Illumina Reports Financial Results for Second Quarter of Fiscal Year 2018
SAN DIEGO--(BUSINESS WIRE)--Jul 30, 2018--Illumina, Inc. (NASDAQ:ILMN) today announced its financial results for the second quarter of fiscal year 2018.
Second quarter 2018 results:Revenue of $830 million, a 25% increase compared to $662 million in the second quarter of 2017 GAAP net income attributable to Illumina stockholders for the quarter of $209 million, or $1.41 per diluted share, compared to $128 million, or $0.87 per diluted share, for the second quarter of 2017 Non-GAAP net income attributable to Illumina stockholders for the quarter of $212 million, or $1.43 per diluted share, compared to $121 million, or $0.82 per diluted share, for the second 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 $295 million compared to $178 million in the second quarter of 2017 Free cash flow (cash flow from operations less capital expenditures) of $218 million for the quarter, compared to $109 million in the second quarter of 2017
Gross margin in the second quarter of 2018 was 69.3% compared to 65.5% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 70.3% for the second quarter of 2018 compared to 67.0% in the prior year period.
Research and development (R&D) expenses for the second quarter of 2018 were $151 million compared to $130 million in the prior year period. Non-GAAP R&D expenses as a percentage of revenue were 18.2%, including 0.9% attributable to Helix. This compares to non-GAAP R&D expenses as a percentage of revenue of 19.7% in the prior year period, including 0.8% attributable to Helix.
Selling, general and administrative (SG&A) expenses for the second quarter of 2018 were $197 million compared to $161 million in the prior year period. Non-GAAP SG&A expenses as a percentage of revenue were 23.7%, including 1.0% attributable to Helix. This compares to 25.2% in the prior year period, including 1.0% attributable to Helix.
Depreciation and amortization expenses were $44 million and capital expenditures for free cash flow purposes were $77 million during the second quarter of 2018. At the close of the quarter, the company held $2.5 billion in cash, cash equivalents and short-term investments, compared to $2.1 billion as of December 31, 2017.
“Driven by broad demand across applications, systems and geographies, revenue grew 25% from the second quarter of 2017, and we are now expecting revenue growth of approximately 20% for 2018,” said Francis deSouza, President and CEO. “Sequencing consumables, array consumables, and lab and other services each grew more than 30% compared to the second quarter of 2017, highlighting the growing interest in genomic information and its application to research, clinical and consumer markets.”
Updates since our last earnings release:Launched the S4 200 cycle kit (available in the fourth quarter of 2018) on NovaSeq which will enable customers to extend their research across more applications including single-cell and exome sequencing Released the NovaSeq S Prime (SP) flow cell (available in the fourth quarter of 2018) which is designed for smaller run sizes and/or applications that require lower sequencing output Announced the acquisition of Edico Genome, the leading provider of data analysis acceleration solutions for next-generation sequencing (NGS)
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 now projects revenue growth of approximately 20%, GAAP earnings per diluted share attributable to Illumina stockholders of $5.10 to $5.20 and non-GAAP earnings per diluted share attributable to Illumina stockholders of $5.35 to $5.45.
Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Monday, July 30, 2018. Interested parties may access the live teleconference through the Investor Relations section of Illumina’s web site under the “company” tab at www.illumina.com. Alternatively, individuals can access the call by dialing 800-708-4539, or 1-847-619-6396 outside North America, both with passcode 47172781.
A replay of the conference call will be available from 4:30 pm Pacific Time (7:30 pm Eastern Time) on July 30, 2018 through August 6, 2018 by dialing 888-843-7419, or 1-630-652-3042 outside North America, both with passcode 47172781.
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 2018 and expectations regarding the development and commercialization of new products. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: (i) challenges inherent in developing, manufacturing, and launching new products and services, including expanding manufacturing operations and reliance on third-party suppliers for critical components; (ii) the timing and mix of customer orders among our products and services; (iii) the impact of recently launched or pre-announced products and services on existing products and services; (iv) our ability to further develop and commercialize our instruments and consumables and to deploy new products, services, and applications, and expand the markets, for our technology platforms; (v) our ability to manufacture robust instrumentation and consumables; (vi) the success of products and services competitive with our own; (vii) our ability to successfully identify and integrate acquired technologies, products, or businesses; (viii) our expectations and beliefs regarding future conduct and growth of the business and the markets in which we operate; and (ix) 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.
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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