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Illumina's Q3 Revenues Jump 25 Percent

NEW YORK (GenomeWeb News) – Illumina reported after the close of the market Tuesday that its third quarter revenues increased 25 percent year over year, beating Wall Street estimates on the top and bottom line.

The San Diego-based genetic analysis tools firm reported total revenues of $357 million, up from $285.9 million for Q3 2012, and surpassing the Wall Street consensus estimate for revenues of $343.6 million.

Its product revenues rose to $318.6 million from $262.4 million. Instrument revenue was $100 million, up from $82 million in the year-ago quarter, while consumable revenue increased 22 percent to $216 million from $177 million.

Illumina's services and other revenue jumped 64 percent to$38.2 million from $23.5 million, driven by genomes processed, genotyping services from the agriculture and consumer markets, growth in maintenance contracts, and the Verinata business, CFO Marc Stapley said on a conference call following the release of the results.

Illumina's sequencing business grew 37 percent driven by its HiSeq system and sequencing consumables, while its microarray business decreased 3 percent. Nevertheless, Illumina President and CEO Jay Flatley said on the call that Illumina remains "confident in the long-term outlook of the array market." Already, sample orders for its Infinium product line have exceeded orders from 2012, he noted.

Flatley also disclosed on the call that Illumina will exit the qPCR market. "Given the tremendous opportunities for our sequencing and array technologies, we need to continue to focus our R&D and commercialization priorities," he said.

By the end of the year, Illumina will cease selling its Eco real-time PCR instrument and PCR assays, but will "continue to provide service and support for the installed base for a customary period," Flatley said.

"Given the tremendous opportunities for our sequencing and array technologies, we need to continue to focus our R&D and commercialization priorities," Flatley said, noting that he expected the decision to have only a "minimal" impact on future non-GAAP revenue and EPS.

Illumina posted net income of $31.4 million, or $.22 per share, compared to $29.7 million, or $.22 per share, for Q3 2012. On a non-GAAP basis, its EPS was $.45 versus $.41 for Q3 2012 and above the consensus estimate of $.40.

The firm's R&D spending jumped around 31 percent to $71 million from $54.1 million, and its SG&A expenses increased around 37 percent to $95.6 million from $69.8 million.

Illumina finished the quarter with $1.03 billion in cash, cash equivalents, and short-term investments.

The firm increased its 2013 guidance and said it is now anticipating 22 percent revenue growth and EPS of $1.75 to $1.77, including the impact of the Verinata Health and Advanced Liquid Logic acquisitions.

"These results highlight another quarter of solid operational execution and record financial performance," Flatley said in a statement. "We continue to be pleased with the robust global trends demonstrated by our business and believe we are positioned to continue to deliver strong growth."

Last week Illumina announced sweeping organizational changes, which included the creation of new business units, new roles for existing managers, and the separation of the president's position from Flatley's continued role as CEO.

In Tuesday morning trade on the Nasdaq, shares of Illumina were up around 10 percent at $89.70.