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 January 30, 2026, we acquired SomaLogic, a proteomics company that provides high-throughput protein measurement technology and related data analysis services, and other specified assets from Standard BioTools. We believe our acquisition of SomaLogic will enhance our presence in the proteomics market and advance our multiomics strategy. We have included the financial results of SomaLogic in our condensed consolidated financial statements from the date of acquisition. Refer to note 2. Acquisitions, Intangible Assets and Goodwill for 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

In 2024, we outlined key strategic goals focused on a return to revenue growth and improved margin performance by the end of 2027. We continued to make progress toward these goals in YTD 2026. Revenue increased 7% to $2,251 million and operating margin increased to 20.2% in YTD 2026 as compared to 18.0% in YTD 2025.

Throughout 2025 and 2026, we experienced several headwinds, including macroeconomic factors such as tariffs, inflation, exchange rate fluctuations and concerns about an economic downturn, competitive challenges in our China region, inclusion on the unreliable entities list by regulatory authorities in China, impacts from armed conflicts between Russia and Ukraine and in the Middle East, including Iran, and reductions in the U.S. government’s funding of the NIH. Moreover, in 2026, we have experienced higher fuel, energy, and shipping costs related to the conflict and instability in the Middle East and higher costs associated with memory chips used in our products, both of which have negatively impacted gross margin in 2026. We expect these factors to continue to impact our sales and results of operations in 2026, and beyond, the magnitude and duration of which remains uncertain.

In April 2025, the U.S. government and several other countries enacted tariffs. Under the current 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 U.S. and importation into China. In February 2026, the U.S. Supreme Court held that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs. In March 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (CBP) to process refunds of IEEPA-related tariffs, and CBP has been implementing that process in phases. We have incurred significant costs under IEEPA-related tariffs since their implementation. While we intend to seek refunds, and have begun that process, the timing and amount of recoveries remain uncertain and will depend on the scope and timing of future phases, any further court or administrative developments, and completion of applicable administrative steps. We expect to recognize any recoveries, which to date have been immaterial, in our consolidated financial statements when realized (generally upon receipt). We have taken and will continue to take action to mitigate the impact of tariffs. We have partially mitigated the effects of tariffs through supply-chain optimization, cost measures, and pricing actions, and aim to continue such efforts in the future.

Financial highlights for YTD 2026 included the following:

•Revenue increased 7% in YTD 2026 to $2,251 million compared to $2,100 million in YTD 2025 primarily due to increases in consumables and instruments related to demand for our NovaSeq X instrument. Service and other revenue increased primarily due to revenue attributable to SomaLogic, which we acquired in January 2026.

•Gross margin was 66.2% in YTD 2026 compared to 65.6% in YTD 2025. The increase in gross margin was driven primarily by a $23 million intangible asset impairment recognized in Q2 2025. Excluding this impact, gross margin decreased primarily due to higher tariff costs, increased sales mix toward lower-margin instruments as compared to higher-margin consumables, the addition of lower-margin SomaLogic revenue, and higher memory chip and freight costs, partially offset by decreases for field service and warranty costs. 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 $454 million in YTD 2026 compared to $378 million in YTD 2025. The increase was due to an increase in gross profit of $113 million, offset by an increase in operating expense of $37 million. The increase in operating expense was primarily due to increases in legal expenses, costs related to our ERP upgrade, and employee-related compensation costs, partially offset by a decrease in restructuring charges of $36 million and an increase in benefits recognized from government incentives of $21 million.

•Our effective tax rate was 18.4% in YTD 2026 compared to 25.1% in YTD 2025. The variance from the U.S. federal statutory tax rate of 21% was primarily due to prior year tax return adjustments. The tax rate in YTD 2026 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 in Singapore.

•We ended Q2 2026 with cash, cash equivalents, and short-term investments totaling $1,168 million, of which approximately $435 million was held by our foreign subsidiaries.