San Diego, California, USA
October 23, 2018
Illumina, Inc. (NASDAQ: ILMN) today announced its financial results for the third quarter of fiscal year 2018.
Third quarter 2018 results:
- Revenue of $853 million, a 20% increase compared to $714 million in the third quarter of 2017
- GAAP net income attributable to Illumina stockholders for the quarter of $199 million, or $1.33 per diluted share, compared to $163 million, or $1.11 per diluted share, for the third quarter of 2017
- Non-GAAP net income attributable to Illumina stockholders for the quarter of $227 million, or $1.52 per diluted share, compared to $163 million, or $1.11 per diluted share, for the third quarter of 2017 (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 $292 million compared to $235 million in the third quarter of 2017
- Free cash flow (cash flow from operations less capital expenditures) of $228 million for the quarter, compared to $153 million in the third quarter of 2017
Gross margin in the third quarter of 2018 was 70.0% compared to 67.5% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 71.1% for the third quarter of 2018 compared to 68.8% in the prior year period.
Research and development (R&D) expenses for the third quarter of 2018 were $159 million compared to $134 million in the prior year period. Non-GAAP R&D expenses as a percentage of revenue were 18.6%, including 0.9% attributable to Helix. This compares to non-GAAP R&D expenses as a percentage of revenue of 18.7% in the prior year period, including 0.8% attributable to Helix.
Selling, general and administrative (SG&A) expenses for the third quarter of 2018 were $197 million compared to $167 million in the prior year period. Non-GAAP SG&A expenses as a percentage of revenue were 23.2%, including 1.4% attributable to Helix. This compares to 23.2% in the prior year period, including 1.7% attributable to Helix.
Depreciation and amortization expenses were $46 million and capital expenditures for free cash flow purposes were $64 million during the third quarter of 2018. At the close of the quarter, the company held $3.4 billion in cash, cash equivalents and short-term investments, compared to $2.1 billion as of December 31, 2017.
“Illumina’s strong performance in the third quarter of 2018 reflected growth across our sequencing and arrays portfolios,” said Francis deSouza, President and CEO. “Sequencing system revenue of $138 million was the strongest since 2015, reflecting strong demand within our sequencing family from the NovaSeq, the most powerful and flexible sequencer ever, to the iSeq, our most accessible and easiest-to-use sequencer.”
Updates since our last earnings release:
- Received regulatory approval for the MiSeqDx, Illumina’s first next-generation sequencing (NGS) system cleared by the National Medical Products Administration (NMPA) in China
- Released the S4 200 cycle kit for the NovaSeq in response to customer requests to support high-throughput sequencing for whole exome, RNA and single-cell sequencing
- Reached a legal settlement as well as a supply and license agreement with Premaitha, who will now license Illumina’s IP for NIPT, launch an IONA test that runs on Illumina sequencing technology, and work with customers to migrate to Illumina systems
- Completed an offering of 0.0% convertible senior notes due 2023 for an aggregate principal amount of $650 million, plus an additional $100 million pursuant to the initial purchasers’ option to purchase additional notes, for total net proceeds of $735 million
- Repurchased $103 million of common stock in the third quarter under the previously announced share repurchase program
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 2018, the company projects revenue growth of approximately 20%. The company now expects fiscal 2018 GAAP earnings per diluted share attributable to Illumina stockholders of $5.32 to $5.37 and non-GAAP earnings per diluted share attributable to Illumina stockholders of $5.70 to $5.75.
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