10x Genomics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Although the request identifies 2021 Q4, this filing reports full-year results; it does not provide a clear standalone Q4 financial summary. 10x Genomics sells life-science research instruments, consumables and software, principally through its Chromium and Visium platforms. Its products are marketed for research use only.
Financial performance
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $490.5 million | $298.8 million | +64% |
| Instruments revenue | $64.5 million | $40.1 million | +61% |
| Consumables revenue | $418.7 million | $252.7 million | +66% |
| Services revenue | $7.3 million | $6.0 million | +21% |
| Gross profit / margin | $416.4 million / 85% | $240.4 million / 80% | Margin +5 percentage points |
| Operating loss | $(52.3) million | $(534.1) million | Improved, largely reflecting no comparable $447.5 million acquired in-process R&D charge |
| Net loss | $(58.2) million | $(542.7) million | Improved substantially |
| Operating cash flow | $(21.4) million | $(217.9) million | Cash use declined |
| Capital expenditures | $101.3 million | $36.7 million | Increased |
Consumables represented the large majority of revenue. The company sold 1,099 instruments during 2021, up 46%, bringing cumulative sales to 3,511. Annual Chromium consumable pull-through per instrument was reported at $142,000, versus $124,000 in 2020; management cautions that this measure is increasingly less representative as product lines and customer usage expand.
At December 31, 2021, cash and cash equivalents were $587.4 million, accounts receivable $85.3 million, inventory $60.0 million, total current assets $747.6 million and current liabilities $110.4 million. Total assets were $1.019 billion and stockholders’ equity was $817.6 million. The company reported no outstanding term loan; it repaid the term loan in February 2020. Lease liabilities totaled $82.0 million, including $5.1 million current and $76.8 million noncurrent. Cash, cash equivalents and restricted cash totaled $596.1 million at year-end.
Material changes and unusual items
- Revenue growth reflected higher instrument sales, increased consumables demand and a lessening of pandemic-related disruption at customer laboratories. Multiome and Visium consumables grew, and 2021 launches included Chromium X Series, CellPlex, low- and high-throughput gene-expression kits, and Visium for FFPE tissue.
- Gross margin rose from 80% to 85%, chiefly due to lower Bio-Rad-related royalties and the absence of prior-year idle-capacity charges, partly offset by product mix from newer offerings. Management expects margin to trend slightly lower during the year as new products and capacity investments affect mix and costs.
- FY2020 included $447.5 million of acquired in-process R&D expense from the ReadCoor and CartaNA asset acquisitions. FY2021 had no comparable charge. Therefore, the sharply narrower 2021 net loss does not by itself indicate a comparable reduction in underlying operating investment.
- The July 2021 Bio-Rad settlement resolved worldwide disputes and established reciprocal royalty-bearing licenses through 2030. 10x paid Bio-Rad $29.4 million for royalties and interest, and reversed previously accrued royalties and interest, including a $14.7 million cost-of-revenue reversal and a separate interest reversal.
- Research and development expense rose 72% to $211.8 million; selling, general and administrative expense rose 27% to $257.6 million. Stock-based compensation was $96.0 million, versus $48.6 million in 2020.
- Operating cash use fell to $21.4 million, but working capital absorbed cash, including higher receivables and inventory. Investing cash use increased to $106.7 million, primarily from property and equipment spending and the Tetramer Shop acquisition.
Outlook, risks and contingencies
Management said existing cash and expected product-sale cash generation should fund anticipated needs for at least the next 12 months, while noting that assumptions could prove incorrect. It expects operating losses to continue in the near term and operating expenses to increase significantly in 2022 as it invests in R&D, commercial capacity and operations. Planned capital expenditures for the next 12 months are approximately $200–$225 million, about two-thirds for construction at the Pleasanton site; external financing, such as mortgage financing or a capital partner, may be considered.
The company did not provide a clear numerical revenue-growth or profitability forecast in the filing. Management expects supply-chain, shipping, distribution and labor disruptions to continue affecting results, but said the duration and financial impact could not be reasonably estimated. COVID-19-related customer restrictions and productivity challenges, dependence on research funding and academic customers, sole- or single-source suppliers, manufacturing complexity, competition, and product adoption are significant risks. The business also depends heavily on Chromium and Single Cell Gene Expression consumables.
10x’s Nanostring patent-infringement case remained in discovery. The court dismissed without prejudice certain pre-suit indirect-infringement and willful-infringement claims; a Markman hearing was scheduled for October 2022 and trial for June 2023. Other notable exposures include patent licensing and royalties, including the Bio-Rad agreement, and potential limits on tax-attribute use. The company disclosed a March 2020 ransomware incident and said it believed confidential information was stolen. Its auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management also assessed controls as effective at year-end.
Important facts for investors to verify
- Whether revenue growth and consumables demand remain strong as customers normalize research activity and as new products ramp.
- How the $200–$225 million planned capital program is funded, and whether cash and operating cash flows remain adequate.
- Whether margin trends reflect sustainable unit economics or temporary effects from Bio-Rad royalty reversals and product mix.
- Progress and potential costs or outcomes of the Nanostring litigation, Bio-Rad royalties, and other intellectual-property obligations.
- Exposure to supplier, logistics and customer-funding disruptions, and any developments related to the reported cybersecurity incident.