Keysight Technologies (KEYS) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue reached $1.31 billion, up 7% year-over-year, with non-GAAP EPS of $1.70 and GAAP EPS of $1.49, both exceeding guidance.

• Net income for Q2 was $295 million non-GAAP and $257 million GAAP, with net income more than doubling year-over-year.

• Orders grew 8% year-over-year to $1.316 billion, marking the third consecutive quarter of order growth.

• Management raised the full-year outlook to the midpoint of the 5–7% long-term target, citing robust backlog and strong demand in AI, aerospace, defense, and semiconductors.

• Business resilience was demonstrated through a flexible cost structure, diversified supply chain, and minimal China exposure.

Financial highlights

• Q2 revenue: $1,306 million (+7% YoY); orders: $1,316 million (+8% YoY); non-GAAP EPS: $1.70 (+21% YoY); GAAP EPS: $1.49.

• Gross margin: 65% non-GAAP, 62.4% GAAP; operating margin: 25% non-GAAP, 15.9% GAAP.

• Free cash flow: $457 million; cash and equivalents: $3.12–$3.14 billion as of April 30, 2025.

• Operating expenses: $516 million, up 4% YoY; R&D expense: $250 million for Q2 (+10% YoY).

• Share repurchases: ~1.04 million shares for $150 million in Q2; $225–$228 million in first half of 2025.

Outlook and guidance

• Q3 2025 revenue guidance: $1.305–$1.325 billion; non-GAAP EPS: $1.63–$1.69.

• Full-year revenue growth expected at midpoint of 5–7% long-term target; annual non-GAAP EPS growth to slightly exceed 10%.

• FY25 capital expenditures projected at $150 million; non-GAAP tax rate of 14%.

• Tariff impact expected to peak in Q3 with full mitigation by fiscal year-end.

• Solid pipeline and backlog of $2.4 billion support guidance.