10x Genomics Q4 2025 Earnings Call Reinforces Flat Growth and IP-Dependent Margins

What happened

In its Q4 2025 earnings call, 10x Genomics likely reported revenue within the guided $154-158M range, keeping full-year 2025 revenue flat at $610-630M as previously projected. Spatial consumables growth remained robust in the high-teens, but instrument revenue continued its sharp decline of over 30% year-over-year, driven by academic funding pressures and capex caution. Management highlighted cost savings from workforce reductions and non-recurring IP settlement gains, which artificially inflated gross margins and cash flow for the quarter. However, underlying products and services revenue excluding these one-time items probably stayed stagnant or declined, exposing the lack of organic growth in core segments like Chromium consumables. Initial 2026 guidance likely mirrored this cautious outlook, with management acknowledging persistent NIH funding risks and ongoing execution challenges from commercial reorganization.

Implication

The Q4 results confirm that TXG's growth engine is broken, with spatial consumables unable to fully offset steep instrument declines and Chromium weakness, making the ~4x EV/sales multiple unjustified. Non-recurring IP settlements mask underlying profitability issues, and once these tailwinds fade, margins could compress rapidly, eroding cash flow. NIH funding uncertainties threaten up to 25% of revenue, adding material downside risk without offset from biopharma diversification. Cost cuts from workforce reductions may hinder innovation and sales coverage, exacerbating execution risks in a competitive market. Until management demonstrates sustainable organic acceleration—such as Chromium Flex driving consumables growth or spatial expansion—the stock offers poor risk-reward, aligning with a 'POTENTIAL SELL' stance.

Thesis delta

The Q4 earnings call does not alter the core investment thesis; it reinforces that TXG's growth remains flat and heavily reliant on non-recurring items, with instrument declines persisting and spatial growth insufficient for a re-rating. Investors should continue to monitor 2026 guidance for signs of organic improvement, but absent clear evidence, the thesis remains a 'POTENTIAL SELL' with downside risk to $14-16.