10-QPeriod: Q1 FY2025

Keysight Technologies, Inc. Quarterly Report for Q1 Ended Jan 31, 2025

Filed March 6, 2025For Securities:KEYS

Summary

Keysight Technologies, Inc. reported its financial results for the third quarter of fiscal year 2025, ending January 31, 2025. Total revenue for the quarter increased by 3% year-over-year to $1.3 billion, driven by a 5% increase in the Communications Solutions Group (CSG), while the Electronic Industrial Solutions Group (EISG) saw a slight 1% decline. Net income for the quarter was $169 million, a marginal decrease from $172 million in the prior year period. This decrease was primarily attributed to losses on derivative instruments and higher research and development expenses, partially offset by a lower provision for income taxes and gains on equity investments. The company's cash flow from operations remained robust, increasing by $50 million year-over-year to $378 million, demonstrating strong operational performance. Investing activities saw a significant reduction in cash outflow compared to the prior year, largely due to the absence of a major acquisition. Financing activities also showed a decrease in cash used, primarily due to lower treasury stock repurchases and the prior year's acquisition of non-controlling interests. Keysight reiterated its confidence in long-term growth trends and its ability to navigate current macroeconomic challenges, with plans for continued R&D investment in next-generation technologies.

Financial Highlights

51 data points
Beta

Revenue

$1.30B

63.2% Gross Margin

Net Income

$169.00M

13.0% Net Margin

EPS (Diluted)

$0.97

Total Assets

$9.39B

Cash & Equivalents

$2.06B

Free Cash Flow

$346.00M

Financial Statements
Beta
Revenue$1.30B
Cost of Revenue$478.00M
Gross Profit$820.00M
R&D Expenses$249.00M
SG&A Expenses$361.00M
Operating Expenses$1.08B
Operating Income$218.00M
Net Income$169.00M
EPS (Basic)$0.97
EPS (Diluted)$0.97
Shares Outstanding (Basic)173.00M
Shares Outstanding (Diluted)174.00M

Key Highlights

  • 1Total revenue grew 3% year-over-year to $1.3 billion, driven by strength in the Communications Solutions Group.
  • 2Net income slightly decreased to $169 million from $172 million in the prior year quarter.
  • 3Operating cash flow increased by $50 million year-over-year to $378 million.
  • 4The company's effective tax rate decreased significantly to 15.3% from 24.5% in the prior year, primarily due to tax benefits related to foreign earnings and a lawsuit seeking a tax refund.
  • 5Keysight continues to invest in R&D, with R&D expenses increasing 7% year-over-year, reflecting a focus on key growth opportunities and emerging technologies.
  • 6The company has $410 million remaining under its current stock repurchase authorization as of January 31, 2025.
  • 7Announced definitive agreement to acquire Synopsys' Optical Solutions Group, further expanding its technology portfolio.

Frequently Asked Questions

Keysight Technologies reported a 3% increase in total revenue to $1.3 billion for the three months ended January 31, 2025, compared to the same period last year. The Communications Solutions Group (CSG) saw a 5% revenue increase, primarily driven by investments in high-speed networks for AI capabilities and aerospace/defense solutions. The Electronic Industrial Solutions Group (EISG) experienced a 1% decrease in revenue, influenced by mixed demand across automotive, energy, and semiconductor markets.

Net income for the quarter was $169 million, a slight decrease from $172 million in the prior year. This was mainly due to losses on derivative instruments, unfavorable product mix, and higher R&D expenses. However, these were partially offset by a lower provision for income taxes and gains on equity investments.

Keysight demonstrated strong operational cash flow, which increased by $50 million year-over-year to $378 million for the three months ended January 31, 2025. This indicates healthy cash generation from core business operations.

The company's effective tax rate significantly decreased due to a variety of factors, including a lower tax rate on foreign earnings and the impact of Pillar Two minimum taxes. Notably, Keysight filed a lawsuit seeking a tax refund of $107 million related to Global Intangible Low-Taxed Income (GILTI) regulations, which, if successful, could materially impact future tax liabilities. There are also ongoing legal proceedings related to patent infringement claims, which the company is actively defending.

Keysight remains focused on R&D investments in areas like 5G/6G evolution, high-speed data center networks, AI, IoT, and electric/autonomous vehicles. The company expressed confidence in long-term growth trends and its ability to navigate macroeconomic challenges. Acquisitions remain a part of their strategy, with a definitive agreement to acquire Synopsys' Optical Solutions Group announced, aimed at further enhancing their technology offerings.