10x Genomics (TXG) Q2 2026 earnings call transcript

Thank you, and good afternoon everyone. Earlier today, 10 Exgenomics released financial results for the second quarter ended June 30th, 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 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 10xgenomics issued today, and in the documents and reports filed by 10xgenomics from time to time with the Securities and Exchange Commission. 10xgenomics 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 Tach, 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, Cassie, and good afternoon, everyone. I will start with a brief overview of our second quarter performance, then provide an update on ATERRA, and finally discuss several broader trends that are reshaping biological research and creating new opportunities for our business. Revenue for the second quarter was $151 million. During the quarter, we recognized $1.6 million of licensed royalty revenue in connection with a settlement with Takara. Excluding non-recurring settlement revenue in both this quarter and the prior year period, Q2 revenue was $149 million and grew 3% year over year.

The story of the quarter was the extraordinary customer response to ATERRA. We're highly encouraged by the engagement across the research ecosystem and the very strong early order flow. At the same time, our own market products showed sustained strength. We drove robust growth in chromium consumable reaction volumes, reflecting expanding usage across a broad range of applications. In spatial, zeni mutualization continued to perform exceptionally well, reinforcing its position as the leading platform for spatial analysis today.

Our launch of ATERRA is still, by far, the biggest highlight of the year. On our last call, I discussed ATERRA's core capabilities, many of which were not thought possible within a single platform. It delivers step-change advances across a range of features, including throughput, plaques, and sensitivity. ATERRA enables spatial, whole transcriptome profiling with single-cell sensitivity at scale. The promise of spatial has always been that it represents the convergence of molecular cell and tissue biology. ATERRA is poised to deliver on that promise, to provide researchers with a fundamentally more complete view of biological systems and answers to many questions that were previously out of reach.

You may remember that we said initial customer reception exceeded our expectations, which were already very high heading into the launch. Since then, customer enthusiasm has only gotten stronger. This has translated into a strikingly large number of orders in a very short amount of time. The momentum we're seeing is remarkable for a platform that was completely unknown to our customers only a few months ago. We believe customers' enthusiasm should only increase as they learn more about the system and see what it is able to deliver in their hands. Similarly, we're seeing strong demand for Catalyst Research Services, a program for customers to submit their own samples to be run on ATERRA in our lab. We expect sample processing to begin alongside ATERRA's commercial availability.

Catalyst Research Services is designed to support a range of customer needs from generating initial pilot data sets to providing flexible and ongoing access for routine research to enabling researchers who do not yet have access to an ATERRA instrument. The strong demand for the service is another encouraging leading indicator for the future of the platform and the breadth of its impact. Our vision for ATERRA was to build the cornerstone platform that enables scientists to interrogate a full spectrum of research questions with the versatility and scale needed to resolve the complexity of biology.

It is gratifying to see that vision start to come to life as customers describe how they plan to use ATERRA. We're seeing engagement from universities, academic medical centers, and biopharma companies pursuing research across nearly every major disease area. From oncology across dozens of tumor types to neurodegeneration, autoimmune and inflammatory disease, cardiometabolic conditions, kidney transplant biology. The list goes on. That diversity is also evident in the specific research questions being asked. Customers are interested in applying the platform for foundational cell and tissue atlas in mechanistic studies of how disease actually develops, monitoring response to novel immunotherapies and cell therapies, and for early biomarker and translational work. Just as importantly, customers are planning to integrate ATERRA into the routine fabric of their research.

Researchers within academic medical centers, for instance, are planning to deploy it across the entirety of their translational oncology programs. We're hearing similar conviction from industry, where senior R&D leaders adopted by pharmaceutical companies are investing in ATERRA with the belief that spatial biology will fundamentally change how they approach drug discovery and development. We build ATERRA as a long duration, upgradable platform with capabilities that will continue to expand over time.

ATERRA's extensive roadmap includes workflow automation, base by base spatial sequencing, and the addition of protein multiomics. With that in mind, during the quarter, we took an important step to enhance our proteomics capabilities with acquisition of protein tech genomics. Protein tech genomics brings deep expertise and differentiated technologies for measuring proteins in multiomic context.

We believe integrating rich proteomic information alongside spatial transcriptomics will further expand the biological questions ATERRA can address and continue to strengthen the platform. The intensity of the early interest and the spectrum of customer applications are reinforcing our conviction that ATERRA is poised to transform how we measure and understand biology.

When you look back at the history of our industry, every now and again a new platform comes along that reshapes markets and changes how science is done. This is a very rare but profoundly exciting occurrence. We build ATERRA with exactly that ambition and the early science suggests it is on that trajectory.

Turning to single cell, I want to highlight a few major trends driving the business. First, our customers are adopting our platforms for larger more ambitious studies. Over the past several quarters, products like Flex Apex have enabled a new generation of this work, particularly in biopharma and translational research. One way we're supporting the shift is through our recently introduced whole blood workflows that stabilize samples at the point of collection, enabling longitudinal research, distributed sample acquisition and access to archived material.

Second, there's a growing interest in additional modalities and multiomics, an area that has always been a strength of our portfolio in the focus of our investments.

Last quarter was a particularly great example. We launched a new GMX version of our multion product, significantly improving research's ability to measure epigenetics and gene expression from the same cell. This unlocks new dimensions of biological context and has been met with positive early customer response. Furthermore, a protein tech genomics acquisition expands and complements our existing multiomics capabilities. It provides us with the largest single cell protein panels on the market and allows us to offer more complete solutions for customers to measure gene expression and proteins on the same cell.

Finally, a significant trend in single cell has been an increase in large-scale perturbation experiments to map biological mechanisms and resolve causality. We're finding that Flex Apex is becoming the standard assay for these experiments because of its scalability, robustness and sensitivity. While we see significant Flex Apex adoption across all customer segments, the uptake of Apex and BioFarma has been particularly strong driven by the application of perturbation screening to target identification. The value of these studies is also increasing because of the progress in AI, which helps drive mechanistic insights from the large amounts of data generated by these experiments. As we have discussed before, we believe AI represents a significant and structural tailwind for our business.

AI has enormous potential to transform biology and human health, but realizing that potential depends on generating vastly more of the right kinds of data. The key bottleneck for AI-driven progress in biology is the same bottleneck we identified when we started the company. Biology is incredibly complex. We understand only a tiny fraction of it and solving that complexity requires measuring biological systems at massive scale and high resolution.

We build single-cell and spatial technologies for precisely that purpose, which is why they're not being deployed by so many of our customers to train AI models.

In fact, AI as an influencer of demand is now becoming pervasive across our customer base. Today, most significant biological data generation efforts are conceived at least in part with the goal of training AI models. On the academic side, there are multiple well-known pioneering efforts such as those led by CZI and the ARCH Institute dedicated to building virtual biology models.

But we're also seeing a wider shift where more of basic scientific research entails training AI models. This shift is driven bottom-up by decisions of individual scientists, as well as top-down by philanthropic and government funding priorities, such as those outlined in recent proposals from the White House.

A similar shift is also starting to happen by pharma with a rapid growth in AI-focused investments. Initially, much of the AI work and drug development has focused on the chemistry side of the process on creating molecular interventions once a target is known. Going forward, we expect increasing investments to be made in modeling biology at the cell and tissue level to unlock new targets and to predict drug response in patients.

We believe this is where the biggest bottlenecks are and where there are the greatest opportunities to transform drug development. This work is also precisely what our tools enable and why we anticipate a very large opportunity for our technologies over time. Most pharma companies now have strategic mandates to leverage AI to speed up drug development and increase the probability of success.

At the same time, there's a rapidly growing number of biotech companies that seek to transform drug development using AI. More and more of them are focused on building sophisticated virtual models of human biology. The vast majority of the companies building such models are using 10x single cell and spatial technologies. Customers, overwhelmingly, choose our products because they deliver the highest data quality, the largest scale, the widest biological context, and the most powerful multi-omics capabilities. It has become increasingly clear in the field that all of these considerations are critical for building high quality, generalizable, and useful models. It should be noted that building better models is only a part of the AI story. For years, one of the biggest barriers to broader adoption of single cell and spatial biology has been the bioinformatics expertise required to analyze increasingly rich datasets.

Advances in agent AI are beginning to remove that bottleneck. Researchers who previously required dedicated computational experts are starting to analyze complex datasets through natural language interactions with AI agents. We believe that will make single cell and spatial analysis accessible to a much broader community of scientists while increasing the value of the underlying data. Together, these trends reinforce our conviction that single cell and spatial biology are foundational to the future of basic science and drug discovery research.

AI is increasing both the demand for high quality biological data and the ability of researchers to extract insights from that data. We believe those two forces will reinforce one another over the coming years. Now, as we have discussed previously, we envisioned a significant opportunity to extend our technologies into clinical diagnostics in the future. Realizing that opportunity requires generating robust clinical evidence on large patient cohorts.

We're continuing to make progress on our internal efforts to generate such evidence in oncology and in autoimmunity. This quarter, we announced new partnerships with the Cleveland Clinic and with the Lausanne University Hospital to identify bar markers of response to therapy across multiple oncology indications. Taken together, this quarter demonstrates the strength of our strategy and continued execution across our business. We advanced the game-changing new platform, sustained strong momentum in our core consumables business, and deepened our engagement with customers through high impact partnerships. We continue to build a stronger company operationally and financially, giving us the flexibility to invest for the long term.

Our technologies are at the nexus of some of the most powerful trends transforming biology and medicine. The upcoming years are going to be profoundly exciting and we're uniquely well positioned for the opportunity ahead.

With that, I will turn the call over to Adam.

Thanks, Serge. Unless otherwise noted, all growth rates referenced reflect year over year comparisons. Revenue for the second quarter was $151 million. As Serge mentioned, when excluding the $1.6 million allocated to license and royalty revenue, our second quarter revenue was $149.4 million. This represents 3% growth over Q2 2025, when excluding the non-recurring settlement revenue in both periods. These results reflect continued momentum in the key drivers of our business. Total consumables revenue was up 7%, with growth in both single-cell and spatial.

Single-cell consumables revenue grew 3%, supported by double-digit growth in reaction volumes, given accelerating momentum for Flex Apex. Spatial consumables continued to perform well in the quarter with revenue up 16%. We saw sequential consumables revenue growth for both zenium continues to be the primary driver of spatial consumables growth. Total instrument revenue declined 47%, with chromium instrument revenue down 46%, and spatial instrument revenue down 48%, both primarily driven by a lower number of units sold. As anticipated, the decline in spatial instruments reflects customers moderating purchases of our current spatial products in anticipation of a tariff. Looking at revenue by geography, excluding the impact of non-recurring license and royalty revenue in both periods, America's revenue was up 6%.

AMEA grew 15%. APAC revenue was down 19%. As a reminder, APAC benefited from approximately $4 million of temporary pull forward in purchasing activity in China in the prior year period, as customers accelerated orders ahead of potential tariff changes.

Turning to the rest of the P&L, gross margin increased to 74% from 72% the prior year. The increase in gross margin was primarily driven by lower manufacturing costs, which included $2.6 million of tariff refunds, as well as lower inventory writedowns, partially offset by a decrease in non-recurring license and royalty revenue. Excluding the impact of non-recurring settlement revenue in both periods, gross margins increased to 74% from 67% the prior year. Total operating expenses were $132.1 million for the quarter, as compared to $95 million in the prior year period. The second quarters of 2026 and 2025 included gains on settlements related to patent litigation of $3.4 million and $40.7 million respectively. Excluding these gains in both periods, operating expenses were approximately flat year over year.

We ended the quarter with $552 million in cash, cash equivalents, and marketable securities, up $105 million year over year, and up $12 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 $610 million to $630 million. Excluding non-recurring revenue related to patent litigation settlements in both 2026 and 2025, this represents 2% to 5% growth over the full year 2025.

The increase to our outlook reflects our performance in the first half, together with the benefit of the $1.6 million of settlement revenue recognized during the quarter. As Serge mentioned, order volume for ATERRA has been very strong. We previously communicated that we expect to sell approximately 40 ATERRA instruments this year, weighted mostly towards the fourth quarter. As of the end of the second quarter, booked orders already greatly exceeded that full year number.

That said, our shipment outlook of approximately 40 units for the year remains unchanged as we continue ramping production. Looking at our quarterly cadence, ATERRA demand is driving the transition dynamics we expected as customers are moderating purchases of existing spatial products in anticipation of ATERRA. We expect this spatial transition dynamic to continue into the third quarter, resulting in a modest sequential step down for our total revenue from Q2. We then expect a significant step up in the fourth quarter as a tariff shipment's ramp and begin to contribute more meaningfully to revenue. ATERRA alone accounts for the large majority of the Q4 sequential increase implied by the midpoint of our full year guidance with normal seasonal Q4 strength across the rest of the portfolio closing the remainder of the difference.

As we look to the second half, our priorities are unchanged, delivering for our customers, executing with discipline, and strengthening our operating profile. That foundation allows us to keep investing across the portfolio and the early enthusiasm we're seeing for ATERRA reinforces our conviction in that strategy.

With that, I'll turn the call back to search.

Thanks, Adam. Before we open it up for questions, I want to thank the entire 10X team. This has been another good quarter of progress across the business. And none of it is ever an accident. The value we create in the business and the progress we make toward our mission is entirely a function of the hard work and commitment to excellence you demonstrate every day.

I'm incredibly proud of what we have accomplished and even more excited about what we're building for the future. Thank you to everyone at 10X for making the impossible possible.

With that, we will now open it up for questions. Operator?

Thanks, Kyle. So just like to your first question on on a terra. So the like as we talked about in a pretty fair remark, the demand has been extraordinary. And that's not the constraint here, right? The constraint is actually, you know, shipping the manufacturing capacity to to ship the units in this second half of the year. And we continue to expect to be able to ship 40, which is what we lost in the last call, and that still continues to be the case going forward.

So let me take the first sort of pieces of that, Luke. So I wouldn't say that things have changed. In fact, I've just reminded you that the Q3 that we're talking about here is consistent with what we said in our Q1 call. So we've always known the Q3 from a transition dynamic perspective in spatial.

Would be the peak transition dynamics. And that's exactly what we're seeing. And part of it's a function of the enthusiasm that we've seen around the terra. So we'd originally said that when we gave the original guide Q1 and then it would be a step down and then, you know, Q2 and Q3 would look similar from a dollars perspective. Now what we're saying is Q3 will look the same kind of as what we'd articulated back on the Q1 call. And so we're still anticipating a modest, you know, a million dollar step down from Q2 to Q3. And that really is just a function of what's happening, both on spatial instruments, but also some a bit of spatial consumables as people are ramping up and getting prepared to receive their teras.

One thing I would just clarify in your question as it relates to Q4. If you think about the 40 units that we've committed to get out the door into the hands of customers in RevRec here, and we've talked about sort of where list pricing is, a terra instrument's alone gets you most of the way, almost entirely of the way from Q3 to Q4, and that doesn't factor in a terra consumables. So if you sprinkle in a little bit of seasonal, you know, what we would normally have anticipated, and I'm not talking about, you know, some expectation of a big budget flush, I'm just saying if you think about our normal Q3 to Q4 industry dynamics, you know, that poupled with, but most of it coming from the Q4, I think you'll find it's a fairly reasonable step up from Q3 to Q4.

Yeah, thanks, Taiko. So like the team is working really hard to get to the official launch of the platform to start shipping. And like we said, yes, we have 40 that we're planning for this for this quarter for Q4, for the second half of the year. And as we are, you know, kind of moving into next year, we certainly expect to keep kind of building out our capacity. You know, we're building a terra on the backs of a lot of investments we made over the years into the operational infrastructure and supply chain expertise. And so all of that will be brought to bear as we scale up and, you know, move into next year and beyond.

So we feel really good about being able to scale up capacity over time to meet the demand as appropriate. So as far as pull through is concerned, you know, really good about interest in a platform. You know, it's way too early to talk about precise estimates before we even get instruments on there. And people actually start running them. You know, that's a, of course, we are focused on kind of engaging customers that are in particular eager to use the platform, and particularly eager to ramp up sooner around the later. So, you know, we feel good about the potential of utilization here, you know, just for a kind of collaboration. Max utilization of a terra is somewhere between, depending on the kinds of assays you run, between one and a half million and two, three million or so, depending, you know, depending on the assays, is about two exes that have seen you.

So there is plenty of room for people to make use of these instruments. Again, a little too early to give precise numbers, but feeling quite optimistic about the trajectory at the stage.

Yeah. I mean, like a little bit early to talk about the next couple of years, we're in the middle of fairly much year old transition here right now, because of this flex A-bex dynamic. A-bex has been, has had a good momentum so far since launch, you know, the towards the end of Q4 last year, and it's been having a really nice growth so far this year based, you know, based on the funnel, we expect the A-bex to be even higher percentage of reactions as we go into second half. And, you know, kind of our expectation as we proceed through this year is by the end of the year, the large majority of people who would convert to flex from our kind of existing other products will have converted, which put us in a good spot, you know, for subsequent quarters and years.

Yeah, I mean, there's a lot of nuance, obviously, to do these kinds of comparisons, but the high-level picture is unambiguously like with sort of not real caveats, like the appearance and stability is substantially higher than geniums. Now, it's important to be, you know, to be comparing apples to apples when it comes to various essays and certainly for, you know, like the very targeted panels, if you care about specific genes, you can really boost your sensitivity on genium. So, and you can do that on a terra as well. If you're comparing kind of, you know, why do you use that thing? For example, whole transcriptome on a terra, you're able to get to single cell sensitivity, which with large flux kinds of panels on genium is you can't really do that.

So, very, very high sensitivity and you can remember, whether terra you can also augment it with additional custom content if you need to boost any genes further. And overall, yes, we feel really, really strong about this platform. There's going to be some comparisons, maybe, those are kind of early days of the platform. We specifically released some early data sets out there to give people a flavor of what the platform is able to accomplish. There is still work that's going on in R&D to keep improving the specs of the platform, by and large, even based on the data set that we have really so far, the feedback from the community has been overwhelmingly positive, and both really well for the trajectory of the platform.

Yeah, like, obviously, like I said earlier, a lot of demand for the platform. So this has been really, really great to see from the reactions from customers. Lots of interest, lots of eagerness, very few conversations these days that when I engage with a customer, someone is not trying to lobby to get minutes earlier rather than later. So that, from that perspective, from the amount of perspective, not really an issue. In terms of, you know, product performance, once it's out there in the field, important something, you know, really important question, something we take incredibly seriously. Obviously, we have had a lot of experience with product development and with delivering game-changing platforms that work really well to the field.

And as Tara in particular, something that we have been working on for a very long time, I talked about that in the law school. We're talking about that since then. And we do a lot of testing, a lot of buttoning up all the different elements before we ship our products and particularly through Avatera. And, you know, team, the team has been making tremendous progress.

So we feel really good about where things are headed, about the product, and what, based on what we're seeing internally as well. And so in many ways, we expect it to be very similar to our previous successful launches. Again, it's not better given all the experience that we have, all the work that has gone in, all the investments that have gone into Avatera specifically.

And of course, on the roadmap, you know, we've talked about many elements of that, making big investments going forward as well. There's going to be a lot more coming on the software side, more content, more panels. There's going to be additional capabilities around automation, proteomics, multiomics, based by base sequencing. So yes, there's a lot to decide for the platform right out of the gate as we're seeing by the reaction. So there's going to be a lot more to decide over the coming quarters of years as we deliver more capabilities.

Yeah, my thanks for the question. So, yeah, I mean, on single cell, I would say the first order dynamic by far is that sort of transition that I talked about earlier, the rise of flex apex and transition of some of the other products to that assay. Again, it's been having, it's had a really nice pickup, a really nice momentum. We've stuck that to continue. And as a result of that, yeah, the volume growth has been wide consistent and very robust and very encouraging. And a lot of the growth is, in fact, driven, being driven by kind of emergence of AI applications and also more large-scale experiments that involve larger cohorts and kind of distributed sample collection that flex is particularly great for.

That also has a bit of an influence, in fact, on instruments in the sense that because of the capability enabled by flex of having the distributed sample collection and then centralization of processing, that naturally leads to more centralization towards service providers, to core labs, to big labs, which kind of reduces the necessity to be placing instruments at every single lab. And also, at this point, we do have a lot of chromium instruments out there, so accessibility is generally not an issue at all. So, yeah, so overall, the dynamic strong single cell are very similar to what we've been describing for the last couple of quarters.

And we expect that to continue in the over the rest of the year. And I do expect, like I said earlier, yeah, all the people are like, large majority of the people who intend to transition to ABACs will have largely done so by the end of the year. And that should put us in a good position to keep driving that sort of robust reaction growth, but also having it be translated into more top line impact as well. As far as, you know, as far as AI question is concerned. So, maybe there's a lot of layers to that. And I think it's really, really important to set context here, which is what I did early as well with my prepared remarks.

Like I said earlier, and I think there's like a wide sort of recognition about that. AI is now made a structural tailwind for us. And because, you know, what these big AI models need is precisely what we have built over the years. And AI at this point, one way, in one shape or point, it's becoming pervasive across just about all of our customer segments. At this point, you know, there's really a large project out there where AI isn't like either a big driver or at least like, you know, an important influencer and even small scale projects. I think in many instances are performed with an eye toward feeding the data into AI models. And so, you know, in some cases, AI is a driver demand.

In some cases, it's an influencer and sometimes an accelerator. And what that means, right? One issue here is that AI can mean a lot of different things. And also, the landscape is changing quite fast. And so, that's why I want specifically in a bit more detail and explaining how AI, for example, is used potentially in the context of drug development for the parts, specifically to measure biology. You know, if you think about drug development, that the three kind of stages of drug development target to understand the biology of what targets to go after the chemistry, the middle part actually making the drug, the molecule, and then figuring out which patients to give the drug to you.

The middle part is chemistry, where a lot of current AI sort of investments up to now have been focused. But the big, big opportunity is really around the biology, the target idea and patient selection. And that's where, you know, our tools are becoming are really, really compelling and are becoming increasingly important. And so, there are some parts of our revenue where unambiguously AI AI revenue is coming from those, like tech bio companies, some large academic projects.

But there's also others where there is a mix. Big pharma companies that are, we know are developing these AI models of biology, but also using our products for other, for other goals. And same thing in academia. And so, there's a mix. So, right now, the stage I say is still very early while the opportunity is massive. And our products and technologies are particularly well positioned for this opportunity. And, you know, as we go forward and as these categories grow, we'll provide more granular color on them and how to think about sort of numbers around them.

Searching, the only thing I think I'll just add is to the point you're making around centralization for unchromium instruments. Obviously, we're focused on driving every part of our business, but I think that distinguishing between demand for instruments versus demand for the platform and driving the volume and the activity that we're doing for chromium consuming. So, I mean, just for context, if you remember that chromium instruments is about 2% of sales, so just kind of important context as we're thinking about the total business.

Yeah, a really interesting question. Well, you know, the first order, as I would say, is that the platforms by themselves, whether you look at single cell and spatial, have really strong merits just to stand on their own. I would say, and certainly is really appealing in many ways to our customers. You know, if you think about, for example, Flux Apex, really, really high sensitivity, incredible scalability, huge robustness. This is actually really important for AI, in particular, subtle points where it works across many different tissue tests, many different cell tests, many different contexts, and increasingly it's becoming critical. So if you want to build AI models that are useful that generalize, you really need to be able to measure lots of different contexts.

You can be measuring the same cell line over and over again, for example, and Flux is incredibly great for that. Well, so another sort of emerging trend is, and maybe it's a little bit of your question too here, is multi-omics being able to measure other modalities, and we have unmatched strength along that dimension.

Certainly, there is an attractiveness to be able to train new models from a spatial perspective, as well as from single cell, and we certainly provide these kinds of solutions to our customers, and also, yes, on the software side, something we haven't talked that much about, but of course, we have invested in software fairly materially from the beginning of the company, and in particular, is becoming important here, because the data sets, whether the ABACs and whether they are getting to be very large, especially for training AI models, and we have made quite a number of advances specifically to enable people to run large-scale experiments in a straightforward kind of economic manner. So, all of these pieces together do kind of tie out to provide really compelling solutions for our customers.

Certainly, much much more compelling than any other potential alternative on the market.

Yeah, good question too. So, it's kind of interesting, almost feels like wrong a little bit, because we've been in this kind of tenuous environment for a while now, where people are hoping and expecting that things will improve. And to some extent, the sentiment has been, in the expectation, has been getting somewhat better. But I think the story is largely the same as it was lost water, improvement in sentiment, but the environment, again, is still tenuous, and the dollars are still so I would say, still same kind of various issues that have been at play for a while, where even if you see sort of at the very highest level, the dollars are kind of appearing there in terms of funding, they don't actually impact purchasing because of all these dollars allocated, for example, because of multi-year funding, or the other sort of increased oversight of the review process that kind of puts in kind of some standard of the gears, and just general shortage of staffing and things like that, for grant reviews and order processing that we're hearing, keep hearing, from our customers.

So, I would say the environment is roughly similar to what it has been before.

Yeah, and I would just add to that, in the context of the guide, we're not anticipating things get any better. Right, so to the extent that there's, you know, some improvement, that's just a broader macro comment I would make, is that we're anticipating kind of in the guide that we've raised, that the macro sort of stays the same with what we've been seeing, and it's been fairly consistent, and that's the way that we're thinking about our guidance.

Yeah, so yeah, good question. I mean, commercially, if you remember two years ago now, almost two years ago now, we did a major restructuring or of our Salesforce, and we specifically created a team focused on CapEx sales, and that has actually put us in a really good position now with the arrival of ATERRA to have a team that specifically focused on ATERRA instruments to, you know, introduce them to the market and to drive sales.

We are also leveraging the rest of our team to reach out to customers much more broadly, and have the teams kind of work in concert to drive ATERRA into the market. I think your other question was any special incentives to drive customers to ATERRA? No, I mean, look, first of all, our focus is always to make sure that customers are, you know, that we satisfy the applications needs that they have and kind of provide one-to-right solution in every case. And we've been, you know, sales team has been selling all of our solutions, and certainly the amount of excitement around ATERRA is there, but it's driven fundamentally by customer demand.

Yeah, thanks, Wendy. So first of all, there's a bunch of those questions. First of all, on the ATERRA, you look, obviously, early days, but the demand has been really, really strong kind of across the board, not just sort of your kind of early technology people, but much wider than that. And so that's really encouraging. For example, you know, BioFarma is an early days, but like a disproportionate customer here with ATERRA. So we feel quite good at the stage about the amount of demand there beyond just the early customers. And we haven't had to incentivize customers in any way to get in here and to put in their orders. So very, very encouraging sign. And I would say, you know, on the kind of the other side of the business, I mean, certainly, like I said, kind of in the answer to the previous question, we have the sales team that's selling all of our products right now and very focused on that, especially given that ATERRA is not yet shipping.

But again, we are, you know, we always run some programs in different territories, in different regions, where our customers work with customers, where our salespeople work with customers to give them kind of the right deals for their, you know, so they are sort of budgets and their applications. And we're going to continue to do that, but nothing particularly out of the extraordinary feel good about the ATERRA trajectory. No question around that. As far as, you know, as far as AI and funding is concerned, I think there's a lot of kind of work at the highest levels happening where I kind of spoke to that, where there's a general kind of re-appretization of kind of funding flows.

I think, in fact, a lot of large scale projects, anything that has to do with the sort of larger scale science, is now having AI as it's kind of as a driver. And if you think about it, kind of the fundamental mental model, if you want to understand biology using AI, you have to use single cell and spatial, because these are the only scale, they are these scale technologies to manage biology. And so whether that's, you know, whether it's the by-farm kind of world or the world of academia or like various consortiums, that's sort of the case. And so as, you know, as people put in their priorities, whether it's sort of from governments or from various non-profit organizations, we anticipate that that will ultimately translate into, you know, more deployment of single cell and spatial, and ultimately more revenue flows.

Yeah, I think fundamentally, you know, we're talking about zenium and we've been quite, well, the past quite some amount of time, we've seen really, really nice growth in zenium and actually still continue to see it. So zenium has been growing this facial market quite like really robust and it's been really exciting. And as we look forward to a tear, we actually, we expected to amplify and accelerate that threat and also the early signals were getting. Now, you know, it is true that, of course, it's going to impact sales of zenium and certainly starting to moderate that somewhat already and more so going forward and in zenium as well, our expectations that the third demand were more than make up for any diminution in the other platforms.

I would just add to that, sir, even after the post-a-terra launch, both on the consumable site, both, zenium and zenium grew sequentially, you know, grew from prior quarter. So it's a really good momentum happening there and spatial with the existing products.

Yeah, look, we're seeing, like I mentioned, kind of from across the board for a teara, like really, really a lot of kind of diversity both in terms of like the kinds of customers, whether it's universities, academic medical centers, biopharma companies and also from the applications perspective, like really broad, we started out with a focus, obviously on oncology here, but also doesn't interest in neuroscience or immune, you know, cardi metabolic kidney. I mentioned this early, my prepared remarks, just every kind of biological system, therapeutic area. And also the kinds of experiments that people are looking to run, they're also like really, really huge press, you know, you have a sort of foundational tissue atmosphere, you have all these mechanistic studies of disease response to drugs like immunotherapy, cell therapies and kind of all this biomarker translational work as well.

So, you know, really strong early science about just like really material market expansion, and we're even at this stage where we didn't really, we have not focused at all, we're already seeing some new customers coming out of coming out and expressing really strong interest in a teara. And, you know, our view is ultimately, you know, over time, a teara is the future.

Obviously the instrument does not even shift yet. So, so zenium is the best spatial platform right now. And we'll keep being used as Adam just mentioned, really, really continuous to show really, really strong growth. But as we go forward, we do expect that a teara will take up more and more of the spatial market and also drive material expansion over the market.

Well, I can start, maybe. I think it's surgery. I mean, we don't, we don't have any units out in the field as of yet. So, we know what max pull through could be. And it's 2x from a maximum perspective compared to zenium. And I think I would also just add a surge noted. I mean, our intent for a wide variety of reasons is to get the first 40 instruments in the hands because demand is so high. Again, the first 40 instruments in the hands of folks that do intend to be running those. And in many cases, our service providers that could provide access to those that either don't have the CAPX, you know, are weren't one of the first, you know, lucky 40 to get their hands on one.

I would say there's certainly our intent is I don't think anyone wants to get an instrument, you know, of that sort of caliber and cost without the consumables to run through them. So, we are starting to take orders on the consumable side. But it's not something we'll quantify at this time. But it is embedded into that Q3 to Q4 step up. And again, just to articulate that, you know, we've been talking about spatial consumables and the momentum there.

So, I just want folks to understand logically, we are still anticipating that we'll have good growth year on year from a consumable standpoint in Q3, but there will be a sequential step done. Because as we're starting to have conversations with customers about when they will receive their Tera, some of those are very large zenium users. And so, some of them, you know, are already planning ahead and won't be running projects. And so, won't be placing an order, you know, towards the end of Q3 that they would normally, you know, that they would normally place. And we're accounting for that in the guidance that we've given you. And then as you think about that step up, you know, from Q3 to Q4, most of that, as I mentioned, is covered by a Tera instruments alone.

If you think about, we've said, you know, we'll get 40 out the door and the vast majority of those will actually happen in Q4. And so, if you've got that, couple that with C consumables, you know, they've come through and then just normal year-end sort of dynamics. And again, it doesn't take a big through the year-end flush, as we've seen in certain years, actually, to bridge yourself from that Q3 number to the Q4 number. If you think about it at the midpoint of our guide.