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 increase in Core Illumina consumables revenue in Q3 2025 and YTD 2025 was primarily due to demand for high-throughput consumables as customers continue to transition to NovaSeq X. Instruments revenue increased in Q3 2025 primarily driven by an increase in MiSeq i100 Series shipments, which launched in Q4 2024. The decrease in instruments revenue in YTD 2025 was primarily 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, partially offset by an increase in MiSeq i100 Series shipments. Core Illumina service and other revenue decreased in Q3 2025 and YTD 2025 primarily due to decreased revenue from our strategic partnerships. Total revenue in Q3 2025 and YTD 2025 was impacted, across all products and services, by decreases in revenue in our Greater China region of $23 million and $41 million, respectively, primarily due to our inclusion on the unreliable entities list.

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

Gross Margin

*Not meaningful.

Core Illumina gross margin decreased in Q3 2025 and YTD 2025 primarily due to higher tariff costs, partially offset by lower strategic partnership revenue, that is lower margin. The decrease in Q3 2025 was also due to an increase in inventory reserves. The decrease in YTD 2025 was also due to a $23 million intangible asset impairment.

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

Operating Expense

Core Illumina R&D expense decreased by $24 million, or 9%, in Q3 2025 and by $4 million, or 1%, in YTD 2025 primarily due to decreases in employee-related compensation costs, including share-based compensation expense related to our optimization efforts, and a decrease in outside professional services, partially offset by increases in lab supply costs and, in YTD 2025, an increase in restructuring charges of $13 million.

Core Illumina SG&A expense increased by $38 million, or 16%, in Q3 2025 primarily due to an unfavorable impact of $52 million from the remeasurement of our contingent consideration liabilities, primarily related to the GRAIL CVRs (recognized a loss of $3 million and a gain of $49 million in Q3 2025 and Q3 2024, respectively). Excluding the impact from our contingent consideration liabilities, SG&A expense decreased in Q3 2025 primarily due to decreases in employee-related compensation costs, including share-based compensation expense related to our optimization efforts, and acquisition-related costs from our acquisition of Fluent Biosciences in Q3 2024.

Core Illumina SG&A expense increased by $156 million, or 25%, in YTD 2025 primarily due to a lower net gain recognized on our contingent consideration liabilities, primarily related to the GRAIL CVRs, of $275 million (recognized gains of $29 million and $304 million in YTD 2025 and YTD 2024, respectively). Excluding the impact from our contingent consideration liabilities, SG&A expense decreased in YTD 2025 primarily due to a decrease in acquisition-related costs, which included $53 million of expenses incurred in YTD 2024 related to the Spin-Off of GRAIL, a decrease in restructuring charges of $20 million, primarily due to lease and other asset impairments recognized in Q1 2024 on two properties, decreases in employee-related compensation costs, including share-based compensation expense related to our optimization efforts, and a decrease in outside professional services.

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

GRAIL goodwill and intangible impairment for YTD 2024 consisted of goodwill impairment of $1,466 million and an 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.

Core Illumina legal contingency and settlement in Q3 2024 and YTD 2024 primarily consisted of a gain of $489 million resulting from the reversal of the EC fine accrual, and related accrued interest, following the European Commission’s decision to withdraw its previously imposed fine.

Other Income (Expense)

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

Interest income consisted primarily of interest on our money market funds. Interest expense consisted primarily of interest on our outstanding term debt. The decrease in interest expense in Q3 2025 was primarily due to the repayment of our delayed draw term loan in Q3 2024, which accrued interest at a higher rate and for which we recognized a loss on extinguishment of $5 million upon repayment. Other income (expense), net increased in Q3 2025 primarily due to net gains recognized on our strategic investments in Q3 2025 compared to net losses in Q3 2024, partially offset by an unfavorable impact related to foreign currency activity as compared to Q3 2024. The fluctuation in other income (expense), net in YTD 2025 was primarily due to net gains recognized on our investments in YTD 2025 compared to net losses recognized in YTD 2024, partially offset by a $15 million gain on our Helix contingent value right in YTD 2024. In YTD 2024, we recognized a loss on our retained investment in GRAIL, subsequent to the Spin-Off, of $332 million.

Provision for Income Taxes

Our effective tax rate was 31.8% and 27.2% in Q3 2025 and YTD 2025, respectively, compared to 2.1% and (3.2)% in Q3 2024 and YTD 2024, respectively. The variance from the U.S. federal statutory tax rate of 21% for Q3 2025 and YTD 2025 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. The tax rate in Q3 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 Q3 2024, the variance from the U.S. federal statutory tax rate of 21% was primarily due to the $25 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 $10 million income tax expense impact of capitalizing research and development expenses for tax purposes. The variance from the U.S. federal statutory tax rate of 21% in YTD 2024 was primarily due to the $308 million income tax expense impact from the impairment of goodwill, which is nondeductible for tax purposes, $141 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, and the $53 million income tax expense impact of capitalizing research and development expenses for tax purposes. The income tax rate in Q3 2024 and YTD 2024 was favorably impacted by the reversal of the European Commission fine related to the GRAIL acquisition, which is excluded from taxable income, and by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore.

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.