Illumina(ILMN) - 2026 Q3 - Quarterly Results

Financial Performance - Revenue for Q3 2025 was $1.084 billion, flat compared to Q3 2024[3] - GAAP operating margin for Q3 2025 was 21.0%, while non-GAAP operating margin was 24.5%[5] - GAAP diluted EPS for Q3 2025 was $0.98, and non-GAAP diluted EPS was $1.34[5] - Total revenue for the three months ended September 28, 2025, was $1,084 million, a slight increase from $1,080 million in the same period last year[19] - Product revenue increased to $927 million from $914 million year-over-year, while service and other revenue decreased to $157 million from $166 million[19] - Gross profit for the three months ended September 28, 2025, was $733 million, compared to $745 million in the prior year, reflecting a decrease of approximately 1.6%[19] - Net income for the three months ended September 28, 2025, was $150 million, down from $705 million in the prior year, representing a decline of approximately 78.7%[19] - The company reported a basic earnings per share of $0.98 for the three months ended September 28, 2025, down from $4.43 in the same period last year[19] - Non-GAAP net income for Q3 2025 was $206 million, up from $181 million in Q3 2024, representing a 13.8% increase[28] - For the nine months ended September 28, 2025, GAAP gross profit was $2,111 million, with a margin of 66.3%[34] - Non-GAAP gross profit for the nine months ended September 28, 2025, was $2,187 million, reflecting a margin of 68.7%[34] Cash Flow and Expenses - Cash flow provided by operations was $284 million, with free cash flow of $253 million for Q3 2025[4] - Free cash flow for the three months ended September 28, 2025, was $253 million, compared to $284 million in the same period last year, a decrease of about 10.9%[22] - Operating expenses for the three months ended September 28, 2025, totaled $506 million, significantly lower than $4 million in the same period last year, primarily due to a legal contingency settlement in 2024[19] - Research and development expenses for the three months ended September 28, 2025, were $229 million, down from $253 million in the same period last year, a decrease of approximately 9.5%[19] - SG&A expenses for Q3 2025 were $277 million, representing 25.5% of revenue, up from 22.2% in Q3 2024[31] Guidance and Expectations - The company expects total constant currency revenue decline for fiscal year 2025 in the range of (1.5%) to (0.5%), improved from prior guidance of (2.5%) to (1.5%)[5] - Non-GAAP diluted EPS guidance for fiscal year 2025 is now in the range of $4.65 to $4.75, up from $4.45 to $4.55[5] Legal and Tax Provisions - The GAAP tax provision for Q3 2025 was $77 million, reflecting a 31.8% increase compared to $70 million in Q3 2024[37] - Non-GAAP tax provision for YTD 2025 was $157 million, a 20.8% increase from $144 million in YTD 2024[37] - The company incurred $42 million in one-time valuation allowance adjustments against deferred tax assets in Q3 2025 due to new U.S. tax legislation[39] - The impact of GRAIL's pre-acquisition net operating losses on tax provisions is no longer applicable for 2025, as these losses were fully utilized in prior years[39] Strategic Initiatives - Launched a 5-base solution for simultaneous genomic and epigenomic insights[12] - Introduced Constellation mapped read technology to uncover hard-to-see genomic variants[12] - Expanded personalized cancer care efforts through new pharmaceutical development partnerships[12] - The company is in the process of acquiring SomaLogic, Inc., which may impact future results[13] Other Notable Information - The company had cash and cash equivalents of $1,050 million at the end of the period, up from $869 million at the end of the same period last year[22] - GAAP gross profit margin for Q3 2025 was 67.6%, slightly down from 68.9% in Q3 2024[31] - Non-GAAP gross profit margin for Q3 2025 was 69.2%, compared to 70.5% in Q3 2024[31] - R&D expenses for Q3 2025 were $229 million, accounting for 21.1% of revenue, down from 23.4% in Q3 2024[31] - The company reported a legal contingency and settlement expense of $488 million in Q3 2024, which significantly impacted GAAP results[31] - Legal expenses related to acquisitions and divestitures totaled $100 million for YTD 2024, primarily associated with GRAIL[35] - The consolidated results for YTD 2024 include GRAIL's results prior to its spin-off on June 24, 2024[35] - Non-GAAP gross profit is a key measure of manufacturing efficiency, with significant adjustments made for amortization and legal expenses totaling $100 million for YTD 2024 related to GRAIL[35] - Non-GAAP operating margin is utilized by the board to assess management performance, with adjustments for fair value totaling $304 million for YTD 2024[35]