Illumina, Inc. · NASDAQ:ILMN

Illumina — Q3 2023 Earnings Presentation

42 slides from Illumina's earnings presentation, Nov 9, 2023

1. Slide 1: Q3 2023 Earnings Presentation

   Q3 2023 Earnings Presentation November 9, 2023 © 2023 Illumina, Inc. All rights reserved.

2. Slide 2: Presenters: Jacob Thaysen, Joydeep Goswami, Salli Schwartz

   Jacob Thaysen Joydeep Goswami Salli Schwartz Chief Executive Officer Chief Financial Officer, Head of 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: Jacob Thaysen

   Jacob Thaysen Chief Executive Officer 4

5. Slide 5: Jacob Thaysen, Ph.D., Chief Executive Officer

   Jacob Thaysen, Ph.D. Chief Executive Officer Present 2018-2023 2013-2018 2007-2013 Chief Executive Officer, SVP and President, President, Diagnostics Corporate Vice President Illumina Life Sciences & Applied & Genomics Group, of R&D, Markets Group, Agilent Dako Agilent 5

6. Slide 6: Early Impressions as CEO

   Early Impressions as CEO Highly Capable Team Driven to Move 1 Genomics Forward Massive Opportunity; Illumina Will Remain 2 the Key Player INITIAL OBSERVATIONS Infrastructure Built Over 25 Years; Our 3 Compelling Offerings Set the Standard Commitment to Innovation Will Drive 4 Genomics and Multiomics

7. Slide 7: Q3 2023 Financial Results

   Q3 2023 Financial Results Consolidated Revenue Non-GAAP EPS $1.12 Billion $0.33 REVENUE NON-GAAP EPS Flat +1% ~Flat YoY YoY Increase (CC)1 YoY The macroeconomic environment remains challenging for our industry, with customers Tight management of our operating expenses increasingly cautious and const

8. Slide 8: Key Areas of Focus

   Key Areas of Focus 1 Supporting our Customers and Our Own Operational Execution Undergoing a Comprehensive Review of the Business 2 ▪ We will re-examine our: ‒ Strategic initiatives ‒ Targets for long-term revenue growth and operating margins ▪ We will lay out our new targets later in 2024 Gaining C

9. Slide 9: Joydeep Goswami

   Joydeep Goswami Chief Financial Officer, Chief Strategy & Corporate Development Officer 9

10. Slide 10: Consolidated Q3 2023 Financials

    Consolidated Q3 2023 Financials REVENUE NON-GAAP METRICS NET INCOME DILUTED EPS $1.12B $52M $0.33 Flat YoY Growth GRAIL +1% OPERATING LOSS YoY Growth (CC)1 (5%) ($155M) QoQ Revenue Note: CC = Constant Currency. Note: See Appendix for reconciliations of these GAAP and non-GAAP financial measures. 1 N

11. Slide 11: Consolidated Q3 2023 Financials (Cont'd.)

    Consolidated Q3 2023 Financials (Cont’d.) GAAP METRICS NON-GAAP TAX RATE1 NET LOSS 39.7% ($754M) Decreased from 43.2% in Q3 2022 DILUTED EPS ($4.77) NON-GAAP WEIGHTED AVERAGE DILUTED SHARES Include goodwill and intangible impairments of $821M related to GRAIL ~158 Million Note: CC = Constant Currenc

12. Slide 12: Core Illumina Q3 2023 Financials

    Core Illumina Q3 2023 Financials REVENUE CONSUMABLES REVENUE Consumables By Customer Type $1.11B Flat YoY Growth Flat YoY Growth (CC)1 $695M Research Clinical Includes anticipated YoY reductions from: (12%) +10% 3.5 Percentage Pts 3.5 Percentage Pts (4%) YoY Decline YoY Increase COVID surveillance a

13. Slide 13: Core Illumina Q3 2023 Financials (Cont'd.)

    Core Illumina Q3 2023 Financials (Cont’d.) Other Core Illumina Revenue NovaSeq™X Q3 Highlights INSTRUMENTS >310 Orders since launch $179M +10% Revenue YoY Increase 97 Q3’23 Shipments SERVICE & OTHER 273 $142M +15% Installed Base Revenue YoY Increase 13

14. Slide 14: Core Illumina Q3 2023 Regional Revenue

    Core Illumina Q3 2023 Regional Revenue $650M $260M 10% YoY Flat YoY; +1% CC1 $98M (22%) YoY; (19%) CC1 $98M (26%) YoY; (25%) CC1 Americas Europe AMEA Greater China Note: CC = Constant Currency. Note: AMEA denotes Asia Pacific, Middle East and Africa. 1 Net of the effects of hedging. 14

15. Slide 15: Core Illumina Q3 2023 Additional P&L Results

    Core Illumina Q3 2023 Additional P&L Results NON-GAAP GROSS MARGIN NON-GAAP OPERATING EXPENSES 66.0% $481M Down 290 bps YoY $33 Million YoY Primarily driven by product mix, less fixed cost Lower than expected, primarily due to continued leverage on lower manufacturing volumes, lower expense reductio

16. Slide 16: GRAIL Q3 2023 Financial Results

    GRAIL Q3 2023 Financial Results REVENUE NON-GAAP OPERATING EXPENSES $21M $161M Up 110% YoY $12 Million YoY Due to Driven primarily by efforts to scale GRAIL’s adoption of Galleri® commercial and R&D organizations Note: See Appendix for reconciliations of these GAAP and non-GAAP financial measures. 1

17. Slide 17: Cash Flow and Balance Sheet Items Q3 2023

    Cash Flow and Balance Sheet Items Q3 2023 CASH FLOW FROM OPERATIONS CASH, CASH EQUIVALENTS AND SHORT- TERM INVESTMENTS $139M $933M CAPITAL EXPENDITURES $45M $750M Cash used in Q3 to repay convertible notes that matured in August 2023 Free Cash Flow of $94M Note: See Appendix for reconciliations of t

18. Slide 18: Guidance for Full Year 2023

    Guidance for Full Year 2023 CONSOLIDATED Consolidated Revenue Decline Non-GAAP Operating Margin Weighted Avg Shares O/S 4% – 4.5% ~159 million (2%) – (3%) Non-GAAP Tax Rate Non-GAAP EPS1 ~39% $0.60 – $0.70 GRAIL CORE ILLUMINA Revenue at Low End of Range Revenue Decline2 Sequencing Decline2 Non-GAAP

19. Slide 19: Jacob Thaysen

    Jacob Thaysen Chief Executive Officer 19

20. Slide 20: Preliminary Views on 2024

    Preliminary Views on 2024 ▪ We are in the process of developing our 2024 budget ▪ Preliminary macroeconomic view: ‒ Do not expect near-term improvement to the macroeconomic environment ‒ Persistent geopolitical issues ▪ NovaSeq X Roll-out: ‒ Encouraging signs with NovaSeq X utilization ‒ Continued r

21. Slide 21: Key Priorities

    Key Priorities 1 2 3 Focus On Operational Drive the Top Line Deliver Innovation Excellence ▪ Continued placements of NovaSeq ▪ Automation and sample-to-answer ▪ Reduced annualized run-rate X and all our instruments solutions expenses by ~$175M, above ▪ Lay the groundwork for increased ▪ Strengthen o

22. Slide 22: Slide 22

23. Slide 23: 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

24. Slide 24: Appendix

    Appendix © 2023 Illumina, Inc. All rights reserved.

25. 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

26. Slide 26: Condensed Consolidated Statements of Cash Flows

    Illumina, Inc. Condensed Consolidated Statements of Cash Flows (In millions) (unaudited) Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, 2023 2022 2023 2022 Net cash provided by (used in) operating activities $ 139 $ (52) $ 254 $ 245 Net cash used in investing activi

27. Slide 27: Results of Operations - Revenue by Segment

    Illumina, Inc. Results of Operations - Revenue by Segment (Dollars in millions) (unaudited) Three Months Ended Nine Months Ended October 1, October 2, % Change October 1, October 2, % Change 2023 2022 2023 2022 Consolidated revenue $ 1,119 $ 1,115 — $ 3,382 $ 3,501 (3)% Less: Hedge gains 5 16 9 32 C

28. Slide 28: Results of Operations - Revenue by Region

    Illumina, Inc. Results of Operations - Revenue by Region (Dollars in millions) (unaudited) Three Months Ended Nine Months Ended October 1, October 2, % Change October 1, October 2, % Change 2023 2022 2023 2022 AMR revenue - Core Illumina $ 650 $ 592 10 % $ 1,879 $ 1,871 — Less: Hedge gains — — 1 1 A

29. 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 Nine Months Ended October 1, October 2, October 1, October 2, 2023 2022 2023 2022 G

30. Slide 30: Reconciliation footnotes

    (b) Refer to the Itemized Reconciliations between GAAP and Non-GAAP Results of Operations for the components of these amounts. (c) Amounts represent the impact of GRAIL pre-acquisition net operating losses on GILTI and the utilization of U.S. foreign tax credits. (d) Incremental non-GAAP tax expense

31. 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 October 1, 2023 Core Illumina GRAIL Eliminations Consolidated GAAP gross profit (

32. 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 October 2, 2022 Core Illumina GRAIL Eliminations Consolidated GAAP gr

33. 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: Nine Months Ended October 1, 2023 Core Illumina GRAIL Eliminations Consolidated GAAP gro

34. Slide 34: Note on rounding of amounts in tables

    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.

35. 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: Nine Months Ended October 2, 2022 Core Illumina GRAIL Eliminations Consolidated GAAP gro

36. Slide 36: Reconciliation footnotes

    investors in analyzing and assessing past and future operating performance, including in the non-GAAP measures related to our Core Illumina and GRAIL segments. (b) Reconciling amounts are recorded in cost of revenue. (c) Amounts consist primarily of fair value adjustments for our contingent consider

37. Slide 37: 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 PROVISION (BENEFIT): Three Months Ended Nine Months Ended October 1, October 1, 2023 2023 GAAP tax (benefit) provision $ (28) 3.6

38. 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

39. Slide 39: Guidance reconciliation footnote

    (l) Amount represents the difference between book and tax accounting related to stock-based compensation cost recognized through Q3 2023.

40. 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

41. 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 $ (1,634) Amortization of acquired intangible assets 138 Acquisition-related expenses (b) 12 Restruc

42. 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 Consolidated GAAP tax rate (4)% Non-GAAP tax adjustments (a) 43 Consolidated non-GAAP tax rate 39 % (a) Non-GAAP tax adjustments

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