ILLUMINA, INC.

MANAGEMENT’S OVERVIEW AND OUTLOOK

This overview and outlook provide a high-level discussion of our operating results and significant known trends that affect our business. We believe an understanding of these trends is important to understanding our financial results for the periods being reported herein as well as our future financial performance. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere.

About Illumina

Our focus on innovation has established us as a global leader in DNA sequencing and array-based technologies, serving customers in the research, clinical and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture and other emerging segments. Our customers include leading genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies. Our comprehensive line of products addresses the scale of experimentation and breadth of functional analysis to advance disease research, drug development, and the development of molecular tests. This portfolio of leading-edge sequencing and array-based solutions addresses a range of genomic complexity and throughput, enabling researchers and clinical practitioners to select the best solution for their scientific challenge.

On June 24, 2024, we completed the Spin-Off of GRAIL into a new public company through the distribution of approximately 85.5% of the outstanding shares of common stock of GRAIL to Illumina stockholders on a pro rata basis. We retained 14.5% of the shares of GRAIL common stock immediately following the Spin-Off. The disposition of GRAIL did not meet the criteria to be reported as a discontinued operation and GRAIL’s results of operations and cash flows have not been reclassified. In connection with the Spin-Off, Illumina’s stockholders received one share of GRAIL common stock for every six shares of Illumina common stock held on the Record Date.

We have one reportable segment as of September 28, 2025. Prior to the GRAIL Spin-Off, our reportable segments included Core Illumina and GRAIL. See note 10. Segment Information for details on our segments.

On June 22, 2025, we entered into a Stock Purchase Agreement (the Purchase Agreement) with Standard BioTools to acquire SomaLogic and other specified assets for $350 million in cash, subject to customary adjustments. The Purchase Agreement further provides for, in connection with the revenues generated from certain products and services, (i) royalty streams and (ii) up to $75 million in potential milestone payments to Standard BioTools. We believe our acquisition of SomaLogic will enhance our presence in the expanding proteomics market and advance our multiomics strategy. The transaction is subject to customary closing conditions, including applicable regulatory approvals, and is expected to close in the first half of 2026. See note 2. Pending Acquisition for further details.

Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto within the Condensed Consolidated Financial Statements section of this report, and the other transactions, events, and trends discussed in Risk Factors within the Other Key Information section of this report.

Financial Overview

Macroeconomic factors such as tariffs, inflation, exchange rate fluctuations and concerns about an economic downturn, competitive challenges in our China region, the 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 have impacted both Illumina directly and our customers’ behavior. Some customers, specifically research customers, continue to manage inventory and capital more conservatively and some labs are delaying projects due to funding concerns. In Q1 2025, we were added to the unreliable entities list by regulatory authorities in China and received notice that we are not permitted to export sequencing instruments into China. See the risk factor “Regulatory Authorities in China have added Illumina to the List of Unreliable Entities” described in our Quarterly Report on Form 10-Q for the period ended March 30, 2025 for more information. We expect these factors to continue to impact our sales and results of operations for the remainder of 2025 and beyond, the size and duration of which is significantly uncertain.

We have made significant progress towards our strategic goals. During 2024 and 2025, we focused on our operational excellence initiatives to improve productivity and achieve cost savings, including expanding operating margins, and on our capital allocation strategy, including significant share repurchases. In Q1 2025, we implemented an incremental $100 million cost reduction program for 2025, including optimizing stock-based compensation and non-labor spending and accelerating certain productivity measures, as well as workforce reductions, to help mitigate the expected impact of a reduction in revenue and related operating income from our Greater China business and the uncertainty in the U.S. government’s funding of the NIH. We expect to continue to make further progress towards our strategic goals, including a focus on returning to revenue growth.

Beginning in April 2025, the U.S. government and several other countries enacted tariffs. Under the current tariff environment, the largest cost impact to us relates to importation from our manufacturing facility in Singapore. The remainder is a mix of importation of parts and sub-assemblies to our manufacturing operations in the United States and importation into China. We have and will continue to take several actions to fully mitigate the impact of these tariffs, expecting to partially mitigate the impact in 2025, through supply chain optimization, cost measures, and pricing actions. Based on the current tariff environment, our aim is to more fully mitigate the impact in 2026.

Financial highlights for YTD 2025 included the following:

•Revenue decreased 3% in YTD 2025 to $3,184 million compared to $3,268 million in YTD 2024 primarily due to a decrease in service and other revenue, driven by a decrease in GRAIL service and other revenue of $55 million as a result of the Spin-Off in Q2 2024, and a decrease in Core Illumina service and other revenue, primarily driven by decreased revenue from our strategic partnerships. The decrease was also driven by a decrease in instruments revenue, primarily due to fewer shipments of our high- and mid-throughput sequencing instruments, offset by an increase in consumables revenue.

•Gross margin was 66.3% in YTD 2025 compared to 65.3% in YTD 2024. The increase in gross margin was driven by the Spin-Off of GRAIL in Q2 2024. Core Illumina gross margin decreased in YTD 2025 primarily due to higher costs related to tariffs and a $23 million impairment of an intangible asset, partially offset by lower strategic partnership revenue, that is lower margin. Our gross margin depends on many factors, including: market conditions that may impact our pricing; sales mix changes among consumables, instruments, services, and strategic partnership revenue; product mix changes between established products and new products; excess and obsolete inventories; royalties; our cost structure for manufacturing operations relative to volume; freight costs; tariffs; and product support obligations.

•Income from operations was $606 million in YTD 2025 compared to loss from operations of $1,008 million in YTD 2024. The change was due to a decrease in operating expense of $1,636 million, offset by a decrease in gross profit of $22 million. The decrease in operating expense was primarily driven by a decrease in GRAIL operating expense of $2,267 million, primarily due to the $1,886 million goodwill and intangible impairment recognized in YTD 2024, partially offset by an increase in Core Illumina operating expense of $623 million. The increase in operating expense was primarily due to a gain of $474 million recognized in YTD 2024 for legal contingency and settlement, primarily related to the withdrawn European Commission fine and a lower net gain recognized on our contingent consideration liabilities, primarily related to the GRAIL CVRs, of $275 million. Excluding these impacts, Core Illumina operating expense decreased in YTD 2025, primarily due to a decrease in acquisition-related costs, which included $53 million in YTD 2024 related to the Spin-Off. We continue to focus on our operational excellence and cost reduction initiatives to accelerate growth and expand operating margins.

•Our effective tax rate was 27.2% in YTD 2025 compared to (3.2)% in YTD 2024. The variance from the U.S. federal statutory tax rate of 21% was primarily due to the implications of the U.S. tax legislation that was signed on July 4, 2025, which included changes to no longer require capitalization of U.S. based research and development expenses. While the changes from the recent U.S. tax legislation were favorable, based on the available evidence, the increased U.S. tax deductions resulted in a determination that it is more likely than not the future realization of deferred tax assets associated with certain U.S. foreign tax credits may not be achieved. Therefore, a valuation allowance of $42 million was recorded as a one-time adjustment in Q3 2025 against the deferred tax assets associated with certain U.S. foreign tax credits that were generated in prior years that were not previously utilized. This was partially offset by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore.

•We ended Q3 2025 with cash, cash equivalents, and short-term investments totaling $1,278 million, of which approximately $501 million was held by our foreign subsidiaries.