Illumina Q3 Revenue Rises 7.6%; 2026 Outlook Detailed

Illumina Inc. (NASDAQ: ILMN) reported higher third-quarter 2026 revenue and modest margin expansion, supported by sequencing consumables and growth in the U.S. and Canada. Revenue excluding tariff refunds was $1.17 billion, up 7.6% year over year on a reported basis and 4.8% organically. The company expects full-year revenue of $4.64 billion to $4.66 billion on the same basis.

Non-GAAP operating margin excluding tariff refunds increased to 25.0% from 24.5% a year earlier, while non-GAAP diluted earnings per share rose 7% to $1.44. Non-GAAP gross margin edged up 20 basis points to 69.4%. On a GAAP basis, diluted EPS was $1.43, compared with $0.98 in the prior-year quarter.

The quarter included the effects of refunds tied to tariffs imposed under the International Emergency Economic Powers Act. Illumina accrued $37 million of customer credits, reducing reported revenue, while recognizing a larger benefit in cost of revenue. Excluding tariff-refund effects, third-quarter revenue was $1.166 billion, compared with $1.084 billion a year earlier. Including those effects, revenue growth was 4.2%.

Clinical consumables lead sequencing growth

Sequencing consumables revenue excluding tariff refunds increased 6% to $792 million. Rest-of-world consumables revenue, which excludes Greater China, also rose 6% on a reported basis to $748 million and grew 5% organically.

Clinical demand was the strongest part of the consumables business outside China, with revenue up 14% year over year. Research and applied consumables revenue declined 6%, extending the contrast between the two customer categories.

Sequencing instrument revenue was approximately flat at $106 million and declined 1% organically. Illumina placed more than 80 NovaSeq X instruments during the quarter. NovaSeq X represented 60% of high-throughput consumables revenue and 84% of high-throughput gigabases shipped, indicating that customers continued to transition to the platform.

Sequencing service and other revenue increased 7% to $158 million, or 8% organically. Microarray revenue rose 32% excluding tariff refunds, although organic growth was 1% after adjusting for acquisitions and currency.

North America records strongest regional growth

U.S. and Canada revenue was $665 million, up 12% excluding tariff refunds and 9% organically. The region accounted for about 57% of quarterly revenue.

Revenue from Europe, the Middle East, Africa and Latin America was $356 million, approximately flat on a reported basis excluding tariff refunds and down 2% organically. Asia-Pacific revenue was $86 million, up 5% on both bases. Greater China revenue totaled $59 million, increasing 13% on a reported basis and 7% organically. Overall organic growth outside Greater China was 4.7%.

Operating cash flow reached $419 million, up from $284 million a year earlier. After $41 million of capital expenditures, free cash flow was $378 million, compared with $253 million in the prior-year quarter. Illumina ended the period with about $1.34 billion in cash, cash equivalents and short-term investments, against approximately $1.79 billion of debt. Gross leverage was about 1.4 times last-12-month EBITDA.

Full-year and fourth-quarter outlook

Illumina expects 2026 revenue excluding tariff refunds of $4.64 billion to $4.66 billion. Management projects organic revenue growth of more than 4%, with rest-of-world organic growth above 5%. The company expects a full-year non-GAAP operating margin of approximately 23.6% and diluted EPS of $5.40 to $5.45, excluding tariff refunds.

For the fourth quarter, Illumina forecasts revenue of $1.22 billion to $1.24 billion and organic growth of approximately 4.5%. Rest-of-world sequencing consumables revenue is expected to grow at a mid-single-digit rate, while instrument revenue is projected to increase at a low-single-digit rate. Fourth-quarter non-GAAP operating margin is expected to be about 25%, with diluted EPS of $1.51 to $1.56.

The guidance excludes a $37 million revenue reduction related to tariff refunds, along with an estimated positive impact of 90 basis points on operating margin and $0.18 on EPS. Illumina said it cannot reconcile forward-looking non-GAAP measures to GAAP results because several adjustments, including acquisition-related costs, investment gains and losses, restructuring items and litigation outcomes, cannot be predicted with reasonable certainty.

Risks identified by the company include changes in market growth and customer-order timing, uncertainty surrounding Illumina’s inclusion on China’s unreliable entities list, tariffs and other trade measures, manufacturing and supply-chain challenges, competition, product-launch execution, regulatory approvals and potential liabilities connected with previous acquisitions, including GRAIL.