Key Highlights

  • Reported Revenue rose 4.2% to $1.129 billion from $1.084 billion in the third quarter.
  • GAAP diluted EPS was $1.43, compared with $0.98 a year earlier.
  • GAAP Operating Margin reached 27.0%, up from 21.0%.
  • Free Cash Flow was $378 million, versus $253 million in the prior year period.
  • Full year revenue guidance rose to $4.64 billion to $4.66 billion excluding Tariff refunds.

Third-quarter revenue grows 4.2% with services leading the mix

Illumina (NASDAQ:ILMN), a San Diego company that supplies DNA sequencing and array-based technologies to research, clinical and applied customers, reported third quarter fiscal 2026 results on October 29, 2026. Reported revenue was $1.13 billion, up 4.2% from $1.084 billion in the prior year quarter.

Product revenue was $946 million versus $927 million, while service and other revenue was $183 million versus $157 million, which is about 17% higher on a calculated basis. Chief Executive Jacob Thaysen pointed to healthy clinical Demand and strong NovaSeq X placements as the drivers of results above the company's guidance.

For the nine months, revenue was $3.38 billion, up from $3.18 billion a year earlier.

Tariff refunds reshape the margin picture

Illumina recognized a benefit of about $79 million as a reduction to cost of revenue in the quarter from expected refunds of tariffs imposed under the International Emergency Economic Powers Act. It also booked a $37 million reduction to revenue for the portion of those refunds it expects to Credit to customers.

Excluding the refunds, revenue was $1.17 billion, and rest-of-world organic revenue growth, which also removes currency, acquisitions and the Greater China region, was 4.7%. China is excluded because Illumina sits on that country's Unreliable Entities List.

Non-GAAP gross margin was 75.3% as reported, but 69.4% excluding the refunds, compared with 69.2% a year earlier.

Operating margin climbs to 27.0% on a GAAP basis

GAAP operating profit rose to $305 million from $227 million, lifting GAAP operating margin to 27.0% from 21.0%. Non-GAAP operating margin was 28.8% against 24.5%, and 25.0% once tariff refunds are excluded.

Operating expenses were $525 million versus $506 million, with Research and Development at $244 million and selling, general and administrative at $281 million.

Net income was $220 million, or $1.43 per diluted share, compared with $150 million, or $0.98. Non-GAAP diluted EPS was $1.62 versus $1.34, and $1.44 excluding the refunds. The provision for income taxes fell to $44 million from $70 million, while other expense, net was $41 million versus $7 million.

Cash generation and a lighter Debt load

Cash flow provided by operations was $419 million, compared with $284 million a year ago. After $41 million of capital expenditures, free cash flow was $378 million versus $253 million, and the nine month figure reached $791 million versus $665 million.

Cash, cash equivalents and short-term investments totaled $1.34 billion at the close of the quarter. Current term debt was nil at September 27, 2026, compared with $499 million at December 28, 2025, while long-term term debt was $1,789 million versus $1,490 million.

Stockholders' Equity increased to $3,145 million from $2,723 million.

Raised guidance sets the bar for the final quarter

Illumina now expects fiscal 2026 revenue of $4.64 billion to $4.66 billion excluding tariff refunds, up from prior guidance of $4.60 billion to $4.64 billion. Organic revenue growth is still expected to exceed 4%, and rest-of-world organic growth to exceed 5%.

Non-GAAP operating margin guidance is 23.6%, against a prior range of 23.4% to 23.6%, and non-GAAP diluted EPS is now $5.40 to $5.45 versus $5.30 to $5.40.

Readers tracking the name will likely follow clinical demand, NovaSeq X placements and how the tariff refund process develops.