Begins commercial shipments of Xenium Cell Segmentation Kit to improve determination of cell boundaries Launches first Xenium application-focused panel optimized for immuno-oncology across all tissue types PLEASANTON, Calif., March 21, 2024 /PRNewswire/ -- 10x Genomics, Inc. (Nasdaq: TXG), a leader in single cell and spatial biology, announced today the commercial availability of its Xenium multi-modal cell segmentation kit and the launch of a new Xenium gene panel optimized for immuno-oncology applicatio ...

The next generation of the company's leading single cell technology architecture, GEM-X, enables higher performance at larger scale and lower cost PLEASANTON, Calif., March 13, 2024 /PRNewswire/ -- 10x Genomics, Inc. (Nasdaq: TXG), a leader in single cell and spatial biology, announced today that it has started shipping the first two products powered by the GEM-X technology architecture, Chromium Single Cell Gene Expression 3' v4 and Chromium Single Cell Immune Profiling 5' v3. GEM-X is the next generation ...

Financial Data and Key Metrics Changes - Total revenue for 2023 was $619 million, a 20% increase year-over-year [26] - Gross profit for 2023 was $409.3 million compared to $396 million for 2022 [14] - Free cash flow was positive in Q4 2023, with a cash burn of $41.3 million for the year [15][80] - Gross margin for 2023 was 66%, down from 77% in 2022, primarily due to a higher mix of Xenium instruments sold [93] Business Line Data and Key Metrics Changes - Total consumables revenue for 2023 was $479.6 million, a 10% increase year-over-year [13] - Chromium consumables revenue was $420.3 million, up 5% year-over-year, while Spatial consumables revenue was $59.2 million, up 69% year-over-year [13] - Total instrument revenue for Q4 2023 was $38.4 million, a 72% increase year-over-year, with Spatial instrument revenue at $27.2 million compared to $7.1 million in Q4 2022 [85] Market Data and Key Metrics Changes - Revenue in the Americas was $373.2 million, growing 27% year-over-year, while EMEA revenue was $142.3 million, growing 22% year-over-year [77] - APAC revenue was $103.3 million, a 2% decrease year-over-year [77] - In Q4, Americas revenue was $103.8 million, growing 21% year-over-year, while EMEA revenue was $50.6 million, growing 18% year-over-year [73] Company Strategy and Development Direction - The company aims to maintain a strong focus on cash discipline while driving growth through innovation [8][42] - Significant investments have been made in R&D and manufacturing to support new product development and operational scale [29][31] - The introduction of GEM-X and Visium HD is expected to enhance product offerings and drive broader adoption of single-cell analysis [46][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth opportunities ahead, particularly in single-cell and spatial biology [10][44] - The company anticipates some temporary headwinds due to product transitions but expects to see gradual ramp-up in demand [96][145] - Management emphasized the importance of maintaining a long-term orientation in decision-making and innovation [71] Other Important Information - The company sold nearly 6,000 cumulative instruments globally, a 29% increase year-over-year [29] - Customer publications citing 10x technologies increased by 58% year-over-year, surpassing 7,000 peer-reviewed papers [30] - The company plans to launch several new products in 2024, including a 5,000-plex gene panel and integrated high-plex Xenium Protein Profiling capability [55][56] Q&A Session Summary Question: Can you provide more color on the components of the guidance, particularly for single-cell and spatial? - Management indicated that they are guiding total revenue without breaking it out by product line but provided insights on instrument expectations for various platforms [112] Question: What are the drivers behind the increase in Xenium consumables contribution? - The increase was attributed to stocking orders and a ramp in usage as more systems were placed [118] Question: How does the company view the transition to GEM-X and Visium HD? - Management sees these transitions as natural upgrades for customers, with expectations of increased adoption over time [158] Question: What is the company's guidance philosophy entering this year? - The company is anchored at the midpoint of their guidance range, balancing upsides and downsides while remaining cautious about new product adoption [155]

10x Genomics (TXG) reported $183.98 million in revenue for the quarter ended December 2023, representing a year-over-year increase of 17.8%. EPS of -$0.41 for the same period compares to -$0.15 a year ago.The reported revenue represents a surprise of +0.03% over the Zacks Consensus Estimate of $183.93 million. With the consensus EPS estimate being -$0.36, the EPS surprise was -13.89%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to W ...

Q4 2023 revenue growth of 18% and FY 2023 revenue growth of 20% over the corresponding periods of 2022 PLEASANTON, Calif., Feb. 15, 2024 /PRNewswire/ -- 10x Genomics, Inc. (Nasdaq: TXG), a leader in single cell and spatial biology, today reported financial results for the fourth quarter and full year ended December 31, 2023 and provided outlook for 2024. Recent Highlights Revenue was $184.0 million for the fourth quarter and $618.7 million for the full year of 2023, representing 18% and 20% increases over ...

PART I [Business](index=6&type=section&id=Item%201.%20Business) 10x Genomics develops and sells integrated solutions for biological system analysis, including instruments, consumables, and software, generating **$618.7 million in 2023 revenue** with a **20% increase** year-over-year and a **net loss of $255.1 million** - The company's mission is to accelerate the mastery of biology to advance human health[22](index=22&type=chunk) - As of December 31, 2023, the company has sold a cumulative total of **5,966 instruments** to researchers worldwide since its first product launch in mid-2015[24](index=24&type=chunk) - The company's three main technology platforms are Chromium (high-throughput single-cell analysis), Visium (spatial analysis), and Xenium (in situ analysis), which together provide a comprehensive view of biology[27](index=27&type=chunk) Financial Performance (2022-2023) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Revenue** | $618.7 million | $516.4 million | | **Year-over-Year Growth** | 20% | - | | **Net Loss** | $255.1 million | $166.0 million | [Our Solutions and Platforms](index=10&type=section&id=Our%20Solutions%20and%20Platforms) The company's product portfolio comprises three core platforms—Chromium, Visium, and Xenium—offering integrated solutions for high-throughput single-cell, spatial, and in situ analysis, supported by comprehensive software for data analysis - The **Chromium platform** uses GemCode technology for high-throughput partitioning and barcoding of single cells, enabling analysis of up to a **million cells per run** with the Flex solution[45](index=45&type=chunk)[46](index=46&type=chunk)[50](index=50&type=chunk) - The **Visium platform**, enhanced by the Visium CytAssist instrument, allows for spatial analysis of whole transcriptome and protein expression in both fresh frozen and FFPE tissue samples[74](index=74&type=chunk)[79](index=79&type=chunk)[81](index=81&type=chunk) - The **Xenium platform** provides in situ analysis, detecting hundreds of RNA targets directly in tissue sections with subcellular resolution, using a fully automated instrument, the Xenium Analyzer[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - The company provides a suite of software, including Cell Ranger, Loupe Browser, and the 10x Genomics Cloud Analysis platform, to facilitate data analysis and visualization for its customers, generally free of charge[92](index=92&type=chunk)[93](index=93&type=chunk) [Market Opportunity and Strategy](index=22&type=section&id=Market%20Opportunity%20and%20Strategy) The company targets a global life sciences research tools market of over **$67 billion**, with an accessible market of approximately **$16 billion**, pursuing growth through R&D, instrument sales, consumable adoption, and strategic acquisitions - The company estimates its current solutions can access approximately **$16 billion** of the more than **$67 billion** global life sciences research tools market[97](index=97&type=chunk) - The accessible market is broken down into four research areas: Cell Atlassing (**$2 billion**), Genetic Mechanisms (**$2 billion**), Cellular and Molecular Biology (**$5 billion**), and Translational research (**$7 billion**)[98](index=98&type=chunk)[100](index=100&type=chunk) - Growth strategies include continued R&D investment, expanding the installed base of instruments, strengthening recurring consumable revenue, and acquiring or in-licensing key technologies[105](index=105&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Competitive strengths are cited as market leadership with over **7,200 peer-reviewed publications**, a proprietary IP portfolio with over **970 issued or allowed patents**, and a strong multidisciplinary team[99](index=99&type=chunk)[101](index=101&type=chunk)[104](index=104&type=chunk) [Operations](index=25&type=section&id=Operations) Operations are supported by substantial R&D investment, a global commercial team, and certified manufacturing facilities, with **$270.3 million in R&D expenses in 2023** and most consumables manufactured in-house Operational Headcount and Expenses (as of Dec 31, 2023) | Department | Headcount | 2023 Expense | | :--- | :--- | :--- | | **Research & Development** | 451 | $270.3 million | | **Commercial (Sales, Marketing, Support)** | 450 | - | | **General & Administrative** | 196 | - | | **Manufacturing** | 162 | - | | **Total Employees** | 1,259 | - | - The company's manufacturing facilities in Pleasanton, CA, and Singapore are ISO 9001:2015 certified, with most consumables manufactured in-house and instrument manufacturing outsourced to qualified contract manufacturers[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Sales to academic institutions represented approximately **65% of direct sales revenue** in 2023[118](index=118&type=chunk) [Competition, Regulation, and Intellectual Property](index=29&type=section&id=Competition,%20Regulation,%20and%20Intellectual%20Property) The company faces intense competition across genomics and analysis fields, markets products for Research Use Only (RUO) to avoid stringent medical device regulations, and protects its competitive position with over **970 issued patents** and **1,220 pending applications** - The company competes with both new and established companies in the genomics, single cell, spatial, and in situ analysis fields, as well as with existing technologies like bulk sequencing and flow cytometry[134](index=134&type=chunk) - Current products are marketed for "Research Use Only" (RUO), which exempts them from most FDA and EU IVDR requirements for medical devices, though future clinical use products would face more stringent regulations[138](index=138&type=chunk)[139](index=139&type=chunk) - As of December 31, 2023, the company owns or exclusively in-licenses over **970 issued or allowed patents** and has **1,220 pending patent applications** worldwide[101](index=101&type=chunk)[140](index=140&type=chunk) - Key exclusive license agreements are in place with Harvard University (for sequencing sample preparation) and Stanford University (for ATAC-seq technology), requiring low single-digit royalty payments[143](index=143&type=chunk)[145](index=145&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks including fluctuating operating results, intense competition, R&D spending dependency, reliance on Chromium solutions, international operational complexities, supply chain disruptions, increased regulation, and extensive intellectual property litigation - **Business & Industry Risks:** The company faces risks from fluctuating operating results, intense competition, dependence on R&D spending, reliance on Chromium solutions, international business complexities (especially in China), and potential manufacturing/supply chain disruptions[154](index=154&type=chunk)[158](index=158&type=chunk) - **Regulatory & Tax Risks:** Products could become subject to more onerous government regulation (e.g., by the FDA), and the business could be harmed by trade tariffs, import/export restrictions, and adverse changes in tax laws[156](index=156&type=chunk)[264](index=264&type=chunk)[267](index=267&type=chunk) - **Intellectual Property & Litigation Risks:** The company's success depends on protecting its IP rights, and it is involved in multiple, costly lawsuits with competitors like NanoString, Vizgen, and Parse to enforce its patents, with uncertain outcomes[157](index=157&type=chunk)[336](index=336&type=chunk)[345](index=345&type=chunk) - **Ownership & General Risks:** The multi-class stock structure concentrates voting control, and the company also faces risks related to failing to meet public guidance, stock price volatility, and maintaining effective internal controls[157](index=157&type=chunk)[158](index=158&type=chunk) [Cybersecurity](index=89&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity risk management program, based on CIS Controls and overseen by the Audit Committee, addresses threats including a March 2020 ransomware attack, which has not had a material adverse effect to date - The cybersecurity program is designed based on the Center For Internet Security (CIS) Controls framework and is overseen by the Audit Committee of the Board of Directors[391](index=391&type=chunk)[394](index=394&type=chunk) - The management team, including the Chief Legal Officer and Chief Information Officer, is responsible for assessing and managing cybersecurity threats[397](index=397&type=chunk) - A ransomware attack occurred in March 2020 where confidential information was believed to be stolen, but the company states it has not had a material adverse effect on the business[393](index=393&type=chunk) [Properties](index=91&type=section&id=Item%202.%20Properties) The company's global headquarters, R&D, and manufacturing facilities are in Pleasanton, CA, comprising approximately **338,000 sq. ft. leased** and **150,000 sq. ft. owned**, with total global leased space of approximately **470,000 sq. ft.** - The company's headquarters are in Pleasanton, CA, where it leases ~**338,000 sq. ft.** and owns a ~**150,000 sq. ft.** manufacturing and operations facility[399](index=399&type=chunk) - Total global leased space is approximately **470,000 sq. ft.**, including facilities in Singapore and Taiwan[399](index=399&type=chunk) [Legal Proceedings](index=91&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, with detailed information provided in Note 7 of the consolidated financial statements and key litigation risks discussed in the Risk Factors section - Information regarding legal proceedings is detailed in Note 7, Commitments and Contingencies, of the consolidated financial statements[400](index=400&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=92&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on the Nasdaq Global Select Market under "TXG," with no cash dividends ever paid or planned, as earnings are retained for future business growth - The company's Class A common stock is listed on the Nasdaq Global Select Market under the symbol "TXG"[404](index=404&type=chunk) - The company has never declared or paid cash dividends and intends to retain future earnings for business growth[405](index=405&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=94&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, revenue grew **20% to $618.7 million**, driven by instrument and consumables sales, but gross margin declined to **66%**, operating expenses increased **20% to $674.6 million**, and net loss widened to **$255.1 million** Key Business Metrics | Metric | As of Dec 31, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | **Cumulative Instruments Sold** | 5,966 | 4,630 | | - Chromium | 5,180 | 4,411 | | - Visium | 531 | 211 | | - Xenium | 255 | 8 | | **Total Consumable Reactions Sold (Annual)** | 347,000 | 319,300 | Revenue Breakdown by Product Type (in thousands) | Product Type | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Instruments** | $123,471 | $72,396 | $51,075 | 71% | | - Chromium Instruments | $47,866 | $58,552 | ($10,686) | (18)% | | - Spatial Instruments | $75,605 | $13,844 | $61,761 | 446% | | **Total Consumables** | $479,553 | $435,588 | $43,965 | 10% | | - Chromium Consumables | $420,316 | $400,433 | $19,883 | 5% | | - Spatial Consumables | $59,237 | $35,155 | $24,082 | 69% | | **Services** | $15,703 | $8,425 | $7,278 | 86% | | **Total Revenue** | **$618,727** | **$516,409** | **$102,318** | **20%** | - Gross margin decreased from **77% in 2022 to 66% in 2023**, primarily due to higher manufacturing costs of **$79.0 million** from increased sales and higher costs of newly introduced products, particularly the lower-margin Xenium instrument[433](index=433&type=chunk)[454](index=454&type=chunk) - Operating expenses increased by **20% to $674.6 million in 2023**, driven by a **$61.0 million in-process R&D expense** from an asset acquisition and a **$45.0 million (15%) increase in SG&A**, largely due to higher outside legal expenses of **$18.1 million**[455](index=455&type=chunk)[456](index=456&type=chunk)[457](index=457&type=chunk) - Net cash used in operating activities was **$15.2 million in 2023**, an improvement from **$33.6 million used in 2022**, with the company ending 2023 with **$388.7 million** in cash, cash equivalents, and marketable securities[463](index=463&type=chunk)[471](index=471&type=chunk)[472](index=472&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=106&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate fluctuations and foreign currency exchange rate volatility, with a hypothetical **100 basis-point interest rate increase** impacting investments by **$0.1 million** and a **10% adverse currency movement** impacting cash and receivables by **$3.8 million** - **Interest Rate Risk:** A hypothetical **100 basis-point increase** in interest rates would decrease the fair value of the investment portfolio by approximately **$0.1 million** as of December 31, 2023[488](index=488&type=chunk) - **Foreign Currency Exchange Risk:** Approximately **23% of sales in 2023** were denominated in currencies other than the U.S. dollar, and a hypothetical **10% adverse movement** in exchange rates would change the reported U.S. dollar value of cash and accounts receivable by approximately **$3.8 million** as of December 31, 2023[489](index=489&type=chunk) [Financial Statements and Supplementary Data](index=107&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2023, 2022, and 2021, including balance sheets, statements of operations, and cash flows, along with detailed notes on accounting policies, acquisitions, and litigation [Consolidated Financial Statements](index=110&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show **total assets of $965.1 million** and **total liabilities of $224.1 million** as of December 31, 2023, with **$618.7 million in revenue** and a **net loss of $255.1 million** for the year Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | $965,143 | $1,028,980 | | Cash, cash equivalents, & marketable securities | $388,695 | $429,984 | | Inventory | $73,706 | $81,629 | | **Total Liabilities** | $224,100 | $223,237 | | **Total Stockholders' Equity** | $741,043 | $805,743 | Consolidated Statement of Operations Highlights (in thousands) | Account | 2023 | 2022 | | :--- | :--- | :--- | | **Revenue** | $618,727 | $516,409 | | **Gross Profit** | $409,313 | $396,023 | | **Total Operating Expenses** | $674,642 | $563,967 | | **Loss from Operations** | ($265,329) | ($167,944) | | **Net Loss** | ($255,099) | ($166,000) | | **Net Loss Per Share** | ($2.18) | ($1.46) | [Notes to Consolidated Financial Statements](index=115&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, acquisitions like the **$61.0 million Centrillion Technologies asset purchase**, restructuring charges, extensive litigation with competitors such as NanoString and Vizgen, lease agreements, and stock-based compensation plans - In January 2023, the company acquired assets from Centrillion Technologies, resulting in a **$61.0 million in-process R&D expense**, with the deal including up to **$15.0 million** in additional development milestones and future sales milestones[569](index=569&type=chunk)[570](index=570&type=chunk) - The company is engaged in significant, multi-front patent litigation against NanoString, Vizgen, Parse, and Curio in both the U.S. and Europe to defend its spatial and in situ technology patents[611](index=611&type=chunk) - In November 2023, a U.S. jury found that NanoString willfully infringed the company's patents related to the GeoMx product line and awarded over **$31 million in damages**, though post-trial motions are stayed due to NanoString's February 2024 bankruptcy filing[612](index=612&type=chunk)[613](index=613&type=chunk) - In Europe, the Unified Patent Court (UPC) granted a preliminary injunction in September 2023 requiring NanoString to stop selling its CosMx products in **17 UPC member states**[622](index=622&type=chunk) - As of December 31, 2023, the company had **$224.6 million** in total unrecognized stock-based compensation related to RSUs, to be recognized over a weighted-average period of approximately two years[644](index=644&type=chunk) [Controls and Procedures](index=144&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023, a conclusion affirmed by an unqualified opinion from Ernst & Young LLP - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[662](index=662&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, based on the COSO 2013 framework[665](index=665&type=chunk) - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2023[669](index=669&type=chunk) PART III [Directors, Executive Officers, Corporate Governance, Executive Compensation, and Other Matters](index=147&type=section&id=Items%2010,%2011,%2012,%2013,%20and%2014) Information for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, and related matters, is incorporated by reference from the company's forthcoming 2024 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's forthcoming Proxy Statement[682](index=682&type=chunk)[683](index=683&type=chunk)[684](index=684&type=chunk)[685](index=685&type=chunk)[686](index=686&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=148&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications, with financial statement schedules omitted as not applicable - This item lists all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications[688](index=688&type=chunk)

New single cell and spatial products set to deliver higher performance, improve ease of use and enable researchers to measure more biology PLEASANTON, Calif., Feb. 5, 2024 /PRNewswire/ -- 10x Genomics, Inc. (Nasdaq: TXG), a leader in single cell and spatial biology, announced today a series of new products and technology demonstrations that will be presented at the 2024 Advances in Genome Biology and Technology (AGBT) General Meeting this week in Orlando, Florida. "The new products we have planned for 2024 ...

Yuichiro Chino/Moment via Getty Images In my previous article on 10x Genomics (NASDAQ:TXG), I debated the potential insertion of TXG in the Compounding Healthcare "Bio Boom" speculative portfolio. This deliberation was centered on the company's ability to develop cutting-edge products, services, and R&D capabilities. The article defined my game plan fixated on technical analysis and explicit conditions for entry. However, those circumstances did not appear, and I am still sitting on the sidelines, awaiting ...

Financial Data and Key Metrics Changes - Revenue increased 17% year-over-year to $154 million in Q3 2023, driven by strong demand for the Xenium platform [12][48] - Total revenue for the quarter grew to $153.6 million compared to $131.1 million for the prior year period [49] - Gross profit for Q3 2023 was $95.5 million, down from $100.7 million in the prior year, with a gross margin of 62% compared to 77% [82][86] - Operating loss for Q3 2023 was $94.8 million, compared to a loss of $40 million in Q3 2022 [55][86] - The company raised its full-year revenue guidance to a range of $610 million to $625 million, reflecting growth of 18% to 21% over 2022 [56] Business Line Data and Key Metrics Changes - Revenue from Spatial products exceeded $36 million, largely driven by the Xenium platform [13] - Total Consumables revenue was $114.4 million, an increase of 6% year-over-year, with Chromium Consumables revenue at $100.3 million, up 2% [49] - Spatial Consumables revenue grew 38% year-over-year to $14.1 million [49] - Total instrument revenue was $34.9 million, a 67% increase year-over-year, with Spatial Instrument revenue at $22.7 million compared to $6 million in Q3 2022 [80] Market Data and Key Metrics Changes - Revenue in the Americas was $99.0 million, growing 28% year-over-year, while EMEA revenue was $32 million, growing 15% [50] - Revenue in APAC was $22.6 million, a 12% decrease year-over-year, primarily due to challenges in China [50][81] Company Strategy and Development Direction - The company is focused on the Xenium product launch, which is seen as a transformative technology in the industry [32][43] - There is a strong emphasis on expanding the Chromium franchise and capturing untapped opportunities in single-cell analysis [42][43] - The company plans to introduce new capabilities, including a high-plex protein assay and multimodal cell segmentation, to enhance the Xenium platform [38][139] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the Chromium and Xenium platforms, despite current challenges in the macro environment [59][60] - The company is optimistic about the robust pipeline of new product launches planned for 2024 [47] - Management noted that the enthusiasm for Xenium among researchers indicates a significant market opportunity ahead [68] Other Important Information - The company faced increased operating expenses of $190.3 million in Q3 2023, driven by R&D expenses related to an acquisition [53] - The company ended the quarter with $356.9 million in cash and cash equivalents [86] Q&A Session Summary Question: Can you provide metrics on the Xenium order funnel? - Management noted that the order funnel remains healthy, with strong demand and enthusiasm from researchers [61] Question: How is the Chromium business performing in different regions? - Management indicated that Chromium growth has been a regional story, with challenges in China but mid-to-high teens growth in the Americas and EMEA [63] Question: What are the expectations for the Xenium adoption curve? - Management expressed that the Xenium launch is on a strong trajectory, with many customers quickly ramping up their usage [120] Question: How is the biopharma market performing? - Biopharma remains a stable fraction of the business, around 20%, but there has been a tightening of budgets recently [127]

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)