Financial Trends -- 5/10
ILMN financial trends score a moderate 5/10. Revenue has declined for three consecutive years (2023-2025)
on a reported basis, falling from a $4.58B peak in FY2022 to $4.34B in FY2025. However, the quarterly
trajectory inflected positive in Q3 2025 (+0.4% YoY) and accelerated to +5.0% in Q4. Non-GAAP EPS grew
+16% YoY to $4.84, and FCF staged a strong recovery to $931M -- exceeding pre-GRAIL levels. Gross margins
recovered to 66.1% from the 2023 trough of 60.9% but remain below 2020-2021 peaks. Instrument revenue
is in structural decline from the NovaSeq X transition, while clinical consumables are the clear bright
spot at +20% ex-China in Q4 2025. 2026 guidance of 4-6% revenue growth and ~10% EPS growth marks the
potential inflection point.
Weight: 25%
FY2025 Revenue
$4,343M
-0.7% YoY | 3rd year of decline
Non-GAAP EPS
$4.84
+16.3% YoY | Q4 +42% YoY
Gross Margin
66.1%
Recovering from 60.9% trough | below 69.7% peak
FY2025 FCF
$931M
+34% YoY | exceeds pre-GRAIL levels
Revenue Trajectory (Annual, USD M) -- Calendar FY
Revenue has declined for three consecutive years but the rate of decline is decelerating.
Annual YoY growth: -1.7% (2023) to -2.9% (2024) to -0.7% (2025). On an ex-China constant-currency
basis, revenue returned to growth in H2 2025 (+2% for the year, +7% in Q4). Consumables ($2.94B)
are the recurring revenue engine at ~68% of total. Instrument revenue ($465M) continues to decline
as the NovaSeq X transition matures -- guided flat to slightly down in 2026. FY2026 guidance of
$4.5-4.6B implies 4-6% reported growth, the first positive annual growth since FY2022.
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Total Revenue | $3,239M | $4,526M | $4,584M | $4,504M | $4,372M | $4,343M |
| YoY Growth | — | 39.7% | 1.3% | -1.7% | -2.9% | -0.7% |
| Consumables | $2,039M | $2,914M | $2,940M | $2,813M | $2,872M | $2,939M |
| Consumables YoY | — | 42.9% | 0.9% | -4.3% | 2.1% | 2.3% |
| Instruments | $417M | $736M | $710M | $687M | $484M | $465M |
| Instruments YoY | — | 76.5% | -3.5% | -3.2% | -29.5% | -3.9% |
Revenue peaked at $4.58B in FY2022. Three consecutive years of decline (2023-2025). FY2026 guidance: $4.5-4.6B (4-6% reported growth). Data from Daloopa and ILMN 10-K filings.
Quarterly Revenue and YoY Growth
Inflection visible: Q3 2025 turned positive (+0.4% YoY), Q4 accelerated to +5.0%.
Sequential acceleration from -4.8% (Q2) to +0.4% (Q3) to +5.0% (Q4) is the clearest positive signal.
Q4 2025 revenue of $1,159M was the highest quarterly figure in 2 years. Clinical consumables grew ~20%
ex-China in Q4 driven by broader NGS adoption and whole exome-to-whole genome transition. The Q4 exit
rate supports the 4-6% full-year 2026 revenue growth guidance.
| Metric | Q1 24 | Q2 24 | Q3 24 | Q4 24 | Q1 25 | Q2 25 | Q3 25 | Q4 25 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | $1,076M | $1,112M | $1,080M | $1,104M | $1,041M | $1,059M | $1,084M | $1,159M |
| YoY Growth | -1.0% | -5.4% | -3.5% | -1.6% | -3.3% | -4.8% | 0.4% | 5.0% |
| Consumables ($M) | — | — | $741M | $698M | $696M | $740M | $747M | $755M |
| Consumables YoY | — | — | 6.6% | 1.6% | -0.3% | 0.4% | 0.8% | 8.2% |
Q4 2025 revenue of $1,159M is the highest quarterly figure since Q4 2023. Clinical consumables +20% ex-China in Q4. Data from Daloopa and ILMN earnings transcripts.
Revenue Mix: Consumables Recovery, Instruments Declining
Consumables returned to low-single-digit growth (+2.3% YoY) while instruments declined -3.9%.
The NovaSeq X transition created pricing headwinds in 2023-2024 as customers migrated from higher-priced
NovaSeq 6000 flow cells. Clinical consumables grew ~16% ex-China in H2 2025, with Q4 reaching 20%
ex-China -- genuinely strong. Research consumables remain a drag (mid-to-high single-digit declines).
Instrument revenue fell -29.5% in 2024 as the transition matured; now stabilizing at ~$465M with
50-60 NovaSeq X placements per quarter. Over 60% of Q4 placements were clinical customers.
Consumables at 68% of total revenue in FY2025. Clinical consumables +20% ex-China in Q4 2025. Instrument installed base: 890 active NovaSeq X units. Data from Daloopa and ILMN transcripts.
Profitability: Margin Expansion and EPS Acceleration
Margin expansion is the strongest dimension of the financial turnaround.
Gross margin recovered from the 2023 trough of 60.9% to 66.1% in FY2025, though still ~360 bps below
the 2021 peak of 69.7%. Non-GAAP operating margin expanded ~180 bps to ~22.0% in FY2025, with Q4
hitting 23.7% (up 400 bps YoY). Management targets 26% non-GAAP operating margin by 2027. Non-GAAP
EPS of $4.84 grew +16.3% YoY, with clear quarterly acceleration: Q4 grew +42% YoY on operating leverage
and cost discipline. 2026 guidance: $5.00-$5.20 EPS (~10% growth ex-Somalogic).
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Gross Margin | 68.0% | 69.7% | 64.8% | 60.9% | 65.4% | 66.1% |
| Non-GAAP Op Margin | — | — | — | — | 20.2% | 22.0% |
| GAAP EPS | — | — | — | — | $5.6 | $5.5 |
| Non-GAAP EPS | — | — | — | — | $4.2 | $4.8 |
Gross margin troughed at 60.9% in FY2023 (GRAIL drag + NovaSeq X transition). Q4 2025 non-GAAP operating margin 23.7%. 2026 guide: 23.3-23.5% op margin, $5.00-$5.20 EPS. Data from Daloopa and ILMN filings.
Free Cash Flow: Strong Recovery to $931M
FCF recovery is the strongest financial trend -- from $106M trough in 2022 to $931M in 2025.
FCF now exceeds the pre-GRAIL level of $891M in 2020. Cash conversion is excellent, funding $740M
of share repurchases in FY2025 (reducing share count by 3.5%). Quarterly FCF has been consistently
strong at $200-320M per quarter since Q3 2024. This is unambiguously the most positive financial
data point in the ILMN turnaround story.
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Free Cash Flow | $891M | $337M | $106M | $283M | $695M | $931M |
| FCF YoY Growth | — | -62.2% | -68.5% | 167.0% | 145.6% | 34.0% |
| Shares (M) | 128.2M | 157.0M | 158.0M | 158.9M | 158.4M | 152.9M |
FCF troughed at $106M in FY2022 during GRAIL period. $740M in share repurchases in FY2025. Diluted shares declined 3.5% to 152.9M. Data from Daloopa and ILMN 10-K filings.
Forward Estimates and 2026 Guidance
Trailing P/E
23.4x
On FY2025 GAAP EPS of $5.45
FY2026 Rev Guide
$4.5-4.6B
4-6% reported growth
FY2026 EPS Guide
$5.00-5.20
~10% growth ex-Somalogic
Next Earnings
May 7
Q1 2026 results
2026 guidance represents a credible inflection but is not yet delivered.
Revenue of $4.5-4.6B implies 4-6% reported growth (organic ex-China 2-4%). Non-GAAP operating margin
guided at 23.3-23.5% (including ~100 bps Somalogic dilution; ex-Somalogic implies +130 bps expansion).
Long-range target: 26% non-GAAP operating margin by 2027. Clinical consumables expected to grow
double-digit to mid-teens. Research consumables expected to decline mid-to-high single digits.
Instruments guided flat to slightly down with 50-60 X placements per quarter continuing.
FY2026 guidance from Q4 2025 earnings call. Trailing P/E of 23.4x on GAAP EPS. Next earnings: May 7, 2026.
Acceleration / Deceleration Analysis
| Metric | Trend | Direction |
|---|---|---|
| Total Revenue YoY | -2.9% to -0.7% (FY); Q4 +5.0% | Accelerating |
| Seq. Consumables YoY | +2.1% to +2.3% (FY); Q4 +8.2% | Accelerating |
| Seq. Instruments YoY | -29.5% to -3.9% (FY) | Stabilizing (negative) |
| Gross Margin | 60.9% to 65.4% to 66.1% | Recovering |
| Non-GAAP Op Margin | ~20.2% to ~22.0%; Q4 23.7% | Expanding |
| Non-GAAP EPS | +16.3% FY; Q4 +42% | Accelerating |
| Free Cash Flow | $695M to $931M (+34%) | Accelerating |
| Share Count | 158.4M to 152.9M (-3.5%) | Buyback tailwind |
Overall trajectory: accelerating off a low base.
Revenue inflection is real but recent (only 2 quarters of positive YoY growth). Margin expansion and
FCF recovery are well-established. EPS growth is strong but partly from cost cuts and buybacks, not
organic top-line leverage. If Q1/Q2 2026 confirms continued acceleration, this score would move toward
a 6.
Acceleration analysis based on FY2024 to FY2025 trends. Revenue inflection visible in Q3-Q4 2025. Data from Daloopa.
Key Financial Signals
Positive Signals
1. FCF recovery to $931M -- exceeds pre-GRAIL levels; excellent cash conversion
2. Non-GAAP EPS +16.3% YoY -- Q4 accelerated to +42%; genuine operating leverage
3. Q4 revenue +5.0% YoY -- clearest inflection signal after 3 years of decline
4. Clinical consumables +20% ex-China (Q4) -- NGS adoption broadening
5. Operating margin expanding -- Q4 23.7%, targeting 26% by 2027
6. Share buybacks reducing count -- $740M deployed, -3.5% share reduction
7. Sequencing output growing 30%+ YoY -- volume utilization accelerating
8. 890 active NovaSeq X installed base -- platform transition maturing
2. Non-GAAP EPS +16.3% YoY -- Q4 accelerated to +42%; genuine operating leverage
3. Q4 revenue +5.0% YoY -- clearest inflection signal after 3 years of decline
4. Clinical consumables +20% ex-China (Q4) -- NGS adoption broadening
5. Operating margin expanding -- Q4 23.7%, targeting 26% by 2027
6. Share buybacks reducing count -- $740M deployed, -3.5% share reduction
7. Sequencing output growing 30%+ YoY -- volume utilization accelerating
8. 890 active NovaSeq X installed base -- platform transition maturing
Negative / Concerning Signals
1. Three years of annual revenue decline -- FY2023-FY2025 still negative at FY level
2. Instrument revenue in structural decline -- NovaSeq X lower ASP; guided flat-to-down
3. Gross margin still below 2020-2021 peaks -- 66.1% vs 68-70%; tariff headwinds
4. Research end market weakness -- NIH funding uncertainty; mid-to-high single-digit declines
5. China headwind -- export restrictions; less than 5% of revenue but persistent drag
6. GAAP EPS declined -2.9% in FY2025 -- one-time items offset non-GAAP growth
7. Somalogic dilution in 2026 -- ~100 bps op margin, ~$0.18 EPS headwind
8. Revenue inflection unproven -- only 2 quarters of positive YoY growth so far
2. Instrument revenue in structural decline -- NovaSeq X lower ASP; guided flat-to-down
3. Gross margin still below 2020-2021 peaks -- 66.1% vs 68-70%; tariff headwinds
4. Research end market weakness -- NIH funding uncertainty; mid-to-high single-digit declines
5. China headwind -- export restrictions; less than 5% of revenue but persistent drag
6. GAAP EPS declined -2.9% in FY2025 -- one-time items offset non-GAAP growth
7. Somalogic dilution in 2026 -- ~100 bps op margin, ~$0.18 EPS headwind
8. Revenue inflection unproven -- only 2 quarters of positive YoY growth so far
Score Buildup and Penalty Modifiers
| Component | Points | Notes |
|---|---|---|
| Base score: turnaround with mixed evidence | 5.0 | Revenue declining at annual level; quarterly inflection recent |
| Three years of revenue decline (2023-2025) | -1.5 | Reported revenue still declining at the annual level |
| Instrument revenue in structural decline | -0.5 | NovaSeq X transition created a step-down; guided flat-to-down |
| Gross margin still below 2020-2021 levels | -0.5 | 66.1% vs 68-70% historical; tariff headwinds persisting |
| Research end market weakness | -0.5 | NIH funding uncertainty; mid-to-high single-digit declines |
| China headwind (export restrictions) | -0.5 | Less than 5% of revenue but still a drag |
| Strong FCF recovery | +1.0 | $931M FCF, exceeding pre-GRAIL levels |
| Non-GAAP EPS growth of 16% | +0.5 | Genuine operating leverage |
| Q4 2025 acceleration visible | +0.5 | Clinical consumables +20% ex-China; total revenue +5% YoY |
| Share count reduction | +0.5 | Buyback program supporting per-share growth |
| Total Score | #C0392B | Turnaround working but not yet proven across all dimensions |
Score reflects turnaround gaining momentum but with unproven top-line recovery. Base 5.0, penalties -3.5, bonuses +2.5 = 5/10 (rounding favors base). If Q1/Q2 2026 confirms acceleration, score moves to 6. Data from Daloopa.