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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 001-39035

txg-20210930_g1.jpg
10x Genomics, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware45-5614458
(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 classTrading
Symbol
Name of each exchange
on which registered
Class A common stock, par value $0.00001 per shareTXGThe 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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  ☒
As of October 31, 2021, the registrant had 91,585,992 shares of Class A common stock, $0.00001 par value per share, outstanding and 20,121,465 shares of Class B common stock, $0.00001 par value per share, outstanding.


Table of Contents


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, 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 the negatives of these terms 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. 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 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 unprecedented and 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.



1


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.
2

10x Genomics, Inc.
PART I—FINANCIAL INFORMATION
Item 1.    Financial Statements.
10x Genomics, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
September 30,
2021
December 31,
2020
(Unaudited)(Note 1)
Assets
Current assets:
Cash and cash equivalents$600,440 $663,603 
Restricted cash28 16,567 
Accounts receivable, net78,430 51,208 
Inventory51,141 29,959 
Prepaid expenses and other current assets14,065 13,029 
Total current assets744,104 774,366 
Property and equipment, net142,589 72,840 
Restricted cash8,597 8,474 
Operating lease right-of-use assets60,715 46,983 
Goodwill4,511  
Other non-current assets30,056 26,678 
Total assets$990,572 $929,341 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$17,037 $4,709 
Accrued compensation and related benefits27,182 15,383 
Accrued expenses and other current liabilities46,187 43,453 
Deferred revenue5,505 4,472 
Operating lease liabilities4,464 5,936 
Accrued contingent liabilities 44,173 
Total current liabilities100,375 118,126 
Accrued license fee, noncurrent5,814 11,171 
Operating lease liabilities, noncurrent75,735 57,042 
Other noncurrent liabilities8,427 3,930 
Total liabilities190,351 190,269 
Commitments and contingencies (Note 6)


Stockholders’ equity:
Preferred stock  
Common stock2 2 
Additional paid-in capital1,644,897 1,544,218 
Accumulated deficit(844,872)(805,098)
Accumulated other comprehensive gain (loss)194 (50)
Total stockholders’ equity800,221 739,072 
Total liabilities and stockholders’ equity$990,572 $929,341 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

10x Genomics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenue$125,297 $71,817 $346,960 $186,627 
Cost of revenue24,518 14,411 46,493 39,571 
Gross profit100,779 57,406 300,467 147,056 
Operating expenses:
Research and development54,582 30,143 149,867 83,670 
In-process research and development 40,637  40,637 
Selling, general and administrative62,076 51,549 187,683 146,352 
Accrued contingent liabilities 332 (660)956 
Total operating expenses116,658 122,661 336,890 271,615 
Loss from operations(15,879)(65,255)(36,423)(124,559)
Other income (expense):
Interest income49 28 157 1,471 
Interest expense(219)(397)(649)(1,365)
Other (expense) income, net(599)361 (807)121 
Loss on extinguishment of debt   (1,521)
Total other expense(769)(8)(1,299)(1,294)
Loss before provision for income taxes(16,648)(65,263)(37,722)(125,853)
Provision for income taxes523 585 2,052 1,305 
Net loss$(17,171)$(65,848)$(39,774)$(127,158)
Other comprehensive income:
Foreign currency translation adjustment136 (366)244 (6)
Comprehensive loss$(17,035)$(66,214)$(39,530)$(127,164)
Net loss per share, basic and diluted$(0.15)$(0.65)$(0.36)$(1.28)
Weighted-average shares of common stock used in computing net loss per share, basic and diluted110,874,249 101,341,945 109,826,104 99,058,139 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

10x Genomics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
Common StockAdditional Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
SharesAmount
Balance as of December 31, 2020108,485,909 $2 $1,544,218 $(805,098)$(50)$739,072 
Issuance of Class A common stock related to equity awards1,102,618 — 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, 2021109,588,527 2 1,569,059 (816,649)48 752,460 
Issuance of Class A common stock related to equity awards1,151,392 — 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, 2021110,739,919 2 1,612,227 (827,701)58 784,586 
Issuance of Class A common stock related to equity awards797,529 — 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, 2021111,537,448 $2 $1,644,897 $(844,872)$194 $800,221 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.













5

10x Genomics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
Common StockAdditional Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
SharesAmount
Balance as of December 31, 201996,241,596 $2 $682,494 $(262,367)$(46)$420,083 
Issuance of Class A common stock related to equity awards1,903,612 — 3,283 — — 3,283 
Vesting of shares subject to repurchase, including early exercised options— — 122 — — 122 
Stock-based compensation— — 6,718 — — 6,718 
Net loss— — — (21,143)— (21,143)
Other comprehensive income— — — — 5 5 
Balance as of March 31, 202098,145,208 2 692,617 (283,510)(41)409,068 
Issuance of Class A common stock related to equity awards2,113,974 — 8,051 — — 8,051 
Vesting of shares subject to repurchase, including early exercised options— — 42 — — 42 
Stock-based compensation— — 13,920 — — 13,920 
Net loss— — — (40,167)— (40,167)
Other comprehensive income— — — — 355 355 
Balance as of June 30, 2020100,259,182 2 714,630 (323,677)314 391,269 
Sale of Class A common stock4,600,000 — 482,279 — — 482,279 
Issuance of Class A common stock related to equity awards740,794 — 3,920 — — 3,920 
Vesting of shares subject to repurchase, including early exercised options— — 42 — — 42 
Stock-based compensation— — 13,784 — — 13,784 
Net loss— — — (65,848)— (65,848)
Other comprehensive loss— — — — (366)(366)
Balance as of September 30, 2020105,599,976 $2 $1,214,655 $(389,525)$(52)$825,080 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

10x Genomics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended September 30,
20212020
Operating activities:
Net loss$(39,774)$(127,158)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization15,337 10,094 
Stock-based compensation expense69,058 34,357 
Loss on disposal of property and equipment66  
Loss on extinguishment of debt 1,521 
Accretion of discount on term loan 17 
Amortization of right-of-use assets5,593 3,511 
Changes in operating assets and liabilities:
Accounts receivable(27,216)(2,654)
Inventory(21,349)(9,848)
Prepaid expenses and other current assets(1,220)(3,363)
Other assets348 (2,574)
Accounts payable12,191 (3,307)
Accrued compensation and other related benefits11,868 (1,286)
Deferred revenue1,221 898 
Accrued contingent liabilities(44,173)8,900 
Accrued expenses and other current liabilities(2,545)9,464 
Operating lease liability(2,498)(3,093)
Other noncurrent liabilities(4,085)(3,202)
Net cash used in operating activities(27,178)(87,723)
Investing activities:
Acquisition of intangible assets(801)
Acquisition of business, net of cash acquired(5,451) 
Purchases of property and equipment(73,660)(15,327)
Net cash used in investing activities(79,111)(16,128)
Financing activities:
Payments on financing arrangement(5,028)(5,846)
Payments on term loans (31,256)
Proceeds from issuance of common stock from follow-on public offering, net of issuance costs 483,047 
Issuance of common stock from exercise of stock options and employee stock purchase plan purchases31,422 15,255 
Net cash provided by financing activities26,394 461,200 
Effect of exchange rates on changes in cash, cash equivalents, and restricted cash316 (144)
Net (decrease) increase in cash, cash equivalents, and restricted cash(79,579)357,205 
Cash, cash equivalents, and restricted cash at beginning of period688,644 476,493 
Cash, cash equivalents, and restricted cash at end of period$609,065 $833,698 
Supplemental disclosures of cash flow information:
Cash paid for interest$1,222 $1,670 
Cash paid for taxes$8,318 $224 




7

10x Genomics, Inc.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
(In thousands)
Nine Months Ended September 30,
20212020
Noncash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities$12,710 $14,183 
Right-of-use assets obtained in exchange for new operating lease liabilities$19,566 $10,883 
Contingent consideration payable from business acquisition$1,536 $ 
Deferred offering costs in accounts payable and accrued expenses and other current liabilities$ $768 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
o
1.    Description of Business and Basis of Presentation
Organization and Description of Business
10x Genomics, Inc. (the “Company”) was incorporated in the state of Delaware on July 2, 2012 and 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 “instruments,” and the Company’s proprietary microfluidic chips, slides, reagents and other consumables for both the Company’s Visium and Chromium 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 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 Canada, China, Denmark, Germany, Netherlands, Singapore, Sweden, the United States and the United Kingdom.
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, 2020 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, 2020 included in our Annual Report on Form 10-K filed with the SEC on February 26, 2021 (our "Annual Report").
2.    Summary of Significant Accounting Policies
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. As of September 30, 2021 and December 31, 2020, the Company held $548.0 million and $600.9 million in money market funds, respectively, with no unrealized gains or losses.
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.
9

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
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 identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, adjusted for outstanding shares that are subject to repurchase.
For the calculation of diluted net loss per share, basic net loss per share is adjusted by the effect of dilutive securities including awards under the Company’s equity compensation plans. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding. For periods in which the Company reports net losses, diluted net loss per share is the same as basic net loss per share because potentially dilutive shares of common stock are not assumed to have been issued if their effect is anti-dilutive.
3.    Acquisition
On January 8, 2021 (the "acquisition date"), the Company purchased 100% of the outstanding shares of Tetramer Shop ApS (“Tetramer Shop”), a privately held company based in Copenhagen, Denmark, for a total cash consideration of $8.5 million, net of cash acquired of $0.2 million and including $1.5 million of estimated fair value of contingent consideration. The contingent consideration is recorded as a liability and is payable upon the successful transfer of Tetramer Shop's technology to the Company within two years of the acquisition date.
Tetramer Shop is a life sciences technology company which develops and provides reagents for precise monitoring of antigen-specific T-cells in research and development. The Company acquired Tetramer Shop for its expertise in building empty, loadable major histocompatibility complex (MHC) molecules.
The acquisition was accounted for using the acquisition method of accounting, with Tetramer Shop treated as the acquiree. The acquired assets, including identified intangible assets, and liabilities were recorded at their respective fair values with an amount recorded to goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets. The fair values assigned to the assets acquired and liabilities assumed were based on management’s assumptions as of the reporting date.
Our condensed consolidated statements of income include the financial results of Tetramer Shop subsequent to the acquisition date. Revenue related to Tetramer Shop since the acquisition date was included in our condensed consolidated statements of income and was not material.
10

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The estimated fair value of assets acquired, including goodwill and intangibles, and liabilities assumed as of the acquisition date were as follows (in thousands):
Amount
Cash and cash equivalents$224 
Other current assets45 
Property and equipment, net38 
Tangible assets acquired307 
Accrued expenses(555)
Other current liabilities(97)
Deferred tax liability - non-current(1,131)
Total net tangible assets acquired and liabilities assumed(1,476)
Intangible assets5,640 
Goodwill4,511 
Net assets acquired$8,675 

The intangible assets as of the acquisition date included (in thousands):
AmountWeighted Average Useful Life (in years)
Developed technology$5,500 10
Customer relationships140 3
$5,640 
The fair value of the intangible assets acquired in connection with the acquisition was determined using either the income or replacement cost methodologies. The developed technology and customer relationships will be amortized over ten years and three years, respectively.

Identifiable Intangible Assets
Valuation of intangible assets involves multiple assumptions. The key assumptions are described below.
Developed technology acquired primarily consists of existing technology related to developing reagents for precise monitoring of antigen-specific T cells in research and development, enabling the Company to strengthen its efforts in immunology. The Company valued the developed technology using the multi-period excess earnings method under the income approach. Using this approach, the estimated fair values were calculated using expected future cash flows discounted to their net present values at an appropriate risk-adjusted rate of return.

Goodwill
The excess of purchase price over the fair value assigned to the assets acquired and liabilities assumed represents the amount of goodwill resulting from the acquisition. We do not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the acquisition was recorded as a non-current asset and is not amortized but is subject to an annual review for impairment.
4.    Other Financial Statement Information
Inventory
Inventory was comprised of the following (in thousands):
11

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30,
2021
December 31,
2020
Purchased materials$25,995 $9,930 
Work in progress12,742 9,312 
Finished goods12,404 10,717 
Inventory$51,141 $29,959 
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
September 30,
2021
December 31,
2020
Land$35,692 $ 
Laboratory equipment and machinery 42,017 30,010 
Computer equipment and software11,844 5,783 
Furniture and fixtures5,647 5,887 
Leasehold improvements52,941 42,068 
Construction in progress38,842 19,594 
Total property and equipment186,983 103,342 
Less: accumulated depreciation and amortization (44,394)(30,502)
Property and equipment, net$142,589 $72,840 
Intangible Assets, Net
Intangible assets, net, which are recorded within other assets in the condensed consolidated balance sheets, consisted of the following (dollars in thousands):
September 30, 2021December 31, 2020
Remaining Useful Life in YearsGross
Carrying
Amount
Accumulated
Amortization
Intangibles,
Net
Remaining Useful Life in YearsGross
Carrying
Amount
Accumulated
Amortization
Intangibles,
Net
Technology licenses13.0$22,504 $(3,123)$19,381 13.7$22,504 $(1,973)$20,531 
Developed technology9.35,500 (413)5,087 —    
Customer relationships3.0945 (280)665 3.9805 (111)694 
Trademarks0.1204 (193)11 0.9204 (142)62 
Assembled workforce4.01,128 (231)897 4.81,128 (61)1,067 
Total intangible assets, net$30,281 $(4,240)$26,041 $24,641 $(2,287)$22,354 
The estimated annual amortization of intangible assets for the next five years is shown below (in thousands):
Estimated
Annual
Amortization
2021 (excluding the nine months ended September 30, 2021)$645 
20222,535 
20232,506 
20242,378 
20252,214 
Thereafter15,763 
Total$26,041 
12

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures and asset impairments, among other factors.
Accrued Compensation and Related Benefits
Accrued compensation and related benefits were comprised of the following as of the dates indicated (in thousands):
September 30,
2021
December 31,
2020
Accrued payroll and related costs$3,470 $2,506 
Employee stock purchase program liability3,567 1,258 
Accrued bonus12,200 5,058 
Accrued commissions3,001 3,038 
Accrued acquisition-related compensation2,968 2,213 
Accrued vacation1,287 1,035 
Other689 275 
Accrued compensation and related benefits$27,182 $15,383 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were comprised of the following as of the dates indicated (in thousands):
September 30,
2021
December 31,
2020
Accrued legal and related costs$3,327 $5,704 
Accrued license fee5,999 6,198 
Accrued purchase consideration5,015 4,146 
Accrued royalties for licensed technologies4,143 3,160 
Accrued property and equipment12,515 2,983 
Accrued professional services5,400 3,137 
Product warranties824 399 
Customer deposits962 1,727 
Taxes payable3,300 8,649 
Accrued lab supplies1,875 1,506 
Other2,827 5,844 
Accrued expenses and other current liabilities$46,187 $43,453 
Product Warranties
Changes in the reserve for product warranties were as follows for the periods indicated (in thousands):
Nine Months Ended September 30, 2021Year Ended December 31, 2020
Beginning of period$399 $467 
Amounts charged to cost of revenue2,113 796 
Repairs and replacements(1,688)(864)
End of period$824 $399 

13

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Revenue and Deferred Revenue
As of September 30, 2021, 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 Chromium instruments, was $7.3 million, of which approximately $5.4 million is expected to be recognized to revenue in the next 12 months, with the remainder thereafter. The contract liabilities of $7.3 million and $6.2 million as of September 30, 2021 and December 31, 2020, respectively, consisted of deferred revenue related to extended warranty service agreements. Revenue recorded during the three and nine months ended September 30, 2021 included $0.9 million and $3.4 million, respectively, of previously deferred revenue that was included in contract liabilities as of December 31, 2020. Revenue recorded during the three and nine months ended September 30, 2020 included $0.7 million and $2.8 million, respectively, of previously deferred revenue that was included in contract liabilities as of December 31, 2019.
The following table represents revenue by source for the periods indicated (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Instruments$17,121 $9,676 $45,123 $26,108 
Consumables106,117 60,557 296,342 156,149 
Services2,059 1,584 5,495 4,370 
Total revenue$125,297 $71,817 $346,960 $186,627 
The following table presents revenue by geography based on the location of the customer for the periods indicated (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
North America$70,228 $42,363 $187,800 $102,356 
Europe, Middle East and Africa25,819 15,497 73,761 40,370 
China19,063 8,689 55,577 27,314 
Asia-Pacific (excluding China)10,187 5,268 29,822 16,587 
Total revenue$125,297 $71,817 $346,960 $186,627 
Revenue for the United States, which is included in North America in the table above, was 55% and 57% of consolidated revenue for the three months ended September 30, 2021 and 2020, respectively, and 53% and 53% of consolidated revenue for the nine months ended September 30, 2021 and 2020, respectively.
5.    Debt
In September 2016, the Company entered into a Second Amended and Restated Loan and Security Agreement with Silicon Valley Bank (as amended and restated in February 2018 and as further amended, restated or supplemented from time to time, the “Loan and Security Agreement”), which included a term loan and revolving line of credit. On February 20, 2020, the Company prepaid the remaining balance of the term loan and all associated costs. The final payment of $30.5 million included $28.3 million for the outstanding principal balance of the term loan, $1.8 million for an end of term payment, $0.3 million for early termination fees and $0.1 million for interest. The prepayment resulted in a loss on extinguishment of debt of $1.5 million. The non-accreted portion of the end of term payment, unamortized discounts and early termination fees were included in the calculation of the loss on extinguishment of debt.
The revolving line of credit and the Loan and Security Agreement was terminated at the election of the Company on June 18, 2020. Upon termination, the Company incurred termination fees of $0.3 million. As of June 18, 2020, there were no balances outstanding under the revolving line of credit.


14

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
6.    Commitments and Contingencies
Lease Agreements
The Company leases office, laboratory, manufacturing, distribution and server space with lease terms up to 12 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities.
For the three and nine months ended September 30, 2021, the Company incurred $2.6 million and $7.9 million, respectively, of operating lease costs and $0.1 million and $0.5 million, respectively, of variable lease costs. For the three and nine months ended September 30, 2020, the Company incurred $2.1 million and $6.1 million, respectively, of operating lease costs and $19 thousand and $0.2 million, respectively, of variable lease costs. The variable lease cost is comprised primarily of the Company’s proportionate share of operating expenses, property taxes and insurance and is classified as lease cost due to the Company’s election to not separate lease and non-lease components.
Cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2021 and 2020 was $4.6 million and $5.1 million and were included in net cash used in operating activities in the Company’s condensed consolidated statements of cash flows.
Future net lease payments related to the Company’s operating lease liabilities as of September 30, 2021 is as follows (in thousands):
Operating Leases
2021 (excluding the nine months ended September 30, 2021)$464 
20229,969 
202311,637 
202410,942 
202511,152 
Thereafter59,746 
Total lease payments$103,910 
Less: imputed interest(23,711)
Present value of operating lease liabilities$80,199 
Operating lease liabilities, current$4,464 
Operating lease liabilities, noncurrent$75,735 
The following table summarizes additional information related to operating leases as of September 30, 2021:
September 30, 2021December 31, 2020
Weighted-average remaining lease term7.6 years8.4 years
Weighted-average discount rate5.4 %4.5 %
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 Company intends to utilize the leased space of approximately 145,000 square feet to accommodate its future growth requirements. The MLA consists of various lease components expected to commence on various dates between 2021 and 2023 and is expected to terminate on June 30, 2033 with total lease payments over the lease term expected to amount to approximately $60.8 million, net of a tenant improvement allowance of approximately $10.0 million to be received in 2021 and 2022. Approximately, $2.6 million of this allowance has been received as of September 30, 2021. Certain lease components of the MLA commenced on January 1, 2021 and July 1, 2021. Total undiscounted payments for leases commencing in fiscal years 2022 and 2023 will be $21.0 million and $14.0 million, respectively, with weighted-average expected lease terms of 12 years for 2022 and 11 years for 2023.
15

10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
On April 30, 2021, the Company entered into a lease agreement to lease office building space of approximately 22,000 square feet in Stockholm, Sweden to accommodate its future growth requirements. The Company expects the lease term to commence in January 2022 for a five-year term and expects total lease payments over the lease term to amount to approximately $5.7 million.
The tables above do not include payments, lease term, or discount rates relating to any leases or lease components that have not yet commenced as of September 30, 2021. The Company will determine the classification for each lease component at the individual component's commencement date. All leases and lease components that have not yet commenced are expected to be classified as operating leases. Lease payments for leases not yet commenced as of September 30, 2021 is as follows (in thousands):
Lease payments for leases not yet Commenced
2021 (excluding the nine months ended September 30, 2021)$ 
20221,054 
20232,855 
20244,342 
20254,179 
Thereafter28,270 
Total undiscounted lease payments$40,700 
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.
The 2021 Bio-Rad Settlement And Patent Cross License Agreement
Bio-Rad Laboratories, Inc. (“Bio-Rad”) and the Company were previously engaged in litigation and other proceedings relating to substantially all of the Company’s Chromium products, including the Company’s legacy GEM products and Next GEM products and multiple Bio-Rad products, around the world. On July 26, 2021, the Company entered into a Settlement and Patent Cross License Agreement (the “Bio-Rad Agreement”) with Bio-Rad resolving all outstanding litigation and other proceedings between the two companies across all jurisdictions around the world and dismissing all infringement claims with prejudice.
Pursuant to the terms of the Bio-Rad Agreement, Bio-Rad and the Company granted each other a non-exclusive, worldwide, royalty-bearing license to develop products and services related to single cell analysis. The cross license excludes spatial and In Situ products. It also excludes digital PCR products in the case of 10x. The term of the Bio-Rad Agreement is for the life of the licensed patents. The Company and Bio-Rad have agreed not to sue each other on licensed products and licensed services on other patents owned or exclusively licensed by each company. The companies have agreed that each company’s patents are owned by each respective company. Each company shall pay to the other royalties from licensed products and licensed services through 2030.
Each company shall pay to the other royalties from licensed products and licensed services through 2030. The Company previously accrued $44.8 million in royalties and interest between November 14, 2018 and March 31, 2021 related to sales of the Company’s GEM products as a result of the litigation with Bio-Rad. Pursuant to the Agreement, the Company paid Bio-Rad $29.4 million in royalties and interest related to the sales of such GEM products between November 14, 2018 and March 31, 2021. As a result, in connection with the Agreement the Company reversed $15.4 million in accrued royalties and interest as a reduction in cost of goods sold and operating expenses in the second quarter of 2021.
The Nanostring Action
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
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10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
infringe U.S. Patent Nos. 10,472,669, 10,662,467, 10,961,566, 10,983,113, and 10,996,219. 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 July 1, 2021, Nanostring filed a motion to dismiss. Briefing is complete and a hearing has been scheduled for November 17, 2021. Discovery has just commenced; no case schedule has been set.
For further discussion of the risks relating to intellectual property and our pending litigation, see the section titled “Risk Factors—Risks related to litigation and our intellectual property” under Item 1A below.
7.    Capital Stock
As of September 30, 2021, the number of shares of Class A common stock and Class B common stock issued and outstanding was 91,255,983 and 20,281,465, respectively. During the three months ended September 30, 2020 and during the nine months ended September 30, 2021 and 2020, 2,153,783, 2,400,000 and 47,558,717 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. No conversions of Class B common stock to Class A common stock occurred during the three months ended September 30, 2021.
8.    Equity Incentive Plans
2019 Employee Stock Purchase Plan
A total of 3,084,859 shares of Class A common stock was 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. Shares purchased under the ESPP are subject to a one-year holding period following the purchase date.
During the nine months ended September 30, 2021 and 2020, 30,980 and 118,218 shares of Class A common stock, respectively, were issued under the ESPP. No shares of Class A common stock were issued under the ESPP during the three months ended September 30, 2021 or 2020. As of September 30, 2021, there were 2,888,340 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
September 30,
Nine Months Ended
September 30,
2021202020212020
Cost of revenue$878 $398 $2,183 $1,108 
Research and development11,226 5,467 30,162 14,398 
Selling, general and administrative13,846 7,919 36,713 18,851 
Total stock-based compensation expense$25,950 $13,784 $69,058 $34,357 
Restricted Stock Units
Restricted stock unit activity for the nine months ended September 30, 2021 is as follows:
Restricted Stock
Units
Weighted-Average
Grant Date Fair Value
(per share)
Outstanding as of December 31, 2020823,947 $80.97 
Granted828,463 184.38 
Vested(266,602)106.14 
Cancelled(71,651)118.67 
Outstanding as of September 30, 20211,314,157 $139.00 
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10x Genomics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Stock Options
Stock option activity for the nine months ended September 30, 2021 is as follows:
Stock OptionsWeighted-Average
Exercise Price
Outstanding as of December 31, 202011,860,844 $18.86 
Granted363,874 178.40 
Exercised(