San Diego, California, USA
Janury 31, 2017
Illumina, Inc. (NASDAQ:ILMN) today announced its full financial results for the fourth quarter and fiscal year 2016.
Fourth quarter 2016 results:
- Revenue of $619 million, a 5% increase compared to $592 million in the fourth quarter of 2015
- GAAP net income attributable to Illumina stockholders for the quarter of $124 million, or $0.84 per diluted share, compared to $104 million, or $0.70 per diluted share, for the fourth quarter of 2015
- Non-GAAP net income attributable to Illumina stockholders for the quarter of $126 million, or $0.85 per diluted share, compared to $121 million, or $0.81 per diluted share, for the fourth quarter of 2015 (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 $280 million and free cash flow of $199 million for the quarter, compared to $240 million and $205 million, respectively, in the prior year period
Gross margin in the fourth quarter of 2016 was 67.7% compared to 69.4% in the prior year period. Excluding the effect of non-cash stock compensation expense and amortization of acquired intangible assets, non-GAAP gross margin was 69.9% for the fourth quarter of 2016 compared to 71.7% in the prior year period.
Research and development (R&D) expenses for the fourth quarter of 2016 were $129.9 million, or 21.0% of revenue, compared to $114.3 million, or 19.3% of revenue, in the prior year period. R&D expenses included $9.4 million and $10.8 million of non-cash stock compensation expense in the fourth quarters of 2016 and 2015, respectively. Excluding these charges and contingent compensation, R&D expenses as a percentage of revenue were 19.5%, including 2.5% attributable to GRAIL and Helix. This compares to 17.5% in the prior year period.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2016 were $146.1 million, or 23.6% of revenue, compared to $147.3 million, or 24.9% of revenue, in the prior year period. SG&A expenses included $15.2 million and $21.4 million of non-cash stock compensation expense in the fourth quarters of 2016 and 2015, respectively. Excluding these charges, amortization of acquired intangible assets, and contingent compensation, SG&A expenses as a percentage of revenue were 20.9%, including 1.6% attributable to GRAIL and Helix. This compares to 20.9% in the prior year period.
Depreciation and amortization expenses were $37.4 million and capital expenditures for free cash flow purposes were $81.5 million during the fourth quarter of 2016, which excludes an increase of $24.6 million in property and equipment recorded under build-to-suit lease accounting since such expenses were paid for by the landlord. At the close of the quarter, the company held $1.56 billion in cash, cash equivalents and short-term investments, compared to $1.39 billion as of January 3, 2016.
Fiscal 2016 results:
- Revenue of $2,398 million, an 8% increase compared to $2,220 million in fiscal 2015
- GAAP net income attributable to Illumina stockholders of $463 million, or $3.07 per diluted share, compared to $462 million, or $3.10 per diluted share, in fiscal 2015
- Non-GAAP net income attributable to Illumina stockholders of $503 million, or $3.33 per diluted share, compared to $495 million, or $3.32 per diluted share, in fiscal 2015 (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 $687 million and free cash flow of $427 million for the fiscal year, compared to $660 million and $517 million, respectively, in the prior year
Gross margin for fiscal 2016 was 69.5% compared to 69.8% in the prior year. Excluding the effect of non-cash stock compensation expense and amortization of acquired intangible assets, non-GAAP gross margin was 71.7% for fiscal 2016 compared to 72.4% in the prior year period.
Research and development (R&D) expenses for fiscal 2016 were $504.4 million compared to $401.5 million in the prior year. R&D expenses included $42.3 million and $42.0 million of non-cash stock compensation expense in fiscal 2016 and 2015, respectively. Excluding these charges and contingent compensation, R&D expenses as a percentage of revenue were 19.3%, including 1.8% attributable to GRAIL and Helix. This compares to 16.2% in the prior year period.
Selling, general and administrative (SG&A) expenses for fiscal 2016 were $583.0 million compared to $524.7 million in the prior year. SG&A expenses included $76.1 million and $79.1 million of non-cash stock compensation expense in fiscal 2016 and 2015, respectively. Excluding these charges, amortization of acquired intangible assets, and contingent compensation, SG&A expenses as a percentage of revenue were 20.8%, including 1.2% attributable to GRAIL and Helix. This compares to 19.8% in the prior year period.
“We ended 2016 on a stronger note than we anticipated, with robust performance across sequencing consumables and microarrays,” stated Francis de Souza, President and CEO. “We also made significant progress on key R&D programs as evidenced by the launch of NovaSeq, a brand new architecture that delivers the most powerful, flexible sequencer ever created, once again redefining the trajectory of sequencing.”
Updates since our last earnings release:
- Launched the NovaSeq System™, an entirely new scalable high throughput architecture designed to one day usher in the $100 genome
- Announced the launch of the Illumina® Bio-Rad® Single-Cell Sequencing Solution, the first next-generation sequencing (NGS) workflow for single-cell analysis
- Launched TruSight® Tumor 170, a 170 gene next-generation sequencing solution to support a multi-analyte approach and provide a more thorough picture of a tumor’s genomic landscape
- Applied the CE mark to our VeriSeq™ NIPT Analysis Software, designed for larger batches of 48 samples
- Entered into a strategic collaboration with Philips to integrate Illumina’s sequencing systems for large-scale analysis of genetic variation and function and Philips’ IntelliSpace Genomics clinical informatics platform
- Partnered with IBM to expand access to genome data interpretation by integrating Watson for Genomics into Illumina’s BaseSpace Sequence Hub and tumor sequencing process
- Announced that GRAIL has received indications of interest to invest approximately $1B in its Series B financing, which is intended to close prior to the end of the first quarter
- Announced several key senior appointments to our executive team: Garret Hampton as EVP, Clinical Genomics Group, Sam Samad as Senior Vice President and Chief Financial Officer, and Jonathan Seaton as Senior Vice President of Corporate and Business Development
- Appointed Caroline Dorsa to the company’s Board of Directors and the Audit Committee of the Board
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our 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 is projecting 10% to 12% revenue growth, GAAP earnings per diluted share attributable to Illumina stockholders of $3.25 to $3.35 and non-GAAP earnings per diluted share attributable to Illumina stockholders of $3.60 to $3.70. Our annual guidance assumes first quarter revenue of $580 million to $595 million, GAAP earnings per diluted share attributable to Illumina stockholders of $0.51 to $0.56 and non-GAAP earnings per diluted share attributable to Illumina stockholders of $0.60 to $0.65.
All earnings per diluted share guidance includes the consolidated results of GRAIL in the first quarter, with the exception of any one-time items associated with the expected close of the Series B financing.
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