10x Genomics Inc

Previous wording

Since our inception in 2012, we have incurred net losses in each year. Our net losses were $59.9 million and $50.7 million for the three months ended March 31, 2024 and March 31, 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $1.3 billion and cash, cash equivalents and marketable securities totaling $371.8 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 in connection with our ongoing activities, as we:

Current wording

Since our inception in 2012, we have incurred net losses in each year. Our net losses were $37.9 million and $97.8 million for the three and six months ended June 30, 2024 and $62.4 million and $113.2 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $1.4 billion and cash, cash equivalents and marketable securities totaling $380.1 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 in connection with our ongoing activities, as we:

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Revenue increased $6.7 million, or 5%, to $141.0 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Instruments revenue increased $6.3 million, or 33%, to $25.5 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to higher volume of Spatial instruments sold. Chromium instruments revenue decreased $3.8 million, or 32%, to $7.9 million primarily due to lower volume of Chromium instruments sold. Consumables revenue decreased $2.0 million, or 2%, to $110.3 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily driven by lower Chromium consumables sales.

Current wording

Revenue increased $6.3 million, or 4%, to $153.1 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Instruments revenue decreased $7.1 million, or 23%, to $23.9 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to lower volume of Chromium and Spatial instruments sold. Consumables revenue increased $10.9 million, or 10%, to $123.4 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily driven by higher Spatial consumables sales.

Previous wording

Cost of revenue increased $12.2 million, or 34%, to $48.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was primarily driven by higher manufacturing costs of $10.5 million due to increased sales and higher costs associated with newly introduced products and $2.0 million of higher warranty charges. Gross margin decreased by 7% percentage points to 66% primarily due to change in product mix driven by Xenium instruments.

Current wording

Cost of revenue increased $13.9 million, or 17%, to $97.0 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was primarily driven by higher manufacturing costs of $12.7 million due to increased sales and higher costs of newly introduced products and $2.9 million of higher warranty charges, partially offset by lower inventory write-downs of $1.8 million. Gross margin percentage decreased by 3% points to 67% primarily due to change in product mix and higher royalties.

Previous wording

We expect our gross margin to trend lower due in part to product mix and the impact of royalty obligations which vary by product. In particular, the Xenium instrument currently carries a significantly lower margin than our other instruments. We believe that potential increases for average selling price, as well as potential opportunities for cost reductions due to economies of scale, will improve instrument margin over the long term.

Current wording

We expect our gross margin to continue to fluctuate due to product mix and the impact of royalty obligations which vary by product.

Previous wording

Selling, general and administrative expenses increased $2.5 million, or 3%, to $85.8 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase was primarily driven by $5.9 million of increased outside legal expenses and $2.0 million of higher costs for facilities and information technology to support operational expansion, partially offset by a decrease in personnel expenses of $5.6 million including a decrease of $5.7 million in stock-based compensation expense. During the three months ended March 31, 2024, we recorded impairment charges of $2.1 million related to computer equipment and software of which $1.1 million was classified as selling, general and administrative expenses in our condensed consolidated statement of operations.

Current wording

Selling, general and administrative expenses decreased $6.0 million, or 3%, to $168.8 million for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The decrease was primarily driven by lower personnel expenses of $12.4 million, including a decrease of $11.6 million in stock-based compensation expense, a decrease in marketing expenses related to conferences and seminars of $2.1 million and a decrease in facilities and information technology expenses supporting operational expansion of $1.5 million, partially offset by an increase in outside legal expenses of $9.4 million. Facilities and Information Technology costs includes a one-time lease impairment charge of $2.8 million in the six months ended June 30, 2023. During the six months ended June 30, 2024, the Company recorded impairment charges of $2.1 million related to computer equipment and software of which $1.1 million was classified as selling, general and administrative expenses in the condensed consolidated statement of operations. The impairment charge was triggered by a decision to discontinue a software project.

Previous wording

Interest income increased by $0.9 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was primarily due to interest income generated from our cash equivalents and marketable securities during the three months ended March 31, 2024 reflecting an increase in interest rates.

Current wording

Interest income increased by $0.6 million or 15% to $4.7 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Interest income increased by $1.5 million, or 19%, to $9.5 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was primarily due to interest income generated from our cash equivalents and marketable securities during the three and six months ended June 30, 2024 reflecting an increase in interest rates.

Previous wording

Other expense, net decreased by $0.5 million, or 31% for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease was driven by lower net realized and unrealized losses from foreign currency rate measurement fluctuations.

Current wording

Other expense, net decreased by $1.4 million, or 96% to $0.1 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Other expense, net decreased by $1.9 million, or 64% to $1.1 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The decrease was driven by realized and unrealized losses from foreign currency rate measurement fluctuations.

Previous wording

The Company’s provision for income taxes was $2.1 million and $1.1 million, respectively, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase in the provision for income taxes was primarily due to higher foreign income. Deferred tax assets related to our domestic operations are fully offset by a valuation allowance.

Current wording

The Company’s provision for income taxes was $0.8 million and $3.0 million, respectively, for the three and six months ended June 30, 2024, and $1.6 million and $2.7 million, respectively, for the three and six months ended June 30, 2023. The decrease of $0.8 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 is primarily due to lower foreign income. The provision for income taxes remained flat for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Deferred tax assets related to our domestic operations are fully offset by a valuation allowance.

Previous wording

As of March 31, 2024, we had $371.8 million in cash and cash equivalents and marketable securities. We have generated negative cumulative cash flows from operations since inception through March 31, 2024, and we have generated losses from operations since inception as reflected in our accumulated deficit of $1.3 billion.

Current wording

As of June 30, 2024, we had $380.1 million in cash and cash equivalents and marketable securities. We have generated negative cumulative cash flows from operations since inception through June 30, 2024, and we have generated losses from operations since inception as reflected in our accumulated deficit of $1.4 billion.

Previous wording

The net cash used in operating activities of $15.7 million for the three months ended March 31, 2024 was primarily due to a net loss of $59.9 million, net cash outflow from changes in operating assets and liabilities of $6.3 million, primarily offset by stock-based compensation expense of $36.1 million, depreciation and amortization of $9.2 million, lease and asset impairment charges of $2.5 million, amortization of leased right-of-use assets of $2.3 million, and other non-cash expenses of $0.4 million. The net cash outflow from operating assets and liabilities was primarily due to a decrease in accrued expenses and other current liabilities of $12.7 million primarily driven by a payment of $20.0 million related to purchase consideration, an increase in inventory of $9.9 million, a decrease in accrued compensation and other related benefits of $9.4 million related to the prior year annual bonus payments and a decrease in operating lease liability of $3.0 million. The net cash outflow from operating assets and liabilities was partially offset by an increase in accounts receivable of $23.5 million due to timing of collections, an increase in accounts payable of $4.6 million and an increase in deferred revenue of $2.1 million.

Current wording

The net cash used in operating activities of $8.2 million for the six months ended June 30, 2024 was primarily due to a net loss of $97.8 million, net cash outflow from changes in operating assets and liabilities of $10.4 million, primarily offset by stock-based compensation expense of $74.6 million, depreciation and amortization of $18.2 million, lease and asset impairment charges of $2.5 million, amortization of leased right-of-use assets of $4.2 million, and other non-cash expenses of $0.5 million. The net cash outflow from operating assets and liabilities was primarily due to a decrease in accrued expenses and other current liabilities of $12.1 million primarily driven by payments related to purchase consideration and royalty payments, an increase in inventory of $15.1 million, a decrease in accrued compensation and other related benefits of $10.0 million related to the prior year annual bonus payments and a decrease in operating lease liability of $5.6 million. The net cash outflow from operating assets and liabilities was partially offset by an increase in accounts receivable of $23.6 million due to timing of collections, an increase in accounts payable of $5.7 million and an increase in deferred revenue of $5.8 million.

Previous wording

The net cash used in operating activities of $4.1 million for the three months ended March 31, 2023 was primarily due to a net loss of $50.7 million, net cash outflow from changes in operating assets and liabilities of $6.0 million, primarily offset by stock-based compensation expense of $42.1 million, depreciation and amortization of $6.5 million, amortization of leased right-of-use assets of $2.1 million, realized losses on sale of marketable securities of $1.7 million, and other non-cash expenses of $0.2 million. The net cash outflow from operating assets and liabilities was primarily due to a decrease in accrued compensation and other related benefits of $15.1 million related to the prior year annual bonus payments, an increase in other noncurrent assets of $10.5 million primarily due to an upfront payment for an intellectual property license of $10.0 million, an increase in prepaid expenses and other current assets of $4.3 million, and a decrease in operating lease liability of $2.3 million. The net cash outflow from operating assets and liabilities was partially offset by a decrease of accounts receivable of $26.3 million due to timing of collections and an increase in deferred revenue of $1.1 million.

Current wording

The net cash used in operating activities of $15.7 million for the six months ended June 30, 2023 was primarily due to a net loss of $113.2 million, net cash outflow from changes in operating assets and liabilities of $15.9 million, primarily offset by stock-based compensation expense of $87.8 million, depreciation and amortization of $16.4 million, amortization of leased right-of-use assets of $4.1 million, lease impairment charges of $2.8 million, realized losses on sale of marketable securities of $1.7 million and other non-cash expenses of $0.6 million. The net cash outflow from operating assets and liabilities was primarily due to an increase in other noncurrent assets of $18.1 million primarily due to an upfront payment for an intellectual property license of $10.0 million and a legal security deposit of $7.8 million, a decrease in accrued compensation and other related benefits of $10.3 million primarily related to the prior year annual bonus payments, a decrease in operating lease liability of $4.5 million, an increase in inventory of $2.3 million, and a decrease in prepaid expenses and other current assets of $2.1 million. The net cash outflow from operating assets and liabilities was partially offset by a decrease of accounts receivable of $16.5 million due to timing of collections, an increase in deferred revenue of $2.9 million, and an increase in accounts payable of $1.3 million due to timing of vendor payments.

Previous wording

The net cash provided by investing activities of $10.6 million in the three months ended March 31, 2024 was due to proceeds from sales and maturities of marketable securities of $0.6 million and $13.0 million, respectively, partially offset by purchases of property and equipment of $2.9 million.

Current wording

The net cash provided by investing activities of $22.6 million in the six months ended June 30, 2024 was due to proceeds from sales and maturities of marketable securities of $3.6 million and $25.8 million, respectively, partially offset by purchases of property and equipment and intangible assets of $5.8 million and $1.0 million, respectively.

Previous wording

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

Current wording

The net cash provided by investing activities of $115.5 million in the six months ended June 30, 2023 was due to proceeds from sales and maturities of marketable securities of $94.9 million and $51.2 million, respectively, partially offset by purchases of property and equipment and intangible assets of $29.9 million and $0.7 million, respectively.

Previous wording

The net cash provided by financing activities of $1.6 million in the three months ended March 31, 2024 was primarily from proceeds related to the issuance of common stock from the exercise of stock options.

Current wording

The net cash provided by financing activities of $6.2 million in the six months ended June 30, 2024 was primarily from proceeds related to the issuance of common stock from the exercise of stock options and employee stock purchase plan.

Previous wording

The net cash used in financing activities of $3.4 million in the three months ended March 31, 2023 was primarily from proceeds of $2.4 million from the issuance of common stock from the exercise of stock options, partially offset by payments on financing arrangements of $5.8 million.

Current wording

The net cash provided by financing activities of $3.7 million in the six months ended June 30, 2023 was primarily from proceeds of $9.5 million from the issuance of common stock from the exercise of stock options and employee stock purchase plan, partially offset by payments on financing arrangements of $5.8 million.

Previous wording

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2024 as compared to the critical accounting policies and estimates disclosed in the section titled “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 15, 2024.

Current wording

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2024 as compared to the critical accounting policies and estimates disclosed in the section titled “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 15, 2024.