And therefore, maybe actually managing that cannibalization could help sort of ease that transition into it. Or is that just too early at this stage to really go forward with those efforts?
Serge Saxonov: Yes. 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 are getting results they could have gotten with Chromium using the spatial technologies and approaches. You can’t. They’re complementary. They extend, they complement, they — and they supplement. So 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 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 are they looking — what are the questions they’re asking, what are their research goals and then making sure they understand the capability of the products to give them the most efficient way to get to those goals.
And so I think I would frame it as less about 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.
Operator: We’ll take our next question from Subbu Nambi with Guggenheim Securities.
Subbu Nambi: Regarding performance in China, revenue was down 16% in the quarter. Could you provide any initial color on the status of the strategy here given that inventory is piling up, created some obstacles in last year, how did 1Q fare? Are there any material updates regarding your priority to continue building up backup sales force in China?
Justin McAnear: Subbu, thanks for the question. As we talked about on our previous calls, over the last year, we’ve worked actively to bring down inventory levels at the distributors and service providers. And just for the context here, we sell to distributors who sell primarily to service providers, who actually perform the service for the end customer. And so then when there’s any kind of fluctuation in the demand at the end, you can have inventory stack up at either one of those levels of the chain. And so we saw that throughout last year. And each quarter, we work to bring those inventory levels down. We 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, Q3 and Q4 played out roughly like we expected them to. I would say the same with Q1. And at least right now at this level of 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.
Operator: We’ll take our next question from Michael Ryskin with Bank of America.
Michael Ryskin: I hate to belabor the Chromium consumers point. But 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 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 2 years-plus. There’s been a number of different issues, commercial missteps. Justin, you were just talking about China headwinds. Now you’ve got the GEM-X transition, the broader macro, you’re having some of the shift of the spend into spatial. I won’t go cannibalization but probably you will. Given that performance over the last 2 years, I mean, in your comments on what feels like a revised Chromium consumables outlook for this year, it sounds like you’re not expecting to hit [indiscernible] you were talking about before.
Is there’s some deeper issue at play here, where it’s not just any one of these, whether it is competition and someone brought up Nanostring but there are a number of smaller vendors coming into the single-cell market that are making inroads in the market. Whether it is just budget constraints from customers, whether it is price elasticity? Just — I mean, is there a way we can revisit sort of the single-cell opportunity in the near term and maybe take a look at from that perspective?
Serge Saxonov: Yes, Mike. Yes, let me kind of take that. So I mean a fair point. There has been, I mean, a number of legitimate reasons why Chromium has been particularly buffeted over the past couple of years. The fact that our business in China went down a lot, all this current period. 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, for sure. The — but ultimately, the question of the underlying potential of Chromium, there is still — it’s still there for the same reasons we’ve always articulated. Like I said earlier, most first principles, 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, the main obstacles to that are 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 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. The question of competition is, yes, certainly, it’s a relevant one. There’s always been stock competition in single cell. Sometimes more, sometimes less. Over the last year — a couple of years, there has been a few more players that have come into the space.
We’ve talked about this before. There’s — compared to a year ago, there’s 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 them which does create — introduce some friction to sales process. It does put pressure on prices. But 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. So it’s still largely the same story. And we — the reason we’ve been successful up to now is because of the product innovation and the 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. And we believe the much, much larger opportunities to drive the overall growth of the market relative to the effects of any particular type of competition.
Operator: We’ll take our next question from Tejas Savant with Morgan Stanley.
Tejas Savant: Serge, I have one on single cell and then one on Visium HD. So starting with single cell, 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 want to get a sense of how open you are to deeper and more accelerated price cuts on Chromium versus the 10% set you got with the GEM-X launch. And I understand that, that could mean incremental downside to the near-term guide and perhaps it then puts your commercial folks on more even footing versus some of the incumbents or the new entrants you were talking about and helps to reignite customer interest to pull the trigger on larger projects. And then my unrelated to the second part of the question is on Visium HD.
Really good to see the strong start there. 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 4 [ph] 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?
Serge Saxonov: Tejas, thanks for the questions. So let me talk to the first one. So you’re right, so with GEM-X, we showed a 10% drop in per sample price. Now I do have to say that’s a substantially larger drop in the per sale price because you’ve got a lot more throughput with GEM-X 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. We talked about — the fact, ultimately, we want to reach the price point of $100 a sample. We’re excited by that. We will drive the technology and products in that direction. We just want to be careful in how we do that and kind of stepping into that kind of commensurate with our other efforts in terms of driving demand and in terms of driving sample volume.
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 outcome version in upcoming years. Maybe on the second question, I can start. So certainly, there’s been a lot of pent-up interest in Visium HD. And we do anticipate there are a lot of customers that were — that came into — sort of into this quarter with pent-up demand. And we kind of have to see. It’s early to make a determination around how much of demand we’re seeing right now is sort of the initial bolus versus what the sustained trajectory looks like. There’s — again, 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.
Operator: We’ll take our next question from Luke Sergott with Barclays.
Luke Sergott: So can you guys help us give a sense of how many Xenium you placed? And then any type of directional commentary on — I know you don’t typically break it out but the contribution of Visium versus Xenium in that revenue base on spatial and how that trended? And then really just kind of figuring out the momentum within those 2 businesses to offset the single-cell decline for you guys to be able to hit that for your guide because the back half step-up is now outsized of what you’ve done in the past.
Justin McAnear: Yes. This is Justin. I’ll take that. In looking at Xenium instruments, on our last call, we talked about a quarterly range of roughly $50 to $75 per quarter. For Q1, it was about $50. 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 CapEx budget, elongated purchase cycles, I would expect that it would be closer to $50 again. When we’re looking at — and that’s for Q2. And then when we’re looking at Visium versus Xenium overall, looking back at Q1, roughly half and half between each of those on the spatial side. When looking on the consumables side, when you’re looking from Q4 into Q1, most of the growth that we saw sequentially from Q4 into Q1 was driven by Visium HD.
And so there is — there has been a lot of excitement around Visium HD. 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. And then there’s the potential for the Xenium consumables to ramp up throughout the year. 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 a couple of quarters to ramp up as well. 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 and our outlook for the rest of the year.
Operator: We’ll take our next question — or I do apologize, we’ll take our last question from Kyle Mikson with Canaccord Genuity.
Kyle Mikson: A quick follow-up on the single-cell questions, I think, for Serge. You messed a lot in that business this year, GEM-X upstream fixation, other things. That includes additional resources this year that replaced those kind of taken out spatial last year. I wanted to ask what the company’s ROI is a single cell today given that the decelerating kind of decreasing even negative growth in some cases? And does that kind of make sense to keep investing at this pace if the return is becoming less attractive and kind of make the argument that maybe like shift those that focus to spatial possibly, I guess, just in line with some of the cannibalization questions earlier?
Serge Saxonov: Thanks, Kyle. So look, we see — like I said earlier, potential — large market potential in all 3 platforms. We are going to keep investing in all 3 platforms. Over the past several years, we made very, very large investments on the spatial front. We talked about in the past how much we shifted resources on to Xenium. Bringing up HD was also a pretty massive undertaking. There is — at this stage, we don’t see any reason to let go of Chromium. We’re anywhere near it. In fact, the investments we’re making right now, we feel like we have 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 3 platforms very carefully and continuously and feel good about the balance and the amount.
Operator: Thank you. With that we do conclude today’s presentation. Thank you for your participation today and you may now disconnect.
