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Illumina Lowers 2015 Revenue Forecast After Missing Q3 Guidance

NEW YORK (GenomeWeb) – Illumina expects its third quarter 2015 revenues to be lower than originally anticipated and has lowered its expected full-year revenue growth to 18 percent from its previous estimate of 20 percent, the company said after the close of the market today.

Illumina reported preliminary Q3 revenues of $550 million, a 14 percent increase from $481 million in the third quarter of 2014, but below analysts' average estimate of $568.6 million. On a constant currency basis, Q3 revenues were up 18 percent.

In the fourth quarter, the firm said it expects $570 million in revenue, below the analysts' average estimate of $602.8 million. In addition, Illumina said it expects full-year revenues to grow 18 percent to $2.19 billion from $1.86 billion in 2014. Previously, it had anticipated 20 percent growth to $2.23 billion for the full year, while the Wall Street consensus estimate was $2.25 billion.

Illumina expects approximately 15 percent to 20 percent revenue growth in 2016.

During a conference call discussing the missed revenue target, Illumina CEO Jay Flatley said that the company had lower than expected sales of its desktop sequencing instruments, MiSeq and NextSeq, and lower than expected sales in Europe and Asia Pacific.

"The continued growth in NextSeq that we projected did not materialize in Q3," Flatley said. In addition, a number of forecasted deals with customers in Europe slipped out of the quarter or closed too late to be recognized as revenue, Flatley said.

Although the company had lower than expected sales of MiSeq and NextSeq, Flatley said that Illumina is "confident that this is not due to a change in competitive dynamics, and heading into Q4 our desktop instrument pipeline is stronger than it was entering the third quarter." He added that the sales team plans to increase its focus on the desktop market, particularly to customers that are new to NGS.

By contrast, Flatley said that revenue from the HiSeq family of instruments was higher than expected. The company now has 25 customers of HiSeq X Ten systems, 15 of which added capacity during the quarter.

Flatley also said that the company converted to an "enterprise transaction system," which although executed "as seamlessly as possible," nevertheless impacted the manufacturing of certain products and resulted in about a $5 million impact of "slippage into the next quarter," he said.

The company plans to provide full Q3 results on Oct. 20. In Tuesday morning trade on the Nasdaq, shares of Illumina were down around 14 percent at $140.82.