10x Genomics, Inc. (TXG) Cash Flow Statement

The gap between net income and operating cash flow is stark: in 2026Q2, OCF/NI was -0.95, but the positive OCF despite a net loss suggests that large non-cash items like stock-based compensation and depreciation are inflating cash flow relative to earnings. This pattern persists across the period, with OCF positive in 8 of 10 quarters while net income was negative in 9, implying that reported losses overstate the cash burn. Investors should monitor whether this conversion quality deteriorates if revenue declines further, as the positive OCF may be increasingly dependent on working capital swings.

FCF margins have been volatile, ranging from -13.2% in 2024Q1 to 28.5% in 2025Q3, but the recent trend shows a contraction from the 2025 mid-year highs. The 2026Q2 FCF margin of 10.2% is down from 16.3% in the prior quarter, and the sequential decline in OCF from $26.1M to $17.0M suggests that working capital tailwinds are fading. This trajectory appears consistent with the revenue deceleration noted in the income statement analysis, and investors should watch whether FCF can stabilize above the 10% margin level.

The low capital intensity suggests that TXG's growth does not require heavy investment in physical assets, which is typical for a technology-driven healthcare company. However, the modest CapEx also implies that the company is not investing heavily in capacity expansion, which may limit its ability to scale if demand rebounds. The depreciation and amortization charges, averaging around $10-12M per quarter, are significantly higher than CapEx, indicating that the existing asset base is being utilized without significant replacement, which could lead to future maintenance capex needs.

The large positive working capital contributions in 2025Q3 and 2025Q4 (totaling $50.4M) were instrumental in generating record OCF, but the negative swing in 2025Q2 and 2026Q2 indicates that these benefits are not sustainable. The 2026Q2 working capital change of -$5.3M, while modest, suggests that the company is not consistently converting revenue into cash, and the volatility may reflect customer payment terms or inventory management. Given the revenue decline, investors should monitor whether working capital becomes a drag on cash flow as the company potentially reduces inventory or tightens credit.

The absence of capital returns is consistent with a company in a growth phase that is still generating inconsistent profitability. The cash generated from operations, which totaled over $200M in the last two years, has been retained on the balance sheet, providing a cushion against future losses. However, the lack of shareholder returns may be a concern for investors seeking income, and the company's capital deployment strategy appears to be centered on funding ongoing R&D and potential acquisitions, though no major acquisitions have been disclosed in the cash flow data.