NEW YORK (GenomeWeb) – Illumina reported after the close of the market Tuesday that its fourth quarter 2017 revenues grew 26 percent over Q4 2016, driven in particular by sequencing consumables as well as growth across both the sequencing and microarray businesses.
The San Diego-based genomic technologies company reported $778.0 million in Q4 2017 revenues compared to $619.0 million in the prior-year period. It beat analysts' average estimate of $750.2 million. Its Q4 2017 revenues were also slightly above the $775 million it pre-reported at the JP Morgan Healthcare Conference earlier this month.
The primary driver of revenue growth, sequencing consumables, grew more than 30 percent to $432 million, with NovaSeq consumables making up around $100 million of that total, Illumina CEO and President Francis deSouza said in a call with investors.
Revenue from sequencing instruments grew 18 percent in Q4 2017 to $131 million, driven by NovaSeq. The firm shipped more than 80 NovaSeq systems to customers in Q4.
"Though we are about a third of the way into the NovaSeq launch, we are already seeing elasticity of demand playing out – much in line with our prior expectations," Leerink analyst Puneet Souda said in a note published following Illumina's conference call.
Revenue from microarray consumables was $82 million, while microarray instrument revenue was $8 million. In total, revenues from the microrarray business grew 20 percent in Q4 2017 compared to Q4 2016.
The company reported net income attributable to stockholders of $68.0 million, or $.46 per share, down from $123.9 million, or $.84 per share, in the prior-year period. Its Q4 2017 non-GAAP income was $212 million, or $1.44 per diluted share, compared to $126 million, or $.85 per share, in Q4 2016. Wall Street analysts estimated EPS at $1.22.
Illumina's R&D expenses in Q4 2017 were $137.0 million, up from $130 million in Q4 2016. Its SG&A expenses were $175.0 million, up from $146 million in Q4 2016.
Illumina also reported that its full-year 2017 revenues grew 15 percent to $2.75 billion from $2.40 billion in 2016. It beat analysts' average estimate of $2.73 billion for the year.
"Our 2017 results demonstrate customers' growing demand across both our sequencing and array portfolios," deSouza said in a statement.
Illumina posted net income of $726.0 million, or $4.92 per share, for FY 2017 versus $463.0 million, or $3.07 per share, for full-year 2016. On a non-GAAP basis, its net income was $591 million, or $4.00 per share, beating the consensus estimate of $3.78.
Its full year R&D expenses grew to $546 million from $504 million in 2016, while SG&A expenses climbed to $674 million in 2017 from $584 million. In addition, it anticipates that it will ship between 330 and 350 NovaSeq instruments. However, the firm expects Q1 2018 revenues to be $35 million lower than Q4 2017.
"We believe this number may be slightly below consensus," William Blair analyst Amanda Murphy said in a note to investors. "[H]owever, as the company has seen an inflection point in consumer genomics, microarrays are expected to grow similar to the overall corporate revenue growth rate (which would imply well above our 5 percent estimate for that business)."
"[W]e see high-throughput customers having no choice but to buy the instrument in order to compete in the market and new to sequencing customers continuing to purchase as well given an expanding market," Leerink's Souda added.
In 2018, Illumina anticipates its revenues will grow between 13 percent and 14 percent over 2017 revenues with GAAP EPS in the range of $4.14 to $4.24 and non-GAAP EPS of $4.50 to $4.60.
Illumina ended 2017 with $1.23 billion in cash and cash equivalents and $920 million in short-term investments.
Following the results, investment bank First Analysis upgraded its rating on Illumina's stock to Overweight and raised its price target to $277 from $230.
In Wednesday morning trade on the Nasdaq, shares of Illumina were up a fraction of a percent at $241.51, after trading as high as $248.05 earlier in the session.