10-QPeriod: Q3 FY2025

Keysight Technologies, Inc. Quarterly Report for Q3 Ended Jul 31, 2025

Filed August 29, 2025For Securities:KEYS

Summary

Keysight Technologies, Inc. reported solid top-line growth in its third quarter and the first nine months of fiscal year 2025, with total revenue increasing by 11% and 7%, respectively, year-over-year. This growth was driven by strong performance in both the Communications Solutions Group (CSG) and the Electronic Industrial Solutions Group (EISG), particularly in areas like AI-driven data centers, 5G evolution, and aerospace & defense. Despite revenue growth, net income for the quarter and nine-month period declined compared to the prior year, primarily due to a significant one-time income tax benefit recorded in the prior year. The company also faced increased operating expenses related to people costs, tariffs, and integration expenses from acquisitions. However, a substantial increase in operating cash flow to $1.184 billion for the nine months ended July 31, 2025, up from $693 million in the prior year, demonstrates improved operational cash generation. The company also raised $750 million in senior notes and is progressing with its announced acquisition of Spirent Communications.

Financial Highlights

52 data points
Beta

Revenue

$1.35B

61.7% Gross Margin

Net Income

$191.00M

14.1% Net Margin

EPS (Diluted)

$1.10

Total Assets

$10.65B

Cash & Equivalents

$2.64B

Free Cash Flow

$291.00M

Financial Statements
Beta
Revenue$1.35B
Cost of Revenue$518.00M
Gross Profit$834.00M
R&D Expenses$250.00M
SG&A Expenses$354.00M
Operating Expenses$1.12B
Operating Income$234.00M
Net Income$191.00M
EPS (Basic)$1.11
EPS (Diluted)$1.10
Shares Outstanding (Basic)172.00M
Shares Outstanding (Diluted)173.00M

Key Highlights

  • 1Total revenue increased by 11% to $1,352 million for the three months ended July 31, 2025, and by 7% to $3,956 million for the nine months ended July 31, 2025, compared to the prior year periods.
  • 2Net income decreased to $191 million for the three months and $617 million for the nine months ended July 31, 2025, largely due to a significant prior-year income tax benefit.
  • 3Operating cash flow saw a substantial increase, reaching $1,184 million for the nine months ended July 31, 2025, compared to $693 million in the prior year.
  • 4The company issued $750 million in 5.35% senior notes due 2030 in April 2025 to support its financial strategy.
  • 5Keysight is actively pursuing the acquisition of Spirent Communications, with expectations to close in the fourth quarter of fiscal year 2025, subject to regulatory approvals.
  • 6Gross margins remained strong, at 61.7% for the quarter and 62.4% for the nine months, though slightly down year-over-year, impacted by tariffs and higher people-related costs.
  • 7Research and Development expenses increased by 11% and 9% for the three and nine-month periods, respectively, reflecting continued investment in innovation.

Frequently Asked Questions

The decrease in net income is primarily attributable to a significant one-time income tax benefit recorded in the prior year (fiscal 2024), which boosted net income in that period. The current period's net income reflects the absence of this extraordinary benefit, alongside increased operating expenses such as higher people-related costs, the impact of tariffs, and acquisition integration costs.

Keysight is actively monitoring and assessing the potential impact of tariffs on its financial results. The company is implementing a multi-pronged mitigation approach that includes adjustments to its global manufacturing footprint, sourcing strategies, pricing actions, and cost management initiatives to reduce the overall impact.

Keysight remains confident in the long-term secular growth trends of its markets. The company is focusing its R&D investments on strategic opportunities in next-generation technologies such as 5G/6G evolution, high-speed data center networks, AI, industrial IoT, satellite networks, and advanced automotive technologies, aiming to capitalize on customer investments in these areas.

Keysight announced its intention to acquire Spirent Communications for cash consideration. The acquisition is subject to customary closing conditions, including regulatory reviews. The review by China's State Administration for Market Regulation is still pending, and Keysight expects to close the acquisition during the fourth quarter of fiscal year 2025, contingent upon the completion of this review.