Illumina, Inc. Q3 FY2025 earnings call

• NovaSeq X transition: More than 55 instruments placed in Q3, with over 75% of high-throughput gigabases shipped and 50% of high-throughput revenue on the X platform by year-end exceeded. Clinical sequencing consumables revenue grew in high single digits year-over-year.
• Multiomics: Launched Illumina Protein Prep, 5-base solution, and BioInsight to accelerate use of genomic and multiomics data in drug discovery and research.
• Cost structure: Non-GAAP operating margin expanded to 24.5% in Q3, driven by cost reduction programs while prioritizing growth investments.
• China business: Revenue in China was ahead of guidance despite export restrictions, and made progress in serving OEM partners by manufacturing select instruments locally.

In the third quarter, total revenue was $1.08 billion. Sequencing consumables revenue was $747 million, roughly flat year-over-year. Excluding China (which makes up 95% of revenue), revenue grew approximately 2% year-over-year. Greater China revenue was $52 million. Clinical had double-digit revenue growth outside China driven by broader adoption of comprehensive genomic profiling and growing use of sequencing-intensive applications. Research and applied consumables sales declined in high single digits outside China due to funding uncertainty and X transition pricing dynamics.

• Raised full-year 2025 revenue guidance, with total constant currency revenues expected to decline in the range of minus 0.5% to minus 1.5%. Sequencing consumables growth revised to 2.5% to 3% towards the higher end of prior guidance. Operating margin guidance increased by ~60 basis points. Non-GAAP diluted EPS guidance raised to $4.65 to $4.75.
• 2026 outlook: Clinical expected to continue strong volume growth and X transition, research and applied to stabilize with pricing headwinds easing, and multiomics launches to contribute to growth as research markets recover.

• Export restrictions in China remaining a concern with no long-term resolution yet.
• Regulatory and funding uncertainties affecting research and applied markets.
• Competitive landscape posing challenges in maintaining market position across multiple dimensions.

Q: How to think about China in 2026 and competitive announcements at ASHG?

A: Jacob mentioned China performance was strong but situation unresolved, and competition is seen as a driver for innovation.

Q: Thoughts on 2026 revenue growth framework?

A: Jacob and Ankur discussed clinical growth, research stabilization, and China uncertainties, expecting low single-digit revenue growth.

Q: Parsing consumables growth and margin expansion?

A: Jacob noted no pull forward in academic/government segments, Ankur discussed margin expansion from cost actions and operating leverage.

Q: Research muted next year and earnings growth in 2026?

A: Jacob said research funding predictability needed, but confident in earnings growth; Ankur discussed margin expansion and growth levers.

Q: Competitive landscape impact on clinical side?

A: Jacob stated Illumina differentiates on multidimensions of quality, workflow, and cost, standing out in the competitive space.