Illumina, Inc. · NASDAQ:ILMN
Illumina — Q2 2023 Earnings Presentation
42 slides from Illumina's earnings presentation, Aug 9, 2023
Slide 1: Q2 2023 Earnings Presentation
Q2 2023 Earnings Presentation August 9, 2023 © 2023 Illumina, Inc. All rights reserved.
Slide 2: Presenters
Charles Dadswell Joydeep Goswami Salli Schwartz Interim Chief Executive Chief Financial Officer, Head of Officer & General Counsel Chief Strategy & Investor Relations Corporate Development Officer 2
Slide 3: Cautionary Notes on Forward Looking Statements
Cautionary Notes on Forward Looking Statements This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors to which our business is subject that could cause actual results to differ materially from those in any forward-looking statements are:
Slide 4: Charles Dadswell
Charles Dadswell Interim Chief Executive Officer, General Counsel 4
Slide 5: Q2 2023 Highlights
5 Q2 2023 Highlights CONSOLIDATED RESULTS NOVASEQ™ X MILESTONES $1.18 Billion 109 REVENUE Q2 SHIPMENTS $0.32 >390 NON-GAAP EPS EXPECTED 2023 SHIPMENTS Note: See Appendix for reconciliations of these GAAP and non-GAAP financial measures.
Slide 6: Adjusting FY'23 Revenue Expectations
6 Adjusting FY’23 Revenue Expectations FACTORS FOR GUIDANCE ADJUSTMENT NOVASEQ X TRANSITION NOVASEQ X ROLLOUT The most sophisticated platform we have launched with the most Larger-than-expected temporary decline in high comprehensive end-to-end software 1 throughput consumables as we transition mo
Slide 7: Continued Expense Base Reductions
7 Continued Expense Base Reductions Q1’23 EARNINGS CALL Q2’23 PROGRESS LOOKING AHEAD Reduced global headcount 2023 ANNOUNCED Helps mitigate impact of lower $100M+ Downsizing global real estate footprint revenue on operating margin RUN-RATE EXPENSE Optimizing third-party vendor spend BEYOND 202
Slide 8: Select Sequencing Instrument Highlights Q2 2023
8 Select Sequencing Instrument Highlights Q2 2023 NovaSeq X NextSeq™ 1k/2k >260 160 Orders since launch Shipments 109 +8% Shipments Shipments YoY (above 80 expected in Q1’23) >390 >20% Expected 2023 shipments Shipments to new-to-Illumina (above 330 in Q1’23) customers We continue to see lengthened s
Slide 9: Q2 2023 Core Illumina Clinical Markets Performance
9 Q2 2023 Core Illumina Clinical Markets Performance Clinical represented ~53% of total sequencing consumables ONCOLOGY REIMBURSEMENT PROGRESS TRUSIGHT™ ONCOLOGY (TSO) 500 United States ON TRACK >$100M Anthem Added coverage for CGP for patients with BCBS of Michigan advanced cancers EXPECTED 2023 RE
Slide 10: Continued Solid Progress for GRAIL's Galleri Test
10 Continued Solid Progress for GRAIL’s Galleri® Multi-Cancer Early Detection Test Q2’23 MILESTONES NHS-GALLERI STUDY EVIDENCE GENERATION In Q2, GRAIL completed second- 100,000th year study visits Commercial Galleri tests SYMPLIFY study results demonstrate feasibility of 130,000 using an MCED test t
Slide 11: Q2 2023 Core Illumina Markets Performance
11 Q2 2023 Core Illumina Markets Performance REPRODUCTIVE HEALTH RESEARCH & APPLIED United States Alliance for Genomic Discovery Louisiana Michigan Now covering NIPT for 5 North Carolina all pregnancies Rhode Island Industry-led collaboration to Tennessee FOUNDING MEMBERS accelerate therapeutics dev
Slide 12: Recent Launches & Looking Ahead
12 Recent Launches & Looking Ahead RECENTLY ANNOUNCED INNOVATIONS OUR FOCUS PrimateAI-3D Execution, innovation and supporting our customers as they ramp 1 their NovaSeq X instruments AI algorithm predicts disease-causing Continue progress on margin improvement while prioritizing genetic mutations 2
Slide 13: Joydeep Goswami
Joydeep Goswami Chief Financial Officer, Chief Strategy & Corporate Development Officer 13
Slide 14: Consolidated Q2 2023 Financials
14 Consolidated Q2 2023 Financials REVENUE NON-GAAP METRICS GRAIL NET INCOME $1.18B OPERATING LOSS $50M ($164M) DILUTED EPS TAX RATE2 Exceeding the high end of our guidance range $0.32 39.3% +1% +8% YoY Revenue Growth NON-GAAP WEIGHTED AVERAGE DILUTED SHARE COUNT QoQ Revenue +3% YoY Revenue Growth (
Slide 15: Core Illumina Q2 2023 Financials
15 Core Illumina Q2 2023 Financials REVENUE CORE SEQUENCING REVENUE Consumables Instruments Service & Other ~Flat $739M $193M $134M $1.16B YoY Revenue Growth +2% (1%) +2% +7% YoY Revenue Growth (CC)1 YoY Decline YoY Increase YoY Increase COVID-19 SURVEILLANCE SEQUENCING ACTIVITY2 Research Total Clin
Slide 16: Core Illumina Q2 2023 Regional Revenue
16 Core Illumina Q2 2023 Regional Revenue $115M (3%) YoY; 1% CC1 $118M (10%) YoY; (6%) CC1 $623M (2%) YoY $303M 11% YoY; 14% CC1 Americas Europe AMEA Greater China Note: See Appendix for reconciliations of these GAAP and non-GAAP financial measures. Note: CC = Constant Currency. Note: AMEA denotes A
Slide 17: Core Illumina Q2 2023 Additional P&L Results
17 Core Illumina Q2 2023 Additional P&L Results NON-GAAP GROSS MARGIN NON-GAAP OPERATING EXPENSES 67.0% $531M Down 280 bps YoY $12 Million YoY Driven by lower instrument margins due to the Primarily due to the full-year impact of our 2022 NovaSeq X launch, as well as less fixed cost headcount growth
Slide 18: GRAIL Q2 2023 Financial Results
18 GRAIL Q2 2023 Financial Results REVENUE NON-GAAP OPERATING EXPENSES $22M $174M Up 83% YoY $18 Million YoY Due to accelerating adoption of Driven primarily by continued Galleri® investments to scale GRAIL’s commercial organization Note: See Appendix for reconciliations of these GAAP and non-GAAP f
Slide 19: Cash Flow and Balance Sheet Items Q2 2023
19 Cash Flow and Balance Sheet Items Q2 2023 CASH FLOW FROM OPERATIONS CASH, CASH EQUIVALENTS AND SHORT- TERM INVESTMENTS $105M Free Cash Flow of $58M ~$1.6B CAPITAL EXPENDITURES $750M Convertible debt that matures in August 2023 $47M €432M European Commission imposed fine due to completion of the G
Slide 20: Guidance for Full Year 2023
20 Guidance for Full Year 2023 CONSOLIDATED Consolidated Revenue Growth1 Non-GAAP Operating Margin Non-GAAP EPS2 ~5% $0.75-$0.90 ~1% Non-GAAP Tax Rate ~41% GRAIL CORE ILLUMINA Revenue Revenue Growth3 Sequencing Growth3 Non-GAAP Operating Margin $90M-$110M ~Flat% ~Flat% ~20% Non-GAAP Operating Loss:
Slide 21: Guidance for Third Quarter 2023
21 Guidance for Third Quarter 2023 CONSOLIDATED Consolidated Revenue1 Non-GAAP Operating Margin ~2% ~4% Sequential Decrease Non-GAAP Earnings Per Share ~320 bps $0.10 - $0.15 CORE ILLUMINA Non-GAAP Operating Margin ~19% Note: See Appendix for reconciliations of these GAAP and non-GAAP financial meas
Slide 22: Slide 22
Slide 23: Illumina's mission: Improve human health by unlocking the power of the genome
23 Illumina’s mission: Improve human health by unlocking the power of the genome
Slide 24: Appendix
Appendix © 2023 Illumina, Inc. All rights reserved.
Slide 25: Statement regarding use of non-GAAP financial measures
Statement regarding use of non-GAAP financial measures The company reports non-GAAP results for diluted earnings per share, net income, gross margin, operating expenses, including research and development expense, selling general and administrative expense, and from time to time, as applicable, lega
Slide 26: Condensed Consolidated Statements of Cash Flows
Illumina, Inc. Condensed Consolidated Statements of Cash Flows (In millions) (unaudited) Three Months Ended Six Months Ended July 2, July 3, July 2, July 3, 2023 2022 2023 2022 Net cash provided by operating activities $ 105 $ 125 $ 115 $ 297 Net cash used in investing activities (37) (165) (93) (23
Slide 27: Results of Operations - Revenue by Segment
Illumina, Inc. Results of Operations - Revenue by Segment (Dollars in millions) (unaudited) Three Months Ended Six Months Ended July 2, July 3, % Change July 2, July 3, % Change 2023 2022 2023 2022 Consolidated revenue $ 1,176 $ 1,162 1% $ 2,263 $ 2,386 (5)% Less: Hedge gains 2 10 3 16 Consolidated
Slide 28: Results of Operations - Revenue by Region
Illumina, Inc. Results of Operations - Revenue by Region (Dollars in millions) (unaudited) Three Months Ended Six Months Ended July 2, July 3, % Change July 2, July 3, % Change 2023 2022 2023 2022 AMR revenue - Core Illumina $ 623 $ 633 (2)% $ 1,228 $ 1,278 (4)% Less: Hedge gains — — 1 — AMR revenue
Slide 29: Results of Operations - Non-GAAP
Illumina, Inc. Results of Operations - Non-GAAP (In millions, except per share amounts) (unaudited) TABLE 1: CONSOLIDATED RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED (LOSS) EARNINGS PER SHARE: Three Months Ended Six Months Ended July 2, July 3, July 2, July 3, 2023 2022 2023 2022 GAAP loss per
Slide 30: Non-GAAP footnotes
of management’s compensation. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing our past and future operating performance. (b) Refer to the Itemized Reconciliations between GAAP and Non-GAAP Results of Operations for the components of
Slide 31: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 3: ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: Three Months Ended July 2, 2023 Core Illumina GRAIL Eliminations Consolidated GAAP gross profit (los
Slide 32: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 3 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: Three Months Ended July 3, 2022 Core Illumina GRAIL Eliminations Consolidated GAAP gross
Slide 33: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 3 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: Six Months Ended July 2, 2023 Core Illumina GRAIL Eliminations Consolidated GAAP gross p
Slide 34: Rounding note on table amounts
All amounts in tables are rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided. Percentages of revenue are calculated based on the revenue of the respective segment.
Slide 35: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 3 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: Six Months Ended July 3, 2022 Core Illumina GRAIL Eliminations Consolidated GAAP gross p
Slide 36: Non-GAAP footnotes (e)-(h)
(e) Amounts consist primarily of mark-to-market adjustments and impairments from our strategic investments. (f) Amounts consist of fair value adjustments related to our Helix contingent value right. (g) Amounts consist primarily of employee severance costs and lease and other asset impairments relat
Slide 37: Reconciliation of GAAP and Non-GAAP Tax Provision
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 4: CONSOLIDATED ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP TAX PROVISION (BENEFIT): Three Months Ended Six Months Ended July 2, July 2, 2023 2023 GAAP tax provision $ 145 (163.8)% $ 64 (38.5)%
Slide 38: Reconciliation of Consolidated Non-GAAP Financial Guidance
Illumina, Inc. Reconciliation of Consolidated Non-GAAP Financial Guidance (unaudited) Our future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect our financial
Slide 39: Guidance footnotes (h)-(k)
(h) Amount consists primarily of fair value adjustments recognized through Q2 2023 for our contingent consideration liability related to GRAIL. (i) Amount represents the impact of GRAIL pre-acquisition net operating losses on GILTI and the utilization of U.S. foreign tax credits. (j) Incremental non
Slide 40: Reconciliation of Non-GAAP Financial Guidance
Illumina, Inc. Reconciliation of Non-GAAP Financial Guidance (unaudited) Our future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect our financial results are
Slide 41: Reconciliation of Non-GAAP Financial Guidance (continued)
Illumina, Inc. Reconciliation of Non-GAAP Financial Guidance (continued) (unaudited) TABLE 7: RECONCILIATION BETWEEN GRAIL GAAP AND NON-GAAP OPERATING LOSS GUIDANCE: FY 2023 GRAIL GAAP operating loss $ (819) Amortization of acquired intangible assets 138 Acquisition-related expenses (b) 9 Restructur
Slide 42: Reconciliation of Non-GAAP Financial Guidance (continued)
Illumina, Inc. Reconciliation of Non-GAAP Financial Guidance (continued) (unaudited) TABLE 8: RECONCILIATION BETWEEN GAAP AND NON-GAAP TAX RATE GUIDANCE: Fiscal Year 2023 Current (b) If repealed (c) Consolidated GAAP tax rate (123)% (44)% Non-GAAP tax adjustments (a) 164 58 Consolidated non-GAAP tax