TXG earnings call transcript, November 5, 2026

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... I'll now turn the call over to Serge.

And good afternoon, everyone. Revenue for the third quarter was $151 million, up 1% year over year. The biggest... Highlight was the start of commercial shipments of Atera. Enthusiasm for the platform has continued to build, and we're incredibly excited to be putting instruments in customers' hands. The rest of the business also performed well. Driven by continuous strength in consumables. Adam will cover the financial results and outlook in more detail. Now, stepping back, it's worth reflecting on this remarkable point in time. As progress in AI is reshaping so much of the world. Many believe that AI's greatest promise is in accelerating science and advancing human health. We agree. And the key bottleneck is the data. Biology is incredibly complex. Capturing that complexity requires measuring biological systems at massive scale and high resolution. It requires measurements of molecules, cells and tissues across vast numbers of samples, conditions and contexts. This is precisely why we started TXG and why we have built our single cell and spatial technologies. And now, as biology is entering this new era of AI and data maximalism, our business is... ...positioned incredibly well to benefit and to be the key enabler of progress going forward. The success we're seeing with ATER is a powerful demonstration of this trend. The platform delivers whole transcriptome spatial profiling...

...with single cell sensitivity at high throughput. It brings together molecular, cellular, and tissue biology on a single instrument. By delivering its incredible capabilities at scale, ATER is both perfect... ...suited and critically necessary for this new AI-driven era of biology. The extraordinary customer demand and momentum have continued to build since our last call. Our priority now is to ramp production, get instruments into... ...customers' hands and help ensure their success. I've said before that we expected Atera to be the biggest product introduction in our history. And what we're seeing from customers is consistent with that expectation. Whether judging by their enthusiasm for the... ...platform, by the flow of orders, or by the ambition of their plans. We're also encouraged by the strong interest in Catalyst Research Services, our internal service lab for running customer samples. In its first five months, more than 100 customers... booked projects representing a wide variety of applications and use cases. We're seeing extensive demand for Atero across universities, academic medical centers, and biopharma. Customers are preparing to use the platform... to generate data for AI models, whether for basic science, translational research, or drug development. In addition to training AI models, customers are planning to deploy Atero across a wide range of applications.

and fields, including population scale studies, cell and tissue atlasing, studies of disease mechanisms, and biomarker discovery. Nearly all of the world's top 20 biopharma companies have now purchased Atero. systems or services through Catalyst. As we mentioned previously, many pharmaceutical companies expect that spatial biology will fundamentally change how they approach drug discovery and development. We're hearing about applications across the entire drug development continuum, from finding therapeutic targets, to understanding mechanisms of action, to assessing safety, to predicting response in patients. For example, we now have a growing arsenal of revolutionary medicines for treatment. cancer. The critical challenge is that most patients develop resistance and the mechanisms are not well understood. Many leading researchers are now planning to use ATERRA to address this challenge because at ATERRA can provide an unparalleled view of the underlying cancer biology and of on-treatment effects. We built ATERRA as a long duration, upgradeable platform to keep expanding what's possible in spatial biology. This setup includes on-board slide preparation automation to enable true sampling data out capability. It also includes RNA protein multiomics and base-by-base sequencing for in-situ mutation detection. Together, these capabilities will enable customers to answer an even broader range of biological questions.

Turning to single cell, our customers continue to adopt our platforms for larger, more ambitious studies. TXG is enabling a new generation of this work, especially in biopharma and translational research. Our recently introduced whole blood workflows are bringing single cell into applications that would previously have been inconceivable. Customers have shared enthusiasm for their ability to access troves of archival blood samples for retrospective single cell data generation. For prospective studies, the workflow stabilizes samples and simplifies processing at the point. of collection, enabling use across a variety of clinical collection settings while dramatically reducing sample variability. Ultimately, these improvements enable more complete and consistent data sets that are critical for AI and for clinically related applications. Our single cell solutions have long been at the epicenter of the perturbation experiments that are now fueling AI biology models. Furthermore, we're now seeing increasing demand for multi-modal solutions driven by the value of measuring more biology from the same cell. And lately, we're seeing customers build up their infrastructure, investing in automation to expand the scale of the experiments. Our new FlexAPEX CRISPR workflow builds on the scalability, robustness, and sensitivity of FlexAPEX for perturbation studies. Combined with our protein tech genomics panels, the

largest single-cell protein panels available, researchers get the richest data per cell for model development. And their newest GEMX multi-ohm configuration captures gene expression alongside the regulatory elements to control it. Taken together, we believe our menu of multi-modal solutions delivers the best approach for generating valuable mechanistic data critical for drug target discovery and predictive models of biology. As the scale of data enabled by these products grows exponentially, analysis can become an even greater bottleneck. We see that as both a challenge and an opportunity. And with that in mind, this quarter we announced... Sentira, our new cloud analysis platform. Sentira is designed to help customers turn large complex biological data into experimental conclusions using agentic AI, all in a seamless integrated experience. Researchers can explore their results and iterate rapidly without having to build or manage the underlying computing infrastructure. We have announced the initial capabilities of the platform with a lot more to come in the future. Centura Spatial uses NVIDIA Accelerate computing to reduce processing of Atera and Xenium data from hours to minutes. Centura Single Cell brings agentic analysis to Chromium data, powered by Anthropics Cloud. Researchers can ask questions in natural language, review proposed analyses, and examine the methods and code behind the results in an editable notebook. Together, these capabilities give more scientists the computer.

And as we have said, in addition to being an accelerator of data analysis, AI represents a structural technology. Tailwind for the demand for our products. It is still very early days, but the effects of AI demand are being felt across many areas of our business. Today, most significant biological data... ...generation efforts are conceived, at least in part, with the goal of training AI models. And when researchers set out to build AI models of biology, they usually think in terms of multiomics, single cell, and spatial. ...which usually means our technologies. This is not surprising because, as I mentioned earlier, we built our technologies precisely to measure biological systems comprehensively at massive scale and high resolution. Across different segments, thought leaders are converging on the idea that we need large-scale data collection on an industrial scale. We have previously talked about some of the projects that have been publicly announced, such as the ones from Cancer Research Institute. ARC Institute, and CZI Biohub. These efforts have all been progressing and scaling up. For example, recently, Biohub has been outlining its ambitions toward profiling hundreds of billions of cells. To build predictive AI models of life. At the same time, governments across the world are looking to invest in sovereign AI capabilities in healthcare and biology. There is often a strong case to...

...made for training models based on the unique samples and profiles of local populations. These plans naturally translate into mandates to collect multi-omics single cell and spatial data. We believe these priorities could support programs to generate large... ...biological data sets and models around the world. In BioPharma, there continues to be rapid growth in AI-focused investments. Much of the initial AI investment has focused on chemistry, on designing and making molecules. As we have noted in the past, we... I believe the next arguably larger opportunity lies in understanding the biology, identifying new therapeutic targets, and predicting how patients will respond to treatment. This requires a much deeper view of cells and tissues. And that is precisely the information our technologies enable customers to generate. We're seeing similar momentum among tech buyer companies, where we are the predominant vendor of choice for single cell and spatial data generation. This category is expanding beyond drug development companies to include diagnostics companies looking to use their large collections of patient samples to generate training data for AI models. While it's still very early, these developments strengthen our conversation. This is the conviction that we are at the beginning of an exponential trend in the scale of AI-driven data generation. Finally, we're continuing to make progress with our clinical strategy. Our newly announced collaboration with Fred Hutch adds...

...to the partnerships we have formed with some of the leading medical centers around the world. As a reminder, we're focused on generating evidence to establish the clinical utility of our single-cell and spatial technologies in oncology and autoimmunity. Our team is also making strong progress, standing up an internal CLIA lab with the goal of launching it next year. While these efforts are still early, we're encouraged by our learnings and by the potential of single-cell and spatial... So, coming back to where we started. We're at the beginning of an era in which AI will bring extraordinary advances in biology, and our products are delivering the data that is necessary for that progress. And executing our company mission... We have spent more than a decade building assets, capabilities, and expertise to put us in a position to capitalize on opportunities created by this era. And our strong financial profile gives us the ability... to realize the full potential of these opportunities. We're excited for the road ahead. With that, I will now turn the call over to Adam.

Unless otherwise noted, all... The growth rates referenced reflect year-over-year comparisons. Revenue for the third quarter was $150.7 million, representing 1% growth over the prior year period. Total consumables revenue was up 5%. With growth in both single-cell and spatial, single-cell consumables revenue grew 1%, supported by double-digit growth in reaction volumes, given strong demand for flex apex. Spatial consumables revenue grew 16%, driven primarily by Xenium consumables. It is especially encouraging to see Xenium continue to perform well even in anticipation of a Terra. This demonstrates the strong momentum behind Spatial and reinforces our conviction in the opportunity for a Terra total instrument revenue declined 43% with chromium instrument revenue down 20. 3% and Spatial instrument revenue down 57%, both primarily driven by a lower number of units sold. As anticipated, the decline in Spatial instruments reflects cost. Customers moderating purchases of our Vizium and Xenium products in anticipation of Atera. Turning to the rest of the P&L, gross margin increased to 75%, up from 67%. The prior year period. The increase in gross margin was primarily driven by lower inventory write-downs and changes in product mix. Total operating expenses were $129 million. for the quarter as compared to $132.5 million in the prior year period. The decrease was primarily driven by lower personnel and lab equipment expenses partially offset by higher

litigation expenses. We ended the quarter with $576 million in cash, cash equivalents, and marketable securities, up $94 million year-over-year, and up $24 million. Sequentially. Turning to our outlook for the rest of the year, we are raising our full-year outlook and now expect 2026 revenue to be in the range of $625 million to $635 million. Up from $610 million to $630 million. Excluding non-recurring revenue related to patent litigation settlements in both 2026 and 2025, this represents... 4% to 6% growth over the full year 2025. The increase reflects our third quarter performance, stronger than anticipated spatial consumables, and a higher ATERRA shipment outlook for the year. Our ATERRA production ramp is progressing well, as we've leveraged our experience building complex instruments like Xenium. As a result, we now expect to ship approximately 50 ATERRA instruments by year. up from our previous expectation of approximately 40. Additionally, as ATERRA instruments shipments ramp in the fourth quarter, we expect gross margins to step down sequentially. Our disciplined focus on cash generation and expense management has strengthened our financial position, giving us even greater capacity to invest for growth and capitalize on the significant opportunities ahead. With that, I'll turn the call back to Serge.

Before we open it up for questions, I want to thank the entire TXG team. ATERA embodies so much of what makes this company special, the ambition to take on problems that seem out of reach. The persistence to work through them, and the commitment to get the details right. Bringing it to life has drawn on talent and dedication from across the company, united by our mission to advance human health through a deeper understanding of biology. I'm incredibly proud of this team and grateful for everything you do. Seeing what we can accomplish together gives me even greater conviction in the future we're building.

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