Financial Performance - Keysight Technologies reported third-quarter earnings of $1.72 per share, exceeding the analyst consensus estimate of $1.67 per share [1] - The company achieved quarterly sales of $1.352 billion, surpassing the analyst consensus estimate of $1.318 billion [1] Future Outlook - For the fourth quarter, Keysight expects revenue to be in the range of $1.370 billion to $1.390 billion [2] - Non-GAAP earnings per share for the fourth quarter are projected to be between $1.79 and $1.85 [2] Management Commentary - Keysight's President and CEO, Satish Dhanasekaran, stated that the company delivered strong results, exceeding the high end of guidance for both revenue and earnings per share [3] - The company is raising its outlook for the full year, citing solid demand and strong customer engagements [3] Stock Performance - Following the earnings announcement, Keysight Technologies shares fell 3.8% to trade at $157.20 [3] Analyst Ratings - B of A Securities analyst David Ridley-Lane maintained a Neutral rating on Keysight and raised the price target from $175 to $179 [9] - Barclays analyst Tim Long maintained an Overweight rating but lowered the price target from $200 to $195 [9]

Core Insights - Keysight Technologies, Inc. (KEYS) reported strong third-quarter fiscal 2025 results, with both net income and revenues exceeding the Zacks Consensus Estimate, driven by growth in the AI data-center market and aerospace, defense, and government sectors [1][2][3] Financial Performance - Net income on a GAAP basis was $191 million or $1.10 per share, down from $389 million or $2.22 per share in the year-ago quarter. Non-GAAP net income was $297 million or $1.72 per share, compared to $275 million or $1.57 in the prior-year quarter, surpassing the Zacks Consensus Estimate by 4 cents [2] - Quarterly net sales increased to $1.35 billion from $1.22 billion year-over-year, exceeding guidance and the Zacks Consensus Estimate by $38 million. Total orders rose 7% year-over-year to $1.34 billion [3][8] Segment Performance - The Communication Solutions Group (CSG) generated $940 million in revenues, an 11% increase from $847 million in the prior-year quarter, driven by demand for AI data-center network solutions and applications [4] - The Electronic Industrial Solutions Group (EISG) saw revenues rise to $412 million from $370 million, supported by investments in AI-driven technologies and growth in the semiconductor vertical [5] Regional Performance - Asia-Pacific revenues reached $569 million, up from $496 million year-over-year. Revenues from the Americas increased by 13% to $566 million, while European revenues were $217 million, down 2% from the previous year [6] Profitability Metrics - Non-GAAP gross profit totaled $864 million with gross margins of 63.9%, compared to $781 million and 64.1% in the year-ago quarter. Non-GAAP operating margin improved to 25% from 24.4% [7] Cash Flow and Outlook - Keysight generated $322 million in cash from operating activities, up from $255 million a year ago. As of July 31, 2025, the company had $2.63 billion in cash and cash equivalents and $2.53 billion in long-term debt [9] - For the fourth quarter of fiscal 2025, Keysight expects revenues between $1.37 billion and $1.39 billion, with non-GAAP earnings per share estimated between $1.79 and $1.85 [10]

Group 1 - The core point of the article is that Keysight Technologies (KEYS) experienced a significant stock price drop of 6.3% despite raising its full-year revenue and earnings per share growth forecasts to 7% and 13% respectively [1] Group 2 - Keysight Technologies raised its full-year revenue growth forecast to 7% [1] - The company also increased its earnings per share growth expectation to 13% [1] - The stock price decline occurred in the early trading session on Wednesday [1]

Core Insights - Keysight reported revenue of $1.35 billion for the quarter ended July 2025, reflecting an 11.1% increase year-over-year and surpassing the Zacks Consensus Estimate of $1.31 billion by 2.92% [1] - Earnings per share (EPS) for the quarter was $1.72, up from $1.57 in the same quarter last year, also exceeding the consensus EPS estimate of $1.68 by 2.38% [1] Revenue Breakdown - Communications Solutions Group generated $940 million, exceeding the average analyst estimate of $917.23 million, marking an 11% year-over-year increase [4] - Commercial Communications revenue reached $644 million, surpassing the average estimate of $617.75 million, with a year-over-year growth of 12.6% [4] - Aerospace, Defense & Government revenue was $296 million, slightly below the estimated $299.47 million, but still showing a 7.6% increase compared to the previous year [4] - Electronic Industrial Solutions Group reported $412 million, exceeding the average estimate of $396.45 million, representing an 11.4% year-over-year change [4] Operational Performance - Income from operations for the Electronic Industrial Solutions Group was $92 million, surpassing the average estimate of $88.33 million [4] - Income from operations for the Communications Solutions Group was $246 million, which was below the average estimate of $253.54 million [4] Stock Performance - Keysight's shares returned +0.9% over the past month, while the Zacks S&P 500 composite increased by +2.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Keysight (KEYS) reported quarterly earnings of $1.72 per share, exceeding the Zacks Consensus Estimate of $1.68 per share, and up from $1.57 per share a year ago, representing an earnings surprise of +2.38% [1] - The company achieved revenues of $1.35 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 2.92%, and up from $1.22 billion year-over-year [2] - Keysight has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was +3.66%, with actual earnings of $1.70 per share compared to an expected $1.64 per share [1] - The current consensus EPS estimate for the upcoming quarter is $1.78, with projected revenues of $1.38 billion, and for the current fiscal year, the EPS estimate is $7.01 on revenues of $5.28 billion [7] Stock Performance and Outlook - Keysight shares have increased approximately 2.4% since the beginning of the year, while the S&P 500 has gained 9.7% [3] - The company's Zacks Rank is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] - The outlook for Keysight's stock will depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] Industry Context - Keysight operates within the Zacks Electronics - Measuring Instruments industry, which is currently ranked in the top 24% of over 250 Zacks industries [8] - Historical data suggests that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8]

Financial Data and Key Metrics Changes - Keysight reported a revenue increase of 11% year over year to $1.4 billion and earnings per share of $1.72, exceeding guidance [6][21] - Orders increased by 7%, with growth across both the Communication Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments [6][21] - Gross margin was reported at 64%, with operating expenses of $526 million and an operating margin of 25%, reflecting a 60 basis point increase year over year [21] Business Segment Data and Key Metrics Changes - The Communication Solutions Group generated revenue of $940 million, up 11% year over year, with commercial communications revenue of $644 million, also up 13% [23] - The Electronic Industrial Solutions Group reported revenue of $412 million, an increase of 11% year over year, with growth across automotive, energy, semiconductor, and general electronics [23] - Software and services accounted for approximately 36% of total revenue, with annual recurring revenue at 28% [24] Market Data and Key Metrics Changes - The aerospace, defense, and government sectors showed robust demand due to elevated defense spending globally, particularly in the U.S. and Europe [11][12] - The wireless business remained stable, with momentum in non-terrestrial networks and continued R&D activity in 5G Advanced contributing to steady demand [10] - The semiconductor business experienced double-digit growth, driven by demand for wafer test solutions and advanced node technologies [17][92] Company Strategy and Development Direction - Keysight is capitalizing on opportunities in the AI ecosystem, focusing on advanced physical layer solutions and silicon photonics capabilities to enhance R&D workflows [8][9] - The company is engaged in early 6G research and shaping standards for its implementation, collaborating with industry leaders to drive innovation [11][86] - Keysight's strategy includes mitigating tariff impacts through supply chain optimization and pricing actions, while maintaining operational flexibility to invest and adapt [22][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, noting that orders have accelerated and are slightly better than initial expectations [30][31] - The company anticipates continued growth in the aerospace and defense sectors, supported by robust backlogs and government budgets [55] - Despite challenges in the automotive sector, management remains optimistic about long-term growth driven by AI and other technological advancements [32][44] Other Important Information - Keysight generated cash flow from operations of $322 million and free cash flow of $291 million in Q3, with year-to-date free cash flow at $1.1 billion [25] - The company repurchased approximately 300,000 shares at an average price of $164, totaling $50 million [25] - The pending acquisition of Spirent is expected to close in the fiscal fourth quarter, with regulatory reviews progressing [25][80] Q&A Session Summary Question: Can you help investors understand your view of the end markets now? - Management noted strong order growth and positive customer activity despite geopolitical challenges, with AI and aerospace defense showing momentum [30][31] Question: What is supporting the revenue outlook into Q4? - Management indicated that timing of large deals impacted Q3 performance, but they expect more normal sequential seasonality in Q4 [34][35] Question: How should we think about the long-term growth rate? - Management suggested that while they initially expected low-end growth, recent performance has been better than expected, indicating bullish sentiment for fiscal 2026 [39][40] Question: What is the impact of tariffs on your business? - Management confirmed that tariffs are being mitigated through various strategies, and they expect to fully address the tariff impacts in the coming quarters [52][53] Question: Can you provide insights on the aerospace and defense market? - Management expressed confidence in ongoing programs and robust backlogs, with expectations for continued growth driven by government budgets [54][55] Question: What is the outlook for the semiconductor business? - Management highlighted strong demand for wafer test solutions and advanced technologies, indicating favorable growth prospects [92] Question: How is the mix between R&D and production testing evolving? - Management noted a shift towards more manufacturing exposure while still maintaining a strong R&D focus, benefiting from supply chain improvements [93][96]

Financial Data and Key Metrics Changes - Keysight reported a revenue increase of 11% year over year to $1.4 billion and earnings per share of $1.72, exceeding guidance [5][20] - Orders increased by 7%, with growth across both the Communication Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments [5][20] - Gross margin was reported at 64%, with operating margin at 25%, reflecting a 60 basis point increase year over year [20] Business Segment Data and Key Metrics Changes - CSG generated revenue of $940 million, up 11% year over year, with commercial communications revenue of $644 million, also up 13% [22] - EISG revenue reached $412 million, an 11% increase year over year, with growth across automotive, energy, semiconductor, and general electronics [22] - CSG delivered a gross margin of 67% and an operating margin of 26%, while EISG had a gross margin of 57% and an operating margin of 22% [22] Market Data and Key Metrics Changes - The aerospace, defense, and government sectors saw robust demand due to elevated defense spending globally, particularly in the U.S. and Europe [11][12] - The wireless business remained stable, with momentum in non-terrestrial networks and continued R&D activity in 5G Advanced [10] - Demand in the automotive sector improved sequentially, with stable year-over-year performance [15] Company Strategy and Development Direction - Keysight is capitalizing on the ongoing AI momentum and investing in advanced physical layer solutions and silicon photonics capabilities [6][7] - The company is focused on leading the industry into the next generation of innovation, particularly in 6G research and development [10][11] - Keysight's strategy includes enhancing collaboration with customers and leveraging a solid pipeline of opportunities [6][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving trade and tariff environment while maintaining healthy margins and strong free cash flow [19] - The demand environment remains resilient despite macroeconomic uncertainties, leading to an upward revision of the full-year growth outlook [25] - Management noted that while some end markets are recovering, challenges remain in sectors like automotive [29] Other Important Information - Keysight's cash flow from operations was $322 million, with free cash flow of $291 million for the quarter [23] - The company repurchased approximately 300,000 shares at an average price of $164, totaling $50 million [23] - The pending acquisition of Spirent is expected to close in the fiscal fourth quarter, with regulatory reviews progressing [23][24] Q&A Session Summary Question: Can you help investors understand your view of the end markets now? - Management noted strong order growth and positive customer activity despite geopolitical challenges, indicating a better-than-expected performance [28][29] Question: What is supporting the revenue outlook into Q4? - Management highlighted the timing of large deals and expected more normal sequential seasonality in orders compared to revenue [31][32] Question: How should we think about the long-term growth rate? - Management indicated a bullish outlook for fiscal 2026, with a focus on executing Q4 and navigating tariff impacts [38] Question: What is the contribution of AI to Keysight's story? - Management emphasized that AI is driving demand across multiple end markets, particularly in wireline, with expectations for continued growth [40][41] Question: Can you outline the tariff impacts? - Management clarified that tariffs are expected to increase exposure by approximately $75 million annually, with mitigation strategies in place [48][51] Question: What is the outlook for the aerospace and defense market? - Management expressed confidence in ongoing demand due to robust backlogs and government budgets, with a steady growth trajectory expected [52][54] Question: How is the semiconductor business performing? - Management noted strong growth in the semiconductor business, driven by advanced nodes and increased customer interest in silicon photonics [90][91] Question: What is the impact of tariffs on orders? - Management stated that there has been no material pull-in of orders due to tariff changes, and demand profiles remain stable [104][105]

Q3 2025 Financial Performance - Q3 revenue reached $1.352 billion, an increase of 11% year-over-year[5, 6, 11] - Earnings per share (EPS) stood at $1.72, reflecting a 9% year-over-year growth[5, 6] - Core operating margin increased by 110 basis points year-over-year to 25.4%[5] - YTD free cash flow amounted to $1.1 billion[5] Segment and Regional Revenue - Communications Solutions Group (CSG) revenue was $940 million, up 11% year-over-year[21] - Electronic Industrial Solutions Group (EISG) revenue was $412 million, also up 11% year-over-year[26, 33] - Americas region revenue grew by 13% year-over-year[15, 39] - Asia Pacific region revenue increased by 15% year-over-year[19, 39] Forward Guidance and Outlook - The company raised its full-year outlook, expecting revenue growth of 7% and non-GAAP EPS growth of approximately 13% for FY25[5] - Q4 2025 revenue is guided to be between $1.370 billion and $1.390 billion, with non-GAAP EPS between $1.79 and $1.85[34] Strategic Initiatives and Tariff Mitigation - The company is progressing with regulatory clearances for the Spirent acquisition, expecting closure in Q4 FY25[5] - The company is actioning a multi-pronged approach to reduce the impact of tariffs, with an incremental gross impact of tariff increases announced on August 1 being $75 million on an annualized basis[5]

Financial Performance - Keysight Technologies reported third quarter revenue of $1.35 billion, a 11% increase from $1.22 billion in the same quarter of 2024[5] - GAAP net income for the third quarter was $191 million, or $1.10 per share, compared to $389 million, or $2.22 per share, in the third quarter of 2024[5] - Non-GAAP net income was $297 million, or $1.72 per share, up from $275 million, or $1.57 per share, in the third quarter of 2024[5] - Total revenue for Q3 2025 was $1,352 million, an increase of 11% from $1,217 million in Q3 2024[30] - Non-GAAP net income for the nine months ended July 31, 2025, was $909 million, up from $808 million in the same period last year, reflecting a 12% increase[22] - The company reported a diluted EPS of $3.56 for the nine months ended July 31, 2025, compared to $3.92 in the same period of 2024[22] Segment Performance - The Communications Solutions Group (CSG) generated $940 million in revenue, reflecting an 11% year-over-year growth, with 13% growth in commercial communications[3] - The Electronic Industrial Solutions Group (EISG) reported revenue of $412 million, also up 11% from the prior year, driven by growth in semiconductor and automotive sectors[3] - The Communications Solutions Group reported revenue of $940 million in Q3 2025, an 11% increase from $847 million in Q3 2024[25] - The Electronic Industrial Solutions Group also saw revenue growth of 11%, reaching $412 million in Q3 2025, compared to $370 million in Q3 2024[26] Cash Flow and Assets - Cash flow from operations was $322 million, compared to $255 million in the same period last year, while free cash flow increased to $291 million from $222 million[5] - Operating cash flow increased significantly to $1,184 million, up 71% from $693 million in the prior year[19] - Free cash flow for the nine months ended July 31, 2025, was $1,094 million, compared to $577 million in the same period last year, representing an increase of 90%[28] - Cash, cash equivalents, and restricted cash at the end of the period totaled $3,397 million, up from $1,649 million at the end of the previous year[19] - As of July 31, 2025, Keysight's cash, cash equivalents, and restricted cash totaled $3.40 billion[5] - Total assets increased to $10.651 billion as of July 31, 2025, up from $9.269 billion on October 31, 2024[17] Future Outlook - Keysight expects fourth quarter revenue to be between $1.370 billion and $1.390 billion, with non-GAAP earnings per share projected to be between $1.79 and $1.85[4] - For fiscal year 2025, revenue growth is anticipated to be approximately 7%, with non-GAAP earnings per share growth expected to be around 13%[4] - The company plans to continue investing in property, plant, and equipment, with $90 million spent in the nine months ended July 31, 2025[19] Year-over-Year Comparison - For the nine months ended July 31, 2025, net income was $617 million, a decrease of 10% compared to $687 million for the same period in 2024[19]

Group 1 - The author is a self-taught value investor with two decades of investing experience, focusing on value investing through case studies in the ASEAN and US regions [1] - The author has served as a Board member of a Malaysia listed company for several decades, providing a unique perspective on investment opportunities [1] - A value investing book titled "Do you really want to master value investing?" is available on Amazon, indicating the author's commitment to educating others in the field [1] Group 2 - The article does not provide specific investment recommendations or advice, emphasizing that past performance is not indicative of future results [2] - The views expressed in the article may not reflect those of Seeking Alpha as a whole, highlighting the independent nature of the author's analysis [2] - The author has no current or planned investment positions in any of the companies mentioned, ensuring an unbiased perspective [2]