Analyst Conference Summary

conference date: February 6, 2025 @ 1:30 PM Pacific Time
for quarter ending: December 30, 2024 (fourth quarter, Q4 2024)

Forward-looking statements

Overview: Maintaining revenue, but p/e of a higher-growth company. Then again the stock price is about one-quarter of its high point in 2021.

Basic data (GAAP):

Revenue was $1.10 billion, up 2% sequentially from $1.08 billion and down 2% from $1.12 billion in the year-earlier quarter.

Net income was $187 million, down sequentially from $642 million, and up from negative $176 million year-earlier.

Diluted EPS was $1.17, down sequentially from $4.42, and up from negative $1.11 year-earlier.

Guidance:

Full year 2025 non-GAAP diluted EPS in the range of $4.50 to $4.65. This does not reflect potential impact of Chinese ban or tariffs on Illumina products. For Q1 expects revenue about flat y/y.

Conference Highlights:

Jacob Thaysen, CEO, said "The Illumina team delivered fourth quarter revenue that exceeded our expectations, and we made significant progress in 2024 toward our goals to drive customer-centric innovation, margin expansion, and EPS growth." Has a three year plan to accelerate revenue growth and expand margins. Is talking to Chinese officials to seek a mutual solution (to their retaliation to Trump tariffs). China represents about 7% of ILMN revenue. Non-GAAP Gross Margin grew to 58.6% in Q4.

On June 24, 2024 Illumina divested GRAIL. Illumina retains a 14.5% stake in Grail. The rest of the Grail stock was distributed to Illumina stockholders.

Illumina hopes to return to high single-digit growth by 2027. In Q4 2024 launched Single Flow Cell NovaSeq X and 25B cycle kits.

Product revenue was $939 million, services $165 million. $155 million of the product revenue was for instruments.

Illumina shipped 91 NovaSeq X instruments in Q4 2024. [NovaSeq X is the most power and expensive of its sequencers.] Expected to ship fewer high-throughput devices in 2024 than in 2023. Installed base ended at 630 systems. MiSeq i100 sales were over 70.

In Q3 2024, Illumina introduced the MiSeq i100 Series, its simplest, fastest benchtop sequencer.

Non-GAAP numbers: net income $138 million, down 24% sequentially from $181 million, and well up from $22 million year-earlier. Diluted EPS was $0.86, down 25% sequentially from $1.14, and well up from $0.14 year-earlier.

Cash, equivalents and investment balance was $1.22 billion, up sequentialy from $939 million. $1.49 billion term debt. Cash flow from operations was $364 million. Free cash flow was $322 million. Capital expenditures were $42 million. Cash used to repurchase stock was $17 million. $0 million was used to pay down debt.

GAAP cost of revenue was $376 million, leaving gross profit of $728 million. Operating expenses were $553 million, consisting of: $256 million for research and development; $279 million for selling, general, and administrative; $18 million income from legal settlement. Leaving income from operations of $175 million. Other income was $13 million. Income tax $1 million.

Q&A selective summary:

China? New news, it is a significant market for us. No details at this time.

Volumes? Customers are moving to X, then using it to increase sequencing volumes. The main message is that volume growth is accelerating, above mid-20s %.

Can you protect the low end of your EPS targets for 2025? We remain committed to our plan. We will keep driving margins regardless of the China outcome.

Completion of optimizations? No, still significant opportunities for better efficiency. We need to lower R&D costs and the cost of manufacturing.

BGI sequencer ban by U.S.? We will let that be decided by Washington.

Application specific pricing? We have discussed this with some customers, we may have to do this for emerging, high-volume tech. A set of customers are already on board for that.

We think the Nvidia partnership will help our customers compute large amounts of data. So we are enabling their programming language on our infrastructure. We see a lot of interest from customers.

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