Illumina, Inc. Q4 FY2025 earnings call

Key Points

• Returned to growth in 2025 with ex-China revenue up 2% for the year and 7% in Q4.
• Clinical consumables revenue grew strongly, with mid-teens growth in the second half and 20% ex-China growth in Q4.
• Achieved high throughput transition milestones, advanced portfolio into multiomics, data software, and AI.
• Expanded non-GAAP operating margins by 180 basis points and grew non-GAAP EPS by 16%.
• Generated strong free cash flow and returned ~$740 million to shareholders via share repurchases.
• Launched BioInsight, introduced the Billion Cell Atlas with collaborations from AstraZeneca, Merck, and Eli Lilly.
• Acquired Somalogic to expand multiomics capabilities, and launched Illumina Connected Multiomics software.

In the fourth quarter, Illumina's revenue was $1.16 billion, up 5% YOY on a reported basis and 4% on constant currency. Sequencing consumables revenue was $755 million, up 8% YOY and 11% ex-China. Sequencing instruments revenue was $154 million, approximately flat YOY and 3% ex-China. Sequencing service and other revenue was $157 million, up approximately 3% YOY and 4% ex-China.

2026 Outlook

• Organic revenue growth ex-China expected to be 2%-4%, total company revenue $4.5-$4.6 billion (4%-6% reported).
• Clinical consumables expected to grow double-digit to mid-teens.
• Research and applied consumables to decline mid to high single digits.
• Instruments roughly flat to slightly down, with expected 50-60 NovaSeq X placements per quarter on average.
• Operating margins expected to be 23.3%-23.5%, EPS $5.00-$5.20 including Somalogic dilution.

• Dynamic market developments that could impact performance.
• Regulatory uncertainties in China affecting business operations.
• Impact of foreign exchange fluctuations on revenue.
• Competition in the genomics space challenging market position.

Q: On operating margin and long-term targets, how are they thinking about capital deployment and M&A criteria?

A: Jacob Thaysen and Ankur Dhingra discussed that they are confident in long-term targets, with progress made towards 26% operating margin by 2027, and M&A criteria focus on synergies and growth opportunities to drive further expansion.

Q: On guidance, why the step down from Q4 clinical performance to 2026 guidance?

A: Jacob Thaysen explained that while Q4 was strong, the guidance uses the second half of 2025 as a base, acknowledging research still has uncertainties but clinical momentum is continuing.

Q: Instrument split between research and clinical, competition in research?

A: Jacob Thaysen stated that over 60% of NovaSeq X placements in Q4 were to clinical customers, and research is still muted due to funding uncertainties though there is interest in new technologies.

Q: Instrumentation split, NovaSeq X placements, multiomics and BioInsight?

A: Ankur Dhingra mentioned about 200-240 NovaSeq X placements expected for 2026, with BioInsight being an early but promising area for future growth.

Q: Clinical applications growth split, multiomics and BioInsight impact?

A: Jacob Thaysen said clinical growth is broad-based across applications, and multiomics and BioInsight are early initiatives expected to contribute in subsequent years.

Q: China assumptions, competitive pricing headlines?

A: Jacob Thaysen discussed ongoing conversations with Chinese regulators, and while competitive pricing headlines exist, Illumina focuses on workflow and value proposition to customers.

Q: Academic core labs, NIH funding, Eric Green's impact?

A: Jacob Thaysen noted efforts to support academic core labs, Eric Green's role in aiding navigation through funding challenges, and better line of sight to NIH funding but still uncertainties.

Q: 6K pull-through, geography growth (Europe, Asia)?

A: Ankur Dhingra explained 6K pull-through continues as customers use it for validated assays, and Europe and APAC are expected to maintain growth momentum.