ILLUMINA, INC.

RESULTS OF OPERATIONS

To enhance comparability, the following table sets forth unaudited condensed consolidated statement of operations data for the specified reporting periods, stated as a percentage of total revenue.(1)

(1)Percentages may not recalculate due to rounding.

Revenue

The slight decrease in Core Illumina consumables revenue in Q2 2025 and YTD 2025 was primarily due to a decrease in microarray consumables, partially offset by an increase in sequencing consumables, which was driven by strength in high-throughput consumables as customers continue to transition to NovaSeq X. Instruments revenue decreased in Q2 2025 and YTD 2025 primarily due to a decrease in sequencing instruments revenue of $20 million and $22 million, respectively, due to fewer shipments of our high- and mid-throughput instruments, as capital and cash flow constraints continue to impact our customer’s purchasing behavior. The decrease was partially offset by an increase in MiSeq i100 Series shipments, which launched in Q4 2024. Core Illumina service and other revenue decreased in Q2 2025 and YTD 2025 primarily due to decreased revenue from our strategic partnerships.

The decrease in GRAIL revenue in Q2 2025 and YTD 2025 was due to the Spin-Off in Q2 2024.

Gross Margin

*Not meaningful.

Core Illumina gross margin decreased in Q2 2025 and YTD 2025 primarily due to a $23 million intangible asset impairment, higher freight and duties costs related to tariffs, and an increase in field service costs, partially offset by lower strategic partnership revenue, that is lower margin, and a more favorable product mix towards consumables.

The decrease in GRAIL gross loss in Q2 2025 and YTD 2025 was due to the Spin-Off in Q2 2024.

Operating Expense

Core Illumina R&D expense increased by $6 million, or 2%, in Q2 2025 and by $20 million, or 4%, in YTD 2025 primarily due to increases in restructuring charges of $4 million and $13 million, respectively, and increases in employee related compensation costs and lab supply costs. The increase was partially offset by decreases in share-based compensation expense related to our optimization efforts and decreases in outside professional services.

Core Illumina SG&A expense increased by $174 million, or 290%, in Q2 2025 primarily due to a lower net gain recognized on our contingent consideration liabilities, primarily related to the GRAIL CVRs, of $250 million (recognized gains of $21 million and $271 million in Q2 2025 and Q2 2024, respectively). Excluding the impact from our contingent consideration liabilities, SG&A expense decreased in Q2 2025 primarily due to a decrease in acquisition-related costs, which included $37 million of expenses incurred in Q2 2024 directly related to the Spin-Off of GRAIL, a decrease in share-based compensation expense related to our optimization efforts, a decrease in outside professional services, a decrease in accrued interest on the fine previously imposed by the European Commission of $7 million, and a decrease in employee related compensation costs.

Core Illumina SG&A expense increased by $105 million, or 27%, in YTD 2025 primarily due to a lower net gain recognized on our contingent consideration liabilities, primarily related to the GRAIL CVRs, of $223 million (recognized gains of $32 million and $255 million in YTD 2025 and YTD 2024, respectively). Excluding the impact from our contingent consideration liabilities, SG&A expense decreased in Q2 2025 primarily due to a decrease in acquisition-related costs, which included $52 million of expenses incurred in YTD 2024 directly related to the Spin-Off of GRAIL, a decrease in restructuring charges of $16 million, primarily due to the lease and other asset impairments recognized in Q1 2024 on two of our properties, a decrease in accrued interest on the fine previously imposed by the European Commission of $14 million, and decreases in outside professional services, employee related compensation costs, and share-based compensation expense related to our optimization efforts.

The decrease in GRAIL R&D and SG&A expense in Q2 2025 and YTD 2025 was due to the Spin-Off in Q2 2024.

GRAIL goodwill and intangible impairment for Q2 2024 and YTD 2024 consisted of goodwill impairment of $1,466 million and IPR&D intangible asset impairment of $420 million as a result of performing impairment tests. Core Illumina goodwill and intangible impairment for YTD 2024 consisted of an IPR&D intangible asset impairment.

Other Income (Expense)

(1)Total other income (expense), net in Q2 2024 and YTD 2024 primarily relates to Core Illumina segment.

Interest income in Q2 2025 and YTD 2025 was relatively flat and consisted primarily of interest on our money market funds. Interest expense consisted primarily of interest on our outstanding term debt and increased in Q2 2025 and YTD 2025 due to the issuance of our 2026 Term Notes in Q3 2024. The fluctuation in other income (expense), net in Q2 2025 and YTD 2025 was primarily due to net gains recognized on our strategic investments, primarily on marketable equity securities, in Q2 2025 and YTD 2025 compared to net losses recognized in Q2 2024 and YTD 2024. We recognized gains of $101 million and $133 million in Q2 2025 and YTD 2025, respectively and losses of $335 million and $330 million in Q2 2024 and YTD 2024, respectively. The significant losses recognized in Q2 2024 and YTD 2024 primarily related to our retained investment in GRAIL subsequent to the Spin-Off.

Provision for Income Taxes

Our effective tax rate was 23.4% and 25.1% in Q2 2025 and YTD 2025, respectively, compared to (0.6)% and (1.4)% in Q2 2024 and YTD 2024, respectively. The variance from the U.S. federal statutory tax rate of 21% for Q2 2025 and YTD 2025 was primarily due to the $10 million and $20 million income tax expense impact of capitalizing research and development expense for tax purposes, respectively. The tax rate in Q2 2025 and YTD 2025 was favorably impacted by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as Singapore.

In Q2 2024 and YTD 2024, the variance from the U.S. federal statutory tax rate of 21% was primarily due to the $308 million income tax expense impact from the impairment of goodwill, which is nondeductible for tax purposes, the $99 million and $116 million income tax expense impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits, and the Pillar Two global minimum top-up tax, respectively, and the $41 million and $63 million income tax expense impact of capitalizing research and development expenses for tax purposes, respectively. The income tax expense in Q2 2024 and YTD 2024 was also favorably impacted by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as Singapore.

We continue to review and analyze the impact of the recent U.S. tax legislation that was signed on July 4, 2025. As a result of the changes to U.S. based research and development expenses no longer being required to be capitalized, along with other aspects of the legislation, we anticipate our effective tax rate to decrease starting in Q3 2025. Our future effective tax rate may vary from the U.S. federal statutory tax rate due to the mix of earnings in tax jurisdictions with different statutory tax rates and the other factors discussed in the risk factor “We are subject to risks related to taxation in multiple jurisdictions” described in “Risk Factors” within the Business & Market Information section of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.