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Nearly 100 workers at a Tri-Valley-based biosciences company are in their final weeks on the job this month as 10x Genomics made moves to cut costs after reviewing internal and external factors that have changed in the most recent quarter.
A total of 93 layoff notices were issued to workers at the company’s Pleasanton headquarters on May 8, according to data from the Employment Development Department — with the layoffs set to go into effect July 7.
The move came the same day as 10x Genomics most recent earnings call on its first quarter financial details and outlook for the future, in which CEO Serge Saxonov pointed to a decrease in profits compared with the previous year and new challenges facing the company that have emerged in the first quarter of the current fiscal year.
With license and royalty revenue excluded, first quarter revenue for the company came out to a total of $138 million, marking a 2% decrease compared with the first quarter of the previous year, thanks to a decrease in instrument revenue, Saxonov said, but “offset by continued strength in consumable”.
According to prepared remarks by Saxonov for the earnings call, the results of the first quarter “demonstrated clear signals that customer demand for our products is robust and reinforced our conviction in the long-term growth potential ahead.”
But while optimistic about the long-term, Saxonov noted that there were unprecedented challenges in the present and immediate future.
“I’d like to take a moment to reflect on the significant changes in the macro environment since the beginning of the year – changes that went far beyond what any of us expected,” Saxonov said. “Signs of risk and uncertainty across academic research funding and the macro landscape began with a cap on indirect funding from the NIH and since then, the research funding environment has continued to deteriorate, particularly across U.S. academic and government labs.”
Some of these factors – specifically delays, reductions, and cancellations of government research funding – are already at play, with additional challenges on the horizon including anticipated budget cuts, funding caps, and concerns over delays in research projects subject to additional grant review.
With approximately 40% to 50% of 10x Genomics’ revenue being supported by academic and government research funding, the present challenges and future uncertainties are expected to continue playing a major role in its operations and strategic goals.
“Taken together, these pressures are creating a climate of deep uncertainty,” Saxonov said. “We are increasingly hearing from customers that the combination of actual cuts and looming risks is making them hesitant to initiate new projects or invest in capital purchases. The uncertainty for our customers is driving increasingly unpredictable customer purchasing behavior and reduced visibility on our outlook for the year.”
One immediate goal Saxonov pointed to was protecting the company’s “strong cash position” through the ongoing “turbulence”.
“We have implemented a reduction in both headcount and non-headcount related expenses across the company,” Saxonov said. “This week, we reduced our global workforce by approximately 8%. While these changes are never easy, they will allow us to be a more efficient organization – better positioned to navigate today’s environment while continuing to invest in our highest priorities.”
Another response to the “turbulence” of the current landscape Saxonov announced May 8 was the withdrawal of full-year revenue guidance that had previously been in place as it shifts to quarterly revenue guidance starting in the next quarter.