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Illumina's Q2 Revenues Rise 36 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Illumina reported after the close of the market Tuesday that its second-quarter revenues increased 36 percent year over year, as the firm beat Wall Street estimates on both the top and bottom line.

The San Diego-based firm reported total revenues of $287.5 million for the three months ended July 3, compared to $212 million for Q2 2010. Its product revenues were $269.9 million, up from $198.5 million year over year, and its service and other revenue was $17.6 million versus $13.5 million.

Illumina beat analysts' consensus estimate for revenues of $281.6 million.

"Revenue growth was driven by strong demand for our sequencing products and overall improvement in our array business," Christian Henry, Illumina's CFO and GM of the Life Sciences Business unit, said during a conference call following the release of the results.

The firm's consumables revenues increased 26 percent to $159 million from $126 million year over year. Its instrument revenues increased 53 percent year over year to $107 million, Henry noted on the call, adding that the growth was due to shipments of HiSeq, HiScan, and HiScanSQ systems.

Illumina CEO Jay Flatley noted on the call that the firm's microarray revenues grew more than 10 percent year over year, which he attributed to consumables growth across its array products. "We shipped more samples of GWAS arrays than in any other quarter in our history," Flatley said.

He also noted that the firm more than doubled the number of its Eco real-time PCR instrument shipped.

Illumina's sequencing revenues increased 53 percent year over year, due primarily to sales of the HiSeq 2000, said Flatley. He noted that around 90 percent of HiSeq shipments and orders were to customers outside of the major genome centers, and the firm added between 30 and 35 new sequencing customers, a rate that is consistent with the firm's historical run rate.

During the quarter, Illumina launched the early-access program for its MiSeq platform, a low-cost personal sequencing system that uses the same sequencing-by-synthesis chemistry found in the HiSeq platform. Flatley said that the early-access program would continue through August and into September.

"We began taking orders in April and we've now booked more than 135 systems," he said, further noting that more than half of the customers for the MiSeq are new to Illumina.

The firm has plans to file for US Food and Drug Administration clearance of the MiSeq system for diagnostic applications in mid- to late 2012, according to Flatley.

Illumina's net income for the quarter was $30.6 million, or $.22 per share, compared to $29.8 million, or $.21 per share, for Q2 2010. On a non-GAAP basis, its net income was $52.5 million, or $.38 per share, compared to $34 million, or $.26 per share. It edged out the Wall Street estimate of $.37 per share.

Among the items that cut into its bottom line were $4.8 million for acquisition-related expense and $2.5 million related to its headquarters relocation. The firm's R&D expenses jumped 16 percent to $50.8 million from $43.7 million, and its SG&A spending increased 30 percent to $69.2 million from $53.1 million.

Illumina finished the quarter with $261.1 million in cash and cash equivalents and $972.8 million in short-term investments.

For full-year 2011, the firm expects to report revenue growth of between 24 percent and 26 percent over its 2010 revenues of $902.7 million. It also expects non-GAAP EPS to grow between 33 percent and 36 percent from $1.06 in 2010.

Flatley noted that there is uncertainty in the US regarding government funding, but "we continue to believe that the funding allocations globally will further genetic analysis tools, and in particular next-generation sequencing."

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