NEW YORK (GenomeWeb) – Illumina's second quarter revenues rose 21 percent year over year, the company announced after the close of the market on Tuesday, but fell short of Wall Street's consensus estimate on the top line.
The firm recognized total revenues of $539.4 million for the three months ended June 30, compared to $447.6 million in the second quarter 2014. Analysts, on average, had expected revenues of $541.8 million. On a constant currency basis, Illumina's revenues rose 25 percent.
The revenue miss pushed Illumina's stock down 11 percent to $211.12 in Wednesday morning trade on the Nasdaq.
Product revenue increased to $462.8 million in Q2 from $390.8 million in Q2 2014, while service and other revenue climbed to $76.6 million from $56.8 million.
"We delivered solid financial results in the second quarter with increasing demand for our new products," Illumina CEO Jay Flatley said in a statement, adding that the company remains "focused on innovation and market expansion."
Revenue from the firm's sequencing business grew 28 percent, driven by record consumables and services sales. Revenue from sequencing instruments was up 13 percent, while consumables revenue grew 32 percent year over year.
"As expected, shipments of HiSeq X instruments were lower sequentially and year over year," Illumina President Francis de Souza said on a conference call following the release of the results. "We continue to expect HiSeq X orders and shipments to remain lumpy quarter-to-quarter and dependent on timing of funding and customer readiness." He added that the company expects a quarterly order rate of 20 to 30 HiSeq X units.
Meantime, the array business experienced a "growth in sample volumes, but at lower prices," Flatley said during the call. Volumes of its Infinium product line increased 29 percent, he added, but revenues for the overall array business decreased by 11 percent year over year.
Reproductive health and oncology continue to be Illumina's biggest clinical markets. Flatley said that revenues from the firm's noninvasive prenatal testing business — which includes products, services, and test fees — grew more than 50 percent. Shipments to customers in the oncology space grew 35 percent, he added.
Illumina posted a profit of $102.2 million, or $.69 per share, compared to $46.6 million, or $.31 per share, in Q2 2014. On a non-GAAP basis, its net income in Q2 was $120 million, or $.80 per share, compared to $85 million, or $.57 per share, in the year-ago quarter. It beat the Wall Street estimate of $.77 per share.
The firm's R&D spending increased 16 percent to $96.2 million from $83.0 million in the prior-year period, while SG&A expenses were up 9 percent to $124.4 million from $114.6 million.
Illumina continues to expect total revenue growth of 20 percent in 2015, including a 3 percent negative impact from foreign exchange assuming current currency exchange rates. It has increased its projected GAAP EPS to a range of $3.39 to $3.45 from a previous estimated range of $3.07 to $3.13.
The company ended the quarter with $591.1 million in cash and cash equivalents and $919.3 million in short-term investments.
Peter Lawson, an executive director at Mizuho Securities USA noted that the second quarter was the first revenue miss in 15 quarters for Illumina, which he attributed to "aggressive Street expectations versus real demand issues." He added, "We would be buyers on any weakness and are raising our [price target on Illumina's stock] from $230 to $240 following 2Q results."
"Given clinical and research market trends remain on-track, solid NIPT growth as well as expectations of strong consumable demand 2H15, we remain Overweight with a $230 price target," Piper Jaffray analyst William Quirk said in a note published this morning.