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~~September 30, 2022


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

For the transition period from ___________ to ___________

Commission File Number: 001-39035

10x Genomics, Inc.

(Exact Name of Registrant as Specified in Its Charter)


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

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

(925) 401-7300

(Registrant’s telephone number, including area code)

_____________________

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

Title of each class

Trading
Symbol

Name of each exchange
on which registered

Class A common stock, par value $0.00001 per share

TXG

The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of ~~July 29,~~October 31, 2022, the registrant had ~~95,046,366~~95,596,266 shares of Class A common stock, $0.00001 par value per share, outstanding and 18,867,255 shares of Class B common stock, $0.00001 par value per share, outstanding.

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10x Genomics, Inc.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Quarterly Report, including statements concerning our plans, objectives, goals, beliefs, business strategies, results of operations, financial position, sufficiency of our capital resources and business outlook, future events, business conditions, costs and expenses that we expect to incur or to save in connection with our ~~planned~~ workforce reduction, the anticipated timing for completion of our workforce restructuring activities, uncertainties related to the global COVID-19 pandemic and the impact of our and our customers' and suppliers' responses to it, business trends and other information, may be forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or variations of them or similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct and actual results may vary materially from what is expressed in or indicated by the forward-looking statement. Such statements reflect the current views of our management with respect to our business, results of operations and future financial performance.

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

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or occur and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. Further, as the COVID-19 pandemic is continuously evolving, our forward-looking statements may not accurately or fully reflect the potential impact that the COVID-19 pandemic may have on our business, financial condition, results of operations and cash flows.

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

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

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Channels for Disclosure of Information

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

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

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10x Genomics, Inc.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

10x Genomics, Inc.

Condensed Consolidated Balance Sheets

(In thousands)


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(Unaudited)		(Note 1)			(Unaudited)		(Note 1)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	274,187	$	587,447	Cash and cash equivalents	$	233,951	$	587,447
Marketable securities	Marketable securities	225,546		—		Marketable securities	218,435		—
Restricted cash	Restricted cash	508		1,028		Restricted cash	508		1,028
Accounts receivable, net	Accounts receivable, net	76,204		85,254		Accounts receivable, net	83,549		85,254
Inventory	Inventory	70,646		59,966		Inventory	78,629		59,966
Prepaid expenses and other current assets	Prepaid expenses and other current assets	19,141		13,896		Prepaid expenses and other current assets	14,350		13,896
Total current assets	Total current assets	666,232		747,591		Total current assets	629,422		747,591
Property and equipment, net	Property and equipment, net	223,001		169,492		Property and equipment, net	257,694		169,492
Restricted cash	Restricted cash	7,095		7,598		Restricted cash	7,091		7,598
Operating lease right-of-use assets	Operating lease right-of-use assets	73,425		60,918		Operating lease right-of-use assets	71,095		60,918
Goodwill	Goodwill	4,511		4,511		Goodwill	4,511		4,511
Intangible assets, net	Intangible assets, net	24,128		25,397		Intangible assets, net	23,493		25,397
Other noncurrent assets	Other noncurrent assets	3,199		3,319		Other noncurrent assets	2,901		3,319
Total assets	Total assets	$	1,001,591	$	1,018,826	Total assets	$	996,207	$	1,018,826
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	26,731	$	17,351	Accounts payable	$	21,594	$	17,351
Accrued compensation and related benefits	Accrued compensation and related benefits	23,505		31,626		Accrued compensation and related benefits	28,214		31,626
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	53,222		50,909		Accrued expenses and other current liabilities	61,989		50,909

Deferred revenue	Deferred revenue	6,473		5,340		Deferred revenue	6,665		5,340
Operating lease liabilities	Operating lease liabilities	7,977		5,131		Operating lease liabilities	8,393		5,131

Total current liabilities	Total current liabilities	117,908		110,357		Total current liabilities	126,855		110,357

Accrued license fee, noncurrent	Accrued license fee, noncurrent	—		5,814		Accrued license fee, noncurrent	—		5,814

Operating lease liabilities, noncurrent	Operating lease liabilities, noncurrent	91,040		76,847		Operating lease liabilities, noncurrent	87,833		76,847
Other noncurrent liabilities	Other noncurrent liabilities	9,127		8,240		Other noncurrent liabilities	5,727		8,240
Total liabilities	Total liabilities	218,075		201,258		Total liabilities	220,415		201,258
Commitments and contingencies (Note 4)				0
0Stockholders’ equity:
Commitments and contingencies (Note 5)						Commitments and contingencies (Note 5)
Stockholders’ equity:						Stockholders’ equity:
Preferred stock	Preferred stock	—		—		Preferred stock	—		—
Common stock	Common stock	2		2		Common stock	2		2
Additional paid-in capital	Additional paid-in capital	1,757,671		1,680,865		Additional paid-in capital	1,793,388		1,680,865
Accumulated deficit	Accumulated deficit	(970,192)		(863,321)		Accumulated deficit	(1,012,106)		(863,321)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(3,965)		22		Accumulated other comprehensive income (loss)	(5,492)		22
Total stockholders’ equity	Total stockholders’ equity	783,516		817,568		Total stockholders’ equity	775,792		817,568
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,001,591	$	1,018,826	Total liabilities and stockholders’ equity	$	996,207	$	1,018,826

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

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10x Genomics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share data)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Revenue	Revenue	$	114,609	$	115,842	$	229,105	$	221,663	Revenue	$	131,072	$	125,297	$	360,177	$	346,960
Cost of revenue	Cost of revenue	27,704		4,915		53,182		21,975		Cost of revenue	30,377		24,518		83,559		46,493
Gross profit	Gross profit	86,905		110,927		175,923		199,688		Gross profit	100,695		100,779		276,618		300,467
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	70,685		53,402		134,763		95,285		Research and development	67,290		54,582		202,053		149,867

Selling, general and administrative	Selling, general and administrative	79,337		68,703		146,012		125,607		Selling, general and administrative	73,401		62,076		219,413		187,683
Accrued contingent liabilities	Accrued contingent liabilities	—		(850)		—		(660)		Accrued contingent liabilities	—		—		—		(660)
Total operating expenses	Total operating expenses	150,022		121,255		280,775		220,232		Total operating expenses	140,691		116,658		421,466		336,890
Loss from operations	Loss from operations	(63,117)		(10,328)		(104,852)		(20,544)		Loss from operations	(39,996)		(15,879)		(144,848)		(36,423)
Other income (expense):	Other income (expense):									Other income (expense):
Interest income	Interest income	1,238		58		1,807		108		Interest income	2,025		49		3,832		157
Interest expense	Interest expense	(109)		(209)		(237)		(430)		Interest expense	(114)		(219)		(351)		(649)
Other (expense) income, net		(1,843)		521		(2,243)		(208)
Other expense, net										Other expense, net	(1,950)		(599)		(4,193)		(807)

Total other (expense) income		(714)		370		(673)		(530)
Total other expense										Total other expense	(39)		(769)		(712)		(1,299)
Loss before provision for income taxes	Loss before provision for income taxes	(63,831)		(9,958)		(105,525)		(21,074)		Loss before provision for income taxes	(40,035)		(16,648)		(145,560)		(37,722)
Provision for income taxes	Provision for income taxes	627		1,094		1,346		1,529		Provision for income taxes	1,879		523		3,225		2,052
Net loss	Net loss	$	(64,458)	$	(11,052)	$	(106,871)	$	(22,603)	Net loss	$	(41,914)	$	(17,171)	$	(148,785)	$	(39,774)

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.57)	$	(0.10)	$	(0.94)	$	(0.21)	Net loss per share, basic and diluted	$	(0.37)	$	(0.15)	$	(1.31)	$	(0.36)
Weighted-average shares of common stock used in computing net loss per share, basic and diluted	Weighted-average shares of common stock used in computing net loss per share, basic and diluted	113,574,757		109,866,294		113,272,158		109,293,342		Weighted-average shares of common stock used in computing net loss per share, basic and diluted	114,112,382		110,874,249		113,555,750		109,826,104

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

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10x Genomics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Net loss	Net loss	$	(64,458)	$	(11,052)	$	(106,871)	$	(22,603)	Net loss	$	(41,914)	$	(17,171)	$	(148,785)	$	(39,774)
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Unrealized losses on available-for-sale marketable securities	Unrealized losses on available-for-sale marketable securities	(1,326)		—		(3,729)		—		Unrealized losses on available-for-sale marketable securities	(1,459)		—		(5,188)		—
Foreign currency translation adjustment	Foreign currency translation adjustment	(196)		10		(258)		108		Foreign currency translation adjustment	(68)		136		(326)		244
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(1,522)		10		(3,987)		108		Other comprehensive income (loss), net of tax	(1,527)		136		(5,514)		244
Comprehensive loss	Comprehensive loss	$	(65,980)	$	(11,042)	$	(110,858)	$	(22,495)	Comprehensive loss	$	(43,441)	$	(17,035)	$	(154,299)	$	(39,530)

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

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10x Genomics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)


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

Common Stock Additional Paid-in
Capital Accumulated
Deficit Accumulated
Other Comprehensive
Income (Loss) Total
Stockholders’
Equity
Shares Amount
Balance as of December 31, 2020 108,485,909 $ 2 $ 1,544,218 $ (805,098) $ (50) $ 739,072
Issuance of Class A common stock related to equity awards 1,102,618 — 8,546 — — 8,546
Vesting of shares subject to repurchase, including early exercised options — — 42 — — 42
Stock-based compensation — — 16,253 — — 16,253
Net loss — — — (11,551) — (11,551)
Other comprehensive income — — — — 98 98
Balance as of March 31, 2021 109,588,527 2 1,569,059 (816,649) 48 752,460
Issuance of Class A common stock related to equity awards 1,151,392 — 16,194 — — 16,194
Vesting of shares subject to repurchase, including early exercised options — — 42 — — 42
Stock-based compensation — — 26,932 — — 26,932
Net loss — — — (11,052) — (11,052)
Other comprehensive income — — — — 10 10
Balance as of June 30, 2021 110,739,919 $ 2 $ 1,612,227 $ (827,701) $ 58 $ 784,586

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10x Genomics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)


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

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

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10x Genomics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(106,871)	$	(22,603)	Net loss	$	(148,785)	$	(39,774)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization	Depreciation and amortization	12,691		9,641		Depreciation and amortization	18,847		15,337
Stock-based compensation expense	Stock-based compensation expense	62,360		43,108		Stock-based compensation expense	95,874		69,058
Loss on disposal of property and equipment	Loss on disposal of property and equipment	5		66		Loss on disposal of property and equipment	455		66

Amortization of premium and accretion of discount on marketable securities, net	Amortization of premium and accretion of discount on marketable securities, net	455		—		Amortization of premium and accretion of discount on marketable securities, net	665		—

Amortization of right-of-use assets	Amortization of right-of-use assets	3,728		4,014		Amortization of right-of-use assets	5,687		5,593
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	9,025		(7,824)		Accounts receivable	1,673		(27,216)
Inventory	Inventory	(11,101)		(14,215)		Inventory	(19,761)		(21,349)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(5,348)		(1,070)		Prepaid expenses and other current assets	(2,457)		(1,220)
Other noncurrent assets	Other noncurrent assets	115		217		Other noncurrent assets	411		348
Accounts payable	Accounts payable	10,262		9,711		Accounts payable	6,082		12,191
Accrued compensation and other related benefits	Accrued compensation and other related benefits	(8,007)		5,730		Accrued compensation and other related benefits	(3,163)		11,868
Deferred revenue	Deferred revenue	1,667		952		Deferred revenue	1,845		1,221
Accrued contingent liabilities	Accrued contingent liabilities	—		(14,676)		Accrued contingent liabilities	—		(44,173)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	(4,922)		(6,530)		Accrued expenses and other current liabilities	2,867		(2,545)
Operating lease liability	Operating lease liability	(2,181)		(3,170)		Operating lease liability	(4,566)		(2,498)
Other noncurrent liabilities	Other noncurrent liabilities	357		(4,313)		Other noncurrent liabilities	(3,003)		(4,085)
Net cash used in operating activities	Net cash used in operating activities	(37,765)		(962)		Net cash used in operating activities	(47,329)		(27,178)
Investing activities:	Investing activities:					Investing activities:

Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	—		(5,451)		Acquisition of business, net of cash acquired	(1,500)		(5,451)
Purchases of property and equipment	Purchases of property and equipment	(55,355)		(53,433)		Purchases of property and equipment	(91,927)		(73,660)
Purchase of marketable securities	Purchase of marketable securities	(271,547)		—		Purchase of marketable securities	(282,871)		—
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	32,693		—		Proceeds from sales of marketable securities	41,401		—
Proceeds from maturities of marketable securities	Proceeds from maturities of marketable securities	9,124		—		Proceeds from maturities of marketable securities	17,182		—
Net cash used in investing activities	Net cash used in investing activities	(285,085)		(58,884)		Net cash used in investing activities	(317,715)		(79,111)
Financing activities:	Financing activities:					Financing activities:
Payments on financing arrangement	Payments on financing arrangement	(5,409)		(5,028)		Payments on financing arrangement	(5,409)		(5,028)

Issuance of common stock from exercise of stock options and employee stock purchase plan purchases	Issuance of common stock from exercise of stock options and employee stock purchase plan purchases	14,186		24,739		Issuance of common stock from exercise of stock options and employee stock purchase plan purchases	16,225		31,422
Net cash provided by financing activities	Net cash provided by financing activities	8,777		19,711		Net cash provided by financing activities	10,816		26,394
Effect of exchange rates on changes in cash, cash equivalents, and restricted cash		(210)		199
Effect of exchange rate changes on cash, cash equivalents, and restricted cash						Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(295)		316
Net decrease in cash, cash equivalents, and restricted cash	Net decrease in cash, cash equivalents, and restricted cash	(314,283)		(39,936)		Net decrease in cash, cash equivalents, and restricted cash	(354,523)		(79,579)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	596,073		688,644		Cash, cash equivalents, and restricted cash at beginning of period	596,073		688,644
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	281,790	$	648,708	Cash, cash equivalents, and restricted cash at end of period	$	241,550	$	609,065

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid for interest	Cash paid for interest	$	841	$	1,222	Cash paid for interest	$	841	$	1,222
Cash paid for taxes	Cash paid for taxes	$	3,319	$	7,838	Cash paid for taxes	$	3,649	$	8,318
Noncash investing and financing activities:	Noncash investing and financing activities:					Noncash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	$	26,679	$	7,516	Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	$	29,290	$	12,710
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	$	16,562	$	11,267	Right-of-use assets obtained in exchange for new operating lease liabilities	$	16,562	$	19,566
Contingent consideration payable from business acquisition	Contingent consideration payable from business acquisition	$	1,500	$	1,523	Contingent consideration payable from business acquisition	$	1,500	$	1,536

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

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Description of Business and Basis of Presentation

Organization and Description of Business

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

Basis of Presentation

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

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

2. Summary of Significant Accounting Policies

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

Marketable Securities

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

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

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

of the investment if it is more likely than not that the Company will be required or will intend to sell the

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

investment before recovery of its amortized cost basis. Allowances for credit losses and write-downs are recognized in “Other ~~(expense) income,~~expense, net,” and unrealized losses not related to credit losses are recognized in “Accumulated other comprehensive income (loss).”. There are no allowances for credit losses for the periods presented. As of ~~June~~September 30, 2022, the gross unrealized losses on available-for-sale securities are related to market interest rate changes and not attributable to credit.

Fair Value of Financial Instruments

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

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

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

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

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

Revenue Recognition

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

The Company regularly enters into contracts that include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. The transaction price is allocated to each performance obligation in proportion to its standalone selling price. The Company determines standalone selling price using average selling prices with consideration of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, the Company relies upon prices set by management, adjusted for applicable discounts.

Net Loss Per Share

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

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

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

Stock-Based Compensation

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

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

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

3. Restructuring

On August 3, 2022, the Company implemented a reduction in force plan in order to decrease costs and maintain a streamlined organization to support the business. Restructuring charges of $4.2 million associated with this plan, comprised primarily of severance-related costs, were recorded in the three months ended September 30, 2022.

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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


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

Restructuring costs of $0.3 million, $1.4 million and $2.5 million were recorded in cost of revenue, research and development expense, and selling, general and administrative expense, respectively, in the Company's condensed consolidated statements of operations during the three months ended September 30, 2022. No additional restructuring charges are expected to be incurred and the restructuring activities are expected to be substantially completed by the end of the fourth quarter of 2022.

4. Other Financial Statement Information

Available-for-sale Securities

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


		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Fair Value Measurement		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Fair Value Measurement
Cash equivalents:	Cash equivalents:										Cash equivalents:
Money market funds	Money market funds	$	225,176	$	—	$	—	$	225,176	Level 1	Money market funds	$	198,852	$	—	$	—	$	198,852	Level 1
Marketable securities:	Marketable securities:										Marketable securities:
Corporate debt securities	Corporate debt securities	161,622		—		(2,733)		158,889		Level 2	Corporate debt securities	158,491		—		(3,634)		154,857		Level 2
Government debt securities	Government debt securities	51,746		9		(883)		50,872		Level 2	Government debt securities	54,142		—		(1,417)		52,725		Level 2
Asset-backed securities	Asset-backed securities	15,907		—		(122)		15,785		Level 2	Asset-backed securities	10,990		—		(137)		10,853		Level 2
Total available-for-sale securities	Total available-for-sale securities	$	454,451	$	9	$	(3,738)	$	450,722		Total available-for-sale securities	$	422,475	$	—	$	(5,188)	$	417,287

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

The contractual maturities of marketable securities as of ~~June~~September 30, 2022 were as follows (in thousands):


		Amortized Cost		Fair Value			Amortized Cost		Fair Value
Due in one year or less	Due in one year or less	$	97,324	$	95,930	Due in one year or less	$	130,206	$	127,560
Due after one year to five years	Due after one year to five years	131,951		129,616		Due after one year to five years	93,417		90,875
Total marketable securities	Total marketable securities	$	229,275	$	225,546	Total marketable securities	$	223,623	$	218,435

Inventory

Inventory was comprised of the following (in thousands):


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Purchased materials	Purchased materials	$	28,291	$	31,954	Purchased materials	$	33,418	$	31,954
Work in progress	Work in progress	21,846		14,052		Work in progress	26,157		14,052
Finished goods	Finished goods	20,509		13,960		Finished goods	19,054		13,960
Inventory	Inventory	$	70,646	$	59,966	Inventory	$	78,629	$	59,966

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Accrued Compensation and Related Benefits

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


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Accrued payroll and related costs	Accrued payroll and related costs	$	3,450	$	3,978	Accrued payroll and related costs	$	3,797	$	3,978
Employee stock purchase program liability	Employee stock purchase program liability	754		1,693		Employee stock purchase program liability	1,812		1,693
Accrued bonus	Accrued bonus	11,294		16,558		Accrued bonus	14,278		16,558
Accrued commissions	Accrued commissions	4,055		3,417		Accrued commissions	3,055		3,417
Accrued acquisition-related compensation	Accrued acquisition-related compensation	2,156		4,430		Accrued acquisition-related compensation	3,766		4,430
Accrued vacation	Accrued vacation	1,403		1,172		Accrued vacation	1,089		1,172
Other	Other	393		378		Other	417		378
Accrued compensation and related benefits	Accrued compensation and related benefits	$	23,505	$	31,626	Accrued compensation and related benefits	$	28,214	$	31,626

Accrued Expenses and Other Current Liabilities

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


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Accrued legal and related costs	Accrued legal and related costs	$	2,313	$	2,425	Accrued legal and related costs	$	3,277	$	2,425
Accrued license fee	Accrued license fee	6,008		6,214		Accrued license fee	6,119		6,214

Accrued royalties for licensed technologies	Accrued royalties for licensed technologies	4,166		4,415		Accrued royalties for licensed technologies	4,245		4,415
Accrued property and equipment	Accrued property and equipment	25,833		15,361		Accrued property and equipment	29,290		15,361
Accrued professional services	Accrued professional services	4,332		8,593		Accrued professional services	4,447		8,593
Product warranties	Product warranties	1,430		994		Product warranties	1,968		994
Customer deposits	Customer deposits	888		954		Customer deposits	1,161		954
Taxes payable	Taxes payable	1,445		4,622		Taxes payable	3,118		4,622
Accrued lab supplies	Accrued lab supplies	1,884		2,056		Accrued lab supplies	1,266		2,056
Other	Other	4,923		5,275		Other	7,098		5,275
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	$	53,222	$	50,909	Accrued expenses and other current liabilities	$	61,989	$	50,909

Product Warranties

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


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
Beginning of period	Beginning of period	$	994	$	399	Beginning of period	$	994	$	399
Amounts charged to cost of revenue	Amounts charged to cost of revenue	1,983		1,242		Amounts charged to cost of revenue	3,590		2,113
Repairs and replacements	Repairs and replacements	(1,547)		(1,064)		Repairs and replacements	(2,616)		(1,688)
End of period	End of period	$	1,430	$	577	End of period	$	1,968	$	824

Revenue and Deferred Revenue

As of ~~June~~September 30, 2022, the aggregate amount of remaining performance obligations related to separately sold extended warranty service agreements, or allocated amounts for extended warranty service agreements bundled with sales of instruments, was ~~$9.3~~$9.4 million, of which approximately ~~$6.4~~$6.6 million is expected to be recognized to revenue in the next 12 months, with the remainder thereafter. The contract liabilities of $9.3 million and $7.7 million as of June 30, 2022 and December 31, 2021, respectively, consisted of deferred revenue related to extended warranty service agreements. Revenue recorded during the three

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

remainder thereafter. The contract liabilities of $9.4 million and ~~six months ended June~~$7.7 million as of September 30, 2022 and December 31, 2021, ~~included $1.3 million and $2.9 million, and, $1.1 million and $2.5 million,~~ respectively, consisted of ~~previously~~ deferred revenue ~~that was~~related to extended warranty service agreements.

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


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

The following table represents revenue by source for the periods indicated (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Instruments	Instruments	$	14,736	$	16,877	$	29,165	$	28,002	Instruments	$	20,899	$	17,121	$	50,064	$	45,123
Consumables	Consumables	97,934		97,146		195,884		190,225		Consumables	108,107		106,117		303,991		296,342
Services	Services	1,939		1,819		4,056		3,436		Services	2,066		2,059		6,122		5,495
Total revenue	Total revenue	$	114,609	$	115,842	$	229,105	$	221,663	Total revenue	$	131,072	$	125,297	$	360,177	$	346,960

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
United States	United States	$	69,373	$	64,001	$	126,814	$	114,307	United States	$	75,345	$	68,440	$	202,159	$	182,747
Europe, Middle East and Africa	Europe, Middle East and Africa	25,608		28,772		46,140		47,942		Europe, Middle East and Africa	27,927		25,819		74,067		73,761
China	China	9,087		12,874		29,847		36,514		China	15,773		19,063		45,620		55,577
Asia-Pacific (excluding China)	Asia-Pacific (excluding China)	9,026		8,431		22,543		19,635		Asia-Pacific (excluding China)	9,791		10,187		32,334		29,822
North America (excluding United States)	North America (excluding United States)	1,515		1,764		3,761		3,265		North America (excluding United States)	2,236		1,788		5,997		5,053
Total revenue	Total revenue	$	114,609	$	115,842	$	229,105	$	221,663	Total revenue	$	131,072	$	125,297	$	360,177	$	346,960

4.5. Commitments and Contingencies

Lease Agreements

The Company leases office, laboratory, manufacturing and distribution space in various locations worldwide. On November 6, 2020, the Company entered into a Master Lease Agreement ("MLA") to lease additional office building space near the Company's Pleasanton, California headquarters. The MLA consists of various lease components, a few of which commenced in the ~~six~~nine months ended ~~June~~September 30, 2022. The sole outstanding component is expected to commence in 2023 and is expected to terminate on June 30, 2033. Total undiscounted payments for the lease component commencing in fiscal year 2023 will be $14.0 million with an expected lease term of 10.5 years.

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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


		Operating Leases			Operating Leases
2022 (excluding the six months ended June 30, 2022)		$	5,852
2022 (excluding the nine months ended September 30, 2022)				2022 (excluding the nine months ended September 30, 2022)	$	2,424
2023	2023	14,920		2023	14,774
2024	2024	15,046		2024	14,891
2025	2025	13,908		2025	13,774
2026	2026	14,638		2026	14,481
Thereafter	Thereafter	61,684		Thereafter	61,452
Total lease payments	Total lease payments	$	126,048	Total lease payments	$	121,796
Less: imputed interest	Less: imputed interest	(27,031)		Less: imputed interest	(25,570)
Present value of operating lease liabilities	Present value of operating lease liabilities	$	99,017	Present value of operating lease liabilities	$	96,226
Operating lease liabilities, current	Operating lease liabilities, current	$	7,977	Operating lease liabilities, current	$	8,393
Operating lease liabilities, noncurrent	Operating lease liabilities, noncurrent	$	91,040	Operating lease liabilities, noncurrent	87,833
Total operating lease liabilities				Total operating lease liabilities	$	96,226

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

June 30,
2022

December 31, 2021

September 30,
2022

December 31, 2021

Weighted-average remaining lease term

8.5 years

8.7 years

Weighted-average remaining lease term

8.4 years

8.7 years

Weighted-average discount rate

5.5

5.4

Weighted-average discount rate

5.5

5.4

Litigation

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

Nanostring

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

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

On August 16, 2022, Nanostring filed a counterclaim in the CosMx Action alleging that the Company's Visium products infringe U.S. Patent No. 11,377,689. The Company filed its answer to Nanostring's counterclaim in the CosMx Action on August 30, 2022. Discovery and trial are consolidated with the Company's claims against Nanostring in the CosMx Action. The Company believes Nanostring's counterclaim in the CosMx Action is meritless and intends to vigorously defend itself.

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

On March 9, 2022, the Company filed suit in the Munich Regional Court in Germany alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe EP Patent No. ~~2794928B1.~~2794928B1 (the "Germany CosMx Action"). Nanostring ~~has not yet responded~~filed its statement of defense to the ~~complaint.~~Germany CosMx Action on August 26, 2022. A hearing on infringement is scheduled for March 2023 and a decision is expected around May 2023.

~~Table~~ On July 29, 2022, Nanostring filed a nullity action with the German Federal Patent Court challenging the validity of ~~Contents~~

~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

EP Patent No. 2794928B1. A preliminary decision in the nullity action is expected by February 2023.

Vizgen

In May 2022, the Company filed suit against Vizgen, Inc. ("Vizgen") in the U.S. District Court for the District of Delaware alleging that Vizgen’s MERSCOPE Platform and workflow and Vizgen’s Lab Services program, including associated instruments and reagents, infringe U.S. Patent Nos. 11,021,737, 11,293,051, 11,293,052, 11,293,054 and 11,299,767. On July 25, 2022, Vizgen filed a motion to dismiss the Company's claims for willful and indirect ~~infringement.~~infringement, which the Court denied on September 19, 2022. Discovery is in progress. A Markman hearing is scheduled for July 2023 and trial is scheduled for July 2024.

On August 30, 2022, Vizgen filed its answer and counterclaims alleging that the Company's forthcoming Xenium product infringes U.S. Patent No. 11,098,303. Vizgen also filed counterclaims alleging that the Company tortiously interfered with Vizgen's contractual and business relationship with Harvard and that the Company engaged in unfair practices under Massachusetts state law. The Company has not yet responded. The Company believes these claims are meritless and intends to vigorously defend itself.

Parse

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

5.6. Capital Stock

As of ~~June~~September 30, 2022, the number of shares of Class A common stock and Class B common stock issued and outstanding were ~~95,019,542~~95,561,247 and 18,867,255, respectively. ~~During~~

The following table represents the ~~three months ended June 30, 2022 and 2021 and during the six months ended June 30, 2022 and 2021, 579,210, 2,250,000, 779,210 and 2,400,000~~number of shares of Class B common stock ~~respectively, were~~ converted to shares of Class A common stock upon the election of the holders of such ~~shares.~~shares during the periods:


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

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

7. Equity Incentive Plans

Stock-based Compensation

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


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

Restricted Stock Units

Restricted stock unit activity for the nine months ended September 30, 2022 is as follows:


	Restricted Stock Units	Weighted-Average Grant Date Fair Value (per share)
Outstanding as of December 31, 2021	1,298,244	$	141.48
Granted	5,462,866	45.21
Vested	(495,552)	114.08
Cancelled	(454,836)	105.49
Outstanding as of September 30, 2022	5,810,722	$	56.13

Stock Options

Stock option activity for the nine months ended September 30, 2022 is as follows:


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

Market-based Performance Stock Awards (PSAs)

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

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

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10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

2019 Employee Stock Purchase Plan

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

During the ~~three~~nine months ended ~~June~~September 30, 2022 and 2021, 91,871 and ~~30,868~~30,980 shares of Class A common stock, respectively, were issued under the ESPP. ~~There were no~~No shares of Class A common stock were issued under the ESPP during the three months ended ~~March 31,~~September 30, 2022 ~~and~~or 2021. As of ~~June~~September 30, 2022, there were 2,965,685 shares available for issuance in connection under the ESPP.

~~Stock-based Compensation~~

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

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Cost of revenue $ 1,453 $ 841 $ 2,467 $ 1,305
Research and development 15,579 12,140 26,870 18,936
Selling, general and administrative 19,281 13,951 33,023 22,867
Total stock-based compensation expense $ 36,313 $ 26,932 $ 62,360 $ 43,108

~~Restricted Stock Units~~

~~Restricted stock unit activity for the six months ended June 30, 2022 is as follows:~~

Restricted Stock
Units Weighted-Average
Grant Date Fair Value
(per share)
Outstanding as of December 31, 2021 1,298,244 $ 141.48
Granted 1,734,841 71.67
Vested (301,496) 118.75
Cancelled (166,137) 113.63
Outstanding as of June 30, 2022 2,565,452 $ 98.75

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~~10x Genomics, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~Stock Options~~

~~Stock option activity for the six months ended June 30, 2022 is as follows:~~

Stock Options Weighted-Average
Exercise Price
Outstanding as of December 31, 2021 8,212,754 $ 29.28
Granted 1,067,902 68.02
Exercised (978,467) 10.70
Cancelled (142,509) 53.36
Outstanding as of June 30, 2022 8,159,680 $ 36.16

7.8. Net Loss Per Share

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

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Stock options to purchase common stock 8,159,680 10,042,162 8,159,680 10,042,162
Restricted stock units 2,565,452 1,340,188 2,565,452 1,340,188
Shares committed under ESPP 19,611 12,201 19,611 12,201
Shares subject to repurchase 6,250 37,500 6,250 37,500
Contingent restricted shares — 236,484 — 236,484
Total 10,750,993 11,668,535 10,750,993 11,668,535

~~8. Subsequent Event~~

On August 3, 2022, to decrease its costs and maintain a streamlined organization to support its business, the Company committed to a reduction in force that is expected to result in the termination of approximately 8% of the Company’s global workforce. In connection with the reduction in force, the Company currently estimates it will incur between approximately $5 million and $6 million of costs, consisting primarily of cash severance costs, which the Company expects to recognize in the third quarter of 2022. The estimates of costs and expenses that the Company expects to incur in connection with the workforce reduction are subject to a number of assumptions and actual results may differ materially. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the workforce reduction.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Stock options to purchase common stock	8,350,916	9,206,850	8,350,916	9,206,850
Restricted stock units	5,810,722	1,314,157	5,810,722	1,314,157
Shares committed under ESPP	74,835	29,178	74,835	29,178
Shares subject to repurchase	—	25,000	—	25,000
Contingent restricted shares	—	236,484	—	236,484
Total	14,236,473	10,811,669	14,236,473	10,811,669

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

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

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

Overview

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

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

Since our inception in 2012, we have incurred net losses in each year. Our net losses were ~~$64.5~~$41.9 million and ~~$106.9~~$148.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and ~~$11.1~~$17.2 million and ~~$22.6~~$39.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. As of ~~June~~September 30, 2022, we had an accumulated deficit of ~~$970.2 million,~~$1.0 billion, and, cash, cash equivalents and marketable securities totaling ~~$499.7~~$452.4 million. We expect to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

•attract, hire and retain qualified personnel;

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

•protect and defend our intellectual property;

•acquire businesses or technologies; and

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

Operational Effectiveness in the COVID-19 Environment

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

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~~COVID-19 related lockdowns in China negatively impacted our revenues in the quarter ended June 30,~~ 2022. We, our suppliers and our other partners also have encountered COVID-19 related challenges, including difficulties procuring equipment, materials and components necessary to develop, manufacture and distribute our products, but to date we have not experienced any material impacts as a result of such challenges.

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

Results of Operations


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Revenue	Revenue	$	114,609	$	115,842	$	229,105	$	221,663	Revenue	$	131,072	$	125,297	$	360,177	$	346,960
Cost of revenue	Cost of revenue	27,704		4,915		53,182		21,975		Cost of revenue	30,377		24,518		83,559		46,493
Gross profit	Gross profit	86,905		110,927		175,923		199,688		Gross profit	100,695		100,779		276,618		300,467
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	70,685		53,402		134,763		95,285		Research and development	67,290		54,582		202,053		149,867

Selling, general and administrative	Selling, general and administrative	79,337		68,703		146,012		125,607		Selling, general and administrative	73,401		62,076		219,413		187,683
Accrued contingent liabilities	Accrued contingent liabilities	—		(850)		—		(660)		Accrued contingent liabilities	—		—		—		(660)
Total operating expenses	Total operating expenses	150,022		121,255		280,775		220,232		Total operating expenses	140,691		116,658		421,466		336,890
Loss from operations	Loss from operations	(63,117)		(10,328)		(104,852)		(20,544)		Loss from operations	(39,996)		(15,879)		(144,848)		(36,423)
Other income (expense):	Other income (expense):									Other income (expense):
Interest income	Interest income	1,238		58		1,807		108		Interest income	2,025		49		3,832		157
Interest expense	Interest expense	(109)		(209)		(237)		(430)		Interest expense	(114)		(219)		(351)		(649)
Other (expense) income, net		(1,843)		521		(2,243)		(208)
Other expense, net										Other expense, net	(1,950)		(599)		(4,193)		(807)

Total other (expense) income		(714)		370		(673)		(530)
Total other expense										Total other expense	(39)		(769)		(712)		(1,299)
Loss before provision for income taxes	Loss before provision for income taxes	(63,831)		(9,958)		(105,525)		(21,074)		Loss before provision for income taxes	(40,035)		(16,648)		(145,560)		(37,722)
Provision for income taxes	Provision for income taxes	627		1,094		1,346		1,529		Provision for income taxes	1,879		523		3,225		2,052
Net loss	Net loss	$	(64,458)	$	(11,052)	$	(106,871)	$	(22,603)	Net loss	$	(41,914)	$	(17,171)	$	(148,785)	$	(39,774)

Comparison of the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021

Revenue


		Three Months Ended June 30,				Change				Six Months Ended June 30,				Change					Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(dollars in thousands)	2022		2021		$		%		2022		2021		$		%
Instruments	Instruments	$	14,736	$	16,877	$	(2,141)	(13)	%	$	29,165	$	28,002	$	1,163	4	%	Instruments	$	20,899	$	17,121	$	3,778	22	%	$	50,064	$	45,123	$	4,941	11	%
Consumables	Consumables	97,934		97,146		788		1		195,884		190,225		5,659		3		Consumables	108,107		106,117		1,990		2		303,991		296,342		7,649		3
Services	Services	1,939		1,819		120		7		4,056		3,436		620		18		Services	2,066		2,059		7		—		6,122		5,495		627		11
Total revenue	Total revenue	$	114,609	$	115,842	$	(1,233)	(1)	%	$	229,105	$	221,663	$	7,442	3	%	Total revenue	$	131,072	$	125,297	$	5,775	5	%	$	360,177	$	346,960	$	13,217	4	%

Revenue ~~decreased $1.2~~increased $5.8 million, or 1%5%, to ~~$114.6~~$131.1 million for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021. Instruments revenue ~~which includes sales of our Chromium instruments and Visium CytAssist, decreased $2.1~~increased $3.8 million, or ~~13%~~22%, to ~~$14.7~~$20.9 million for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021, primarily due to ~~lower~~higher volume of instruments sold. Consumables revenue increased ~~$0.8~~$2.0 million, or 1%2%, to ~~$97.9~~$108.1 million for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021, primarily driven by growth due to ~~increased usage by existing customers and~~ the addition of new customers, ~~largely~~partially offset by ~~decreased~~unfavorable currency fluctuations.

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demand due to limited laboratory productivity arising from the continued impact of the global COVID-19 pandemic, including lockdowns in China, delayed purchases by customers impacted by a previously disclosed process breakdown in our logistics cold-chain, execution challenges and unfavorable currency fluctuations.

Revenue increased ~~$7.4~~$13.2 million, or 3%4%, to ~~$229.1~~$360.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021. Instruments revenue increased ~~$1.2~~$4.9 million, or 4%11%, to ~~$29.2~~$50.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021 primarily due to higher ~~average selling prices for Chromium X series instruments compared to Chromium Controller instruments, partially offset by lower~~ volume of instruments sold. Consumables revenue increased ~~$5.7~~$7.6 million, or 3%, to ~~$195.9~~$304.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021 primarily driven by growth due to increased usage by existing customers and the addition of new customers, largely offset by decreased demand due to limited laboratory productivity arising from the continued impact of the global COVID-19 pandemic, including lockdowns in China, delayed purchases by customers impacted by a previously disclosed process breakdown in our logistics cold-chain, execution challenges and unfavorable currency fluctuations.

Cost of revenue, gross profit and gross margin


		Three Months Ended June 30,						Change				Six Months Ended June 30,						Change					Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change
(dollars in thousands)	(dollars in thousands)	2022			2021			$		%		2022			2021			$		%		(dollars in thousands)	2022			2021			$		%		2022			2021			$		%
Cost of revenue	Cost of revenue	$	27,704		$	4,915		$	22,789	464	%	$	53,182		$	21,975		$	31,207	142	%	Cost of revenue	$	30,377		$	24,518		$	5,859	24	%	$	83,559		$	46,493		$	37,066	80	%
Gross profit	Gross profit	$	86,905		$	110,927		$	(24,022)	(22)	%	$	175,923		$	199,688		$	(23,765)	(12)	%	Gross profit	$	100,695		$	100,779		$	(84)	—	%	$	276,618		$	300,467		$	(23,849)	(8)	%
Gross margin	Gross margin	76		%	96		%					77		%	90		%					Gross margin	77		%	80		%					77		%	87		%

Cost of revenue increased ~~$22.8~~$5.9 million, or ~~464%~~24%, to ~~$27.7~~$30.4 million for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021. The increase was primarily driven by higher manufacturing costs of $4.2 million due to increased sales and higher costs of newly introduced products, $0.9 million of higher warranty costs and $0.9 million of loss on a purchase commitment.

Cost of revenue increased $37.1 million, or 80%, to $83.6 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. The increase was primarily driven by a one-time reversal of $14.7 million of accrued royalties resulting from the Settlement and Patent Cross License Agreement (the "Bio-Rad Agreement") with Bio-Rad Laboratories ~~Inc.~~ during the ~~three~~nine months ended ~~June~~September 30, 2021, ~~$4.1~~$15.4 million from higher manufacturing costs due to increased sales and higher costs of newly introduced products, ~~$1.7~~$3.3 million of higher royalty expenses, ~~$1.5~~$2.4 million of higher inventory scrap and excess and obsolete inventory charges, and ~~$0.9~~$1.7 million of higher warranty costs.

Cost of revenue increased $31.2 million, or 142%, to $53.2 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase was primarily driven by a one-time reversal of $14.7 million of accrued royalties resulting from the Bio-Rad Agreement during the six months ended June 30, 2021, $11.3 million from higher manufacturing costs due to increased sales and higher costs of newly introduced products, $3.1 million of higher royalty expenses, $1.8 million of higher inventory scrap and excess and obsolete inventory charges, and $1.2 million of higher warranty costs, partially offset by a decrease of $1.0 million of costs related to ramping our second manufacturing facility.

We expect our gross margin will trend ~~slightly~~ lower ~~during the year~~ due in part to change in product mix with newly introduced products and the impacts of inflation and increased supply chain costs.

Operating expenses


		Three Months Ended June 30,				Change				Six Months Ended June 30,				Change					Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(dollars in thousands)	2022		2021		$		%		2022		2021		$		%
Research and development	Research and development	$	70,685	$	53,402	$	17,283	32	%	$	134,763	$	95,285	$	39,478	41	%	Research and development	$	67,290	$	54,582	$	12,708	23	%	$	202,053	$	149,867	$	52,186	35	%

Selling, general and administrative	Selling, general and administrative	79,337		68,703		10,634		15		146,012		125,607		20,405		16		Selling, general and administrative	73,401		62,076		11,325		18		219,413		187,683		31,730		17
Accrued contingent liabilities	Accrued contingent liabilities	—		(850)		850		(100)		—		(660)		660		(100)		Accrued contingent liabilities	—		—		—		N/A		—		(660)		660		(100)
Total operating expenses	Total operating expenses	$	150,022	$	121,255	$	28,767	24	%	$	280,775	$	220,232	$	60,543	27	%	Total operating expenses	$	140,691	$	116,658	$	24,033	21	%	$	421,466	$	336,890	$	84,576	25	%

Research and development expenses increased ~~$17.3~~$12.7 million, or ~~32%~~23%, to ~~$70.7~~$67.3 million for the three months ended ~~June~~September 30, 2022, as compared to the three months ended ~~June~~September 30, 2021. The increase was primarily driven by an increase in personnel expenses of ~~$11.0~~$8.2 million, including ~~$3.4~~$3.3 million in stock-based compensation expense ~~$3.6~~and $1.4 million in restructuring expense, $2.1 million of higher ~~allocated~~ costs for facilities and information technology to support operational expansion, and higher costs of laboratory materials and supplies ~~and expensed equipment of~~

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~~$2.0~~$2.1 million used to support our research and development ~~efforts, and higher consulting and professional services of $0.6 million for product development.~~efforts.

Research and development expenses increased ~~$39.5~~$52.2 million, or ~~41%~~35%, to ~~$134.8~~$202.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022, as compared to the ~~six~~nine months ended ~~June~~September 30, 2021. The increase was primarily driven by an increase in personnel expenses of ~~$22.4~~$30.6 million, including ~~$7.9~~$11.2 million in stock-based compensation expense and $1.4 million in restructuring expense, higher costs of laboratory materials and supplies ~~and expensed equipment~~ of ~~$8.1~~$10.1 million used to support our research and

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development efforts, ~~$6.8~~$8.9 million of higher ~~allocated~~ costs for facilities and information technology to support operational expansion, higher consulting and professional services of ~~$1.1~~$1.4 million for product development, and $0.9 million of higher depreciation.

~~We expect our research development activities and expenditures to continue to increase in the third quarter of 2022 and beyond as we increase our investment to support new and existing projects.~~

Selling, general and administrative expenses increased ~~$10.6~~$11.3 million, or ~~15%~~18%, to ~~$79.3~~$73.4 million for the three months ended ~~June~~September 30, 2022, as compared to the three months ended ~~June~~September 30, 2021. The increase was primarily driven by increased personnel expenses of ~~$15.2~~$11.3 million, including ~~$5.3~~$3.9 million in stock-based compensation expense ~~$2.3~~and $2.5 million ~~of marketing expenses and $0.6~~in restructuring expense, $1.7 million of higher ~~allocated~~outside legal expenses, and $1.0 million of higher costs for facilities and information technology to support operational expansion, partially offset by decreased marketing expenses related to conferences and seminars of $2.4 million.

Selling, general and administrative expenses increased $31.7 million, or 17%, to $219.4 million for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021. The increase was primarily driven by increased personnel expenses of $41.0 million, including $14.1 million in stock-based compensation expense and $2.5 million in restructuring expense, $3.0 million of higher costs for facilities and information technology to support operational expansion, partially offset by decreased outside legal expenses of ~~$6.0~~$11.0 million and ~~$1.6~~$3.0 million of consulting and professional services.

~~Selling, general~~We expect our operating expenditures to continue to increase in the fourth quarter of 2022 and ~~administrative expenses increased $20.4 million, or 16%, to $146.0 million for the six months ended June 30, 2022~~beyond as ~~compared to the six months ended June 30, 2021. The~~we increase was primarily driven by increased personnel expenses of $29.8 million, including $10.2 million in stock-based compensation expense, $3.0 million of higher marketing expenses related to conferences and seminars, and $1.9 million of higher allocated costs for facilities and information technologyour investment to support ~~operational expansion, partially offset by decreased outside legal expenses of $12.6 million~~new and ~~$2.4 million of consulting~~existing research and ~~professional services.~~

~~On August 3, 2022, to decrease our costs~~development projects and maintain a streamlined organization to support our business, we committed to a reduction in force that is expected to result in the termination of approximately 8% of our global workforce. In connection with the reduction in force, we currently estimate that we will incur between approximately $5 millionincentivize and ~~$6 million of costs, consisting primarily of cash severance costs,~~retain key talent, which we expect to ~~recognize~~result in ~~the third quarter of 2022. We expect to benefit from the cost savings arising from the reduction~~increased stock-based compensation expense in work force commencing from the fourth quarter of 2022. The estimates of costs and expenses that we expect to incur in connection with the workforce reduction are subject to a number of assumptions and actual results may differ materially. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the workforce reduction.future periods.

Other ~~(expense) income,~~expense, net


		Three Months Ended June 30,				Change				Six Months Ended June 30,				Change					Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(dollars in thousands)	(dollars in thousands)	2022		2021		$		%		2022		2021		$		%		(dollars in thousands)	2022		2021		$		%		2022		2021		$		%
Interest income	Interest income	$	1,238	$	58	$	1,180	2,034	%	$	1,807	$	108	$	1,699	1,573	%	Interest income	$	2,025	$	49	$	1,976	4,033	%	$	3,832	$	157	$	3,675	2,341	%
Interest expense	Interest expense	(109)		(209)		100		(48)		(237)		(430)		193		(45)		Interest expense	(114)		(219)		105		(48)		(351)		(649)		298		(46)
Other (expense) income, net		(1,843)		521		(2,364)		(454)		(2,243)		(208)		(2,035)		978
Other expense, net																		Other expense, net	(1,950)		(599)		(1,351)		226		(4,193)		(807)		(3,386)		420

Total other (expense) income		$	(714)	$	370	$	(1,084)	(293)	%	$	(673)	$	(530)	$	(143)	27	%
Total other expense																		Total other expense	$	(39)	$	(769)	$	730	(95)	%	$	(712)	$	(1,299)	$	587	(45)	%

Interest income increased by ~~$1.2~~$2.0 million for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021. Interest income increased by ~~$1.7~~$3.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021. The increases for the three and ~~six~~nine ended ~~June~~September 30, 2022 as compared to the corresponding prior year periods were primarily due to interest income generated from our cash equivalents and marketable securities during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and an increase in interest rates.

Interest expense decreased by $0.1 million, or 48% for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021. Interest expense decreased by ~~$0.2~~$0.3 million, or ~~45%~~46% for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021. The decreases for the three and ~~six~~nine months ended ~~June~~September 30, 2022 were driven primarily by lower interest expense recognized on accrued license fees.

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The change in other ~~(expense) income,~~expense, net for the three and ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the three and ~~six~~nine months ended ~~June~~September 30, 2021 was driven by realized and unrealized losses from foreign currency rate measurement fluctuations.

Provision for Income Taxes

The Company's provision for income taxes was ~~$0.6~~$1.9 million and ~~$1.3~~$3.2 million, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and ~~$1.1~~$0.5 million and ~~$1.5~~$2.1 million, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2021. The provision for income taxes consists primarily of foreign taxes. Deferred tax assets related to our domestic operations are fully offset by a valuation allowance.

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Liquidity and Capital Resources

As of ~~June~~September 30, 2022, we had ~~$274.2~~$234.0 million in cash and cash equivalents which were primarily held in U.S. bank deposit accounts and money market funds ~~$225.5~~and $218.4 million in marketable ~~securities and an accumulated deficit of $970.2 million.~~securities. Short-term restricted cash of $0.5 million and long-term restricted cash of $7.1 million primarily serves as collateral for outstanding letters of credit for facilities. We have generated negative cumulative cash flows from operations since inception through the ~~six~~nine months ended ~~June~~September 30, 2022, and we have generated losses from operations since inception as reflected in our accumulated deficit of ~~$970.2 million.~~$1.0 billion.

We currently anticipate making aggregate capital expenditures of between approximately ~~$140~~$80 million and ~~$150~~$90 million during the next 12 months, approximately two thirds of which we expect to incur for construction costs of the facilities on our property in Pleasanton, California, as well as other global facilities and equipment to be used for manufacturing and research and development.

Our future capital requirements will depend on many factors including our revenue growth rate, research and development efforts, investments in or acquisitions of complementary or enhancing technologies or businesses, the impacts of the COVID-19 pandemic, the timing and extent of additional capital expenditures to invest in existing and new facilities, the expansion of sales and marketing and international activities and the introduction of new products. We take a long-term view in growing and scaling our business and we regularly review acquisition and investment opportunities, and we may in the future enter into arrangements to acquire or invest in businesses, real estate, services and technologies, including intellectual property rights, and any such acquisitions or investments could significantly increase our capital needs. We regularly review opportunities that meet our long-term growth objectives.

While we expect to continue to incur operating losses for the foreseeable future due to the investments we intend to make, we believe that our existing cash and cash equivalents and cash generated from sales of our products will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We intend to continue to evaluate market conditions and may in the future pursue additional sources of funding, such as mortgage or other financing, to further enhance our financial position and to execute our business strategy. In addition, should prevailing economic, financial, business or other factors adversely affect our ability to meet our operating cash requirements, we could be required to obtain funding though traditional or alternative sources of financing. We cannot be certain that additional funds would be available to us on favorable terms when required, or at all.

Sources of liquidity

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

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


		Six Months Ended June 30,					Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2022		2021
Net cash (used in) provided by:	Net cash (used in) provided by:					Net cash (used in) provided by:
Operating activities	Operating activities	$	(37,765)	$	(962)	Operating activities	$	(47,329)	$	(27,178)
Investing activities	Investing activities	(285,085)		(58,884)		Investing activities	(317,715)		(79,111)
Financing activities	Financing activities	8,777		19,711		Financing activities	10,816		26,394
Effect of exchange rates on changes in cash, cash equivalents, and restricted cash		(210)		199
Effect of exchange rate changes on cash, cash equivalents, and restricted cash						Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(295)		316
Net decrease in cash, cash equivalents, and restricted cash	Net decrease in cash, cash equivalents, and restricted cash	$	(314,283)	$	(39,936)	Net decrease in cash, cash equivalents, and restricted cash	$	(354,523)	$	(79,579)

Operating activities

The net cash used in operating activities of ~~$37.8~~$47.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022 was primarily due to a net loss of ~~$106.9~~$148.8 million, net cash outflow from changes in operating assets and liabilities of ~~$10.1~~$20.1 million, partially offset by stock-based compensation expense of ~~$62.4~~$95.9 million, depreciation and amortization of ~~$12.7~~$18.8 million, amortization of leased

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right-of-use assets of ~~$3.7~~$5.7 million, ~~and~~ amortization of premium and accretion of discount on marketable securities, net of $0.7 million, and loss on disposal of property and equipment of $0.5 million. The net cash outflow from operating assets and liabilities was primarily due to an increase in inventory of ~~$11.1~~$19.8 million due to ~~the timing~~ramp-up of inventory ~~purchases including advance purchases of inventory due to~~for anticipated demand and supply chain management, a decrease of $4.6 million due to payment of operating lease liabilities, a decrease in accrued compensation and other related benefits of ~~$8.0~~$3.2 million due to the prior year annual bonus payments, a decrease in other noncurrent liabilities of $3.0 million, and an increase in prepaid expenses and other current assets of ~~$5.3 million and a decrease in accrued expenses and other current liabilities of $4.9 million due to the timing of payments including license fees.~~$2.5 million. The net cash outflow from operating assets and liabilities was partially offset by an increase in accounts payable of ~~$10.3~~$6.1 million due to timing of vendor payments, an increase in accrued expenses and other current liabilities of $2.9 million, an increase in deferred revenue of $1.8 million, and a decrease in accounts receivable of ~~$9.0~~$1.7 million due to timing of ~~collections and an increase in deferred revenue of $1.7 million.~~collections.

The net cash used in operating activities of ~~$1.0~~$27.2 million for the ~~six~~nine months ended ~~June~~September 30, 2021 was due primarily to a net loss of ~~$22.6~~$39.8 million, net cash outflow from changes in operating assets and liabilities of ~~$35.2~~$77.5 million, partially offset by adjustments for stock-based compensation expense of ~~$43.1~~$69.1 million, depreciation and amortization of ~~$9.6~~$15.3 million and amortization of leased right-of-use assets of ~~$4.0~~$5.6 million. The net cash outflow from operating assets and liabilities was primarily due to a decrease in accrued contingent liabilities of ~~$14.7~~$44.2 million, ~~resulting~~of which $29.4 million was paid as cash settlement arising from the Bio-Rad Agreement, an increase in accounts receivable of $27.2 million due to increase in sales and timing of collections, an increase in inventory of ~~$14.2~~$21.3 million due to the timing of inventory purchases including advance purchases of inventory due to anticipated demand, ~~an increase in accounts receivable of $7.8 million due to timing of collections,~~ a decrease in accrued expenses and other current liabilities of ~~$6.5~~$2.5 million due to the timing of payments including license fees, a decrease in other noncurrent liabilities of ~~$4.3~~$4.1 million, an increase in prepaid expenses and other current assets of ~~$1.1~~$1.2 million and a decrease of ~~$3.2~~$2.5 million due to payment of operating lease liabilities. The net cash outflow from operating assets and liabilities was partially offset by an increase in accounts payable of ~~$9.7~~$12.2 million due to timing of vendor payments and an increase in accrued compensation and other related benefits of ~~$5.7~~$11.9 million.

Investing activities

The net cash used in investing activities of ~~$285.1~~$317.7 million in the ~~six~~nine months ended ~~June~~September 30, 2022 was due to purchases of marketable securities of ~~$271.5~~$282.9 million and property and equipment of ~~$55.4~~$91.9 million, and payment of acquisition-related holdback cash of $1.5 million, partially offset by proceeds from sales and maturities of marketable securities of ~~$32.7~~$41.4 million and ~~$9.1~~$17.2 million, respectively.

The net cash used in investing activities of ~~$58.9~~$79.1 million in the ~~six~~nine months ended ~~June~~September 30, 2021 was due to purchases of property and equipment of ~~$53.4~~$73.7 million including the purchase of land for $28.1 million, and cash paid for the acquisition of Tetramer Shop ApS of $5.5 million.

Financing activities

The net cash provided by financing activities of ~~$8.8~~$10.8 million in the ~~six~~nine months ended ~~June~~September 30, 2022 was primarily from proceeds of ~~$14.2~~$16.2 million from the issuance of common stock from the exercise of stock options and employee stock purchase plan purchases partially offset by payments on financing arrangements of $5.4 million.

The net cash provided by financing activities of ~~$19.7~~$26.4 million in the ~~six~~nine months ended ~~June~~September 30, 2021 was primarily from proceeds of ~~$24.7~~$31.4 million from the issuance of common stock from the exercise of stock options and employee stock purchase plan purchases partially offset by payments on financing arrangements of $5.0 million.

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Critical Accounting Estimates

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

There have been no significant changes in our critical accounting policies and estimates during the three and ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the critical accounting policies and estimates disclosed in the section titled ~~“Management’s~~

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

Stock-Based Compensation

In the three months ended September 30, 2022, we started to ~~Note 2~~issue market-based performance stock awards ("PSAs") comprising of performance stock options and performance restricted stock units. The PSAs each vest in equal installments upon the achievement of escalating stock price thresholds of $60, $80 and $105, respectively, calculated based on 20 consecutive days of trading at each respective threshold. The escalating stock price thresholds can be met any time prior to ~~our unaudited condensed consolidated financial statements~~the fourth anniversary of the date of grant. We estimated the value of the PSA awards granted in ~~this Quarterly Report.~~the three months ended September 30, 2022 to be approximately $16.0 million using a Monte Carlo simulation model, using assumptions including volatility, risk-free interest rate, cost of equity and dividends. We will recognize the compensation expense over the derived service period using the accelerated attribution method commencing on the grant date. The derived service period is the median duration of the successful stock price paths to meet the escalating stock price thresholds as simulated in the Monte Carlo valuation model. If the related market condition is achieved earlier than its estimated derived service period, the stock-based compensation expense will be accelerated, and a cumulative catch-up expense will be recorded during the period in which the market condition is met.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Interest Rate Risk

During the three and ~~six~~nine months ended ~~June~~September 30, 2022, we invested in debt securities which were designated as available-for-sale. Our marketable securities as of ~~June~~September 30, 2022 was ~~$225.5~~$218.4 million.

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio comprising of marketable securities. We invest in a number of securities including corporate bonds, U.S. agency notes, asset-backed securities, commercial paper, U.S. treasuries and money market funds. We attempt to ensure the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in high grade investment securities. The fair market value of our fixed rate securities may be adversely impacted by increases in interest rates while income earned may decline as a result of decreases in interest rates. A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to rates at ~~June~~September 30, 2022 would have affected the fair value of our investment portfolio by approximately ~~$2.3~~$1.9 million.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of ~~June~~September 30, 2022.

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Changes in Internal Control over Financial Reporting

There ~~was not any change~~have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended ~~June~~September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2325

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10x Genomics, Inc.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

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

Nanostring

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

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

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

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

On March 9, 2022, we filed suit in the Munich Regional Court in Germany alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe EP Patent No. ~~2794928B1.~~2794928B1 (the "Germany CosMx Action"). Nanostring ~~has not yet responded~~filed its statement of defense to the ~~complaint.~~Germany CosMx Action on August 26, 2022. A hearing on infringement is scheduled for March 2023 and a decision is expected around May 2023. On July 29, 2022, Nanostring filed a nullity action with the German Federal Patent Court challenging the validity of EP Patent No. 2794928B1. A preliminary decision in the nullity action is expected by February 2023.

Vizgen

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

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

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

Parse

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

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

Item 1A. Risk Factors.

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

Item 5. Other Information

On October 28, 2022, the Company adopted Amended and Restated Bylaws (the “Bylaws”), effective as of that date. Amendments contained in the Bylaws include the addition of language to address the adoption by the Securities and Exchange Commission of universal proxy rules requiring any stockholder submitting notice of nomination to use a proxy card color other than white and updates to provisions relating to adjournment procedures and lists of stockholders entitled to vote at stockholder meetings, each to align with recent amendments to the Delaware General Corporation Law, as amended, or to address certain administrative and other nonmaterial matters. The foregoing summary and description of the provisions of the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Bylaws, a copy of which is filed as Exhibit 3.2 with this Quarterly Report on Form 10-Q and is incorporated herein by reference.

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Item 6. Exhibits.

Exhibit

Number

Exhibit

Number

Incorporated by Reference

Exhibit

Number

Incorporated by Reference

Exhibit Title

Form

File No.

Exhibit

Filing Date

Exhibit Title

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation of the Registrant.

8-K

001-39035

3.1

9/16/2019

3.1

Amended and Restated Certificate of Incorporation of the Registrant.

8-K

001-39035

3.1

9/16/2019

3.2

Amended and Restated Bylaws of the Registrant.

8-K

001-39035

3.1

3/26/2020

3.2

Amended and Restated Bylaws of the Registrant.

4.1

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

S-1

333-233361

4.2

8/19/2019

4.1

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

S-1

333-233361

4.2

8/19/2019

10.1+

Employment Offer Letter by and between the Registrant and James Wilbur dated July 12, 2022 .

10.1+

2019 Omnibus Incentive Plan Stock Option Award Notice and Agreement .

10.2+

2019 Omnibus Incentive Plan Restricted Stock Unit Award Notice and Agreement .

31.1

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

31.1

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

31.2

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

31.2

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

32.1*

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

32.1*

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

32.2*

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

32.2*

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

101.INS

Inline XBRL Instance Document.

101.INS

Inline XBRL Instance Document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

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

104

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

+ Management contract or compensatory plan or arrangement.

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

2528

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Signatures

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


	10x Genomics, Inc.

Date: ~~August 8,~~November 2, 2022	By:	/s/ Serge Saxonov
		Serge Saxonov Chief Executive Officer and Director (Principal Executive Officer)

Date: ~~August 8,~~November 2, 2022	By:	/s/ Justin J. McAnear
		Justin J. McAnear Chief Financial Officer (Principal Financial and Accounting Officer)

2629


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	78
	Notes to Condensed Consolidated Financial Statements	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1619
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2225
Item 4.	Controls and Procedures	2225
PART II.	OTHER INFORMATION	2426
Item 1.	Legal Proceedings	2426
Item 1A.	Risk Factors	2427
Item 5 .	Other Information	27
Item 6.	Exhibits	2528
	Signatures	2629