Illumina ILMN · USD

12. SEGMENT AND GEOGRAPHIC INFORMATIONReportable Segment InformationAs of December 28, 2025, we have one reportable segment, Core Illumina. Prior to the Spin-Off of GRAIL, on June 24, 2024, our reportable segments included both Core Illumina and GRAIL. See note 8. GRAIL Spin-Off for details. We continue to disclose certain historical information for GRAIL prior to the Spin-Off. Segment information is consistent with how our Chief Operating Decision Maker (CODM), who is our Chief Executive Officer, reviews financial information, makes operating decisions, allocates resources, and assesses performance. We also consider the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined. Core Illumina: Core Illumina’s products and services serve customers in the research, clinical and applied markets, and enable the adoption of a variety of genomic solutions. Core Illumina sells products and provides services to GRAIL, and vice versa, in accordance with contractual agreements between the entities.GRAIL: GRAIL is a healthcare company focused on early detection of multiple cancers. Prior to the Spin-Off of GRAIL into a separate, independent public company, GRAIL was required to be held and operated separately and independently from Illumina pursuant to the transitional measures ordered by the European Commission. Our CODM allocates resources and evaluates business performance based on revenues and net income (loss). Net income (loss) is used in the annual budgeting and monthly forecasting processes and to monitor and assess budgeted/forecasted versus actual results. Our CODM does not evaluate segments using asset information. The accounting policies for segments are the same as those described in the summary of significant accounting policies.

2. REVENUEOur revenue is generated from the sale of products and services. Product revenue consists of sales of instruments and consumables used in genetic analysis. Service and other revenue consists of revenue generated from genotyping and sequencing services, instrument service contracts, development and licensing agreements, and prior to the Spin-Off of GRAIL on June 24, 2024, cancer detection testing services related to the GRAIL business. Revenue by Source202520242023In millionsSequencingMicroarrayTotalSequencingMicroarrayTotalSequencingMicroarrayTotalConsumables$2,939 $288 $3,227 $2,858 $297 $3,155 $2,790 $293 $3,083 Instruments465 17 482 484 17 501 685 19 704 Total product revenue3,404 305 3,709 3,342 314 3,656 3,475 312 3,787 Service and other revenue581 53 634 651 65 716 637 80 717 Total revenue$3,985 $358 $4,343 $3,993 $379 $4,372 $4,112 $392 $4,504 Revenue by Geographic AreaBased on region of destination (in millions)202520242023Americas (1)$2,406 $2,441 $2,521 Europe1,264 1,185 1,140 Greater China (2)243 308 384 Asia-Pacific, Middle East and Africa (3)430 438 459 Total revenue$4,343 $4,372 $4,504 _____________(1)Americas revenue included United States revenue of $2,243 million, $2,288 million, and $2,359 million in 2025, 2024, and 2023, respectively.(2)Region includes revenue from China, Taiwan, and Hong Kong.(3)Region includes revenue from Russia and Turkey.Contract Assets and LiabilitiesContract assets, which consist of revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing, as of December 28, 2025 and December 29, 2024, were $21 million and $16 million, respectively, all of which were short-term and recorded in prepaid expenses and other current assets.Contract liabilities, which consist of deferred revenue and customer deposits, as of December 28, 2025 and December 29, 2024, were $346 million and $327 million, respectively, of which the short-term portions of $270 million and $260 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded in 2025 included $244 million of previously deferred revenue that was included in contract liabilities as of December 29, 2024. Remaining Performance ObligationsWe regularly enter into contracts with multiple performance obligations. These contracts are believed to be firm as of the balance sheet date.

5. DEBT AND OTHER COMMITMENTSSummary of Term Debt ObligationsIn millionsDecember 28,2025December 29,2024Principal amount of 2025 Term Notes outstanding— 500 Principal amount of 2026 Term Notes outstanding500 500 Principal amount of 2027 Term Notes outstanding500 500 Principal amount of 2030 Term Notes outstanding500 — Principal amount of 2031 Term Notes outstanding500 500 Unamortized discounts and debt issuance costs(11)(11)Net carrying amount of term debt1,989 1,989 Less: current portion499 499 Term debt, non-current$1,490 $1,490 Fair value of term debt outstanding (Level 2)$1,977 $1,940 Interest expense recognized on our outstanding debt obligations, which included amortization of debt discounts and debt issuance costs, was $99 million in 2025 and 2024, respectively, and $74 million in 2023.4.750% Term Notes due 2030 (2030 Term Notes)On November 25, 2025, we issued $500 million aggregate principal amount of 2030 Term Notes. After deducting discounts and issuance costs, we received net proceeds of $495 million. The 2030 Notes, which mature on December 12, 2030, accrue interest at a rate of 4.750% per annum, payable semi-annually on June 12 and December 12 of each year, beginning on June 12, 2026. We may redeem for cash all or any portion of the 2030 Term Notes, at our option, at any time prior to maturity at make-whole premium redemption prices as defined in the form of the notes.4.650% Term Notes due 2026 (2026 Term Notes)On September 9, 2024, we issued $500 million aggregate principal amount of 2026 Term Notes. After deducting discounts and issuance costs, we received net proceeds of $497 million, which were used to repay a portion of the outstanding debt under the Delayed Draw Credit Agreement. The 2026 Term Notes, which mature on September 9, 2026, accrue interest at a rate of 4.650% per annum, payable semi-annually on March 9 and September 9 of each year, beginning on March 9, 2025. We may redeem for cash all or any portion of the 2026 Term Notes, at our option, at any time prior to maturity at make-whole premium redemption prices as defined in the form of the notes.5.800% Term Notes due 2025 (2025 Term Notes) and 5.750% Term Notes due 2027 (2027 Term Notes)In December 2022, we issued $500 million aggregate principal amount of 2025 Term Notes and $500 million aggregate principal amount of 2027 Term Notes. The 2025 Term Notes matured and were repaid in cash on December 12, 2025.

10. INCOME TAXESIncome (loss) before income taxes summarized by region was as follows: In millions202520242023United States$331 $(1,834)$(1,735)Foreign755 655 618 Total income (loss) before income taxes$1,086 $(1,179)$(1,117)The provision for income taxes consisted of the following: In millions202520242023Current: Federal$— $6 $(5)State13 18 6 Foreign104 137 77 Total current provision117 161 78 Deferred:Federal106 (59)(13)State19 (56)(26)Foreign(6)(2)5 Total deferred benefit119 (117)(34)Total tax provision$236 $44 $44 During the year ended December 28, 2025, we adopted ASU 2023-09 to enhance the income tax disclosures regarding income taxes paid and the rate reconciliation disclosure. The provision for income taxes reconciles to the amount computed by applying the federal statutory rate to income (loss) before income taxes as follows: 202520242023Dollars in millions$%$%$%US federal statutory tax rate$228 21.0 %$(248)21.0 %$(235)21.0 %State and local income taxes, net of federal income tax effect (1)22 2.0 %(36)3.1 %(32)2.9 %Foreign tax effectsSingaporeStatutory rate difference between Singapore and US(54)(5.0)%(110)9.3 %(103)9.2 %Change in valuation allowance(74)(6.8)%(3)0.3 %31 (2.8)%Nondeductible R&D expense2 0.2 %15 (1.3)%2 (0.2)%Other10 0.9 %12 (1.0)%3 (0.2)%United KingdomPillar 2 (Global Minimum Tax) top-up tax10 0.9 %54 (4.6)%— — %Other15 1.4 %4 (0.3)%(2)0.2 %Other foreign jurisdictions16 1.5 %20 (1.7)%8 (0.7)%Effect of changes in tax laws or rates enacted in current period— — %— — %— — %Effect of cross-border tax lawsGlobal intangible low-taxed income (GILTI)12 1.1 %121 (10.3)%153 (13.7)%Subpart F income(15)(1.4)%23 (2.0)%20 (1.8)%Foreign-derived intangible income (FDII)(5)(0.5)%(4)0.3 %5 (0.4)%Tax CreditsResearch tax credits(16)(1.5)%(21)1.8 %(27)2.4 %Change in valuation allowances44 4.1 %14 (1.2)%(2)0.2 %Nontaxable or nondeductible itemsStock compensation17 1.6 %16 (1.4)%31 (2.8)%Goodwill impairment— — %308 (26.1)%149 (13.3)%Accrual of European Commission fine— — %(99)8.4 %3 (0.3)%Impact of acquisition related items(3)(0.3)%(46)3.9 %8 (0.7)%Other6 0.6 %4 (0.3)%— — %Changes in unrecognized tax benefits22 2.0 %19 (1.6)%32 (2.9)%Other adjustments(1)(0.1)%1 (0.1)%— — %Total tax provision, effective tax rate$236 21.7 %$44 (3.8)%$44 (3.9)%_____________(1)State taxes in California, Massachusetts, Illinois and Maryland made up the majority (greater than 50%) of the tax effect in this category for 2025.

We recognize the importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. Our cybersecurity risk management strategy is integrated into our established enterprise risk management program, which includes defined risk, assessment, mitigation, and reporting processes. Our information security team has deployed multiple technical and operational processes to aid in our ability to continuously identify and respond to cybersecurity threats and incidents. Our cybersecurity incident management process includes impact assessment, containment, mitigation and recovery strategies.In addition to our continuous monitoring of our information systems, we utilize third parties to provide external threat intelligence and evaluation of incident notifications in order to identify potential threats or incidents that could impact us. We also evaluate our cybersecurity program against the National Institute of Standards and Technology’s Cybersecurity Framework. For all suspected cybersecurity incidents, the information security team conducts a preliminary assessment to determine the potential severity and impact extent of the incident and, where appropriate, a materiality assessment is made. Upon a confirmed cybersecurity incident, the information security team initiates an incident response process with goals to contain, respond, recover, protect and minimize any impacts caused by the incident. The response process includes deployment of a variety of short term and long-term technical and procedural actions as appropriate. Further, we have established a third party risk management program to monitor suppliers who have access to our information.

8. GRAIL SPIN-OFFOn June 24, 2024, we completed the Spin-Off of GRAIL into a separate, independent publicly traded company through the distribution of 26,547,021 shares of GRAIL common stock to Illumina stockholders on a pro rata basis. The GRAIL common stock distributed in the Spin-Off consisted of approximately 85.5% of the outstanding common stock of GRAIL as of the Record Date. The Spin-Off was structured as a tax-free spin-off and Illumina stockholders received one share of GRAIL common stock for every six shares of Illumina common stock held on the Record Date. We retained approximately 14.5% of the shares of GRAIL common stock immediately following the Spin-Off. The disposition of GRAIL did not meet the criteria to be reported as a discontinued operation and accordingly, GRAIL’s assets, liabilities, results of operations and cash flows have not been reclassified. As part of the Spin-Off, we contributed to GRAIL an amount, in cash, to cover 2.5 years of GRAIL’s operations (the Disposal Funding), which was determined to be $974 million, less the cash and cash equivalents held by GRAIL.The carrying amounts of GRAIL’s assets and liabilities included as part of the disposal group were as follows:In millionsCash and cash equivalents$968 Accounts receivable, net13 Inventory, net22 Prepaid expenses and other current assets27 Property and equipment, net80 Operating lease right-of-use assets74 Intangible assets, net (1)2,201 Other assets14 Accounts payable(12)Accrued liabilities (118)Operating lease liabilities(62)Other long term-liabilities(469)GRAIL net assets$2,738 Amount of GRAIL net assets recorded to short-term investments$397 Amount of GRAIL net assets recorded to additional paid-in capital$2,341 Additional adjustments recorded to additional paid-in capital as a result of the GRAIL Spin-Off:Non-contingent indemnification liability (see Note 7)1 Tax adjustment for difference between the book and tax values of our retained investment in GRAIL57 Total recorded to additional paid-in capital as a result of the GRAIL Spin-Off$2,399 _____________(1)Includes IPR&D with a carrying value of $140 million after impairment. Refer to note 4. Intangible Assets, Goodwill and Acquisitions.See note 12. Segment and Geographic Information for GRAIL’s results of operations, prior to the Spin-Off, included in our consolidated statements of operations for the periods presented within.

9. LEGAL PROCEEDINGSWe are involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. In connection with these matters, we assess, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the consolidated financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows.Shareholder Derivative ComplaintsOn October 17, 2023, a stockholder derivative and class action complaint captioned Icahn Partners LP, et al. v. deSouza, et al., purportedly brought on behalf of Illumina and public holders of Illumina’s common stock, was filed in the Delaware Court of Chancery against certain current and former directors (including our former Chief Executive Officer). We are named as a nominal defendant in the complaint. The lawsuit alleges the named directors breached their fiduciary duties by knowingly causing Illumina to unlawfully close the GRAIL acquisition, concealing material facts related to the GRAIL acquisition and making inadequate disclosures. Before the filing of the complaint, the purported stockholders did not make a demand that our Board of Directors pursue the claims asserted therein. The complaint seeks damages, costs and expenses, including attorney fees, the certification and consolidation of a putative class, the issuance of amended disclosures, the removal of conflicted directors and declaratory and other equitable relief. On November 1, 2023, the defendants filed a motion to dismiss the complaint.

13. SUBSEQUENT EVENTSOn January 30, 2026, we acquired SomaLogic and other specified assets from Standard BioTools for a $350 million upfront cash payment, subject to customary adjustments. The Stock Purchase Agreement, which we entered into on June 22, 2025, further provides for, in connection with the revenues generated from certain products and services, (i) royalty streams and (ii) up to $75 million in potential milestone payments to Standard BioTools. We also acquired an intellectual property portfolio on January 30, 2026 for a $50 million upfront cash payment.