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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” under Part I, Item 1A above.
−Removed: We operate on a fiscal year that ends on December 31.
−Removed: 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.
−Removed: 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.
+Added: We are a life science technology company focused on building innovative products to interrogate, understand and master biology.
+Added: Our integrated platform solutions include instruments, consumables and software for analyzing biological systems at a resolution and scale that matches the complexity of biology.
We have launched multiple products that enable researchers to understand and interrogate biological analytes in their full biological context.
−Removed: Our commercial product portfolio leverages our Chromium Controller, Chromium Connect and Chromium X Series, which we refer to as “Chromium instruments” or “instruments,” and our proprietary microfluidic chips, slides, reagents and other consumables for our Visium solution, which does not require an instrument, and our Chromium solution, 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.
−Removed: Since launching our first product in mid-2015, and as of December 31, 2021, cumulatively we have sold 3,511 instruments to customers around the world, including all of the top 100 global research institutions as ranked by Nature in 2020 based on publications and all of the top 20 global biopharmaceutical companies by 2020 research and development spend.
−Removed: 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.
−Removed: Our Chromium instruments and Chromium consumables are designed to work together exclusively.
−Removed: After buying a Chromium instrument, customers purchase consumables from us for use in their experiments.
−Removed: In addition to our Chromium products, we also sell Visium consumables which do not require a 10x Genomics instrument.
−Removed: In addition to instrument and consumable sales, we derive revenue from post-warranty service contracts for our Chromium instruments.
+Added: Our commercial product portfolio leverages our Chromium X Series and Chromium Connect, which we refer to as “Chromium instruments,” our Visium CytAssist, an instrument designed to simplify the Visium solution workflow by facilitating the transfer of transcriptomic probes from standard glass slides to Visium slides, our Xenium Analyzer, an instrument designed for fully automated high-throughput analysis of cells in their tissue environment, and our proprietary microfluidic chips, slides, reagents and other consumables for our Chromium, Visium and Xenium 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.
+Added: Since launching our first product in mid-2015 through December 31, 2022, cumulatively we have sold 4,630 instruments to researchers around the world, including all of the top 100 global research institutions as ranked by Nature in 2021 based on publications and all of the top 20 global biopharmaceutical companies by 2021 research and development spend.
+Added: Our products cover a wide variety of applications and allow researchers to analyze biological systems at fundamental resolution and on massive scale, such as at the single cell level for millions of cells.
+Added: Customers purchase instruments and consumables from us for use in their experiments.
+Added: In addition to instrument and consumable sales, we derive revenue from post-warranty service contracts for our instruments.
We focus a substantial portion of our resources on developing new products and solutions.
−Removed: Our research and development efforts are centered around improving the performance of our existing assays and software, developing new Chromium solutions such as multi-omics solutions, developing our Visium platform, improving and developing new capabilities for our Chromium platform, developing combined software and workflows across multiple solutions and investigating new technologies including the development of our forthcoming Xenium platform for in situ analysis.
+Added: Our research and development efforts are centered around improving the performance of our existing assays and software, improving and developing new capabilities for our Chromium, Visium and Xenium platforms, developing combined software and workflows across multiple solutions and investigating new technologies.
We intend to make significant investments in this area for the foreseeable future.
−Removed: In 2021, we acquired Tetramer Shop, a life sciences technology company which develops and provides reagents for precise monitoring of antigen-specific T-cells in research and development.
−Removed: Historically, we have financed our operations primarily from the sale of our instruments and consumable products, the issuance and sale of our convertible preferred stock and common stock and the issuances of debt.
−Removed: On September 16, 2019, we completed an initial public offering and received aggregate net proceeds of $410.8 million.
−Removed: On September 15, 2020, we completed an underwritten follow-on public offering and received aggregate net proceeds of $482.3 million.
+Added: Historically, 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.
+Added: In September 2019, we completed our initial public offering for aggregate proceeds of $410.8 million, net of offering costs, underwriter discounts and commissions.
+Added: In September 2020, we completed a public offering of our Class A common stock for aggregate proceeds of $482.3 million, net of offering costs, underwriting discounts and commissions.
Since our inception in 2012, we have incurred net losses in each year.
Our net losses were $166.0 million and $58.2 million for the years ended December 31, 2022 and 2021, respectively.
−Removed: As of December 31, 2021, we had an accumulated deficit of $863.3 million and cash and cash equivalents totaling $587.4 million.
+Added: As of December 31, 2022, we had an accumulated deficit of $1.0 billion and cash and cash equivalents and marketable securities totaling $430.0 million.
We expect to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term.
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Operational Effectiveness in the COVID-19 Pandemic Environment
−Removed: Since the World Health Organization ("WHO") declared the global outbreak of COVID-19 to be a pandemic in March 2020, we have operated in an uncertain and disruptive pandemic environment but to date we have successfully maintained our operational effectiveness and COVID-19 has not materially affected our ability to maintain our business operations, including the operation of financial reporting systems, internal control over financial reporting and disclosure controls and procedures.
−Removed: We continue to closely monitor the recent developments surrounding this pandemic and resurgences including, among other developments, local, state, national and global vaccination efforts and the potential impacts of variants.
−Removed: In response to the pandemic, we have placed and continue to sell instruments and provide reagents to clinicians and researchers around the world working to understand COVID-19 and develop treatments for the disease.
−Removed: Our products are a critical tool for infectious disease research as they allow for a detailed understanding of how the virus causing COVID-19 impacts infected people, how the immune system is mobilized, which immune cells react to pathogens and many other aspects of the disease and potential therapies.
−Removed: While many of our customers' laboratories were open during 2021, many of our customers have continued to navigate second-order COVID-19 related challenges that we believe have affected our customers’ productivity.
−Removed: Such challenges include the reinstatement of 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.
−Removed: Further, we believe COVID-19 has limited the ability of the research community to connect, collaborate, attend conferences and share best practices.
−Removed: We believe these challenges have affected, and we expect will continue to affect, many of our customers' operations.
−Removed: We, our suppliers and our other partners have encountered similar 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.
−Removed: Because our workflows are expensive and complex and often require fresh samples, coordinated stakeholders and constraint timeframes, we believe our academic customers are particularly impacted by COVID-19 related challenges.
−Removed: The situation remains uncertain, and there is an increased risk in our ability to source equipment, materials and components and deliver our products due to global logistics and supply chain challenges which may negatively impact our business in 2022.
−Removed: Given the importance of maintaining continuity of our business and continued access to instruments and consumables by our customers, including researchers engaged in the fight against COVID-19, we initiated and continue to adhere to protocols and safety measures at our facilities which have facilitated the safe return to work of many of our personnel and have implemented enhanced efforts to secure our supply chain and distribution network.
−Removed: By mid-2021, in person commercial and support activities had largely resumed and the majority of our customers' sites were open to in-person meetings with our sales and support teams.
−Removed: During the second half of 2021, some of our customers reinstated pandemic-related protocols due to rising COVID-19 case counts and in some cases closed or limited access to outside visitors, which negatively affected the operations of our sales and support teams at times in this period.
−Removed: While there were increased in-person commercial and support activities at times during the fourth quarter of 2021, the emergence of the omicron variant beginning in November and continuing through the end of the quarter impacted customer orders.
−Removed: In light of these continuing challenges, our sales and marketing teams are supplementing in person sales activities by leveraging digital marketing and sales activities and our customer service teams around the world have been utilizing in person and remote interactions and remain available to assist our customers and partners as needed.
−Removed: To date, our production, shipping and customer service functions have been operational and we have been able to maintain a continuous supply of products to our customers.
−Removed: We communicate regularly with our suppliers, and while we have seen cases of limited availability of certain equipment, components and materials, any supply chain issues faced by the Company have not yet materially impacted our ability to manufacture and ship our products.
−Removed: With respect to equipment and material supply, we continue to work to secure sufficient equipment and materials to meet anticipated future demand.
−Removed: We are monitoring closely whether there will be a material negative impact due to potential future shortages, price increases from suppliers, labor shortages or other supply chain disruptions as well as disruptions to our logistics, shipping and other distribution operations.
+Added: We continue to closely monitor developments surrounding the COVID-19 pandemic including, among other developments, the potential impacts of variants.
+Added: Many of our customers continue to navigate COVID-19 related challenges that we believe have affected our customers’ productivity.
+Added: Such challenges have included 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.
+Added: For example, we believe COVID-19 related lockdowns in China negatively impacted our revenues for the year ended December 31, 2022.
+Added: 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 these disruptions.
We expect these disruptions to continue to impact our operating results, however, the extent of the financial impact and duration cannot be reasonably estimated at this time.
−Removed: For further discussion of the risks relating to the impacts of the COVID-19 pandemic, see the section titled “ Risk Factors, ” generally,
−Removed: and “ Risk Factors—The impacts and potential impacts of the COVID-19 pandemic continues to create significant uncertainty for our business, financial condition and results of operations ,” specifically, under Part I, Item 1A.
+Added: 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—Risks related to our business and industry—We are subject to risks associated with COVID-19 ,” specifically, under Part I, Item 1A.
On January 8, 2021, we acquired 100% of the outstanding shares of Tetramer Shop ApS, a privately held company based in Copenhagen, Denmark, for $8.5 million in cash, net of cash acquired of $0.2 million.
−Removed: Tetramer Shop ApS develops and provides reagents for precise monitoring of antigen-specific T cells in research and development.
+Added: Tetramer Shop ApS developed and provided reagents for precise monitoring of antigen-specific T cells in research and development, which we commercialized with our BEAM-T product in 2022.
On October 13, 2020, we purchased all of the outstanding shares of ReadCoor, a privately held company based in Cambridge, Massachusetts, for $407.4 million, inclusive of $1.6 million of transaction costs and net of cash acquired of $9.2 million.
The total purchase consideration comprised of $101.4 million in cash and $306.0 million in shares of the Company's common stock.
−Removed: ReadCoor is developing In Situ RNA analysis technology, consisting of a suite of proprietary reagents, which aims to enable researchers to visualize spatially resolved RNA expression profiles with sub-cellular resolution throughout fresh frozen or formalin-fixed, paraffin-embedded tissue sections.
On August 21, 2020, we purchased all of the outstanding shares of CartaNA, a privately held company based in Stockholm, Sweden, for $41.8 million, inclusive of $0.6 million of transaction costs and net of cash acquired of $1.5 million.
−Removed: CartaNA is developing In Situ technology, consisting of a suite of proprietary reagents, which aims to enable researchers to visualize spatially resolved RNA expression profiles with sub-cellular resolution throughout fresh frozen or formalin-fixed, paraffin-embedded tissue sections.
+Added: ReadCoor and CartaNA were developing in situ technology which when combined with internal innovations formed the foundation of our Xenium platform.
See Note 4 to the consolidated financial statements for further details of the above acquisitions.
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however, we anticipate these may change or may be substituted for additional or different metrics as our business grows and as we introduce new products.
+Added: For example, as further described below, various factors make consumable pull-through per instrument less useful than in past periods and we do not intend to present this key metric in future filings.
Cumulative instruments sold
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Our products are sold to academic, government, biopharmaceutical, biotechnology and other leading institutions around the globe.
−Removed: Our Chromium Controller and Chromium X Series instruments are user installable and do not require in-person training.
−Removed: Our Chromium Connect instrument requires installation and we offer in-person training for its use.
+Added: Our Chromium Controller, Chromium X Series and Visium CytAssist instruments are user installable and do not require in-person training.
+Added: Our Chromium Connect and Xenium instruments require installation and we offer in-person training for their use.
We believe cumulative instruments sold, a metric we previously referred to as our instrument installed base, is one of the indicators of our ability to drive customer adoption of our products.
−Removed: We define cumulative instruments sold as the cumulative number of Chromium instruments, including the Chromium Controller, the Chromium X Series and the Chromium Connect, sold since inception.
−Removed: Our quarterly instrument unit volumes can fluctuate due to a number of factors, including the procurement and budgeting cycles of many of our customers, especially government and academic institutions where unused funds may be forfeited or future budgets reduced if purchases are not made by their fiscal year end.
+Added: We define cumulative instruments sold as the cumulative number of Chromium instruments, including the Chromium X Series, the Chromium Connect and the legacy Chromium Controller, Visium CytAssist instruments and Xenium instruments sold since inception.
+Added: Our quarterly instrument unit volumes can fluctuate due to a number of factors, including the procurement and budgeting cycles of many of our customers, especially government and academic institutions where unused funds may be forfeited or future budgets reduced if purchases are not made by their fiscal year end, and the purchasing patterns of international customers which vary due to procurement or budgeting cycles, holidays or other factors which may result in a disproportionate amount of their purchasing activity occurring in specific periods.
Similarly, our biopharmaceutical customers typically have calendar year fiscal years which may result in a disproportionate amount of their purchasing activity occurring during our fourth quarter.
We also believe the timing of unit sales has been impacted and will continue to be impacted by the timing of product introductions and transitions which can either accelerate or delay demand of existing and new products depending on the needs of individual researchers to conclude existing studies or to use new and improved product capabilities.
−Removed: Further, the growth of our market in certain geographic regions and our continued efforts to service these regions impact unit volumes quarter to quarter.
+Added: Also, the timing of our price increases, typically at the beginning of a new calendar year, can pull forward additional volume to the quarter before.
We therefore believe that an annual representation of cumulative instruments sold is most appropriate for assessing trends in our business.
−Removed: Chromium consumable pull-through per instrument
+Added: Consumable pull-through per instrument
Year ended December 31,
(in thousands) 2022 2021
−Removed: Chromium consumable pull-through per instrument
−Removed: Our consumables portfolio includes proprietary microfluidic chips, slides, reagents and other consumables for both our Visium and Chromium solutions.
−Removed: Our Chromium instruments and Chromium consumables are designed to work together exclusively.
−Removed: This Chromium closed-system model generates recurring revenue from each instrument we sell.
−Removed: Historically, growth in cumulative instruments sold has been the largest contributor to our growth in consumable sales.
−Removed: However, in 2021, the lessening impact of the COVID-19 pandemic on our customers' operations also contributed to the growth in consumables as compared to the prior year period.
+Added: Consumable pull-through per instrument $ 109 $ 142
+Added: Our consumables portfolio includes proprietary microfluidic chips, slides, reagents and other consumables across our platforms.
The figures in the table above represent the annual consumable pull-through per instrument for the years ended December 31, 2022 and 2021.
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We do not believe the consumable pull-through per instrument in an individual quarter is an effective indicator of current business trends as quarterly consumable pull-through can fluctuate due to a number of factors, including the timing of product transitions, budget and funding cycles of our customers, expansion into new global markets and industries and the impact of the COVID-19 pandemic on our customers' operations.
−Removed: With the emerging complexity of our product offerings, we believe pull-through per instrument is less relevant today than in past periods given the expanding breadth of our portfolio, and as such, is not representative of trends in our business.
−Removed: For example, some of our customers are purchasing Chromium X Series instruments to replace previously purchased Chromium Controllers.
−Removed: Additionally, certain of our solutions do not require a Chromium instrument, such as our Visium solution, and forthcoming solutions, such as our Xenium platform which is expected to utilize a separate family of 10x Genomics' instruments and not rely on a Chromium instrument for its workflow.
−Removed: Our consumables pull-through is also impacted by additional factors including expanding utilization by our existing customers, the rate of new customer acquisition, the ramp of utilization by new customers and the overall mix of “halo” users and their ordering patterns.
−Removed: As our business, product lines and customer composition have become more complex since adopting this key business metric, we believe that this metric represents an oversimplification of these different drivers and can obscure underlying trends in the business.
+Added: With the increasing complexity of our product offerings and the expansion of our product portfolio, pull-through per instrument is becoming less representative of trends in our business for a number of reasons.
+Added: We have discontinued our legacy Chromium Controller which has been replaced by the Chromium X Series as well as Chromium Connect instruments, and many Chromium Controller users have upgraded to newer instruments.
+Added: In addition, some customers purchase and regularly utilize more than one Chromium instrument.
+Added: The utilization patterns of our customers vary.
+Added: Also, we have expanded our instrument portfolio and now sell several types of instruments across all three of our platforms, each with unique use cases and utilization patterns.
+Added: Certain of our solutions do not require an instrument, such as our Visium Spatial Gene Expression solution.
+Added: Each of these factors make average consumable pull-through per instrument less useful than in past periods.
+Added: As such, the year ending December 31, 2022 will be the last reporting period in which it is a key business metric.
Key factors affecting our performance
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We plan to grow our instrument sales in the coming years through multiple strategies including expanding our sales efforts globally and continuing to enhance the underlying technology and applications for life sciences research.
−Removed: As part of this strategy and in an effort to increase the rate of sales of our instruments, we increased our sales force by 44% from December 31, 2020 through December 31, 2021, with more than 160 commissionable sales representatives as of December 31, 2021.
−Removed: We regularly solicit feedback from our customers and focus our research and development efforts on enhancing the fleet of Chromium instruments and enabling their ability to use additional applications that address their needs, which we believe in turn helps to drive additional sales of our instruments and consumables.
−Removed: In 2020, we introduced our Chromium Connect instrument, which is an automated version of our current Chromium Controller instrument.
−Removed: We believe the automated features of the Chromium
−Removed: Connect will increase our addressable market by increasing utilization by biopharmaceutical customers.
−Removed: In 2021, we introduced our Chromium X Series which consists of the Chromium X, the company’s most powerful instrument yet that delivers routine million cell experiments, and the Chromium iX, an instrument capable of running experiments for tens of thousands of cells seamlessly upgradable to the Chromium X as scientists expand their research projects.
+Added: As part of this strategy and in an effort to increase the rate of sales of our instruments, we increased our sales force by 9% from December 31, 2021 through December 31, 2022.
+Added: We regularly solicit feedback from our customers and focus our research and development efforts on enhancing the fleet of 10x instruments and enabling their ability to use additional applications that address their needs, which we believe in turn helps to drive additional sales of our instruments and consumables.
+Added: In 2020, we introduced our Chromium Connect instrument, which is an automated version of our legacy Chromium Controller instrument.
+Added: We believe the automated features of the Chromium Connect will increase our addressable market by increasing utilization by biopharmaceutical customers.
+Added: In 2021, we introduced our Chromium X Series which consists of the Chromium X, a high-throughput instrument to deliver routine million cell experiments, and the Chromium iX, an instrument capable of running experiments for tens of thousands of cells seamlessly upgradable to the Chromium X as scientists expand their research projects.
+Added: In 2022, we introduced our Visium CytAssist instrument, which streamlines the workflow of our Visium Spatial assays, and our Xenium Analyzer instrument, which is designed for fully automated high-throughput analysis of cells in their tissue environment.
Our sales process varies considerably depending upon the type of customer to whom we are selling.
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We regularly assess trends relating to recurring consumable revenue based on our product offerings, our customer base and our understanding of how our customers use our products.
−Removed: As we sell additional instruments and launch additional consumables solutions, some of which may not require the use of a 10x instrument, consumables revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our revenue.
−Removed: Our annual consumable pull-through per instrument increased in 2021 as a result of 2020 being comparatively more severely impacted by COVID-19.
−Removed: We have reported our Visium product revenue as part of consumable revenue and included it in the average pull-through per instrument calculation.
−Removed: Even though Visium is not processed through a Chromium instrument, we sell the product primarily to Chromium instrument users and view it as pull-through from a business perspective.
−Removed: As our business, product lines and customer composition have become more complex since adopting this key business metric, we believe that annual consumable pull-through per instrument represents an oversimplification of these different drivers and can obscure underlying trends in the business.
+Added: We sell additional instruments and launch additional consumables solutions, some of which do not require the use of a 10x instrument, to drive increased consumables usage by our existing customers and to gain new customers.
+Added: Consumables revenue on an absolute basis is expected to increase over time and remain the bulk of our revenue.
Revenue mix and gross margin
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The revenue contribution from these and other consumable products has varied and is expected to vary on a quarterly basis due to several factors, including the publication of scientific papers demonstrating the value of the consumables, the availability of grants to fund research, budgetary timing and our introduction of new product features and new consumables offerings.
−Removed: For each of the years ended December 31, 2021 and 2020, our Single Cell Gene Expression consumables, which were introduced in 2016, accounted for the majority of our consumables revenue.
−Removed: For the year ended December 31, 2021, the remaining consumables revenue was substantially comprised of sales of our Single Cell Immune Profiling consumables, our Single Cell ATAC consumables, Single Cell Multiome ATAC+Gene Expression solution and Visium.
−Removed: Revenue contribution from our Single Cell Gene Expression and Single Cell Immune Profiling consumables decreased as a percentage of overall consumables revenue while revenue contribution from our Single Cell Multiome ATAC+Gene Expression solution and Visium consumables increased as a percentage of overall consumables revenue for the year ended December 31, 2021.
−Removed: In 2021, we launched four new consumables products for our customers:
−Removed: (1) Our Single Cell Gene Expression Kit with CellPlex which allows researchers to increase sample and cell throughput by enabling multiple samples and higher cell loads to be loaded into each Chromium channel, lowering costs per sample and cost per cell for our customers;
−Removed: (2) Our Single Cell Gene Expression Low Throughput Kit which reduces the startup costs for a single cell experiment and enables a broader base of researchers to conduct single cell analysis;
−Removed: (3) Single Cell Gene Expression High Throughput which is compatible with our Chromium X instrument and enables routine million cell experiments;
−Removed: and (4) Our Visium Spatial Gene Expression for FFPE enabling Visium to be applied to FFPE tissues with similarly high sensitivity and the same spatial resolution as fresh frozen samples.
−Removed: In addition, our margins are higher for those instruments and consumables that we sell directly to customers as compared to those that we sell through distributors.
+Added: For each of the years ended December 31, 2022, 2021 and 2020, our Single Cell Gene Expression consumables, which were introduced in 2016, were our highest selling consumables product.
+Added: For the year ended December 31, 2022, the remaining consumables revenue was substantially comprised of sales of our Single Cell Immune Profiling consumables, Single Cell Multiome ATAC+Gene Expression solution and Visium.
+Added: Revenue contribution from our Single Cell Gene Expression and Single Cell ATAC consumables decreased as a percentage of overall consumables revenue while revenue contribution from our Single Cell Immune Profiling, Single Cell Multiome ATAC+Gene Expression solution and Visium consumables increased as a percentage of overall consumables revenue for the year ended December 31, 2022.
+Added: Our margins are generally higher for those instruments and consumables that we sell directly to customers as compared to those that we sell through distributors.
While we expect the mix of direct sales as compared to sales through distributors to remain relatively constant in the near term, we are currently evaluating increasing our direct sales capabilities in certain geographies.
−Removed: In the near term, we expect product mix changes between established products and lower margin new products, and investment in the expansion of manufacturing, warehousing and product distribution facilities to have the greatest impact on our margins.
−Removed: We expect accrued royalties related to the Bio-Rad litigation as described below under “Part II, footnote 7 of Item 8,” will be lower as compared to accrued royalties recognized in prior periods and which will have a modest favorable impact on our margins.
−Removed: We expect this favorable impact to be offset, by lower margin newly introduced products, the resulting product mix and expenses related to our planned increases in manufacturing and distribution capacity in our Pleasanton, California headquarters.
−Removed: In addition to the impact of competing products entering the market, the future margin profiles of our instruments and consumables will depend upon the outcome of such litigation, any royalties we are required to pay and the royalty rates and products to which such royalties apply.
+Added: Overall, we expect our gross margin will trend lower in the near-term due in part to change in product mix with newly introduced products and the impacts of inflation and increased supply chain costs.
Continued investment in growth
Our significant revenue growth has been driven by rapid innovation towards novel solutions that command price premiums and quick adoption of our solutions by our customer base.
−Removed: In 2021 and 2020, we introduced four new products for each of these years, respectively .
+Added: In 2022 and 2021, we introduced five and four new consumables products for each of these years, respectively.
We intend to continue to make focused investments to increase revenue and scale operations to support the growth of our business and therefore expect expenses in this area to increase.
−Removed: We have invested, and will continue to invest, significantly in our manufacturing capabilities and commercial infrastructure.
−Removed: The expansion, in 2021, of our Pleasanton global headquarters and research and development center by purchasing additional land adjacent to our headquarters to build additional buildings in anticipation of our continued rapid growth will help us achieve these goals by providing additional manufacturing, research and development and general office space.
−Removed: We plan to further invest in research and development as we hire employees with the necessary scientific and technical backgrounds to enhance our existing products and help us bring new products to market, and we expect to incur additional research and development expenses and higher stock-based compensation expenses as a result.
−Removed: We also plan to invest in sales and marketing activities, and we expect to incur additional general and administrative expenses and to have higher stock-based compensation expenses as we support our growth.
+Added: We have invested, and will continue to invest, in our manufacturing capabilities and commercial infrastructure.
+Added: We expect to complete the expansion of our research and development center and manufacturing facility adjacent to our Pleasanton global headquarters in the near future.
+Added: We expect our operating expenditures to continue to increase in 2023 and beyond as we increase our investment to support new and existing research and development projects and incentivize and retain key talent, which we expect to result in increased stock-based compensation expense in future periods.
As cost of revenue, operating expenses and capital expenditures fluctuate over time, we may experience short-term, negative impacts to our results of operations and cash flows, but we are undertaking such investments in the belief that they will contribute to long-term growth.
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Our revenue is subject to fluctuation based on the foreign currency in which our products are sold, principally for sales denominated in the euro.
−Removed: Our revenue from consumables includes sales of our Chromium and Visium consumable products.
−Removed: Our Chromium consumables are designed to work exclusively with our Chromium instruments while our Visium consumables do not require the use of a 10x Genomics instrument.
+Added: Our revenue from consumables includes sales of our Chromium, Visium and Xenium consumable products.
+Added: Our consumables are designed to work exclusively with our instruments.
+Added: Our Chromium, Xenium and Visium Spatial Proteogenomics consumables require the use of a 10x Genomics instrument, while use of a 10x instrument is optional for our Visium Spatial Gene Expression solution.
Our instruments and consumables are generally sold without the right of return.
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market conditions that may impact our pricing;
−Removed: sales mix changes among consumables, instruments and services;
+Added: sales mix changes among
+Added: consumables, instruments and services;
product mix changes between established products and new products;
+Added: impacts of inflation and increased supply chain costs;
excess and obsolete inventories;
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Research and development expense primarily consists of personnel and related costs, independent contractor costs, laboratory supplies, equipment maintenance prototype and materials expenses, amortization of developed technology and intangibles and allocated costs including facilities and information technology.
−Removed: We plan to continue to invest significantly in our research and development efforts, including hiring additional employees, to enhance existing products and develop new products.
−Removed: In addition to making investments in next generation products for single cell and spatial analysis, our ReadCoor and CartaNA acquisitions which when combined with internal innovations will form the basis of our forthcoming Xenium In Situ Analysis Platform.
+Added: We plan to continue to invest in our research and development efforts, including hiring additional employees, to enhance existing products and develop new products.
+Added: In addition to making investments in next generation products for single cell and spatial analysis, our ReadCoor and CartaNA acquisitions which when combined with internal innovations formed the basis of our Xenium platform.
We also expect allocated facilities and information technology costs to increase in future periods as a result of higher costs associated with the expansion to our global headquarters and research and development center in Pleasanton, California.
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We expect these costs to be recognized only in periods during which we complete an acquisition of assets comprised in whole or part of intellectual property for research and development.
−Removed: While we periodically evaluate acquisitions of this nature from time to time, we have no definitive agreements currently in place to acquire additional intellectual property for research and development.
+Added: We periodically evaluate acquisitions of this nature.
Selling, general and administrative.
Selling, general and administrative expense primarily consists of costs related to the selling and marketing of our products, including sales incentives and advertising expenses and costs associated with our finance, accounting, legal (excluding accrued contingent liabilities), human resources and administrative personnel.
−Removed: Related costs associated with these functions, such as attorney and accounting fees, recruiting services, administrative services, insurance, public relations and communication activities, marketing programs and trade show appearances, travel, customer service costs, costs associated with COVID-19 screening, safety equipment purchases and cleaning and allocated costs including facilities and information technology, are also included in selling, general and administrative expenses.
+Added: Related costs associated with these functions, such as attorney and accounting fees, recruiting services, administrative services, insurance, public relations and communication activities, marketing programs and trade show appearances, travel, customer service costs, safety equipment purchases and cleaning and allocated costs including facilities and information technology, are also included in selling, general and administrative expenses.
We expect to incur additional selling, general and administrative expenses due to continued investment in our sales, marketing and customer service efforts to support the anticipated growth of our business.
We also expect increased infrastructure costs, as well as increased costs for accounting, human resources, legal including litigation-related fees and contingency payments, insurance and investor relations.
−Removed: We expect to continue our hiring, in the United States as well as internationally, in all these areas in line with the continued growth of our business.
We also expect allocated facilities costs to increase in future periods as a result of higher costs associated with the expansion to our global headquarters and research and development center in Pleasanton, California.
2 unchanged sentences
Accrued contingent liabilities
−Removed: Accrued contingent liabilities which comprised of the original charge, estimated royalties and interest charges primarily relating to our litigation with Bio-Rad was settled in July 2021 as discussed above under “Part II, footnote 7 of Item 8.”
+Added: In 2021 and 2020, accrued contingent liabilities were comprised of the original charge, estimated royalties and interest charges primarily related to our litigation with Bio-Rad Laboratories, Inc.
+Added: We did not incur any accrued contingent liabilities in 2022.
Interest income
−Removed: Interest income consists of interest earned on our cash and cash equivalents which are invested in bank deposit and in money market funds.
−Removed: Interest expense
−Removed: Interest expense consists primarily of interest on our accrued license fees and outstanding debt which was fully repaid on February 20, 2020.
−Removed: See Note 5 to the consolidated financial statements for further details.
+Added: Interest income consists of interest earned on our cash and cash equivalents which are invested in bank deposit, in money market funds and from our investments in marketable securities.
Other income (expense), net
6 unchanged sentences
As of December 31, 2022, we had state NOLs of $375.7 million, which expire beginning in 2033.
−Removed: In addition, we had state tax credit carryforwards of $35.3 million, which do not expire.
+Added: In addition, we had state tax credit carryforwards of $46.6 million, which carry forward indefinitely.
Our ability to utilize such carryforwards for income tax savings is subject to certain conditions and may be subject to certain limitations in the future due to ownership changes.
7 unchanged sentences
Such limitations may result in expiration of a portion of the NOL carryforwards before utilization.
−Removed: We completed a study through October 31, 2021 and besides the ownership change resulting in a limitation on NOLs generated before November 1, 2013 no other limitations on the use of carryover attributes exist.
+Added: We completed a study through October 31, 2022 to determine whether an ownership change had occurred under Section 382 or 383 of the Code, and we determined that an ownership change occurred in 2013.
+Added: As a result, our net operating losses generated through November 1, 2013 may be subject to limitation under Section 382 of the Code.
+Added: In addition, certain attributes attributable to ReadCoor are subject to annual limitations as a result of our acquisition of ReadCoor, which constituted an ownership change of ReadCoor.
+Added: Such limitations may result in expiration of a portion of our net operating loss carryforwards or other tax attributes before utilization.
Our ability to use net operating loss carryforwards, research and development credit carryforwards and other tax attributes to reduce future taxable income and liabilities may be further limited as a result of future changes in stock ownership.
As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards or other pre-change tax attributes to offset United States federal and state taxable income may still be subject to limitations, which could potentially result in increased future tax liability to us.
−Removed: In addition, certain attributes are subject to an annual limitation as a result of the acquisition of our Subsidiary ReadCoor, which constitutes a change of ownership as defined under Internal Revenue Code Section 382.
Results of Operations
21 unchanged sentences
Loss on extinguishment of debt — — (1,521)
−Removed: Total other expense (1,462) (334) (460)
+Added: Total other income (expense) 5,973 (1,462) (334)
Loss before provision for income taxes (161,971) (53,715) (534,476)
8 unchanged sentences
Revenue increased $25.9 million, or 5%, for the year ended December 31, 2022 as compared to year ended December 31, 2021.
−Removed: The increase was driven primarily by an increase in consumables and instruments revenue.
−Removed: Consumables revenue increased $166.1 million, or 66%, to $418.7 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
−Removed: The increase in consumables revenue was primarily driven by growth in instrument sales and higher demand for our products, in part due to a lessening impact on our customers' operations related to the COVID-19 pandemic compared to the prior year.
−Removed: We experienced continued increases in revenue from our Single Cell Multiome ATAC+Gene Expression and Visium Spatial Gene Expression consumable products.
−Removed: Instrument revenue increased $24.3 million, or 61%, to $64.5 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020 due to an increase in number of units sold.
−Removed: We believe consumables and instrument revenues for 2020 were adversely impacted by customer lab closures due to the impact of the COVID-19 pandemic.
−Removed: The number of instruments sold during the year ended December 31, 2021 1,099 units, an increase of 46% as compared to the prior year, resulted in a total of 3,511 cumulative instruments sold since inception.
−Removed: Revenue for the year ended December 31, 2021 include sales of our newly introduced Chromium X Series instruments.
−Removed: Service revenue increased $1.2 million, or 21%, to $7.3 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020 primarily due to an increase in the number of units coming off warranty.
−Removed: We largely rely on research activities in both academic institutions and government laboratories for our revenue.
−Removed: While many of our customers' laboratories were open during 2021, some had to reinstate COVID-19 related protocols and restrictions
−Removed: and many of our customers continued to navigate second-order COVID-19 related challenges that we believe have affected our customers’ productivity.
−Removed: Such challenges include 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.
−Removed: Further, we believe COVID-19 has limited the ability of the research community to connect, collaborate, attend conferences and share best practices which has been essential to the growth in utilization of our products.
−Removed: We believe these challenges have affected, and we expect will continue to affect, many of our customers' operations.
−Removed: We, our suppliers and our other partners have encountered similar 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.
−Removed: The situation remains uncertain, and there is an increased risk in our ability to source equipment, materials and components and deliver our products due to global logistics and supply chain challenges which may negatively impact our business in 2022.
−Removed: Once all labs are able to resume normal levels of research activities on a continual basis and supply chain disruptions, logistics, shipping and other distribution disruptions and labor shortages are resolved, we expect to see increased demand for our products.
+Added: Instrument revenue increased $7.9 million, or 12%, to $72.4 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to higher volume of instruments sold including our newly introduced Visium CytAssist and Xenium instruments.
+Added: The number of instruments sold during the year ended December 31, 2022 was 1,119 units and the cumulative instruments sold since inception was 4,630 units.
+Added: Consumables revenue increased $16.8 million, or 4%, to $435.6 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily driven by higher volume of instruments sold, partially offset by decreased demand due to limited laboratory productivity arising from the continued impact of the global COVID-19 pandemic, including lockdowns in China.
Cost of revenue, Gross Profit and Gross Margin
5 unchanged sentences
Cost of revenue increased $46.3 million, or 62%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
−Removed: The increase was primarily due to $31.1 million from higher sales, including newly introduced products, $4.0 million of inventory scrap and excess and obsolete inventory charges, $2.1 million of warranty costs and $0.6 million of amortization of developed technology resulting from the acquisition of Tetramer Shop, partially offset by lower accrued royalties of $20.0 million related to the Settlement and Patent Cross License Agreement (the "Bio-Rad Agreement") with Bio-Rad Laboratories, Inc., including a one-time reversal of $14.7 million of accrued royalties arising from the Bio-Rad Agreement, a decrease of $1.9 million of costs related to ramping our second manufacturing facility and no idle manufacturing capacity charges incurred in 2021 as compared to $0.8 million in the prior year.
−Removed: Gross profit increased $176.0 million, or 73% primarily due to higher revenue and lower accrued royalties related to the Bio-Rad Agreement including a one-time reversal of $14.7 million of accrued royalties.
−Removed: Gross margin percentage increased by 5 points for the year ended December 31, 2021 as compared to the year ended December 31, 2020 primarily due to lower accrued royalties related to the Bio-Rad Agreement and no idle manufacturing capacity charges incurred during 2021 as compared to $0.8 million incurred in 2020, partially offset by less favorable product mix with newly introduced products.
−Removed: We expect our gross margin will trend slightly lower during the year due in part to less favorable product mix with newly introduced products.
−Removed: Upon the onset of the pandemic in March 2020 and through a majority of the second quarter of 2020, the vast majority of academic and government labs around the world suspended or severely reduced operations in compliance with stay-at-home, shelter-in-place and similar orders which resulted in a decrease in overall demand during this period.
−Removed: However, beginning in
−Removed: June 2020, we observed a modest re-opening of labs for general research which continued throughout the second half of 2020 resulting in an uptick in our sales activity during this period.
−Removed: In 2021, we saw a lessening impact the COVID-19 pandemic on our customers' operations which resulted in higher demand for our products as compared to the prior year period.
−Removed: The decrease in demand resulted in our production facilities running at less than normal capacity negatively impacting our gross margin in the second quarter of 2020 and 2020 as compared to 2021.
+Added: The increase was primarily driven by a one-time reversal of $14.7 million of accrued royalties resulting from
+Added: the Settlement and Patent Cross License Agreement with Bio-Rad Laboratories, Inc.
+Added: (the "Bio-Rad Agreement") during the year ended December 31, 2021, $19.7 million from higher manufacturing costs due to increased sales and higher costs of newly introduced products, $5.1 million of higher inventory scrap and excess and obsolete inventory charges, $3.7 million of higher warranty costs and $3.1 million of higher royalty expenses.
Operating Expenses
2 unchanged sentences
Research and development $ 265,667 $ 211,752 $ 53,915 25 %
−Removed: In-process research and development — 447,548 (447,548) (100) %
Selling, general and administrative 298,300 257,560 40,740 16 %
2 unchanged sentences
Research and development expense increased $53.9 million, or 25%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
−Removed: The increase was primarily driven by increased personnel expenses of $52.8 million, including $22.3 million in stock-based compensation expense, laboratory materials, supplies and expensed equipment of $19.4 million used to support our research and development efforts, $10.4 million of higher allocated costs for facilities and information technology to support operational expansion and $3.6 million of higher consulting and professional services for product development.
−Removed: In-process research and development expense for the year ended December 31, 2020 relates to intellectual property we purchased in connection with our acquisition of ReadCoor and CartaNA.
−Removed: In connection with these asset acquisitions, we recognized in-process research and development intangible assets of $406.9 million and $40.6 million, respectively, which did not have alternative future use and therefore was recognized as an expense during this period.
−Removed: See Note 3 to the consolidated financial statements for further details.
−Removed: There were no similar purchases in the year ended December 31, 2021.
−Removed: During the first half of 2020, the COVID-19 pandemic resulted in a decrease in certain research laboratory activities, and as a result we incurred lower materials spending.
−Removed: Our research and development activities have increased in the second half of 2020 and 2021, and we expect our research development activities and expenditures to continue to increase in 2022 and beyond as we increase our level of investment to support new and existing projects.
+Added: The increase was primarily driven by an increase in personnel expenses of $34.8 million, including $17.2 million in stock-based compensation expense and $1.4 million in restructuring expense, higher costs of laboratory materials and supplies of $4.6 million used to support our research and development efforts, $11.2 million of higher costs for facilities and information technology to support operational expansion, higher consulting and professional services of $1.1 million for product development and $0.9 million of higher depreciation.
Selling, general and administrative expenses increased $40.7 million, or 16%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
−Removed: The increase in expenses was primarily driven by increased personnel expenses of $55.7 million, including $23.3 million in stock-based compensation expense, $9.2 million of higher allocated costs for facilities and information technology to support the general expansion of our operations, $9.1 million of marketing expenses related to conferences and seminars, partially offset by a decrease in outside legal expenses of $18.6 million.
−Removed: We expect our operating expenses to significantly increase in 2022 due to our continuing investments in the growth of our business and increased stock based compensation expense.
−Removed: Accrued contingent liabilities decreased by $1.9 million, or 152%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
−Removed: The decrease was primarily due to a one-time reversal of accrued interest arising from the Bio-Rad Agreement.
−Removed: See Note 7 to the consolidated financial statements for further details.
+Added: The increase was primarily driven by increased personnel expenses of $50.3 million, including $21.6 million in stock-based compensation expense and $2.5 million in restructuring expense, $3.1 million of higher costs for facilities and information technology to support operational expansion, partially offset by decreased outside legal expenses of $7.7 million, $3.8 million of consulting and professional services and $2.5 million of lower marketing expenses related to conferences and seminars.
Other Income (Expense), Net
3 unchanged sentences
Interest expense (476) (866) 390 (45) %
−Removed: Other (expense) income, net (802) 1,337 (2,139) N/M
−Removed: Loss on extinguishment of debt — (1,521) 1,521 N/M
−Removed: Total other expense $ (1,462) $ (334) $ (1,128) 338 %
−Removed: result not meaningful.
−Removed: Interest income decreased by $1.3 million, or 87%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
−Removed: The decrease was primarily due to lower interest rates in 2021.
−Removed: Interest expense decreased by $0.8 million, or 49%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
−Removed: The decrease was driven primarily by the repayment of our term loan in February 2020.
−Removed: Other (expense) income, net was comprised of realized and unrealized losses from foreign currency rate measurement fluctuations for the year December 31, 2021 as compared to net gains for the year ended December 31, 2020.
−Removed: Loss on extinguishment of debt was $1.5 million for the year ended December 31, 2020.
−Removed: In February 2020, we repaid the remaining balance on our term loan, an end-of-term payment and prepayment fees.
+Added: Other (expense) income, net (198) (802) 604 (75) %
+Added: Total other income (expense) $ 5,973 $ (1,462) $ 7,435 (509) %
+Added: Interest income increased by $6.4 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
+Added: The increase was primarily due to interest income generated from our cash equivalents and marketable securities during the year ended December 31, 2022 and an increase in interest rates.
+Added: Interest expense decreased by $0.4 million, or 45%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021 driven primarily by lower interest expense recognized on accrued license fees.
+Added: The change in other income (expense), net for the year December 31, 2022 as compared to the year ended December 31, 2021 was driven by realized and unrealized losses from foreign currency rate measurement fluctuations.
Provision for Income Taxes
3 unchanged sentences
Liquidity and Capital Resources
−Removed: As of December 31, 2021, we had approximately $587.4 million in cash and cash equivalents which were primarily held in U.S.
−Removed: bank deposit accounts and money market funds, $85.3 million in accounts receivable and an accumulated deficit of $863.3 million.
+Added: As of December 31, 2022, we had approximately $430.0 million in cash and cash equivalents, and marketable securities which were primarily held in U.S.
Short-term restricted cash of $2.6 million and long-term restricted cash of $5.0 million primarily serves as collateral for outstanding letters of credit for facilities.
−Removed: We have generated negative cumulative cash flows from operations since inception through the year ended December 31, 2021, and we have generated losses from operations since inception as reflected in our accumulated deficit of $863.3 million.
−Removed: We expect to continue to incur operating losses for the foreseeable future due to investments we intend to make and as a result we may require additional capital resources to execute strategic initiatives to grow our business.
−Removed: We expect this may include accessing alternative sources of financing for the expansion of our headquarters in Pleasanton, such as mortgage financing or a capital partner.
−Removed: We currently anticipate making aggregate capital expenditures of between approximately $200 million and $225 million during the next 12 months, approximately two thirds of which we expect to incur for construction costs of the facilities on the land we purchased in Pleasanton, California, as well as other global facilities and equipment to be used for manufacturing and research and development, the sources of which may include external funding such as mortgage financing or a capital partner.
−Removed: In the normal course of operations, we enter into certain contractual obligations and commitments.
−Removed: See Note 7 of our consolidated financial statements for additional details regarding commitments and contingencies.
+Added: We have generated negative cumulative cash flows from operations since inception through the year ended December 31, 2022, and we have generated losses from operations since inception as reflected in our accumulated deficit of $1.0 billion.
+Added: We currently anticipate making aggregate capital expenditures of between approximately $60 million and $70 million during the next 12 months, the majority of which we expect to incur for construction costs of the facilities on our property in Pleasanton, California in the first half of 2023, 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.
1 unchanged sentence
We regularly review opportunities that meet our long-term growth objectives.
−Removed: 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.
+Added: 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.
−Removed: We intend to continue to evaluate market conditions and may in the future pursue various funding alternatives to further enhance our financial position and to help fund our strategic initiatives.
+Added: 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.
−Removed: The COVID-19 pandemic has negatively impacted the global economy and our suppliers', customers' and other partners' operations, disrupted global labor supply, supply chains, logistics, shipping and other distribution operations and created significant volatility and disruption of financial markets.
−Removed: We will continue to monitor the development and control of the COVID-19 pandemic and its effects and while the situation remains uncertain, we intend to continue to invest in research and development activities and other initiatives including accelerated investments in product development and intellectual property to launch new products and continue improving existing 10x solutions.
−Removed: Additionally, we plan to continue to build our commercial
−Removed: organization across key geographies around the world and invest in capabilities to address the interest we are seeing from the pharmaceutical and translational markets.
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.
−Removed: In September 2019, we completed our IPO for aggregate proceeds of $410.8 million, net of offering costs, underwriter discounts and commissions.
−Removed: 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.
+Added: In September 2019, we completed our initial public offering for aggregate proceeds of $410.8 million, net of offering costs, underwriter discounts and commissions.
+Added: In September 2020, we completed a public offering of our Class A common stock for aggregate proceeds of $482.3 million, net of offering costs, underwriting discounts and commissions.
Cash flow summary
7 unchanged sentences
Effect of exchange rates changes on cash, cash equivalents, and restricted cash (44) 234
−Removed: Net (decrease) increase in cash, cash equivalents, and restricted cash $ (92,571) $ 212,151
+Added: Net decrease in cash, cash equivalents, and restricted cash $ (368,720) $ (92,571)
Operating activities
+Added: The net cash used in operating activities of $33.6 million for the year ended December 31, 2022 was due primarily to a net loss of $166.0 million, net cash outflow from changes in operating assets and liabilities of $39.4 million, partially offset by stock-based compensation expense of $136.8 million, depreciation and amortization of $25.4 million, amortization of leased right-of-use assets of $7.6 million, loss on disposal of property and equipment of $1.1 million and amortization of premium and accretion of discount on marketable securities, net of $0.9 million.
+Added: The net cash outflow from operating assets and liabilities was primarily due to an increase in inventory of $21.2 million due to anticipated demand including new product introductions and supply chain management, an increase in accounts receivable of $18.9 million primarily due to increase in revenue and timing of collections, a decrease of $6.4 million due to payment of operating lease liabilities, an increase in prepaid expenses and other current assets of $4.5 million and a decrease in other noncurrent liabilities of $2.9 million.
+Added: The net cash outflow from operating assets and liabilities was partially offset by an increase in accounts payable of $5.9 million due to timing of vendor payments, an increase in deferred revenue of $3.4 million, an increase in accrued expenses and other current liabilities of $3.3 million, an increase in accrued compensation and other related benefits of $1.1 million and a decrease in other noncurrent assets of $0.9 million.
The net cash used in operating activities of $21.4 million for the year ended December 31, 2021 was due primarily to a net loss of $58.2 million, net cash outflow from changes in operating assets and liabilities of $87.4 million, partially offset by stock-based compensation expense of $96.0 million, depreciation and amortization of $21.1 million and amortization of leased right-of-use assets of $7.1 million.
1 unchanged sentence
The net cash outflow from operating assets and liabilities was partially offset by an increase in accrued compensation and other related benefits of $16.3 million, an increase in accounts payable of $11.1 million due to higher operational spending and timing of vendor payments, a decrease in deferred revenue of $1.5 million and a decrease in other noncurrent assets of $1.0 million.
−Removed: The net cash used in operating activities of $217.9 million for the year ended December 31, 2020 was due primarily to a net loss of $542.7 million, net cash outflow from changes in operating assets and liabilities of $50.4 million, partially offset by adjustments for Class A common stock issued for in-process research and development related to the ReadCoor asset acquisition of $306.0 million, stock-based compensation expense of $48.6 million, depreciation and amortization of $14.0 million, amortization of leased right-of-use assets of $5.0 million and loss on extinguishment of debt of $1.5 million.
−Removed: The net cash outflow from operating assets and liabilities was primarily due to a decrease in accrued contingent liabilities of $24.5 million as a result of a payment of $34.5 million in December 2020 relating to the Bio-Rad judgement (see Note 7 for details), an increase in accounts receivable of $17.8 million due to timing of collections, an increase in inventory of $14.6 million due to the timing of inventory purchases including advance purchases of inventory due to anticipated demand, a decrease in other noncurrent liabilities of $3.8 million, an increase in prepaid expenses and other current assets of $5.3 million, a decrease of $4.8 million in payment of operating lease expenses, an increase in other assets of $2.7 million and a decrease in accounts payable of $7.8 million due to timing of vendor payments.
−Removed: The net cash outflow from operating assets and liabilities was partially offset by an increase in accrued expenses and other current liabilities of $25.9 million consistent with the growth of our business and an increase in accrued compensation and other related benefits of $2.9 million.
Investing activities
+Added: The net cash used in investing activities of $350.9 million in the year ended December 31, 2022 was due to purchases of marketable securities of $282.9 million, purchases of property and equipment of $131.7 million and payment of acquisition-related holdback cash and contingent consideration of $4.0 million, partially offset by proceeds from sales and maturities of marketable securities of $49.1 million and $18.5 million, respectively.
The net cash used in investing activities of $106.7 million in the year ended December 31, 2021 was due to purchases of property and equipment of $101.3 million including the purchase of land for $28.1 million and cash paid for the acquisition of Tetramer Shop of $5.5 million.
−Removed: The net cash used in investing activities of $38.4 million in the year ended December 31, 2020 was due to purchases of property and equipment of $36.7 million and purchases of intangible assets of $1.7 million.
Financing activities
The net cash provided by financing activities of $15.8 million in the year ended December 31, 2022 was primarily from proceeds of $21.2 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.
−Removed: The net cash provided by financing activities of $468.9 million in the year ended December 31, 2020 was primarily from proceeds of $482.3 million from the issuance of Class A common stock after deducting offering costs, underwriting discounts and commissions, and proceeds of $23.7 million from the issuance of common stock from the exercise of stock options and employee stock purchase plan purchases, partially offset by the use of $31.3 million in connection with loan principal payments including the early repayment of the term loan under the Loan and Security Agreement (including fees in connection with the early repayment of the term loan) and payments on financing arrangements of $5.8 million.
+Added: The net cash provided by financing activities of $35.3 million in the year ended December 31, 2021 was primarily from proceeds of $40.3 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.
Critical Accounting Estimates
14 unchanged sentences
Customers are invoiced generally upon shipment, or upon order for services, and payment is typically due within 45 days.
−Removed: Cash received from customers in advance of product shipment or providing services is recorded as a contract liability.
+Added: Cash received from customers in advance of product shipment or providing services is recorded as a liability.
Our contracts with our customers generally do not include rights of return or a significant financing component.
5 unchanged sentences
We use judgment to analyze and determine if the composition of our inventory is obsolete, slow-moving or unsalable and frequently review such determinations.
−Removed: We write down specifically identified unusable, obsolete, slow-moving or known unsalable inventory in the
−Removed: period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders and sales forecasts.
+Added: We write down specifically identified unusable, obsolete, slow-moving or known unsalable inventory in the period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders and sales forecasts.
Any write-down of inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods.
3 unchanged sentences
Stock-based compensation
−Removed: Our stock-based compensation relates to stock options, restricted stock units (“RSUs”) and stock purchase rights under an Employee Stock Purchase Plan (“ESPP”).
+Added: Our stock-based compensation 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 stock-based awards are based on their grant date fair value.
−Removed: We determine the fair value of RSUs based on the closing price of our stock price, which is listed on Nasdaq, at the date of the grant.
−Removed: We estimate the fair value of stock option awards granted to employees, non-employees and directors on the grant date using the Black-Scholes option-pricing model.
−Removed: The fair value of stock option awards is 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.
−Removed: Stock option awards that include a service condition and a performance condition are considered expected to vest when the performance condition is probable of being met.
+Added: We determine the fair value of RSUs based on the closing price of our stock price, which is listed on Nasdaq Stock Market LLC, at the date of the grant.
+Added: We estimate the fair value of stock option awards under an equity incentive plan and stock purchase right under an ESPP on the grant date using the Black-Scholes option-pricing model.
+Added: 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.
−Removed: For all stock options granted, we calculate the expected term using the simplified method for “plain vanilla” stock option awards.
+Added: We calculate the expected term using the simplified method, which is the mid-point between the vesting and contractual term.
We determine expected volatility using the historical volatility of the stock price of similar publicly traded peer companies.
1 unchanged sentence
Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award.
+Added: During the year ended December 31, 2022, we issued market-based performance stock awards ("PSAs") comprising of performance stock options and performance restricted stock units.
+Added: The PSAs consist of three separate tranches and the vesting of each tranche is subject to the Class A common stock closing price being maintained at or above the predetermined share price goals of $60, $80 and $105 for each tranche, respectively, for a period of 20 consecutive trading days.
+Added: The share price goals can
+Added: be met any time prior to the fourth anniversary of the date of grant.
+Added: We estimated the value of the PSA awards granted in the year ended December 31, 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.
+Added: We will recognize the compensation expense over the derived service period using the accelerated attribution method commencing on the grant date.
+Added: The derived service period is the median duration of the successful stock price paths to meet the price goal for each tranche as simulated in the Monte Carlo valuation model.
+Added: 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.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.