Illumina Beats Its Own Forecast and Raises 2026 Outlook

Illumina raised its full-year revenue and earnings forecasts on Thursday after third-quarter results came in above its own guidance, which CEO Jacob Thaysen credited to healthy clinical demand and robust placements of its NovaSeq X sequencers, according to the earnings release the company filed with an 8-K after the market close.

The DNA sequencing company now expects fiscal 2026 revenue of $4.64 billion to $4.66 billion, up from prior guidance of $4.60 billion to $4.64 billion, and non-GAAP diluted EPS of $5.40 to $5.45, up from $5.30 to $5.40. Both figures exclude tariff refunds.

Results beat guidance

"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," Thaysen said in the release.

Reported revenue rose 4.2% to $1.13 billion from $1.08 billion. Excluding tariff refunds, revenue was $1.17 billion, and organic revenue growth was 4.8%. Growth in the rest of the world, a measure that excludes the Greater China region, was 4.7% on an organic basis.

Illumina said it excludes Greater China from that measure because of its inclusion on China's Unreliable Entities List.

Tariff refunds swing the numbers

The quarter included effects from tariff refunds under the International Emergency Economic Powers Act that the company expects to recover. Those consisted primarily of a $79 million benefit recorded as a reduction to cost of revenue and a $37 million reduction to revenue for the portion Illumina expects to credit to customers.

That benefit lifted GAAP gross margin to 73.5% from 67.6%, and GAAP operating margin to 27.0% from 21.0%. Excluding the refunds, non-GAAP gross margin was 69.4% and non-GAAP operating margin was 25.0%, compared with 24.5% a year earlier.

Net income rose to $220 million, or $1.43 a diluted share, from $150 million, or 98 cents. Non-GAAP EPS excluding tariff refunds was $1.44, up from $1.34, after an 18-cent adjustment for the refunds.

GAAP results also absorbed a 19-cent-per-share net loss on strategic investments, according to the company's reconciliation tables.

Margin outlook and cash flow

For the full year, Illumina now expects a non-GAAP operating margin of 23.6%, the top of its prior 23.4% to 23.6% range. It kept its forecasts for organic revenue growth above 4% and rest-of-world organic growth above 5%.

Operating cash flow rose to $419 million from $284 million, and free cash flow climbed to $378 million from $253 million. Illumina ended the quarter with $1.34 billion in cash, cash equivalents and short-term investments.

Service and other revenue grew to $183 million from $157 million, while product revenue rose to $946 million from $927 million.

The company scheduled a conference call for 4:30 p.m. ET on Thursday.

Sources

1. Illumina Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 29, 2026 (accession 0001110803-26-000202)

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