Q1 2024 10x Genomics Inc Earnings Call

Operator: Good day, everyone, and welcome to the 10X Genomics first quarter 2024 earnings call. Today's call is being recorded, and I would like to turn the call over to Cassie Corneau, Director of Investor Relations and Strategic Finance. Please go ahead.

Good day, everyone and welcome to the <unk> genomics first quarter 2024 earnings call.

Today's call is being recorded and I would like to turn the call over to Kathy Cornell Director head of Investor Relations and strategic Finance. Please go ahead.

Okay.

Cassie Corneau: Thank you, and good afternoon, everyone. Earlier today, 10X Genomics released financial results for the first quarter ended March 31, 2024. If you have not received this news release, or if you would like to be added to the company's distribution list, please send an email to investors@10xgenomics.com. An archived webcast of this call will be available on the investor tab of the company's website, 10XGenomics.com, for at least 45 days following this call.

Thank you and good afternoon, everyone earlier today <unk> genomics released financial results for the first quarter ended March 31st 2024.

If you have not received this news release or if you would like to be added to the Companys distribution list. Please send an email to investors at Tenex genomic dotcom and.

An archived webcast of this call will be available on the Investor tab of the company's website connects genomics dot com for at least 45 days following this call.

Cassie Corneau: Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on such forward-looking statements.

Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements within the meaning of federal securities laws.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated and you should not place undue reliance on forward looking statements additional information.

Cassie Corneau: Additional information regarding these risks, uncertainties, and factors that could cause results to differ appears in the press release 10X Genomics issued today and in the documents and reports filed by 10X Genomics from time to time with the Securities and Exchange Commission. 10X Genomics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Joining the call today are Serge Saxonov, our CEO and co-founder, and Justin McAnear, our Chief Financial Officer.

Information regarding these risks uncertainties and factors that could cause results to differ appears in the press release <unk> genomics issued today and in the documents and reports filed by <unk> genomics from time to time with the Securities and Exchange Commission.

<unk> genomics disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

Joining the call today are Serge <unk>, our CEO and co founder and Justin Macken here, our Chief Financial Officer.

Speaker Change: We will host a question and answer session. After our prepared remarks, we ask analysts to please keep to one question. So that we may accommodate everyone in the queue.

Cassie Corneau: We will host a question and answer session after our prepared remarks. We ask analysts to please keep to one question so that we may accommodate everyone in the queue. With that, I will now turn the call over to Serge. Thanks, Cassie. And good afternoon, everyone.

Serge: With that I will now turn the call over to search.

Serge Saxonov: During today's call, I will start with an overview of our first quarter progress, highlighted by the launch of four major new products that we believe set a new standard for single cell and spatial biology. Next, I will discuss the exciting opportunities we have ahead across our three platforms and the steps we are taking to deliver on this future. Then I'll turn the call over to Justin for a more detailed look at our financials, business trends, and outlook for the rest of the year. For the first quarter, total revenue grew 5% to $141 million.

Serge: Thanks Scott.

Serge: Good afternoon, everyone. During today's call I will start with an overview of our first quarter progress and performance highlighted by the launch of four major new products that we believe set a new standard for single cell and spatial biology.

Search: Next I will discuss the exciting opportunities we have ahead across our three platforms and the steps, we're taking to deliver on those future.

Search: Then I will turn the call over to Justin for a more detailed look at our financials business strategy and outlook for the rest of the year.

Justin Macken: Well the first quarter total revenue grew 5% to $141 million, we continued to drive strong growth in spatial led by our <unk> franchise and the highly anticipated launch of <unk> HTS.

Serge Saxonov: We continue to drive strong growth in spatial, led by our Visium franchise and the highly anticipated launch of Visium HD. We also saw strong interest in our new Chromium GEM-X technology, which delivers substantially higher performance at a lower price. A significant number of customers trialed the new RQS, contributing to lower than expected quadrant orders for Chromium overall.

Justin Macken: We also saw strong interest in our new chromium, Jim X technology, which deliver substantially higher performance at a lower price.

Justin Macken: A significant number of customers to trial, the new architecture contributing to lower than expected quarter and orders will chromium overall.

Serge Saxonov: Despite the near-term sales impact, we believe GEM-X will invigorate chromium growth over the long term and ultimately enable wider single-cell adoption. And while we're working to deliver on the vast opportunity ahead in Chromium, our strategy has always been focused on the strength of the entire portfolio and on providing the full breadth of our capabilities. With our three complementary platforms in single cell and spatial, we're committed to innovation that enables the scale and resolution necessary for researchers to better understand biology. However, we believe that we're still early in this opportunity and in adoption.

Justin Macken: Despite the near term sales impact, we believe <unk> will invigorate chromium growth over the long term and ultimately enabled wider single cell adoption.

Justin Macken: And while we're working to deliver on the vast opportunity ahead in chromium. Our strategy has always been focused on the strength of the entire portfolio and we will providing the breadth of our capabilities to customers.

Justin Macken: With our three complementary platforms and single cell and spatial we're committed to innovation that enables the scaled resolution necessary for researchers to better understand biology and disease.

Justin Macken: We believe that we're still early in this opportunity and in the adoption of these tools.

Serge Saxonov: This year, we're introducing franchise-defining products in each platform to enhance our performers' leadership and accelerate long-term growth. These products are a testament to the enduring strength and velocity of our innovation engine and its value for customers around the world. These launches also reflect how we listen closely to customer feedback and build products that are most responsive to their needs. Let me highlight a few of our latest advances and how we expect them to extend our technology leadership. First, we were thrilled to officially start shipping VisMHD at the end of March.

Justin Macken: This year, we're introducing franchise defining products in each platform to enhance our performance leadership and accelerate long term growth. Please.

Justin Macken: These products are a testament to the enduring strengths and velocity over our innovation engine and its value for customers around the world.

Justin Macken: These launches also reflect how we listen closely to customer feedback and build products that are most responsive to their needs.

Justin Macken: Let me highlight a few of our latest advances and how we expect them to extend our technology leadership.

Justin Macken: First we were thrilled to officially start shipping visiting HD at the end of March.

Serge Saxonov: For our team, there's really no better feeling than seeing new products in the hands of our customers. That's especially true here. Vizium HD has not only been the most requested product in our but also one of the most ambitious development projects we've ever taken. It is precisely the kind of challenge 10X was built for. It is yet another example of our ability to tackle hard problems and arrive at the best solution possible for our customers and their resources. VisMIS-C enables whole transcriptome spatial analysis at single cell scale resolution.

Justin Macken: For our team there is really no better feeling than seeing new products in the hands of researchers.

Justin Macken: That's especially true here vis vis D has not only been the most requested product in our history, but also one of the most ambitious development projects we've ever taken on.

Justin Macken: It is precisely the kind of challenge <unk> was built for if this is yet. Another example of our ability to tackle hard problems and arrive at the best solution possible for our customers and their research.

Visiting to see enables whole transcriptome spatial analysis single cell scale resolution.

Justin Macken: It runs on existing psychosis instruments leverages, the same robust and easy to use workflow standardization.

Serge Saxonov: [inaudible] leverages the same robust and easy to use workflow as standards and brings the field of spatial discovery to a whole new level. While it's still very early, we're really pleased with the strong initial demand and tremendous enthusiasm we're seeing from our customers. The positive momentum further fuels our ambition to establish VisionHD as the platform for translational discovery. This quarter, we also continue to deliver on our robust Xenium R&D pipeline. We began shipping both our multi-modal cell segmentation product and our new immune oncology gene panel in March. Cell segmentation includes an add-on kit compatible with existing ZNEMath.

Justin Macken: And brings the field of spatial discovery to a whole new level.

Justin Macken: While it's still very early we're really pleased with the strong initial demand and tremendous enthusiasm we're seeing from our customers.

Justin Macken: The positive momentum further fuels, our ambition to establish <unk> as the lead platform for translational and discovery.

Justin Macken: This quarter, we also continued to deliver on our robust R&D pipeline.

Justin Macken: We began shipping both our multimodal self-ignite decent product and then a new immuno oncology gene panel March.

Justin Macken: So segmentation includes an add on kit compatible with existing Xenia and assays.

Serge Saxonov: It leverages advances in assay chemistry and sophisticated machine learning algorithms to significantly improve the determination of cell bond rates using multiple morphological features and modalities. While Xenium launched with a robust nuclear-based segmentation approach, many researchers have been waiting for this new solution to enable the most accurate biological, Zinium is already well-recognized as being a C2 performance leader, and there is still much more to... We're planning to launch our 5,000-plex capability mid-year.

Justin Macken: It Leverages advances of assay chemistry, and sophisticated machine learning algorithms.

Justin Macken: Inefficiently improve the determination of cell boundaries using multiple morphological features and modalities.

Justin Macken: While the new launched with a robust nuclear based segmentation approach. Many researchers have been waiting for this new solution to enable the most accurate biological interpretation. So there is union bronze.

Justin Macken: <unk> is already well recognized as being Ctrip performance leader.

Justin Macken: Now there is still much more to come.

Justin Macken: We're planning to launch our 5000 Blake's capability in mid year.

Serge Saxonov: Scaling up plugs by an order of magnitude while still delivering high quality sensitivity, specificity, and throughput. We're also developing panels of 1,000 to 2,000 genes to give customers even more options and flexibility. We're moving forward with integrated protein profiling, which will significantly expand Zinium's existing protein capabilities. And, longer term, we have architected Xenium to allow for tremendous technological headroom and enable more applications, higher throughput, and lower cost. With the long-awaited launch of Vizium HD, the performance of Vizinium in the field, and the interest and buzz around the Zinium pipeline, it's clear we're at the forefront of spatial biology.

Justin Macken: Scaling up plex by an order of magnitude, while still delivering high quality sensitivity specificity and throughput.

Justin Macken: We're also developing bib panels of one to 2000 genes to give customers, even more options and flexibility.

Justin Macken: We're moving forward with integrated protein profiling, which will significantly expand <unk> existing protein capabilities.

Justin Macken: And longer term, we have architected veniam to allow for tremendous technological headroom and enabled more obligations higher throughput and lower cost.

Justin Macken: With the long awaited launch of wisdom as the performance of <unk> in the field and the interest and buzz around the Xenial pipeline. It's clear we are in the forefront of this spatial biology Revolution.

Serge Saxonov: We're seeing some cutting-edge researchers and technologists start to reprioritize their team's resources and mindshare from single-cell approaches to explore how spatial methods can push their research forward. We're also seeing spatial methods resonate with new researchers who have never done single-cell or other genomics. Take this year's annual meeting of the American Association of Cancer Research, or AACR. There was resounding energy and conviction on Spatial, which emerged as a huge theme of the conference.

Justin Macken: We're seeing some cutting edge researchers and technologies start to re prioritize their teams resources and monitor from single cell approaches to explore how special methods can push their research forward.

Justin Macken: We're also seeing space will resonate with new researchers who have never done single cell or other genomics work before.

Justin Macken: Big This year's annual meeting of the American Association of cancer research or ACR for example.

Justin Macken: There was a resounding NRG unconventional space, so which emerge is a huge theme of the conference.

Serge Saxonov: In fact, the majority of the plenary sessions featured or referenced 10X Spatial Dynamics. This burgeoning interest in spatial technology is drawing the attention of both new and existing customers. And we have work to do to ensure we can satisfy that and DRIVE girls across the board. Turning to single cell and the launch of our new GEM-X technology, the first major overhaul to our Chromium architecture since 2019. With its completely re-engineered microfluidic chip design, GEM-X delivers superior performance at a larger scale and lower cost.

Justin Macken: In fact, the majority of the plenary sessions featured or referenced 10 X spatial data.

Justin Macken: This burgeoning interest in spatial is drawing the attention of both new and existing customers.

Justin Macken: And we have work to do to ensure we can satisfy that interest and drive growth across the portfolio.

Justin Macken: Turning to single cell and the launch of our new <unk> technology. The first major overhaul so our chromium architecture since 2019.

Justin Macken: Well this is completely re engineered mark alluded chip design, Jim Max deliver superior performance at larger scale and lower cost.

Serge Saxonov: In March, we began shipping the first two products on GEMMAX, our highest volume chromium assays, three prime gene expression, and five prime immune profile. These apps take single-cell analysis to the next level, giving researchers meaningful performance advantages across the board. From increased sensitivity and capture, Improved Robustness, and Scalability, all at a lower cost. In fact, the new technology provides researchers a more than two-fold reduction in cost per cell. We believe GEM-X raises the bar for the field and sets a new standard for single-cell analysis.

In March we began shipping the first two products on Jim ex our highest volume chromium assays, three Brian gene expression and a five prime immune profiling.

Justin Macken: These assays take single cell analysis to the next level human researchers meaningful performance advantages across the board from increased sensitivity and capture efficiencies to improve robustness of scalability all at a lower cost.

Justin Macken: In fact, the new technology provides researchers of more than two fold reduction in cost per sale.

We believe Jim ex raises the bar for the field and sets a new standard for single cell analysis.

Serge Saxonov: Our customers have been eager to see and validate this for themselves. In Q1, more customers than expected tested GEM-X to see firsthand the power of this technology on their own samples. And more recently, customers, including the Fred Hutch Innovation Lab, have started to share their own independent comparisons of GEM-X and their next GEM technology, verifying our performance claim. We're encouraged by the early enthusiasm, adoption, and feedback on GEMAC from the Neutron Headwinds as we help customers navigate this product. Genomics delivers great value to customers now.

Justin Macken: Our customers have been eager to see and validate this for themselves.

Justin Macken: In Q1 more customers than expected trial, Jim X to see firsthand the borrow this technology on their own samples.

Justin Macken: And more recently customers, including the Fred Hutch innovation lab have started to share their own independent comparisons of Jim Max and our Nextgen technology.

Justin Macken: Various why our performance claims.

Justin Macken: We are encouraged by the early enthusiasm adoption and feedback on <unk>. Despite the near term headwinds as we help customers navigate this product transition.

Jim <unk> delivers great value to customers now and opens up meaningful possibilities to expand the field long term.

Serge Saxonov: It opens up meaningful possibilities to expand the field long-term. As we have said before, we believe there is significant price elasticity in single cell, which presents a significant long-term opportunity for broader adoption. 10X Genomics is one of several steps we have planned to take advantage of the LSE.

Justin Macken: As we have said before we believe there is significant price elasticity in single cell, which presents a significant long term opportunity for broader adoption.

Justin Macken: Jim is one of several steps we have plans to take advantage of the electricity but.

Serge Saxonov: By delivering superior performance and superior economics, we believe GEM-X will help us enable larger projects, reach new customers, and encourage more routine use among existing ones. We fully intend to expand the single cell opportunity through a robust chromium roadmap and other efforts to drive better awareness and broader adoption at large. Put simply, our goal is to make single-cell analysis the standard for most biological

Justin Macken: Delivering superior performance of superior Economics, we believe <unk> will help us enable larger projects reach new customers and encourage more routine use among existing researches.

Justin Macken: We fully intend to expand the single cell opportunities through our robust chromium roadmap and other efforts to drive better awareness and broader adoption at large scale.

Justin Macken: Put simply our goal is to make single cell analysis. These standards for most biological research.

Serge Saxonov: While we believe there's huge untapped potential for single cell, our conviction is not just in single cell; it's in the combined performance, leadership, and differentiation of all three platforms together. Our strategy has always been about the power of the full portfolio and the choice it enables for customers. Our goal is to ensure that researchers and ultimately clinicians have access to a comprehensive suite of the best performing products to resolve biology in the way that's best for them. We intentionally designed distinct yet complementary plots.

Justin Macken: While we believe there is huge untapped potential for single cell. Our conviction is not just in chromium isn't the combined performance leadership and differentiation of all three platforms together.

Our strategy has always been about the power of the full portfolio and the choice enables where customers.

Justin Macken: Our goal is to ensure the researchers and ultimately clinicians have access to a comprehensive suite of the best performing products to resolve biology, and the way the best for their work.

We intentionally designed distinct yet complementary platforms to support the broad spectrum of customers use cases, and how the research and the research questions may evolve over time.

Serge Saxonov: The strength of our execution in R&D and operations has enabled us to deliver a full portfolio of groundbreaking products. And as we continue to evolve our commercial execution, it will better position us to maximize and deliver on our incredible potential. We believe there are clear opportunities to drive growth, utilization, and scale with existing customers, to bring new researchers into the 10X, and to accelerate translational and biopharma operations. The Hawkins Mosaic Study, which we first announced in November, is a powerful example of the progress we're making in translational applications. This large-scale project is on track to complete spatial profiles on thousands of tumor samples across seven different cancers by the end of the year.

Justin Macken: The strength of our execution in R&D and operations has enabled us to deliver our full portfolio of ground breaking products and.

Justin Macken: And as we continue to evolve our commercial execution, it will better position us to maximize and deliver all the incredible potential ahead.

Justin Macken: We believe there are clear opportunities to drive growth utilization and scale with existing customers to bring new research just into the telematics ecosystem and to accelerate translational and biopharma opportunities.

Oregon's mosaic study, which we first announced in November is a powerful example of the progress we're making translation of obligations.

Justin Macken: This large scale project is on track to complete spatial profiles them thousands of tumor samples and of course, the seven different cancer indications by the end of the year.

Serge Saxonov: The team is looking to discover biomarkers and to build predictive models that could transform how we diagnose, treat, and ultimately cure cancer. In addition, we firmly believe there's a long runway ahead for single-cell methods in biopharma. Importantly, we're not the only ones who share this conviction. Some of our pharma customers recently published on the value and the impact of our products in therapeutic development. Sanofi reported that 90% of the company's disease targets are credentialed using single-cell genomics. A recent preprint in MedArchive helps shed light on why. The study analyzed single-celled data across 30 diseases and 13 tissues to examine associations between genes, cell types, and diseases.

The team is looking to discover biomarkers and to build predictive models that could transform how would diagnose treat and ultimately a cure cancer.

Justin Macken: In addition, we firmly believe there is a long runway ahead for single cell methods in Biopharma importantly, we're not the only ones who share this conviction.

Justin Macken: Some of our pharma customers recently published on the value and impact of our products and therapeutic development.

Justin Macken: Sanofi reported that 90% of the company's disease targets, a credential using single cell genomics.

Justin Macken: Our recent preprint and Matt Archive helps shed light on Hawaii.

Justin Macken: Study analyzed single cell data of course, 30 diseases and the routine tissues.

Justin Macken: Examine associations between gene cell types and diseases.

Serge Saxonov: They found that support for single cell analysis significantly increased the odds of clinical success for a given gene to be a viable drug. In fact, the authors estimate that their approach could approximately triple the chances of a drug target reaching a Phase III clinical trial. So while we have established strong beachheads in translational and biopharma, it's still very early relative to the large potential. With all of the advances in our portfolio, we're in a better position than we've ever been to deliver.

Justin Macken: They found that support for single cell analysis is significantly increase the odds of clinical success for a given gene to be a viable drug targets.

Justin Macken: In fact, the authors estimate their approach could approximately triple the chances of a drug target, reaching a phase III clinical trial.

Justin Macken: So while we have established strong beachheads in translational and Biopharma, it's still very early relative to the expected large potential.

With all of the advances in our portfolio, we're in a better position than we've ever been to deliver as one customer at ACR told me F N b changes everything.

Serge Saxonov: As one customer at ACR told me, FFP changes everything. Our FFP capabilities, available on all three platforms, open up vast archives of biobank samples along with exciting possibilities for new biologicals. These capabilities reflect, yet again, how we listen to our customers, think deeply about their research, and build innovative products to accelerate and advance their work. We believe the long-term potential for single-celled and space is boundless. While we're focused on delivering in 2024, we will remain steadfast in maintaining the long-term orientation that has always guided us. I have every confidence when I say we're still just getting started. And with that, I'll turn it over to Justin. Thank you, Serge.

Justin Macken: Our SSP capabilities available in all three platforms open up vast archives, a biobank samples along with exciting possibilities for new biological discoveries.

Justin Macken: Capabilities reflect yet again, how will listen to our customers think deeply about their research and innovative products to accelerate and advance their work.

We believe the long term potential for single cell and spatial is boundless.

Justin Macken: While we're focused on delivering in 2024, we will remain steadfast in maintaining the long term orientation that has always guided us.

Justin Macken: Every confidence when I say, we're still just getting started.

Justin Macken: With that let me turn it over to Justin.

Justin Macken: Thank you Serge.

Justin J. McAnear: I'll start by reviewing our financial results for the three months ended March 31st, 2024, and we'll then provide an update on our outlook for 2020. All growth rates provided will be on a year-over-year basis unless otherwise noted. Total revenue for the quarter was $141 million, up 5%.

Justin Macken: I'll start by reviewing our financial results for the three months ended March 31, 2024, and will then provide an update on our outlook for 2024.

Justin Macken: All growth rates provided will be on a year over year basis, unless otherwise noted.

Justin J. McAnear: At a high level, the quarter played out largely in line with total revenue expectation, with stronger contributions from Spatial, partially offsetting lower chromium contribution. Looking at our revenue breakdown, total consumables revenue was $110.3 million, down 2%. Spatial Consumables revenue was $26.4 million, up 134%. This growth was driven primarily by our Xenium platform, along with strong adoption of Vizium HD, which started shipping at the end of Q1. Chromium consumables revenue was $83.9 million, down 17%.

Justin Macken: Total revenue for the quarter was $141 million up 5%.

Justin Macken: At a high level the quarter played out largely in line with total revenue expectations with stronger contributions from spatial partially offsetting lower chromium contributions.

Justin Macken: Looking at our revenue breakout total consumables revenue was $110 3 million down 2%.

Justin Macken: Special consumables revenue was $26 4 million up 134% this.

This growth was driven primarily by our <unk> platform, along with strong adoption of <unk>, HD, which started shipping at the end of Q1.

Justin Macken: Chromium consumables revenue was $83 $9 million down 17%.

Justin J. McAnear: Some of this year-over-year decline was expected. As discussed on our year-end earnings call in mid-February, we anticipated headwinds for Chromium revenue in the first quarter while customers began their transition to the new GEM-X product. As part of this transition, we anticipated that customers would trial GEM-X and would not stock up on either the legacy or newly introduced products. While we believe this increased trialing created stronger headwinds for chromium consumables in Q1, we are nonetheless encouraged by the initial adoption and enthusiastic feedback from customers thus far.

Justin Macken: Some of this year over year decline was expected as discussed on our year end earnings call in mid February we anticipated headwinds for chromium revenue in the first quarter, while customers began their transition to the new <unk> products.

Justin Macken: As part of this transition we anticipated that customers would trial gemex and would not stock up on either the legacy or newly introduced products at quarter end.

Justin Macken: While we believe this increased trialing created stronger headwinds for chromium consumables in Q1, we are nonetheless encouraged by the initial adoption and enthusiastic feedback from customers thus far.

Justin J. McAnear: The lower price of GEM-X will continue to drive some near-term revenue pressure, but over time, we believe there is elasticity that will more than offset the lower price. We also believe that the stronger than anticipated spatial demand took some customer mind and wallet share away from Chromium this year.

Justin Macken: Lower price of <unk> will continue to drive some near term revenue pressure, but over time. We believe there is elasticity there were more than offset the lower price.

Justin Macken: We also believe that the stronger than anticipated special demand took some customer mind and wallet share away from chromium this quarter.

Justin J. McAnear: As Serge shared, we are seeing both new and existing customers prioritize spatial studies given the burgeoning interest in the space. How this plays out over time remains to be seen, but we continue to believe in the power of our full portfolio and offer customers a comprehensive suite of products to fit various, Moving on to industry, total instrument revenue increased 33% to $25.5 million.

Justin Macken: As search shared we're seeing both new and existing customers prioritize spatial studies given the burgeoning interest in this space.

Justin Macken: How this plays out over time remains to be seen but we continue to believe in the power of our full portfolio and offering customers a comprehensive suite of products at various needs.

Justin Macken: Moving onto instruments.

Justin J. McAnear: Spatial Instrument Revenue was up 133% to $17.6 million, primarily driven by xenium instrument placement. We also saw sustained demand for our Cytosys instruments as customers purchased the instruments along with Vizium HD. Chromium instrument revenue was $7.9 million, down 32% driven by fewer units sold.

Justin Macken: Instrument revenue increased 33% to $25 $5 million.

Justin Macken: Spatial instrument revenue was up 133% to $17 $6 million, primarily driven by <unk> instrument placements.

Justin Macken: We also saw sustained demand for our site assist instruments as customers purchase the instrument along with museum HD consumables.

Justin Macken: Chromium instrument revenue was $7 $9 million down, 32% driven by fewer units sold.

Justin J. McAnear: Services revenue was $5.2 million, up 91%, driven by increased service contract revenue and increased C&EM instrument training and installation. Looking at our revenue by geography, America's revenue grew 1% to $79.6 million. AMIA revenue grew 22% to $34.7 million, and revenue in APAC decreased 2% to $26.7 million. Turning to the rest of the income statement, gross profit for the first quarter was $92.9 million compared to $98.

Justin Macken: Services revenue was $5 2 million up 91% driven by increased service contracts revenue and increased instrument training and installation revenue.

Justin Macken: Yeah.

Justin Macken: Looking at our revenue by geography, Americas revenue grew 1% to $79 $6 million EMEA revenue grew 22% to $34 $7 million and revenue in APAC decreased 2% to $26 $7 million.

Justin Macken: Turning to the rest of the income statement.

Justin J. McAnear: Gross margin declined to 66% compared to 73% in the first quarter of 2020, primarily due to a change in product mix driven by xenium. Total operating expenses for the first quarter increased to $154.4 million compared to $150.4 million for the prior year period, driven by higher legal expenses and costs for facilities and IT, partially offset by lower personnel expenses. R&D expenses increased slightly to $68.6 million compared to $67.1 million for the prior year period, primarily driven by higher facilities and IT costs and increased personnel-related expenses.

Gross profit for the first quarter was $92 $9 million.

Justin Macken: Compared to $98 4 million for the prior year period gross margin declined to 66% compared to 73% in the first quarter of 2023, primarily due to a change in product mix driven by the <unk> instruments.

Justin Macken: Total operating expenses for the first quarter increased to $154 4 million compared to $154 million for the prior year period, driven by higher legal expenses and costs for facilities, Nike, partially offset by lower personnel expenses.

Justin Macken: R&D expenses increased slightly to $68 $6 million compared to $67 $1 million for the prior year period, primarily driven by higher facilities cost and increased personnel related expenses.

Justin J. McAnear: ST&A expenses increased to $85.8 million compared to $83.3 million for the prior year period, primarily driven by increased outside legal expenses and higher facilities and IT costs, offset by a decrease in personnel-related expenses. Operating loss for the first quarter was $61.5 million compared to a loss of $52 million in the first quarter last year. This includes $36.1 million of stock-based compensation compared to $42.1 million of stock-based compensation for the corresponding prior year period. The net loss for the period was $59.9 million compared to a net loss of $50.7 million for the first quarter.

Justin Macken: SG&A expenses increased to $85 8 million compared to $83 $3 million for the prior year period, primarily driven by increased outside legal expenses and higher facilities costs offset by a decrease in personnel related expenses.

Justin Macken: Operating loss for the first quarter was $61 5 million compared to a loss of $52 million in the first quarter last year.

Justin Macken: This includes $36 $1 million of stock based compensation compared to $42 1 million of stock based compensation for the corresponding prior year period.

Justin Macken: Net loss for the period was $59 $9 million compared to a net loss of $57 million for the first quarter of 2023.

Justin J. McAnear: We ended the quarter with $371.8 million in cash and cash equivalents and marketable securities. We burned $17 million of cash over the course of Q1, while making a $20 million payment in January related to the asset acquisition that we will recognize in Q4 2020. Turning to our outlook for 2024, we continue to expect full-year revenue to be in the range of $670 to $690 million, representing growth of 8% to 12% over full-year 2023.

Justin Macken: We ended the quarter with $371 $8 million in cash and cash equivalents in marketable securities.

Justin Macken: We burn $17 million of cash over the course of Q1, while making a $20 million payment in January related to the asset acquisition that we recognized in Q4 2023.

Justin Macken: Turning to our outlook for 2024, we continue to expect full year revenue to be in the range of $670 million to $690 million representing growth of 8% to 12% over full year 2023.

Justin J. McAnear: We believe this range represents a balanced view for the year. It incorporates both the upside we've seen in Spatial and the headwinds we are experiencing now in Chromium, which we expect to continue into Q2 as additional customers trial and transition to GenX. Looking out over the next 12 months, we are anticipating about $15 million to $20 million of total capital expenditure.

Justin Macken: We believe this range represents a balanced view for the year and incorporates both the upside we've seen in spatial and the headwinds we are experiencing now in chromium, which we expect to continue into Q2 as additional customers trial and transitioned to <unk>.

Justin Macken: When looking out over the next 12 months, we're anticipating about 15 million to $20 million of total capital expenditures.

Operator: We are maintaining cash discipline in 2024. Overall, we believe we have a great setup to drive positive cash flow for the year while making targeted investments to continue driving. Ultimately, our goal is to self-fund our innovation and scale by investing cash generated back into our business. At 10X, we continue to be laser-focused on execution to drive growth and impact. We are excited about the strong enthusiasm for the products we launched in Q1 and look forward to providing more updates on our progress throughout the year.

Justin Macken: We are maintaining cash discipline in 2024 overall, we believe we have a great setup to drive positive cash flow for the year, while making targeted investments to continue driving growth.

Justin Macken: Ultimately our goal is to self fund, our innovation and scale by investing cash generated back into our business.

Justin Macken: At Fedex, we continue to be laser focused on execution to drive growth and impact. We are excited about the strong enthusiasm for the products. We launched in Q1 and look forward to providing more updates on our progress throughout the year with that we will now open it up for questions operator.

Operator: With that, we will now open it up for questions. Operator. Thank you. If you would like to ask a question, simply press star 1 on your telephone keypad. If you find your question has been answered or you would like to withdraw your question, you can press star 1 again.

Mason Owen Carrico: As a reminder, we do ask that you please limit yourself to one question. And with that, we'll take our first question from Mason Carrico with Stevens. Hey, guys, congrats on the quarter, particularly in the tough macro backdrop.

Justin Macken: Yeah.

Speaker Change: Thank you. Thank you would like to ask a question simply press star one on your telephone keypad. If you find your question that has been answered or you would like to withdraw. Your question you can press star one again as a reminder, we do ask that you. Please limit yourself to one question.

Justin J. McAnear: If you could, could you give us maybe just a bit more insight into the adoption trends and early feedback on HD and GEM-X? How many of your site assist customers have purchased HD at this point? And how do you think about that driving sustained demand for site assist this year? And then, similarly, adoption rates among existing customers for GEM-X, and has initial interest made you maybe more bullish on the opportunity for Chromium in the back half of this year and into next year? Hey Mason, this is Justin.

Speaker Change: That will take our first question from Nathan <unk> with Stephens.

Nathan: Hey, guys congrats on the quarter, particularly in the tough macro backdrop.

Nathan: Could could you give us some maybe just a bit more insight into.

Nathan: Into the adoption trends and early feedback on an HD and Jim Max how.

Nathan: How many of your side is this customers have purchased H D. At this point and how do you think about that driving sustained demand for <unk>. This year.

Nathan: And then similarly adoption rates among existing customers on an genex and has initial interest made you maybe more bullish on the opportunity for chromium in the back half of this year and into next year.

Justin J. McAnear: I'll take the first part of that and then Serge can add some more color. So as far as Visium goes in looking at the SD versus HD split, I'd say roughly half. And when we're looking on the chrome side around the GEMMAX adoption, if you're looking over the last month, as in Q2 today, you see roughly about a third of the chromium consumables on. And back to the Visium side, with the launch of HD, we have seen that driving sustained demand for SiteAssist.

Nathan: Hey, Jason This is Justin I'll take the first part of that and then Serge can add some more color. So as far as <unk> goes and looking at the SD versus HD split I'd say roughly half and half.

Justin Macken: And when we're looking at on the chromium side around the <unk> adoption, if youre looking over the last month.

Serge: As in Q2 today seeing roughly about a third of the chromium our consumables.

Serge: Thanks.

Serge: And back to the busiest side.

Serge: With the launch of HD, and we have seen that driving sustained demand for the site assist.

Justin J. McAnear: We do think that anticipation of the Visium HD launch helped us place SiteAssist in particular in the back half of last year, and we are expecting that to be a catalyst for SiteAssist placements going forward in 2020. Same thing with GEM-X.

Serge: We do think that anticipation of the museum HD launch helped US play side assist in particular in the back half of last year.

Serge: And we are expecting that to be a catalyst for cytosorb placements going forward in 2020 for.

Serge Saxonov: That is a product that you need Chromium IX in order to run, and we do think that that's also going to be driving Chromium IX placements throughout 2020. Yeah, so as far as the feedback on products is concerned, it has been very positive. So HD, obviously, has been perhaps our most anticipated product to date. Lots of customers were excited, and lots of customers were excited to get their hands on the product.

Serge: Same thing with Gen X that is a product that you need a chromium IX in order to run and we do think that that's also going to be driving.

Serge: Chromium IX placements throughout 2024 as well.

Speaker Change: Yeah, so as far as the <unk>.

Speaker Change: You bought some products is concerned it has been very positive.

Speaker Change: <unk>, obviously has been there.

Speaker Change: Our most anticipated product two days and lots of customers. We're excited that a lot of customers who are excited to get their hands on the product and the early.

Serge Saxonov: And the early early sentiment coming back from seeing the data, seeing the data coming from their samples, is very, very positive. You know, so all the investments we made along the way, in terms of improving the chemistry, the workflows, importantly, side assist, and now putting HD on top of it, have really seemed to be bearing fruit and resulting in great feedback from customers. On the genomics side, the sentiment is also very, very positive.

Early sentiment coming back from seeing that data.

Speaker Change: Seeing the data coming from their samples as a very positive.

Speaker Change: So all the investments we've made along the way President program that demonstrates the workflows.

Speaker Change: Importantly, cytosorb and now putting HDR double that really seems to be bearing fruit.

And.

Speaker Change: Resulting in great feedback from customers.

Speaker Change: On the jumbo side.

Speaker Change: The sentiment is also very very positive.

Serge Saxonov: We're just now kind of going through the cycle where the initial customers who got, ordered, and got their Genomics reagents are actually getting the data back and now talking about their results. I mentioned in my prepared remarks this testimonial from Fred Hutch, and we're hearing from other customers. Very pleased with the fact that there's a substantial boost to performance, great improvements along a number of axes, and also a lower price. So the feedback has been really positive. People were really excited when we first revealed GenMax in the middle of February.

Speaker Change: We're just now kind of going through the cycle with initial customers who've got awarded under other generics.

Speaker Change: The agents are actually getting the data, but and now talking about their results I mentioned in my prepared remarks.

Speaker Change: Just the one off from the Fred Hutch were hearing from other customers are very pleased with the fact that there is a substantial was the performance great.

Great improvements along the number of Skus and.

Speaker Change: And also a lower price so.

Speaker Change: The feedback has been really positive people, who are really excited when we first revealed Jim.

Speaker Change: In the middle of February and a lot of a lot of customers have been or joining us now to trial. It suggests that against the.

Patrick Bernard Donnelly: And a lot of customers have been ordering it now to trial it, to test it against the next-gen products that are out there, and the feedback that's coming back has been very positive. We'll take our next question from Patrick Donnelly with Citi. Hey guys, thanks for taking the questions. I want to focus on single cell just given the result there a little light in terms of what we're looking for.

Speaker Change: And as Jim products that are out there and the feedback that's coming back has been has been very positive.

Speaker Change: We'll take our next question from Patrick Donnelly with Citi.

Justin J. McAnear: Justin, I know you talked about maybe this weakness or softness lingers in the 2Q, as people kick the tires on some of the new products and trials and things. Can you just give us some sense of visibility into what that growth trajectory looks like? How are you thinking about that piece?

Patrick Bernard Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Bernard Donnelly: One focused on single cell just given now getting the results that were a little light in terms of what we're looking for Justin I know you talked about.

Patrick Bernard Donnelly: Weakness or softness lingers into <unk> with people kick the tires on some of the new products and trials and things.

Can you just give us some sense of visibility into what.

Patrick Bernard Donnelly: That growth trajectory looks like how are you thinking about that piece, let's call. It single cell chromium could a year I'm just wondering.

Patrick Bernard Donnelly: Let's call it single cell chromium for the year. Just want to try to think about the cadence this year and the overall expectations for this year on single cell. We appreciate it. Yeah, Patrick, thanks for the question.

Patrick Bernard Donnelly: Trying to think about again the cadence this year and the overall expectations for this year on the single cell I appreciate it.

Patrick Bernard Donnelly: Yeah, Patrick Thanks for the question.

Justin J. McAnear: When we're thinking about single-cell for the year, I go back to the three factors that we're seeing impact single-cell right now. And so the first is the GEM-X transition. We're talking about a limited timeframe in Q1 that launched in the last month of the quarter. And so, you know, there's a limited amount of data that we're going off of for that.

When we're thinking about single cell for the year I would go back to the three factors that we're seeing the impact of single cell right now and so the first is the <unk> transition, we're talking about a limited timeframe in Q1.

That launched in the last month of the quarter.

And so there's a there's a limited amount of data that we're going off of that but we did see a higher adoption rate than we were originally planning and then looking at the customer ordering patterns, we were able to see impacts with customers that ordered gemex ordering smaller kit sizes.

Justin J. McAnear: But, you know, we did see a higher adoption rate than we were originally planning. And in looking at the customer ordering patterns, we were able to see impacts with customers that ordered GEM-X, ordering smaller kit sizes, smaller numbers of reactions, and just a smaller number of orders overall. And as we can tell, too, some customers are still waiting to get their results from that. And so this trial is something that doesn't happen, you know, right away.

Patrick Bernard Donnelly: Smaller number of reactions.

Patrick Bernard Donnelly: And just smaller number of orders overall and as we can tell to some customers are still waiting to get the results from that and so this trial is something that doesn't happen.

Justin J. McAnear: It's, you know, over a somewhat extended period of time. And so, as I just said earlier, for Q2 roughly to date, about one third has been on GEM-X. And so, you know, a higher uptick than we initially expected. But then, you know, we would expect a more linear transition for the rest of the year with, you know, it to be substantially cut over by the end of the year. And the other impact that we're seeing is that of spatial. And that's a product, you know, that is drawing more mind and wallet share on the customer side towards spatial from single-cell. And so we'll see how those both play out throughout the rest of the year.

Away, it's over a somewhat extended period of time and so as I just said earlier for Q2 roughly today about one third has been on China accident. So a higher uptick than we initially expected, but then we would expect a more linear transition for the rest of the year with the to be substantially cut over by the end of.

Patrick Bernard Donnelly: The year and the other impact that we're seeing is that of a special.

Patrick Bernard Donnelly: And that's the product.

Patrick Bernard Donnelly: <unk>.

Patrick Bernard Donnelly: Drawing more mind and wallet share on the customer side.

Patrick Bernard Donnelly: Toward spatial from single cell and so we'll see how those both play out throughout the rest of the year.

Justin J. McAnear: As far as the GEM-X transition is concerned, that could be more transitory. You know, we do expect an impact in Q2, I think similar to what we've seen in Q1. Overall, just looking overall, and this is more broadly than just single-cell.

Patrick Bernard Donnelly: As far as the Gen X transition that could be more transitory, we do expect an impact in Q2 I think.

Patrick Bernard Donnelly: Similar to what we've seen in Q1.

Patrick Bernard Donnelly: Just looking overall.

Patrick Bernard Donnelly: And this is more broadly than just single cell. If we're talking about Q2, I would expect that the top line.

Justin J. McAnear: If we're talking about Q2, I would expect at the top line, you know, somewhere mid-single to high-single digits, a sequential increase over Q1. So maybe 7%, 8% revenue increase in Q2 over Q1. And then the last part is just, you know, the macro impact overall for single cells.

Patrick Bernard Donnelly: Somewhere mid single to high single digits sequential increase over Q1, so maybe seven 8% a revenue increase Q2 over Q1.

Patrick Bernard Donnelly: And then the last part is just.

Patrick Bernard Donnelly: The macro impact overall for single cell and I think this is impacting things.

Justin J. McAnear: And, you know, I think this is impacting things on the instrument side, probably seeing more of an impact on the instrument side. We are hearing of CapEx budget pressures, and elongated purchase cycles. And I think specifically when you're looking at chromium, when you have a number of spatial instruments out there as well, customers are having to make hard choices. And I think that's having a bigger impact on the chromium side than it is. We'll take our next question from Dan Arias with Stiefel. Afternoon, guys.

The instrument side, probably seeing more of an impact on the instrument side. We are hearing of Capex budget pressures elongated purchase cycles, and I think specifically when youre looking at chromium. When you have a number of special instruments out there as well customers are having to make hard choices and I think thats, having a bigger impact on the chromium side than it is on the.

On the station side.

Patrick Bernard Donnelly: We'll take our next question is from Dan Arias with Stifel.

Daniel Anthony Arias: Thanks for the question. Serge, just sticking with the transition and the validation for GEM-X. You know, where is the confidence and understanding the timelines associated with that process? How would you compare it to other processes for your other single cell kits?

Daniel Anthony Arias: Afternoon, guys. Thanks for the question Serge just sticking with the transition and the validation of <unk>.

Daniel Anthony Arias: There is the confidence and understanding the timelines associated with that process, how would you compare it to other processes for your other single cell kits.

Serge Saxonov: And Justin, if I could, just to kind of finish off Patrick's question there, last quarter, you said you expected Chromium revenues to grow this year. Does that view still hold, just given the way that the start of the year has played out? Yeah, Dan, thanks for the question. So as far as the transition to GEM-X, if I were to put it in a historical context, maybe things to keep in mind is that it is a straight up replacement for the existing products.

Daniel Anthony Arias: And Justin if I could just to kind of finish off Patricks question. There last last quarter. You said you expected chromium revenues to grow this year does that view still hold just given the way that started the year has played out.

Justin Macken: Yeah, Dan Thanks for the question.

Justin Macken: So as far as the transition to <unk>, if I want to put it in a historical context maybe.

Justin Macken: Things to keep in mind is that it is a straight up replacement over the existing products. It's a literally probably gets better on.

Serge Saxonov: It's literally a product that's better on multiple dimensions with very few trade-offs that people have to make, and it's at a lower price. So we do expect that once people go through their initial validation to confirm our claims, to make sure they're replicating their own hands and their own samples, the transition should happen relatively quickly. So, kind of a different kind of thing than what we had seen previously with FLEX, for example, which is a very different kind of workflow for different kinds of applications, for different kinds of customers, and also likely faster than what we had seen previously, for example, with the next-gen transition, which did entail some trade-offs and not necessarily huge performance advantages. So the question is, what is the feedback that people are going to give us, what are the customers going to be giving us, and what are they going to be actually seeing in their own hands? Very positive

Multiple dimensions.

Justin Macken: With very little.

Justin Macken: Trey this is that people will have to make and it's at a lower price. So we do expect that once people go through.

Justin Macken: Their initial validation to confirm our claims to make sure that replicate in their own hands and their own samples. This transition should happen relatively quickly so kind of a different kind of a thing.

Justin Macken: I'd seen previously with Flex for example, which is a very different kind of workflow for different kinds of obligations over time with different kinds of customers and also likely faster than what we had seen previously for example, with the next gem transition, which which did entail some tradeoffs or not necessarily.

Justin Macken: A huge performance advantages. So so the question is what is the feedback that people are going to be the customers are going to be.

Justin Macken: Giving us what are they going to be absolutely seeing in their own hands and so far.

Justin Macken: Hasn't been.

Justin J. McAnear: And so we're feeling optimistic that as they go through this transition, that will be happening at a pretty rapid pace relative to our previous product introduction. Dan, as far as the second part of your question, given the results that we've had in Q1, it's certainly going to be more challenging to achieve growth year-over-year in chromium. So at the midpoint of our guidance range, we are modeling more spatial upside, and we're also modeling more chromium downside.

Justin Macken: Very positive.

Justin Macken: So we're feeling optimistic that as they go through this transition that that'll be happening on a pretty rapid.

Justin Macken: Base relative to our previous.

Justin Macken: Product introductions.

Speaker Change: And then as far as the second part of your question given the results that we've had in Q1, certainly going to be more challenging to adhere to achieve growth year over year in chromium.

Speaker Change: So at the midpoint of our guidance range, we are modeling more spatial upside and we're also modeling more chromium downside.

Justin J. McAnear: And so with some of the headwinds that we're seeing related to the, to the GEM-X transition, you know, we do think by the end of the year, those will smooth out. We definitely saw an impact in Q1, and we're expecting to see an impact from that in Q2 as well. As far as the offset coming from spatial, to the extent that chromium growth is being impacted by spatial, you know, we would expect to see an offsetting upside, and that's what gives us the confidence. Our guidance range is the same as 670 to 690 that we had on the last call. We'll take your next question from Doug Schenkel with Wolf Research. Good afternoon.

Speaker Change: And so with some of the headwinds that we're seeing related to the to the <unk> transition.

Speaker Change: Do think by the by the end of the year those will smooth out we definitely saw an impact in Q1, and we're expecting to see an impact for that in Q2 as well as far as the offset coming from special to the extent that chromium growth is being impacted by special we would expect to see a.

Speaker Change: Offsetting upside in special and that's what gives us the confidence to keep our guidance range. The same 672 to $6 90 that we had.

Speaker Change: On the last call.

Speaker Change: We'll take our next question from Doug Schenkel with Wolfe Research.

Douglas Anthony Schenkel: Good afternoon so.

Douglas Anthony Schenkel: So, I'm going to try to package in two different things here. First, just as a follow-up to Dan's last question, you know, keeping in mind you launched GEMX with a week or two left in Q1, which obviously stalled the market a bit, but it doesn't sound like I'm hearing anything to suggest that, you know, there was momentum or there is momentum coming off of that launch over the last five or six weeks that makes you feel like you can get close to target on single cell So this is not just a timing issue. There are other dynamics that are, you know, basically hitting performance here on the single cell side. I just want to make sure the answer to that is yes.

Douglas Anthony Schenkel: I'm going to try to package in two different things here first just as a follow up to Dan's last question keeping in mind, you launched <unk> with a week or two left in Q1.

Douglas Anthony Schenkel: And that obviously stalled the market a bit but it doesn't sound like I'm hearing anything to suggest that there was momentum or there is momentum coming off of that launch over the last five or six weeks that makes you feel like you can get close to the target on single cell. So this is not just a timing issue. There are other dynamics that are basically cutting performance.

Speaker Change: <unk> here on the single cell side I, just want to make sure of the answer to that is yes, and then my second unrelated thing I want to talk about as brokers purchase of nano strength.

Douglas Anthony Schenkel: And then my second, you know, unrelated thing I want to talk about is Bruker's purchase of nanostring. That brings to market a high-quality company with a much more formidable commercial and innovation infrastructure, a much bigger balance sheet. Obviously, they're poised to invest here. How is the emergence of Bruker as a direct competitor changing how you budget and tactically plan? Thank you. Thanks, Doug.

Speaker Change: That brings to market a high quality company with a much more formidable commercial and innovation infrastructure, a much bigger balance sheet, obviously theyre poised to invest here how is the emergence of broker as a direct competitor changing how you budget and tactically plan. Thank you.

Serge Saxonov: So let me take that first question. So on Chromium, so I mean, first of all, just stepping back at a high level, Chromium, not like it's not fundamental. The franchise is not where we want it to be, or where we think it should be.

Speaker Change: Thanks, Doug So let me take the first question. So on chromium. So I mean first of all just stepping back at a high level comment.

Speaker Change: It's not fundamental the franchise is not where we want it to be where we think it should be.

Serge Saxonov: You know, we've been talking about this for several quarters, and there's been a lot of focus on space among our commercial team and, actually, more generally for the company in the last few years. And we've been making efforts to shift more of a balance and more focus, more resources on to Chromium, but we still have a lot of work to do on that, and a lot of work continues.

Speaker Change: We've been talking about for several quarters in fact, there's been a lot of focus on spatial among our commercial team and actually the more generally for the company in the last few years and we've been making efforts to shift more of a balanced and more focus more resources on too.

Speaker Change: Onto.

Speaker Change: Chromium and we still have a lot of Oh I wanted to do on that front.

Serge Saxonov: For this particular quarter, like you mentioned, there's the GEM-X transition. I would just say that we actually announced GEM-X in mid-February. So it's not just the last few weeks, the last couple of weeks of the quarter. It's kind of a longer stalling period, and it had a substantial impact on the quarter.

Speaker Change: And a lot of work continues.

Speaker Change: This particular quarter like you mentioned there is the <unk> transition and I would just say that we actually announced Jim.

Speaker Change: Net February so it's not just it's not just the last few weeks.

Speaker Change: The last couple of weeks of the quarter. So it kind of a longest all good.

Speaker Change: A substantial impact on the quarter.

Serge Saxonov: We're also seeing, like I said in my prepared remarks, more attention from customers on space. So kind of as we're making internal efforts to bring more research to bear on the program, we're also fighting a little bit of that headwind from the market. And then, of course, there's sort of macro factors in play as well in terms of pressure on budgets and this elongated sale.

Speaker Change: We are also seeing like I said in my prepared remarks more attention from customers on schedule. So.

Speaker Change: And as we're making internal levers too.

Speaker Change: Can you do to bring more resources to bear on the program. We're also fighting a little bit of that.

Speaker Change: That hasnt been for the from the market and then of course.

Speaker Change: Theres sort of macro factors in play as well in terms of pressure on budgets.

Speaker Change: Elongated sales cycle.

Serge Saxonov: Again, I would say stepping back, like I said before, from first principles and based on our customer feedback, we see a tremendous long-term opportunity here. We're still very early in that opportunity, and we're taking many steps to realize it. On the question about Bruker, so does the spatial field, which as we've said before is very attractive. We've seen that for several years going back.

Speaker Change: Again, I would say stepping back like I.

Speaker Change: I said before for a first principles and based on our customer feedback, we we see a tremendous long term opportunity here, we're still very early in that opportunity and and.

Speaker Change: And we were taking manual steps do too to realize that opportunity.

Speaker Change: On the <unk>.

Speaker Change: Listen.

Speaker Change: Above broker.

Speaker Change: With the official field.

Speaker Change: We've said before.

Speaker Change: Uh huh.

Speaker Change: It is very attractive we see a lot.

Speaker Change: Sure.

Speaker Change: So several years going back we've made a lot of investments in innovation and product development because of the conviction, it's not surprising that new companies are going to be entering this space.

Serge Saxonov: We've made a lot of investments in innovation and product development because of that conviction. It's not surprising that new companies are going to be entering this space. Again, very attractive field, very attractive applications. We've done a great job of developing products that customers really love. We've been getting great feedback. That's really our North Star.

Speaker Change: Yes, they are attractive.

Speaker Change: I feel very attractive applications.

Speaker Change: We've done a great job of developing.

Speaker Change: Developing products that customers really resonate with customers, we've been getting great feedback and that's really our north star and we continue to make investments in rolling out new products. That's how we've established our leadership now in spatial and we anticipate as we progress through the coming quarters and coming years.

Serge Saxonov: We continue to make investments and roll out new products. That's how we established our leadership now in Spatial. We anticipate as we progress through the coming quarters and coming years, that that's going to keep propelling us to greater and greater success in the market. We'll take our next question from Dan Brennan with TD Cowen. Thank you.

Speaker Change: That's going to keep propelling us to do a greater and greater success in the market.

Speaker Change: And we'll take our next question from Dan Brennan with TD Cowen.

Speaker Change: [laughter].

Daniel Gregory Brennan: Thanks for the questions. Maybe just a follow-up and then a couple other parts on single-cell and spatial. So I know part of the push coming this year was the reorientation of sales incentives to get them to focus more on single-cell. Serge, I think you just mentioned there's still a lot more work to do. So maybe if you could just clarify that.

Daniel Gregory Brennan: Great. Thank you thanks for the questions.

Daniel Gregory Brennan: Maybe just a follow up and then a couple of other part time single cell and spatial so.

Daniel Gregory Brennan: I know part of the push coming into this year was the.

Daniel Gregory Brennan: Reorientation of sales incentives to get them to focus more on single cell search I think you just mentioned there's still a lot more work to do so maybe if you can just clarify that secondly.

Serge Saxonov: Secondly, I'm just wondering, obviously, Serge, you sound extremely bullish on the untapped opportunity and the demand elasticity. So obviously, we're working through this GEMEX transition right now, but could you speak to, as we're through this transition, it sounds like by year-end, kind of how we would think about what a steady-state single-cell kind of growth could look like, and then C, You know, you've talked more about cannibalization on this call than in the past, but, you know, arguably that also drives more spatial growth.

Speaker Change: I'm just wondering.

Speaker Change: Serge you sound extremely bullish on the untapped opportunity and the demand elasticity. So obviously, we're working through this <unk> transition right now, but could you could you speak to as we're through this transition it sounds like by year end.

Speaker Change: Kind of how we would think about what a steady state single so kind of growth could look like and then see you.

Speaker Change: You've talked more about cannibalization on this call than in the past but.

Speaker Change: Arguably that also drives more space will grow so I'm just wondering as we think about the cannibalization like is your outlook for single cell growth lower today than it would have been given this cannibalization and is there an offset on higher spatial growth. Thank you.

Serge Saxonov: So I'm just wondering, as we think about cannibalization, is your outlook for single-cell growth lower today than it would have been given this cannibalization? And is there an offset for higher spatial growth? Thank you.

Serge Saxonov: So a number of questions here. So let me kind of go through them in order. So first of all, in terms of the efforts that we're making on Chromium, yes, you're right. We identify that as a priority, and we've been making progress. But it does take time.

Speaker Change: Thanks, Dan So a number of questions in here. So let me kind of go through them.

Speaker Change: And sequence.

Speaker Change: So first of all it shows all the efforts that we're making on chromium.

Speaker Change: Yes, youre right. So we identify that.

Speaker Change: As a as a priority and we've been making progress it does take time I would say.

Speaker Change: One of the foundational elements here is it starts with leadership.

Speaker Change: We have no we.

Serge Saxonov: I would say, you know, one of the foundational elements here is leadership. And we have great new leadership in place across all our three regions now this quarter, AMR, EMEA, and APAC. We also have a great interim CCO leader in place, Mena Mustafa, who's been doing an amazing job in the transition.

Speaker Change: Have a great.

Speaker Change: New leadership in place across all our three regions now.

Speaker Change: This quarter.

Speaker Change: You bet.

Speaker Change: Have a great interim CTO leader in place.

Speaker Change: Animal startup has been doing an amazing job in that transition.

Serge Saxonov: And we have been implementing a number of initiatives within the commercial organization to bring more focus on Chromium. So I've talked about in the past about setting up explicit quote targets around Chromium, the Chrome business, more time, and more focus on Chromium. We also have implemented direct KPIs and management expectations around driving Chromium.

Speaker Change: And.

Speaker Change: We have been implementing a number of initiatives within the commercial organization to bring more focus on chromium. So I've talked about in the past about setting up explicit target around chromium.

Speaker Change: <unk> business, we have not had that in the past.

Speaker Change: We're creating a great amount of specialization within the commercial team to provide more and more.

Speaker Change: More bandwidth more or.

Speaker Change: Our salespeople to be able to spend.

Speaker Change: More time and more focus on the chromium.

Speaker Change: <unk> implemented derived kpis and management expectations around driving Colombian we're also putting to bear more marketing resources that can be in specifically for chromium as well.

Serge Saxonov: We're also putting more marketing resources and campaigns specifically for Chromium into place as well, and we do expect that that's going to bear fruit in the coming quarters, for sure. And of course, this is being done on the background of really exciting product launches as well. There's going to be a second question on elasticity. Yes, yeah, I've commented a lot in the past on the fact that yes, we do believe there is a tremendous elasticity of demand in the single cell market.

Speaker Change: And we do expect that that's going to do it to bear fruit in the coming quarters.

Speaker Change: For sure.

Speaker Change: And of course this is being done on the background of a really exciting product launches as well.

Speaker Change: Kind of your second question on electricity.

Serge Saxonov: And one way you can look at it is from first principles. Biology, like I've said before, really should be studied in a single cell context. And the vast majority of it is currently not studied at that level.

Speaker Change: Yes, Yes, I've commented a lot in the past around the fact that yes, we do believe there's a tremendous almost as steel demand and.

Speaker Change: In the single cell.

Speaker Change: And one.

Speaker Change: One way you can look at it is from first principles.

Speaker Change: Biology, like I said before really should Miss studies, a single silicon does it.

Speaker Change: The vast majority of it towards theres not studying that.

Speaker Change: Most people who should be using single cell are currently not using it.

Serge Saxonov: Most people who should be using single-cell are currently not using it, and we know that price is a major obstacle to them using it. And we hear it. And that's the second sort of chain of evidence.

Speaker Change: And we know that price is a major obstacle to seem to them using it and we hear it and that's the second sort of channels evidence, we hear a lot from our customers.

Serge Saxonov: We hear it a lot from our customers. Consistently, price is a major obstacle, both in terms of new customers who are interested in single-cell technology when they see the price that tends to turn them away, or at least slow them down in adoption. We hear from existing customers who are interested in making single-cell analysis a more routine part of their research, as opposed to a method of exception when you need to get really, really deep insight into a particular sample.

Speaker Change: Simply the price is a major obstacle both in terms of new customers, who are interested in single cell when they surprised that that's true.

Speaker Change: To turn them away or at least a slow them down and adoption, we hear it from existing customers, who were interested in making single cell, becoming a more routine part of their research as opposed to.

Speaker Change: Best of exception when you need to get really really deep insight into a particular sample and then we hear this from our customers who want to scale to two really large projects the main obstacle.

Serge Saxonov: And then we hear it from customers who want to scale to really large projects. The main obstacle consistently is price. And so we do see a lot of opportunities, both from first principles and based on the feedback we've been hearing from customers. And we've been making efforts, GEMEX is a strong example of that, to kind of walk down the price curve and to generate increasing demand. We have strong conviction that over time, this will lead to the expansion of the total market. And then, kind of, the third point you mentioned was around the sort of trade-offs with space.

Speaker Change: List price.

Speaker Change: And so we do see a lot of opportunities both from first principles and based on the feedback we're hearing from customers.

Speaker Change: And and we've been making efforts <unk> is a strong example of that to kind of work down the price curve and to generate increasing demand and we have strong conviction that overtime. This will lead to the extension of a total market.

Speaker Change: And then kind of a third point you mentioned was around.

Speaker Change: It's sort of tradeoffs with spatial.

Serge Saxonov: And it is definitely the case that there's been a lot of excitement around Spatial recently, especially with the launch of Visium HD and the progress we've been making on Xenium. And it's certainly the case that we see customers making those trade-offs, thinking about their budgets, their mindshare, where they're going to be kind of spending their time. This was true, as we've talked about in the past, for certainly early technologists, people who are specifically focused on what is the latest and greatest innovation.

Speaker Change: And it is it is definitely the case that there's a lot of there's been a lot of excitement around spatial recently.

Speaker Change: Especially with the launch of visiting H D with the progress we've been making on Xinyu and it's certainly the case that we see customers, making those tradeoffs.

Speaker Change: Thinking about their budgets their mind sure whether we're going to be kind of spending their time. This was a true we've talked about in the past for certainly for early technologies people, who are specifically focused on what is the latest and greatest innovation neither.

Serge Saxonov: They are looking at Spatial, where in the past they might have been looking at single-cell and other customers too. And also, this interest from customers is drawing the attention of our sales team as well, naturally and as one might expect. Now, it is not the case that people are just switching over from single-cell to Spatial. The insights that you get, the kinds of research questions you can ask and answer are complementary; they're different. And we're also seeing a lot of customers that are new to this whole ecosystem coming in through Spatial. People who've not done single-cell before, people who've not even done genomics.

Speaker Change: They are looking at diesel where in the past there might have been looking at single cell and another customer's tool and also the.

Speaker Change: This interest from customers is drawing attention all of our sales team as well naturally.

Speaker Change: No. It is not the case that people are just switching over from single cell into seasonal the the insights that you get the kinds of research questions. You can ask and you can ask and answer or a complementary there are different and.

Speaker Change: We're also seeing a lot of customers that are new to this whole ecosystem coming in those special people who've not done single cell before people have not even done genomics before.

Serge Saxonov: And so this is going to be ebb and flow as customers kind of figure out specific use cases as new technologies come to prominence to figure out the precise appropriate use of them. Ultimately, we see huge potential for all three of our franchises. We expect them to coexist and complement and supplement each other, and we expect that there is a great, great future ahead for Chromium and the Relink for the whole portfolio. We'll take our next question from Matt Larew with William Blair. Hi, good afternoon.

Speaker Change: And so there's going to be ebb and flow as customers kind of figure out specific use cases, as new technologies come to prominence to figure out the precise appropriate use of them ultimately we see huge potential for all three of our franchises, we expect them to coexist in complement and supplement each other.

Speaker Change: And we expect that there is a there is a.

Speaker Change: Great future ahead for <unk>.

Speaker Change: Permian.

Speaker Change: And really for the whole portfolio.

Speaker Change: We'll take our next question from Matt <unk> with William Blair.

Matthew Richard Larew: Maybe just picking up on that last point, Serge, obviously, for a long time, you've been talking about the value of the ecosystem and building a portfolio of platform assets, within the ecosystem. Could you maybe update us with sort of the proof points you track internally to validate that thesis, be it adoption of newer spatial technologies by perhaps legacy single-thought customers or retention of single-thought customers uh in labs where they might have other 10X products that they've committed to um you know is anything that speaks sort of strategically to the value you're seeing of having you know different modalities and how, Yeah, so I would say there's good kind of example data and, you know, a substantial number of anecdotes and examples of customers purchasing platforms together when they're kind of looking at, kind of, setting up their genomics infrastructure, where they buy the biosciences, they buy chromium, they buy xenium, and they contemplate kind of use cases that combine all.

Matt: Hi, Good afternoon, maybe just picking up on that last point search obviously.

Matt: A long time, you've been talking about.

Matt: With the ecosystem and building a portfolio.

Speaker Change: That form assets.

Matt: Within the ecosystem could you maybe just update us with sort of a proof point to track internally to validate that thesis yet adoption of <unk>.

Matt: Special technologies by perhaps like if you take all of our customers or retention of single site customers.

Matt: In labs, where they might have other tax products that they've committed to and if there's anything that speaks sort of strategically today youre seeing of having.

Matt: Current modalities.

Speaker Change: Yeah, So I would say there is a.

Speaker Change: Ah Theres good kind of example theater.

Speaker Change: And a substantial number of Ah I think those are examples of customers are purchasing.

Speaker Change: Platforms together, when they kind of looking at a.

Speaker Change: Kind of setting up their genomics infrastructure where are they.

Speaker Change: Bye Goodbye Sunesis, they Brian chromium advising them and they contemplate kind of use cases.

Speaker Change: That's the that's the final thing platforms.

Matthew Richard Larew: We're also seeing results getting published in papers and data sets that get released, and a consistent kind of feedback when we talk to customers that oftentimes people do use these platforms together. It's rare that you have a xenium run, for example, that doesn't make use of some single cell information. To some extent, it's the same for Visium, and we see the interest going back and forth where people might run a xenium experiment and look at Visium or Chromium to put those results in context. Or going the other way, you run your Chromium experiments, you generate data, then you want to follow up and validate it using xenium for your specific biological system.

Speaker Change: We're also seeing a kind of resolved getting published in the papers and datasets that get released and ecosystem kind of feedback when we talk to customers that oftentimes people do do use these platforms together.

Speaker Change: It's rare that you have as you knew him around for example, without that doesn't make use of some single cell information.

Speaker Change: And same stomach that the same for <unk>.

Speaker Change: And and we see kind of the interest going back and forth where people might run Xinyu experiment and uncle kind of look at the museum or a or chromium to put those results in context or going the other way you run your chromium experiments you generated data and then you.

Speaker Change: Wanted to follow up and validated using veniam with.

Speaker Change: Specific biological system. So we see plenty of examples and there are a lot more of them getting published are along those lines.

Serge Saxonov: So we see plenty of examples here, and a lot more of them are getting published along those lines. But I do want to emphasize it's kind of early in this whole process in terms of collecting reliable statistics because all these products are coming at customers pretty fast at this stage, and it is a pretty dynamic field. We'll take our next question from Matt Sykes with Goldman Sachs. Good afternoon.

Speaker Change: I do want to emphasize it's kind of early in this whole process in terms of collecting kind of reliable statistics because all these products are coming with customers pretty fast at this stage and it is a pretty dynamic field.

Speaker Change: But when we look at the again the use cases and applications, we see plenty of evidence of customers.

Speaker Change: Being excited about using multiple platforms.

Speaker Change: We'll take our next question from Mac Sykes with Goldman Sachs.

Matthew Carlisle Sykes: Thanks for taking my questions. Maybe this is a bit premature, but I know you've addressed the cannibalization comments, but I just wanted to take a little different take on it. And just given your comments on spatial taking time and wild share from single cell, is there a way to maybe effectively manage the potential cannibalization if you believe this focus stays on spatial? Meaning, would you want to use this transition to spatial to your advantage?

Matthew Carlisle Sykes: Good afternoon, Thanks, taking my questions.

Matthew Carlisle Sykes: Maybe this is a bit premature, but I know you've addressed.

Matthew Carlisle Sykes: The cannibalization comments, but I just wanted to take a little different take on it and.

Matthew Carlisle Sykes: Just given your comments on special taking time of wallet share from single cell is there a way to effectively manage the potential cannibalization. If you believe this focus stays in spatial meaning would you want to use this transition to space to your advantage and just try and much more proactive approach to cannibalization or they're encouraging existing Colombian customers, where special makes sense.

Matthew Carlisle Sykes: And just try a much more proactive approach to cannibalization, either encouraging existing growing customers where spatial makes sense, you know, towards spatial, which I'm sure you're doing commercially, but I just think that given sort of your earlier comments about the ecosystem, keeping the customer within the 10X platform is probably the first priority, and therefore, maybe actually managing that cannibalization could help sort of ease that transition into it. Or is it just too early at this stage to really go forward with those efforts?

Matthew Carlisle Sykes: Towards spatial which im sure Youre doing.

Matthew Carlisle Sykes: <unk> standpoint, but I, just think that given sort of your earlier comments about the ecosystem keeping the customer within the 10 X platform is probably the.

Matthew Carlisle Sykes: The first priority and therefore, maybe actually managing that Campbell, that's cannibalization could help sort of ease that transition into it or is that just too early at.

Matthew Carlisle Sykes: At this stage to really.

Matthew Carlisle Sykes: Go forward with those efforts.

Matthew Carlisle Sykes: Yeah, so one thing I would say, you have to be careful using the word cannibalization because it's not so much a substitution where people kind of get results they could have gotten with Chromium using these spatial technologies and approaches. You can't

Speaker Change: Yeah, one thing I would say you have to be careful using the word cannibalization because.

Speaker Change: Because it's not so much the substitution with people kind of are.

Matthew Carlisle Sykes: Getting resolved they could've gotten with with chromium eating these diesel technology technologies and approaches you can theyre complementary they extend that complement the AR and the.

Serge Saxonov: They're complementary. They extend, they complement, and they supplement. So it's important to keep that in mind. I think for us, our North Star is really customer success and delivering value for their particular applications and their questions. And so we want to present the full solution to our customers. And the way that our sales team kind of interacts with our customers is to really try to understand deeply what they are looking for, what are the questions they're asking, what are the research goals, and then make sure they understand the capability of the products to give them the most efficient way to get to those goals.

Matthew Carlisle Sykes: Supplement so.

Matthew Carlisle Sykes: It's important to keep that in mind I think for us our north star is really kind of customer success and delivering the value for their particular applications in there there are questions.

Matthew Carlisle Sykes: So we want to present, the full solution to our customers and the way that our sales team kind of entrust with a with a with a customer says to really try to understand deeply what are they looking what are the questions. They're asking what are the research goals and then making sure that they understand the capability of the products that give them the most efficient way to get through those.

Matthew Carlisle Sykes: So those goals.

Matthew Carlisle Sykes: And so I think I would frame it is less about what.

Matthew Carlisle Sykes: What we are driving for ourselves, but making sure that we've got the full set of solutions that our customers can take advantage of them.

Serge Saxonov: And so I think I would frame it as less about what we're driving for ourselves but making sure that we've got the full set of solutions that our customers can take advantage of. We'll take our next question from Subhu Nambi with Guggenheim Security. Hey guys, thank you for taking my question regarding performance in China. Revenue was down 16% in the quarter.

Matthew Carlisle Sykes: We'll take our next question from Silvan <unk> with Guggenheim Securities.

Silvan: Oh, Hey, guys. Thank you for taking my question.

Silvan: Regarding performance in China revenue was down 16% in the quarter.

Silvan: Could you provide any initial color on those topics.

Subhalaxmi T. Nambi: Could you provide any initial color on the status of The strategy here, given that inventory is piling up, created some obstacles last year. How did 1Q fare, and are there any material updates regarding your priority to continue building up a backup sales force in China? Thanks for the question.

Silvan:

Silvan: Yeah.

Silvan: Our strategy here, given that inventory piling up creating some obstacles.

Silvan: Last year, how did one acute care.

Silvan: Any material updates regarding your priority to continue building up.

Silvan: Backup sales force in China.

Justin J. McAnear: You know, as we talked about on previous calls, over the last year, we've worked actively to bring down inventory levels at distributors and service providers. And just, you know, for the context here, we sell to distributors who sell, you know, primarily to service providers who actually perform the service for the end customer. So then when there's any kind of fluctuation in demand at the end, you can have inventory stack up at either end of the chain. And so we saw that throughout last year.

Speaker Change: Hey, Susan Thanks for the question.

Susan: You know as we talked about on our previous calls over the last year, we've worked actively to bring down inventory levels.

Susan: At the distributors and service providers.

Susan: And just for context here, you know, we sell to distributors, who sell primarily to service providers, who actually performed the service for the end customer and so then when theres any kind of flip.

Susan: Fluctuation in the demand at the end you can have inventory stack up at either one of those levels.

Justin J. McAnear: And, you know, each quarter, we work to bring those inventory levels down. We have developed closer relationships with the service providers and shared more information with them, and they were able to share more information with us. We've also made some progress on adding distributors in the region to reduce the burden on any given one and also allow us to get closer to the customers as well. And so going back to the last part of 2023, you know, Q3 and Q4 played out roughly like we expected them to.

Susan: Of the chain.

Susan: And so we saw that throughout last year.

Susan: And each quarter, we work to bring those inventory levels down we developed closer closer relationships with the service providers and shared more information.

Susan: With them and they were able to share more information with US. We've also made some progress on adding distributors and in the region to reduce the burden on any given one and also allow us to get closer to the customers as well and then so going back to the last part of 'twenty 'twenty.

Susan: Three Q3, and Q4 played out roughly like we expected them to our I would say the same with <unk> with Q1 at least right now at this level of.

Justin J. McAnear: I would say the same with Q1. And at least right now, at this level of demand. You know, we do think that we have, we don't think that we'll see the same issues that we saw last year with inventory. But, you know, that could change if demand changes, like it did at the beginning. We'll take our next question from Michael Ryskin with Bank of America. Okay. Thanks for taking the question. I hate to belabor the curling consumers point, but I just want to ask sort of a big picture theoretical question. I'm not just focusing on the first quarter.

Susan: Demand, we do think that we have we don't think that we'll see the same issues that we saw last year with inventory, but that could change if demand changes like it did at the beginning of last year.

Susan: Well take our next question from Michael <unk> with Bank of America.

Michael: Great. Thanks for taking.

Michael: My question I'm I hate to believe belabor, the chromium consumable point I just want to ask sort of a big picture theoretical question not just focusing on the first quarter. If you take a look at.

Michael Ryskin: If you take a look at chromium consumables over the last couple of years, now going back to 2021-2022. I think it's safe to say that that's been somewhat disappointing over the last two years, plus there's been a number of different issues commercial missteps Justin, you're just talking about China headwinds now you've got the GEMEX transition broader macro, you're having some of the shift of the spend into space. Cannibalization, but call it what you will.

Michael: Chromium consumables over the last couple of years now going back to 2021 2022, I think it's safe to say that that's been.

Michael: Somewhat disappointing over the last two years, plus theres been a number of different issues.

Michael: Commercial missteps, Justin you were just talking about China headwinds now you've got the Chemex transition.

Michael: The broader macro youre, having some of the shifting of the spend into space show.

Michael: Called cannibalization, but call. It what you will given given that performance over the last two years I mean and your comments on.

Michael Ryskin: Given that performance over the last two years, comments on what feels like a revised chromium. Universal Outlook for this year. You're not expecting to hit the levels you were talking about before. If there's some deeper issue at play here, you know, where it's not just any one of these, whether it is competition, and you know, someone brought up nanostrand, but there are a number of smaller vendors coming into the single cell market that are, you know, making inroads into the market, whether it is just budget constraints from customers, whether it is price elasticity, Yeah, let me kind of dig into that. So, I mean, a fair point.

Michael: What feels like a revised chromium consumables outlook for this year it sounds like youre not expecting to hit the levels you were talking about before.

Michael: Is there some deeper issue at play here, where it's not just any one of these whether it is competition and you know someone brought up and downstream, but there are a number of smaller vendors.

Susan: Coming into the single cell market.

Susan: Are you now making inroads in the market whether it is just budget constraints from customers, whether it's price elasticity. Just I mean is there we can revisit sort of the single cell opportunity in the near term and maybe take a look at from that perspective.

Speaker Change: Yeah Yeah.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Take that so.

Serge Saxonov: There have been, I mean, a number of legitimate reasons why Chromium has been particularly buffeted over the past couple of years. The fact is, our business in China went down a lot over this current period, so that certainly put a lot of pressure on us. We are this quarter, like I said, going into a particular product transition. So those factors are all at play for sure, but ultimately, the question of the underlying potential of chromium there is still there for the same reasons we've always articulated. Like I said earlier, most researchers should really be using single cell analysis to understand their tissues. That's where the biology is, and that certainly is not the case now.

Speaker Change: Airplanes, there has been a number of legitimate reasons why korlym has been particularly buffeted over that.

Speaker Change: Over the past couple of years the factors are.

Speaker Change: Our business in China went down.

Speaker Change: What all of this grant data so that certainly put a lot of pressure. We are this quarter like I said going into a particular product transition. So those factors are all at play.

Speaker Change: Sure V, but ultimately the question all the underlying potential.

Speaker Change: Oh chromium there is still is still there for the same reasons, we've always articulated.

Speaker Change: Like I said earlier most of our first principles.

Speaker Change: Most researchers should really be using single cell analysis to understand their tissues, that's where the biology is and that certainly is not the case now and like we said before it mean obstacles to that or.

Serge Saxonov: And like we said before, the main obstacles to that are your workflow ease, which we're in the process of addressing through various means, and price, which we're also addressing through a number of steps, and then also driving greater awareness through commercial execution and, in general, market development. We do believe there's lots of robust growth ahead, but those obstacles do need to get addressed, and we are in the process of addressing them.

Speaker Change: The workflow is which which we're in the process of addressing.

Speaker Change: It just means and price.

Speaker Change: Which are also addressing through throw a number of steps.

Speaker Change: And then also driving greater awareness through through commercial execution and in general.

Speaker Change: Market development.

Speaker Change: We do believe theres lots of robust growth.

Speaker Change: Obstacles do you need to get addressed and we are in the process of addressing them.

Serge Saxonov: The question of competition is, yeah, certainly it's a relevant one. There's always been some competition in single cells, sometimes more, sometimes less. Over the last year or so, there's been a few more players that have come into the space. We've talked about this before. Compared to a year ago, there's somewhat more awareness and somewhat more prevalence of them out there. But I would still say that the story is largely the same.

Speaker Change: The question is competition that yes, it's only it's a it's a relevant one.

Speaker Change: There's been some competition on single cell, sometimes more sometimes less.

Speaker Change: The last year.

Speaker Change: A year a couple of years.

Speaker Change: There's been a few more players have come into our into the space. We've talked about this before there is compared to a year ago. There is somewhat more awareness and somewhat more prevalence of them out there I would still say that the story is largely the same customers do trial.

Speaker Change: Which does create a introduce some friction to a sales process industrial pressure on prices, but by and large customers come back to us.

Serge Saxonov: Customers do trial them, which does introduce some friction to the sales process and does put pressure on prices. By and large, customers come back to us due to all the various advantages our products have, like much better performance, much better data quality, much better workflow, much better breadth of applications, customer support, and all the other things that people love about 10X. But it's still largely the same story.

Speaker Change: Due to all the various damages on our products a much better performance much better data quality much better workflow much better breadth of applications.

Speaker Change: Customer support and all the other things that people love about.

Serge Saxonov: The reason we've been successful up to now is because of product innovation and product quality, and that is our North Star. The goal is to keep delivering value to customers. We're continuing to invest in that, both in terms of product development and in terms of customer focus. However, we believe there are much, much larger opportunities to drive the overall growth of the market relative to the effects of any particular product. We'll take our next question from Tejas Savant with Morgan Stanley. Hey guys, good evening, and appreciate the time here. Serge, I have one on Single-Cell and then one on Visium HD.

Dennis: Dennis So it's still.

Speaker Change: Largely the same the same story in there.

Speaker Change: The reason we've been successful up to now is because of the product innovation in the product quality and that is our north star.

Speaker Change: The goal is to keep delivering value to to two customers.

Speaker Change: We're continuing to invest in that both in terms of product development and in terms of customer focus.

Speaker Change: And we believe the much much larger but changes to drive the overall growth of the market are relative.

Speaker Change: Relative to the effects of any particular.

Speaker Change: Yes.

Speaker Change: We'll take our next question from Tejas Savant with Morgan Stanley.

Tejas Savant: Hey, guys good evening and I appreciate the time here.

Speaker Change: So.

Tejas Savant: I have one on on single cell and then one on Vizio HD. So starting with single cell. You know you mentioned in an earlier answer that the main obstacle to larger projects was price and you've talked about the commercial refocusing as well, but I just wanted to get a sense of.

Tejas Savant: So starting with Single-Cell, you know, you mentioned in an earlier answer that the main obstacle to larger projects was price, and you've talked about commercial refocusing as well. But I just want to get a sense of how open you are to deeper and more accelerated price cuts on Chromium versus the 10% that you got with the GEM-X launch. And I understand that that could mean, you know, incremental downside to the near-term guide, and perhaps it then puts your commercial folks on a more even footing versus, you know, some of the incumbents or the new entrants you were talking about and helps And then the unrelated second part of the question is on Visium HD. Really good to see the strong start there.

Tejas Savant: When you are to deeper and more accelerated price cuts on chromium versus the 10% that you got with the <unk> launch and I understand that that could mean incremental downside to the near term guide and then perhaps it then puts your commercial folks on more even footing versus some of the incumbents or new entrants, who we're talking about.

Speaker Change: And helps to reignite customer interest to pull the trigger on larger projects.

Speaker Change: And then my unrelated to the second part of the question is on the zoom HD really good to see the strong start there and I know, there's an interplay of different dynamics here, but to what extent that initial stocking from new users play a role in the upside.

Serge Saxonov: And I know there's an interplay of different dynamics here, but to what extent did initial stocking from new users play a role in the upside? Is there a possibility of a natural sort of sequential breather, maybe a couple quarters out, before we see the big inflection that you've talked about, given the strong customer interest and how they were clamoring for this product to come through? Hey Tejas, thanks for the questions. So let me let me talk to the first one.

Speaker Change: Is there a possibility of a natural sort of sequential breather, maybe a couple of quarters out before we see the big inflection that you've talked about given the strong customer interest in how they were clamoring for this product to come through.

Serge Saxonov: So you're right. So with Genomics, we showed a 10% drop in the per sample price. Now, I do have to say that's a substantially larger drop in the per cell price because you get a lot more throughput with Genomics and something that a number of customers appreciate. Your larger point as to whether we intend to drive further into the price. Yes, over time, for sure.

Speaker Change: Hey, Dave Thanks.

Dave: Thanks for the questions. So let me.

Dave: Let me talk to the first one your rental with Jim as we showed.

Speaker Change: 10% drop in per sample price now I do have to say, that's a substantially larger drop in a burst sell price because you've got a lot more robust with the with <unk>.

Speaker Change: And something that you have a number of customers appreciate it.

Serge Saxonov: We talked about the fact that, ultimately, we want to reach the price point of $100 for a sample. We're excited about that. We will drive the technology and the products in that direction. We just want to be careful in how we do that and kind of step into that, kind of commensurate with our other efforts in terms of driving demand and in terms of driving sample price. So certainly, customers should expect to see more along this trajectory, and those are the considerations that we're going to keep balancing as we proceed through the upcoming quarters and upcoming years. Maybe on the second question, I can start.

Speaker Change: Your largest wanted us to whether we intend to drive further into the price, yes overtime for sure we talked about the.

Speaker Change: The fact that ultimately we want to reach a the price point of $100. A sample. We're excited by that we will drive the technology and the products in that direction. We just want to be careful in how we do that then kind of stepping into that are kind of commensurate with our other efforts in terms of driving demand and in terms of driving.

Speaker Change: Sample volume.

Speaker Change: So so certainly customers should expect to see more along this trajectory and and and those are the considerations that we're gonna keep balancing as we proceed through the upcoming quarters and upcoming.

Speaker Change: Now coming years.

Serge Saxonov: So certainly, there's been a lot of pent-up interest in Vizium HD, and we do anticipate there are a lot of customers that came into this quarter with pent-up demand. And we'll kind of have to see. It's early to make a determination around how much demand we're seeing right now, sort of the initial bullets versus what the sustained trajectory looks like. There's – again, there are good indications based on the feedback we're getting from customers once they actually see the data, but it's still very early data.

Speaker Change:

Speaker Change: Maybe on the second.

Speaker Change: Second question I can I can start so certainly theres been a lot of sense.

Speaker Change: Pent up interest and and busy image D and we do anticipate there were a lot of customers that were that came on to.

Speaker Change: Sort of into <unk>.

Speaker Change: This quarter it was pent up demand and we'll kind of start to see its early 222 to make a determination around how much of demand. We're seeing right now is real good initial bolus versus what the sustained trajectory looks like.

Speaker Change: There's.

Speaker Change: There's good indications based on the feedback we're getting from customers once they actually see the data, but it's still very early days on that front.

Serge Saxonov: We'll take our next question from Luke Sargod with Barclays. All right, thanks for the question. So, can you guys help us give a sense of how many Xeniums you placed and then any type of directional commentary on, I know you don't typically break it out, but you know, the contribution of Vizium versus Xenium to that revenue base on Spatial and how that trended, and then really just kind of figuring out the momentum within those two businesses to offset the single cell decline for you guys to be able Hey, this is Justin.

Speaker Change: We'll take our next question from Luca <unk> with Barclays.

Luca: Alright, thanks for the question.

Luca: So can.

Luca: Can you guys help us.

Luca: Give a sense of like how many zooms you placed and then at any type of directional commentary on I know you don't typically break it out but you know the contribution of <unk> versus <unk>.

Luca: And that revenue base on spatial on how that trended and then really just kind of figuring out the momentum within those two businesses to offset.

Luca: Single cell decline for you guys to be able to hit that full year guide because the back half step up is now.

Luca: Outsized of what you've done in the past.

Luke Sargod: I'll take that. In looking at the Xenium instruments on our last call, we talked about, you know, a quarterly range of roughly 50 to 75 per quarter. For Q1, it was about We would expect that to continue to ramp throughout the year from the lower end to the high end, with what we've seen so far last quarter and this quarter with pressures on the CapEx budget. Elongated Purchase Cycles, I would expect that it would be closer to 50 again.

Luca: Yeah, Hi, this is Justin I'll I'll take that.

Justin Macken: And looking at Xenia and instruments in our last call, we talked about a quarterly range of roughly 50 to 75 per quarter.

Justin Macken: For Q1, it was about 50.

Justin Macken: We would expect that to continue to ramp throughout the year from the lower end to the high end.

Justin Macken: With what we've seen so far last quarter and this quarter with.

Justin Macken: Pressures on Capex budget elongated purchase cycles, I would expect that it would be closer to closer to 50 again.

Justin J. McAnear: When we're looking at, and that's for Q2, and then when we're looking at Vizium versus Xenium overall, you know, looking back at Q1, roughly half and half between each of those on the spatial side. When looking on the consumable side, when you're looking from Q4 into Q1, you know, most of the growth that we saw sequentially from Q4 into Q1 was driven by Vizium and X And so there has been a lot of excitement around VisMHD; like Serge said, we've got to see what the sustained level is, but I would say that the initial level that we've been seeing has been exciting.

Justin Macken: When we're looking at and Thats for Q2.

Luca: And then when we're looking at busy them versus xenia them overall.

Luca: Looking back at Q1.

Luca: Roughly roughly half and half.

Luca: Between each of those on the spatial side when looking on the consumable side when Youre looking from Q4 into Q1.

Luca: Most of the growth that we saw.

Luca: Sequentially from Q4 into Q1 was driven by Museum HD.

Luca: And so there is there has been a lot of excitement.

Luca: Around visiting M H D like search said.

Luca: We've got to see what the sustained level is but I would say that the initial level that we've been seeing you know.

Luca: As Ben has been exciting.

Justin J. McAnear: And then there's the potential for Xenium consumables to ramp up throughout the year. You know, we haven't released too many details on that. I would say that we're still looking at a wide variety of usage across the customer base, but we are seeing good trends as far as increasing use over time when we're looking back at the older cohorts versus the new cohorts. And this is also allowing, you know, a couple of quarters for ramp-up as well.

Luca: And then there is the potential for those.

Luca: <unk> consumables to ramp up.

Luca: Throughout the year.

Luca: Haven't released too many details on that I would say that we're still looking at a wide variety of usage across the customer base.

Luca: But we are seeing a.

Luca: Good trends as far as increasing use overtime. When we were looking back at the older cohorts versus the new cohorts and this is also allowing you know a couple of quarters for ramp up as well and so I do think that there is upside on both the busier side and <unk> side.

Justin J. McAnear: And so I do think that there's upside on both the Visium side and the Xenium side within Spatial when we're looking at offsets between Chromium and Spatial in our outlook. We'll take our next question, or I do apologize. We'll take our last question from Kyle Mikson with Canaccord Genuity. Great. Hey, guys, thanks for the questions. Quick follow-up on the single-cell questions.

Luca: Within special when we're looking at offsets between chromium and spatial and our outlook for the rest of the year.

Luca: We'll take our next question I do apologize, we'll take our last question from Kyle <unk> with Canaccord Genuity.

Kyle: Great Hey, guys. Thanks for the questions quick follow up on the singles all questions I think for Serge.

Kyle Alexander Mikson: I think for Serge, you've made a lot of progress in that business this year, GEMEX, upstream fixation, other things. That includes additional resources this year that replace those that were kind of taken out, shifted to space last year. I wanted to ask what the company's ROI is in single-cell today, given that they're decelerating, kind of decreasing, even negative growth in some cases. And does it make sense to keep investing at this pace if the returns become less attractive?

Kyle: Re invest a lot in that business. This year genex upstream fixation or other things that includes additional resources. This year that replace those without kind of taken out chip just facial last year.

Kyle: I wanted to ask with the company's ROI is in single cell can be given that these decelerating kind of decreasing even negative growth in some cases and does that kind of makes sense to keep investing at this pace. If the returns kind of what's attractive in kind of mcdarrah given that that maybe like shifting that focus to spatial possibly I guess just in line with some of the cannibalization questions earlier. Thanks.

Serge Saxonov: I make the argument that maybe you should shift that focus to spatial possibly, I guess, just in line with some of the capitalization questions earlier. Thanks. Thanks, Kyle.

Serge Saxonov: So, look, we see a huge, like I said earlier, potential, large market potential on all three platforms. We are going to keep investing in all three platforms. Over the past several years, we have made very, very large investments on the spatial front. We talked about in the past how much we shifted resources onto Xenium. Bringing up HD was also a pretty massive undertaking.

Speaker Change: Thanks, Kyle So look we see a huge like I said earlier, a potential large market potential in all three platforms. We.

Speaker Change: We are going to keep investing in all three platforms over the past several years, we made very very large investments on a spatial front, we talked about in the past how much we shifted resources onto ASEAN.

Speaker Change: Bringing up HD was also a pretty massive undertaking there is a at this stage, we don't see any reason to to.

Serge Saxonov: At this stage, we don't see any reason to let go of Chromium or anywhere near it. In fact, the investments we're making right now, we feel like they have the potential to open up a lot of new use cases and much broader use cases with much broader categories of customers. So, we are certainly managing the spend and investment across our three platforms very carefully and continuously, and we feel good about the balance between that.

Speaker Change: Two Lego chromium, Brian you were in Europe.

Speaker Change: In fact, the investments, we're making right now we feel like.

Speaker Change: Central to open up a lot of new use cases, and much broader used cases with much broader categories of customers. So.

Kyle: We are certainly managing the standard investment across our three platforms very carefully.

Kyle: And and continuously and feel good about the balance and that month.

Operator: Thank you. With that, we do conclude today's presentation. Thank you for your participation today, and you may now disconnect.

Speaker Change: Thank you with that we do conclude todays presentation. Thank you for your participation today and you may now disconnect.

Kyle: Yeah.

Speaker Change: Thank you.

Speaker Change: That.