Executive Summary & Highlights Keysight Technologies reported strong Q2 FY25 financial results, exceeding guidance and raising full-year growth expectations, driven by robust performance across key segments and significant improvements in net income and cash flow Q2 FY25 Performance Overview Keysight Technologies reported strong financial results for the second fiscal quarter ended April 30, 2025, with revenue and earnings per share exceeding the high end of guidance, driven by disciplined execution and deep customer engagement - Keysight delivered strong Q2 FY25 results, with revenue and EPS above the high end of guidance2 - Performance highlights the strength of the company's long-term strategy, deep customer engagement, and disciplined execution2 Full-Year Outlook Improvement Despite monitoring the macroeconomic environment, Keysight is raising its full-year growth expectations to the midpoint of its long-term target of 5-7%, reflecting a healthy funnel of opportunities - Keysight is raising full-year growth expectations to the midpoint of its long-term 5-7% target2 - The company continues to see a healthy funnel of opportunities2 Key Financial Highlights (Q2 FY25 vs Q2 FY24) Keysight reported significant year-over-year growth in Q2 FY25, with revenue increasing by 7%, GAAP net income more than doubling, and non-GAAP net income rising by 19%. Operating and free cash flow also saw substantial improvements | Metric | Q2 FY25 | Q2 FY24 | Change (YoY) | | :------------------------- | :---------- | :---------- | :----------- | | Revenue | $1.31 billion | $1.22 billion | +7% | | GAAP Net Income | $257 million | $126 million | +104% | | GAAP EPS | $1.49 | $0.72 | +107% | | Non-GAAP Net Income | $295 million | $247 million | +19% | | Non-GAAP EPS | $1.70 | $1.41 | +21% | | Cash Flow from Operations | $484 million | $110 million | +340% | | Free Cash Flow | $457 million | $74 million | +518% | | Cash and Cash Equivalents (as of April 30, 2025) | $3.12 billion | N/A | N/A | Segment Performance Highlights (Q2 FY25 vs Q2 FY24) Both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) reported revenue growth in Q2 FY25. CSG saw a 9% increase, driven by commercial communications and aerospace, defense, and government sectors. EISG grew by 5%, primarily from semiconductor and general electronics, despite a decline in automotive and energy | Segment | Q2 FY25 Revenue | Q2 FY24 Revenue | YoY Growth | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Communications Solutions Group (CSG) | $913 million | N/A | +9% | | Electronic Industrial Solutions Group (EISG) | $393 million | N/A | +5% | - CSG growth was driven by 9% increases in both commercial communications and aerospace, defense, and government4 - EISG growth was primarily from semiconductor and general electronics, partially offset by a decline in automotive and energy4 Outlook Keysight provides its financial guidance for Q3 FY25, projecting revenue and non-GAAP earnings per share within a specified range Q3 FY25 Financial Guidance Keysight projects its third fiscal quarter 2025 revenue to be between $1.305 billion and $1.325 billion, with non-GAAP earnings per share expected in the range of $1.63 to $1.69 | Metric | Q3 FY25 Guidance | | :-------------------- | :--------------------- | | Revenue | $1.305 billion to $1.325 billion | | Non-GAAP EPS | $1.63 to $1.69 | | Weighted Diluted Share Count | Approximately 173 million shares | Financial Statements This section presents Keysight's condensed consolidated financial statements, including statements of operations, balance sheet, and cash flows, detailing the company's financial position and performance Condensed Consolidated Statement of Operations For the three months ended April 30, 2025, Keysight reported revenue of $1,306 million, an increase from $1,216 million in the prior year. Net income significantly increased to $257 million from $126 million, resulting in diluted EPS of $1.49 compared to $0.72 Three Months Ended April 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------- | :-------------- | :-------------- | | Orders | $1,316 | $1,219 | | Revenue | $1,306 | $1,216 | | Income from operations | $207 | $177 | | Income before taxes | $320 | $175 | | Net income | $257 | $126 | | Diluted Net income per share | $1.49 | $0.72 | Six Months Ended April 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------- | :-------------- | :-------------- | | Orders | $2,579 | $2,439 | | Revenue | $2,604 | $2,475 | | Income from operations | $425 | $398 | | Income before taxes | $519 | $404 | | Net income | $426 | $298 | | Diluted Net income per share | $2.45 | $1.70 | Condensed Consolidated Balance Sheet As of April 30, 2025, Keysight's total assets increased to $10,549 million from $9,269 million at October 31, 2024, primarily driven by a significant increase in cash and cash equivalents. Total liabilities also rose to $5,072 million, while total stockholders' equity increased to $5,477 million As of April 30, 2025 vs October 31, 2024 | Metric | April 30, 2025 (Millions) | October 31, 2024 (Millions) | | :-------------------------- | :------------------------ | :------------------------ | | ASSETS | | | | Cash and cash equivalents | $3,118 | $1,796 | | Total current assets | $5,480 | $4,257 | | Total assets | $10,549 | $9,269 | | LIABILITIES AND EQUITY | | | | Total current liabilities | $1,628 | $1,427 | | Long-term debt | $2,532 | $1,790 | | Total liabilities | $5,072 | $4,164 | | Total stockholders' equity | $5,477 | $5,105 | | Total liabilities and equity | $10,549 | $9,269 | Condensed Consolidated Statement of Cash Flows For the six months ended April 30, 2025, net cash provided by operating activities significantly increased to $862 million from $438 million in the prior year. Net cash used in investing activities decreased, while net cash provided by financing activities turned positive, primarily due to proceeds from long-term debt issuance Six Months Ended April 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------------ | :-------------- | :-------------- | | Net cash provided by operating activities | $862 | $438 | | Net cash used in investing activities | $(66) | $(631) | | Net cash provided by (used in) financing activities | $515 | $(621) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $1,321 | $(814) | | Cash, cash equivalents, and restricted cash at end of period | $3,135 | $1,674 | - Proceeds from issuance of long-term debt contributed $748 million to financing activities in 2025, compared to none in 202420 Segment & Market Performance This section details Keysight's financial performance by segment and end market, highlighting revenue growth and margin trends for CSG and EISG Segment Results Information (Q2 FY25 vs Q2 FY24) The Communications Solutions Group (CSG) reported a 9% revenue increase to $913 million, though its gross and operating margins slightly declined. The Electronic Industrial Solutions Group (EISG) saw a 5% revenue increase to $393 million, with improved gross and operating margins Communications Solutions Group (CSG) | Metric | Q2'25 | Q2'24 | Inc/(Dec) | | :------------------ | :---- | :---- | :-------- | | Revenue | $913 | $840 | 9% | | Gross margin, % | 67 % | 68 % | -1 pp | | Income from operations | $236 | $223 | N/A | | Operating margin, % | 26 % | 27 % | -1 pp | Electronic Industrial Solutions Group (EISG) | Metric | Q2'25 | Q2'24 | Inc/(Dec) | | :------------------ | :---- | :---- | :-------- | | Revenue | $393 | $376 | 5% | | Gross margin, % | 59 % | 58 % | +1 pp | | Income from operations | $92 | $71 | N/A | | Operating margin, % | 23 % | 19 % | +4 pp | Revenue by End Markets (Q2 FY25 vs Q2 FY24) Keysight's total revenue increased by 7% year-over-year in Q2 FY25. Commercial Communications and Aerospace, Defense and Government markets both grew by 9%, while Electronic Industrial revenue increased by 5% Q2 Revenue by End Market | End Market | Q2'25 (Millions) | Q2'24 (Millions) | Inc/(Dec) | | :------------------------------ | :--------------- | :--------------- | :-------- | | Aerospace, Defense and Government | $301 | $277 | 9% | | Commercial Communications | $612 | $563 | 9% | | Electronic Industrial | $393 | $376 | 5% | | Total Revenue | $1,306 | $1,216 | 7% | Non-GAAP Financial Measures This section explains Keysight's use of non-GAAP financial measures, providing reconciliations for net income, EPS, and free cash flow to offer a clearer view of core business performance Use of Non-GAAP Financial Measures (Introduction) Keysight uses non-GAAP financial measures, in addition to GAAP, to provide management's view of performance, enhance investor understanding of business performance, and facilitate comparisons. These measures include Non-GAAP Net Income/Earnings, Non-GAAP Net Income per share/Earnings per share, and Free Cash Flow - Management uses both GAAP and non-GAAP financial measures to analyze business performance, make operating decisions, and forecast future periods1133 - Non-GAAP measures include Net Income/Earnings, Net Income per share/Earnings per share, and Free Cash Flow12 Net Income and Diluted EPS Reconciliation Keysight reconciles GAAP net income and diluted EPS to non-GAAP figures by adjusting for items such as amortization of acquisition-related balances, share-based compensation, acquisition and integration costs, restructuring, and tax adjustments. For Q2 FY25, non-GAAP diluted EPS was $1.70 compared to GAAP diluted EPS of $1.49 Three Months Ended April 30 | Metric | GAAP Net Income (Millions) | Non-GAAP Adjustments (Millions) | Non-GAAP Net Income (Millions) | | :------------------------------------ | :------------------------- | :------------------------------ | :----------------------------- | | GAAP Net income | $257 | N/A | N/A | | Amortization of acquisition-related balances | N/A | $34 | N/A | | Share-based compensation | N/A | $37 | N/A | | Acquisition and integration costs (benefits) | N/A | $(74) | N/A | | Restructuring and others | N/A | $26 | N/A | | Adjustment for taxes | N/A | $15 | N/A | | Non-GAAP Net income | N/A | N/A | $295 | | Diluted EPS | | | | | GAAP Diluted EPS | $1.49 | N/A | N/A | | Non-GAAP Diluted EPS | N/A | N/A | $1.70 | Six Months Ended April 30 | Metric | GAAP Net Income (Millions) | Non-GAAP Adjustments (Millions) | Non-GAAP Net Income (Millions) | | :------------------------------------ | :------------------------- | :------------------------------ | :----------------------------- | | GAAP Net income | $426 | N/A | N/A | | Amortization of acquisition-related balances | N/A | $67 | N/A | | Share-based compensation | N/A | $99 | N/A | | Acquisition and integration costs (benefits) | N/A | $24 | N/A | | Restructuring and others | N/A | $2 | N/A | | Adjustment for taxes | N/A | $(6) | N/A | | Non-GAAP Net income | N/A | N/A | $612 | | Diluted EPS | | | | | GAAP Diluted EPS | $2.45 | N/A | N/A | | Non-GAAP Diluted EPS | N/A | N/A | $3.52 | - Management uses a non-GAAP effective tax rate of 14% for the three and six months ended April 30, 2025, compared to 17% for the same periods in 202422 Free Cash Flow Reconciliation Free cash flow is calculated by adjusting net cash provided by operating activities for investments in property, plant, and equipment. For Q2 FY25, free cash flow was $457 million, a significant increase from $74 million in Q2 FY24 Three Months Ended April 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------ | :-------------- | :-------------- | | Net cash provided by operating activities | $484 | $110 | | Less: Investments in property, plant and equipment | $(27) | $(36) | | Free cash flow | $457 | $74 | Six Months Ended April 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------ | :-------------- | :-------------- | | Net cash provided by operating activities | $862 | $438 | | Less: Investments in property, plant and equipment | $(59) | $(83) | | Free cash flow | $803 | $355 | Non-GAAP Financial Measures Explanation (Detailed) Keysight provides detailed explanations for its non-GAAP adjustments, which include acquisition-related items (amortization of intangibles, integration costs), share-based compensation, restructuring expenses, and other non-recurring operating income/expenses. The company also defines 'Core Revenue' and explains its methodology for the estimated non-GAAP tax rate, emphasizing that these measures offer insights into core business performance but should be considered supplemental to GAAP results - Non-GAAP measures are used to analyze overall business performance, make operating decisions, and forecast future periods, providing investors with management's view of performance33 - Adjustments include acquisition-related items (amortization of acquired intangibles, integration costs), share-based compensation expense, restructuring and other incremental expenses, and other non-normal, recurring, cash operating income/expenses3738 - Core Revenue excludes the impact of foreign currency changes and revenue from acquisitions or divestitures within the last twelve months to facilitate comparisons of revenue growth and underlying business trends36 - A consistent methodology is used for the long-term projected non-GAAP tax rate, excluding tax benefits or expenses not directly related to ongoing operations37 Corporate Information This section provides essential corporate information about Keysight Technologies, including company overview, webcast details, forward-looking statements, and contact information About Keysight Technologies Keysight Technologies (NYSE: KEYS) is an S&P 500 company that provides market-leading design, emulation, and test solutions. They serve as a global innovation partner for customers in communications, industrial automation, aerospace and defense, automotive, semiconductor, and general electronics markets, aiming to accelerate innovation and secure the world - Keysight delivers market-leading design, emulation, and test solutions to help engineers develop and deploy technologies faster and with less risk13 - The company serves customers in communications, industrial automation, aerospace and defense, automotive, semiconductor, and general electronics markets13 Webcast Information Keysight's management hosted a conference call on May 20, 2025, at 1:30 p.m. PT to discuss Q2 FY25 financial results and Q3 FY25 outlook. The webcast is available in listen-only mode on the company's investor relations website for 90 days - A conference call was held on May 20, 2025, at 1:30 p.m. PT to discuss Q2 FY25 results and Q3 FY25 outlook7 - The webcast is available in listen-only mode on www.investor.keysight.com under the 'Upcoming Events' section for 90 days7 Forward-Looking Statements & Risks This communication contains forward-looking statements subject to risks and uncertainties that could materially affect actual results. These risks include global economic conditions (inflation, recession), slowing demand, market volatility, geopolitical tensions, export control regulations, customer purchasing decisions, and order cancellations. Readers are cautioned not to place undue reliance on these statements - Forward-looking statements involve risks and uncertainties that could significantly affect expected results8 - Key risks include impacts of global economic conditions (inflation, recession), slowing demand, volatility in financial markets, geopolitical tension, export control regulations, customer purchasing decisions, and order cancellations8 - Additional risks are detailed in Keysight's annual report on Form 10-K for the period ended October 31, 2024, and quarterly report on Form 10-Q for the period ended January 31, 20259 Contact Information Contact information for investor relations and media inquiries is provided for Keysight Technologies - Investor Relations contact: +1 707-577-6915, Investor.Relations@Keysight.com14 - Media Contact: Andrea Mueller, +1 408-236-1541, andrea.mueller@keysight.com14
Keysight Technologies(KEYS) - 2025 Q2 - Quarterly Results