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Illumina Inc. (ILMN)
Q3 2009 Conference Call
October 27, 2009 05.00 PM ET
Peter J. Fromen - Senior Director of Investor Relations
Christian O. Henry - Senior Vice President
Jay T. Flatley - President and Chief Executive Officer
Ross Muken - Deutsche Bank Securities
Doug Schenkel - Cowen & Co.
Marshall Urist - Morgan Stanley
Quintin Lai - Robert W. Baird
Bill Quirk - Piper Jaffray
Derik De Bruin - UBS
Tycho Peterson - JP Morgan
Isaac Ro - Leerink Swann & Company
Dan Leonard - First Analysis
Zarak Khurshid - Caris & Company
Davis Bu - Goldman Sachs
Jonathan Groberg - Macquarie Capital
Previous Statements by ILMN
» Illumina, Inc. Q2 2009 Earnings Call Transcript
» Illumina, Inc. Q1 2009 Earnings Call Transcript
» Illumina Inc. Q4 2008 Earnings Call Transcript
I would now like to turn the conference over to your host for today's call Mr. Peter Fromen, Senior Director, Investor Relations. Please proceed, sir.
Peter J. Fromen
Thank you, operator. Good afternoon everyone and welcome to our third quarter 2009 earnings call. During the call we will review our financial results released today after the close of the market, also commentary on our commercial activity and provide financial guidance for the remainder of fiscal 2009 after which we'll host a question-and-answer session.
If you have not had a chance to review the earnings release, it can be found on the Investor Relation section of our website at illumina.com.
Presenting for Illumina will be Jay Flatley, President and Chief Executive Officer and Christian Henry, Senior Vice President of Corporate Development and Chief Financial Officer.
This call is being recorded and the audio portion will be archived in the Investor Relations section of our website.
You should note that all forward-looking statements regarding financial guidance and commercial activity made during today's call to protect under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties. 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 document that Illumina filed with the Securities and Exchange Commission including Form 10-Q and 10-K.
Before, I will turn the call over to Christian, I want to let you know that we will participate in the Piper Jaffray Healthcare Conference in New York on December 2nd, the Deutsche Bank Med Tools Conference, in Boston on December 9, 10 and the JP Morgan Healthcare Conference in San Francisco on January 11 and 12.
Following the JP Morgan conference, we will host an Analyst Day in the afternoon on January 14 at our Beriya facility in Hayward, California. All information regarding this event will be available shortly. For those of you unable to attend any of the upcoming conferences or our Analyst Day, we encourage you to listen to the webcast presentation which will be available through the Investor Relations section of our website.
With that I will now turn the call over to Christian.
Christian O. Henry
Good afternoon everyone and thank you for joining us today. During today's call, I will review our third quarter financial results and provide guidance for the remainder of fiscal 2009. Jay will then discuss our commercial progress and provide an update on the state of our business and our markets.
We recorded 158 million of total revenue for the third quarter, which was approximately $4 million below the low end of our guidance for the quarter. This represented 5% growth over Q3 of last year. Product revenue was 150 million growing 7% over the prior year period led by significant growth in our sequencing products. Then over to last quarter, the strong growth we recognized in our sequencing business was insufficient to offset declines in our microarray business, specifically for products that enabled genome-wide associations studies.
Consumables revenue for the quarter was 87 million compared to 90 million in Q3 of '08 which represent a year-over-year decline of 4%. Sequencing consumables grew well over 100% on a year-over-year basis, but were essentially flat with respect to Q2. Late in the third quarter, we estimate that we lost approximately 68 million in revenue due to a sequencing reagent quality issue which prevented us from shipping certain kits at the end of the quarter.
Jay will provide more details about this matter and its resolution in his remarks. Despite this issue annualized consumable pull through on the Genome Analyzer was still within our projected range of 150 to 200 K per system.
Array consumables remain more than half of our consumable revenue but were down in the quarter on both the year-over-year and a sequential basis. The decline in array consumables continues to be directly attributed to the weakness in sales of whole-genome genotyping chips.
Consumable pull through for the array business was between 400 and 500,000 per system. We shipped another record number Genome Analyzers during the quarter as demand for the system continues to exceed our expectations.
Strong GA shipments as well as year-over-year and sequential growth in iScan revenue enabled us to recognize record instrument revenue of $61 million. This compares to 47 million in the third quarter of 2008 and represents year-over-year growth of 30%.
Services and other revenue which includes genotyping and sequencing services as well as instrument maintenance contracts was 8 million, compared to 10 million in Q3 of last year. The year-over-year decline in services was largely due to the overall decline in GWAS studies, but also to the fact that more of our genotyping service revenue has moved to our CSPro certified customers.