Illumina shares drop 15.3% after hours after raised 2026 guidance

Illumina, Inc. (ILMN) raised its fiscal 2026 revenue and earnings forecast on Oct. 29, after reporting third-quarter results that the company said were above its guidance.

Shares fell 15.3% in after-hours trading as of 4:12 p.m. ET, from a regular-session close of $289.42.

Here's how the company did:

• Revenue: $1.13 billion vs. $1.08 billion a year earlier
• Non-GAAP diluted EPS: $1.62 vs. $1.34 a year earlier, or $1.44 excluding tariff refunds
• GAAP diluted EPS: $1.43 vs. 98 cents a year earlier

Revenue rose 4.2% from a year earlier. Excluding tariff refunds, revenue was $1.17 billion.

The company's rest-of-world organic revenue growth, which excludes currency, acquisitions and the Greater China region, was 4.7%.

The company recognized a $79 million benefit from International Emergency Economic Powers Act tariff refunds as a reduction to cost of revenue. It also reduced revenue by $37 million for the portion of refunds it expects to credit to customers.

GAAP operating margin was 27.0%, up from 21.0% a year earlier. Non-GAAP operating margin was 28.8%, up from 24.5%, or 25.0% excluding tariff refunds.

Chief Executive Officer Jacob Thaysen said the results were driven by demand. "In the third quarter, healthy clinical demand and robust NovaSeq X placements drove results above our guidance." Thaysen added, "Based on continued momentum, we are raising our full year revenue and earnings guidance."

2026 guidance

The company now expects fiscal 2026 total revenue of $4.64 billion to $4.66 billion, up from its prior range of $4.60 billion to $4.64 billion. These figures exclude tariff refunds.

It expects non-GAAP operating margin of 23.6%, versus a prior range of 23.4% to 23.6%.

Non-GAAP diluted EPS is now expected at $5.40 to $5.45, versus a prior range of $5.30 to $5.40. The company left its organic revenue growth outlook unchanged, at greater than 4%, and its rest-of-world organic revenue growth outlook unchanged, at greater than 5%.

Cash flow and charges

Cash flow from operations was $419 million in the quarter, compared with $284 million a year earlier. Free cash flow was $378 million, compared with $253 million.

The company held $1.34 billion in cash, cash equivalents and short-term investments at the close of the quarter.

Non-GAAP results exclude acquisition-related costs and implementation costs for an ERP system upgrade. In the quarter, the company recorded a strategic investment loss of 19 cents per share, which it excluded from non-GAAP EPS.

The company will hold a conference call at 1:30 p.m. Pacific Time, or 4:30 p.m. Eastern Time, on Thursday, Oct. 29.