Business context and reporting period
10x Genomics, Inc. filed this Form 10-K for the fiscal year ended December 31, 2022. The filing reports full-year results; it does not provide a clear standalone Q4 income statement or cash-flow statement. The company sells integrated life-sciences research platforms—Chromium, Visium and Xenium—comprising instruments, consumables and software.
Key financial metrics
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $516.4 million | $490.5 million |
| Gross profit / margin | $396.0 million / 77% | $416.4 million / 85% |
| Operating loss | $167.9 million | $52.3 million |
| Net loss | $166.0 million | $58.2 million |
| Net loss per share, diluted | $1.46 | $0.53 |
| Cash used in operating activities | $33.6 million | $21.4 million |
| Capital expenditures | $131.7 million | $101.3 million |
- Revenue mix in 2022: instruments $72.4 million (+12%); consumables $435.6 million (+4%); services $8.4 million (+16%).
- Cash and cash equivalents were $219.7 million and marketable securities $210.2 million at year-end, totaling $430.0 million. Current assets were $635.0 million and current liabilities $131.0 million.
- Total liabilities were $223.2 million, including $95.2 million of operating lease liabilities. The balance sheet does not report a term-loan balance at year-end; the company did make $5.4 million of payments on a technology-license financing arrangement.
- Operating cash flow less reported property and equipment purchases was approximately negative $165.3 million in 2022.
- Cumulative instruments sold reached 4,630, versus 3,511 at year-end 2021. Annual consumable pull-through per instrument declined to $109,000 from $142,000; the company said 2022 would be its last reporting period for this metric.
Material changes versus the prior comparable period
- Revenue grew 5%, but net loss widened to $166.0 million from $58.2 million.
- Gross margin fell eight percentage points to 77%. Cost of revenue rose 62%, reflecting higher manufacturing costs, new-product costs, inventory charges and warranty costs. The comparison was also affected by a $14.7 million one-time reversal of accrued royalties in 2021 related to the Bio-Rad agreement.
- Research and development expense increased 25% to $265.7 million; selling, general and administrative expense increased 16% to $298.3 million. Stock-based compensation was $136.8 million, up from $96.0 million.
- China revenue declined to $59.6 million from $74.9 million, while U.S. revenue increased to $285.0 million from $258.3 million. Management cited COVID-related lockdowns in China and reduced laboratory productivity as factors affecting demand.
- Cash used in investing activities increased to $350.9 million, mainly reflecting purchases of marketable securities and $131.7 million of property and equipment. Year-end cash, cash equivalents and restricted cash were $227.4 million, down from $596.1 million; marketable securities were separately reported at $210.2 million.
Outlook, risks and unusual items
- Management said it expects operating losses to continue in the near term, with operating expenses and investment in research, product launches and infrastructure increasing. It expects gross margin to trend lower in the near term, partly due to product mix, inflation and supply-chain costs.
- The company stated a goal of becoming free-cash-flow positive by the end of 2023; this is an objective, not a guarantee. It anticipated $60–$70 million of capital expenditures over the next 12 months, primarily for Pleasanton facility construction and equipment.
- Management believed existing cash, cash equivalents and cash generated from product sales would meet anticipated needs for at least 12 months, while cautioning that assumptions could prove incorrect and additional financing might be needed.
- Material risks include reliance on research-institution funding, competition, execution and adoption of new products, supplier concentration, manufacturing and cold-chain delivery issues, international and China exposure, foreign-exchange movements, and patent disputes.
- The company disclosed a 2022 reduction in force with $4.2 million of restructuring charges, substantially completed by year-end. It also cited a cold-chain logistics breakdown that spoiled consumables and delayed affected customers’ purchases.
- Multiple patent cases involving NanoString, Vizgen and Parse were ongoing, including countersuits alleging infringement by 10x products. The company reported that, as of December 31, 2022, it considered a litigation loss not probable and had recorded no contingent liability.
- A January 2023 asset-purchase agreement included a $10.0 million upfront payment and up to $36.3 million of additional cash consideration tied to future development milestones, plus sales-related consideration.
Important facts for investors to verify
- Whether revenue growth and recurring consumables demand improve, particularly given the decline in reported consumable pull-through per instrument and lower China sales.
- Progress toward the end-2023 free-cash-flow-positive objective, including operating cash burn, capital spending and facility costs.
- Whether gross margin stabilizes as new products scale and manufacturing, inventory, warranty and supply-chain costs evolve.
- Developments and potential financial or operational consequences of the disclosed patent litigation.
- The effects of stock-based compensation, equity-plan issuances and possible future financing on dilution and liquidity.
Ernst & Young issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded disclosure controls were effective at year-end.