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Illumina Q2 Revenues Jump 78 Percent

NEW YORK – Illumina reported after the close of the market on Thursday that its second quarter revenues grew 78 percent year over year, driven by strength in its core sequencing business.

For the three months ended June 30, the San Diego-based sequencing and microarray technology company recorded total revenues of $1.13 billion, compared to $633 million a year ago, beating the consensus Wall Street estimate of $1.01 billion.

Illumina tallied $972 million in product revenue, up 84 percent from $527 million in Q2 2020, and $154 million in service and other revenue, up 45 percent from $106 million a year ago.

Sequencing revenues accounted for $1.02 billion, or 91 percent, of total revenues in the quarter, compared to $566 million a year ago. Sequencing systems revenues more than doubled to $189 million, compared to $88 million in Q2 2020. Sequencing consumables revenues were $704 million, up 82 percent from $387 million a year ago. Clinical sequencing consumables accounted for nearly half of those revenues, due to lower research consumables sales. Sequencing service and other revenue grew 41 percent year over year to $128 million, primarily due to approximately $20 million of one-time revenue recognized from noninvasive prenatal testing royalties received related to a patent litigation settlement. Microarray revenues grew 57 percent from $67 million in Q2 2020, but Illumina did not provide total revenues for this product segment.

Revenues exceeded expectations across all geographic regions, Illumina CEO Francis deSouza said on a conference call to discuss the financial results. Revenues from the Americas were $589 million, up 76 percent from the prior-year period; revenues from China were $132 million, up 67 percent; revenues from Europe, the Middle East, and Africa were $320 million, up 90 percent; and revenues from Asia Pacific totaled $85 million, up 67 percent.

"This demonstrates the strength of our business led by clinical applications, including oncology and genetic disease testing, as well as research," deSouza said in a statement. "Additionally, we are proud of the critical role that [next-generation sequencing] plays in identifying and monitoring COVID-19 variants to inform strategies to combat the pandemic."

"Revenue contributions from COVID-19 surveillance testing exceeded our expectations, contributing approximately $40 million in sequencing consumables revenue and $20 million in incremental instrument revenue," Illumina CFO Sam Samad said on a conference call with investors following the release of results.

Illumina's Q2 net income was $185 million, or $1.26 per share, compared to net income of $47 million, or $.32 per share, in the year-ago period. On an adjusted basis, EPS was $1.87, beating analysts' consensus estimate for EPS of $1.35.

The adjusted income excludes acquisition-related expenses, primarily continuation payments paid to Grail under their merger agreement.

Illumina's R&D expenses grew 30 percent to $202 million from $155 million, while its SG&A expenses more than doubled to $413 million from $177 million a year ago.

The company finished the quarter with $4.20 billion in cash and cash equivalents and $90 million in short-term investments.

Illumina raised its full-year 2021 guidance again, "as a result of the enduring strength of the core business," deSouza said. The company now expects year-over-year revenue growth in the range of 32 percent to 34 percent, or $4.28 billion to $4.34 billion in total revenue. "At the midpoint, this represents an increase of approximately $1.07 billion compared to 2020," Samad said, and sequencing revenue growth of approximately 35 percent year over year, driven by accelerating strength in the core business and higher-than-expected contributions from COVID-19 surveillance.

Illumina also expects EPS of $4.69 to $4.89 for the year, and adjusted EPS of $6.30 to $6.50. The guidance excludes any potential impact of consolidating the financial results of Grail, which Illumina still intends to buy.

For the third quarter of 2021, Illumina expects revenue to increase approximately 30 percent year over year, EPS in the range of $1.23 to $1.28, and adjusted EPS in the range of $1.30 to $1.35.

In Friday morning trading on the Nasdaq, shares of Illumina were down 4 percent at $493.00.

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