Illumina Reports Strong Financial Results For Second Quarter Of Fiscal Year 2017

SAN DIEGO--(BUSINESS WIRE)--Illumina, Inc. (NASDAQ: ILMN) today announced its financial results for the second quarter of fiscal year 2017.

Second quarter 2017 results:

  • Revenue of $662 million, a 10% increase compared to $600 million in the second quarter of 2016
  • GAAP net income attributable to Illumina stockholders for the quarter of $128 million, or $0.87 per diluted share, compared to $120 million, or $0.82 per diluted share, for the second quarter of 2016
  • Non-GAAP net income attributable to Illumina stockholders for the quarter of $121 million, or $0.82 per diluted share, compared to $127 million, or $0.86 per diluted share, for the second quarter of 2016 (see the table entitled “Itemized Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders” for a reconciliation of these GAAP and non-GAAP financial measures)
  • Cash flow from operations of $178 million and free cash flow of $109 million for the quarter, compared to $242 million and $174 million, respectively, in the second quarter of 2016

Gross margin in the second quarter of 2017 was 65.5% compared to 70.6% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 67.0% for the second quarter of 2017 compared to 72.4% in the prior year period.

Research and development (R&D) expenses for the second quarter of 2017 were $130 million compared to $125 million in the prior year period. R&D expenses as a percentage of revenue were 19.7%, including 0.8% attributable to Helix. This compares to 20.7% in the prior year period, including 1.5% attributable to GRAIL and Helix.

Selling, general and administrative (SG&A) expenses for the second quarter of 2017 were $169 million compared to $148 million in the prior year period. Excluding the amortization of acquired intangible assets, SG&A expenses as a percentage of revenue were 25.2%, including 1.0% attributable to Helix. This compares to 24.4% in the prior year period, including 1.1% attributable to GRAIL and Helix.

Depreciation and amortization expenses were $38 million and capital expenditures for free cash flow purposes were $69 million during the second quarter of 2017. At the close of the quarter, the company held $1.9 billion in cash, cash equivalents and short-term investments, compared to $1.6 billion as of January 1, 2017.

“We are pleased with our strong Q2 results,” said Francis deSouza, President and CEO. “Interest in the NovaSeq platform exceeded our expectations during the quarter. As a result, we have updated our 2017 revenue growth projections to reflect the market demand for NovaSeq and our positive outlook for the rest of the business.”

Updates since our last earnings release:

  • Received FDA approval for the Extended RAS Panel, a companion diagnostic kit that helps identify colorectal cancer patients eligible for Amgen’s Vectibix®
  • Announced that Genomics England will be using Illumina’s variant interpretation and reporting software in the characterization of tumor and matched normal samples as part of the 100,000 Genomes Project
  • Announced that Helix has launched an online consumer marketplace of DNA-powered products
  • Appointed Mark Van Oene as Chief Commercial Officer

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 2017, the company has updated its projections to approximately 12% revenue growth. GAAP earnings per diluted share attributable to Illumina stockholders is forecasted to be $5.36 to $5.46 and the company expects non-GAAP earnings per diluted share attributable to Illumina stockholders of $3.60 to $3.70.

Quarterly conference call information

The conference call will begin at 1:30 pm Pacific Time (4:30 pm Eastern Time) on Tuesday, August 1, 2017. Interested parties may listen to the call by dialing 888.771.4371 (passcode: 45213860), or if outside North America by dialing +1.847.585.4405 (passcode: 45213860). Individuals may access the live teleconference in the Investor Relations section of Illumina’s web site under the “company” tab at www.illumina.com.

A replay of the conference call will be available from 4:00 pm Pacific Time (7:00 pm Eastern Time) on August 1, 2017 through August 8, 2017 by dialing 888.843.7419 (passcode: 45213860), or if outside North America by dialing +1.630.652.3042 (passcode: 45213860).

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.

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