01—Abstract
Summary
Summary of the 10-Q filed August 29, 2025. Cited figures are marked; the original filing is the authoritative source.
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%a 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 billionb 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.
02—Key points
Key Highlights
- Total 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.
- Net 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.
- Operating 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.
- The company issued $750 million in 5.35% senior notes due 2030 in April 2025 to support its financial strategy.
- Keysight is actively pursuing the acquisition of Spirent Communications, with expectations to close in the fourth quarter of fiscal year 2025, subject to regulatory approvals.
- Gross 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.
- Research and Development expenses increased by 11% and 9% for the three and nine-month periods, respectively, reflecting continued investment in innovation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Keysight Technologies, Inc. kept $0.14.
- Revenue$1.35B100.0%
- Cost of revenue−$518.0M38.3%
- Gross profit$834.0M61.7%
- Operating costs−$600.0M44.4%
- Operating income$234.0M17.3%
- Interest, other & tax−$43.0M3.2%
- Net income$191.0M14.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed August 29, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $1.35B$1.22B | +11.1% |
| Cost of Revenue | $518.00M$462.00M | +12.1% |
| Gross Profit | $834.00M$755.00M | +10.5% |
| R&D Expenses | $250.00M$226.00M | +10.6% |
| SG&A Expenses | $354.00M$329.00M | +7.6% |
| Operating Expenses | $1.12B$1.01B | +10.5% |
| Operating Income | $234.00M$205.00M | +14.1% |
| Net Income | $191.00M$389.00M | −50.9% |
| EPS (Basic) | $1.11$2.23 | −50.2% |
| EPS (Diluted) | $1.10$2.22 | −50.5% |
| Shares Outstanding (Basic) | 172.00M174.00M | −1.1% |
| Shares Outstanding (Diluted) | 173.00M175.00M | −1.1% |
05—Questions
Frequently Asked Questions
What drove the decrease in net income despite revenue growth?
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.
How is Keysight managing the impact of tariffs?
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.
What is the company's outlook on future investments and growth areas?
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.
What is the status of the Spirent Communications acquisition?
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.
06—Continue