NEW YORK – Illumina said Tuesday after the close of the market that it is lowering its core revenue guidance for full-year 2024, in light of lackluster Q3 results and an ongoing unfavorable macroeconomic environment.
The San Diego-based sequencing technology company now expects full-year core revenues to be down by approximately 3 percent on both a reported and constant-currency basis compared to fiscal year 2023. Meanwhile, the company upped its core adjusted full-year EPS guidance to a range of $4.05 to $4.15 from the previous range of $3.80 to $3.95.
"Looking ahead through year-end, while the funds remain healthy, the near-term macroeconomic environment has been persistently constrained," Illumina CEO Jacob Thaysen told investors in a call recapping the company's Q3 financial results. "We now expect our 2024 revenue growth to be slightly lower than our prior guidance range."
The company still anticipates instrument revenues to decline in the mid-30s percentage range compared to 2023, CFO Ankur Dhingra told investors during the call. Meanwhile, sequencing consumables revenues are expected to grow in the upper end of the low-single-digit percentage range versus 2023, he added.
For the three months ended Oct. 1, Illumina's core revenues were $1.08 billion, down 3 percent compared to $1.11 billion for Q3 2023 and on par with the Wall Street estimate of $1.08 billion. The revenue decline was primarily driven by weak instrument sales, according to Dhingra. Illumina also noted that Q3 financial results included results from Grail, which the company spun off on June 24.
Sequencing consumables revenues were $741.0 million, up 7 percent year over year from $695.0 million a year ago, driven by continued strong uptake in NovaSeq X consumables, Dhingra noted.
Sequencing instruments revenue was $104.0 million for the quarter, down 42 percent from Q3 2023. Dhingra attributed the year-over-year decline to lower NovaSeq X placements compared to "significant" launch-related shipments in Q3 2023 and a decline in the mid-throughput market "as capital and cash flow constraints continue to impact purchasing behavior and moderate instrument placements globally."
In the quarter, Illumina shipped 58 NovaSeq X instruments, bringing the total installed base to 527, approximately 40 percent of which have been shipped to clinical customers, Thaysen said.
The company declined to provide an update regarding the placement of its mid-throughput platforms during the Q&A portion of the call, though Thaysen noted the company faces ongoing macroeconomic pressure and competition in the mid-throughput sequencing market.
Sequencing services and other revenue increased 6 percent year over year to $150.0 million in Q3, driven by strategic partnerships as well as instrument service contract revenues from the growing installed base, Dhingra said.
By regions, Illumina's revenues in the Americas were down 6 percent, European revenues were up 12 percent, and greater China revenues declined 23 percent year over year.
The firm's net income for the quarter was $705 million, or $4.42 per share, compared to a loss of $754 million, or $4.77 per share, in Q3 2023. On an adjusted basis, EPS was $1.14, beating analysts' consensus estimate for EPS of $.88.
Illumina's R&D expenses grew 6 percent year over year to $253 million from $238 million, while SG&A expenses increased 11 percent to $239 million from $216 million.
The company ended the quarter with approximately $939.0 million in cash, cash equivalents, and short-term investments.
For Q4 2024, the company expects core revenues to be approximately $1.07 billion.
While Illumina is "very excited" about its newly launched MiSeq i100, the company expects to receive "minimal revenue contribution" from the platform as it is still in early access, Thaysen said during the call. Instead, the company foresees a likely decline in Q4 low-throughput instrument sales as many customers are waiting to buy the new sequencer, Dhingra said.