PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements reveal decreased assets and equity, increased net loss, and a shift in investing cash flow [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary | Metric | Dec 31, 2022 (in thousands) | Sep 30, 2023 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $1,028,980 | $948,540 | $(80,440) | | Cash and cash equivalents | $219,746 | $311,264 | $91,518 | | Marketable securities | $210,238 | $45,643 | $(164,595) | | Total current assets | $635,035 | $562,348 | $(72,687) | | Total Liabilities | $223,237 | $203,324 | $(19,913) | | Total Stockholders' Equity | $805,743 | $745,216 | $(60,527) | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statements of Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (3 Months) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (9 Months) | | :-------------------- | :-------------------------- | :-------------------------- | :---------------- | :-------------------------- | :-------------------------- | :---------------- | | Revenue | $153,644 | $131,072 | $22,572 | $434,748 | $360,177 | $74,571 | | Cost of revenue | $58,115 | $30,377 | $27,738 | $141,217 | $83,559 | $57,658 | | Gross profit | $95,529 | $100,695 | $(5,166) | $293,531 | $276,618 | $16,913 | | Research and development | $66,507 | $67,290 | $(783) | $205,065 | $202,053 | $3,012 | | In-process research and development | $41,402 | $— | $41,402 | $41,402 | $— | $41,402 | | Selling, general and administrative | $82,415 | $73,401 | $9,014 | $257,205 | $219,413 | $37,792 | | Loss from operations | $(94,795) | $(39,996) | $(54,799) | $(210,141) | $(144,848) | $(65,293) | | Net loss | $(92,986) | $(41,914) | $(51,072) | $(206,147) | $(148,785) | $(57,362) | | Net loss per share, basic and diluted | $(0.79) | $(0.37) | $(0.42) | $(1.77) | $(1.31) | $(0.46) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Statements of Comprehensive Loss Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(92,986) | $(41,914) | $(206,147) | $(148,785) | | Other comprehensive income (loss), net of tax | $292 | $(1,527) | $3,658 | $(5,514) | | Comprehensive loss | $(92,694) | $(43,441) | $(202,489) | $(154,299) | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Summary | Metric (in thousands) | Dec 31, 2022 | Sep 30, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Stockholders' Equity | $805,743 | $745,216 | $(60,527) | | Additional Paid-in Capital | $1,839,397 | $1,981,359 | $141,962 | | Accumulated Deficit | $(1,029,321) | $(1,235,468) | $(206,147) | - Net loss for the nine months ended September 30, 2023, was **$(206.1) million**, contributing to the accumulated deficit[27](index=27&type=chunk) - Stock-based compensation contributed **$128.0 million** to additional paid-in capital for the nine months ended September 30, 2023[27](index=27&type=chunk)[91](index=91&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | | Net cash used in operating activities | $(40,955) | $(47,329) | $6,374 | | Net cash provided by (used in) investing activities | $120,394 | $(317,715) | $438,109 | | Net cash provided by financing activities | $8,056 | $10,816 | $(2,760) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $87,385 | $(354,523) | $441,908 | | Cash, cash equivalents, and restricted cash at end of period | $314,738 | $241,550 | $73,188 | - Investing activities shifted from a net outflow of **$317.7 million** in 2022 to a net inflow of **$120.4 million** in 2023, primarily due to proceeds from sales and maturities of marketable securities[139](index=139&type=chunk)[140](index=140&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Description of Business and Basis of Presentation](index=12&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - 10x Genomics offers integrated solutions including Chromium X Series and Chromium Connect instruments, Visium CytAssist and Xenium Analyzer (Spatial instruments), and proprietary microfluidic chips, slides, reagents, and consumables[34](index=34&type=chunk)[105](index=105&type=chunk) - The company's products enable researchers to analyze biological systems at fundamental resolutions and massive scale, such as single-cell level for millions of cells[106](index=106&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - No material changes in significant accounting policies occurred during the nine months ended September 30, 2023[37](index=37&type=chunk) - Revenue is recognized from product sales (instruments and consumables) upon transfer of control, and from extended warranty service agreements ratably over the term[38](index=38&type=chunk) [Note 3. Asset Acquisition](index=13&type=section&id=Note%203.%20Asset%20Acquisition) - The company acquired certain intangible and other assets for an intellectual property license, with initial payments totaling **$20.0 million** by July 2023[45](index=45&type=chunk) - As of September 30, 2023, **$21.3 million** has been paid for development milestones, with up to **$15.0 million** additional cash consideration due for future technology development milestones[45](index=45&type=chunk) - A **$41.4 million** in-process research and development intangible asset was recognized as an expense during the three months ended September 30, 2023, as it had no alternative future use[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 4. Other Financial Statement Information](index=14&type=section&id=Note%204.%20Other%20Financial%20Statement%20Information) Available-for-Sale Securities Fair Value | Category | Sep 30, 2023 Fair Value (in thousands) | Dec 31, 2022 Fair Value (in thousands) | Change (in thousands) | | :------- | :----------------------------------- | :----------------------------------- | :-------------------- | | Money market funds | $296,315 | $163,184 | $133,131 | | Corporate debt securities | $12,324 | $151,030 | $(138,706) | | Government debt securities | $30,981 | $52,889 | $(21,908) | | Asset-backed securities | $2,338 | $6,319 | $(3,981) | | Total available-for-sale securities | $341,958 | $373,422 | $(31,464) | - Gross unrealized losses on available-for-sale securities as of September 30, 2023, are related to market interest rate changes, not credit risk[51](index=51&type=chunk) Inventory Breakdown | Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | | :------- | :-------------------------- | :-------------------------- | :-------------------- | | Purchased materials | $35,829 | $34,497 | $1,332 | | Work in progress | $23,245 | $24,650 | $(1,405) | | Finished goods | $21,843 | $22,482 | $(639) | | Total Inventory | $80,917 | $81,629 | $(712) | Property and Equipment, Net | Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | | :------- | :-------------------------- | :-------------------------- | :-------------------- | | Total property and equipment | $378,881 | $358,158 | $20,723 | | Less: accumulated depreciation and amortization | $(93,873) | $(68,830) | $(25,043) | | Property and equipment, net | $285,008 | $289,328 | $(4,320) | Accrued Compensation and Related Benefits | Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | | :------- | :-------------------------- | :-------------------------- | :-------------------- | | Accrued compensation and related benefits | $28,477 | $32,675 | $(4,198) | Accrued Expenses and Other Current Liabilities | Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | | :------- | :-------------------------- | :-------------------------- | :-------------------- | | Accrued expenses and other current liabilities | $36,256 | $59,779 | $(23,523) | Goodwill Balance | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | End of period | $6,435 | $1,968 | $4,467 | Revenue by Category and Instrument Type | Category | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change (3 Months) (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (9 Months) (in thousands) | | :------- | :--------------------------------------- | :--------------------------------------- | :------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------- | | Total instruments revenue | $34,942 | $20,899 | $14,043 | $85,073 | $50,064 | $35,009 | | Total consumables revenue | $114,373 | $108,107 | $6,266 | $339,239 | $303,991 | $35,248 | | Services | $4,329 | $2,066 | $2,263 | $10,436 | $6,122 | $4,314 | | Total revenue | $153,644 | $131,072 | $22,572 | $434,748 | $360,177 | $74,571 | - Spatial instruments revenue significantly increased by **281%** for the three months and **616%** for the nine months ended September 30, 2023, driven by sales of Xenium instruments[63](index=63&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Chromium instruments revenue decreased by **18%** for the three months and **15%** for the nine months ended September 30, 2023, due to lower volume and product mix changes[63](index=63&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Total Americas revenue increased by **27%** for the three months and **29%** for the nine months ended September 30, 2023[63](index=63&type=chunk) - Total Asia-Pacific revenue decreased by **12%** for the three months and **5%** for the nine months ended September 30, 2023, primarily due to a decline in China revenue[63](index=63&type=chunk) [Note 5. Commitments and Contingencies](index=17&type=section&id=Note%205.%20Commitments%20and%20Contingencies) Operating Lease Liabilities | Metric | Sep 30, 2023 (in thousands) | | :----- | :-------------------------- | | Total lease payments | $123,684 | | Present value of operating lease liabilities | $98,473 | | Operating lease liabilities, current | $10,005 | | Operating lease liabilities, noncurrent | $88,468 | - The company recognized a **$2.8 million** impairment loss on long-lived assets during the nine months ended September 30, 2023, due to vacating leased office space[66](index=66&type=chunk) - The company filed suit against NanoString in the U.S. District Court for the District of Delaware (GeoMx Action and CosMx Action) and in Germany and the UPC, alleging patent infringement[68](index=68&type=chunk)[71](index=71&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - On May 17, 2023, the Munich Regional Court found NanoString's CosMx products infringe the EP928 patent and issued a permanent injunction in Germany[76](index=76&type=chunk) - On September 19, 2023, the UPC granted a preliminary injunction against NanoString for the EP782 patent, requiring them to stop selling CosMx instruments and reagents for RNA detection in all 17 UPC member states[79](index=79&type=chunk) - The company is also involved in patent infringement lawsuits against Vizgen (MERSCOPE Platform) and Parse Biosciences (Evercode products) in the U.S. District Court for the District of Delaware[81](index=81&type=chunk)[86](index=86&type=chunk) [Note 6. Capital Stock](index=21&type=section&id=Note%206.%20Capital%20Stock) Common Stock Outstanding | Class | Shares Outstanding (as of Sep 30, 2023) | | :---- | :-------------------------------------- | | Class A common stock | 104,140,884 | | Class B common stock | 14,056,833 | - **4,610,422 shares** of Class B common stock were converted to Class A common stock during the nine months ended September 30, 2023[90](index=90&type=chunk) [Note 7. Equity Incentive Plans](index=21&type=section&id=Note%207.%20Equity%20Incentive%20Plans) Stock-Based Compensation Expense | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Total stock-based compensation expense | $40,235 | $33,514 | $128,032 | $95,874 | - Restricted stock units outstanding as of September 30, 2023, were **5,698,984**, with **2,069,494** granted during the nine months ended September 30, 2023[92](index=92&type=chunk) - Stock options outstanding as of September 30, 2023, were **6,465,828**, with **357,457** granted during the nine months ended September 30, 2023[94](index=94&type=chunk) - Market-based performance stock awards (PSAs) were granted in March 2023, subject to stock price thresholds of **$72.14**, **$96.19**, and **$120.24**. None of these thresholds had been met as of September 30, 2023[95](index=95&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) [Note 8. Net Loss Per Share](index=23&type=section&id=Note%208.%20Net%20Loss%20Per%20Share) - Potentially dilutive shares of common stock are not included in diluted net loss per share calculations when the company reports net losses, as their effect would be anti-dilutive[44](index=44&type=chunk) Potentially Dilutive Common Stock Equivalents | Category | Number of Equivalents (as of Sep 30, 2023) | | :------- | :--------------------------------------- | | Stock options to purchase common stock | 6,465,828 | | Restricted stock units | 5,698,984 | | Shares committed under ESPP | 105,292 | | Total | 12,270,104 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, highlighting Spatial instrument revenue growth, increased net loss, and liquidity [Overview](index=24&type=section&id=Overview) - The company's integrated solutions include Chromium and Spatial instruments, proprietary microfluidic chips, slides, reagents, and consumables, bundled with software[105](index=105&type=chunk) - Since inception in 2012, the company has incurred net losses annually, with an accumulated deficit of **$1.2 billion** as of September 30, 2023[107](index=107&type=chunk) - The company expects continued significant expenses and operating losses in the near term due to investments in R&D, technology scaling, IP protection, potential acquisitions, and infrastructure[107](index=107&type=chunk)[108](index=108&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Key Financial Highlights | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | YoY Change (%) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | YoY Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------- | :--------------------------------------- | :--------------------------------------- | :------------- | | Revenue | $153,644 | $131,072 | 17% | $434,748 | $360,177 | 21% | | Gross profit | $95,529 | $100,695 | (5)% | $293,531 | $276,618 | 6% | | Gross margin | 62% | 77% | (15) pp | 68% | 77% | (9) pp | | Total operating expenses | $190,324 | $140,691 | 35% | $503,672 | $421,466 | 20% | | Net loss | $(92,986) | $(41,914) | 122% | $(206,147) | $(148,785) | 39% | [Revenue](index=25&type=section&id=Revenue) Revenue by Product Category | Category | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | | :------- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | | Total instruments revenue | $34,942 | $20,899 | $14,043 | 67% | $85,073 | $50,064 | $35,009 | 70% | | Spatial instruments | $22,711 | $5,963 | $16,748 | 281% | $48,357 | $6,755 | $41,602 | 616% | | Chromium instruments | $12,231 | $14,936 | $(2,705) | (18)% | $36,716 | $43,309 | $(6,593) | (15)% | | Total consumables revenue | $114,373 | $108,107 | $6,266 | 6% | $339,239 | $303,991 | $35,248 | 12% | | Spatial consumables | $14,091 | $10,239 | $3,852 | 38% | $37,067 | $23,796 | $13,271 | 56% | | Chromium consumables | $100,282 | $97,868 | $2,414 | 2% | $302,172 | $280,195 | $21,977 | 8% | | Services | $4,329 | $2,066 | $2,263 | 110% | $10,436 | $6,122 | $4,314 | 70% | - The sales of Xenium instruments contributed to the significant increase in Spatial instruments revenue, as there were no Xenium instruments sold in the comparable 2022 periods[110](index=110&type=chunk)[111](index=111&type=chunk) [Cost of revenue, gross profit and gross margin](index=26&type=section&id=Cost%20of%20revenue,%20gross%20profit%20and%20gross%20margin) Cost of Revenue and Gross Margin Analysis | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | | Cost of revenue | $58,115 | $30,377 | $27,738 | 91% | $141,217 | $83,559 | $57,658 | 69% | | Gross profit | $95,529 | $100,695 | $(5,166) | (5)% | $293,531 | $276,618 | $16,913 | 6% | | Gross margin | 62% | 77% | (15) pp | - | 68% | 77% | (9) pp | - | - The increase in cost of revenue was primarily driven by higher manufacturing costs (**$24.8 million** for three months, **$49.8 million** for nine months) due to increased sales and higher costs of newly introduced products, particularly the Xenium instrument which currently has a significantly lower margin[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Higher warranty charges (**$1.8 million** for three months, **$3.7 million** for nine months) and inventory write-downs (**$1.7 million** for three months, **$4.5 million** for nine months) also contributed to the increase in cost of revenue[112](index=112&type=chunk)[113](index=113&type=chunk) - Gross margin is expected to continue trending lower due to changes in product mix with newly introduced products, inflationary impacts, and increased supply chain costs[114](index=114&type=chunk) [Operating expenses](index=26&type=section&id=Operating%20expenses) Operating Expenses Summary | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | | Research and development | $66,507 | $67,290 | $(783) | (1)% | $205,065 | $202,053 | $3,012 | 1% | | In-process research and development | $41,402 | $— | $41,402 | 100% | $41,402 | $— | $41,402 | 100% | | Selling, general and administrative | $82,415 | $73,401 | $9,014 | 12% | $257,205 | $219,413 | $37,792 | 17% | | Total operating expenses | $190,324 | $140,691 | $49,633 | 35% | $503,672 | $421,466 | $82,206 | 20% | - The **$41.4 million** in-process research and development expense in Q3 2023 was related to an asset acquisition where the intangible asset had no alternative future use[118](index=118&type=chunk) - Selling, general and administrative expenses increased due to higher outside legal expenses (**$4.0 million** for three months, **$12.3 million** for nine months) and increased personnel expenses, including stock-based compensation[119](index=119&type=chunk)[120](index=120&type=chunk) [Other income (expense), net](index=27&type=section&id=Other%20income%20(expense),%20net) Other Income (Expense), Net | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change ($) (in thousands) | Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------------ | :--------- | | Interest income | $4,300 | $2,025 | $2,275 | 112% | $12,269 | $3,832 | $8,437 | 220% | | Other expense, net | $(1,248) | $(1,950) | $702 | (36)% | $(4,268) | $(4,193) | $(75) | 2% | | Total other income (expense) | $3,051 | $(39) | $3,090 | (7923)% | $7,976 | $(712) | $8,688 | (1220)% | - The significant increase in interest income was due to higher interest rates on cash equivalents and marketable securities[124](index=124&type=chunk) - Other expense, net, decreased for the three-month period due to lower net realized and unrealized losses from foreign currency fluctuations[125](index=125&type=chunk) [Provision for Income Taxes](index=27&type=section&id=Provision%20for%20Income%20Taxes) Provision for Income Taxes | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Provision for income taxes | $1,242 | $1,879 | $3,982 | $3,225 | - The provision for income taxes primarily consists of foreign taxes, with domestic deferred tax assets fully offset by a valuation allowance[126](index=126&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2023, the company held **$356.9 million** in cash, cash equivalents, and marketable securities[127](index=127&type=chunk) - The company has an accumulated deficit of **$1.2 billion** and has generated negative cumulative cash flows from operations since inception[127](index=127&type=chunk) - Anticipated capital expenditures for the next 12 months are between **$20 million** and **$25 million**, primarily for manufacturing and R&D equipment[128](index=128&type=chunk) - The company expects existing cash and cash generated from sales to be sufficient for the next 12 months, but may pursue additional funding for growth or acquisitions[132](index=132&type=chunk)[133](index=133&type=chunk) [Sources of liquidity](index=29&type=section&id=Sources%20of%20liquidity) - Primary funding sources include sales of convertible preferred stock and common stock, product revenue, and indebtedness[135](index=135&type=chunk) - The company raised **$410.8 million** from its 2019 IPO and **$482.3 million** from a 2020 public offering of Class A common stock[135](index=135&type=chunk) [Operating activities](index=29&type=section&id=Operating%20activities) Net Cash Used in Operating Activities | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net cash used in operating activities | $(40,955) | $(47,329) | $6,374 | - The net cash used in operating activities was primarily due to a net loss of **$206.1 million**, partially offset by **$128.0 million** in stock-based compensation expense and **$25.8 million** in depreciation and amortization[137](index=137&type=chunk) - Changes in operating assets and liabilities resulted in a net cash inflow of **$0.3 million** in 2023, compared to a net outflow of **$20.1 million** in 2022[137](index=137&type=chunk)[138](index=138&type=chunk) [Investing activities](index=29&type=section&id=Investing%20activities) Net Cash Provided by (Used in) Investing Activities | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net cash provided by (used in) investing activities | $120,394 | $(317,715) | $438,109 | - Proceeds from sales and maturities of marketable securities totaled **$166.4 million** in 2023, significantly higher than **$58.6 million** in 2022[139](index=139&type=chunk)[140](index=140&type=chunk) - Purchases of property and equipment decreased from **$91.9 million** in 2022 to **$45.2 million** in 2023[139](index=139&type=chunk)[140](index=140&type=chunk) [Financing activities](index=30&type=section&id=Financing%20activities) Net Cash Provided by Financing Activities | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net cash provided by financing activities | $8,056 | $10,816 | $(2,760) | - Proceeds from common stock issuance from stock options and ESPP purchases were **$13.9 million** in 2023, compared to **$16.2 million** in 2022[141](index=141&type=chunk)[142](index=142&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) - No significant changes in critical accounting policies and estimates occurred during the nine months ended September 30, 2023[144](index=144&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Market risk exposure, including interest rates and foreign currency, remains materially unchanged since December 31, 2022 - No material changes to market risk exposure (interest rates, foreign currency) since December 31, 2022[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes to internal controls reported for the quarter [Evaluation of Disclosure Controls and Procedures](index=30&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of September 30, 2023[146](index=146&type=chunk) [Changes in Internal Control over Financial Reporting](index=30&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[147](index=147&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 5 of the unaudited condensed consolidated financial statements for detailed information regarding legal proceedings - Legal proceedings information is detailed in Note 5 to the financial statements[149](index=149&type=chunk) [Item 1A. Risk Factors](index=31&type=page&id=Item%201A.%20Risk%20Factors) The company reports no material changes to its risk factors since the disclosures in its Annual Report - No material changes to risk factors since the Annual Report[150](index=150&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) CEO Serge Saxonov adopted a Rule 10b5-1 trading arrangement for Class A common stock, expiring December 31, 2024 - CEO Serge Saxonov adopted a Rule 10b5-1 trading arrangement on September 13, 2023, to sell up to **152,000 shares** plus **40,000 carryover shares**, expiring December 31, 2024[151](index=151&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial and Accounting Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents[153](index=153&type=chunk) [Signatures](index=33&type=section&id=Signatures) The report is formally signed by the Chief Executive Officer and Chief Financial Officer on November 2, 2023 - The report was signed by Serge Saxonov (CEO) and Justin J. McAnear (CFO) on November 2, 2023[156](index=156&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q2 2023 was $147 million, representing a 28% year-over-year increase from $114.6 million in Q2 2022 [22][31] - Gross profit for Q2 2023 was $99.6 million, compared to $86.9 million in the prior year, with a gross margin of 68% down from 76% [14][31] - Net loss for the period was $62.4 million, an improvement from a net loss of $64.5 million in Q2 2022 [33] Business Line Data and Key Metrics Changes - Total instrument revenue was $31 million, a 110% increase year-over-year, with spatial instrument revenue at $18.1 million [13] - Chromium consumables delivered double-digit year-over-year growth, driven by strong performance in the Americas and EMEA [22][23] - Services revenue increased by 74% year-over-year to $3.4 million [52] Market Data and Key Metrics Changes - Strong performance was noted in the Americas and EMEA, while challenges persisted in the APAC region, particularly in China [22][32] - The demand for CytAssist instruments has significantly increased, with sales of CytAssist-based consumables doubling [140] Company Strategy and Development Direction - The company plans to launch the Feature Barcode application for Flex, enhancing the capabilities of the Flex portfolio [5] - A robust multi-year roadmap for Xenium is in place, focusing on applications like isoform mapping and CAR-T tracking [10] - The company aims to become free cash flow positive, emphasizing cost discipline and operational excellence [15][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum of the Xenium platform, highlighting strong customer feedback and rapid adoption [7][35] - The company anticipates continued challenges in the APAC region but expects strong growth in the Americas and EMEA to offset this [32][68] - Management noted that the market is competitive, with a focus on delivering superior specifications and customer experiences [36][70] Other Important Information - The company has invested over $1 billion in R&D to drive innovation and deliver breakthrough products [11] - The gross margin decline is expected to stabilize as consumables from Xenium become a larger portion of revenue [14][82] Q&A Session Summary Question: Can you comment on the manufacturing capabilities for Xenium? - Management indicated that they have scaled up production and are working to ensure that production is not a constraint on placements [39] Question: How has the demand for CytAssist trended? - Demand for CytAssist has rebounded, nearing levels seen during its launch quarter, with expectations of a slight decline as initial demand stabilizes [42] Question: What is the outlook for gross margins? - Gross margins may trend lower in the near term due to increased Xenium placements, but improvements are expected as production scales [82] Question: How is the company addressing inventory levels in China? - The company is managing high inventory levels with distributors and does not expect significant improvements in the near term [88] Question: What is the adoption phase for Flex? - Flex is seeing increased adoption, with projects emerging that were not possible before, leading to a lower price per sample [62]

Table of Contents 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 June 30, 2023 OR ☐ 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 Re ...

10x Genomics, Inc. (NASDAQ:TXG) Q1 2023 Earnings Conference Call May 3, 2023 4:30 PM ET Company Participants Cassie Corneau – Head-Investor Relations & Strategic Finance Serge Saxonov – Chief Executive Officer and Co-founder Justin McAnear – Chief Financial Officer Conference Call Participants Dan Arias – Stifel Dan Brennan – Cowen Tejas Savant – Morgan Stanley Patrick Donnelly – Citi Matthew Sykes – Goldman Sachs Kyle Mikson – Canaccord Julia Qin – J.P. Morgan Mason Carrico – Stephens Michael Ryskin – Bank ...

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides essential details about the Quarterly Report on Form 10-Q, including the filing entity, period, filer status, and outstanding common stock shares - This document is a Quarterly Report on Form **10-Q** for the period ended **March 31, 2023**, filed by **10x Genomics, Inc.**[2](index=2&type=chunk) - The registrant, **10x Genomics, Inc.**, is classified as a **Large accelerated filer**[5](index=5&type=chunk) - As of **April 28, 2023**, there were **98,124,868** shares of Class A common stock and **18,067,255** shares of Class B common stock outstanding[5](index=5&type=chunk) [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions readers that the report contains forward-looking statements subject to risks and uncertainties, which may differ from actual outcomes - This Quarterly Report contains forward-looking statements subject to risks, uncertainties, and other factors, and actual outcomes could differ materially from these statements[10](index=10&type=chunk)[11](index=11&type=chunk) - The company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the report date, except as required by law[12](index=12&type=chunk) [Channels for Disclosure of Information](index=5&type=section&id=Channels%20for%20Disclosure%20of%20Information) This section outlines the various official channels through which the company discloses material information, including SEC filings, its website, and press releases - Material information is disclosed through SEC filings, the company's website (**https://www.10xGenomics.com**), press releases, public conference calls, webcasts, and social media accounts[15](index=15&type=chunk) - Information on these channels, including the website and social media, is not incorporated by reference into this Quarterly Report unless expressly set forth by specific reference[15](index=15&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2023, along with detailed notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of March 31, 2023, and December 31, 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :------------------------- | :------------- | :---------------- | | Total assets | $1,014,030 | $1,028,980 | | Total liabilities | $211,645 | $223,237 | | Total stockholders' equity | $802,385 | $805,743 | | Cash and cash equivalents | $332,320 | $219,746 | | Marketable securities | $85,970 | $210,238 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance over specific periods, including revenue, gross profit, operating loss, and net loss Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Revenue | $134,285 | $114,496 | | Gross profit | $98,390 | $89,018 | | Loss from operations | $(51,988) | $(41,735) | | Net loss | $(50,747) | $(42,413) | | Net loss per share, basic and diluted | $(0.44) | $(0.38) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the company's net loss and other comprehensive income or loss, reflecting all changes in equity during the period Condensed Consolidated Statements of Comprehensive Loss Highlights (Three Months Ended March 31, in thousands) | Metric | 2023 | 2022 | | :------------------------------------------ | :--------- | :--------- | | Net loss | $(50,747) | $(42,413) | | Other comprehensive income (loss), net of tax | $2,856 | $(2,465) | | Comprehensive loss | $(47,891) | $(44,878) | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including total stockholders' equity, accumulated deficit, and additional paid-in capital Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :------------------------- | :------------- | :---------------- | | Total Stockholders' Equity | $802,385 | $805,743 | | Accumulated Deficit | $(1,080,068) | $(1,029,321) | | Additional Paid-in Capital | $1,883,930 | $1,839,397 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the specified periods Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, in thousands) | Cash Flow Activity | 2023 | 2022 | | :---------------------------------------------------- | :--------- | :---------- | | Net cash used in operating activities | $(4,125) | $(20,802) | | Net cash provided by (used in) investing activities | $119,956 | $(257,558) | | Net cash (used in) provided by financing activities | $(3,414) | $2,417 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $112,441 | $(275,961) | | Cash, cash equivalents, and restricted cash at end of period | $339,794 | $320,112 | [Note 1. Description of Business and Basis of Presentation](index=11&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes 10x Genomics, Inc.'s core business, integrated solutions, incorporation details, and global operational presence - **10x Genomics, Inc.** is a life sciences technology company providing integrated solutions including **Chromium X Series**, **Chromium Connect**, **Visium CytAssist**, and **Xenium Analyzer** instruments, along with proprietary microfluidic chips, slides, reagents, and software[32](index=32&type=chunk) - The company was incorporated in Delaware in **July 2012**, began commercial operations in **2015**, and is headquartered in Pleasanton, California, with subsidiaries in Asia, Europe, and North America[32](index=32&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods applied in preparing the financial statements, including revenue recognition and net loss per share calculation - There were no material changes in the company's significant accounting policies during the three months ended **March 31, 2023**[35](index=35&type=chunk) - Revenue from product sales is recognized when control is transferred (generally upon shipment), while extended warranty revenue is recognized ratably over the service period[36](index=36&type=chunk) - Net loss per share is computed using the two-class method, with identical liquidation, dividend, and loss-sharing rights for Class A and Class B common stock, resulting in the same net loss per share for both classes[40](index=40&type=chunk) [Note 3. Other Financial Statement Information](index=12&type=section&id=Note%203.%20Other%20Financial%20Statement%20Information) This note provides additional details on various financial statement components, including available-for-sale securities, inventory composition, and revenue breakdowns by source and geography Available-for-sale Securities (in thousands) | Category | March 31, 2023 Fair Value | December 31, 2022 Fair Value | | :----------------------- | :------------------------ | :------------------------- | | Money market funds | $302,826 | $163,184 | | Corporate debt securities | $32,241 | $151,030 | | Government debt securities | $48,804 | $52,889 | | Asset-backed securities | $4,925 | $6,319 | | Total available-for-sale securities | $388,796 | $373,422 | - The company incurred gross realized losses of **$1.7 million** from the sale of available-for-sale debt securities for the three months ended **March 31, 2023**, with no material gains or losses in the prior year period[43](index=43&type=chunk)[45](index=45&type=chunk) Inventory Composition (in thousands) | Category | 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 | | Total Inventory | $82,307 | $81,629 | Revenue by Source (Three Months Ended March 31, in thousands) | Revenue Source | 2023 | 2022 | Change (%) | | :----------------------- | :----- | :----- | :--------- | | Instruments - Chromium | $11,626 | $14,326 | -19% | | Instruments - Spatial | $7,550 | $103 | N/M | | Total instruments revenue | $19,176 | $14,429 | 33% | | Consumables - Chromium | $101,096 | $91,279 | 11% | | Consumables - Spatial | $11,282 | $6,671 | 69% | | Total consumables revenue | $112,378 | $97,950 | 15% | | Services | $2,731 | $2,117 | 29% | | Total revenue | $134,285 | $114,496 | 17% | Revenue by Geography (Three Months Ended March 31, in thousands) | Geography | 2023 | 2022 | | :--------------------------------- | :----- | :----- | | Americas - United States | $76,281 | $57,441 | | Americas (excluding United States) | $2,515 | $2,246 | | Total Americas | $78,796 | $59,687 | | Europe, Middle East and Africa | $28,422 | $20,532 | | Asia-Pacific - China | $14,031 | $21,782 | | Asia-Pacific (excluding China) | $13,036 | $12,495 | | Total Asia-Pacific | $27,067 | $34,277 | | Total Revenue | $134,285 | $114,496 | [Note 4. Commitments and Contingencies](index=15&type=section&id=Note%204.%20Commitments%20and%20Contingencies) This note details the company's lease obligations and ongoing intellectual property litigation, including patent infringement claims and counterclaims - The company leases office, laboratory, manufacturing, and distribution space globally, with a Master Lease Agreement for its Pleasanton, California headquarters expected to terminate on **June 30, 2033**[56](index=56&type=chunk) Operating Lease Liabilities as of March 31, 2023 (in thousands) | Period | 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 | - The company is actively involved in multiple intellectual property litigation cases, including suits against **Nanostring Technologies, Inc.** (**GeoMx Action**, **CosMx Action**, **Germany CosMx Action**), **Vizgen, Inc.**, and **Parse Biosciences, Inc.**, alleging patent infringement and facing counterclaims[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[68](index=68&type=chunk)[71](index=71&type=chunk) [Note 5. Capital Stock](index=17&type=section&id=Note%205.%20Capital%20Stock) This note provides information on the company's Class A and Class B common stock outstanding and conversions between the two classes Common Stock Outstanding as of March 31, 2023 | Class | Shares Outstanding | | :----------------- | :----------------- | | Class A common stock | 98,106,087 | | Class B common stock | 18,067,255 | Class B Common Stock Converted to Class A Common Stock (Three Months Ended March 31) | Year | Shares Converted | | :--- | :--------------- | | 2023 | 600,000 | | 2022 | 200,000 | [Note 6. Equity Incentive Plans](index=18&type=section&id=Note%206.%20Equity%20Incentive%20Plans) This note details stock-based compensation expenses and the terms of market-based performance restricted stock unit awards granted to employees Stock-based Compensation Expense (Three Months Ended March 31, in thousands) | Category | 2023 | 2022 | | :--------------------------------- | :----- | :----- | | Cost of revenue | $1,461 | $1,014 | | Research and development | $17,780 | $11,291 | | Selling, general and administrative | $22,860 | $13,742 | | Total stock-based compensation expense | $42,101 | $26,047 | - In **March 2023**, the company granted **172,842** market-based performance restricted stock unit awards (PSAs) subject to escalating stock price thresholds (**$72.14**, **$96.19**, **$120.24**) to be met within **five years**[79](index=79&type=chunk)[80](index=80&type=chunk) - As of **March 31, 2023**, none of the escalating stock price thresholds for PSAs had been met, resulting in no shares vesting or becoming exercisable[84](index=84&type=chunk) [Note 7. Net Loss Per Share](index=19&type=section&id=Note%207.%20Net%20Loss%20Per%20Share) This note explains the calculation of net loss per share and lists common stock equivalents excluded from diluted net loss per share due to their anti-dilutive effect Common Stock Equivalents Excluded from Diluted Net Loss Per Share (Three Months Ended March 31) | Category | 2023 | 2022 | | :--------------------------------- | :--------- | :--------- | | Stock options to purchase common stock | 7,556,361 | 8,419,444 | | Restricted stock units | 5,871,150 | 1,610,391 | | Shares committed under ESPP | 100,253 | 60,181 | | Shares subject to repurchase | — | 12,500 | | Total | 13,527,764 | 10,102,516 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition for the three months ended March 31, 2023, discussing revenue, cost of revenue, operating expenses, other income/expense, and liquidity, while also addressing the ongoing impact of the COVID-19 pandemic [Overview](index=20&type=section&id=Overview) This section provides an overview of 10x Genomics' business, its integrated platform solutions, and its financial performance, including net losses and accumulated deficit - **10x Genomics** is a life science technology company offering integrated platform solutions (instruments, consumables, software) for analyzing biological systems, including **Chromium X Series**, **Chromium Connect**, **Visium CytAssist**, and **Xenium Analyzer** instruments[90](index=90&type=chunk) - The company incurred net losses of **$50.7 million** and **$42.4 million** for the three months ended **March 31, 2023** and **2022**, respectively, with an accumulated deficit of **$1.1 billion** as of **March 31, 2023**[92](index=92&type=chunk) - The company expects to continue incurring significant expenses and operating losses in the near term due to investments in personnel, technology platforms, new products, intellectual property defense, potential acquisitions, and infrastructure[92](index=92&type=chunk) [Operational Effectiveness in the COVID-19 Environment](index=20&type=section&id=Operational%20Effectiveness%20in%20the%20COVID-19%20Environment) This section discusses the ongoing impact of COVID-19 on the company's operations, customer productivity, and supply chain, noting continued revenue challenges and procurement difficulties - **COVID-19** related challenges, including lockdowns in China, continue to negatively impact customer productivity and the company's revenues for the quarter ended **March 31, 2023**[93](index=93&type=chunk) - While the company and its suppliers have faced procurement difficulties, no material impacts have been experienced to date, but the extent and duration of future financial impacts remain uncertain[95](index=95&type=chunk)[96](index=96&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section analyzes the company's financial results for the three months ended March 31, 2023, detailing revenue, cost of revenue, gross profit, operating expenses, and other income/expense Revenue Performance (Three Months Ended March 31, in thousands) | Category | 2023 | 2022 | Change ($) | Change (%) | | :----------------------- | :----- | :----- | :--------- | :--------- | | Total revenue | $134,285 | $114,496 | $19,789 | 17% | | Total instruments revenue | $19,176 | $14,429 | $4,747 | 33% | | Total consumables revenue | $112,378 | $97,950 | $14,428 | 15% | | Services revenue | $2,731 | $2,117 | $614 | 29% | - Instruments revenue increased **33%** primarily due to sales of **Visium CytAssist** and **Xenium** instruments in **Q1 2023**, which had no sales in **Q1 2022**. Chromium instruments revenue decreased **19%** due to lower volume[100](index=100&type=chunk) Cost of Revenue, Gross Profit, and Gross Margin (Three Months Ended March 31, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :----------------- | :----- | :----- | :--------- | :--------- | | Cost of revenue | $35,895 | $25,478 | $10,417 | 41% | | Gross profit | $98,390 | $89,018 | $9,372 | 11% | | Gross margin | 73% | 78% | -5% | -6.4% | - Gross margin is expected to trend lower due to changes in product mix (new products like **Xenium** having lower margins), inflation, increased supply chain costs, and expansion of operational infrastructure[102](index=102&type=chunk) Operating Expenses (Three Months Ended March 31, in thousands) | Expense Category | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | :--------- | | Research and development | $67,098 | $64,078 | $3,020 | 5% | | Selling, general and administrative | $83,280 | $66,675 | $16,605 | 25% | | Total operating expenses | $150,378 | $130,753 | $19,625 | 15% | Other Income (Expense) (Three Months Ended March 31, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :----------------- | :----- | :----- | :--------- | :--------- | | Interest income | $3,869 | $569 | $3,300 | 580% | | Interest expense | $(19) | $(128) | $109 | -85% | | Other expense, net | $(1,516) | $(400) | $(1,116) | 279% | | Total other income | $2,334 | $41 | $2,293 | 5,593% | - Interest income increased significantly by **$3.3 million** due to higher interest rates on cash equivalents and marketable securities[106](index=106&type=chunk) Provision for Income Taxes (Three Months Ended March 31, in thousands) | Year | Provision for Income Taxes | | :--- | :------------------------- | | 2023 | $1,093 | | 2022 | $719 | [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial position, including cash, marketable securities, capital expenditures, and cash flow activities, and its ability to meet future cash needs - As of **March 31, 2023**, the company had **$418.3 million** in cash, cash equivalents, and marketable securities, and an accumulated deficit of **$1.1 billion**[110](index=110&type=chunk) - Anticipates **$60 million to $70 million** in capital expenditures over the next **12 months**, primarily for facility construction in Pleasanton, California, and other global facilities/equipment for manufacturing and R&D[111](index=111&type=chunk) - The company expects existing cash and cash equivalents, along with sales revenue, to be sufficient to meet anticipated cash needs for at least the next **12 months**, despite projected ongoing operating losses[115](index=115&type=chunk) - In **January 2023**, the company signed an agreement to acquire intangible assets for an upfront payment of **$10.0 million**, with potential additional cash consideration up to **$36.3 million** for technology development and future sales milestones[114](index=114&type=chunk) Cash Flows Summary (Three Months Ended March 31, in thousands) | Cash Flow Activity | 2023 | 2022 | | :---------------------------------------------------- | :--------- | :---------- | | Net cash provided by (used in) operating activities | $(4,125) | $(20,802) | | Net cash provided by (used in) investing activities | $119,956 | $(257,558) | | Net cash (used in) provided by financing activities | $(3,414) | $2,417 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $112,441 | $(275,961) | - Net cash used in operating activities decreased from **$20.8 million** in **Q1 2022** to **$4.1 million** in **Q1 2023**, primarily due to a net loss of **$50.7 million**, offset by non-cash expenses like stock-based compensation (**$42.1 million**) and a decrease in accounts receivable (**$26.3 million**)[121](index=121&type=chunk) - Net cash provided by investing activities was **$120.0 million** in **Q1 2023**, a significant shift from **$257.6 million** used in **Q1 2022**, driven by proceeds from sales and maturities of marketable securities (**$93.3 million** and **$31.9 million**, respectively)[124](index=124&type=chunk)[125](index=125&type=chunk) - Net cash used in financing activities was **$3.4 million** in **Q1 2023**, primarily from payments on financing arrangements (**$5.8 million**), partially offset by proceeds from stock option exercises (**$2.4 million**)[126](index=126&type=chunk) [Critical Accounting Estimates](index=27&type=section&id=Critical%20Accounting%20Estimates) This section confirms that there have been no significant changes to the company's critical accounting policies and estimates during the three months ended March 31, 2023 - There have been no significant changes in the company's critical accounting policies and estimates during the three months ended **March 31, 2023**, compared to those disclosed in its most recent Annual Report on Form **10-K**[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that the company's exposure to financial market risks, particularly related to changes in interest rates and foreign currency exchange rates, has not materially changed since December 31, 2022 - The company's exposure to market risk, including interest rates and foreign currency exchange rates, has not materially changed since **December 31, 2022**[130](index=130&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, concluding their effectiveness as of March 31, 2023, and reports no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section describes the evaluation of the effectiveness of the company's disclosure controls and procedures by management, including the CEO and CFO - Management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of disclosure controls and procedures as of **March 31, 2023**[131](index=131&type=chunk) - Based on the evaluation, disclosure controls and procedures were concluded to be effective at a reasonable assurance level as of **March 31, 2023**[132](index=132&type=chunk) [Changes in Internal Control over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports that there have been no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2023 - There have been no material changes in internal control over financial reporting during the quarter ended **March 31, 2023**[133](index=133&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, other information, and exhibits, providing additional context beyond the financial statements [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 4 of the unaudited condensed consolidated financial statements for detailed information regarding the company's legal proceedings, which include various intellectual property disputes - Information regarding legal proceedings is detailed in **Note 4** to the unaudited condensed consolidated financial statements[136](index=136&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the company's risk factors since those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes to the company's risk factors have occurred since the Annual Report on Form **10-K** for the fiscal year ended **December 31, 2022**[137](index=137&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report under this item - No other information is reported under this item[138](index=138&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including organizational documents, certifications (302 and 906), and Inline XBRL documents - Exhibits include certifications (**31.1**, **31.2**, **32.1**, **32.2**) and Inline XBRL documents (**101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**, **104**)[140](index=140&type=chunk) [Signatures](index=32&type=section&id=Signatures) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report on behalf of 10x Genomics, Inc - The report is signed by **Serge Saxonov** (Chief Executive Officer and Director) and **Justin J. McAnear** (Chief Financial Officer) on **May 4, 2023**[144](index=144&type=chunk)

10x Genomics, Inc. (NASDAQ:TXG) Q4 2022 Earnings Conference Call February 15, 2023 4:30 PM ET Company Participants Cassie Corneau - Head, Investor Relations & Strategic Finance Serge Saxonov - Chief Executive Officer & Co-Founder Justin McAnear - Chief Financial Officer Conference Call Participants Dan Brennan - Cowen Dan Arias - Stifel Tejas Savant - Morgan Stanley Patrick Donnelly - Citigroup Julia Qin - J.P. Morgan Kyle Mikson - Canaccord Genuity Matt Larew - William Blair Michael Ryskin - Bank of Americ ...

[PART I](index=6&type=section&id=PART%20I) [Business](index=6&type=section&id=Item%201.%20Business) 10x Genomics provides integrated platforms for high-resolution biological analysis, serving global research institutions and biopharmaceutical companies - The company's mission is to accelerate the mastery of biology to advance human health[23](index=23&type=chunk) - As of December 31, 2022, 10x Genomics has sold a cumulative total of **4,630 instruments** to researchers worldwide, serving all top 100 global research institutions and top 20 global biopharmaceutical companies[25](index=25&type=chunk) Financial Performance (2021-2022) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Revenue** | $516.4 million | $490.5 million | | **Year-over-Year Growth** | 5% | - | | **Net Loss** | $166.0 million | $58.2 million | [Our Solutions and Platforms](index=7&type=section&id=Our%20Solutions%20and%20Platforms) The company's product portfolio features Chromium, Visium, and Xenium platforms for single-cell, spatial, and in situ analysis, supported by integrated instruments and software - The **Chromium platform** enables high-throughput analysis of individual biological components by partitioning samples into millions of micro-reactions, each barcoded for unique identification[31](index=31&type=chunk) - The **Visium platform** provides spatial analysis, using DNA arrays to encode the physical location of biological analytes within a tissue sample, creating a visual map of their distribution[31](index=31&type=chunk) - The **Xenium platform** for in situ analysis detects and preserves the cellular localization of hundreds of RNA targets directly in tissue without requiring conventional sequencing, providing a detailed map of gene expression patterns[31](index=31&type=chunk)[91](index=91&type=chunk) Overview of 10x Genomics Solutions | 10x Solution | Platform | Key Applications | | :--- | :--- | :--- | | **Single Cell Gene Expression** | Chromium | Developmental Biology, Oncology, Immunology | | **Single Cell Immune Profiling** | Chromium | Immunology, Oncology, BioPharma | | **Single Cell ATAC** | Chromium | Developmental Biology, Oncology, Immunology | | **Single Cell Multiome ATAC + Gene Expression** | Chromium | Developmental Biology, Oncology, Immunology | | **Visium Spatial Gene Expression** | Visium | Developmental Biology, Pathology, Oncology | | **Xenium In Situ Gene Expression** | Xenium | Developmental Biology, Pathology, Oncology | [Market Opportunity and Strategy](index=24&type=section&id=Market%20Opportunity%20and%20Strategy) The company targets a $16 billion accessible life sciences market, pursuing growth through technology development, instrument sales, consumable adoption, and strategic acquisitions - The company views the global life sciences research tools market, valued at over **$67 billion in 2021**, as its total addressable market, with its current solutions accessing approximately **$16 billion** of this market[102](index=102&type=chunk)[103](index=103&type=chunk) - The growth strategy includes developing new enabling technologies, expanding instrument sales, strengthening the use of recurring consumables, and acquiring or licensing relevant technologies to accelerate product development[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Strategic acquisitions have been key to expanding the product portfolio, including Epinomics and Spatial Transcriptomics in 2018 (for ATAC-seq and Visium) and ReadCoor and CartaNA in 2020 (for the Xenium platform)[114](index=114&type=chunk) [Operations and Organization](index=28&type=section&id=Operations%20and%20Organization) The company emphasizes interdisciplinary R&D, operates global commercial and manufacturing teams, and employed 1,243 individuals as of December 31, 2022 R&D Expenses | Year | R&D Expense | | :--- | :--- | | **2022** | $265.7 million | | **2021** | $211.8 million | Employee Headcount by Function (as of Dec 31, 2022) | Department | Number of Employees | | :--- | :--- | | **Total Employees** | 1,243 | | Research and Development | 448 | | Sales, Marketing and Support | 453 | | General and Administrative | 213 | | Manufacturing | 129 | - The majority of consumable products are manufactured in-house at ISO 9001:2015 certified facilities in Singapore and Pleasanton, California, while instrument manufacturing is outsourced to qualified contract manufacturers[136](index=136&type=chunk)[138](index=138&type=chunk) [Competition, Regulation, and Intellectual Property](index=32&type=section&id=Competition%20%26%20Regulation%20%26%20Intellectual%20Property) The company navigates intense competition, operates under Research Use Only regulations, and protects its competitive advantage with a portfolio of over 700 patents - The company competes with established and emerging companies in genomics, single cell, spatial, and in situ analysis, as well as with researchers developing their own in-house solutions[145](index=145&type=chunk)[181](index=181&type=chunk) - Current products are marketed for Research Use Only (RUO), exempting them from most FDA medical device requirements, but future clinical or diagnostic products would face more onerous regulations[149](index=149&type=chunk)[150](index=150&type=chunk) - As of December 31, 2022, the company owns or exclusively in-licenses over **700 issued or allowed patents** and has more than **1,050 pending patent applications** worldwide[107](index=107&type=chunk)[151](index=151&type=chunk) - The company has exclusive license agreements with Harvard University and Stanford University for key technologies, requiring low single-digit royalty payments on net revenue of certain products[154](index=154&type=chunk)[156](index=156&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including fluctuating operating results, R&D spending dependency, intense competition, manufacturing complexities, regulatory changes, IP litigation, and stock volatility [Risks related to our business and industry](index=37&type=section&id=Risks%20related%20to%20our%20business%20and%20industry) The business faces industry risks from fluctuating operating results, R&D spending dependency, intense competition, supply chain disruptions, and challenges in new product development and market penetration - Operating results may fluctuate significantly due to factors like variable demand, changes in government research funding, product mix, and supply chain disruptions[170](index=170&type=chunk)[171](index=171&type=chunk) - The business is highly dependent on R&D spending by research institutions, which can be affected by budgetary constraints, changes in funding priorities, and macroeconomic conditions[175](index=175&type=chunk)[178](index=178&type=chunk) - The company faces intense competition from both established and early-stage companies, as well as from researchers developing their own in-house solutions[180](index=180&type=chunk)[181](index=181&type=chunk) - Manufacturing of complex instruments and consumables is subject to risks of quality defects, production problems, and reliance on single-source suppliers for critical components like enzymes and reagents, which could harm the business if disrupted[183](index=183&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) [Risks related to our regulatory environment and taxation](index=60&type=section&id=Risks%20related%20to%20our%20regulatory%20environment%20and%20taxation) The company faces regulatory risks from potential FDA oversight for clinical use, trade tariffs, evolving tax laws, and limitations on Net Operating Losses, which could impact financial results - Products are currently marketed for Research Use Only (RUO), but could become subject to more onerous FDA or other regulatory agency oversight if intended for clinical or diagnostic use, which would increase costs and could delay commercialization[272](index=272&type=chunk) - The business is exposed to risks from enhanced trade tariffs, import/export restrictions, and other trade barriers, particularly concerning the U.S.-China relationship[275](index=275&type=chunk)[276](index=276&type=chunk) - Changes in tax laws, such as the requirement to capitalize and amortize U.S. R&D expenditures, could adversely affect cash flow and financial results[280](index=280&type=chunk) - The ability to use significant Net Operating Loss (NOL) carryforwards (**$717.0 million federal as of Dec 31, 2022**) to offset future taxable income may be limited due to past and future ownership changes under Section 382 of the Code[281](index=281&type=chunk)[282](index=282&type=chunk) [Risks related to our intellectual property, information technology and data security](index=63&type=section&id=Risks%20related%20to%20our%20intellectual%20property%2C%20information%20technology%20and%20data%20security) Success depends on protecting intellectual property and managing risks from infringement claims, licensed IP, cyberattacks, data breaches, and complex global data privacy regulations - Success depends on the ability to obtain, maintain, and protect intellectual property rights, and failure to do so could allow competitors to use the company's technologies and erode its competitive advantage[286](index=286&type=chunk) - The company relies on in-licensed intellectual property, and its rights are subject to compliance with the terms of those license agreements[299](index=299&type=chunk) - The company is subject to governmental regulations and legal obligations related to data privacy and security (e.g., GDPR, CCPA), and failure to comply could result in significant penalties and harm the business[320](index=320&type=chunk)[321](index=321&type=chunk)[326](index=326&type=chunk) - The company experienced a ransomware attack in March 2020 where cybercriminals accessed its IT systems and confidential information was believed to be stolen, highlighting its vulnerability to cyber threats[333](index=333&type=chunk) [Risks related to litigation and our intellectual property](index=79&type=section&id=Risks%20related%20to%20litigation%20and%20our%20intellectual%20property) The company is engaged in multiple patent infringement lawsuits against competitors, facing potential damages, commercialization restrictions, and costly licensing requirements - The company is involved in ongoing patent infringement litigation against Nanostring Technologies related to Nanostring's GeoMx and CosMx products[354](index=354&type=chunk)[355](index=355&type=chunk) - The company has filed a patent infringement suit against Vizgen, Inc. related to its MERSCOPE Platform, and Vizgen has filed counterclaims alleging infringement by the company's Xenium product[359](index=359&type=chunk)[360](index=360&type=chunk) - A patent infringement lawsuit has been filed against Parse Biosciences, Inc. concerning its Evercode Whole Transcriptomics and ATAC-seq products[361](index=361&type=chunk) - Intellectual property litigation is costly and time-consuming, and an adverse outcome could prevent the company from commercializing its products, require substantial damage payments, or invalidate its patents[344](index=344&type=chunk)[346](index=346&type=chunk) [Risks related to ownership of our Class A common stock](index=86&type=section&id=Risks%20related%20to%20ownership%20of%20our%20Class%20A%20common%20stock) Ownership of Class A common stock carries risks from concentrated voting control, stock price volatility, anti-takeover provisions, and exclusive forum clauses for stockholder disputes - The dual-class stock structure concentrates voting power with holders of Class B common stock (**10 votes per share**) versus Class A common stock (**1 vote per share**), limiting the influence of Class A stockholders on corporate matters[377](index=377&type=chunk) - The market price of the Class A common stock is highly volatile and subject to wide fluctuations[384](index=384&type=chunk) - Anti-takeover provisions in the company's certificate of incorporation and bylaws, as well as Delaware law, may discourage, delay, or prevent a change in control[379](index=379&type=chunk) [Unresolved Staff Comments](index=91&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[396](index=396&type=chunk) [Properties](index=91&type=section&id=Item%202.%20Properties) The company's global headquarters, R&D, manufacturing, and distribution facilities are primarily in Pleasanton, California, with total leased space of 396,000 square feet globally - The company's headquarters are in Pleasanton, California, where it leases approximately **307,000 square feet** and is constructing a new **150,000 square foot facility** on land acquired in January 2021[397](index=397&type=chunk) - Total leased space globally is approximately **396,000 square feet**, which includes a manufacturing center in Singapore[397](index=397&type=chunk) [Legal Proceedings](index=91&type=section&id=Item%203.%20Legal%20Proceedings) The company is actively engaged in multiple patent infringement lawsuits against competitors Nanostring, Vizgen, and Parse, with uncertain outcomes - The company has filed multiple patent infringement lawsuits against Nanostring Technologies in the U.S. and Germany concerning Nanostring's GeoMx and CosMx products, while Nanostring has filed a counterclaim alleging infringement by 10x's Visium products[399](index=399&type=chunk)[400](index=400&type=chunk)[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk) - In May 2022, the company sued Vizgen, Inc. for patent infringement related to its MERSCOPE Platform, and Vizgen has filed counterclaims alleging infringement by the Xenium product and tortious interference[405](index=405&type=chunk)[406](index=406&type=chunk) - In August 2022, the company sued Parse Biosciences, Inc. for patent infringement related to its Evercode Whole Transcriptomics and ATAC-seq products[407](index=407&type=chunk) [Mine Safety Disclosures](index=92&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[409](index=409&type=chunk) [PART II](index=93&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=93&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on Nasdaq under 'TXG', has never paid dividends, and shows a cumulative return of $69.08 on a $100 investment since its 2019 IPO - The company's Class A common stock is listed on the Nasdaq Global Select Market under the symbol "TXG"[411](index=411&type=chunk) - The company has never declared or paid cash dividends and does not expect to in the foreseeable future, intending to retain future earnings[412](index=412&type=chunk) Cumulative Total Return Comparison (Sept 2019 - Dec 2022) | Index | Sept 12, 2019 | Dec 31, 2022 | | :--- | :--- | :--- | | **10x Genomics, Inc.** | $100 | $69.08 | | **Nasdaq Composite Index** | $100 | $127.73 | | **Nasdaq Biotechnology Composite Index** | $100 | $128.83 | [Reserved](index=94&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=96&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, revenue grew 5% to $516.4 million, but gross margin declined to 77%, and operating expenses rose 20%, resulting in a net loss of $166.0 million [Overview and Key Business Metrics](index=96&type=section&id=Overview%20and%20Key%20Business%20Metrics) The company sold 4,630 instruments by year-end 2022, but will discontinue reporting consumable pull-through per instrument due to increasing product portfolio complexity Cumulative Instruments Sold | As of December 31, | 2022 | 2021 | | :--- | :--- | :--- | | **Cumulative instruments sold** | 4,630 | 3,511 | Consumable Pull-Through Per Instrument | Year ended December 31, | 2022 | 2021 | | :--- | :--- | :--- | | **Consumable pull-through per instrument** | $109,000 | $142,000 | - The company will discontinue reporting 'consumable pull-through per instrument' as a key metric after the 2022 reporting period, as the increasing complexity and diversity of its product portfolio make this average less representative of business trends[442](index=442&type=chunk) [Results of Operations](index=102&type=section&id=Results%20of%20Operations) In 2022, revenue increased 5% to $516.4 million, but gross profit decreased, and operating expenses rose 20%, leading to a net loss of $166.0 million Revenue Breakdown (2021 vs. 2022) (in thousands) | Revenue Source | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Instruments** | $72,396 | $64,474 | $7,922 | 12% | | **Consumables** | $435,588 | $418,740 | $16,848 | 4% | | **Services** | $8,425 | $7,276 | $1,149 | 16% | | **Total Revenue** | **$516,409** | **$490,490** | **$25,919** | **5%** | Gross Profit and Margin (2021 vs. 2022) (in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Cost of Revenue** | $120,386 | $74,091 | $46,295 | 62% | | **Gross Profit** | $396,023 | $416,399 | ($20,376) | (5)% | | **Gross Margin** | 77% | 85% | - | - | Operating Expenses (2021 vs. 2022) (in thousands) | Expense Category | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Research and development** | $265,667 | $211,752 | $53,915 | 25% | | **Selling, general and administrative** | $298,300 | $257,560 | $40,740 | 16% | | **Total operating expenses** | **$563,967** | **$468,652** | **$95,315** | **20%** | [Liquidity and Capital Resources](index=105&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company held $430.0 million in cash and equivalents, with net cash used in operations at $33.6 million, and anticipates $60-$70 million in capital expenditures - As of December 31, 2022, the company held approximately **$430.0 million** in cash, cash equivalents, and marketable securities[482](index=482&type=chunk) - The company anticipates capital expenditures of **$60 million to $70 million** over the next 12 months, primarily for construction costs at its Pleasanton, California facility[483](index=483&type=chunk) Cash Flow Summary (in thousands) | Activity | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(33,606) | $(21,373) | | **Net cash used in investing activities** | $(350,887) | $(106,729) | | **Net cash provided by financing activities** | $15,817 | $35,297 | [Critical Accounting Estimates](index=106&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve significant judgment in revenue recognition, inventory valuation for obsolescence, and stock-based compensation fair value using complex models - **Revenue Recognition:** In contracts with multiple products and services, the transaction price is allocated to each performance obligation based on its standalone selling price, determined using average selling prices or management estimates[497](index=497&type=chunk) - **Inventory:** Judgment is used to identify and write down obsolete, slow-moving, or unsalable inventory based on factors like expiration dates, open orders, and sales forecasts[498](index=498&type=chunk) - **Stock-Based Compensation:** The fair value of stock options and ESPP rights is estimated using the Black-Scholes model, while market-based performance awards (PSAs) are valued using a Monte Carlo simulation, both requiring significant assumptions about volatility, risk-free rates, and expected term[499](index=499&type=chunk)[500](index=500&type=chunk)[501](index=501&type=chunk)[502](index=502&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=108&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk, where a 100 basis-point increase would reduce investment portfolio fair value by $1.4 million, and foreign currency risk, where a 10% adverse movement would impact cash and receivables by $6.0 million - A hypothetical **100 basis-point increase** in interest rates would decrease the fair value of the company's investment portfolio by approximately **$1.4 million** as of December 31, 2022[504](index=504&type=chunk) - A hypothetical **10% adverse movement** in foreign currency exchange rates would change the U.S. dollar value of reported cash and accounts receivable by approximately **$6.0 million** as of December 31, 2022[505](index=505&type=chunk) [Financial Statements and Supplementary Data](index=109&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, including balance sheets, statements of operations, and cash flows, with an unqualified opinion from Ernst & Young LLP [Consolidated Financial Statements](index=112&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position and performance, reporting total assets of $1.03 billion and a net loss of $166.0 million in 2022 Consolidated Balance Sheet Highlights (as of Dec 31, 2022) (in thousands) | Account | Amount (in thousands) | | :--- | :--- | | **Total Assets** | $1,028,980 | | Cash, cash equivalents, and marketable securities | $430,000 | | **Total Liabilities** | $223,237 | | **Total Stockholders' Equity** | $805,743 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2022) (in thousands) | Account | Amount (in thousands) | | :--- | :--- | | **Revenue** | $516,409 | | **Gross Profit** | $396,023 | | **Loss from Operations** | $(167,944) | | **Net Loss** | $(166,000) | | **Net Loss Per Share** | $(1.46) | [Notes to Consolidated Financial Statements](index=118&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, acquisitions, restructuring charges, revenue breakdown by geography, and significant patent litigation, providing context to the financial statements - In August 2022, the company implemented a reduction in force, incurring restructuring charges of **$4.2 million**, primarily for severance-related costs[585](index=585&type=chunk) - The 2021 acquisition of Tetramer Shop for **$8.5 million in cash** was accounted for as a business combination, resulting in **$4.5 million of goodwill** and **$5.6 million of intangible assets**[587](index=587&type=chunk)[590](index=590&type=chunk) Revenue by Geography (in thousands) | Region | 2022 | 2021 | | :--- | :--- | :--- | | **United States** | $284,987 | $258,274 | | **Europe, Middle East and Africa** | $117,068 | $108,491 | | **China** | $59,559 | $74,924 | | **Asia-Pacific (excluding China)** | $46,004 | $42,087 | | **North America (excluding United States)** | $8,791 | $6,714 | | **Total Revenue** | **$516,409** | **$490,490** | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=143&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[668](index=668&type=chunk) [Controls and Procedures](index=143&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with an unqualified opinion from Ernst & Young LLP - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2022[669](index=669&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, and the independent auditor, Ernst & Young LLP, issued an unqualified opinion on its effectiveness[672](index=672&type=chunk)[676](index=676&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, internal controls[673](index=673&type=chunk) [Other Information](index=145&type=section&id=Item%209B.%20Other%20Information) The company reports no other information under this item - None[684](index=684&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=145&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[685](index=685&type=chunk) [PART III](index=146&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=146&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 Annual Meeting of Shareholders proxy statement - The information required for this item is incorporated by reference from the company's definitive proxy statement, which will be filed within 120 days of the fiscal year-end[689](index=689&type=chunk) [Executive Compensation](index=146&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2023 Annual Meeting of Shareholders proxy statement - The information required for this item is incorporated by reference from the company's definitive proxy statement[690](index=690&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=146&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners, management, and related matters is incorporated by reference from the company's 2023 Annual Meeting of Shareholders proxy statement - The information required for this item is incorporated by reference from the company's definitive proxy statement[691](index=691&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=146&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's 2023 Annual Meeting of Shareholders proxy statement - The information required for this item is incorporated by reference from the company's definitive proxy statement[692](index=692&type=chunk) [Principal Accounting Fees and Services](index=146&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's 2023 Annual Meeting of Shareholders proxy statement - The information required for this item is incorporated by reference from the company's definitive proxy statement[693](index=693&type=chunk) [PART IV](index=147&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=147&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists filed financial statements and exhibits, noting the omission of inapplicable financial statement schedules - The financial statements are included in Part II, Item 8 of the Annual Report[696](index=696&type=chunk) - Financial statement schedules have been omitted because they are not applicable or the required information is included elsewhere[696](index=696&type=chunk) [Form 10-K Summary](index=150&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary under this item - None[700](index=700&type=chunk)

10x Genomics, Inc. (NASDAQ:TXG) Q3 2022 Earnings Conference Call November 2, 2022 4:30 PM ET Company Participants Cassie Corneau - Head, Investor Relations & Strategic Finance Serge Saxonov - Chief Executive Officer & Co-Founder Justin McAnear - Chief Financial Officer Conference Call Participants Tejas Savant - Morgan Stanley Dan Arias - Stifel Patrick Donnelly - Citi Kyle Mikson - Canaccord Genuity Dan Brennan - Cowen Julia Qin - JPMorgan Michael Ryskin - Bank of America Matt Sykes - Goldman Sachs Operato ...

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the period ended September 30, 2022, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets slightly decreased to $996.2 million, while cash and equivalents significantly declined, and total liabilities increased Condensed Consolidated Balance Sheets (in thousands) | | September 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $629,422 | $747,591 | | **Total assets** | $996,207 | $1,018,826 | | **Total current liabilities** | $126,855 | $110,357 | | **Total liabilities** | $220,415 | $201,258 | | **Total stockholders' equity** | $775,792 | $817,568 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased in Q3 2022, but a significant rise in operating expenses led to a wider net loss for both the quarter and the first nine months Statement of Operations Highlights - Q3 (in thousands) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | **Revenue** | $131,072 | $125,297 | | **Gross Profit** | $100,695 | $100,779 | | **Total Operating Expenses** | $140,691 | $116,658 | | **Loss from Operations** | $(39,996) | $(15,879) | | **Net Loss** | $(41,914) | $(17,171) | | **Net Loss Per Share** | $(0.37) | $(0.15) | Statement of Operations Highlights - Nine Months (in thousands) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | **Revenue** | $360,177 | $346,960 | | **Gross Profit** | $276,618 | $300,467 | | **Total Operating Expenses** | $421,466 | $336,890 | | **Loss from Operations** | $(144,848) | $(36,423) | | **Net Loss** | $(148,785) | $(39,774) | | **Net Loss Per Share** | $(1.31) | $(0.36) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss for Q3 2022 increased to $43.4 million, primarily due to a higher net loss and unrealized losses on marketable securities Comprehensive Loss Summary (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Net loss** | $(41,914) | $(17,171) | | **Other comprehensive income (loss)** | $(1,527) | $136 | | **Comprehensive loss** | $(43,441) | $(17,035) | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased to $775.8 million by September 30, 2022, mainly due to the cumulative net loss, partially offset by stock-based compensation - The accumulated deficit grew from **$863.3 million** at the end of 2021 to over **$1.01 billion** by September 30, 2022, reflecting ongoing net losses[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased, and investing activities saw substantial cash usage, primarily for marketable securities and property purchases Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(47,329) | $(27,178) | | **Net cash used in investing activities** | $(317,715) | $(79,111) | | **Net cash provided by financing activities** | $10,816 | $26,394 | | **Net decrease in cash, cash equivalents, and restricted cash** | $(354,523) | $(79,579) | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail business operations, accounting policies, a $4.2 million restructuring charge, revenue breakdowns by source and geography, and ongoing patent litigation - In August 2022, the company implemented a reduction in force, resulting in a restructuring charge of **$4.2 million**, primarily for severance costs[53](index=53&type=chunk)[55](index=55&type=chunk) Revenue by Source - Nine Months Ended Sep 30 (in thousands) | Source | 2022 | 2021 | | :--- | :--- | :--- | | Instruments | $50,064 | $45,123 | | Consumables | $303,991 | $296,342 | | Services | $6,122 | $5,495 | | **Total revenue** | **$360,177** | **$346,960** | Revenue by Geography - Nine Months Ended Sep 30 (in thousands) | Geography | 2022 | 2021 | | :--- | :--- | :--- | | United States | $202,159 | $182,747 | | Europe, Middle East and Africa | $74,067 | $73,761 | | China | $45,620 | $55,577 | | Asia-Pacific (excluding China) | $32,334 | $29,822 | | **Total revenue** | **$360,177** | **$346,960** | - The company is engaged in multiple patent infringement lawsuits, both as a plaintiff against Nanostring, Vizgen, and Parse, and as a defendant in counterclaims from Nanostring and Vizgen[71](index=71&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 revenue growth driven by instrument sales, increased net loss due to higher operating expenses and lower gross margin, and sufficient liquidity for the next 12 months - The company incurred net losses of **$41.9 million** for Q3 2022 and **$148.8 million** for the first nine months of 2022, compared to losses of **$17.2 million** and **$39.8 million** in the respective prior-year periods[96](index=96&type=chunk) - COVID-19 related lockdowns in China continued to negatively impact revenues in Q3 2022, affecting customer productivity due to hiring, logistics, and procurement challenges[97](index=97&type=chunk)[99](index=99&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q3 2022 revenue increased 5% year-over-year, driven by instrument sales, while gross margin declined and operating expenses significantly rose due to personnel and restructuring costs Revenue Change by Source - Q3 2022 vs Q3 2021 | Source | Q3 2022 Revenue (M) | YoY Change ($) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Instruments | $20.9 | +$3.8M | +22% | | Consumables | $108.1 | +$2.0M | +2% | | **Total** | **$131.1** | **+$5.8M** | **+5%** | - Gross margin for Q3 2022 was **77%**, down from **80%** in Q3 2021, attributed to higher manufacturing costs, newly introduced products, and increased warranty costs[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - Q3 R&D expenses increased **23%** year-over-year to **$67.3 million**, and SG&A expenses increased **18%** year-over-year to **$73.4 million**, primarily driven by higher personnel expenses, including stock-based compensation and restructuring charges[108](index=108&type=chunk)[111](index=111&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $452.4 million in cash and marketable securities and anticipates $80-90 million in capital expenditures, believing its liquidity is sufficient for the next 12 months - The company has **$452.4 million** in total cash, cash equivalents, and marketable securities as of September 30, 2022[96](index=96&type=chunk)[118](index=118&type=chunk) - Anticipated capital expenditures for the next 12 months are between **$80 million** and **$90 million**, primarily for construction costs of facilities in Pleasanton, California[119](index=119&type=chunk) - Net cash used in operating activities for the first nine months of 2022 was **$47.3 million**, primarily due to a net loss of **$148.8 million**, offset by non-cash charges like stock-based compensation (**$95.9 million**)[123](index=123&type=chunk)[124](index=124&type=chunk) [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) A new critical accounting estimate was introduced for market-based performance stock awards granted in Q3 2022, with a fair value of $16.0 million determined by Monte Carlo simulation - In Q3 2022, the company began issuing market-based PSAs that vest upon achieving stock price thresholds of **$60**, **$80**, and **$105**, with an estimated value of **$16.0 million** using a Monte Carlo simulation[134](index=134&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk on its $218.4 million marketable securities portfolio, where a 100 basis-point rate change would impact fair value by approximately $1.9 million - The company's investment portfolio of **$218.4 million** is exposed to interest rate risk, where a hypothetical **100 basis-point** increase or decrease would impact the portfolio's fair value by approximately **$1.9 million**[136](index=136&type=chunk)[137](index=137&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[138](index=138&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control[139](index=139&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is actively involved in multiple significant patent infringement lawsuits, both as a plaintiff and defending against counterclaims - The company has filed two separate lawsuits against Nanostring Technologies in the U.S. and one in Germany, alleging infringement of multiple patents by Nanostring's GeoMx and CosMx products[142](index=142&type=chunk)[143](index=143&type=chunk)[146](index=146&type=chunk) - Nanostring has filed counterclaims and a separate lawsuit against 10x Genomics, alleging that its Visium products infringe on Nanostring patents[144](index=144&type=chunk)[145](index=145&type=chunk) - The company has sued Vizgen, Inc. for patent infringement related to its MERSCOPE Platform, while Vizgen has filed counterclaims alleging infringement by the company's forthcoming Xenium product[147](index=147&type=chunk)[149](index=149&type=chunk) - The company filed a suit against Parse Biosciences, Inc. in August 2022, alleging its Evercode products infringe on six U.S. patents[150](index=150&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There have been no material changes to the company's risk factors from those previously disclosed in its Annual Report[152](index=152&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) On October 28, 2022, the company adopted Amended and Restated Bylaws to address new SEC universal proxy rules and align with Delaware corporate law updates - The company adopted Amended and Restated Bylaws on October 28, 2022, to address new SEC universal proxy rules and align with Delaware corporate law updates[153](index=153&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including Amended and Restated Bylaws, stock award agreements, and required certifications - Key exhibits filed include the Amended and Restated Bylaws (Exhibit 3.2), forms of stock option and RSU agreements, and Sarbanes-Oxley Section 302 and 906 certifications[155](index=155&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $114.6 million, a 1% decrease year-over-year from $115.8 million in Q2 2021 [38] - Full year revenue is now expected to be in the range of $500 million to $520 million, representing growth of 2% to 6% over the prior year [7][47] - Gross profit for Q2 was $86.9 million, down from $110.9 million in the prior year, with a gross margin of 76% compared to 96% in Q2 2021 [41] - Operating loss for Q2 was $63.1 million, compared to a loss of $10.3 million in Q2 2021, primarily due to increased personnel-related expenses [43] - Net loss for the period was $64.5 million, compared to a net loss of $11.1 million in Q2 2021 [45] Business Line Data and Key Metrics Changes - Consumables revenue was $97.9 million, increasing 1% year-over-year and flat compared to Q1 2022 [38] - Instrument revenue was $14.7 million, a 13% decrease from the prior year but up 2% from Q1 2022 [38] - Service revenue was $1.9 million, increasing 7% over the prior year [38] Market Data and Key Metrics Changes - Revenue in the Americas for Q2 was $70.9 million, an 8% increase year-over-year and up 19% from Q1 2022 [40] - APAC revenue was $18.1 million, a 15% decrease year-over-year and down 47% compared to Q1 2022, impacted by lockdowns in China [39] - EMEA revenue was $25.6 million, an 11% decrease year-over-year but up 25% from Q1 2022 [40] Company Strategy and Development Direction - The company is focusing on improving execution and implementing tools and processes to increase leverage and scale for future growth [9][24] - There is a strong emphasis on product innovation and customer experience, with plans to enhance commercial strategies and systems [10][24] - The company is committed to maintaining a strong cash position while investing in long-term growth [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the macro environment and execution, expecting some issues to persist into the second half of the year [7] - Confidence remains in the underlying opportunity for single-cell and spatial technology despite slower topline growth [8] - The company is adjusting expectations for the second half of the year to reflect a more modest growth rate due to lingering macro headwinds [47] Other Important Information - The company implemented a reduction in workforce by approximately 8% to reduce spending and preserve cash [45] - The company is targeting to be free cash flow positive by the end of 2023 [46] - New product launches are anticipated to drive growth, with a focus on the first full year of Xenium and CytAssist [53] Q&A Session Summary Question: Insights on 2023 growth outlook - Management expressed excitement about new products and improvements in systems and processes, but refrained from providing specific forecasts for 2023 [52][54] Question: Commercial strategy improvements - Emphasis was placed on enhancing commercial execution through better tools and metrics, focusing on both new customer acquisition and increasing usage among existing customers [55][56] Question: Trends in July and August - Trends observed in Q3 support expectations of low to mid-teens percent growth from Q2, with APAC and EMEA showing the most significant impacts [75][76] Question: Visibility into overall business - Management noted that extended lockdowns in China and currency impacts were significant drivers of Q2 performance, affecting visibility into future growth [82][84] Question: Balancing growth and profitability - The company remains in growth mode while also focusing on becoming free cash flow positive, reflecting on organizational complexity and spending [86][88] Question: Insights on single-cell market growth - Management confirmed that the fundamental need for single-cell resolution remains strong, despite recent macroeconomic challenges [92] Question: Update on Visium HD delay - The delay is attributed to technical and manufacturing challenges, but the company is committed to delivering the capabilities as soon as possible [98]