A few days ago, I predicted that there would be few if any surprises with Illumina's (ILMN 1.11%) fourth-quarter results. This was an easy prediction to make: Illumina CEO Francis deSouza's presentation at the J.P. Morgan Healthcare Conference earlier this month included some sneak peeks at the company's Q4 performance.

Illumina announced its Q4 results after the market closed on Wednesday. I was right that there wouldn't be many surprises. But there was one twist. Here are the three most important things to know about Illumina's Q4 results.

Magnifying glass showing DNA double helix with color-coded DNA sequence in the background

Image source: Getty Images.

1. Revenue slightly above projections

Illumina reported Q4 revenue of $953 million, up 10% year over year. This figure was well above the consensus analysts' revenue estimate of $942.9 million. However, Wall Street analysts made their Q4 projections prior to deSouza's presentation at the J.P. Morgan conference.

DeSouza told conference attendees that Illumina expected to report Q4 revenue of around $950 million. The company's actual revenue total came in slightly higher than that level.

Product revenue increased by 10% year over year to $812 million, with solid sales for NovaSeq and NextSeq. Services and other revenue rose by 9.3% year over year to $141 million. As anticipated, headwinds in the direct-to-consumer market weighed on Illumina's overall growth.

2. Much better-than-expected earnings

DeSouza didn't provide a hint about what Illumina's Q4 earnings would be. The average analysts' estimate projected that the company would generate adjusted earnings per share (EPS) of $1.58. Illumina handily beat that estimate, though, announcing Q4 adjusted EPS of $1.70 -- up nearly 29% year over year.

I wrote earlier this week, "If there's anything unexpected in Illumina's Q4 results, it will probably be related to expenses that impact the bottom line." And that's exactly where the one surprise in the company's quarterly update occurred.

Illumina's total operating costs were basically flat year over year thanks largely to an 8.5% decline in research and development expenses. This, combined with a $15 million reduction in cost of service and other revenue, helped boost the company's bottom line.

3. No surprises with the full-year 2020 outlook 

Illumina projects full-year 2020 revenue growth of between 9% and 11%. The company expects earnings per diluted share between $6.45 and $6.65 based on generally accepted accounting principles (GAAP), with non-GAAP EPS between $6.80 and $7.00.

The company's guidance didn't contain any surprises. DeSouza said at the J.P. Morgan conference that Illumina expected to deliver revenue growth in the 9% to 11% range for full-year 2020. Wall Street analysts were expecting full-year adjusted EPS to come in between $6.80 and $7.00, with the average analysts' estimate slightly above the midpoint of the range.

Beyond 2020

Francis deSouza said that Illumina's management believes "that this is the decade that genomics becomes available to cancer and genetic disease patients on a mass scale and integrates into standard of care." That view could very well be right. Genomic sequencing is a critical part of personalized medicine. Increasingly more new drugs are being developed that target specific types of cancer and that rely on sequencing.

Illumina's dominant position in the genomic sequencing market and its decades of leadership make it the player to beat in capitalizing on the growth that should be on the way. However, the company has some vulnerabilities, notably including its lack of expertise in long-read sequencing. The planned acquisition of Pacific Biosciences of California would have addressed this issue, but it's now off the table.

Perhaps the biggest challenge for Illumina is that, as a growth stock, investors expect higher revenue and earnings growth than the company will be able to deliver over the short term. This could put a damper on the stock at least temporarily. But if deSouza's optimistic view of the future proves to be accurate and Illumina can deliver on its potential, the one-time high-flying stock should take off yet again.