Company: TXG
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001770787-25-000032
Chunk: 164

Company: 10x Genomics, Inc.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 4
Chunk 164
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 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 NIH and other government 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, priorities, policies or operations could result in delays, reductions or cancellations of funding for our customers' research. If researchers experience delays, reductions or cancellations in U.S. academic and government funding, or modifications of the terms or conditions of funding, they may reduce, delay or cancel entirely their purchases of our products and services, which could have a material adverse effect on our business, financial condition and results of operations. 

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Any changes in U.S. academic and government regulations, policies or operations that affect the terms of research funding could impact our customers’ ability to secure funding and, consequently, the timing and demand for our products and services. For example, in February 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. 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 terms, 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