What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-16 compared with 2022-02-18 · 229 added, 147 removed, 730 unchanged (34% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of 10x Genomics, Inc.

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Revenue Recognition

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Auditing the Company’s revenue recognition can be complex due to the volume of sales transactions including multiple performance obligations.

Judgment is involved to determine the allocation of consideration using stand-alone selling price.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the allocation of the transaction price to performance obligations in revenue transactions.

For example, we tested controls over management’s review of revenue system configurations, management’s analyses of stand-alone selling price, and the automated system controls for the application of the stand-alone selling price to the revenue transactions.

Our audit procedures over the allocation of consideration using stand-alone selling price included, among others, for a sample of individual sales transactions, we inspected the customer contract, identified the distinct performance obligation(s) in the contract, and recalculated the allocation of the transaction price.

For example, we tested management’s analyses of stand-alone selling price, and tested the automated system controls for the application of the stand-alone selling price to the revenue transactions.

Our audit procedures included, among others, evaluating the allocation of consideration using stand-alone selling price for a sample of individual sales transactions.

For the sample, we inspected the customer contract, identified the distinct performance obligation(s) in the contract, and recalculated the allocation of the transaction price.

We further assessed the timing of revenue recognition based on evidence of transfer of control of the goods to the customer or the recognition of revenue over time for extended warranty service performance obligations.

We also tested the reconciliation of the deferred revenue related to the extended warranty service performance obligation.

/s/ Ernst & Young LLP

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Cash and cash equivalents $ 219,746 $ 587,447

Marketable securities 210,238 —

Restricted cash 2,633 1,028

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Operating lease liabilities 9,037 5,131

Accrued contingent liabilities — 44,173

Total current liabilities 130,957 110,357

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Accumulated deficit ( 1,029,321 ) ( 863,321 )

Accumulated other comprehensive gain (loss) 22 ( 50 )

Accumulated other comprehensive income (loss) ( 4,335 ) 22

Total stockholders’ equity 805,743 817,568

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10x Genomics, Inc.

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Operations

(In thousands, except share and per share data)

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Loss on extinguishment of debt — — ( 1,521 )

Total other expense ( 1,462 ) ( 334 ) ( 460 )

Total other income (expense) 5,973 ( 1,462 ) ( 334 )

Loss before provision for income taxes ( 161,971 ) ( 53,715 ) ( 534,476 )

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Net loss $ ( 166,000 ) $ ( 58,223 ) $ ( 542,731 )

Net loss per share, basic and diluted $ ( 1.46 ) $ ( 0.53 ) $ ( 5.37 )

Weighted-average shares used to compute net loss per share, basic and diluted 113,858,684 110,347,937 101,151,675

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

10x Genomics, Inc.

Consolidated Statements of Comprehensive Loss

(In thousands)

2022 2021 2020

Net loss $ ( 166,000 ) $ ( 58,223 ) $ ( 542,731 )

Other comprehensive income (loss), net of tax:

Unrealized losses on available-for-sale marketable securities ( 4,116 ) — —

Foreign currency translation adjustment ( 241 ) 72 ( 4 )

Other comprehensive income (loss), net of tax ( 4,357 ) 72 ( 4 )

Comprehensive loss $ ( 170,357 ) $ ( 58,151 ) $ ( 542,735 )

Net loss per share, basic and diluted $ ( 0.53 ) $ ( 5.37 ) $ ( 0.80 )

Weighted-average shares used to compute net loss per share, basic and diluted 110,347,937 101,151,675 39,091,366

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

10x Genomics, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

Preferred Stock Common Stock Additional

Common Stock Additional

Capital Accumulated

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Stockholders’

Shares Amount Shares Amount

Shares Amount

Balance as of December 31, 2019 96,241,596 $ 2 $ 682,494 $ ( 262,367 ) $ ( 46 ) $ 420,083

Issuance of Class A common stock upon exercise of options — — 2,226,493 — 3,435 — — 3,435

Conversion of convertible preferred stock into Class B common stock ( 67,704,278 ) ( 243,244 ) 67,704,278 1 243,243 — — 243,244

Issuance of Class A common stock upon initial public offering, net of issuance costs — — 11,500,000 — 410,824 — — 410,824

Cashless exercise of Class A common stock warrants — — 261,024 — — — — —

Issuance of Class A common stock related to equity awards 5,742,931 — 23,743 — — 23,743

Sale of Class A common stock 4,600,000 — 482,267 — — 482,267

Issuance of Class A common stock for asset acquisition 1,901,382 — 306,000 — — 306,000

Vesting of shares subject to repurchase, including early exercised options — — 247 — — 247

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Issuance of Class A common stock related to equity awards 4,029,068 — 40,325 — — 40,325

Sale of Class A common stock — — 4,600,000 — 482,267 — — 482,267

Issuance of Class A common stock for asset acquisition — — 1,901,382 — 306,000 — — 306,000

Vesting of shares subject to repurchase, including early exercised options — — 154 — — 154

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Net loss — — — ( 58,223 ) — ( 58,223 )

Other comprehensive loss — — — — — — ( 4 ) ( 4 )

Other comprehensive income — — — — 72 72

Balance as of December 31, 2021 112,514,977 2 1,680,865 ( 863,321 ) 22 817,568

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Net loss — — — ( 166,000 ) — ( 166,000 )

Other comprehensive income — — — — — — 72 72

Other comprehensive loss — — — — ( 4,357 ) ( 4,357 )

Balance as of December 31, 2022 115,195,009 $ 2 $ 1,839,397 $ ( 1,029,321 ) $ ( 4,335 ) $ 805,743

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Net loss $ ( 166,000 ) $ ( 58,223 ) $ ( 542,731 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 25,368 21,118 14,012

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Loss on extinguishment of debt — — 1,521

Amortization of premium and accretion of discount on marketable securities, net 871 — —

Amortization of right-of-use assets 7,638 7,136 5,009

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Accrued expenses and other current liabilities 3,336 ( 873 ) 25,917

Deferred rent, noncurrent — — 12,730

Operating lease liability ( 6,423 ) ( 2,469 ) ( 4,832 )

Other noncurrent liabilities ( 2,942 ) ( 4,705 ) ( 3,771 )

Net cash (used in) provided by operating activities ( 21,373 ) ( 217,898 ) 34,627

Net cash used in operating activities ( 33,606 ) ( 21,373 ) ( 217,898 )

Investing activities:

Purchase of marketable securities ( 282,871 ) — —

Purchases of property and equipment ( 131,661 ) ( 101,278 ) ( 36,666 )

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Acquisition of intangible assets — — ( 1,728 )

Proceeds from sales of marketable securities 49,117 — —

Proceeds from maturities of marketable securities 18,528 — —

Net cash used in investing activities ( 350,887 ) ( 106,729 ) ( 38,394 )

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Payments on term loans — — ( 31,256 )

Proceeds from borrowings under revolver — — 11,000

Payments on borrowings under revolver — — ( 11,000 )

Payments on technology license financing arrangement ( 5,409 ) ( 5,028 ) ( 5,848 )

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Net cash provided by financing activities 15,817 35,297 468,906

Effect of exchange rates on changes in cash, cash equivalents, and restricted cash 234 ( 463 ) ( 45 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 44 ) 234 ( 463 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 368,720 ) ( 92,571 ) 212,151

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Contingent consideration payable related to business acquisition $ — $ 1,500 $ —

Conversion of convertible preferred stock into common stock upon initial public offering $ — $ — $ 243,244

Purchase of technology licenses under financing arrangement $ — $ — $ 22,099

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

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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 our Visium solution, which does not require a 10x Genomics instrument, and our Chromium solution, 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 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 X Series and Chromium Connect instruments, which the Company refers to as “Chromium instruments,” the Company's Visium CytAssist and Xenium Analyzer instruments and the Company’s proprietary microfluidic chips, slides, reagents and other consumables for the Company's Chromium, Visium and Xenium solutions, which the Company refers to as “consumables.” The Company bundles its software with these products to guide customers through the workflow, from sample preparation through analysis and visualization.

The Company was incorporated in the state of Delaware in July 2012 and began commercial and manufacturing operations and selling its instruments and consumables in 2015.

The Company is headquartered in Pleasanton, California and has wholly-owned subsidiaries in Asia, Europe and North America.

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Cash equivalents consist of amounts invested in money market funds and are stated at fair value.

Short-term restricted cash of $ 1.0 million and long-term restricted cash of $ 7.6 million primarily represents cash on deposit with financial institutions as security for letters of credit outstanding for the benefit of the landlord related to the Company’s non-cancelable operating leases for its corporate headquarters (see “—Commitments and Contingencies” below).

As of December 31, 2022, short-term restricted cash of $ 2.6 million and long-term restricted cash of $ 5.0 million primarily represents cash on deposit with financial institutions as security for letters of credit outstanding for the benefit of the landlord related to the Company’s non-cancelable operating leases for its corporate headquarters (see “Commitments and Contingencies” below).

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):

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Total cash, cash equivalents and restricted cash $ 227,353 $ 596,073 $ 688,644

Marketable Securities

The Company designates investments in debt securities as available-for-sale.

Available-for-sale debt securities with original maturities of three months or less from the date of purchase are classified within cash and cash equivalents.

Available-for-sale debt securities with original maturities longer than three months are available to fund current operations and are classified as marketable securities, within current assets on the balance sheet.

Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in "Accumulated other comprehensive income (loss)," a component of stockholders’ equity, net of tax.

Realized gains (losses) on the sale of marketable securities are determined using the specific-identification method and recorded in “Other (expense) income, net” in the Consolidated Statements of Operations.

The available-for-sale debt securities are subject to a periodic impairment review.

For investments in an unrealized loss position, the Company determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions.

The Company recognizes an allowance for credit losses, up to the amount of the unrealized loss when appropriate, and writes down the amortized cost basis of the investment if it is more likely than not that the Company will be required or will intend to sell the investment before recovery of its amortized cost basis.

Allowances for credit losses and write-downs are recognized in “Other (expense) income, net,” and unrealized losses not related to credit losses are recognized in “Accumulated other comprehensive income (loss).” There are no allowances for credit losses for the periods presented.

As of December 31, 2022, the gross unrealized losses on available-for-sale securities are related to market interest rate changes and not attributable to credit.

Fair Value of Financial Instruments

The Company determines the fair value of an asset or liability based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction between market participants at the measurement date.

The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability.

A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs.

This hierarchy prioritized the inputs into three broad levels as follows:

Quoted prices in active markets for identical instruments

Other significant observable inputs (including quoted prices in active markets for similar instruments)

Significant unobservable inputs (including assumptions in determining the fair value of certain investments)

Money market funds are highly liquid investments which are actively traded.

The pricing information for the Company’s money market funds are readily available and can be independently validated as of the measurement date.

This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

There were no transfers between Levels 1, 2 or 3 for any of the periods presented.

As of December 31, 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.

Cash equivalents are comprised of money market funds which are classified as Level 1 in the fair value hierarchy.

Assets recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values.

Fair value is defined as the exchange price that would be received for an asset in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

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

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

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

The Company’s financial instruments consist of Level 1 and Level 2 assets.

Where quoted prices are available in an active market, securities are classified as Level 1.

Money market funds are classified as Level 1.

Level 2 assets consist primarily of corporate bonds, asset-backed securities, commercial paper, U.S.

Government Treasury and agency securities, and debt securities in government-sponsored entities based upon quoted market prices for similar movements in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third party-data providers, including but not limited to, benchmark yields, interest rate curves, reported trades, broker/dealer quotes and reference data.

Accounts Receivable, Net

Accounts receivable consist of amounts due from customers for the sales of products and services.

The Company reviews its accounts receivable and provides allowances of specific amounts if collectability is no longer reasonably assured based on historical experience and specific customer collection issues.

There was no allowance for doubtful accounts as of December 31, 2021 and December 31, 2020.

The Company reviews its accounts receivable and provides allowances of specific amounts if collectability is no longer reasonably assured based on

historical experience and specific customer collection issues.

The allowance for doubtful accounts was $ 0.1 million and $ 0 as of December 31, 2022 and 2021, respectively.

Business Concentrations

The Company’s instruments are mostly assembled and tested by a single contract manufacturer in Asia and the United States.

The Company’s instruments are mostly assembled and tested by third party contract manufacturers in Asia and the United States.

The Company’s agreement with the contract manufacturers contains purchase commitments.

In addition, the Company is reliant on several suppliers for key components for its reagent kits.

A significant disruption in the operations of the contract manufacturers or suppliers may impact the production of the Company’s products for a substantial period of time, which could have a material adverse effect on its business, financial condition and results of operations, which may be partially mitigated by the contract manufacturer's ability to relocate operations from Asia location to United States.

Concentrations

Financial instruments that potentially subject the Company to credit risk consist of cash equivalents and accounts receivable.

Financial instruments that potentially subject the Company to credit risk consist of cash equivalents, marketable securities (as described in this footnote under the header “Marketable Securities” above) and accounts receivable.

The Company’s cash and cash equivalents held with large financial institutions in the United States and deposits exceed the Federal Deposit Insurance Corporation’s insurance limit.

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As of December 31, 2021, one of the Company's distributors accounted for 11 % of the Company’s outstanding accounts receivable.

No other customer or distributor represented more than 10% of the Company’s outstanding accounts receivable as of December 31, 2021 and December 31, 2020.

No customer or distributor represented more than 10% of the Company’s outstanding accounts receivable as of December 31, 2022.

Substantially all the Company’s long-lived assets are located in the United States.

Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or net realizable value.

The Company uses judgment to analyze and determine if the composition of its inventory is obsolete, slow-moving or unsalable and frequently reviews such determinations.

The Company writes 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.

The Company uses judgment to analyze and determine if the composition of its inventory is obsolete, slow-moving, unsalable or otherwise carried above the net realizable value and frequently reviews such determinations.

The Company writes down specifically identified unusable, obsolete, slow-moving or known unsalable inventory and inventory otherwise carried above the net realizable value 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.

Net realizable value is determined using the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

Any write-down of its 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.

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Internal-Use Software

The Company capitalizes costs incurred to develop internal-use software within fixed assets and commencing from 2020, began capitalizing costs to develop hosting arrangements within other noncurrent assets in the consolidated balance sheets.

The Company capitalizes costs incurred to develop internal-use software within property and equipment, net and capitalizes costs to develop hosting arrangements within other noncurrent assets in the consolidated balance sheets.

Costs incurred during the preliminary planning and evaluation and post implementation stages of the project are expensed as incurred.

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The Company evaluates long-lived assets, such as property and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

If indicators of impairment exist and the undiscounted future cash flows that the assets are expected to generate are less than the carrying value of the assets, the Company reduces the carrying amount of the assets to their estimated fair values based on a discounted cash flow approach or,

when available and appropriate, to comparable market values.

There were no impairment losses recorded for the years ended December 31, 2022, 2021 and 2020.

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The Company reviews its exposure to estimated warranty obligations associated with instrument sales and establishes an accrual based on historical product failure rates and actual warranty costs incurred.

This expense is recorded as a component of cost of revenue in the consolidated statements of operations and comprehensive loss.

This expense is recorded as a component of cost of revenue in the consolidated statements of operations.

Deferred Revenue

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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.

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.

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Stock-Based Compensation

The Company’s stock-based compensation relates to stock options, restricted stock units (“RSUs”) and stock purchase rights under an Employee Stock Purchase Plan (“ESPP”).

The Company’s stock-based compensation expense relates to stock options, restricted stock units (“RSUs”), market-based performance stock awards ("PSAs") including performance stock options and performance RSUs granted pursuant to equity incentive plans, and stock purchase rights under an Employee Stock Purchase Plan (“ESPP”).

Stock-based compensation expense for its stock-based awards is based on their grant date fair value.

The Company determines the fair value of RSUs based on the closing price of its stock, which is listed on Nasdaq, at the date of the grant.

The Company estimates the fair value of stock option awards and stock purchase rights under an ESPP on the grant date using the Black-Scholes option-pricing model.

The fair values of stock-based awards 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 Company determines the fair value of RSUs based on the closing price of its stock, which is listed on the Nasdaq Stock Market LLC, at the date of the grant.

The Company estimates the fair value of stock option awards under an equity incentive plan and stock purchase rights under an ESPP on the grant date using the Black-Scholes option-pricing model.

The fair values of stock-based awards excluding PSAs are recognized as compensation expense on a straight-line basis over the requisite service period in which the awards are expected to vest and forfeitures are recognized as they occur.

The Black-Scholes model considers several variables and assumptions in estimating the fair value of stock-based awards.

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Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award.

For PSAs, the Company derives the valuation of the award and the requisite service period for each separately vesting portion of the award using a Monte Carlo simulation model and the related compensation expense is recognized over the derived service period using the accelerated attribution method commencing on the grant date.

The derived service period is the median

duration of the successful stock price paths to meet the respective escalating stock price thresholds as simulated in the Monte Carlo valuation model which uses assumptions such as volatility, risk-free interest rate, cost of equity and dividend estimated for the performance period of the PSAs.

If the related market condition is achieved earlier than its estimated derived service period, the stock-based compensation expense will be accelerated, and a cumulative catch-up expense will be recorded during the period in which the market condition is met.

Foreign Currency

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dollar using month-end exchange rates, and revenue and expenses using average exchange rates.

The adjustments resulting from these foreign currency translations are recorded in Accumulated other comprehensive gain (loss).

The adjustments resulting from these foreign currency translations are recorded in “Accumulated other comprehensive income (loss).”

For entities where the functional currency is the U.S.

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Revenue and expenses are remeasured at the average exchange rates for the period.

Gains or losses from foreign currency remeasurement are included in other income (expense), net in the consolidated statements of operations and comprehensive loss.

The Company recognized foreign currency transaction losses of $ 0.9 million for the year ended December 31, 2021, and foreign currency transaction gains of $ 1.3 million and $ 0.1 million for the years ended December 31, 2020 and 2019, respectively.

Gains or losses from foreign currency remeasurement are included in “other (expense) income, net” in the consolidated statements of operations.

The Company recognized foreign currency transaction gains of $ 0.2 million and $ 1.3 million for the years ended December 31, 2022 and December 31, 2020, and foreign currency transaction losses of $ 0.9 million for the year ended December 31, 2021, respectively.

The Company uses the asset and liability method of accounting for income taxes, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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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.

The Company’s participating securities included the Company’s convertible preferred stock, as the holders would have been entitled to receive noncumulative dividends on a pari passu basis in the event that a dividend was paid on common stock.

The Company also considers any shares issued on the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of convertible preferred stock, as well as the holders of early exercised shares subject to repurchase, do not have a contractual obligation to share in losses.

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.

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Upon recognition of the contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets.

Restructuring

On August 3, 2022, the Company implemented a reduction in force plan in order to decrease costs and maintain a streamlined organization to support the business.

Restructuring charges of $ 4.2 million associated with this plan, comprised primarily of severance-related costs, were recorded during the year ended December 31, 2022.

The following table is a summary of restructuring costs related to the restructuring as of December 31, 2022 (in thousands):

Severance and Benefits Costs Stock-Based Compensation Expense Total

Balance at January 1, 2022 $ — $ — $ —

Restructuring charge 3,600 616 4,216

Cash payments made ( 3,385 ) — ( 3,385 )

Non-cash charge — ( 616 ) ( 616 )

Balance at December 31, 2022 $ 215 $ — $ 215

Restructuring costs of $ 0.3 million, $ 1.4 million and $ 2.5 million were recorded in cost of revenue, research and development expense, and selling, general and administrative expense, respectively, in the Company's consolidated statements of operations during the year ended December 31, 2022.

The restructuring activities were substantially completed as of December 31, 2022.

2021 Acquisition

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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 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 contingent consideration was recorded as a liability on the acquisition date and was paid in 2022 upon the successful completion of the transfer of Tetramer Shop's technology.

Tetramer Shop was a life sciences technology company which developed and provided 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.

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The fair values assigned to the assets acquired and liabilities assumed were based on management’s assumptions as of the reporting date.

Our 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 consolidated statements of income and was not material.

The final fair value of assets acquired, including goodwill and intangibles, and liabilities assumed as of the acquisition date were as follows (in thousands):

Our consolidated statements of operations 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 consolidated statements of operations.

The fair value of assets acquired, including goodwill and intangibles, and liabilities assumed as of the acquisition date were as follows (in thousands):

Cash and cash equivalents $ 224

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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 Company does not expect any portion of this goodwill to be deductible for tax purposes.

The goodwill attributable to the acquisition was recorded as a noncurrent asset and is not amortized but is subject to an annual review for impairment.

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In determining the total purchase consideration paid for ReadCoor, these shares were valued at $ 306.0 million based on the fair value of the Company’s class A common stock on the acquisition date.

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.

ReadCoor developed In Situ RNA analysis technology, consisting of a suite of proprietary reagents, which enabled researchers to visualize spatially resolved RNA expression profiles with sub-cellular resolution throughout fresh frozen or formalin-fixed, paraffin-embedded tissue sections.

The transaction was accounted for as an asset acquisition.

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On August 21, 2020, the Company purchased all of the outstanding shares of CartaNA AB (“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.

CartaNA 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.

CartaNA developed In Situ RNA analysis technology, consisting of a suite of proprietary reagents, which enabled researchers to visualize spatially resolved RNA expression profiles with sub-cellular resolution throughout fresh frozen or formalin-fixed, paraffin-embedded tissue sections.

The transaction was accounted for as an asset acquisition.

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Other Financial Statement Information

Available-for-sale Securities

Available-for-sale securities at December 31, 2022 consisted of the following (in thousands):

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Fair Value Measurement

Cash equivalents:

Money market funds $ 163,184 $ — $ — $ 163,184 Level 1

Marketable securities:

Corporate debt securities 153,794 4 ( 2,768 ) 151,030 Level 2

Government debt securities 54,136 — ( 1,247 ) 52,889 Level 2

Asset-backed securities 6,424 — ( 105 ) 6,319 Level 2

Total available-for-sale securities $ 377,538 $ 4 $ ( 4,120 ) $ 373,422

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

The contractual maturities of marketable securities as of December 31, 2022 were as follows (in thousands):

Due in one year or less $ 144,543

Due after one year to five years 65,695

Inventory was comprised of the following (in thousands):

Year Ended December 31,

Purchased materials $ 34,497 $ 31,954

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Property and equipment, net consisted of the following (in thousands):

Year Ended December 31,

Land $ 36,780 $ 36,099

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Intangible Assets, Net

Intangible assets, net, which are recorded within other noncurrent assets in the consolidated balance sheets, consisted of the following (dollars in thousands):

Intangible assets, net consisted of the following (dollars in thousands):

December 31, 2022 December 31, 2021

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Customer relationships 1.8 945 ( 563 ) 382 945 ( 337 ) 608

Trademarks — 204 ( 204 ) — 204 ( 142 ) 62

Assembled workforce 2.8 1,128 ( 513 ) 615 1,128 ( 287 ) 841

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

Year Ended December 31,

Accrued payroll and related costs $ 2,052 $ 3,978

Employee stock purchase program liability 1,693 1,258

Accrued bonus 17,081 16,558

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Accrued acquisition-related compensation 5,470 4,430

Accrued vacation 1,172 1,035

Other 2,929 3,243

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

Year Ended December 31,

Accrued legal and related costs $ 3,102 $ 2,425

Accrued license fee 6,231 6,214

Accrued purchase consideration — 4,146

Accrued royalties for licensed technologies 4,707 4,415

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Product warranties 3,023 994

Customer deposits 954 1,727

Taxes payable 4,079 4,622

Accrued lab supplies 2,056 1,506

Other 6,707 8,285

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Total revenue $ 516,409 $ 490,490 $ 298,845

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 repaid 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.

Loss before provision for income taxes were as follows for the periods indicated (in thousands):

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Stock-based compensation 20,910 12,261

Section 174 capitalized R&D 49,462 —

Total deferred tax assets 382,711 330,612

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As of December 31, 2022 and 2021, the Company maintained a full valuation allowance on its domestic net deferred tax assets.

The domestic deferred tax assets predominantly relate to operating losses and tax credits.

The domestic deferred tax assets predominantly relate to operating losses, tax credits and Section 174 capitalized R&D intangibles.

The domestic valuation allowance was estimated based on an assessment of both positive and negative evidence to determine whether it is more likely than not that deferred tax assets are recoverable.

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Reductions based on prior year tax provisions ( 380 ) ( 252 )

Additions based on prior year tax provisions 2,474 —

Additions based on current year tax provisions 5,902 9,354

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The Company maintained undistributed earnings overseas as of December 31, 2022.

As of December 31, 2021, the Company believed the funds held by all non-US subsidiaries will be permanently reinvested outside of the U.S.

As of December 31, 2022, the Company believed the funds held by all non-U.S.

subsidiaries will be permanently reinvested outside of the U.S.

However, if these funds were repatriated to the U.S.

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Non-cancelable Purchase Commitments

The Company’s contract manufacturer makes advance purchases of components based on the instrument unit forecasts and purchase orders placed by the Company.

To the extent these components are purchased by the contract manufacturer on the Company’s behalf and cannot be used by their other customers, the Company is obligated to purchase these components.

The Company’s contract manufacturers make advance purchases of components based on the instrument unit forecasts and purchase orders placed by the Company.

To the extent these components are purchased by a contract manufacturer on the

Company’s behalf and cannot be used by their other customers, the Company is obligated to purchase these components.

In addition, certain supplier agreements require that the Company to make minimum annual purchases under the agreements.

December 31, 2021, the Company has commitments to make a total of $ 0.5 million in purchases over the next three years.

To date, the Company has met the minimum purchase commitments.

As of December 31, 2021, the Company has entered into non-cancelable arrangements for subscription software services and construction contracts associated with the development of buildings at our Springdale, Pleasanton site under which the Company has an obligation to make payments aggregating to $ 15.9 million and $ 16.3 million over the next five years.

As of December 31, 2022, the Company has entered into non-cancelable arrangements for subscription software services and construction contracts associated with the development of buildings at our Springdale, Pleasanton site under which the Company has an obligation to make payments aggregating to $ 13.2 million and $ 0.2 million, respectively, over the next three years.

Intellectual Property Licensing

In July 2021, the Company entered into a global settlement and patent cross license agreement with Bio-Rad Laboratories, Inc.

(see the 2021 Bio-Rad Settlement And Patent Cross License Agreement in this footnote for further details) pursuant to which both parties granted each other a non-exclusive, worldwide, royalty-bearing license to develop products and services related to single cell analysis.

pursuant to which both parties granted each other a non-exclusive, worldwide, royalty-bearing license to develop products and services related to single cell analysis.

Each company shall pay to the other royalties from licensed products and licensed services through 2030.

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As the Company receives revenue related to products covered by these licenses, it is required to pay Stanford a low single-digit royalty percentage based on the net revenue of certain products during the applicable term of the licensed patents.

In October 2019, as part of the 2019 Becton Dickinson Settlement and Patent Cross License Agreement with Becton, Dickinson and Company and Cellular Research, Inc.

(“BD Entities”), the Company was granted a worldwide royalty-free, nonexclusive license to certain intellectual property from the BD Entities.

The Company recognized $ 22.1 million in technology licenses as an intangible asset with a weighted average amortization period of 15 years.

This license is classified within other noncurrent assets on the Company’s consolidated balance sheet as of December 31, 2021.

The minimum commitments related to the Company's license arrangements aggregate to $ 24.6 million as of December 31, 2022 to be paid over the next 17 years.

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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 years ended December 31, 2021 and December 31, 2020, the Company incurred $ 10.5 million and $ 8.4 million, respectively, of operating lease costs and $ 0.6 million and $ 0.4 million, respectively, of variable lease costs.

For the years ended December 31, 2022, 2021 and 2020, the Company incurred $ 13.1 million, $ 10.5 million and $ 8.4 million, respectively, of operating lease costs and $ 0.4 million, $ 0.6 million and $ 0.4 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 year ended December 31, 2021 and December 31, 2020 were $ 6.2 million and $ 7.1 million and were included in net cash used in operating activities in the Company’s consolidated statements of cash flows.

The Company maintains letters of credit for the benefit of the landlord related to two of the Company’s non-cancelable operating leases, in the amount of $ 7.5 million in aggregate.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2022, 2021 and 2020 were $ 12.1 million, $ 6.2 million and $ 7.1 million, respectively, and were included in net cash used in operating activities in the Company’s consolidated statements of cash flows.

The Company maintains letters of credit relating to its non-cancelable operating leases amounting to $ 7.5 million in aggregate.

The maturity of the Company’s operating lease liabilities as of December 31, 2022 is as follows (in thousands):

Operating Leases

2023 $ 13,981

Thereafter 47,897

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Operating lease liabilities, noncurrent 86,139

Total operating lease liabilities $ 95,176

The following table summarizes additional information related to operating leases as of December 31, 2022:

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The MLA consists of various lease components, certain of which commenced during the year ended December 31, 2022.

The remaining components are expected to commence on various dates within 2022 and 2023 and is expected to terminate on June 30, 2033 Total undiscounted payments for lease components 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.

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 $ 5.6 million.

The sole outstanding component commenced in January 2023 and is expected to terminate on June 30, 2033.

Total undiscounted payments for this lease component commencing in fiscal year 2023 will be $ 14.0 million, with an expected lease term of 11 years.

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 December 31, 2022.

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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.

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

As of December 31, 2022, the Company has concluded that a loss is not probable and a contingent liability has not been recorded.

On May 6, 2021, the Company filed suit against Nanostring Technologies, Inc.

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District Court for the District of Delaware alleging that Nanostring's GeoMx Digital Spatial Profiler and associated instruments and reagents infringe U.S.

10,472,669, 10,662,467, 10,961,566, 10,983,113, and 10,996,219.

10,472,669, 10,662,467, 10,961,566, 10,983,113 and 10,996,219 (the "GeoMx Action").

On May 19, 2021, the Company filed an amended complaint additionally alleging that the GeoMx products infringe U.S.

11,001,878 and 11,008,607.

On July 1, 2021, Nanostring filed a motion to dismiss.

On November 17, 2021, the Court held a hearing and dismissed without prejudice the Company's claims for pre-suit indirect infringement and willful infringement.

On May 4, 2022, the Company filed an amended complaint in the GeoMx Action additionally alleging that the GeoMx products infringe U.S.

11,293,917 and withdrawing the Company's claim of infringement of U.S.

Nanostring filed its answer to the GeoMx Action on May 18, 2022.

Discovery is in progress.

A Markman hearing is scheduled for October 2022 and trial is scheduled for June 2023.

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 above.

A Markman hearing is scheduled for February 2023 and trial is scheduled for November 2023.

On February 28, 2022, the Company filed a second suit against Nanostring in the U.S.

District Court for the District of Delaware alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe U.S.

10,227,639 and 11,021,737 (the "CosMx Action").

On May 12, 2022, the Company filed an amended complaint in the CosMx Action additionally alleging that the CosMx products infringe U.S.

11,293,051, 11,293,052 and 11,293,054.

Nanostring filed its answer to the CosMx Action on May 26, 2022.

Discovery is in progress.

A Markman hearing is scheduled for July 2023 and trial is scheduled for June 2024.

On August 16, 2022, Nanostring filed a counterclaim in the CosMx Action alleging that the Company's Visium products infringe U.S.

The Company filed its answer to Nanostring's counterclaim in the CosMx Action on August 30, 2022.

On November 23, 2022, the Company moved to sever claims relating to NanoString’s assertion of U.S.

11,377,689 and consolidate those claims with the patent case NanoString filed against the Company on October 20, 2022 (discussed below).

On January 24, 2023, the Court granted the Company's motion.

On October 20, 2022, Nanostring filed a suit against the Company in the U.S.

District Court for the District of Delaware alleging that the Company's Visium products infringe U.S.

11,473,142, a continuation of U.S.

11,377,689 (the "Nanostring Action").

On January 24, 2023, the Court severed Nanostring’s claims with respect to U.S.

11,377,689 from the CosMx Action and consolidated those claims with this action.

Discovery is in progress;

and no case schedule has been set.

The Company believes Nanostring's claim in the Nanostring Action is meritless and intends to vigorously defend itself.

On March 9, 2022, the Company filed suit in the Munich Regional Court in Germany alleging that Nanostring's CosMx Spatial Molecular Imager and associated instruments, reagents and services infringe EP Patent No.

2794928B1 (the "928 Patent") (the "Germany CosMx Action").

Nanostring filed its statement of defense to the Germany CosMx Action on August 26, 2022.

A hearing on infringement is scheduled for March 2023 and a decision is expected around May 2023.

On July 29, 2022, Nanostring filed a nullity action with the German Federal Patent Court challenging the validity of the 928 Patent.

On February 10, 2023, the Federal Patent Court issued a preliminary opinion upholding the validity of certain claims of the 928 Patent directed to in situ analysis.

A hearing on validity is scheduled before the Federal Patent Court in May 2024 and a decision is expected around the end of 2024.

In May 2022, the Company filed suit against Vizgen, Inc.

("Vizgen") in the U.S.

District Court for the District of Delaware alleging that Vizgen’s MERSCOPE Platform and workflow and Vizgen’s Lab Services program, including associated instruments and reagents, infringe U.S.

11,021,737, 11,293,051, 11,293,052, 11,293,054 and 11,299,767.

On July 25, 2022, Vizgen filed a motion to dismiss the Company's claims for willful and indirect infringement, which the Court denied on September 19, 2022.

Discovery is in progress.

A Markman hearing is scheduled for July 2023 and trial is scheduled for July 2024.

On August 30, 2022, Vizgen filed its answer and counterclaims alleging that the Company's Xenium product infringes U.S.

Vizgen also filed counterclaims alleging that the Company tortiously interfered with Vizgen's contractual and business relationship with Harvard and that the Company engaged in unfair practices under Massachusetts state law.

October 27, 2022, the Company filed a partial answer and motion to dismiss the infringement counterclaim and the tort counterclaims.

On February 2, 2023, the Company's motion to dismiss was denied.

The Company believes Vizgen’s claims are meritless and intends to vigorously defend itself.

On August 24, 2022, the Company filed suit against Parse Biosciences, Inc.

("Parse") in the U.S.

District Court for the District of Delaware alleging that Parse’s Evercode Whole Transcriptomics and ATAC-seq products infringe U.S.

10,155,981, 10,697,013, 10,240,197, 10,150,995, 10,619,207, and 10,738,357.

On October 17, 2022, Parse filed a motion to dismiss alleging that the asserted claims are directed to patent ineligible subject matter.

The Court held a hearing on the motion to dismiss on November 22, 2022, and supplemental briefing was submitted on December 15, 2022.

A ruling on the motion to dismiss is expected around March 2023.

Discovery has not yet commenced and no case schedule has been set.

Capital Stock

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Total common stock issued and outstanding 115,195,009 112,514,977

During the twelve months ended December 31, 2021 and December 31, 2020, 3,035,000 shares and 52,587,965 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.

The following table represents the number of shares of Class B common stock converted to shares of Class A common stock upon the election of the holders of such shares during the years:

Year Ended December 31,

2022 2021 2020

Class B common stock converted to Class A common stock 979,210 3,035,000 52,587,965

The Company’s Class A common stock and Class B common stock have a par value of $ 0.00001 per share.

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However, if on January 1 of a calendar year, the Company’s board of directors has not either confirmed the 5 % increase described in clause (i) or approved a lesser number of shares of the Company’s Class A common stock for such calendar year, then the Company’s board of directors will be deemed to have waived the automatic increase, and no such increase will occur for such calendar year.

Of the Absolute Share Limit, no more than

11,000,000 shares of Class A common stock may be issued in the aggregate pursuant to the exercise of incentive stock options granted under the Omnibus Incentive Plan.

Of the Absolute Share Limit, no more than 11,000,000 shares of Class A common stock may be issued in the aggregate pursuant to the exercise of incentive stock options granted under the Omnibus Incentive Plan.

Options under the Omnibus Incentive Plan have a contractual term of 10 years.

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Exercised ( 1,650,434 ) 9.42

Cancelled ( 427,030 ) 35.54

Cancelled and forfeited ( 459,395 ) 61.96

Balance as of December 31, 2022 7,964,557 $ 37.10 6.4 $ 128,069,003

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Restricted Stock Units

The Company began granting restricted stock unit awards (“RSUs”) to employees and other service providers during 2020.

RSU activity for the year ended December 31, 2021 is as follows:

Restricted stock units (“RSUs”) activity for the year ended December 31, 2022 is as follows:

Restricted Stock

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As of December 31, 2022, the total unrecognized stock-based compensation related to RSUs was $ 286.5 million, which will be recognized over a weighted-average period of approximately three years .

Market-based Performance Stock Awards (PSAs)

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

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.

The share price goals can be met any time prior to the fourth anniversary of the date of grant.

The vesting of the PSAs can also be triggered upon certain change in control events and achievement of certain change in control price goals, or in the event of death or disability.

As of December 31, 2022, none of the predetermined share price goals had been met resulting in no shares vesting or becoming exercisable.

Stock-based compensation expense recognized for these market-based awards was approximately $ 3.3 million for the year ended December 31, 2022.

The weighted-average grant date fair value of the PSAs was $ 22.55 .

The Company estimates the fair values of shares under the Performance stock options using a Monte Carlo simulation model with the following assumptions:

Year Ended December 31,

Expected volatility 68 %

Risk-free interest rate 3.4 %

Expected dividend — %

2019 Employee Stock Purchase Plan

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Subject to any limitations contained therein, the ESPP allows eligible employees to contribute, through payroll deductions, up to 15 % of their eligible compensation to purchase the Company’s Class A common stock at a discounted price per share.

The ESPP generally provides for consecutive, overlapping 6-month offering periods.

Unless otherwise determined by the administrator of the ESPP, a participant may not sell, transfer or otherwise dispose of any shares of the Company’s Class A common stock purchased under the ESPP for 12 months following the applicable exercise date.

The ESPP generally provides for consecutive 6-month offering periods.

During the years ended December 31, 2022 and 2021, 151,028 and 61,764 shares of Class A common stock, respectively, were issued under the ESPP.

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0.04 % – 0.06 %

0.12 % – 0.15 %

Expected term (in years) 0.5

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Under this plan, employee and employer contributions and accumulated plan earnings qualify for favorable tax treatment under Section 401(k) of the Internal Revenue Code.

The Company has not contributed to the plan.

Commencing April 1, 2022, retroactive to January 1, 2022, the Company matched 100 % of the first 3 % of the employee's eligible compensation, up to a maximum of two thousand dollars annually per employee.

The Company contributed $ 2.0 million for the year ended December 31, 2022.

Net Loss Per Share

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Stock options to purchase common stock 7,964,557 8,212,754 11,860,844

Shares subject to repurchase 18,750 68,750 138,250

Restricted stock units 5,836,192 1,298,244 823,947

Contingent restricted shares — 236,484 —

Shares committed under ESPP 46,548 13,368 10,939

Shares subject to repurchase — 18,750 68,750

Contingent restricted shares — — 236,484

Total 13,847,297 9,543,116 13,000,964

Subsequent Event

In January 2023, the Company signed an agreement to acquire certain intangible and other assets for an upfront payment of $ 10.0 million.

Upon acquiring the assets, the Company expects to pay $ 10.0 million and up to $ 36.3 million cash consideration pursuant to the agreement in the event certain future technology development milestones are met and additional cash consideration tied to future sales milestones.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data