Long-term Growth and Margin Outlook
Q: Can you share medium and long-term growth and margin outlook?
A: CEO Jacob Thaysen is not yet ready to share detailed long-term growth perspectives but remains optimistic about Illumina's growth. " He is dedicated to expanding margins back to historic levels, evidenced by gross margin expansion in Q1. "

Competition in Mid-Throughput Segment
Q: How are you addressing competition in mid-throughput segment?
A: Illumina acknowledges competition, especially in mid-throughput, primarily in China but also globally. " They are committed to innovation with the XLEAP chemistry, offering higher quality, capacity, and lower cost without new instruments, making them highly competitive. "

Guidance and Mix of Consumables and Instruments
Q: Do you expect the mix of consumables and instruments to change?
A: Illumina reiterated guidance for core sequencing revenue growth, with the mix of consumables and instruments expected to remain the same. " Instruments may show variability due to last year's NovaSeq X shipments, but consumables should have a steady profile. "

NovaSeq X Adoption and Consumables Pull-Through
Q: What's driving revenue growth—NovaSeq X adoption or consumables?
A: Revenue growth is driven by both instrument placements and consumables pull-through of NovaSeq X. " Customers are adopting the full portfolio of X consumables, with strength seen throughout the quarter. "

Regulatory Issues: GRAIL Divestiture
Q: Will you provide final terms of GRAIL divestiture if EU appeal delays?
A: Illumina is moving forward with GRAIL divestiture and committed to providing insight by end of Q2, regardless of the timing of the EU jurisdictional appeal decision. "

Margins and Operating Expenses
Q: What's causing the margin step-down in Q2 and outlook ahead?
A: Q2 operating expenses increase due to timing of merit increases and annual stock grants, accounting for about half the sequential increase; project-related spending accounts for the rest. " Operating margin is expected to improve sequentially each quarter. "

FDA's LDT Regulatory Rule Impact
Q: Does FDA's new LDT rule give you an advantage?
A: Illumina is well-positioned due to their IVD-compliant machines and investments in high-quality documentation, aiding customers in obtaining FDA approvals. " The new rule plays to their strengths, and they are committed to supporting customers. "

Multiomics and SomaLogic Partnership
Q: Can you provide color on multiomics and SomaLogic partnership?
A: Illumina is excited about sequencing's role in multiomics, notably their early-access proteomics collaboration with SomaLogic. " They aim to strengthen their position in multiomics both organically and with partners. "

High-Throughput Capacity and Competition
Q: Is excess high-throughput capacity affecting customer decisions?
A: Approximately half of NovaSeq X customers are using the 25B flow cell, indicating strong adoption. " Many clinical customers are still validating assays and will gradually bring new ones online; Illumina monitors competition closely. "

Win Rates Outside China
Q: Have win rates outside China stabilized in 2024?
A: Win rates have stabilized, and Illumina continues to improve performance by focusing on customer support and taking competition seriously. "

Population Genomics Budget Pressure
Q: Does budget pressure in population genomics risk consumables forecast?
A: Illumina isn't relying on any individual population genomics program and doesn't foresee significant impact on consumables forecasts for 2024 or 2025. "

Service Revenues Higher Than Expected
Q: Why were service revenues higher than expected?
A: Strong service revenue growth of 27% year-over-year due to timing of specific pharma customer services and excellent performance in core instrument services. "

NovaSeq X Customers in Ramp Phase
Q: How many NovaSeq X customers are at scale versus validating?
A: Most of the approximately 400 NovaSeq X customers are still in the ramp phase; some research customers are at scale with one instrument and may be expanding. "

Order Momentum and Budget Anticipation
Q: Is high-throughput order momentum based on actual orders?
A: NovaSeq X orders are up year-over-year, with momentum expected to improve as customers complete validation and place multiple orders; this is not based on new budgets but existing customer activity. "

Mid-Throughput Elasticity and Pricing
Q: How does XLEAP prevent a race to the bottom on pricing?
A: XLEAP chemistry provides increased output and performance without requiring new instruments, appealing to customers and allowing Illumina to maintain a price premium due to innovation and technical superiority. "