Illumina, Inc. · NASDAQ:ILMN

Illumina — Q1 2023 Earnings Presentation

41 slides from Illumina's earnings presentation, Apr 25, 2023

  1. Slide 1: Q1 2023 Earnings Presentation

    Q1 2023 Earnings Presentation April 25, 2023 © 2023 Illumina, Inc. All rights reserved.

  2. Slide 2: Presenters

    Francis deSouza Joydeep Goswami Salli Schwartz President & Chief Financial Officer, Head of Chief Executive Officer Chief Strategy & Investor Relations Corporate Development Officer 2

  3. 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:

  4. Slide 4: Francis deSouza

    Francis deSouza President & Chief Executive Officer 4

  5. Slide 5: Q1 2023 Highlights

    5 Q1 2023 Highlights CONSOLIDATED RESULTS KEY PRODUCT MILESTONES $1.09 Billion REVENUE NovaSeq™ X FIRST SHIPMENTS $0.08 NON-GAAP EPS Illumina Complete Long Reads (ICLR) & Illumina Connected Insights Both ahead of the guidance ranges PRODUCT LAUNCHES provided at the beginning of 2023 Note: See Append

  6. Slide 6: Continued Strong Interest for NovaSeq X

    6 Continued Strong Interest for NovaSeq X ORDERS >30 Countries with >200 NovaSeq X orders Orders >40% Orders by clinical customers ~15% New to high- throughput customers SHIPMENTS 67 >330 2023 Expected Shipments Shipments >7 Terabases of output >95% Bases above Q30, well ahead of published specs

  7. Slide 7: NovaSeq X is Unlocking Demand Elasticity

    7 NovaSeq X is Unlocking Demand Elasticity DEMAND ELASTICITY CUSTOMER EXAMPLES More Customers are planning to leverage NovaSeq X to: Samples  Scale data-intensive programs, specifically in multi-omics, spatial and single cell, to deliver ‘atlas-scale’ projects  Move from targeted panels to exomes

  8. Slide 8: Sequencing Instrument Performance Q1 2023

    8 Sequencing Instrument Performance Q1 2023 High-Throughput Mid-Throughput Low-Throughput NovaSeq 6000 NextSeq™ 1k/2k ~30% shipments to new-to-Illumina customers 6% shipment increase YoY >80% shipments to clinical customers >20% shipments to Enabling adoption of sequencing ~25% shipments for oncolog

  9. Slide 9: Q1 2023 Oncology Testing Updates

    9 Q1 2023 Oncology Testing Updates Q1’23 Milestone: Clinical sequencing consumables revenue represented 50% of total sequencing consumables for the first time Oncology Testing Sequencing Consumables Shipments TruSight™ Oncology (TSO) 500 >$25M Revenue 1 26% YoY Revenue Growth (3%) >540 Global accoun

  10. Slide 10: Continued Strong Demand for GRAIL's Galleri

    10 Continued Strong Demand for GRAIL’s Galleri® Multi-Cancer Early Detection Test PARTNERSHIPS $20M 100% Q1’23 Revenue Revenue growth YoY Expanded access to eligible life insurance customers >85,000 ~20,000 Galleri test orders Galleri tests delivered received to date in Q1’23 alone Expanded partners

  11. Slide 11: Q1 2023 Reproductive Health & Genetic Disease Testing

    11 Q1 2023 Reproductive Health & Genetic Disease Testing REPRODUCTIVE HEALTH GENETIC DISEASE TESTING Sequencing Consumables Sequencing Consumables (4%) +14% +7% +6% YoY growth QoQ growth YoY growth QoQ growth Reimbursement Progress Coverage Progress One of the Updated policy to include largest U.S.

  12. Slide 12: Looking Ahead

    12 Looking Ahead UPCOMING PRODUCT LAUNCHES OUR FOCUS ICLR Enrichment Assay Delivering success for our shareholders through:  Investing in breakthrough innovations for future growth Q3 2023  Disciplined expense management Our Targets:  Non-GAAP operating margin of 25% in 2024 XLEAP-SBS™ on NextSeq

  13. Slide 13: Joydeep Goswami

    Joydeep Goswami Chief Financial Officer, Chief Strategy & Corporate Development Officer 13

  14. Slide 14: Consolidated Q1 2023 Financials

    14 Consolidated Q1 2023 Financials CONSOLIDATED REVENUE NON-GAAP METRICS GRAIL NET INCOME OPERATING LOSS $1.09B $13M DILUTED EPS ($164M) TAX RATE2 Exceeding the high end of our guidance range $0.08 27.3% (11%) +1% YoY Revenue Decline NON-GAAP WEIGHTED AVERAGE DILUTED SHARE COUNT QoQ Revenue (9%) YoY

  15. Slide 15: Core Illumina Q1 2023 Financials

    17 Core Illumina Q1 2023 Financials CORE ILLUMINA REVENUE CORE SEQUENCING REVENUE 1% (12%) $692M QoQ Revenue Increase YoY Revenue Decline $1.08B Consumables (12%) (10%) YoY Revenue Decline YoY Revenue Decline (Constant Currency)1 $154M Instruments (27%) YoY Revenue Decline COVID-19 SURVEILLANCE ~$11

  16. Slide 16: Sequencing Activity

    16 Sequencing Activity Total Sequencing Activity Research & Applied Markets 6% QoQ Growth 7% (4%) QoQ Growth YoY Decline 3% Clinical Markets YoY Growth 7% 15% On connected high- and mid- QoQ Growth YoY Growth throughput instruments

  17. Slide 17: Core Illumina Q1 2023 Regional Revenue

    18 Core Illumina Q1 2023 Regional Revenue CORE ILLUMINA $119M (27%) YoY;(23%) CC1 $91M (28%) YoY; (23%) CC1 $605M +5% QoQ (6%) YoY $261M (9%) YoY; (4%) CC1 Americas Europe Greater China AMEA Note: CC = Constant Currency. Note: We have implemented a new global commercial structure in Q1 2023 to impro

  18. Slide 18: Core Illumina Q1 2023 Additional P&L Results

    19 Core Illumina Q1 2023 Additional P&L Results CORE ILLUMINA NON-GAAP GROSS MARGIN NON-GAAP OPERATING EXPENSES 65.2% $514M Down 500 bps $9 Million YoY due to less fixed cost leverage YoY primarily due to the full-year impact on lower manufacturing volumes of our 2022 headcount growth and lower inst

  19. Slide 19: GRAIL Q1 2023 Financial Results

    20 GRAIL Q1 2023 Financial Results  Grew 100% YoY Revenue $20M  Due to accelerating adoption of Galleri® Non-GAAP  Driven primarily by investments in clinical Operating Expenses $173M trials and scaling GRAIL’s commercial organization Note: See Appendix for reconciliations of hese GAAP and non-GA

  20. Slide 20: Cash Flow and Balance Sheet Items Q1 2023

    21 Cash Flow and Balance Sheet Items Q1 2023 CASH FLOW FROM OPERATIONS CASH, CASH EQUIVALENTS AND SHORT- TERM INVESTMENTS $10M Free Cash Flow of ($42M) ~$1.5B CAPITAL EXPENDITURES $52M $500M Used to repay the outstanding principal of 2023 term notes that matured in March Note: See Appendix for recon

  21. Slide 21: Guidance for Full Year 2023

    22 Guidance for Full Year 2023 Consolidated Revenue Growth1 Non-GAAP Operating Margin Non-GAAP EPS2 ~7-10% ~8% $1.25-$1.50 Non-GAAP Diluted Shares COVID-19 Surveillance Revenue Non-GAAP Tax Rate Outstanding ~$30M ~36% ~160M GRAIL CORE ILLUMINA Revenue Revenue Growth3 Sequencing Growth3 Non-GAAP Oper

  22. Slide 22: FY'23 Core Illumina Expected Revenue Ramp

    23 FY’23 Core Illumina Expected Revenue Ramp We expect Core Illumina revenue ramp to ramp sequentially throughout 2023, with linearity trends similar to 2017 when we launched NovaSeq 6000 2017 REVENUE RAMP 2017 Revenue (%) 54% Q3’17 ~26% of total 2017 revenue 46% H1'17 H2'17

  23. Slide 23: Guidance for Second Quarter 2023 & Commitment to Margin Expansion

    25 Guidance for Second Quarter 2023 & Commitment to Margin Expansion Consolidated Revenue Non-GAAP Operating Margin C O R E IL L U M IN A $1.15B - $1.17B ~1% Operating Margin Sequential Increase (at midpoint) 670 bps Non-GAAP Earnings Per Share ~$0.01 ~17% CORE NON-GAAP OPERATING MARGIN TARGETS 2024

  24. Slide 24: Slide 24

  25. Slide 25: Illumina's mission: Improve human health by unlocking the power of the genome

    27 Illumina’s mission: Improve human health by unlocking the power of the genome

  26. Slide 26: Appendix

    Appendix © 2023 Illumina, Inc. All rights reserved.

  27. Slide 27: 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

  28. Slide 28: Statement regarding use of non-GAAP financial measures (continued)

    clearance for our products from government agencies; (xvii) our ability to successfully partner with other companies and organizations to develop new products, expand markets, and grow our business; (xviii) uncertainty, or adverse economic and business conditions, including as a result of slowing or

  29. Slide 29: Condensed Consolidated Statements of Cash Flows

    Illumina, Inc. Condensed Consolidated Statements of Cash Flows (In millions) (unaudited) Three Months Ended April 2, April 3, 2023 2022 Net cash provided by operating activities $ 10 $ 172 Net cash used in investing activities (56) (74) Net cash (used in) provided by financing activities (473) 21 Ef

  30. Slide 30: Results of Operations - Revenue by Segment

    Illumina, Inc. Results of Operations - Revenue by Segment (Dollars in millions) (unaudited) Three Months Ended April 2, 2023 April 3, 2022 % Change Consolidated revenue $ 1,087 $ 1,223 (11) % Less: Hedge gains 2 5 Consolidated revenue, excluding hedge effect 1,085 1,218 Less: Exchange rate effect (2

  31. Slide 31: Results of Operations - Revenue by Region

    Illumina, Inc. Results of Operations - Revenue by Region (Dollars in millions) (unaudited) Three Months Ended April 2, April 3, % Change 2023 2022 AMR revenue - Core Illumina $ 605 $ 646 (6)% Less: Hedge gains — — AMR revenue - Core Illumina, excluding hedge effect 605 646 Less: Exchange rate effect

  32. Slide 32: 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 EARNINGS PER SHARE: Three Months Ended April 2, April 3, 2023 2022 GAAP earnings per share - diluted $ 0.02 $ 0.55 Cost of revenu

  33. Slide 33: 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 April 2, 2023 Core Illumina GRAIL Eliminations Consolidated GAAP gross profit (lo

  34. Slide 34: 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 April 3, 2022 Core Illumina GRAIL Eliminations Consolidated GAAP gros

  35. Slide 35: Footnotes to non-GAAP reconciliation

    (g) Amounts consist primarily of employee severance costs related to restructuring activities. (h) Amount consists of a loss related to a patent litigation settlement.

  36. Slide 36: Results of Operations - Non-GAAP (continued)

    Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 4: CONSOLIDATED ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP TAX (BENEFIT) PROVISION: Three Months Ended April 2, 2023 GAAP tax benefit $ (81) 103.9 % Incremental non-GAAP tax expense (b) 50 Inco

  37. Slide 37: 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

  38. Slide 38: Footnotes to non-GAAP guidance reconciliation

    (g) Amounts consist primarily of employee severance costs related to restructuring activities incurred in Q1 2023. (h) Amount represents the impact of GRAIL pre-acquisition net operating losses on GILTI and the utilization of U.S. foreign tax credits. (i) Incremental non-GAAP tax expense reflects th

  39. Slide 39: 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

  40. Slide 40: 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 $ (813) Amortization of acquired intangible assets 138 Acquisition-related expenses (b) 5 GRAIL non-

  41. Slide 41: 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 118 % 57 % Non-GAAP tax adjustments (a) (82) (43) Consolidated non-GAAP ta

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