Analyst Conference Summary

conference date: April 27, 2021 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2021 (first quarter, Q1 2021)

Forward-looking statements

Overview: Recovering from pandemic, likely benefitting from delayed orders.

Basic data (GAAP):

Revenue was $1.09 billion, a record, up 14% sequentially from $953 million and up 27% from $859 million in the year-earlier quarter.

Net income was $147 million, down 43% sequentially from $257 million, and up % from $ million year-earlier.

Diluted EPS was $1.00, down 43% sequentially from $1.75, and down 15% from $1.17 year-earlier.

Guidance:

Revised 2021 guidance. Expects year-over-year revenue growth in the range of 25% to 28%, and now expects GAAP earnings per diluted share of $4.72 to $4.97 and non-GAAP earnings per diluted share of $5.80 to $6.05. Except for acquisition-related expenses and bridge facility fees incurred during Q1 2021, this guidance excludes the potential impact from the pending acquisition of GRAIL, which is expected to close in 2H 2021.

Conference Highlights:

Francis deSouza, President and CEO, said "Illumina achieved its first billion dollar revenue quarter in company history and delivered a very strong start to 2021, exceeding our expectations. Orders during the first quarter of 2021 reached an all time high demonstrating strength in our core business across all regions, reflecting growth in both clinical and research customers. We are seeing tremendous progress in clinical market access and reimbursement for genomic applications increasing access to genomic testing for patients worldwide. We are proud of the significant contributions our customers, partners, and employees are making to the creation of a genomic epidemiology infrastructure to combat COVID-19, as well as monitor for future pathogen outbreaks for the benefit of global public health."

During Q3 2020 Illumina announced an agreement to acquire GRAIL to accelerate commercialization and adoption of transformative multi-cancer screening genetic tests. GRAIL was spun off from Illumina in 2016. Will pay $8 billion to acquire it, but believes will close in second half of 2021.

In Q2 2021 announced a partnership with Kartos Therapeutics for comprehensive genomic profiling for blood cancers.

In Q1 2021 completed a senior unsecured bond offering for an aggregate principal amount of $1 billion and a $750 million 5-year unsecured revolving credit facility

Non-GAAP numbers: net income $278 million, up 55% sequentially from $179 million, and up 14% from $243 million year-earlier. Diluted EPS was $1.89, up 55% sequentially from $1.22, and up 15% from $1.64 year-earlier. Main difference with GAAP was eliminating $ million in other income.

Cash, equivalents and investment balance was $4.43 billion, up sequentialy from $3.5 billion. Long term debt increased to $1.67 billion. Cash flow from operations was $282 million. Free cash flow was $240 million. Capital expenditures were $42 million. Cash used to repurchase stock was $0 million.

Product revenue was $953 million, services $140 million.

Seeing continued HiSeq to NovaSeq adoption. NextSeq DX approved in China and there will be a collaboration with Sequoia Capital China to catalyze the genomic startup ecosystem in China.

In Q1 2021 consumables growth grew y/y, implying instrument growth declined, though sequencing instrument revenue was % y/y. Microarray revenue declined % y/y.

GAAP cost of revenue was $329 million, leaving gross profit of $764 million. Operating expenses were $571 million, consisting of: $197 million for research and development; $374 million for selling, general, and administrative. Leaving income from operations of $193 million. Other expense was $24 million. Income tax provision $22 million.

Q&A selective summary:

not available due to webcast replay delay

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