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Keysight's Q2 Earnings Beat Estimates, Top Line Surges Y/Y
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Keysight Technologies Inc. (KEYS - Free Report) reported solid second-quarter fiscal 2025 results, with both bottom and top lines beating the respective Zacks Consensus Estimate. Based in Santa Rosa, CA, the leading electronic design and testing solution provider reported higher year-over-year revenues, backed by strength in the AI data-center market, aerospace, defense and government end markets. Management’s focus on expanding its business through collaborations with established sector players is another positive.
Net Income of KEYS
Net income on a GAAP basis was $257 million or $1.49 per share compared with $126 million or 72 cents in the year-ago quarter.
Non-GAAP net income in the reported quarter was $295 million or $1.7 per share compared with $247 million or $1.41 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 6 cents.
Keysight Technologies Inc. Price, Consensus and EPS Surprise
Quarterly net sales improved to $1.31 billion from the year-ago quarter’s $1.22 billion, exceeding the high end of the guidance. Total orders increased 8% year over year to $1.31 billion. The company is witnessing incrementally positive signals in its sales funnel and customer engagement. The top line beat the Zacks Consensus Estimate by $36 million.
Communication Solutions Group (“CSG”) generated $913 million in revenues, up from the year-ago quarter’s $840 million. The 9% year-over-year growth was primarily driven by healthy traction in the commercial communications end market, induced by strong demand for AI data-center network solutions and applications. Aerospace, defense and government end markets grew backed by healthy demand trends in Europe. The growing defense modernization initiative is a positive factor. The top line beat our estimate of $870.2 million.
Growing investment in 1.6 terabyte electrical and optical technologies, deployment of 400 and 800 gig ethernet technologies, investment in advanced 5G and 6G are driving demand. Wireless orders also grew during the quarter.
The Electronic Industrial Solutions Group (“EISG”) segment’s revenues increased to $393 million from $376 million in the prior-year quarter. Growing investment in advanced nodes and packaging, high-bandwidth memory and silicon photonics is induced by high AI-performance requirements driving growth in the semiconductor vertical. Demand also remains strong in the general electronics vertical. The growth, however, is partially offset by declining orders in the automotive vertical. The top line fell short of our revenue estimate of $409.2 million.
Region-wise, Asia-Pacific revenues aggregated $573 million compared with $496 million in the prior-year quarter. The company reported a 4% year-over-year improvement in revenues from the Americas to $510 million. Revenues from Europe were $223 million, down 2% from the year-ago quarter's $227 million.
Other Details of KEYS
During the quarter, the company’s non-GAAP gross profit totaled $844 million compared with $790 million in the year-ago quarter, with gross margins of 64.6% and 65%, respectively. The non-GAAP operating margin was 25.2%, up from 24.2% in the prior-year quarter.
CSG reported a non-GAAP operating margin of 25.9%, down 60 basis points (bps) year over year. EISG reported a non-GAAP operating margin of 23.4%, up 430 bps year over year, largely due to a higher mix of software.
Cash Flow & Liquidity of KEYS
In the first six months of fiscal 2025, Keysight generated $862 million in cash from operating activities compared with $438 million a year ago. As of April 30, 2025, the company had $3.11 billion in cash and cash equivalents and $2.53 billion of long-term debt.
KEYS’ Outlook
For the second quarter of fiscal 2025, Keysight expects revenues in the range of $1.3-$1.32 billion. Non-GAAP earnings are estimated to be between $1.63 and $1.69 per share.
KEYS’ Zacks Rank & Stocks to Consider
Keysight currently carries a Zacks Rank #3 (Hold).
In the last reported quarter, it delivered an earnings surprise of 4.88%. Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. Juniper also introduced new features within the AI-driven enterprise portfolio that enable customers to simplify the rollout of their campus wired and wireless networks while bringing greater insight to network operators.
InterDigital (IDCC - Free Report) carries a Zacks Rank #2 (Buy) at present. In the trailing four quarters, InterDigital delivered an earnings surprise of 160.15%. It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings worldwide.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank of 2 at present, supplies products to a prestigious set of customers, including Fortune 500 global companies in markets such as cloud titans, enterprises, financials and specialty cloud service providers.
Arista delivered a trailing four-quarter average earnings surprise of 11.82% and has a long-term growth expectation of 14.81%. Arista currently serves five verticals, namely cloud titans (customers that deploy more than one million servers), cloud specialty providers, service providers, financial services and the rest of the enterprise.
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Keysight's Q2 Earnings Beat Estimates, Top Line Surges Y/Y
Keysight Technologies Inc. (KEYS - Free Report) reported solid second-quarter fiscal 2025 results, with both bottom and top lines beating the respective Zacks Consensus Estimate. Based in Santa Rosa, CA, the leading electronic design and testing solution provider reported higher year-over-year revenues, backed by strength in the AI data-center market, aerospace, defense and government end markets. Management’s focus on expanding its business through collaborations with established sector players is another positive.
Net Income of KEYS
Net income on a GAAP basis was $257 million or $1.49 per share compared with $126 million or 72 cents in the year-ago quarter.
Non-GAAP net income in the reported quarter was $295 million or $1.7 per share compared with $247 million or $1.41 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 6 cents.
Keysight Technologies Inc. Price, Consensus and EPS Surprise
Keysight Technologies Inc. price-consensus-eps-surprise-chart | Keysight Technologies Inc. Quote
KEYS’ Q2 Revenues
Quarterly net sales improved to $1.31 billion from the year-ago quarter’s $1.22 billion, exceeding the high end of the guidance. Total orders increased 8% year over year to $1.31 billion. The company is witnessing incrementally positive signals in its sales funnel and customer engagement. The top line beat the Zacks Consensus Estimate by $36 million.
Communication Solutions Group (“CSG”) generated $913 million in revenues, up from the year-ago quarter’s $840 million. The 9% year-over-year growth was primarily driven by healthy traction in the commercial communications end market, induced by strong demand for AI data-center network solutions and applications. Aerospace, defense and government end markets grew backed by healthy demand trends in Europe. The growing defense modernization initiative is a positive factor. The top line beat our estimate of $870.2 million.
Growing investment in 1.6 terabyte electrical and optical technologies, deployment of 400 and 800 gig ethernet technologies, investment in advanced 5G and 6G are driving demand. Wireless orders also grew during the quarter.
The Electronic Industrial Solutions Group (“EISG”) segment’s revenues increased to $393 million from $376 million in the prior-year quarter. Growing investment in advanced nodes and packaging, high-bandwidth memory and silicon photonics is induced by high AI-performance requirements driving growth in the semiconductor vertical. Demand also remains strong in the general electronics vertical. The growth, however, is partially offset by declining orders in the automotive vertical. The top line fell short of our revenue estimate of $409.2 million.
Region-wise, Asia-Pacific revenues aggregated $573 million compared with $496 million in the prior-year quarter. The company reported a 4% year-over-year improvement in revenues from the Americas to $510 million. Revenues from Europe were $223 million, down 2% from the year-ago quarter's $227 million.
Other Details of KEYS
During the quarter, the company’s non-GAAP gross profit totaled $844 million compared with $790 million in the year-ago quarter, with gross margins of 64.6% and 65%, respectively. The non-GAAP operating margin was 25.2%, up from 24.2% in the prior-year quarter.
CSG reported a non-GAAP operating margin of 25.9%, down 60 basis points (bps) year over year. EISG reported a non-GAAP operating margin of 23.4%, up 430 bps year over year, largely due to a higher mix of software.
Cash Flow & Liquidity of KEYS
In the first six months of fiscal 2025, Keysight generated $862 million in cash from operating activities compared with $438 million a year ago. As of April 30, 2025, the company had $3.11 billion in cash and cash equivalents and $2.53 billion of long-term debt.
KEYS’ Outlook
For the second quarter of fiscal 2025, Keysight expects revenues in the range of $1.3-$1.32 billion. Non-GAAP earnings are estimated to be between $1.63 and $1.69 per share.
KEYS’ Zacks Rank & Stocks to Consider
Keysight currently carries a Zacks Rank #3 (Hold).
Juniper Networks, Inc. (JNPR - Free Report) sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last reported quarter, it delivered an earnings surprise of 4.88%. Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. Juniper also introduced new features within the AI-driven enterprise portfolio that enable customers to simplify the rollout of their campus wired and wireless networks while bringing greater insight to network operators.
InterDigital (IDCC - Free Report) carries a Zacks Rank #2 (Buy) at present. In the trailing four quarters, InterDigital delivered an earnings surprise of 160.15%. It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings worldwide.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank of 2 at present, supplies products to a prestigious set of customers, including Fortune 500 global companies in markets such as cloud titans, enterprises, financials and specialty cloud service providers.
Arista delivered a trailing four-quarter average earnings surprise of 11.82% and has a long-term growth expectation of 14.81%. Arista currently serves five verticals, namely cloud titans (customers that deploy more than one million servers), cloud specialty providers, service providers, financial services and the rest of the enterprise.