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TechnologyKeysight Technologies
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XBRL · SEC EDGAR2013–2025(13yr)| Metric | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $2.9B | $2.9B | $2.9B | $2.9B | $3.2B | $3.9B | $4.3B | $4.2B | $4.9B | $5.4B | $5.5B | $5.0B | $5.4B | +8.0% |
| Gross Profit | $1.6B | $1.6B | $1.6B | $1.6B | $1.7B | $2.1B | $2.5B | $2.5B | $3.1B | $3.5B | $3.5B | $3.1B | $3.3B | +6.5% |
| Gross Margin | 56.2% | 55.2% | 55.6% | 55.7% | 53.4% | 54.7% | 58.9% | 60.0% | 62.1% | 63.7% | 64.6% | 62.9% | 62.1% | -0.8pp |
| Operating Income | $496.0M | $469.0M | $431.0M | $406.0M | $239.0M | -$346.0M | $711.0M | $765.0M | $1.1B | $1.3B | $1.4B | $833.0M | $876.0M | +5.2% |
| Operating Margin | 17.2% | 16.0% | 15.1% | 13.9% | 7.5% | -8.9% | 16.5% | 18.1% | 21.9% | 24.6% | 24.9% | 16.7% | 16.3% | -0.4pp |
| Net Income | $457.0M | $392.0M | $513.0M | $335.0M | $102.0M | $165.0M | $621.0M | $627.0M | $894.0M | $1.1B | $1.1B | $614.0M | $850.0M | +38.4% |
| Net Margin | 15.8% | 13.4% | 18.0% | 11.5% | 3.2% | 4.3% | 14.4% | 14.9% | 18.1% | 20.7% | 19.3% | 12.3% | 15.8% | +3.5pp |
| Free Cash Flow | $497.0M | $493.0M | $284.0M | $325.0M | $241.0M | $423.0M | $878.0M | $899.0M | $1.1B | $959.0M | $1.2B | $898.0M | $1.3B | +42.7% |
| FCF Margin | 17.2% | 16.8% | 9.9% | 11.1% | 7.6% | 10.9% | 20.4% | 21.3% | 23.2% | 17.7% | 22.2% | 18.0% | 23.8% | +5.8pp |
| EPS (Diluted) | $2.74 | $2.35 | $3.00 | $1.95 | $0.56 | $0.86 | $3.25 | $3.31 | $4.78 | $6.18 | $5.91 | $3.51 | $4.91 | +39.9% |
1. THE BIG PICTURE
Keysight Technologies is no longer just a provider of measurement hardware; it has become the essential auditor of the AI and 5G revolution. By embedding its proprietary software and semiconductor technology into the earliest research and development phases of the technology lifecycle, Keysight has created a high-margin, recurring revenue engine that is currently accelerating well beyond its historical growth rates.
2. WHERE THE RISKS HIT HARDEST
Keysight’s "durable and resilient business model," which relies on "variable pay mechanisms" to maintain flexibility (10-K Item 1), is directly threatened by "market cyclicality" and "economic volatility" (Risks). If global uncertainty leads to the "delayed or canceled orders" cited in its risk disclosures, these cost-saving mechanisms may not be enough to offset the high fixed costs of its internal manufacturing and "in-house fab capabilities."
Furthermore, Keysight Technologies's "deep, long-term global customer relationships" are vulnerable to "new U.S. tariffs" and "trade restrictions" (10-Q). Because Keysight serves a "large, global installed base," any escalation in trade disputes—particularly regarding China—could force customers to decouple from Keysight’s integrated ecosystem to avoid supply chain disruptions or increased component costs.
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a company in the midst of a significant growth breakout. While its trailing twelve-month revenue growth of 8.0% ranks last among its peer group (XBRL), its most recent quarterly revenue growth of 23%—and forward guidance of 30%—suggests a structural shift rather than a temporary fluctuation (10-Q). This acceleration is driven by the Communications Solutions Group, where demand for AI data center infrastructure and high-speed networks pushed revenue up 27% (10-Q).
Keysight’s efficiency is best reflected in its cash flow rather than its bottom line. Its Free Cash Flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin of 27.0% significantly outpaces its net margin of 16.2% (XBRL). This high cash conversion, combined with a low short interest of just 1.8% of the float (Yahoo Finance), suggests that the market has high confidence in Keysight Technologies’s ability to fund its aggressive acquisition strategy—including recent deals for Spirent Communications and ESI Group—without straining its balance sheet.
4. IS IT WORTH IT AT THIS PRICE?
At a 28.0x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, the market is pricing in ~7.2% long-term growth (CAPM analysis). This represents an 11% discount to the peer median of 31.3x. This discount is likely a reflection of Keysight’s lower operating margins (16.3%) compared to software-heavy peers like Cadence (27.2%) or high-growth semiconductor firms like Monolithic Power Systems (26.0%).
However, the current price appears to underappreciate Keysight Technologies's momentum. If Keysight can sustain even half of its current 23% growth rate, the market-implied 7.2% target will prove to be an easy hurdle. The sensitivity analysis suggests that if growth were to align more closely with its recent performance, the justified multiple would sit significantly higher than the current 28.0x. The primary factor keeping the valuation in check is the "geopolitical turmoil" and "trade restrictions" that could abruptly halt this trajectory (10-Q).
5. WHAT WOULD CHANGE THIS VIEW?
- Cautious if operating margins fail to expand toward the 20% range during this period of 20%+ revenue growth, which would suggest that Keysight's "variable cost" model is not providing the operating leverage management claims.
- Constructive if recurring revenue from the recent string of software acquisitions (Spirent, ESI Group, PowerArtist) begins to represent a larger portion of the mix, reducing Keysight Technologies's sensitivity to hardware R&DR&DResearch & Development — spending on creating new products or technologies cycles.
- Cautious if there is any "expiration of tax incentives" in Malaysia or Singapore, which would immediately compress net margins regardless of operational performance (Risks).
6. BOTTOM LINE
Structural Advantage: Vertical integration of proprietary semiconductor technology and an 80-year installed base that locks customers into a software-centric testing ecosystem from the R&DR&DResearch & Development — spending on creating new products or technologies phase onward.
Bottom Line: Keysight is an attractively priced play on the build-out of AI and 5G infrastructure, offering a rare combination of accelerating growth and a valuation discount to its peers.
1. Top 5 Material Risks
- Economic Volatility: Global economic uncertainty, inflation, and potential recession risk reducing customer purchasing power, leading to delayed or canceled orders and increased excess inventory.
- International Trade and Tariffs: New U.S. tariffs on imports from all countries, including higher rates on Chinese goods, threaten to increase costs for customers and Keysight Technologies, potentially causing supply chain disruptions and reduced demand.
- Geopolitical Turmoil: Regional conflicts, such as the war in Ukraine and tensions between China and Taiwan, risk market instability, increased energy costs, and potential facility closures in sanctioned regions.
- Market Cyclicality: Keysight Technologies’ reliance on technology-related spending makes its quarterly results highly sensitive to market volatility; if markets decline, fixed costs in R&DR&DResearch & Development — spending on creating new products or technologies and manufacturing may compress operating margins.
- Supply Chain and Outsourcing: Dependence on contract manufacturers and outsourced IT functions creates risks where performance failures or geopolitical instability in developing countries could impair the ability to bring solutions to market.
2. Company-Specific Risks
- Tax Incentive Expiration: Keysight Technologies relies on tax incentives in Singapore and Malaysia; the Malaysia incentive expired in October 2025, and the Singapore incentive expires in July 2029, creating risk to the effective tax rate if renewals are not granted.
- Catastrophic Facility Loss: Production facilities in California and Japan are located in areas with above-average seismic activity, and Keysight Technologies lacks insurance or financial reserves for losses arising from earthquakes.
- Pension Funding: Future investment returns on pension assets or changes in interest rates may require Keysight Technologies to make significant, unplanned cash contributions to its defined benefit plans.
- Environmental Remediation: Keysight Technologies remains subject to potential unreimbursed costs related to subsurface contamination at certain facilities, despite indemnification agreements with HP and Agilent.
3. Regulatory/Legal Risks
- Intellectual Property Litigation: Keysight Technologies is involved in ongoing patent litigation with Centripetal Networks, including appeals regarding ITC determinations and European patent validity, which could result in significant legal expenses or injunctions against product sales.
- Tax Refund Lawsuit: Keysight Technologies has filed a lawsuit against the U.S. government seeking a $107 million tax refund; an unsuccessful outcome would require the reversal of previously recorded benefits, increasing the effective tax rate and income tax liability.
- Data Privacy Compliance: Failure to comply with GDPR or similar international data privacy regulations could result in significant financial fines and damage to Keysight Technologies’s reputation.
- DEI Scrutiny: Recent U.S. executive orders prohibiting certain Diversity, Equity and Inclusion programs have increased scrutiny on Keysight Technologies’ employment policies, creating risks of investigations, litigation, and penalties.
4. Financial Impact Map
Economic Volatility → Operating Results → Increased risk of excess and obsolete inventory and greater risk of impairment to the value of the future investment portfolio. International Trade and Tariffs → Cost of Goods Sold → Increased cost of components and raw materials for customers and Keysight Technologies. Market Cyclicality → Operating Margins → Fixed costs in sales, R&DR&DResearch & Development — spending on creating new products or technologies, and manufacturing cannot be adjusted quickly enough to offset pricing pressures during market downturns. Tax Incentive Expiration → Effective Tax Rate → Potential for higher tax rates if incentives in Singapore and Malaysia are not renewed or granted. Tax Refund Lawsuit → Income Tax Liability → Potential for a material increase in tax liability if the $107 million refund claim is unsuccessful.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 10-Q | Mar 2026 | Jan 2026 |
| 8-K | Feb 2026 | — |
| 14A | Jan 2026 | — |
| 10-K | Dec 2025 | Oct 2025 |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Keysight Technologies Q2 Revenue Guidance $1.69B–$1.71B; Core Orders +22% YoY
- ▸Q2 FY26 revenue guidance $1.69B–$1.71B
- ▸Core order growth +22% YoY reported in fiscal Q1
- ▸Management targets 20%+ adjusted EPS growth through FY26
- ▸Launched AresONE 1600GE and 224G/1.6T AI data center validation tools
- ▸Wireline orders surpassed wireless orders for the first time
Keysight Q1 Revenue $1.6B Beats Estimates, EPS $2.17 Tops Consensus by $0.18
- ▸Q1 revenue $1.6B vs $1.54B estimate, up from $1.3B YoY
- ▸Non-GAAP EPS $2.17, beating consensus estimate by $0.18
- ▸CSG segment revenue $1.12B, up 27% YoY on AI and 5G demand
- ▸Total orders $1.65B, significant increase from $1.26B in year-ago quarter
- ▸Aerospace, Defense and Government revenue $366M, up from $311M YoY