What happened
Shares of 10x Genomics (TXG +1.27%) have sunk 13.9% as of 10:56 a.m. ET on Thursday. The big decline came after the life sciences company announced its 2021 fourth-quarter and full-year results following market close on Wednesday.
10x Genomics reported fourth-quarter revenue of $490.5 million, a 64% year-over-year increase. It posted a net loss in the quarter of $18.4 million, or $0.16 per share. Although the company's bottom line reflected improvement compared to the prior-year period, it didn't meet the consensus Wall Street estimate of a net loss of $0.09 per share.
Investors were most disappointed by 10x's guidance for full-year 2022. The company stated that it expects revenue this year will be between $600 million and $630 million. The midpoint of that range represents 24% year-over-year growth. However, it fell short of the average analysts' revenue projection of $679.9 million.
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So what
10x Genomics CEO Serge Saxonov provided three reasons for the underwhelming revenue outlook in the company's Q4 conference call:
- The ongoing impact of the coronavirus omicron variant.
- Customers' use of consumables ramping up slower than in the past.
- Development of the company's new Xenium platform delaying the launches of other products.
While the genomics stock is getting hammered today, there are arguably silver linings with each of these headwinds. For example, the omicron variant appears to be running its course in the U.S. and in other countries.
Saxonov also stated in the Q4 call that the sluggish consumable use rates are coming from "halo" customers that don't own their own genomic sequencing instruments. He argued that while this dampens growth in the short term, it's great for 10x Genomics over the long term because it means that more customers are performing single-cell genomic analysis.
The acceleration of the development of the Xenium platform is a net positive as well, according to Saxonov. He said that the company is seeing the in situ market for sequencing molecules in their native tissue ramping up faster than expected. 10x has shifted its development plans as a result.
Now what
It's quite possible that 10x Genomics is merely experiencing some short-term pain that will lead to long-term gain. The second half of 2022 for the company should give investors a better sense of how 10x will perform in the future.
