Illumina Reports Financial Results for Second Quarter of Fiscal Year 2024

GAAP

Non-GAAP (a)

Dollars in millions, except per share amounts

Q2 2024

Q2 2023

Q2 2024

Q2 2023

Revenue

$  1,112

$  1,176

$  1,112

$  1,176

Gross margin

64.8 %

62.2 %

69.0 %

66.5 %

Research and development (“R&D”) expense

$     325

$     358

$     325

$     345

Selling, general and administrative (“SG&A”) expense

$     147

$     462

$     358

$     355

Goodwill and intangible impairment (b)

$  1,886

$       —

$       —

$       —

Operating (loss) profit

$ (1,637)

$     (88)

$       84

$       82

Operating margin

(147.2) %

(7.5) %

7.6 %

7.0 %

Tax provision

$       12

$     145

$       16

$       33

Tax rate

(0.6) %

(163.8) %

22.3 %

39.3 %

Net (loss) income

$ (1,988)

$   (234)

$       57

$       50

Diluted (loss) earnings per share

$ (12.48)

$   (1.48)

$    0.36

$    0.32

(a) See the tables included in the “Results of Operations – Non-GAAP” section below for reconciliations of these GAAP and non-GAAP financial measures.

(b) During the second quarter of 2024, the company recognized $1,466 million in goodwill and $420 million in intangible asset (IPR&D) impairment related to the GRAIL segment.

GAAP

Non-GAAP (a)

Dollars in millions

Q2 2024

Q2 2023

Q2 2024

Q2 2023

Revenue (b)

$  1,092

$  1,159

$  1,092

$  1,159

Gross margin (c)

68.0 %

65.5 %

69.4 %

67.0 %

R&D expense

$     241

$     274

$     241

$     261

SG&A expense

$       60

$     371

$     275

$     270

Operating profit

$     442

$     115

$     242

$     245

Operating margin

40.5 %

9.9 %

22.2 %

21.2 %

Tax provision

$       35

*

$       55

*

Tax rate

35.0 %

*

24.2 %

*

Net income

$       66

*

$     174

*

Diluted earnings per share

$    0.41

*

$    1.09

*

* Prior year information not provided.

(a) See the tables included in the “Results of Operations – Non-GAAP” section below for reconciliations of these GAAP and non-GAAP financial measures.

(b) Core Illumina revenue for Q2 2024 was down 6% as compared to Q2 2023 and down 6% on a constant currency basis. Amounts for Q2 2024 and Q2 2023 included intercompany revenue of $9 million and $5 million, respectively, which is eliminated in consolidation.

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

GAAP

Non-GAAP (a)

In millions

Q2 2024

Q2 2023

Q2 2024

Q2 2023

Revenue

$       29

$          22

$       29

$          22

Gross (loss) profit

$     (16)

$        (24)

$       15

$            9

R&D expense

$       88

$          89

$       88

$          89

SG&A expense

$       88

$          91

$       84

$          85

Goodwill and intangible impairment

$  1,886

$          —

$       —

$          —

Operating loss

$ (2,078)

$      (204)

$   (157)

$      (164)

(a) See Table 5 included in the “Results of Operations – Non-GAAP” section below for reconciliations of these GAAP and non-GAAP financial measures.

Illumina, Inc.

Condensed Consolidated Balance Sheets

(In millions)

June 30,
2024

December 31,
2023

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$            920

$         1,048

Short-term investments

74

6

Accounts receivable, net

641

734

Inventory, net

561

587

Prepaid expenses and other current assets

263

234

Total current assets

2,459

2,609

Property and equipment, net

859

1,007

Operating lease right-of-use assets

460

544

Goodwill

1,079

2,545

Intangible assets, net

278

2,993

Deferred tax assets, net

632

56

Other assets

314

357

Total assets

$         6,081

$       10,111

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$            199

$            245

Accrued liabilities

1,265

1,325

Term debt, current portion

744

—

Total current liabilities

2,208

1,570

Operating lease liabilities

616

687

Term debt

1,490

1,489

Other long-term liabilities

331

620

Stockholders’ equity

1,436

5,745

Total liabilities and stockholders’ equity

$         6,081

$       10,111

Illumina, Inc.

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

(unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

Revenue:

Product revenue

$            927

$         1,001

$        1,803

$        1,923

Service and other revenue

185

175

385

340

Total revenue

1,112

1,176

2,188

2,263

Cost of revenue:

Cost of product revenue (a)

250

305

504

591

Cost of service and other revenue (a)

95

91

202

190

Amortization of acquired intangible assets

46

48

94

96

Total cost of revenue

391

444

800

877

Gross profit

721

732

1,388

1,386

Operating expense:

Research and development (a)

325

358

660

699

Selling, general and administrative (a)

147

462

588

839

Goodwill and intangible impairment

1,886

—

1,889

—

Total operating expense

2,358

820

3,137

1,538

Loss from operations

(1,637)

(88)

(1,749)

(152)

Other expense, net

(339)

(1)

(337)

(15)

Loss before income taxes

(1,976)

(89)

(2,086)

(167)

Provision for income taxes

12

145

28

64

Net loss

$        (1,988)

$          (234)

$      (2,114)

$         (231)

Loss per share:

Basic

$        (12.48)

$         (1.48)

$      (13.28)

$        (1.46)

Diluted

$        (12.48)

$         (1.48)

$      (13.28)

$        (1.46)

Shares used in computing loss per share:

Basic

159

158

159

158

Diluted

159

158

159

158

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

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

Cost of product revenue

$                7

$                8

$            13

$            15

Cost of service and other revenue

1

6

4

12

Research and development

43

43

82

79

Selling, general and administrative

59

48

109

93

Stock-based compensation expense before taxes

$            110

$            105

$           208

$           199

Illumina, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

Net cash provided by operating activities

$              80

$            105

$           157

$           115

Net cash used in investing activities

(41)

(37)

(89)

(93)

Net cash used in financing activities

(225)

(3)

(191)

(476)

Effect of exchange rate changes on cash and cash equivalents

(2)

(6)

(5)

(4)

Net (decrease) increase in cash and cash equivalents

(188)

59

(128)

(458)

Cash and cash equivalents, beginning of period

1,108

1,494

1,048

2,011

Cash and cash equivalents, end of period

$            920

$         1,553

$           920

$        1,553

Calculation of free cash flow:

Net cash provided by operating activities

$              80

$            105

$           157

$           115

Purchases of property and equipment

(32)

(47)

(67)

(99)

Free cash flow (a)

$              48

$              58

$            90

$            16

(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 – Revenue by Segment

(Dollars in millions)

(unaudited)

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

% Change

June 30,
2024

July 2,
2023

% Change

Consolidated revenue

$         1,112

$         1,176

(5) %

$         2,188

$       2,263

(3) %

Less: Hedge gains

4

2

7

3

Consolidated revenue, excluding hedge effect

1,108

1,174

2,181

2,260

Less: Exchange rate effect

(5)

—

(7)

—

Consolidated constant currency revenue (a)

$         1,113

$         1,174

(5) %

$         2,188

$       2,260

(3) %

Core Illumina revenue

$         1,092

$         1,159

(6) %

$         2,148

$       2,235

(4) %

Less: Hedge gains

4

2

7

3

Core Illumina revenue, excluding hedge effect

1,088

1,157

2,141

2,232

Less: Exchange rate effect

(5)

—

(7)

—

Core Illumina constant currency revenue (a)

$         1,093

$         1,157

(6) %

$         2,148

$       2,232

(4) %

(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.

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

GAAP loss per share – diluted

$       (12.48)

$         (1.48)

$       (13.28)

$        (1.46)

Cost of revenue (b)

0.29

0.32

0.60

0.63

R&D expense (b)

—

0.08

0.01

0.09

SG&A expense (b)

(1.33)

0.68

(0.75)

0.89

Goodwill and intangible impairment (b)

11.84

—

11.86

—

Other expense, net (b)

2.06

0.01

2.01

0.08

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

0.62

0.44

0.73

0.16

Incremental non-GAAP tax expense (d)

(0.65)

0.27

(0.74)

(0.04)

Income tax provision (e)

0.01

—

0.01

0.05

Non-GAAP earnings per share – diluted (a)

$           0.36

$           0.32

$          0.45

$          0.40

Three Months Ended

Six Months Ended

June 30,
2024

July 2,
2023

June 30,
2024

July 2,
2023

GAAP net loss

$       (1,988)

$          (234)

$       (2,114)

$         (231)

Cost of revenue (b)

46

50

95

99

R&D expense (b)

—

13

2

14

SG&A expense (b)

(211)

107

(120)

142

Goodwill and intangible impairment (b)

1,886

—

1,889

—

Other expense, net (b)

328

2

319

13

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

99

69

116

25

Incremental non-GAAP tax expense (d)

(104)

43

(117)

(6)

Income tax provision (e)

1

—

1

8

Non-GAAP net income (a)

$             57

$              50

$             71

$             64

Three Months Ended

Six Months Ended

June 30,
2024

June 30,
2024

GAAP earnings per share – diluted

$                  0.41

$                  0.85

Cost of revenue (b)

0.10

0.19

R&D expense (b)

—

0.01

SG&A expense (b)

(1.35)

(0.84)

Goodwill and intangible impairment (b)

—

0.02

Other expense, net (b)

2.06

2.01

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

0.12

0.21

Incremental non-GAAP tax expense (d)

(0.26)

(0.39)

Income tax provision (e)

0.01

0.01

Non-GAAP earnings per share – diluted (a)

$                  1.09

$                  2.07

Three Months Ended

Six Months Ended

June 30,
2024

June 30,
2024

GAAP net income

$                     66

$                   135

Cost of revenue (b)

15

30

R&D expense (b)

—

2

SG&A expense (b)

(215)

(132)

Goodwill and intangible impairment (b)

—

3

Other expense, net (b)

328

319

GILTI, U.S. foreign tax credits, and global minimum top-up tax (c)

20

33

Incremental non-GAAP tax expense (d)

(41)

(62)

Income tax provision (e)

1

1

Non-GAAP net income (a)

$                   174

$                   329

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 as 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 the Itemized Reconciliations between GAAP and Non-GAAP Results of Operations for the components of these amounts.

(c) Amounts represent the impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of U.S. 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.

Three Months Ended

June 30, 2024

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$   743

68.0 %

$           (16)

$              (6)

$    721

64.8 %

Amortization of acquired intangible assets

15

1.4 %

31

—

46

4.2 %

Non-GAAP gross profit (a)

$   758

69.4 %

$             15

$              (6)

$    767

69.0 %

GAAP and Non-GAAP R&D expense

$   241

22.1 %

$             88

$              (4)

$    325

29.2 %

GAAP SG&A expense

$     60

5.5 %

$             88

$              (1)

$    147

13.2 %

Amortization of acquired intangible assets

—

—

(1)

—

(1)

(0.1) %

Contingent consideration liabilities (c)

271

24.8 %

—

—

271

24.4 %

Acquisition-related expenses (d)

(46)

(4.2) %

(3)

—

(49)

(4.4) %

Restructuring (g)

(3)

(0.3) %

—

—

(3)

(0.3) %

Accrued interest on EC fine (h)

(7)

(0.6) %

—

—

(7)

(0.6) %

Non-GAAP SG&A expense

$   275

25.2 %

$             84

$              (1)

$    358

32.2 %

GAAP goodwill and intangible impairment

$      —

—

$        1,886

$              —

$  1,886

169.6 %

Goodwill impairment (i)

—

—

(1,466)

—

(1,466)

(131.8) %

Intangible (IPR&D) impairment (i)

—

—

(420)

—

(420)

(37.8) %

Non-GAAP goodwill and intangible impairment

$      —

—

$             —

$              —

$       —

—

GAAP operating profit (loss)

$   442

40.5 %

$       (2,078)

$              (1)

$  (1,637)

(147.2) %

Cost of revenue

15

1.4 %

31

—

46

4.2 %

SG&A costs

(215)

(19.7) %

4

—

(211)

(19.0) %

Goodwill and intangible impairment

—

—

1,886

—

1,886

169.6 %

Non-GAAP operating profit (loss) (a)

$   242

22.2 %

$         (157)

$              (1)

$      84

7.6 %

GAAP other (expense) income, net

$  (341)

(31.2) %

$               2

$              —

$   (339)

(30.5) %

Strategic investment related loss, net (e)

334

30.5 %

—

—

334

30.0 %

Gain on Helix contingent value right (f)

(8)

(0.7) %

—

—

(8)

(0.7) %

Foreign currency loss on EC fine (j)

2

0.2 %

—

—

2

0.2 %

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

$    (13)

(1.2) %

$               2

$              —

$     (11)

(1.0) %

Three Months Ended

July 2, 2023

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$   760

65.5 %

$       (24)

$              (4)

$    732

62.2 %

Amortization of acquired intangible assets

14

1.2 %

33

—

47

4.0 %

Restructuring (g)

3

0.3 %

—

—

3

0.3 %

Non-GAAP gross profit (a)

$   777

67.0 %

$          9

$              (4)

$    782

66.5 %

GAAP R&D expense

$   274

23.6 %

$        89

$              (5)

$    358

30.4 %

Acquisition-related expenses (d)

(1)

(0.1) %

—

—

(1)

(0.1) %

Restructuring (g)

(12)

(1.0) %

—

—

(12)

(1.0) %

Non-GAAP R&D expense

$   261

22.5 %

$        89

$              (5)

$    345

29.3 %

GAAP SG&A expense

$   371

31.9 %

$        91

$              —

$    462

39.3 %

Amortization of acquired intangible assets

—

—

(1)

—

(1)

(0.1) %

Contingent consideration liabilities (c)

(29)

(2.5) %

—

—

(29)

(2.5) %

Acquisition-related expenses (d)

(18)

(1.4) %

(3)

—

(21)

(1.8) %

Restructuring (g)

(17)

(1.5) %

(2)

—

(19)

(1.6) %

Legal contingency and settlement (k)

(12)

(1.0) %

—

—

(12)

(1.0) %

Proxy contest

(25)

(2.2) %

—

—

(25)

(2.1) %

Non-GAAP SG&A expense

$   270

23.3 %

$        85

$              —

$    355

30.2 %

GAAP operating profit (loss)

$   115

9.9 %

$     (204)

$               1

$     (88)

(7.5) %

Cost of revenue

17

1.5 %

33

—

50

4.3 %

R&D costs

13

1.1 %

—

—

13

1.1 %

SG&A costs

100

8.7 %

7

—

107

9.1 %

Non-GAAP operating profit (loss) (a)

$   245

21.2 %

$     (164)

$               1

$      82

7.0 %

GAAP other (expense) income, net

$      (3)

(0.3) %

$          2

$              —

$       (1)

(0.1) %

Strategic investment related loss, net (e)

2

0.2 %

—

—

2

0.2 %

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

$      (1)

(0.1) %

$          2

$              —

$        1

0.1 %

Six Months Ended

June 30, 2024

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$ 1,436

66.9 %

$      (38)

$            (10)

$  1,388

63.5 %

Amortization of acquired intangible assets

30

1.4 %

65

—

95

4.3 %

Non-GAAP gross profit (a)

$ 1,466

68.3 %

$       27

$            (10)

$  1,483

67.8 %

GAAP R&D expense

$   479

22.3 %

$     189

$              (8)

$     660

30.2 %

Restructuring (g)

(2)

(0.1) %

—

—

(2)

(0.1) %

Non-GAAP R&D expense

$   477

22.2 %

$     189

$              (8)

$     658

30.1 %

GAAP SG&A expense

$   396

18.5 %

$     192

$              —

$     588

26.9 %

Amortization of acquired intangible assets

—

—

(2)

—

(2)

(0.1) %

Contingent consideration liabilities (c)

255

11.9 %

—

—

255

11.7 %

Acquisition-related expenses (d)

(70)

(3.3) %

(11)

—

(81)

(3.7) %

Restructuring (g)

(38)

(1.8) %

(1)

—

(39)

(1.8) %

Accrued interest on EC fine (h)

(14)

(0.7) %

—

—

(14)

(0.7) %

Non-GAAP SG&A expense

$   529

24.6 %

$     178

$              —

$     707

32.3 %

GAAP goodwill and intangible impairment

$       3

0.1 %

$   1,886

$              —

$  1,889

86.3 %

Goodwill impairment (i)

—

—

(1,466)

—

(1,466)

(67.0) %

Intangible (IPR&D) impairment (i)

(3)

(0.1) %

(420)

—

(423)

(19.3) %

Non-GAAP goodwill and intangible impairment

$      —

—

$        —

$              —

$       —

—

GAAP operating profit (loss)

$   558

26.0 %

$ (2,305)

$              (2)

$ (1,749)

(79.9) %

Cost of revenue

30

1.4 %

65

—

95

4.3 %

R&D costs

2

0.1 %

—

—

2

0.1 %

SG&A costs

(133)

(6.2) %

13

—

(120)

(5.4) %

Goodwill and intangible impairment

3

0.1 %

1,886

—

1,889

86.3 %

Non-GAAP operating profit (loss) (a)

$   460

21.4 %

$    (341)

$              (2)

$     117

5.4 %

GAAP other (expense) income, net

$  (342)

(15.9) %

$         5

$              —

$   (337)

(15.4) %

Strategic investment related loss, net (e)

327

15.2 %

—

—

327

15.0 %

Gain on Helix contingent value right (f)

(11)

(0.5) %

—

—

(11)

(0.5) %

Foreign currency loss on EC fine (j)

3

0.1 %

—

—

3

0.1 %

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

$    (23)

(1.1) %

$         5

$              —

$     (18)

(0.8) %

Six Months Ended

July 2, 2023

Core Illumina

GRAIL

Eliminations

Consolidated

GAAP gross profit (loss) (b)

$ 1,446

64.7 %

$      (50)

$  1,386

61.3 %

Amortization of acquired intangible assets

29

1.3 %

67

—

96

4.2 %

Restructuring (g)

3

0.1 %

—

—

3

0.1 %

Non-GAAP gross profit (a)

$ 1,478

66.1 %

$       17

$            (10)

$  1,485

65.6 %

GAAP R&D expense

$   532

23.7 %

$     175

$              (8)

$     699

30.9 %

Acquisition-related expenses (d)

(1)

—

—

—

(1)

—

Restructuring (g)

(13)

(0.5) %

—

—

(13)

(0.6) %

Non-GAAP R&D expense

$   518

23.2 %

$     175

$              (8)

$     685

30.3 %

GAAP SG&A expense

$   656

29.4 %

$     184

$              (1)

$     839

37.1 %

Amortization of acquired intangible assets

—

—

(2)

—

(2)

(0.1) %

Contingent consideration liabilities (c)

(28)

(1.3) %

—

—

(28)

(1.2) %

Acquisition-related expenses (d)

(38)

(1.7) %

(9)

—

(47)

(2.1) %

Restructuring (g)

(17)

(0.7) %

(2)

—

(19)

(0.8) %

Legal contingency and settlement (k)

(15)

(0.7) %

—

—

(15)

(0.7) %

Proxy contest

(31)

(1.4) %

—

—

(31)

(1.4) %

Non-GAAP SG&A expense

$   527

23.6 %

$     171

$              (1)

$     697

30.8 %

GAAP operating profit (loss)

$   257

11.5 %

$    (408)

$              (1)

$   (152)

(6.7) %

Cost of revenue

32

1.4 %

67

—

99

4.3 %

R&D costs

14

0.6 %

—

—

14

0.6 %

SG&A costs

129

5.8 %

13

—

142

6.3 %

Non-GAAP operating profit (loss) (a)

$   432

19.3 %

$    (328)

$              (1)

$     103

4.5 %

GAAP other (expense) income, net

$    (19)

(0.9) %

$         4

$              —

$     (15)

(0.7) %

Strategic investment related loss, net (e)

16

0.7 %

—

—

16

0.7 %

Gain on Helix contingent value right (f)

(3)

(0.1) %

—

—

(3)

(0.1) %

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

$      (6)

(0.3) %

$         4

$              —

$       (2)

(0.1) %

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, including in the non-GAAP measures related to our segments.

(b) Reconciling amounts are recorded in cost of revenue.

(c) Amounts consist 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.

(e) Amounts consist primarily of mark-to-market adjustments and impairments from our strategic investments. Amounts for Q2 2024 and YTD 2024 primarily relate to the impairment on our retained investment in GRAIL post spin-off.

(f) Amounts consist of fair value adjustments related to our Helix contingent value right.

(g) Amount for Q2 2024 consists primarily of employee severance costs. Amount for YTD 2024 consists primarily of lease and other asset impairments. Amounts for Q2 2023 and YTD 2023 consist primarily of employee severance costs and lease and other asset impairments.

(h) Amounts for Q2 2024 and YTD 2024 consist of accrued interest on the fine imposed by the European Commission.

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

(j) Amounts for Q2 2024 and YTD 2024 consist of unrealized gains/losses related to foreign currency balance sheet remeasurement of the EC fine liability and unrealized/realized mark-to-market gains/losses on the hedge associated with the EC fine.

(k) Amount for Q2 2023 consists of an adjustment to our accrual for the fine imposed by the European Commission. Amount for YTD 2023 also consists of a loss related to a patent litigation settlement in Q1 2023.  

Three Months Ended

Six Months Ended

June 30,
2024

June 30,
2024

GAAP tax provision

$         12

(0.6) %

$         28

(1.4) %

Incremental non-GAAP tax expense (b)

104

117

Income tax provision (c)

(1)

(1)

GILTI, U.S. foreign tax credits, and global minimum top-up tax (d)

(99)

(116)

Non-GAAP tax provision (a)

$         16

22.3 %

$         28

28.8 %

Three Months Ended

Six Months Ended

July 2,
2023

July 2,
2023

GAAP tax provision

$       145

(163.8) %

$         64

(38.5) %

Incremental non-GAAP tax expense (b)

(43)

6

Income tax provision (c)

—

(8)

GILTI and U.S. foreign tax credits (d)

(69)

(25)

Non-GAAP tax provision (a)

$         33

39.3 %

$         37

37.2 %

Three Months Ended

Six Months Ended

June 30,
2024

June 30,
2024

GAAP tax provision

$         35

35.0 %

$         80

37.3 %

Incremental non-GAAP tax expense (b)

41

62

Income tax provision (c)

(1)

(1)

GILTI, U.S. foreign tax credits, and global minimum top-up tax (d)

(20)

(33)

Non-GAAP tax provision (a)

$         55

24.2 %

$       108

24.9 %

(a) Non-GAAP tax provision excludes the effects of the pro forma adjustments as detailed above. Management has excluded the effects of these items in this measure to assist investors in analyzing and assessing past and future operating performance.

(b) Incremental non-GAAP tax expense reflects the 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 U.S. foreign tax credits, and the Pillar Two global minimum top-up tax, which became effective in Q1 2024.