10x Genomics (TXG) Risk Analysis

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 including our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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 products could become subject to more onerous government regulation by the FDA or other regulatory agencies; Changes in tax laws or regulations that are applied adversely to us or our customers; and Ethical, legal, privacy and social concerns or governmental restrictions surrounding the use of the genomic and multiomic information and gene editing. For example, our products intended for research use may be subject to changes in regulatory controls if they are later determined to be used in the clinical setting. Further, changes in taxation of corporate income or other relevant tax laws or regulations, including adverse changes or changes that disadvantage our business or customers, could have a material adverse effect on our financial condition and results of operations. In addition, adjustments to the tax treatment of our revenue, expenses or future acquisitions may adversely affect our results. Any modifications to these or any other laws or regulations, or their interpretations, governing our business may have a material adverse effect on our financial condition and results of operations.

Our operating results have in the past fluctuated significantly and may continue to fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide. Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:•delays in, changes in terms of, reductions of or 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, seasonal or other spending patterns or the operations of our 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 sources for our customers; •the effects of competition, including competition with both new and existing companies offering products that compete or intend to compete with our products and may offer performance, price or other advantages as well as researchers developing their own solutions; •the timing and magnitude of our price changes, including the effects of potentially lower average selling prices for certain products as we expand our portfolio with lower-priced instruments and consumables;•the success of our recently introduced and recently announced products and new versions of existing products, and our ability to generate revenue for such products, and the introduction of new products or product enhancements by us or others in our industry including the timing of such introductions, and the risk that the introduction of a new or enhanced product cannibalizes sales of our existing products or that we fail to effectively manage the transition from older to newer versions of our products;•changes in volume and product mix, particularly from products with lower gross margins than other products that we sell, or changes in costs related to our instruments and consumables, including products which incur royalty payment obligations at higher rates than other products we sell;•the success of our strategy to enter the clinical and diagnostic markets;•trade tariffs, import restrictions, export restrictions, Chinese regulations or other trade barriers, including retaliatory measures taken by trade partners; •changes in general market conditions and other factors, including factors unrelated to our operating performance or the performance of our competitors;•the effects of inflation on us or our customers, manufacturers and suppliers, including increases in the cost of labor and materials, including as a result of tariffs imposed by the United States which are currently, or in the future, under consideration, proposed or enacted;•modifications to our commercial processes and organization, including changes we made to our commercial processes and organization to increase effectiveness; •excess capacity expenses and inventory write-downs; •the timing and amount of expenditures (including success fees) related to litigation, as well as the outcomes of and related rulings in the litigation and administrative proceedings which may vary substantially from quarter to quarter;•disruptions in customers’ on-going experiments or interruptions in the ability of our customers to complete research projects;•investment decisions we make with respect to the allocation of our resources, including regarding product development or to support our commercial organization;•differences in purchasing patterns across our customer base or across our two portfolios and variances in consumables spending for each of our portfolios;•the timing and amount of expenditures that we may incur to acquire, develop or commercialize additional products and technologies or for other purposes;•risks related to our business and demand for our products in China and elsewhere in the Asia-Pacific region, including competition or other factors;•the outcome of any current or future litigation or governmental investigations involving us or other third parties;•higher than anticipated warranty costs;•our ability and the ability of our partners to successfully manufacture our instruments and consumables in necessary quantities at necessary quality, including due to the impacts of supply chain disruptions, logistics, shipping and other distribution disruptions and labor shortages;•shortages, delays, production problems, distribution and quality issues with the materials we purchase for manufacturing, which could impact our ability to manufacture and ship our instruments, consumables and related components;•our inability or the inability of our customers to source our products or necessary equipment, components and materials used in our products or in conjunction with our products, including shortages of consumables or other components and materials used in gene sequencing (which occurred in 2024), because of issues with suppliers, including supply chain disruptions, logistics, shipping and other distribution disruptions and labor shortages;•our dependence and the dependence of our customers on single source and sole source suppliers for some of the equipment, components and materials used in our products or in conjunction with our products;•our ability to successfully integrate personnel, technology and other assets that we acquire into our company;•difficulties encountered by our commercial carriers in delivering our instruments or consumables, whether as a result of external factors such as weather, customs or import processes, transportation bottlenecks, port lockdowns or slowdowns or fuel shortages or internal issues such as labor disputes or difficulties hiring and retaining adequate staffing;•changes in customer payment timing trends including potential increases in the days sales outstanding (DSO);•reductions in or other difficulties relating to staffing, capacity, shutdowns or slowdowns of laboratories and other institutions, such as reduced or delayed spending on instruments or consumables due to reductions in or other difficulties relating to staffing, capacity, shutdowns or slowdowns of laboratories and other institutions in which our instruments and solutions are used;•expenses related to our facilities and real estate;•our reputation or public perception of us;•the impacts of geopolitical issues, infectious disease, epidemics or pandemics on our business operations and on the business operations of our customers, manufacturers and suppliers; and•the other factors described in this “Risk Factors” section. The cumulative effects of the factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors at any time. If our revenue or operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts or investors, the price of our Class A common stock could decline substantially. Such a stock price decline could occur even when we have met or exceeded any previously publicly stated guidance we may provide.

We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline. Our operating results, revenue levels, and expenses may be affected by a wide variety of external factors beyond our control, such as economic downturns, competitive pressures, regulatory changes, and unexpected events. In addition, our limited operating history and rapid growth may make it difficult for investors to assess our future prospects. Furthermore, fluctuations in the market price of our Class A common stock could adversely affect our ability to raise additional capital or to complete strategic transactions. Finally, additional risks not currently known to us or deemed immaterial may emerge in the future, which could further adversely affect our business, financial condition, results of operations, and prospects. Moreover, several of these risk factors may interact, compounding their effects and resulting in outcomes that would be difficult to predict. For example, unanticipated changes in regulatory requirements could lead to higher costs and delays in product development, while at the same time, adverse economic conditions could reduce customer demand. Such interactions could materially harm our business and adversely affect our competitive position, financial performance, and the market price of our Class A common stock. Investors should not assume that our past operating performance is a reliable indicator of future results. We operate in a rapidly evolving industry with high levels of uncertainty and volatility. As a result, forecasting and evaluating our future performance is inherently challenging, and even if all factors evolve as expected, our actual results may differ significantly from our expectations. Any adverse development in these or other risk factors could have a material adverse effect on our business, financial condition, and results of operations.