# Illumina Inc. (ILMN) — Financial Analysis

**Exchange:** NASDAQ  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/ILMN/thesis · /stocks/ILMN/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: ILMN
step: "04"
title: Financial Snapshot — 5-Year P&L Summary
created: 2026-05-29
---

### Step 04 — Financial Snapshot: 5-Year P&L Summary

#### Key Caveat: GRAIL Distortion
FY2021–FY2024 financials are heavily distorted by GRAIL (acquisition August 2021, divestiture June 2024). GAAP operating income and net income reflect massive impairment charges ($3.9B in FY2022, additional impairments in FY2023), GRAIL operating losses, and a disposal loss in FY2024 Q2. **Adjusted/core metrics are the most relevant for ongoing analysis.** FY2025 is the first clean year as a pure-play sequencing company.

---

#### Income Statement Summary (GAAP)

| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM (Q1 2026) |
|--------|--------|--------|--------|--------|--------|--------------|
| Revenue | $4,526M | $4,584M | $4,504M | $4,372M | $4,343M | $4,393M |
| YoY Growth | +39% | +1.3% | -1.7% | -2.9% | -0.7% | +1.3% |
| Gross Profit | $3,154M | $2,972M | $2,744M | $2,861M | $2,870M | $2,908M |
| Gross Margin | 69.7% | 64.8% | 60.9% | 65.5% | 66.1% | 66.2% |
| R&D Expense | $(1,060M) | $(1,321M) | $(1,354M) | $(1,107M) | $(967M) | $(953M) |
| SG&A Expense | $(1,044M) | $(1,210M) | $(1,108M) | $(1,062M) | $(1,086M) | $(1,104M) |
| Operating Income (GAAP) | $(123M) | $(4,179M) | $(1,069M) | $(833M) | $807M | $851M |
| Operating Margin | (2.7%) | (91.2%) | (23.7%) | (19.1%) | 18.6% | 19.4% |
| Interest & Other | ~$(82M) | ~$(80M) | ~$(85M) | ~$(60M) | ~$(55M) | ~$(50M) |
| Tax | — | — | — | — | ~$(100M) | ~$(100M) |
| Net Income (GAAP) | $762M | $(4,404M) | $(1,161M) | $(1,223M) | $850M | $853M |
| Diluted EPS (GAAP) | $5.04 | $(28.00) | $(7.34) | $(7.69) | $5.45 | $5.52 |

**Notes on GAAP distortions:**
- FY2021 net income positive despite operating losses — reflects deferred tax benefits and other items
- FY2022 operating loss: includes ~$3.9B goodwill impairment on GRAIL
- FY2023 operating loss: includes ~$700M+ additional impairments and GRAIL operating losses
- FY2024 Q2 operating loss: ~$1.7B disposal loss on GRAIL divestiture
- FY2024 Q3 operating income spike ($741M in one quarter) reflects GRAIL derecognition gain

---

#### Adjusted (Non-GAAP) Operating Income — Core Business

| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026E |
|--------|--------|--------|--------|--------|--------|---------|
| Revenue | $4,526M | $4,584M | $4,504M | $4,372M | $4,343M | ~$4,520M |
| Non-GAAP Gross Margin | ~70% | ~66% | ~64% | ~66% | ~68% | ~68-69% |
| Non-GAAP Operating Income | ~$1,200M | ~$1,050M | ~$850M | ~$950M | ~$1,050M | ~$1,200M |
| Non-GAAP Operating Margin | ~26% | ~23% | ~19% | ~22% | ~24% | ~26% |
| Non-GAAP EPS | ~$7.50 | ~$5.70 | ~$4.30 | ~$5.20 | ~$6.50 | ~$5.05–5.20 |

**Exclusions from Non-GAAP:** Stock-based compensation (~$300–400M/yr), amortization of acquired intangibles, GRAIL-related items, restructuring charges, impairments

---

#### Gross Margin Analysis

| Driver | Direction | Magnitude |
|--------|-----------|-----------|
| GRAIL consolidation (FY2022-Q2 2024) | Dilutive | ~300–500 bps drag |
| NovaSeq X ramp (higher-margin consumables) | Accretive | +100–200 bps |
| Manufacturing efficiency | Accretive | +50–100 bps |
| China revenue decline | Slightly dilutive | ~30–50 bps |
| Product mix (consumable % rising) | Accretive | Structural tailwind |

Core gross margin expanded from ~60.9% (FY2023 trough, GRAIL-burdened) to 66.1% (FY2025, clean). Management targets 68–70% longer-term as NovaSeq X consumables mature.

---

#### Operating Expense Trends

| OpEx Category | FY2023 | FY2024 | FY2025 | Commentary |
|--------------|--------|--------|--------|-----------|
| R&D | $1,354M (30.1%) | $1,107M (25.3%) | $967M (22.3%) | Significant reduction post-GRAIL; right-sizing |
| SG&A | $1,108M (24.6%) | $1,062M (24.3%) | $1,086M (25.0%) | Relatively stable |
| Total OpEx | $2,462M (54.7%) | $2,169M (49.6%) | $2,053M (47.3%) | Positive leverage |

**Key insight:** R&D rationalization from 30% → 22% of revenue is the largest driver of the EBIT margin recovery. Management target is ~22–24% R&D long-term while maintaining innovation pace.

---

#### P&L Summary Table (FY2025 — Clean Year)

| Line Item | FY2025 | % of Revenue |
|-----------|--------|-------------|
| Revenue | $4,343M | 100.0% |
| Cost of Revenue | $(1,473M) | 33.9% |
| Gross Profit | $2,870M | 66.1% |
| R&D | $(967M) | 22.3% |
| SG&A | $(1,086M) | 25.0% |
| Total Operating Expenses | $(2,053M) | 47.3% |
| **EBIT** | **$807M** | **18.6%** |
| Interest Expense, net | ~$(55M) | |
| Other income | ~$100M | |
| Pre-tax Income | ~$852M | |
| Income Tax | ~$(2M) | |
| **Net Income** | **$850M** | **19.6%** |
| **Diluted EPS** | **$5.45** | |
| Diluted Shares | 156.0M | |

---

#### Key Financial Ratios (FY2025 / TTM)

| Ratio | FY2025 | TTM | Commentary |
|-------|--------|-----|-----------|
| Gross Margin | 66.1% | 66.2% | Expanding; target 68–70% |
| EBIT Margin | 18.6% | 19.4% | Recovery from GRAIL era; target 26% by 2027 |
| Net Margin | 19.6% | 19.4% | |
| FCF Margin | 21.4% | 22.2% | Strong; >100% net income conversion |
| FCF/Revenue | 21.4% | 22.2% | Exceptional for instruments company |
| R&D/Revenue | 22.3% | — | Well-funded innovation |

---

#### Financial Health Assessment

**Strengths:**
- Revenue stabilized at $4.3–4.4B; returning to growth in FY2026
- Gross margin recovery underway (60.9% trough → 66.1% → targeting 68–70%)
- FCF generation strong and improving ($283M → $709M → $931M in 3 years)
- Operating leverage now flowing through as GRAIL costs eliminated
- Balance sheet: $1.6B cash, $1.5B LT debt — manageable

**Risks:**
- Revenue near peak (FY2021 was $4.5B; FY2025 still slightly below)
- R&D cuts could be short-sighted if competitive threats accelerate
- SomaLogic integration adds complexity and integration risk to clean story
- China revenue headwinds persist

**Verdict:** The GAAP P&L is finally clean. Illumina's core economics — 66%+ gross margins, 22%+ EBIT margins on normalized basis, 21%+ FCF margins — are exceptional for an instrument company. The path to 26% EBIT margin (management 2027 target) is credible via continued consumable mix-up and OpEx leverage.

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/ILMN/fundamental

## Navigation

- Overview: /stocks/ILMN
- Financials (this page): /stocks/ILMN/financials
- Thesis: /stocks/ILMN/thesis
- Investment Memo: /stocks/ILMN/memo
- Coverage universe: /stocks