Illumina Reports Financial Results for Third Quarter of Fiscal Year 2024

GAAP

Non-GAAP (a)

Dollars in millions

Q3 2024

Q3 2023

Q3 2024

Q3 2023

Revenue (b)

$ 1,080

$ 1,106

$ 1,080

$ 1,106

Gross margin (c)

68.9 %

64.7 %

70.5 %

66.0 %

Research and development (R&D) expense

$ 253

$ 238

$ 249

$ 235

Selling, general and administrative (SG&A) expense

$ 239

$ 216

$ 268

$ 246

Legal contingency and settlement

$ (488)

$ (1)

$ -

$ -

Operating profit

$ 741

$ 262

$ 244

$ 249

Operating margin

68.6 %

23.7 %

22.6 %

22.5 %

Tax provision

$ 77

*

$ 48

*

Tax rate

10.8 %

*

21.0 %

*

Net income

$ 642

*

$ 181

*

Diluted EPS

$ 4.03

*

$ 1.14

*

* Prior year information not provided.

(a)

See tables in "Results of Operations - Non-GAAP" section below for GAAP and non-GAAP reconciliations.

(b)

Core Illumina revenue for Q3 2023 included intercompany revenue of $8 million which, prior to the spin-off of GRAIL in Q2 2024, was eliminated in consolidation.

(c)

The increase in gross margin was driven by execution of our operational excellence priorities that delivered cost savings, including freight, and improved productivity and a more favorable mix of sequencing consumables.

GAAP

Non-GAAP (a)

Dollars in millions

Q3 2024

Q3 2023

Q3 2024

Q3 2023

Revenue

$ 1,080

$ 1,119

$ 1,080

$ 1,119

Gross margin

68.9 %

61.1 %

70.5 %

65.4 %

R&D expense

$ 253

$ 315

$ 249

$ 312

SG&A expense

$ 239

$ 303

$ 268

$ 328

Goodwill and intangible impairment

$ -

$ 821

$ -

$ -

Legal contingency and settlement

$ (488)

$ (1)

$ -

$ -

Operating profit (loss)

$ 741

$ (754)

$ 244

$ 93

Operating margin

68.6 %

(67.3) %

22.6 %

8.3 %

Tax provision (benefit)

$ 15

$ (28)

$ 48

$ 35

Tax rate

2.1 %

3.6 %

21.0 %

39.7 %

Net income (loss)

$ 705

$ (754)

$ 181

$ 52

Diluted earnings (loss) per share

$ 4.42

$ (4.77)

$ 1.14

$ 0.33

(a) See tables in "Results of Operations - Non-GAAP" section below for GAAP and non-GAAP reconciliations.

Illumina, Inc.

Condensed Consolidated Balance Sheets

(In millions)

September 29,
2024

December 31,
2023

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$ 869

$ 1,048

Short-term investments

70

6

Accounts receivable, net

699

734

Inventory, net

574

587

Prepaid expenses and other current assets

161

234

Total current assets

2,373

2,609

Property and equipment, net

832

1,007

Operating lease right-of-use assets

453

544

Goodwill

1,113

2,545

Intangible assets, net

305

2,993

Deferred tax assets, net

617

56

Other assets

321

357

Total assets

$ 6,014

$ 10,111

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 191

$ 245

Accrued liabilities

784

1,325

Total current liabilities

975

1,570

Operating lease liabilities

613

687

Term debt

1,988

1,489

Other long-term liabilities

313

620

Stockholders' equity

2,125

5,745

Total liabilities and stockholders' equity

$ 6,014

$ 10,111

Illumina, Inc.

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

(unaudited)

Three Months Ended

Nine Months Ended

September 29,
2024

October 1,
2023

September 29,
2024

October 1,
2023

Revenue:

Product revenue

$ 914

$ 941

$ 2,718

$ 2,864

Service and other revenue

166

178

550

518

Total revenue

1,080

1,119

3,268

3,382

Cost of revenue:

Cost of product revenue (a)

235

293

739

884

Cost of service and other revenue (a)

84

95

286

285

Amortization of acquired intangible assets

16

47

110

143

Total cost of revenue

335

435

1,135

1,312

Gross profit

745

684

2,133

2,070

Operating expense:

Research and development (a)

253

315

913

1,013

Selling, general and administrative (a)

239

303

813

1,127

Goodwill and intangible impairment

-

821

1,889

821

Legal contingency and settlement

(488)

(1)

(474)

14

Total operating expense

4

1,438

3,141

2,975

Income (loss) from operations

741

(754)

(1,008)

(905)

Other expense, net

(21)

(28)

(358)

(45)

Income (loss) before income taxes

720

(782)

(1,366)

(950)

Provision (benefit) for income taxes

15

(28)

44

36

Net income (loss)

$ 705

$ (754)

$ (1,410)

$ (986)

Earnings (loss) per share:

Basic

$ 4.43

$ (4.77)

$ (8.86)

$ (6.23)

Diluted

$ 4.42

$ (4.77)

$ (8.86)

$ (6.23)

Shares used in computing earnings (loss) per share:

Basic

159

158

159

158

Diluted

160

158

159

158

(a) Includes stock-based compensation expense for stock-based awards:

Three Months Ended

Nine Months Ended

September 29,
2024

October 1,
2023

September 29,
2024

October 1,
2023

Cost of product revenue

$ 7

$ 7

$ 19

$ 22

Cost of service and other revenue

1

2

5

5

Research and development

33

36

115

117

Selling, general and administrative

43

41

152

142

Stock-based compensation expense before taxes

$ 84

$ 86

$ 291

$ 286

Illumina, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(unaudited)

Three Months Ended

Nine Months Ended

September 29,
2024

October 1,
2023

September 29,
2024

October 1,
2023

Net cash provided by operating activities

$ 316

$ 139

$ 473

$ 254

Net cash used in investing activities

(42)

(54)

(130)

(146)

Net cash used in financing activities

(332)

(707)

(523)

(1,183)

Effect of exchange rate changes on cash and cash equivalents

7

(4)

1

(9)

Net decrease in cash and cash equivalents

(51)

(626)

(179)

(1,084)

Cash and cash equivalents, beginning of period

920

1,553

1,048

2,011

Cash and cash equivalents, end of period

$ 869

$ 927

$ 869

$ 927

Calculation of free cash flow:

Net cash provided by operating activities

$ 316

$ 139

$ 473

$ 254

Purchases of property and equipment

(32)

(45)

(99)

(144)

Free cash flow (a)

$ 284

$ 94

$ 374

$ 110

(a)

Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities reduced by purchases of property and equipment. Free cash flow is useful to management as it is one of the metrics used to evaluate our performance and to compare us with other companies in our industry. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.

Illumina, Inc.

Results of Operations - Constant Currency Revenue

(Dollars in millions)

(unaudited)

TABLE 1: CORE ILLUMINA - CONSTANT CURRENCY REVENUE:

Three Months Ended

Nine Months Ended

September 29,
2024

October 1,
2023

% Change

September 29,
2024

October 1,
2023

% Change

Core Illumina revenue

$ 1,080

$ 1,106

(2) %

$ 3,228

$ 3,341

(3) %

Less: Hedge gains

3

5

10

9

Core Illumina revenue, excluding hedge effect

1,077

1,101

3,218

3,332

Less: Exchange rate effect

(1)

-

(7)

-

Core Illumina constant currency revenue (a)

$ 1,078

$ 1,101

(2) %

$ 3,225

$ 3,332

(3) %

TABLE 2: CONSOLIDATED - CONSTANT CURRENCY REVENUE:

Three Months Ended

Nine Months Ended

September 29,
2024

October 1,
2023

% Change

September 29,
2024

October 1,
2023

% Change

Consolidated revenue

$ 1,080

$ 1,119

(4) %

$ 3,268

$ 3,382

(3) %

Less: Hedge gains

3

5

10

9

Consolidated revenue, excluding hedge effect

1,077

1,114

3,258

3,373

Less: Exchange rate effect

(1)

-

(7)

-

Consolidated constant currency revenue (a)

$ 1,078

$ 1,114

(3) %

$ 3,265

$ 3,373

(3) %

(a)

Constant currency revenue growth, which is a non-GAAP financial measure, is calculated using comparative prior period foreign exchange rates to translate current period revenue, net of the effects of hedges.

Illumina, Inc.

Results of Operations - Non-GAAP

(In millions, except per share amounts)

(unaudited)

TABLE 1: CORE ILLUMINA - RECONCILIATION OF GAAP AND NON-GAAP DILUTED EARNINGS PER SHARE:

Three Months Ended

Nine Months Ended

September 29,
2024

September 29,
2024

GAAP earnings per share - diluted

$ 4.03

$ 4.88

Cost of revenue (b)

0.10

0.29

R&D expense (b)

0.03

0.04

SG&A expense (b)

(0.18)

(1.11)

Goodwill and intangible impairment (b)

-

0.02

Legal contingency and settlement (b)

(3.07)

(2.98)

Other expense, net (b)

0.04

2.05

GILTI, US foreign tax credits, and global minimum top-up tax (c)

0.34

0.55

Incremental non-GAAP tax expense (d)

(0.16)

(0.56)

Income tax provision (e)

0.01

0.02

Non-GAAP earnings per share - diluted (a)

$ 1.14

$ 3.20

TABLE 2: CORE ILLUMINA - RECONCILIATION OF GAAP AND NON-GAAP NET INCOME:

Three Months Ended

Nine Months Ended

September 29,
2024

September 29,
2024

GAAP net income

$ 642

$ 777

Cost of revenue (b)

16

47

R&D expense (b)

4

6

SG&A expense (b)

(29)

(176)

Goodwill and intangible impairment (b)

-

3

Legal contingency and settlement (b)

(488)

(474)

Other expense, net (b)

7

326

GILTI, US foreign tax credits, and global minimum top-up tax (c)

54

87

Incremental non-GAAP tax expense (d)

(26)

(89)

Income tax provision (e)

1

3

Non-GAAP net income (a)

$ 181

$ 510

Results of Operations - Non-GAAP (continued)

(In millions, except per share amounts)

(unaudited)

TABLE 3: CONSOLIDATED - RECONCILIATION OF GAAP AND NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE:

Three Months Ended

Nine Months Ended

September 29,
2024

October 1,
2023

September 29,
2024

October 1,
2023

GAAP earnings (loss) per share - diluted

$ 4.42

$ (4.77)

$ (8.86)

$ (6.23)

Cost of revenue (b)

0.09

0.30

0.70

0.93

R&D expense (b)

0.03

0.02

0.04

0.11

SG&A expense (b)

(0.18)

(0.15)

(1.03)

0.64

Goodwill and intangible impairment (b)

-

5.20

11.87

5.19

Legal contingency and settlement (b)

(3.06)

(0.01)

(2.98)

0.09

Other expense, net (b)

0.04

0.14

2.05

0.23

GILTI, US foreign tax credits, and global minimum top-up tax (c)

0.16

0.24

0.89

0.40

Incremental non-GAAP tax expense (d)

(0.37)

(0.65)

(1.11)

(0.68)

Income tax provision (e)

0.01

0.01

0.02

0.05

Non-GAAP earnings per share - diluted (a)

$ 1.14

$ 0.33

$ 1.59

$ 0.73

TABLE 4: CONSOLIDATED - RECONCILIATION OF GAAP AND NON-GAAP NET INCOME (LOSS):

Three Months Ended

Nine Months Ended

September 29,
2024

October 1,
2023

September 29,
2024

October 1,
2023

GAAP net income (loss)

$ 705

$ (754)

$ (1,410)

$ (986)

Cost of revenue (b)

16

48

112

147

R&D expense (b)

4

3

6

17

SG&A expense (b)

(30)

(24)

(163)

102

Goodwill and intangible impairment (b)

-

821

1,889

821

Legal contingency and settlement (b)

(488)

(1)

(474)

14

Other expense, net (b)

7

22

326

36

GILTI, US foreign tax credits, and global minimum top-up tax (c)

25

38

141

63

Incremental non-GAAP tax expense (d)

(59)

(102)

(177)

(108)

Income tax provision (e)

1

1

3

9

Non-GAAP net income (a)

$ 181

$ 52

$ 253

$ 115

All amounts in tables are rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided.

(a)

Non-GAAP net income and diluted earnings per share exclude the effects of the pro forma adjustments detailed above. Non-GAAP net income 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. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing our past and future operating performance.

(b)

Refer to Reconciliations between GAAP and Non-GAAP Results of Operations for details of amounts.

(c)

Amounts represent the impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of US foreign tax credits, and the Pillar Two global minimum top-up tax, which became effective in Q1 2024.

(d)

Incremental non-GAAP tax expense reflects the tax impact of the non-GAAP adjustments listed.

(e)

Amounts represent the difference between book and tax accounting related to stock-based compensation cost.

Illumina, Inc.

Results of Operations - Non-GAAP (continued)

(Dollars in millions)

(unaudited)

TABLE 5: RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

Three Months Ended

September 29, 2024

October 1, 2023

Core/Consolidated

Core Illumina

GRAIL

Elims

Consolidated

GAAP gross profit (loss) (b)

$ 745

68.9 %

$ 715

64.7 %

$ (27)

$ (4)

$ 684

61.1 %

Amortization of acquired intangible assets

16

1.6 %

14

1.2 %

33

-

47

4.2 %

Restructuring (g)

-

-

1

0.1 %

-

-

1

0.1 %

Non-GAAP gross profit (a)

$ 761

70.5 %

$ 730

66.0 %

$ 6

$ (4)

$ 732

65.4 %

GAAP R&D expense

$ 253

23.4 %

$ 238

21.5 %

$ 79

$ (2)

$ 315

28.1 %

Acquisition-related expenses (d)

(3)

(0.2) %

-

-

-

-

-

-

Restructuring (g)

(1)

(0.1) %

(3)

(0.3) %

-

-

(3)

(0.3) %

Non-GAAP R&D expense

$ 249

23.1 %

$ 235

21.2 %

$ 79

$ (2)

$ 312

27.8 %

GAAP SG&A expense

$ 239

22.2 %

$ 216

19.5 %

$ 87

$ -

$ 303

27.0 %

Amortization of acquired intangible assets

-

-

-

-

(1)

-

(1)

(0.1) %

Contingent consideration liabilities (c)

49

4.6 %

110

9.9 %

-

-

110

9.8 %

Acquisition-related expenses (d)

(15)

(1.4) %

(26)

(2.2) %

(3)

-

(29)

(2.5) %

Restructuring (g)

(5)

(0.5) %

(54)

(4.9) %

(1)

-

(55)

(4.9) %

Non-GAAP SG&A expense

$ 268

24.9 %

$ 246

22.3 %

$ 82

$ -

$ 328

29.3 %

GAAP goodwill and intangible impairment

$ -

-

$ -

-

$ 821

$ -

$ 821

73.4 %

Goodwill impairment (i)

-

-

-

-

(712)

-

(712)

(63.6) %

Intangible (IPR&D) impairment (i)

-

-

-

-

(109)

-

(109)

(9.8) %

Non-GAAP goodwill and intangible impairment

$ -

-

$ -

-

$ -

$ -

$ -

-

GAAP legal contingency and settlement

$ (488)

(45.3) %

$ (1)

(0.2) %

$ -

$ -

$ (1)

(0.1) %

Legal contingency and settlement (h)

488

45.3 %

1

0.2 %

-

-

1

0.1 %

Non-GAAP legal contingency and settlement

$ -

-

$ -

-

$ -

$ -

$ -

-

GAAP operating profit (loss)

$ 741

68.6 %

$ 262

23.7 %

$ (1,015)

$ (1)

$ (754)

(67.3) %

Cost of revenue

16

1.5 %

15

1.3 %

33

-

48

4.3 %

R&D costs

4

0.4 %

3

0.4 %

-

-

3

0.3 %

SG&A costs

(29)

(2.6) %

(30)

(2.7) %

6

-

(24)

(2.3) %

Goodwill and intangible impairment

-

-

-

-

821

-

821

73.4 %

Legal contingency and settlement

(488)

(45.3) %

(1)

(0.2) %

-

-

(1)

(0.1) %

Non-GAAP operating profit (loss) (a)

$ 244

22.6 %

$ 249

22.5 %

$ (155)

$ (1)

$ 93

8.3 %

GAAP other (expense) income, net

$ (21)

(2.0) %

$ (33)

(3.0) %

$ 5

$ -

$ (28)

(2.6) %

Strategic investment related loss, net (e)

12

1.2 %

19

1.8 %

-

-

19

1.8 %

Gain on Helix contingent value right (f)

(4)

(0.4) %

(5)

(0.5) %

-

-

(5)

(0.4) %

Acquisition-related expenses (d)

(1)

(0.1) %

8

0.7 %

-

-

8

0.7 %

Non-GAAP other (expense) income, net (a)

$ (14)

(1.3) %

$ (11)

(1.0) %

$ 5

$ -

$ (6)

(0.5) %

Illumina, Inc.

Results of Operations - Non-GAAP (continued)

(Dollars in millions)

(unaudited)

TABLE 5: RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

Nine Months Ended

September 29, 2024

Core Illumina

GRAIL

Elims

Consolidated

GAAP gross profit (loss) (b)

$ 2,181

67.6 %

$ (38)

$ (10)

$ 2,133

65.3 %

Amortization of acquired intangible assets

46

1.4 %

65

-

111

3.4 %

Restructuring (g)

1

-

-

-

1

-

Non-GAAP gross profit (a)

$ 2,228

69.0 %

$ 27

$ (10)

$ 2,245

68.7 %

GAAP R&D expense

$ 732

22.7 %

$ 189

$ (8)

$ 913

27.9 %

Acquisition-related expenses (d)

(4)

(0.1) %

-

-

(4)

(0.1) %

Restructuring (g)

(2)

(0.1) %

-

-

(2)

-

Non-GAAP R&D expense

$ 726

22.5 %

$ 189

$ (8)

$ 907

27.8 %

GAAP SG&A expense

$ 621

19.3 %

$ 192

$ -

$ 813

24.8 %

Amortization of acquired intangible assets

-

-

(2)

-

(2)

(0.1) %

Contingent consideration liabilities (c)

304

9.3 %

-

-

304

9.3 %

Acquisition-related expenses (d)

(85)

(2.6) %

(11)

-

(96)

(2.9) %

Restructuring (g)

(43)

(1.3) %

(1)

-

(44)

(1.3) %

Non-GAAP SG&A expense

$ 797

24.7 %

$ 178

$ -

$ 975

29.8 %

GAAP goodwill and intangible impairment

$ 3

0.1 %

$ 1,886

$ -

$ 1,889

57.8 %

Goodwill impairment (i)

-

-

(1,466)

-

(1,466)

(44.9) %

Intangible (IPR&D) impairment (i)

(3)

(0.1) %

(420)

-

(423)

(12.9) %

Non-GAAP goodwill and intangible impairment

$ -

-

$ -

$ -

$ -

-

GAAP legal contingency and settlement

$ (474)

(14.7) %

$ -

$ -

$ (474)

(14.4) %

Legal contingency and settlement (h)

474

14.7 %

-

-

474

14.4 %

Non-GAAP legal contingency and settlement

$ -

-

$ -

$ -

$ -

-

GAAP operating profit (loss)

$ 1,298

40.2 %

$ (2,305)

$ (1)

$ (1,008)

(30.8) %

Cost of revenue

47

1.5 %

65

-

112

3.4 %

R&D costs

6

0.2 %

-

-

6

0.2 %

SG&A costs

(176)

(5.5) %

13

-

(163)

(5.1) %

Goodwill and intangible impairment

3

0.1 %

1,886

-

1,889

57.8 %

Legal contingency and settlement

(474)

(14.7) %

-

-

(474)

(14.4) %

Non-GAAP operating profit (loss) (a)

$ 704

21.8 %

$ (341)

$ (1)

$ 362

11.1 %

GAAP other (expense) income, net

$ (363)

(11.2) %

$ 5

$ -

$ (358)

(11.0) %

Strategic investment related loss, net (e)

339

10.5 %

-

-

339

10.4 %

Gain on Helix contingent value right (f)

(15)

(0.5) %

-

-

(15)

(0.5) %

Acquisition-related expenses (d)

2

0.1 %

-

-

2

0.1 %

Non-GAAP other (expense) income, net (a)

$ (37)

(1.1) %

$ 5

$ -

$ (32)

(1.0) %

Illumina, Inc.

Results of Operations - Non-GAAP (continued)

(Dollars in millions)

(unaudited)

TABLE 5: RECONCILIATION OF GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

Nine Months Ended

October 1, 2023

Core Illumina

GRAIL

Elims

Consolidated

GAAP gross profit (loss) (b)

$ 2,161

64.7 %

$ (77)

$ (14)

$ 2,070

61.2 %

Amortization of acquired intangible assets

43

1.3 %

100

-

143

4.3 %

Restructuring (g)

4

0.1 %

-

-

4

0.1 %

Non-GAAP gross profit (a)

$ 2,208

66.1 %

$ 23

$ (14)

$ 2,217

65.6 %

GAAP R&D expense

$ 771

23.1 %

$ 254

$ (12)

$ 1,013

30.0 %

Acquisition-related expenses (d)

(1)

-

-

-

(1)

-

Restructuring (g)

(16)

(0.6) %

-

-

(16)

(0.5) %

Non-GAAP R&D expense

$ 754

22.5 %

$ 254

$ (12)

$ 996

29.5 %

GAAP SG&A expense

$ 857

25.7 %

$ 271

$ (1)

$ 1,127

33.3 %

Amortization of acquired intangible assets

(1)

-

(3)

-

(4)

(0.1) %

Contingent consideration liabilities (c)

82

2.5 %

-

-

82

2.3 %

Acquisition-related expenses (d)

(64)

(1.9) %

(11)

-

(75)

(2.1) %

Restructuring (g)

(72)

(2.3) %

(3)

-

(75)

(2.2) %

Proxy contest

(29)

(0.9) %

-

-

(29)

(0.9) %

Non-GAAP SG&A expense

$ 773

23.1 %

$ 254

$ (1)

$ 1,026

30.3 %

GAAP goodwill and intangible impairment

$ -

-

$ 821

$ -

$ 821

24.3 %

Goodwill impairment (i)

-

-

(712)

-

(712)

(21.1) %

Intangible (IPR&D) impairment (i)

-

-

(109)

-

(109)

(3.2) %

Non-GAAP goodwill and intangible impairment

$ -

-

$ -

$ -

$ -

-

GAAP legal contingency and settlement

$ 14

0.4 %

$ -

$ -

$ 14

0.4 %

Legal contingency and settlement (h)

(14)

(0.4) %

-

-

(14)

(0.4) %

Non-GAAP legal contingency and settlement

$ -

-

$ -

$ -

$ -

-

GAAP operating profit (loss)

$ 519

15.5 %

$ (1,424)

$ -

$ (905)

(26.8) %

Cost of revenue

47

1.4 %

100

-

147

4.4 %

R&D costs

17

0.5 %

-

-

17

0.5 %

SG&A costs

84

2.6 %

18

-

102

3.0 %

Goodwill and intangible impairment

-

-

821

-

821

24.3 %

Legal contingency and settlement

14

0.4 %

-

-

14

0.4 %

Non-GAAP operating profit (loss) (a)

$ 681

20.4 %

$ (485)

$ -

$ 196

5.8 %

GAAP other (expense) income, net

$ (53)

(1.6) %

$ 8

$ -

$ (45)

(1.3) %

Strategic investment related loss, net (e)

36

1.1 %

-

-

36

1.0 %

Gain on Helix contingent value right (f)

(8)

(0.2) %

-

-

(8)

(0.2) %

Acquisition-related expenses (d)

8

0.2 %

-

-

8

0.2 %

Non-GAAP other (expense) income, net (a)

$ (17)

(0.5) %

$ 8

$ -

$ (9)

(0.3) %

All amounts in tables are rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided. Percentages of revenue are calculated based on the revenue of the respective segment.

(a)

Non-GAAP gross profit, included within non-GAAP operating profit (loss), is a key measure of the effectiveness and efficiency of manufacturing processes, product mix and the average selling prices of our products and services. Non-GAAP operating profit (loss) and non-GAAP other (expense) income, net exclude the effects of the pro forma adjustments as detailed above. Non-GAAP operating margin is a key component 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. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing past and future operating performance.

(b)

Reconciling amounts are recorded in cost of revenue.

(c)

Amounts consist primarily of fair value adjustments for our contingent consideration liability related to GRAIL.

(d)

Amounts consist primarily of legal and other expenses related to the acquisition and divestiture of GRAIL, as well as the acquisition of Fluent Biosciences which was completed in Q3 2024. Amounts in other (expense) income, net for Q3 2023 and YTD 2023 relate to unrealized gains/losses for foreign currency balance sheet remeasurement of the EC fine liability, which was reversed in Q3 2024, and mark-to-market gains/losses on the hedge for the EC fine.

(e)

Amounts consist primarily of mark-to-market adjustments and impairments from strategic investments. Amount for YTD 2024 primarily relates to impairment recorded on our retained investment in GRAIL post spin-off.

(f)

Amounts consist of fair value adjustments related to our Helix contingent value right, which was settled in Q3 2024.

(g)

Amounts for Q3 2024 consist primarily of employee severance costs. Amounts for YTD 2024 also consist of lease and other asset impairments. Amounts for Q3 2023 consist primarily of lease and other asset impairments and amounts for YTD 2023 consist primarily of employee severance costs and lease and other asset impairments.

(h)

Amounts for Q3 2024 and YTD 2024 primarily consist of the reversal of the accrued EC fine, including accrued interest. Amount for YTD 2023 primarily consists of an adjustment recorded to our accrual for the EC fine.

(i)

Amount for YTD 2024 consists of goodwill and IPR&D intangible asset impairments related to GRAIL in Q2 2024. Amount for YTD 2024 also consists of an IPR&D intangible asset impairment related to Core Illumina in Q1 2024. Amounts for Q3 2023 and YTD 2023 consist of goodwill and IPR&D intangible asset impairments related to GRAIL.

Illumina, Inc.

Results of Operations - Non-GAAP (continued)

(Dollars in millions)

(unaudited)

TABLE 6: CORE ILLUMINA - RECONCILIATION OF GAAP AND NON-GAAP TAX PROVISION:

Three Months Ended

Nine Months Ended

September 29,
2024

September 29,
2024

GAAP tax provision

$ 77

10.8 %

$ 158

16.9 %

Incremental non-GAAP tax expense (b)

26

89

Income tax provision (c)

(1)

(3)

GILTI, US foreign tax credits, and global minimum top-up tax (d)

(54)

(87)

Non-GAAP tax provision (a)

$ 48

21.0 %

$ 157

23.6 %

TABLE 7: CONSOLIDATED - RECONCILIATION OF GAAP AND NON-GAAP TAX PROVISION (BENEFIT):

Three Months Ended

Nine Months Ended

September 29,
2024

September 29,
2024

GAAP tax provision

$ 15

2.1 %

$ 44

(3.2) %

Incremental non-GAAP tax expense (b)

59

177

Income tax provision (c)

(1)

(3)

GILTI, US foreign tax credits, and global minimum top-up tax (d)

(25)

(141)

Non-GAAP tax provision (a)

$ 48

21.0 %

$ 77

23.4 %

Three Months Ended

Nine Months Ended

October 1,
2023

October 1,
2023

GAAP tax (benefit) provision

$ (28)

3.6 %

$ 36

(3.8) %

Incremental non-GAAP tax expense (b)

102

108

Income tax provision (c)

(1)

(9)

GILTI and US foreign tax credits (d)

(38)

(63)

Non-GAAP tax provision (a)

$ 35

39.7 %

$ 72

38.3 %

(a)

Non-GAAP tax provision excludes the effects of the pro forma adjustments detailed above, which have been excluded to assist investors in analyzing and assessing past and future operating performance.

(b)

Incremental non-GAAP tax expense reflects tax impact of the non-GAAP adjustments listed in Table 2 and 4.

(c)

Amounts represent the difference between book and tax accounting related to stock-based compensation cost.

(d)

Amounts represent the impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of US foreign tax credits, and the Pillar Two global minimum top-up tax, which became effective in Q1 2024.