Illumina Raises Outlook as Revenue Growth Accelerates
Quarterly revenue reached $1.159 billion as international demand strengthened.
Illumina Inc. (ILMN), the DNA-sequencing company, raised its full-year outlook after second-quarter revenue rose 9.5% from a year earlier, accelerating from 4.8% growth in the first quarter.
The quarter marked a return to Illumina’s fourth-quarter 2023 revenue level after a slower start to the year. Revenue increased 6.2% sequentially, while gross and operating margins continued to improve on a GAAP basis.
Revenue totaled $1.159 billion, up from $1.058 billion a year earlier. GAAP diluted earnings were $1.35 a share, down from $1.49 a share a year earlier but up 55% sequentially. Adjusted earnings increased to $1.31 a share from $1.19 a year earlier.
Growth outside China helped drive the acceleration. Rest-of-world organic revenue rose 8.1%, compared with 3.5% growth in the first quarter. Total organic growth was 6.5%, while acquisitions and currency added 2.1 and 0.9 percentage points, respectively, and China reduced growth by 1.6 points.
Product revenue increased 7.7% to $982 million, while service and other revenue grew 20.4% to $177 million and accounted for a larger share of sales. GAAP gross margin expanded to 66.4% from 65.6% a year earlier, and GAAP operating margin increased to 21.1% from 20.2%.
Illumina now expects 2024 revenue of $4.60 billion to $4.64 billion, compared with its previous forecast of $4.52 billion to $4.62 billion. The company also raised its rest-of-world organic-growth forecast to more than 5% from a range of 2% to 4%. Adjusted earnings guidance increased to $5.30 to $5.40 a share from $5.15 to $5.30, while the adjusted operating-margin forecast remained 23.4% to 23.6%.
Cash generation weakened despite the stronger operating result. Free cash flow fell to $162 million from $204 million a year earlier as operating cash flow declined, while net income dropped to $207 million because other income fell even as operating profit increased.