[Management View]
Total revenue for Q2 2025 was $1.06 billion, down approximately 3% YoY but at the high end of the guidance range. Non-GAAP operating margin was 23.8%, up 160 basis points YoY, and non-GAAP EPS was $1.19, up 9% YoY. Key strategic priorities include the transition to NovaSeq X, expansion of the multiomics portfolio, and operational excellence.

[Outlook]
Fiscal 2025 total reported revenue is expected in the $4.23 billion-$4.31 billion range, with non-GAAP EPS guidance raised to $4.45-$4.55 and non-GAAP operating margin guidance raised to 22%-22.5%. The acquisition of Somalogic is expected to close in 2026, expanding Illumina's affinity-based proteomics portfolio.

[Financial Performance]
Revenue of $1.06 billion was down 3% YoY. Sequencing consumables revenue was $740 million, flat YoY but up 6% sequentially. Greater China revenue was $63 million, down $12 million YoY. Non-GAAP operating expenses were $484 million, down 6% YoY. Free cash flow was $204 million.

[Q&A Highlights]
Question 1: Did you see any change in customer behavior in anticipation of competition? How are you preparing for that possibility as we look at the Rouge platform? (Line breaks here)
Answer: We focus on engaging with customers early, sharing our roadmap, and supporting them. We have the largest R&D budget in the industry and continue to innovate, particularly in clinical and decentralized spaces. We aim to provide the highest quality insights at the lowest end-to-end cost.

Question 2: Did you see any pull forward from customers in the quarter? What are you hearing from larger clinical customers about the transition to NovaSeq X? (Line breaks here)
Answer: We did not see any pull forward. We have increased backlog as customers feel comfortable running NovaSeq X in production mode. Clinical customers are transitioning to NovaSeq X as planned, with no cliff expected in the transition.

Question 3: How should we think about the trajectory of NovaSeq X placements for the rest of the year? What percentage of customers are now getting 30B reads? (Line breaks here)
Answer: We expect 50-60 NovaSeq X placements per quarter, with potential for more in Q4. The 1.3 software release improved customer experience, but we are not committing to 30B reads at this point.

Question 4: Can you talk about GB growth from here and high throughput? Do you think you can stay in the 30% range in Q3 and Q4? (Line breaks here)
Answer: We anticipate staying above 30% GB growth, driven by clinical demand and structural developments like MRD and genetic disease testing. Proteomics integration will add incremental growth.

Question 5: Can you speak to mid throughput trends and competition? How does the new R&D expensing legislation impact earnings? (Line breaks here)
Answer: Mid throughput segment faces conservative purchasing and project-based demand. The new R&D expensing legislation positively impacts our tax rate, contributing to raised EPS guidance.

[Sentiment Analysis]
Analysts expressed positive sentiment regarding Illumina's execution and strategic initiatives, particularly the clinical growth and multiomics strategy. Management maintained a confident tone, emphasizing strong customer engagement and innovation.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|--------|---------|---------|------------|
| Total Revenue | $1.06B | $1.09B | -3% |
| Non-GAAP Operating Margin | 23.8% | 22.2% | +160 bps |
| Non-GAAP EPS | $1.19 | $1.09 | +9% |
| Sequencing Consumables Revenue | $740M | $740M | 0% |
| Greater China Revenue | $63M | $75M | -16% |

[Risks and Concerns]
US academic and government research demand remains constrained due to funding uncertainties. Export restrictions in Greater China continue to impact instrument sales. Mid throughput segment faces conservative purchasing and project-based demand.

[Final Takeaway]
Illumina delivered strong Q2 2025 results, with revenue at the high end of guidance and significant margin expansion. The company raised fiscal 2025 guidance, reflecting strong clinical consumables demand and operational efficiency. The acquisition of Somalogic will enhance Illumina's multiomics portfolio, driving future growth. Despite near-term headwinds in research funding and China export restrictions, Illumina's strategic focus on clinical applications and innovation positions it well for sustained growth.