Keysight Technologies Exceeds Q2 2025 Earnings Expectations

Keysight Technologies Inc ((KEYS)) has held its Q2 earnings call. Read on for the main highlights of the call.

Keysight Technologies Inc. recently held an earnings call that highlighted a strong financial performance for the quarter, with both revenue and earnings per share (EPS) surpassing expectations. The company reported robust order growth and notable achievements in its Communications Solutions and Aerospace Defense sectors. While challenges such as tariff impacts on margins and mixed demand in certain segments were acknowledged, the overall sentiment was positive, emphasizing strategic growth initiatives and strong financial results.

Exceeding Revenue and EPS Guidance

Keysight Technologies reported impressive financial results, with revenue reaching $1.3 billion and earnings per share hitting $1.70, both surpassing the high end of guidance for the second quarter of 2025. This performance underscores the company’s ability to navigate a challenging economic environment and deliver value to its shareholders.

Strong Order Growth

The company experienced an 8% year-over-year increase in orders, totaling $1.3 billion, with a 4% sequential growth. This strong demand across various segments highlights Keysight’s robust market position and the effectiveness of its strategic initiatives.

Communications Solutions Group Performance

Keysight’s Communications Solutions Group (CSG) saw revenue climb to $913 million, marking a 9% increase. The growth was driven by sustained strength in wireline and wireless sectors, along with double-digit growth in commercial communications orders, showcasing the group’s strategic importance to the company’s overall success.

Aerospace Defense and Government Growth

The aerospace, defense, and government sectors reported a 9% increase in orders and revenue, supported by strong performance in the US and Europe. Continued investments in technology have positioned Keysight well in these critical sectors.

Software and Services Growth

Software and services now account for approximately 36% of Keysight’s revenue, with design engineering software orders experiencing double-digit growth. This segment’s expansion underscores the company’s focus on diversifying its revenue streams and enhancing its technological offerings.

Capital Allocation and Share Repurchase

Keysight continued its capital allocation strategy by repurchasing 1,042,000 shares this quarter at an average price of approximately $144, amounting to $150 million. This move reflects the company’s confidence in its financial health and commitment to returning value to shareholders.

Tariff Impact on Margins

The company faced approximately $7 million in new tariff expenses, impacting gross and operating margins by 60 basis points and reducing EPS by $0.04. Despite these challenges, Keysight remains focused on mitigating tariff impacts and optimizing its cost structure.

Mixed Demand in Electronics Industrial Solutions Group

While the Electronics Industrial Solutions Group (EISG) returned to growth after six quarters of decline, automotive orders and revenues were down, and general electronics orders grew at a slower pace. This mixed demand highlights the need for strategic adjustments in certain segments.

Tariff Exposure and Mitigation Challenges

Keysight’s annual tariff exposure is estimated at $75 million to $100 million, with full mitigation expected by the end of the fiscal year. The company is actively working to address these challenges and minimize their impact on financial performance.

Forward-Looking Guidance

Looking ahead, Keysight Technologies has raised its full-year growth expectations, anticipating fiscal year 2025 revenue growth at the midpoint of its 5% to 7% long-term target. The company also expects annual EPS growth slightly above the 10% target, demonstrating confidence in its strategic direction and operational capabilities.

In summary, Keysight Technologies Inc.’s earnings call conveyed a positive outlook, with strong financial performance and strategic growth initiatives taking center stage. Despite challenges such as tariff impacts and mixed demand in certain segments, the company’s robust order growth and achievements in key sectors underscore its resilience and potential for future success.