Analyst Conference Summary


conference date: April 30, 2020 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2020 (first quarter, Q1 2020)

Forward-looking statements

Overview: Slower revenue growth.

Basic data (GAAP):

Revenue was $859 million, down 10% sequentially from $953 million and up 2% from $846 million in the year-earlier quarter.

Net income was $173 million, down 28% sequentially from $239 million, and down 26% from $233 million year-earlier.

Diluted EPS was $1,17, down 27% sequentially from $1.61, and down 25% from $1.57 year-earlier.

Guidance: Expects Q2 to be more negative than Q1.

Illumina has withdrawn its fiscal 2020 full year revenue EPS guidance due to the COVID-19 pandemic.

Conference Highlights:

Francis deSouza, President and CEO, said "While the near-term headwind is strong, the opportunity for sequencing and genomic insights is clearer than ever." China most impacted in quarter, but bottomed in March. Sold systems to support coronavirus work in some regions. Main impact overall was lower sequencing instrument sales.

Non-GAAP numbers: net income $243 million, up % sequentially from $na million, and up 3% from $237 million year-earlier. Diluted EPS was $1.64, down 4% sequentially from $1.70, and up 3% from $1.60 year-earlier.

Cash, equivalents and investment balance was $ billion, up sequentialy from $3.41 billion. Long term debt was $1.14 billion. Cash flow from operations was $281 million. Free cash flow was $241 million. Capital expenditures were $40 million. Cash used to repurchase stock was $187 million.

In Q2 2020 Illumina partnered with IDbyDNA to co-market IDbyDNA's Explify Platform for use with Illumina's NGS systems and library preparation to provide a complete, streamlined workflow solution for infectious disease applications.

GAAP cost of revenue was $240 million, leaving gross profit of $619 million. Operating expenses were $430 million, consisting of: $156 million for research and development; $274 million for selling, general, and administrative. Leaving income from operations of $189 million. Other expense was $11 million. Income tax provision $5 million.

Q&A summary:

Academic end market? They are working under challenging circumstances. Will be impacted as long as shelter in place mandates stay in effect. The work does not go away. Some will attempt to catch up, but some will seek extensions to their funding windows.

COVID testing opportunity? Work needs to be done on the evolution of the genome and risk factors for individuals. There is funding allocated for that. We are already seeing some NGS based testing, including for surveilance. Also looking at ultra-high throughput screening to speed people back to work.

End of April market stabilization, is that for all areas? We are seeing China coming back. Rest of world we saw deterioration in the end of March, but the last week of April we started to see revenue coming back.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. This is journalism, not advice.

Copyright 2020 William P. Meyers