Investors already pretty much knew what to expect on the top line in Illumina's (ILMN -1.28%) first-quarter results. The genomic sequencing systems leader provided a sneak peek at its Q1 revenue a few weeks ago. 

However, Illumina still managed to deliver an upside surprise on its bottom line when the company announced its Q1 results after the market closed on Tuesday. The life sciences stock rose 1% in after-hours trading. Here are the highlights from Illumina's Q1 update.

DNA with a light shining in the background

Image source: Getty Images.

By the numbers

Illumina reported revenue in the first quarter of $1.09 billion, up 27% year over year and slightly higher than the $1.08 billion given in its preliminary numbers earlier this month. This result beat the consensus Wall Street estimate of nearly $996 million.

The company announced Q1 net income of $147 million, or $1 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, Illumina generated GAAP earnings of $173 million, or $1.17 per share.

That year-over-year decline didn't carry over to Illumina's non-GAAP adjusted bottom line, though. The company recorded Q1 adjusted earnings of $278 million, or $1.89 per share, up from $243 million, or $1.64 per share, in the prior-year period. This result easily topped the average analysts adjusted earnings estimate of $1.38 per share.

Behind the numbers

Illumina didn't just beat Wall Street estimates. CEO Francis deSouza said that the company exceeded its own expectations. In doing so, it also generated quarterly revenue of a least $1 billion for the first time in the company's history.

The picture looked good on practically every front. DeSouza stated, "Orders during the first quarter of 2021 reached an all-time high demonstrating strength in our core business across all regions, reflecting growth in both clinical and research customers." He also noted that the company is "seeing tremendous progress in clinical market access and reimbursement for genomic applications."

Illumina yet again generated strong recurring revenue. Consumables sales totaled $774 million in Q1, up nearly 25% year over year and close to 13% higher sequentially. Instrument sales more than doubled year over year and grew 23% quarter over quarter to $179 million. 

The only area that didn't increase in the first quarter was service and other revenue, which fell 11% year over year to $140 million. However, this still reflected sequential growth of nearly 15%.

Looking ahead

Illumina projects full-year 2021 revenue will grow between 25% and 28% year over year. It expects GAAP earnings per share (EPS) of between $4.72 and $4.97 with non-GAAP EPS between $5.80 and $6.05. The midpoint of that adjusted range is well above the consensus analysts estimate of $5.51.

Perhaps the biggest question for Illumina going forward relates to its planned acquisition of GRAIL. The European Commission is reviewing the deal, which has caused concerns about whether or not it will win approval. DeSouza stated in a press release last week, "We do not believe that the European authorities have jurisdiction to review the GRAIL acquisition and look forward to resolving this matter expeditiously."

The purchase of GRAIL, which Illumina founded and later spun off, could present a significant growth opportunity for the company. Illumina thinks that the transaction will help patients and foster competition. Whether or not antitrust regulators will agree remains to be seen.