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 6% to $3,380 million and operating margin increased to 22.5% in YTD 2026 as compared to 19.0% 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 and 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.

We recognize recoveries of IEEPA tariffs when the refund is probable in accordance with loss recovery guidance. During YTD 2026, we recognized a benefit of $79 million as a reduction to cost of revenue for expected tariff recoveries. As of September 27, 2026, we had received $32 million in IEEPA tariff refunds and recorded a receivable of $47 million in prepaid expenses and other current assets. We expect to refund a portion of the tariff refunds received to customers. As of September 27, 2026, we recorded a liability of $37 million in accrued liabilities for estimated refunds to be credited to customers and recognized a corresponding reduction to revenue in YTD 2026.

Financial highlights for YTD 2026 included the following:

•Revenue increased 6% in YTD 2026 to $3,380 million compared to $3,184 million in YTD 2025 primarily due to increases in consumables and instruments revenue related to demand for our NovaSeq X instrument. Service and other revenue increased primarily due to revenue attributable to SomaLogic. In Q3 2026, we recognized a reduction to revenue of $37 million for IEEPA tariff refunds we expect to refund to customers.

•Gross margin was 68.7% in YTD 2026 compared to 66.3% in YTD 2025. The increase in gross margin was primarily due to a net benefit of $42 million recognized in Q3 2026 for IEEPA tariff refunds and the related refunds to customers and a $23 million intangible asset impairment recognized in Q2 2025. Excluding these impacts, gross margin decreased primarily due to an increased sales mix shift toward lower-margin products, including lower-margin SomaLogic revenue, and higher freight 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 $759 million in YTD 2026 compared to $606 million in YTD 2025. The increase was due to an increase in gross profit of $210 million, offset by an increase in operating expense of $57 million. The increase in operating expense was primarily due to increases in employee-related compensation and legal expenses, partially offset by a decrease in restructuring charges of $38 million, an increase in government incentive benefits of $29 million and a higher net gain recognized on contingent consideration liabilities.

•Our effective tax rate was 17.6% in YTD 2026 compared to 27.2% 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 Q3 2026 with cash, cash equivalents, and short-term investments totaling $1,337 million, of which approximately $474 million was held by our foreign subsidiaries.