This story has been modified to add management comments from Illumina's conference call.
NEW YORK (GenomeWeb) – Illumina reported after the close of the market Tuesday that its third quarter revenues increased 14 percent over the third quarter of 2014, consistent with the company's preliminary report earlier this month that revenues would not be as high as anticipated.
Illumina reported total Q3 revenues of $550.3 million, up from $480.6 million in Q3 2014, but missed analysts' average estimate of $556.1 million. On a constant currency basis, revenues increased 18 percent.
"The fundamentals of our business remain strong, despite a 3 percent miss to revenue expectations," Illumina CEO Jay Flatley said in a statement.
Following Illumina's pre-announcement of lower than expected revenues earlier this month, several investment banks downgraded Illumina, while others cut revenue estimates.
"Our competitive position and product development pipeline are as robust as ever, which we believe will enable our continued penetration of the enormous market opportunities ahead." Flatley added.
During a conference call discussing the company's third quarter performance, Flatley noted a couple of "strong underlying trends." Illumina's sequencing revenues grew 21 percent year over year with an uptick in shipments to clinical and translational customers, which grew 40 percent.
Shipments to both research and clinical customers in the oncology field now represent around 20 percent of revenues, he added.
Consumable revenue increased 23 percent year over year to $321 million, driven especially by HiSeq X and NextSeq customers, and as a result, the firm raised its expected consumable pull-through guidance to between $650,000 and $700,000 per HiSeq X unit annually and to between $100,000 and $125,000 per NextSeq instrument annually. Previously, Illumina had predicted HiSeq X would generated between $600,000 and $650,000 per instrument of consumable revenue per year, and that NextSeq would realize between $80,000 and $100,000 of per-instrument consumable revenue annually.
Total instrument revenue across all technology segments fell 3 percent year over year to $145 million. Revenue from services grew 23 percent to $79 million.
Revenue from Illumina's array business declined 17 percent year over year and now accounts for less than 15 percent of the firm's total revenue, Flatley said. Nonetheless, Flatley said that there is now a "stabilization of market trends," noting that genotyping orders grew 26 percent in the third quarter.
For the full year, Flatley said that array revenues would decline in the "low double digits," but should "grow slightly in 2016," driven by agricultural customers and direct-to-consumer companies.
Illumina's net income for the third quarter was $118.2 million, or $.79 per share, up from $93.5 million, or $.63 per share, in Q3 2014. On a non-GAAP basis its EPS was $.80 for the quarter versus $.77 for the previous year's quarter. Analysts, on average, estimated EPS would be $.79 per share.
Illumina's R&D expenses in the quarter were $99.2 million, up 17 percent from $85.1 million in the year-ago quarter. Its SG&A expenses were up 14 percent to $136.6 million in Q3 from $119.9 million in Q3 2014.
The company finished the quarter with $551.5 million in cash and cash equivalents and $887.9 million in short-term investments.
For fiscal year 2015, Illumina said it expects approximately 18 percent total revenue growth and fourth quarter revenues of around $570 million. It guided for non-GAAP EPS of between .78 and $.80 for Q4, which is below the Wall Street estimate of $.87, and between $3.29 and $3.31 for FY 2015.
Shares of Illumina were down around 4 percent at $139.33 in Wednesday morning trade on the Nasdaq.