ILMN - Earnings call transcript Q4 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2021 Illumina Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would like to now pass the conference over to Salli Schwartz, Vice President of Investor Relations.

Salli Schwartz

welcome full earnings year and fourth for everyone, and quarter XXXX. afternoon, to call our the Good

During the and call will results our released today, activity, host we will the commercial of review a close question-and-answer the which market after offer session. on after commentary we the financial

the will illumina.com. Samad, the Sam of and you Financial Officer; section Investor If Sam review of Executive not be Participating Chief can it and our update which state a had President will Francis release, the have will results, an at for Illumina's Chief Relations today Illumina be provide Francis GRAIL. to website chance financial deSouza, earnings found Officer. and include review on our business, in

Commission's As adopted a an with and entities monitoring investigation is commission GRAIL, interim order acquisition an operated separate monitored Compliance by reminder, GRAIL has the of as pending Illumina's the to European for Illumina period. the into and requiring and held trustee. order distinct outcome the a of

today's archived this recorded, to our regarding financial Commercial unless companies share our be are the will our and of GRAIL Litigation the XXXX. confidential audio section protected not between exclusively best all undertaken portion activity Reform GRAIL. two be Private forward-looking statements Securities results during in of be period, length. arm's intent interactions made is Investors the call will at call under website. Act commercial that It the being is permitted interest and must in the information required, and of legally GRAIL must business Illumina This During run be independently and

including to results discussed. available uncertainties. materially results with statements to Forms and based Illumina's understand All refer may obligation Securities call and Illumina differ cause could you update that, or current XX-K. those Forward-looking statements from Commission, over files these statements. to With are will Illumina better subject risks differ, the Exchange the the the Francis. and XX-Q I documents and no To upon turn Actual risks and are assumes forward-looking that uncertainties we most that actual projected information, events now to to or recent

Francis deSouza

Thank exceptional you, strong by how support everyone. commitment and and our share My of is and XXXX, finish few highlighting comments the our driving to unlocking innovation you to Good then I'll by in with how afternoon, growth the growth starting excited few momentum areas, a the will and will I'm our with continued power trends Salli. of genome. for followed key those beyond. drove and markets conclude platforms that XXXX many results results. a cover our

and than last pull-through customers. and placement million compared start instrument in instruments both approximately XX% in throughput new than than with XXXX, of were for fourth increased over both orders reflecting In NovaSeq billion more of financial year with was Approximately XX% XX% $X.X NovaSeq instruments into across customers, for and added the X,XXX XXXX. than XX% quarter strong across to new consumables starting XXXX quarter XXXX. per sequencing units instruments now instruments $X.X more of XXX We're the those growth oncology third all regions. even year-over-year, We in our XX% growth consumable XXXX our throughput. more Delving our than and high the year. for in Full of with and highest shipped across XXXX year across Fourth throughput more billion results year-over-year, geographies. revenue XX% full shipped ever record XXXX one demand increased to sequencing over high spectrum testing. in XXX or XXXX instrument to NovaSeq to average or each with more of new than revenue we $X.X the and Let's consumables. sequencing platforms, seeing instruments of Illumina growth double with more

nearly mid-throughput. this throughput XXXX customers was continue the new as applications XXXX placed by NextSeq demand NextSeq more as well shipments. we In and Illumina for to This oncology using XXXX and and into XXXX, like multi-omic More health, XXXX with Moving to we of new as shipped XXX doubling driven XXXX and customers systems, surpassing growing than NextSeq NextSeq volume than reproductive to as in applications. time first demand X,XXX clinical application. expand testing customers XX% higher were units see X,XXX year

units, customers. record, we shipped the than than by part addition XXXX, in more of another more in throughput, driven low new X,XXX For XXX

expanding continued for customers monitoring. oncology, our by and into markets to markets testing our through disease. genetic lens our include XX%, of consumable at strong clinical reproductive driven many are the shipments currently clinical growth biopsy CGP, particular XXXX, our where or and oncology Looking and genomic grew liquid out In profiling, in comprehensive testing, health market, building

expanding see for TruSight our XXX to Asia, continue Europe launching research-use including products assay. We new oncology globally, our only studies and in Oncology opportunities with

project Hospital Jean in early detect be University example, test Squibb NHS, strong personalized of patients carcinoma, Bristol-Myers on participation which the CGP can a and care. Galleri with great collaborate leading innovations initial The nasopharyngeal from potential reception the for with Clinic Center like of standard including more in new the the AstraZeneca, current continues and no clinically the joint And in late-stage to with Mayo Asia. compared to that disease frequently space. partners, see first team systems in the cancer research than Cancer partnership with diagnostic Perrin health treatments Clinic. the our employers continues most large the multi-cancer with more National cancer Galleri Clermont-Ferrand prescribing payers validated, current GRAIL and GRAIL patients last momentum. available market For recent partners have cancer, Center providers. our Cleveland in to and of occurs assess screening. X,XXX year like as the than the value Galleri will Amgen launched the develop to the XX Japan at to France pharmaceutical oncology, Also and types of It's clinical will test post multiple with adopting more to detection patients see

against treatment the the care to a early EU deeply initiatives Finally, in cancer to Europe’s launched Illumina U.S. are of committed in beat and Beating The recognition improve National the critical to and the and Moonshot highlight supporting Initiative recent very initiatives detection detection, testing and lives. is Cancer early Cancer encouraging. Plan U.S.’ oncology component all fight cancer. as increasing save

well in in increasing of College was or U.S. testing a revised driven enabling had and American product adoption XXXX. as genetic This coverage part year NIPT our by VeriSeq also health reproductive pregnancies, oncology, globally. Beyond Obstetricians Gynecologists, of all VX guidelines strong for as ACOG,

the body Australia NICU occurring with sequencing, Expansion other third recent to and of globally, In generation Our the in or the and coverage Maryland Pediatrics patients. XXXX, a whole Hannover already increase as critically evidence setting. for health that implement WGS for in we're for for and of NICU significant coverage clinical both significant Kingdom program and genetic critically evidence growing additional infants, showing including efficiencies With market, genetic disease the U.S., programs saw the in in England of WGS cost School United countries, an well benefits tremendous systems. seeing XXXX. contributes in as states with with NICU ill Medicaid WGS clinical diagnosis of also offers JAMA disease Medical for WGS project Medicine This Germany's in publications including of testing, use across genome children. to our from are and in Journal New growth settings of utility ill the WGS, affirming initiating California, Oregon along

in that will consumables revenue. ongoing Turning All three that contributed Us, in trends markets, research XXXX, million drive projects driven to a grew surveillance by I'd like our long-term few and growth. approximately COVID minutes $XXX spend with applied of along now on key XX% total to like efforts,

markets. continued care access to The and proliferating sequencing Illumina's of through applications, is and of adoption. national expansion health our deepening genomics use markets increased globally of seeing continue initiatives further new First, the into existing penetration and systems. addressable integrate across We're is

expertise new or change program. in diseases to DNA be used will genomics largest-ever deliver that the to new Future of this will analysis variety better earlier, Health, for health their course program ways signals play This excited UK's are a samples diseases like partner programs genotyping progression. the from detect project of up discoveries, and potential data technology volunteers. role to new personalized diseases for We're Our Our as for high-risk to genetic research enabling or of population the the million therapies and a five delay to tools including predict

genomic growing pan to other infrastructure and continue COVID to will infectious extend also study We support network to epidemiology work. a surveillance already is global broader diseases. This that being used pathogen

in example, their Africa, For diseases team to HIV like and Response Center is at of Oliveira’s CERI, Tulio other South using malaria. de for fleet study Epidemic communicable Innovation, and the sequencers Dr.

improve multiple future discovery, global evolving We're applications including funding additional We speed growing drug across applications multi-omic in for sequencing We're with where like in surveillance also off where to And the research supporting costs. partnership including and spectrum as applications SomaLogic is of are development. methods in market, and opportunities to our growth start. nascent success can expect opportunities and epidemiology rapidly, for and co-development strong genomic-based the pathogen instruments, and drug multi-omics spaces dramatically expand. proteomics, our a rates catalyzing new

our applications markets Roche the large-scale global in patient enable adoption we're promising NGS. targets growing of and we're The with for and while equity multifaceted experiencing In partnership enable Hospital, analysis like XXXX. is and integration Future the data data Our was Programs to We're will opening this to the second Neurological Health, demand entering diseases. with it development of with drug collaborating increasing like for increasing Biosciences, will as identify Institute base. trend long-term growth access into and neurological we discovery our new XXXX, addition twice Takeda care. support instrument A enter Nashville size Montreal customer our also the health drug genomics further improving almost in adoption, backlog genomics of

new fleet. numbers of Our existing to Illumina. customers also are growing seeing their instrument We're customers increasing

installed at result, XX,XXX to grown the As base has a than more XXXX. our end of instruments

average our clinical the tests This an demand genomic will This continue Xx and shifts sequencing continue for XXXX, demand standard consumables more generation. of project in customers higher number Illumina rigs are sequencing the in NGS of even run data data in number more high-throughput sample across will information is the turn, in used becomes trend third In XXXX. need These per of than patient approximately like The sequencing as as are and throughput setting. generated and per customer greater for complete multi-omic. for drive depth revenue. for samples samples as applications projects, multiple further high-intensity to growth will, increase

strong Sam on to highlight customers revenue than as I'll trends performance position genomics For and guidance XXXX, between partners invest Sam? future our operations, nature. discuss as and and XXXX care. predictable our and our and call XXXX. now stream growth. provides and more our momentum turn XXXX more XX% additional consumables to health a for in details business This these results to to base demonstrate Illumina's is in recurring profitable entering tremendous the our services, the significant as support drive revenue into well our accelerate over of

Sam Samad

Francis. Thanks,

be consolidated I'll start and results our XXXX. GRAIL. our the results results today's stock-based can I GAAP conclude results, by for quarter followed on Illumina highlighting with the be which financial As review to include supplementary by of will and core our financial compensation. fourth GRAIL, reminder, encourage in website. data consolidated a includes our release which segment outlook for I reconciliation reviewing for non-GAAP these financial and the results, in non-GAAP found measures, you available

revenue fourth growing $X.XXX strength our due exceeded business, billion. continued with to again expectations year-over-year core Our XX% revenue consolidated our quarter to record in

of operating income For $X.XX the share, per losses dilution share, the million incremental million net $X.XX from was which of shares the GRAIL $X.XX diluted $XXX or from fourth quarter, GAAP fund dilution was income million diluted GRAIL and $X.XX $XXX non-GAAP per issued acquisition. to or X.X net and included

basis tax lower points due Our mix non-GAAP tax to with rate. XXX primarily rate a more earnings jurisdictions which was decreased of year-over-year, statutory in favorable XX.X%,

share the diluted for quarter approximately million. average weighted XXX was Our count

core genomics. grew to record with will start of shipments growth revenue segment exceeded of another oncology financial adoption the $XXX XX% Illumina. shipments core due $XXX strong both by in XX% I that installed customer research, in year-over-year guidance Core revenue record throughput to for testing, pull-through to from results. shipments revenue million, and Sequencing driven population new record results grew for XX% continued significant base driven by resulting instruments NovaSeq consumables range. by sequencing notable demand Illumina disease Moving by and driven oncology our again billion, million, NovaSeq consumables to and Core the accelerating Illumina in strength highlighting year-over-year high genetic clinical grew $X.XXX testing. testing year-over-year and Illumina quarter to to

NextSeq the quarter, a high across new in and mid systems year-over-year. XXXX, was XXXX shipments and reached low growth also strong throughput there all

are entering a the entering by surveillance is of XXXX. variant on that COVID-XX We from the to again instrument sustained emergence strong Omicron backlog our focus the exceeded XXXX variants. sequencing expectations, tracking double with backlog Revenue the almost driven due

revenue revenue. sequencing sequencing revenue growth flat other and instrument Core consumables revenue. During $XXX contracts quarter, million surveillance as and million the incremental contributed from service fourth Illumina by services in $XX million lab was and in lower offset $X of was partnership instrument IVD service year-over-year revenue COVID-XX approximately

demand installed results and population oncology regional compared genetic research Americas in by prior representing by period, delivered to to clinical COVID markets, growth strength hospitals. driven initiatives core like the $XXX growing to pharma clinical in and testing, Us, driven in revenue growing driven in growth of region the year population EMEA $XXX surveillance Greater emerging Illumina. All Moving in genomics genomics million, Revenue million, COVID year-over-year and strength XX% was XX% initiatives revenue base testing. China for for representing XX% million, $XXX surveillance of disease of due by for was testing. region strength continued the the year-over-year,

and NovaSeq Finally, markets, $XXX placements in record including APJ grew clinical million testing. momentum revenue oncology year-over-year, of by XX% disease testing continued genetic driven and

non-GAAP increased expected to of of by basis and rest consisted million results expenses QX fixed headcount margin test on Galleri of GRAIL. $XXX $XXX million trials. primarily expenses, was core totaled previous to expectations. compensation to in other our related the cost Core the other for up fund partnership operating expenses Transitioning XXXX. in on and term performance-based the expense expense business. to of investments MRD to XX.X% project increased quarter, million the financial operations increased the of spend revenue million due compensation points expense of non-GAAP income expense Illumina for and non-GAAP the to P&L. increased $XX XXXX interest support the compared the variable million lower as expenses of in higher and short-term operating year-over-year higher than partnership growth, to issued GRAIL investments quarter non-GAAP to R&D Illumina income growth for volumes. well making consisted scale $X expenses GRAIL of headcount $XX due XXX Core for Non-GAAP partnership-related were notes year-over-year million as and QX gross $XXX liquidated to primarily GRAIL and than expenses onetime acquisition, higher due Moving we fees of lower are driven Illumina to on the leverage Illumina due were interest clinical higher revenue. higher which operating Core quarter primarily

equivalents flow quarter. cash, was investments. million. in and revenue linearity. Moving ended $XXX driven days common in days XXXX with sheet Fourth consolidated flow million. were quarter repurchase flow $XX XX DSO last items. stock from $X.X million. billion to capital And to the by free cash operations cash was XX expenditures approximately compared balance short-term not the did We was quarter, We Cash any $XXX fourth quarter cash and

now to XXXX Moving guidance.

to XX% year XX% to consolidated to billion. billion $X.XX approximately $X.XX full to revenue grow XXXX expect We

year Core full range million Illumina revenue $X.X Galleri billion primarily the to XXXX, to revenue to XX% for its to XX% expects expect GRAIL approximately $X.XX grow XXXX We of to $XX of million to billion. in consisting test. $XX be

million, are expect revenue base GRAIL approximately accelerating For to demand in Core year-over-year, business. intercompany range, by fiscal guidance of at consolidation. our approximately driven eliminated midpoint to we sequencing revenue $XX includes the which This Illumina of XX% in sales XXXX, our grow

strength Core and expect driven NovaSeq instrument approximately growth Illumina of placements. We XX% in continued NextSeq by year-over-year, sequencing

driven expect by of and growing strong year-over-year, approximately We XX% customers. consumables instrument Core growth our by base Illumina utilization sequencing installed our

pull-through are expand strength We our for of $X.X our NovaSeq range million platform, expect the to and guidance raising per for to we system a million to $X.X XXXX.

for to for $XXX,XXX per NextSeq pull-through We NextSeq per expect pull-through $XXX,XXX XXXX. in to in of range XXX the the of And in $XXX,XXX system. XXXX $XXX,XXX range system XXXX,

range to $XX,XXX we we expect the of MiniSeq, $XX,XXX range in expect system. For in per for MiSeq, pull-through $XX,XXX And to system. per the pull-through $XX,XXX of

revenue million in XXXX. surveillance in expect to COVID $XXX $XXX also from of the We range million

expect margin operating in We margin range Illumina for non-GAAP and XXXX. non-GAAP consolidated operating to XX%, approximately Core XX% of XX.X% the of

the also approximately consolidated expect XX%. We of non-GAAP rate tax

We range expect approximately the incremental to share in and approximately $X.XX dilution GRAIL of line finally, dilution dilution from operating XXX to shares approximately of includes consolidated million which to non-GAAP And $X.XX of earnings diluted shares be with fund issued per loss the expect including of X.X diluted acquisition GRAIL $X $X.XX, expectations. from outstanding for million shares. GRAIL fiscal in previous we the XXXX $X.XX,

first This XX% to to start a the quarter revenue Illumina, the increase to of represents we increase for the from of expect year-over-year quarter strong year. of reflecting XX% For XXXX. consolidated a first the from XXXX, fourth XXXX sequential quarter

a approximately We decrease sequentially, to expect basis operating XXX primarily in to non-GAAP expenses. increase operating points due margin

year our guidance to of XX%. rate tax be non-GAAP expect approximately We with line XXXX in full

shares with year of shares. to in guidance XXXX full our XXX diluted line expect We million be approximately outstanding

Francis with call margin now I’ll XXXX to in his operating final hand guidance remarks. year of for QX back non-GAAP our expect line to For XX%. full the Core in we approximately over Illumina, be

Francis deSouza

medicine. opportunities thank more will and patients life-saving I’d therapy genomics years from the Today, to teams, To network within genomic are partners health, continue billion growing X double and testing reproductive am our globally, people this I for our genetic excited the oncology we and Sam. testing personalized adoption Illumina to the like of the expect than benefits we to extraordinary genomics support accessing accelerates scientists disease of X and surveillance. of potential many of world, around pathogen incredibly and clinicians close, as number selection, Thanks, the to serve. the for covered number ahead.

will and drug to new push also development proteomics. genomics to frontiers We like continue

enable Additionally, base in with existing solutions these developments, developed products including markets long-read has and X of we to across new our discovery customers. pipeline with and Infinity customer fantastic and for our latest innovative breakthrough will excitement It our across been our a and strong our interest technology. the see collaboration Chemistry

expect health operator with also I’ll health. human scientists to market ultimately not sequencing. unmet connect but and directly only transform genomic-based care clinicians enabling We we’re invite for needs, now Operator? to Q&A. revolutionized future a for brighter provide open that spectrum can and discoveries Together, address the

Operator

[Operator is first Brennan goes Dan Cowen. question open. your to Our with Dan, Instructions] Absolutely. line

can ahead. You go

Dan Brennan

Congrats, quarter. for questions. on Thanks thanks. obviously, the Great, the

ask needs. to expected and light and basic metrics be things to wondering, some you expect and Obviously, will fall. question competitive and about out X relaying would talked a But launches going interest you’ve this wanted Infinity, on speed So more laid about in that particularly a I some coming just accuracy in now Chemistry between So and around on of to there’s the HBT? material lot unmet I’m hear of the new revolutionizing products. we’re you

word and/or be idea might a addressed product things about job higher arguably, Illumina us product. that done products? give maybe terrific about but could prices, Francis, provide has point, because, factors not more bit these revolutionary revolutionizing So needs to of this this color you’re some big how sounds at the hoping, new particularly little evolving of but lower pretty around that I portfolio, like driving think Obviously, was can their unmet this we a you throughput, a for going

more get trying some So Thank just and wondering to hoping to color. you.

Francis deSouza

of data Thanks, our see fantastic, Infinity. we’ve to it Chemistry provided the so reaction X And on customers has I to both and far the Dan. been Yes. as said,

go we shared of keeping from years Chemistry we So bit. loop the a as with Chemistry we’ve production. of into and all a from a just little through couple data, over now in been the weeks of some the over ago. moved them product as into development early the then moving of ago, With of said the each research phase sort X, maybe manufacturing manufacturing year facility product then we’re up development And and X whole new scaling I you

that been in terrific so Chemistry X. and to the And the progress see are innovations it’s

times to a advance As What terms biggest I clinical very the rethink committed a in of our since about industry where that. fact translate all this make want change research of price terms tests created that Chemistry the the also in that results more we’ve is a of means some continue the do all in in projects, ground-up to to years said, customers and those of those for, for map not exciting of talked chemistry but much probably from just running. you down this we more was and single Solexa G. accessible road it of especially It can be patients enable chemistry, in of chemistry, the that is to are of accuracy higher means cost relevant especially the our the speed terms into expect part to combines a large-scale fundamental and the our that will we for turnaround ago. per sequencing, And that’s X, step really customers in of quickly. get to driving And settings faster our really

in parts portfolio to reason, coming there why out. in some our look be manufacturing, as closer sense going at no is to and that well. our I’ve And to existing fact foundational we’ve of there’s the entering ever out it about new it to may have we been. now as into make bringing than products talked we’re that all And products so portfolio we’re this not

short people Infinity, want to about the how of customers went is principles first what is one of think again, two different you accuracy, and short sort they take we’ve reads. don’t what rethought telling for apply read. long excitement best terms some because all that for the platforms, don’t they want in back is reads got cost, read one they’re there high long low low input And And we’ve of SBS, to say, requirements and that want In to of what reads. elements and to

at long And so of how we didn’t And it to we requirements, when want want a reads, we would and looked best They also multiple lower composite rethink cost, accuracy. elements be brought maintain some molecules. low a to of say it single input approach. those they the be to of molecule high

And terms Infinity in team a technology. that our so has of job fantastic the to innovating done deliver

You’ve talked from about some more to bringing data this continue it seen We’ve fact from year, customers. information that data and the to us. more some we’re our of see you’ll and later market

Operator

with goes your question Peterson JPMorgan. to line Tycho open. Tycho, next Our is

You can go ahead.

Tycho Peterson

in growth. GRAIL guidance a XX% million you a NovaSeq minute DX being to a $XX guidance, to your a step up of do sequencing wondering fourth million How is on quarter. market if more of freezing the Obviously, million the around well, little follow-up rolled kind And color And avoid how from out? then $XX then Chemistry ago, as you do $XX material ahead X big the I’m Francis, got Hey, that could you’ve just On launch. thanks. that. think be? put comments instrument bit could you

plans So just plan can there? and a about you to talk bit how get scale-up you little

Sam Samad

Yes.

Thanks maybe let in brief comments. XXXX So provide instruments mean, can I of incredible just first and represented the Tycho, I’ll I is a this say all, question the guidance for Sam. of start, performance. on about me couple instruments,

entering XXXX in year record with a now We’re of the instruments. backlog

lot it the gives XX%. guide, the So about confidence us of a

those of placements performance drivers very As record some platforms. this, the on NovaSeq, of strong the continued XXXX in placements And with we strong XXXX, two the talked behind side XXXX. mid-throughput continued very NextSeq across about we think about

there in Now quite COVID which We for And surveillance expect, XXXX. to COVID for a is instruments placed don’t instruments is a headwind, XXXX. surveillance place surveillance. few in we frankly, COVID

of headwind year-over-year growth guide. that’s So terms a in that’s the the XX% into factored

NovaSeq launched of It we’re the For be It DX, a instruments year. does impact this not to growth very in represent later for that’s launch. will material in product excited that XXXX. terms

maybe... Francis, So

Francis deSouza

Yes.

of talk that about you market and potentially. customers we and let’s said, Chemistry avoid, in our So X as freezing how terms do what means the

exciting One know that hear to is exciting roadmap, you new you’re and provide Illumina part that what products today, but of out. customers getting are this only of the to to from things we with access our not that you’re about we being and going continue we innovate bring

I journey And this the customers, our develop, it’s X about been this good exciting so for to been, Chemistry we’ve watch and think, of sharing data through whole process.

programs We get it product they’ve market announced, can know new a freeze what a for. that our you we it’s the And us in involve done order mean new introduce product, switch backlog, times don’t a can have that have So an you’ve they with nothing so and you whenever wanted instrument. sense if that or if them. trade-ins for in several placed also place do can to that what’s coming. They there’s already for the know this our new we customers

And a seamless customers. pretty number around years, for robust a our over upgrade the of we’ve enabling programs so developed

is, for other clinical upgrade plan that and the to the instruments, a also, example, that new and learned of a some buy an instruments markets, when develop use one get of over new new multiyear our thing especially customers we’ve familiar Now new will then workflows, out, to their instrument comes period. typically, the in the with

we in with excited introduce transport tech and play about companies, that has across plan as to that way of is been employers. the terrific attract GRAIL future, players that we employees. are benefit we upgrade buy And could companies, a one their comfortable They traditionally seeing it, customers period. are and been But the benefits more as watch. to logistics over financial with are players What GRAIL, we really terms with they talent. said, to and seeing we’re We’ve forward-leaning large then we are with services as out. interesting a And is we’re to in still what’s of And industries. expected multiyear momentum seeing terms up that traction, to using of to so seen, may said, as that then some use new there a offer this other companies traction signed in get sort instrument with

And so to that’s been exciting see.

experience providers tests. We’re also really prescribing of got have now with pleased number that the with the Galleri

we year. are ordered X,XXX last going over test said there in XXXX providers that So prescribing this into year the

so a have of great Galleri care And forward. professionals ordering that experience base some more and now be it with that’s comfortable going should health

terms the guidance, a is component but – of most smaller Galleri this is is There with of it it guide year GRAIL percentage. the In for Galleri. for of a associated MRD,

Now for look that keep that are traction area upside, as space. and in watching could making we potential that be they a at number, we’ll the

Operator

question with open. line your Dan, next Stifel. is Dan Our Arias to goes

You can go ahead.

Dan Arias

should those then second I a a crowd? NextSeq for the think be at just sequencing on gigabase Is throughput a guys. can lower for that running Thanks. could just could mid there NovaSeq decrease you play? anything economics users, also on sneak cheaper X. see a of the might afternoon, if then per they’re Francis, much be And one. And and back do or MiSeq? you in Good if the cost genome How pricing folks Chemistry add there

samples Nashville is the I time the collaboration, the that all XXX,XXX think what’s line Biosciences there? whole-genome? you’re On sequencing Thanks. that And for

Francis deSouza

Yes.

get you X mean. Chemistry versus reductions X Chemistry Difficulty] significant know, with you Chemistry will cost it apples-to-apples, and that start as could yet. me We just [Technical let So X what

everything that Difficulty] depends per be [Technical so on key Now will ultimately, chemistry. looks Difficulty] ultimately, we else think partially [Technical like cost

Difficulty] Nashville additional So as give have specific specific [Technical we were Difficulty] will have cost part stay comes giant very [Technical It on that. Difficulty] specifics And [Technical confident to impact. reduction a Difficulty] [Technical early But a about on oncology the entire specific a depends with [Technical be [Technical the little that look get to chemistry. at Difficulty] with that Difficulty] all to you we that Difficulty] [Technical the Difficulty] of depends this [Technical price. optics detail It’s what

Operator

cutting answer bit to try want don’t to try there. you restate or that. you anything fix there a if little Francis, in like or were to if I you and to your out want know that

Francis deSouza

Yes.

that Chemistry customers. Let just summary reductions, say on delivering price the the in for me our of we on. step big I’ll into type specific as with that us it instrument. But of data sequencing the ultimately, of gives and depend – will optics technology as well in the forward number we instrument it X terms the other built ecosystem into, on so path, terms is The a components the build

with we more get stay so we that as share tuned will specific, And you.

Operator

Okay. Great. much That sounded better.

line Our Evercore. open. with Vijay Kumar is Vijay, next from question your comes

You can go ahead.

Vijay Kumar

year. ramp being I the print, comments and Sam, up throughout guess question talk sequentially. about visibility haven’t on the up the maybe you I QX seen historically you twice I guidance Congrats backlog on guidance around as guidance we here. your know the guess, sequential I have. made had high. and some imply that just a revenue your

visibility the being you twice about around have. I comments know talk you So some made as high. backlog

about talk into efferent. the the So guided visibility

Is million net Galleri Thank to on some number? the volumes? elimination Or for gross for think the in million GRAIL, you. that a proxy contribution? $XX is that that $XX that there Is intercompany number? is I a

Sam Samad

Thanks, Yes. Vijay.

So let actually me both questions. take

visibility first So, the I’ll take on the is on one guide the good. The guide.

guide achieving confident about have very correct. have. balanced we QX, With think we a are you I to and that we’re regards guide the

year business is is very momentum We the strong. really are entering QX. strong – I mean, very in with the

disease markets also We’re with genetic NIPT our are in robust. in and strong on research testing, clinical, seeing momentum testing, oncology very

a in as very backlog, a backlog, in we strong of instruments. We said, have fact, record terms

So that’s what’s driving the momentum. QX

we few a considered are been As to where sequential forward a terms the this derisks believe reflects we prior look Vijay, in, we’ve a to the in guide similar that is the see pandemic, in revenues year. that would to that also I increase a of ramp we linearity the more XX%, reflected that’s towards in an have – that’s have year that things the say, year, There more, that guide. we factored throughout or XX%

couple those. me of let mention So, a

regards to surveillance. COVID one is For instance, with

terms by $XXX the step termination the in It’s As also I Biobank. in down the from million and driven COVID genomics, assuming down. of a mentioned a of at prepared the step revenues. million terms to the a the we’re million last finishing step We’ve the reflected of population UK midpoint, in Biobank, UK wrap-up of approximately down year. surveillance $XXX remarks, of $XX That’s

revenues year-over-year. very So pull-through. of down population terms NovaSeq showing a in And very, step genomics strong is that’s

we we’re in to million $X.X and range factor said, that time to instrument, make across a are significant the saw installed $X.X that XXXX, of we sure pull-through into that that pull-through As coming million to across we’re some exceeded we in instruments to in million average take of reflecting up those the seeing we ramp $X.X guidance – that the per levels will XXXX. base

very that. that about is the backdrop GRAIL pandemic to year million good million, to with a guide, end goes this the to still sales visibility. year regards But general, three, confident their So $XX $XX With in all uncertainty in and the that’s to the customers. of GRAIL, here

we total total the they’re Illumina to GRAIL the and sales million business, by have $XX impacted in on total consolidated to eliminated is The But our their consolidated million core intercompany. end impact of elimination the $XX So, sales revenues us the up GRAIL not that then customers. to do intercompany from That’s revenues. view. show

Operator

Derik question Our Bruin America. Derik next with to Bank line is De of your open. goes

ahead. go can You

Derik De Bruin

Thank afternoon. taking questions. for my you Hi, good

for for What mean, don’t for like clearly I sort that X of to sort So market. two broadly and premium are on elasticity human what on are been the But to is a as genome can applications? the your make you Thanks. related you’re are to, follow you single in it of a before volume pricing assumptions? out. take there market while I questions. Or segment mean, and basically in clinical you the has approach the going assumptions see clinical really price? lower volumes this keep your of accessible? up? make platform longer can going are cell research proven it make at a like And sort HiSeq One, or certainly you then see demand that to alluding new you of whole a I to have

Francis deSouza

Great. Thanks, Derik.

let’s So applied the new chemistry across This be can take throughput both. spectrum.

said, So like all could options at this are market. point targets and are an the you on a There the segment where that create of instrument we catalyzes a, options, table.

whole that was you’ve sequencing before to, up opening number whole of whole alluding the at did, that market in part genome HiSeq successful in you’re after seen X and that X whole small sequencing explosion a was $X,XXX X, And sequencing. of genome the extraordinarily as of a enabled HiSeq market, point, So do genomes. could HiSeq price terms very customers do genome just an fact, the

the could market. And on for allow you catalyzed. of one of that options to segments imagine of us the markets is, of Chemistry do again, I be that would to so parts lots certain that look opportunities like table catalyze X could mean the the

to with single they much, love, lots could cell you and love much much, market. hypothetically, of that cells. be would do larger the customers look able experiments using to at we single example, hear from for So And lots

market. like something that Chemistry so enable X could the part of And

Alzheimer’s from hear experiments, Parkinson’s. also the neurological targeting, they our of that love genomic much, conditions, like much larger customers drivers understanding We run to and would autism and

you kinds could use it this – can also provides we single because time decide you that so applications. to some the And would turnaround chemistry, benefits is to a it fundamentally this those returned of be lower cost, could again, scenarios enable that experiments. with you the have could faster see in where imagine of get In other clinical on being shift. terms one certain and depths enabling a but to some so the can depends this And things of where chemistry you of customers but within

the buy you the priced are we just segments where was markets a turn report the of customer shift of market the terms per it’s fee. because in terms stage they ability So price solutions, or or already a at up parts are. in the the those even there customers in and potentially clinical to From provide some example, sample already where price results open if point diagnosis genetic are of eight-hour our market. would price – disease single the the at a enabled product end-to-end NIPT, for of we’re perspective, same, in like the And some per the around

business other the is But not fundamentally reimbursement enabling. change clinical our price necessary per the And in where to already lower in because have lab will profitable are those point it’s so markets areas. place, a be customers there to allowing sample price that needs

the And so in about question. X. Chemistry we’re ready thinking of Hi, that’s how the sort operator, front with options us of for we're next

Operator

line question next goes your Kyle to Our connected. of Mikson Canaccord. Kyle, is

You may proceed.

Kyle Mikson

question. Thanks taking Great. for my

a two-part question. Just

then second kind of these medium that's early any development underpenetrated that's part as you like said market throughput wondering suitable ask my into And like of is going growth involving to are share term to that most clinical that part clinical platforms earlier was, research. near I'm of term references maybe for it to launching multi-cancer So the new the the kind for adoption capability, with will want launched the in right market I of Biden focus low-to-mid route now. clinical to near the test. initiative. which if studies mean, detection hospitals just lead accelerate of an the you market in short mentioned the trials administration Francis, test, and I market of early and the cancer question And or be Moonshot or particularly

impact specifically and going obviously, trials of potentially level Difficulty] could improve to And on for is ongoing the So the [Technical the that downstream to merger, initiative needle overall. move I'd just the MSAID global domestic the industry like reviews. any your of it or with importantly, the confidence perception have understand Thanks. or

Operator

connected? Kyle you we could question the that now speakers. while but moment, our reconnect speakers repeat interruption, your that One pardon are

Kyle Mikson

you hear can Sure, me?

Operator

can. We

Francis deSouza

We can.

Kyle Mikson

Perfect.

Okay.

two-part the So question.

the That's going The near share I'm growth these market. think is that's the low or first suitable to still you near is wondering or are industry is term or these the most competing any any the the the impact ongoing early overall? given was that question to have And eat of if want medium of short-route which second on kind term clinical for the going move of if an the downstream clinical recently, perception just it that mentioned global about announced into improve the reviews? Biden the could be the MSAID platforms or I have then for which in to trials emerging And domestic your was throughput, focus to Moonshot and to understand I GRAIL, you tests. mid needle just to underpenetrated? the new cancer of of the for market specifically administration going related industry companies. think action pretty had area merger in initiative potentially launching multi-cancer the

Francis deSouza

right. All

So both. we'll take

is question entrance we around market mid-throughput to to in how first expect and low- out. The play the that

in the performance coming products just, that market. targeted NextSeq of of from customers are there to even that especially including will XXXX, are part instruments the XXXX. provide the say, NextSeq clear already clinical the are of workhorse space. then the our entrants Let NextSeqDx, that I'll have XXXX, the that couple think because of XXXX very get NextSeq a And mid-throughput market. is market, forward. terrific perspective, that the on value XXXX some that you well in terrific years, price the first. Those the represent Dx, And have suited the the in in. most powerful you compelling clinical out I to going last continue jump think products launched we And we for me the obviously, MiSeq we XXXX, – markets are in have they squarely that the And you

of in than we've ends seen The the new out dynamic, historically. in of more portfolio the seeing other – interesting are more playing in market at is coming higher the that and we're though, customers coming

And market high applications that more demanding so power. are sequencing They out performance intensity that are sequencing are data what's for the and emerging and applications playing the just that are more intensive. intensive in is sequencing more

just more out is, I in more saw computer the play And saw with out need play the what powerful. that to we think, we this market, iPhones this so means be that with PC devices and and the

power. that somebody if the today’s the low- today, like a I throughput today, market high the that as more we’re insatiable more that’s is MiSeq. telling you demand lot fact, for if think in In low this what’s of seeing of you market. sort what there new the today, ethos look And consider and power, is you’re we NovaSeq and better future who’s with Because and targeting lot mid-throughput up will show a mid the

curve it’s and to on GRAIL mortality obviously of great Moonshot, Cancer the cancer have for and the bending increased terms In cancer. an national focus

So in are cancer. that’s fight detection this of specifically, an test, see simple It’s early cancer terms especially a cancer. important simultaneously, a exciting terrific to of to detection recognition multiple against see. that And thrust early of

is I to And attention space, see. this being think, the put so on just great

additional can We’re helpful terms that going reimbursement. of see to in helpful funding GRAIL or XX we all or out market. that of tissue is it’s detect very origin. because for today in of cancers only But the accelerating market regulatory watch in product terms review obviously identify and that accelerated especially the feel GRAIL, plays to It’s how

So really obviously that’s exciting perspective. GRAIL from a

Operator

Okay.

We proceed our will in questions.

is line next BTIG. from Sung is Ji Ji Please your Our connected. of question Nam Sung proceed.

Sung Ji Nam

Hi, thanks for taking the question.

the was launch could data the interim characteristics you the some wondering next to And throughout the potential test against this market that multi-cancer be to might if of expected Just are comment expect MRD MRD GRAIL you’re year? readouts single-cancer on then tests on we that year. able available performance today. in I

Francis deSouza

Yes.

One just of will performance a that for. the approach cancer, is some the able GRAIL gets ultimate launched, of to technology watch the we as of as single here the can multiple test. of product you know is are some the will underlying announced that not be the Galleri the that recurrence detect cancer. leveraging This is test a types because same already So given taking, course. be of and the characteristics that things But it’s things

cancer before. really may cancer that’s had as the emerges be sometimes so because the not exact patient same helpful that And a

to for with Also, that. into required GRAIL’s patient, able depending than also you so much test will first you biopsy. be the patient’s the that faster able a tissue on biopsy a tissue approach are create get because be would to hands a to test approach the And should detect not you

So for another patient for have patient. can very, and a key get very patients, how the ready metric test to is watch, some is quickly that important which it

perspective. is So is the GRAIL that conceptually, much faster approach just, from

Galleri metric And a in really an of And early for false-positive of specificity another It And test, to that’s detection and same lot then MRD terms since the be around test the of leveraging high with into key the that’s strong. is terms positive watch something going screening technology, extraordinarily rate. too, the of the has sensitivity the test performance low in expertise for, market. for. delivering watch is MRD that so this predictive to they’re value bringing to

Operator

your Sung Ji, does this answer question?

Sung Ji Nam

Yes, thank you.

Operator

Ji. Thank you, Sung

question is from is your Puneet next Puneet proceed. Our SVB line Leerink. Please of connected. Souda

Puneet Souda

taking Sam. Thanks. question. ask the Hi, one. in for I’ll just Thanks two Francis and

make exome you’re benefit could about Chemistry is XX-kilo lower that That’s Infinity, today? want And closer get lastly, price equal First $XXX is a from quite understanding. routine I sure. applications, want is Chemistry genome to reads still my base I core just or genome to on the what technology to just genome getting one And then bit to meaningfully $XXX RNA to more with clarify want does it that to genome already, is, I seq know if asked a versus SBS? of cells. clarify that the the to but X I across to you’ve single all just X

reads? the And is the correctly. viewed are thinking being about to a lower of long so end this Thank the is produced want read we’re the on sequencing So sure by of just end that being So native long-read that lenses make synthetic? as this does – at this day, I you.

Francis deSouza

Yes.

questions in take, me So order. Puneet let your

tied This Is specific to application. work chemistry that X. a is is So not Chemistry or First, specific applications? application all across it works it applications. all does to it a answer an is across the

should any that application benefits So sequencer reduction. chemistry. of absolutely run a will – on chemistry you get you price It you step the uses is across a of terms this in this big forward

the lower part depending deliver of on on factor, able in depending so And instrument to out, a the it be cost put we that will the market. form

again, And one it's component. so

part whatever As to instrument a you it, that's but factor step whatever chemistry form type. part big know, going and us one we chemistry a of give to choose is this forward release it's

and it down Infinity, that platform read input that their customers upfront multiple different different scale the is and don't of What train terms workflows a In lengths. loudly techs things SBS, want technologies them is one they that DNA of requires have labs that in requirements. we've heard have is they can from single differently to multiple that multiple want up

SBS. It's a platform market scales down, requirement and that's in so and big, to this have a going on big can chemistry, you sort what Infinity delivers. single And is single up that of be

things the gives and SBS. all know that it you already you are with so And with, familiar

for so X,XXX great our And instruments our that's XX,XXX the field, news. in really customers and

of terms players market. where loan XX some a long are exactly not absolutely the lead honest, In it's kb, other it's be in of the the to

of than some there can go but not the that, the bigger Now that that's are is. market where majority

Puneet Souda

Got it. Thank you.

Operator

Thank you, Puneet.

question is line of Morgan next Tejas, connected. Tejas with question. from Stanley. Please your proceed your is Savant Our

Tejas Savant

A evening. for Francis. two-parter Good you, guys. Hey

clarification a it you existing of portfolio I to of earlier mention you Just I parts some in X, as first Chemistry heard might point think bring well. the that

that. assume tests this the of bit at sort compatible selectively? Is just lower Or that you your second it effective that guide of of Does least So a list it here. XX,XXX price? And on then a using assumptions? mean on GRAIL finer are $XXX point could midpoint to sort assuming in backwards the guidance at fair be one ASP

Francis deSouza

Yes.

thank for So, you that.

is that question. couldn't plans compatible that technical reason will at Chemistry X parts portfolio. around Chemistry then X Let don't for absolutely GRAIL... technically why We the the parts have to point, bring we've of all, said going new me announced But be portfolio. some we all backwards for And first we selectively your that there's take What platforms our the forward. I've but of it's speaking no to current using

Sam Samad

me Let Francis. that one, take

said, or as because thanks at So uniform that I be the would not partnerships that that regards assume the for have. and assume I question, GRAIL, with depending is price the range. assumptions actually. $XXX by across pricing No, But would the way. approximately guide the revenue that, you the total The on is Tejas, full to different not guide could they there collaborations, price

volume. I not So assumption would test the that make around

Francis deSouza

Tejas, this your question? does answers

Tejas Savant

Yes. Thank I'm good. you.

Operator

is Donnelly Citi. proceed. next Our line Please from of connected. Patrick, question Patrick your is

Patrick Donnelly

you, Hey guys. questions. Thanks for for Sam. taking It be might one the

part, Do next chain issues, expectations you big like for quarter Just organic worst in things coming double just last the hear get the terms backlog, as is the ago? of the of encouraging to versus talk obviously natural Have normalized a mostly was year. quarters? kind and build sure of bigger much that in feel couple what a a supply you're about a how there any that bit numbers almost it's Can you I'm was just it past for you? topic what's the of

Sam Samad

Yes.

I some extent. Patrick, It's seeing clinical in research clinical that to the build. is for simple thanks strength of the and in and the question, It's and answer, strength we're organic across business. the think the the of demand really applications terms its

that backlog And instruments. of some is

is Some of consumables. it

it base – the it's broad of So business. our reflects

In to with last chain COVID. taken chain, steps we supply I supply of of terms continuity the our initiatives address more done we product. of supply preserve is talked help make question, chain, mean, to a days these as have uninterrupted quarter, and obviously your lot lot with But customers about of have complicated to to access the a pandemic, sure

disruption really terms chain. chain, We've very in traditionally, but of that these ensure to steps distribution and unusual increased taken chain of that capacity isolated the we consumables. see amount we given We've can nothing supply of from to product customers. have, continues So we to increased disruptions that we in on of supply aside made integrity sure of that stock have seen some lot not we've we've a cases the supply center safety the provide actions

make I clear. So that's sure want just to

Operator

Thank you, Patrick.

next Barclays. Luke, Luke Our of from question proceed. Sergott is please

Luke Sergott

questions. for Great. Thanks the

a update that out process, of appeal? things the timelines be on the means? as you how how kind a deadline guys an us I EC the give you then pacing idea ultimately give and And of the perspective. suspension then and in and again, way year and margin the to if you timing And can And walk just playing So your just then us go of of what thinking guidance see the, could an we that here lastly, really don't wanted should then you throughout there? from the through about the idea get appeals characteristics just

Francis deSouza

Yes.

the question, take first of the various is around I'll timing processes which So regulatory underway.

review discussions this II for Phase with European the we phase our of terms Commission, in deal. where work are are first, the could currently So in we remedies in around potential that

through potential both pause work to times of right gives sort in now discuss sides, that both together. the and remedies so us, of And we're

There's QX that's And processes going jurisdictional at is Europe is QX-ish means looking sort by the separately that decision was of frame. a associated other time decision decision. what so case March. the a the decision also end out looking a a in little And time of on in Luxembourg Initially, the to here. we that like It's it line expected the around now line in in get pushes time issues bit. that to that's likely

are Europe. go And for our so the either done process that the start integrating. hearing we're our part there's If that we still QX, and That's go way and that. the in for decision can to be can frame. could time where, we done the European If them start watching an in processes of – The with we're at time a in frame we happen. associated waiting we'll and decision appeal we look process, review the way, doesn't after happened of that

Sam Samad

provide an as with is with more We the regards and we'll I Luke, our throughout we year, mean, the And updates guidance Yes. what to go margin give forward. QX evolution regards on update that you to in mentioned terms across We margins. to from approximately said QX that in is XX%. sequentially QX core operating we QX basis Illumina point that and would XXX for be of a going QX be Illumina, improvement consolidated

quarterly more year the of we provide as comments, Now margin going deeper don't forward, – updates year. we provide into as the we'll go usually sort but

Luke Sergott

Okay. Thank you.

Operator

Thank you, Luke.

Sourbeer from proceed. Our next question is John of UBS. John, please

John Sourbeer

taking thanks questions. for Hi, my

I to these? around XX-XX the you the is customers throughput. it there? clinical, in said So I for outlook XX% what around in your on for get think similar currently takes believe, thoughts presentation are and line month, the Any mid-throughput on And to XXXX what is low time last

Francis deSouza

Yes.

– I'll think I and So start.

continue see the target clinical have continue business grow. to We to our percentage into of

from So XXs our seen you've grow grow clinical sequencing the continue segment. that faster look research consumable how that's continuing last overall at steadily And if mid-XXs and you sort if to now, grow. played at late the the see segments revenue, than of towards to we you the year look out,

in lines only. direction going those steadily so are one And

last to clinical fact, that we our And testing, target long to that's largest oncology segment largest be the year, segment the for time. likely single segment. continue a became In

was long segment. very So for time, you research, that's which, largest disease as overtaken know, our a genetic

And definitely XX%, but it's heading crosses specific so don't when that it time frame have in a direction. we around

Sam Samad

look the over – at I look revenues. clinical NIPT testing, regards just growth of that research. Yes, Francis' been that [Technical really there to fact genetic disease that add robustly, if reflects And last but growing total the at have both an are just the if the oncology mean, with growth years, reflects Illumina growing is really, the very impressive comments, of testing, that clinical of last, would markets one I exceeded three Difficulty] But John, to clip. other markets dynamic, over you you has

John Sourbeer

the taking questions. for Thanks Great.

Sam Samad

welcome. You’re

Operator

questions John. waiting There are at you, Thank no additional this time.

remarks. conference So I'll hand closing any over for the Salli Schwartz back to

Salli Schwartz

Thank you.

concludes you the update of our As of Investors forward a website. of for available to first our a in fiscal the and replay close quarter of be Thank our XXXX. reminder, we section the us joining will next today. this This call look following call,

Operator

QX all for XXXX participation. call. concludes Illumina This you Thank earnings the your

disconnect now your lines. may You

Illumina (ILMN) 11 Feb 222021 Q4 Earnings call transcript