Illumina, Inc.

What they do

Illumina develops and sells DNA sequencing instruments and the consumable reagents and flow cells used to run them, along with related data analysis and workflow offerings. Its customers are primarily clinical and research laboratories, and the company highlights clinical customers expanding sequencing-intensive applications. The business is organized around sequencing platforms and the recurring consumables and services that follow instrument placements.

Revenue drivers

• Sequencing instruments, led by NovaSeq X — Illumina sells high-throughput sequencing platforms, and management states demand for NovaSeq X remains high; instrument placements drive the installed base that generates follow-on consumables.
• Consumables and services — Reagents, flow cells, and related services are sold to the installed base and are the recurring portion of revenue, though the filings provided do not break out consumables as a separate dollar figure.
• Clinical sequencing-intensive applications — Management attributes first-half 2026 momentum to clinical customers expanding sequencing-intensive applications, which increases the volume of cases run on Illumina platforms.
• Workflow and multiomics capabilities — Illumina is expanding its workflow and multiomics offerings, which management says broadens the value of its ecosystem beyond the core sequencing run.

Recent performance

For Q2 2026, revenue was $1.159 billion, up 9.5% from $1.059 billion in Q2 2025 and up 8.1% on a ROW organic basis excluding currency, acquisitions, and China. GAAP operating margin was 21.1% and non-GAAP operating margin was 22.5%, with GAAP diluted EPS of $1.35 and non-GAAP diluted EPS of $1.31. Cash flow provided by operations was $201 million versus $234 million a year earlier, and free cash flow was $162 million versus $204 million. The company held $1.17 billion in cash, cash equivalents, and short-term investments at quarter end, and reported $39 million of capital expenditures. Fiscal 2025 revenue was $4.34 billion with net income of $850.0 million and operating cash flow of $1.08 billion.

Strategy

Management is focused on driving adoption of the NovaSeq X platform while expanding workflow and multiomics capabilities across the Illumina ecosystem. The company reports a rest-of-world organic metric that excludes Greater China, where it says it was included on China's Unreliable Entities List. Illumina is increasing both revenue and EPS guidance for fiscal 2026 while keeping its non-GAAP operating margin target unchanged at 23.4%-23.6%. It continues to invest in capital expenditures, reported at $39 million in Q2 2026, and returned focus to extending sequencing-intensive clinical applications.

Risks

• China exposure — Illumina was included on China's Unreliable Entities List, and its ROW organic revenue metric explicitly excludes the Greater China region.
• Margin mix — Non-GAAP gross margin fell to 68.2% in Q2 2026 from 69.4% in Q2 2025, and non-GAAP operating margin declined to 22.5% from 23.8% even as revenue grew.
• Cash generation pressure — Operating cash flow fell to $201 million in Q2 2026 from $234 million a year earlier, and free cash flow declined to $162 million from $204 million.
• Prior losses — Illumina reported large annual net losses in 2023 and 2024, including a $4.40 billion loss in 2023 and a $1.22 billion loss in 2024, before returning to $850.0 million of net income in 2025.

Outlook

For fiscal 2026, management now expects total revenue of $4.60-$4.64 billion, up from prior guidance of $4.52-$4.62 billion. ROW organic revenue growth is guided to greater than 5%, versus prior guidance of 2%-4%. Non-GAAP operating margin is unchanged at 23.4%-23.6%, and non-GAAP diluted EPS guidance was raised to $5.30-$5.40 from $5.15-$5.30.