Good afternoon. Thank you for attending today's 10x Genomics fourth quarter and full year 2022 earnings conference call. My name is Bethany. I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Cassie Corneau with 10x Genomics. Please go ahead.
Thank you and good afternoon, everyone. Earlier today, 10x Genomics released financial results for the fourth quarter and full year ended December 31st, 2022. If you have not received this news release or if you would like to be added to the company's distribution list, please send an email to investors@10xgenomics.com.
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. 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 Justin McAnear, our Chief Financial Officer. With that, I will now turn the call over to Serge.
Thanks, Cassie. Good afternoon. Thank you for joining us. During today's call, I'll start with an overview of our performance during the fourth quarter. Next, I will highlight our progress and momentum across our business and the exciting opportunities we have ahead in each of our three platforms. I'll then turn the call over to Justin for a more detailed look at our financial results, as well as our revenue guidance for 2023. While 2022 had its challenges, we ended the year strong with revenue of $156 million in the fourth quarter, up 9% year-over-year. This represents quarter-over-quarter growth of 19%, demonstrating our momentum and focus on execution as we closed out the year. Total revenue for the year was approximately $516 million, up 5% over 2021.
In 2022, we sold more than 1,100 instruments, surpassed 4,500 peer review publications using our products, and expanded our intellectual property portfolio to more than 1,750 patents and patent applications. The clear highlight of the year was the continued strength and velocity over our innovation engine. 2022 was the biggest and most exciting year of new products in our history as our team delivered catalytic launches in all three platforms. In Chromium, our new products further expanded our broad menu of high-performing assays. We released Chromium Flex, the new gold standard for single-cell gene expression, which we believe has the potential to be transformative to the Chromium franchise. In addition, we introduced our first sample prep product, the Nuclei Isolation Kit, and opened up new applications with the launch of BEAM. In Visium, we launched CytAssist, our first spatial instrument.
We see CytAssist as the foundation of the Visium platform going forward, transforming the Visium workflow and outperforming manual methods. Finally, we launched our Xenium platform, which we believe is the most advanced in situ platform on the market. The platform includes a versatile and easy-to-use instrument, a diverse menu of curated, customizable, and high-quality panels, and Xenium Explorer, intuitive software for interactive data visualization. We're incredibly proud of what our innovation engine delivered in 2022, and we're confident we'll have the commercial scale and operations infrastructure in place to get everything out of the opportunity ahead. On the commercial front, we're building from a solid foundation with broad reach and a talented team obsessed with customer success. Last year, we started implementing better commercial processes, systems, and tools as we prepare for our next phase of growth.
On the operations side, we made tremendous progress building our new R&D and manufacturing center here in Pleasanton, which is on track to be completed soon. This is one of our initiatives to build our global manufacturing network for scale and significant capacity for future growth. Let me share more about our recent progress and pipeline, starting with Chromium, the definitive platform for single-cell analysis. Throughout the year, we've seen ongoing demand for Chromium X Series instruments as both new and existing customers chose the X Series for its high performance, expanded capabilities, and series-specific assays. In fact, after several consecutive quarters of customers overwhelmingly opting for X Series instruments, we made the decision during Q4 to discontinue future sales of our legacy Chromium Controller.
On the consumable side, our comprehensive portfolio of high-performance assays, which are easy to use and scale, delivered deep biological insights across a wide range of applications and analytes. The performance, differentiation, and scalability of our consumables portfolio should position us well to drive growth with existing customers, welcome new researchers into the 10x ecosystem, and accelerate translational and biopharma opportunities. In Q4, we saw particular strength with our Multiome product as researchers continued the trend towards measuring multiple analytes per cell. We also saw increased adoption of our high-throughput assays as customers embark on larger scale projects. We're pleased with the customer response to Chromium Flex, which we believe will become the new flagship assay for single-cell gene expression. After completing their initial evaluation cycles, customers are reordering consistently and starting to adopt larger kits for more scale and lower cost per sample.
We're still very early in this launch, particularly with the FFPE opportunity. Flex is the first and only assay to open up the vast volumes of archival FFPE samples for single-cell analysis, which should enable much more research, particularly in translational settings. We have now rigorously validated Flex across a broad range of different FFPE samples and have published demonstrated protocols to better enable our customers to access this groundbreaking capability. In Q4, we began shipping BEAM. BEAM's proprietary screening approach enables researchers to quickly analyze up to millions of B or T cells to determine their antigen binding at high plex and high resolution. We believe the scale, resolution, and throughput of BEAM can revolutionize therapeutic discovery, making it of particular interest to our pharma and biotech customers. BEAM is a great example of how innovation opens new applications for single-cell analysis.
As the unambiguous leader in single cell, we continue to invest in new product development to unlock more sample types, enable larger scale, lower the cost of experiments, and engage a broader base of researchers. At the AGBT conference last week, we shared proof of concept data demonstrating how Chromium Flex can easily scale to up to 10 million cells and hundreds of samples in a single experimental run. We believe the data illustrates the power and long-term potential of Chromium Flex to deliver scale at levels that were inconceivable just a few years ago. In addition, this shows how 10x continues to raise the bar on scalability and ease of use, and how our product innovation can drive down the cost of single-cell experiments. I'd like to share more about our spatial platforms.
Through our internal investments and acquisitions of Spatial Transcriptomics, ReadCoor, and Cartana, 10x has been leading the way in spatial for a decade. We have built incredibly powerful technologies, developed foundational intellectual property, and have deep experience and customer insights that have been instrumental to our Visium and Xenium platforms. Visium is the leader in unbiased spatial discovery. It has been adopted in thousands of labs around the world, used in more than 440 publications and preprints, and has generated by far the largest number of public datasets than any other spatial platform. We're still just getting started. We made big strides last year with the launch of CytAssist, which we believe will be a great catalyst to accelerate the platform. We're pleased with the sustained customer interest and demand for CytAssist in its second full quarter since launch.
We're hearing very positive feedback from customers as they complete their initial runs of CytAssist, along with its companion assay, Visium FFPE version 2. FFPE is increasingly the sample type of choice for Visium users as demand nearly doubled that of fresh frozen in Q4. We designed CytAssist to help solve the key challenges our customers have faced with the Visium workflow. Beyond its ease of use, the instrument outperforms manual methods, ensuring customers not only have a better experience, but also receive better insights. With CytAssist, researchers can access more samples and more sample types, including tissue sections previously stored on standard glass slides. In addition, we recently released a new protocol enabling customers to use fresh frozen tissues on CytAssist. This new protocol, along with the performance advantages inherent in our v2 Chemistry, results in much higher sensitivity than our standard manual fresh frozen assay.
We're continuing to invest in Visium new product development with CytAssist as the foundation of our pipeline moving forward. At AGBT, we shared more about the future products and capabilities that will be exclusively available on CytAssist. We will continue to expand CytAssist to be compatible with more sample types, including tissue microarrays. We're also working to bring multi-omics to the platform with a planned launch of gene plus protein expression in the first half of 2023. We're fully committed to delivering higher resolution. Our team is making tons of exciting progress on Visium HD, which will be offered only on CytAssist. As you may have seen on AGBT, the HD data looks exquisite, showing its power to deliver unbiased whole transcriptome discovery across entire tissue sections at single-cell scale resolution.
We've come a long way with this ambitious project. We'll share more when we get closer to launch. Now, turning to Xenium, our newly launched platform for in situ analysis and what we believe is the best performing system on the market. As we shared in Investor Day, we delivered our accelerated timeline and officially began global commercial shipments in December. Both instrument shipments and orders exceeded our internal expectations in Q4, reflecting a strong customer enthusiasm for Xenium. For our team, there's really no better feeling than seeing new products in the hands of researchers. It was especially rewarding to have a customer share data from his own Xenium runs at AGBT just weeks after we started shipments. With feedback from our initial customers, we're now more confident than ever in Xenium's differentiation and performance advantages across a number of fronts. First, Xenium offers excellent sensitivity and specificity.
Because of the unique features of our chemistry, Xenium delivers high sensitivity even on difficult issues, ensuring that customers can reliably measure the genes they're interested in. At the same time, our chemistry ensures high specificity, giving customers confidence that they're not seeing phantom genes or cells in their samples. Second, Xenium offers the best workflow from instrument to insight. We've worked hard to design easy and straightforward sample preparation and assay protocols, and we have brought our world-class software capabilities to Xenium, which is the only platform to feature comprehensive onboard analysis in parallel with the instrument run, including cell segmentation and clustering results. Directly after the run, without additional processing, results can be easily transferred off instrument for interpretation using Xenium Explorer or a wide variety of open source tools. Our differentiated approach is both flexible and fast and significantly reduces the computational burden on customers.
Third, our gene panel strategy, developed in collaboration with leading researchers, best enables customers to answer their specific research questions. Our approach combines targeted gene panels optimized by tissue type with the flexibility to add in large numbers of custom genes. This year, we plan to add several tissue-specific and multi-tissue panels to our lineup, as well as fully custom panels for maximum flexibility. Finally, Xenium delivers best-in-class throughput enabled through advances across the full technology stack in chemistry, hardware, and software. With Xenium, researchers can analyze the most tissue area at single molecule resolution in the least amount of time. We built Xenium to have key performance advantages for launch and for the long term. Xenium is backed by a comprehensive multi-year roadmap and 10x's track record of innovation, giving customers even more confidence in their investment.
At AGBT, we put some of these future capabilities on full display, unveiling new proof-of-concept data to demonstrate just how powerful Xenium is already and how much more it can enable in the future. This data showcase some of our key development directions, including multimodal cell boundary stains and trained cell segmentation algorithms, multiplex RNA and protein on the same tissue section, and isoform mapping SNV detection. In addition, we shared R&D data from a 5,000-plex multi-tissue gene panel on seven human FFPE tissues, demonstrating the platform's capability to scale to many thousands of genes. Also, at AGBT, we announced the Xenium Catalyst Program. Through this service, prospective customers can see proof-of-concept data on their own samples to support their grant applications and funding requests.
While many researchers are able to use our provided datasets for this purpose, we believe the Xenium Catalyst Program will be a great resource for select customers who require sample-specific data. We can't wait for even more customers to see first-hand why we strongly believe Xenium is the most advanced in situ platform on the market. Coming off this record-setting year of catalyzing launches across all three platforms, we're fully focused on driving new product adoption, ensuring our customer success, and getting the most out of the tremendous opportunities ahead. At our Investor Day, we shared our view of the large opportunities in life science research and beyond. When you look at all the ways our platforms are being used, the diversity of applications, diversity of analysis, and number of customers, we see that our technologies are replacing much of the conventional toolkit in the life sciences.
Our tools are revolutionizing how researchers address biological questions. By analyzing how much scientists currently spend pursuing the answers, we can estimate the magnitude of our opportunity. At a high level, there are four broad categories of research questions where single-cell and spatial methods are particularly useful. The first category, atlasing, is the initial home court for single-cell analysis, yet we're less than 20% penetrated. The second category, which entails the investigations of genetic mechanisms, also sees a meaningful use of our tools but is less than 10% penetrated. It's the same in the third category, which encompasses a large opportunity and broader diversity of mainstream biology. Similarly, we're barely scratching the surface with our fourth category, translational and biopharma applications. We have established strong beachheads, but it's still very early relative to the large potential.
Now, turning to 2023, while still a dynamic environment, most geographies have stabilized with the exception of China. We have so much to look forward to and deliver on this year. 2023 will be the first full year on market for several key products, including Chromium Flex, Visium CytAssist, and Xenium. Our commercial team is fully focused on driving adoption and increased use with new and existing customers alike. While we're coming off the biggest year of product launches in our history, we're not slowing down. Our innovation engine is focused on extending our product leadership with new capabilities, all three platforms. Capabilities that will open up our tools for more samples, more research, and more customers. From a commercial and operations perspective, we're continuing to put the pieces in place to get back to our track record of execution and scale to the next phase of growth.
At our core, 10x is fundamentally about growth and impact. It's why since the earliest days of the company, we have invested to build foundations and scale for the long term. This next phase of growth will be complemented by increased focus on operational excellence and efficient scaling. We'll be disciplined, yet remain bold and ambitious in pursuit of our mission to accelerate the mastery of biology and advance human health. With that, let me turn it over to Justin for more detail on our financials.
Thank you, Serge. Total revenue for the three months ended December 31st, 2022 was $156.2 million compared to $143.5 million for the prior year period, representing a 9% increase year-over-year and a 19% increase quarter-over-quarter. Consumables revenue was $131.6 million, which increased 8% over the prior year period. Instrument revenue was $22.3 million, which increased 15% over the prior year period. Services revenue was $2.3 million, which increased 29% over the prior year period. Americas revenue for the fourth quarter was $85.6 million, representing 11% growth over the prior year period. EMEA revenue for the fourth quarter was $43 million, representing 24% growth over the prior year period.
APAC revenue for the fourth quarter was $27.6 million, representing 13% decrease over the prior-year period, which was primarily due to COVID disruptions during the quarter. Turning to the rest of the income statement, gross profit for the fourth quarter of 2022 was $119.4 million compared to a gross profit of $115.9 million for the prior-year period. Gross margin for the fourth quarter was 76% compared to 81% for the fourth quarter of 2021. The gross margin decrease was driven primarily by the impact of shifting product mix due to newly introduced products.
Total operating expenses for the fourth quarter of 2022 were $142.5 million compared to $131.8 million for the fourth quarter of 2021. R&D expenses for the fourth quarter of 2022 were $63.6 million compared to $61.9 million for the fourth quarter of 2021. SG&A expenses for the fourth quarter were $78.9 million compared to $69.9 million for the fourth quarter of 2021. The increase in R&D and SG&A expenses during the quarter were primarily due to increased personnel-related costs as we continue to scale the organization over the last year. Operating loss for the fourth quarter was $23.1 million compared to a loss of $15.8 million for the fourth quarter of 2021.
This included $41 million of stock-based compensation for the fourth quarter of 2022 compared to $26.9 million for the fourth quarter of 2021. Net loss for the period was $17.2 million compared to a net loss of $18.4 million for the fourth quarter of 2021. Turning to our full year results, total revenue for the full year ended December 31st, 2022 was $516.4 million compared to $490.5 million for 2021, representing a 5% increase. Consumables revenue was $435.6 million, an increase of 4% over the prior year. Instrument revenue was $72.4 million, an increase of 12% over the prior year.
Services revenue was $8.4 million, an increase of 16% over the prior year. As of year-end, we have sold a cumulative total of 4,630 instruments, up 1,119 instruments from the end of 2021, representing a 32% increase in cumulative instruments sold across all three platforms. Pull-through per instrument for 2022 was $109,000, decreasing from $142,000 in 2021. As we discussed at our Investor Day, due to a number of factors, pull-through per instrument is becoming less relevant for our business today, and this will be the last year that we report on this as a key metric. Our focus is to increase the utilization of our products and drive growth in overall consumables revenue.
To assess our performance in these goals, in addition to revenue, we also track the number of reactions sold in a given period. During 2022, our customers bought over 316,000 reactions worth of consumables products. This was up from approximately 310,000 reactions in 2021 and represents an increase of 2% year-over-year. Looking at our regional results for 2022, revenue for the Americas for the full year was $293.8 million, representing 11% growth over the prior year. EMEA revenue for the full year was $117.1 million, representing 8% growth over the prior year.
APAC revenue for the full year was $105.6 million, representing a 10% decline over the prior year. Gross profit for 2022 was $396 million compared to a gross profit of $416.4 million for 2021. Gross margin for 2022 was 77% compared to 85% for 2021. The decrease in gross margin was primarily due to a one-time reversal of $14.7 million of accrued royalties in 2021, the impact of shifting product mix with newly introduced products and the impacts of inflation and increased supply chain costs. Total operating expenses for 2022 were $564 million compared to $468.7 million for 2021.
The increase in operating expenses was primarily driven by an increase in personnel expenses, including stock-based compensation expense and higher costs for facilities and information technology to support operational expansion. R&D expenses for 2022 were $265.7 million compared to $211.8 million for 2021. The increase was primarily attributable to increased personnel-related costs, including stock-based compensation expenses, laboratory materials, supplies, expensed equipment and facilities costs. SG&A expenses for 2022 were $298.3 million compared to $257.6 million for the prior year. The increase was primarily due to increased personnel-related costs, including stock-based compensation expenses, marketing expenses, and facilities costs.
Operating loss for 2022 was $167.9 million compared to a loss of $52.3 million for 2021. Net loss for 2022 was $166 million compared to a net loss of $58.2 million for 2021. We ended 2022 with $430 million in cash and cash equivalents and marketable securities, net of restricted cash. Turning to our outlook for 2023, we expect full year revenue to be in the range of $580 million-$600 million, representing growth of 12%-16% over full year 2022.
Looking at Q1 trends, we have seen an impact to bookings in China, and while we believe activity levels are recovering, there is typically a lag in reorders after disruptions as customers work through existing inventory. This has been reflected in our 2023 annual guidance range. Moving to gross margin, we expect our gross margin % to trend lower from where we exited the year as newly introduced products expand to become a large % of overall revenue. This is particularly the case for the Xenium instrument. As this is currently a low margin instrument, the impact on overall company gross margin will be greater as more instruments are placed. We plan to continue to invest across the business to support our growth.
While our rate of headcount growth in 2023 will be lower than in 2022, we will still be adding additional headcount, mainly to support new products development and support. As our new operations facility in Pleasanton nears completion, we expect a significant reduction in capital expenses in the back half of this year and will continue to drive towards becoming free cash flow positive by the end of 2023.
We will maintain a disciplined and targeted approach to OpEx spend throughout the year and expect some increases over 2022 due to increased stock-based compensation expense as a result of our previous equity grants to incentivize employees, the additional headcount to support new products and increased litigation expenses as we continue to defend our intellectual property. We look forward to an exciting year and feel well positioned financially and operationally to capitalize on what lies ahead.
At this point, I'll turn it back to Serge.
Thanks, Justin. What I hope you heard today was our focus on execution and scale as we continue to push the frontiers of biology. We're proud of the formidable strength of our innovation engine to deliver new products that fuel scientific research and enable major discoveries across every area of life sciences.
These discoveries continuously reinforce my conviction that just about all tissue samples will one day need to be analyzed with single cell resolution at large scale and with spatial context. With our three platforms, we're uniquely positioned to bring this future forward. We believe our platforms, each on their own, are by far the best in class in their respective fields. When used together, our tools provide even more value and reveal the deepest biological insights. As I look to 2023, I'm more optimistic than ever about our future.
There are massive opportunities ahead. We're in a very strong position to capture them. We have incredible products, broad commercial scale, and an amazing team, all of which give me every confidence we're still just getting started. My sincere thanks to the 10x team for making this magic happen day in and day out. Our team's relentless focus on our mission and customers has always been a fundamental strength that sets 10x apart and will continue to propel us well into the future. With that, we will now open it up for questions. Operator.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one.
As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question comes from the line of Dan Brennan with Cowen. Please go ahead.
Great. Thank you. Thanks for the question. Congrats on the quarter, guys. Maybe the first one just on the guide, 12%-16%, a bit below where, you know, consensus was, but certainly can make sense given macro and the comments on China that you made and the experience during 2022. Just would love, while you don't kind of break down single-cell and kind of spatial today, would love just a little help to the extent you can, just kind of how we think about, you know, those two buckets. In particular, I think the single-cell bucket, which is the bigger one, just, you know, kind of what you're seeing both from academia and biopharma and kind of how you incorporated that into the guide.
Hey, Dan. This is Justin. I'll take that one. As far as our 2023 guidance goes, you're right. We've got a, you know, a Chromium bucket and a spatial bucket. If we look on the Chromium side, we're looking at probably from the low-to-mid teens% growth year-over-year. Keep in mind, this does include the impact that we've seen so far in China in Q1, which we've called out. We think China is probably gonna end up around 20% down for Q1 year-over-year. That's probably gonna drive Q1 somewhere in the low-to-mid teens% increase year-over-year over Q1 of last year. That's incorporated in the overall guidance range.
On the Chromium side, low to mid-teens increase. On the spatial side, with the addition of Xenium, and the ramp that we've seen so far with Visium, looking at about 40%+ increase year-over-year, as the initial input for the guidance range there.
Great. Thanks for that. This maybe as a follow-up, I'm sure there'll be a lot of questions to pick that apart, but just when we think about profitability, I heard you at the end, Justin, at the prepared remarks. Can you just walk through again how we're thinking about exiting the year? You said free cash flow positivity. I know in the past you've talked about EBITDA positivity. Just kind of what can we expect in the fourth quarter of this year, and what does that exit rate kind of portend as we go beyond 2023? Thank you.
Yeah. Thanks, Dan. Driving towards free cash flow positive by the end of the year, is still our goal. We believe that we can do that under multiple different scenarios. There's many levers that we could pull if we did see things, trending down towards, the lower end. You know, as we mentioned before at Investor Day, and then also in the prepared remarks, after we complete our facility here in the first half of the year and get all the payments out for that, we are gonna see a pretty steep drop-off in CapEx, going from the first half of the year, to the second half of the year. Also keep in mind that, you know, this is under our current business. It's not taking into account, any significant non-recurring events.
Overall, it's important for us, you know, we're being disciplined in how we're managing our OpEx. We're being very thoughtful with how we invest right now.
Thank you. Our next question comes from the line of Dan Arias with Stifel. Please go ahead.
Evening, guys. Thanks for the questions. Serge or Justin, maybe specifically on Xenium, now that systems are making their way into the field here, what's the best way to think about contributions specifically for that box, just given that it sounds like you're, you know, you're trying to be, I think, measured early on with the launch, but you're also pretty clear about demand being strong? Anything you can sort of help us with to frame out year one for that product? Then maybe relatedly, is there anything that you're thinking about in terms of the impact to the Visium franchise?
When we're looking at 2023, I believe that Xenium is likely to be the largest variable in our guidance range. We expect the revenue from Xenium to be more skewed towards the instruments rather than consumables this year. We expect the placements to ramp through the year. You know, we gave the overall thoughts on how just the spatial platforms will contribute overall to the 2023 revenue. Visium and Xenium together, over a 40% increase year-over-year. You know, we have mentioned before that this is a complex technology. It's a product that we pulled forward quite a bit to launch by the end of last year.
We're really focused right now on the initial placements and early customer success. You know, in looking at how those placements have gone, and looking at the data that customers themselves have generated off the instruments that we've delivered and installed, initial signs are looking good. I think we need a little bit more time to see how that continues to ramp, at which point we'll assess how quickly we'll execute the rest of the installs, and what kind of constraints there might be after that.
Dan, to your question on Visium and Xenium interaction. At this stage, the platform exists, platforms exist in fairly distinct use cases and swim lanes in terms of what kinds of applications customers would be considering them for, and obviously quite different sort of shape of capital requirements and run rates. We don't see them kind of cannibalizing each other to a significant extent right now. In fact, you know, there's a fair amount of synergy between using the platforms and we do see customers kind of opting into the sort of the full 10X spatial ecosystem, and we certainly are eager to encourage that as well. That's how we see, you know, this year kind of planning out.
In the long run, of course, it's very hard to predict how the different applications and platforms will sort of overlap, interact and support each other. I don't think anyone quite knows that. At this stage, I think they are both gaining a lot of momentum and quite complementary out there.
Okay. Thank you for that color there. Maybe I'll just stay on the new products. On the Flex assay, how meaningful do you think that can be this year? I mean, you had talked about customers needing to see some validation data and just get comfortable with the assay. It sounds like that's happening now at a fairly decent pace, although I'd love to hear whether you think that's the case. Should we think about that being a needle mover this year? Relatedly, is that assay driving Chromium X placements forward? You know, when you just look at the install rate over the last quarter and what you're looking for bookings-wise.
Yeah. There's several variables here. First to kind of your initial framing question. Yeah, I mean, we're definitely seeing good momentum on Flex and especially kind of increasingly good momentum as we look at the last quarter and how customers have been scaling. We definitely see people kind of doing the initial test, coming back with positive results, by and large, very enthusiastic reactions, and then scaling to larger experiments and growing more and more. The key variables that we're gonna need to watch is some amount of Flex usage is going to be crossover from our previous flagship assays, 3' or 5' gene expression. That's not going to be necessarily additive.
Another variable to watch is that the Flex enables much more streamlined multiplexing, which allows people to drop the price per sample. While we're seeing it allowing creating possibilities for running new types of experiments that people weren't planning to do before, so adding to the sum total to the ecosystem, it also has the effect of potentially moderating some of the top line because now people, if we're running the same size study, they don't have to spend as much. We see that as a more of a near-term effect. In the long run, have full conviction there is tremendous elasticity of demand and it's only gonna drive more, but we've got to be cautious in the meantime. We do see Flex has been driving instrument placements.
Certainly that is the feature, the key feature now that differentiates or differentiated iX Series instruments from the Chromium Controller. It definitely is an enabling feature. So that will create more momentum going forward. Flex of course opens up, as we've always planned on, opens up new sample types, new tissues and in particular FFPE samples, which was something that was not even conceivable for single-cell analysis not that long ago. There's great potential there. It's still early, especially on FFPE side, to kind of make predictions around how the trajectory is going to evolve. We just started really putting full force marketing behind it at the end of last year. Early to say anything meaningful.
Thank you. Our next question comes from the line of Tejas Savant with Morgan Stanley. Please go ahead.
Hey, guys, good evening. Maybe I'll start with one on the guide. Serge, you know, just given your comments earlier this afternoon on how you think about, you know, the three different platforms and the distinct value propositions, you kind of laid out the case for Xenium versus Visium. What do you think about sort of Xenium versus potentially Chromium? Secondly, in terms of just, you know, the Visium HD launch, are you thinking of that as essentially replacing the Visium sales in the model over time, if and when Visium HD goes live?
Yeah. The first question, Xenium versus Chromium. Couple of things. I mean, I think embedded in your question maybe is the question of cannibalization and potential reinforcement. When you look at how in situ is used in general, traditionally, and when we look at previous instantiations like Cartana experiments, all of them are used pretty much always use Chromium data, single-cell data, as complementary, and we see that continuing.
To a large extent, we see Xenium as being complementary to Chromium. We also. To the question of cannibalization, there is potential for some of that, and that potential is probably stronger with like really early technology adopters, people who are particularly oriented toward new technologies.
Certainly they're going to be If single cell was something, Chromium was something that was super new a few years ago, now Xenium is going to be that new thing. There could be potential shift in some attention. Keep in mind that the Chromium market now is much, much larger than that. There's lots of enthusiasm, lots of lots of momentum behind projects that really require that single-cell or Chromium approach. We do see that again, the two will exist while there's going to be some amount of potential cross cannibalization. They do exist in very complementary swim lanes as well. Your question around Visium HD and standard Visium, we'll see. We'll talk more about it when we get closer to launch.
We certainly have, like I said all along, very high enthusiasm, and we're seeing that from customers around Visium HD and, huge potential, lots of excitement.
Got it. Then as a follow-up on the Xenium, here again, I know you probably don't wanna get into the specifics of the order book, but any color you can share in just month-over-month trends through January? Second, where do you expect to be in terms of the instrument manufacturing scale up, Justin, to your point, on a relatively complicated instrument, exiting the year? Any color you can share on the list price versus discounting versus some of the bundling that you've spoken about in the past, across your portfolio in terms of the 2023 outlook? Thank you.
Hey, Tejas. This is Justin. I'll start with the month-to-month trend. You know, as you know, we don't disclose pre-orders or orders. Those aren't sales. We're focusing entirely right now on ramping up the operational supply chain, manufacturing and continuing to build out the install teams. Demand is strong. We don't see demand as being an issue in the near term. As far as manufacturing overall, this is the most complex product that we've ever built. You know, it was produced on a compressed timeline that we pulled forward. You know, we're continuing to focus operationally. We see that as a strength longer term.
We're working to move as fast as we can. You know, but there could be constraints on that side as we move forward in the future, and we get past these initial placements that we're thinking more deliberate about and going towards, you know, just more widespread placements. What was the th ird part of your question?
No. I think we covered all three.
Okay.
Thank you. Our next question comes from the line of Patrick Donnelly with Citigroup. Please go ahead.
Hey, guys. Thanks for taking the questions. Justin, maybe to stick with the guidance. Just wanna get a flavor of kind of how you approached it relative to last year. You know, in 2022 you had a few things pop up, obviously the lockdowns in China being the most significant, but then, you know, cold chain issues in Europe. You talked a little bit about this year you almost have more variables, right? With Xenium being kind of the bigger one.
I guess, how did you approach it in terms of the level of conservatism just given, again, you know, some things can always come up, and particularly around Xenium, I guess, just trying to get a flavor for the conservatism and the guide relative to how you approached things last year or the year before.
Overall, our philosophy on guidance hasn't changed. It's a balanced view that we're looking at overall with upsides and downsides across all products and, you know, all the factors that we're aware of that go into it. I would say that this year, though, one thing that's a little bit different in formulating that view is the growth rates that we're projecting for later in the year. We're not getting too far ahead of ourselves as far as projecting growth rates that we aren't seeing right now. That was, you know, the base assumption that was going into planning the rest of the year.
As far as just looking at the guidance overall, like I mentioned, you know, a big portion, I think of the variability that we could see in the year is going to be how Xenium instruments ramp. We didn't want to get too far ahead of ourselves there either. If there was one part of the guide that would probably be a little bit more on the conservative side, it would be just what we're assuming for the Xenium, for the Xenium ramp. You know, as the year progresses, we'll update that as we go forward.
Understood. Okay. That's helpful. Serge, maybe on Visium HD, can you just talk through, I guess, what steps are left to get this out to the market? You know, I know we were chatting a little bit last week at AGBT about, you know, sounded like there were maybe more technical challenges than you expected initially. You got through a lot of that. Maybe just your view, the roadmap to commercialization here, what steps have already been taken and kind of where, what inning you think we're in, if that's the right way to ask. Thank you, guys.
Yeah. No, we talked about it last time. As I mentioned at AGBT, we showed some really exciting data that we're now producing internally. We're working really hard. The team is working really hard to get the product to market. Tons of enthusiasm from customers. We're not at this stage ready to give an update on the timeline or on the state of development, but I do want to emphasize that we're very, very strongly committed to the platform, and I'm very excited by what it will enable with our customers.
Thank you. Our next question comes from the line of Julia Qin with J.P. Morgan. Please go ahead.
Hi, good afternoon. I want to touch on Chromium trends. Since biopharma is at the core of driving up that volume scale of and translational use, could you give us an update on your progress in penetrating biopharma accounts? For the new Chromium instruments that you're placing or the consumable utilizations, how much of that is driven by biopharma accounts? What is a reasonable, kind of, you know, medium-term target that you're thinking about?
Yeah. In terms of biopharma adoption, I would say as it's kind of as we've talked about it before, we see that we have a strong beachhead, and our biopharma sort of progress has good like sales into biopharma has been tracking pretty similar to our sales in academia, and they still are. It's, you know, we do expect that over time there's huge, huge potential within biopharma applications, and we do expect that to see, realize, materialize in the coming years.
Up to now, there's been pretty fundamental barriers to adoption within biopharma due to the limitations of our products, most importantly, inability to fix tissues and needing to work with live samples, live cells.
That got addressed last year. Increasingly as we kind of march through the year towards the end of 2022, we've demonstrated more and more how the new products, especially the Flex, on the Chromium side, is able to work with fixed tissue and in particular with FFPE samples. I think we now have a good baseline of product capabilities on which to build the commercial strategies to drive much more intentionally, much more aggressively into biopharma. I think that's going to be a story going forward, that sort of potential for acceleration, and not yet what we have seen.
Got it. A question on sort of the interplay between the single-cell and spatial sides of your platform. We've been hearing some talks about, you know, customer budget reallocation, potentially, you know, away from single-cell to spatial to take advantage of the new capabilities. Just curious, you know, what are you seeing based on your customer conversations in terms of the budget? In light of that, you know, do you see any fundamental shifts in the Chromium customer mix going forward, especially once Xenium is out? Yeah, any color you can share on that would be great. Thanks.
Yeah. That's a good question and one we certainly track. I think the important thing to appreciate here is that there's different types of customers, and certainly the early adopters, the technology enthusiasts, the people who will tend to be the earliest adopters of both the Xenium and the Chromium platform, would na turally shift to the latest kind of technology, would expand to the latest kind of technology.
When you talk to those kinds of customers, you would expect, and we are hearing that there's some shift in budgets toward Xenium, potentially from Chromium. At the same time, the Chromium customer base is much larger, certainly these days than the initial technology early adopter people.
There's lots and lots of mainstream biologists who are using Chromium. There's lots and lots of now translational customers that are using Chromium, and there things are just getting started. There's tons and tons of applications that people are looking to do specifically on Chromium, where Chromium is a much better fit for many reasons.
Of course, there is applications where it's always going to be really dissociated single cell. It's always going to be the right approach, whether if you're starting with the dissociated samples like blood or you're working on various combinatorial screens, CRISPR screens, where the cell is the fundamental unit of experiment, where it's always going to be really based around the Chromium approach.
While it is, we are seeing some amount of budget shifts to Xenium, we think the, you know, a large majority of the Chromium franchise is going to keep expanding, keep growing.
Thank you. Our next question comes from the line of Kyle Mikson with Canaccord Genuity. Please go ahead.
Hey, guys. Thanks for the questions. Multi-part question on Xenium to start. It's really your first instrument, maybe other than the Connect possibly, that kind of has this price point that might start to trigger evaluation from, like, the higher level individuals at institutions. How are you thinking about your sales team's ability to adjust to that new sales cycle here and, like, close deals?
Do you think there's gonna be any growing pains, especially in light of, you know, those changes in 2022 and Jim now leaving? There's always this, like, initial training period for users of a, of a new platform, and when we speak to these early users, it sounds like, you know, they're just entering that true sample processing phase with Xenium.
Like, within the guidance, how long do you expect it's gonna take for the early adopters, like those, like, 1Q and 2Q placements to kind of ramp up their usage of the platform?
Maybe kind of to start with on just the general commercial evolution that we've talked about before. We have a great foundation in our commercial organization and huge reach really, lots of talent in the organization, and we plan to leverage that commercial foundation for growth into this year and beyond. We're adding, you know, we're adding new tools.
We're adding new processes, common language, you know, to our reengineering some of our sales incentives, and I think there's a lot of good stuff that's happening, and we see that that's going to, you know, help us throughout, certainly now and throughout this year and going forward.
In terms of, what's the second question?
Just like the initial training period's pretty long. Do you think it's gonna take a long time to ramp their usage of the platform? Like, what's included in the, in the guidance maybe?
Yeah, in terms of the Xenium ramp up, that's something that we're gonna have to see. Like we said, their initial signs are pretty encouraging. People pretty quickly get up to speed, and we've seen some very early results from customers running their own samples on our instruments, so that's very encouraging. We're very, very early right now, so of course, we incorporate all of that knowledge in our expectations.
Thank you. Our next question comes from the line of Matt Larew with William Blair. Please go ahead.
Hey, good afternoon. Justin, just wanted to ask a bit about the cadence of the year. I think, you know, some variants typically said about 55% of sales in the back half, and the waiting is a bit higher on instruments. Just given your comments on China and the Xenium instrument ramp, maybe just help us think about whether there might be a greater skew to the back half of the year this year?
As far as seasonality goes, we're not expecting anything out of the ordinary. We do expect the seasonality to be similar to the average of the last couple of years.
Serge, following up on your comments. Obviously, the commercial team went through leadership and meaningful infrastructure changes last year, bringing on tools, new incentive structures. Maybe it's how do you feel about where the organization's at from a personnel perspective, and is this more of a year of additional investments or more of a harvesting some of the investments that have been made?
I think, like in all of this, like building a company, building organizations, it's always a long-term journey. We feel good about where we are. We're putting a lot of new pieces in place, and, you know, we're gonna keep doing that. I don't see it as necessarily harvesting. I suppose only we'll take advantage of what we have done, and we'll keep doing more.
Thank you. Our next question comes from the line of Michael Ryskin with Bank of America. Please go ahead.
Great. Thanks for taking the question, guys. First I wanna talk about the, you know, some of the new metrics going forward. For example, you talked about a 2% increase in reactions year-over-year for 2022. Just so we get some familiarity with that metric going forward, any sense of what a good bogey that'll be in 2023 just so we can try to think about, you know, reactions versus revenue growth? You know, any thoughts on how that paced throughout the year last year, sort of, you know, did it come in ahead of expectations, below expectations? Just a little bit more context there.
Yeah. As far as the guidance for 2023, we're guiding on revenue dollars and gave some of the expected growth rate ranges across the different platforms. As far as reactions, you know, one thing to keep in mind when you're looking at the change in reactions is, you know, a reaction is the physical product that we sell, but there's also samples that go into reactions. As you know, you know, as customers multiplex more, they can get more samples per reaction. That's difficult for us to track. We can get a sense of that somewhat anecdotally. We know that that's been increasing, especially over the last year.
Our newer products we've released in the past, Flex, have enabled that. You know, some of our newer products, it's built, you know, it's built in, you know, fundamental to the product as well. I do think that that can be a decent variable that can impact the number of reactions from year to year. As far as the price points on it, the cost per reaction has been trending up over the last couple of years. When you're looking at a Visium reaction compared to a single-cell reaction, you know, all-in cost for that, the Visium is a little bit more. Really, you know, on average, within that $1,300-$1,400 range across all products.
Okay. All right. I appreciate that. Just for the follow-up, I wanna just tie up some loose ends that you mentioned earlier. I mean, you talked about, for example, Justin, you talked about low to mid-teens on Chromium and 40% year-over-year Spatial, but I don't think we have an accurate base for 2022. I mean, we have some numbers from your Analyst Days, but not for the full year. Could you just give us a sense of what the full year numbers were? On China, you know, you commented on 1Q, but what about the full year for China? Any thoughts there? Some thoughts on your assumptions, when do you think China will normalize as the year goes ahead? Thanks.
Sure. Let's start on the 2023 guidance overall on Chromium. You know, within our guidance range, we're talking low to mid-teens year-over-year increase for Chromium. In spatial, it's at least 40%, so you know, 40% on the lowest end, and then ramping up. You know, inverse to how the Chromium increase would be ramping up. Not 40%, but more than 40%, for spatial. As far as looking at Q4, you know, we did give the information on Q3 at the Analyst Day, but in looking at Q4, spatial was about the same % of revenue in Q4 than it was in Q3. Same percentage at a You know, roughly the same percentage at a higher revenue base.
As far as how we expect things to progress for the rest of the year, especially with China. You know, I mentioned earlier that, you know, we are seeing impacts to China right now. We do think that China is gonna be roughly somewhere in the ballpark of 20% down year-over-year. What we are seeing and hearing right now from our team in China is that, you know, activity levels are looking good and activity levels are recovering. We're also hearing that inventory levels at the service providers and the distributors are higher as they were coming off of this level of disruption before the activity came back up. There's now some inventory to work through. You know, we see that having an impact to Q1.
We're expecting an impact in Q1. You know, also expecting, you know, somewhat of an impact in Q2, although not as great, as Q1. Then a moderate improvement throughout the rest of the year. You know, if we see it get better then, you know, a moderate improvement, we'll update that, at that time.
Thank you. Our next question comes from the line of Matthew Sykes with Goldman Sachs. Please go ahead.
Hi, good afternoon. Thanks for taking my questions. Justin, maybe just on the first one, just on gross margin. I know you mentioned you expect to be below the level of last year and a lot of that has to do with the new product introductions. How should we think about it over the cadence of the year? I mean, should we think about it as sort of a lower level consistently throughout the year, or is there going to be some level of change in cadence of gross margin as we move through the year?
Hey, Matt. When you're thinking about gross margin for this year, the biggest driver on gross margin is going to be what % of overall revenue is Xenium instruments. The Xenium instrument itself, it's a low margin instrument for reasons that I've gone over before. The consumables, though, are more comparable to the consumables that we currently sell.
There is gonna be an impact throughout this year. I think it's gonna continue to trend lower throughout the year as we increase our Xenium placements and also the % of the overall revenue increases. I do think that there will be partial offsets as the consumables revenue stream on those continues to ramp up as well.
As far as how the consumables ramp compares to the instrument ramp, you know, it's too early to make a call on that. I think, the best assumption is just that it's gonna continue to trend lower throughout the year, and it's gonna flex according to the number of overall placements.
Got it. That's helpful. Serge, just on the commercial strategy. You had mentioned in your prepared comments about changes you made. I know you hired Jim last year, but any more detail that you can provide, just given that you're now a multi-product company, you know, looking to scale as well as grow. Could you maybe talk about some of the changes that you made or some of the things you might be doing differently this year as you're dealing with multiple products in the marketplace?
Yeah. Definitely the complexity of our platforms and products set has increased, and substantially, especially with the introduction of Xenium, which is the most kind of the biggest instrument, the most complex instrument we've had before. That said, as we also talked about before, the products are highly complementary and there's a huge overlap, a huge overlap in customers and huge overlap in terms of you being able to use them in complementary ways. That's something we're definitely leaning into and certainly taking advantage of our entire, like, sales force and commercial force to help the different platforms support each other and reinforce the mutual advantages. We're also, you know, recognizing that some of them require, you know, a bit more focus.
We are investing in some amount of specialization on, certainly on the sales side, on the marketing side, on the support side to especially to help with the Xenium.
Thank you. Our next question comes from the line of Justin Bowers with Deutsche Bank. Please go ahead.
Hi, good afternoon. During the prepared remarks, you talked about the next phase of growth and was hoping that you could help characterize that, for us a little more. Thinking about, you know, the next two or three years, is the growth rate we're seeing, in the guidance for this year, kind of reflective of, you know, the outlook for the next two or three years?
In terms of kind of how we look at the next several years and the next phase of growth here, a lot of it is going back to the previous question from Matt. The complexity of our product lineup has increased tremendously, the products, you know, different platforms are somewhat different stages of market penetration. Given, you know, Xenium is just getting launched, I think there's tons and tons of excitement in the marketplace right now for the platform as it currently stands and tons and tons of potential as we add more capabilities to the platform. I think it's going to be a huge driver of market demand, especially as we look over the next several years.
We're making big investments in there. The Visium franchise has been around for a few years and it took us some of the time to build out the full stack of capabilities. Especially with the launch of CytAssist met last year, it's really set up for an acceleration in growth. So we're feeling particularly excited, and we see a lot of resonance with customers there, and we are going to be investing to lean into that acceleration. Then on the Chromium side, we've grown a lot over the last several years. I think we're at the point where there is a lot of potential to grow into new kinds of applications and to new kinds of areas. We've emphasized translational research, especially with the capabilities now.
I think there's a lot huge potential there. There's lots of opportunities in biopharma. There's a general sense that the single cell and the Chromium platform is really in a good place now to go much more mainstream throughout mainstream biology. That's our goal. All of these sort of vectors require more scale and more intentional and oftentimes, you know, specialized approaches to how we go to market in all these areas. We're investing and scaling the company while scaling our approaches leveraging what we have built so far to drive it next level as well.
Understood. Just a quick follow-up. In terms of the headcount additions, it sounded like those were concentrated in R&D and product development. Can you give us a sense of the mix there? Then just on China, are some of your partners over there starting to see tenders from the stimulus package that was introduced last year or passed last year?
As far as headcount goes, when we're looking at increases in 2023, it's mostly to support new products. We're looking at minimal increases, 2023 over 2022. We are hiring some Xenium specialists throughout the year to help augment the efforts and support the sales reps. We're also taking over support and installations of all products internally, whereas we used to do that through a third party. The increases are coming, you know, mainly from those two areas.
Thank you.
As far as China, we haven't heard anything.
Our last question comes from the line of John Sourbeer with UBS. Please go ahead.
Thanks for taking my question. If I could ask two here. I guess first with Europe. Any color there on just how you see the Europe market playing out for the year and any of the dynamics around macro pressures there?
Europe had a solid quarter, this past quarter. I think, you know, there's probably a number of reasons for that. I think, you know, looking at the year-over-year compare, you know, it was a favorable compare going back to 2021, the end of 2021 when, you know, the Omicron rose. We saw that impact in Europe during the last two weeks of the quarter. I think operationally, we had some challenges in the middle part of the year that I believe that we've, you know, improved and mostly recovered from, going into Q4.
It definitely seems like things in Europe have been more stable, and the trends over this last quarter have definitely been, you know, encouraging. You know, one thing to add as well, though, and this impacts Europe and other geographies as well, is coming into the beginning of 2023, we executed the largest annual price increase that we've ever done. I do believe that there has been some. You know, there's always some pull forward when you have a price increase, but this being the largest one that we've done, going from Q4 into Q1, I do think that it was likely a little bit more than we've seen in the past.
It's a little bit too early right now to tell how much of that was pulled forward, and how much of that was regular demand. I think we need a few more data points before we start calling a new trend, you know, in particular in Europe, but just worldwide as well.
Thanks. My follow-up was gonna be on pricing, but maybe just to kind of end it, high-level question here. I guess, you know, when you think about now post-AGBT and the conversations from your customers, I guess, you know, where do you see the most excitement coming when you look through the different platforms from the year? You know, any shift in those dynamics there between spatial and single cell?
Yeah, no, it's a good question, we're actually like trying to rank order ourselves, it's challenging. There's tons and tons of excitement coming out of the AGBT, strongly on the single cell side. We showed how the scaling potential of the Chromium platform, it's, you know, it's pretty astounding with 10 million cell experiments, all kinds of data that you can get from a single sample. We showed on the Visium side, we showed Visium HD data, in parallel, there's huge resonance with CytAssist and what it's enabling. You know, hearing people that, you know, have more, you know, a lot more demand than the capacity to run it at this stage.
We are, and also Xenium, again, we showed, you know, the features, the great features of the instrument, the platform itself right now, really clean data, high sensitivity, high specificity. It has the best throughput in the market by far. Has great workflow, really sophisticated software which has gotten tons of resonance from people. Then at the AGBT in particular, we talked about also about long-term development directions, and those also resonated really strongly with people, whether it's Flex levels in the future, improvements to cell segmentation or like really excitingly, all the different kinds of analyze. You can actually analyze with Xenium using our chemistry that you can't with really any other approach.
Being able to look at, individual single nucleotide variants in cancer samples and isoforms. Lots and lots of excitement both around like what the platforms could do right now and, sort of the, the direction that they're going in. It's very hard to pick any particular one as the winner.
Thank you. That concludes today's 10x Genomics fourth quarter and full year 2022 earnings conference call. I hope you all enjoy the rest of your day. You may now disconnect your line.