- Core Illumina revenue of $1.06
billion for Q1 2024, down 2% from Q1 2023 (down 2% on a
constant currency basis)
- Core Illumina GAAP operating margin of 11.0% and non-GAAP
operating margin of 20.6% for Q1 2024
- Reiterating fiscal year 2024 Core Illumina revenue guidance
that is approximately flat compared to 2023 and a Core Illumina
non-GAAP operating margin for fiscal year 2024 of approximately
20%
- Consolidated revenue of $1.08
billion for Q1 2024, down 1% from Q1 2023 (down 1% on a
constant currency basis)
- GAAP diluted loss per share of ($0.79) for Q1 2024, compared to GAAP diluted
earnings per share of $0.02 for Q1
2023
- Non-GAAP diluted earnings per share of $0.09 for Q1 2024, compared to non-GAAP diluted
earnings per share of $0.08 in Q1
2023
- Illumina remains on track to divest GRAIL through either a sale
or a capital markets transaction, with the goal of finalizing the
terms of divestiture by the end of Q2 2024. In April, Illumina
received approval of its divestment plan from the European
Commission. In the instance of a capital markets transaction, the
divestment plan requires Illumina to provide GRAIL with
approximately $1 billion in
funding
SAN
DIEGO, May 2, 2024 /PRNewswire/ -- Illumina, Inc.
(Nasdaq: ILMN) ("Illumina" or the "company") today announced its
financial results for the first quarter of fiscal year 2024, which
include the consolidated financial results for GRAIL.
"The Illumina team delivered results ahead of our expectations
by supporting our customers with innovative solutions that enable
the next wave of progress in genomics and multiomics," said
Jacob Thaysen, Chief Executive
Officer. "Our customers are leveraging the NovaSeq X to drive
increased sequencing activity, even in a persistently challenging
global macroeconomic environment. Additionally, our team's strong
execution and continued focus on operational excellence enabled us
to deliver year-over-year improvement in both gross margin and
non-GAAP operating margin."
First quarter consolidated results
|
GAAP
|
|
Non-GAAP
(a)
|
Dollars in millions,
except per share amounts
|
Q1
2024
|
|
Q1
2023
|
|
Q1
2024
|
|
Q1
2023
|
Revenue
|
$
1,076
|
|
$
1,087
|
|
$
1,076
|
|
$
1,087
|
Gross margin
|
62.0 %
|
|
60.3 %
|
|
66.5 %
|
|
64.7 %
|
Research and
development ("R&D") expense
|
$ 339
|
|
$ 341
|
|
$ 335
|
|
$ 339
|
Selling, general and
administrative ("SG&A") expense
|
$ 439
|
|
$ 378
|
|
$ 349
|
|
$ 343
|
Operating (loss)
profit
|
$
(111)
|
|
$ (64)
|
|
$
33
|
|
$ 21
|
Operating
margin
|
(10.3) %
|
|
(5.7) %
|
|
3.1 %
|
|
1.9 %
|
Tax provision
(benefit)
|
$
17
|
|
$ (81)
|
|
$
13
|
|
$
5
|
Tax rate
|
(15.3) %
|
|
103.9 %
|
|
46.4 %
|
|
27.3 %
|
Net (loss)
income
|
$
(126)
|
|
$
3
|
|
$
14
|
|
$ 13
|
Diluted (loss) earnings
per share
|
$
(0.79)
|
|
$
0.02
|
|
$
0.09
|
|
$
0.08
|
|
(a) See the
tables included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
Capital expenditures for free cash flow purposes were
$36 million for Q1 2024. Cash flow
provided by operations was $77
million, compared to cash flow provided by operations of
$10 million in the prior year period.
Free cash flow (cash flow provided by operations less capital
expenditures) was $41 million for the
quarter, compared to $(42) million in
the prior year period. Depreciation and amortization expenses were
$108 million for Q1 2024. At the
close of the quarter, the company held $1,115 million in cash, cash equivalents and
short-term investments.
First quarter segment results
Illumina has two
reportable segments, Core Illumina and GRAIL.
Core Illumina
|
GAAP
|
|
Non-GAAP
(a)
|
Dollars in
millions
|
Q1
2024
|
|
Q1
2023
|
|
Q1
2024
|
|
Q1
2023
|
Revenue
(b)
|
$
1,056
|
|
$
1,076
|
|
$
1,056
|
|
$
1,076
|
Gross margin
(c)
|
65.7 %
|
|
63.8 %
|
|
67.1 %
|
|
65.2 %
|
R&D
expense
|
$ 241
|
|
$ 259
|
|
$ 237
|
|
$ 257
|
SG&A
expense
|
$ 336
|
|
$ 286
|
|
$ 254
|
|
$ 257
|
Operating
profit
|
$ 116
|
|
$ 142
|
|
$ 218
|
|
$ 187
|
Operating
margin
|
11.0 %
|
|
13.2 %
|
|
20.6 %
|
|
17.4 %
|
|
(a) See
Table 3 included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
(b) Core
Illumina revenue for Q1 2024 was down 2% as compared to Q1 2023 and
down 2% on a constant currency basis. Amounts for Q1 2024 and
Q1 2023 included intercompany revenue of $7 million and $9 million,
respectively, which is eliminated in consolidation.
|
(c) The
year-over-year increase in gross margin was primarily driven by a
more favorable mix of sequencing consumables and execution of our
operational excellence priorities that delivered cost savings,
including freight and improved productivity. This was partially
offset by certain strategic partnership revenue that is lower
margin and increased warranty and field service costs.
|
GRAIL
|
GAAP
|
|
Non-GAAP
(a)
|
In
millions
|
Q1
2024
|
|
Q1
2023
|
|
Q1
2024
|
|
Q1
2023
|
Revenue
|
$
27
|
|
$
20
|
|
$
27
|
|
$
20
|
Gross (loss)
profit
|
$ (22)
|
|
$
(25)
|
|
$
12
|
|
$
9
|
R&D
expense
|
$ 101
|
|
$
86
|
|
$ 101
|
|
$
86
|
SG&A
expense
|
$ 104
|
|
$
93
|
|
$
96
|
|
$
87
|
Operating
loss
|
$
(227)
|
|
$ (204)
|
|
$
(185)
|
|
$ (164)
|
|
(a) See
Table 3 included in the "Results of Operations - Non-GAAP" section
below for reconciliations of these GAAP and non-GAAP financial
measures.
|
Key announcements by Illumina since Illumina's last earnings
release
- Released XLEAP-SBS chemistry on NextSeq™ 1000 and NextSeq 2000
Systems, our fastest, highest quality, and most robust sequencing
by synthesis (SBS) chemistry to date
- Launched Illumina Complete Long Reads (ICLR) with Enrichment, a
flexible, cost-effective solution to enhance coverage of known
challenging-to-map regions with targeted long reads where they
provide the most value
- A recent literature review, published in the Nature
journal Genomic Medicine, showed that short-read genomic
sequencing (GS) reduces the time it takes to diagnose and treat
pediatric patients who may have a rare genetic condition
- Appointed Ankur Dhingra as Chief
Financial Officer and Jakob Wedel as
Chief Strategy and Corporate Development Officer
- Appointed Jenny Zheng as Head of
Region, Greater China
A full list of recent Illumina announcements can be found in the
company's News Center.
Key announcements by GRAIL since Illumina's last earnings
release
- Presented new data at the American Association for Cancer
Research (AACR) Annual Meeting that:
- Demonstrated the first real-world evaluation of repeat
multi-cancer early detection (MCED) / Galleri testing showing the
potential value of adding repeat MCED screening
- Exhibited 4-year overall survival follow-up demonstrating the
prognostic significance of detecting cancer with a
methylation-based cfDNA platform like Galleri
- Illustrated data demonstrating the power of Galleri to
preferentially detect high grade, clinically significant prostate
cancer over indolent cases.
- Announced a collaboration with AstraZeneca in which
participants from Japan will have
their samples tested using GRAIL's novel risk classification test
on its Methylation Platform
A full list of recent GRAIL announcements can be found in
GRAIL's Newsroom.
Financial outlook and guidance
For fiscal year 2024,
the company continues to expect Core Illumina revenue to be
approximately flat compared to fiscal year 2023 and Core Illumina
non-GAAP operating margin to be approximately 20%. While Illumina
continues to move as quickly as possible to resolve GRAIL, the
company is focusing its financial outlook on Core Illumina, as the
specific timing and impact of the GRAIL divestment remains
uncertain.
The company provides forward-looking guidance on a non-GAAP
basis. The company is unable to provide a reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP reported financial measures because it is unable to
predict with reasonable certainty the financial impact of items
such as acquisition-related expenses, gains and losses from our
strategic investments, fair value adjustments related to contingent
consideration and contingent value rights, potential future asset
impairments, restructuring activities, and the ultimate outcome of
pending litigation without unreasonable effort. These items are
uncertain, inherently difficult to predict, depend on various
factors, and could have a material impact on GAAP reported results
for the guidance period. For the same reasons, the company is
unable to address the significance of the unavailable information,
which could be material to future results.
Conference call information
The conference call will
begin at 2 p.m. Pacific Time (5
p.m. Eastern Time) on Thursday, May 2, 2024. Interested
parties may access the live teleconference through the Investor
Info section of Illumina's website at investor.illumina.com.
Alternatively, individuals can access the call by dialing
866.400.0049 or +1.323.701.0225 outside North America, both using conference ID
9170634. To ensure timely connection, please dial in at least ten
minutes before the scheduled start of the call.
A replay of the conference call will be posted on Illumina's
website after the event and will be available for at least 30 days
following.
Statement regarding use of non-GAAP financial
measures
The company reports non-GAAP results for diluted
earnings per share, net income, gross margin, operating expenses,
including research and development expense, selling general and
administrative expense, and from time to time, as applicable, legal
contingencies and settlement, and goodwill and intangible
impairment, operating income (loss), operating margin, gross profit
(loss), other income (expense), tax provision, constant currency
revenue growth, and free cash flow (on a consolidated and, as
applicable, segment basis for our Core Illumina and GRAIL segments)
in addition to, and not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. The
company's financial measures under GAAP include substantial charges
such as amortization of acquired intangible assets among others
that are listed in the itemized reconciliations between GAAP and
non-GAAP financial measures included in this press release, as well
as the effects of currency translation. Management has excluded the
effects of these items in non-GAAP measures to assist investors in
analyzing and assessing past and future operating performance,
including in the non-GAAP measures related to our Core Illumina and
GRAIL segments. Additionally, non-GAAP net income, diluted earnings
per share and operating margin are key components of the financial
metrics utilized by the company's board of directors to measure, in
part, management's performance and determine significant elements
of management's compensation.
The company encourages investors to carefully consider its
results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Reconciliations between GAAP
and non-GAAP results are presented in the tables of this
release.
Use of forward-looking statements
This release may
contain forward-looking statements that involve risks and
uncertainties. Among the important factors to which our business is
subject that could cause actual results to differ materially from
those in any forward-looking statements are: (i) changes in the
rate of growth in the markets we serve; (ii) the volume, timing and
mix of customer orders among our products and services; (iii) our
ability to adjust our operating expenses to align with our revenue
expectations; (iv) our ability to manufacture robust
instrumentation and consumables; (v) the success of products and
services competitive with our own; (vi) challenges inherent in
developing, manufacturing, and launching new products and services,
including expanding or modifying manufacturing operations and
reliance on third-party suppliers for critical components; (vii)
the impact of recently launched or pre-announced products and
services on existing products and services; (viii) our ability to
modify our business strategies to accomplish our desired
operational goals; (ix) our ability to realize the anticipated
benefits from prior or future actions to streamline and improve our
R&D processes, reduce our operating expenses and maximize our
revenue growth; (x) our ability to further develop and
commercialize our instruments, consumables, and products; (xi) to
deploy new products, services, and applications, and to expand the
markets for our technology platforms; (xii) the risks and costs
associated with our ongoing inability to integrate GRAIL due to the
transitional measures imposed on us by the European Commission as a
result of their prohibition of our acquisition of GRAIL and orders
issued by the European Commission and the Federal Trade Commission
requiring that we divest GRAIL; (xiii) the risks and costs
associated with the expected divestment of GRAIL, including the
possibility that the terms on which we divest all or a portion of
the assets or equity interests of GRAIL are materially worse than
those on which we acquired GRAIL; (xiv) our ability to satisfy the
necessary conditions to consummate the divestiture of GRAIL on a
timely basis or at all, due to the requirements set by the European
Commission; (xv) the risk that disruptions from the consummation of
our acquisition of GRAIL and associated legal or regulatory
proceedings, including appeals, or obligations will harm our
business, including current plans and operations; (xvi) the risk of
incurring additional fines associated with the consummation of our
acquisition of GRAIL; (xvii) our ability to obtain approval by
third-party payors to reimburse patients for our products; (xviii)
our ability to obtain regulatory clearance for our products from
government agencies; (xix) our ability to successfully partner with
other companies and organizations to develop new products, expand
markets, and grow our business; (xx) uncertainty, or adverse
economic and business conditions, including as a result of slowing
or uncertain economic growth or armed conflict; (xxi) the
application of generally accepted accounting principles, which are
highly complex and involve many subjective assumptions, estimates,
and judgments and (xxii) legislative, regulatory and economic
developments, together with other factors detailed in our filings
with the Securities and Exchange Commission, including our most
recent filings on Forms 10-K and 10-Q, or in information disclosed
in public conference calls, the date and time of which are released
beforehand. We undertake no obligation, and do not intend, to
update these forward-looking statements, to review or confirm
analysts' expectations, or to provide interim reports or updates on
the progress of the current quarter.
About Illumina
Illumina is improving human health by
unlocking the power of the genome. Our focus on innovation has
established us as a global leader in DNA sequencing and array-based
technologies, serving customers in the research, clinical, and
applied markets. Our products are used for applications in the life
sciences, oncology, reproductive health, agriculture, and other
emerging segments. To learn more,
visit www.illumina.com and connect with us on X
(Twitter), Facebook, LinkedIn, Instagram, TikTok, and YouTube.
About GRAIL
GRAIL is a healthcare company whose
mission is to detect cancer early, when it can be cured. GRAIL is
focused on alleviating the global burden of cancer by developing
pioneering technology to detect and identify multiple deadly cancer
types early. The company is using the power of next-generation
sequencing, population-scale clinical studies, and state-of-the-art
computer science and data science to enhance the scientific
understanding of cancer biology, and to develop its multi-cancer
early detection blood test. GRAIL is headquartered in Menlo Park, CA with locations in Washington, D.C., North Carolina, and the United Kingdom. GRAIL, LLC, is a wholly-owned
subsidiary of Illumina, which currently must be held and operated
separately and independently from Illumina pursuant to transitional
measures ordered by the European Commission, which prohibited our
acquisition of GRAIL on September 6,
2022. For more information, please visit www.grail.com.
Illumina,
Inc.
Condensed
Consolidated Balance Sheets
(In
millions)
|
|
|
March 31,
2024
|
|
December 31,
2023
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
1,108
|
|
$
1,048
|
Accounts receivable,
net
|
635
|
|
734
|
Inventory,
net
|
584
|
|
587
|
Prepaid expenses and
other current assets
|
256
|
|
240
|
Total current
assets
|
2,583
|
|
2,609
|
Property and equipment,
net
|
964
|
|
1,007
|
Operating lease
right-of-use assets
|
550
|
|
544
|
Goodwill
|
2,545
|
|
2,545
|
Intangible assets,
net
|
2,940
|
|
2,993
|
Other assets
|
458
|
|
413
|
Total
assets
|
$
10,040
|
|
$
10,111
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
201
|
|
$
245
|
Accrued
liabilities
|
1,273
|
|
1,325
|
Total current
liabilities
|
1,474
|
|
1,570
|
Operating lease
liabilities
|
700
|
|
687
|
Term notes
|
1,490
|
|
1,489
|
Other long-term
liabilities
|
642
|
|
620
|
Stockholders'
equity
|
5,734
|
|
5,745
|
Total liabilities and
stockholders' equity
|
$
10,040
|
|
$
10,111
|
Illumina,
Inc.
Condensed
Consolidated Statements of Operations
(In millions, except
per share amounts)
(unaudited)
|
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
April 2,
2023
|
Revenue:
|
|
|
|
Product
revenue
|
$
876
|
|
$
922
|
Service and other
revenue
|
200
|
|
165
|
Total
revenue
|
1,076
|
|
1,087
|
Cost of
revenue:
|
|
|
|
Cost of product
revenue (a)
|
255
|
|
285
|
Cost of service and
other revenue (a)
|
106
|
|
99
|
Amortization of
acquired intangible assets
|
48
|
|
48
|
Total cost of
revenue
|
409
|
|
432
|
Gross
profit
|
667
|
|
655
|
Operating
expense:
|
|
|
|
Research and
development (a)
|
339
|
|
341
|
Selling, general and
administrative (a)
|
439
|
|
378
|
Total operating
expense
|
778
|
|
719
|
Loss from
operations
|
(111)
|
|
(64)
|
Other income
(expense), net
|
2
|
|
(14)
|
Loss before income
taxes
|
(109)
|
|
(78)
|
Provision (benefit)
for income taxes
|
17
|
|
(81)
|
Net (loss)
income
|
$
(126)
|
|
$
3
|
(Loss) earnings per
share:
|
|
|
|
Basic
|
$
(0.79)
|
|
$
0.02
|
Diluted
|
$
(0.79)
|
|
$
0.02
|
Shares used in
computing (loss) earnings per share:
|
|
|
|
Basic
|
159
|
|
158
|
Diluted
|
159
|
|
158
|
|
(a) Includes stock-based compensation
expense for stock-based awards:
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
April 2,
2023
|
Cost of product
revenue
|
$
5
|
|
$
6
|
Cost of service and
other revenue
|
2
|
|
1
|
Research and
development
|
39
|
|
38
|
Selling, general and
administrative
|
50
|
|
48
|
Stock-based
compensation expense before taxes
|
$
96
|
|
$
93
|
Illumina,
Inc.
Condensed
Consolidated Statements of Cash Flows
(In
millions)
(unaudited)
|
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
April 2,
2023
|
Net cash provided by
operating activities
|
$
77
|
|
$
10
|
Net cash used in
investing activities
|
(48)
|
|
(56)
|
Net cash provided by
(used in) financing activities
|
35
|
|
(473)
|
Effect of exchange rate
changes on cash and cash equivalents
|
(4)
|
|
2
|
Net increase (decrease)
in cash and cash equivalents
|
60
|
|
(517)
|
Cash and cash
equivalents, beginning of period
|
1,048
|
|
2,011
|
Cash and cash
equivalents, end of period
|
$
1,108
|
|
$
1,494
|
|
|
|
|
Calculation of free
cash flow:
|
|
|
|
Net cash provided by
operating activities
|
$
77
|
|
$
10
|
Purchases of property
and equipment
|
(36)
|
|
(52)
|
Free cash flow
(a)
|
$
41
|
|
$
(42)
|
|
(a) Free cash
flow, which is a non-GAAP financial measure, is calculated as net
cash provided by operating activities reduced by purchases of
property and equipment. Free cash flow is useful to management as
it is one of the metrics used to evaluate our performance and to
compare us with other companies in our industry. However, our
calculation of free cash flow may not be comparable to similar
measures used by other companies.
|
Illumina,
Inc.
Results of
Operations - Revenue by Segment
(Dollars in
millions)
(unaudited)
|
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
April 2,
2023
|
|
%
Change
|
Consolidated
revenue
|
$
1,076
|
|
$
1,087
|
|
(1) %
|
Less: Hedge
gains
|
3
|
|
2
|
|
|
Consolidated revenue,
excluding hedge effect
|
1,073
|
|
1,085
|
|
|
Less: Exchange rate
effect
|
(1)
|
|
—
|
|
|
Consolidated constant
currency revenue (a)
|
$
1,074
|
|
$
1,085
|
|
(1) %
|
|
|
|
|
|
|
Core Illumina
revenue
|
$
1,056
|
|
$
1,076
|
|
(2) %
|
Less: Hedge
gains
|
3
|
|
2
|
|
|
Core Illumina revenue,
excluding hedge effect
|
1,053
|
|
1,074
|
|
|
Less: Exchange rate
effect
|
(1)
|
|
—
|
|
|
Core Illumina constant
currency revenue (a)
|
$
1,054
|
|
$
1,074
|
|
(2) %
|
|
(a) Constant
currency revenue growth, which is a non-GAAP financial measure, is
calculated using comparative prior period foreign exchange rates to
translate current period revenue, net of the effects of
hedges.
|
Illumina, Inc.
Results of Operations
- Non-GAAP
(In millions, except per share
amounts)
(unaudited)
TABLE 1: CONSOLIDATED RECONCILIATION BETWEEN GAAP AND
NON-GAAP DILUTED (LOSS) EARNINGS PER SHARE:
|
Three Months
Ended
|
|
March 31,
2024
|
|
April 2,
2023
|
GAAP (loss) earnings
per share - diluted
|
$
(0.79)
|
|
$
0.02
|
Cost of revenue
(b)
|
0.31
|
|
0.30
|
R&D expense
(b)
|
0.03
|
|
0.01
|
SG&A expense
(b)
|
0.57
|
|
0.22
|
Other (income) expense,
net (b)
|
(0.05)
|
|
0.08
|
GILTI, U.S. foreign tax
credits, and global minimum top-up tax (c)
|
0.10
|
|
(0.28)
|
Incremental non-GAAP
tax expense (d)
|
(0.08)
|
|
(0.32)
|
Income tax provision
(e)
|
—
|
|
0.05
|
Non-GAAP earnings per
share - diluted (a)
|
$
0.09
|
|
$
0.08
|
TABLE 2: CONSOLIDATED RECONCILIATION BETWEEN GAAP AND
NON-GAAP NET (LOSS) INCOME:
|
Three Months
Ended
|
|
March 31,
2024
|
|
April 2,
2023
|
GAAP net (loss)
income
|
$
(126)
|
|
$
3
|
Cost of revenue
(b)
|
49
|
|
48
|
R&D expense
(b)
|
4
|
|
2
|
SG&A expense
(b)
|
91
|
|
35
|
Other (income) expense,
net (b)
|
(8)
|
|
11
|
GILTI, U.S. foreign tax
credits, and global minimum top-up tax (c)
|
17
|
|
(44)
|
Incremental non-GAAP
tax expense (d)
|
(13)
|
|
(50)
|
Income tax provision
(e)
|
—
|
|
8
|
Non-GAAP net income
(a)
|
$
14
|
|
$
13
|
|
All amounts in
tables are rounded to the nearest millions, except as otherwise
noted. As a result, certain amounts may not recalculate using the
rounded amounts provided.
|
|
(a) Non-GAAP net
income and diluted earnings per share exclude the effects of the
pro forma adjustments as detailed above. Non-GAAP net income and
diluted earnings per share are key components of the financial
metrics utilized by the company's board of directors to measure, in
part, management's performance and determine significant elements
of management's compensation. Management has excluded the effects
of these items in these measures to assist investors in analyzing
and assessing our past and future operating performance.
|
(b) Refer to the
Itemized Reconciliations between GAAP and Non-GAAP Results of
Operations for the components of these amounts.
|
(c) Amounts
represent the impact of GRAIL pre-acquisition net operating losses
on GILTI, the utilization of U.S. foreign tax credits, and the
Pillar Two global minimum top-up tax, which became effective in Q1
2024.
|
(d) Incremental
non-GAAP tax expense reflects the tax impact of the non-GAAP
adjustments listed.
|
(e) Amounts
represent the difference between book and tax accounting related to
stock-based compensation cost.
|
Illumina, Inc.
Results of Operations
- Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
TABLE 3: ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP
RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:
|
Three Months
Ended
|
|
March 31,
2024
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
693
|
65.7 %
|
|
$
(22)
|
|
$
(4)
|
|
$
667
|
62.0 %
|
Amortization of
acquired intangible assets
|
15
|
1.4 %
|
|
34
|
|
—
|
|
49
|
4.5 %
|
Non-GAAP gross profit
(a)
|
$
708
|
67.1 %
|
|
$
12
|
|
$
(4)
|
|
$
716
|
66.5 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
241
|
22.8 %
|
|
$
101
|
|
$
(3)
|
|
$
339
|
31.5 %
|
Restructuring
(g)
|
(1)
|
(0.1) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
IPR&D impairment
(i)
|
(3)
|
(0.3) %
|
|
—
|
|
—
|
|
(3)
|
(0.3) %
|
Non-GAAP R&D
expense
|
$
237
|
22.4 %
|
|
$
101
|
|
$
(3)
|
|
$
335
|
31.1 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
336
|
31.9 %
|
|
$
104
|
|
$
(1)
|
|
$
439
|
40.8 %
|
Amortization of
acquired intangible assets
|
—
|
—
|
|
(1)
|
|
—
|
|
(1)
|
(0.1) %
|
Contingent
consideration liabilities (c)
|
(16)
|
(1.5) %
|
|
—
|
|
—
|
|
(16)
|
(1.4) %
|
Acquisition-related
expenses (d)
|
(25)
|
(2.4) %
|
|
(6)
|
|
—
|
|
(31)
|
(2.9) %
|
Restructuring
(g)
|
(34)
|
(3.3) %
|
|
(1)
|
|
—
|
|
(35)
|
(3.3) %
|
Accrued interest on EC
fine (h)
|
(7)
|
(0.7) %
|
|
—
|
|
—
|
|
(7)
|
(0.7) %
|
Non-GAAP SG&A
expense
|
$
254
|
24.0 %
|
|
$
96
|
|
$
(1)
|
|
$
349
|
32.4 %
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
116
|
11.0 %
|
|
$
(227)
|
|
$
—
|
|
$
(111)
|
(10.3) %
|
Cost of
revenue
|
15
|
1.4 %
|
|
34
|
|
—
|
|
49
|
4.5 %
|
R&D
costs
|
4
|
0.4 %
|
|
—
|
|
—
|
|
4
|
0.4 %
|
SG&A
costs
|
83
|
7.8 %
|
|
8
|
|
—
|
|
91
|
8.5 %
|
Non-GAAP operating
profit (loss) (a)
|
$
218
|
20.6 %
|
|
$
(185)
|
|
$
—
|
|
$ 33
|
3.1 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$ (1)
|
(0.1) %
|
|
$
3
|
|
$
—
|
|
$
2
|
0.2 %
|
Strategic investment
related gain, net (e)
|
(6)
|
(0.6) %
|
|
—
|
|
—
|
|
(6)
|
(0.6) %
|
Gain on Helix
contingent value right (f)
|
(3)
|
(0.3) %
|
|
—
|
|
—
|
|
(3)
|
(0.3) %
|
Unrealized foreign
currency loss on EC fine (j)
|
1
|
0.1 %
|
|
—
|
|
—
|
|
1
|
0.1 %
|
Non-GAAP other
(expense) income, net (a)
|
$ (9)
|
(0.9) %
|
|
$
3
|
|
$
—
|
|
$
(6)
|
(0.6) %
|
Illumina, Inc.
Results of Operations
- Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
TABLE 3 (CONTINUED): ITEMIZED RECONCILIATION BETWEEN GAAP AND
NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:
|
Three Months
Ended
|
|
April 2,
2023
|
|
Core
Illumina
|
|
GRAIL
|
|
Eliminations
|
|
Consolidated
|
GAAP gross profit
(loss) (b)
|
$
687
|
63.8 %
|
|
$ (25)
|
|
$
(7)
|
|
$
655
|
60.3 %
|
Amortization of
acquired intangible assets
|
14
|
1.4 %
|
|
34
|
|
—
|
|
48
|
4.4 %
|
Non-GAAP gross profit
(a)
|
$
701
|
65.2 %
|
|
$
9
|
|
$
(7)
|
|
$
703
|
64.7 %
|
|
|
|
|
|
|
|
|
|
|
GAAP R&D
expense
|
$
259
|
24.1 %
|
|
$
86
|
|
$
(4)
|
|
$
341
|
31.4 %
|
Acquisition-related
expenses (d)
|
(1)
|
(0.1) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
Restructuring
(g)
|
(1)
|
(0.1) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
Non-GAAP R&D
expense
|
$
257
|
23.9 %
|
|
$
86
|
|
$
(4)
|
|
$
339
|
31.2 %
|
|
|
|
|
|
|
|
|
|
|
GAAP SG&A
expense
|
$
286
|
26.6 %
|
|
$
93
|
|
$
(1)
|
|
$
378
|
34.8 %
|
Amortization of
acquired intangible assets
|
—
|
—
|
|
(1)
|
|
—
|
|
(1)
|
(0.1) %
|
Acquisition-related
expenses (d)
|
(20)
|
(1.8) %
|
|
(5)
|
|
—
|
|
(25)
|
(2.3) %
|
Restructuring
(g)
|
(1)
|
(0.1) %
|
|
—
|
|
—
|
|
(1)
|
(0.1) %
|
Legal settlement
(k)
|
(2)
|
(0.2) %
|
|
—
|
|
—
|
|
(2)
|
(0.2) %
|
Proxy
contest
|
(6)
|
(0.6) %
|
|
—
|
|
—
|
|
(6)
|
(0.6) %
|
Non-GAAP SG&A
expense
|
$
257
|
23.9 %
|
|
$
87
|
|
$
(1)
|
|
$
343
|
31.5 %
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
profit (loss)
|
$
142
|
13.2 %
|
|
$ (204)
|
|
$
(2)
|
|
$ (64)
|
(5.7) %
|
Cost of
revenue
|
14
|
1.3 %
|
|
34
|
|
—
|
|
48
|
4.4 %
|
R&D
costs
|
2
|
0.2 %
|
|
—
|
|
—
|
|
2
|
0.2 %
|
SG&A
costs
|
29
|
2.7 %
|
|
6
|
|
—
|
|
35
|
3.0 %
|
Non-GAAP operating
profit (loss) (a)
|
$
187
|
17.4 %
|
|
$ (164)
|
|
$
(2)
|
|
$ 21
|
1.9 %
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense)
income, net
|
$
(17)
|
(1.6) %
|
|
$
2
|
|
$
—
|
|
$ (14)
|
(1.3) %
|
Strategic investment
related loss, net (e)
|
15
|
1.4 %
|
|
—
|
|
—
|
|
14
|
1.3 %
|
Gain on Helix
contingent value right (f)
|
(3)
|
(0.3) %
|
|
—
|
|
—
|
|
(3)
|
(0.3) %
|
Non-GAAP other
(expense) income, net (a)
|
$ (5)
|
(0.5) %
|
|
$
2
|
|
$
—
|
|
$ (3)
|
(0.3) %
|
|
All amounts in
tables are rounded to the nearest millions, except as otherwise
noted. As a result, certain amounts may not recalculate using the
rounded amounts provided. Percentages of revenue are calculated
based on the revenue of the respective segment.
|
|
(a) Non-GAAP
gross profit, included within non-GAAP operating profit (loss), is
a key measure of the effectiveness and efficiency of manufacturing
processes, product mix and the average selling prices of our
products and services. Non-GAAP operating profit (loss) and
non-GAAP other (expense) income, net exclude the effects of the pro
forma adjustments as detailed above. Non-GAAP operating margin is a
key component of the financial metrics utilized by the company's
board of directors to measure, in part, management's performance
and determine significant elements of management's compensation.
Management has excluded the effects of these items in these
measures to assist investors in analyzing and assessing past and
future operating performance, including in the non-GAAP measures
related to our Core Illumina and GRAIL segments.
|
(b) Reconciling
amounts are recorded in cost of revenue.
|
(c) Amount
consists of fair value adjustments for our contingent consideration
liability related to GRAIL.
|
(d) Amounts
consist primarily of legal and other expenses related to the
planned divestiture of GRAIL.
|
(e) Amounts
consist primarily of mark-to-market adjustments and impairments
from our strategic investments.
|
(f) Amounts
consist of fair value adjustments related to our Helix contingent
value right.
|
(g) Amounts for
Q1 2024 consist primarily of lease and other asset impairments
related to restructuring activities. Amounts for Q1 2023
consist primarily of employee severance costs related to
restructuring activities.
|
(h) Amount
consists of accrued interest on the fine imposed by the European
Commission.
|
(i) Amount
for Q1 2024 consists of an IPR&D intangible asset impairment
related to our Core Illumina segment.
|
(j) Amount
consists of unrealized gains/losses related to foreign currency
balance sheet remeasurement of the EC fine liability and unrealized
mark-to-market gains/losses on the hedge associated with the EC
fine.
|
(k) Amount
consists of a loss related to a patent litigation
settlement.
|
Illumina, Inc.
Results of Operations
- Non-GAAP (continued)
(Dollars in
millions)
(unaudited)
TABLE 4: CONSOLIDATED ITEMIZED RECONCILIATION BETWEEN GAAP
AND NON-GAAP TAX PROVISION (BENEFIT):
|
Three Months
Ended
|
|
March 31,
2024
|
GAAP tax
provision
|
$
17
|
(15.3) %
|
Incremental non-GAAP
tax expense (b)
|
13
|
|
GILTI, U.S. foreign tax
credits, and global minimum top-up tax (d)
|
(17)
|
|
Non-GAAP tax provision
(a)
|
$
13
|
46.4 %
|
|
|
Three Months
Ended
|
|
April 2,
2023
|
GAAP tax
benefit
|
$ (81)
|
103.9 %
|
Incremental non-GAAP
tax expense (b)
|
50
|
|
Income tax provision
(c)
|
(8)
|
|
GILTI and U.S. foreign
tax credits (d)
|
44
|
|
Non-GAAP tax provision
(a)
|
$
5
|
27.3 %
|
|
(a) Non-GAAP tax
provision excludes the effects of the pro forma adjustments as
detailed above. Management has excluded the effects of these items
in this measure to assist investors in analyzing and assessing past
and future operating performance.
|
(b) Incremental
non-GAAP tax expense reflects the tax impact of the non-GAAP
adjustments listed in Table 2.
|
(c) Amounts
represent the difference between book and tax accounting related to
stock-based compensation cost.
|
(d) Amounts
represent the impact of GRAIL pre-acquisition net operating losses
on GILTI, the utilization of U.S. foreign tax credits, and the
Pillar Two global minimum top-up tax, which became effective in Q1
2024.
|
Investors:
Salli Schwartz
+1.858.291.6421
ir@illumina.com
Media:
Bonny Fowler
+1.740.641.5579
pr@illumina.com
View original
content:https://www.prnewswire.com/news-releases/illumina-reports-financial-results-for-first-quarter-of-fiscal-year-2024-302135018.html
SOURCE Illumina, Inc.