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Illumina Q2 Revenues Climb 11 Percent

NEW YORK (GenomeWeb) – Illumina reported after the close of the market on Tuesday that its second quarter revenues rose 11 percent.

The San Diego, California-based genomic technology company recognized total revenues of $600.1 million, up from $539.4 million in the Q2 2015, and beating analysts' average estimates of $593.1 million.

Total Q2 revenues included a 10 percent jump in product revenue to $509.9 million, from $462.8 million, as well as an 18 percent increase in service and other revenues to $90.2 million from $76.6 million.

On a conference call with analysts following the release of the results, President and CEO Francis deSouza said revenues were driven by a growth in sequencing consumables as well as a strong demand for arrays. Revenues from the array business grew 30 percent, with direct-to-consumer and medical research and biobanking customers driving the growth. As a result, deSouza said that the company expects double-digit growth in full-year 2016 array revenues. That's "clearly a turnaround for this business," he added.

Total instrument revenues, meanwhile, fell 19 percent to $126.0 million year over year. CFO Marc Stapley told analysts that the decline was primarily due to an exceptionally strong Q2 in 2015 that saw the launch of the HiSeq 3000 and HiSeq 4000. However, he added, instrument revenue grew 7 percent sequentially, driven primarily by increased sales of benchtop instruments.

Total consumables revenues grew 25 percent year over year to $379.0 million, driven by strength in both sequencing and arrays.

"We delivered solid second quarter financial results with notable strength across our sequencing consumable and array portfolios," de Souza said in a statement accompanying the earnings release.

Net income in Q2 was $120.4 million, or $.82 per share, compared to $102.2 million, or $.69 per share, in Q2 2015. On a non-GAAP basis the company reported EPS of $.86 per share, beating the Wall Street average estimate of $.73 per share.

Illumina's R&D expenses rose 30 percent to $124.6 million in the quarter, from $96.2 million in the prior year quarter. Approximately 1.4 percent of R&D expenses were attributable to the firm's spinout companies Grail and Helix. SG&A expenses rose 19 percent to $148.5 million from $124.4 million in Q2 2015, about 1.1 percent of which could be attributed to Grail and Helix.

Illumina ended the quarter with $951.7 million in cash and cash equivalents and $473.6 million in short-term investments.

For the third quarter, the company anticipates revenues of $625 million to $630 million, and reiterated its previous guidance for fiscal 2016 for 12 percent revenue growth and EPS of $3.48 to $3.58. Analysts on average expect Q3 revenues of $631.7 million and full-year EPS of $3.37.

Illumina's shares were down 1 percent to $148.4 on the Nasdaq in Wednesday morning trading.