ILLUMINA, INC.

Illumina, Inc. is a global leader in sequencing- and array-based solutions for genetic and genomic analysis, serving customers in the research, clinical, and applied markets. The company's products are used for applications in the life sciences, oncology, reproductive health, agriculture, and other emerging segments. Customers include leading genomic research centers, academic institutions, government laboratories, hospitals, pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies. The industry is characterized by rapid technological change, strong price competition, and frequent new product introductions, with next-generation sequencing technologies reducing the cost of sequencing by a factor of more than 10,000 over the last 20 years.

Illumina faces intense and increasing competition from third parties that design, manufacture, and market products for analysis of genetic variation and biological function. Competitors include companies with substantially greater financial, technical, research, artificial intelligence capabilities, and other resources, along with larger, more established marketing, sales, distribution, and service organizations. The company believes its products provide significant advantages over currently available alternatives, and its competitive position depends on demonstrating superior throughput, cost, and accuracy. A portion of revenue is increasingly derived from a small number of large, centralized laboratory customers, increasing customer concentration risk.

Illumina generates revenue from the sale of products and services. Product revenue consists of sales of instruments and consumables used in genetic analysis. Service and other revenue consists of revenue from genotyping and sequencing services, instrument service contracts, development and licensing agreements, and, prior to the Spin-Off of GRAIL in 2024, cancer detection testing services. In 2025, 2024, and 2023, instrument sales represented 11%, 12%, and 16% of total consolidated revenue, respectively; consumable sales represented 74%, 72%, and 68%, respectively; and services and other represented 15%, 16%, and 16%, respectively. The company's portfolio of integrated sequencing and microarray systems, consumables, and analysis tools addresses a range of genomic complexity, price points, and throughput.

Illumina's sequencing portfolio includes platforms that can generate between 500 megabases and 16.0 terabases of genomic data in a single run. In 2023, the company launched the NovaSeq X Plus, a production-scale sequencing system that can sequence a human genome for as little as $200. In 2024, the company launched the benchtop MiSeq i100 series, its fastest, simplest sequencing system featuring room temperature reagents. Total sequencing revenue comprised 92%, 91%, and 91% of total revenue in 2025, 2024, and 2023, respectively. The company's informatics products include the BaseSpace Informatics Suite, the DRAGEN Bio-IT Platform, Illumina Connected Analytics, Emedgene, Illumina Connected Insights, and Illumina Connected Multiomics.

Illumina's array-based solutions use BeadArray technology to perform SNP genotyping, CNV analysis, and methylation analysis. The iScan System and NextSeq 550 System can be used to image arrays. Total array revenue comprised 8%, 9%, and 9% of total revenue in 2025, 2024, and 2023, respectively. The company also offers consumables including library preparation and sequencing kits. In January 2025, the company launched Illumina Single Cell 3' RNA Prep. In September 2025, the company launched Illumina Protein Prep, a sequencing-based proteomics assay. In October 2025, the company launched the Illumina 5-base solution, an end-to-end workflow enabling simultaneous interrogation of genomic and epigenomic information. Services include whole-genome sequencing, genotyping, NIPT, and product support services through a CLIA-certified, CAP-accredited laboratory.

On June 24, 2024, Illumina completed the separation of GRAIL into a new public company through the distribution of 26,547,021 ¹ shares of GRAIL common stock to Illumina stockholders on a pro rata basis, reflecting approximately 85.5% ² of the outstanding common stock of GRAIL. Illumina retained approximately 14.5% ³ of the shares of GRAIL common stock immediately following the Spin-Off. In August 2024, the Board of Directors authorized a share repurchase program to repurchase up to $1.5 billion ⁴ of outstanding common stock. During 2025, the company repurchased 7,790 ⁵ shares for $742 million ⁶. In November 2025, the company issued $500 million ⁷ aggregate principal amount of 2030 Term Notes, receiving net proceeds of $495 million ⁸. In 2025, the company implemented an incremental $100 million ⁹ cost reduction program. On June 22, 2025, the company entered into a Stock Purchase Agreement with Standard BioTools to acquire SomaLogic and other specified assets for $350 million ¹⁰ in cash, with up to $75 million ¹¹ in potential milestone payments. The transaction was completed on January 30, 2026.

Consolidated revenue decreased 1% in 2025 to $4.34 billion ¹² compared to $4.37 billion ¹³ in 2024. Core Illumina revenue was $4.34 billion ¹⁴ in 2025, relatively flat compared to $4.33 billion ¹⁵ in 2024. Consolidated gross margin was 66.1% ¹⁶ in 2025 compared to 65.4% ¹⁷ in 2024. Core Illumina gross margin was 66.1% ¹⁸ in 2025 compared to 67.1% ¹⁹ in 2024. Consolidated income from operations was $807 million ²⁰ in 2025 compared to a loss of $833 million ²¹ in 2024. Net income was $850 million ²² in 2025 compared to a net loss of $1.223 billion ²³ in 2024. Diluted EPS was $5.45 ²⁴ in 2025 compared to a loss per share of $7.69 ²⁵ in 2024. Cash, cash equivalents, and short-term investments totaled $1.633 billion ²⁶ as of December 28, 2025.

A key growth vector is the expansion of the multiomics consumables portfolio. In January 2025, the company launched Illumina Single Cell 3' RNA Prep, a simple, end-to-end single cell workflow. In September 2025, the company launched Illumina Protein Prep, a sequencing-based proteomics assay designed to deliver high-performance, scalable protein analysis. In October 2025, the company launched the Illumina 5-base solution, an end-to-end workflow that enables the simultaneous interrogation of genomic and epigenomic information. These are complemented by recently-announced roadmap innovations, including Constellation Mapped Reads and spatial solutions, which are anticipated to launch in 2026. The acquisition of SomaLogic, completed on January 30, 2026, is expected to enhance the company's presence in the expanding proteomics market and advance its multiomics strategy.

Another growth vector is the continued adoption of high-throughput sequencing platforms. Consumables revenue increased in 2025 primarily due to demand for high-throughput consumables as customers continue to transition to NovaSeq X. The company expects to continue making commercial investments in 2026 and beyond as it launches new products and expands its potential commercial base. The company also expects that sales to international customers will continue to be an important and growing source of revenue. Shipments to customers outside the United States totaled $2.100 billion ²⁷, or 48% ²⁸, of total consolidated revenue in 2025.

Core Illumina gross margin decreased to 66.1% ²⁹ in 2025 from 67.1% ³⁰ in 2024, primarily due to higher costs related to tariffs and a $23 million ³¹ intangible asset impairment, partially offset by lower strategic partnership revenue and a more favorable product mix towards consumables. The company expects gross margin to depend on many factors, including market conditions, sales mix, product mix, excess and obsolete inventories, royalties, cost structure, freight costs, tariffs, and product support obligations. In early 2025, the company implemented an incremental $100 million ³² cost reduction program for 2025, including optimizing stock-based compensation and non-labor spending and accelerating certain productivity measures, as well as workforce reductions.

The company expects to increase its manufacturing capability and capacity in 2026 to meet customer demand. To address increasing product complexity and volume, the company continues to automate manufacturing processes to accelerate throughput and improve quality and yield. The company's key manufacturing and distribution facilities operate under a quality management system certified to ISO 13485. The company's manufacturing facilities are located in San Diego and the San Francisco Bay Area in California; Madison, Wisconsin; Cambridge, United Kingdom; and Singapore.

Research and development expense in 2025 was $967 million ³³, and the company expects to continue to make investments in research and development during 2026 to support business growth and its innovation pipeline. Capital expenditures in 2025 were $148 million ³⁴, primarily for investments in facilities. As of December 28, 2025, authorizations to repurchase up to $643 million ³⁵ of outstanding common stock remained available under the share repurchase program. The company intends to continue to repurchase incremental shares over the course of 2026. The company has never paid cash dividends and has no present intention to pay cash dividends in the foreseeable future.

The company faces several headwinds that are expected to continue to impact sales and results of operations in 2026 and beyond. These include macroeconomic factors such as tariffs, inflation, exchange rate fluctuations, and concerns about an economic downturn; competitive challenges in the China region; sanctions imposed on Russia as a result of the armed conflict between Russia and Ukraine; and reductions in the U.S. government's funding of the NIH. In early 2025, regulatory authorities in China added Illumina to the List of Unreliable Entities, and on March 4, 2025, the company received a notice that it would no longer be permitted to export sequencing instruments into China. On November 5, 2025, such authorities decided that, effective November 10, 2025, Illumina would again be permitted to export sequencing instruments to Chinese companies, but such transactions remain subject to approval on a case-by-case basis. Revenue from the Greater China region was $243 million ³⁶ in 2025.

The company faces constraints from the current tariff environment. Beginning in April 2025, the U.S. government and several other countries enacted tariffs. Under the current tariff environment, the largest cost impact relates to importation from the company's manufacturing facility in Singapore. The company has taken and will continue to take several actions to fully mitigate the impact of these tariffs, and it partially mitigated the impact in 2025 through supply chain optimization, cost measures, and pricing actions. Based on the current tariff environment, the company's aim is to more fully mitigate the impact in 2026.

The company faces material risks from its inclusion on the List of Unreliable Entities by regulatory authorities in China, which resulted in a ban on exporting sequencing instruments into China from March to November 2025, with transactions now subject to case-by-case approval. Revenue from the Greater China region was $243 million ³⁷ in 2025. The company also faces significant risk from the current tariff environment, with the largest cost impact relating to importation from its manufacturing facility in Singapore. The company's success depends on the continued emergence and growth of markets for genetic analysis, and a reduction or delay in government funding, including from the NIH, could materially and adversely affect its business. The company faces intense and increasing competition, and a portion of its revenue is increasingly derived from a small number of large, centralized laboratory customers, increasing customer concentration risk. The company depends on third-party manufacturers and suppliers for some products, sub-assemblies, components, and materials, and any delay or interruption could prevent it from manufacturing or shipping products in a timely manner.

Management's message emphasizes a focus on innovation and operational excellence to achieve strategic goals of returning to revenue growth and improved margin performance by the end of 2027. Despite headwinds including tariffs, inflation, exchange rate fluctuations, competitive challenges in China, sanctions on Russia, and reductions in NIH funding, management highlights significant progress towards these goals in 2025, including achieving revenue growth and improving operating margins. Key strategic priorities emphasized include operational excellence initiatives to improve productivity and achieve cost savings, a disciplined capital allocation strategy including significant share repurchases, and the implementation of an incremental $100 million ³⁸ cost reduction program for 2025. Management expects to make further progress towards these strategic goals in 2026.