Good afternoon, and welcome to 10X Genomics' first quarter 2026 earnings conference call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. To ask a question at this time, you'll need to press star, followed by the number 1 on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Cassie Corneau, Senior Director, Investor Relations and Strategic Finance. Please go ahead.

Thank you, and good afternoon, everyone. Earlier today, 10xGenomics released financial results for the first quarter ended March 31, 2026. 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 investors at 10xGenomics.com. An archived webcast of this call will be available on the Investor tab of the company's website, PenexGenomics.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 Saxonoff, our CEO and co-founder, and Adam Taich, our Chief Financial Officer. We will host a question and answer session after our prepared remarks. We ask analysts to please keep to one question so that we may accommodate everyone in the queue. With that, I will now turn the call over to Serge.

Thanks, Kathy, and good afternoon, everyone. We had a really nice start to the year, with solid sales momentum, a step change advance in our product roadmap, and strong execution across the business. Revenue for the first quarter was $151 million, representing 9% growth over Q1 2025 when excluding the non-recurring settlement revenue in the prior year period. In single-cell, we again saw double-digit growth in consumable reaction volumes, driven by Flex Apex. As we have expected, and as we have been seeing over the past several quarters, our new products with more accessible pricing have been unlocking new ways of single-cell demand. Similarly, in spatial, we again delivered double-digit growth in consumables revenue, which was driven by Xenium momentum. Spatial biology remains in the very early stages of adoption, and the vast majority of the opportunity is still untapped. The biggest highlight since our last call is, without a question, the launch of our new instrument platform, ATERA. ATERA represents the most significant product introduction in our history. among many other benefits it enables for the first time spatial whole transcriptome analysis with single cell sensitivity at scale we believe atera is poised to redefine how biology is measured and understood we went into the launch expecting a very strong response from researchers in the broader scientific community and what we have heard so far has been extraordinary Before I talk about what ATERRA is and what it does, I want to spend a moment on why we built it. The central challenge of biology is that it's very complex. It is complex in just about every system, in just about every sample. Biological systems comprise massive numbers of molecules and cells interacting with each other in a bewildering diversity of ways. Addressing this complexity requires tools that can measure biology at large scale and high resolution. And historically, technologies available to researchers have lacked the necessary scale and resolution. Furthermore, the tool set of biology has been very fragmented. We have used one set of technologies for analyzing tissues, another for measuring cells, and yet another for working with molecules. But that's not how biology works. It works by specific cells expressing specific molecules in specific locations within tissue. That has always been the promise of spatial biology. It represents the convergence of the different tools for analyzing biological systems. It entails measuring molecules, cells, and tissues together, preserving the full context at massive scale and incredibly high resolution. However, until now, despite many advances, spatial biology has been fundamentally constrained by the limitations of existing technologies. Researchers have been forced into frustrating trade-offs between the critical attributes they care about across throughput, specificity, sensitivity, scale, performance. Again, in one area, they had to compromise in others. We built ATERRA to address all of these trade-offs and to unlock the full potential of spatial biology. ATERRA is the product of a long-held conviction about where biology needed to go and years of deliberate work to get there. It is poised to become the large-scale discovery engine, whether for basic research, AI-driven science, or translational applications. We believe that now spatial will increasingly become the default approach for analyzing biological samples. It is important to appreciate that Atera brings together a set of capabilities that until recently were not even thought possible for a single platform. It delivers very high levels of plugs, including whole transcriptome, and sensitivity comparable to Flex Apex, the gold standard for single-cell analysis. Enabled by refined probe chemistry, it delivers high specificity and data quality and non-negotiable for researchers and their collaborators to be able to trust the data. And ATERRA delivers a step change in throughput, with a single instrument capable of processing up to 800 whole transcriptome, one centimeter squared samples per year, or more than 3,000 if using the targeted ATERRA select panels. This increase in throughput now enables large cohort studies at a pace and scale that were not previously feasible. Equally important is the user experience. Atera builds on a proven Xenium workflow, which is already highly robust, widely adopted, and well-regarded by our customers. Atera runs on standard, off-the-shelf class slides, which makes the platform inherently scalable across labs and experiments and enables distributed sample collection. Using standard slides also allows customers to access archived samples from biobanks and other repositories. In addition, Atera uses a universal sample preparation approach that works across tissue types, supporting different sample types on the same slide to provide extra flexibility and scalability. We have also developed powerful computational and software tools so that customers can effectively work with the data. To handle spatial biology at this unprecedented scale, the most computationally intensive part of the workflow, image processing, is performed directly on the instrument, driven by high-performance on-board GPUs and optimized algorithms. Data is processed efficiently at the source and translated into actionable biology in real time. From there, customers have the flexibility to use their own on-premise infrastructure or leverage our 10x cloud platform for analysis and collaboration, ensuring that Atera is not just generating more data, but also making that data easy to use. We built Atera to be a long-duration, upgradable platform, and we intend to continue delivering new capabilities over the years ahead. The roadmap on the platform includes workflow automation designed to enable true sample-in, data-out capability, protein multiomics, in-situ sequencing for spatial mutation and variant detection, and continued development over our 10x cloud platform for multi-sample analysis and collaboration. As I mentioned, the early customer response has been extraordinary. We had high expectations coming into this launch, and the reception has exceeded even those expectations. One customer told us that this was the largest technology leap they'd seen in their career. Another called Ateros Capabilities v. Holly Grail. Others, to convey their enthusiasm, have used the kind of language that would not be appropriate for me to repeat in this forum. And this enthusiasm is translating directly into demand as we take pre-orders ahead of initial shipments expected in the second half of 2026. Even in a challenging capital equipment environment, customer conversations have immediately centered on how to incorporate ATERRA into their research programs, not whether to buy it. In many cases, the discussion starts from the assumption that this is a must-have platform and quickly moves to multi-year programs, large cohort studies, and the scale of inside generation that is now within reach. ATERRA fundamentally expands our addressable market across three high-growth segments. In discovery research, initiatives like the human cell atlas can now map entire organs and tissues at unprecedented scale and speed. In translational research, clinical cohorts can be comprehensively characterized to understand patient response patterns, something our collaborators are already validating, as shown by Carl June at AACR. And critically, large AI models represent an entirely new market where Attero's billion-cell-per-year capability enables creation of virtual models at a new level of scale and sophistication. Each segment unlocks distinct applications while reinforcing our position as the essential platform for spatial biology. As we have been saying for some time, we believe AI represents a significant and structural tailwind for our business. The potential to transform our understanding of biology is enormous, but progress depends critically on generating vastly more of the right kinds of data. From the beginning, we have built our platforms precisely for that purpose. Products like Flex, Apex, and now Atera exemplify this imperative, and are seeing intense interest from customers building AI models of biology. the partnerships we have announced over the past year reflect and reinforce these trends including the champ zuckerberg initiative on the building cells project the arc institute around the virtual cell challenge and xyre therapeutics to build the largest perturbation data set ever reported and just last month we announced a partnership with bioptimus and the ai focused biotech company bioptimist is building stellar a global initiative aiming to profile up to 100 000 patient tissue specimens across three continents the goal is to build a data backbone for a world model of biology the initiative is starting this effort on our zini platform and plans to expand to atera over time and just last week the chan zuckerberg biohub announced its new 500 million virtual biology initiative. The goal of the effort is to build AI models that can accurately simulate cells and tissues in silico. This initiative is an incredibly ambitious undertaking that would not have been conceivable even a few years ago. Now, because of progress in AI and in technologies for measuring biology, there is a path to that vision. There's increasing evidence the scaling laws applying biology just like they do in other domains what we now need is many orders of managing more data specifically of molecules cells and tissues across vast numbers of contexts this initiative is galvanizing the broader scientific ecosystem with an aligned view that this direction is the next grand challenge for advancing science and medicine analogous to the human genome project and its role in catalyzing the genomics era Taken together, these programs are exactly the type of large multi-year initiatives our single-cell and spatial platforms are built to enable. AI is poised to fundamentally reshape how science is done and large-scale high-quality biological data sits at the center of that transformation. As AI models improve, we expect an exponential increase in the demand for the kind of data our technologies produce. This reinforces our conviction in the importance of what we're building and the vast size of the opportunity ahead. Building on another theme that has become increasingly prominent in our business, we're seeing growing interest in translational applications across both academia and biopharma. Customers are increasingly focused on identifying human-relevant drug targets and, critically, biomarkers' response for therapies that only work in subsets of patients. There is now a growing body of evidence supporting the value of single cell and spatial approaches in uncovering these signals. At the same time, our recent product advances have made these technologies far more practical to deploy in translational settings. In single cell, Flex Apex has been a game changer for large-scale translational studies because of strong performance on FFP samples, streamlined workflows, and a cost profile that enables large cohorts. In spatial, Xenium has proven to be a robust and powerful platform for extracting meaningful insights from clinical samples. ATERRA is now poised to extend that momentum by enabling much larger studies with significantly more information content per sample. While our technologies are relevant across the drug development continuum, a particularly large opportunity lies in later stage translational settings where biomarker strategies are essential to understand patient response and potential toxicity. This is where our solutions can meaningfully improve the probability of success and where we are increasingly focused. Over time, these trends also reinforce the potential for single cell and spatial in diagnostics applications. To realize that potential, the critical next step is the generation of robust clinical evidence on large patient cohorts. As we have discussed previously, we're pursuing two parallel paths. One, we're continuing to support our customers in their studies, and we'll partner with them to enable clinical deployment in the future. And two, we're advancing our own internal efforts to generate clinical evidence for specific high value applications. We're making progress in the two previously announced areas of tissue based spatial profiling for oncology, and blood-based single-cell monitoring in autoimmune disease. Stepping back, this quarter has been emblematic of the great work by the whole 10X team. We launched a game-changing new platform, so continued sales momentum and engaged in powerful partnerships with our customers to drive the future of research and healthcare, all while maintaining laser focus on tight execution.

Thanks, Serge. before walking through the detailed financials i want to reflect on the last 12 months a year ago on our q1 call we were operating in a highly uncertain macro environment after drastic changes to government research funding that led us to withdraw our full year guidance since then and despite persistent challenges in the macro environment we have consistently executed, improved our operating profile, and have grown our cash balance by over $100 million. The business is in a meaningfully stronger position today. With that, I will now walk through our first quarter 2026 financial results in more detail. Unless otherwise noted, all growth rates referenced reflect year-over-year comparisons. We had a solid start to 2026. Revenue for the first quarter was $150.8 million. Excluding the impact of non-recurring settlement revenue in the prior year period, revenue for the first quarter was up 9% year-over-year. This reflects continued momentum in the key drivers of our business, as well as some benefit from orders received late in the fourth quarter that shipped in early January. total consumables revenue was up 13 percent with growth in both single cell and spatial single cell consumables revenue was up six percent supported by double-digit growth in reaction volumes and flex continued to be the most popular assay by volume in the quarter spatial consumables continued to perform well in the quarter with revenue up 31 driven by xenium consumables Total instrument revenue declined to 24%, with chromium instrument revenue down 12%, and spatial instrument revenue down 32%. Looking at revenue by geography, excluding the impact of license and royalty revenue in the first quarter of 2025, America's revenue was up 9%. EMEA and APAC grew 16% and 5% respectively. Turning to the rest of the P&L, gross margin was 70% for the first quarter of 2026, as compared to 68% for the prior year period. The increase was primarily driven by lower warranty costs and lower inventory write-downs, partially offset by a decrease in license and royalty revenue. Total operating expenses decreased 15% in the quarter, primarily driven by lower outside legal expenses and lower personnel costs. As a reminder, Q1-2025 included a one-time gain on settlement related to patent litigation. Excluding this impact in the prior year period, operating expenses decreased 20%. We ended the quarter with $540 million in cash, cash equivalents, and marketable securities, up $113 million year-over-year, and up $16 million sequentially. Turning to our outlook for the rest of the year, we are maintaining our full-year outlook and expect 2026 revenue to be in the range of $600 million to $625 million. Excluding upfront revenue related to patent litigation settlements in 2025, this represents 0% to 4% growth over the full year 2025. At the midpoint, our outlook remains consistent with what we provided in February, including double-digit growth in both single-cell consumables reactions and spatial consumables revenue. We built our initial outlook with the ATERRA launch in mind, reflecting our expectation that some customers may delay additional purchases of our current spatial products in anticipation of ATERRA. Looking at our quarterly cadence, as previously discussed, first quarter revenue represents a higher proportion of our expected full-year revenue, driven in part by orders received late in the fourth quarter of 2025 that shipped in January. We expect second quarter revenue to step down sequentially from Q1, reflecting lower spatial sales as customers wait for ATERRA to start shipping. We anticipate the third quarter to be broadly similar to the second quarter. In the fourth quarter, we expect ATERRA shipments to begin contributing meaningfully to revenue, though initial production capacity for Terra Terra will be limited in 2026 as we ramp production. Looking ahead, we remain focused on customer success, disciplined execution, and strengthening our financial position, which support continued investment in innovation across our portfolio. With that, I'll turn the call back to Serge.

Thanks, Adam. Before we open it up for questions, I want to pick up on Adam's early remarks and reflect on how much difference a year makes. While our internal conviction never wavered, the external circumstances a year ago put incredible pressure on the 10X team. Yet, we executed with relentless discipline, met every challenge, and significantly improved our operating profile. All while launching multiple critical products, including Flex Apex, to change world of single cell, and now Atera, the biggest product introduction in our history. To the Tenex team, I could not be more proud or thankful for how you responded and what you have delivered. Thank you. Thank you for everything that you do. With that, we will now open it up for questions. Operator?

Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. In the interest of time, we ask that you please limit yourself to one question. Thank you. Our first question comes from Patrick Donnelly from Citi. Please go ahead. Your line is open.

Hey, guys. Thank you for taking the question. Maybe on Atera, you know, Serge, a lot of color there. Appreciate it. Can you just talk about the early conversations in terms of the funnel, what end customer you're seeing the highest reception or interest level from? And then secondly, also on Atera, just how we should think about the launch timing, you know, what that impact is on the portfolio. It sounds like you guys are preparing for some customers to delay other spatial purchases in 2Q and 3Q, would love just a little more color on how you're thinking about that. Thank you, guys.

Yeah, thanks, Patrick.

Thanks for the question.

Yeah, like I said earlier in my prepared remarks, really, really excited about Terra. We had really high expectations going into the launch, and it's been incredibly gratifying to see the response from customers, which I would say even probably exceeded our really high expectations. And as far as how that translates into demand and pre-orders, well, that has been really, really encouraging, really strong. And the interest is coming from everywhere. I can't actually point to any particular area of the market or any particular area of our customers that are not expressing interest in this. And our internal, like our efforts is on customers who can quickly scale you know, serve demand for others, like service providers, and generally evangelize that platform for the future. So that's how we're approaching the market, and the signal, again, has been just so resounding. It's been really, really, really fun to see. Now, as far as sort of the second part of your question, obviously, Atara is a really compelling product. We've known that since for a long time. We've been anticipating and planning for this launch for a long time. And we also very much anticipated there were going to be some changes to ordering dynamics from our customers. And overall, it's all going really very much in accordance with our expectations. Again, we have lots of experience with past product launches and new kind of versions of things and new capabilities. And so we've been prepared. And of course, there's going to be a fact on customer order patterns, naturally, customers adjust their thinking about future projects and such in light of Atera, which puts some pressure on some of our spatial business like we talked about earlier, but all that is incorporated into our guide. So because at the same time, while people are starting to contemplate for the future with Atera, right now, our customers are running their experiments because they have established workflows they have ongoing studies they have ground grants budgets they're really used to the workflows they really like the data remember these products our spatial products are leading in the industry there is a lot of a lot of really great resonance uh with uh with them in emorgo customers and also you know realistically if people are just now deciding whether to go forward with a terror they probably won't be getting their instruments until well into 2027 right most of them So the fact is that existing products, existing spatial products continue at a robust pace consistent with our expectations. So I feel really, really good about that. And I think all of that information has been incorporated into our guide pretty well.

Our next question comes from Matt LaRue from William Blair. Please go ahead. Your line is open.

Hey, good afternoon, everyone. Serge, you called out, you know, one of the new TAMs around AI. I think last quarter you mentioned that was a relatively low percentage of revenue, but you referenced today a number of new initiatives you're involved in, both on the single cell and spatial side. So as you've, you know, had those discussions and gotten some sense for how customers are going to be building out their plans, what's your sense for, you know, what ultimately that TAM could look like and how it might grow over time?

Yeah, man, that is a really good, a really important question. And I would say, so a couple of things, just going back to what I said back in preparing remarks, we fundamentally believe and have seen that AI is a structural tailwind to our business. If you think about what is happening now with the progress in AI, it's sort of this emergence of increasingly large models that are increasingly powerful in being able to make predictions and inferences. and what they all universally need is large amounts of data across many different kinds of contexts and specifically the right kinds of data too right so for uh for biology measuring right biology and i said earlier the right biology is all around molecules uh cells and tissues and being able to measure them at a large scale and at high quality is imperative and that's precisely what we have built. In fact, that is like the central premise of the mission of the company. And so it's a really exciting moment right now for us, the emergence of these kinds of models and the emergence of the AI capabilities, because it just resonates so strongly with our mission and with our strategy from day one of the company. And now as to the question of how that translates into revenue and what is the dam here the fact is it's already when you look at our uh at our customers and how ai is used and what it is driving it's actually really pervasive at this point across our customer segments and across applications i don't think at this stage there isn't a large project where ai isn't a big driver or if not the biggest driver of that project and And when I look at even smaller scale experiments, in many instances, they are performed with an eye toward feeding the data into AI models and scaling up down the road as well. So when we look at our business, fundamentally, kind of this AI wave of progress is really lifting all of it, all across. So I think, and that's for really good fundamental first principles reasons. And so we do see it as a structural accelerant to across our product line and across our application set in many ways that's by design.

Our next question comes from Doug Schenkel from Wolf Research. Please go ahead. Your line is open.

Hi, this is Madeline Molman on for Doug. Growth margin in the quarter I think came in a little better than we in the street were expecting. As we think about the full year, are you anticipating any impact to growth margin from increased inflationary pressures related to memory or petroleum-based plastics? And then thinking about ATERRA ramping up as the year goes on, should there be any dilution to margins from the ATERRA launch?

Hey, Madeline. Adam here. Thanks for the question. Yeah, I mean, we're absolutely monitoring costs closely. You know, the couple that you mentioned, but other input costs that have inflationary pressure, managing that, teams managing that quite well. So we're still anticipating margins for the year to be in the mid-60s. To your question on ATERRA specifically, as that launch, you know, we mentioned that that would be – we'd start shipping units in the second half. It'll be heavily weighted towards Q4. You know, and as has been sort of typical in our portfolio, the instrument margins will come at, you know, margins that are less than that of our sort of standard portfolio. So I'd anticipate as that starts to move in, you know, particularly in Q4, we start to see a little bit of margin pressure, but still feel highly confident that we'll end up in that mid-60s for the full year.

Our next question comes from Mason Carrico from Stevens. Please go ahead. Your line is open.

Hey, guys. I was just wondering if you could provide, I guess, a bit more detail on spatial instrument revenue this year. I mean, how material is, you know, the Q1 to Q2 sequential decline? How many ATERRA instruments do you ultimately expect to place in Q4? And then I guess as a follow-up, how many placements do you think production will be able to support in 2027 as you ramp production?

So, yeah, we are, as we mentioned, or as I mentioned in the prepared remarks, we're anticipating a step down from Q1 to Q2 and Q3. So we continue to, you know, we'll continue to sell Xenium, but it'll be at a lower rate than what we saw last year, particularly over the next two quarters. You know, we certainly built that into the guidance, I think, as Serge just mentioned earlier. So that's certainly part of the plan that we have. As it relates to total number of ATERRA, we're ramping up production right now. Anticipate between Qs 3 and 4, we'll sell approximately 40 units. And those will be mostly weighted towards Q4. And, again, that's all sort of factored into the guidance range that we've provided.

Our next question comes from Luke Sergut from Barclays. Please go ahead. Your line is open.

Thanks for the question. I just want to talk about the pricing strategy and the positioning there with Atera versus the Xenium and the rest of the space portfolio. I understand this. This is like you're calling it the biggest launch in the history of the company. I mean, you guys did a pretty good job on single cell, but now as you look towards spatial, you know, is this where you kind of look like, all right, we're just going to launch Atera and then cannibalize or essentially put all the other platforms and applications and customers onto one box? Or are you trying to segment the market here? Because it seems like there's quite a bit of risk of cannibalization versus Xenium.

Yeah, Luke, thanks for the question. I mean, there's a lot of questions embedded in that one question. First of all, I will say that, yes, me saying that this is the biggest, most significant launch in our history has been intentional, and I am very keenly aware of our history and the success we have with single cell and chromin. For sure, I do think this is a fundamentally, like I said, a platform to change how we measure biology and will fundamentally redefine many aspects of science. so i feel very uh very excited about it and for like uh really fundamental uh first principles reasons as far as uh kind of where this is headed like i say i mean we if we look at the kind of the short-term impacts uh we have been uh we have planned those for those really really carefully and all of those dynamics are incorporated into the guide uh quite uh quite carefully and so we We feel really confident about that. And then, yeah, we feel really, really good about, kind of, as we look into next year and what Atera kind of opens up. The way that we see it is that Atera is poised to really, kind of, really break open a lot of markets, a lot of opportunities, a lot of customer samples, and a lot of new customers. If you think about, kind of, all the different constraints that have kept existing spatial users from running more or from uh that have got other people on the sidelines from entering spatial we have intentionally built the terror to really uh to remove all those constraints to address all of them and so if you think about just kind of from a perspective of technical enablers just to kind of list a few like the whole transcriptome capability really addresses the uh the the constraints over there because of customization which limited applications limited tissue types Now people can sort of go forth with no worries that it's going to work across all these different areas. Throughput was another huge constraint, has been in the past where people have had to pick a few samples at a time from, you know, if they have a clinical trial, a large cohort, could only run a few, now they can do kind of the full cohort, the full large study they have always wanted to do and now also with the all the shelf life capability now you have access to all these archive samples all these bio banks that just like multiply by a large amount the availability of samples that that are available and this is all consistent with the feedback we are now hearing from customers so you're just like fundamental a huge expansion of the of of of the tab and potential uh for these platforms and uh you know and our thinking as far as the question of pricing has been consistent with that to enable to enable these uh these very large uh kind of very large expansion of the opportunity that we're seeing ahead of us whether it's basic discovery translational research or all of these ai driven uh applications uh like i said earlier you know people really like our existing products xenium vision uh really really powerful uh products and capabilities and for the foreseeable future we expect them to be really, really robustly used. And kind of as we go forth, you know, kind of further out, there's going to be more and more applications that will migrate to a Torre d'Aterra, more customers and more samples as well. And that's going to be an amazingly great thing for us.

Our next question comes from Dan Brennan from TD Cowan. Please go ahead. Your line is open.

Hey, good afternoon. This is Kyle on for Dan. Thank you for taking my question. I wanted to ask on your OpEx. You know, OPEX was down quite materially year over year in Q over Q, and I know you mentioned it a few times or a little bit more detail on the call, prepared remarks. But can you just talk about sort of where the jumping off point is for OPEX going forward, just given, you know, SG&A and R&D were down quite a bit year over year?

Yeah, sure, Kyle. Yeah, I mean, I think as you're aware, we've really been trying to manage our costs in a super disciplined way. You know, and as you know, we are on a good trajectory here. You know, keep in mind last year I had that, you know, the one time gain on settlement. So excluding that, OPEX is down 20% year on year. We're still anticipating, you know, giving ourselves some flexibility as it relates to continue to invest in the business and anticipate that the business or that OPEX year on year will be roughly flat.

Our next question comes from Kyle Nixon from Canaccord. Please go ahead. Your line is open.

Thanks for the questions. First, could you talk about the spatial instruments in the quarter? It seems a little bit weaker than what we had, and I thought I heard he had some, like, a benefit in January or something like that. So just talk about how we should think about that line going forward, especially with potential market freezing and things like that.

And then, secondly, Adam, on the guidance for 2Q, are you talking about, like, a mid-single-digit decline quarter-for-quarter or more like a low single-digit? yeah sure let me take the second part of your question first so yeah thinking about a a low single digit decline qoq is really the way that we're thinking about q2 and then fairly similar is what we would anticipate for q3 then with the balance you know getting us there on the guide in q4 um yeah i think really what the way to think about spatial instruments for for q1 um you know is really there was fairly significant anticipation regarding what we were going to announce in april As you may recall, we did, you know, a campaign at AGBT, you know, and certainly word started to spread. And as you can also imagine, you know, we were working with some of the early access customers, you know, under NDA just to make sure we were going sort of down the right track. But the customers that would have been adding either a new Xenium or to their Xenium fleet, you know, that ultimately, you know, have decided in Q1 and will decide to wait for Terra. The second thing I would just note, you know, we don't see the macro backdrop being any, you know, meaningfully different for CapEx, you know, than where it's been. But, you know, I'd be remiss if it's still fairly constrained. But the predominant, you know, rationale around sort of Q1 and where we came in on spatial instruments is really just around the anticipation of the product launch. And then I would just, you know, echo what Serge said, you know, earlier in the call. The enthusiasm around Atera is extremely high. And, you know, what we're finding is even in a constrained capital environment, customers are finding CapEx. You know, we've got, you know, orders and folks are – this is the type of launch where folks go out and find money. And I'd also just add that the timing, you know, we were thoughtful and tried to work, you know, around the timing of our launch just to ensure that it's built in to budgets, whether that's, you know, for customers that, you know, have a year-end, you know, sort of come fall, customers that need to get this into grant submissions. And then certainly we want to make sure that our customers are well-positioned as they start to think here as we move through the year, they start to think by their 2027 budgets, we wanted to make sure that they were earmarking funds for ATERRA.

Our next question comes from Michael Riskin from Bank of America. Please go ahead. Your line is open.

Hi, this is Avandika. I'm from Mike. Thank you for taking your question. On ATERRA manufacturing capacity, you noted the initial demand would be limited in 20 – production would be limited in 2026. What are the primary bottlenecks to scaling the output from here, and how quickly do you think you can ram toward meeting that level of demand?

Well, yeah, so the question is around just scaling up the production of instruments. The fact is it's always this is a really sophisticated instrument, as you can imagine, and we want to be very smart and measured around how we build it and how we test it. We are very, very careful with these kinds of launches. And like Adam said, we feel good about what we can do in 26, and we're going to keep ramping production as we exit the year into the next year.

Our next question comes from Subu Nambi from Guggenheim Securities. Please go ahead. Your line is open.

Hi, guys. This is Thomas on for Zubu. Thanks for taking our question. A lot of focus on spatial, so maybe one on single cell here. Can you just share any color on what pricing headwind you may have experienced, if any, in the quarter from APEX and then what you're anticipating for the second quarter? Thank you.

Yeah, I would say the general trend has been similar to what we saw in Q4 as far as sort of the mix and the pricing dynamics around Flex APEX. It is, I would point out that it's still very early here in terms of the launch. We only have a partial Q4 for the launch and then the Q1, so just a bit over one quarter. So far, very happy with the progress. Really, really great feedback from customers and really large scaling up of volumes of the product. So overall, I feel good about single cell and kind of how it's proceeding. Again, still early time in the launch, but all in all, like really, really strong trajectory.

Our next question comes from Sam Martin from Deutsche Bank. Please go ahead. Your line is open.

Hi, this is Sam Martin on for Justin Bowers and Deutsche Bank. I just want to ask a couple of quick questions around the Vizium platform. So I think last quarter you mentioned Xenium had become the spatial platform of choice. And now with the launch of Atera, another, you know, launch and I guess upgrade really within the spatial realm, I just want to kind of get your updated thoughts on, A, customer demand for Visium year-to-date with the launch of Visium HD really just over two years ago. And then your thoughts on really the future of the Visium platform and whether or not you still think it has a space in your portfolio. Thank you.

Yeah, good question. So, as I've been saying now for the past several quarters, there's clearly a trend in the market towards kind of the imaging-based redout, and in particular towards Xenium. It's been a huge resonance within sort of spatial circles of the Xenium platform, and with the launch of Atera, we obviously kind of anticipate that trend to get reinforced going forward. But, you know, that said, certainly Visium has its place as well. There's many customers who absolutely love the platform and running it very robustly, very consistently across very large numbers of samples. And we expect that it's going to have its place. It's going to continue to have its place. It's a great assay for many applications and well regarded by many of our customers. And, of course, we'll continue to support it. and, you know, we'll ensure customer success.

Our next question comes from Puneet Suda from WeRank Partners. Please go ahead. Your line is open.

Yeah. Hi, Serge. Thanks for taking my questions here. So, you know, I don't know if this was already covered, but just trying to think about, you know, does this have any additional, the Terra launch, does it have any impact on the decline decline or that's maybe an acceleration in decline in the Visium usage? And if you could talk about, you know, how does the, you know, if there is anything else that you can do to sort of mitigate that or address that, you know, before the launch. And wondering if there is a desire from customers to, you know, pull the launch forward a bit to address their, you know, high level of interest in the instrument here?

Yeah. So, yeah, a few different kind of questions here. I think as far as Visium is concerned, I mean, there's going to be some effect, right? It's a spatial platform, and like I kind of said earlier, there has been a trend of converting towards Xenium, and I think there's going to, that sort of trend is going to continue with the arrival of Atera. There is definitely a place for Visium customers really like the data. they're going to keep running it and uh while the the launch of a tear is going to put pressure on on both spatial platforms um it's going to put pressure on vision too it you know that is all incorporated into our guide and i think it's always um uh uh sometimes you know we have a lot of experience with different product launches and one thing that's important to appreciate that think sometimes people kind of underestimate is the amount of kind of built-in stickiness that exists with with products right people have ongoing projects they've got their workflows they have the data that they're used to that they really like and so that's what's showing up that what that's what we're seeing in the field you know kind of robust continued use of these products and these capabilities. As far as kind of Atera and the demand for it, I mean, certainly people are like very, very interested and we're going to be, we have the team is working really, really hard to deliver the instrument to the world as fast as possible. We're being very deliberate, very rigorous and really excited to get it out there. And trust me, working as hard as they can to get it done quickly.

Our next question comes from Tycho Peterson in from Jeffries. Please go ahead. Your line is open.

Hi, guys. This is Priyan for Tyco. Thanks for taking our question here today. Just wanted to hit on the clinical adoption scaling there. You mentioned that Tara can analyze up to 3,000 core biopsies per year. So I guess, what is the specific feedback from biopharma partners regarding the platform's readiness for integration into large-scale phase two and phase three clinical trials? Thank you.

Yeah, I mean, good question. I mean, the fact is, actually, the number, when I talk about the number of samples that are processed, I specifically refer to one-centimeter squared areas, and in fact, it's possible to put more samples onto if you need to, like if you're doing tissue mycorrhiz and things like that. So there's additional scaling that, depending on your format of your biopsies and what you're interested in measuring that's possible there. And so the platform does enable really, really massive scaling. And the conversations by pharma have been really encouraging, as both Apex and Athera have been very resonant, both by virtue of opening up translational applications, the sample types, and the scaling, all are very enabling. And so, yes, we do feel like this is going to be a big driver, especially as we kind of think about next year and beyond.

Our last question today comes from Dan Arias from Stifol. Please go ahead. Your line is open.

This is Paul on for Dan. Thanks for the questions. There's been some messaging of ATERA as providing sensitivity at the level of single cell sequencing. So, I mean, obviously, there will still be lots of use cases for single cell, but on the margin, do you expect any flex volumes over time to potentially move to a terra? And just kind of on that same idea, you mentioned in your prepared remarks that the double digit chromium reaction volume growth was driven by flex apex. Just Just wondering if reaction volume is growing at what kind of level, excluding FLEX APEX?

Yeah, so as far as the sort of single cell relative to ATERRA kind of question, it's a reasonable question to ask, but not something that we're expecting to be an issue in a near nor is it anything that we're hearing from customers at this stage. If you think about just kind of configuration of the products and the capabilities, what you get from underpricing, the workloads, everything is sufficiently different. You know, we do expect that in the long run, there's going to be really massive experiments with single cell that will be possible with Athera that had not been previously possible before. But we see that as the future, and we're certainly not seeing any effect on a single cell business at this stage or in the near term. And yeah, in terms of reaction growth, yeah, we're seeing it across multiples of our applications. And also, since this was the last question, just before we hand off, I wanted to kind of finish with a couple of closing thoughts. And just personally, just how excited am I about the setup we have for 2027 and beyond. If you look at it through the product lens, 2027 will be the first full year over Terra, really the year over Terra. And then if you look at FlexAPEX, by that point, it will gain widespread adoption and pricing on the single-cell side will stabilize. And so the growth in volume will naturally then translate into growth and revenue. and when you look at it through the market lens we expect this exponential increase in ai driven research and all the ai influenced science that's going to be happening out there and then the scaling of translational cohorts is really set to take in as we look to next year and then from the macro perspective at the very least we will have good compares and to the extent to the extent of the conditions improve we should see an acceleration to all the other trends this will conclude today's conference call.

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