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Illumina's Q4 Revenues Rise 45 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Illumina reported on Tuesday after the close of the market a 45 percent increase in its fourth-quarter revenues, slightly above an estimate it provided last month and beating analysts' consensus estimate.

The San Diego-based firm had total revenues of $261.3 million for the quarter ended Jan. 2, compared to revenues of $180.6 million for the fourth quarter of 2009. It said last month that it expected to report revenues of approximately $260 million, above analysts' estimates of $255.8 million.

Its product revenue was $245.6 million, up sharply from $167.5 million, while service and other revenue increased to $15.7 million from $13 million.

Christian Henry, Illumina's CFO and GM of the life sciences business unit, noted during a conference call Tuesday evening that the firm's consumables revenues grew 26 percent year over year to $132 million for the quarter, driven primarily by sequencing products. Henry said that the annualized consumables pull-through for its installed sequencing base is at the high end of the $150,000-$200,000 range. He also noted that the HiSeq 2000 — the high-end sequencing platform launched in early 2010 — is generating annualized pull-through of more than $350,000.

Microarray consumables sales were down sequentially, which Illumina attributed to the timing of orders related to genome-wide association studies. Company officials also noted that array revenues are not being cannibalized by lower-cost sequencing options.

Illumina's instrument revenues jumped 81 percent to $110 million for the quarter, and the firm noted that its microarray instrument sales increased more than 100 percent from Q4 2009. CEO Jay Flatley said during the call that part of that growth was due to "strong demand" for its HiScanSQ, which was launched in early 2010.

Illumina's net income for the quarter was $38.4 million, or $.25 per share, compared to $11.7 million, or $.09 per share, for the fourth quarter of 2009. On a non-GAAP basis, its EPS was $.29 versus $.21 for Q4 2009, matching Wall Street expectations.

The firm's R&D spending for the quarter was $45.8 million, up 13 percent from $40.4 million year over year, while its SG&A spending climbed 25 percent to $62 million from $49.5 million.

For Q4 2010, Illumina recognized an acquisition-related gain of $10.4 million, compared to an acquisition-related expense of $10 million for Q4 2009.

For full-year 2010, Illumina reported revenues of $902.7 million, a 35 percent increase over 2009 revenues of $666.3 million. It beat Wall Street expectations of $897.3 million.

The firm's product revenue for the year was $842.5 million versus $627.2 million for 2009, and service and other revenue was $60.2 million, up from $39.1 million.

Illumina's net income for FY 2010 was $124.9 million, or $.87 per share, compared to $72.3 million, or $.53 per share, for FY 2009. On a non-GAAP basis, its EPS for the year was $1.06 versus $.80 for the previous year, matching analysts' estimates.

Its R&D spending for the year increased to $177.9 million from $140.6 million, and its SG&A expenses were $221 million, up from $176.3 million.

Last month, Illumina launched its MiSeq platform, an instrument with a list price of under $125,000 that runs Illumina's existing TruSeq sequencing-by-synthesis chemistry. The platform provides Illumina with a low-end entry in sequencing that it previously lacked.

Asked during a Q&A on the call if the firm sees room for new instrument platforms to cover parts of the market it may not be reaching, Flatley said, "We think we have most of the market covered with what we have today.

"Obviously, on our drawing boards, we have a five-year evolution of all these technologies and how they may go and migrate in the future, and obviously technology like Oxford Nanapore is a component of that," he said. "We have multiple internal development programs both in research and product development that are looking at fundamental ways to improve sequencing, and that has to do with everything from the chemistry, to the hardware, to the imaging, to the sample prep, to the bioinformatics."

Illumina also recently purchased of Epicentre Biotechnologies, which has developed the Nextera technology for next-generation sequencing library preparation. During the call, Flatley said that many of the firm's HiSeq customers have already begun using the Nextara kit.

Illumina finished the year with $248.9 million in cash and cash equivalents, and $645.3 million in short-term investments.

The firm expects its fiscal 2011 revenues to grow 20 percent, with non-GAAP EPS up more than 30 percent from 2010.

In early Wednesday trade on the Nasdaq, shares of Illumina were down 2 percent at $69.03.

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