San Diego, California, USA
January 30, 2018
Illumina, Inc. (NASDAQ: ILMN) today announced its financial results for the fourth quarter and fiscal year 2017.
Fourth quarter 2017 results:
- Revenue of $778 million, a 26% increase compared to $619 million in the fourth quarter of 2016
- GAAP net income attributable to Illumina stockholders for the quarter of $68 million, or $0.46 per diluted share, compared to $124 million, or $0.84 per diluted share, for the fourth quarter of 2016; GAAP provision for income taxes for the fourth quarter of 2017 includes our provisional estimate of the one-time transition tax as a result of U.S. tax reform
- Non-GAAP net income attributable to Illumina stockholders for the quarter of $212 million, or $1.44 per diluted share, compared to $126 million, or $0.85 per diluted share, for the fourth quarter of 2016 (see the table entitled “Itemized Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders” for a reconciliation of GAAP and non-GAAP financial measures)
- Cash flow from operations of $294 million compared to $262 million in the fourth quarter of 2016
- Free cash flow (cash flow from operations less capital expenditures) of $218 million for the quarter, compared to $180 million in the fourth quarter of 2016
Gross margin in the fourth quarter of 2017 was 69.7% compared to 67.7% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 70.9% for the fourth quarter of 2017 compared to 69.5% in the prior year period.
Research and development (R&D) expenses for the fourth quarter of 2017 were $137 million compared to $130 million in the prior year period. Excluding restructuring charges, non-GAAP R&D expenses as a percentage of revenue were 17.4%, including 0.7% attributable to Helix. This compares to 21.0% in the prior year period, including 2.6% attributable to GRAIL and Helix.
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2017 were $175 million compared to $146 million in the prior year period. Excluding amortization of acquired intangible assets and restructuring charges, SG&A expenses as a percentage of revenue were 22.1%, including 1.2% attributable to Helix. This compares to 23.4% in the prior year period, including 1.7% attributable to GRAIL and Helix.
Depreciation and amortization expenses were $40 million and capital expenditures for free cash flow purposes were $76 million during the fourth quarter of 2017. At the close of the quarter, the company held $2.1 billion in cash, cash equivalents and short-term investments, compared to $1.6 billion as of January 1, 2017.
Fiscal 2017 results:
- Revenue of $2,752 million, a 15% increase compared to $2,398 million in fiscal 2016
- GAAP net income attributable to Illumina stockholders of $726 million, or $4.92 per diluted share, compared to $463 million, or $3.07 per diluted share, in fiscal 2016; GAAP provision for income taxes for fiscal 2017 includes the provisional estimate of the one-time transition tax referenced previously
- Non-GAAP net income attributable to Illumina stockholders of $591 million, or $4.00 per diluted share, compared to $503 million, or $3.33 per diluted share, in fiscal 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 $875 million compared to $779 million in fiscal 2016
- Free cash flow (cash flow from operations less capital expenditures) of $565 million, compared to $519 million in fiscal 2016
Gross margin for fiscal 2017 was 66.4% compared to 69.5% in the prior year. Excluding amortization and impairment of acquired intangible assets, non-GAAP gross margin was 68.4% for fiscal 2017 compared to 71.3% in the prior year period.
Research and development (R&D) expenses for fiscal 2017 were $546 million compared to $504 million in the prior year. Excluding restructuring charges and an impairment of in-process research and development, non-GAAP R&D expenses as a percentage of revenue were 19.6%, including 1.0% attributable to GRAIL and Helix. This compares to 21.0% in the prior year period, including 1.9% attributable to GRAIL and Helix.
Selling, general and administrative (SG&A) expenses for fiscal 2017 were $674 million compared to $584 million in the prior year period. Excluding amortization of acquired intangible assets, restructuring charges, performance-based compensation related to GRAIL Series B financing, and acquisition related gain, SG&A expenses as a percentage of revenue were 23.9%, including 1.7% attributable to GRAIL and Helix. This compares to 24.0% in the prior year period, including 1.2% attributable to GRAIL and Helix.
“With 26% revenue growth in the fourth quarter, and 15% for the full year, our 2017 results demonstrate customers’ growing demand across both our sequencing and array portfolios,” said Francis deSouza, President and CEO. “From our NovaSeq and the recently launched iSeq, to our clinical portfolio that includes the VeriSeq NIPT Solution, NextSeqDx and MiSeqDx, Illumina is well-positioned to continue to drive sequencing innovation and unlock the power of the genome.”
Updates since our last earnings release:
- Launched the iSeq™ 100 Sequencing System, a flexible benchtop sequencer priced at $19,900 designed to provide a fast and easy-to-use system with unmatched accuracy
- Announced availability of AmpliSeq for Illumina, developed in partnership with Thermo Fisher Scientific
- Introduced the NextSeq™ 550Dx instrument, Illumina’s second FDA regulated CE-IVD market platform, to deliver the power of high-throughput next-generation sequencing (NGS) to the clinical laboratory
- Partnered with KingMed Diagnostics to develop novel oncology and hereditary disease testing applications utilizing Illumina’s NGS technology in China
- Appointed Gary S. Guthart to the company’s Board of Directors
- Appointed Aimee Hoyt to the position of Senior Vice President and Chief People Officer
- Repurchased $75 million of common stock in the fourth 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 is projecting 13% to 14% revenue growth, GAAP earnings per diluted share attributable to Illumina stockholders of $4.14 to $4.24 and non-GAAP earnings per diluted share attributable to Illumina stockholders of $4.50 to $4.60.
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