pricing dynamic. We did mention, I think, at an investor conference in January that we did see some unanticipated budget flush, which is part of the reason that we ended up beyond the guide that we had set. Some of those orders that came in, in late December, we weren't able to fulfill until January. So that was a couple of million dollars that essentially carried over and spilled into Q1. So that's part of what gives us confidence, although it's a fairly small number for Q1. And then we're a good way into Q1. So the way we're thinking about the quarter is historically, we've been 23-or-so percent in Q1. If you think about sort of the full year, probably be about 1 point higher than that. So closer to 24% as we think about Q1 as a percent of where we are, if you're thinking about that at the midpoint of the guide.

Your next question comes from Luke Sergott with Barclays.

This is Salem on for Luke. Just wanted a quick update on the timing of the scale technology integration. Are the expectations to kind of retain roughly the same throughput that scale on its own can achieve while retaining the same quality of the legacy 10x technology? And are you able to kind of use the proposition of this new sort of integration to win over these new AI customers now with kind of the promise of providing something even higher throughput down the line?

Yes. So yes, so first of all, on the question of sort of AI customers and those applications, the -- like predominantly, the right solution there is Flex Apex that's resonating really, really well for a number of reasons. It's incredibly scalable. It has huge sensitivity -- like really, really good sensitivity, it's really robust, works across many different cell types and tissues. There's a lot of kind of technical reasons, but it is just a really, really great product. And again, there have been papers and there have now been [indiscernible] that have been coming out just validating just it's really perfectly suited for that. As far as the scale technology is concerned, so what is currently in the market, as we've said that before, like the kind of on the spectrum of our overall revenue, it is not really material. And we are obviously excited about the technology that the scale brings to us and incorporating it into future products. We haven't yet talked about what those future products are, but there is definitely a great potential. And in due time, we'll talk about.

Your next question comes from Casey Woodring with JPMorgan.

Great. Maybe first one, I wanted to dig into your plan to set up a CLIA lab. Can you maybe talk more about which indications you plan to target first and the timing of generating clinical evidence for these diagnostics applications and actually standing up the lab and going through all the certifications and all that? And then how should we think about the CapEx required to build out the lab and that return on investment over time? And maybe just as a follow-up to that piece, how should we think about potential impact from diagnostics customers that are seeing 10x enter as a competitor?

Yes. Good question. So these are very good thematic questions here. One, maybe to step back, I just want to emphasize that we're excited about this direction. A lot of it driven by, again, the interest from our customers and just generally physicians out there. We believe there's huge potential in clinical applications of single cell and spatial. It is -- we are starting to make some initial investments and efforts along this direction. They're early. They're really for the future. One great thing is that we have a lot of assets, both in terms of technology, in terms of our position in the research market, in terms of the infrastructure we have here, where building up clinical evidence is actually really, really efficient for us. And we can do this in a way that doesn't really materially impact our P&L. Our strategy is a hybrid strategy where we absolutely are going to enable customers to develop clinical tests in the future. We're working with quite a number of them right now, help them generate clinical evidence, help them deploy those tests, the necessary test in the future. But again, we also believe we are in a unique position for some applications to really accelerate their arrival and to drive impact sooner and faster than they otherwise would have been possible because, again, because we have these assets that we can deploy in a really, really cost-effective manner to do that. We talked about two big applications, specifically for tissue-based tumor profiling to guide the therapy selection for like all these new generations of therapeutics that are now coming online that are targeting different expression markers. And also blood, we talked about an application of using single cell for blood to guide monitoring and treatment selection for autoimmune diseases. Another really, really big and exciting application. So again, these are efforts all aimed towards the future. We have set out to build a CLIA lab, and we're targeting early next year to stand it up. Again, we believe we can do it very efficiently and make use of a lot of the assets we already have. And in that sense, it's going to be a very minor impact on our P&L.

Your final question comes from Matt Larew with William Blair.

I wanted to follow up on AI. One is for Adam, which is if you could quantify at all either revenue orders related to AI in '25 or the expectation in '26. The second part, Serge, is for you, which is, I guess, a bit higher level. It sounds like demand right now is in service of larger projects, virtual soft and nation models. I guess I'm curious if you expect that work that demand to be iterative over time where customers are constantly building models based in part on large perturbation sets rather than sort of a one and done. That's kind of the first part. And last year, there were some papers out around the idea of in silico perturbation. So I'm curious, how you see that complementing or competing? And then the third, I guess, higher level on Serge is you have a network of CRO partners around the world and certainly, 10x can -- you're an expert user of your own products. So just as you have some of these more nontraditional companies or groups of people entering the space and building models, maybe if the customer group might shift at all for your products and maybe if that alleviates the capital constraints that some smaller customers might face if it becomes more outsourced. So I understand there's a lot there, but I guess one of the near-term opportunity and then the bigger ones are just how you see the space playing out over time.

Yes. So maybe I'll start there. First of all, in terms of kind of providing potential service offerings to customers that they kind of want to generate very large data sets, that's certainly something that has been on our minds and that we certainly had people come to us. And we do have some service offerings that could potentially play a larger role in the future as we think about this. But the bigger kind -- of stepping back, the bigger part of your question around potential for AI and how will it evolve, yes. Like I think very much back to kind of your first framing where we see this as a continuous kind of growth in demand and scale. I don't think there's anyone who thinks that we are anywhere near the scale we need and that there's going to be any less usefulness to graining more and more data where we currently are. So I think we're just at the very early stages of the sort of the scaling revolution for generating AI. It's sort of -- it's very analogous to what has happened in other domains where AI has been applied, and there is good reasons to think why it might be even more relevant and powerful for these kinds of biological data sets where the complexity is just enormous. There is -- and then sort of the second kind of part of your like framing there was whether in silico experiments can, at some point, replace some of the sort of biological data generation. And yes, I think it's a very strong view. I think it's very hard to argue with the fact that biology is just like increasingly complex, and we're very, very, very far from understanding it. If we get -- start getting close to the point where we're actually like solving biology, then okay, but we are like very, very far away from it. And so the runway here is enormous. We need to generate lots and lots of data. And I don't think there's anyone who would materially disagree with that premise. And maybe I'll just pick up that last -- that first bit of the question is like in terms of how much demand is driving right now. I kind of mentioned earlier, I mean, it's meaningful. We talked about very large projects last year that have been running that have been gearing up, but still a relatively small percentage of the business. We do expect all this to grow, and a lot of it is actually being driven by Flex Apex. It is the perfect assay for all these projects for driving perturbation screening for doing it across many different cell types and tissues. But it's still very, very early days. And like I said earlier, what's particularly exciting here is that as we look to the future, there is really no cap to the upside here.

There are no further questions at this time. With that being said, we'll conclude today's conference call. We thank you all for joining. You may now disconnect.