Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the 10x Genomics Second Quarter 2025 Earnings Conference Call. I would now like to turn the call over to Cassie Corneau, Investor Relations and Strategic Finance. Kathy. Cassie, please go ahead.

Thank you, and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the second quarter ended June 30, 2025. If you have not received this news release or would like to be added to the company's distribution list, please send an email to [email protected]. 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 10x Genomics 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.

Thanks, Cassie, and good afternoon, everyone. Today, I'll cover our Q2 performance and share updates on what we're seeing across our customer base. I'll also walk through recent business developments before handing it over to Adam for the financial review and outlook. Total revenue for the second quarter was $173 million. During the quarter, we settled our worldwide patent litigation with Bruker on favorable terms and recognized an upfront payment of $68 million that we allocated to both operating expenses and license and royalty revenue. Excluding the portion allocated to license and royalty revenue, our second quarter revenue was $146 million. And as we continue our focus on cost management, we increased our cash balance by $40 million during the quarter, not including any settlement-related payments, which began in Q3. The current funding environment remains challenging and highly uncertain. In particular, the academic funding landscape remains marked by shifting policies, weaker grant disbursements and lack of clarity around future budgets, all of which are contributing to extended project timelines and cautious customer spending. We're staying closely aligned with our customers to support them and remain flexible as we all navigate the uncertainty. Against this challenging backdrop, the current quarter played out largely as we anticipated. We saw some upside from strong performance in China, driven in part by purchasing dynamics associated with the timing of tariffs. Even in this difficult environment, our business fundamentals are solid, and the key positive drivers of performance that we've seen recently carried through into Q2. We continue to see solid signs of underlying single-cell demand. On the consumables side, while revenue was down year-over-year, Chromium reaction volumes grew both year-over-year and sequentially, an indicator of increasing demand for our solutions and single-cell more broadly. This growth was driven by robust adoption of our latest products, including GEM-X Flex and Universal On Chip Multiplex, which have been instrumental in lowering cost barriers, enabling larger scaling and opening up new applications. Additionally, we saw meaningful year-over-year and sequential growth in spatial consumables revenue and volume. Within spatial, Xenium consistently serves as a strong driver of growth and performance. Utilization per instrument continues to grow, reflecting both a higher number of runs and increased spend per run. We're seeing continued ramp across both our earliest adopters and newer customers, and regularly receive strong feedback on Xenium's superior data quality, accuracy, robustness, throughput and ease of use. Together, these qualities continue to set Xenium apart as a best-in-class platform and are fueling broad adoption across both basic science and translational research. We continue to monitor customer sentiment closely as the funding environment remains highly uncertain. While the U.S. academic and government funding landscape has not deteriorated further, we also have not seen meaningful improvement in customer behavior. Across many institutions, spending remains conservative and capital equipment spending continues to be a significant challenge, both in the U.S. and more broadly around the world. Customers are facing increased scrutiny on purchases, longer approval timelines and in many cases, new restrictions on capital spending and staffing within their labs. These challenges are leading to delays in project starts, scale backs in both ongoing and pilot study designs and heightened price sensitivity. With open proposals around next year's federal funding and institutional budgets still in early stages, we expect these uncertainties to continue impacting customer spending behavior until there's greater clarity on policy direction and actual distribution of funding resources. As customers work through evolving budget timelines and operational planning cycles, we're partnering closely to help them navigate this environment and support continuity of their research. And despite this backdrop, we continue to hear clearly that our tools are essential to scientific progress. Our conversations with customers reinforce our conviction that single-cell and spatial are the most promising areas of growth in life science tools, with researchers increasingly shifting both mind share and funding towards these areas. And as researchers increasingly invest in these technologies, we are prioritizing our efforts to advance our technology leadership, unlock new high-value applications and ensure the long-term financial strength of our business. Looking across our product roadmap, our recent and upcoming launches are continuing to resonate with customers. During the quarter, we began shipping Visium HD 3 Prime, which expands the capabilities of the Visium HD portfolio by extending it to more applications. We also launched HD cell segmentation capabilities, which enable researchers to assign transcripts to individual cells with precision, simplify data analysis and uncover new biological insights. In parallel, we're also preparing for the release of several important innovations across spatial, including Visium HD XL and Xenium RNA plus protein, which will further enhance multiomic spatial analysis and unlock deeper insights from complex tissue samples. Turning to single-cell, I'm really excited about Flex v2, our new plate-based Chromium Flex product that we expect to launch in the near term. Built to dramatically increase throughput and streamline workflows, Flex v2 provides ultimate flexibility for customers when designing their experiments. This next-generation Flex is an important step as we continue driving lower costs across the full spectrum of studies from small to large, while maintaining the highest quality data. Flex v2 is designed to be the ideal method for large-scale perturbation experiments and biopharma applications from early target discovery to clinical trial integration, delivering higher cell throughput, more flexible workflows, FFPE sample compatibility and the quality needed to train and validate AI models. In addition to the launches planned for this year, our team is hard at work on future products that will further expand the capabilities of our platforms. We are excited about our roadmap for the coming years and the opportunity to deliver ever more value to increasing numbers of customers. As we look at the broader opportunity, we continue to believe that both single-cell and spatial are in the early stages of the adoption curve, with large-scale, high-impact applications gaining traction across both platforms. In particular, I'd like to highlight two very exciting trends, large translational studies using Xenium and large-scale single-cell perturbation experiments to train AI models and build virtual cells. As an emblematic example of the first trend, we recently announced a collaboration with the Genome Institute of Singapore on the TISHUMAP initiative, aimed at accelerating the discovery of drug targets and biomarker signatures in cancer and inflammatory diseases. This study will use Xenium to enable high-resolution spatial mapping of gene activity and cells with intact FFPE tissue samples paired with detailed clinical data. Its goal is to analyze thousands of samples to discover clinically relevant biomarker signatures and therapeutic targets. On the single-cell front, the emergence of increasingly powerful AI methods that are hungry for high-quality data is accelerating researchers' interest in running larger and larger single-cell perturbation studies. For example, this quarter, Xaira Therapeutics used our Chromium Universal 5 Prime assay in its industrialized Perturb-seq workflow to produce the largest publicly available genome-wide Perturb-seq data set to date, capturing transcriptional responses across 8 million perturbed cells. This quarter, we also extended our partnership with the Arc Institute to support the Virtual Cell Challenge, which is a worldwide competition to incentivize the development of powerful computational models of biology. The challenge has established a rigorous evaluation framework and uses our Chromium Flex assay as the standard. The work being done right now is clearly just the beginning. Virtual cells and large-scale single-cell experiments represent the next frontier at the intersection of AI and biology. To understand biology, to understand health and to understand disease, you need to understand how cells work. If we can model cells and perturbations computationally using AI, we can guide the discovery of new drugs, simulate patient responses and reduce the experimental trial and error that defines so much of biology and drug development today. Finally, we remain focused on cost management and cash generation. We have a strong balance sheet and the resolve to protect it. Across our business, we continue to carefully evaluate costs to ensure operational efficiency while also continuing to invest in long-term growth. With our strong balance sheet, we have the resources to pursue our strategic priorities and continue to fuel innovation. To that end, as part of our strategy for continued innovation within single-cell, we announced earlier today the signing of a definitive agreement to acquire Scale Biosciences. The acquisition brings us key inventions and technologies that will accelerate innovation across our Chromium platform. It enables us to broaden access to single-cell analysis by making it more powerful, more affordable and more accessible to researchers worldwide. By integrating these technologies into our broader roadmap, we're strengthening our ability to support larger scale applications while continuing to deliver high-quality multiomic data that researchers expect from us. We're excited by the strategic value of this transaction and its benefits to the scientific community. Adam will share more details on the financials. Our conviction in the potential of single-cell and spatial biology is stronger than ever. As we move forward, we remain focused on staying closely aligned with our customers, executing with discipline and continuing to invest in our technologies to capture the large opportunities ahead. With that, I'll turn the call over to Adam.

Thank you, Serge. I'll start by reviewing our financial results for the 3 months ended June 30, 2025, and will then provide further details on our outlook for the third quarter. All figures and growth rates provided will be on a year-over-year basis, unless otherwise noted. As Serge mentioned, the quarter unfolded largely in line with our expectations. Total revenue for the second quarter was $172.9 million, up 13%. Excluding the license and royalty revenue from the settlement, revenue was $145.6 million, down 5%. Total consumables revenue was $122.2 million, down 1%. Chromium consumables revenue was $85.8 million, down 9%, primarily driven by lower average reaction prices. Spatial consumables revenue was $36.4 million, up 24%, primarily driven by Xenium consumables revenue. Moving on to instruments. Total instrument revenue was $14.5 million, down 39%. Chromium instrument revenue was $5.7 million, down 35%, driven primarily by lower average selling prices. We implemented strategic discounts during the quarter as we partnered with customers who were navigating CapEx constraints. These discounts drove broader instrument adoption and an 11% increase in Chromium placements year-over-year. Spatial instrument revenue was $8.8 million, down 42%, driven primarily by fewer instruments sold. Services revenue was $8.5 million, up 47%, primarily due to an increase in Xenium service plans. Looking at our revenue by geography, ongoing CapEx headwinds continued to persist globally. However, solid consumables performance contributed to sequential improvements in most areas. Excluding settlement impacts, Americas revenue was $78.9 million, down 15% from the prior year and up 7% sequentially. EMEA revenue was $34.7 million, down 7% from the prior year and up 9% sequentially. APAC revenue was $32 million, up 41% year-over-year and down 1% sequentially. As Serge mentioned, APAC benefited from a temporary pull forward in purchasing activity in China, as customers accelerated orders ahead of potential tariff changes. We estimate the revenue impact from that pull forward was approximately $4 million. Turning to the rest of the income statement. Gross profit for the second quarter was $125.1 million compared to $104.2 million for the prior year period. Gross margin increased to 72% from 68% the prior year, primarily driven by higher license and royalty revenue. Excluding settlement impacts, gross margin was 67%. Total operating expenses for the second quarter decreased to $95 million compared to $146 million for the prior year period, driven by gain on settlement. Excluding settlement impacts, operating expenses were $135.7 million. Operating income for the second quarter was $30.1 million compared to an operating loss of $41.7 million in the second quarter of last year. Excluding settlement impacts, operating loss was $37.9 million. Net income for the period was $34.5 million compared to a net loss of $37.9 million for the second quarter of 2024. Excluding settlement impacts, net loss was $33.5 million. We ended the quarter with $447 million in cash, cash equivalents and marketable securities. Turning to our outlook for the third quarter. We expect revenue to be in the range of $140 million to $144 million. This outlook takes into account approximately $4 million of revenue in China that was pull forward from Q3 into Q2 ahead of potential tariff changes. Excluding this pull forward, we expect Q3 revenue to be broadly in line with Q2 revenue, given the continuation of cautious customer spending behavior and ongoing capital equipment spending constraints. As we announced earlier today, we signed a definitive agreement to acquire Scale Biosciences for upfront cash and stock consideration of $30 million, plus contingent consideration that could become payable upon the achievement of certain milestones. This acquisition is subject to customary closing conditions. As Serge mentioned, we are excited about the strategic value of this acquisition, as Scale brings key inventions and technical capabilities that augment our innovative foundation within single-cell. We do not expect this transaction to have a material impact on our revenue or operating expenses for the remainder of 2025. Our balance sheet remains strong, giving us flexibility to continue executing on our strategic priorities while investing in innovation and long-term growth. We believe we are well positioned to navigate uncertain market conditions and remain committed to staying agile and responsive as the environment evolves. With that, I'll turn the call back to Serge.

Thanks, Adam. Before we open it up for questions, I'd like to make a note of appreciation to our customers. The last 6 months have been a particularly trying time for many of you. While many of your challenges remain unresolved, your work and continued perseverance are an absolute inspiration to us at 10x. Progress in science is the ultimate public good. So much new knowledge and so much potential to improve the human condition is coming within our grasp. Your work is more important than ever. We will continue to root for your success and support you in any way we can. And to our team, thank you. The current environment has been incredibly challenging. But it is during times of adversity that you can really tell what the team is made of. And by that measure, I couldn't be more proud of all of you. You have stayed focused, creative, and relentless in the pursuit of our mission, regardless of what has been thrown at you. Remember too, that times of stress build strength. This is not the first time we have faced adversity, and I'm sure it won't be the last. Our team has only gotten stronger through time. I have more confidence than ever that we will solve whatever challenges lie ahead. We have been through a lot together, but there is so much more to do. After all, we're just getting started. With that, we will now open it up for questions.

Your first question comes from the line of Patrick Donnelly with Citi.

Serge, maybe one for you just on the backdrop. I mean it sounds like in the prepared remarks, still a little bit constrained, not surprising there, particularly on the academic research side. Can you just talk about how the quarter progressed on that front, what the conversations look like? Obviously, a lot of volatility on the headlines around things like the NIH and what that's going to shake out to be. Did you sense any improvement as the quarter went? Where are we on the visibility side at this point? Just curious what you're hearing from customers and what the right expectations are on that front as we move forward. And again, if the certainty on the budget as we get closer to that will help a little bit or just how those conversations progressed during the quarter would help.

Thank you, Patrick. Over the past six months, the environment has certainly been dynamic. Overall, Q2 unfolded similarly to our expectations from the last call. There have been various events, and I believe that compared to three to four months ago, customers are showing more optimism due to some positive developments. However, things have remained stable overall. Customers have been very cautious about their spending and grants, as the actual disbursement of funds has been slow. Budgets are still in the early stages, and their future is uncertain. Additionally, there has been a continuous stream of news about various issues. For instance, just last week, it seemed that the NIH would not allocate any funds for an indefinite period, although that policy was reversed within the day. Nonetheless, this situation does not instill confidence about the future. There are ongoing discussions with universities, proposals for multiyear grant changes, and other matters. While there are positive indications of bipartisan support for the NIH— which was unclear earlier—uncertainty still looms as we look ahead. We'll need to monitor how this evolves, and we anticipate that Q3 will progress similarly to Q2.

Your next question comes from the line of Dan Arias with Stifel.

Serge, on the Scale deal, what is it that made this the right move and the right time for the move? And for customers that are looking for the lowest cost per sale as a part of a big study, will it be the Chromium kit or the Scale kit that best serves that need? How are you going to position these products for your customers?

Thank you, Dan. Looking at the strategic rationale, we've often mentioned that there is significant potential in single-cell technology, especially as we focus on reducing costs and increasing scale. Over the past year and recent quarters, the opportunity is accelerating, particularly with the rise of AI and the growing interest in developing larger biological models using single-cell methods and conducting extensive perturbation screens. Our vision has always been to scale up single-cell applications, make them more routine, and reduce costs. This is the main reason behind the acquisition, as it will help us implement that strategy. The acquisition itself is primarily about enhancing our technological capabilities for existing and future products. Historically, we've been successful in identifying valuable technologies through acquisitions and creating outstanding products that customers appreciate. We expect the same outcome here. Regarding our product portfolio, we will continue to offer some of the Scale products to ensure our current customers are satisfied. However, we are particularly enthusiastic about integrating this new technology into our offerings and providing even greater value to our customers.

Your next question comes from the line of Kyle Mikson with Canaccord.

Congrats on the quarter and the acquisition. Congrats again on Scale as well. Just to follow up on Dan's question about the acquisition. Sounds good about your perspective on why you did it. But is this deal like an instrument-free solution kind of an admission that the Droplet-based architecture is not capable of scaling enough to address the needs of future single-cell projects, large projects? And then secondly, when will this contribution from Scale become more material? Could that become like a dominant technology in your portfolio over time?

To address your first question, I would say that's not the case at all. We have strong confidence in the value of having instruments integrated into workflows. They provide high precision, excellent workflow, and robust data quality, all aspects that our customers appreciate in our products. Looking at the market, instruments have not posed any barriers for single-cell applications. We believe the real value lies in integrating these technologies with our existing portfolio. The technologies complement each other well, which will help us advance Scale technology and the innovations associated with it. In terms of revenue impact, we anticipate the near-term effects will be minimal. Overall, our vision is to integrate these capabilities into our broader portfolio.

Your next question comes from the line of Doug Schenkel with Wolfe Research.

This is Madeline Mollman on for Doug. Single-cell consumables revenue was down in the quarter, but reactions were up. Can you give us any color on how you're thinking about the pricing headwind related to the new lower-cost product roadmap that you rolled out? And how long you think it will take you to work through that? And then could incorporating the Scale technology into the portfolio exacerbate this?

Yes. So thanks, Madeline. So let me maybe just kind of zoom out a little bit and give context for the product transitions because we have multiple going on, on the Chromium side. First of all, there is a transition from a Next-GEM architecture to GEM-X, and that's well on its way. By the end of the year, we should be just about finished with that. And that's been going well. Customers are responding really well to GEM-X and all the great benefits from that architecture. We also have other products that we launched last year that around Flex and around on-chip multiplexing, which has multiple dynamics kind of operating there. Many are opening up new use cases and new customers. So that's obviously accretive. For sure, some customers are converting from higher-priced products to these new solutions. And some customers will never convert because they need the features in the other products. And so we do see those dynamics kind of playing out in concert. And fundamentally, we believe that lower prices, like I've always said, lead to higher volumes, and there's a tremendous amount of elasticity here in this market, in these fields, but this happens with a time lag. And overall, kind of high level, the price per reaction needs to be in the hundreds of dollars rather than thousands to really kind of unlock a lot more experiments and a lot more samples. And that is what we're seeing. I would say that in general, the trends we're seeing are fundamentally encouraging, seeing the growth in reaction volumes. And that is especially given the challenges in the macro environment. And I would also say because of the challenges in the macro environment, actually getting to a net positive revenue net growth would take longer than it might otherwise have in the absence of those challenges. But overall, the fundamental trends are positive, and we do expect this to drive more growth, both ultimately in reaction and revenue.

Your next question comes from the line of Mason Carrico with Stephens Inc.

Could you talk about the maturity or ramp of the Xenium sales force in Europe? How have you seen the sales funnel and conversion rates of new opportunities evolve over the course of 2025 now that, that team is in place?

Yes, Jason. That's a good question. The team is now fully assembled, having recently welcomed new members. This completes our commercial reorganization. The Xenium CapEx team was the final piece to establish, especially in Europe. Everyone is now on board, and the new hires are quickly getting up to speed. We're observing a marked improvement in execution compared to previous periods, thanks to the focus and expertise within the company. Our funnel management and opportunity management processes are functioning well, but this is occurring in a more challenging CapEx environment. We are consistently adding more opportunities to the funnel, yet closing these opportunities is taking longer. The primary delays stem from funding issues, where customers face unexpected restrictions or need to seek additional funds, leading to increased scrutiny of their budgets. This dynamic is evident. We are seeing better execution now that we have a dedicated team, and there continues to be strong enthusiasm for the platform and positive feedback from customers. These factors give us significant optimism as we navigate this environment and position ourselves for growth once the macro challenges are behind us.

Your next question comes from the line of Dan Brennan with TD Cowen.

This is Kyle on for Dan. I wanted to go back to Scale again. Maybe on the technology side specifically, can you sort of just talk about what you saw as a unique attractive factor of the Scale technology versus maybe some other single-cell assets that are out there? I guess what's so unique in your view about Scale? And how much incremental R&D do you think needs to go into that platform?

So Scale, like I said earlier, we do a very thorough assessment of the technology landscape out there. We have a track record of, I think, being successful in our assessments and in determining what technologies have particular promise and how they can be built into awesome products. In the case of Scale, there's really some great inventions, really foundational inventions around combinatorial indexing, around quantum barcoding that make that company stand out that we're really looking forward to bringing into our portfolio. As far as R&D expenses to develop, integrate these products. I think this fits really nicely into our existing infrastructure and into our existing innovation engine. So we don't expect there to be any material incremental costs.

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

I want to dig into a little bit some of the geo comments you made. You called out $4 million pull forward in China. Just always a question of how do you size that? How do you estimate that? What makes you confident it's not a little bit less, a little bit more? And then beyond that, China overall, even if you back that out, still did really well, one of the better quarters you've had there for a while or I think better than any quarter you've had since 2023. So just what are you seeing there that's spurring this recovery?

Yes, Mike, thanks for the question. Over the last few years, we've discussed our efforts to change our go-to-market model in China. We've taken significant steps to get closer to our customers, adjusting our relationships with service providers and distributors, and altering our business structures. This strategy has proven effective. We're now closely aligned with our customers and have a strong understanding of their decision-making processes and inventory levels. We've received feedback indicating that customers want to receive products before any potential tariffs take effect. We believe that the $4 million estimate is solid, as we have good visibility into the end market. Additionally, China is performing well, largely due to the changes and efforts made by our team, which is doing an excellent job. The market conditions there are also favorable compared to a couple of years ago.

Your next question comes from the line of Luke Sergott with Barclays.

This is Salem Salem on for Luke. Just one on royalties from Bruker. Could you just talk about the structure of those royalties and the settlement? What's the percent or dollar amount that you'll get paid per unit of sales on that side, whether it's instruments or consumables and which instruments and consumables there, if you could clarify? Are there any potential minimum or maximum payment thresholds as well? And any other dynamics there would be helpful. And then, kind of lastly on China, just piggybacking off of Mike's question there. Wondering if you expect this type of strength going forward into Q3 and Q4.

Yes. Let me address the question about Bruker first. While I can't provide specific details about rates, I can share some high-level information about the structure and its impact on the profit and loss statement. We're looking at a $68 million cash payment, which will be distributed as $17 million over four quarters. It's important to note that the cash reflected in Q2 does not include the first installment, which is due in Q3. In Q2, we recognized $27.3 million of that $68 million as revenue, achieving a 100% margin. That’s why we included an adjusted gross margin figure for clarity. Additionally, we recognized nearly $41 million as a gain on settlement, which effectively provides a credit to operating expenses. We shared an adjusted figure to give you a better view of the baseline operating expenses. Regarding Q3, our guidance does not factor in ongoing royalties, which is at the core of your inquiry. This is specified in our financial reports under license and royalty revenue, allowing for visibility into one-time effects as well as where ongoing royalties from the Bruker settlement and other activities will be noted. As for your question about China, we saw nearly 40% growth there, even after excluding the customer-driven increase related to tariffs. The team is performing exceptionally well and competing effectively in those markets. However, due to the early acceleration in Q3, our overall guidance is lower, particularly for China. Serge mentioned that we believe this is a one-quarter issue related to inventory, and we expect the business to recover to its previous strength as we move into Q4.

Your next question comes from the line of Lu Li with UBS.

I wanted to know if you can comment a little bit on the order book for the quarter. What order pattern have you been seeing, and what visibility do you have into the second half?

Yes, I can take that. I mean I think for our business, given that we're providing quarterly guidance, I can speak to you about what we're seeing here in Q3. At the simplest level, we have confidence here as we're whatever, 5 weeks into the quarter, providing the number that we did. We're seeing mostly really a continuation of where we were in Q2. So continuing to see really good strength in spatial consumables, continuing to see really nice reaction volume growth as it relates to the Chromium consumables business and ongoing pressures are persisting on CapEx, more pronounced in the spatial side of things with the higher-priced Xenium analyzer, but also even on Chromium. And it's one of the things that we commented on in my script earlier was just the discounting and the work that we were doing in Q2 to get Chromium instruments into the hands of customers who are really excited to get kind of into our single-cell ecosystem. But yes, I think at the simplest level, order book is looking consistent with the guide that we provided.

Your next question comes from the line of Matt Larew with William Blair.

This is Jacob Krahenbuhl on for Matt. Maybe just a more high-level one on the macro. It sounds like things have held fairly stable since last quarter in terms of the demand and funding environment. Maybe on margin, slightly better, but just wondering, as you've talked to customers in the field, what have you learned or heard from them that could provide the biggest unlock in spend? Is it just more clarity on the NIH budget for 2026, a release or pickup in certain paused funding or grants, maybe a green light from department heads on new project starts? And I mean, what do you think a realistic timeline for an unlock like this is in the market? And what are customers telling you that they're kind of assuming for their budgets next year?

Yes. We are receiving various feedback from customers based on their location and the specific institutions they represent, each facing distinct challenges. If I summarize the main points, I would highlight two key areas. First, there is a significant need for clarity regarding next year's budget, as many are eagerly anticipating this information, which could have far-reaching implications. Second, while there has been a slight improvement in the overall mindset, the main obstacle remains the timely disbursement of funds. The actual transfer of money to recipients has been delayed in numerous cases. Seeing financial support reaching customers would be a crucial factor that could encourage them to start spending again.

Your next question comes from the line of Subbu Nambi with Guggenheim.

This is Thomas on for Subbu. You're a quarter into the headcount reduction and a few quarters removed from commercial restructuring. Now you have the Scale acquisition. Can you just talk about how you feel about the base business at this point heading into the second half? Is it where you want it to be? Or are there more cuts coming? And then what will 10x look like exiting this year or maybe into 2026?

Yes. So there's multiple elements to the question. So first of all, touching on the commercial restructuring, yes, we feel really good about where the team is now. We've made the structural changes. We have filled the roles and folks have been ramping up quite nicely that have joined more recently. So overall, when we look at the business, we have really strong signs of just the fundamentals like I talked about in terms of Chromium consumable reactions, spatial consumable reactions, and spatial consumable revenue. Those are all good, strong indications for the future. The feedback from customers is consistently positive, both in terms of the performance of the products, their excitement over the products and the new applications that they see emerging that require more and more of these products at larger scale. So those fundamentals are strong. And as we've been saying now, last quarter, this quarter, we've had a really strong focus on cost and cash management and are in a really good position now with our balance sheet and our spending profile. The team has done a really great job of this. We generated cash last quarter and feel really good about the trajectory going forward. And of course, we'll continue to be really focused on cost discipline because the environment is still very uncertain. But from where we sit right now, I think we're in really good shape.

Your next question comes from the line of Rachel Vatnsdal with JPMorgan.

This is Jaden on for Rachel. Just a quick one for me. Digging into the placement assumptions, what are you assuming for placements between Visium, Xenium and Chromium next quarter and the full year, even if it's just higher-level comments? And what are the drivers on each of these franchises, that would be really helpful.

Sure. I can take that one. I mean the reality is we don't break those two out specifically. What I can tell you, though, as it relates to Q3, given what we've embedded in guidance, is that from an instrument perspective, from a spatial instrument, given that's where your question lies, we're anticipating that Q3 is going to look fairly similar to Q2. And I guess even though we haven't given a Q4 guide, we don't have any reason to believe that Q4 would look meaningfully different from where Q3 is. Other than the fact that there typically is an uptick from Q3 to Q4 in CapEx. Again, not something in this environment, we've got great visibility into at this moment, but that has been more of a historical pattern. The CapEx environment continues to be challenged. But as Serge has mentioned, we've got a fantastic Xenium sales team that's out there selling. They've got really good robust disciplined pipelines. We continue to work those things through. So we feel very confident that we're out there competing for each of the placements out there in the market, and we'll continue to be aggressive to ensure we're winning business.

Your next question comes from the line of Tycho Peterson with Jefferies.

This is Lauren on for Tycho. Congrats on the quarter. Going back to the discount on Chromium during the quarter that you talked about, do you see maybe some visibility into kind of 2H and into 2026 if you're going to be continuing this discount or how the price overall is going to look evolving over time?

Yes. So in terms of the discounting on Chromium instruments, really, this is a function of the environment we're in, right? Customers have been dealing with all kinds of challenging challenges when it comes to purchases, especially around CapEx, all kinds of new limits, all kinds of new scrutiny on buying instruments. And we have been working creatively with our customers to allow them to buy instruments as long as there is also a material commitment in reagents to go along with it. And we do expect that as long as this kind of environment continues, we expect to keep working with our customers to keep doing that. And I also would want to emphasize that all of these kinds of interactions and deals are ultimately accretive to 10x as well. So it is in our economic interest as well to keep pursuing the strategy.

That concludes our question-and-answer session. Ladies and gentlemen, this will conclude today's call. We thank you all for joining. You may now disconnect.