Illumina Q1 Revenues Fall Short of Expectations

April 19, 2016
Illumina Q1 Revenues Fall Short of Expectations
Source: Sanjay Deva/Fotolia

Illumina saw its stock price fall nearly 24% this morning after reporting estimated first-quarter results in which the company acknowledged lower-than-projected revenues—a result blamed on underperforming sales for its sequencing instruments.

Illumina reported estimated first-quarter revenues of approximately $572 million, up 6% from the $539 million reported for the year-ago quarter, and up 7% on a constant-currency basis.

“Our first-quarter results fell short of expectations largely due to lower than expected sales of HiSeq 2500, 3000, and 4000 instruments,” Illumina Chairman and CEO Jay Flatley said in a statement.

“Despite this slow start in Q1, we anticipate that our Americas and Asia Pacific regions will meet our expectations for the full year, but that Europe will underperform. As a result, we now project approximately 12% revenue growth for fiscal 2016,” Flatley added.

That’s down from the 16% revenue growth Illumina projected in its 2016 guidance to investors issued in February, when the company released fourth-quarter 2015 results. That guidance also called non-GAAP earnings per diluted share attributable to Illumina stockholders of $3.55 to $3.65.

Illumina said it will offer updated GAAP and non-GAAP earnings per share guidance when it reports first-quarter results on May 3. The company indicated it expected Q1 EPS to fall below consensus estimates of 78 cents a share.

Shares of Illumina fell from yesterday’s closing price of $178.32 to $136.03 as of 10:23 am

Illumina’s Q1 estimated revenue fell 4% below the $596.8 million average of estimates by 18 analysts cited by Blloomberg and $596.3 million average of estimates by Thomson Reuters Institutional Brokers' Estimate System (I/B/E/S) cited by Reuters.

The company attributed the drop in sales to fewer than anticipated upgrades to the HiSeq 4000 System, greater outsourcing to sequencing service providers, and fewer instrument upgrades—especially in Europe.

“We feel the outsourcing issue in particular could linger for a few quarters. Europe shipment growth is expected to be low- to mid-single digits, versus mid-teens for the Americas and Asia Pacific regions,” Mizuho Securities USA concluded in a note to investors.

The disappointing revenue projections for Europe have prompted Illumina to make managerial changes. The company reassigned one of its senior U.S. sales leaders to Europe and expects to hire a general manager to oversee the continent to start by Q1/17, or sooner, Canaccord Genuity said in a note to investors.

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