NEW YORK – Illumina said on Tuesday after the close of the market that its overall and core revenues for the second quarter fell 6 percent year over year, driven by falling sequencing instrument revenues.
For the three months ended June 30, the San Diego-based sequencing technology company recorded core revenue of $1.09 billion, compared to $1.16 billion in the year-ago quarter and down 6 percent on a constant currency basis.
Total revenues, including from Grail, which the firm spun out in late June, were also down 6 percent, to $1.11 billion, compared to $1.18 billion a year ago, beating the consensus Wall Street estimate of $1.08 billion.
Illumina reported $927 million in product revenue, down from $1.00 billion in Q2 2023, and $185 million in service and other revenue, up 5 percent from $175 million a year ago.
"The Illumina team delivered results ahead of our expectations in the quarter, driven by disciplined execution on our strategic priorities," CEO Jacob Thaysen said in a statement. "Consumable sales remained solid as customers continued to increase their sequencing activity, but instrument demand has softened in a constrained funding environment. We are progressing our operating excellence initiatives and will deliver expanded margins this year."
On a conference call with investors following the release of the results, Illumina officials explained that sequencing instrument revenues fell 40 percent year over year to $116 million from $193 million in Q2 2023, driven by a decline in mid-throughput instrument shipments as well as lower NovaSeq X placements compared to preorder-related shipments in the year-ago quarter.
Sequencing consumables revenues were flat year over year at $737 million. High-throughput consumables revenues grew year over year, CFO Ankur Dhingra said, with 25 percent of those revenues coming from the NovaSeq X Plus. "Almost half of high-throughput sequencing consumables revenue should transition to the NovaSeq X by mid-2025," he said.
Service revenue grew 7 percent year over year to $143 million, driven by strategic partnerships and service contract revenues.
Illumina placed 62 NovaSeq X Plus instruments in the quarter, down from 109 in the year-ago quarter, bringing the total installed base to 469 instruments.
Revenues from the Americas were "relatively flat" compared to $623 million a year ago, Thaysen said. Revenues from China were down 35 percent from $115 million a year ago; revenues from Europe declined 5 percent from $303 million a year ago; and revenues from Asia, the Middle East, and Africa were down 8 percent from $118 million a year ago.
Thaysen also said Illumina will release several new products in Q4. The single flow cell NovaSeq X instrument, "for customers looking for a lower-cost entry point to the X Series," will begin shipping in Q4 and will be upgradable to the X Plus, which takes two flow cells. The firm will also launch 100-cycle and 200-cycle 25B flow cells designed for large-scale counting applications. "Additionally, our next software update for the NovaSeq X and X Plus will enable increased yield and other improvements," he said.
Net loss in the quarter was $1.99 billion, or $12.48 per share, compared to a net loss of $234 million, or $1.48 per share, in Q2 2023. The loss included a $1.89 billion goodwill and intangible impairment on Grail assets. On an adjusted basis, Illumina reported EPS of $1.09, compared to $.32 in the year-ago quarter, beating the consensus Wall Street estimate of $.09 per share.
Illumina's R&D expenses fell 9 percent to $325 million from $358 million a year ago, while its SG&A expenses fell 68 percent to $147 million from $462 million a year ago.
The company ended the quarter with $920 million in cash and cash equivalents and $74 million in short-term investments.
For 2024, Illumina lowered its core revenue guidance to a year-over-year decline of 2 percent to 3 percent, or 1.5 percent to 2.5 percent on a constant currency basis.
The company also introduced guidance for core Illumina adjusted full-year EPS in the range of $3.80 to $3.95.
"For the third quarter of 2024, we expect core Illumina revenue in the range of $1.08 billion to $1.09 billion," Dhingra said. "The decline from the prior year is driven predominantly by lower NovaSeq X instrument shipments given the significant backlog we worked through last year following the launch."
In Wednesday morning trading on the Nasdaq, Illumina's shares were up 8 percent to $125.48.