10x Genomics Inc.
02/13/2026 | Press release | Distributed by Public on 02/13/2026 05:01
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report and our audited consolidated financial statements and notes thereto.
As discussed in the section titled "Special Note Regarding Forward-looking Statements," the following discussion and analysis, in addition to historical financial information, contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" under Part I, Item 1A above.
Overview
We are a life sciences technology company focused on building innovative products and solutions to interrogate, understand and master biology. Our integrated research solutions include instruments, consumables and software for analyzing biological systems at resolution and scale that matches the complexity of biology. Our commercial product portfolio is made up of our Single Cell and Spatial solutions. Our products include our instruments, which include our Chromium instruments, our Visium CytAssist and our Xenium Analyzer, and our consumables, which include proprietary microfluidic chips, slides, reagents and other consumables for our Single Cell and Spatial solutions. We bundle our software with these products to guide customers through the workflow, from sample preparation through analysis and visualization. Customers purchase instruments and consumables from us for use in their experiments. We also derive revenue from post-warranty service contracts for our instruments.
Acquisition
In August 2025, we entered into an agreement to acquire all outstanding shares of common stock of Scale Biosciences, Inc. ("Scale Bio"), a single cell genomics technology company. Upon closing the transaction in August 2025, we made an upfront payment consisting of $9.2 million in cash and $13.5 million (1,099,992 shares) in shares of our Class A common stock. In the first quarter of 2026, we expect to pay $20.0 million, subject to any adjustments, in cash and in shares of our Class A common stock in connection with the technology transfer completed in the third quarter of 2025. In the future, we may pay up to $30.0 million of contingent consideration if certain milestones are met.
The transaction was accounted for as an asset acquisition because substantially all of the fair value of the assets acquired is concentrated in the developed technology. We determined that the contingent consideration was within the scope of ASC 480, Distinguishing Liabilities from Equity, because the contingent consideration is payable in cash or shares of our Class A common stock, at our election. The contingent consideration was recorded at fair value as of the acquisition date. Upon closing, we recognized $22.4 million for the fair value of the contingent consideration. Refer to Note 4, Acquisitions, in the Notes to consolidated financial statements included in this Annual report on Form 10-K, for a description of the fair value measurement of the contingent consideration.
Key business metrics
We regularly review a number of operating and financial metrics, including cumulative instruments sold and total consumables reactions, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe that these metrics are representative of our current business;
however, we anticipate these may change or may be substituted for additional or different metrics as our business grows and as we introduce new products or new versions of existing products.
Cumulative instruments sold
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As of December 31,
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| 2025 | 2024 | 2023 | |||||||||||||||
| Chromium (Single Cell) | 6,477 | 5,808 | 5,180 | ||||||||||||||
| Visium (Spatial) | 1,015 | 810 | 531 | ||||||||||||||
| Xenium (Spatial) | 554 | 421 | 255 | ||||||||||||||
| Cumulative instruments sold | 8,046 | 7,039 | 5,966 | ||||||||||||||
Our products are sold to academic and translational researchers and biopharmaceutical companies. Our Chromium and Visium CytAssist instruments are user installable and do not require in-person training. Our Xenium instrument requires installation and we offer in-person training for its use. We believe cumulative instruments sold is one of the indicators of our ability to drive customer adoption of our products. We define cumulative instruments sold as the cumulative number of Chromium instruments, Visium CytAssists and Xenium Analyzers sold since inception.
Our quarterly instrument unit volumes can fluctuate due to a number of factors, including the procurement and budgeting cycles of many of our customers and the availability of academic and government research funding. We also believe the timing of unit sales has been impacted and will continue to be impacted by the timing of product introductions and transitions which can either accelerate or delay demand of existing and new products or new versions of existing products depending on the needs of individual researchers to conclude existing studies or to use capabilities of new products or versions. Also, the timing and magnitude of our price changes can influence quarterly instrument unit volumes. For example, we believe that historical announcements of price changes have caused customers to pull forward purchases or postpone purchases of instruments. We therefore believe that an annual representation of cumulative instruments sold is most appropriate for assessing trends in our business.
Total consumables reactions sold
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Year Ended December 31,
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| 2025 | 2024 | 2023 | |||||||||||||||
| Chromium (Single Cell) | 378,300 | 310,900 | 312,500 | ||||||||||||||
| Visium (Spatial) | 31,200 | 35,400 | 29,300 | ||||||||||||||
| Xenium (Spatial) | 14,500 | 10,800 | 5,200 | ||||||||||||||
| Total consumable reactions | 424,000 | 357,100 | 347,000 | ||||||||||||||
A consumable reaction is the reagent setup needed to perform an experiment using one of our solutions. Reactions represent the unit volumes that we sell when a researcher purchases our consumables. As such, we believe consumable reactions sold is an appropriate metric for assessing trends in our business. The figures in the table above (rounded to the nearest hundred) represent the total consumable reactions, by product platform and in total, for the years ended December 31, 2025, 2024 and 2023. For the year ended December 31, 2025, Chromium Single Cell reactions include Chromium and Scale Bio reactions.
As we expand our product portfolios and as our business evolves, we will continue to evaluate the key metrics of our business. We may change or substitute these for additional or different metrics if we determine such other metrics are meaningful in understanding our business.
Key factors affecting our performance
We believe that our financial performance has been and in the foreseeable future will continue to be primarily driven by the following factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to grow and improve our results of operations. Our ability to successfully address the factors below is subject to various risks and uncertainties, including those described under the heading "Risk Factors."
Instrument sales
Management focuses on instrument sales as an indicator of current business success and a leading indicator of likely future sales of consumables. We expect the number of cumulative instruments sold to continue to grow as we increase penetration in our existing markets and expand into, or offer new features and solutions that appeal to, new markets.
We plan to support instrument sales in the coming years through multiple strategies including expanding our sales efforts globally, adjusting prices for our instruments and continuing to enhance the underlying technology and applications for life sciences research. We regularly solicit feedback from our customers and focus our research and development efforts on enhancing the fleet of 10x instruments and enabling their ability to use additional applications that address their needs, and we believe that these efforts help to drive sales of our instruments and consumables.
Recurring consumable revenue
We regularly assess trends relating to recurring consumable revenue based on our product offerings, our customer base and our understanding of how our customers use our products. We sell additional instruments and launch additional consumables solutions, some of which do not require the use of a 10x instrument, and adjust prices of our consumables to drive increased consumables usage by our existing customers and to gain new customers. Consumables revenue on an absolute basis is expected to increase over time and remain the bulk of our revenue.
Pricing changes
We believe that price changes can affect purchasing decisions by our customers and potential customers. We expect average selling prices for certain products to decline over time as we expand our portfolio with lower-priced instruments and consumables and products which can lower the total cost of an experiment. We believe that lowering prices for our products can expand usage and we anticipate that increased adoption and volume growth will drive higher overall sales of our instruments and consumables over time.
Revenue mix and gross margin
Our revenue is derived from sales of our instruments, consumables and services. There have been fluctuations in the mix between instruments and consumables and amongst our consumables. Each of our consumables solutions is designed to allow researchers to study a different aspect of biology, such as RNA, protein or epigenetics, at a resolution and scale that may be impractical or impossible using previously existing tools. As each of our solutions has been introduced, they have been initially purchased by a small number of early adopters. As these early adopters successfully perform experiments and publish scientific articles using our solutions, the utility of these solutions is more broadly understood and the solutions are then subsequently adopted by the larger research community. The revenue contribution from these and other consumable products has varied and is expected to vary on a quarterly basis due to several factors, including the publication of scientific papers demonstrating the value of the consumables, the availability of grants to fund research, budgetary timing, our introduction of new product features or configurations and new consumables offerings and our own manufacturing capacity or the capacity of our partners. For each of the years ended December 31, 2025, 2024 and 2023, our Chromium Universal Gene Expression consumables were our highest selling consumables products.
Our margins are generally higher for those instruments and consumables that we sell directly to customers as compared to those that we sell through distributors. We expect the mix of direct sales as compared to sales through distributors to remain relatively constant in the near term.
We expect our gross margin to fluctuate throughout 2026 due to a number of factors including changes in product mix and the non-recurring benefit in license and royalty revenue experienced in the first half of 2025.
Continued investment in growth
Historically, our revenue growth has been driven by the development of new solutions and quick adoption of our solutions by our customer base. We intend to continue to make focused investments to support the growth of our business. Excluding acquisitions, we do not expect our operating expenditures to meaningfully increase in 2026. As cost of revenue, operating expenses and capital expenditures fluctuate over time, we may experience short-term, negative impacts to our results of operations and cash flows, but we are undertaking such investments in the belief that they will contribute to long-term growth.
Acquisitions of key technologies
We have made, and intend to continue to make, investments that meet management's criteria to expand or add key technologies that we believe will facilitate the commercialization of new products and new versions of existing products in the future. Such investments could take the form of an acquisition of a business, asset acquisition or the exclusive or non-exclusive
in-license of intellectual property rights. Any such acquisitions we make may affect our future financial results. While we have not previously entered into material joint-development, partnership or joint-venture agreements, we may in the future decide to do so and any such arrangements may limit our rights and the commercial opportunities of any jointly developed technology.
Components of Results of Operations
Revenue
Products and services revenue. We generate virtually all of our products and services revenue through the sale of our instruments and consumables to customers. We also generate a small portion of our revenue from instrument service agreements which relate to extended warranties. Our revenue is subject to fluctuation based on the foreign currency in which our products are sold, principally for sales denominated in the euro, Great British pound and Japanese yen.
Our revenue from consumables includes sales of our Single Cell and Spatial consumable products. Our consumables are designed to work exclusively with our instruments. Our Single Cell and Spatial consumables require the use of a 10x Genomics instrument, with the exception of our QuantumScale Single Cell RNA kit, Single Cell Methylation kit and Visium v1 3' Gene Expression solution. Our instruments and consumables are generally sold without the right of return. Revenue is recognized as instruments and consumables are shipped. Revenue is recognized net of any sales incentive, distributor rebates and commissions and any taxes collected from customers. Instrument service agreements are typically entered into for a one-year term, with the coverage period beginning after the expiration of the standard one-year warranty period. Revenue from the sale of instrument service agreements are recognized ratably over the coverage period.
License and royalty revenue. We have agreements with third parties that include up-front fees and royalties. Revenue related to the delivery of intellectual property is recognized when the license is delivered to the third parties. Royalty revenue is recognized when the underlying sales occur. We also record allocated license and royalty revenue from patent litigation settlements.
Cost of products and services revenue, gross profit and gross margin
Cost of products and services revenue.Cost of products and services revenue primarily consists of manufacturing costs incurred in the production process including personnel and related costs, costs of component materials, manufacturing overhead, packaging and delivery costs and allocated costs including facilities and information technology. In addition, cost of products and services revenue includes royalty costs for licensed technologies included in our products, warranty costs, provisions for slow-moving and obsolete inventory and personnel and related costs and component costs incurred in connection with our obligations under our instrument service agreements. When applicable, we record royalty accruals relating to sales of our products as cost of products and services revenue.
Gross profit/gross margin.Gross profit is calculated as revenue less cost of products and services revenue. Gross margin is gross profit expressed as a percentage of revenue. Our gross profit and gross margins in future periods are expected to fluctuate from quarter to quarter and will depend on a variety of factors, including: market conditions that may impact our pricing; sales mix changes among consumables, instruments and services; product mix changes between established products and new products and new versions of existing products; impacts of inflation, tariffs and increased supply chain costs; excess and obsolete inventories; royalties; our cost structure for manufacturing operations relative to volume; and product warranty obligations.
Research and development
Research and development expense primarily consists of personnel and related costs, independent contractor costs, laboratory supplies, equipment maintenance prototype and materials expenses, amortization of developed technology and intangibles and allocated costs including facilities and information technology.
We plan to continue to invest in our research and development efforts to enhance existing products and develop new products and new versions of existing products. As a result of our ongoing efforts to manage our spend, we expect our research and development expense to modestly decrease in 2026 versus the prior year.
In-process research and development
In-process research and development consists of costs incurred to acquire intellectual property for research and development. We expect these costs to be recognized, in most cases, only in periods during which we complete an acquisition of assets comprised in whole or part of intellectual property for research and development.
Selling, general and administrative
Selling, general and administrative expense primarily consists of costs related to the selling and marketing of our products, including sales incentives and advertising expenses and costs associated with our finance, accounting, legal, human resources and administrative personnel. Related costs associated with these functions, such as attorney and accounting fees, recruiting services, administrative services, insurance, public relations and communication activities, marketing programs and trade show appearances, travel, customer service costs, safety equipment purchases and cleaning and allocated costs including facilities and information technology, are also included in selling, general and administrative expenses. As a result of the increased effectiveness of our commercial organization and our ongoing efforts to manage our spend, we expect our selling, general and administrative expense to modestly decrease in 2026 versus the prior year.
We expect infrastructure costs including allocated facilities and information technology costs to modestly decrease in absolute dollars. We expect our stock-based compensation expense allocated to cost of revenue, research and development expenses and selling, general and administrative expenses to decrease in absolute dollars.
Gain on settlement
When we enter into settlement and license agreements with various parties to resolve outstanding litigation and other proceedings between these parties, we have recognized, and may in the future recognize a gain on settlement for royalties earned on historical revenues by such parties.
Interest income
Interest income consists of interest earned on our cash and cash equivalents which are invested in bank deposits, money market funds and marketable securities and accretion of discount and amortization of premium on marketable securities.
Other income (expense), net
Other income (expense), net primarily consists of realized and unrealized gains and losses related to foreign exchange rate remeasurements and fair value adjustments on contingent consideration.
Provision for income taxes
Our provision for income taxes consists primarily of foreign taxes. As we expand the scale and scope of our international business activities, any changes in the U.S. and foreign taxation of such activities may increase our overall provision for income taxes in the future.
As of December 31, 2025, we had federal net operating loss ("NOL") carryforwards of $808.1 million and federal tax credit carryforwards of $93.8 million. Our federal NOL carryforwards generated after December 31, 2017, which total $802.3 million, are carried forward indefinitely, while all of our other federal NOL and tax credit carryforwards expire beginning in 2033 and 2036 respectively. As of December 31, 2025, we had state NOL carryforwards of $506.5 million, which begin to expire primarily in 2033. In addition, we had state tax credit carryforwards of $77.4 million, which do not expire. Our ability to utilize such carryforwards for income tax savings is subject to certain conditions and may be subject to certain limitations in the future due to ownership changes. As such, there can be no assurance that we will be able to utilize such carryforwards. We have experienced a history of losses and a lack of future taxable income would adversely affect our ability to utilize these NOL and tax credit carryforwards. We currently maintain a full valuation allowance against these tax assets.
Results of Operations
In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
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Year Ended December 31,
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(in thousands)
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2025 | 2024 | 2023 | ||||||||||||||
| Products and services revenue | $ | 596,688 | $ | 610,464 | $ | 618,727 | |||||||||||
| License and royalty revenue | 46,135 | 321 | - | ||||||||||||||
| Revenue | 642,823 | 610,785 | 618,727 | ||||||||||||||
| Cost of products and services revenue | 198,942 | 196,303 | 209,414 | ||||||||||||||
| Gross profit | 443,881 | 414,482 | 409,313 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 238,632 | 264,698 | 270,332 | ||||||||||||||
| Selling, general and administrative | 316,134 | 344,343 | 343,330 | ||||||||||||||
| Gain on settlement | (49,900) | - | - | ||||||||||||||
| In-process research and development | - | - | 60,980 | ||||||||||||||
| Total operating expenses | 504,866 | 609,041 | 674,642 | ||||||||||||||
| Loss from operations | (60,985) | (194,559) | (265,329) | ||||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest income | 20,048 | 18,930 | 16,885 | ||||||||||||||
| Interest expense | - | (4) | (33) | ||||||||||||||
| Other income (expense), net | 1,030 | (2,067) | (286) | ||||||||||||||
| Total other income | 21,078 | 16,859 | 16,566 | ||||||||||||||
| Loss before provision for income taxes | (39,907) | (177,700) | (248,763) | ||||||||||||||
| Provision for income taxes | 3,637 | 4,927 | 6,336 | ||||||||||||||
| Net loss | $ | (43,544) | $ | (182,627) | $ | (255,099) | |||||||||||
Revenue
| Year Ended December 31, |
Change
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(in thousands)
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2025 | 2024 |
$
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%
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| Instruments | |||||||||||||||||||||||
| Single Cell | $ | 22,671 | $ | 35,212 | $ | (12,541) | (36) | % | |||||||||||||||
| Spatial | 34,108 | 57,503 | (23,395) | (41) | % | ||||||||||||||||||
| Total instruments revenue | 56,779 | 92,715 | (35,936) | (39) | % | ||||||||||||||||||
| Consumables | |||||||||||||||||||||||
| Single Cell | 363,206 | 372,308 | (9,102) | (2) | % | ||||||||||||||||||
| Spatial | 143,977 | 121,124 | 22,853 | 19 | % | ||||||||||||||||||
| Total consumables revenue | 507,183 | 493,432 | 13,751 | 3 | % | ||||||||||||||||||
| Services | 32,726 | 24,317 | 8,409 | 35 | % | ||||||||||||||||||
| Products and services revenue | 596,688 | 610,464 | (13,776) | (2) | % | ||||||||||||||||||
| License and royalty revenue | 46,135 | 321 | 45,814 | N/A | |||||||||||||||||||
| Total revenue | $ | 642,823 | $ | 610,785 | $ | 32,038 | 5 | % | |||||||||||||||
Product and Services Revenue
Product and services revenue decreased $13.8 million, or 2%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. Instruments revenue decreased $35.9 million, or 39%, to $56.8 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to price decreases and lower volume of Spatial instruments sold. Consumables revenue increased $13.8 million, or 3%, to $507.2 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily driven by growth in Spatial consumables sales
partially offset by lower Single Cell consumables sales. Service revenue increased $8.4 million, or 35%, for the year ended December 31, 2025 as compared to year ended December 31, 2024, primarily driven by an increase in service plans for instruments coming off warranty.
License and Royalty Revenue
In February 2025, we settled our worldwide patent litigation with Vizgen, Inc. As part of that settlement, Vizgen has limited rights to certain intellectual property owned or exclusively licensed by us. As one part of the settlement, we received an upfront payment of $26.0 million and receive royalties on Vizgen's sales of products covered by the license. The $26.0 million upfront payment was recorded as a $9.2 million gain on settlement and $16.8 million in license and royalty revenue. The amount attributed to the gain on settlement was determined by applying a royalty rate to Vizgen's historical revenues prior to the settlement.
In May 2025, we entered into a settlement agreement and license agreements with Bruker Corporation ("Bruker") resolving all outstanding litigation and other proceedings between the parties across all jurisdictions around the world. Under the agreements, we have the right to receive four quarterly installment payments beginning in the third quarter of 2025, which total $68.0 million, and applicable interest. We will also receive royalties on Bruker's sales of products and services covered by the license. The $68.0 million amount was recorded as a $40.7 million gain on settlement and $27.3 million in license and royalty revenue. The amount attributed to the gain on settlement was determined by applying a royalty rate to the historical revenues prior to the settlement.
Excluding $44.1 million of non-recurring revenue related to patent litigation settlements in 2025, we expect our revenues to moderately increase in 2026 as compared to 2025.
Cost of Products and Services Revenue, Gross Profit and Gross Margin
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Year Ended December 31,
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Change
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(dollars in thousands)
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2025 | 2024 |
$
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%
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| Cost of products and services revenue | $ | 198,942 | $ | 196,303 | $ | 2,639 | 1 | % | |||||||||||||||
| Gross profit | $ | 443,881 | $ | 414,482 | $ | 29,399 | 7 | % | |||||||||||||||
| Gross margin | 69 | % | 68 | % | |||||||||||||||||||
Cost of products and services revenue increased $2.6 million, or 1%, to $198.9 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The increase was primarily driven by higher manufacturing costs of $12.2 million due to a change in product mix and higher inventory write-downs of $7.8 million, partially offset by lower royalties of $12.5 million and lower warranty costs of $4.9 million. Gross margin increased to 69% primarily due to higher license and royalty revenue, reflecting a 2.3% benefit to gross margin, and lower royalties and warranty costs, partially offset by an increase in inventory write-downs and higher manufacturing costs.
We expect our gross margin to fluctuate throughout 2026 due to a number of factors including changes in product mix and the non-recurring benefit in license and royalty revenue experienced in the first half of 2025.
Operating Expenses
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Year Ended December 31,
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Change
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(dollars in thousands)
|
2025 | 2024 |
$
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%
|
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| Research and development | $ | 238,632 | $ | 264,698 | $ | (26,066) | (10) | % | |||||||||||||||
| Selling, general and administrative | 316,134 | 344,343 | (28,209) | (8) | % | ||||||||||||||||||
| Gain on settlement | (49,900) | - | (49,900) | N/A | |||||||||||||||||||
| Total operating expenses | $ | 504,866 | $ | 609,041 | $ | (104,175) | (17) | % | |||||||||||||||
Research and development expense decreased $26.1 million, or 10%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease was primarily driven by a $21.7 million decrease in personnel expenses, including a $16.3 million decrease in stock-based compensation expense, a $4.0 million decrease in facilities and information technology costs, a $1.8 million decrease in equipment costs, a $1.5 million decrease in depreciation and amortization, and a $1.3 million decrease in other expenses, partially offset by restructuring charges of $4.1 million.
Selling, general and administrative expenses decreased $28.2 million, or 8.2%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease was primarily driven by a decrease in outside legal expenses of
$25.6 million, a decrease in personnel expenses of $4.3 million, a decrease in marketing expenses related to advertising and conferences and seminars of $2.9 million, and a decrease in facilities and information technology costs of $1.2 million, partially offset by restructuring charges of $6.0 million.
As a result of our settlements of our worldwide patent litigation with Vizgen and Bruker in 2025, we recorded a gain on settlement of $9.2 million and $40.7 million, respectively.
Excluding a gain on settlement of $49.9 million in 2025, we expect our operating expenses to modestly decrease in 2026 versus the prior year as a result of our ongoing efforts to manage our spend.
Total Other Income
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Year Ended December 31,
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Change
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| (dollars in thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Interest income | $ | 20,048 | $ | 18,930 | $ | 1,118 | 6 | % | |||||||||||||||
| Interest expense | - | (4) | 4 | (100) | % | ||||||||||||||||||
| Other income (expense), net | 1,030 | (2,067) | 3,097 | (150) | % | ||||||||||||||||||
| Total other income | $ | 21,078 | $ | 16,859 | $ | 4,219 | 25 | % | |||||||||||||||
Interest income increased by $1.1 million for the year ended December 31, 2025 primarily due to a gain from net accretion of discounts on the investment balance during that period. Other income (expense), net increased by $3.1 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a $4.6 million increase in net realized and unrealized gains from foreign currency rate measurement fluctuations, partially offset by a $1.4 million change in fair value of contingent consideration related to the Scale Bio acquisition.
We remeasure the contingent consideration and assumed liabilities related to the Scale Bio acquisition within the scope of ASC 480 as of each applicable reporting period. Upon remeasurement, we record the change in the fair value of the contingent consideration within other income (expense), net in our consolidated statement of operations. We expect other income (expense), net, to potentially fluctuate, potentially significantly, from quarter to quarter due to potential changes in the fair value of the contingent consideration.
Provision for Income Taxes
Our provision for income taxes was $3.6 million and $4.9 million, respectively, for the years ended December 31, 2025 and 2024. The provision for income taxes decreased by $1.3 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease was primarily due to lower foreign income and the enactment of an Act to provide for reconciliation pursuant to title II of H. Con. Res. 14. on July 4, 2025 (the "Act"). Among its provisions, the Act restored the immediate deductibility of U.S. research and experimental expenditures, resulting in lower U.S. taxable income and a corresponding reduction in the Company's provision for income taxes.
Liquidity and Capital Resources
As of December 31, 2025, we had approximately $523.4 million in cash and cash equivalents, and marketable securities which were primarily held in U.S. banks. We have generated losses from operations since inception as reflected in our accumulated deficit of $1.5 billion.
We currently anticipate making aggregate capital expenditures of between approximately $15 million and $20 million during the next 12 months, which we expect to include, among other expenditures, equipment to be used for manufacturing and research and development.
Our future capital requirements will depend on many factors including our revenue growth rate, research and development efforts, investments in or acquisitions of complementary or enhancing technologies or businesses, the timing and extent of additional capital expenditures to invest in existing and new facilities, the expansion of sales and marketing and international activities, legal costs associated with defending and enforcing intellectual property rights and the introduction of new products and new versions of existing products.
We take a long-term view in growing and scaling our business and we regularly review acquisition and investment opportunities, and we may in the future enter into arrangements to acquire or invest in businesses, services and technologies, including intellectual property rights, and any such acquisitions or investments could significantly increase our capital needs. We regularly review opportunities that meet our long-term growth objectives.
In August 2025, we entered into an agreement to acquire all outstanding shares of common stock of Scale Bio for an upfront payment consisting of $9.2 million in cash and $13.5 million (1,099,992 shares) in shares of our Class A common stock. In the first quarter of 2026, we expect to pay $20.0 million, subject to any adjustments, in cash and in shares of our Class A common stock in connection with the technology transfer completed in the third quarter of 2025 related to the Scale Bio acquisition. In the future, we may pay up to $30.0 million of contingent consideration if certain milestones are met, which are payable in cash or equity at our election.
In January 2023, we signed an agreement to acquire certain intangible and other assets from Centrillion Technologies, Inc. and Centrillion Technology Holdings Corp. Under the agreement, we are obligated to pay for certain technology development milestones if they are met. As of December 31, 2025, we have paid $41.3 million relating to the completion of development milestones. Up to $15.0 million of cash consideration is due if an additional technology development milestone is met.
We expect to continue to incur operating losses for the foreseeable future. We believe that our existing cash and cash equivalents and cash generated from sales of our products will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.
We intend to continue to evaluate market conditions and may in the future pursue additional sources of funding, such as mortgage or other financing, to further enhance our financial position and to execute our business strategy. In addition, should prevailing economic, financial, business or other factors adversely affect our ability to meet our operating cash requirements, we could be required to obtain funding through traditional or alternative sources of financing. We cannot be certain that additional funds would be available to us on favorable terms when required, or at all.
Sources of liquidity
Since our inception, we have financed our operations and capital expenditures primarily through sales of convertible preferred stock and common stock, revenue from sales of our products and the incurrence of indebtedness. In September 2019, we completed our initial public offering for aggregate proceeds of $410.8 million, net of offering costs, underwriter discounts and commissions. In September 2020, we completed a public offering of our Class A common stock for aggregate proceeds of $482.3 million, net of offering costs, underwriting discounts and commissions.
Cash flow summary
The following table summarizes our cash flows for the periods indicated:
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Year Ended December 31,
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| 2025 | 2024 | ||||||||||
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(in thousands)
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Net cash provided by (used in):
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| Operating activities | $ | 136,050 | $ | 6,664 | |||||||
| Investing activities | (13,438) | (32,631) | |||||||||
| Financing activities | 6,803 | 10,914 | |||||||||
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Effect of exchange rates changes on cash and cash equivalents
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484 | (164) | |||||||||
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Net increase (decrease) in cash and cash equivalents
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$ | 129,899 | $ | (15,217) | |||||||
Operating activities
For the year ended December 31, 2025, the net cash provided by operating activities of $136.1 million consisted of a net loss of $43.5 million, adjusted by non-cash adjustments of $154.7 million and net cash inflows from changes in operating assets and liabilities of $24.9 million. The non-cash adjustments of $154.7 million primarily consisted of stock-based compensation expense of $109.1 million, depreciation and amortization of $36.2 million, amortization of leased right-of-use assets of $7.6 million, fair value adjustments on contingent consideration of $1.4 million, ROU assets impairment of $1.3 million due to restructuring, and lease and asset impairment charges of $0.8 million, partially offset by accretion of discounts related to our marketable securities of $1.8 million. The net cash inflow from changes in operating assets and liabilities of $24.9 million was primarily driven by cash inflows related to a decrease in accounts receivable of $41.3 million mainly due to timing of collections,
a decrease in inventory of $28.0 million, an increase in accrued compensation and other related benefits of $7.6 million, and an increase in other noncurrent liabilities of $1.4 million, partially offset by cash outflows due to an increase in other receivables of $34.9 million primarily related to the Bruker settlement, a decrease in operating lease liabilities of $10.3 million due to lease payments, a decrease in accrued expenses and other current liabilities of $5.2 million, a decrease in accounts payable of $2.1 million due to timing of vendor payments, and an increase in prepaid expenses and other current assets of $2.3 million. During the year ended December 31, 2025, we received an upfront payment of $26.0 million from Vizgen, and two quarterly settlement payments from Bruker totaling $34.0 million, along with the corresponding interest payments. Because these amounts were collected in the same period they were recognized, they are reflected in operating cash flows through earnings, with no corresponding change in accounts receivable other than the $34.0 million receivable from Bruker remaining at December 31, 2025.
For the year ended December 31, 2024, the net cash provided by operating activities of $6.7 million consisted of a net loss of $182.6 million, adjusted by non-cash adjustments of $188.0 million, and net cash inflows from changes in operating assets and liabilities of $1.3 million. The non-cash adjustments of $188.0 million primarily consisted of stock-based compensation expense of $140.7 million, depreciation and amortization of $35.9 million, amortization of leased right-of-use assets of $7.8 million, lease and asset impairment charges of $3.1 million, and other non-cash expenses of $0.5 million. The net cash inflow from operating assets and liabilities was primarily due to a decrease in accounts receivable of $27.0 million primarily due to reduced revenue, an increase in deferred revenue of $11.2 million, an increase in accrued compensation and other related benefits of $3.7 million, and an increase in other noncurrent liabilities of $0.8 million. The net cash inflow from operating assets and liabilities was partially offset by a decrease in accrued expenses and other current liabilities of $12.7 million, a decrease of $12.5 million due to payment of operating lease liabilities, an increase in inventory of $9.8 million, a decrease in accounts payable of $3.4 million due to timing of vendor payments, an increase in prepaid expenses and other current assets of $1.9 million, and an increase in other noncurrent assets of $1.1 million.
Investing activities
The net cash used in investing activities of $13.4 million in the year ended December 31, 2025 was due to the purchase of marketable securities of $123.4 million, net cash paid for the asset acquisition of $9.3 million, purchases of property and equipment and intangible assets of $5.9 million, partially offset by the proceeds from maturities of marketable securities of $125.2 million.
The net cash used in investing activities of $32.6 million in the year ended December 31, 2024 was due to the purchase of marketable securities of $48.9 million, purchases of property and equipment and intangible assets of $12.4 million and $1.0 million, respectively, partially offset by the proceeds from sales and maturities of marketable securities of $3.9 million and $25.8 million, respectively.
Financing activities
The net cash provided by financing activities of $6.8 million in the year ended December 31, 2025 was primarily from proceeds of $6.8 million from the issuance of common stock from the exercise of stock options and employee stock purchase plan purchases.
The net cash provided by financing activities of $10.9 million in the year ended December 31, 2024 was primarily from proceeds of $10.9 million from the issuance of common stock from the exercise of stock options and employee stock purchase plan purchases.
Critical Accounting Policies and Estimates
Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report are prepared in accordance with GAAP. We believe that our accounting policies related to revenue recognition are important in understanding our consolidated financial position and results of operations. The other accounting policies and estimates below also involve a significant degree of judgment and complexity. The preparation of consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
For further information, see Note 2 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Revenue recognition
We generate revenue from sales of products, which consist of instruments and consumables, and services. Revenue from product sales is recognized when control of the product is transferred, which is generally upon shipment to the customer. Instrument service agreements, which relate to extended warranties, are typically entered into for a one-year term, following the expiration of the standard one-year warranty period. Revenue for extended warranties is recognized ratably over the term of the extended warranty period as a stand ready performance obligation. Revenue is recorded net of discounts, distributor commissions and sales taxes collected on behalf of governmental authorities. 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 provision of services is recorded as a liability. Our contracts with our customers generally do not include rights of return or a significant financing component.
We regularly enter into contracts that include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. The recognition of revenue can be complex due to the volume of sales transactions including multiple performance obligations. The transaction price is allocated to each performance obligation in proportion to its standalone selling price. We determine standalone selling price using average selling prices with consideration of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by management, adjusted for applicable discounts.
We have agreements with third parties that include up-front fees and royalties. Revenue related to the delivery of intellectual property is recognized when the license is delivered to the third parties. Royalty revenue is recognized when the underlying sales occur. If the reporting of the actual sales from our licensees occurs after our reporting date, we estimate the royalty revenue receivable at the reporting date and adjust for any changes in estimates in the following period.
Inventory
Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or net realizable value. We use judgment to analyze and determine if the composition of our inventory is obsolete, slow-moving, unsalable or otherwise carried above the net realizable value and frequently review such determinations. We write down specifically identified unusable, obsolete, slow-moving or known unsalable inventory and inventory otherwise carried above the net realizable value in the period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders and sales forecasts. Any write-down of inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded to cost of revenue on our consolidated statements of operations. We make assumptions about future demand, market conditions and the release of new products and new versions of existing products that may supersede old ones. However, if actual market conditions are less favorable than anticipated, additional inventory write-downs could be required. For example, we recorded charges of $26.5 million and $11.3 million in the years ended December 31, 2025 and 2024, respectively, related to excess and obsolete inventory.
Stock-based compensation
Our stock-based compensation relates to stock options, restricted stock units ("RSUs"), performance stock units ("PSUs"), market-based performance stock awards ("PSAs") including performance stock options and performance RSUs granted pursuant to equity incentive plans, and stock purchase rights under an Employee Stock Purchase Plan ("ESPP"). Stock-based compensation expense for stock-based awards are based on their grant date fair value. We determine the fair value of RSUs based on the closing price of our stock price, which is listed on Nasdaq Stock Market LLC, at the date of the grant. We estimate the fair value of stock option awards under an equity incentive plan and stock purchase right under an ESPP on the grant date using the Black-Scholes option-pricing model. The fair values of stock-based awards, excluding PSAs and PSUs, are recognized as compensation expense on a straight-line basis over the requisite service period in which the awards are expected to vest and forfeitures are recognized as they occur.
The Black-Scholes model considers several variables and assumptions in estimating the fair value of stock-based awards. These variables include the per share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected annual dividend yield and the expected stock price volatility over the expected term. We calculate the expected term using the simplified method, which is the mid-point between the vesting and contractual term. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award.
During the year ended December 31, 2025, we granted PSUs ("2025 PSUs") to certain members of management which are subject to the achievement of certain performance conditions established by the Company's Compensation Committee of the Board of Directors as described below:
i.50% of target 2025 PSUs earned will be based on the Company's compound annual growth rate ("CAGR") of the Company's revenue over a two-year performance period from January 1, 2025 to December 31, 2026. Holders may earn from 0% to 200% of the target amount of shares and earned 2025 PSUs will then be subject to service-based vesting; and
ii.50% of target 2025 PSUs earned will be based on the relative Total Shareholder Return ("TSR") of the Company's Class A common stock as compared to the TSR of the members of the Russell 3000 Medical Equipment and Services Sector Index over a three-year performance period from January 1, 2025 to December 31, 2027. Depending on the results relative to the TSR market condition, the holders may earn from 0% to 200% of the target amount of shares which will vest at the end of the performance period.
The 2025 PSUs will be forfeited if the performance or market conditions are not achieved at the end of the relative performance periods as described above. The vesting of the 2025 PSUs can also be triggered upon certain change in control events or in the event of death or disability. Stock-based compensation expense recognized for the 2025 PSUs relating to TSR components was $1.0 million for the year ended December 31, 2025. The 2025 PSUs relating to CAGR components were deemed not probable of vesting as of December 31, 2025, which resulted in no stock-based compensation expense recognized for the year ended December 31, 2025.
During the year ended December 31, 2024, we granted PSUs ("2024 PSUs") to certain members of management which are subject to the achievement of certain performance conditions established by the Company's Compensation Committee of the Board of Directors as described below:
i.50% of target 2024 PSUs earned were based on the Company's CAGR of the Company's revenue over a two-year performance period from January 1, 2024 to December 31, 2025. Holders could have earned from 0% to 175% of the target amount of shares and earned 2024 PSUs would have then been subject to service-based vesting; and
ii.50% of target 2024 PSUs earned will be based on the relative TSR of the Company's common stock as compared to the TSR of the members of the Russell 3000 Medical Equipment and Services Sector Index over a three-year performance period from January 1, 2024 to December 31, 2026. Depending on the results relative to the TSR market condition, the holders may earn from 0% to 200% of the target amount of shares which will vest at the end of the performance period.
The 2024 PSUs were or will be forfeited if the performance or market conditions were or are not achieved at the end of the relative performance periods as described above. We did not achieve the revenue CAGR performance condition over the two-year performance period; accordingly, the 2024 PSUs subject to this performance condition were forfeited as of December 31, 2025. The vesting of the 2024 PSUs subject to the relative TSR condition can also be triggered upon certain change in control events or in the event of death or disability. Stock-based compensation expense recognized for the TSR component of the 2024 PSUs was $1.3 million for each of the years ended December 31, 2025 and 2024. The CAGR component of the 2024 PSUs was deemed not probable of vesting as of December 31, 2025 and December 31, 2024, which resulted in no stock-based compensation expense recognized for the years ended December 31, 2025 and 2024.
During the year ended December 31, 2023, we issued market-based PSAs comprising performance restricted stock units (and in one case a performance stock option). 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 certain predetermined share price goals for each tranche. We estimated the value of the PSA awards granted using a Monte Carlo simulation model, using assumptions including volatility, risk-free interest rate, cost of equity and dividends. We recognized the compensation expense over the derived service period using the accelerated attribution method commencing on the grant date. The derived service period was the median duration of the successful stock price paths to meet the price goal for each tranche as simulated in the Monte Carlo valuation model. 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. None of the stock price thresholds for the PSAs have been met, resulting in no shares vesting or becoming exercisable as of December 31, 2025.
Acquisitions of intellectual property
We evaluate acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, further determination is required as to whether or not we have acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business. We account for an asset acquisition under Accounting Standards Codification, Business CombinationsTopic 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 and 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.
On August 7, 2025, we entered into an agreement to acquire all outstanding shares of common stock of Scale Bio. The transaction was accounted for as an asset acquisition because substantially all of the fair value of the assets acquired is concentrated in the developed technology. Upon closing the transaction on August 11, 2025, we made an upfront payment consisting of $9.2 million in cash and $13.5 million (1,099,992 shares) in shares of our Class A common stock. In the first quarter of 2026, we expect to pay $20.0 million, subject to any adjustments, in cash and in shares of our Class A common stock in connection with the technology transfer completed in the third quarter of 2025. In the future, we may pay up to $30.0 million of contingent consideration if certain milestones are met.
We determined that the contingent consideration was within the scope of ASC 480, Distinguishing Liabilities from Equity, because the contingent consideration is payable in cash or Class A common shares, at our election. The contingent consideration was recorded at fair value as of the acquisition date. As of December 31, 2025, we recognized $24.6 million for the fair value of the contingent consideration. The contingent consideration will be remeasured each reporting period, with changes in fair value recognized within "other income (expense), net" in our consolidated statement of operations.
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