Illumina, Inc.

Good day, ladies and gentlemen, and welcome to the first quarter 2025 Illumina Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Brian Blanchett, the Interim Head of Investor Relations.

Hello, everyone, and welcome to Illumina's first quarter 2025 earnings call. Today, we will review our financial results released after market close and provide commentary before opening for Q&A. Our earnings release is available in the investor relations section of Illumina.com. Speaking today are Jacob Tyson, Chief Executive Officer, and Ankur Dhingra, Chief Financial Officer. Jacob will provide an update on Illumina's business, followed by Ankur's review of the company's financials. All financial information shared on this call relates to Core Illumina. For historical consolidated financials, please refer to our earnings release and SEC filings. Please note that all revenue growth rates discussed during the prepared remarks are presented on a constant currency basis to exclude the impact of forward exchange fluctuations. We encourage you to review the gap reconciliation of our non-gap measures, which can be found in today's release and in the supplementary data available on our website. This call is being recorded and the audio will be archived in our investor section of our website. It is our intent that all forward-looking statements regarding the financial results and commercial activity made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Illumina files with the Securities and Exchange Commission, including our most recent forms 10Q and 10K. With that, I now turn the call over to Jacob. Thank you, Brian, and good afternoon, everyone.

Before we begin, I want to take a moment to recognize our former chair of the board of directors, Steve McMillan, for his leadership in strengthening Illumina's position in genomics innovation. His contributions have positioned us well for the significant opportunities ahead. I look forward to working closely with our new chair, Scott Gottlieb, as we advance our mission, execute our strategy, and progress the Omics ecosystem. I'm also pleased to welcome Keith Meister to the board. His deep investor experience in genomics and strong track record of driving shareholder value will be invaluable as we build our momentum and deliver on our strategic priorities. Despite the macroeconomic challenges we have faced over the past few months, we have a good start to the year. Thanks to the Illumina team's continued focus on execution and operational excellence, we delivered Q1 revenue and EPS at the upper end of our guidance range. Illumina is a resilient franchise with multiple drivers of near and long-term growth, and there is a lot to be encouraged by this quarter. Our Novosig X instruments continue to perform well, exceeding our expectations with another quarter of over 60 placements in Q1. following more than 90 placements in Q4. The X transition continues to progress well, particularly among clinical customers, reaffirming both the value we provide and the resilience of the clinical market. We also saw a sequential increase in X and overall high throughput consumables, a clear indicator that this key growth driver continues to gain traction and demonstrate elasticity. Our innovation pipeline remains unmatched. We are advancing the multi-omics ecosystem and every day our technologies enable customers to generate insights that were previously not possible. With this foundation, we focused on achieving our long-term financial goals We continue to execute on our strategy to deliver high single digit revenue growth and 500 basis point margin expansions by 2027, excluding our greater China region, which has been affected by the recent regulatory developments. At the same time, we are navigating a dynamic environment with discipline and urgency. Developments around China, U.S. funding uncertainty, and global trade dynamics have introduced new pressures for our customers. These are important concerns, and we are taking clear actions to address them. But these are transitory challenges that will not define Illumina's long-term success or our leadership in advancing the genomics revolution. In light of this, we are revising our guidance to reflect both the headwinds and the proactive steps we are taking to protect earnings. I will now walk through each of these factors, and Ankur will provide more details in his remark shortly. In China, our ability to export sequencing instruments has been restricted. We now expect lower revenue from the region in 2025, driven by minimal instrument placements. To provide greater clarity on the fundamentals of our global business, we will issue distinct guidance for the greater China region and the rest of the world until the situation is resolved. We continue to engage with the regulatory authorities in China on potential solutions to support a sustainable long-term presence in the market. and we will keep you updated on any material developments as the situation evolves. In the US, ongoing uncertainty in research funding is weighing on our customers and affecting purchasing timelines. We are working closely with our customers to help them navigate this environment, offering flexible solutions to sustain their research projects and drive continued genomic innovation. In March, we took decisive actions to address the impact of China and the research environment by executing a global incremental $100 million cost reduction program. As of this call, we've already implemented the necessary actions to realize the full savings in 2025, reinforcing our disciplined approach to operational execution. Since our last update, the US government enacted a baseline import tariffs of 10% with significantly higher rates for certain countries. These tariffs are increasing costs for Illumina. To address this, our teams are actively working to minimize the impact through supply chain optimization, cost measures, and pricing actions. With these actions underway, we expect to partially offset the impact in 2025. And at current level, our aim is to more fully mitigate the impact in 2026. The Illumina team is navigating these external pressures carefully and strategically, ensuring that our core business and our commitment to our customers and to advancing innovation remain strong and unaffected. We have made significant progress in delivering competitively differentiated innovations that keep our customers at the forefront of discovery. Our multi-omics roadmap, a growing portfolio of omics and sequencing applications, is key to advancing the ecosystem and in helping us achieve our long-term targets. I will share a few examples. In February, we announced our new spatial offering, featuring a significantly larger capture area, higher resolution and greater sensitivity than existing technologies. This powerful solution will enable researchers to analyze millions of cells per experiments, increasing the likelihood of identifying rare cell populations. These advancements open new possibilities for research applications that were previously unattainable. This offering will integrate seamlessly into Illumina's end-to-end workflows and connect with Illumina Connected Multiomics, our new tertiary analysis solution powered by Partech's intuitive data visualization technology. We have begun early access and early customer feedback has been very positive, emphasizing our spatial solutions accessibility without the need for special equipment purchases and how it streamlines a previously complex analysis and interpretation process. We plan to release our new spatial offering in 2026. Also tied to our multi-omic strategy, we recently announced a new single-cell offering for CRISPR research with applications in oncology, immunology, and drug target discovery. Our new PerturbSig solution will allow researchers to study how genetic changes affect single cells at scale, accelerating drug discovery, and advancing our understanding of complex diseases. This is the next evolution of Fluence PIP-seq technology, which we acquired last year. By capturing both CRISPR, guide RNA, and messenger RNA transcripts from the same cell, our solution will enable researchers to perform genome-wide CRISPR screens at market-leading cost, providing deeper insights with greater efficiency. The solution is expected to launch later this year. Additionally, our innovation pipeline remains on track. Our proteomics solution, developed in collaboration with Standard BioTools, is in early access, and we are looking forward to our commercial launch in the first half of 2025. Our Constellation mat breeds and 5Base genome technologies are already in early access, with full commercial launches on track for 2026. We are excited about these innovations, which are advancing multi-omics while empowering our customers with deeper insights than ever before. The core of Illumina is strong, and our growth projections X-China are on track as we deliver on our strategy. I will now ask Ankur to share more details on our results and outlook for 2025, and we will go from there directly into Q&A.