ILMN - Earnings call transcript Q2 2024

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2024 Illumina Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Salli Schwartz, Vice President of Investor Relations.

Sallilyn Schwartz

Hello, everyone, and welcome to our earnings call for the second quarter of 2024.

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

be at the illumina.com. can of Relations release website our earnings found Investor in section Our Chief Providing be Executive Dhingra, Jacob remarks Thaysen, Officer. prepared for Chief Officer; Illumina and today will Financial Ankur update Jacob review will results on will financial provide the of and our Illumina's Illumina. core state for Anker business an

in As GRAIL this June reminder, a divested year. of we

website. Investors section and is of and today's under and a Act all that the is forward-looking please made XXXX. Securities see Illumina, activity regarding review our call results and GRAIL It financial Private consolidated call our be will be protected Reform the of intent For our portion will This during statements earnings audio second Litigation our release archived commercial of for being filings. quarter recorded, financial results the SEC our in

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

Jacob Thaysen

genome their the second been science more together are see to they're and Most technology discovery the quarter, Salli. opportunities about has customers world. more encouraging continue significantly and of positioned with whole launch that Illumina sequencing programs large-scale hearing the to insights. facing you, our in our customers' in importantly, now customers everyone. and next our for, uniquely around empowered I of all Multiomics customers possible Throughout excited we're environment. and the aspirations. allows and been are customers to that partners envision Thank it discussing I've progress Good afternoon, this provides our meet partners Ongoing to is issues generation move to support products. using the

genomics customers Furthermore, care current have our I'm their that in improve throughout are realities. the there's elements more also patient to and many a feel to constrained to significant There opportunity view. But global outcomes. to hearing navigate measured help we the capital are we moving an system, integrate outlays. regularly our customers economy, taking make health still

in see and sales delays We orders our also cycle out. in pushed in it being

we doing is balance own jobs. lay to continued Series for base. one, groundwork to pursue future. the rollout NovaSeq our the in For important to Illumina, two Job customers and X means we the want our stabilize We're this that everything through of

which And way excellence highly We in are operational the job optimizing focused also accelerating run is and our business. growth. two on we

Our vision our next future new the strategy vault execute and R&D financial the next update week dimensions and for several technology strategy will our of address for years. our from outlook Illumina's to

will today's of focus on quarter second call results. purposes our For

with expectations, to ongoing quarter. NovaSeq Core revenue the activity sequencing of XX.X%, and continued in transition operating our of Illumina non-GAAP Illumina the margins against delivered Plus, of The by in significant priorities. again $X.X QX, execution ahead X strategic to of consumables led step-up In results billion driven a

customers With also said, their that see NovaSeq continue managing placed capital spend. XX We instruments. actively our we another to X Plus

the caution we remainder As a our adding result, to for guide. the year, of are

instrument reflect the a prudent view We to cycles. further of more business extension the have sales on taken

adjusted further shortly. But at time, have details consumables. guidance the Anker on stronger provide same our slightly on we view a will

the worked Americas in Europe given revenue X year significant year-over-year. was down backlog launch. performance our the we following to second the was X%, early flat region's revenue quarter. Turning relatively last through

made was EMEA has three the to was management key down the base China our during X% I'd priorities. about our which progress maximize you talking been Lumina's like and and on highlight expanding our focused XX%. second I'll I've been start revenue by down with team instruments. driving the helping installed our quarter towards properties. with line, customers top potential Greater those of

corresponding milestone in sequencing see their Plus pull-through earlier, has base achievement. NovaSeq mentioned projects Customers topped I NovaSeq X+ activity. X As to a by average instrument, bringing XX million XXX QX, to X+ and instruments are NovaSeq X+ encouraged total on transition instruments. to the installed increase we the in annual $X per our we continue

the installed the PX introduced More year. QX, XK,XK,PX, indicator launched flow upgraded now exceeded the and we cell earlier to we next leading PX times has delivers XkXk greater of software in our than XX% SBS mid-throughput. has adoption. The chemistry pricing. and usable improved to turnaround launch attractive for addition PX Moving XLEAP base lower and flow quality, an reads XLEAP-SBS chemistry our to complementing In expectations. cells, this

in uptake encouraging, interest to additional has XLEAP customers' been is instrument expected. we than While less translation

segment clearly seen Our capital sales we by environment. continue macroeconomic driven mid-throughput our remains cycles the constrained to spending. most to And lengthen. have sensitive the This is

have Our win our stable, remained pipeline rates grown. and has

XLEAP to NextSeq further strengthening around will position continue leadership customers We world. and the environment through are mid-throughput Xk/Xk our confident bringing our this to support that is

priority, operational second excellence. delivering our to Turning

operational driving board We as to of Everett on Chief Officer. with underpinning business focus Cunningham essential already is Commercial are customer sharp a excellence. the Everett an have thrilled across

their needs. that to our customers way by most and our As my services I've been a has it align in delivering pressing that the products, goal organization heroes will make shared, solutions address

our Following we've our commercial and new marketing organizational implemented a design. to commercial functions combine move

serve scale more to innovation. Teams expertise effectively and partners and equipped our research a with are commercialize go-to-market We customers for are teams our capabilities our our as across to Multiomics clinical stack positioning accelerate customers. software their and

provide will to customers alignment business. structure long-term deliver for our the and new needed results This the for

drive strategy Additionally, productivity earlier improvements optimization across we this year, are to chain. portfolio we our implementing shared supply that a

that an effort in rationalize example, of our we to a recent focus will As increase offerings. higher one profitable we have number on products identified

in We portfolio. work our with provide course, a other of to seamless customers offerings will, to our transition

achieving make greater to operating continue towards good this year. We leverage progress

my Moving priority, working has which resolve as quickly on possible. been as third to GRAIL to

future. know, has completed company. while of As we an independent a GRAIL the public minority and confident XX.X% part we role the maintained its fight remain Illumina now and in GRAIL of longer a is spin-off June, in Illumina, against in GRAIL cancer, you critical it's no stake. plays

We will continue our services. and technology of with sequencing GRAIL suite support to

genomics process will forward era move As we're and our we in continuing activating well to and growth positioned discovery. new be to the I next of know deliver strategy, our lead

share quarter second outlook. and to Ankur ask detail more I'll our on Now results

Ankur Dhingra

and the includes in Thank you, non-GAAP discussing hello, reconciliation encourage Jacob, and I release be to well data be which review in non-GAAP on everyone. as measures, can available results, our as compensation. these GRAIL, consolidated found of the you GAAP supplementary our financials today's I include which will that stock-based website.

chance also from investors In tour. hold the last Illumina a taking with part functions. months, all be I've time how across also to several a at listening team impressed to I spend X transformation how of as of heard had continue I've teams our is and is Illumina. this with mission-driven

include As additional I I and current in focus will my financial outlook, color commentary my some the results remarks. on

XXXX. exceeded X% on Core reported both guidance. Illumina continue results fewer-than-expected from increase basis primarily in by X% in of quarter high billion by This up of throughput of shipments first and sequencing consumables quarter offset instruments, revenue capital impact and performance constant expectations activity the These above to further second $X.X down purchasing mid-throughput consumables our This year-over-year was our currency X+. customers' ramp was continued driven customers and as decisions. partially flow strength revenue our constraints as on cash NovaSeq our was

Accelerating $XXX Illumina particularly second quarter, the color which the High was Plus. consumables the last as Ex grew of X consumables In approximately on of first in revenue provide consumables a high growth double-digit of little revenue bright NovaSeq and QX, the spot sequenced, XXXX. growing transition, consumables quarter. sequentially. to was revenue was high year-over-year this was quarter over quarter throughput million we of consumable from flat giga against XXXX. some in year's quarter throughput XX% from both sequencing bases and a order year revenue Total additional the highest with throughput on saw shipments first of of sequencing XX% year's core sequential second XX%

quarter. shifting of pace high throughput to X+ of X XXXX to average roughly has from NovaSeq terms XXXX NovaSeq on date each points percentage mix revenue moved from In to sequencing of X consumables

thereafter. growth mid-XXXX, to impact additional progresses, hope and consumables transition price should impact trajectory X holds, information of the growth this transition higher NovaSeq into reduce converting helpful. continues throughput transition half continuing to sequencing volume find of you If reduce. to high almost of the As revenue revenue the pricing this by this I

NovaSeq in this of We clearer X making to are you important the the increasing our transition. a give disclosures are progress around we picture

to GB approximately high Moving research activity. in applied and and more mid-throughput year-over-year output quarter-over-quarter. sequencing total on from customers our and clinical healthy. sequencing instruments XX% activity grew both XX% than and Growth was connected

for revenue, output consumables. our year-over-year. QX instruments us levels X% underlying but instruments Core of of XX% provides view million Although not and utilization GB revenue a predictor for of grew of directional of Sequencing applications sequentially near-term and a Illumina $XXX declined demand

decline in purchasing quarter by preorder year-over-year two and of X impact to second lower placements. was placements an instrument behavior NovaSeq moderate expected as continue compared XXXX, significant cash in and and mid-throughput factors: capital shipments flow to driven two, The one, decline shipments as launch-related the constraints

increase higher revenue revenue instrument up Core Illumina growing driven installed sequencing by base. an a well from revenue service service as and $XXX was partnerships X% strategic million contract as of on other year-over-year, in

points Core of increased gross importantly, sequencing margins the that primarily operational year-over-year. strong consumables the initiatives to cost and was delivered the favorable improve Core of XXX mix productivity basis of gross driven also rest performance savings. by execution P&L. revenue of a non-GAAP XX.X% excellence more and for Illumina This margin Illumina quarter our Moving

million all in above XXXX prior expectations, containment was $XXX Core has This operating together, as Core in our Illumina compared down the head of reflecting to initiatives. and cost margin came in due better-than-expected well it Illumina expenses in other margin Putting several gross strides non-GAAP as expenses. reducing in reductions and guidance non-GAAP organization our of million made XX.X% higher-than-expected our well year to XX% period. $XX revenue, were count operating year-over-year, XX.X% QX operating

of June income non-GAAP expense term rate for XX.X% or Below Core million tax share. full non-GAAP Illumina Core on other draw million $X.XX the QX interest for of the XX operating includes net Illumina was in we million in Core income loan, XXXX. days $XXX drew quarter. diluted for QX delayed line, per was XX, expense $XXX $XX Illumina the non-GAAP

for diluted approximately million. quarter count the Our average share was $XXX non-GAAP weighted

Moving items for and sheet quarter. to balance Core Illumina cash flow the

$XX were with cash, was and CapEx Cash million. We approximately ended million free $XXX cash million. million short-term the flow investments. operations and flow equivalents quarter provided by was $XXX $XXX in cash

now to Moving XXXX guidance.

see were customers' results the we the one consider in takes While hand, our remains spending by constrained. we we several as and year. puts QX, our On remainder encouraged of capital

the Consumables by solid. On X driven especially the transition throughput other our of NovaSeq business, hand, high remains

We are Instruments the half therefore especially second year. for for expectations, revenue reducing the our of

XXXX now our on to year Illumina is is For revenue be the mid-throughput X.X% of and broader decline And guidance and other business expectations China shipments. Approximately lower a projected for to down or for currency X/X due prior X% NovaSeq half our expectations reduced the from full of X down in from to is basis. constant to our our X.X% result a X% Asia.

to From perspective, the mid-XXs instruments revenue XXXX. low projected upper range of of revenue Sequencing midpoint guidance XXXX. an the Consumables is single-digit is Illumina decline end the Sequencing revenue relative to range. grow versus now the Core rate consumables projected to in the versus towards now instruments at

XX%. also guidance the for of to expectations. remainder reducing to our of above but achieved are expansion P&L. expenses reflects excellence on forecasted Illumina leverage non-GAAP about our of second range operating operating thus XXXX, initiatives, year. operational half been Core has to previous are delivering able raising We Now the margin stated XX.X% we a This margin the operating the execute QX in Illumina our

new against an upcoming well few $XXX years. detail We this operational as our which expect initiatives internal talk actions about next initiatives under the in will under program. more in the savings program, make million expense expense clinical several continuous update. we several progress deliver We'll improvement over excellence our continue to at additional this continuous launched improvement We've as strategy now

XXXX. $X.XX tax this to This resulting full million the range in place And Illumina we and in term Additionally, approximately XX%. June introducing put be delayed diluted interest we in for year $X.XX loan guidance we the range earnings draw half expect of Core lastly, Illumina rate the expense for are includes per non-GAAP year. share non-GAAP $XXX from Core second

For decline $X.XXX Illumina year is third Core the prior $X.XXX significant predominantly of quarter to expect from we launch. given range we the billion backlog last X the year NovaSeq in by of lower revenue XXXX, the the driven Instrument following billion. The worked through shipments

For the second is approximately quarter, to and The we non-GAAP the delayed spend project QX. quarter also Illumina the XX%. revenue third operating Core from of primarily timing decrease of margin lower expect sequential due from

interest We Illumina the XX% tax and and non-GAAP third EPS Core Illumina $X.XX, said to expect again approximately includes $X.XX diluted the quarter non-GAAP Core be which between rate expense.

to closing Jacob I for Thank With his you. that, will back turn remarks. it now over

Jacob Thaysen

Ankur. Thanks,

analysis has The couple Illumina's asset is our of enhancements of DRAGEN difficult has innovation software, our this machine the from multi spend to innovations. mapping version Before latest genotype to unlock XX engine. decisions, learning which to we our of insights. to One the added most significant minutes our quarter move genes new genome deeper years, to a driver [indiscernible] for launch like the I value on become and latest would advancement accurate and in includes been highest key tools. Q&A, example our technology our ability release a customer

the excited I'm to next share of Solutions. ahead, NovaSeq X Looking round

sequence cell X NovaSeq includes and output introduce such in XXX been this customers As for X+, cost cell year to you will Cells high Series. upgradable shipping XXXX flow application XXB will X NovaSeq will recall, and NovaSeq designed X+. to Series, the systems. XXX counting Also cycling a X point late The has QX our high single globally looking proteomics. we entry through-put The for since X begin March announced single the QX, in of for lower be Flow as XXXX the we and cycle and shipping in which X

for update Additionally, and other our increased next enable X+ and yield software the X will improvements. NovaSeq

ecosystem. I'm Illumina multiomics to has also pleased the with the opportunities enable further

Fluent's but available processed will workflows. and a be acquisition technology greater cell single our to for analysis block share to solution company of single with We Fluent that more cell specialized to set our will one multiomic further yet labels next week, approach sequencing. BioSciences, cell complex highlight recent mixtures a make of was source Fluent's solution with another building broader Partech customers. by are our software the in Together for a customers our their efforts create from acquisition, integrating value

to website. strategy and for for event Q&A. fit open be have update. Relations you Thank to to our best partnerships. August and operator vision, today. flexibility sure looking our I'll Investor to tools next joining committed Please is existing to maintaining at strategy to line the now customers our will want the outlook our will our We through speaking adopt the therefore on forward for needs. I'm Illumina open financial This our and supporting their week Tuesday, an virtual single-cell invite our remain platform XX. us that about make more register NGS the

Operator

first Vijay Kumar Our comes ISI. Evercore Instructions] [Operator question with from

Vijay Kumar

that on details lot execution $X But Congrats X about I look with there Jacob, Maybe, -- the guidance of high number and think of about in nice is at about was didn't super the on change to versus the generated we're this was delta of X.? amount details How some an the if this pull-through X I of deck. being sort change of model here, impact, the on Nova the the supposed guidance I instrumentation million, here. just and mid-super revenue and see here for coming the commentary, transition much data tie side? from think your but that a Is when the orders contribution. you versus pricing sort is how

Jacob Thaysen

Thanks, we better we model how on a comments Yes, to I little so quarter how your Vijay, to the also. and on appreciate wanted it. strong insights more see provide

Ankur the versus you we're are annual is from X. received on also we with more milestone here. more going you -- the that reached guide how little foremost, of a the the impact information we're the volume where pull-through million and I pleased, now and Ankur, exactly help have the pricing think happening. So is very to provide insight and on And can first we $X certainly

Ankur? So

Ankur Dhingra

sure. Yes, Vijay.

as yes, So you think we've some disclosures saw, more help through added here. specifically the everyone transition to

Let me just lay in it said out, as the script. I

XX% is to saying of about Consumables So X, terms NovaSeq transition of within XXXX the volume roughly on is we're from high in now throughput X. what

in to second holds. roughly nearing volume the trajectory moved would we're Half year So the X. the X.X of of if half this point about NovaSeq have

I seeing get of if shifting points of next of pace that that roughly half the quarter. mix holds year, trajectory revenue should to every And XXXX about from from to we that we're was that NovaSeq. X also mix included by is also NovaSeq about coming X

So is the X%, overall that's growth high trajectory. mid-throughput, growth, as the throughput there. across change was volume GB of around and about pricing your on of delta That mix high think impact the revenue sequenced and the XX%. yes, question throughput To about about roughly is the across the the you

Operator

comes from And Capital we'll Markets. move with our Conor next RBC McNamara to question

Conor Noel McNamara

to And that. a just follow-up

trying what flat. the is headwind pricing that the volumes it NovaSeq think simple you It's continues? a early we be? Or launch? if mean, price say should headwind -- you the -- roughly X sequencing XX% will if X% math, in pricing. it and to were kind on out Just I consumables the headwind conversion XX% higher as So up on was figure of were Is

Ankur Dhingra

that. address Yes, let me

of more the primarily way pricing and impact to I'm reduce. volume of the position the trying X, on continues the just to early data. higher it's to It So moves

from on holistically, and down, X overall back to basis. would come baseline to transition continues, about price our go transition XXXX right? decline GB there all as more And the easily a a you to than XX% JB was have inclusive, think resulted XX% to continues If

So half projection point, continues transition of this impact next to into and go transition as the volume year. revenue year of now get as the get mix by to -- mid point halfway based getting back halfway improves in the to could price the that down. And we on

Conor Noel McNamara

And pricing. side. Are you just equipment on any seeing on one follow-up pricing changes quick the

has that price you or If had stable? give to been relatively --

Jacob Thaysen

X+ advantage seen where we've the Yes. much -- allows seen pricing. introducing here for to actually are why price access constrained, of the capital series you're -- instruments. allows get Overall, the what's which -- X X+ NovaSeq them we're the have that's pretty now we stable lower I to to period of the about instruments the and wants that to that -- NovaSeq NovaSeq it think referring And both series NovaSeq also but get upgrade a point. customers the And for that the X, to cells. later beauty X NovaSeq the to flow it to in of is

to we customers and the X+ from we NovaSeqX. interest later the launched expect year NovaSeq see here this some So when

Operator

our next question, And we'll to Patrick next move Donnelly with Citi.

Patrick Donnelly

And of bit XX% opportunity P&L. expense big a one I'm feel R&D question you But for pacing? savings in like as of whether a there then there's you're here? where you those cost you areas Can circled can maybe talk conversations, for it any where just that does terms are to you opportunities It a talk Jacob, that again, kind seeing little about, next cost use lot just people focusing over the if And guys limits sure. have week, know the lever about, save I some the are on want of of $XXX investor in controls? off is lot from you're million reductions? on first, second, the line, willing a initiative, of are to that

discuss that a just bit. So

Jacob Thaysen

the Yes, reflection million that off-limits elements start the certainly at is a $XXX also. let me all of no P&L by looking that saying in We're and there's area.

insight at on are we We pacing tell is the we'll next providing are and all looking provide more elements insights can I this week. we're of that But what not, point, not at you this.

Just we or continue to how to referring we take R&D. the and how to look R&D, in spending at set up we're want the a money

thereby, each little them the as have you also background NPV to in drives and of that know, I just provide my truly based overall we philosophy a not And are give IC. And for programs and I'm by an at looking [indiscernible]. also, But shareholder R&D you bit on of just that -- valuing using that but project overall value. including R&D internally I'm is But tight and it growth number, around the on a company. driving focusing course, just measures,

on very thereby building a not this very, at are we we're and looking tops-down also. budget So detailed

think, the... a say maybe you I Ankur, about bit want to little more

Ankur Dhingra

as in little Yes, taking where is steps towards sure. a said, we the expansion all Yes, we'll strategy. company strategy but there for more sustainable the long to laying the we'll during multiyear we lead can likely better the next week, here focus are cost details bit And across we term. we a areas a what margin share structure out and structurally are

come, So focus all more across across all but to lines. opportunities the is

Operator

Doug And Schenkel from next question our with Wolfe Research. comes

Douglas Schenkel

look bottomed just in now it It seems quarter QX. way under Good the We're different consumable revenue here, simpler in to $XXX up cutting QX. $XXX just $XXX sequencing multi-quarter to at model at afternoon. Maybe out trend a like million the increased the as fourth just and under I million. in

down $XXX seem the it be assuming range year-over-year, every million over revenue XX% in million While to to $XXX this you've guided stabilizing you're year. instruments like like instrument quarter does of

Analyst there If to kind year. guide, I use to asking there's to the and not revenue return get up? expands just Consumables I'm missing Or there's have installed if and stabilizing for ahead we to revenue think continues asking no the quarter clearly forward not simplifying levels, to to the at something magical is in you that I'm reason what that plus these -- are growing material I'm you a next assuming of you essentially math, change is be every grow Instrument forward week. doesn't volume mid-single-digit yourself, just fast year? messing to base as mathematically, Day could of next But So imply I'm next growth that here? as

Jacob Thaysen

you're the is assumption we believe is that, think the growth turn that indicator I what better said consumer Doug, right for your that we on right and in into a earlier the performance to it's for the too detailed I still mean early conversation 'XX. a we've moving that the company. seen have last there's days lot I of a few think in about elements.

U.S. still We There in coming election what is East. have a up. Middle are the concerns happening about

course, have goes. will where of a much interest everything Of see can trajectory we on years. past back better course, the we to get rates, the few growth we that doing But for to been we than are

Ankur Dhingra

pointing the add, Yes. we're here. looking moving well. That's And at right only And as you're I exactly Doug, that parts to the thing said, business as would lots metrics. how Jacob of

You've the seen recent around macro. prints the

consumables, well but XXXX, become factors, the the we are to the are transition on should high time of or the fact as on impact lower over on seeing pricing continue right? throughput erode to X early call as trends the too So all positive that

what growth the year of during the the seen very year, strong. GB output also This been first half overall is has we've

XX%. XX%. now was seeing We're First quarter over over

in average range was the sort you of If that more XXs as years last well. mid-XXs look to X-year at

but direction, moving call the of So fundamentals for The right business still to early to parts. too the in be 'XX. several seem moving

Operator

Dan Arias question comes with Stifel. next Our from

Daniel Arias

'XX? adopt community the community, the next should there? to you clinical actually for if year have X? And incremental the than point back guys markets is can the Jacob, the then research have a you of you then where things that to the or you start start expectations are work kit? that what are was head into we represent two about. pricing talking adopting of pressure for clinical there in the is Do elasticity something think as or later how thinking think half in about those year? If you presumably headwind to do an labs those And does Or moving that the XXB kind we Ankur

Jacob Thaysen

Yes.

is we that. X course, good the reason has than think where that faster see, clinical the continue environment I the very academia a -- to -- to academic that's is, of for and there's environment moved

your to mode. XXXX have you keep for and validate has current releases As actually know, on new or a put products out. the it on you clinical What products customers of their few few really assays. you X your strategy you've the assays been the been production our before we seen many on assays on and have into to assays the coming focusing full validated then last And new weeks, the over seen,

clinical So you're starting most believe big have all to actually multiple see that is already customers and -- there be to this going much our -- pretty happening. We access our of in laboratories.

to next be or time. swings think We going over the So period quite that we don't material stable in -- we're any is change transition. not foreseeing of

concerned trajectory. I'm in So certain about change too not

Operator

our question from move Jefferies. And we'll to next Tycho Peterson from

Tycho Peterson

you rates as issue? bit capital maybe talking probe think stable. little want that's know talk I about into the I some don't why competitive comments. a a to cash you're when to mid-throughput of more Can flow you

Jacob Thaysen

company. had And I'd can all, say drive I mentioned No, -- we and stance see taking in Yes. that than all do we're the I But have we from is competition coming before I'm that different meaningful think both had we a the certainly -- said, competition. that. first here we company. seriously. into I continue have mentioned this. what impact of in -- proactive first seeing. through not of competition marketplace also that to approach the taking very This very starting we're Illumina before, the way culture take the competition as saw That lifetime also to and I the And we're we

China with the We but least that area over this, competitive is the past there in still pressure do most competitive an is mid-throughput see, here, changed issue at space that the intensive really quarters. here, hasn't it

right are quite a where actually few at And now. on very insight good change we on We the look actually win closely. And this rates. very we deal actually we any quarters. remain don't over see in each following the last we have you it, Secondly, very, if are range-bound

any we in And we economic So this. the environment. the therefore, attributing real don't part are of change see this biggest to

Tycho Peterson

a Okay. then And follow-up.

forthcoming transition XX% that's much transition I If expect XXXX work more be we should you're And the long-range guess, how the below way you Consumables high-throughput year to expect therefore, and to X price to your through of to mid-'XX. a its to by do plan? model? pressure expecting

Ankur Dhingra

Yes.

there. Let right me just make sure we number got the

cross we from the perspective, half of should a in halfway the mark volume second So . 'XX here

QX, price in we'll As of come the go transition XXXX to revenue mix, X, saw impact of X. X-point And continues into several XX% volume The the the every and references, over down to volume that into the should specifically moving parts. of contribution to be X. of half revenue the on with Tycho, continues this. talk XXXX, around, increase. the the about we There'll

So this about we'll to talk when guidance the point. get we

Tycho Peterson

And that program, hear that And million continuous clarification Is hop at the the is over X we'll improvement then $XXX just years? the the cost about I a Day? before extent Okay. off. outs Analyst

Jacob Thaysen

-- comprehensive few application power. also going our we're on growth, our see but on our you give next course, expect over our week, expansion, next how view insight the more to how both come growth earnings margin a we provide we'll and we back of Yes, but the of years. of

years period. that insight next we'll So in provide X all

Operator

to with from move next Guggenheim. question our we'll And Nambi

Subhalaxmi Nambi

they research? color of question [indiscernible], dynamics. for had is a and on XXXX the what that of NovaSeq they clinical clinical customers customers X X the assays are which versus I on are replacement, of follow-up X within Or moving the versus thanks for X, to existing what purchase they additional placement, Ankur, typically when is mix mix new specific using And the existing to customers, NovaSeq offshore X? is And new assays. providing

of does Assays or part like squencing? that deeper because [indiscernible]. utilization the I tend is last require to XXXX asked seem fairly it

Ankur Dhingra

ongoing believe, providing provided and you've that Yes. We've specifically know Subu, basis. -- half it's half, segmentation. past, don't clinical I an something we're data roughly that said I but research not if and generally right in the on between mix

from clinical time transition is the to around where on add perspective in newer tests tests, the clinical see Jacob terms launch customer our the develop high still volume. of most X newer focus there. can more you Now the color and is of X to X, And of general customers approach at an then is

Jacob Thaysen

that's correct. intensive seeing we're absolutely tests And sequencing. new of of these mostly Yes, being higher

not So your panels. only there's, and of parameter to larger insights, going samples, itself. hold including sample Deeper seeing for of insights more It's in in interest example, our the for is course, so of panels sequencing many genome We're new customers so getting forth. looking sequencing, [indiscernible] here. on certainly but

that's in what we So see the space. clinical

much in look spatial, areas, you academia requires which in going the If sequencing. we're into now in uptick starting there's lot a and on, cell, other higher of see single intensity certainly space, to an

So that's what we're seeing right now.

Operator

question next with from Leerink Souda Our comes Puneet Partners.

Puneet Souda

the the in potential market? use the lower with provided Jacob to near first that Nova order comment moving throughput trying there gap to is X-plus is of you think So -- just the that in address flow in a with do segment? can there that pricing the mid-throughput more single one maybe a compete actually the the that effectively instead think to understand X a cell in competitor per a the at cost on you lower to you Or end, is -- cost gigabase term lever mid

Jacob Thaysen

thanks think for that. I Yes, --

cell, I think NovaSeq I applications. you the both. X meaning that all for the X run can mean, with flow

we we the a But already than there to. power but provides competitors also think I lot of take And think complicated of is have but is caught up But it's our throughput, to certainly while a that XXB priced competitive if narrow the do the -- opportunity I members get of need I -- we we do run we I actually pricing NovaSeq of say very, that. But that element. full the a mid -- definitions for that with certainly on can to that in think would sometimes actually, claims. too low cells. of use of our great teams lot very believe an and very more level You flow have I Plus cell pricing

data. chain full are I we're the from the performance reduce And computational claim costs. pretty the overall all much workflow workflow applications. limited So being sometimes meeting even a just quality is very based or think seeing at looked from improve we on cases, DRAGEN is also perspective, limited see that and it steps that significantly interim in

continue of So if see and actually you differentiated. to take of we full when provide we application will even all that a for power cost into consideration you highly and full computation be per workflow, premium cost that breadth gigabase,

spend to time in could to high better actually seeing this, agree. throughput of going our And We I mid I customers our a vault. have in we're But examples the also we that. providing and insights throughput also both job provide what communicating we'll but the more by giving week R&D you of on think next that. are more more depreciation do

Puneet Souda

of -- commercial why And the is to there? quota-bearing of change? That's the trying force trying that historically. of are really in out helpful. are well What I'm some then Some understand org, now you there? the to time understand Okay. sales just change are worked on right I'm sort the has to that's changes driving just some -- what

what really driving have in that? But are marketplace. obviously You a what's wondering solid some the there. the just And changes of product

Jacob Thaysen

together. announced was in sales come Yes. our was I that Everett marketing I it mean, we what bring felt I to our think that teams and already before important

those you top effect. So if bring X also the synergistic together, level, when some have start you teams you at

on team, the now leadership have align will and average. we You that done

do informatics have so to into into And a play. sure believe now how should we application taken how So X have we when that even where we capabilities Number the into look that's commercial deeper bigger multiomics field. better an we ourselves one. accelerating X we and team, is even also have are number we make have

the So regional -- but more more and say. on about structure, the to this adding ground, regions the is feet less so changing

Puneet Souda

ask, more could through? already that pull the where about It's think Got the could eventually? overall math last land what then your should -- just it. we how one, if I you're And than $X suggesting What's million.

Jacob Thaysen

while certainly million is And the don't for Yes. very we equilibrium. $X this point believe -- at of I X the going think exit to that it's mean, encouraged are Series. now we we already annually we're the

go it we can So believe higher.

now right We also see customers already. much doing higher

So go. this not we think we this go don't could at to ready on we're least we're to But at point. see share encouraged where have this -- a view where could detailed

Operator

Nam next comes Our from question Sung with Ji Scotiabank.

Sung Ji Nam

Ankur. China maybe in us bit and EMEA. one your in Just color of outlook more Greater China give Could and you terms a for

think of seems attributable curious growth if quarters, at said you trends if look the I I that but just half guidance, over is that the Asia. China, last you pretty stable, of few your kind to think

so since And how you deterioration in your changed significant has curious expect what going And those quarter? -- last kind expectation a the just if of forward? your regions

Jacob Thaysen

Yes.

be me I are China, here that call and we related start to cycle. addressing is too where we constrained. to can of customer let by this And think, So in still weak economy first the to see, it's the continues still what all, early from

also, and as I'm really market I a than active is a -- the -- we hired be field really she in and see as in. the tough last don't back intensity mentioned, any quarter, very new and from she's But change you Region on about the competitive we for and material office. focusing a mentioned China. China, don't of in commercial also the into been we to of What also, as really structure -- that more -- more we our we excited in in still So world, call optimizing there it's the have in think, head bringing the change little really in place for rest is

consider continuing our course, ID groups and targeted those product specific for are to kind finally we of resetting bringing optimizing She's partnerships in strategies IVD and how also pricing products relationships and more China. to of

lot But are now. it's early will turn. doing deeper insights. a I eventually, think right we too there's point, to that this And this So at provide

provide rest maybe, think can Ankur more a I little on insight you asia. of

Ankur Dhingra

just specifically China that in and previous not give you as couple me part -- let we've a expectations for business. were recovery more because of estimates Yes, included a guidance. our the of our material that The colors

you build still though if sequential of -- several the to down weak. over look business, X China implied year-over-year. However, in the quarters last was X increase has that now over even business there -- at been The an

a all currency China. our very basis, constant where of been In part, on to Illumina from constant at year-over-year if a my midpoint all guidance roughly points big currency quite points on a or now is that has of basis is full X/X basis you X almost X.X look fact, that And of year at due a weak. midpoint, business lower

look any in of action the team. seeing signs we're perspective, the not from rest go the year. of business commercial where out and lots of overall We're I would making volumes environment now in the changes increase recovery, there assume But just kind our of right doesn't for

to the that. that and out So forecast taken kind de-risk of trying of

Operator

next Berstein Eve from our Bernstein question Associates. And from comes

Unknown Analyst

expand or reasons And imagine those your customers. Great. comes differently LabCorp clinical you those In collaborations Quest few companies? seen of one competitors. announced revenue us what some from than act remind then both months, companies and I why question. of portion we've Can your can other last the with your of would

higher fit. don't example, of they boxes. they portion a I'm so DX as for FDA-approved many need do So there's and that Maybe a natural tests, guessing LDTs more

take assays major But shouldn't market? to if we share potential this and a as Plus. sign clinical potentially of to hit the in just when shift Not the why X and revenue X a loss

Jacob Thaysen

Yes.

I closer the other agreements with think I decisions in parties companies on space. collaboration MTS suggest those about to their you speak making

patents is can customers you that do first be foremost, or very a not here you we today goes very, I and do really the on think limited whole what the because, it's addressing And a price a the provides [indiscernible] to for little focusing actually application there on, our highest I bit quality genomes. for space. are think

also only confidence think So a on you. price, that I where support it's about provide you is have hand, product and solution not and other providing the a a continue can in the to vendor providing

best provide And So our element solutions answers and will one whole only goes I to sequencing, single think cost into workflow, we hear continue focusing the the providing but of in to there's best cost workflow do not that this. quality many our the of of the the on the customers. more Illumina highest but to details

Operator

from with comes David Piper Sandler. question next our Westenberg And

David Westenberg

you the the Can transition? is is in the follow-up. So you actual compatible. just specifically talk you impact about sleep some said I on believe believe pricing should this XX% -- is talk pricing adoption. one guidance? year total backwards dollar in that in about transition with I mid-throughput can think we of I that about the that XLEAP? How have And

then validation throughput. talk about moving clinical one -- regular one had actually... you for required to further -- And step and from the I Can that sorry, clarification just

Jacob Thaysen

going a for had So But X. cell first downloaded XX% flow of software. people X into has overall, in we This a the XLEAP for PX, mentioned, we see of PX our as on an while, for but see chemistry. very indicator we has that we out is are lot interest the been installed base also what in also now interested particular

have interesting sequencing a higher of -- and for higher point have also quality the but different one which we XLEAP chemistry, We a of price capacity. is interested as also areas, talking we've about been

to to other the maybe clinical the SBS transtion? can chemistry there's validation that transition. really a the more are from do will provide provide do validation. more will normal you to our depends you normally, you let depends we the to on on through you chemistry. just that to the But is and when so. little to on where its one XLEAP It bit go going But over standard assays. or lab Ankur, you'll required specific do the and going know want on from from how That to steps no But from software from shift insights other. is patients end that in is me just Ankur, -- talk XLEAP So the have that,

Ankur Dhingra

Yes.

previous to transition of more pricing XLEAP And relative on to significantly side. a will likely original X it In our you've seen be -- or transition, the will proactive there but terms is smaller. that the what consumables, happen,

business consumables revenue a has. the from going Consumables modeling our is and perspective, portion P&L to a or a MT as business what of base relative volume ex forward much, our So of much smaller

overall perspective, -- be So on smaller. an significantly will not from revenue I'm impact it line

David Westenberg

then to pricing Can on that drive in quick What's lower terms pricing? even And you intention you terms do there than a of comfortable thoughts bundled versus I any follow-up [indiscernible] step feel that's know And have with IP, that's -- you pretty have step. pricing bundles, how it. Fluent. of the just a Got in in do you would pricing. just emulsion IP? believe on an I

that lot So that space? been mean there's in IP I a does of protect you?

Jacob Thaysen

Yes.

first So a excited as certainly broader we, you that Fluent is mentioned we also technology and are the The very most allows that about Fluent cell. of for for acquisition. believe And adoption single

cells can here, the actually mid-throughput into individual address cost So experience individual there certainly are the certainly competitive that space. and patients some is volume market areas high get where of easily in in and the can customers the where single -- cell there's

go go still this. to But a early there course, how of commercialize we're we a about offering. will, we too and into mentioned very present as discussion attractive going Fluent that are before, We in to but

the allow partners on with also. to work very and the all the all cell providers continue and very, We single platforms industry offering our competitive to in will them a have

Operator

question next to we'll Brennan, our with with Dan And move TD Cowen.

Daniel Brennan

on question clarification just and Jacob a a and Ankur. just first just Maybe then Consumables.

X NextSeq is there's guess, impression, I you label price present the but G I think low been into a actually the have and something hours drag I or actually we you clarification, XXs. move margin On really were per the correct? on not mid-throughput, that might think as Because much for into said under of the teens

So just speak can little as bit impact a you actually? margin the base flows adopts mid-throughput your through to maybe how

Ankur Dhingra

Yes.

is consumables be different looking already, make is you're smaller from P&L given That be then a there the list the market manageable. saying margin prices the drag drag list are part relatively of on that full contribution revenue on generally P&L. overall prices, prices second, margin on Illumina will where mid-throughput our I'm likely side, my on the but going to at So What and track. is the are

Jacob Thaysen

the done R&D has with great But also price that XL I lower manufacturing the say job the a of to chemistry. team will together

with COGS comes a margins yes. and actually it the So lower on of drag less thereby a

Daniel Brennan

'XX Like know growth bit you a clinical kind would of about the quarter? you the really during revenue in presumably, in I though it. then even gave side I clinical break winning? impact there the that if any research like for And I side, But is did assumed and side. and presentation between out the research you volume. see guess color NGS? apologize it's lot -- research more more the Got having on like to I the guide and you're of did that that color presume than on clinical first competitive how speak did a And you little success on whatever what's

any helpful. So could color you provide would there be

Jacob Thaysen

Yes.

sides that can business. splitting normally on not out, are the we're academic I of the tell So but and clinical part the of you healthy that we growing both

Operator

session. concludes And will hand ladies Salli Q&A back to call and I our gentlemen, the Schwartz. now that over

Sallilyn Schwartz

today. us joining for you Thank

reminder, our upcoming Investor call section be we to a As of at other the our Day replay Investors concludes our call, seeing events. look and website. a in you will This forward available and of this

Operator

Ladies call. and concludes gentlemen, this today's

You may now disconnect.

Illumina (ILMN) 6 Aug 242024 Q2 Earnings call transcript