Equity Incentive Plans

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Amended and Restated 2012 Stock Plan

Following the adoption of the 2019 Omnibus Incentive Plan in September 2019, any awards outstanding under the Amended and Restated 2012 Stock Plan continue to be governed by their existing terms but no further awards may be granted under the Amended and Restated 2012 Stock Plan. As of December 31, 2023, the number of shares of Class A common stock issuable under the Amended and Restated 2012 Stock Plan which includes shares issuable upon the exercise of outstanding awards was 2,563,328.

2019 Omnibus Incentive Plan

The Omnibus Incentive Plan allows for the issuance of incentive stock options (“ISOs”), non-statutory stock options (“NSOs”) or restricted shares. ISOs may be granted only to the Company’s employees (including officers and directors who are also considered employees). NSOs and restricted shares may be granted to the Company’s employees and service providers. As of December 31, 2023, the number of shares of Class A common stock available for issuance under the 2019 Omnibus Incentive Plan was 5,334,134 shares issuable in connection with outstanding awards and 16,300,671 shares reserved for issuance in connection with grants of future awards.

The number of shares of Class A common stock reserved for issuance under the 2019 Omnibus Incentive Plan at the time the 2019 Omnibus Incentive Plan was adopted in 2019 was 11,000,000. The Omnibus Incentive Plan provides that the total number of shares of the Company’s Class A common stock that may be issued under the Omnibus Incentive Plan, including options authorized and options outstanding, is 11,000,000 (such share limit as increased from time to time, the “Absolute Share Limit”). However, the Absolute Share Limit shall be increased on the first day of each calendar year commencing on January 1, 2021 and ending on January 1, 2029 in an amount equal to the lesser of (i) 5% of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such number of shares of the Company’s Class A common stock as determined by the Company’s board of directors. However, if on January 1 of a calendar year, the Company’s board of directors has not either confirmed the 5% increase described in clause (i) or approved a lesser number of shares of the Company’s Class A common stock for such calendar year, then the Company’s board of directors will be deemed to have waived the automatic increase, and no such increase will occur for such calendar year. Of the Absolute Share Limit, no more than 11,000,000 shares of Class A common stock may be issued in the aggregate pursuant to the exercise of incentive stock options granted under the Omnibus Incentive Plan.

Options under the Omnibus Incentive Plan have a contractual term of 10 years. The exercise price of an ISO and NSO shall not be less than 100% of the fair market value of the shares on the date of grant.

A summary of the Company’s stock option activity under the Plans is as follows:


	Outstanding Options	Weighted- Average Exercise Price		Weighted- Average Remaining Term (Years)	Aggregate Intrinsic Value
Balance as of December 31, 2022	7,964,557	$	37.10	6.4	$	128,069,003
Granted	387,757	51.31
Exercised	(1,782,196)	6.76
Cancelled and forfeited	(623,332)	84.31
Balance as of December 31, 2023	5,946,786	$	42.17	6.3	$	144,350,070

Vested and exercisable as of December 31, 2023	4,460,855	$	36.82	5.5	$	129,774,778

The weighted-average grant date fair value of options granted during the years ended December 31, 2023, 2022 and 2021 was $33.67, $32.95, and $108.05 per share, respectively. The total intrinsic value of stock options exercised was $78.0 million, $89.5 million and $572.2 million during the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, the total unrecognized stock-based compensation related to stock options was $48.5 million, which will be recognized over a weighted-average period of approximately two years.

Stock Option Valuation Assumptions

The fair value of each employee option grant was estimated on the date of grant using the Black-Scholes option pricing model and the following assumptions for the periods indicated:

Year Ended December 31,

2023

2022

2021

Expected volatility

70% – 71%

65% – 71%

67% – 69%

Risk-free interest rate

3.7% – 4.6%

1.6% – 4.1%

1.0% – 1.1%

Expected term

5.3 – 6.1 years

6.0 – 6.1 years

Expected dividend

—%

Restricted Stock Units

Restricted stock units (“RSUs”) activity for the year ended December 31, 2023 is as follows:


	Restricted Stock Units	Weighted-Average Grant Date Fair Value (per share)
Balance as of December 31, 2022	5,836,192	$	52.21
Granted	2,320,714	50.08
Vested	(1,900,620)	59.60
Cancelled	(922,152)	54.42
Outstanding as of December 31, 2023	5,334,134	$	48.26

As of December 31, 2023, the total unrecognized stock-based compensation related to RSUs was $224.6 million, which will be recognized over a weighted-average period of approximately two years.

Market-based Performance Stock Awards (PSAs)

In March 2023, the Company granted 172,842 performance restricted stock unit awards (PSAs) under the 2019 Plan to certain members of management, which are subject to the achievement of certain escalating stock price thresholds established by the Company's Compensation Committee of the Board of Directors.

The PSAs each vest in equal installments upon the achievement of escalating stock price thresholds of $72.14, $96.19 and $120.24 respectively, calculated based on the volume-weighted average price per share of the Company’s Class A common stock over the immediately trailing 20 trading day period for each respective threshold. The escalating stock price thresholds can be met any time prior to the fifth anniversary of the date of grant. The vesting of the PSAs can also be triggered upon certain change in control events and achievement of certain change in control price thresholds, or in the event of death or disability. The weighted-average grant date fair value of the PSAs was $43.13. Stock-based compensation expense recognized for these market-based awards was approximately $5.1 million for the year ended December 31, 2023.

The Company estimates the fair values of shares granted under the PSAs using a Monte Carlo simulation model with the following assumptions:


			Year Ended December 31,
			2023
Expected volatility			71%
Risk-free interest rate			3.7%
Expected dividend			—%

In September 2022, the Company granted 709,025 PSAs including RSUs and a performance stock option under the 2019 Plan to certain members of management, which are subject to the achievement of certain stock price thresholds established by the Company’s Compensation Committee of the Board of Directors.

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 the predetermined share price goals of $60, $80 and $105 for each tranche, respectively, for a period of 20 consecutive trading days. The share price goals can be met any time prior to the fourth anniversary of the date of grant. The vesting of the PSAs can also be triggered upon certain change in control events and achievement of certain change in control price goals, or in the event of death or disability. The weighted-average grant date fair value of the PSAs was $22.55. Stock-based compensation expense recognized for these market-based awards was approximately $10.0 million and $3.3 million for the years ended December 31, 2023 and 2022, respectively.

The Company estimates the fair values of shares under the Performance stock options using a Monte Carlo simulation model with the following assumptions:


			Year Ended December 31,
			2022
Expected volatility			68%
Risk-free interest rate			3.4%
Expected dividend			—%

As of December 31, 2023, none of the escalating stock price thresholds had been met for any of the PSAs, resulting in no shares vesting or becoming exercisable.

2019 Employee Stock Purchase Plan

In July 2019, the Company’s board of directors adopted the 10x Genomics, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”), which was subsequently approved by the Company’s stockholders. The ESPP went into effect on September 11, 2019. Subject to any limitations contained therein, the ESPP allows eligible employees to contribute, through payroll deductions, up to 15% of their eligible compensation to purchase the Company’s Class A common stock at a discounted price per share. The ESPP generally provides for consecutive 6-month offering periods.

During the years ended December 31, 2023 and 2022, 217,537 and 151,028 shares of Class A common stock, respectively, were issued under the ESPP. The ESPP provides that the maximum number of shares of the Company’s Class A common stock made available for sale thereunder will be 3,486,671, which number will be automatically increased on the first day of each

calendar year commencing on January 1, 2021 and ending on January 1, 2029 in an amount equal to the lesser of (i) 1% of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such number of shares of the Company’s Class A common stock as determined by the Company’s board of directors. However, if on January 1 of a calendar year the Company’s board of directors has not either confirmed the 1% described in clause (i) or approved a lesser number of shares of the Company’s Class A common stock for such calendar year, the Company’s board of directors will be deemed to have waived the automatic increase and no such increase will occur for such calendar year. The maximum number of shares available under the ESPP (and any share limitations thereunder, as applicable) will automatically be adjusted upon certain changes to the Company’s capital structure. As of December 31, 2023, there were 2,891,063 shares available for issuance under the ESPP.

For the years ended December 31, 2023 and 2022, the weighted average grant date fair values of the ESPP shares purchased, using the Black-Scholes option pricing model, were $16.91 and $33.74, respectively.

The following assumptions were used in estimating the fair values of shares under the ESPP:


	Year Ended December 31,
	2023	2022	2021
Expected volatility	49% – 58%	81% – 92%	47% – 69%
Risk-free interest rate	5.24% – 5.41%	1.54% – 4.54%	0.04% – 0.06%
Expected term (in years)	0.5	0.5	0.50 – 1.0
Expected dividend	—%	—%	0%

As of December 31, 2023, the total unrecognized stock-based compensation related to the ESPP was $1.3 million, which will be recognized over a weighted-average period of approximately 0.4 years.

Stock-based Compensation

The Company recorded stock-based compensation expense in the consolidated statement of operations for the periods presented as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Cost of revenue	$	7,068	$	5,259	$	3,231
Research and development	72,804		59,211		41,970
Selling, general and administrative	87,078		72,378		50,761
Total stock-based compensation expense	$	166,950	$	136,848	$	95,962