What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-15 compared with 2023-02-16 · 299 added, 207 removed, 752 unchanged (40% of the section changed)

33 unchanged sentences

Revenue Recognition

Description of the Matter For the year ended December 31, 2022, the Company recognized revenues of $516.4 million from the sale of products and services.

Description of the Matter For the year ended December 31, 2023, the Company recognized revenues of $618.7 million.

As discussed in Note 2 to the consolidated financial statements, the Company recognizes revenue when control of the products and services is transferred to its customers in an amount that reflects the consideration it expects to receive from its customers in exchange for those products and services.

1 unchanged sentence

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 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.

For example, we tested management’s controls over establishing 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.

For the sample, we further tested 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.

/s/ Ernst & Young LLP

28 unchanged sentences

Total current liabilities 127,162 130,957

Accrued license fee, noncurrent — 5,814

Operating lease liabilities, noncurrent 83,849 86,139

Deferred revenue, noncurrent 8,814 3,165

Other noncurrent liabilities 4,275 2,976

3 unchanged sentences

Preferred stock, $ 0.00001 par value;

100,000,000 shares authorized, no shares issued or outstanding as of December 31, 2022 and December 31, 2021

100,000,000 shares authorized, no shares issued or outstanding as of December 31, 2023 and 2022

Common stock, $ 0.00001 par value;

1,100,000,000 shares authorized (Class A 1,000,000,000 , Class B 100,000,000 );

115,195,009 (Class A 96,527,754 , Class B 18,667,255 ) and 112,514,977 (Class A 92,868,512 , Class B 19,646,465 ) shares issued and outstanding as of December 31, 2022 and 2021

119,095,362 (Class A 105,038,529 , Class B 14,056,833 ) and 115,195,009 (Class A 96,527,754 , Class B 18,667,255 ) shares issued and outstanding as of December 31, 2023 and 2022, respectively

Additional paid-in capital 2,025,890 1,839,397

Accumulated deficit ( 1,284,420 ) ( 1,029,321 )

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

Accumulated other comprehensive loss ( 429 ) ( 4,335 )

Total stockholders’ equity 741,043 805,743

19 unchanged sentences

Interest expense ( 33 ) ( 476 ) ( 866 )

Other (expense) income, net ( 198 ) ( 802 ) 1,337

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

Other expense, net ( 307 ) ( 198 ) ( 802 )

Total other income (expense) 16,566 5,973 ( 1,462 )

11 unchanged sentences

Other comprehensive income (loss), net of tax:

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

Unrealized gains (losses) on available-for-sale marketable securities 2,210 ( 4,116 ) —

Realized loss on available-for-sale marketable securities reclassified into net loss 1,718 — —

Foreign currency translation adjustment ( 22 ) ( 241 ) 72

14 unchanged sentences

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

1 unchanged sentence

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

3 unchanged sentences

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

Issuance of Class A common stock related to equity awards 3,900,353 — 19,483 — — 19,483

Vesting of shares subject to repurchase, including early exercised options — — 96 — — 96

Stock-based compensation — — 167,010 — — 167,010

Net loss — — — ( 255,099 ) — ( 255,099 )

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

Other comprehensive income — — — — 3,906 3,906

Balance as of December 31, 2023 119,095,362 $ 2 $ 2,025,890 $ ( 1,284,420 ) $ ( 429 ) $ 741,043

8 unchanged sentences

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

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

Stock-based compensation expense 166,950 136,848 95,962

Loss on disposal of property and equipment 1,086 79 29

Loss on extinguishment of debt — — 1,521

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

Depreciation and amortization 35,512 25,368 21,118

Asset impairment charges 9,845 — —

Amortization of right-of-use assets 8,107 7,638 7,136

Class A common stock issued for in-process research and development — — 306,000

Accretion of discount on term loan — — 17

Realized loss on marketable securities 1,718 — —

Other 427 1,957 79

Changes in operating assets and liabilities:

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Investing activities:

Purchase of marketable securities ( 282,871 ) — —

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

Acquisition of business, net of cash acquired ( 4,000 ) ( 5,451 ) —

Acquisition of intangible assets — — ( 1,728 )

Proceeds from sales of marketable securities 100,191 49,117 —

Proceeds from maturities of marketable securities 82,825 18,528 —

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

Purchases of property and equipment ( 48,601 ) ( 131,661 ) ( 101,278 )

Purchase of intangible assets ( 923 ) — —

Acquisition of business, net of cash acquired — ( 4,000 ) ( 5,451 )

Purchase of marketable securities — ( 282,871 ) —

Net cash provided by (used in) investing activities 133,492 ( 350,887 ) ( 106,729 )

Financing activities:

Payments on term loans — — ( 31,256 )

Payments on technology license financing arrangement ( 5,814 ) ( 5,409 ) ( 5,028 )

Proceeds from issuance of common stock upon initial and follow-on public offerings, net of issuance costs — — 482,267

Issuance of common stock from exercise of stock options and employee stock purchase plan purchases 19,483 21,226 40,325

1 unchanged sentence

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 33 ) ( 44 ) 234

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

Net increase (decrease) in cash, cash equivalents, and restricted cash 131,931 ( 368,720 ) ( 92,571 )

Cash, cash equivalents, and restricted cash at beginning of year 227,353 596,073 688,644

3 unchanged sentences

Cash paid for taxes $ 4,927 $ 3,925 $ 8,660

10x Genomics, Inc.

Consolidated Statements of Cash Flows (Continued)

(In thousands)

Year Ended December 31,

2022 2021 2020

Noncash investing and financing activities

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(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’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, which the Company refers to as “Spatial 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.

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

Basis of Presentation

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To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future consolidated results of operation may be affected.

The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.

Segment Information

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

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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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.

Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in "Accumulated other comprehensive 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, net,” in the Consolidated Statements of Operations.

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

1 unchanged sentence

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.

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

As of December 31, 2023, the gross unrealized losses on available-for-sale securities are related to market interest rate changes and not attributable to credit.

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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.

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

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 as of December 31, 2023 and 2022, respectively.

Business Concentrations

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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.

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.

Concentrations

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As of December 31, 2022, one of the Company's distributors accounted for 11 % of the Company’s outstanding accounts receivable.

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

No customer or distributor represented more than 10% of the Company’s outstanding accounts receivable as of December 31, 2023 or 2021.

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

9 unchanged sentences

ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.

As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments.

The Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments.

The Company gives consideration to its credit risk, term of the lease and total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates.

1 unchanged sentence

Lease costs for the Company’s operating leases are recognized on a straight-line basis within operating expenses and costs of goods sold over the reasonably assured lease term.

The Company evaluates ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of an ROU asset may not be recoverable.

When a decision has been made to sublease that space, the Company evaluates the asset for impairment and recognize the associated impact to the ROU asset and related expense, if applicable.

The evaluation is performed at the lowest level of identifiable cash flows for an asset group.

Undiscounted cash flows expected to be generated by the related ROU assets are estimated over the ROU assets’ useful lives.

If the evaluation indicates that the carrying amount of the ROU assets may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques.

Note 7, Commitments and Contingencies - Lease Agreements, to the Notes to Consolidated Financial Statements for further details.

The Company has elected to not separate lease and non-lease components for any leases within its existing classes of assets and, as a result, accounts for any lease and non-lease components as a single lease component.

9 unchanged sentences

Useful Life (Years)

Building 10 - 40

Laboratory equipment and machinery 3 - 5

5 unchanged sentences

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.

The Company recorded impairment charges of $ 4.6 million primarily relating to intangible assets during the year ended December 31, 2023.

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

Refer to Note 5, Other Financial Statement Information - Intangible Assets, Net, to the Notes to Consolidated Financial Statements for further details.

Product Warranties

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Customers are invoiced generally upon shipment, or upon order for services, and payment is typically due within 30 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.

12 unchanged sentences

Research and development expense 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.

See Note 4 for discussion of in-process research and development included on the consolidated statements of operations.

See Note 4 for discussion of in-process research and development included in the consolidated statements of operations.

Advertising Costs

4 unchanged sentences

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

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

The Company determines the fair value of RSUs based on the closing price of its stock, which is listed on the Nasdaq Global Select Market, at the date of the grant (or on the most recent trading day prior to grant, if the date of grant is not a trading day).

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.

2 unchanged sentences

These variables include the per share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected annual dividend yield and the expected stock price volatility over the expected term.

The Company calculated the expected term using the simplified method, which is the mid-point between the vesting and contractual term.

Due to the short trading period of the Company's stock, the Company has estimated volatility by reference to the historical volatilities of similar publicly traded peer companies.

The Company calculated the

expected term using the simplified method, which is the mid-point between the vesting and contractual term.

Due to the short trading period of the Company's stock, the Company has estimated volatility by reference to the historical volatilities of the Company and that of similar publicly traded peer companies.

The risk-free interest rate is based on the yield available on U.S.

1 unchanged sentence

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.

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.

2 unchanged sentences

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 income (loss).”

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

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

1 unchanged sentence

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

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

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

The Company recognized foreign currency transaction gains of $ 1.2 million and $ 0.2 million for the years ended December 31, 2023 and December 31, 2022, and foreign currency transaction losses of $ 0.9 million for the year ended December 31, 2021, respectively.

10 unchanged sentences

The amount of income tax paid is subject to examination by U.S.

federal state and foreign tax authorities.

and foreign tax authorities.

The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of the relevant risks, facts and circumstances existing at that time.

15 unchanged sentences

During the goodwill impairment review, the Company assesses qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than the carrying amount, including goodwill.

The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance.

If, after assessing the totality of these qualitative factors, we determine that it is not more likely than not that the fair values of our reporting unit is less than the carrying amount, then no additional assessment is deemed necessary.

Otherwise, we proceed to compare the estimated fair values of the reporting unit with the carrying value, including goodwill.

If the carrying amounts of the reporting unit exceed the fair value, we record an impairment loss based on the difference.

The Company accounts for an asset acquisition under ASC, Business Combinations Topic 805, Subtopic 50 , which requires the acquiring entity in an asset acquisition to recognize net assets based on the cost to the acquiring entity on a relative fair value basis, which includes transaction costs in addition to consideration given.

Goodwill is not recognized in an asset acquisition;

any excess consideration transferred over the fair value of the net assets acquired is allocated to the non-monetary identifiable assets based on relative fair values.

The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations and overall financial performance.

If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair values of our reporting unit is less than the carrying amount, then no additional assessment is deemed necessary.

Otherwise, the Company proceeds to compare the estimated fair values of the reporting unit with the carrying value, including goodwill.

If the carrying amounts of the reporting unit exceed the fair value, the Company records an impairment loss based on the difference.

The Company accounts for asset acquisitions under ASC, Business Combinations Topic 805, Subtopic 50 , which requires the acquiring entity in an asset acquisition to recognize net assets based on the cost to the acquiring entity on a relative fair value basis, which includes transaction costs in addition to consideration given.

In-process research and development expense is expensed as incurred provided there is no alternative future use.

Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration meets the definition of a derivative, in which case the amount becomes part of the basis in the asset acquired).

Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable.

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

Restructuring

On December 7, 2023, the Company committed to a restructuring plan related to the closure of one of its research and development facilities resulting in restructuring charges of $ 2.5 million associated with this plan, comprised primarily of long-lived assets impairment costs and one-time employee termination benefits which were recorded during the year ended December 31, 2023.

Restructuring costs of $ 2.5 million were recorded in research and development and general and administrative expenses during the year ended December 31, 2023 in the Company's consolidated statements of operations.

The restructuring activities are expected to be substantially complete by the end of the first half of 2024.

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

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, during the year ended December 31, 2022 in the Company's consolidated statements of operations.

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

The following table is a summary of restructuring costs related to the Company’s restructuring activities as of December 31, 2023 (in thousands):

Termination Benefits Costs Long-lived Assets Impairment Expenses Total

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

3 unchanged sentences

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.

Restructuring charge 310 2,171 2,481

Cash payments made ( 215 ) — ( 215 )

Non-cash charge — ( 2,171 ) ( 2,171 )

Balance at December 31, 2023 $ 310 $ — $ 310

2023 Acquisition

On January 28, 2023, the Company signed an agreement to acquire certain intangible and other assets from Centrillion Technologies, Inc.

and Centrillion Technology Holdings Corp.

for an upfront cash payment of $ 10.0 million relating to an intellectual property license.

Upon the close of the transaction on July 14, 2023, the Company paid additional cash consideration of $ 10.0 million upon acquiring the assets.

Under the agreement, the Company is obligated to provide additional cash consideration if certain technology development milestones are met.

As of December 31, 2023, the Company had paid $ 21.3 million relating to the completion of development milestones.

The Company paid an additional $ 20.0 million in January 2024 in relation to a development milestone which was accrued in the Company's consolidated financial statements as of December 31, 2023.

Up to $ 15.0 million of cash consideration is due if an additional technology development milestone is met.

Furthermore, the Company expects to pay cash consideration tied to future sales milestones if such milestones are met.

The transaction was accounted for as an asset acquisition.

In connection with this acquisition and milestone payments, the Company acquired an in-process research and development intangible asset of $ 61.0 million during the year ended December 31, 2023 which did not have alternative future use and therefore was recognized as an expense and included as a component of “In-process research and development” in the condensed consolidated statements of operations.

The Company also acquired an intangible asset of $ 0.2 million related to assembled workforce which is included in “Intangible assets, net” in the consolidated balance sheets.

The following table summarizes the value of assets acquired and liabilities assumed (in thousands):

Assets Acquired and Liabilities Assumed

In-process research and development $ 60,980

Intangible assets - acquired workforce 200

Property and equipment 671

Operating lease liabilities ( 1,496 )

Other assets and liabilities, net 758

Total net assets acquired $ 61,113

2021 Acquisition

Tetramer Shop Acquisition

On January 8, 2021 (the "acquisition date"), the Company purchased 100 % of the outstanding shares of Tetramer Shop ApS (“Tetramer Shop”), a privately held company based in Copenhagen, Denmark, for a total cash consideration of $ 8.5 million, net of cash acquired of $ 0.2 million and including $ 1.5 million of fair value of contingent consideration.

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.

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.

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The fair value of the intangible assets acquired in connection with the acquisition was determined using either the income or replacement cost methodologies.

The developed technology and customer relationships will be amortized over ten years and three years , respectively.

The developed technology and customer relationships were amortized over ten years and three years , respectively.

During the year ended December 31, 2023, the Company recorded impairment charges of $ 4.5 million, in general and administrative expenses, related to this acquired developed technology.

The impairment charge was triggered by a decision to discontinue a product.

Identifiable Intangible Assets

5 unchanged sentences

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.

2020 Acquisitions

ReadCoor Acquisition

On October 13, 2020, the Company purchased all of the outstanding shares of ReadCoor Inc.

(“ReadCoor”), a privately held company based in Cambridge, MA, 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.

The purchase agreement provided for the Company to issue 1,901,382 shares of the Company’s class A common stock which was based on a contractual value of $ 250.0 million divided by the ten-day weighted average price of the Company's common stock shortly prior to the acquisition.

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 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.

In connection with this acquisition, the Company acquired an in-process research and development intangible asset of $ 406.9 million which did not have alternative future use and therefore was recognized as an expense and included as a component of in-process research and development in the consolidated statements of operations and comprehensive loss.

The Company also acquired an intangible asset of $ 0.9 million related to assembled workforce which is included in other noncurrent assets in the consolidated balance sheets.

The following table summarizes the value of assets acquired and liabilities assumed (in thousands):

Assets Acquired and Liabilities Assumed

In-process research and development $ 406,911

Intangible asset 927

Other assets and liabilities, net ( 406 )

Total net assets acquired $ 407,432

CartaNA Acquisition

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 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.

In connection with this acquisition, the Company acquired an in-process research and development intangible asset of $ 40.6 million which did not have alternative future use and therefore was recognized as an expense and included as a component of in-process research and development in the consolidated statements of

operations and comprehensive loss.

The Company also acquired $ 0.8 million in intangible assets related to customer relationships and assembled workforce which are included in other noncurrent assets in the consolidated balance sheets.

The following table summarizes the value of assets acquired and liabilities assumed (in thousands):

Assets Acquired and Liabilities Assumed

In-process research and development $ 40,637

Intangible assets 801

Other assets and liabilities, net 348

Total net assets acquired $ 41,786

Other Financial Statement Information

1 unchanged sentence

Available-for-sale securities at December 31, 2023 consisted of the following (in thousands):

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

December 31, 2023 December 31, 2022

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

Cash equivalents:

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Total available-for-sale securities $ 378,138 $ — $ ( 188 ) $ 377,950 $ 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, 2023 were as follows (in thousands):

1 unchanged sentence

Due after one year to five years 1,366

The company incurred gross realized losses of $ 1.7 million and no gross realized gains from the sale of available-for-sales debt securities during the year ended December 31, 2023.

The Company incurred no material gross realized gains or losses from available-for-sales debt securities for the years ended December 31, 2022 and 2021.

Realized gains (losses) on the sale of marketable securities are recorded in “Other expense, net” in the condensed 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.

As of December 31, 2023, the gross unrealized losses on available-for-sale securities are related to market interest rate changes and not attributable to credit.

Inventory was comprised of the following (in thousands):

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Land $ 36,765 $ 36,780

Building 146,044 —

Laboratory equipment and machinery 69,238 54,658

Computer equipment 12,565 12,294

Computer equipment and software 16,379 12,565

Furniture and fixtures 10,979 9,642

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Technology licenses 10.7 $ 22,504 $ ( 6,546 ) $ 15,958 $ 22,504 $ ( 5,043 ) $ 17,461

Developed technology 8.0 5,500 ( 1,100 ) 4,400 5,500 ( 550 ) 4,950

Developed technology N/A — — — 5,500 ( 1,100 ) 4,400

Customer relationships 1.1 945 ( 789 ) 156 945 ( 563 ) 382

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Intangible assets, net $ 24,777 $ ( 8,161 ) $ 16,616 $ 30,077 $ ( 7,219 ) $ 22,858

During the year ended December 31, 2023, the Company recorded impairment charges of $ 4.6 million related to its developed technology and assembled workforce.

No impairment losses were recognized for intangible assets during the years ended December 31, 2022 and 2021.

The estimated annual amortization of intangible assets for the next five years is shown below (in thousands):

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

Accrued purchase consideration $ 20,000 $ —

Accrued legal and related costs 3,839 3,102

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As of December 31, 2023, the aggregate amount of remaining performance obligations related to separately sold extended warranty service agreements, or allocated amounts for extended warranty service agreements bundled with sales of instruments, was $ 22.0 million, of which approximately $ 13.1 million is expected to be recognized to revenue in the next 12 months, with the remainder thereafter.

The contract liabilities of $ 11.0 million and $ 7.7 million as of December 31, 2022 and December 31, 2021, respectively, consisted of deferred revenue related to extended warranty service agreements.

The contract liabilities of $ 22.0 million and $ 11.0 million as of December 31, 2023 and 2022, respectively, consisted of deferred revenue related to extended warranty service agreements.

A summary of the change in contract liabilities is as follows (in thousands):

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Revenue deferred excluding amounts recognized as revenue during the period 17,520 8,137

Balance as of December 31 $ 11,032 $ 7,688

End of period $ 21,964 $ 11,032

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

Spatial products include the Company’s Visium and Xenium products:

Year Ended December 31,

2023 2022 2021

Instruments $ 72,396 $ 64,474 $ 40,128

Consumables 435,588 418,740 252,685

Chromium $ 47,866 $ 58,552 $ 64,171

Spatial 75,605 13,844 303

Total instruments revenue 123,471 72,396 64,474

Chromium 420,316 400,433 390,883

Spatial 59,237 35,155 27,857

Total consumables revenue 479,553 435,588 418,740

Services 15,703 8,425 7,276

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United States $ 360,091 $ 284,987 $ 258,274

Americas (excluding United States) 13,101 8,791 6,714

Total Americas 373,192 293,778 264,988

Europe, Middle East and Africa 142,276 117,068 108,491

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Asia-Pacific (excluding China) 52,294 41,207 39,112

North America (excluding United States) 8,791 6,714 4,564

Total Asia-Pacific 103,259 105,563 117,011

Total Revenue $ 618,727 $ 516,409 $ 490,490

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

1 Includes Hong Kong effective from the fiscal year of 2023.

Comparative periods have been adjusted for this inclusion.

Income (loss) before provision for income taxes were as follows (in thousands):

Year Ended December 31,

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Provision for income taxes $ 6,336 $ 4,029 $ 4,508

The provision for income taxes was $ 4.0 million for the year ended December 31, 2022, which related to foreign and state income taxes.

For the years ended December 31, 2021 and 2020, the provision for income taxes were $ 4.5 million and $ 8.3 million, respectively.

A reconciliation of the federal statutory income tax provision to the effective income tax provision is as follows for the periods indicated (in thousands):

A reconciliation of the federal statutory income tax provision to the effective income tax provision is as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Income tax provision at statutory rate $ ( 34,014 ) $ ( 11,280 ) $ ( 112,240 )

State taxes, net ( 11,782 ) ( 20,136 ) ( 16,653 )

Income tax provision at federal statutory rate $ ( 52,240 ) $ ( 34,014 ) $ ( 11,280 )

State taxes, net of federal benefit ( 14,831 ) ( 11,782 ) ( 20,136 )

Tax credits ( 14,551 ) ( 9,028 ) ( 11,836 )

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Acquisition related expenses 2,296 — ( 793 )

Impact of change in tax status — — ( 34,731 )

Other ( 199 ) 1,442 877

1 unchanged sentence

Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes.

The major components of deferred tax assets and liabilities are as follows as of the dates indicated (in thousands):

The major components of deferred tax assets and liabilities are as follows (in thousands):

Year Ended December 31,

3 unchanged sentences

Accruals and reserves 10,610 7,116

Lease liability 21,873 19,697

Operating lease liability 22,000 21,873

Intangibles 39,117 39,061

Stock-based compensation 24,342 20,910

Section 174 capitalized R&D 49,462 —

Capitalized research and development 1

108,255 49,462

Total deferred tax assets 460,452 382,711

1 unchanged sentence

Net deferred tax assets $ 17,378 $ 18,448

Year Ended December 31,

Deferred tax liabilities

Fixed assets $ ( 4,046 ) $ ( 4,189 )

Right-of-use assets ( 15,054 ) ( 13,745 )

Property and equipment ( 2,609 ) ( 4,046 )

Operating right-of-use assets $ ( 14,975 ) $ ( 15,054 )

Total deferred tax liabilities $ ( 17,584 ) $ ( 19,100 )

Net deferred tax liabilities $ ( 206 ) $ ( 652 )

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, 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.

1 Effective beginning January 1, 2022, under the 2017 Tax Cuts and Jobs Act, our research and development expenditures were capitalized and amortized.

As of December 31, 2023 and 2022, the Company maintained a full valuation allowance on its U.S.

net deferred tax assets.

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

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.

Such assessment is required on a jurisdiction-by-jurisdiction basis.

The Company’s history of cumulative losses, along with expected future U.S.

losses, required that a full valuation allowance be recorded against all domestic net deferred tax assets.

The Company intends to maintain a full valuation allowance on domestic net deferred tax assets until sufficient positive evidence exists to support a reversal of the valuation allowance.

losses, required that a full valuation allowance be recorded against all U.S.

net deferred tax assets.

The Company intends to maintain a full valuation allowance on U.S.

net deferred tax assets until sufficient positive evidence exists to support a reversal of the valuation allowance.

The valuation allowance increased by $ 78.8 million and by $ 51.1 million for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, the Company had federal net operating loss (NOL) carryforwards of $ 672.3 million and federal tax credit carryforwards of $ 77.3 million.

The federal NOL carryforwards generated during and after fiscal 2018 totaling $ 708.5 million are carried forward indefinitely, while all others, along with the federal tax credit carryforwards, expire in years beginning in 2033.

The federal NOL carryforwards generated after December 31, 2017 totaling $ 665.9 million are carried forward indefinitely, while all others, along with the federal tax credit carryforwards, expire in years beginning in 2033.

As of December 31, 2023, the Company had state NOL carryforwards of $ 412.2 million, which begin to expire in 2033.

In addition, the Company had state tax credit carryforwards of $ 58.5 million, which do not expire.

The federal and state net operating losses and credit carryforwards are subject to change of ownership limitations provided by the Internal Revenue Code and similar state provisions.

The federal and state NOL and tax credit carryforwards are subject to change of ownership limitations provided by the Internal Revenue Code and similar state provisions.

In general, if the Company experiences a greater than 50 percentage point aggregate change in ownership over a 3-year period (a “Section 382 ownership change”), utilization of its pre-change NOL and credit carryforwards are subject to an annual limitation.

The Company completed a study through October 31, 2022 and determined that a Section 382 ownership change occurred in 2013.

As a result, the Company’s net operating losses generated through November 1, 2013 may be subject to limitation under Section 382 of the Code.

The amount of pre-change loss carryforwards which may be subject to this limitation is $ 4.8 million.

In addition certain attributes are subject to annual limitations as a result of the acquisition of ReadCoor, which constitutes a change in ownership as defined under Section 382.

The Company completed a study through September 30, 2023 and determined that a Section 382 ownership change occurred in 2013.

As a result, the Company’s NOLs generated through November 1, 2013 may be subject to limitation under Section 382 of the Code.

The amount of pre-change NOL carryforwards which may be subject to this limitation is $ 4.8 million.

In addition, certain attributes are subject to annual limitations as a result of the Company’s acquisition of ReadCoor, Inc.

in 2020, which constituted a change in ownership as defined under Section 382.

Such limitations may result in expiration of a portion of the carryforwards before utilization.

The Company’s 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 the Company earns net taxable income, its ability to use 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.

The total balance of unrecognized gross tax benefits for the years ended December 31, 2022 and 2021 resulting primarily from research and development tax credits claimed on the Company’s annual tax returns were as follows (in thousands):

The Company’s ability to use NOL or tax credit carryforwards to reduce future taxable income and liabilities may be further limited as a result of future changes in stock ownership.

As a result, if the Company generates taxable income, its ability to use pre-change NOL or tax credit carryforwards to offset U.

federal and state taxable income may still be subject to limitations, which could potentially result in increased future tax liability.

The total balance of unrecognized gross tax benefits resulting primarily from research and development tax credits claimed on the Company’s annual tax returns were as follows (in thousands):

Unrecognized tax benefits at beginning of year $ 31,755 $ 23,759

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The Company has not been audited in such jurisdictions.

Tax examinations are expected to focus on research and development tax credits, intercompany transfer pricing practices and other matters.

Due to NOLs and credit carryforwards, as of December 31, 2022, federal and California income tax returns for the years ended 2012 through the current period are open to examination.

Tax examinations are expected to focus primarily on research and development tax credits and intercompany transfer pricing practices.

Due to NOLs and tax credit carryforwards, as of December 31, 2023, federal and California income tax returns for the years ended 2012 through the current period are open to examination.

Significant foreign income tax returns for the years 2019 through the current period are open to examination.

6 unchanged sentences

The Company recognized interest and penalty expenses of $ 0.5 million in 2023.

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

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

The Company maintained undistributed earnings overseas as of December 31, 2023 and the Company believed the funds held by all non-U.S.

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

13 unchanged sentences

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.

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.

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.

As of December 31, 2023, the Company has commitments to make a total of $ 13.0 million in purchases over the next two years .

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

As of December 31, 2023, the Company has entered into non-cancelable arrangements for subscription software services to make payments aggregating to $ 20.5 million over the next six years .

Intellectual Property Licensing

2 unchanged sentences

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

In September 2020, the Company and the Board of Trustees of the Leland Stanford Junior University ("Stanford") entered into a license agreement pursuant to which the Company was granted a license to certain intellectual property from Stanford relating to single cell profiling and tissue clarification.

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.

The minimum commitments related to the Company's license arrangements aggregate to $ 14.6 million as of December 31, 2023 to be paid over the next 15 years.

4 unchanged sentences

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.

On November 6, 2020, the Company entered into a Master Lease Agreement ("MLA") to lease additional office building space near the Company's Pleasanton, California headquarters.

All of the components of the MLA have commenced and are expected to terminate on June 30, 2033.

For the years ended December 31, 2023, 2022 and 2021, the Company incurred $ 13.6 million, $ 13.1 million and $ 10.5 million, respectively, of operating lease costs and $ 0.2 million, $ 0.4 million and $ 0.6 million, respectively, of variable lease costs.

1 unchanged sentence

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2023, 2022 and 2021 were $ 15.2 million, $ 12.1 million and $ 6.2 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):

The payments due under of the Company’s operating lease liabilities as of December 31, 2023 are as follows (in thousands):

Operating Leases

13 unchanged sentences

Operating leases 5.9 % 5.5 %

On November 6, 2020, the Company entered into a Master Lease Agreement ("MLA") to lease additional office building space near the Company's Pleasanton, California headquarters.

The Company intends to utilize the leased space of approximately 145,000 square feet to accommodate its future growth requirements.

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

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.

The Company will determine the classification for each lease component at the individual component's commencement date.

All leases and lease components that have not yet commenced are expected to be classified as operating leases.

Lease payments for leases not yet commenced as of December 31, 2022 is as follows (in thousands):

Lease payments for leases not yet commenced

Thereafter 8,536

Total undiscounted lease payments $ 14,004

During the year ended December 31, 2023, the Company made the decision to vacate some of its leased office space for the remaining lease term, sublease certain portions of the vacated office space and to terminate additional leased office space.

In connection with these actions, the Company recognized an aggregate $ 4.9 million of impairment losses associated with these long-lived assets of which $ 2.1 million was classified in research and development, and $ 2.8 million was classified in selling, general and administrative expenses in the consolidated statement of operations.

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.

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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.

11,293,917 and withdrawing the Company’s claims of infringement of U.S.

The Company is seeking, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to NanoString’s making, using, selling, offering to sell, exporting and/or importing in the United States the GeoMx Digital Spatial Profiler and associated instruments and reagents.

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

Discovery is in progress.

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

A Markman hearing was held on February 17, 2023 and the Court issued its claim construction order on February 28, 2023.

On September 7, 2023, the Court issued an order granting the Company’s motion for summary judgment that the asserted patents are not invalid for indefiniteness and denying NanoString’s motion for summary judgment that the asserted patents are invalid for indefiniteness and lack of written description.

On November 17, 2023, a jury found that NanoString

willfully infringed the asserted patents and that the asserted patents are valid.

The jury awarded the Company more than $ 31 million in damages, consisting of approximately $ 25 million in lost profits and approximately $ 6 million in royalties.

Post-trial motions, including the Company’s motions for a permanent injunction, ongoing royalties, enhanced damages, attorneys’ fees and pre- and post-judgment interest, are pending.

NanoString filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in the U.S.

bankruptcy court in Delaware on February 4, 2024, and the Court’s consideration of these post-trial motions is currently stayed due to the bankruptcy filing.

Due to the uncertainties in collecting the jury award, the Company has not recorded a receivable from NanoString as of December 31, 2023.

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

1 unchanged sentence

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.

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

On March 1, 2023, the Company filed a second amended complaint additionally alleging that the CosMx products infringe U.S.

The Company is seeking, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to NanoString’s making, using, selling, offering to sell, exporting and/or importing in the United States the CosMx Spatial Molecular Imager and associated instruments, reagents and services.

NanoString filed its answer to the second amended complaint on March 22, 2023.

Discovery is in progress.

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

A Markman hearing was held on January 10, 2024, and the Court issued its claim construction order on February 1, 2024.

Trial is scheduled for September 2024.

This litigation is currently stayed due to NanoString’s bankruptcy filing.

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

11,377,689 (the “689 patent”).

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 November 23, 2022, the Company moved to sever claims relating to NanoString’s assertion of the 689 patent 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.

On May 1, 2023, NanoString filed a motion in the CosMx Action to add antitrust, unfair competition, tort, and contract counterclaims.

NanoString seeks, among other relief, injunction relief (including that the Company grant NanoString a license to the patents that the Company asserted against NanoString in the CosMx Action) and unspecified damages (including attorneys’ fees).

On July 10, 2023, the Court denied NanoString’s motion for leave to add a contract counterclaim but otherwise granted the motion for leave to amend.

On May 24, 2023, NanoString filed a motion to bifurcate its amended counterclaims and a motion for expedited discovery.

On June 6, 2023, the Court denied NanoString’s motion to bifurcate and granted its motion for expedited discovery.

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

On October 20, 2022, NanoString filed 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.

11,473,142 (the “142 patent”), a continuation of the 689 patent (the “NanoString Action”).

NanoString seeks, among other relief, injunctive relief and unspecified damages (including attorneys’ fees) in relation to the Company’s making, using, selling, offering to sell, exporting and/or importing in the United States Visium products and associated instruments, reagents and services.

On January 24, 2023, the Court severed NanoString’s claims with respect to the 689 patent from the CosMx Action and consolidated those claims with this action.

NanoString filed an amended complaint on January 27, 2023.

The Company filed an answer to the NanoString Action on February 10, 2023.

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.

A Markman hearing was held on January 10, 2024, and the Court issued its claim construction order on February 1, 2024.

Trial is scheduled for December 2024.

The Company believes NanoString’s claims in the NanoString Action are meritless and intends to vigorously defend itself.

On August 16 and September 25, 2023, the Company filed petitions for inter partes review (“IPR”) of the 689 patent and the 142 patent, respectively.

On February 1, 2024, IPR was instituted for the 689 patent.

An institution decision for the IPR against the 142 patent is expected in April 2024.

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.

2794928B1 (the “EP928 patent”) (the “Germany CosMx Action”).

A hearing on infringement was held on March 23, 2023.

On May 17, 2023, the Munich Regional Court found that the CosMx products infringe the EP928 patent and issued a permanent injunction requiring NanoString to stop selling and supplying CosMx instruments and reagents for RNA detection in Germany.

The injunction took effect on June 1, 2023.

On May 25, 2023, NanoString filed an appeal of the Germany CosMx Action in the Munich Higher Regional Court.

A hearing date has not yet been set for this appeal.

On October 30, 2023, NanoString requested that the Higher Regional Court temporarily stay enforcement of the injunction pending the appeal.

On December 20, 2023, the Higher Regional Court granted

NanoString’s request conditioned upon NanoString posting a 2.3 million Euro security deposit.

To date, NanoString has not posted this security deposit.

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

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

A hearing on validity is scheduled before the Federal Patent Court in May 2024.

On June 1, 2023, the Company filed requests for preliminary injunctions in the Munich Local Division of the Unified Patent Court (“UPC”) alleging that NanoString’s CosMx Spatial Molecular Imager and associated instruments, reagents and services for RNA detection infringe the EP928 patent and EP Patent No.

4108782 (the “EP782 patent”).

Hearings were held for the EP 782 and EP 928 patents on September 5 and September 19, respectively.

On September 19, 2023, the UPC granted the Company’s request for the EP782 patent and issued a preliminary injunction requiring NanoString to stop selling and supplying CosMx instruments and reagents for RNA detection in all 17 UPC member states.

On October 10, 2023, the UPC denied the Company’s preliminary injunction request for the EP928 patent.

On October 2, 2023, NanoString filed an appeal of the preliminary injunction for the EP782 patent in the UPC Court of Appeals.

A hearing was held before the UPC Court of Appeals on December 18, 2023, and a decision is pending.

On August 31 and September 18, 2023 we filed main requests in the Munich Local Division of the UPC alleging that NanoString's CosMx Spatial Molecular Imager and associated instruments, reagents and services for RNA detection infringe the EP 782 and EP 928 patents, respectively.

No hearings have yet been set for these main requests.

On July 18, 2023, NanoString filed an opposition in the European Patent Office challenging the validity of the EP782 patent.

No schedule has yet been set for this opposition.

On July 27, 2023, NanoString filed a revocation action in the Munich Central Division of the UPC challenging the validity of the EP928 patent.

A hearing in the revocation action is scheduled on April 17, 2024.

On January 30, 2024, NanoString filed a petition for IPR of U.S.

11,542,554, which is asserted by the Company against NanoString in the CosMx Action.

The impact of NanoString’s bankruptcy filing on the Company’s actions against NanoString outside of the U.S.

District Court for the District of Delaware is not yet fully resolved.

On May 3, 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.

District Court for the District of Delaware alleging that Vizgen’s MERSCOPE Platform and workflow and/or 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.

The Company seeks, among other relief, injunction relief and unspecified damages (including attorneys’ fees) in relation to Vizgen’s making, using, selling, offering to sell, exporting and/or importing in the United States the MERSCOPE Platform and workflow and/or Vizgen’s Lab Services program, including associated instruments and reagents.

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.

A Markman hearing was held on January 10, 2024, and the Court issued its claim construction order on February 1, 2024.

Trial is scheduled for October 2024.

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

11,098,303 (the “303 patent”).

Vizgen seeks, among other relief, injunction relief and unspecified damages (including attorneys’ fees) in relation to the Company’s making, using, selling, offering to sell, exporting and/or importing in the United States Xenium products, including associated instruments and reagents.

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 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 March 15, 2023, the Company filed an amended complaint additionally alleging that the MERSCOPE Platform and workflow and Vizgen’s Lab Services program infringe U.S.

11,549,136 and withdrawing its claim of infringement of U.S.

On April 17, 2023, Vizgen filed its answer adding amended counterclaims including antitrust, unfair competition, tort and contract counterclaims.

Vizgen seeks, among other relief, injunctive relief (including that the Company grant Vizgen a license to the patents that the Company asserted against Vizgen) and unspecified damages (including attorneys’ fees).

On May 18, 2023, the Company filed a motion to dismiss Vizgen’s amended counterclaims.

On July 10, 2023, the Court granted the Company’s motion to dismiss Vizgen’s contract counterclaim but otherwise denied the Company’s motion to dismiss.

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

On June 1, 2023, the Company filed suit in the Hamburg Local Division of the Unified Patent Court alleging that Vizgen’s MERSCOPE products infringe the EP782 patent.

The Company seeks, among other relief, injunction relief and unspecified damages (including attorneys’ fees) in relation to Vizgen’s MERSCOPE products in all 17 UPC member states.

A hearing has not yet been set.

On August 30, 2023, the Company filed a petition for IPR of the 303 patent.

An institution decision is expected by March 2023.

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.

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

10,155,981 (the “981 patent”), 10,697,013 (the “013 patent”), 10,240,197 (the “197 patent”), 10,150,995, 10,619,207 and 10,738,357.

The Company seeks, among other relief, injunction relief and unspecified damages (including attorneys’ fees) in relation to Parse’s making, using, selling, offering to sell, exporting and/or importing in the United States Parse’s Evercode Whole Transcriptomics products and ATAC-seq products.

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.

On September 14, 2023, the Court denied the motion.

Parse filed its answer on October 6, 2023.

Discovery is in progress.

A Markman hearing is scheduled for February 2024, and trial is scheduled for December 2024.

Between April 20 and June 21, 2023, Parse filed petitions for IPR of all of the patents asserted.

On October 13, 2023, IPR was instituted on the 981 patent.

The PTAB denied institution of Parse’s petitions for IPR on the other five asserted patents.

On January 2 and 5, 2024, Parse filed rehearing requests with the PTAB for the 197 and 013 patents, respectively.

On November 6, 2023, Parse filed a motion to stay the Delaware action pending the IPRs.

On December 21, 2023, the court denied Parse’s motion to stay.

On February 5, 2024, the PTAB instituted IPRs for the 197 and 013 patents on Parse’s requests for rehearing.

On February 8, 2024, Parse filed a renewed motion to stay.

On December 1, 2023, the Company filed suit against Curio Bioscience, Inc.

(“Curio”) in the U.S.

District Court for the District of Delaware alleging that the Curio Seeker Spatial Mapping Kit and associated products and services infringe U.S.

10,480,022, 10,662,468, 11,001,879, 11,549,138, and 11,761,030.

On February 1, 2024, Curio filed a motion to dismiss alleging that the asserted claims are directed to patent ineligible subject matter.

A case schedule has not yet been set.

On December 4, 2023, the Company filed a request for a preliminary injunction in the Dusseldorf Local Division of the UPC alleging that the Curio Seeker Spatial Mapping Kit and associated products and services infringe EP Patent No.

2697391 (the “EP 391 patent”).

A hearing for the preliminary injunction request has been set for March 26, 2024.

Capital Stock

The Company’s Amended and Restated Certificate of Incorporation authorizes it to issue 1,200,000,000 shares of capital stock consisting of 1,000,000,000 shares of Class A common stock, 100,000,000 shares of Class B common stock, and 100,000,000 shares of preferred stock.

The Company has the following shares of common stock issued and outstanding:

As of December 31,

Class A common stock 96,527,754 92,868,512

Class B common stock 18,667,255 19,646,465

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

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:

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Outstanding as of December 31, 2023 5,334,134 $ 48.26

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 .

As of December 31, 2023, the total unrecognized stock-based compensation related to RSUs was $ 224.6 million, which will be recognized over a weighted-average period of approximately two 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.

In March 2023, the Company granted 172,842 performance restricted stock unit awards (PSAs) under the 2019 Plan to certain members of management, which are subject to the achievement of certain escalating stock price thresholds established by the Company's Compensation Committee of the Board of Directors.

The PSAs each vest in equal installments upon the achievement of escalating stock price thresholds of $ 72.14 , $ 96.19 and $ 120.24 respectively, calculated based on the volume-weighted average price per share of the Company’s Class A common stock over the immediately trailing 20 trading day period for each respective threshold.

The escalating stock price thresholds can be met any time prior to the fifth anniversary of the date of grant.

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

The weighted-average grant date fair value of the PSAs was $ 43.13 .

Stock-based compensation expense recognized for these market-based awards was approximately $ 5.1 million for the year ended December 31, 2023.

The Company estimates the fair values of shares granted under the PSAs using a Monte Carlo simulation model with the following assumptions:

Year Ended December 31,

Expected volatility 71 %

Risk-free interest rate 3.7 %

Expected dividend — %

In September 2022, the Company granted 709,025 PSAs including RSUs and a performance stock option under the 2019 Plan to certain members of management, which are subject to the achievement of certain stock price thresholds established by the Company’s Compensation Committee of the 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.

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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 .

Stock-based compensation expense recognized for these market-based awards was approximately $ 10.0 million and $ 3.3 million for the years ended December 31, 2023 and 2022, respectively.

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

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Expected dividend — %

As of December 31, 2023, none of the escalating stock price thresholds had been met for any of the PSAs, resulting in no shares vesting or becoming exercisable.

2019 Employee Stock Purchase Plan

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During the years ended December 31, 2023 and 2022, 217,537 and 151,028 shares of Class A common stock, respectively, were issued under the ESPP.

The ESPP provides that the maximum number of shares of the Company’s Class A common stock made available for sale thereunder will be 3,284,859 , which number will be automatically increased on the first day of each calendar year commencing on January 1, 2021 and ending on January 1, 2029 in an amount equal to the lesser of (i) 1 % of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such number of shares of the Company’s Class A common stock as determined by the Company’s board of directors.

The ESPP provides that the maximum number of shares of the Company’s Class A common stock made available for sale thereunder will be 3,486,671 , which number will be automatically increased on the first day of each

calendar year commencing on January 1, 2021 and ending on January 1, 2029 in an amount equal to the lesser of (i) 1 % of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such number of shares of the Company’s Class A common stock as determined by the Company’s board of directors.

However, if on January 1 of a calendar year the Company’s board of directors has not either confirmed the 1 % described in clause (i) or approved a lesser number of shares of the Company’s Class A common stock for such calendar year, 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.

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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.

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.

Commencing in 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 $ 1.8 million and $ 2.0 million for the years ended December 31, 2023 and 2022, respectively.

Net Loss Per Share

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Shares subject to repurchase — — 18,750

Contingent restricted shares — — 236,484

Total 11,329,222 13,847,297 9,543,116

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