NEW YORK (GenomeWeb) – Illumina saw its third quarter 2016 revenues climb 10 percent to $607.1 million from $550.3 million in the third quarter of 2015, the company said today. However, as Illumina said last month, its Q3 revenues were short of its guidance of $625 million to $630 million and also short of analysts' average estimate of $614.3 million. Prior to Illumina's pre-announcement in October, analysts' average estimate was $628.1 million.
Illumina's Q3 2016 product revenue was $513.7 million, up 9 percent from $470.8 million in Q3 2015. Revenue from sequencing instruments, however, declined 26 percent to $106 million, while total consumables revenue increased 23 percent to $396 million. Service and other revenue was up 18 percent to $93.4 million from $79.4 million.
As previously stated, Illumina attributed its lower than expected revenues to receiving fewer orders for its HiSeq 2500 and HiSeq 4000 instruments.
"Over the last few weeks it has become clear that certain academic funding practices were modified in the third quarter, limiting our customers' ability to make HiSeq X capital commitments," Francis deSouza, Illumina's CEO and president, said in a statement today. "Further, HiSeq 2500 and 4000 demand has been impacted by a migration to NextSeq for enhanced workflow flexibility and HiSeq X, given its beneficial pricing for whole-genome sequencing."
During a conference call discussing the firm's Q3 results, deSouza said that as a result of the company's missed revenue forecast, it had implemented a global forecast improvement project, in order to better identify changes and trends globally in customers' purchasing patterns. Marc Stapley, Illumina's CFO, will head up that project.
Illumina's microarray business performed better than expected, with revenues from that business segment growing more than 35 percent, deSouza said during the call. Microarray orders were driven by the direct-to-consumer market, as well as "robust interest" from agricultural customers. Array orders grew 90 percent, which included 2 million orders of the Global Screening Array, deSouza said.
Illumina's net income was $128.9 million, or $.87 per share, compared to $118.2 million, or $.79 per share, in the third quarter of 2015. Its non-GAAP net income was $.97 per share, beating the average Wall Street estimate of $.87 per share.
Illumina's R&D expenses during Q3 were $125.9 million, up from $99.2 million in Q3 2015, while SG&A expenses were up to $139.1 million from $136.6 million in the prior year's quarter. Illumina's spinoff companies, Grail and Helix, contributed to 2.4 percent and 1.5 percent of R&D and SG&A expenses during the quarter, respectively.
Illumina expects Q4 2016 revenues to be flat to slightly up compared to Q3.
"While sequencing sample volume growth remains robust, our lowered revenue outlook reflects our updated expectations for HiSeq 2500, HiSeq 4000, and HiSeq X instrument purchases, as well as HiSeq 2500 reagent sales," deSouza said in the statement.
The firm ended the quarter with $794.7 million in cash and cash equivalents and $741.6 million in short-term investments.
Illumina also noted today that Chief Commercial Officer Christian Henry will be leaving the company. It appointed Mark Van Oene, currently its senior VP and GM, Americas, as its interim chief commercial officer.
In Wednesday morning trading, Illumina's stock was down 3 percent at $135.10.