Slide 1: Q2 2024 Earnings Presentation
Q2 2024 Earnings Presentation August 6, 2024 © 2024 Illumina, Inc. All rights reserved.
Slide 2: Presenters: Jacob Thaysen, Ankur Dhingra, Salli Schwartz
Jacob Thaysen Ankur Dhingra Salli Schwartz Chief Executive Officer Chief Financial Officer Head of Investor Relations 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: Jacob Thaysen, Chief Executive Officer
Jacob Thaysen Chief Executive Officer 4
Slide 5: Q2'24 Core Illumina Results
Q2’24 Core Illumina Results Results Ahead of Expectations ~$1.1B Revenue 22.2% Non-GAAP Operating Margin Driven by continued execution against our strategic priorities Note: See Appendix for reconciliations of these GAAP and non-GAAP financial measures. 5
Slide 6: Drivers for Q2'24 Results & Adjusted Guidance
Drivers for Q2’24 Results & Adjusted Guidance Continued NovaSeq X Plus transition Adding caution to 2024 guide with customers actively managing their capital spend 62 Q2’24 NovaSeq X Plus Reduced Instrument Outlook instrument placements Taking a more prudent view to reflect further extension of sa
Slide 7: Core Illumina Q2'24 Regional Revenue
Core Illumina Q2’24 Regional Revenue $620M $289M ~Flat YoY (5%) YoY; (5%) CC 57% 26% $1.1B Q2’24 Core Illumina Revenue $75M $108M (35%) YoY; (33%) CC 10% (8%) YoY; (7%) CC 7% Americas Europe AMEA Greater China Note: See Appendix for reconciliations of these GAAP and non-GAAP financial measures. Note
Slide 8: My Priorities as CEO
My Priorities as CEO 1 Drive Our Top Line 2 Deliver Operational Excellence 3 Resolve GRAIL as Quickly as Possible 8
Slide 9: Drive Our Top Line
Drive Our Top Line NovaSeq X Plus XLEAP-SBS on NextSeq 1k/2k 62 Q2’24 NovaSeq X Plus 469 Q2’24 total NovaSeq X Plus P1-P3 Launched in Q2’24 P4 Launched in Q1’24 instrument shipments installed base >60% Of 1k/2k installed base with upgraded software, a leading indicator for XLEAP adoption Encouraged
Slide 10: Deliver Operational Excellence
Deliver Operational Excellence Updates to our commercial organization Portfolio optimization to drive productivity improvements across our supply chain Everett Cunningham joins as Example: product rationalization Chief Commercial Officer To increase our focus on higher profitability offerings Implem
Slide 11: GRAIL Divestment Completed
Resolve GRAIL as Quickly as Possible GRAIL Divestment Completed Spin-off in June 2024 Illumina will continue to support GRAIL with our sequencing technology and suite of services 11
Slide 12: Ankur Dhingra, Chief Financial Officer
Ankur Dhingra Chief Financial Officer 12
Slide 13: Core Illumina Q2'24 Financials
Core Illumina Q2’24 Financials CORE ILLUMINA REVENUE SEQUENCING CONSUMABLES REVENUE $1.1B $737M (6%) (6%) +3% Flat YoY YoY (CC) QoQ YoY Exceeded our guidance primarily driven by: Performed well against a challenging YoY compare: Continued increase in high throughput consumables, Q2’23 was the hi
Slide 14: Q2'24 NovaSeq X Transition Update
Q2’24 NovaSeq X Transition Update Acceleration in NovaSeq X Consumables Revenue Pace of Continued Transition from NovaSeq 6000 Q2’24 Q1’24 Q2’24 +35% +Double Digit ~5 pct. points QoQ NovaSeq X QoQ NovaSeq X Avg. QoQ HT sequencing consumables revenue transition from consumables growth consumables gro
Slide 15: Q2'24 Total Sequencing Activity
Q2’24 Total Sequencing Activity Gigabase (Gb) growth on connected high- and mid-throughput instruments >40% YoY Growth ~10% QoQ Growth Growth in activity from both Research & Applied and Clinical customers was healthy Note: Reflects total sequencing Gb output on connected high- and mid-throughput in
Slide 16: Core Illumina Q2'24 Financials (cont'd.)
Core Illumina Q2’24 Financials (cont’d.) SEQUENCING INSTRUMENTS REVENUE SEQUENCING SERVICE & OTHER $116M $143M +5% (40%) +7% QoQ YoY YoY Year-over-Year Decline Driven by: Driven primarily by increase in revenue from strategic partnerships and higher instrument service contract revenue Lower NovaSe
Slide 17: Core Illumina Q2'24 Additional P&L Results
Core Illumina Q2’24 Additional P&L Results NON-GAAP NON-GAAP NON-GAAP GROSS MARGIN OPERATING EXPENSES OPERATING MARGIN1 69.4% $516M 22.2% 240 bps YoY $15M YoY 100 bps YoY Primarily driven by more favorable mix of Reflecting reductions in headcount and Due to higher-than-expected revenue, better- seq
Slide 18: Core Illumina Q2'24 Additional P&L Results (cont'd.)
Core Illumina Q2’24 Additional P&L Results (cont’d.) NON-GAAP OTHER EXPENSE NON-GAAP TAX RATE ($13M) 24.2 % Includes 11 days of interest expense for $750M delayed draw term loan put in place in June NON-GAAP NON-GAAP NON-GAAP WEIGHTED AVERAGE DILUTED NET INCOME DILUTED EPS SHARE COUNT $174M $1.09 ~1
Slide 19: Core Illumina Cash Flow & Balance Sheet Items Q2'24
Core Illumina Cash Flow & Balance Sheet Items Q2’24 CASH FLOW FROM OPERATIONS FREE CASH FLOW $243M $213M CAPITAL EXPENDITURES CASH, CASH EQUIVALENTS AND SHORT- TERM INVESTMENTS $30M ~$994M Note: See Appendix for reconciliations of these GAAP and non-GAAP financial measures. 19
Slide 20: Guidance for FY'24
Guidance for FY’24 As of 08/06/2024 CORE ILLUMINA Revenue Sequencing Instruments1 Sequencing Consumables1 Down (2%)-(3%) Mid-30s % Upper end of Down (1.5%)-(2.5%) on a CC basis decline LSD % growth Non-GAAP Operating Income Non-GAAP Tax Rate Non-GAAP EPS 20.5% - 21% ~25% $3.80-$3.95 Net of guidance
Slide 21: Progress Against our Expense Actions
Progress Against our Expense Actions Pinnacle Continuous Improvement Program Will deliver additional $200M Expense savings over next few years 21
Slide 22: Guidance for Q3'24
Guidance for Q3’24 As of 08/06/2024 CORE ILLUMINA Revenue Non-GAAP Operating Margin $1.075B-$1.085B ~20% Non-GAAP Tax Rate Non-GAAP EPS ~25% $0.80-$0.90 Includes 2H interest expense from $750M delayed draw term loan Note: EPS = earnings per diluted share. Note: See Appendix for statement regarding u
Slide 23: Jacob Thaysen, Chief Executive Officer
Jacob Thaysen Chief Executive Officer 25
Slide 24: Innovation Roadmap Update
Innovation Roadmap Update Software bioinformatics update Recent acquisitions enable the multi-omics ecosystem DRAGEN Most accurate multi-genome mapping technology Latest software version Advancements in machine learning launched in Q2’24 Ability to genotype difficult genes Single-cell solution
Slide 25: 2024 Strategy Update
2024 Strategy Update Tuesday, August 13, 2024 08:00 AM – 10:00 AM (PT) | 11:00 AM – 01:00PM (ET) Virtual Event Registration open on Investor Relations website 27
Slide 26: Slide 26
Slide 27: Q&A
Q&A Jacob Thaysen Ankur Dhingra 29
Slide 28: Our Mission: To improve human health by unlocking the power of the genome
Our Mission: To improve human health by unlocking the power of the genome
Slide 29: Appendix
Appendix © 2024 Illumina, Inc. All rights reserved.
Slide 30: 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 31: Condensed Consolidated Statements of Cash Flows
Illumina, Inc. Condensed Consolidated Statements of Cash Flows (In millions) (unaudited) TABLE 1: CONSOLIDATED STATEMENTS OF CASH FLOWS AND FREE CASH FLOWS: Three Months Ended Six Months Ended June 30, July 2, June 30, July 2, 2024 2023 2024 2023 Net cash provided by operating activities $ 80 $ 105
Slide 32: Results of Operations - Revenue by Segment
Illumina, Inc. Results of Operations - Revenue by Segment (Dollars in millions) (unaudited) Three Months Ended Six Months Ended June 30, July 2, % Change June 30, July 2, % Change 2024 2023 2024 2023 Consolidated revenue $ 1,112 $ 1,176 (5)% $ 2,188 $ 2,263 (3)% Less: Hedge gains 4 2 7 3 Consolidate
Slide 33: Results of Operations - Revenue by Region
Illumina, Inc. Results of Operations - Revenue by Region (Dollars in millions) (unaudited) Three Months Ended Six Months Ended June 30, July 2, June 30, July 2, % Change % Change 2024 2023 2024 2023 AMR revenue - Core Illumina $ 620 $ 623 (1)% $ 1,203 $ 1,228 (2)% Less: Hedge gains — — — 1 AMR reven
Slide 34: 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 June 30, July 2, June 30, July 2, 2024 2023 2024 2023 GAAP loss pe
Slide 35: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (In millions, except per share amounts) (unaudited) TABLE 3: CORE ILLUMINA RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED EARNINGS PER SHARE: Three Months Ended Six Months Ended June 30, June 30, 2024 2024 GAAP earnings per share - dilute
Slide 36: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 5: ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: Three Months Ended June 30, 2024 Core Illumina GRAIL Eliminations Consolidated GAAP gross profit (lo
Slide 37: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 5 (CONTINUED): 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
Slide 38: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 5 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: Six Months Ended June 30, 2024 Core Illumina GRAIL Eliminations Consolidated GAAP gross
Slide 39: Results of Operations - Non-GAAP (continued)
lllumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 5 (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 40: Footnotes to non-GAAP reconciliation
(d) Amounts consist primarily of legal and other expenses related to the acquisition and divestiture of GRAIL. (e) Amounts consist primarily of mark-to-market adjustments and impairments from our strategic investments. Amounts for Q2 2024 and YTD 2024 primarily relate to the impairment on our retain
Slide 41: Results of Operations - Non-GAAP (continued)
Illumina, Inc. Results of Operations - Non-GAAP (continued) (Dollars in millions) (unaudited) TABLE 6: CONSOLIDATED ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP TAX PROVISION: Three Months Ended Six Months Ended June 30, June 30, 2024 2024 GAAP tax provision $ 12 (0.6)% $ 28 (1.4)% Incremental