UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

_____________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-39035

10x Genomics, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			45-5614458
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

6230 Stoneridge Mall Road
Pleasanton, California			94588
(Address of principle executive offices)			(Zip Code)

(925) 401-7300

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_____________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol

Name of each exchange
on which registered

Class A common stock, par value $0.00001 per share

TXG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 31, 2022,~~April 28, 2023, the registrant had ~~95,596,266~~98,124,868 shares of Class A common stock, $0.00001 par value per share, outstanding and ~~18,867,255~~18,067,255 shares of Class B common stock, $0.00001 par value per share, outstanding.

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10x Genomics, Inc.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains ~~“forward-looking statements”~~forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included in this Quarterly Report ~~including~~may be forward-looking statements. Forward-looking statements ~~concerning~~generally can be identified by the use of forward-looking terminology such as “may,” "might," “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “would,” “likely,” “seek” or “continue” or the negatives of these terms or variations of them or similar terminology, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include statements regarding 10x Genomics, Inc.’s expectations regarding our plans, objectives, goals, beliefs, business strategies, results of operations, financial position, sufficiency of our capital resources, ~~and~~ business outlook, future events, business conditions, ~~costs~~key business metrics and ~~expenses that we expect~~key factors affecting our performance, gross margin trends including the potential impact of change in product mix, expected future investments including anticipated capital expenditures, anticipated size of market opportunities and our ability to ~~incur or to save in connection with our workforce reduction, the anticipated timing for completion~~capture them, expected uses, performance and benefits of our ~~workforce restructuring activities,~~products and services, uncertainties related to the global COVID-19 pandemic and the impact of our and our customers' and suppliers' responses to it, business trends and ~~other~~the impact of macroeconomic conditions, including inflation and rising interest rates. These statements are based on management’s current expectations, forecasts, beliefs, assumptions and information ~~may be forward-looking statements. Forward-looking~~currently available to management, and actual outcomes and results could differ materially from these statements ~~generally can be identified by the use~~due to a number of forward-looking terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or variations of them or similar terminology.factors. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct and actual results may vary materially from what is expressed in or indicated by the forward-looking statement. Such statements reflect the current views of our management with respect to our business, results of operations and future financial performance.correct.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” in this Quarterly Report and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (“Annual Report”). Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. For a more detailed discussion of the risks, uncertainties and other factors that could cause actual results to differ, please refer to the “Risk Factors” in our Annual Report and this Quarterly Report, as such risk factors may be updated from time to time in our periodic filings with the U.S. Securities and Exchange Commission ("SEC"). Our periodic filings are accessible on the SEC’s website at www.sec.gov.

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct nor can we guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or occur and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. Further, ~~as the COVID-19 pandemic is continuously evolving,~~ our forward-looking statements may not accurately or fully reflect the potential impact ~~that~~of adverse geopolitical and macroeconomic events, international economic, political, legal compliance, social and business factors such as the COVID-19 pandemic, inflation and supply chain interruptions may have on our business, financial condition, results of operations and cash flows.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Unless otherwise stated or the context otherwise indicates, references to “we,” “us,” “our,” “the Company,” “10x” and similar references refer to 10x Genomics, Inc. and its subsidiaries.

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Channels for Disclosure of Information

Investors and others should note that we may announce material information to the public through filings with the SEC, our website (https://www.10xGenomics.com), press releases, public conference calls, public webcasts and our social media accounts, (https://twitter.com/10xGenomics, https://www.facebook.com/10xGenomics and

https://www.linkedin.com/company/10xgenomics). We use these channels to communicate with our customers and the public about the Company, our products, our services and other matters. We encourage our investors, the media and others to review the information disclosed through such channels as such information could be deemed to be material information. The information on such channels, including on our website and our social media accounts, is not incorporated by reference in this Quarterly Report and shall not be deemed to be incorporated by reference into any other filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing. Please note that this list of disclosure channels may be updated from time to time.

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10x Genomics, Inc.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

10x Genomics, Inc.

Condensed Consolidated Balance Sheets

(In thousands)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(Unaudited)		(Note 1)			(Unaudited)		(Note 1)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	233,951	$	587,447	Cash and cash equivalents	$	332,320	$	219,746
Marketable securities	Marketable securities	218,435		—		Marketable securities	85,970		210,238
Restricted cash	Restricted cash	508		1,028		Restricted cash	2,500		2,633
Accounts receivable, net	Accounts receivable, net	83,549		85,254		Accounts receivable, net	77,940		104,211
Inventory	Inventory	78,629		59,966		Inventory	82,307		81,629
Prepaid expenses and other current assets	Prepaid expenses and other current assets	14,350		13,896		Prepaid expenses and other current assets	20,857		16,578
Total current assets	Total current assets	629,422		747,591		Total current assets	601,894		635,035
Property and equipment, net	Property and equipment, net	257,694		169,492		Property and equipment, net	292,106		289,328
Restricted cash	Restricted cash	7,091		7,598		Restricted cash	4,974		4,974
Operating lease right-of-use assets	Operating lease right-of-use assets	71,095		60,918		Operating lease right-of-use assets	74,738		69,882
Goodwill	Goodwill	4,511		4,511		Goodwill	4,511		4,511
Intangible assets, net	Intangible assets, net	23,493		25,397		Intangible assets, net	22,948		22,858
Other noncurrent assets	Other noncurrent assets	2,901		3,319		Other noncurrent assets	12,859		2,392
Total assets	Total assets	$	996,207	$	1,018,826	Total assets	$	1,014,030	$	1,028,980
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	21,594	$	17,351	Accounts payable	$	29,317	$	21,599
Accrued compensation and related benefits	Accrued compensation and related benefits	28,214		31,626		Accrued compensation and related benefits	17,574		32,675
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	61,989		50,909		Accrued expenses and other current liabilities	47,386		59,779

Deferred revenue	Deferred revenue	6,665		5,340		Deferred revenue	8,530		7,867
Operating lease liabilities	Operating lease liabilities	8,393		5,131		Operating lease liabilities	9,199		9,037

Total current liabilities	Total current liabilities	126,855		110,357		Total current liabilities	112,006		130,957

Accrued license fee, noncurrent		—		5,814

Operating lease liabilities, noncurrent	Operating lease liabilities, noncurrent	87,833		76,847		Operating lease liabilities, noncurrent	92,843		86,139
Other noncurrent liabilities	Other noncurrent liabilities	5,727		8,240		Other noncurrent liabilities	6,796		6,141
Total liabilities	Total liabilities	220,415		201,258		Total liabilities	211,645		223,237
Commitments and contingencies (Note 5)
Commitments and contingencies (Note 4)						Commitments and contingencies (Note 4)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock	Preferred stock	—		—		Preferred stock	—		—
Common stock	Common stock	2		2		Common stock	2		2
Additional paid-in capital	Additional paid-in capital	1,793,388		1,680,865		Additional paid-in capital	1,883,930		1,839,397
Accumulated deficit	Accumulated deficit	(1,012,106)		(863,321)		Accumulated deficit	(1,080,068)		(1,029,321)
Accumulated other comprehensive income (loss)		(5,492)		22
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(1,479)		(4,335)
Total stockholders’ equity	Total stockholders’ equity	775,792		817,568		Total stockholders’ equity	802,385		805,743
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	996,207	$	1,018,826	Total liabilities and stockholders’ equity	$	1,014,030	$	1,028,980

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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10x Genomics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue	Revenue	$	131,072	$	125,297	$	360,177	$	346,960	Revenue	$	134,285	$	114,496
Cost of revenue	Cost of revenue	30,377		24,518		83,559		46,493		Cost of revenue	35,895		25,478
Gross profit	Gross profit	100,695		100,779		276,618		300,467		Gross profit	98,390		89,018
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	67,290		54,582		202,053		149,867		Research and development	67,098		64,078

Selling, general and administrative	Selling, general and administrative	73,401		62,076		219,413		187,683		Selling, general and administrative	83,280		66,675
Accrued contingent liabilities		—		—		—		(660)

Total operating expenses	Total operating expenses	140,691		116,658		421,466		336,890		Total operating expenses	150,378		130,753
Loss from operations	Loss from operations	(39,996)		(15,879)		(144,848)		(36,423)		Loss from operations	(51,988)		(41,735)
Other income (expense):	Other income (expense):									Other income (expense):
Interest income	Interest income	2,025		49		3,832		157		Interest income	3,869		569
Interest expense	Interest expense	(114)		(219)		(351)		(649)		Interest expense	(19)		(128)
Other expense, net	Other expense, net	(1,950)		(599)		(4,193)		(807)		Other expense, net	(1,516)		(400)

Total other expense		(39)		(769)		(712)		(1,299)
Total other income										Total other income	2,334		41
Loss before provision for income taxes	Loss before provision for income taxes	(40,035)		(16,648)		(145,560)		(37,722)		Loss before provision for income taxes	(49,654)		(41,694)
Provision for income taxes	Provision for income taxes	1,879		523		3,225		2,052		Provision for income taxes	1,093		719
Net loss	Net loss	$	(41,914)	$	(17,171)	$	(148,785)	$	(39,774)	Net loss	$	(50,747)	$	(42,413)

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.37)	$	(0.15)	$	(1.31)	$	(0.36)	Net loss per share, basic and diluted	$	(0.44)	$	(0.38)
Weighted-average shares of common stock used in computing net loss per share, basic and diluted	Weighted-average shares of common stock used in computing net loss per share, basic and diluted	114,112,382		110,874,249		113,555,750		109,826,104		Weighted-average shares of common stock used in computing net loss per share, basic and diluted	115,619,869		112,966,196

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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10x Genomics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net loss	Net loss	$	(41,914)	$	(17,171)	$	(148,785)	$	(39,774)	Net loss	$	(50,747)	$	(42,413)
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Unrealized losses on available-for-sale marketable securities		(1,459)		—		(5,188)		—
Unrealized gains (losses) on available-for-sale marketable securities										Unrealized gains (losses) on available-for-sale marketable securities	1,117		(2,403)
Realized loss on available-for-sale marketable securities reclassified into net loss										Realized loss on available-for-sale marketable securities reclassified into net loss	1,715		—
Foreign currency translation adjustment	Foreign currency translation adjustment	(68)		136		(326)		244		Foreign currency translation adjustment	24		(62)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(1,527)		136		(5,514)		244		Other comprehensive income (loss), net of tax	2,856		(2,465)
Comprehensive loss	Comprehensive loss	$	(43,441)	$	(17,035)	$	(154,299)	$	(39,530)	Comprehensive loss	$	(47,891)	$	(44,878)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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10x Genomics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)

Common Stock Additional Paid-in
Capital Accumulated
Deficit Accumulated
Other Comprehensive
Income (Loss) Total
Stockholders’
Equity
Shares Amount
Balance as of December 31, 2021 112,514,977 $ 2 $ 1,680,865 $ (863,321) $ 22 $ 817,568
Issuance of Class A common stock related to equity awards 761,373 — 7,826 — — 7,826
Vesting of shares subject to repurchase, including early exercised options — — 32 — — 32
Stock-based compensation — — 26,137 — — 26,137
Net loss — — — (42,413) — (42,413)
Other comprehensive loss — — — — (2,465) (2,465)
Balance as of March 31, 2022 113,276,350 2 1,714,860 (905,734) (2,443) 806,685
Issuance of Class A common stock related to equity awards 610,447 — 6,360 — — 6,360
Vesting of shares subject to repurchase, including early exercised options — — 32 — — 32
Stock-based compensation — — 36,419 — — 36,419
Net loss — — — (64,458) — (64,458)
Other comprehensive loss — — — (1,522) (1,522)
Balance as of June 30, 2022 113,886,797 2 1,757,671 (970,192) (3,965) 783,516
Issuance of Class A common stock related to equity awards 541,705 — 2,039 — — 2,039
Vesting of shares subject to repurchase, including early exercised options — — 32 — — 32
Stock-based compensation — — 33,646 — — 33,646
Net loss — — — (41,914) — (41,914)
Other comprehensive loss — — — — (1,527) (1,527)
Balance as of September 30, 2022 114,428,502 $ 2 $ 1,793,388 $ (1,012,106) $ (5,492) $ 775,792


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2022	115,195,009	$	2	$	1,839,397	$	(1,029,321)	$	(4,335)	$	805,743
Issuance of Class A common stock related to equity awards	978,333	—		2,400		—		—		2,400

Stock-based compensation	—	—		42,133		—		—		42,133
Net loss	—	—		—		(50,747)		—		(50,747)
Other comprehensive income	—	—		—		—		2,856		2,856
Balance as of March 31, 2023	116,173,342	$	2	$	1,883,930	$	(1,080,068)	$	(1,479)	$	802,385

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~~10x Genomics, Inc.~~

~~Condensed Consolidated Statements of Stockholders’ Equity~~

~~(Unaudited)~~

~~(In thousands, except share data)~~


		Common Stock			Additional Paid-in Capital				Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity					Common Stock				Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
		Shares	Amount											Shares					Amount
Balance as of December 31, 2020		108,485,909	$	2			$	1,544,218					$	(805,098)			$	(50)		$	739,072
Balance as of December 31, 2021																		Balance as of December 31, 2021		112,514,977		$	2		$	1,680,865		$	(863,321)		$	22		$	817,568
Issuance of Class A common stock related to equity awards	Issuance of Class A common stock related to equity awards	1,102,618	—		8,546				—		—				8,546			Issuance of Class A common stock related to equity awards		761,373		—		7,826			—			—			7,826
Vesting of shares subject to repurchase, including early exercised options	Vesting of shares subject to repurchase, including early exercised options	—	—		42				—		—				42			Vesting of shares subject to repurchase, including early exercised options		—		—		32			—			—			32
Stock-based compensation	Stock-based compensation	—	—		16,253				—		—				16,253			Stock-based compensation		—		—		26,137			—			—			26,137
Net loss	Net loss	—	—		—				(11,551)		—				(11,551)			Net loss		—		—		—			(42,413)			—			(42,413)
Other comprehensive income		—	—		—				—		98				98
Balance as of March 31, 2021		109,588,527	2		1,569,059				(816,649)		48				752,460
Issuance of Class A common stock related to equity awards		1,151,392	—		16,194				—		—				16,194
Vesting of shares subject to repurchase, including early exercised options		—	—		42				—		—				42
Stock-based compensation		—	—		26,932				—		—				26,932
Net loss		—	—		—				(11,052)		—				(11,052)
Other comprehensive income		—	—		—				—		10				10
Balance as of June 30, 2021		110,739,919	2		1,612,227				(827,701)		58				784,586
Issuance of Class A common stock related to equity awards		797,529	—		6,682				—		—				6,682
Vesting of shares subject to repurchase, including early exercised options		—	—		38				—		—				38
Stock-based compensation		—	—		25,950				—		—				25,950
Net loss		—	—		—				(17,171)		—				(17,171)
Other comprehensive income		—	—		—				—		136				136
Balance as of September 30, 2021		111,537,448	$	2	$	1,644,897			$	(844,872)	$	194			$	800,221
Other comprehensive loss																		Other comprehensive loss		—		—		—			—			(2,465)			(2,465)
Balance as of March 31, 2022																		Balance as of March 31, 2022		113,276,350		$	2	$	1,714,860		$	(905,734)		$	(2,443)		$	806,685

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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10x Genomics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(148,785)	$	(39,774)	Net loss	$	(50,747)	$	(42,413)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense						Stock-based compensation expense	42,101		26,047
Depreciation and amortization	Depreciation and amortization	18,847		15,337		Depreciation and amortization	6,482		6,191
Stock-based compensation expense		95,874		69,058
Loss on disposal of property and equipment		455		66

Amortization of premium and accretion of discount on marketable securities, net		665		—

Amortization of right-of-use assets	Amortization of right-of-use assets	5,687		5,593		Amortization of right-of-use assets	2,134		1,784
Realized loss on marketable securities						Realized loss on marketable securities	1,715		—
Other						Other	150		183
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	1,673		(27,216)		Accounts receivable	26,279		8,728
Inventory	Inventory	(19,761)		(21,349)		Inventory	(449)		(3,736)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(2,457)		(1,220)		Prepaid expenses and other current assets	(4,253)		(3,873)
Other noncurrent assets	Other noncurrent assets	411		348		Other noncurrent assets	(10,470)		157
Accounts payable	Accounts payable	6,082		12,191		Accounts payable	(781)		2,875
Accrued compensation and other related benefits	Accrued compensation and other related benefits	(3,163)		11,868		Accrued compensation and other related benefits	(15,129)		(13,283)
Deferred revenue	Deferred revenue	1,845		1,221		Deferred revenue	1,051		230
Accrued contingent liabilities		—		(44,173)

Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	2,867		(2,545)		Accrued expenses and other current liabilities	(161)		(3,541)
Operating lease liability	Operating lease liability	(4,566)		(2,498)		Operating lease liability	(2,308)		(357)
Other noncurrent liabilities	Other noncurrent liabilities	(3,003)		(4,085)		Other noncurrent liabilities	261		206
Net cash used in operating activities	Net cash used in operating activities	(47,329)		(27,178)		Net cash used in operating activities	(4,125)		(20,802)
Investing activities:	Investing activities:					Investing activities:

Acquisition of business, net of cash acquired		(1,500)		(5,451)

Purchases of property and equipment	Purchases of property and equipment	(91,927)		(73,660)		Purchases of property and equipment	(4,559)		(28,136)
Purchase of intangible assets						Purchase of intangible assets	(723)		—
Purchase of marketable securities	Purchase of marketable securities	(282,871)		—		Purchase of marketable securities	—		(242,329)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	41,401		—		Proceeds from sales of marketable securities	93,342		12,657
Proceeds from maturities of marketable securities	Proceeds from maturities of marketable securities	17,182		—		Proceeds from maturities of marketable securities	31,896		250
Net cash used in investing activities		(317,715)		(79,111)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	119,956		(257,558)
Financing activities:	Financing activities:					Financing activities:
Payments on financing arrangement	Payments on financing arrangement	(5,409)		(5,028)		Payments on financing arrangement	(5,814)		(5,409)

Issuance of common stock from exercise of stock options and employee stock purchase plan purchases		16,225		31,422
Net cash provided by financing activities		10,816		26,394
Issuance of common stock from exercise of stock options						Issuance of common stock from exercise of stock options	2,400		7,826
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(3,414)		2,417
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(295)		316		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	24		(18)
Net decrease in cash, cash equivalents, and restricted cash		(354,523)		(79,579)
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	112,441		(275,961)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	596,073		688,644		Cash, cash equivalents, and restricted cash at beginning of period	227,353		596,073
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	241,550	$	609,065	Cash, cash equivalents, and restricted cash at end of period	$	339,794	$	320,112

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid for interest	Cash paid for interest	$	841	$	1,222	Cash paid for interest	$	436	$	841
Cash paid for taxes	Cash paid for taxes	$	3,649	$	8,318	Cash paid for taxes	$	2,547	$	2,900
Noncash investing and financing activities:	Noncash investing and financing activities:					Noncash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	$	29,290	$	12,710	Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	$	30,668	$	15,023
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	$	16,562	$	19,566	Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,893	$	16,562
Contingent consideration payable from business acquisition	Contingent consideration payable from business acquisition	$	1,500	$	1,536	Contingent consideration payable from business acquisition	$	—	$	1,500

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Description of Business and Basis of Presentation

Organization and Description of Business

10x Genomics, Inc. (the “Company”) is a life sciences technology company focused on building innovative products and solutions to interrogate, understand and master biological systems at resolution and scale that matches the complexity of biology. The Company’s integrated solutions include the Company’s Chromium ~~Controller,~~X Series and Chromium Connect ~~and Chromium X Series~~ instruments, which the Company refers to as “Chromium instruments,” the Company's Visium CytAssist ~~instrument~~and Xenium Analyzer instruments, which the Company refers to as “Spatial instruments,” and the Company’s proprietary microfluidic chips, slides, reagents and other consumables for the Company's Chromium, Visium and ~~Visium~~Xenium solutions, which the Company refers to as “consumables.” The Company bundles its software with these products to guide customers through the workflow, from sample preparation through analysis and visualization. The Company was incorporated in the state of Delaware in July 2012 and began commercial and manufacturing operations and selling its instruments and consumables in 2015. The Company is headquartered in Pleasanton, California and has wholly-owned subsidiaries in Asia, Europe and North America.

Basis of Presentation

The accompanying condensed consolidated financial statements, which include the Company’s accounts and the accounts of its wholly-owned subsidiaries, are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The condensed consolidated balance sheets at December 31, ~~2021~~2022 have been derived from the audited consolidated financial statements of the Company at that date. Certain information and footnote disclosures typically included in the Company’s audited consolidated financial statements have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated for any future annual or interim period. All intercompany transactions and balances have been eliminated. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.

The accompanying unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, ~~2021~~2022 included in the Company's Annual Report on Form 10-K filed with the SEC on February ~~18, 2022~~16, 2023 (our "Annual Report").

2. Summary of Significant Accounting Policies

There were no material changes in the Company's significant accounting policies during the three ~~and nine~~ months ended ~~September 30, 2022, except as set forth below.~~March 31, 2023. See Note 2 – Summary of Significant Accounting Policies to the consolidated financial statements included in the Company's Annual Report, for information regarding the Company's significant accounting policies.

~~Marketable Securities~~

The Company designates investments in debt securities as available-for-sale. Available-for-sale debt securities with original maturities of three months or less from the date of purchase are classified within cash and cash equivalents. Available-for-sale debt securities with original maturities longer than three months are available to fund current operations and are classified as marketable securities, within current assets on the balance sheet. Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in "Accumulated other comprehensive income (loss)," a component of stockholders’ equity, net of tax. Realized gains (losses) on the sale of marketable securities are determined using the specific-identification method and recorded in "Other expense, net" in the Consolidated Statements of Operations.

The available-for-sale debt securities are subject to a periodic impairment review. For investments in an unrealized loss position, the Company determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions. The Company recognizes an allowance for credit losses, up to the amount of the unrealized loss when appropriate, and writes down the amortized cost basis

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

of the investment if it is more likely than not that the Company will be required or will intend to sell the investment before recovery of its amortized cost basis. Allowances for credit losses and write-downs are recognized in “Other expense, net,” and unrealized losses not related to credit losses are recognized in “Accumulated other comprehensive income (loss).” There are no allowances for credit losses for the periods presented.~~As of September 30, 2022, the gross unrealized losses on available-for-sale securities are related to market interest rate changes and not attributable to credit.~~

~~Fair Value of Financial Instruments~~

Cash and cash equivalents are comprised of money market funds and cash which are classified as Level 1 in the fair value hierarchy. Assets recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

~~Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;~~

Level 2 - Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

~~Level 3 - Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.~~

The Company’s financial instruments consist of Level 1 and Level 2 assets. Where quoted prices are available in an active market, securities are classified as Level 1. Money market funds are classified as Level 1. Level 2 assets consist primarily of corporate bonds, asset backed securities, commercial paper, U.S. Government Treasury and agency securities, and debt securities in government-sponsored entities based upon quoted market prices for similar movements in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Where applicable these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third party-data providers, including but not limited to, benchmark yields, interest rate curves, reported trades, broker/dealer quotes and reference data.

Revenue Recognition

The Company generates revenue from sales of products and services, and its products consist of instruments and consumables. Revenue from product sales is recognized when control of the product is transferred, which is generally upon shipment to the customer. Instrument service agreements, which relate to extended warranties, are typically entered into for one-year terms, following the expiration of the standard one-year warranty period. Revenue for extended warranties is recognized ratably over the term of the extended warranty period as a stand ready performance obligation. Revenue is recorded net of discounts, distributor commissions and sales taxes collected on behalf of governmental authorities. Customers are invoiced generally upon shipment, or upon order for services, and payment is typically due within 45 days. Cash received from customers in advance of product shipment or providing services is recorded as a contract liability. The Company’s contracts with its customers generally do not include rights of return or a significant financing component.

The Company regularly enters into contracts that include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. The transaction price is allocated to each performance obligation in proportion to its standalone selling price. The Company determines standalone selling price using average selling

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

prices with consideration of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, the Company relies upon prices set by management, adjusted for applicable discounts.

Net Loss Per Share

Net loss per share is computed using the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights and sharing of losses, of the Class A common stock and Class B common stock are identical, other than voting rights. As the liquidation and dividend rights and sharing of losses are

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, adjusted for outstanding shares that are subject to repurchase.

For the calculation of diluted net loss per share, basic net loss per share is adjusted by the effect of dilutive securities including awards under the Company’s equity compensation plans. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding. For periods in which the Company reports net losses, diluted net loss per share is the same as basic net loss per share because potentially dilutive shares of common stock are not assumed to have been issued if their effect is anti-dilutive.

~~Stock-Based Compensation~~

3. Other Financial Statement Information

Available-for-sale Securities

Available-for-sale securitiesconsisted of the following (in thousands):


	March 31, 2023								December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Fair Value Measurement
Cash equivalents:
Money market funds	$	302,826	$	—	$	—	$	302,826	$	163,184	$	—	$	—	$	163,184	Level 1
Marketable securities:
Corporate debt securities	32,623		—		(382)		32,241		153,794		4		(2,768)		151,030		Level 2
Government debt securities	49,632		—		(828)		48,804		54,136		—		(1,247)		52,889		Level 2
Asset-backed securities	4,999		—		(74)		4,925		6,424		—		(105)		6,319		Level 2
Total available-for-sale securities	$	390,080	$	—	$	(1,284)	$	388,796	$	377,538	$	4	$	(4,120)	$	373,422

The Company’s stock-based compensation expense relates to stock options, restricted stock units (“RSUs”), market-based performance stock awards ("PSAs") including performance stock options and performance RSUs granted pursuant to equity incentive plans and stock purchase rights under an Employee Stock Purchase Plan (“ESPP”). Stock-based compensation expense for its stock-based awards is based on their grant date fair value. The Company determines the fair valuecontractual maturities of ~~RSUs based on the closing price~~marketable securities as of its stock, which is listed on the Nasdaq Stock Market LLC, at the date of the grant. The Company estimates the fair value of stock option awards under an equity incentive plan and stock purchase rights under an ESPP on the grant date using the Black-Scholes option-pricing model. The fair values of stock-based awards excluding PSAs are recognizedMarch 31, 2023 were as ~~compensation expense on a straight-line basis over the requisite service period in which the awards are expected to vest and forfeitures are recognized as they occur.~~follows (in thousands):

The Black-Scholes model considers several variables and assumptions in estimating the fair value of stock-based awards. These variables include the per share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected annual dividend yield and the expected stock price volatility over the expected term. The Company calculated the expected term using the simplified method, which is the mid-point between the vesting and contractual term. Due to the short trading period of the Company's stock, the Company has estimated volatility by reference to the historical volatilities of similar publicly traded peer companies. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award.


	Fair Value
Due in one year or less	$	66,133
Due after one year to five years	19,837
Total marketable securities	$	85,970

For PSAs, the Company derives the requisite service period for each separately vesting portion of the award using a Monte Carlo simulation model and the related compensation expense is recognized over the derived service period using the accelerated attribution method commencing on the grant date. The derived service period is the median duration of the successful stock price paths to meet the respective escalating stock price thresholds as simulated in the Monte Carlo valuation model which uses assumptions such as volatility, risk-free interest rate, cost of equity and dividend estimated for the performance period of the PSAs. If the related market condition is achieved earlier than its estimated derived service period, the stock-based compensation expense will be accelerated, and a cumulative catch-up expense will be recorded during the period in which the market condition is met.

~~3. Restructuring~~

On August 3, 2022, the Company implemented a reduction in force plan in order to decrease costs and maintain a streamlined organization to support the business. Restructuring charges of $4.2 million associated with this plan, comprised primarily of severance-related costs, were recorded inDuring the three months ended ~~September 30, 2022.~~March 31, 2023, the Company incurred gross realized losses of $1.7 million and no gross realized gains from the sale of available-for-sales debt securities. The Company incurred no material gross realized gains or losses

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

~~The following table is a summary of restructuring costs related to the restructuring as of September 30, 2022 (in thousands):~~

Severance and Benefits Costs Stock-Based Compensation Expense Total
Restructuring charge $ 3,600 $ 616 $ 4,216
Cash payments made (2,838) — (2,838)
Non-cash charge — (616) (616)
Balance at September 30, 2022 $ 762 $ — $ 762

Restructuring costs of $0.3 million, $1.4 million and $2.5 million were recorded in cost of revenue, research and development expense, and selling, general and administrative expense, respectively, in the Company's condensed consolidated statements of operationsfrom available-for-sales debt securities during the three months ended ~~September 30,~~March 31, 2022. ~~No additional restructuring charges are expected to be incurred and~~Realized gains (losses) on the ~~restructuring activities are expected to be substantially completed by the end of the fourth quarter of 2022.~~

~~4. Other Financial Statement Information~~

~~Available-for-sale Securities~~

~~Available-for-sale securitiesat September 30, 2022 consisted of the following (in thousands):~~

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Fair Value Measurement
Cash equivalents:
Money market funds $ 198,852 $ — $ — $ 198,852 Level 1
Marketable securities:
Corporate debt securities 158,491 — (3,634) 154,857 Level 2
Government debt securities 54,142 — (1,417) 52,725 Level 2
Asset-backed securities 10,990 — (137) 10,853 Level 2
Total available-for-sale securities $ 422,475 $ — $ (5,188) $ 417,287

~~As of December 31, 2021, the Company held $548.0 million in money market funds with no unrealized gains or losses.~~

~~The contractual maturities~~sale of marketable securities asare recorded in “Other expense, net” in the condensed consolidated statements of ~~September 30, 2022 were as follows (in thousands):~~operations.

Amortized Cost Fair Value
Due in one year or less $ 130,206 $ 127,560
Due after one year to five years 93,417 90,875
Total marketable securities $ 223,623 $ 218,435
The available-for-sale debt securities are subject to a periodic impairment review. For investments in an unrealized loss position, the Company determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions. The Company recognizes an allowance for credit losses, up to the amount of the unrealized loss when appropriate, and writes down the amortized cost basis of the investment if it is more likely than not that the Company will be required or will intend to sell the investment before recovery of its amortized cost basis. Allowances for credit losses and write-downs are recognized in “Other (expense) income, net,” and unrealized losses not related to credit losses are recognized in “Accumulated other comprehensive income (loss).” There are no allowances for credit losses for the periods presented. As of March 31, 2023, the gross unrealized losses on available-for-sale securities are related to market interest rate changes and not attributable to credit.

Inventory

Inventory was comprised of the following (in thousands):

September 30,
2022 December 31,
2021
Purchased materials $ 33,418 $ 31,954
Work in progress 26,157 14,052
Finished goods 19,054 13,960
Inventory $ 78,629 $ 59,966

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~


	March 31, 2023		December 31, 2022
Purchased materials	$	37,100	$	34,497
Work in progress	20,530		24,650
Finished goods	24,677		22,482
Inventory	$	82,307	$	81,629

Accrued Compensation and Related Benefits

Accrued compensation and related benefits were comprised of the following as of the dates indicated (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Accrued payroll and related costs	Accrued payroll and related costs	$	3,797	$	3,978	Accrued payroll and related costs	$	4,298	$	2,052
Employee stock purchase program liability		1,812		1,693
Accrued bonus	Accrued bonus	14,278		16,558		Accrued bonus	5,587		17,081
Accrued commissions	Accrued commissions	3,055		3,417		Accrued commissions	2,769		5,143
Accrued acquisition-related compensation	Accrued acquisition-related compensation	3,766		4,430		Accrued acquisition-related compensation	—		5,470
Accrued vacation		1,089		1,172
Other	Other	417		378		Other	4,920		2,929
Accrued compensation and related benefits	Accrued compensation and related benefits	$	28,214	$	31,626	Accrued compensation and related benefits	$	17,574	$	32,675

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities were comprised of the following as of the dates indicated (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Accrued legal and related costs	Accrued legal and related costs	$	3,277	$	2,425	Accrued legal and related costs	$	5,639	$	3,102
Accrued license fee	Accrued license fee	6,119		6,214		Accrued license fee	—		6,231

Accrued royalties for licensed technologies	Accrued royalties for licensed technologies	4,245		4,415		Accrued royalties for licensed technologies	4,501		4,707
Accrued property and equipment	Accrued property and equipment	29,290		15,361		Accrued property and equipment	22,167		26,750
Accrued professional services	Accrued professional services	4,447		8,593		Accrued professional services	4,318		5,180
Product warranties	Product warranties	1,968		994		Product warranties	3,206		3,023
Customer deposits		1,161		954
Taxes payable	Taxes payable	3,118		4,622		Taxes payable	2,297		4,079
Accrued lab supplies		1,266		2,056
Other	Other	7,098		5,275		Other	5,258		6,707
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	$	61,989	$	50,909	Accrued expenses and other current liabilities	$	47,386	$	59,779

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Product Warranties

Changes in the reserve for product warranties were as follows for the periods indicated (in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2021
Beginning of period	Beginning of period	$	994	$	399	Beginning of period	$	3,023	$	994
Amounts charged to cost of revenue	Amounts charged to cost of revenue	3,590		2,113		Amounts charged to cost of revenue	1,630		775
Repairs and replacements	Repairs and replacements	(2,616)		(1,688)		Repairs and replacements	(1,447)		(672)
End of period	End of period	$	1,968	$	824	End of period	$	3,206	$	1,097

Revenue and Deferred Revenue

As of ~~September 30, 2022,~~March 31, 2023, the aggregate amount of remaining performance obligations related to separately sold extended warranty service agreements, or allocated amounts for extended warranty service agreements bundled with sales of instruments, was ~~$9.4~~$12.1 million, of which approximately ~~$6.6~~$8.5 million is expected to be recognized to revenue in the next 12 months, with the

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

remainder thereafter. The contract liabilities of ~~$9.4~~$12.1 million and ~~$7.7~~$11.0 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, consisted of deferred revenue related to extended warranty service agreements.

The following revenue recognized for the periods were included in contract liabilities as of December 31, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Deferred revenue recognized $ 1,043 $ 884 $ 3,940 $ 3,412


	Three Months Ended March 31,
	2023		2022
Deferred revenue recognized	$	2,107	$	1,604

The following table represents revenue by source for the periods indicated (in thousands):. Spatial products include the Company's Visium and Xenium products:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Instruments	Instruments	$	20,899	$	17,121	$	50,064	$	45,123	Instruments
Chromium										Chromium	$	11,626	$	14,326
Spatial¹										Spatial¹	7,550		103
Total instruments revenue										Total instruments revenue	19,176		14,429
Consumables	Consumables	108,107		106,117		303,991		296,342		Consumables
Chromium										Chromium	101,096		91,279
Spatial										Spatial	11,282		6,671
Total consumables revenue										Total consumables revenue	112,378		97,950
Services	Services	2,066		2,059		6,122		5,495		Services	2,731		2,117
Total revenue	Total revenue	$	131,072	$	125,297	$	360,177	$	346,960	Total revenue	$	134,285	$	114,496

1The Spatial instruments revenue in the first quarter of 2022 related to revenue from the Visium Accessory Kit.

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents revenue by geography based on the location of the customer for the periods indicated (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Americas										Americas
United States	United States	$	75,345	$	68,440	$	202,159	$	182,747	United States	$	76,281	$	57,441
Americas (excluding United States)										Americas (excluding United States)	2,515		2,246
Total Americas										Total Americas	78,796		59,687
Europe, Middle East and Africa	Europe, Middle East and Africa	27,927		25,819		74,067		73,761		Europe, Middle East and Africa	28,422		20,532
China		15,773		19,063		45,620		55,577
Asia-Pacific										Asia-Pacific
China¹										China¹	14,031		21,782
Asia-Pacific (excluding China)	Asia-Pacific (excluding China)	9,791		10,187		32,334		29,822		Asia-Pacific (excluding China)	13,036		12,495
North America (excluding United States)		2,236		1,788		5,997		5,053
Total revenue		$	131,072	$	125,297	$	360,177	$	346,960
Total Asia-Pacific										Total Asia-Pacific	27,067		34,277
Total Revenue										Total Revenue	$	134,285	$	114,496

1Includes Hong Kong effective from the first quarter of 2023. Comparative period has been adjusted for this inclusion.

5.4. Commitments and Contingencies

Lease Agreements

The Company leases office, laboratory, manufacturing and distribution space in various locations worldwide. On November 6, 2020, the Company entered into a Master Lease Agreement ("MLA"), consisting of various lease components, to lease additional office building space near the Company's Pleasanton, California headquarters. ~~The MLA consists~~All of ~~various~~the lease components ~~a few of which~~related to the MLA have commenced inand the ~~nine months ended September 30, 2022. The sole outstanding component is expected to commence in 2023 and~~MLA is expected to terminate on June 30, 2033. ~~Total undiscounted~~

Future net lease payments ~~for~~related to the Company’s operating lease ~~component commencing in fiscal year~~liabilities as of March 31, 2023 ~~will be $14.0 million with an expected lease term~~is as follows (in thousands):


	Operating Leases
2023 (excluding the three months ended March 31, 2023)	$	10,208
2024	16,435
2025	15,330
2026	16,101
2027	15,476
Thereafter	56,475
Total lease payments	$	130,025
Less: imputed interest	(27,983)
Present value of operating lease liabilities	$	102,042
Operating lease liabilities, current	$	9,199
Operating lease liabilities, noncurrent	92,843
Total operating lease liabilities	$	102,042

The following table summarizes additional information related to operating leases as of ~~10.5 years.~~March 31, 2023:


	March 31, 2023		December 31, 2022
Weighted-average remaining lease term	8.1 years		8.1 years
Weighted-average discount rate	5.7	%	5.5	%

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Notes to Unaudited Condensed Consolidated Financial Statements

~~Future net lease payments related to the Company’s operating lease liabilities as of September 30, 2022 is as follows (in thousands):~~

Operating Leases
2022 (excluding the nine months ended September 30, 2022) $ 2,424
2023 14,774
2024 14,891
2025 13,774
2026 14,481
Thereafter 61,452
Total lease payments $ 121,796
Less: imputed interest (25,570)
Present value of operating lease liabilities $ 96,226
Operating lease liabilities, current $ 8,393
Operating lease liabilities, noncurrent 87,833
Total operating lease liabilities $ 96,226

~~The following table summarizes additional information related to operating leases as of September 30, 2022:~~

September 30,
2022 December 31, 2021
Weighted-average remaining lease term 8.4 years 8.7 years
Weighted-average discount rate 5.5 % 5.4 %

Litigation

The Company is regularly subject to lawsuits, claims, arbitration proceedings, administrative actions and other legal and regulatory proceedings involving intellectual property disputes, commercial disputes, competition and other matters, and the Company may become subject to additional types of lawsuits, claims, arbitration proceedings, administrative actions, government investigations and legal and regulatory proceedings in the future.

Nanostring

On May 6, 2021, the Company filed suit against Nanostring Technologies, Inc. ("Nanostring") in the U.S. District Court for the District of Delaware alleging that Nanostring's GeoMx Digital Spatial Profiler and associated instruments and reagents infringe U.S. Patent Nos. 10,472,669, 10,662,467, 10,961,566, 10,983,113 and 10,996,219 (the "GeoMx Action"). On May 19, 2021, the Company filed an amended complaint additionally alleging that the GeoMx products infringe U.S. Patent Nos. 11,001,878 and 11,008,607. On May 4, 2022, the Company filed an amended complaint in the GeoMx Action additionally alleging that the GeoMx products infringe U.S. Patent No. 11,293,917 and withdrawing the Company's claim of infringement of U.S. Patent No. 10,662,467. The Company seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to Nanostring's making, using, selling, offering to sell, exporting and/or importing in the United States the GeoMx Digital Spatial Profiler and associated instruments and reagents. Nanostring filed its answer to the GeoMx Action on May 18, 2022. Discovery is in progress. A Markman hearing was held on February 17, 2023 and the Court issued its claim construction order on February 28, 2023. Trial is scheduled for November ~~2022 and trial is scheduled for August~~ 2023.

On February 28, 2022, the Company filed a second suit against Nanostring in the U.S. District Court for the District of Delaware alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe U.S. Patent Nos. 10,227,639 and 11,021,737 (the "CosMx Action"). On May 12, 2022, the Company filed an amended complaint in the CosMx Action additionally alleging that the CosMx products infringe U.S. Patent Nos. 11,293,051, 11,293,052 and 11,293,054. Nanostring filed its answer to the CosMx Action on May 26, 2022. On March 1, 2023, the Company filed a second amended complaint additionally alleging that the CosMx products infringe U.S. Patent No. 11,542,554. The Company seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to Nanostring's making, using, selling, offering to sell, exporting and/or importing in the United States the CosMx Spatial Molecular Imager and associated instruments, reagents, and services. Nanostring filed its answer to the second amended complaint on March 22, 2023. Discovery is in progress. A Markman hearing is scheduled for ~~May~~December 2023 and trial is scheduled for ~~June~~September 2024.

On August 16, 2022, Nanostring filed a counterclaim in the CosMx Action alleging that the Company's Visium products infringe U.S. Patent No. 11,377,689. The Company filed its answer to Nanostring's counterclaim in the CosMx Action on August 30, 2022. ~~Discovery~~On November 23, 2022, the Company moved to sever claims relating to NanoString’s assertion of U.S. Patent No. 11,377,689 and ~~trial are consolidated~~consolidate those claims with the patent case NanoString filed against the Company on October 20, 2022 (discussed below). On January 24, 2023, the Court granted the Company's ~~claims~~motion.

On April 27, 2023, Nanostring filed a motion in the CosMx Action to add antitrust, unfair competition, and contract counterclaims. Nanostring seeks, among other relief, injunctive relief (including that the Company grant Nanostring a license to the patents that the Company asserted against Nanostring in the CosMx ~~Action.~~Action) and unspecified damages (including attorney's fees). The Company believes ~~Nanostring's counterclaim in the CosMx Action is~~Nanostring’s claims are meritless and intends to vigorously defend itself.

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

On October 20, 2022, Nanostring filed a ~~separate~~ suit against the Company in the U.S. District Court for the District of Delaware alleging that the Company's Visium products ~~also~~ infringe U.S. Patent No. 11,473,142, a continuation of U.S. Patent No. 11,377,689 (the "Nanostring Action"). Nanostring seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to the Company's making, using, selling, offering to sell, exporting and/or importing in the United States Visium products and associated instruments, reagents, and services. On January 24, 2023, the Court severed Nanostring’s claims with respect to U.S. Patent No. 11,377,689 from the CosMx Action and consolidated those claims with this action.Discovery is in progress. NanoString filed an amended complaint on January 27, 2023. The Company ~~has not yet responded. Discovery has not yet commenced~~filed an answer to the NanoString Action on February 10, 2023. A Markman hearing is scheduled for December 2023 and ~~no case schedule has been set.~~trial is scheduled for December 2024. The Company believes Nanostring's ~~claim~~claims in the Nanostring Action isare meritless and intends to vigorously defend itself.

On March 9, 2022, the Company filed suit in the Munich Regional Court in Germany alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe EP Patent No. 2794928B1 (the "928 Patent") (the "Germany CosMx Action"). The Company seeks, among other relief, injunctive relief in relation to Nanostring's making, using, selling, offering to sell, exporting and/or importing in Germany the CosMx Spatial Molecular Imager and associated

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

instruments and reagents. Nanostring filed its statement of defense to the Germany CosMx Action on August 26, 2022. A hearing on infringement ~~is scheduled for~~was held on March 23, 2023 and a decision is expected around May 2023. On July 29, 2022, Nanostring filed a nullity action with the German Federal Patent Court challenging the validity of EPthe 928 Patent. On February 10, 2023, the Federal Patent ~~No. 2794928B1.~~Court issued a preliminary opinion upholding the validity of certain claims of the 928 Patent directed to in situ analysis. A ~~preliminary~~hearing on validity is scheduled before the Federal Patent Court in May 2024 and a decision ~~in the nullity action~~ is expected ~~by February 2023.~~around the end of 2024.

Vizgen

In May 2022, the Company filed suit against Vizgen, Inc. ("Vizgen") in the U.S. District Court for the District of Delaware alleging that Vizgen’s MERSCOPE Platform and workflow and Vizgen’s Lab Services program, including associated instruments and reagents, infringe U.S. Patent Nos. 11,021,737, 11,293,051, 11,293,052, 11,293,054 and 11,299,767. The Company seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to Vizgen's making, using, selling, offering to sell, exporting and/or importing in the United States the MERSCOPE Platform and workflow and Vizgen's Lab Services program, including associated instruments and reagents. On July 25, 2022, Vizgen filed a motion to dismiss the Company's claims for willful and indirect infringement, which the Court denied on September 19, 2022. Discovery is in progress. A Markman hearing is scheduled for ~~July~~December 2023 and trial is scheduled for ~~July~~November 2024.

On August 30, 2022, Vizgen filed its answer and counterclaims alleging that the Company's ~~forthcoming~~ Xenium ~~product~~products infringes U.S. Patent No. 11,098,303. Vizgen seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to the Company's making, using, selling, offering to sell, exporting and/or importing in the United States Xenium products, including associated instruments and reagents. Vizgen also filed counterclaims alleging that the Company tortiously interfered with Vizgen's contractual and business relationship with Harvard and that the Company engaged in unfair practices under Massachusetts state law. ~~The~~On October 27, 2022, the Company ~~has not yet responded.~~filed a partial answer and motion to dismiss the infringement counterclaim and the tort counterclaims. On February 2, 2023, the Company's motion to dismiss was denied.

On March 15, 2023, the Company filed an amended complaint additionally alleging that the MERSCOPE Platform and workflow and Vizgen’s Lab Services program infringe U.S. Patent No. 11,549,136 and withdrawing its claim of infringement of U.S. Patent No. 11,293,054. On April 17, 2023, Vizgen filed its answer adding antitrust, unfair competition, tort, and contract counterclaims. Vizgen seeks, among other relief, injunctive relief (including that the Company grant Vizgen a license to the patents that the Company asserted against Vizgen) and unspecified damages (including attorneys' fees). The Company believes ~~these~~Vizgen’s claims are meritless and intends to vigorously defend itself.

Parse

On August 24, 2022, the Company filed suit against Parse Biosciences, Inc. ("Parse") in the U.S. District Court for the District of Delaware alleging that Parse’s Evercode Whole Transcriptomics and ATAC-seq products infringe U.S. Patent Nos. 10,155,981, 10,697,013, 10,240,197, 10,150,995, 10,619,207, and 10,738,357. The Company seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to Parse's making, using, selling, offering to sell, exporting and/or importing in the United States the Evercode Whole Transcriptomics and ATAC-seq products. On October 17, 2022, Parse filed a motion to dismiss alleging that the asserted claims are directed to patent ineligible subject matter. The ~~Company~~Court held a hearing on the motion to dismiss on November 22, 2022, and supplemental briefing was submitted on December 15, 2022. The Court has not yet ruled on the motion. Discovery is in progress. A Markman hearing is scheduled for February 2024 and trial is scheduled for December 2024.

On April 20, 2023, Parse filed ~~its response. Discovery has not yet commenced~~petitions for Inter Partes Review of U.S. Patent Nos. 10,155,981 and ~~no case schedule has been set.~~10,150,995.

6.5. Capital Stock

As of ~~September 30, 2022,~~March 31, 2023, the number of shares of Class A common stock and Class B common stock issued and outstanding were ~~95,561,247~~98,106,087 and ~~18,867,255,~~18,067,255, respectively.

The following table represents the number of shares of Class B common stock converted to shares of Class A common stock upon the election of the holders of such shares during the periods:

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Class B common stocks converted to Class A common stock — — 779,210 2,400,000

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements


	Three Months Ended March 31,
	2023	2022
Class B common stock converted to Class A common stock	600,000	200,000

6. Equity Incentive Plans

Stock-based Compensation

The Company recorded stock-based compensation expense in the condensed consolidated statement of operations for the periods presented as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Cost of revenue	Cost of revenue	$	1,281	$	878	$	3,748	$	2,183	Cost of revenue	$	1,461	$	1,014
Research and development	Research and development	14,476		11,226		41,346		30,162		Research and development	17,780		11,291
Selling, general and administrative	Selling, general and administrative	17,757		13,846		50,780		36,713		Selling, general and administrative	22,860		13,742
Total stock-based compensation expense	Total stock-based compensation expense	$	33,514	$	25,950	$	95,874	$	69,058	Total stock-based compensation expense	$	42,101	$	26,047

Restricted Stock Units

Restricted stock unit activity for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 is as follows:


		Restricted Stock Units	Weighted-Average Grant Date Fair Value (per share)			Restricted Stock Units	Weighted-Average Grant Date Fair Value (per share)
Outstanding as of December 31, 2021		1,298,244	$	141.48
Outstanding as of December 31, 2022					Outstanding as of December 31, 2022	5,836,192	$	52.21
Granted	Granted	5,462,866	45.21		Granted	584,720	45.72
Vested	Vested	(495,552)	114.08		Vested	(397,222)	64.75
Cancelled	Cancelled	(454,836)	105.49		Cancelled	(152,540)	59.81
Outstanding as of September 30, 2022		5,810,722	$	56.13
Outstanding as of March 31, 2023					Outstanding as of March 31, 2023	5,871,150	$	50.51

Stock Options

Stock option activity for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 is as follows:

Stock Options Weighted-Average
Exercise Price
Outstanding as of December 31, 2021 8,212,754 $ 29.28
Granted 1,803,411 54.01
Exercised (1,326,102) 9.43
Cancelled (339,147) 56.90
Outstanding as of September 30, 2022 8,350,916 $ 36.66


	Stock Options	Weighted-Average Exercise Price
Outstanding as of December 31, 2022	7,964,557	$	37.10
Granted	272,904	50.10
Exercised	(581,111)	4.13
Cancelled and forfeited	(99,989)	85.63
Outstanding as of March 31, 2023	7,556,361	$	39.46

Market-based Performance Stock Awards

In March 2023, the Company granted 172,842 performance restricted stock unit awards (PSAs) under the 2019 Plan to certain members of management, which are subject to the achievement of certain escalating stock price thresholds established by the Company's Compensation Committee of the Board of Directors.

The PSAs each vest in equal installments upon the achievement of escalating stock price thresholds of $72.14, $96.19 and $120.24 respectively, calculated based on the volume-weighted average price per share of the Company’s Class A common stock

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

over the immediately trailing 20 trading day period for each respective threshold. The escalating stock price thresholds can be met any time prior to the fifth anniversary of the date of grant. The vesting of the PSAs can also be triggered upon certain change in control events and achievement of certain change in control price thresholds, or in the event of death or disability. The weighted-average grant date fair value of the PSAs was $43.13. Stock-based compensation expense recognized for these market-based awards was approximately $0.2 million for the three months ended March 31, 2023.

The Company estimates the fair values of shares granted under the PSAs using a Monte Carlo simulation model with the following assumptions:


			Three Months Ended March 31, 2023
Expected volatility			71%
Risk-free interest rate			3.7%
Expected dividend			—%

In September 2022, the Company granted 709,025 PSAs including performance stock options and RSUs under the 2019 Plan to certain members of management, which are subject to the achievement of certain escalating stock price thresholds established by the Company's Compensation Committee of the Board of Directors.

The PSAs each vest in equal installments upon the achievement of escalating stock price thresholds of $60, $80 and $105, respectively, calculated based on 20 consecutive days of trading at each respective threshold. The escalating stock price thresholds can be met any time prior to the fourth anniversary of the date of grant. The vesting of the PSAs can also be triggered upon certain change in control events and achievement of certain change in control price thresholds, or in the event of death or disability.

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

As of ~~September 30, 2022,~~March 31, 2023, none of the escalating stock price thresholds had been met for any of the PSAs, resulting in no shares vesting or becoming exercisable. Stock-based compensation expense recognized for these market-based awards was approximately $0.2 million for the three months ended September 30, 2022. The weighted-average grant date fair value of the PSAs was $22.55.

2019 Employee Stock Purchase Plan

A total of ~~3,284,859~~3,486,671 shares of Class A common stock were reserved for issuance under the 2019 Employee Stock Purchase Plan ("ESPP"). The price at which Class A common stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, 91,871 and 30,980 shares of Class A common stock, respectively, were issued under the ESPP. No~~no shares of Class A common stock were issued under the ~~ESPP during the three months ended September 30, 2022 or 2021.~~ESPP. As of ~~September 30, 2022,~~March 31, 2023, there were ~~2,965,685~~3,108,600 shares available for issuance ~~in connection~~ under the ESPP.

8.7. Net Loss Per Share

The following outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
		2022	2021	2022	2021		2023	2022
Stock options to purchase common stock	Stock options to purchase common stock	8,350,916	9,206,850	8,350,916	9,206,850	Stock options to purchase common stock	7,556,361	8,419,444
Restricted stock units	Restricted stock units	5,810,722	1,314,157	5,810,722	1,314,157	Restricted stock units	5,871,150	1,610,391
Shares committed under ESPP	Shares committed under ESPP	74,835	29,178	74,835	29,178	Shares committed under ESPP	100,253	60,181
Shares subject to repurchase	Shares subject to repurchase	—	25,000	—	25,000	Shares subject to repurchase	—	12,500
Contingent restricted shares		—	236,484	—	236,484

Total	Total	14,236,473	10,811,669	14,236,473	10,811,669	Total	13,527,764	10,102,516

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report and our audited consolidated financial statements and notes thereto and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 filed with the SEC on February ~~18, 2022~~16, 2023 (our "Annual Report"). As discussed in the section titled “Special Note Regarding ~~Forward Looking~~Forward-Looking Statements,” the following discussion and analysis, in addition to historical financial information, contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” in this Quarterly Report and Part I, Item 1A of our Annual Report.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Overview

We are a life ~~sciences~~science technology company focused on building innovative products ~~and solutions~~ to interrogate, understand and master biology. Our integrated platform solutions include instruments, consumables and software for analyzing biological systems at a resolution and scale that matches the complexity of biology. Our expanding suite of offerings leverages our cross-functional expertise across biology, chemistry, software and hardware to provide a comprehensive, dynamic and high-resolution view of complex biological systems. We have launched multiple products that enable researchers to understand and interrogate biological analytes in their full biological context. Our commercial product portfolio leverages our Chromium ~~Controller,~~X Series and Chromium Connect, ~~and Chromium X Series,~~ which we refer to as “Chromium instruments,” our Visium CytAssist, an instrument designed to simplify the Visium solution workflow by facilitating the transfer of ~~analytes~~transcriptomic probes from standard glass slides to Visium slides, our Xenium Analyzer, an instrument designed for fully automated high-throughput analysis of cells in their tissue environment, and our proprietary microfluidic chips, slides, reagents and other consumables for our Chromium, Visium and ~~Visium~~Xenium solutions, which we refer to as “consumables.” We bundle our software with these products to guide customers through the workflow, from sample preparation through analysis and visualization.

Our products cover a wide variety of applications and allow researchers to analyze biological systems at fundamental resolutions and on massive ~~scales,~~scale, such as at the single cell level for millions of cells. Customers purchase instruments and consumables from us for use in their experiments. In addition to instrument and consumable sales, we derive revenue from post-warranty service contracts for our instruments.

Since our inception in 2012, we have incurred net losses in each year. Our net losses were ~~$41.9~~$50.7 million and ~~$148.8~~$42.4 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and March 31, 2022, ~~and $17.2 million and $39.8 million for the three and nine months ended September 30, 2021,~~ respectively. As of ~~September 30, 2022,~~March 31, 2023, we had an accumulated deficit of ~~$1.0~~$1.1 billion, and cash, cash equivalents and marketable securities totaling ~~$452.4~~$418.3 million. We expect to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

•attract, hire and retain qualified personnel;

•scale our technology platforms and introduce new products and services;

•protect and defend our intellectual property;

•acquire businesses or technologies; and

•invest in processes, tools and infrastructure to support the growth of our business.

Operational Effectiveness in the COVID-19 Environment

We continue to closely monitor developments surrounding the COVID-19 pandemic including, among other developments, the potential impacts of variants. ~~Many~~Some of our customers continue to navigate COVID-19 related challenges that we believe have affected our customers’ productivity. Such challenges ~~include~~have included COVID-19 related protocols and restrictions, difficulties hiring, training and retaining laboratory and other personnel, constraints on logistics, shipping and other distribution operations and impediments to procuring materials, equipment and components required for their experiments. For example, we believe COVID-19 related lockdowns in China have continued to negatively impact our revenues in the quarter ended ~~September 30,~~March 31, 2023.

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~~2022.~~ We, our suppliers and our other partners also have encountered COVID-19 related challenges, including difficulties procuring equipment, materials and components necessary to develop, manufacture and distribute our products, but to date we have not experienced any material impacts as a result of such challenges.

There is considerable uncertainty about the duration of the ongoing impacts of COVID-19. We expect COVID-19 to continue to impact our operating results, however, the extent of the financial impact and duration cannot be reasonably estimated at this time. For further discussion of the risks relating to the impacts of the COVID-19 pandemic, see the section titled “Risk Factors,” generally, and “Risk Factors—~~The impacts and potential impacts of the~~We are subject to risks associated with COVID-19 ~~pandemic continue to create significant uncertainty for our business, financial condition and results of operations~~,” specifically, under Part I, Item 1A of our Annual Report, which is incorporated by reference into this Quarterly Report.

Results of Operations


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Revenue	Revenue	$	131,072	$	125,297	$	360,177	$	346,960	Revenue	$	134,285	$	114,496
Cost of revenue	Cost of revenue	30,377		24,518		83,559		46,493		Cost of revenue	35,895		25,478
Gross profit	Gross profit	100,695		100,779		276,618		300,467		Gross profit	98,390		89,018
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	67,290		54,582		202,053		149,867		Research and development	67,098		64,078

Selling, general and administrative	Selling, general and administrative	73,401		62,076		219,413		187,683		Selling, general and administrative	83,280		66,675
Accrued contingent liabilities		—		—		—		(660)

Total operating expenses	Total operating expenses	140,691		116,658		421,466		336,890		Total operating expenses	150,378		130,753
Loss from operations	Loss from operations	(39,996)		(15,879)		(144,848)		(36,423)		Loss from operations	(51,988)		(41,735)
Other income (expense):	Other income (expense):									Other income (expense):
Interest income	Interest income	2,025		49		3,832		157		Interest income	3,869		569
Interest expense	Interest expense	(114)		(219)		(351)		(649)		Interest expense	(19)		(128)
Other expense, net	Other expense, net	(1,950)		(599)		(4,193)		(807)		Other expense, net	(1,516)		(400)

Total other expense		(39)		(769)		(712)		(1,299)
Total other income										Total other income	2,334		41
Loss before provision for income taxes	Loss before provision for income taxes	(40,035)		(16,648)		(145,560)		(37,722)		Loss before provision for income taxes	(49,654)		(41,694)
Provision for income taxes	Provision for income taxes	1,879		523		3,225		2,052		Provision for income taxes	1,093		719
Net loss	Net loss	$	(41,914)	$	(17,171)	$	(148,785)	$	(39,774)	Net loss	$	(50,747)	$	(42,413)

Comparison of the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

Revenue


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change					Three Months Ended March 31,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(dollars in thousands)	2023		2022		$		%
Instruments	Instruments	$	20,899	$	17,121	$	3,778	22	%	$	50,064	$	45,123	$	4,941	11	%	Instruments
Chromium																		Chromium	$	11,626	$	14,326	$	(2,700)	(19)	%
Spatial¹																		Spatial¹	7,550		103		7,447		N/M
Total instruments revenue																		Total instruments revenue	19,176		14,429		4,747		33
Consumables	Consumables	108,107		106,117		1,990		2		303,991		296,342		7,649		3		Consumables
Chromium																		Chromium	101,096		91,279		9,817		11
Spatial																		Spatial	11,282		6,671		4,611		69
Total consumables revenue																		Total consumables revenue	112,378		97,950		14,428		15
Services	Services	2,066		2,059		7		—		6,122		5,495		627		11		Services	2,731		2,117		614		29
Total revenue	Total revenue	$	131,072	$	125,297	$	5,775	5	%	$	360,177	$	346,960	$	13,217	4	%	Total revenue	$	134,285	$	114,496	$	19,789	17	%

N/M: result not meaningful.

1The Spatial instruments revenue in the first quarter of 2022 related to revenue from the Visium Accessory Kit.

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Revenue increased ~~$5.8~~$19.8 million, or 5%17%, to ~~$131.1~~$134.3 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. Instruments revenue increased ~~$3.8~~$4.7 million, or ~~22%~~33%, to ~~$20.9~~$19.2 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021,~~March 31, 2022, primarily due to higher volume of instruments sold. The revenue for the three months ended March 31, 2023 includes the sales of Visium CytAssist and Xenium instruments. There were no Visium CytAssist and Xenium instruments sold during the three months ended March 31, 2022. Chromium instruments revenue decreased $2.7 million, or 19%, to $11.6 million primarily due to lower volume of Chromium instruments sold. Consumables revenue increased ~~$2.0~~$14.4 million, or 2%15%, to ~~$108.1~~$112.4 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021,~~March 31, 2022, primarily driven by ~~growth due to the addition of new customers, partially offset by unfavorable currency fluctuations.~~

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Revenue increased $13.2 million, or 4%, to $360.2 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. Instruments revenue increased $4.9 million, or 11%, to $50.1 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to higher volume of instruments sold. Consumables revenue increased $7.6 million, or 3%, to $304.0 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily driven by growth due to increased usage by existing customers and the addition of new customers, largely offset by decreased demand due to limited laboratory productivity arising from the continued impact of the global COVID-19 pandemic, including lockdowns in China, delayed purchases by customers impacted by a previously disclosed process breakdown in our logistics cold-chain, execution challenges and unfavorable currency fluctuations.

Cost of revenue, gross profit and gross margin


		Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change					Three Months Ended March 31,						Change
(dollars in thousands)	(dollars in thousands)	2022			2021			$		%		2022			2021			$		%		(dollars in thousands)	2023			2022			$		%
Cost of revenue	Cost of revenue	$	30,377		$	24,518		$	5,859	24	%	$	83,559		$	46,493		$	37,066	80	%	Cost of revenue	$	35,895		$	25,478		$	10,417	41	%
Gross profit	Gross profit	$	100,695		$	100,779		$	(84)	—	%	$	276,618		$	300,467		$	(23,849)	(8)	%	Gross profit	$	98,390		$	89,018		$	9,372	11	%
Gross margin	Gross margin	77		%	80		%					77		%	87		%					Gross margin	73		%	78		%

Cost of revenue increased ~~$5.9~~$10.4 million, or ~~24%~~41%, to ~~$30.4~~$35.9 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. The increase was primarily driven by higher manufacturing costs of ~~$4.2~~$7.2 million due to increased sales and higher costs of newly introduced products, ~~$0.9~~$2.2 million of higher inventory write-downs and $1.0 million of higher warranty ~~costs and $0.9 million of loss on a purchase commitment.~~charges.

Cost of revenue increased $37.1 million, or 80%, to $83.6 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. The increase was primarily driven by a one-time reversal of $14.7 million of accrued royalties resulting from the Settlement and Patent Cross License Agreement (the "Bio-Rad Agreement") with Bio-Rad Laboratories during the nine months ended September 30, 2021, $15.4 million from higher manufacturing costs due to increased sales and higher costs of newly introduced products, $3.3 million of higher royalty expenses, $2.4 million of higher inventory scrap and excess and obsolete inventory charges, and $1.7 million of higher warranty costs.

We expect our gross margin will trend lower due in part to change in product mix with newly introduced products, ~~and~~ the impacts of inflation, ~~and~~ increased supply chain ~~costs.~~costs and increased costs due to expanding our operations infrastructure. In particular, the Xenium instrument currently carries a significantly lower margin than our other instruments. As we continue to scale our manufacturing capacity to produce more units, the cost per instrument will decline and there are also opportunities for component cost reduction, which we have not yet undertaken, that will improve instrument margin over time.

Operating expenses


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change					Three Months Ended March 31,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(dollars in thousands)	2023		2022		$		%
Research and development	Research and development	$	67,290	$	54,582	$	12,708	23	%	$	202,053	$	149,867	$	52,186	35	%	Research and development	$	67,098	$	64,078	$	3,020	5	%

Selling, general and administrative	Selling, general and administrative	73,401		62,076		11,325		18		219,413		187,683		31,730		17		Selling, general and administrative	83,280		66,675		16,605		25
Accrued contingent liabilities		—		—		—		N/A		—		(660)		660		(100)

Total operating expenses	Total operating expenses	$	140,691	$	116,658	$	24,033	21	%	$	421,466	$	336,890	$	84,576	25	%	Total operating expenses	$	150,378	$	130,753	$	19,625	15	%

Research and development expenses increased ~~$12.7~~$3.0 million, or ~~23%~~5%, to ~~$67.3~~$67.1 million for the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. The increase was primarily driven by an increase in personnel expenses of ~~$8.2~~$7.4 million, including ~~$3.3~~$6.5 million in stock-based compensation expense and ~~$1.4 million in restructuring expense, $2.1~~$1.6 million of higher costs for facilities and information technology to support operational ~~expansion, and higher~~expansion. The increase is partially offset by lower costs of laboratory materials and supplies and expensed equipment of ~~$2.1~~$5.0 million used to support our research and development ~~efforts.~~

Research and development expenses increased $52.2 million, or 35%, to $202.1 million for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021. The increase was primarily driven by an increase in personnel expenses of $30.6 million, including $11.2 million in stock-based compensation expense and $1.4 million in restructuring expense, higher costs of laboratory materials and supplies of $10.1 million used to support our research and

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~~development~~ efforts, ~~$8.9~~$0.6 million of ~~higher costs for facilities~~lower other expenses and ~~information technology to support operational expansion, higher~~$0.4 million of lower consulting and professional ~~services of $1.4 million for product development, and $0.9 million of higher depreciation.~~services.

Selling, general and administrative expenses increased ~~$11.3~~$16.6 million, or ~~18%~~25%, to ~~$73.4~~$83.3 million for the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. The increase was primarily driven by increased personnel expenses of ~~$11.3~~$9.9 million, including ~~$3.9~~$9.1 million in stock-based compensation expense, and $2.5 million in restructuring expense, $1.7 million of higher outside legal expenses, and $1.0 million of higher costs for facilities and information technology to support operational expansion, partially offset by decreased marketing expenses related to conferences and seminars of $2.4 million.

~~Selling, general and administrative expenses~~ increased $31.7 million, or 17%, to $219.4 million for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021. The increase was primarily driven by increased personnel expenses of $41.0 million, including $14.1 million in stock-based compensation expense and $2.5 million in restructuring expense, $3.0 million of higher costs for facilities and information technology to support operational expansion, partially offset by decreased outside legal expenses of ~~$11.0~~$4.5 million and ~~$3.0 million~~increased marketing expenses of ~~consulting and professional services.~~$1.8 million.

We expect our operating expenditures to continue to increase in the ~~fourth quarter~~remaining quarters of ~~2022~~2023 and beyond as we increase our investment to support new and existing research and development projects and incentivize and retain key talent, which we expect to result in increased stock-based compensation expense in future periods.

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Other expense, net


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change					Three Months Ended March 31,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(dollars in thousands)	2023		2022		$		%
Interest income	Interest income	$	2,025	$	49	$	1,976	4,033	%	$	3,832	$	157	$	3,675	2,341	%	Interest income	$	3,869	$	569	$	3,300	580	%
Interest expense	Interest expense	(114)		(219)		105		(48)		(351)		(649)		298		(46)		Interest expense	(19)		(128)		109		(85)
Other expense, net	Other expense, net	(1,950)		(599)		(1,351)		226		(4,193)		(807)		(3,386)		420		Other expense, net	(1,516)		(400)		(1,116)		279

Total other expense		$	(39)	$	(769)	$	730	(95)	%	$	(712)	$	(1,299)	$	587	(45)	%
Total other income																		Total other income	$	2,334	$	41	$	2,293	5,593	%

Interest income increased by ~~$2.0~~$3.3 million for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021. Interest income increased by $3.7 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.~~March 31, 2022. The ~~increases for the three and nine ended September 30, 2022 as compared to the corresponding prior year periods were~~increase was primarily due to interest income generated from our cash equivalents and marketable securities during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and an increase in interest rates.

Interest expense decreased by $0.1 million, or ~~48%~~85% for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the three months ended ~~September 30, 2021. Interest expense decreased by $0.3 million, or 46% for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.~~March 31, 2022. The ~~decreases for the three and nine months ended September 30, 2022 were~~decrease was driven primarily by lower interest expense recognized on accrued license fees.

~~The change in other~~Other expense, net increased by $1.1 million for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 as compared to the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022. The increase was primarily driven by $1.7 million of realized losses from the sale of available-for-sale debt securities, partially offset by net realized and unrealized ~~losses~~gains from foreign currency rate measurement fluctuations.

Provision for Income Taxes

The Company's provision for income taxes was ~~$1.9~~$1.1 million and ~~$3.2~~$0.7 million, respectively, for the three ~~and nine~~ months ended ~~September 30, 2022 and $0.5 million and $2.1 million, respectively, for~~March 31, 2023 as compared to the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. The provision for income taxes consists primarily of foreign taxes. Deferred tax assets related to our domestic operations are fully offset by a valuation allowance.

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Liquidity and Capital Resources

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$234.0~~$418.3 million in cash and cash equivalents, and marketable securities which were primarily held in U.S. ~~bank deposit accounts and money market funds and $218.4 million in marketable securities.~~banks. Short-term restricted cash of ~~$0.5~~$2.5 million and long-term restricted cash of ~~$7.1~~$5.0 million primarily serves as collateral for outstanding letters of credit for facilities. We have generated negative cumulative cash flows from operations since inception through the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, and we have generated losses from operations since inception as reflected in our accumulated deficit of ~~$1.0~~$1.1 billion.

We currently anticipate making aggregate capital expenditures of between approximately ~~$80~~$60 million and ~~$90~~$70 million during the next 12 months, ~~approximately two thirds~~the majority of which we expect to incur for construction costs of the facilities on our property in Pleasanton, California over the next two quarters, as well as other global facilities and equipment to be used for manufacturing and research and development.

Our future capital requirements will depend on many factors including our revenue growth rate, research and development efforts, investments in or acquisitions of complementary or enhancing technologies or businesses, the impacts of the COVID-19 pandemic, the timing and extent of additional capital expenditures to invest in existing and new facilities, the expansion of sales and marketing and international activities and the introduction of new products.

We take a long-term view in growing and scaling our business and we regularly review acquisition and investment opportunities, and we may in the future enter into arrangements to acquire or invest in businesses, real estate, services and technologies, including intellectual property rights, and any such acquisitions or investments could significantly increase our capital needs. We regularly review opportunities that meet our long-term growth objectives.

In January 2023, we signed an agreement to acquire certain intangible and other assets for an upfront payment of $10.0 million relating to an intellectual property license. Upon acquiring the assets, we expect to pay $10.0 million and up to $36.3 million cash consideration pursuant to the agreement in the event certain future technology development milestones are met as well as additional cash consideration tied to future sales milestones.

While we expect to continue to incur operating losses for the foreseeable future due to the investments we intend to make, we believe that our existing cash and cash equivalents and cash generated from sales of our products will be sufficient to meet our

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anticipated cash needs for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at these institutions exceed insured limits.Market conditions can impact the viability of these institutions.In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all.Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

We intend to continue to evaluate market conditions and may in the future pursue additional sources of funding, such as mortgage or other financing, to further enhance our financial position and to execute our business strategy. In addition, should prevailing economic, financial, business or other factors adversely affect our ability to meet our operating cash requirements, we could be required to obtain funding though traditional or alternative sources of financing. We cannot be certain that additional funds would be available to us on favorable terms when required, or at all.

Sources of liquidity

Since our inception, we have financed our operations and capital expenditures primarily through sales of convertible preferred stock and common stock, revenue from sales of our products and the incurrence of indebtedness. In September 2019, we completed our initial public offering for aggregate proceeds of $410.8 million, net of offering costs, underwriter discounts and commissions. In September 2020, we completed a public offering of our Class A common stock for aggregate proceeds of $482.3 million, after deducting offering costs, underwriting discounts and commissions.

The following table summarizes our cash flows for the periods indicated:


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Net cash (used in) provided by:
Net cash provided by (used in):						Net cash provided by (used in):
Operating activities	Operating activities	$	(47,329)	$	(27,178)	Operating activities	$	(4,125)	$	(20,802)
Investing activities	Investing activities	(317,715)		(79,111)		Investing activities	119,956		(257,558)
Financing activities	Financing activities	10,816		26,394		Financing activities	(3,414)		2,417
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(295)		316		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	24		(18)
Net decrease in cash, cash equivalents, and restricted cash		$	(354,523)	$	(79,579)
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	$	112,441	$	(275,961)

Operating activities

The net cash used in operating activities of ~~$47.3~~$4.1 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was primarily due to a net loss of ~~$148.8~~$50.7 million, net cash outflow from changes in operating assets and liabilities of ~~$20.1~~$6.0 million, ~~partially~~primarily offset by stock-based compensation expense of ~~$95.9~~$42.1 million, depreciation and amortization of ~~$18.8~~$6.5 million, ~~amortization of leased~~

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right-of-use assets of $5.7 million, amortization of premium and accretion of discount on marketable securities, net of $0.7 million, and loss on disposal of property and equipment of $0.5 million. The net cash outflow from operating assets and liabilities was primarily due to an increase in inventory of $19.8 million due to ramp-up of inventory for anticipated demand and supply chain management, a decrease of $4.6 million due to payment of operating lease liabilities, a decrease in accrued compensation and other related benefits of $3.2 million due to the prior year annual bonus payments, a decrease in other noncurrent liabilities of $3.0 million, and an increase in prepaid expenses and other current assets of $2.5 million. The net cash outflow from operating assets and liabilities was partially offset by an increase in accounts payable of $6.1 million due to timing of vendor payments, an increase in accrued expenses and other current liabilities of $2.9 million, an increase in deferred revenue of $1.8 million, and a decrease in accounts receivable of $1.7 million due to timing of collections.

The net cash used in operating activities of $27.2 million for the nine months ended September 30, 2021 was due primarily to a net loss of $39.8 million, net cash outflow from changes in operating assets and liabilities of $77.5 million, partially offset by adjustments for stock-based compensation expense of $69.1 million, depreciation and amortization of $15.3 million and amortization of leased right-of-use assets of ~~$5.6~~$2.1 million, realized losses on sale of marketable securities of $1.7 million, and other non-cash expenses of $0.2 million. The net cash outflow from operating assets and liabilities was primarily due to a decrease in accrued ~~contingent liabilities~~compensation and other related benefits of ~~$44.2~~$15.1 million ~~of which $29.4 million was paid as cash settlement arising from~~related to the ~~Bio-Rad Agreement,~~prior year annual bonus payments, an increase in other noncurrent assets of $10.5 million primarily due to an upfront payment for an intellectual property license of $10.0 million, an increase in prepaid expenses and other current assets of $4.3 million, and a decrease in operating lease liability of $2.3 million. The net cash outflow from operating assets and liabilities was partially offset by a decrease of accounts receivable of ~~$27.2~~$26.3 million due to ~~increase in sales and~~ timing of collections and an increase in deferred revenue of $1.1 million.

The net cash used in operating activities of $20.8 million for the three months ended March 31, 2022 was due primarily to a net loss of $42.4 million, net cash outflow from changes in operating assets and liabilities of $12.6 million, partially offset by stock-based compensation expense of $26.0 million, depreciation and amortization of $6.2 million, amortization of leased right-of-use assets of $1.8 million and amortization of premium and accretion of discount on marketable securities, net of $0.2 million. The net cash outflow from operating assets and liabilities was primarily due to a decrease in accrued compensation and other related benefits of $13.3 million due to the prior year annual bonus payments, an increase in prepaid expenses and other current assets of $3.9 million, an increase in inventory of ~~$21.3~~$3.7 million to due to the timing of inventory purchases including advance purchases of inventory due to anticipated demand and supply chain management, and a decrease in accrued expenses and other current liabilities of ~~$2.5~~$3.5 million due to the timing of payments including license fees, a decrease in other noncurrent liabilities of $4.1 million, an increase in prepaid expenses and other current assets of $1.2 million and a decrease of $2.5 million due to payment of operating lease liabilities.fees. The net cash outflow from operating assets

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and liabilities was partially offset by a decrease in accounts receivable of $8.7 million due to timing of collections and an increase inof accounts payable of ~~$12.2~~$2.9 million due to timing of vendor ~~payments and an increase in accrued compensation and other related benefits of $11.9 million.~~payments.

Investing activities

The net cash provided by investing activities of $120.0 million in the three months ended March 31, 2023 was due to proceeds from sales and maturities of marketable securities of $93.3 million and $31.9 million, respectively, partially offset by purchases of property and equipment and intangible assets of $4.6 million and $0.7 million, respectively.

The net cash used in investing activities of ~~$317.7~~$257.6 million in the ~~nine~~three months ended ~~September 30,~~March 31, 2022 was due to purchases of marketable securities of ~~$282.9~~$242.3 million and property and equipment of ~~$91.9 million, and payment of acquisition-related holdback cash of $1.5~~$28.1 million, partially offset by proceeds from sales and maturities of marketable securities of ~~$41.4 million and $17.2 million, respectively.~~

The net cash used in investing activities of $79.1 million in the nine months ended September 30, 2021 was due to purchases of property and equipment of $73.7 million including the purchase of land for $28.1 million, and cash paid for the acquisition of Tetramer Shop ApS of $5.5$12.9 million.

Financing activities

The net cash ~~provided by~~used in financing activities of ~~$10.8~~$3.4 million in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was primarily from proceeds of ~~$16.2~~$2.4 million from the issuance of common stock from the exercise of stock options, ~~and employee stock purchase plan purchases~~ partially offset by payments on financing arrangements of ~~$5.4~~$5.8 million.

The net cash provided by financing activities of ~~$26.4~~$2.4 million in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was primarily from proceeds of ~~$31.4~~$7.8 million from the issuance of common stock from the exercise of stock options ~~and employee stock purchase plan purchases~~ partially offset by payments on financing arrangements of ~~$5.0~~$5.4 million.

Critical Accounting Estimates

Our condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the applicable rules and regulations of the SEC. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes in our critical accounting policies and estimates during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 as compared to the critical accounting policies and estimates disclosed in the section titled

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~~“Management’s~~ “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K filed with the SEC on February ~~18, 2022, except as set forth below.~~

~~Stock-Based Compensation~~

In the three months ended September 30, 2022, we started to issue market-based performance stock awards ("PSAs") comprising of performance stock options and performance restricted stock units. The PSAs each vest in equal installments upon the achievement of escalating stock price thresholds of $60, $80 and $105, respectively, calculated based on 20 consecutive days of trading at each respective threshold. The escalating stock price thresholds can be met any time prior to the fourth anniversary of the date of grant. We estimated the value of the PSA awards granted in the three months ended September 30, 2022 to be approximately $16.0 million using a Monte Carlo simulation model, using assumptions including volatility, risk-free interest rate, cost of equity and dividends. We will recognize the compensation expense over the derived service period using the accelerated attribution method commencing on the grant date. The derived service period is the median duration of the successful stock price paths to meet the escalating stock price thresholds as simulated in the Monte Carlo valuation model. If the related market condition is achieved earlier than its estimated derived service period, the stock-based compensation expense will be accelerated, and a cumulative catch-up expense will be recorded during the period in which the market condition is met.16, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For financial market risks related to changes in interest rates and foreign currency exchange rates, reference is made to Item 7A “Quantitative and Qualitative Disclosures about Market Risk” contained in Part II of our Annual Report. Our exposure to market risk has not changed materially since December 31, ~~2021 except as shown below.~~

~~Interest Rate Risk~~

During the three and nine months ended September 30, 2022, we invested in debt securities which were designated as available-for-sale. Our marketable securities as of September 30, 2022 was $218.4 million.

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio comprising of marketable securities. We invest in a number of securities including corporate bonds, U.S. agency notes, asset-backed securities, commercial paper, U.S. treasuries and money market funds. We attempt to ensure the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in high grade investment securities. The fair market value of our fixed rate securities may be adversely impacted by increases in interest rates while income earned may decline as a result of decreases in interest rates. A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to rates at September 30, 2022 would have affected the fair value of our investment portfolio by approximately $1.9 million.2022.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of ~~September 30, 2022.~~March 31, 2023.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended ~~September 30, 2022~~March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2523

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10x Genomics, Inc.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

~~We are regularly subject~~Refer to lawsuits, claims, arbitration proceedings, administrative actions and other legal and regulatory proceedings involving intellectual property disputes, commercial disputes, competition and other matters, and we may become subjectNote 4 to ~~additional types of lawsuits, claims, arbitration proceedings, administrative actions, government investigations and legal and regulatory proceedings~~our unaudited condensed consolidated financial statements included elsewhere in the future and as our business grows, including proceedings related to product liability or our acquisitions, securities issuances or our business practices, including public disclosures about our business. Our success depends in part on our non-infringement of the patents or proprietary rights of third parties. In the past, third parties have asserted and may in the future assert that we are employing their proprietary technology without authorization. We have been involved in multiple patent litigation matters and other proceedings in the past and we expect that given the litigious history of our industry and the high profile of operating as a public company, third parties may claim that our products infringe their intellectual property rights. We have also initiated litigation to defend our technology including technology developed through our significant investments in research and development. It is our general policy not to out-license our patents but to protect our sole right to own and practice them. There are inherent uncertainties in these legal matters, some of which are beyond management’s control, making the ultimate outcomes difficult to predict.

~~Nanostring~~

On May 6, 2021, we filed suit against Nanostring Technologies, Inc. ("Nanostring") in the U.S. District Court for the District of Delaware alleging that Nanostring's GeoMx Digital Spatial Profiler and associated instruments and reagents infringe U.S. Patent Nos. 10,472,669, 10,662,467, 10,961,566, 10,983,113 and 10,996,219 (the "GeoMx Action"). On May 19, 2021, we filed an amended complaint additionally alleging that the GeoMx products infringe U.S. Patent Nos. 11,001,878 and 11,008,607. On May 4, 2022, we filed an amended complaint in the GeoMx Action additionally alleging that the GeoMx products infringe U.S. Patent No. 11,293,917 and withdrawing our claim of infringement of U.S. Patent No. 10,662,467. Nanostring filed its answer to the GeoMx Action on May 18, 2022. Discovery is in progress. A Markman hearing is scheduled for November 2022 and trial is scheduled for August 2023.

On February 28, 2022, we filed a second suit against Nanostring in the U.S. District Court for the District of Delaware alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe U.S. Patent Nos. 10,227,639 and 11,021,737 (the "CosMx Action"). On May 12, 2022, we filed an amended complaint in the CosMx Action additionally alleging that the CosMx products infringe U.S. Patent Nos. 11,293,051, 11,293,052 and 11,293,054. Nanostring filed its answer to the CosMx Action on May 26, 2022. Discovery is in progress. A Markman hearing is scheduled for May 2023 and trial is scheduled for June 2024.

On August 16, 2022, Nanostring filed a counterclaim in the CosMx Action alleging that our Visium products infringe U.S. Patent No. 11,377,689. We filed our answer to Nanostring's counterclaim in the CosMx Action on August 30, 2022. Discovery and trial are consolidated with our claims against Nanostring in the CosMx Action. We believe Nanostring's counterclaim in the CosMx Action is meritless and we intend to vigorously defend ourselves.

On October 20, 2022, Nanostring filed a separate suit against us in the U.S. District Court for the District of Delaware alleging that our Visium products also infringe U.S. Patent No. 11,473,142, a continuation of U.S. Patent No. 11,377,689 (the "Nanostring Action"). We have not yet responded. Discovery has not yet commenced and no case schedule has been set. We believe Nanostring's claim in the Nanostring Action is meritless and we intend to vigorously defend ourselves.

On March 9, 2022, we filed suit in the Munich Regional Court in Germany alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe EP Patent No. 2794928B1 (the "Germany CosMx Action"). Nanostring filed its statement of defense to the Germany CosMx Action on August 26, 2022. A hearing on infringement is scheduled for March 2023 and a decision is expected around May 2023. On July 29, 2022, Nanostring filed a nullity action with the German Federal Patent Court challenging the validity of EP Patent No. 2794928B1. A preliminary decision in the nullity action is expected by February 2023.

~~Vizgen~~

In May 2022, we filed suit against Vizgen, Inc. ("Vizgen") in the U.S. District Court for the District of Delaware alleging that Vizgen’s MERSCOPE Platform and workflow and Vizgen’s Lab Services program, including associated instruments and

~~Table of~~ ~~Contents~~

reagents, infringe U.S. Patent Nos. 11,021,737, 11,293,051, 11,293,052, 11,293,054 and 11,299,767. On July 25, 2022, Vizgen filed a motion to dismiss our claims for willful and indirect infringement, which the Court denied on September 19, 2022. Discovery is in progress. A Markman hearing is scheduled for July 2023 and trial is scheduled for July 2024.

On August 30, 2022, Vizgen filed its answer and counterclaims alleging that our forthcoming Xenium product infringes U.S. Patent No. 11,098,303. Vizgen also filed counterclaims alleging that we tortiously interfered with Vizgen's contractual and business relationship with Harvard and that we engaged in unfair practices under Massachusetts state law. We have not yet responded. We believe these claims are meritless and intend to vigorously defend ourselves.

~~Parse~~

On August 24, 2022, we filed suit against Parse Biosciences, Inc. ("Parse") in the U.S. District Court for the District of Delaware alleging that Parse’s Evercode Whole Transcriptomics and ATAC-seq products infringe U.S. Patent Nos. 10,155,981, 10,697,013, 10,240,197, 10,150,995, 10,619,207, and 10,738,357. On October 17, 2022, Parse filed a motion to dismiss alleging that the asserted claims are directed to patent ineligible subject matter. We have not yet filed our response. Discovery has not yet commenced and no case schedule has been set.

~~For further discussion of the risks relating to intellectual property and our pending litigation, see the section titled “Risk Factors—Risks related to litigation and our intellectual property” under Part I, Item 1A of our Annual Report, which is incorporated by reference into~~ this Quarterly Report.

Item 1A. Risk Factors.

There have been no material changes to our risk factors that we believe are material to our business, results of operations and financial condition from the risk factors previously disclosed in our Annual Report, and any documents incorporated by reference therein, which is accessible on the SEC's website at www.sec.gov.

Item 5. Other Information

On October 28, 2022, the Company adopted Amended and Restated Bylaws (the “Bylaws”), effective as of that date. Amendments contained in the Bylaws include the addition of language to address the adoption by the Securities and Exchange Commission of universal proxy rules requiring any stockholder submitting notice of nomination to use a proxy card color other than white and updates to provisions relating to adjournment procedures and lists of stockholders entitled to vote at stockholder meetings, each to align with recent amendments to the Delaware General Corporation Law, as amended, or to address certain administrative and other nonmaterial matters. The foregoing summary and description of the provisions of the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Bylaws, a copy of which is filed as Exhibit 3.2 with this Quarterly Report on Form 10-Q and is incorporated herein by reference.None.

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Item 6. Exhibits.

Exhibit
Number
Incorporated by Reference
Exhibit Title Form File No. Exhibit Filing Date
3.1
Amended and Restated Certificate of Incorporation of the Registrant.
8-K 001-39035 3.1 9/16/2019
3.2
Amended and Restated Bylaws of the Registrant.
4.1
Form of Stock Certificate for Class A common stock of the Registrant.
S-1 333-233361 4.2 8/19/2019
10.1+
2019 Omnibus Incentive Plan Stock Option Award Notice and Agreement .
10.2+
2019 Omnibus Incentive Plan Restricted Stock Unit Award Notice and Agreement .
31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (the Cover Page Interactive Data File does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

~~+ Management contract or compensatory plan or arrangement.~~

Exhibit

Number

Incorporated by Reference

Exhibit Title

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation of the Registrant.

8-K

001-39035

3.1

9/16/2019

3.2

Amended and Restated Bylaws of the Registrant.

10-Q

001-39035

3.2

11/3/2022

4.1

Form of Stock Certificate for Class A common stock of the Registrant.

S-1

333-233361

4.2

8/19/2019

31.1

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (the Cover Page Interactive Data File does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

* This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	10x Genomics, Inc.

Date: ~~November 2, 2022~~May 4, 2023	By:	/s/ Serge Saxonov
		Serge Saxonov Chief Executive Officer and Director (Principal Executive Officer)

Date: ~~November 2, 2022~~May 4, 2023	By:	/s/ Justin J. McAnear
		Justin J. McAnear Chief Financial Officer (Principal Financial and Accounting Officer)

2926


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	87
	Notes to Condensed Consolidated Financial Statements	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1917
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2522
Item 4.	Controls and Procedures	2522
PART II.	OTHER INFORMATION	2624
Item 1.	Legal Proceedings	2624
Item 1A.	Risk Factors	2724
Item 5 .5.	Other Information	2724
Item 6.	Exhibits	2825
	Signatures	2926


	Severance and Benefits Costs		Stock-Based Compensation Expense		Total
Restructuring charge	$	3,600	$	616	$	4,216
Cash payments made	(2,838)		—		(2,838)
Non-cash charge	—		(616)		(616)
Balance at September 30, 2022	$	762	$	—	$	762


	Operating Leases
2022 (excluding the nine months ended September 30, 2022)	$	2,424
2023	14,774
2024	14,891
2025	13,774
2026	14,481
Thereafter	61,452
Total lease payments	$	121,796
Less: imputed interest	(25,570)
Present value of operating lease liabilities	$	96,226
Operating lease liabilities, current	$	8,393
Operating lease liabilities, noncurrent	87,833
Total operating lease liabilities	$	96,226


	September 30, 2022		December 31, 2021
Weighted-average remaining lease term	8.4 years		8.7 years
Weighted-average discount rate	5.5	%	5.4	%