Illumina (ILMN) 2 May 242024 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the First Quarter 2024 Illumina Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Salli Schwartz, Vice President of Investor Relations.

Hello, everyone, and welcome to our earnings call for the first quarter of 2024.

after we close the commentary of commercial regulatory today, released results on call host and the will after market activity, the will session. financial review we our a During question-and-answer we which and offer

be Our Investor Relations at in section earnings found the our of release website can illumina.com.

business Dhingra, review Illumina on Jacob for Officer. will company Q&A. financial an update for then today Thaysen, will include Goswami, remarks Financial be prepared GRAIL. Jacob join will Executive June through as who Chief Chief state and of results, which is Illumina's the us XX, Providing the our an will Officer; Ankur and Ankur Joydeep to adviser provide serving

Illumina Commission, the pursuant the will regulation. the ordered in reminder, by prohibited EU under being measures which recorded, to a and audio website. our must and GRAIL operated from As transitional European acquisition held call is merger the the of portion be of our This Investors GRAIL section archived separately independently be and

statements call Reform intent and during made It is under activity commercial all today's results financial regarding be XXXX. of Private that Securities our Act the protected Litigation will our forward-looking

differ, we including XX-Q Securities to Forms understand and the materially Illumina's cause you uncertainties. To results discussed. uncertainties refer upon subject statements. statements risks Forward-looking risks obligation XX-K. recent the update to documents could may and most projected better no information, to and events available All Commission, files these current those and that to results that the Exchange and or differ forward-looking are statements based from or Actual with Illumina are Illumina assumes actual

call turn now over Jacob. will to I that, the With

Good Thank everyone. you, afternoon, Salli.

and first over want our contributions Development a Illumina quarter many to Corporate our to Strategy Officer, more Officer Financial to into years. than thank take and Goswami, Joydeep his I Chief going for Before former Chief moment results, X

who Chief Illumina Jakob been from transition. November heavily Corporate in and smooth as through now who advisory Jakob Joydeep Ankur planning. joined been a and to welcome our Development new to involved has stay CFO, strategy has June shortly, our on support I noted, named will in will also congratulate long-term an and Salli Dhingra, hear role Wedel, wanted Strategy As you Officer.

the what with world Throughout Illumina. to to I have continued of to bring collaborate, around our opportunity meet their San the a like looks quarter, to discuss and to future with customers and new them shape headquarters innovate Diego ways the number

with greater our how of whole projects discovery Some to X disease. residual scaling area focus of their shared in power. unlock customers One genome up NovaSeq key harnessing they are minimal opportunities is

deeper are adding and Other starting help layers characterize while and methylation disease. to are looking customers their at to are sequence projects, diagnose epigenomic multiomics to biomarkers and others

for opportunity significant are in a we seeing are avenues looking are We sophisticated multiomics. to all in exploring value solutions their space. Customers more to this support create expand and work, to

Our expansion recent software building space. specialized solution, our the a block of multiomics of into is acquisition Partec, this

solutions. sample-to-answer to greater to on our will of can our focus we priorities. ecosystem, more the the how catalyze and collaborate intent to is customers customers' industry is Illumina we Our provide with even an the at with understand heart continue

expectations. approximately on core Turning QX, core $X.XX quarter my of results. to I'll our focus delivered ahead Illumina billion first comments revenue we Illumina. our In of

was cautious due global it start challenging the we decisions. still their constrained year, persistently customers environment where to remain the in purchasing decent to While a macro are

preorder first fulfill our with this out playing book. XXXX, seeing a to X we lower where placements expected, of NovaSeq across we strong are regions first the X our versus As notably quarter shipped instrument

year-over-year the significant company. quarter. down second across my XX%. to although executing declined Nonetheless, year's revenue management we Illumina down China X in up X% against given was team make strong EMEA continues revenue creation the X%, decline accelerate Europe revenue progress the X%, value revenue of and year-over-year. X in key Greater last shipment priorities a to Americas X expect down in was QX regions was our was Europe

first year, priority, in installed expect to full momentum helping our instruments. build. installed My total This bringing solid grounded to an of of the driving instruments. a topline, QX, a potential growing NovaSeq X realize we instruments, is shipped XXX than more continue and customers our is we base start and base the our to XX In X additional

their their consumables We scaling projects. the promising saw and customers expanding sequencing to continue operations also demand throughout our quarter as

the in feedback the exceptional simple received customers of customers with projects are several our the are they with the the in providing impressed and we the launch, reads single-cell launch post flow PX XLEAP-SBS quantity accuracy In are our the Customers exceed first for XXB now the about customers we are existing NovaSeq with well-received positive the of see that's and to with onboard. upgrade enabled cell instruments. them available reporting alongside our suite to and NextSeq reagent on weeks full spatial XXXX, from In specs DRAGEN XXB that with quality. migration who the they we XXXX cell, kit With have run QX X.XB and of mid-throughput the products. the QX, X made chemistry also launch QX, and of flow

Illumina drive and continues partnerships entire alliances forward. to the genomics ecosystem pursue strategic to

with & announced general collaboration development our system. Pillar on MiSeqDx As a for recent residual disease joined sequencing-based the disease molecular important FDA and tumor whole-genome this Squibb quarter, example, multi-cancer Also for of assay understand our the in better partnering to recurrence. on announced IBD are been the excited Johnson pan-cancer Illumina for since approval XXXX Bristol medicine profiling previously We've its Johnson innovative Pillar with Biosciences milestone. Myers

types expect activities should of see You of forward. going to these more

build been organization customers' way evolving growth. best goal priority. Now turning driving one our better brought we commercial global innovation March, a time. teams my confident has global my serve over under increased In supports I'm delivering align teams more customers sustaining combining second excellence our one on and It by our organization through first margins needs. margin focus commercial customer continuing delivering while that sustained while operational agility together to our to into my and these growth to function. improvement will productivity and I'm that in marketing

across Additionally, new cost. focused better to implemented and our structure. we portfolio are on cover to In disciplined improvements our a QX, our adjust further end-to-end chain global approach supply cost to throughout driving taking we are pricing operational our initiatives improve

We we These and continue initiatives facilities Bay high-growth increase flexibility Area further to in number also streamlining select the as of add margins ongoing for will real footprint support estate our the made areas. San exited Diego. to that progress in in actions our and investment in

and is business changes which in partnerships He include local make on and already a mindset. focused more China we be on and global Greater in and Jenny China a We manufacturing our and China stabilizing region. for our our to expertise brought execution are in is proving business. in our as China, introducing organization Head Zheng health deep great of QX, has to the team also And strong Jenny care leader of will tightly region. leadership improving

to milestone GRAIL's contemplates divestment both options, plan working approved approved markets In reached of progress Moving which the April, billion, transaction, based made on the and plan GRAIL. of divestiture. balance is important amount both on quickly on the funding reflecting and European sheet. divestment to approximately for The on market we in my capitalize with years cash have our paths, event GRAIL Commission's sales when In are required X.X as a resolve European an priority, third $X to consistent the capital long-range capital as The with we GRAIL's plan. process possible. we Commission GRAIL includes

terms on the I second for to the to the finalize soon. quarter. having the additional of transactions by end track you We look updates forward are of

in we the initiatives encouraged on I'm about and in quarter delivering by here the our Overall, optimistic progress achieved XXXX. have

I'll ask to outlook. Now our quarter more share and detail results first on Ankur

Thank you, hello, and Jacob, everyone.

weeks. by to very I'm health also I like join Building and would meaningful confident excited and can the can passionate delivering we am the role over leading, my of genomics continue care. globe. our Team with the express great of transition about Illumina years. the the the Illumina been making genome. in in foundation, customers promise last supporting first genomics power to strong improve industry role. impact -- I what to support around familiar to the my rule on Joydeep as that played do X.X establishing his human positive I health on has It's unlocking thanks XX a very for patients the for a I'm advancing into I'm

outlook in results followed non-GAAP for and segment results for our be Illumina the reviewing encourage the stock-based will on results, consolidated GAAP release non-GAAP which our reconciliation of I be on remarks review which current by with I start by these include conclude available my financial then found and supplementary and measures, today's I'll XXXX. our discussing data GRAIL website. core compensation. in to you can

was segment on our first, from timing reported which is revenue Starting with was exceeded quarter year-on-year, and Core expectations $X.XX revenue basis. a some third, of areas: a accelerating QX strong X from NovaSeq QX. customers X of certain in into high-throughput second, consumables; instruments Illumina currency X% billion, first constant primarily performance both and our strategic down financials. and by few partnerships; driven delivery revenue This performance

to revenue NovaSeq growth consumables of digits grew rate basis, sequencing high the was and Total up over of million launch high successful consumables due at in XXB connected our quarter-over-quarter. Illumina mid-throughput on following throughput. On in year-over-year, GB high flow single-digit cell. X sequencing XX% instruments sequential grew primarily year-over-year output a and X% grew Core the double a $XXX the

at activity Clinical XXB the NovaSeq to large be labs. continues predominantly by the benefited as to adoption grew X to driven ramp Research and NovaSeq and XXXX. continued core transition activity applied

correlated shows revenue reminder, believe and a base our trends activity a the installed is As data time. that is directionally general reference we over with useful across this

$XXX in behavior continue impact one, preorder flow Sequencing moderate instrument second, million mid-throughput shipments shipments compared of The revenue purchasing of the year-over-year placements core QX lower an by to first cash decline XXXX. in as declined both X expected and driven instruments quarter as XXXX. was launch-related and placements; capital Illumina XX% year-over-year decline significant for in constraints to NovaSeq and

was up Jacob installed X, strategic from and on partnerships in shipped of as QX. hired revenue XX% primarily year-over-year, increase a Core $XXX by service revenue XX million growing NovaSeq For revenue sequencing in instrument Illumina service base. driven and we contract an other instruments noted,

the gross XX.X% field XXX and points driven of mix core increased year-over-year, Moving to that certain is service consumables Core costs. was primarily partially revenue This sequencing excellence favorable productivity. of and rest quarter non-GAAP of priorities Illumina by lower more for cost execution Illumina and by operational a that the increased delivered margin basis offset and improved partnership including the P&L. margin of freight our warranty savings, strategic

million in million operating non-GAAP Illumina than lower XX.X% were to margin adoption financial million revenue non-GAAP headcount for a development. million Core operating XXXX stock-based primarily project core XX.X% headcount expansion of savings and result XXXX. Transitioning $XX Core from commercial labor lower continued $XX expenses year-over-year to primarily Illumina together, expenses GRAIL the down to support by million of all compensation non-GAAP and in cost totaled of of expenses to research increased primarily Putting driven onetime initiatives. QX reduced from grew expense containment Illumina quarter expected for our driven was and operating and expense year-over-year by $XXX as decreased XX% $XX and timing $XXX operating QX results reversals. spend Galleri. it shifting were QX increased year-over-year to GRAIL of to into due non-GAAP GRAIL. due compared QX due

non-GAAP diluted quarter. million operating loss expenses quarter. GRAIL's our first per and $XXX was share, financial higher year-over-year, consolidated which and in lower $X.XX the or core to for revenue results. the $X.XX exceeded a million included quarter, constant Non-GAAP of the revenue billion dilution currency Non-GAAP down on $XX net primarily consolidated Moving EPS reported by expectations was basis. driven from In operating X% of both income core

XX.X% XXXX to GRAIL's of periods QX QX operating XXXX year-over-year. meaningful Our the QX consolidations XXXX, rates Absent impact including the by $XX with million were compared both our the which impact from tax mid-XXs. in increased tax rate non-GAAP QX and was loss, in of XX.X% a GRAIL,

was million. diluted approximately the Our for quarter share average non-GAAP weighted XXX count

cash and quarter. to Moving the by cash expenditures for any quarter flow investments. were Cash short-term we was items did Capital sheet million flow the operations million. with not common $XX cash, provided flow and consolidated repurchase stock. million, and $X.XX in $XX balance equivalents We cash approximately and ended billion were free $XX

guidance. XXXX to now Moving

as on moving GRAIL uncertainty is Illumina impact and Illumina quickly given is timing reminder, as divestment. focusing the around of a possible XXXX core and outlook As GRAIL company specific the to its the financial resolve the

in Our guidance any does the XXXX. divestment from impact potential GRAIL not of assume

completion guidance We provide EPS divestment. non-GAAP will for of XXXX upon the

the any environment improvement QX. encouraged seen the QX a than or still in or significant came in are total impact results our same in also increased seasonal the margins. of are time, and we the not obligations not from our ahead the expectations backlog, of We -- macroeconomic seeing At our our which end We've for dollar. XX% performance of topline both in business that China, by monitoring strengthening of more U.S. and rebuild we're

instrument on it's we offset strength While continuing are early the by year, seeing being constraints consumables are that weigh to capital to purchases. start in

revenue approximately XXXX XX%. our are we Illumina margin guidance non-GAAP such, As and of of operating core approximately year from XXXX flat full reiterating

reflect Our and of compensation management offset of gross headcount, expenses, our of disciplined continue performance-based as improvement margin benefit of well operating including margin by to the our the impacts inflation. reduced as expectations normalization

midpoint, we to points. billion, $X.XXX from X The NovaSeq For revenue $XX significant of last reflecting quarter year-over-year a in to QX the year At following the expect of second Illumina X.X launch. backlog lower worked of this of decline predominantly we early $X.XXX million given the decline the core instrument X.X is shipments of increase the sequential percentage a range because reflects billion XXXX. year-over-year guidance the XXXX, through

grants. to margin we Illumina expect expenses in of increase non-GAAP an compared primarily a operating second in expenses XX%, of approximately from the from resulting operating core equity QX step-up quarter, due seasonal compensation QX the stock-based to in For timing

some an into We to spending QX increase project QX. shifting also expect from due

With closing to back it that, I remarks. Thank his Jacob you. will for now over turn

Ankur. Thanks,

road strategy event. and the achieving and and we close leadership like believe update I Illumina's growth profitable produce. comment has move our the on map Before to upcoming been initiatives reexamining for we team Q&A, would to our strategy, can it it

of ecosystem will continue customer Illumina's strength strategy and building an Our the competitive space. to in increasingly focus tight to play maintaining a genomics

meeting, understand Central our their our customer the priorities the need labs. making In goal in core every to of we customers their the their to power listening they of Illumina heroes is to of strategy. this what are and full making unleash intently instruments

approach and and to to multiomics solutions which see will our maintain is You innovation drive continue to continue need sample-to-answer our us and develop more ecosystems. for We'll enable the the platform known. customers open genomics that succeed to Illumina

standard the been NGS. long has Illumina in

in be human to comprehensive health. leading customers strategic year. during Our decade-long support markets that industry clinical I am our to and this deep our position to continuing our road with work across strategy us hands-on sharing enabling experience improve excited will virtual map and expertise we and you for a event our announce fall customers technology of the the and well research globally, multiple

information in coming for more have joining. the you will We months. Thank

Ankur invite me to join Q&A. now and for Joydeep I'll

question line from Doug of Research. the first Wolfe Schenkel Our comes with Instructions] [Operator

Jacob, want I and a of level with high kind start the question want specific cleanup of ask just the off a I announcement builds that to on made to you quarter. then on

you of first, hard think tenure it's we X see organization moving are towards just over, CEO broader make resolution the to GRAIL. believe, So we're the changes in the to to but your From it's company. to outside, months a now leadership, into on the as and I starting

and your reasonable for long-term ground about first, company to to the operational and uncertainty Secondly, in sit least targets? assessment play the to we medium given I'd regarding company a and a for the view the data standpoint? ultimately, stakes today and offense. where competitive That willing process whether Would little about landscape what share in moving from market profile a growth some of the thirdly, you on then at elasticity? maybe positioned there outlook the lot to as you like, the be about today, from growth putting said, are be bit long-term And are uncertainty here margin more outlook operating things gathering Illumina's of business continues say, especially is

question but throughput consumable that the It if competitive so, revenue lot, I high elasticity? mathematical was like questions And to what quarter. that low let sequencing follow-up know And tell a on evolving in sneak seems right? the that does about mid-teens. me grew dynamics and Is you regarding

you. question, I happy a Well, birthday and Doug, to much. thank long a That also you was very think

I'll to I'm So here little first my think over bit X months I tenure. answer just best question. my the do into a And actually,

this before employees. in another a a question. innovations -- There's So spending this spend building R&D we I'm of customers, But uncover our maybe to and over lot ask on should lot month walk continue the I'm I in time with we time are excited every really with company. new have go and I I going definitely, our that doing.

to with already both the elasticity that in see but opportunities in meantime, the how also and cell on think a what deeper of bigger forward. where are covered out -- are I into and and spatial a bigger of that with a going -- are of deeper and bit doing a X area in lot looking Illumina course, go direction customers we we my is lot remarks there, many lot In we we and into coming using prepared genomics, putting we energy that program into, single little of in spending are see And in that now analysis. we

price us of expect here point. elasticity the see something that This really over happening at And next the in running time, period time. help same obviously, of But to future. in is the It's to not we already course, now. that change is through we

go about where would I'm range, with we going share an are while from long overall growth optimistic you can forward. guarantee I not the of you that Illumina growth to perspective, ready we still So

in we our here expansion for I quarter. here pleased to are and margins. with think what saw saw continue the highly gross with Secondly, QX, all you we're the here how as team expand work into the And the margin I'm dedicated to really we

that's have are I continue to us evidence up. drive of there's do to levels. margins think next what don't that holds anything time committed on I to back the to where up just we historic we And drive So think period an over been at to

I lined up more a Illumina leading thereby then strategic a details. a continuing of industry, truly customers. go the really and want of in everything that algorithm from and little of and of growth But go to fundamentally, great being the But middle our do cost to done and really have also to structure share ecosystem, wait we has to the last the have again, out the I decade and point believe being support view our out opportunity in what our there algorithm genomics

But the are where into that we're now from really the past highly to innovations the been future, space focus expectations workflows, in what on multiomic in they new also but different the end-to-end have customer committed to.

was that So I'm right now. where

maybe little consumable think the bit question. yes, us I help then a can Joydeep -- on on

with in we in again, -- X the decline decline XK consumers, strong as growth offset and good consumables, Look, revenues offset piece. Yes. saw expected, right? On and think the happy expected our So growth in that's I we, a revenues Doug. birthday consumable X consumables X consumables, saw

research, in driven thing, activity X lot we sequencing we're Jacob clinical by what at XXB expanded in X customers. strong and and a terms applications of positive very a used gets continue that, more and to talked activities growth our customers, more right? the really and about it seeing is expect underpins in So adopted flow that of regular cell applications are So new or this about and in as excited right? also We

Your Leerink next comes from question the with Souda of line Puneet Partners.

XK consumables can was more in growth the -- the provide are lower because system there just core -- what segment. Let it's gigabase both instrumentation. the us you what taking that importantly, I necessarily on and the as is an bit cost and on mean competitor to There's a me almost XLEAP X questions labs NextSeq. an segment understand, don't per a have or focus customers are that increasingly lower want I half a for price of mid-throughput more mid-throughput

elaborate And that So segment? you just address how bit what's can that? do in wondering, a on you more happening

Puneet. that, for Thanks Yes.

need I we of your we, a but growth new software point, we providing the think really our coming not this customers excited you before, me It's of capacity that anyway, you are are X's price and new out have weeks a I'm can as higher get on a with seen, a you that flow use of you But mid XK, get you you there, low very much now is -- with throughput, cells the on can quality let can starting excitement as I to the tremendous try XK. more out upgrade, a only scores, chemistry few mentioned to pretty with also, add can mid-throughput the committed also been and can just point. on instrument, some from doesn't course, details that course, segment. address the can questions

So And segments, maybe more That in said, really other take highly but a there's in there's competition. it space. clearly that -- activity very mid-throughput than competitive where that, right, super whole about of competition are competitive by makes you're customers is excited our way, we us spaces. lot our activities and seriously the

still. in mostly will of China is continue in this But in that we But space. seeing are also there rest world, innovate that. We to

fight for it's in I mentioned, But a we good out expect an points market direction. that to the every compete share there. step And XLEAP will area we think I as also, continue to in. was

X add, to so right, Maybe things.

see to growth. consumables continue We

in mid-throughput that segment. elasticity So

we from expected with to seeing And to of we had when And is some expected. given again, for for level I have said told anticipated want headwinds had certain what actually, We those accounted forecast had we it's a had So -- through going the two, told line we had So the we that's this we we as the you. that throughput that macroeconomic already we right? are year. Again, in see with what line competition that and budget one. you the in of what in we our bear, year, have to market that emphasize had, come and

comes Your Vijay of the Evercore line from Kumar with next question ISI.

welcome. revenues first chime by is about guidance I question Ankur, right? guess on my being are question first core the And here. driven maybe on can that is up So all consumables. -- Jacob, you sequentially, in my this, $XX million-ish. Is by

mentioned improving on you think consumable progressed. you as pull-through the quarter the saw the X I throughout quarter

some on maybe from? rate color So exit increase and coming that what is the is where

Yes.

coming certainly throughout actually I here, saw also we the lot adopt consumables customers. applications in We nothing full But from chime the have X.XB. now Ankur think quarter. quarter. a a onboard There weeks few of but to the of being where customers portfolio more was see we X our of XXB, we continue last and about this the the the see the XXB can strength

So by truly as improvement. we it about really talking was that have seen before the X Joydeep has also been

beat growth. have nice our the consumables. also seen BD Besides we've very that, we so -- the also But on revenue was

continue strategy about some of partnerships been that seen a develop we're our together partners. because to with excited accelerated. our that have part We also to it's just And big has

also was that of our part performance. So

Ankur, you have more comments?

Yes.

are guidance instruments and would the from specifically the in increase I add I that was we both comes The building consumables. only sequential that and thanks think that forecasting covered. thing business well

trend So here. to of expecting positive both that continue

comes Your Brennan next Dan the Cowen. of question from with line TD

it for the expressing. as that? to a just give kind Or Jacob, And you any on in been on the about, and question talking with we do some that start of sample-to-answer how it's us the areas and Is welcome color update you're get of an the Investor excitement looking do on of that about think you timing-wise, multiomics Maybe partnerships? Ankur, maybe you've like the be been multiomic potential aboard. think provide kind products you about newer when of could just other explore Day? opportunity that, Will Can that then proxy we'll just some and maybe Illumina some SomaLogic Illumina? well. color you're new

goes Yes, of that way we help -- play Thanks, if look And very market. with of we're, relationship right. into excited multiomic I SomaLogic stimulate for multiomics. you're -- And short you can the the that that in also spaces, if where are I'm I'm overall, sequences Dan. can just about for proteomics. what mean, partners the excited about and about them. can excited sure. how absolutely And customers all But you our here, course, go and we course, look term with we

We still in early access. are

customers So on the has and going are where and in out customers been we from that. handfuls very we few year 'XX positive will of far be going truly make feedback power so sure a really with understand the but the already

our excited will across also into options us but play to that. organically, course, partners we to continue stronger into multiomics of the even for But all opportunities there, forward certainly about there. both I'm out with So look going together

the I mentioned obviously, also think are looking not before, for customers ease look they but sample-to-answer. end-to-end use. where simplify both really create sample course, our most of automate, informatics, value. also from can can you make that opportunity, but that's can great And about we can spend only technology, course, think workflows, for as the they're the more the see time customers we I that of best sure we looking on also a prep, more If the That of really is into sequence from, can I I itself, but

our our cover great create customers. a opportunity great mentioned you more think strategy that, for about I to has update. also we'll So workflows speak in And Illumina and as whole applications

Your question Daniel Arias the line from next Stifel. of with comes

for is This on Paul Dan.

just us. from think I one

some picking activity that It there consumables of like Europe the side, you POPSEQ, be of flip create seen has for could get of any year? news increased flow been maybe about see seems terms budget we pressure. There's all on cuts. to there's the commentary been would up? some In that with forecast the Is XXXX that could on that? in Europe, risk some chatter recent us with meaningful? in that something genome And some Does

have big overall, I to opportunities if to not PopGen very in look of studies -- the not funnel at the the horizon health the you any horizon. right but it more the banking really we're looking we at the really in constitute individual now, -- run, implement we have future. the [indiscernible] excited PopGen number for only But longer program. -- we XX for for or we what care I'm have in terms system. think into -- midterm about than are long and ongoing programs on end into And one least same genomic

with have individual to in and are a systems budgets have not these bit programs, and on building there's and clear you that. it's really programs. takes make puts so budgeting So little on and the we that budgets our where sovereigns And based big thereby,

to I them market are But out big are best doing 'XX foresee either don't the we opportunity. So that our on any there. stimulate 'XX, of making our impact obviously, a

from the line David Your with next Westenberg of question comes Piper Sandler.

you you some mid-throughput side. mid-throughput maybe with of Joydeep, -- start the to some has And it How or want Puneet's do just anticipate think in helping question -- is continuation I the it. how I on XLEAP that there. helped So there elasticity mentioned

lot see of you department, from price just of prevent from elasticity it's you how more competitor to bit little clear race cell a given think a there? you the and less in see genome is to a definitely that that single being whole that some you as the stuff. reiterate mentioned, the there, -- the bottom, using the I Can , X kind just

that? throughput you side, can the in through orders little order in more the Is clear make how -- on mean, that did build. or based then very the orders a any us late expect rate it's say walk way budgets? actual Is the momentum I and on of you it us to high anticipation book? that cycle on just And you

Yes. No, thanks.

is dimension high quality capacity a there's X give try Let on lower XLEAP's with sequencing, mid-throughput color is it I more also higher actually really seeing -- me that to cost. of a it's as is but with chemistry we're the said, -- little to

on sequences. to there customers opportunity up were it really even looking single maybe or spatial an we do also with to into go cost And the customers cell that afford So with previously positioning capacities that they or with they that that was that see now do thereby, more gives space. the opens couldn't or felt couldn't the they that -- for are

So period over game the are out think elasticity time. play an again next that I seeing of will we

And in think I they to customers with our here continue to another that segments. looking are field. in I think end, XLEAP is really -- innovate example the innovators in the chemistry just work all we

us macro, on And will for actually period been so do chemistry environment new the the over bring pretty an and in am right XLEAP excited also while by impacted it I will now what mid is that's time also next throughput. what the about the applications of it

see some high also in As throughput happening you but things mentioned, same on we lot things of of the there going mid throughput. in a are

Yes.

was research our very tend lot get of on on really right? in spatial in terms just I way research talking want our QX. customers to to performed with use seeing You're I can through think cell, we a us better change, performance. emphasize clearly right, with the already Jacob And XLEAP, a come the for to said, right, add field get basically first they think in things are think that simple right? launch mid-throughput. comment on I of and too, what domain, software help the output, and a increased same Jacob immediately and remember, side that instruments in accuracy, elasticity to the single where has was do about better what to out saw multiomics, I the

point, to continuing do facing and continue, of of and over are at that our that we're also we we expect are that at because the market, and will will premium price We what of some there, by see the we technical encouraged in superiority, customers seeing our that a a right? but that are macroeconomic are that. lot constraints are So maintain, lift. can The offering cash point, some pieces end others innovation they our

orders up And orders all, being the you say, X then the And of on question the we've first year-over-year. I how about Yes. seen -- X. would think the had I

we So we're actually also improvements during have that will during momentum that. as certainly that we the And by know the encouraged expect you year. know --

just point, see So on XX now to orders work And have multiple these And we especially since have up Xs bought are better. customers of in we instruments expecting are time. done a that. at at starting coming we that look to maybe this this to a lot one or validation X

go will I see year you also. think momentum So through that the

budget some this are reiterate, magic now. -- right based Dave, right? We expected see on have the as new just macroeconomic as to conditions But they continue we to not is thing,

comes Nambi question the Subbu from next Guggenheim. of with Your line

core consumables different? revenue be And I apologize expected missed or same? the and is but for growth if still instruments Or I to year. it, mix the now sequencing trajectory a you this of guidance bit the expect reiterated do You the

Ankur. Great Yes. This is question.

We revenue as well you're margin. operating performance as a both start for the performance, with year bit. great full at well QX little Actually, the a right. So we're certainly reiterated our the derisking for the for year, for that the off guidance looking as to

be we'll our overall, confirming guidance. Now

you've there. seen -- So the construct QX still is The and the performance.

of although think rates a to X last growth steady perspective, little Just and starting have have our as profile. half a were year those half variability bit year, the between half should they're from a X, growth cetera, you X more a more half consumables in et the of shipments kind there, instrument color how given add during X, rates now if

the as good good during We've saw pull-through we well. seen quarter pricing. Now

So as for overall the just year. of now, we're guidance the reiterating

line with the Sung comes of from Your Ji next Scotiabank. Nam question

and Ankur And you also to welcome and Joydeep. to congrats, thank

on quick you in -- Europe divestiture? it final of the that of be jurisdictional before if happen the a still the of of terms appeal that, Just the XQ, doesn't end your status the one the would of providing timing and whether resolution

Yes.

end as no course, nothing, that. know, we of from information, can, this QX. we by provide that. I you us there's thanks would forward we as insight and holds nothing moving are committed have overall, here And And for say that So with of back point, to at GRAIL as fast

doesn't it don't ECJ really said, QX. information the not comes is coming. waiting of when we And I -- before change for QX, we're end know it So timeline, the it. If as

comes Your the next Morgan question from line of with Tejas Savant Stanley.

high-throughput few if may. cleanups side things, the a Jacob, on Just I

flow past XX% update number in give number XXB X really who you Where the customers you sounds Can you're like cell, on an XXB? that there. the on good So us adopted and that today? provided getting traction it is

on in the X Or high a we could should and think workflows Second, any their XXXX Any update process? of where mainly are dynamic? ramping is clinical you clinical share? validation customers metrics production

on high while. that customer That's to at throughput throughput once on up just one, here. as a decisions got for purchase that capacity. last launching You've these then weigh every in customers dynamic comes And excess Ultima well high starting a all? Is

the launch curious of headwinds also and given but just So that's added capacity throughput as competition? that versus macro to the the X the been XXB high NovaSeq digestion the

-- X half think I also our very now, customers right approximately we're the and using flow it's where we Overall, XXB -- where XXB are Yes. of cell. And seeing with going. have are the consumers the pleased

are momentum. exciting really we by that us, encouraged that's So and for

I think running their most many their customers, of they're of know on XK. on assays still of the I our clinical

doing seeing We production. are when they're tracking where and very closely each and are from of them they they're where going into validation and

don't share -- of have good higher, to through them deeper these of there that. we point, or understanding and assets more are depth lot for new But then on in is a had on at a that insights we -- we are XK. insight. I bring very that the have But still that. of think they the ready I by one think is have types assays working So that we deeper still will one they validation -- on that this likely

Your of with Carrico the line Mason next question comes Stephens. from

fleet Sorry on QX. orders that here. outside mix I into the And update you that they a customers, in of if these could us said are Could then joined you terms of have to been new think rates stability in QX seen Have you upgrades, us expansions, continue you throughout had last XK stabilized China quarter? insight late new bit far? high-throughput I and customers? XXXX as addressed -- any so coming second, coming give of win

stabilized, even and to are of course we in think following that are overall, on we rate. as also it's we looking we hone that we regularly continue where do ensuring course, are the And how very I we on So are, win can at we closely, better. of and mentioned,

obviously, the we're keeping actually But pleased I'm on close with very sight So there. out a performance this.

we I before, competition very seriously. take As mentioned

run I everything that our customers doing We we supported are end, being sure and think for in the being they very formula in the are laboratories, our partner keep the customers. highly can for successful to make preferred winning long in is which the

more multiple research the expert. don't seen now sharing of in information. certainly customers normally to move vast with are there's over point, on are we starting there But the majority customers phase. still to to I are the orders. would this I on at have whether XKs that we think the still transition X. are say And that mix that I moved And -- know I think have

from Vatnsdal comes the question JPMorgan. next Your of with line Rachel

a bit to number want instrument on I question placement So the the X for quarter. little this

you that XQ. but places a into from that placements, there number were XX pulled also of forward mentioned highlighted You were XQ

assumption, in were of placements how quarter. can this that sector remains the terms first, many can So across year just But light just latest what you dynamics, full your then quantify highlight the give backdrop you for seen macro the forward? of And that on We've you that really year? placements just assumptions continue pulled in are us difficult. to

the like that already their now X. were was because there's not shows say, the only change forward so accelerate it of I'd overall, But transition and of there that mentioned customers end because looking in forward. their customer out few one We to expectations. really it into a anything big But some we requesting put in was programs lot anticipated. a that than there as Yes. a interest faster that were there -- we was purchased is -- to pull has are didn't we're running I that

about I'm so So we -- that. are excited

At backlog, strong that very, XXXX. course, we this but know, number, know of entered into XXXX, you we a we not point, as into providing very we're had a as coming

So year of placement very throughput. -- was high and thereby, strong a XXXX

the -- expect do as guidance. in able -- year. are at this original that our not for But -- we're haven't be So to we provide lower to really not our not we point, communicated expectation we're we or changing also than we

would performance or I overachievement to an only was customers topline who we overall thing add, only came X/X expecting. these for Richard, instrument. that The in terms achievement just or so small portion, a about say, than Relative delivery our quite better from what for to were earlier of the you, of asked

that small portion phenomenon. relatively from So

from question comes with line Patrick next of Citi. Your the Donnelly

through just terms give XQ, year. we you a talk the product I color XQ obviously, there. we margins? metric our about step a cost up work as know can think you in how then spend little of what little the some Can down. through maybe should a that bit guys you just in picks But mentioned and of more way

just on came service just bit were a the expecting. quick then quite higher than cleanup, a we revs, And those

If could out helpful. happened as that well, there just would what you flesh be

Yes, sure. Good question.

address So let them Ankur. both. me This is

in said a QX, as my spending to primarily X prepared in coming factors. QX yes, OpEx, the is I step-up from from remarks, there on So

relates stock just timing the increases merit in to annual our the them branch of of One cycle.

QX. So cost the full impact in we end that up getting of

So that's company. every year happens seasonal, the for typically

half increase from comes the about roughly sequential So OpEx of in our that.

that milestones we've are generally there will or either other that happen. spend, QX, out The out project-related around half QX is pushed into certain into pushed

think performance P&L I sequentially margin the for your operating every quarter. of forward, overall improve continue to do expect you the year, In as to the rest terms going of about

better So QX better and than then QX. QX QX than

And then the on service?

growth, less side, timing One again, in the had overall of pharma services the half which about that the year-over-year growth, from services, XX% very on that little customer strong And main X coming components. is specific than part of quarter. then is

excellent in business. that was less it, roughly the of just growth is of half but from half our services coming that performance than So instrument core

to right? Ankur's are number would that our performance, expect of delivered margin. operating So just margin instruments that right? gross given and should we comments, help placed. the You We to And better expecting add

We gross continue expect on to strong margins. performance

that steps That costs, help to to through us well. up reduced revenue last go and as have benefits to year. should that given line about by taken operating as our the as our compared add overall we've year. headcount also measures we And we control So should XX% the margin

the from of line Your with question comes next Research. Eve Burstein Bernstein

lab Earlier this power week, the regulatory tests. rule a a over FDA developed final published exercising

you emerging the having of yet. those to have that For companies are you have the compliant benefit you guys, of challenge lot IVD don't a machines when

only bit However, our use are be but actually it understanding It's a machines is that quite harder, done. can for research little tests. used a bit FDA-approved

right much you the big upside think role way that expect don't competitive you about from that a this it? be for you? the to Is could advantage. there we more give to Or affect So or

our and required and their for go right also get approved. you're that our the with both documentation our overall, portfolio positioning, DX into we investment high-quality customers to and there with needs But the be first have of to and now of we FDA I for that we there's of all, clarified. the No, of Yes. more a ruling greater pleased sure are detail this. clarity helping made the with PMAs have in think lot But still direction that on

I well positioned. think we're very

You PMA to only a with site on. right and for help go And requires Well, into single our a lot so mentioned level documentation are like setup. work with that if that for customers that really of of the Illumina you actually vendors FDA approval. LDTs used

bring or plays our area are full So committed and new us. PMA this a support independent that of other whether customers actually our single it's it on we think to I this and going to be strength opportunities world site successful will forward, help types

comes question of from the Conor with next Markets. RBC Capital Your McNamara line

is demand is adoption conditions your you there of with customers what the been for talked of still are would can at ordering versa, and are placed, ordered whether from boxes stock all just about economic vice them? say But really that detail of like the are with not quantify XXX-or-so there scale X those too those know And any -- haven't much at you or I any what has consumable you customers. validating customers? you any X many expect the on giving orders at versus how

that's a still Yes, point, good that see this still question. customers are in at of most ramp. And our the we

very that run of fast us bigger out have really are, I course, think programs. there and research customers

starting interest least think of or scale single where instruments research And [indiscernible], now have areas have have there's to seen customers We cell of to lot they're seen we maybe already the been they move one. have that seen running. one of in and the a we some those elements been with bought at some on being the next on I

still But of ramp you think if the XXX, general is the positioning. most then is look still this again, I in at broader a that

Now -- yes, so that's where we right are now.

And the stocking?

go ahead, Yes, yes, Joydeep.

to stocking I the shorter, we initial standard, is shelf expect the much. look, life stocking seen when right, a much side, because stock too mean, so on up wouldn't XXB people too on the haven't as you

in but year, On phase. stock that not through as the see the very yet. go up expect Again, early little we to it's a bit we more side, XXB

Salli you. Q&A concludes That Thank hand over Schwartz. I back will our now to call session. the

joining for you today. Thank us

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This concludes today's call.

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