Illumina Reports Strong Q2 2025 Financial Results, Raises Outlook for the Full Year
Illumina, Inc. a global leader in DNA sequencing and array-based technologies, has announced its financial results for the second quarter of fiscal year 2025, showcasing solid performance that exceeded internal guidance despite macroeconomic challenges.
“The Illumina team again delivered results that exceeded our guidance, driven by the continued ramp in X consumables, as well as accelerating growth in clinical, our largest customer segment,” said Jacob Thaysen, Chief Executive Officer of Illumina. “In the research sector, we continue supporting our partners through the headwinds of a constrained funding environment. Even in these challenging conditions, our commitment to operational excellence helped drive margin expansion and allowed us to raise our expectations for the remainder of the year.”
Core Financial Highlights – Q2 2025
Illumina reported total revenue of $1.059 billion for the second quarter of fiscal 2025, compared to $1.092 billion in the same quarter last year. While this reflects a slight year-over-year decline, revenue was in line with expectations and outperformed internal guidance.
Gross margin on a GAAP basis stood at 65.6%, down from 68.0% in Q2 2024, primarily due to a $23 million impairment of an acquired intangible asset. On a non-GAAP basis, gross margin remained flat at 69.4%, supported by a favorable product mix and reduced exposure to lower-margin strategic partnership revenues. However, higher field service costs and tariffs contributed to cost pressures.
Research and development (R&D) expenses reached $247 million (GAAP) and $243 million (non-GAAP), compared to $241 million a year ago, reflecting consistent investment in product innovation and clinical applications.
Selling, general, and administrative (SG&A) expenses totaled $234 million (GAAP), which was lower than the $275 million reported in Q2 2024. Non-GAAP SG&A was $241 million, compared to $275 million the previous year.
Operating profit on a GAAP basis fell to $214 million, compared to $442 million in Q2 2024. On a non-GAAP basis, however, operating profit increased slightly to $252 million, up from $242 million last year, resulting in an operating margin of 23.8% (non-GAAP), an improvement over the 22.2% recorded in the prior-year quarter.
Illumina reported GAAP net income of $235 million, up significantly from $66 million in Q2 2024. On a non-GAAP basis, net income was $187 million, compared to $174 million last year. Diluted earnings per share (EPS) came in at $1.49 (GAAP) and $1.19 (non-GAAP), both reflecting solid year-over-year growth.
Cash Flow and Balance Sheet Metrics
The company generated $234 million in cash flow from operations during the second quarter, slightly below the $243 million recorded in Q2 2024. Capital expenditures totaled $30 million, resulting in free cash flow of $204 million, compared to $213 million a year ago. Depreciation and amortization expenses were reported at $68 million.
Illumina ended the quarter with $1.16 billion in cash, cash equivalents, and short-term investments, providing ample liquidity for strategic initiatives and operational needs.
The company also returned significant capital to shareholders, repurchasing $380 million worth of shares during the quarter. Illumina indicated it plans to continue share repurchases throughout the year, with approximately $800 million in remaining authorization.
Recent Highlights and Strategic Initiatives
Since the last earnings announcement, Illumina has made several key product and strategic developments:
- Launched TruSight Oncology 500 v2 (TSO 500 v2): An updated version of Illumina’s comprehensive genomic profiling assay for cancer research.
- Recognition for Sustainability and Workplace Excellence: Illumina was named to TIME’s World’s Most Sustainable Companies list for the second year and U.S. News & World Report’s Best Companies to Work For list.
- SomaLogic Acquisition Agreement: Illumina entered into a definitive agreement with Standard BioTools to acquire SomaLogic and other specified assets, enhancing its proteomics and multiomic capabilities.
- Introduced PromoterAI: A groundbreaking AI algorithm designed to accurately identify pathogenic regulatory variants in noncoding regions of the human genome.
- Regulatory Milestone in Japan: Received approval from Japan’s Ministry of Health, Labour and Welfare (MHLW) for TruSight™ Oncology Comprehensive, classified as a Class III/IV Specially Controlled Medical Device.
- Launch of DRAGEN™ v4.4 Software: A new release of its industry-leading secondary analysis platform, supporting oncology and multiomic research.
Outlook for the Remainder of Fiscal Year 2025
Illumina reaffirmed and raised aspects of its full-year guidance, citing confidence in continued clinical momentum and improved margin execution. The company provides financial guidance primarily on a non-GAAP and constant currency basis due to variability in one-time expenses, strategic gains or losses, foreign exchange fluctuations, and litigation-related impacts that are difficult to forecast precisely.
While the company cannot reconcile all forward-looking non-GAAP measures to their respective GAAP counterparts, Illumina emphasized that these non-GAAP metrics are valuable tools for evaluating performance trends and guiding investor decisions.
Use of Non-GAAP Financial Measures
Illumina reports select financial measures on a non-GAAP basis, including diluted EPS, operating income, operating margin, tax provision, net income, and free cash flow. These metrics are intended to provide greater transparency into the company’s core operating performance by excluding items such as amortization of intangible assets, acquisition-related costs, litigation expenses, and other significant but infrequent items. Management uses these non-GAAP metrics internally and encourages investors to review both GAAP and non-GAAP financial results to gain a more complete picture of the company’s financial health and strategy.
