Illumina Inc. (ILMN)
Q4 2008 Earnings Call
February 03, 2009; 05:00 pm ET
Jay Flatley - President & Chief Executive Officer
Christian Henry - Senior Vice President & Chief Financial Officer
Peter Fromen - Senior Director of Investor Relations
Quintin Lai - Baird
Tycho Peterson - JP Morgan
Ross Muken - Deutsche Bank
Bill Quirk - Piper Jaffray
Dough Schenkel - Cowen & Co.
Marshall Urist - Morgan Stanley
Derik De Bruin - UBS
Un Kwon-Casado - Pacific Growth Equity
Isaac Ro - Leerink Swann
Zarak Kurshid - Caris & Co.
Tony Butler - Barclays Capital
Davis Bu - Goldman Sachs
Matthew Scalo - Canaccord Adams
Previous Statements by ILMN
» Illumina Q3 2009 Earnings Call Transcript
» Illumina, Inc. Q2 2009 Earnings Call Transcript
» Illumina, Inc. Q1 2009 Earnings Call Transcript
I would now like to turn the presentation over to your host for today’s call, Mr. Peter Fromen, Senior Director of Investor Relations; please proceed sir.
Thank you, Operator. Good afternoon everyone and welcome to our fourth quarter 2008 earnings call. During the call we will review our financial results released today after the close of the market, offer commentary on our commercial activities and provide financial guidance for the first quarter and fiscal 2009, after which we will host a question-and-answer session. If you have not had a chance to review the earnings release, it can be accessed in the Investor Relations section of our website at www.illumina.com.
Presenting for Illumina today will be Jay Flatley, President and Chief Executive Officer; and Christian Henry, Senior Vice President and Chief Financial Officer. This call is being recorded and the audio portion will be archived in the Investor section of our website.
It is our intent that all forward-looking statements regarding financial guidance and commercial activity made during today’s call be protected under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties and actual events or results may differ materially from those projected or discussed.
All forward-looking statements are based upon current information available and Illumina assumes no obligation to update these statements. To better understand these risk factors, we refer you to the documents that Illumina files with the Securities and Exchange Commission, including Form 10-Q and 10-K.
Before I turn the call over to Christian, I want to let you know that we will be presenting at the Barclays Global Healthcare conference in Miami, Florida, which is scheduled for March 10 to the12, and also at the Cowen Healthcare conference in Boston, Massachusetts, which is set for the week of March 16. For those of you unable to attend any of the upcoming conferences, we encourage you to listen to the webcast presentations, which will be available through the Investor Relations section of our website.
With that, I will now turn the call over to Christian.
Good afternoon everyone and thank you for joining us today. During today’s call I will review our fourth quarter financial results and provide guidance for the first quarter and full year of fiscal 2009. Jay will then discuss our commercial progress and provide an update on the state of our business and the markets.
We concluded 2008 with a strong fourth quarter performance. We reported our 30th consecutive quarter of revenue growth with total revenues of $160.9 million. This represents 43% year-over-year growth and 7% sequential growth. Product revenue was $152.8 million and grew 51% over the fourth quarter of last year and 9% sequentially. Once again, our microarray and sequencing product lines contributed nearly equal absolute dollar growth to our total revenue number.
Consumable revenue totaled $98.6 million for the quarter compared to $56.2 million in the fourth quarter of 2007, and $90.2 million last year. This represents growth of 76% year-over-year and 9% sequentially.
Consumables growth was driven by strong demand for Infinium HD BeadChips as well as sequencing kits. In fact, total sequencing consumables grew 24% sequentially and over 200% from the fourth quarter of last year. Sequencing consumables growth was driven by the rapid expansion of our Genome Analyzer installed base and the migration of these installed systems into the production status.
Q4 instrument revenue exceeded $50 million for the first time, coming in at $51.2 million. This compares to $41.8 million in the prior year period and $46.8 million last quarter. This represents year-over-year growth of 23% and 9% sequential growth, as we saw strong demand across all of our systems. During the quarter, we shipped a record number of units for each of the Genome Analyzer, iScan, and BeadExpress platforms.
Services and other revenue which includes genotyping and sequencing services as well as instrument maintenance contracts was $7.6 million compared to $11.4 million in the fourth quarter of last year and $9.7 million last quarter. While we have recognized an increase in the maintenance contract revenue and the sequencing service revenue, we are seeing more of our genotyping service revenue move to our Illumina certified CSPro-certified customers.
As a reminder, CSPro is a collaborative program through which we certify third party service partners using Illumina products to ensure delivery of performance and data quality equivalent to that attainable from our internal services offering. We have seen success across both service business models and recognized comparable profitability between the two.
Before discussing our gross margins and operating expenses for the quarter, I’d like to note that we recorded a pretax amount of $11.0 million related to non-cash stock-based compensation. This impacted our EPS by a tax adjusted amount of $0.06 per pro forma diluted share in the fourth quarter. Our fourth quarter stock compensation expense was lower than usual, due to a favorable year-end catch-up adjustment. I will give more clarity to our option expense estimates when I provide guidance.
In my discussion of operating expenses, I will highlight both our GAAP expenses which include stock compensation expense and other non-cash charges and the corresponding non-GAAP figures. I encourage you to review the GAAP reconciliation of non-GAAP measures also included in today’s earnings release.