Illumina(ILMN) - 2024 Q4 - Annual Report

Revenue Performance - Revenue decreased by 3% in 2024 to $4.4 billion compared to$4.5 billion in 2023, primarily due to a decrease in sequencing instruments revenue[170]. - Total revenue for the year ended December 29, 2024, was $4,372 million, a decrease of 2.9$4,504 million in 2023[258]. - Product revenue decreased to $3,656 million in 2024 from$3,787 million in 2023, representing a decline of 3.5%[258]. - Core Illumina consumables revenue increased by 2% to $3.169 billion in 2024, primarily due to an increase in NovaSeq X consumables[173]. - Core Illumina instruments revenue decreased by 29$501 million in 2024, driven by fewer shipments of high-throughput instruments[173]. - Revenue from product sales is recognized upon delivery to the end customer, with invoicing typically occurring upon shipment and payment due within 30 days[294]. - Revenue from Greater China was $308 million in 2024, down from$384 million in 2023, a decline of 19.8%[353]. - Americas revenue was $2,441 million in 2024, down from$2,521 million in 2023, a decline of 3.2%[353]. Financial Performance - Gross margin increased to 65.4% in 2024 from 60.9% in 2023, driven by operational excellence initiatives and a favorable revenue mix[170]. - Loss from operations improved to $0.8 billion in 2024 from$1.1 billion in 2023, due to a decrease in operating expenses and an increase in gross profit[171]. - The net loss for 2024 was $1,223 million, compared to a net loss of$1,161 million in 2023, reflecting a $62 million increase[187]. - The company reported a net loss of$1,223 million for the year ended December 29, 2024, compared to a net loss of $1,161 million in 2023[258]. - The company incurred a goodwill and intangible asset impairment of$1,889 million in 2024, compared to $827 million in 2023, reflecting a significant increase[268]. - The company recorded a net unrealized loss of$310 million on marketable equity securities in 2024[360]. Cash Flow and Investments - Cash, cash equivalents, and short-term investments totaled $1.220 billion at the end of 2024, with approximately$439 million held by foreign subsidiaries[171]. - Net cash provided by operating activities in 2024 was $837 million, a significant increase from$478 million in 2023[202]. - Net cash used in investing activities was $178 million in 2024, including$128 million in capital expenditures and $81 million for an acquisition[205]. - The company issued$500 million in 2026 Term Notes in September 2024, with net proceeds of 497 million used to repay part of the outstanding debt[193]. - The company anticipates that current cash, cash equivalents, and short-term investments are sufficient to fund near-term capital and operating needs for at least the next 12 months[201]. Operational Efficiency - Core Illumina's R&D expense decreased by 42 million, or 4%, in 2024, primarily due to reductions in headcount and employee compensation costs[180]. - Core Illumina's SG&A expense decreased by $348 million, or 28$119 million, or 3%, from $3,813 million in 2023 to$3,694 million in 2024[180]. Strategic Initiatives - Strategic goals for 2025 include a focus on returning to revenue growth and further progress in operational excellence initiatives[169]. - The company plans to continue advancing research and development efforts and may pursue strategic acquisitions to enhance product offerings[202]. GRAIL Spin-Off - The Spin-Off of GRAIL on June 24, 2024, resulted in Illumina retaining approximately 14.5% of GRAIL common stock[165]. - The company completed the Spin-Off of GRAIL on June 24, 2024, distributing approximately 85.5% of GRAIL's outstanding common stock to Illumina stockholders[272]. - The cash contribution to GRAIL for 2.5 years of operations was determined to be $974 million, net of cash and cash equivalents held by GRAIL[346]. Impairment and Valuation - GRAIL's goodwill and intangible impairment in 2024 was$1,886 million, significantly higher than the 821 million in 2023[183]. - The impairment assessment of GRAIL IPR&D involved significant estimation uncertainty, particularly regarding forecasted revenues and discount rates[251]. - The company recorded an impairment loss of 420 million related to GRAIL in-process research and development (IPR&D), with a carrying value of $140 million post-assessment[250]. Tax and Interest - The effective tax rate was (3.8)$12 million, or 21%, to $46 million in 2024, while interest expense increased by$23 million, or 30%, to $100 million[185]. Market and Currency - The total notional amounts of outstanding forward contracts for foreign currency purchases was$621 million as of December 29, 2024, used to hedge portions of foreign currency exposure associated with forecasted revenue transactions[237]. - The company had foreign exchange forward contracts in place to hedge exposures in multiple currencies, including euro and Japanese yen, as of December 29, 2024[327].