Illumina, Inc (ILMN)
Q4 2009 Earnings Call
February 4, 2010 5:00 pm ET
Jay Flatley - President and CEO
Christian Henry - SVP of Corporate Development and CFO
Peter Fromen - Senior Director of IR
Ross Muken - Deutsche Bank
Tycho Peterson - JPMorgan
Marshall Urist - Morgan Stanley
Doug Schenkel - Cowen and Company
Bill Quirk - Piper Jaffray
Jon Groberg - Macquarie
Madden - Robert W. Bair
Dan Arias - UBS
Isaac Ro - Leerink Swann
May-Kin Ho - Goldman Sachs
Dan Leonard - First Analysis
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 conference over to your host for today's call Mr. Peter Fromen, Senior Director, Investor Relations. Please proceed, sir.
Thank you, operator. Good afternoon everyone and welcome to our fourth quarter 2009 earnings call. During the call we will review our financial results released today after the close of the market, offer commentary on our commercial activity and provide financial guidance for the 2010 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.
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. 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 the risk and uncertainties that could results to results, we refer you to the document that Illumina filed with the Securities and Exchange Commission including Form 10-Q and 10-K.
Before, I turn the call to Christian, I want to let you know that we will participate in the Cowen Healthcare Conference in Boston during the week of March 8th and at the Barclay’s Healthcare Conference in Miami in the week of March 22nd.
For those of you unable to attend any of the upcoming conferences, 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.
Good afternoon everyone and thank you for joining us today. During today's call, I will review our fourth quarter of 2009 financial results and discuss our financial guidance for 2010. Jay will then discuss our commercial progress and provide an update on the state of our business and markets.
In the fourth quarter we recorded $181 million of total revenue. This represents a growth of 12% over fourth quarter of last year. Product revenue was $168 million growing 10% over the prior year period led by significant growth in our sequencing products.
Our microarray business declined year-over-year, but we did recognize strong sequential growth over the third quarter led largely by growth in our whole-genome genotyping products. In January, based on management's preliminary review, we announced fourth quarter revenue of approximately $176 million.
At the time of our announcement we had excluded from revenue one multiunit sequencing instrument shipment where we had not made a final determination on revenue recognition. Subsequent to our pre-announcement, it was determined that this shipment should be recognized as revenue and was the primary factor in actual results exceeding $176 million.
Consumable revenue for the fourth quarter was $105 million compared to $99 million in Q4 of 2008. This represents year-over-year growth of 6% and was driven by very strong growth in sequencing consumables offset by a decline in microarray consumables.
Last quarter we informed you of a sequencing reagent quality issue in which we expected to have an impact on fourth quarter revenue. Originally, we indicated a potential impact on sequencing consumables of up to $15 million. Although difficult to quantify precisely, we now estimate the impact to revenue was approximately $4 million to $5 million. Nonetheless, annualized consumable pull through on the genome analyzer was still within our projected range of $150,000 to $200,000 per system.
Despite lower revenues on the year-over-year basis, microarray consumables represent more than half of our total consumables revenue. The decline relative to last year was primarily attributable to lower sales of whole-genome genotyping arrays, but was partially offset by growth in focused content arrays.
However, on a sequential basis, we did see growth in whole-genome arrays, which drove annualized consumable pull-through on iScan and the BeadArray Reader to nearly $500,000 per system. Total instrument revenue for the quarter was $61 million, compared to %51 million in the fourth quarter of last year, representing year-over-year growth of 19%.
We recognized record Genome Analyzer shipments as demand for next generation sequencing continues to grow rapidly. Although, total instrument revenue was roughly flat with the third quarter, we saw a strong growth in sequencing instrumentation, which was partially offset by lower sales of array instruments during the quarter.
Services and other revenue, which include genotyping and sequencing services as well as instrument maintenance contracts was $13 million compared to $8 million in Q4 of last year. The main driver of this growth was the increase in service maintenance contracts associated with our growing installed base of sequencing systems. The services business also grew nicely in the fourth quarter relative to 2008.