All right. Hey, everyone. Good morning. Thanks for joining us today. I'm Tejas Savant. I cover the life sciences here at Morgan Stanley. Before we begin, please see the Morgan Stanley Research Disclosure website for important disclosures. If you have any questions, do reach out to your Morgan Stanley sales rep. So it's my pleasure to host 10x Genomics this morning, and on behalf of the company, we have Co-founder and CEO Serge Saxonov and CFO Adam Taich. So thank you both for joining us. Maybe just to set the stage, Serge, could you talk about how twenty-four has played out so far versus your initial expectations at the start of the year, and the company's key accomplishments over the last twelve months or so? Good. Thanks for having us. Always fun to be back here. The year has been pretty eventful for us. We announced a number of major launches, product launches, across our portfolio early in the year, in Q1. In fact, in every one of our three platforms, we had major kind of platform-defining product launches. Visium HD on the Visium side, something that's been long awaited from our customers. On the Xenium side, Xenium 5K, so a very large increase in terms of capabilities and the plexing capability on that platform. And then we also announced the big upgrade on our Chromium side, GEM-X architecture. S pecifically the launch of two big products, three prime and five prime gene expression on GEM-X. So, big product launches, we're very excited about those. Obviously, lots of kind of work in the background to get them across. And then the first half of the year was very much defined by those launches, the first quarter and the second quarter as well. And it was also you know, it's one thing to build them, it's also been really gratifying to see the reception among customers. So all of them have been really well received by customers. Good initial traction, good feedback kind of across the board, I would say. And in particular, we're watching the GEM-X transition. The GEM-X launch was a big deal because it affects kind of the majority of our revenue on, certainly on the Chromium side. I n the first quarter of the year, it introduced kind of a delay in customer orders as people were evaluating and considering a transition onto the new architecture. So again, the feedback has been really great, and it was good to see kind of the after the initial delay in Q1 kind of increasing momentum in Q2 on the Chromium side. L ots of activity, lots of kind of customer feedback and transitions on across t he product line. So that, that's been great. The other kind of, you know, sort of dynamic during the year is that the macro environment started out somewhat challenging, p rogressively kind of got worse as we went through Q1 and Q2, and especially affected us on the CapEx side of things. This is where the budgets got particularly tight, particularly constrained around our customers. The sales cycles elongated, the budget approval sort of considerations got a lot more strict, and so we definitely see that affecting our instrument sales and in particular, the Xenium instrument sales, which is sort of the, these are the big ticket items in our product lineup. The kind of the final point to make is that we've had a number of leadership transitions, and especially on the commercial side, something that's been in the works for some time. And we brought in a new Chief Commercial Officer, other leaders in our organization, and kicked off a pretty significant reorganization of the sales force earlier this quarter and going through it right now an d really excited about kind of the trajectory of that and how it will set us up for the future to be able to scale and drive a lot more top-line growth and do it efficiently as well. Got it. So speaking of, you know, leadership transitions, Adam, it's great having you here. First broker conference for you, so you get away with only softballs. You know, so maybe just to set the stage, you know, talk us through your thought process in joining 10x. And Serge, on the other side of that, Adam is a little bit of an atypical choice of CFO in the sense that he comes with a more strategic CFO background, you know, lots of operational experience. Was that something you sort of actively screened for as you looked at the candidates on your shortlist? I'll start from my point of view and then let Adam kind of comment. F or sure, this is what got me really excited about Adam's candidacy, is the fact that he comes in kind of a unique overlap of experience and expertise set, having come with a deep finance background, but also deep, deep experience kind of across the range of businesses in our industry across the range of scales a nd definitely contributing to kind of having been an operator, having seen kind of different sizes, different scales, different types of P&Ls, and setting us up really well as we think about scaling to the future and definitely kind of contributing to our general kind of scaling up of the company and as we look to move to the higher scale. I also, you know, was really excited to bring Adam on, in the context of, you know, we have a great, strong, finance team already in place, and Adam brings a great, complementary, set of experiences and expertise with kind of coming in, again, from a strategic lens, to be a partner to me, to partner to the leadership team, again, to take, kind of the company to the next level. So it definitely something that I was really, really excited by and feel fortunate to, you know, the timing and the, and sort of, this align so well with Adam coming on board. I would just add to that, you know, I've been in the industry for over twenty-five years, which is interesting to hear that coming out of my mouth here on stage. But there are very few companies, you know, in a relatively short period of time that have done what 10x has done. And so I've had my eyes really on 10x as a, you know, as a market player, an innovator, a market creator, really, s ince probably two thousand and fifteen timeframe, is when I became acquainted with the company. And 10x is a, you know, is really sort of me and sort of my decision, and, you know, as Serge mentioned, we started chatting, and 10x is in a really interesting spot. It's a scaled company relative to other sort of, you know, tools companies in our space, but has incredible opportunity, and a s Serge was just talking about, as it relates to the finance team and other, you know, teams I've met now within the company, it's a real platform you can build upon, right, so I do feel comfortable, you know, and confident that from a scale perspective, you know, while there's always work to do to, you know, to create efficiencies and continue to drive operational rigor, T here's incredible growth we can generate, you know, on our own here, in this market. V ery excited to be here. Got it. Switching to Chromium, Serge, let's start with, you know, I like to call it the big-little news this week. You know, you just launched the Chromium Xo yesterday. You know, I was debating whether to call it sort of, you know, big-little news or a gateway drug, right? So can you lay out the portfolio strategy behind the instrument launch? What are the key features beyond, you know, the lower upfront price, obviously, and the assays that will be available on the instrument at launch? Right. So, you know, you've heard me talk over the years and recently as well, about kind of a general view of an imperative for us to democratize single-cell sequencing and just make it available more broadly to the larger market, more customers, more use cases. And this product launch will be viewed in that context, in that light. It's a way to... primarily a way to remove a cost barrier when it comes to CapEx, for people to enter the ecosystem. You know, this is something that's been, you know, we've been conscious of for a long time and contemplated as part of the broader strategy to increase accessibility kind of across the board. T here is various different investments and different barriers that we have been addressing, we'll be addressing going forward, and this is one of those. But again, the CapEx, especially for new to single-cell customers. You know, the issue of CapEx constraints has become particularly relevant and poignant in the current environment. So the timing happens to be particularly right for this launch. We also wanted to make sure that when we launch this product, it supports GEM-X assay. And so specifically, it runs our three-prime gene expression, GEM-X assay, which is the assay that people most commonly use first w hen they first enter the sort of the single-cell world, and then they usually, you know, kind of progress and scale up into other applications and more uses and higher, more routine use. And so this is a way to, again, to get more people into the ecosystem, remove one barrier that tends to hold people back, sometimes. The instrument is also made to be very easily upgradable, so that as people kind of enter, progress through their journey, they can expand out to other assays, other products that we have. Got it. You know, obviously the price is lower, but as we think about, you know, cost per sample for the 3' gene expression workflow versus, say, some of the emerging instrument-free approaches out there, how does that stack up? So we have, you know, we have a number of products, obviously, on the Chromium side. Really, a great breadth of applications. No one can match that, and also, we are, you know, It' s fairly universally acknowledged that we, we've got the best data, the best quality, and the best performance by long shot across our portfolio relative to anything else that's out there. People really appreciate the high quality of the data, they appreciate the robustness of these assays, and they really appreciate the workflow and the ease of use. So that is a really consistent theme. Where there has been somewhat of a question is sort of the cost side of the equation. And, by and large, when we engage with customers, and kind of you actually go through the particular experiment that they're looking to do and start taking account of the like kind of the full cost of the experiment, including certainly like once you include sequencing, the cost side of the equation actually, even setting aside all the advantages we have of the products in terms of performance and workflow, even the cost sort of side of the equation starts looking pretty good when it comes to, again, the total cost of ownership and the experiment. And then, you know, once you include sort of the labor cost in it as well, then i t becomes, the value proposition becomes particularly compelling. W e feel pretty good about where the product lineup is relative to competition. Again, given all those variables, taking all of them into account, we do think there's a large opportunity, as I've been saying all along, to drive into larger market adoption. I do believe there's a lot of elasticity of demand in the marketplace, and there is an opportunity for us to drive much further and expand these markets by, you know, by lowering some of these barriers to adoption as well. Got it. You know, as analysts, we have to put this in Excel, so we like to think of placements and pull-through. What's the theoretical max sort of pull-through look like on the box? And maybe actually a better way to look at it, you know, would be to point on the fact that it's upgradable, right? So you get these customer transitions over time happening. What does that steady state mix of the Chromium installed base look like in your head, in your mind? A couple of points to make. First of all, like our Chromium product lineup was never really constrained by the intrinsic throughput of the instrument. It's like, if you were to try to kind of go to town and run it around the clock, the actual pull-through would be massive. No one really has done that or does that. W e're talking about many millions of dollars per box. No one really does it. So that is not, not really a constraint, typically for people. Chromium Xo can also, you know, again, scale up, on a 3' gene expression assay really, really well. As far as what is the realistic kind of, use and, pattern of use of this, it's too early to tell. I t's been on the market for a day, so we'll kind of will have to see how it scales. But you're absolutely right. T he goal here is to get people new to single-cell, the ones that are maybe in the past have only been episodic kind of buyers, occasional sort of dabblers- and, maybe people who are sort of interested in single cell by virtue of collaborators, and actually become then, make them, right, actual sort of owners of this technology and have greater accessibility. The idea is that they would then progress and increase their utilization over time and upgrade ultimately to the full complement of our assays. So, we'll have to see whether, you know, what is the kind of the steady state sort of ratio of these boxes, these instruments, versus the other ones in the lineup. I would say that our overarching imperative is still the same as it was back when we first, you know, were going public When we had the vision, where this technology should really be ubiquitous, right? Ultimately, you want to make it accessible to every lab out there. The single cell is the fundamental unit of biology. We need to be looking at biology in this way. And, ultimately, every lab, every, you know, benchtop should have access to this technology. Whether that entails actually having an instrument on the benchtop or having some instrument nearby, you know, we'll see how that mix evolves, but, we certainly want to enable that if, necessary. Got it. Switching gears to GEM-X and the transition there. You talked about, you know, seeing both accelerated transitions in the quarter, but also a longer tail. Can you just sort of elaborate on those dynamics? What does the GEM-X adoption rate look like today in your customer base? And as we think about the transition curve, if you will, is it one where it's sort of relatively slow for a couple of quarters, and then we could see essentially sort of force an upgrade cycle via tweaks in pricing and sales force incentives and so on, towards the end of the year? Yeah. So, you know, we mentioned that on our Q2 call, that the initial cohorts of customers, the initial transition dynamic has been actually quite positive. S ome of it is driven by people, you know, having had experience with our launches in the past and being fairly ready to adopt after the initial experiment. Some of it is just a function of people being very happy with the results of GEM-X. T he feedback has been very, very positive across the board. W e have seen those initial sets of customers transition faster than we initially were modeling, and that, you know, it kind of manifested itself in the Q2 results that you saw. At the same time, it is funny that there's like a kind of a... Another dynamic is that some of these assays and some customer studies and projects are kind of sticky, and in the absence of you know some intervention, people are inclined to stick with what they have. In fact, I was just talking to a customer the other day who was gushing about GEM-X, and telling me that, like, every new project going forward is going to be on GEM-X for sure. And then I asked her, like, "What about the existing projects?" She's like, "Well, like I can happy to stick with Next GEM. That works really well too for things." And so there's a sort of a you know some amount of desire for continuity. We believe that it's, you know, ultimately it's best for customers, it's best for us, it's best for everyone to transition to GEM-X. And we will, you know, we'll help our customers do that as we kind of head towards the end of the year and, and beyond. Ultimately, the goal is to transition everyone to GEM-X. Got it. Switching to the competitive landscape search, you know, you've talked about customers trying out some of these instrument-free approaches and then returning to the 10x ecosystem. What are the reasons most often cited for switching back? And does this switching dynamic, at least in your experience, does it hold true for new to single-cell researchers as well? Or was that essentially the point of the Exo launch? Yeah. So, yeah, a couple of things. So in terms of why people come back to, well, t here's a general dynamic, like there are some customers out there, they just sort of try things because it's their job to evaluate technologies, and it's not even necessarily the case that they intend to sort of use things for. They just kind of want to evaluate and then go back to what they're used to. But you know, a lot of it is just driven by, like, the inherent superiority of the technology, right? Like we've said, that's universally acknowledged that the data quality is much better when you run Chromium, when you run 10X single-cell. The workflow is much better. Oftentimes, we hear, "Yes, we tried it. You can make things sort of work, but the workflow is just so much worse.", s o much easier to run, on 10x. The robustness, consistency of results, it's a huge, huge, benefit as well. And, people, you know, when it's fine to trial things, it's trying to kind of explore, but when you're actually running experiments, where you're intending for the data to go into publication, so you actually want to make sure you learn something from those experiments. People do tend to, prefer our technology very strongly because, again, it delivers robust results, best quality of data, best consistency, and, more straightforward, easy workflow. So fairly similar themes and dynamics that we've heard over the years, and the same still holds. And in fact, I would expect, and I have heard that dynamic has been stronger now with the launch of GEM-X, which improves on all those qualities and increases the delta with any other technology as well. As far as the new customers that are coming into 10x, into single cell, it's an interesting dynamic, because actually we believe that, in a way that it helps us because it does... Okay, the more sort of companies out there, especially if some of them are, you know, larger. They'll create a larger sort of megaphone and awareness of single-cell approaches. And as people enter the single-cell world, as they get more educated, for the same reasons that existing customers come back to us, we see and we expect more of that. As customers get more educated, they'll migrate to the best technology, which is our technology, as you go beyond just the initial exploration to start running kind of legitimate scale experiments. Because, again, best performance data, best workflow, best robustness. And of course, the ecosystem and the breadth of applications is totally unmatched as well. Got it. So one of the questions we sometimes get from investors is, you know, the dollar amount these emerging platforms have captured isn't particularly material yet, cumulatively. But, you know, given the pricing delta versus Chromium on a per-sample basis, even a relatively small amount of volume loss, so to speak, can translate into a pretty meaningful sort of top-line headwind for you, right? So first of all, is that a fair way to view things? And then how should we think about, you know, developments like this recent Scale Ultima collaboration for 1 million cell projects with a goal, t hey want to get to 100 million cells. Does that sort of create a near-term air pocket just from a sample availability basis? Yeah, so a couple of things. First of all, mathematically, yes, if you have a lower price per sample on another technology, the impact on revenue is going to be potentially, or the amount of revenue they're gonna get is going to be sort of smaller than we would have gotten for the same samples. But that said, t he impact of all these technologies is still not that materially different than what has been the case in the past. You know, again, they're still trialing, there are people engaging in them and so on, but sort of the fundamental qualities and still the cost equation, still come out in our favor, which and that dynamic is only increasing now because again, with the launch of GEM-X. As far as some of those, sort of, announcements around larger projects, there's definitely a lot of interest, just across the board in doing kind of scaling up single cell and running larger scale experiments. There is, there's nothing about any other technology, that's that delivers better scale. In fact, I would argue that ours delivers the best scale. We've built this platform from the beginning, this technology, to scale really well in terms of the number of, whether it's number of cells, numbers of samples, or the cost structure. Like, we feel very confident we have the best cost structure of any technology out there. There's definitely a lot of interest right now. There are some announcements. The question is, how much reality is there, like, in terms of actual tangible projects that happen? We're engaged in all of those conversations, and we feel really good about our position and our ability to deliver what the customers actually want from these kinds of studies. And again, when you're engaging in a particularly large study, then it behooves you, especially to go with the best technology. Fair enough. Where are you on the journey to, you know, $100 per sample? Is that sort of a one-year journey in your mind, or is it a three-plus-year process? W hen we last spoke, you'd called out the fact that, you know, you need to prepare not just the customer base, but you also need to prepare the company from a cost perspective before you can, you know, unveil a new price point. It's less about a splashy press release, it's operational sort of issues that need to be worked through. Just walk us through that sort of process and timeline. Yeah, so a couple of things I would say. Just, yes, we laid out the sort of long-term imperative, again, to give, primarily, really to give our customers a view that this is where the company is headed, this is where our product lineup is headed, so they can start conceptualizing these new types of experiments, maybe larger scale experiments or new types of experiments with an eye toward those becoming possible in the future, so that we can start kind of introducing, so there is a gestation of demand that can happen ahead of us actually getting to that price point. We explicitly did not give a timeline on that. It's going to be kind of a journey to get to that point. We gave a bit of indication that we're serious about this by launching GEM-X. Despite all the advantages of the product and despite all the innovations, we actually launched at a lower price per sample and substantially lower price per cell relative to the sort of standard throughput kits that were available on the previous generation of Chromium products. So it is a journey. It's not a, like, a one-year thing. It's definitely kind of a multi-year thing, and people will see us kind of march our way toward that point. I do wanna also emphasize that our technology fundamentally is designed to be able to reach those price points at really great margins. It's just a question of volume being there, and that's what we wanna make sure that sort of like our drive toward that point is matched with the commensurate volume that would be available in the marketplace. So we feel good about, you know, sort of, yeah, it's a journey. There's some steps we're taking, have already taken along this way. There's a lot more to come in the future, certainly over the coming years. Got it. Switching to Xenium, you lowered your forecast there to, f ifty units on average for the back half of the year per quarter. What gives you confidence that, you know, the weakness that you're seeing there is purely sort of macro-driven? Perhaps, is there sort of a phenomenon where there could be a natural transition from enthusiastic early adopters in spatial now giving way to, you know, the customers who need time to evaluate, you know, spatial biology as a modality before pulling the trigger? Yeah. So there's a couple of things I would say here. Like, so first of all, it's unambiguous that the macro environment has gotten worse, right? And when you look at, like, us bringing down the guide and why the numbers have gotten soft, the first order effect, you can see it, like, directly in our funnel. It's not that all of a sudden we don't have... like, opportunities have disappeared or something. You see it literally, the opportunities get elongated, like w here decisions get pushed out from customers, where parts of the funds that were previously available are no longer there, so they're scrambling to get more, just more approval levels, more friction than in every decision making. You literally see it with the opportunities that are currently in the funnel. So it's not a function of there being less interest, right? Certainly not for those opportunities. It's clearly a function of just a different environment, different budget process that's happening across our customer base. So that's why it's. I feel pretty confident in saying, like, the first order effect here is clearly kind of a macro environment. As far as, like, the general interest in spatial biology and those applications and the potential of the market, it's very hard for me to see how that could be the case, that there is, like, a fundamental diminution in that r elative to what we were seeing before. We're seeing tons and tons of interest from our customers, the same customer types. It's not that there was just sort of an early adopter kind of bolus, and that's it. There's like... it's kind of across the board. You know, there's lots and lots of interest. You know, I was at the AACR, American Association for Cancer Research, meeting back in April, and spatial biology was basically the theme of the conference. It's a big wave. It's hard to imagine how it's in any way, like, the dynamic is changing, that interest is changing in any way. Fair enough. Where does the multimodal cell segmentation capability that you added, and then obviously the 5K plex kit that you launched, y ou called out sort of substantial early traction there as well. How do they play into the Xenium consumables line on a go-forward basis? And on that, the Xenium Prime 5K launch, are customers now increasingly preferring plex over throughput in then in situ market? So, you know, maybe I'll kind of start with that last question first. F irst of all, what customers really want is great data quality. T hat's the first order, like, by far the most important thing, and that's where we made sure we optimize and develop the system that we built to make sure that it delivers great sensitivity, great specificity, great fidelity of the actual molecules that you detect, the right molecules. That is kind of non-negotiable. Secondarily, you need to be able to deliver the right kind of throughput as well, because if you have a high plex, but it takes you a month to run the assay, it's just not useful at all. The thing that in particular, we're proud of the five K capability, the five K launch, is that it delivers all of those, right? It delivers high plex, but delivers in the context of really great data, and in the context of good throughput. It's not as high as our lower plex assays, which is why we do believe that those, you know, they will coexist. Depending on customers' needs, you will either run more, you know, you sort of run different combinations of assays. They all have kind of their place. It's kind of too early to say about, like, what is the steady state, the equilibrium. Certainly, the multimodal cell segmentation, this is the product we launched at the end of Q1. It's been received really well, really nice results. You know, a lot of work went into it. 5K, like I said, has been received really well, so it's a nice now kind, sort of combination of assays. It does take longer to run 5K, and especially with the, you know, with the cell segmentation built in that. At the same time, every run, you know, ends up, we end up making more money every run, right? And so the ultimate effects on, on pull-through and such are, you know, we'll see where it all settles. But the overarching kind of trend across the product line, across Xenium, I would say, has been quite encouraging. These instruments, while there's a very wide dispersion in use cases and how people are using it, the trends, in general, have been quite encouraging, kind of across the board. Got it. Quickly on Visium, you know, I know HD is off to a clearly strong start, but what was interesting was SD demand also held up better than expected in the second quarter. Is this more related to just ongoing projects or customers essentially looking at non-overlapping use cases? And how does the mix evolve in steady state, in your view? Y eah, so we'll see. A gain, early stages of the launch. Some of it is for sure, people have ongoing studies, and again, these things are kind of sticky And so people kind of keep going with that. Another sort of element here is different use case because the price points are different, and certainly for some people, they would wanna see how HD first performs in the field and maybe from others before deciding to transition to HD, given the higher price point. I do think, given the feedback that we've been getting and how well HD works in the field, and the general kind of increase in the installed base of CytAssist, we do expect that ultimately people will be converting to the HD format. Fair enough. Quickly on the restructuring and with Mina taking over the Chief Commercial Officer role, how are you thinking about, you know, reprioritizing the focus on Chromium versus sending in more troops into battle to shore up Xenium demand? 'Cause it sounds like you had to pivot a little bit in the second quarter towards Xenium. Yeah, and also, you know, part of the point of doing kind of a restructuring and kind of doing all this, kind of stepping back and, like actually bottom-up architecting, this whole sales organization is so that we don't have to make those kinds of trade-offs, right? We're actually putting in place, a specialized team of, CapEx high, you know, high, dollar amount CapEx specialists who are going to be focused on, on those instruments and nothing else, and who have expertise in those instruments specifically. To push that, t hat's going to be very, very helpful in driving more Xenium placements. We 're like feeling really optimistic about the potential there. Then also it creates, like, there is the flip side, benefit as well, where it frees up the focus on the rest of the sales force, right, to focus on non-Xenium, and driving, adoption of, especially of Chromium. And just the general consumable pull through across the product lines. I t is, you know, we've learned a lot over, you know, over the years of kind of the sort of different elements of dealing with our fairly complicated product lineup right now, and incorporated all those learnings and all the imperatives we've kind of sensed across the years into, you know, again, stepping back and re-architecting our organization and putting into kind of a new, a much more what will be a more effective but more efficient way to scale going forward. Got it. Just a couple of cleanups on the guide, and then we'll get you out of here. 12% quarter over quarter growth on both instruments and consumables on the Chromium side of things. Was that in your mind, d o you think the franchise has finally bottomed and should grow more reliably going forward? And then on the Xenium instrument, sort of cadence, if you will, into the fourth quarter, is there enough sort of visibility in the funnel today that orders essentially exceed placements in 2Q, informing your view for the back half of the year? So maybe to comment on Chromium, certainly we were encouraged by the quarter-over-quarter step up, and again, much of it is a function of great feedback on GEM-X and kind of how people were just have an inherent trust in the products would deliver. So we do feel like, you know, the trajectory will, should continue going forward. That said, I t's too early to be calling, you know, with confidence, what's going to be happening in the upcoming quarters. We just wanna, right now we're calling what we're seeing and not projecting kind of beyond that. Obviously, in the long run, we have huge conviction in the single-cell potential and much more growth ahead of there, but w e just wanna be cautious. It's inherently going to be, you know, there's multiple dynamics at play here, and so we wanna be cautious in how we're kind of projecting out in the coming quarters. On the Xenium side, you know, we, like I said, the fundamental opportunity is there. We are going through, you know, reorganization right now and creating this additional bandwidth within our sales organization to drive Xeniums. That is creating some amount of, you know, sort of friction in the process, but, you know, we're taking all these sort of elements into account, as when we formulate the guide and our expectations for the year. Got it. Fair enough. It's a great place to leave it at. So thank you guys for joining me today. Thanks, Tejas. Thank you.