Illumina, Inc.
ILMN · Nasdaq
Next quarter
Reports Oct 29, 2026.
Consensus is $1.38 EPS for Sep 2026 across 6 estimates, ranging $1.35 to $1.49.
ILMN Jun 2026
- 6.50%
- +0.00%
- $1.23
- $1.31
- —
- $1.16B
Reported results
- $1.16B
- 66.44%
- $245.00M
- 21.14%
- $207.00M
- $1.35
Highlights
- Revenue: Q2 FY2026 revenue was $1.159 billion, up 9.5% year over year and 8.1% on a rest-of-world organic basis, with growth led by NovaSeq X-related demand.
- Earnings beat: Non-GAAP diluted EPS was $1.31, ahead of the $1.23 consensus by 6.5%; GAAP diluted EPS was $1.35 versus $1.49 a year ago.
- Guidance raised: FY2026 revenue guidance increased to $4.60-$4.64 billion from $4.52-$4.62 billion, while non-GAAP EPS guidance rose to $5.30-$5.40 from $5.15-$5.30.
- Sequencing momentum: Consumables revenue rose 5% to $852 million and instruments revenue increased 29% to $130 million, driven by high-throughput consumables, NovaSeq X and MiSeq i100 shipments.
- Profitability: GAAP operating income increased 14.5% year over year to $245 million and GAAP operating margin improved to 21.1% from 20.2%, although non-GAAP operating margin declined to 22.5% from 23.8%.
- Mix and costs: Non-GAAP gross margin fell to 68.2% from 69.4% as lower-margin instrument and SomaLogic revenue, higher memory and freight costs outweighed operating improvements.
- SomaLogic: The January acquisition added to service and other revenue and advanced Illumina’s multiomics strategy, but contributed lower-margin revenue; the $460 million purchase included $382 million of cash consideration.
- Cash deployment: Operating cash flow was $201 million and free cash flow was $162 million, down from $234 million and $204 million respectively, while Q2 share repurchases totaled $123 million.
Analysis
Illumina’s second quarter was a growth and guidance-reset quarter. Revenue of $1.159 billion rose 9.5% from $1.059 billion a year ago and increased 6.4% sequentially from $1.09 billion in Q1. Non-GAAP diluted EPS of $1.31 exceeded the $1.23 consensus by 6.5%, while GAAP EPS was $1.35. GAAP operating income reached $245 million, up from $214 million a year ago and $209 million in the prior quarter, but net income fell 12% year over year to $207 million because the prior-year period benefited from substantially higher investment gains; sequentially, net income increased from $134 million.
The core print was driven by continued sequencing demand, particularly for the NovaSeq X installed base. Consumables increased 5% to $852 million, instruments rose 29% to $130 million, and service and other revenue grew 20% to $177 million, helped by SomaLogic. The headline GAAP margin improvement masks underlying pressure: non-GAAP gross margin declined 120 basis points to 68.2% and non-GAAP operating margin fell 130 basis points to 22.5% due to mix, memory and freight costs and lower-margin acquired revenue. Management nevertheless raised FY2026 revenue guidance to $4.60-$4.64 billion and non-GAAP EPS guidance to $5.30-$5.40, with ROW organic growth now expected above 5%.
Sequencing demand
- High-throughput consumables: Consumables revenue rose 5% year over year to $852 million, primarily reflecting greater demand supported by the growing NovaSeq X installed base; mid-throughput consumables declined.
- Instrument shipments: Instrument revenue increased 29% to $130 million, driven mainly by higher NovaSeq X and MiSeq i100 shipments.
- Geographic growth: U.S. and Canada revenue increased to $653 million from $569 million, while EMEA and Latin America revenue rose to $368 million from $355 million. Greater China revenue declined to $56 million from $63 million, with the company attributing the $7 million reduction to its inclusion on China’s Unreliable Entities List.
- Underlying growth: Total revenue growth was 9.5%; after removing acquisition and currency effects, organic growth was 6.5%, or 8.1% excluding China.
Margins and earnings
The quarter delivered operating leverage on a GAAP basis but not on the company’s preferred non-GAAP basis. GAAP gross margin increased to 66.4% from 65.6%, partly because Q2 2025 included a $23 million intangible impairment charge. Excluding that comparison effect, management said gross margin was pressured by a greater instrument mix, higher memory and freight costs, and the addition of lower-margin SomaLogic revenue, partly offset by lower tariff costs and operating initiatives.
GAAP operating income rose 14.5% to $245 million, taking operating margin to 21.1% from 20.2%. Non-GAAP operating profit was $260 million, up from $252 million, but non-GAAP margin declined to 22.5% from 23.8%. Net income fell to $207 million from $235 million as other income declined to $15 million from $92 million, largely reflecting a smaller gain on the retained GRAIL investment. The effective tax rate improved to 20.5% from 23.4%.
Raised 2026 outlook
- Revenue: FY2026 guidance is now $4.60-$4.64 billion, compared with the prior range of $4.52-$4.62 billion.
- Organic growth: ROW organic revenue growth is expected to exceed 5%, raised from the previous 2%-4% range.
- Earnings: Non-GAAP diluted EPS guidance increased to $5.30-$5.40 from $5.15-$5.30.
- Margins: Non-GAAP operating margin guidance was unchanged at 23.4%-23.6%, indicating that the higher outlook is primarily a revenue and earnings-level improvement rather than a margin expansion reset.
SomaLogic integration
The January 30 acquisition of SomaLogic broadened Illumina’s platform toward proteomics and multiomics. The transaction had a total purchase price of $460 million, comprising $382 million of cash, $81 million of contingent consideration and a $3 million reduction for settlement of a preexisting relationship. SomaLogic contributed to the 20% increase in service and other revenue, which reached $177 million, but its lower-margin revenue diluted gross margin. Illumina recorded $186 million of acquired intangible assets and $171 million of goodwill. It paid a $25 million performance milestone during the quarter and subsequently paid $30 million on July 27 to buy out the remaining SomaLogic contingent consideration obligations outstanding at quarter-end.
Cash and capital allocation
- Cash generation: Operating cash flow was $201 million versus $234 million a year ago, and free cash flow was $162 million versus $204 million. Capital expenditures were $39 million.
- Liquidity: Cash, cash equivalents and short-term investments totaled $1.17 billion at quarter-end, including $1.04 billion of cash and cash equivalents; total term debt had a carrying value of $1.99 billion.
- Buybacks: Illumina repurchased 942,000 shares for $123 million in Q2. It had $279 million remaining under the 2024 authorization and $1.5 billion available under the additional 2026 authorization.
- External pressures: Management continues to cite tariffs, higher memory and freight costs, reduced NIH funding, China restrictions and geopolitical uncertainty as risks to demand and margins. The filing also notes that a California securities class action related to the GRAIL acquisition was certified in May 2026, with Illumina seeking appellate review.
