Illumina Inc

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Illumina (ILMN) Beats Revenue, EPS Estimates, and Guidance





Date Published:

Illumina Reports Financial Results for Third Quarter of Fiscal Year 2019


Earlier news: Shares of Pacific Biosciences of California ( NASDAQ:PACB ) are falling today, down 11.5% as of 11:46 a.m. EDT, after the Competition and Markets Authority (CMA) in the United Kingdom announced a provisional decision that the proposed merger between Illumina ( NASDAQ:ILMN ) and PacBio would "result in a significant loss of competition" in the next-generation gene sequencing market.


San Diego ‐‐ (BUSINESS WIRE) ‐ October 24, 2019 ‐ Illumina, Inc. (NASDAQ: ILMN) today announced its financial results for the third quarter of fiscal year 2019. Third quarter 2019 results:


• Revenue of $907 million, a 6% increase compared to $853 million in the third quarter of 2018.

That $907 million in revenue compares to analyst expectations for $870.57 million.

 

• GAAP net income attributable to Illumina stockholders for the quarter of $234 million, or $1.58 per diluted 
share, compared to $199 million, or $1.33 per diluted share, for the third quarter of 2018.

 

• Non‐GAAP net income attributable to Illumina stockholders for the quarter of $286 million, or $1.93 per 
diluted share, compared to $227 million, or $1.52 per diluted share, for the third quarter of 2018. Non‐GAAP 
net income excludes an unrealized net loss of $43 million from mark‐to‐market adjustments on our strategic 
investments, primarily from our marketable equity securities (see the table entitled “Reconciliation Between 
GAAP and Non‐GAAP Net Income Attributable to Illumina Stockholders” for a reconciliation of these GAAP and 
non‐GAAP financial measures) 

That $1.93 in EPS compares to analyst expectations of $1.41.

• Cash flow from operations of $267 million compared to $292 million in the third quarter of 2018.  

• Free cash flow (cash flow from operations less capital expenditures) of $218 million for the quarter compared 
to $228 million in the third quarter of 2018.  

Gross margin in the third quarter of 2019 was 71.5% compared to 70.0% in the prior year period. Excluding 
amortization of acquired intangible assets, non‐GAAP gross margin was 72.5% for the third quarter of 2019 
compared to 71.1% in the prior year period.  

Research and development (R&D) expenses for the third quarter of 2019 were $151 million compared to $159 
million in the prior year period. Excluding restructuring charges, non‐GAAP R&D expenses as a percentage of 
revenue were 16.4% compared to 18.6% in the prior year period. 

Selling, general and administrative (SG&A) expenses for the third quarter of 2019 were $189 million compared to 
$197 million in the prior year period.  Excluding acquisition‐related expenses and restructuring charges, non‐GAAP 
SG&An expenses as a percentage of revenue were 20.0% compared to 23.2% in the prior year period. 

Depreciation and amortization expenses were $47 million and capital expenditures for free cash flow purposes 
were $49 million during the third quarter of 2019. At the close of the quarter, the company held $3.2 billion in 
cash, cash equivalents and short‐term investments, compared to $3.5 billion as of December 30, 2018. 

“This was a solid quarter for Illumina, with product revenue in‐line with expectations, and a stronger than 
expected revenue contribution associated with partner collaborations to develop distributable clinical IVDs for 
Illumina sequencers,” said Francis deSouza, President and CEO.  “Third quarter NovaSeq system shipments 
represented the second highest since launch, and included capacity expansion to support the UK Biobank initiative 
to sequence 450,000 whole genomes over the next several years.  Additionally, continued NovaSeq adoption 
resulted in the highest consumables pull‐through quarter for the platform this year.”  

Updates since our last earnings release:
• Partnered with QIAGEN to develop and commercialize a portfolio of IVD test kits for use on Illumina Dx 
sequencing instruments, broadening clinical access to NGS‐based IVD tests  

• Partnered with Adaptive Biotechnologies to develop distributable IVD test kits for clonoSEQ® and 
immunoSEQ Dx™ on Illumina's NextSeq™ 550Dx system 

• Announced a collaboration with the Broad Institute to co‐develop open‐source genomic secondary 
analysis tools that will broaden access to best‐in‐class variant calling algorithms 

• Submitted the first module of the Premarket Approval (PMA) submission to the FDA for TruSight™ 
Comprehensive Assay, the IVD version of our RUO TruSight Oncology 500 

• Extended the merger agreement with Pacific Biosciences to December 31, 2019 with an option to extend 
the deadline to March 31, 2020 

• Repurchased $199 million of outstanding common stock in the third quarter under the previously 
announced share repurchase program, which has a remaining balance of approximately $289 million as of 
September 29, 2019 

• Welcomed Joydeep Goswami as Senior Vice President of Corporate Development and Strategic Planning  

Financial outlook and guidance
The non‐GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and 
assessing our core operational performance. Please see our Reconciliation of Non‐GAAP Financial Guidance 
included in this release for a reconciliation of the GAAP and non‐GAAP financial measures. 


For fiscal 2019, the company continues to expect year over year revenue growth of approximately 6%, and now 
expects GAAP earnings per diluted share attributable to Illumina stockholders of $6.55 to $6.60 and non‐GAAP 
earnings per diluted share attributable to Illumina stockholders of $6.40 to $6.45.   

 

That $6.40 - $6.45 EPS guidance number compares to analyst expectations of $6.07.


Except for acquisition‐related expenses incurred during the first three quarters of 2019 which are reflected in our 
GAAP guidance, this guidance excludes any impact from the pending acquisition of Pacific Biosciences.  


Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Thursday, October 24, 2019.  
Interested parties may access the live teleconference through the Investor Info section of Illumina’s website under 
the “Company” tab at www.illumina.com. Alternatively, individuals can access the call by dialing 1 (866) 211‐4597 
or 1 (647) 689‐6853 outside North America, both with conference ID 2388693. 
  
Statement regarding use of non‐GAAP financial measures
The company reports non‐GAAP results for diluted net income per share, net income, gross margins, operating 
expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or 
superior to, financial measures calculated in accordance with GAAP. The company’s financial measures under 
GAAP include substantial charges such as amortization of acquired intangible assets, non‐cash interest expense 
associated with the company’s convertible debt instruments that may be settled in cash, and others that are listed 
in the itemized reconciliations between GAAP and non‐GAAP financial measures included in this press release. 
Management has excluded the effects of these items in non‐GAAP measures to assist investors in analyzing and 
assessing past and future operating performance. Additionally, non‐GAAP net income attributable to Illumina 
stockholders and diluted earnings per share attributable to Illumina stockholders are key components of the 
financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and 
determine significant elements of management’s compensation. 
The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐
GAAP information and the reconciliation between these presentations, to more fully understand its business. 
Reconciliations between GAAP and non‐GAAP results are presented in the tables of this release. 
Use of forward‐looking statements
This release contains forward‐looking statements that involve risks and uncertainties, including our financial 
outlook and guidance for fiscal 2019 and our expectations and beliefs regarding future conduct and growth of the 
business and the markets in which we operate. Among the important factors that could cause actual results to 
differ materially from those in any forward‐looking statements are: (i) changes in the rate of growth in the 
markets we serve; (ii) the volume, timing and mix of customer orders among our products and services; (iii) our 
ability to adjust our operating expenses to align with our revenue expectations; (iv) the outcome of the pending 
acquisition of Pacific Biosciences; (v) our ability to manufacture robust instrumentation and consumables; (vi) the 
success of products and services competitive with our own; (vii) challenges inherent in developing, manufacturing, 
and launching new products and services, including expanding or modifying manufacturing operations and 
reliance on third‐party suppliers for critical components; (viii) the impact of recently launched or pre‐announced 
products and services on existing products and services; (ix) our ability to further develop and commercialize our 
instruments and consumables, to deploy new products, services, and applications, and to expand the markets for 
our technology platforms; (x) our ability to successfully identify and integrate acquired technologies, products, or 
businesses; and (xi) the application of generally accepted accounting principles, which are highly complex and 
involve many subjective assumptions, estimates, and judgments, together with other factors detailed in our filings 
with the Securities and Exchange Commission, including our most recent filings on Forms 10‐K and 10‐Q, or in 
information disclosed in public conference calls, the date and time of which are released beforehand. We 
undertake no obligation, and do not intend, to update these forward‐looking statements, to review or confirm 
analysts’ expectations, or to provide interim reports or updates on the progress of the current quarter. 
About Illumina
Illumina is improving human health by unlocking the power of the genome. Our focus on innovation has 
established us as the global leader in DNA sequencing and array‐based technologies, serving customers in the 
research, clinical and applied markets. Our products are used for applications in the life sciences, oncology, 
reproductive health, agriculture and other emerging segments. To learn more, visit www.illumina.com and follow 
@illumina. 
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