TXG 10-K & 10-Q changes, risk factors and insider trading

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this Annual Report,Report including our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations,” in this Annual Report, before deciding whether to invest in our Class A common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations, cash flows and prospects. In such an event, the market price of our Class A common stock could decline and you may lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and the market price of our Class A common stock. In addition, you should consider the interrelationship and compounding effects of multiple risks occurring simultaneously.

•Our dependency on the availability of funding, including government fundingfunding, to and research and development spending by research institutions;

•Existing, enhanced or new tradeTrade tariffs, import restrictions, export restrictions, Chinese regulations or other trade barriers;

•Our products could become subject to more onerous government regulation by the FDA or other regulatory agencies;

•delays in, changes in terms of, or reductionreductions of governmentalor cancellations of U.S. academic and government research funding of life sciences research, generally, or of research projects which utilize or could utilize our solutions, specifically, or other changes that impact budgets, budget cycles orcycles, seasonal or other spending patterns or the operations of our customers,customers or the institutions that fund them, including potential freezes of, reductions in or reduced availability of U.S. academic and government research funding, including funding from the National Institutes of Health (“NIH”) or other fundingsources for our customers;

Our business is significantly dependent on researchers whoand institutions which rely heavily on U.S. academic and government funding, including NIH grants, and any reductiondelays, in,reductions, modification of the terms or cancellations of such funding, or delayother inchanges suchto fundingthe budgets, budget cycles, seasonal or other spending patterns or the operations of our customers or the institutions that fund them, could adversely affect our sales and financial performance.

A substantial portion of our revenue is derived from sales to academic institutions, research organizations and other entities that rely heavily on U.S. academic and government funding, including grants from the National Institutes of Health (NIH) and other government agencies.agencies or other funding sources. Government funding is subject to annual appropriations and budgetary constraints, and there is no assurance that such funding will continue at current levels or at all. Changes in U.S. academic and government budgets, prioritiespriorities, policies or policiesoperations could result in reduceddelays, reductions or delayedcancellations of funding for our customers' research. If researchers experience delays, reductions or delayscancellations in U.S. academic and government funding, or modifications of the terms or conditions of funding, they may reducereduce, delay or delaycancel their purchases of our products and services, which could have a material adverse effect on our business, financial condition and results of operations.

Any changes in U.S. academic and government regulationsregulations, policies or policiesoperations that affect the terms of research funding could impact our customers’ ability to secure funding and, consequently, theirthe timing and demand for our products and services. For example, onin February 7, 2025, the NIH imposed a standard indirect rate of 15% across all NIH grants for indirect costs, defined as “facilities” and “administration,” in lieu of a separately negotiated rate for indirect costs in every grant. Indirect costs represented $9 billion of the $35 billion in grants awarded by the NIH in 2023, which is more than 25% of total grant dollars awarded by the NIH. ResearchWhile institutionsin March 2025 the United States District Court for the District of Massachusetts issued a preliminary injunction halting the implementation, application or enforcement of the standard indirect rate, which injunction was upheld in January 2026 by the United States Court of Appeals for the First Circuit, the situation remains uncertain and our customers may face increased financial pressure due to this change or any future caps on indirect costs. The imposition of this cap, or other changes to grant termsterms, andconditions conditions,or processes, including those related to the disbursement of funds, could lead to delayed, reduced or cancelled funding otherwise available for purchasing research supplies and equipment, thereby negatively impacting our sales.

In addition, various private, state, federal and international agencies that provide grants and other funding may be subject to budgetary or other constraints that could result in spending reductions, reduced grant making, reduced allocations or budget cutbacks, budget reprioritizations, delays or funding cancellations, which could jeopardize the ability of researchers to purchase our products. For example, congressional appropriations to the NIH have generally increased year-over-year in recent years, but the NIH also experiences occasional year-over-year decreases in appropriations. There is no guarantee that NIH appropriations will not decrease in the future. ForIn example,January 2026, the United States Senate passed a package of budget bills which included a year-over-year increase in base discretionary funding for the NIH and the NIH’s final appropriations remain uncertain. Further, in January 2025 the Executive Office of the President’s Office of Management and Budget (OMB) issued a memorandum “temporarily paus[ing] all activities related to obligation or disbursement of all Federal financial assistance...” which maywe havebelieve had the effect of delaying or preventing certain of customers or potential customers from accessing grants or funding. Further,funding in January2025. Additionally, we believe changes to the operations of our customers or the institutions that fund them including reductions in staffing or reorganizations of U.S. academic and government funding institutions, including 2025 areductions numberin staffing and leadership changes at the NIH, have caused, and again in the future may cause, delays, reductions or cancellations of scientificresearch gatheringsspending, negatively impacting our sales. Fewer staff available to process, review and panelsmake acrossdecisions federalregarding sciencefunding agencies,requests includingor severalcomplete meetingsother offunding-related NIHactivities studycould sectionsdelay whichor reviewprevent applicationsour forcustomers fellowshipsfrom andreceiving grants,necessary were canceled pursuantfunding to agencypurchase notices.our These meetings can be hard to reschedule and can substantially delay grant approvals.products. Any cancellations or pausesdelays in the ability of NIH or other funding bodies to make and execute decisions to fund research which uses our productsproducts, including the cancellation or delay of scientific gatherings or panels such as NIH study sections, could delay or prevent researchers from purchasing our products,products or reduce their purchases, negatively impacting our financial results. A decrease in the amount of, or delay in the approval of, appropriations to or disbursements from the NIH or other funding organizations, such as the Medical Research Council in the United Kingdom, could result in less funding available for life sciences research. Reductions, delaysresearch or modifiednegatively grantaffect the timing of purchases of our products. We believe delays, reductions, modification of the terms or cancellations of funding resulted, and in the future again could also resultresult, in a decrease in the aggregate amount of grants awarded or funding disbursed for life sciences research or the redirection of existing funding to other projects or priorities, anywhich ofhas whichcaused, and may again in turnthe future could causecause, our customers and potential customers to reducereduce, delay or delaycancel purchases of our products. For example, in March 2025 the NIH terminated approximately seven hundred research grants totaling more than $2.4 billion that funded scientific research, including studies related to breast cancer, Alzheimer’s disease and HIV prevention, among other topics. Our operating results may fluctuate substantially due to any such reductionsdelays, andreductions, delays.modification Anyof decrease in our customers’ budgetsterms or expenditures, or in the size, scope or frequency of their capital or operating expenditures could materially and adversely affect our business, operating results and financial condition.cancellations.

We havebelieve recentlythat takenprice achanges numbercan ofaffect stepspurchasing decisions by our customers and potential customers. We expect average selling prices for certain products to lowerdecline theover costtime ofas singlewe cellexpand experimentsour throughportfolio thewith introductionlower-priced of new productsinstruments and new versions of existing products that deliver lower price per cell and per sample and we may in the future choose to implement strategic price reductions or discounting of our products and services.consumables. While we believe these actions will drive increased customer adoption, they will also result in lower revenue per unit sold. While we plan to offset these reductions through increased sales volume, operational cost savings and improved operating leverage, our ability to do so will be dependent upon whether our customers increase their usage of our products, and there can be no assurance that these offsetting measures will be successful or will occur in the same time period as the price reductions. We may experience corresponding increases in demand or customers may push out purchases to future periods in anticipation of future product introductions or price reductions or discounting, which would negatively impact our financial results.

Enhanced tradeTrade tariffs, import restrictions, export restrictions, Chinese regulations or other trade barriers may materially harm our business.

WeIn arerecent continuingyears, towe expandhave expanded our international operations as part of our growth strategy and have experienced an increasing concentration of sales in certain regions outside the United States, including in the Asia-Pacific region. For the years ended December 31, 20242025 and 2023,2024, sales outside of North America constituted a substantial component of our total sales revenue and our largest markets outside of North America were China and Germany. There is currently significant uncertainty about the future relationship between the United States and its trade partners, most significantly China, with respect to trade policies, treaties, government regulations and tariffs and the United States has statedimplemented itand is considering additional new tariffs or other restrictions on goods from a number of other countries.

ThisWe face increased costs due to tariffs imposed by the United States on materials we purchase, which may subject our business to retaliatory measures taken by trade partners, including China or other countries which would have an adversenegatively impact on our financial results. SuchThese measurestariffs couldraise includethe restrictionscost onof oursupplies abilityand components we import, potentially leading to sellprice orincreases importfor our products intoand otheraffecting countries or increase the prices of our products. For example, in February 2025, the United States increased tariffs on goods imported into the United States from China by 10%,demand and Chinacompetitive respondedpositioning. by imposing a 15% tariff on coal and liquified natural gas products and a 10% tariff on crude oil, agricultural machinery and certain automobiles. TheseAdditionally, tariffs could increasedisrupt supply chains and exacerbate economic instability. If we cannot recover higher costs promptly, our costs,margins negativelyand impactingprofitability ourmay financialdecline. results. It is possible furtherFurther tariffs may be imposed that could coverworsen importsthese of the export or sale of our products.risks. Our business has been and may in the future could be adversely impacted by retaliatory trade measures taken by trade partners, which could materially harm our business, financial condition and results of operations. The nature of the disputedisputes between the United States and its trade partners iscontinues evolvingto evolve and additionalour products such as ours could become subject to tariffs,additional which could adversely affect the marketability of our products and our results of operations.tariffs. Further, the continued threats of tariffs, trade restrictions and trade barriers could have a generally disruptive impact on the global economy,economy and customer sentiment outside the United States, including increases in inflation and interest rates, and,and therefore,therefore negatively impact our sales. Given the relatively fluid regulatory environment between the United States and its trade partners and uncertainty how each will act with respect to tariffs, international trade agreements and policies, there could be additional tax or other regulatory changes in the future. Any such changes could directly or indirectly adversely impact our financial results and results of operations.

InFurther, in recent years,years the United States government has a renewed focus on export control matters. For example, the Export Control Reform Act of 2018 and regulatory guidance thereunder have imposed additional controls and may result in the imposition of further additional controls, on the export of certain “emerging and foundational technologies.” Our current and future products may be subject to these heightened regulations, which could increase our compliance costs.

We have in the past needed to, and may in the future need to, identify, adopt and adhere to new or modified commercial processes to maintain and increase the effectiveness of our commercial organization. In 2024, we modified our commercial processes and organization to increase effectiveness. While we believe such changes will serveserved the long term best interests of the Company, we believe that in the short term these changes negatively impacted our financial results in 2024 and may continue to negatively impact our results in the future.results. There is no guarantee that the modifications we have made or make in the future to our commercial processes and organization resulted or will result in increased effectiveness. If the modifications to our commercial processes and organization do not result in increased effectiveness, our business, results of operations and growth prospects may be harmed.

Our instruments and consumables, as well as the software that accompanies them, have in the past and may again in the future contain undetected errors or defects due to design, manufacturing, delivery or other issues. Disruptions or other performance problems with our products or software may adversely impact our customers’ research or business, harm our reputation and result in reduced revenue or increased costs associated with product repairs or replacements. If that occurs, we may also incur significant costs, the attention of our key personnel could be diverted or other significant customer relations problems may arise. We have and may again in the future also be subject to warranty claims related to errors or defects in our solutions, and in the future we may be subject to breach of contract for damages related to such errors or defects.

We are significantly dependent upon revenue generated from the sale of our Chromium solutions, and in particular our Universal Gene Expression and Flex solutions.

We currently generate the majority of our revenue from the sale of our instruments and consumables for our Chromium platform. There can be no assurance that we will be able to sustain or increase the success we have historically achieved with our Chromium solutions. For example, revenue from single cell solutions decreased year-over-year from $407.5 million in 2024.2024 to $385.9 million in 2025. In addition, we may not be able to design future Chromium products that will meet the needs of our customers or become and remain commercially successful. Our expectations are based on the continued success of our existing solutions and the future success of new products and new versions of existing products that we launch. Revenue from our single cell solutions decreased year-over-year in 2024 and 2025 which adversely impacted our financial results, and if revenue from our single cell solutions continues to decrease, remains flat or does not increase in line with our expectations, our revenue and financial results could be materially and adversely impacted.

We currently serve thousands of researchers in many countries and plan to continue to expand to new international jurisdictions as part of our growth strategy. For the years ended December 31, 20242025 and 2023,2024, approximately 43%44% and 40%,43%, respectively, of our revenue was generated from sales to customers located outside of North America. We believe that a significant portion of our future revenue will come from international sources. We sell directly in North America and certain regions of Asia, Oceania and Europe and have a significant portion of our sales and customer service personnel in the United States. We sell our products through third-party distributors in certain regions of Asia, Europe, Oceania, CentralNorth America, South America, the Middle East and Africa. As a result, we or our distribution partners may be subject to additional regulations. Conducting operations on an international scale requires close coordination of activities across multiple jurisdictions and time zones. If we fail to coordinate and manage these activities effectively, our business, financial condition or results of operations could be materially and adversely affected and failure to comply with laws and regulations applicable to business operations in foreign jurisdictions may also subject us to significant liabilities and other penalties. International operations entail a variety of other risks, including, without limitation:

•significant taxes or other burdens of complying with a variety of foreign laws, including laws relating to privacy and data protection such as the European Union General Data Protection Regulation (“EU GDPR”).

In conducting our international operations, we are subject to United States laws relating to our international activities, such as the Foreign Corrupt Practices Act of 1977, as well as foreign laws relating to our activities in other countries, such as the United Kingdom Bribery Act of 2010. Additionally, our business must be conducted in compliance with applicable economic and trade sanctions laws and regulations, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. These laws generally prohibit, unless authorized by the relevant authority or otherwise exempt from the regulations, the conduct of business with persons, countries, regions, and governments that are targeted by “sanctions,” including but not limited to persons listed on the United States Department of Commerce’s List of Denied Persons and the United States Department of Treasury’s Specially Designated Nationals and Blocked Persons List, and the areas subject to trade embargoes by the United States (currently, Cuba, Iran, Syria, North Korea, and the CrimeaCrimea, regionDonetsk and Luhansk regions of Ukraine). Our global operations expose us to the risk of violating, or being accused of violating, these laws and regulations. Failure to comply may subject us to reputational harm, claims or significant financial and/or other penalties in the United States and/or foreign countries that could materially and adversely impact our operations or financial condition, including criminal fines, imprisonment, civil fines, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive.

Our ability to sell our products in China may be negatively impacted by other evolving laws and regulations in the U.S. and China. Certain risks and uncertainties of doing business in China are within the control of the Chinese government, and Chinese law regulates the scope of our investments and business conducted within China. The Chinese government requires compliance with significant technical and other regulatory requirements and may adopt new regulations that may impact entities operating in China, including us, our distributors, suppliers and other third parties, potentially with little advance notice, which may directly or indirectly impact our sales and operations in China. These actions may increase the cost of doing business in China or limit how we may do business in China, which could materially and adversely affect our business.

InWe addition, wealso have suppliers, employees and manufacturing operations in Taiwan. As a result, our business could be materially and negatively impacted by adverse changes in China-Taiwan relations. Accordingly, further deterioration in military, political and economic relations between China and Taiwan, as well as the ongoing geopolitical and economic uncertainty between the U.S. and China and other geopolitical risks with respect to China and Taiwan, may cause disruptions in our ability to source products or materials from or to China and Taiwan, which may, directly or indirectly, harm our business.

We use a broad range of materials and supplies, including metals, chemicals and electronic components, in our products. A significant disruption in the supply of materials could decrease production and shipping levels, materially increase our operating costs and materially adversely affect our profit margins. In particular, the rapid expansion of global artificial intelligence infrastructure has precipitated shortages and extended lead times for high-performance computing components, including GPUs and memory. Because suppliers often prioritize allocation to hyperscale technology companies with significantly greater purchasing volume, we may face an inability to secure these critical inputs or be forced to pay significant premiums, creating supply constraints that adversely impact our manufacturing capabilities or other operations. Our customers may face similar challenges. Shortages of materials or interruptions in production and transportation systems, labor strikes, work stoppages, infectious disease, epidemics or pandemics, geopolitical issues (including tariffs, trade disputes and other trade restrictions), conflict, war, civil unrest, acts of terrorism or other interruptions to or difficulties in the employment of labor or transportation that adversely impact equipment, materials and components we require for the production of our products, may adversely affect our ability to maintain production of our products and generate revenue. In addition, a significant prolonged increase in inflation could negatively impact the cost of materials and components. Even if in some cases we are able to pass some or all such cost increases to customers by increasing the selling prices of our products, higher product prices may also result in a reduction in sales volumes.

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 leveragesis made up of our Single Cell and Spatial solutions. Our products include our instruments, which include our Chromium instruments andinstruments, our Visium CytAssist and our Xenium Analyzer, which we refer to as “Spatial instruments,” and our consumables, which include proprietary microfluidic chips, slides, reagents and other consumables for our Chromium,Single VisiumCell and XeniumSpatial solutions, which we refer to as “consumables.”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. InWe addition to instrument and consumable sales, wealso derive revenue from post-warranty service contracts for our instruments.

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.

Our quarterly instrument unit volumes can fluctuate due to a number of factors, including the procurement and budgeting cycles of many of our customers, especially government and academic institutions where unused funds may be forfeited or future budgets reduced if purchases are not made by their fiscal year end,customers and the purchasing patternsavailability of internationalacademic customersand whichgovernment varyresearch due to procurement or budgeting cycles, holidays or other factors which may result in a disproportionate amount of their purchasing activity occurring in specific periods. Similarly, our biopharmaceutical customers typically have calendar year fiscal years which may result in a disproportionate amount of their purchasing activity occurring during our fourth quarter.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 increaseschanges have caused customers to pull forward purchases or postpone purchases of instruments. Conversely, we anticipate that announced price decreases could postpone instrument purchases to future quarters. We therefore believe that an annual representation of cumulative instruments sold is most appropriate for assessing trends in our business.

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, 2024,2025, 20232024 and 2022.2023. For the year ended December 31, 2025, Chromium Single Cell reactions include Chromium and Scale Bio reactions.

We plan to grow oursupport 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.

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 unlockexpand elasticity of demandusage and increasewe purchasesanticipate ofthat bothincreased instrumentsadoption and consumables.volume Wegrowth expectwill todrive lowerhigher prices for certain of our products in 2025 and expectoverall sales of our instruments and consumables to increase over time as a result of introducing lower prices for our instruments and consumables.time.

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 and therefore expect expenses to increase.business. Excluding acquisitions, we do not expect our operating expenditures to meaningfully increase in 2025.2026. 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.

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 Chromium,Single VisiumCell and XeniumSpatial consumable products. Our consumables are designed to work exclusively with our instruments. Our Chromium,Single XeniumCell and VisiumSpatial consumables require the use of a 10x Genomics instrument, with the exception of our SpatialQuantumScale Single Cell RNA kit, Single Cell Methylation kit and Visium v1 3’ Gene Expression v1 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.

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 inflationinflation, tariffs and increased supply chain costs; excess and obsolete inventories; royalties; our cost structure for manufacturing operations relative to volume; and product warranty obligations. We currently anticipate that we will experience an increase in absolute dollars of both revenue and cost of revenue as we grow our business.

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 modestly 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 theseour andongoing otherefforts initiatives,to manage our spend, we expect our research and development expense willto modestly increasedecrease in absolute2026 dollarsversus inthe futureprior periods and vary from period to period as a percentage of revenue.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. We periodically evaluate acquisitions of this nature.

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 to incur additional selling, general and administrative expenses due to continued investment in our sales, marketing and customer service efforts to support the anticipated growth of our business. We expect infrastructure costs including allocated facilities and information technology costs to remainmodestly flatdecrease in absolute dollars. As a result of these and other initiatives, we expect selling, general and administrative expenses to vary from period to period as a percentage of revenue and increase in absolute dollars in future periods. 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.

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 primarily consists of realized and unrealized gains and losses related to foreign exchange rate remeasurements.remeasurements and fair value adjustments on contingent consideration.

As of December 31, 2024,2025, we had federal net operating loss (“NOL”) carryforwards of $638.7$808.1 million and federal tax credit carryforwards of $88.5$93.8 million. Our federal NOLsNOL carryforwards generated after December 31, 2017, which total $632.9$802.3 million, are carried forward indefinitely, while all of our other federal NOL and tax credit carryforwards expire beginning in 2033.2033 and 2036 respectively. As of December 31, 2024,2025, we had state NOL carryforwards of $424.5$506.5 million, which primarilybegin to expire beginningprimarily in 2033. In addition, we had state tax credit carryforwards of $68.3$77.4 million, which carrydo forwardnot indefinitely.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.

RevenueProduct and services revenue decreased $7.9$13.8 million, or 1%,2%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. Instruments revenue decreased $30.8$35.9 million, or 25%,39%, to $92.7$56.8 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024, primarily due to price decreases and lower volume of Chromium and Spatial instruments sold. Consumables revenue increased $13.9$13.8 million, or 3%, to $493.4$507.2 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024, primarily driven by growth in Spatial consumables sales,sales partially offset by lower ChromiumSingle Cell consumables sales due primarily to price decreases and changes in product mix.sales. Service revenue increased $8.9$8.4 million, or 57%,35%, for the year ended December 31, 20242025 as compared to year ended December 31, 2023,2024, primarily driven by increasedan increase in service plans for bothinstruments Chromiumcoming andoff Spatial instruments.warranty.

Cost of Products and Services Revenue, Gross Profit and Gross Margin

Cost of products and services revenue decreasedincreased $13.1$2.6 million, or 6%,1%, to $198.9 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. The decreaseincrease was primarily driven by lowerhigher manufacturing costs of $22.6$12.2 million due to decreased sales anda change in product mix,mix and higher inventory write-downs of $7.8 million, partially offset by higherlower royalties of $9.8$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.

Research and development expense decreased $5.6$26.1 million, or 2%,10%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. The decrease was primarily driven by a decrease$21.7 in allocated costs for facilities and information technology of $2.7 million, amillion decrease in personnel expenses of $2.5 million,expenses, including a $6.5$16.3 million reductiondecrease 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 amortizationamortization, ofand $1.4a million,$1.3 million decrease in other expenses, partially offset by anrestructuring increase in other expensescharges of $0.8$4.1 million.

Selling, general and administrative expenses increaseddecreased $1.0$28.2 million, or 0.3%,8.2%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. The increasedecrease was primarily driven by ana increasedecrease in outside legal expenses of $21.2$25.6 million, an increase in allocated costs for facilities and information technology to support operational expansion of $1.7 million, partially offset by a decrease in personnel expenses of $18.6$4.3 million, including a $21 million reductiondecrease in stock-basedmarketing compensationexpenses expense,related to advertising and conferences and seminars of $2.9 million, and a decrease in otherfacilities expensesand information technology costs of $4.4$1.2 million, partially offset by restructuring charges of $6.0 million.

Total Other Income (Expense), Net

OtherInterest expense, netincome increased by $1.3$1.1 million for the year ended December 31, 20242025 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, 20232024, andprimarily wasdue drivento bya $4.6 million increase in net realized and unrealized lossesgains from foreign currency rate measurement fluctuations.fluctuations, partially offset by a $1.4 million change in fair value of contingent consideration related to the Scale Bio acquisition.

The Company’sOur provision for income taxes was $4.9$3.6 million and $6.3$4.9 million, respectively, for the years ended December 31, 20242025 and 2023.2024. The provision for income taxes decreased by $1.4$1.3 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. The decrease was primarily due to lower foreign income.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.

As of December 31, 2024,2025, we had approximately $393.4$523.4 million in cash and cash equivalents, and marketable securities which were primarily held in U.S. banks. We have generated negative cumulative cash flows from operations since inception through the year ended December 31, 2024, and we have generated losses from operations since inception as reflected in our accumulated deficit of $1.5 billion.

In January 2023, we 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, we paid additional cash consideration of $10.0 million upon acquiring the assets. Under the agreement, we are obligated to providepay additional cash consideration iffor certain technology development milestones if they are met. As of December 31, 2024,2025, 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. Furthermore, we expect to pay cash consideration tied to future sales milestones if such milestones are met.

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 thoughthrough 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.

TheFor the year ended December 31, 2024, the net cash provided by operating activities of $6.7 million forconsisted the year ended December 31, 2024 was due primarily toof a net loss of $182.6 million, partially offsetadjusted 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, netamortization cashof inflowleased from changes in operatingright-of-use assets and liabilities of $1.3$7.8 million, lease and asset impairment charges of $3.1 million, amortization of leased right-of-use assets of $7.8 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.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

ProductProducts and Services Revenue

Products and services revenue increased $12.1$3.9 million, or 9%,3%, to $149.9$149.1 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025. Consumables revenue increased $14.4$8.6 million, or 13%,7%, to $129.8$130.8 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025. Instruments revenue decreased $3.6$6.8 million, or 24%,47%, to $11.3$7.7 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025. Services revenue increased $1.2$2.2 million, or 15%,26%, to $8.8$10.7 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily driven by an increase in service plans for instruments coming off warranty.2025.

License and royalty revenue decreased $16.1$25.8 million, or 94%,93%, in the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily due to one-time royalty revenue of $16.8$27.3 million recognized in the three months ended MarchJune 31,30, 2025 in connection with the settlement of our worldwide patent litigation with Bruker Corporation (“Bruker”), partially offset by $1.6 million of revenue recognized during the three months ended June 30, 2026 in connection with our patent litigation settlement with Vizgen,Takara Bio USA Holdings, Inc. (“VizgenTakara”).

Excluding $44.1 million of non-recurring license and royalty revenue related to patent litigation settlements in 2026 and 2025, we expect our revenues to moderately increase in 2026 as compared to 2025.

Cost of products and services revenue decreased $4.8$9.3 million, or 10%,19%, to $44.7$38.5 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily driven by lower manufacturing costs of $3.3 million which included $2.6 million of tariff refunds, lower inventory write-downs of $9.2$3.0 million andmillion, lower warranty costs of $2.5$2.7 million, partially offset by higher manufacturing costs of $6.1 million due to a change in product mix and higherlower royalty costs of $0.9$0.4 million. Gross margin increased to 70%74% for the three months ended June 30, 2026 as compared to 72% for the three months ended June 30, 2025. The increase was primarily due to lower warrantymanufacturing costs andincluding tariff refunds, lower inventory write-downs, lower warranty costs, and changes in product mix, partially offset by a decrease in license and royalty revenue due to the non-recurring benefit in license and royalty revenue recorded in the three months ended MarchJune 31,30, 2025.

Research and development expenses decreased $7.4$4.4 million, or 12%,7%, to $56.8 million for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily driven by aan $5.4$8.3 million decrease in personnel expenses, including a $3.4$2.1 million decrease in stock-based compensation expense, partially offset by a $1.0$4.2 million decreaseincrease in laboratory materials and supplies and a $0.6 million decrease in facilities and information technology costs.supplies.

Selling, generalResearch and administrativedevelopment expenses decreased $23.4$11.8 million, or 26%,9%, to $66.4$113.6 million for the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025. The decrease was primarily driven by a $12.2 million decrease in outside legal expenses, a $4.3$13.6 million decrease in personnel expensesexpenses, primarily due toincluding a $5.5 million decrease in stock-based compensation expenses,expense and a $1.9 million decrease in travel and entertainment expenses, a $1.8 million decrease in professional services expenses, a $1.7$2.3 million decrease in facilities and information technology costscosts, partially offset by a $3.8 million increase in laboratory materials and a $1.6 million decrease in marketing expenses.supplies.

Gain on settlement decreased in the three and six months ended June 30, 2026 due to a non-recurring gaingains on settlementsettlements of $9.2$40.7 million recorded in the three months ended MarchJune 31,30, 2025 and $49.9 million recorded in the six months ended June 30, 2025, as part of our patent litigation settlements with Bruker and Vizgen in 2025. In both periods, the decrease was partially offset by a $3.4 million gain on settlement recorded in the three months ended June 30, 2026 as part of our patent litigation settlement with Vizgen in 2025.Takara.

Excluding $49.9 million in gains on settlements recorded in 2026 and 2025, we expect our operating expenses to modestly decrease in 2026 compared to the prior year as a result of our ongoing efforts to manage our spend.

Interest income increased by $1.3$0.5 million, or 36%,12%, to $5.0$4.8 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily due to higher money market fund balances. Interest income increased $1.9 million or 23%, to $9.8 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The increase was primarily due to higher money market fund balances and interest income applicable to a quarterly legal settlement paymentpayments aswe describedreceived below,from Bruker during the threesix months ended MarchJune 31,30, 2026.

Other income (expense), net decreased by $3.0$6.5 million to $0.8$3.9 million other expense, net for the three months ended MarchJune 31,30, 2026 as compared to $2.1$2.6 million other income, net, for the three months ended MarchJune 31,30, 2025. Other income (expense), net decreased $9.4 million to $4.7 million other expense, net for the six months ended June 30, 2026 as compared to $4.7 million other income, net, for the six months ended June 30, 2025. The decrease in otherboth income (expense), netperiods was primarily driven by a $2.2$3.5 million increaseloss resulting from the change in fair value of contingent consideration and increases in net losses from foreign currency remeasurements.remeasurements of $2.6 million and $4.9 million for the three and six month periods, respectively.

We expect other income (expense), net, to fluctuate, potentially significantly, from quarter to quarter due to potential changes in the fair value of contingent consideration.consideration and fluctuations in foreign currency exchange rates.

Provision for (Benefit from) Income Taxes

As of MarchJune 31,30, 2026, we had approximately $539.8$552.0 million in cash and cash equivalents and marketable securities, which increased by $16.4$28.6 million as compared to December 31, 2025, and 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.

In 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 MarchJune 31,30, 2026, 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 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 thoughthrough 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.

The net cash provided by operating activities of $26.1$43.1 million for the threesix months ended MarchJune 31,30, 2026 consisted of a net loss of $13.5$31.4 million, non-cash adjustments of $34.3$73.3 million and a net cash inflow from changes in operating assets and liabilities of $5.3$1.2 million. The non-cash adjustments of $34.3$73.3 million primarily consisted of stock-based compensation expense of $22.6$48.3 million, depreciation and amortization of $10.0$19.6 million andmillion, non-cash lease expense of $2.0$4.0 million.million and fair value adjustments on contingent consideration of $3.5 million, partially offset by a $1.4 million of tax benefit recognized in relation to the acquisition of the PTG business. The net cash inflow from operating assets and liabilities was primarily driven by cash inflows associated with a decrease in other receivables of $18.1$32.1 million primarily related to the Bruker settlement, a decrease in accounts receivable of $8.0 million due to timing of collections, an increase in accounts payable of $4.8$8.1 million, a decrease in inventory of $2.7$5.7 million, and a decrease in prepaid and other current assets of $1.9$3.2 million. The net cash inflow from operating assets and liabilities was partially offset by cash outflows associated with a decrease in accrued compensation and other related benefits of $21.0$17.8 million, an increase in other noncurrent assets of $11.9 million, a decrease in accrued expenses and other current liabilities of $6.1$9.7 million andmillion, a decrease in the operating lease liability of $2.9$5.8 million.million, a decrease in deferred revenue of $1.5 million, a decrease in accrued contingent consideration of $0.6 million and an increase in accounts receivable of $0.5 million due to timing of collections.

The net cash provided by operating activities of $34.4$52.1 million for the threesix months ended MarchJune 31,30, 2025 primarily consisted of a net lossincome of $34.4$0.2 million, non-cash adjustments of $40.4$77.3 million and a net cash inflowoutflow from changes in operating assets and liabilities of $28.3$25.4 million. The non-cash adjustmentadjustments of $40.4$77.3 million primarily consisted of stock-based compensation expense of $31.1$58.6 million, depreciation and amortization of $8.0$15.8 million and non-cash lease expense of $1.8$3.6 million. The net cash inflowoutflow from operating assets and liabilities was primarily driven by an increase in other receivables of $68.5 million primarily related to the Bruker settlement, a decrease in accrued compensation and other related benefits of $7.8 million, a decrease in the operating lease liability of $5.0 million and a decrease in accrued expenses and other current liabilities of $2.9 million. The net cash outflow from operating assets and liabilities was partially offset by cash inflows associated with a decrease in accounts receivable of $35.3$37.9 million, a decrease in inventory of $15.1 million, an increase in accounts payable of $3.5 million and a decrease in inventory of $8.1 million. The net cash inflow from operating assets and liabilities was partially offset by cash outflows associated with a decrease in accrued compensation and other related benefits of $11.7 million related to prior year annual bonus payments, an increase in prepaid expenses and other currentnoncurrent assets of $5.5 million, a decrease in operating lease liability of $2.6 million and a decrease in accounts payable of $2.5$2.4 million.

The net cash used in investing activities of $1.3$9.0 million in the threesix months ended MarchJune 31,30, 2026 was due to the purchase of marketable securities of $24.7$49.3 million, net cash paid for the business combination of $6.1 million and net cash paid for purchases of property and equipment of $1.6$3.2 million, partially offset by maturities of marketable securities of $25.0$50.0 million.

The net cash used in investing activities of $1.9$2.8 million in the threesix months ended MarchJune 31,30, 2025 was due to the purchase of marketable securities of $49.4 million and purchases of property and equipment.equipment of $3.5 million, partially offset by maturities of marketable securities of $50.0 million.

The net cash used in financing activities of $8.4$5.4 million in the threesix months ended MarchJune 31,30, 2026 was due to the payment of contingent consideration of $8.7 million related to the Scale Bio acquisition, partially offset by proceeds related to the issuance of common stock from the exercise of stock options.

The net cash provided by financing activities of $0.4$3.9 million in the threesix months ended MarchJune 31,30, 2025 was primarily from proceeds related to the issuance of common stock from the exercise of stock options.options and employee stock purchase plan.

Critical accounting estimates are those estimates made in accordance with United States generally accepted accounting principles (“GAAP”) that involve a significant level of judgments and estimates that can affect the results of operations and financial position of the Company. For further discussion of our critical accounting estimates, see our critical accounting policies and estimates disclosed in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K filed with the SEC on February 12, 2026. There have been no significant changes in estimates in the quarter ended MarchJune 31,30, 2026 that would require disclosure nor have there been any changes to our policies.