It's always reassuring when your audience loves your product. And for investors in 10x Genomics (TXG 4.53%), that rings especially true. While Wall Street has been busy punishing the stock, which is down over 50% year to date, the total number of publications has skyrocketed. The number of papers using the company's toolset has more than tripled since the start of 2020 and is up more than 50% over the last four quarters.
The customer is always right
Maker of biotech instruments and associated consumables, 10x Genomics allows scientists to evaluate what is going on within a single cell. The level of resolution at a cellular level, coupled with the scale to routinely run a million single-cell experiments at a time, was unheard of before the introduction of the company's Chromium X instrument. And every quarter, management provides us with a key metric that gives us insight into customer sentiment -- the number of published academic papers that utilize its products. I like to use this number as an indirect measure of how frequently end users are utilizing its product as well as customer satisfaction. It's mind-blowing that this number has not stagnated despite a pandemic shutting down most labs worldwide for large portions of time since early 2020. And yet, there are over four times the number of publications using this innovator's toolset today than there were just two years ago.
Data source: Earnings transcripts. Chart by author.
You'll also notice a bump in the third quarter of 2020, likely a direct result of COVID-19 publications. This doubling of the number of overall publications within a single quarter tells you what you need to know -- that 10x Genomics is mission-critical for top-level science.
Take COVID-19 therapeutics, for instance. When companies were screening for monoclonal antibody targets, 10x Genomics' toolset significantly decreased the time needed to produce drug candidates. In fact, for one of the steps in the process of identifying potential targets, its tools were able to streamline that step from months to days. It's no wonder why all of the top 100 global research institutions and the top 20 global pharmaceutical companies use this innovative company's instruments.
10x continues to listen to and understand its customers. This is evidenced by its annual Xperience event. It is here that the company demonstrates how its customers are applying its technology to fuel their breakthroughs across all realms of medical science -- from neuroscience to oncology to immunology. By doing so, it creates huge network effects along with massive excitement for its products.
Customer feedback is even more valuable at the 10x Xperience event, which the company utilizes to determine its product launch cadence. The company has even altered its timelines to best align with customers' most pressing needs. The event provides valuable insights as to where the focus of its R&D budget should be so that 10x can best cater to the needs of the scientific community. It also creates a flywheel, as researchers learn about how all of the company's products can help them along their discovery journey.
The fine print
While publications are not everything, they are a proxy of excitement for the tools. And finances remain strong, with a gross margin of 85% in fiscal 2021. In addition, FY 2022 revenue guidance ranges from $600 million to $630 million, representing 22% to 28% growth over full-year 2021 revenue. With a steady stream of new products, its finger on the pulse of its customers, and a productive scientific community behind it, all signs continue to point up and to the right for 10x Genomics.
