Ladies and gentlemen, thank you for standing by and welcome to the 10x Genomics Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Thank you. I would now like to hand the call over to your speaker today Ms.

, Investor Relations and Strategic Finance. Please go ahead..

Thank you. Good afternoon, everyone. Earlier today 10x Genomics released financial results for the fourth quarter and year ended December 31, 2020. 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 Investors tab and the Company’s website 10xgenomics.com for at least 45 days following this call..

Good afternoon and thank you for joining our call to review our fourth quarter and 2020 results. During today's call, I will provide a brief summary of our fourth quarter and full year results.

Next, I will discuss the opportunities that lay ahead and how we're focusing our efforts across our three technology platforms to build great products that deliver amazing insights for our customers. I will then turn the call over to Justin for a more detailed look at our financials, including our outlook for the year.

I would like to start by thanking our employees for their hard work and dedication through an extraordinary difficult year. 2020 brought significant challenges, change and sacrifice, but I continue to be impressed by and grateful for our team's resilience and commitment to our customers and to each other.

Despite all the challenges, we made important progress across our business in 2020. To start, total revenue grew 22% over the prior year to $299 million. In the fourth quarter, revenue grew 49% over the prior year as our business continued to recover from the impacts of COVID. We grew our installed base by 45%, selling 746 additional instruments.

We continue to expand our customer reach and our products have now been adopted by all the top 100 research institutions and top 20 pharmaceutical companies. Our customers published more than 1,500 peer-reviewed papers, bringing the total to over 2,200, more than doubling the number of total publications over the course of the year.

And we continued to invest in developing and defending our patent portfolio and added more than 300 new patents and patent applications, expanding our coverage of enabling technologies. We now have more than 1,000 patents and patents applications..

Thank you, Serge. Total revenue for the three months ended December 31, 2020 was $112.2 million compared to $75.3 million for the prior year period, representing a 49% increase. Similar to prior years, our revenue in 2020 was more heavily weighted to the back half of the year, particularly Q4, due to the typical budgetary cycles of our customer base.

In addition, there was a concentration of orders during the month of December as more labs opened up and customers resumed experiments. Consumables revenue was $96.5 million, which increased 49% over the prior year period. Instrument revenue was $14 million, which increased 49% over the prior year period.

Service revenue was $1.7 million, which increased 48% over the prior year period. North America revenue for the fourth quarter was $57 million, representing 34% growth over the prior year period. EMEA revenue for the fourth quarter was $32.9 million, representing 54% growth over the prior year period.

APAC revenue for the fourth quarter was $22.3 million, representing 95% growth over the prior year period. Gross profit for the fourth quarter of 2020 was $93.3 million compared to a gross profit of $58.7 million for the prior year period. Gross margin for the fourth quarter was 83% compared to 78% for the fourth quarter of 2019.

The gross margin increase was driven primarily by favorable product mix due to the Next GEM transition, which did not carry the same level of royalty accruals as legacy GEM products.

As the transition to Next GEM products is now substantially complete, we see this level of gross margin as a high point and expect that future quarters will have a slightly lower gross margin as our newly introduced products expand and become a larger percentage of our overall revenue.

Total operating expenses for the fourth quarter of 2020 were $502.9 million compared to $66.8 million for the fourth quarter of 2019. Our fourth quarter operating expenses included $406.9 million of in-process R&D expense due to the acquisition of ReadCoor.

R&D expenses for the fourth quarter of 2020 were $39.7 million compared to $27.9 million for the fourth quarter of 2019, excluding in-process R&D expenses related to the acquisitions. The increase was primarily attributable to increased personnel-related costs.

SG&A expenses for the fourth quarter were $56 million compared to $38.8 million for the fourth quarter of 2019. The increase was primarily due to increased personnel-related costs. Operating loss for the fourth quarter was $409.6 million compared to a loss of $8.1 million for the fourth quarter of 2019.

This includes $14.3 million of stock-based compensation for the fourth quarter of 2020 compared to $5.1 million for the fourth quarter of 2019. Net loss for the period was $415.6 million compared to a net loss of $7.1 million for the fourth quarter of 2019. Now turning to our full year results.

Total revenue for the full year ended December 31, 2020 was $298.8 million compared to $245.9 million for 2019, representing a 22% increase. Consumables revenue was $252.7 million, an increase of 22% over the prior year. Instrument revenue was $40.1 million, an increase of 15% over the prior year.

Service revenue was $6 million, an increase of 48% over the prior year. As of year-end, we have sold a cumulative total of 2,412 Chromium instruments, up 746 instruments from 1,666 instruments at the end of 2019, which represents a 45% increase in the ending installed base.

Our customers have historically averaged approximately $150,000 a year in consumable orders per instrument, outside of the impact of the pandemic. Q4 was above that rate on an annualized basis, but due to COVID impacts earlier in the year, our 2020 pull-through averaged $124,000 per instrument for the full year.

North America revenue for the full year was $159.3 million, representing 14% growth over the prior year. EMEA revenue for the full year was $73.3 million, representing 26% growth over the prior year. APAC revenue for the full year was $66.2 million, representing 38% growth over the prior year.

Gross profit for 2020 was $240.4 million compared to a gross profit of $184.9 million for 2019. Gross margin for 2020 was 80% compared to 75% for 2019. The increase in gross margin was driven primarily by lower accrued royalties related to ongoing litigation, partially offset by higher costs from newly introduced products.

Total operating expenses for 2020 were $774.5 million compared to $215.4 million for 2019, inclusive of $447.5 million of in-process R&D expenses related to the acquisitions of CartaNA and ReadCoor.

R&D expenses for 2020 were $123.4 million compared to $83.1 million for 2019, excluding $447.5 million of in-process R&D expenses related to the acquisitions of CartaNA and ReadCoor. The increase was primarily attributable to increased personnel and stock-based compensation expenses.

SG&A expenses for 2020 were $202.3 million compared to $130.8 million for the prior year. The increase was primarily due to increased personnel and stock-based compensation expenses and increased litigation expenses. Operating loss for 2020 was $534.1 million compared to a loss of $30.6 million for 2019.

Net loss for 2020 was $542.7 million compared to a net loss of $31.3 million for 2019. We ended 2020 with $664 million in cash and cash equivalents. Now, turning to our outlook for 2021. We expect full year revenue for 2021 to be in the range of $480 million to $500 million, representing growth of 61% to 67% over full year 2020.

As in prior years, we expect revenue to be heavily weighted towards the back half of 2021, particularly in the fourth quarter. We ended Q4 with about 90% of customer labs operational at varying degrees of capacity and are still seeing a wide range of efficiencies within the COVID operating environment.

Going forward, we expect this capacity to fluctuate in the near term, and we view the percent of labs open as a less important metric compared to the available capacity per lab. We don't expect much improvement in lab capacity in Q1. And Q1 will also lack the seasonality benefit of Q4.

As a result, we expect our Q1 revenues will be sequentially down from Q4. While the most visible impact of COVID-19 on our business has been customer lab closures and reduced capacity, we are also managing supply chain and logistics risks.

These have not caused significant disruptions to date, but our customers are subject to similar risks, which could limit our customers' ability to perform experiments. It's an ever-evolving situation that we are tracking closely. As we enable the Century of Biology, we will continue to aggressively scale the Company.

In 2021, we are focusing our investments on R&D to continue our rapid pace of product development and innovation, intellectual property to protect our products and scientific advancements, our commercial organization to continue to build our sales and support teams and adequately address the interest we are seeing from the biopharma and translational markets, and finally, on our operational capabilities to ensure we have a solid foundation to enable our future growth.

At this point, I'll turn it back to Serge..

Thanks, Justin. I'm so proud of our team and of our achievements and what turned out to be an incredibly challenging 2020. While the pandemic is not over, we anticipate that it will be brought under an increasing measure of control as we progress through the year.

Next week, we're hosting an inaugural virtual event called Xperience, where we will share details about the work of our customers and upcoming products. I look forward to seeing you all there. Overall, there are many reasons to be optimistic as we look to the coming years and beyond.

The pandemic brought into a sharp relief the need to accelerate the mastery of biology and the importance of our mission. And looking beyond the current pandemic, advances in the life sciences are poised to transform the world in massive ways.

We anticipate vast long-term opportunities ahead of us and intend to keep scaling the Company and investing aggressively to capitalize on them. With that, we will now open it up for questions.

Operator?.

Our first question comes from the line of Doug Schenkel from Cowen..

Hey. Good afternoon, guys. I'm actually in the office but on my cell phone, hopefully, the reception is okay.

10x has always been a company that's done a fantastic job balancing high gross margins, which is, of course, attractive to investors with innovation that makes new technologies accessible via ease of use, quality and oftentimes, reduced price per unit for the customers.

I'm recognizing that you noted in your prepared remarks that you're close to a high watermark with gross margin.

As you roll out newer products with often lower price points and add new products organically and inorganically, how do you think about the longer-term outlook for maintaining gross margin at levels seen over the past few quarters? Meaning, at least in the mid-70s or so, even as we factor in what you said about this being kind of a high watermark quarter..

Hey Doug, this is Justin. I'll take that one. Our high consumables gross margin is a core strength of our business model, and it helps enable the deep investments that we're making to develop new products. In our product development process, we typically target gross margins of about 80%.

Some of our newer products have lower gross margins than our previously existing products, but they're mostly in that range. So, I think, 80% is a good number to think about for the near to midterm. And what you propose, I don't think is unreasonable to think about in the longer term..

And I think, this is another one for you. I believe you talked about $150,000 in consumables per box on an annualized basis as the assumption that you baked into guidance, on the surface that seems a little low to me. I mean, back in Q4 of '19, you generated $165,000 in annualized consumable pull-through.

I think that the full year number was a little bit lower than that, but still north of $150,000. I point to those numbers because, obviously, 2019 was pre-pandemic. And I recognize, on one hand, Q4 is seasonally a strong consumable quarter as we look back to Q4 of that year.

But, on the other hand, you have a higher mix of higher pull-through Chromium connects out there. And you also have more Visium users out there, which, of course, because we don't have a great way of modeling it, those consumables revenue typically get baked into that number.

So, it's just not clear that your 2021 revenue guidance embeds an assumption that is kind of consistent with what we've seen trend-wise absent COVID and what we've seen in terms of increased Visium adoption.

Can you just kind of walk us through what I might be missing here as I think about it as that number looks a little bit low?.

Yes. It's a good question, Doug. I think, starting at the beginning around Q4 and seasonality. So, Q4 is seasonally quite a bit stronger in total than the other three quarters. And you're right that the Q4 '19 pull-through was a large quarter-over-quarter increase from the previous quarters. And in fact, Q3 '19 was well below the $150,000 per year.

So, that's why we focus on annual pull-through and not quarterly pull-through. For our 2021 guidance, we contemplate existing customers continuing to increase their usage, while we're adding a large number of new customers at the same time, and those new customers take some time to ramp.

We've previously said that around $150,000 or slightly above that is a good pull-through number to use as we balance the increasing utilization of existing customers against this ramp-up of the new placements.

And as far as the Connect goes, that is having some impact on the ASP when we look at the ASP between the Chromium Controller and the Chromium Connect. But that's a niche product, and it's very early on. And so, that isn't making a material difference in our average pull-through as of yet..

Next one on the queue is Tycho Peterson from JP Morgan..

Hi. Good afternoon. This is Julia on for Tycho. Thanks for taking the question. So, staying on the pull-through question, I know you know that at a conference that some of your oldest customer, that $1 million annual pull-through and you also have Visium FFPE and cytosis coming to unlock sample volumes.

But at the same time, as you add new customers, it also weighs on throughput, at least initially. So, I know you said 150k as a good number for 2021.

But as we look longer term, what do you say is the pull-through potential of Chromium in the out years? Are you still thinking about 200k by 2023, which is, I believe a data point you previously provided, or do you now think there is significant upside to that?.

This is Justin. I'll take that one as well. It's a great question. There's a number of factors that are going to contribute to that.

As we're adding an ever-increasing number of new customers each year and introducing new products, like Visium, the new capabilities on Visium, the Chromium Connect, the Chromium X, it's going to take some time for those products to ramp up and for us to see how they actualize in reference to our expectations.

But, the thing that I think is remarkable is that our pull-through has maintained -- outside of the impact of the pandemic, but has maintained itself in that high-140 to 150 range, even as we've, like this year, increased the instrument installed base by over 40%. So, I think it's yet to be seen how that pull-through metric will materialize.

$150,000 is the best estimate that we can give you right now for the near to medium term. But, at some point, the focus is going to be just an overall consumable application spend within the three platforms that we've defined..

Got it. And then separately, regarding the sales force expansion, you mentioned you're hiring at least 100 more sales people throughout this year.

How should we think about the pace of that hiring and the cadence of revenue ramp this year? And then, what's the relative resource allocation between single cell versus spatial or between academic versus biopharma customers, if that's a better way to think about it? And then, are there any geographic focus? You previously know that China is a big opportunity and now in the manufacturing, how significant will China be as a relative mix of the total revenue?.

This is Brad, why don't I start on -- at least the sales force side, and then Justin can take the rest. But, in general, we're trying to hire those people as prudently and fast as possible. So typically, in a sales organization, you want to sort of frontload it, growing so much and we're adding some of these people.

And we're also really having to make up for the fact that we've had a little bit of a pause as we were trying to understand the course of the pandemic and what it would ultimately impact our business.

So, in general, we will add at least 100 people this year, expanding pretty much across the organization, but you call out China is a real opportunity for us. And there, we continue to add commercial partners, as well as our own team members, so that we have a very good view of what's going on in China.

And overall, China is going to be a major growth axis. It is, you already saw in fourth quarter numbers, and it's been this way for the last couple of years and will continue to be that way, a major, major growth axis for us..

I think that covered it, Brad.

Was there any more to that?.

The resource allocation between academic and biopharma customers?.

Well, maybe -- I'll just touch on that. I mean, we are building out a focused strategic account sales force to deal with pharma and biotech, but mostly pharma and large pharma on their validation side of the house. In other words, outside of the discovery realm, which we certainly can handle.

So, in that sense, we're building a lot more capacity and even internal capabilities to understand and really provide the right kinds of products and documentation that's needed to say that translational into the drug discovery validation process..

Next question comes from Tejas Savant from Morgan Stanley..

I'll start with one on Chromium for you perhaps, Serge. You've got the Connect launch underway, the Chromium X, I believe, comes with $100,000 ASP launching in the back half of the year.

So, how do you think about upside to that 50,000 to 55,000 range instrument ASP? I mean should we be thinking of closer to sort of 60,000 come year-end? And then, in terms of distinguishing the value proposition, you've spoken about sort of walk away automation as being the defining sort of feature on the Connect, and then you've got the high throughput POP-seq users as a target for Chromium X.

How are you thinking about sort of reinforcing that messaging with your customers? And then, have you had any early discussions with your POP-seq sort of potential user base just yet following the launch announcement in January?.

Thanks, Tejas. So, I'll start with the questions focused on the X. So, we certainly have been talking to customers. I would emphasize that it's not just sort of the POP-seq application that X has aimed at, in fact, probably mostly at other things.

And there's plenty of applications, like immune profiling, like looking at scaling up atlasing efforts, looking at more cells, combinatorial drug screens, combinatorial CRISPR screens. This is where like some of the most intense count demand is coming from. And so, we certainly have been talking to customers about this.

And I think there's -- that was the interest that motivated the development of the instrument in the first place, and we have, if anything, have been growing more excited by the potential and what we're hearing from customers. So, I think that's the Chromium X. In terms of Connect, I mean, it's the same story.

I mean, Justin alluded to this before, but walk over automation has been the rationale for the Connect and specifically biopharma customers. But again, during COVID, there's like an expanded use of set of cases that have emerged around -- because people are constrained around when they can actually be in the lab, when they can run things.

So, the Chromium Connect has the advantages that are particularly relevant now. So, that's kind of -- that's how these are -- the instruments are evolving. I'll let Justin touch on the ASP part of it..

Yes. So, for the Chromium X, the pricing isn't final yet. And as far as the ASP range goes, $50,000 to $55,000 is what we've talked about in the past for Chromium. The average ASP, including Chromium and Chromium Connect for 2020 is still in that 50 to 55 range.

I would say, in light of the -- what we would expect to sell in Q4 of this year, with the legacy instruments, I wouldn't recommend making any adjustments to that until we get closer..

Got it. That's helpful. And then, Serge, any color to share on new versus repeat customers in the quarter for Visium? I know in the last quarter, you had highlighted repeat orders as the key sort of customer constituency where you saw strong performance..

Yes, a good question. I think, that trend has continued. Again, our focus internally and what we're seeing from customers is really that, is the reorder rate of getting the customers through their workflows to the answers. And you see that again reflected an increasing number of publications, preprints are coming out.

So overall, I think it is trending positive, and that is the kind of the important area of focus for us, now that we've established like a nice initial user base..

Got it. Perfect. And then, one final one for Justin here. In light of your comments, Justin sort of this 50% increase in headcount.

Should we be sort of just extrapolating from that to sort of $120 million per quarter sort of OpEx run rate with a 40-60 R&D versus SG&A split? Is the math sort of right at a high level on that, or could it be sort of similar, but more front-end loaded, more back-end loaded through the year, how are you thinking about that?.

Yes. So good question. We are planning to grow headcount by 50% this year. Most of the hires are going to be in R&D, followed by commercial and then G&A -- or operations and G&A after that. I would more heavily weight it towards the -- towards the front half of the year and more heavily weight it towards R&D..

Next one on the line is Derik De Bruin from Bank of America..

So, a couple of questions. So, can we talk about the new multiplex application? I mean you say it sort of saves customers 60% in cost.

How is that 60%? Is that 60% sequencing cost? Is that 60% to you? Basically, the question is like, are you expecting just the higher volume experiments to make up any sort of potential price erosion on your end?.

Yes. It's a good question and an important question that we thought a lot about. So, this is an average estimate for like what we expect customers who are using it to save, inclusive like overall on their experiments.

It is definitely the case where they will end up spending less per sample with our expectation, and it's borne out by what we have seen on customers doing -- using kind of homegrown -- homebrew solutions previously is that this will lead to more usage overall and more dollars flowing into the single cell experiments in total.

So, the sort of the drop per sample cost -- the reduced cost per sample will -- should materialize in higher overall spend. Maybe not right immediately, but certainly over time..

Got it. And, can you talk a little bit about the forward monthly order growth rate? I mean, you've provided on the last couple of calls, just some clarity on -- just some color on what you're sort of seeing..

Derik, this is Justin. So, in the past couple of quarters, I think in the midst of COVID, without guidance in place, we were trying our best to give color on what we were seeing in real time.

But, now that we've reinstated guidance and we've given some color around the weighting as far as mostly in the back half of the year and particularly in Q4, we won't be giving any kind of mid-quarter update, at least at this time..

And finally, one last question.

Can you talk a little bit about how much of -- how much you have embedded into your current guidance for recent new product launches in 2021? Just some sort a sense of what's additive, is there any sort of cannibalization that could happen? Just some general thoughts on how you're thinking about new products contributing to the top line..

Yes. So, the guidance, the 480 to 500 range incorporates all of the new product launches. It's our best view taking into account those different factors that you mentioned, like cannibalization, how we expect those products -- what we expect the adoption curve to look like, based upon what we've learned on past launches.

But, it's all incorporated in that range that we've given..

Next one on the queue is David Westenberg from Guggenheim Securities..

So, in terms of the new product launch in the low throughput area, how should we think about the transition speed of your customers in terms of dabbling in their toes into single cell to full believers of single cell? And how should we think about the impact of that low throughput kit on that transition speed, just based on your early customer experiences?.

Hey David, this is Brad. I'll take that. As we've not launched the kit right now, we really don't know. But, we do think we have a very good kind of view of the two reasons that this kit is important.

One, as you've already pointed out, is it gives people an opportunity that are new to 10x to try and do sort of pilot studies, and those usually can be used to help gain grants in funding, and in some cases, even a budget allocation within the laboratory.

The other side of it for us is -- and this is where I'm cautiously optimistic as this could be very important is giving customers that are more experienced customers, a test bed, test experimental workflow, workout sample prep procedures, all the time courses of the way they harvest samples, all that can be worked out in a very -- a much more lower cost environment to measure the -- a likelihood of success of an experiment.

So, those are really the two things that will drive that. I mean, probably -- and then -- so your question is how quickly, if we take that first group of people, we're hoping that we can run people through that adoption cycle, certainly within a year.

Typically, when we have a lot of experience launching products, we've launched a lot of them, and ultimately, just understanding adoption cycle. But in this case, it's just -- it's kind of a new use case and just understanding how that models out. We'll keep an eye on it but as we launch that product, which will be in the next few months..

Got it. No, that was very helpful.

And then, in terms of -- are you giving any kind of number in terms of percent of your Visium customers that -- or sorry, percent of Chromium customers that are starting to use Visium? And then, just in terms of -- are you seeing a pickup in Chromium when you see customers pick up Visium? And how much do you think that is actually on account of Visium versus just these are high users of genomics platforms, period? And that's my last question..

Well, so maybe I'll start here. I will say this that you have to appreciate that -- the Chromium has a pretty -- has now a large established user base. A special number of customers is actually larger than just a number of instruments because of the kind of the concept halo users around each instrument.

And then, if you look -- just looking at the math, the number of Visium customers, a very large fraction of them are existing Chromium users as well. So, the fraction of Chromium people who are using Visium is not trivial, but it's also not very large, right? That's how the math works out.

I would say, as far as being a driver, I'm not sure if that's material right now, probably on the margin, there is some sort of -- some additional Chromium usage that might happen or vice versa. But, I don't think that's sort of the cross reinforcement as that material at this stage..

Next one on the queue is Dan Arias from Stifel..

Serge, maybe just on a few of the new products and thinking about the range of capabilities that you're kind of looking to enable here with the X instrument, then also the lower throughput kits.

Are you able to give us sort of a rough cut on the customer base just in terms of how many or what percentage you want to look at 10,000 cells at a time versus 100,000 versus 1 million? I know that's probably hard, but it would just be helpful to understand the buckets a bit, if possible, when we just think about who these products are targeting at this point and how many of them will really be helped once they have access to them..

Yes. I mean, that's a good question. And like you said, it's a hard number to pin down. And in fact, it's a moving number to pin down. If you went back just a few years ago, the number of people interested in 1 million, so experiments would have been essentially this year, maybe one or two in the world.

It certainly has increased now, like referencing the applications I mentioned earlier, immune profiling, combinatorial screens, especially with the rise of sort of CRISPR screening applications that has been significant.

So, I would say, that number of people who are at the cutting-edge and would be interested in many hundreds thousands of cells or million as -- it exists is not huge, but it's not trivial either, right? And we expect that kind of looking at the pattern of single cell usage and the scaling up of the last five years, we anticipate that people will keep moving up that year and we certainly will help them along as well..

Okay. And then, maybe just on the fixed RNA profiling kit that's coming later this year.

Is the idea to launch targeted and whole transcriptome at the same time, or will one be in the market before the other? And then, I guess relatedly, will they both be launched at some point this year?.

So, the question specifically for 6 RNA profiling kit? Yes, please. Yes. So, we haven't talked about the details on that cadence. It's a good question, but we haven't talked about those details yet..

Next on our queue is Patrick Donnelly from Citi..

Justin, maybe just on the full year guide, can you just talk through, I guess, the assumptions you've made on the end market recovery, certainly exited 4Q in a good position.

I guess, when are you thinking we get back to kind of normal state? And maybe for Brad, on the back of that, obviously, you saw a nice budget flush, as you guys mentioned at the end 4Q.

Have you seen any slowdown, I guess, in January? As you kind of -- as that spend kind of played out? Was there kind of everyone taking a breath in January, or did the strength kind of continue so far this year?.

Good question. When we thought about guidance for this year, we really looked at the first half and the back half. And I think, for the first half, as we shared in detail, at least for Q1, we really don't expect much improvement as far as the lab capacities go. And really, I think that's the case for Q2 as well.

I think, we're optimistic around the back half of the year, and that's why we talked around -- about the weighting in more the second half of the year, particularly Q4. But, this assumes that things will start to turn around in Q3, but won't really be felt until Q4..

Yes. And Patrick, as far as the start of the year, typically, January is slow. I think, this year, it was a little bit larger because -- I mean, let's face it that the news in December was pretty dire, and we certainly saw some headwinds as case counts were spiking. And again, sort of the doom and gloom was the prevailing, feeling.

We certainly have seen that improve in the last three or four weeks, three weeks probably. And ultimately, there will -- there is probably -- and as Justin described, there is some aspect of pull in, and that's contemplated in our guidance..

That's helpful. And then, just maybe on the FFPE launch, I mean that's nearing. Maybe can you just talk through the potential customer conversations there? I mean, has it been a part of the market kind of holding off on adoption until this was available? I'm just curious what the conversations meant like around this ahead of the launch..

So, on FFPE, I think it is a product that we've been pretty excited by for some amount of time. I think the feedback from customers and what it is able to do has been very positive, and we're very excited to get it to like a broad set and launch it -- fully to the market later in the first half of this year.

So, everything is looking good and we're excited by it..

Yes. And I'll just add, I mean, the world didn't really get a good sense of how good this product is going to be just only maybe in the last six weeks. And that's really sparked a lot of interest..

Yes. That's helpful. And maybe last one just on the in situ side. Obviously, a big investment year more than certainly the revenue side, obviously.

But what has feedback been from customers since the deal, just in terms of interest of using it, complementary with Visium? And then, anything we can look out for as you progress through the year in terms of milestones, or is it kind of going to be behind the curtain, and we'll see it in a couple of years?.

Well, yes, interesting question, right, because the instrument -- the interest has only been there, just like you guys have been asking a lot of questions. But, in situ, after the deals, customers have certainly been very interested as well for many similar reasons. Everyone's intrigue what we're going to be able to do.

I think, partially this speaks to our reputation. We built great products before. So, I think, people are expecting big things from us. As far as going forward, I mean, we are focused right now on developing a platform. There's a lot to do. This is a very challenging generally technology area to build products in.

And we are investing to build awesome products for our customers. That's our focus right now. We're further along, when we're -- we'll talk about it..

Next along the line is Matt Sykes from Goldman Sachs..

Just a more high-level question. I know we've talked a lot about the headcount increase you guys planned to do over the course of the year.

I'm just curious more on the qualitative side, how competitive is that market, both on commercial and R&D? And has it gotten tighter over the course of the last year? And do you expect it to get tighter over the course of this year?.

So, yes, it's a good question. So, I'll ask -- I'll answer it broadly, the Company, and Brad might be able to add more color on the commercial side, on sales side. So, look, talent, like I said during my opening remarks, talent, kind of -- has been a focus for us from the very beginning. That's the foundation of the Company.

So, always top-of-mind concern, and we are always trying to get the very best people in the company. So, as far as we're concerned, it's always in some sense a tight market, kind of regardless of what happens there right now. It varies by area.

Back in the early days, it was particularly more challenging for us, for example, to hire more like software developers and people out of the sort of tech industry that has gotten relatively easier for multiple reasons.

In general, I think we're doing -- especially compared to sort of start-up days, it has gotten easier, and we're doing quite well, and we're very happy with the level of talent that is coming to the Company, very happy..

And I'll just add a little bit on the commercial side. I mean, there's generally been somewhat easier, like Serge said overall, because people know who we are. In a commercial, there's always that sort of competitive aspect, and people like to be part of a winning team, and we try to make sure that 10x is a winning team.

So, overall, it's improved, but we also have a very high standard. So, the yield is not very high in giving people through the interview process..

And just one last one I know you guys have talked about lab capacity.

I'm just wondering, as you look out regionally, where you guys are, are there any differences in the cadence of capacity within labs across different regions, or is it pretty much the same cadence that you're expecting as we get towards the back half of the year, the capacity to go up?.

Yes. Maybe I'll just take that. There's a complete range. I mean, in places like China, it's kind of back to what I would consider normal. And even generally across Asia, we've seen that stabilize fairly quickly. Europe is -- with the exception of the UK has continued to open up and function at an increasingly improved capacity.

And in AMR, we see it -- it's kind of all over the board. Early on in the quarter or, let's say, towards the end of the quarter, I should say, we saw certainly some issues in Southern California as there was a spike there.

But overall, we've kind of reached that point where there is some level of attenuation, but we -- as I think Justin has pointed out, we're going to have to see the impact of the vaccine before we see any material change going forward..

There are no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect..