Analyst Conference Summary

conference date: October 29, 2026 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2026 (third quarter, Q3 2026)

Forward-looking statements

Overview: Okay quarter, but give the high P/E of the stock, still prompted a serious selloff.

Basic data (GAAP):

Revenue was $1.13 billion, down 2% sequentially from $1.16 billion and up 4.2% from $1.08 billion in the year-earlier quarter.

Net income was $220 million, up 6% sequentially from $207 million, and up 47% from $150 million year-earlier.

Diluted EPS was $1.43, up 6% sequentially from $1.35, and up 46% from $0.98 year-earlier.

Guidance:

Slightly increase full year 2026 revenue guidance to between $4.64 and $4.66 billion. Non-GAAP EPS range $5.40 to $5.45.

Conference Highlights:

Jacob Thaysen, CEO, said "In the third quarter, healthy clinical demand and robust NovaSeq X placements drove results above our guidance. Based on continued momentum, we are raising our full year revenue and earnings guidance. As we continue to execute our strategy, our innovation is broadening the value of the Illumina ecosystem. Together with our customers, we are laying the foundation for AI to transform our understanding of human biology and improve patient outcomes." There was an impact from tariff refunds of about $40 million, which reduced revenue but increased earnings. Growth was driven by high-throughput instruments and consumables.

Overcoming limitations of AI in biology by creating a better, bigger data set. GSK has joined our Billion Cell Atlas group.

Sales in China were up to $59 million. Approvals are still required for instrument purchases.

Expects a return to growth in research and academic markets as funding returns.

In Q2 new whole genome workflow was launched. Lowers costs, runs on NovaSeq. Expanding multinomics platform. Proteonomics acquisitions are proving attractive to customers.

Product revenue was $946 million, services and other $183 million. $106 million of the product revenue was for sequencing instruments, $792 million was for consumables, up 6% y/y.

Illumina shipped >80 NovaSeq X instruments in Q3 2026. [NovaSeq X is the most powerful and expensive of its sequencers.] New high-volume applications are being built for NovaSeq X. Believes conversion to X is largely complete.

Non-GAAP numbers: net income $na million, up % sequentially from $na million, and up % from $na million year-earlier. Diluted EPS was $1.62, up 24% sequentially from $1.31, and up 21% from $1.34 year-earlier.

Cash, equivalents and investment balance was $1.34 billion, up sequentialy from $1.17 billion. $1.79 billion term debt. Cash flow from operations was $419 million. Free cash flow was $378 million. Capital expenditures were $41 million. Cash used to repurchase stock was $0 million.

GAAP cost of revenue was $299 million, leaving gross profit of $830 million. Operating expenses were $525 million, consisting of: $244 million for research and development; $281 million for selling, general, and administration. Leaving income from operations of $3-5 million. Other expense was $41 million. Income tax $44 million.

Q&A selective summary:

4Q growth, implies for next year? 14-15% growth in clinical. Last year Q4 growth rate was 11%, we are expecting 5-6% in this Q4.

Q4 RRP 2027 targets? Guidance will be in Q4 earnings call. The market environment is healthy, particularly the clinical segment. AI is just beginning, but there will be a substantial need for it. We believe consumables will continue to increase. X will continue to drive growth.

We don't believe there was any pull-forward on X sales. X is the platform to bet on for the future.

We see a big opportunity in predictive biology. This could revolutionize the understanding of biology and the healthcare industry. Including the proteome. We have the capability to be a very strong player in this market. Not concerned about current competition.

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