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Illumina Q1 Revenues Grow 27 Percent

NEW YORK – Illumina said after the close of the market on Tuesday that its first quarter revenues rose 27 percent, driven by higher sequencing revenues.

For the three months ended April 4, the San Diego-based genomics technology firm recognized revenues of $1.09 billion, compared to $859 million in Q1 2020, beating analysts' average estimate of $1 billion and in line with preliminary revenues reported earlier this month.

Product revenue for the quarter totaled $953 million, up 36 percent from $701 million a year ago, and service and other revenue amounted to $140 million, down 11 percent from $158 million a year ago.

"Illumina achieved its first billion-dollar revenue quarter in company history and delivered a very strong start to 2021, exceeding our expectations," Illumina CEO Francis deSouza said in a statement.

Orders in Q1 reached a record high, he said, reflecting growth in both the clinical and research business, and clinical market access and reimbursement for genomic applications have been improving. In addition, the firm and its customers have been building a genomic epidemiology infrastructure to fight COVID-19 and to monitor for future pathogen outbreaks, he said, and both clinical and research customers have returned to pre-COVID-19 levels of sequencing.

On Wednesday, Illumina also said it has committed next-generation sequencing instruments, reagents, and training support worth $60 million over five years towards a global pathogen genomics initiative in partnership with the Bill & Melinda Gates Foundation and other public and private entities. The program expands on the Africa Pathogen Genomics Initiative and will turn its attention to South Asia.

On a conference call following the release of the financial results on Tuesday, Illumina CFO Sam Samad said that sequencing revenues totaled $979 million, up 29 percent from $760 million a year ago. Instrument revenues were $176 million, more than double compared to last year, "reflecting strong performance across all instrument categories," he said. Sequencing consumables revenues were $695 million, up 26 percent year over year from $553 million in Q1 2020, driven by clinical testing and demand for NovaSeq v1.5 flow cells. Samad said that about $20 million in consumables sales were attributable to the timing of purchases.

COVID-19 genomic surveillance added $55 million in revenues, including $35 million from instrument sales and $20 million from consumables sales, deSouza said on the call.

Sequencing services and other revenues were down 16 percent year over year, Samad said, due to non-recurring in vitro diagnostic partnership revenue that was being recognized last year.

Array revenues were up 15 percent from $99 million a year ago.

By region, revenues from the Americas were $562 million, up 18 percent year over year; revenues from Europe, the Middle East, and Africa were $305 million, up 38 percent year over year; revenues from China were $127 million, up 51 percent year over year; and revenues from Asia, Pacific, and Japan were $99 million, up 29 percent year over year.

Net income for the quarter was $147 million, or $1.00 per share, compared to $173 million, or $1.17 per share, in Q1 2020. On an adjusted basis, excluding expenses related to Illumina's planned acquisition of Grail such as $105 million in continuation payments, net income was $1.89 per diluted share. Wall Street analysts, on average, had estimated EPS of $1.38.

Illumina's R&D expenses grew 26 percent to $197 million from $156 million in Q1 2020. SG&A expenses rose 36 percent to $374 million from $274 million a year ago.

As of April 4, Illumina had $4.43 billion in cash and cash equivalents and $197 million in short-term investments. Samad noted that Illumina received $1 billion in proceeds from bond issuances.

As previously announced, Illumina expects year-over-year revenue growth in the range of 25 percent to 28 percent and earnings between $4.72 and $4.97 per share. Samad added that Illumina expects sequencing revenue to grow 29 percent year over year based on strong orders. "This includes sequencing consumables growth of 30 percent, strong demand for NovaSeq, and growth in clinical markets," he said.

In Wednesday morning trading on the Nasdaq, Illumina shares were down 2 percent at $402.83.