AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 2/6 · 31/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · 2/4 · Patent coverage and licensed technology rights provide concrete potential barriers, while an integrated portfolio supports commercial relevance. Experienced pricing pressure and longer competitive sales cycles demonstrate limits to exclusion. The passages establish protected assets, but do not establish their incremental competitive value or a durable cost advantage.
durability · 1/4 · Patent terms extend to 2049, but also begin expiring in 2025, and the commercially decisive patents are unidentified. Experienced competitive pressure and alternative technologies serving less-suited applications make durable protection fragile. A long outer patent-expiration date does not establish a similarly long economic moat.
customer dependency · — · Researchers use Illumina products across multiple applications, and the company reports firm remaining obligations. Neither establishes the cost of changing platforms, required workflow revalidation, exclusivity or customer reliance on proprietary consumables. Customer dependency cannot be established from product breadth and backlog alone.
erosion resilience · 2/4 · Q2 2026 organic revenue grew 6.5%, and year-to-date organic revenue grew 3.9%, including China. This demonstrates continued demand despite disclosed competitive pressure. However, adjusted quarterly margins declined, and the passages do not separate price, volume or mix sufficiently to establish strong resistance to competitive erosion.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 1/4 · Illumina explicitly reports having faced increased competitive pricing pressure and experienced longer sales cycles. This supports weak pricing power even without a quantified net price decline. Revenue growth and margins do not isolate realized pricing, and the supplied passages provide no offsetting quantified price achievement.
retention · — · The CEO reports high NovaSeq X demand, and remaining obligations provide evidence of contracted future business. These do not distinguish new customers from repeat customers or demonstrate renewals, engagement trends or switching friction. The current catalog therefore cannot establish retention, including through indirect repeat-demand evidence.
margin resilience · 2/4 · Year-to-date GAAP operating margin increased to approximately 20.2% from 18.0%, calculated from reported revenue and operating income. Q2 GAAP margins also improved, but non-GAAP gross margin fell from 69.4% to 68.2% and operating margin from 23.8% to 22.5%. Resilience is mixed and does not isolate pricing effects.
contractual freedom · 2/4 · The historical accounting disclosure explicitly identifies management-set prices for offerings lacking sufficient sales history. Most current performance obligations are fulfilled within approximately six months, limiting typical commitment duration. This supports some pricing discretion, but development-contract termination rights and absent repricing provisions prevent a strong assessment of freedom over existing contracts.
Predictability75
5 consecutive published annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 25.00
- Revenue growth volatility (pp)
- 1.55
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 7.02
- observedAnnualPeriods
- 5.00
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 63.55
- currentRatioGrade
- 100.00
- Interest coverage (x)
- 7.99
- Current ratio (x)
- 2.08
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -1.33
- 3-year average SBC / revenue (%)
- 7.74
- cashConversionGrade
- 0.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Operating cash generation increased to $1,079 million in 2025. In YTD 2026, $490 million of operating cash was nearly absorbed by $488 million of investing outflows, while financing outflows contributed to a $378 million cash decrease. Historical substantial impairments temper discipline; the passages do not establish returns on recent investments.
incentive alignment · 3/4 · Actual executive equity forfeiture and bonus repayment, disclosed ownership-policy compliance, a CEO holding period and approximately 70% PSU grant value support strong alignment. Unvested RSUs count toward ownership compliance, and compensation uses adjusted financial metrics. The supplied passages do not establish the PSU performance conditions or exceptional long-term incentive outcomes.
execution · 2/4 · Positive Q2 and year-to-date organic growth and higher GAAP operating income demonstrate delivery through indirect operating evidence. Declining Q2 adjusted margins and substantial historical impairments temper the assessment. Acquisition and currency effects are separated from organic growth; historical setbacks are not attributed solely to the current leadership team.
governance · 2/4 · Independent standing committees, actual independent executive sessions and completed annual director elections provide concrete oversight and accountability mechanisms. Historical impairments temper confidence in oversight outcomes, without establishing misconduct or assigning responsibility to the current board. These disclosures support a mixed assessment rather than exceptional demonstrated governance effectiveness.
Evidence
Our issued and pending patents cover various aspects of our arrays, assays, oligo synthesis, sequencing technology, instruments, digital microfluidics, software, bioinformatics, and chemical-detection technologies, and our issued patents have terms that expire between 2025 and 2049.
2024 Form 10-K, filed 2025-02-12, Intellectual Property: patent scope and expiration range · Filed 12/02/2025
We are party to various exclusive and nonexclusive license agreements and other arrangements with third parties that grant us rights to use key aspects of our sequencing and array technologies, assay methods, chemical detection methods, reagent kits, and scanning equipment.
2025 Form 10-K, filed 2026-02-12, Intellectual Property: exclusive and nonexclusive technology licenses · Filed 12/02/2026
6
Illumina, Inc.
Results of Operations - Non-GAAP
(unaudited)
TABLE 1: RECONCILIATION OF REVENUE GROWTH:
Three Months Ended
Six Months Ended
June 28,
2026
June 28,
2026
Revenue growth
9.5
%
7.2
%
Impact of acquisitions
(2.1)
%
(1.9)
%
Impact of currency exchange rates
(0.9)
%
(1.4)
%
Organic revenue growth (non-GAAP) (a)
6.5
%
3.9
%
Impact of China
1.6
%
1.9
%
ROW organic revenue growth (non-GAAP) (a)
8.1
%
5.8
%
TABLE 2: RECONCILIATION OF GAAP AND NON-GAAP DILUTED EARNINGS PER SHARE:
Three Months Ended
Six Months Ended
June 28,
2026
June 29,
2025
June 28,
2026
June 29,
Q2 2026 earnings release, filed 2026-07-30, Table 1: reported, organic and ROW organic revenue growth · Filed 30/07/2026
(a)Organic revenue growth adjusts for the impact from acquisitions and currency movements, which is calculated using comparative prior period foreign exchange rates to translate current period revenue, net of the effects of hedges; Rest of World (ROW) organic revenue growth also adjusts for the impact from our China region.
Q2 2026 earnings release, filed 2026-07-30, Table 1 footnote: organic and ROW organic growth definitions · Filed 30/07/2026
We have faced, and expect to continue to face, increased pricing pressure from competitors who offer sequencing products and we have experienced lengthened sales cycles with many customers due to competition.
2025 Form 10-K, filed 2026-02-12, competition risk: experienced pricing pressure and longer sales cycles · Filed 12/02/2026
For example, complementary third-party sequencing technologies address use cases to which our products are not as well suited.
2025 Form 10-K, filed 2026-02-12, competition risk: complementary technologies and application limitations · Filed 12/02/2026
We have additional nonexclusive license agreements with various third parties for other components of our products.
2025 Form 10-K, filed 2026-02-12, Intellectual Property: additional nonexclusive component licenses · Filed 12/02/2026
Our portfolio of integrated sequencing and microarray systems, consumables, and analysis tools is designed to accelerate and simplify genetic analysis and addresses the range of genomic complexity, price points, and throughput, enabling customers to select the best solution for their research or clinical application.
2025 Form 10-K, filed 2026-02-12, Business Overview: integrated product portfolio · Filed 12/02/2026
Researchers at these institutions use our products and services for basic and translational research across a spectrum of scientific applications, including targeted, exome, and whole-genome sequencing; genetic variation; gene expression; epigenetics; and metagenomics.
2025 Form 10-K, filed 2026-02-12, Research and Applied: disclosed customer applications · Filed 12/02/2026
Most performance obligations are generally satisfied within approximately six months after the contract execution date and primarily consist of instruments, consumables, and instrument service contracts.
Q2 2026 Form 10-Q, filed 2026-07-31, Revenue: typical performance-obligation duration and scope · Filed 31/07/2026
As of June 28, 2026, the aggregate amount of the transaction price allocated to these remaining performance obligations was $1.0 billion, of which approximately 83% is expected to be converted to revenue in the next twelve months, approximately 11% in the following twelve months, and the remainder thereafter.
Q2 2026 Form 10-Q, filed 2026-07-31, Revenue: remaining performance obligations as of June 28, 2026 · Filed 31/07/2026
“Demand for NovaSeq X remains high as we expand our workflow and multiomics capabilities, broadening the value of Illumina’s ecosystem.”
Q2 2026 earnings release, filed 2026-07-30, CEO statement about NovaSeq X demand · Filed 30/07/2026
•Non-GAAP diluted EPS of $5.30-$5.40, versus prior guidance of $5.15-$5.30
Second quarter results
GAAP
Non-GAAP (a)
Dollars in millions, except per share amounts
Q2 2026
Q2 2025
Q2 2026
Q2 2025
Revenue
$
1,159
$
1,059
$
1,159
$
1,059
Gross margin
66.4
%
65.6
%
68.2
%
69.4
%
Operating profit
$
245
$
214
$
260
$
252
Operating margin
21.1
%
20.2
%
22.5
%
23.8
%
Diluted EPS
$
1.35
$
1.49
$
1.31
$
1.19
(a)See tables in “Results of Operations - Non-GAAP” section below for GAAP and non-GAAP reconciliations.
Q2 2026 earnings release, filed 2026-07-30, quarterly GAAP and non-GAAP results comparison · Filed 30/07/2026
The following table presents selected financial information with respect to segment profit for the periods presented:
In millions
Q2 2026
Q2 2025
YTD 2026
YTD 2025
Revenue
$
1,159
$
1,059
$
2,251
$
2,100
Less:
Cost of revenue
389
364
760
722
Research and development
252
247
492
499
Selling and marketing
164
146
322
311
General and administrative
109
88
223
190
Income from operations
245
214
454
378
Other income (expense), net
15
92
(37)
110
Provision for income taxes
53
71
77
122
Net income
$
207
$
235
$
340
$
366
29
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Our Management’s Discussion and Analysis (MD&A) is designed to help readers understand our results of operations, financial condition, and cash flow.
Q2 2026 Form 10-Q, filed 2026-07-31, Segment Information: quarterly and year-to-date operating results · Filed 31/07/2026
If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by management, adjusted for applicable discounts.
2023 Form 10-K, filed 2024-02-16, revenue recognition: management-set prices for offerings without sufficient sales history · Filed 16/02/2024
These contracts are believed to be firm as of the balance sheet date; however, these arrangements do allow for early termination with prorated fees.
Q2 2026 Form 10-Q, filed 2026-07-31, Revenue: development and licensing contract termination terms · Filed 31/07/2026
Cash Flow Summary
In millions
2025
2024
2023
Net cash provided by operating activities
$
1,079
$
837
$
478
Net cash used in investing activities
(55)
(178)
(231)
Net cash used in financing activities
(744)
(570)
(1,210)
Effect of exchange rate changes on cash and cash equivalents
11
(10)
—
Net increase (decrease) in cash and cash equivalents
$
291
$
79
$
(963)
41
Operating Activities
Net cash provided by operating activities in 2025 consisted of net income of $850 million, plus net adjustments of $382 million, less net changes in operating assets and liabilities of $153 million.
2025 Form 10-K, filed 2026-02-12, Liquidity and Capital Resources: annual cash flow summary · Filed 12/02/2026
Cash Flow Summary
In millions
YTD 2026
YTD 2025
Net cash provided by operating activities
$
490
$
474
Net cash used in investing activities
(488)
(112)
Net cash used in financing activities
(380)
(566)
Effect of exchange rate changes on cash and cash equivalents
—
11
Net decrease in cash and cash equivalents
$
(378)
$
(193)
Operating Activities
Net cash provided by operating activities of $490 million in YTD 2026 consisted of net income of $340 million, plus net adjustments of $278 million, less net changes in operating assets and liabilities of $128 million.
Q2 2026 Form 10-Q, filed 2026-07-31, Liquidity and Capital Resources: year-to-date cash flows · Filed 31/07/2026
The primary adjustments to net loss included goodwill and intangible impairment of $1,889 million, share-based compensation expense of $370 million, depreciation and amortization expense of $354 million, net loss on strategic investments of $312 million, and property and equipment and right-of-use asset impairment of $46 million, offset by change in fair value of contingent consideration liabilities of $315 million and deferred income taxes of $112 million.
2024 Form 10-K, filed 2025-02-12, Operating Activities: impairment and other adjustments to net loss · Filed 12/02/2025
Performance Stock Units represent approximately 70% of the overall grant value.
2026 proxy statement, filed 2026-04-09, fiscal 2025 long-term equity compensation: PSU proportion · Filed 09/04/2026
Cunningham’s unvested equity was forfeited, he was ineligible to receive a 2025 VCP payment, and the sign-on bonus he was paid in 2025 was repaid to the Company pursuant to his offer letter.
2026 proxy statement, filed 2026-04-09, Executive Transitions: actual equity forfeiture, incentive ineligibility and bonus repayment · Filed 09/04/2026
Each individual subject to the guidelines is required to own and hold shares of our common stock or certain of its equivalents having an aggregate value at least equal to:
Title
Requirement
Non-Employee Director
5x annual retainer
Chief Executive Officer
6x base salary
Senior Vice President
2x base salary
Section 16 Officer, if not covered above
1x base salary
Each individual subject to our stock ownership guidelines is required to achieve compliance with the applicable ownership levels set forth above within 5 years from the date such individual director or officer first became subject to the guidelines, either as a result of being hired or promoted.
2026 proxy statement, filed 2026-04-09, Director and Officer Stock Ownership Policy: ownership requirements and compliance period · Filed 09/04/2026
For purposes of assessing compliance with our stock ownership guidelines, unvested RSUs are counted as owned shares of common stock; however, unvested PSUs and stock options are not.
2026 proxy statement, filed 2026-04-09, stock ownership policy: treatment of unvested awards · Filed 09/04/2026
All directors and officers covered by the policy are in compliance with the guidelines as of the record date.
2026 proxy statement, filed 2026-04-09, stock ownership policy: disclosed compliance as of record date · Filed 09/04/2026
Under this policy, shares of common stock received upon the vesting of the CEO’s annual equity grants are subject to no-sell provisions for a further 12-month period (other than shares necessary to satisfy taxes).
2026 proxy statement, filed 2026-04-09, CEO post-vesting holding requirement · Filed 09/04/2026
All of the standing Board committees are composed solely of non-employee, independent directors.
2026 proxy statement, filed 2026-04-09, Board committees: independent membership · Filed 09/04/2026
At its meetings during the fiscal year ended December 28, 2025 (“fiscal 2025”), the Board of Directors regularly met in executive sessions of non-employee, independent directors.
2026 proxy statement, filed 2026-04-09, Board oversight: independent executive sessions held during fiscal 2025 · Filed 09/04/2026
1.The election of each of the following nominees to the Board of Directors to hold office for one year until the annual meeting of stockholders in the year 2027: Caroline Dorsa, Scott Gottlieb, David King, Keith Meister, Anna Richo, Philip Schiller, Susan Siegel, Jacob Thaysen and Scott Ullem.
Annual meeting Form 8-K, filed 2026-05-26, director election proposal: nominees and one-year terms · Filed 26/05/2026
Each of the nominees has been elected to the Board of Directors.
Annual meeting Form 8-K, filed 2026-05-26, completed election of all director nominees · Filed 26/05/2026
Non-GAAP operating margin and diluted earnings per share are key components of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.
Q2 2026 earnings release, filed 2026-07-30, compensation metrics: non-GAAP operating margin and diluted EPS · Filed 30/07/2026
