[Condensed Consolidated Financial Statements](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides the company's financial position, performance, and cash flows, supported by detailed notes on accounting policies, the GRAIL Spin-Off, and other key disclosures [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased from **$10,111 million** to **$6,014 million**, primarily due to reductions in goodwill and intangible assets, reflecting the impact of the GRAIL Spin-Off | Metric | September 29, 2024 (Unaudited) | December 31, 2023 | | :---------------------------------- | :----------------------------- | :------------------ | | Total Assets | $6,014 million | $10,111 million | | Goodwill | $1,113 million | $2,545 million | | Intangible Assets, net | $305 million | $2,993 million | | Total Liabilities and Stockholders' Equity | $6,014 million | $10,111 million | | Total Stockholders' Equity | $2,125 million | $5,745 million | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss for both periods, significantly impacted by goodwill and intangible impairment charges, with total revenue decreasing by **3.4%** year-over-year for the nine months | Metric | Three Months Ended Sep 29, 2024 (Millions) | Three Months Ended Oct 1, 2023 (Millions) | Nine Months Ended Sep 29, 2024 (Millions) | Nine Months Ended Oct 1, 2023 (Millions) | | :---------------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Total Revenue | $1,119 | $1,119 | $3,268 | $3,382 | | Net Income (Loss) | $(754) | $(754) | $(1,410) | $(986) | | Basic Earnings (Loss) Per Share | $(4.77) | $(4.77) | $(8.86) | $(6.23) | | Goodwill and Intangible Impairment | $821 | $821 | $1,889 | $821 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive loss for the nine months ended September 29, 2024, increased to **$(1,414) million**, primarily reflecting the net loss | Metric | Three Months Ended Sep 29, 2024 (Millions) | Three Months Ended Oct 1, 2023 (Millions) | Nine Months Ended Sep 29, 2024 (Millions) | Nine Months Ended Oct 1, 2023 (Millions) | | :---------------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | | Net Income (Loss) | $705 | $(754) | $(1,410) | $(986) | | Unrealized (loss) gain on cash flow hedges, net of deferred tax | $(19) | $9 | $(4) | $18 | | Total Comprehensive Income (Loss) | $686 | $(745) | $(1,414) | $(968) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity significantly decreased from **$5,745 million** to **$2,125 million**, primarily due to net loss and the **$2,399 million** impact from the GRAIL Spin-Off | Metric | December 31, 2023 (Millions) | September 29, 2024 (Millions) | | :---------------------------------- | :------------------ | :----------------------------- | | Total Stockholders' Equity | $5,745 | $2,125 | | Additional Paid-In Capital (Impact of GRAIL Spin-Off) | $9,555 | $7,449 (decrease of $2,399 due to Spin-Off) | | Accumulated Deficit | $(19) | $(1,428) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to **$473 million**, while net cash used in financing activities decreased to **$(523) million**, driven by GRAIL deconsolidation and debt repayments | Cash Flow Activity | Nine Months Ended Sep 29, 2024 (Millions) | Nine Months Ended Oct 1, 2023 (Millions) | | :---------------------------------- | :----------------------------- | :---------------------------- | | Net cash provided by operating activities | $473 | $254 | | Net cash used in investing activities | $(130) | $(146) | | Net cash used in financing activities | $(523) | $(1,183) | | GRAIL cash deconsolidated as a result of spin-off | $(968) | — | | Cash and cash equivalents at end of period | $869 | $927 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures cover organization, accounting policies, the GRAIL Spin-Off, revenue, investments, debt, equity, balance sheet items, legal proceedings, income taxes, and segment information, highlighting key events and impairment charges [1. Organization and Significant Accounting Policies](index=11&type=section&id=1.%20Organization%20and%20Significant%20Accounting%20Policies) Illumina provides genetic analysis solutions; the GRAIL Spin-Off completed on June 24, 2024, with **14.5%** retained ownership, and no significant accounting policy changes occurred in YTD 2024 - Illumina provides sequencing- and array-based solutions for genetic and genomic analysis, serving research, clinical, and applied markets[25](index=25&type=chunk) - The GRAIL Spin-Off was completed on June 24, 2024, distributing approximately **85.5%** of GRAIL common stock to Illumina stockholders, with Illumina retaining approximately **14.5%**[26](index=26&type=chunk)[37](index=37&type=chunk) - No changes to significant accounting policies were made during YTD 2024[30](index=30&type=chunk) - ASU 2023-07 (Segment Reporting) is effective for the company in fiscal year 2024 and interim periods within fiscal year 2025. ASU 2023-09 (Income Taxes) is effective in fiscal year 2025[31](index=31&type=chunk)[32](index=32&type=chunk) [2. GRAIL Spin-Off](index=13&type=section&id=2.%20GRAIL%20Spin-Off) The GRAIL Spin-Off completed on June 24, 2024, distributing **85.5%** of GRAIL common stock to Illumina stockholders, with Illumina retaining **14.5%** and contributing **$974 million** for operations, incurring **$53 million** in separation costs - GRAIL Spin-Off completed on June 24, 2024, distributing approximately **85.5%** of GRAIL common stock to Illumina stockholders (1 GRAIL share for every 6 Illumina shares)[37](index=37&type=chunk) - Illumina retained approximately **14.5%** of GRAIL common stock post-Spin-Off[37](index=37&type=chunk) - Illumina contributed **$974 million** (less GRAIL's cash) to GRAIL for **2.5 years** of operations[38](index=38&type=chunk) - Incurred **$53 million** in separation-related transaction costs in YTD 2024, recognized in selling, general, and administrative expense[39](index=39&type=chunk) GRAIL Net Assets Deconsolidated | GRAIL Net Assets Deconsolidated | Amount (in millions) | | :-------------------------------- | :------------------- | | Cash and cash equivalents | $968 | | Intangible assets, net | $2,201 | | GRAIL net assets | $2,738 | [3. Revenue](index=14&type=section&id=3.%20Revenue) Total revenue slightly decreased in Q3 and YTD 2024 due to lower instrument sales, offset by consumables and service growth, with regional declines in Americas and Greater China Revenue by Source | Revenue by Source (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Consumables | $807 | $760 | $2,376 | $2,327 | | Instruments | $107 | $181 | $342 | $537 | | Service and other revenue | $166 | $178 | $550 | $518 | | Total Revenue | $1,080 | $1,119 | $3,268 | $3,382 | Revenue by Geographic Area | Revenue by Geographic Area (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--------------------------------------- | :------ | :------ | :------- | :------- | | Americas | $609 | $663 | $1,852 | $1,920 | | Europe | $291 | $260 | $859 | $825 | | Greater China | $75 | $98 | $228 | $302 | | Asia-Pacific, Middle East, and Africa | $105 | $98 | $329 | $335 | | Total Revenue | $1,080 | $1,119 | $3,268 | $3,382 | - Remaining performance obligations totaled **$688 million** as of September 29, 2024, with approximately **82%** expected to convert to revenue in the next twelve months[45](index=45&type=chunk) [4. Investments and Fair Value Measurements](index=15&type=section&id=4.%20Investments%20and%20Fair%20Value%20Measurements) Marketable equity securities increased to **$70 million** due to retained GRAIL investment, incurring a **$332 million** unrealized loss, while the GRAIL contingent consideration liability decreased to **$82 million** due to revised projections and restructuring Investments | Metric (in millions) | September 29, 2024 | December 31, 2023 | | :---------------------------------- | :----------------- | :------------------ | | Marketable Equity Securities | $70 | $6 | | Non-Marketable Equity Securities | $27 | $28 | | Venture Funds (carrying amount) | $191 | $168 | - An unrealized loss of **$332 million** was recognized in YTD 2024 on the retained investment in GRAIL subsequent to the Spin-Off[48](index=48&type=chunk)[49](index=49&type=chunk) - The Helix contingent value right was settled for **$83 million** cash on July 31, 2024[54](index=54&type=chunk)[55](index=55&type=chunk) GRAIL Contingent Consideration Liability | GRAIL Contingent Consideration Liability (in millions) | September 29, 2024 | December 31, 2023 | | :----------------------------------------------------- | :----------------- | :------------------ | | Fair Value | $82 | $387 | - The significant decrease in the GRAIL contingent consideration liability was due to revised revenue projections announced by GRAIL in May 2024 and a restructuring announcement in August 2024, along with an increased revenue risk premium[58](index=58&type=chunk) [5. Debt](index=18&type=section&id=5.%20Debt) Net term debt increased to **$1,988 million** with the issuance of **$500 million** in 2026 Term Notes and repayment of the **$750 million** Delayed Draw Credit Facility, while the **$750 million** revolving credit facility remains undrawn Term Debt Obligations | Term Debt Obligations (in millions) | September 29, 2024 | December 31, 2023 | | :---------------------------------- | :----------------- | :------------------ | | Principal amount of 2025 Term Notes outstanding | $500 | $500 | | Principal amount of 2026 Term Notes outstanding | $500 | — | | Principal amount of 2027 Term Notes outstanding | $500 | $500 | | Principal amount of 2031 Term Notes outstanding | $500 | $500 | | Net carrying amount of term debt, non-current | $1,988 | $1,489 | - Issued **$500 million** aggregate principal amount of **4.650%** Term Notes due 2026 on September 9, 2024, with net proceeds of **$497 million** used to repay debt[63](index=63&type=chunk)[182](index=182&type=chunk) - The **$750 million** Delayed Draw Credit Facility, borrowed on June 20, 2024, was fully repaid on September 9, 2024, resulting in a **$5 million** loss on debt extinguishment[68](index=68&type=chunk)[181](index=181&type=chunk) - A **$750 million** senior unsecured five-year revolving credit facility is available, with no outstanding borrowings as of September 29, 2024[69](index=69&type=chunk)[70](index=70&type=chunk)[184](index=184&type=chunk) [6. Stockholders' Equity](index=19&type=section&id=6.%20Stockholders'%20Equity) Stockholders' equity was impacted by the GRAIL Spin-Off and equity award adjustments; a new **$1.5 billion** share repurchase program was authorized, with **$99 million** in repurchases in Q3 2024 - Approximately **5.4 million** shares remained available for future grants under the 2015 Stock and Incentive Compensation Plan as of September 29, 2024[73](index=73&type=chunk) Restricted Stock Units | Restricted Stock Units (in thousands) | Outstanding at Dec 31, 2023 | Outstanding at Sep 29, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | | RSU | 2,198 | 4,623 | | PSU | — | 620 | - All stock options were cancelled, resulting in no outstanding options as of September 29, 2024[76](index=76&type=chunk) - Liability-classified equity incentive awards for GRAIL employees were assumed by GRAIL in connection with the Spin-Off, with a derecognition of **$283 million**[77](index=77&type=chunk) - A new share repurchase program for up to **$1.5 billion** of common stock was authorized in August 2024, with **$1.4 billion** remaining available as of September 29, 2024[81](index=81&type=chunk)[186](index=186&type=chunk) Share Repurchase Activity (Q3 2024) | Share Repurchase Activity (Q3 2024) | Value | | :---------------------------------- | :---- | | Number of shares repurchased (thousands) | 770 | | Total cost of shares repurchased (millions) | $99 | | Average price paid per share | $127.71 | Share-Based Compensation Expense | Share-Based Compensation Expense (in millions, before taxes) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------------------------------------------------- | :------ | :------ | :------- | :------- | | Total Share-based compensation expense | $84 | $86 | $291 | $286 | [7. Supplemental Balance Sheet Details](index=22&type=section&id=7.%20Supplemental%20Balance%20Sheet%20Details) Accrued liabilities significantly decreased to **$784 million**, with **$46 million** in restructuring charges and **$1,886 million** in goodwill and **$420 million** in IPR&D impairments for GRAIL, while derivative instruments manage foreign exchange risks Balance Sheet Metrics | Metric (in millions) | September 29, 2024 | December 31, 2023 | | :---------------------------------- | :----------------- | :------------------ | | Accounts Receivable, net | $699 | $734 | | Inventory, net | $574 | $587 | | Accrued Liabilities | $784 | $1,325 | Restructuring Charges | Restructuring Charges (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :---------------------------------- | :------ | :------ | :------- | :------- | | Employee separation costs | $6 | $7 | $13 | $33 | | Asset impairment charges | — | $49 | $32 | $56 | | Total restructuring charges | $6 | $58 | $46 | $91 | - A goodwill impairment of **$1,466 million** for GRAIL was recorded in Q2 2024, as its carrying value exceeded its fair value[94](index=94&type=chunk) - An IPR&D asset impairment of **$420 million** for GRAIL was recorded in Q2 2024[98](index=98&type=chunk) Intangible Assets, Net | Intangible Assets, Net (in millions) | September 29, 2024 | December 31, 2023 | | :----------------------------------- | :----------------- | :------------------ | | Total finite-lived intangible assets, net | $305 | $2,403 | | In-process research and development (IPR&D) | — | $590 | | Total intangible assets, net | $305 | $2,993 | - Acquired Fluent BioSciences in Q3 2024, recording **$42 million** in developed technology and **$2 million** in customer relationship intangibles[103](index=103&type=chunk) - Foreign exchange forward contracts for non-hedging purposes had total notional amounts of **$497 million** as of September 29, 2024. Contracts for cash flow hedges had total notional amounts of **$671 million**[107](index=107&type=chunk)[108](index=108&type=chunk) [8. Legal Proceedings](index=27&type=section&id=8.%20Legal%20Proceedings) All GRAIL acquisition regulatory proceedings in the US and EU are resolved, with the EU fine of **€432 million** withdrawn, resulting in a **$481 million** gain, though ongoing SEC, shareholder, and DOJ actions persist - All regulatory proceedings in the United States and European Union related to the GRAIL acquisition were resolved as of September 6, 2024[110](index=110&type=chunk) - The EU Court of Justice ruled in Illumina's favor on September 3, 2024, annulling the European Commission's assertion of jurisdiction over the GRAIL acquisition[113](index=113&type=chunk) - The European Commission withdrew its previously imposed fine of **€432 million** on September 6, 2024, resulting in a net gain of **$481 million** in Q3 2024[113](index=113&type=chunk)[114](index=114&type=chunk) - The U.S. Federal Trade Commission dismissed its administrative complaint on August 15, 2024[115](index=115&type=chunk) - An SEC inquiry related to the GRAIL acquisition and certain statements/disclosures is ongoing[116](index=116&type=chunk) - Multiple shareholder derivative complaints and federal and state securities class actions are ongoing, alleging breaches of fiduciary duties and misleading statements related to the GRAIL acquisition[117](index=117&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk) - Received a DOJ civil investigative demand on January 18, 2024, concerning a False Claims Act investigation related to cybersecurity compliance[130](index=130&type=chunk) [9. Income Taxes](index=30&type=section&id=9.%20Income%20Taxes) The effective tax rate was **2.1%** for Q3 2024 and **(3.2)%** for YTD 2024, unfavorably impacted by **$308 million** goodwill impairment and **$141 million** GRAIL NOLs, but favorably by the EC fine reversal Effective Tax Rate | Effective Tax Rate | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------- | :------ | :------ | :------- | :------- | | Rate | 2.1% | 3.6% | (3.2)% | (3.8)% | - YTD 2024 effective tax rate was unfavorably impacted by a **$308 million** income tax expense from non-deductible goodwill impairment and a **$141 million** income tax expense from GRAIL pre-acquisition net operating losses on GILTI[134](index=134&type=chunk) - The income tax rate in Q3 2024 and YTD 2024 was favorably impacted by the reversal of the European Commission fine (excluded from taxable income) and the mix of earnings in jurisdictions with lower statutory tax rates, such as Singapore[134](index=134&type=chunk) [10. Segment Information](index=31&type=section&id=10.%20Segment%20Information) The company reports Core Illumina and GRAIL segments; post-Spin-Off, GRAIL no longer contributes revenue, while Core Illumina's revenue slightly decreased but income from operations significantly increased - Reportable segments are Core Illumina and GRAIL[136](index=136&type=chunk) Core Illumina | Core Illumina (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :-------------------------- | :------ | :------ | :------- | :------- | | Revenue | $1,080 | $1,106 | $3,228 | $3,341 | | Income (loss) from operations | $741 | $262 | $1,298 | $519 | - GRAIL's revenue and income (loss) from operations are no longer reported after the Spin-Off in Q2 2024[137](index=137&type=chunk)[139](index=139&type=chunk) [Management's Discussion & Analysis](index=32&type=section&id=MANAGEMENT'S%20DISCUSSION%20%26%20ANALYSIS) This section provides management's perspective on the company's financial condition and results of operations, covering an overview, detailed results, liquidity, capital resources, and critical accounting policies [Management's Overview and Outlook](index=32&type=section&id=Management's%20Overview%20and%20Outlook) Illumina, a DNA sequencing leader, faces macroeconomic and competitive challenges; the GRAIL Spin-Off completed in June 2024, with YTD 2024 revenue down **3%**, gross margin at **65.3%**, and increased operating loss due to impairments - Illumina is a global leader in DNA sequencing and array-based technologies, serving research, clinical, and applied markets[146](index=146&type=chunk) - Macroeconomic factors (inflation, exchange rates, economic downturn), competitive challenges in China, and Russia sanctions continue to impact sales and operations[150](index=150&type=chunk) - The GRAIL Spin-Off was completed on June 24, 2024, with Illumina retaining approximately **14.5%** of GRAIL common stock[147](index=147&type=chunk) Financial Highlights (YTD 2024) | Financial Highlight (YTD 2024) | Value | Change from YTD 2023 | | :----------------------------- | :---- | :------------------- | | Revenue | $3,268M | -3% | | Gross Margin | 65.3% | +4.1 percentage points | | Loss from Operations | $(1,008)M | Increased by $103M | | Effective Tax Rate | (3.2)% | +0.6 percentage points | | Cash, Cash Equivalents, and Short-term Investments (Q3 2024) | $939M | - | | Goodwill and Intangible Impairment (YTD 2024) | $1,889M | +$1,068M | | Legal Contingency and Settlement (YTD 2024) | $(474)M | Favorable impact of $488M | | Gains on GRAIL Contingent Consideration Liability (YTD 2024) | - | Increased by $222M | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Consolidated revenue decreased by **3%** due to lower instrument sales, while gross margin improved; operating expenses were impacted by GRAIL impairments and the EC fine reversal, with other income affected by GRAIL investment losses Consolidated Financial Performance | Metric | Q3 2024 (Millions) | Q3 2023 (Millions) | YTD 2024 (Millions) | YTD 2023 (Millions) | | :---------------------------------- | :------ | :------ | :------- | :------- | | Total Revenue | $1,080 | $1,119 | $3,268 | $3,382 | | Consolidated Gross Profit | $745 | $684 | $2,133 | $2,070 | | Consolidated Gross Margin | 68.9% | 61.1% | 65.3% | 61.2% | | Consolidated Operating Expense | $4 | $1,438 | $3,141 | $2,975 | | Consolidated Research and Development | $253 | $315 | $913 | $1,013 | | Consolidated Selling, General and Administrative | $239 | $303 | $813 | $1,127 | | Consolidated Goodwill and Intangible Impairment | — | $821 | $1,889 | $821 | | Core Illumina Legal Contingency and Settlement | $(488) | $(1) | $(474) | $14 | | Total Other Expense, net | $(21) | $(28) | $(358) | $(45) | | Provision (Benefit) for Income Taxes | $15 | $(28) | $44 | $36 | - Core Illumina consumables revenue increased due to NovaSeq X consumables, while instrument revenue decreased due to fewer high-throughput and mid-throughput instrument shipments[158](index=158&type=chunk) - GRAIL goodwill and intangible impairment for YTD 2024 included **$1,466 million** goodwill impairment and **$420 million** IPR&D intangible asset impairment[170](index=170&type=chunk) - Core Illumina legal contingency and settlement in Q3 2024 and YTD 2024 primarily consisted of a **$489 million** gain from the reversal of the EC fine accrual[171](index=171&type=chunk) - Other income (expense), net in YTD 2024 was primarily driven by an increase in net losses on strategic investments of **$303 million**, including an unrealized loss of **$332 million** on the retained investment in GRAIL[173](index=173&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased to **$869 million** due to GRAIL deconsolidation and debt repayments; **$500 million** in new term notes were issued, a **$750 million** loan repaid, and a **$1.5 billion** share repurchase program authorized Cash Flow Summary | Metric (in millions) | YTD 2024 | YTD 2023 | | :---------------------------------- | :------- | :------- | | Net cash provided by operating activities | $473 | $254 | | Net cash used in investing activities | $(130) | $(146) | | Net cash used in financing activities | $(523) | $(1,183) | | Net decrease in cash and cash equivalents | $(179) | $(1,084) | - Cash and cash equivalents were **$869 million** as of September 29, 2024, with **$464 million** held by foreign subsidiaries[179](index=179&type=chunk) - The European Commission withdrew its **€432 million** fine, resulting in a net gain of **$481 million** in Q3 2024, and related guarantees are no longer outstanding[180](index=180&type=chunk) - Issued **$500 million** aggregate principal amount of 2026 Term Notes and repaid the **$750 million** Delayed Draw Credit Facility in Q3 2024[181](index=181&type=chunk)[182](index=182&type=chunk) - A new share repurchase program for up to **$1.5 billion** was authorized in August 2024, with **$1.4 billion** remaining available[186](index=186&type=chunk) - The company expects current cash, cash equivalents, short-term investments, operating cash flows, and available borrowing capacity to be sufficient for near-term capital and operating needs for at least the next 12 months[188](index=188&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes occurred to critical accounting policies and estimates during YTD 2024, despite macroeconomic uncertainties - No material changes to critical accounting policies and estimates during YTD 2024[195](index=195&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=Recent%20Accounting%20Pronouncements) Recent accounting pronouncements applicable to the condensed consolidated financial statements are summarized in Note 1, 'Organization and Significant Accounting Policies' - Refer to Note 1 for a summary of recent accounting pronouncements[196](index=196&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No substantial changes to the company's market risks occurred in YTD 2024 compared to prior disclosures in the Annual Report on Form 10-K - No substantial changes to market risks in YTD 2024[197](index=197&type=chunk) [Other Key Information](index=41&type=section&id=OTHER%20KEY%20INFORMATION) This section covers additional important information including controls and procedures, legal proceedings, risk factors, share repurchases, trading plans, and a list of exhibits [Controls and Procedures](index=41&type=section&id=Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of Q3 2024, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of the end of Q3 2024[200](index=200&type=chunk) - No material changes in internal control over financial reporting occurred during Q3 2024[199](index=199&type=chunk) [Legal Proceedings](index=41&type=section&id=Legal%20Proceedings) Detailed discussion of legal proceedings is provided in Note 8, 'Legal Proceedings', within the Condensed Consolidated Financial Statements section - Refer to Note 8 for details on legal proceedings[201](index=201&type=chunk) [Risk Factors](index=41&type=section&id=Risk%20Factors) The GRAIL Spin-Off introduced significant costs, potential revenue loss, and adverse impacts, while ongoing litigation, regulatory investigations, and shareholder lawsuits related to the acquisition persist - The GRAIL Spin-Off resulted in significant costs, potential loss of revenue, and adverse effects on business, financial condition, results of operations, and stock price[204](index=204&type=chunk) - The company is subject to ongoing SEC investigations, shareholder inspection demands, derivative lawsuits, and securities class actions related to the GRAIL acquisition[205](index=205&type=chunk) [Share Repurchases and Sales](index=42&type=section&id=Share%20Repurchases%20and%20Sales) A new **$1.5 billion** share repurchase program was authorized in August 2024, with **770 thousand** shares repurchased for **$99 million** in Q3 2024 - A new share repurchase program for up to **$1.5 billion** of outstanding common stock was authorized in August 2024[206](index=206&type=chunk) Share Repurchase Activity (Q3 2024) | Share Repurchase Activity (Q3 2024) | Value | | :---------------------------------- | :---- | | Total Number of Shares Purchased (thousands) | 770 | | Total Cost of Shares Repurchased (millions) | $99 | | Average Price Paid per Share | $127.71 | | Approximate Dollar Value of Shares Remaining Under Program (millions) | $1,401.684 | [Adoptions, Modifications or Terminations of Trading Plans](index=43&type=section&id=Adoptions,%20Modifications%20or%20Terminations%20of%20Trading%20Plans) No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q3 2024[210](index=210&type=chunk) [Exhibits](index=44&type=section&id=Exhibits) This section lists exhibits filed with Form 10-Q, including amended bylaws, underwriting agreements, officer's certificates, a separation agreement, and SOX certifications - Exhibits include Amended and Restated Bylaws, Underwriting Agreement, Officer's Certificate, Separation Agreement, and Section 302 and 906 certifications[212](index=212&type=chunk) [Form 10-Q Cross-Reference Index](index=46&type=section&id=Form%2010-Q%20Cross-Reference%20Index) This index provides a cross-reference to the parts and items requirements of the SEC Quarterly Report on Form 10-Q, indicating page numbers for each item - Provides a cross-reference index for the parts and items requirements of the SEC Quarterly Report on Form 10-Q[215](index=215&type=chunk)

With the Grail carve-out behind it, Illumina, Inc.'s (NASDAQ: ILMN ) financials are rebounding, helping the stock sentiment. That's not all; a second phase of re-rating should come from a top-line re-acceleration from 2025 to 2027 as delayed and elongated CAPEX cyclesHello readers! Passionate about technology, my focus will be on finding and analyzing companies that can play a relevant role in today's geopolitics, leverage their IP, and eventually, with time, become new leaders. Therefore, the investment st ...

Illumina Inc. (ILMN) reported third-quarter 2024 adjusted earnings per share (EPS) of $1.14, which beat the Zacks Consensus Estimate of 87 cents by a stupendous 31.0%. The bottom line was above the year-ago figure of 33 cents.The adjustments exclude the impact of GRAIL’s 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 from the first quarter of 2024.Including one-time items, the company’s GAAP EPS ...

Illumina (ILMN) reported $1.08 billion in revenue for the quarter ended September 2024, representing a year-over-year decline of 3.5%. EPS of $1.14 for the same period compares to $0.33 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $1.07 billion, representing a surprise of +0.48%. The company delivered an EPS surprise of +31.03%, with the consensus EPS estimate being $0.87.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Stre ...

Financial Data and Key Metrics - Revenue for Q3 2024 was $1.1 billion, in line with expectations [10] - Non-GAAP operating margin was 22.6%, and diluted earnings per share were $1.14, exceeding expectations [12] - Revenue in the Americas was down 6% YoY, Europe was up 12%, EMEA was up 7%, and Greater China was down 23% [10] - The company placed an additional 58 NovaSeq X Plus instruments, bringing the total installed base to 527, with 40% shipped to clinical customers [11] - The X-Series surpassed $1 billion in cumulative revenue [11] Business Line Data and Key Metrics - Sequencing consumables revenue was $741 million, up 7% YoY, driven by strong uptake in X consumables [29] - Sequencing instruments revenue was $104 million, a 42% YoY decline, slightly behind expectations [31] - Sequencing service and other revenue was $150 million, up 6% YoY, driven by strategic partnerships and high instrument service contract revenue [33] - More than 55% of high-throughput gigabases sequenced and over 35% of high-throughput consumables revenue were on the NovaSeq X series [29] Market Data and Key Metrics - Total sequencing GB output on connected high and mid-throughput instruments grew over 40% YoY, with robust growth from both clinical and research customers [31] - The company expects almost half of high-throughput consumables revenue to transition to the X series by mid-2025 [30] Company Strategy and Industry Competition - The company aims to drive high single-digit revenue growth and 500 basis points of operating margin expansion by 2027, with annual EPS growth in the double-digits to teens over the next three years [14] - Key priorities include deeper customer collaboration, continuous innovation, and operational excellence [15] - The company recently launched the MiSeq i100, addressing demand for flexible solutions for smaller-scale projects with faster turnaround times [19] - The company is developing comprehensive whole genome sequencing and the five-phase genome, which will launch over the next 12 to 18 months [21] Management Commentary on Operating Environment and Future Outlook - The near-term macroeconomic environment remains constrained, and the company expects 2024 revenue growth to be slightly lower than prior guidance [13] - The company is raising guidance for 2024 operating margin and earnings per share, reflecting progress in operational excellence and margin expansion [13] - The company expects to return to growth in 2025, with high single-digit revenue growth by 2027 [49] Other Important Information - The company divested GRAIL in June 2024, and all financial information discussed excludes GRAIL [5][27] - The company issued $500 million in debt at a 4.65% coupon to redeem a high-cost $750 million delayed broad term loan, reducing leverage and interest rates [38] - The company repurchased 770,000 shares for $98 million at an average price of $127.71 per share [41] Q&A Session Summary Question: Guidance and Clinical Transition Concerns [50] - The company does not foresee a "clinical cliff" for consumable revenue, as the transition to the X series is gradual, typically taking 12-18 months [52][55] - Q4 consumables guidance assumes a typical seasonal decline due to fewer working days and holidays [56][57] Question: Mid-Throughput Decline and 2025 Outlook [59] - The mid-throughput decline was driven by macroeconomic pressures and competition, particularly in the U.S. and Europe [60][61] - The company expects to return to positive growth in 2025, with high single-digit growth by 2027 [63] Question: Price per GB and Margin Expansion [65] - The price per GB impact was closer to 25%, within the expected range of 20-25% [67] - The company is targeting 500 basis points of margin expansion from a base of 21% [67][68] Question: NGS Consumable Revenue Growth [71] - Consumables revenue grew 7% in Q3, with both research and clinical segments showing strong growth [73] Question: Clinical X Transition and Pricing Dynamics [76] - The transition to the X series is driven by its benefits, including lower costs and improved workflows, with customers gradually moving assays over time [77][78] - Multi-year contracts are not instrument-specific and will continue with the X series [83] Question: Elasticity of Demand and Q4 Seasonality [85] - Customers are expanding assays and increasing sequencing depth, driving volume growth despite lower prices [89] - Q4 seasonality is expected to impact consumables due to fewer working days and inventory management [90][91] Question: Revenue Guidance Change [93] - The revenue guidance change is primarily due to slower deal closures in the instruments business, with the impact spread across instruments, consumables, and services [94][96] Question: Macro Environment and Growth Outlook [99] - The company sees consumables growth as a leading indicator of improvement, but the macroeconomic environment remains a headwind [100][101] Question: Margin Expansion and Cost Savings [103] - The company achieved $100 million in cost savings in 2024 and is targeting an additional $200 million, with a focus on COGS and operating expenses [107][108] Question: Free Cash Flow and Share Buybacks [112] - The company generated $284 million in free cash flow in Q3 and plans to continue share buybacks and tuck-in M&A to drive growth [113][117] Question: End Market Dynamics [120] - Europe showed steady growth, while the Americas faced tougher comparisons due to higher X instrument placements in the prior year [122] Question: Single-Cell Opportunity [124] - The acquisition of Fluent BioSciences expands the single-cell market opportunity, with a focus on enabling large-scale experiments [125][126] Question: MiSeq i100 and XLEAP Impact [130] - The MiSeq i100 is expected to drive growth in the low-throughput segment, with significant interest from customers [131][133] - Over 60% of NextSeq 1K/2K users have adopted the XLEAP chemistry, showing strong market reception [135]

分组1 - Illumina reported quarterly earnings of $1.14 per share, exceeding the Zacks Consensus Estimate of $0.87 per share, and showing a significant increase from $0.33 per share a year ago, resulting in an earnings surprise of 31.03% [1] - The company achieved revenues of $1.08 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.48%, although this represents a decline from year-ago revenues of $1.12 billion [2] - Illumina has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance in earnings [2] 分组2 - The stock has underperformed the market with a gain of about 7.6% since the beginning of the year, compared to the S&P 500's gain of 20.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.93 on revenues of $1.1 billion, and for the current fiscal year, it is $3.62 on revenues of $4.34 billion [7] - The Medical - Biomedical and Genetics industry, to which Illumina belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8]

Financial Performance - Core Illumina revenue for Q3 2024 was $1.1 billion, down 2% from Q3 2023 on a constant currency basis[2] - Core Illumina GAAP operating margin for Q3 2024 was 68.6%, with a non-GAAP operating margin of 22.6%[2] - Core Illumina GAAP diluted EPS for Q3 2024 was $4.03, and non-GAAP diluted EPS was $1.14[2] - Fiscal year 2024 Core Illumina revenue guidance was lowered to a decline of ~3% from fiscal year 2023, with Q4 2024 revenue expected to be approximately $1.07 billion[2] - Fiscal year 2024 Core Illumina non-GAAP operating margin guidance was raised to a range of 21% to 21.5%[2] - Fiscal year 2024 Core Illumina non-GAAP diluted EPS guidance was raised to a range of $4.05 to $4.15[2] - Total revenue for Q3 2024 was $1.08 billion, a decrease of 4% compared to $1.119 billion in Q3 2023[20] - Net income for Q3 2024 was $705 million, compared to a net loss of $754 million in Q3 2023[20] - Core Illumina constant currency revenue for Q3 2024 was $1.078 billion, a decrease of 2% compared to $1.101 billion in Q3 2023[25] - Consolidated constant currency revenue for Q3 2024 was $1.078 billion, a decrease of 3% compared to $1.114 billion in Q3 2023[26] - Non-GAAP diluted earnings per share for the three months ended September 29, 2024, was $1.14, compared to GAAP diluted earnings per share of $4.03[28] - Non-GAAP net income for the three months ended September 29, 2024, was $181 million, compared to GAAP net income of $642 million[29] - Non-GAAP diluted earnings per share for the nine months ended September 29, 2024, was $3.20, compared to GAAP diluted earnings per share of $4.88[28] - Non-GAAP net income for the nine months ended September 29, 2024, was $510 million, compared to GAAP net income of $777 million[29] - Non-GAAP diluted earnings per share for the nine months ended October 1, 2023, was $0.73, compared to GAAP diluted loss per share of $(6.23)[31] - Non-GAAP net income for the nine months ended October 1, 2023, was $115 million, compared to GAAP net loss of $(986) million[32] - Non-GAAP gross profit for the consolidated operations was $732 million, representing 65.4% of revenue[34] - Non-GAAP operating profit for the consolidated operations was $93 million, representing 8.3% of revenue[34] - Core Illumina non-GAAP gross profit was $2.228 billion, representing 69.0% of revenue[36] - Consolidated non-GAAP operating profit was $362 million, or 11.1% of revenue[36] - Non-GAAP gross profit for Core Illumina is $2,208 million, representing 66.1% of revenue[38] - Non-GAAP operating profit for Core Illumina is $681 million, representing 20.4% of revenue[38] - Non-GAAP operating profit for Consolidated is $196 million, representing 5.8% of revenue[38] Expenses and Margins - Gross margin for Q3 2024 increased to 68.9% from 64.7% in Q3 2023, driven by cost savings and improved productivity[5] - Research and development expenses for Q3 2024 were $253 million, a decrease from $315 million in Q3 2023[20] - Selling, general and administrative expenses for Q3 2024 were $239 million, a decrease from $303 million in Q3 2023[20] - GAAP R&D expense for the consolidated operations was $315 million, accounting for 28.1% of revenue[34] - Non-GAAP R&D expense for the consolidated operations was $312 million, representing 27.8% of revenue[34] - GAAP SG&A expense for the consolidated operations was $303 million, accounting for 27.0% of revenue[34] - Non-GAAP SG&A expense for the consolidated operations was $328 million, representing 29.3% of revenue[34] - Non-GAAP R&D expense for Core Illumina is $754 million, representing 22.5% of revenue[38] - Non-GAAP SG&A expense for Core Illumina is $773 million, representing 23.1% of revenue[38] Cash Flow and Assets - Free cash flow for Q3 2024 was $284 million, compared to $94 million in the prior year period[7] - Free cash flow for Q3 2024 was $284 million, compared to $94 million in Q3 2023[23] - Total assets decreased to $6.014 billion as of September 29, 2024, from $10.111 billion as of December 31, 2023[17] - Stockholders' equity decreased to $2.125 billion as of September 29, 2024, from $5.745 billion as of December 31, 2023[18] - Cash and cash equivalents decreased to $869 million as of September 29, 2024, from $1.048 billion as of December 31, 2023[17] Legal and Tax Adjustments - Legal contingency and settlement adjustments reduced GAAP net income by $488 million for the three months ended September 29, 2024[29] - Goodwill and intangible impairment adjustments increased GAAP net income by $821 million for the nine months ended October 1, 2023[32] - GILTI, US foreign tax credits, and global minimum top-up tax adjustments increased non-GAAP net income by $54 million for the three months ended September 29, 2024[29] - Incremental non-GAAP tax expense reduced non-GAAP net income by $26 million for the three months ended September 29, 2024[29] - GAAP goodwill and intangible impairment for the consolidated operations was $821 million, accounting for 73.4% of revenue[34] - GAAP legal contingency and settlement was $(474) million, or (14.4)% of revenue[36] - Non-GAAP other expense was $(32) million, or (1.0)% of revenue[36] - Consolidated GAAP operating loss was $(1.008) billion, or (30.8)% of revenue[36] - Strategic investment related loss was $339 million, or 10.4% of revenue[36] - Goodwill and intangible impairment related to GRAIL is $821 million, representing 24.3% of revenue[38] - Legal contingency and settlement reversal for Q3 2024 is $14 million, representing 0.4% of revenue[38] Product and Innovation Updates - The company introduced the MiSeq i100 Series, Illumina's simplest and fastest benchtop sequencers[8] - The company announced plans to provide updates on key innovations in whole-genome sequencing, proteomics, and single-cell technology at the American Society of Human Genetics Annual Meeting[8] Other Financial Metrics - GAAP other expense, net for the consolidated operations was $(28) million, accounting for (2.6)% of revenue[34] - Non-GAAP other expense, net for the consolidated operations was $(6) million, representing (0.5)% of revenue[34] - Strategic investment-related loss, net for the consolidated operations was $19 million, accounting for 1.8% of revenue[34] - Core Illumina GAAP gross profit was $2.181 billion, or 67.6% of revenue[36] - Non-GAAP tax provision for Core Illumina is $48 million, representing 21.0% of revenue for the three months ended September 2024[43] - Non-GAAP tax provision for Consolidated is $48 million, representing 21.0% of revenue for the three months ended September 2024[44] - Non-GAAP tax provision for Consolidated is $77 million, representing 23.4% of revenue for the nine months ended September 2024[44]

Core Financial Results - Core Illumina revenue for Q3 2024 was $1.1 billion, a decrease of 2% from Q3 2023 on a constant currency basis [1][21] - GAAP operating margin for Q3 2024 was 68.6%, while non-GAAP operating margin was 22.6% [1][4] - GAAP diluted EPS for Q3 2024 was $4.03, and non-GAAP diluted EPS was $1.14 [1][24] Guidance and Outlook - The company lowered its fiscal year 2024 Core Illumina revenue guidance to a decline of approximately 3% compared to fiscal year 2023, with an expected Q4 2024 revenue of around $1.07 billion [1][7] - Fiscal year 2024 non-GAAP operating margin guidance was raised to a range of 21% to 21.5% [1][7] - Non-GAAP diluted EPS guidance for fiscal year 2024 was raised to a range of $4.05 to $4.15 [1][7] Operational Highlights - The company reported strong operating results, with revenue meeting expectations despite a constrained macroeconomic environment [2] - Illumina is making progress towards strategic goals, including launching innovations and accelerating customer adoption of the NovaSeq™ X [2] Segment Performance - Core Illumina segment revenue for Q3 2024 was $1.08 billion, with a gross margin of 68.9% [3][21] - Research and development (R&D) expenses were $253 million, while selling, general and administrative (SG&A) expenses were $239 million [3][4] Cash Flow and Capital Expenditures - Cash flow provided by operations was $316 million for Q3 2024, compared to $139 million in the prior year [5] - Free cash flow for the quarter was $284 million, up from $94 million in the prior year [5][20] Recent Announcements - The company presented a three-year financial outlook featuring accelerating revenue growth and significant margin expansion [6] - Illumina introduced the MiSeq i100 Series, its simplest and fastest benchtop sequencers [6] - The company obtained FDA approval for TSO Comprehensive with two companion diagnostics [6]

New, groundbreaking technology delivers Illumina's most comprehensive genome yet; early results from Broad Clinical Labs demonstrate a highly simplified workflow, ultra-long phasing, high-resolution insights into complex genomic variation, and enhanced long-range information   Illumina and customers will also showcase new details on complete proteomics solution and latest data on Fluent single-cell technologySAN DIEGO, Oct. 31, 2024 /PRNewswire/ -- Illumina, Inc. (NASDAQ: ILMN), a global leader in DNA sequ ...

Wall Street analysts forecast that Illumina (ILMN) will report quarterly earnings of $0.87 per share in its upcoming release, pointing to a year-over-year increase of 163.6%. It is anticipated that revenues will amount to $1.08 billion, exhibiting a decline of 3.6% compared to the year-ago quarter. The consensus EPS estimate for the quarter has undergone an upward revision of 0.8% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed th ...