Keysight Technologies, Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 24 November 2025: press release. Guidance figures: 3 new. The quarter’s numbers.

Key takeaways

Revenue rose 10 percent in quarter: Fourth-quarter revenue was $1.42 billion, against $1.29 billion a year earlier. Fiscal 2025 revenue was $5.37 billion, against $4.98 billion, a rise of 8 percent. Source
Non-GAAP earnings per share rose: Non-GAAP net income was $331 million, or $1.91 per share, against $288 million, or $1.65 per share. For fiscal 2025, non-GAAP EPS was $7.16 against $6.27. Source
First-quarter fiscal 2026 ranges given: Management gave first-quarter fiscal 2026 ranges for non-GAAP EPS, detailed under guidance. Source
Communications Solutions revenue up 11 percent: CSG revenue was $990 million, up 11 percent. Management attributed growth to AI data center infrastructure, non-terrestrial network applications, and defense modernization. Source
Orders exceeded revenue in quarter: Orders were above revenue in the fourth quarter and for the fiscal year, and fiscal-year orders grew from the prior year. Source
Cash flow figures for quarter and year: Quarterly operating cash flow was $225 million, against $359 million, and free cash flow $188 million, against $328 million. Fiscal 2025 operating cash flow was $1.41 billion, and free cash flow $1.28 billion. Source
Acquisition spending rose sharply: Cash paid for acquisitions of businesses and intangible assets was $2,022 million in fiscal 2025, against $681 million. Goodwill rose to $3,435 million and intangible assets to $1,285 million. Source

“Keysight delivered an outstanding quarter and strong close to the fiscal year, returning the company to full-year growth with order momentum accelerating through the year”
Satish Dhanasekaran, Keysight’s President and CEO

Guidance

Area	Period	Figure	Against last quarter
Revenue Source	First quarter of fiscal 2026	$1.53 billion to $1.55 billion	New
Non-GAAP earnings per share Source	First quarter of fiscal 2026	$1.95 to $2.01	New
Share repurchase authorization Source	Effective immediately; no end date given	Up to $1.5 billion	New

What changed from last quarter

New guidance: First-quarter fiscal 2026 revenue and non-GAAP EPS ranges first appear in this release. Source
New: The Board approved a new share repurchase program that replaces the previous one. Source
New: Divestiture proceeds appear in the fiscal-year cash flow statement; the nine-month statement in the prior release showed none. Source

Results and growth drivers

Revenue rose 10 percent in quarter: Fourth-quarter revenue was $1.42 billion, against $1.29 billion a year earlier. Fiscal 2025 revenue was $5.37 billion, against $4.98 billion, a rise of 8 percent. Source
Non-GAAP earnings per share rose: Non-GAAP net income was $331 million, or $1.91 per share, against $288 million, or $1.65 per share. For fiscal 2025, non-GAAP EPS was $7.16 against $6.27. Source
GAAP net income returned to profit: GAAP net income was $229 million, or $1.33 per share, against a loss of $73 million, or $0.42 per share, a year earlier. Fiscal 2025 GAAP diluted EPS was $4.89. Source
First-quarter fiscal 2026 ranges given: Management gave first-quarter fiscal 2026 ranges for non-GAAP EPS, detailed under guidance. Source

Segments and end markets

Communications Solutions revenue up 11 percent: CSG revenue was $990 million, up 11 percent. Management attributed growth to AI data center infrastructure, non-terrestrial network applications, and defense modernization. Source
CSG margins eased slightly: CSG gross margin was 66 percent against 67 percent. Operating margin was 27 percent against 28 percent. Source
EISG revenue up 9 percent: EISG revenue was $429 million, up 9 percent. Management attributed growth to broad general electronics and leading-edge semiconductor solutions. Source
EISG operating margin improved: EISG operating margin was 25 percent against 21 percent, and gross margin 60 percent against 58 percent. Income from operations was $109 million, against $83 million. Source

“These results reflect our leadership across the markets we serve and sustained demand for Keysight's highly differentiated solutions.”
Satish Dhanasekaran, Keysight’s President and CEO

Product and end-market revenue

Commercial communications grew fastest: Commercial Communications revenue was $660 million in the quarter, up 12 percent, and $2,488 million for the year, up 10 percent. Source
Aerospace and defense revenue rose: Aerospace, Defense and Government revenue was $330 million in the quarter, up 9 percent, and $1,238 million for the year, up 8 percent. Source
Electronic Industrial grew 6 percent in year: Electronic Industrial revenue for fiscal 2025 was $1,649 million, up 6 percent from $1,559 million. Source

Costs, margins and taxes

Cost lines rose with revenue: Cost of products and services was $550 million, against $485 million. Research and development was $258 million, against $233 million, and SG&A $399 million, against $343 million. Source
Operating income was lower in quarter: Income from operations was $217 million, against $230 million. For fiscal 2025 it was $876 million, against $833 million. Source
Other income lifted pretax income: Other income, net was $102 million, against $20 million, lifting income from continuing operations before taxes to $322 million from $248 million. Source
Tax provision fell sharply: The provision for income taxes was $70 million, against $321 million a year earlier. Management used a non-GAAP effective tax rate of 14 percent for both periods. Source
Non-GAAP adjustments in quarter: Adjustments included $41 million of acquisition-related amortization, $45 million of share-based compensation, $36 million of acquisition and integration costs, and a $59 million benefit from restructuring and others. Source

Orders and demand

Orders exceeded revenue in quarter: Orders were above revenue in the fourth quarter and for the fiscal year, and fiscal-year orders grew from the prior year. Source
Demand and execution cited for results: Management attributed the quarter to demand, execution and order growth. Source
Deferred revenue rose year over year: Current deferred revenue was $652 million at October 31, 2025, against $561 million a year earlier. Source

Cash, capital and shareholder returns

Cash flow figures for quarter and year: Quarterly operating cash flow was $225 million, against $359 million, and free cash flow $188 million, against $328 million. Fiscal 2025 operating cash flow was $1.41 billion, and free cash flow $1.28 billion. Source
Cash balance and long-term debt rose: Cash and cash equivalents were $1.87 billion at October 31, 2025. Long-term debt was $2,534 million, up from $1,790 million a year earlier. Source
Repurchases in fiscal year: Treasury stock repurchases, including excise tax payments, totaled $377 million for fiscal 2025, against $443 million. Treasury shares held rose to 30.8 million from 28.4 million. Source
Buyback can be paused at any time: Repurchases may be made through open market or privately negotiated purchases, and may be commenced, suspended or discontinued at any time. Source
Receivables and inventory increased: Accounts receivable were $939 million, against $857 million, and inventory $1,050 million, against $1,022 million. Source

Acquisitions, divestiture and investment

Acquisition spending rose sharply: Cash paid for acquisitions of businesses and intangible assets was $2,022 million in fiscal 2025, against $681 million. Goodwill rose to $3,435 million and intangible assets to $1,285 million. Source
Divestiture brought in proceeds: Proceeds from divestiture were $399 million in fiscal 2025. A $23 million loss from discontinued operations is reported separately. Source
Capital spending on equipment declined: Investments in property, plant and equipment were $128 million for fiscal 2025, against $154 million, and $38 million in the fourth quarter. Source

Figures management reported

Figure	Reported
Orders Source	$1,533 million in fourth quarter (vs $1,345 million); $5,452 million in fiscal 2025 (vs $5,033 million)

Risks management discussed

Financial: Management said some items affecting the GAAP tax rate cannot yet be estimated, so no GAAP reconciliation is given for the first quarter. Source

Earlier plans management reported on

Ahead: Management said fourth-quarter results came in above the guidance it had given. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Keysight Technologies Reports Fourth Quarter and Fiscal Year 2025 Results

Robust demand and strong execution deliver above guidance results and strong order growth;

Announces New $1.5 Billion Share Repurchase Program

SANTA ROSA, Calif., November 24, 2025 - Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the fourth fiscal quarter and fiscal year ended October 31, 2025.

“Keysight delivered an outstanding quarter and strong close to the fiscal year, returning the company to full-year growth with order momentum accelerating through the year,” said Satish Dhanasekaran, Keysight’s President and CEO. “These results reflect our leadership across the markets we serve and sustained demand for Keysight's highly differentiated solutions.”

Fourth Quarter Financial Summary

Revenue was $1.42 billion, compared with $1.29 billion last year.
GAAP net income was $229 million, or $1.33 per share, compared with a GAAP net loss of $73 million, or $0.42 per share, in the fourth quarter of 2024.
Non-GAAP net income was $331 million, or $1.91 per share, compared with $288 million, or $1.65 per share, in the fourth quarter of 2024.
Cash flow from operations was $225 million, compared with $359 million last year. Free cash flow was $188 million, compared with $328 million in the fourth quarter of 2024.
As of October 31, 2025, cash and cash equivalents totaled $1.87 billion.

Fiscal Year 2025 Financial Summary

Revenue was $5.37 billion, compared with $4.98 billion last year.
GAAP net income was $846 million, or $4.89 per share, compared with $614 million, or $3.51 per share, in fiscal 2024.
Non-GAAP net income was $1.24 billion, or $7.16 per share, compared with $1.10 billion, or $6.27 per share, in fiscal year 2024.
Cash flow from operations was $1.41 billion, compared with $1.05 billion last year. Free cash flow was $1.28 billion, compared with $0.91 billion in fiscal year 2024.

Reporting Segments

Communications Solutions Group (CSG)

CSG reported revenue of $990 million in the fourth quarter, up 11 percent over last year, driven by ongoing investment in AI data center infrastructure, non-terrestrial network applications, and defense modernization.

Electronic Industrial Solutions Group (EISG)

EISG reported revenue of $429 million in the fourth quarter, up 9 percent over last year, reflecting growth in broad general electronics and leading-edge semiconductor solutions.

Share Repurchase Program

Keysight also announced today that its Board of Directors authorized a new share repurchase program for up to $1.5 billion of its common stock. The new repurchase program is effective immediately and replaces the previous program. Shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. The repurchase authorization may be commenced, suspended or discontinued at any time at the company's discretion.

Outlook

Keysight’s first fiscal quarter of 2026 revenue is expected to be in the range of $1.53 billion to $1.55 billion. Non-GAAP earnings per share for the first fiscal quarter of 2026 are expected to be in the range of $1.95 to $2.01. Certain items impacting the GAAP tax rate pertain to future events and are not currently estimable with a reasonable degree of accuracy; therefore, no reconciliation of GAAP earnings per share to non-GAAP has been provided. Further information is discussed in the section titled “Use of Non-GAAP Financial Measures” below.

Webcast

Keysight’s management will present more details about its fourth quarter and fiscal year 2025 financial results and its first quarter FY2026 outlook on a conference call with investors today at 1:30 p.m. PT. This event will be webcast in listen-only mode. Listeners may log on to the call at www.investor.keysight.com under the “Upcoming Events” section and select “Q4 FY25 Keysight Technologies Inc. Earnings Conference Call” to participate or dial +1 833-470-1428 (Toll-Free) or +1 646-844-6863 (Local) and enter passcode 371019. The webcast will remain on the company site for 90 days.

Forward-Looking Statements

Forward-looking statements notice

This communication contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The words "assume," “expect,” “intend,” “will,” “should,” "outlook" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could significantly affect the expected results and are based on certain key assumptions of Keysight’s management and on currently available information. Due to such uncertainties and risks, no assurances can be given that such expectations or assumptions will prove to have been correct, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Keysight undertakes no responsibility to publicly update or revise any forward-looking statement. The forward-looking statements contained herein include, but are not limited to, predictions, future guidance, projections, beliefs, and expectations about the company’s goals, revenues, financial condition, earnings, and operations that involve risks and uncertainties that could cause Keysight’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, impacts of global economic conditions such as inflation or recession, slowing demand for products or services, volatility in financial markets, impacts of geopolitical tension and conflict outside of the U.S., export control regulations and compliance, net zero emissions commitments, customer purchasing decisions and timing, tariff and trade policy impacts and order cancellations.

In addition to the risks above, other risks that Keysight faces include those detailed in Keysight’s filings with the Securities and Exchange Commission on Keysight’s yearly report on Form 10-K for the period ended October 31, 2024, and Keysight’s quarterly report on Form 10-Q for the period ended July 31, 2025.

Segment Data

Segment data reflects the results of our reportable segments under our management reporting system. Segment data are provided on page 5 of the attached tables.

Use of Non-GAAP Financial Measures

In addition to financial information prepared in accordance with U.S. GAAP (“GAAP”), this document also contains certain non-GAAP financial measures based on management’s view of performance, including:

Non-GAAP Net Income/Earnings
Non-GAAP Net Income per share/Earnings per share
Free Cash Flow

Income per share is based on weighted average diluted share count. See the attached supplemental schedules for reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure for the three months ended October 31, 2025 and fiscal year 2025. Following the reconciliations is a discussion of the items adjusted from our non-GAAP financial measures and the company’s reasons for including or excluding certain categories of income or expenses from our non-GAAP results.

About Keysight Technologies

At Keysight (NYSE: KEYS), we inspire and empower innovators to bring world-changing technologies to life. As an S&P 500 company, we're delivering market-leading design, emulation, and test solutions to help engineers develop and deploy faster, with less risk, throughout the entire product lifecycle. We're a global innovation partner enabling customers in communications, industrial automation, aerospace and defense, automotive, semiconductor, and general electronics markets to accelerate innovation to connect and secure the world. Learn more at Keysight Newsroom and www.keysight.com.

	Three months ended			Year ended
	October 31,			October 31,
	2025	2024		2025		2024
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share data)
(Unaudited)
PRELIMINARY
Orders	$1,533	$1,345		$5,452		$5,033
Revenue	$1,419	$1,287		$5,375		$4,979
Costs and expenses:
Cost of products and services	550	485		2,038		1,846
Research and development	258	233		1,007		919
Selling, general and administrative	399	343		1,474		1,395
Other operating expense (income), net	(5)	(4)		(20)		(14)
Total costs and expenses	1,202	1,057		4,499		4,146
Income from operations	217	230		876		833
Interest income	31	21		102		81
Interest expense	(28)	(23)		(96)		(84)
Other income (expense), net	102	20		200		35
Income from continuing operations before taxes	322	248		1,082		865
Provision for income taxes	70	321		213		251
Income (loss) from continuing operations, net of income taxes	252	(73)		869		614
Loss from discontinued operations, net of income taxes	(23)	-		(23)		-
Net income (loss)	$229	$(73)		$846		$614
Basic income (loss) per share:
Income (loss) per share from continuing operations	$1.47	$(0.42)		$5.04		$3.53
Loss per share from discontinued operations	(0.13)	-		(0.13)		-
Net income (loss) per share	$1.34	$(0.42)		$4.91		$3.53
Diluted income (loss) per share:
Income (loss) per share from continuing operations	$1.46	$(0.42)		$5.02		$3.51
Loss per share from discontinued operations	(0.13)	-		(0.13)		-
Net income (loss) per share	$1.33	$(0.42)		$4.89		$3.51
Weighted average shares used in computing net income (loss) per share:
Basic	172		173		172		174
Diluted	173		173		173		175

	October 31,	October 31,
	2025	2024
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share data)
(Unaudited)
PRELIMINARY
ASSETS
Current assets:
Cash and cash equivalents	$1,873	$1,796
Accounts receivable, net	939	857
Inventory	1,050	1,022
Other current assets	486	582
Total current assets	4,348	4,257
Property, plant and equipment, net	795	774
Operating lease right-of-use assets	236	234
Goodwill	3,435	2,388
Other intangible assets, net	1,285	607
Long-term investments	211	110
Long-term deferred tax assets	373	378
Other assets	610	521
Total assets	$11,293	$9,269
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$355	$313
Employee compensation and benefits	399	295
Deferred revenue	652	561
Income and other taxes payable	207	90
Operating lease liabilities	51	43
Other accrued liabilities	186	125
Total current liabilities	1,850	1,427
Long-term debt	2,534	1,790
Retirement and post-retirement benefits	75	81
Long-term deferred revenue	232	206
Long-term operating lease liabilities	193	197
Other long-term liabilities	532	463
Total liabilities	5,416	4,164
Stockholders' equity:
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding	-	-
Common stock; $0.01 par value; 1 billion shares authorized; 202 million and 201 million shares issued, respectively	2	2
Treasury stock, at cost; 30.8 million shares and 28.4 million shares, respectively	(3,799)	(3,422)
Additional paid-in-capital	2,851	2,664
Retained earnings	7,071	6,225
Accumulated other comprehensive loss	(248)	(364)
Total stockholders' equity	5,877	5,105
Total liabilities and equity	$11,293	$9,269

	Year ended
	October 31,
	2025	2024
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
PRELIMINARY
Cash flows from operating activities:
Net income	$846	$614
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	131	126
Amortization	145	144
Share-based compensation	162	137
Deferred tax expense (benefit)	(112)	268
Excess and obsolete inventory-related charges	43	35
Gain on sale of investments	(21)	-
Unrealized loss (gain) on investments in equity securities	(93)	(8)
Other non-cash expenses (income), net	6	7
Changes in assets and liabilities, net of effects of businesses acquired and divested:
Accounts receivable	23	71
Inventory	(24)	(49)
Accounts payable	26	26
Employee compensation and benefits	47	(36)
Deferred revenue	35	(12)
Income taxes payable	105	30
Income taxes receivable	105	(202)
Other assets and liabilities	(15)	(99)
Net cash provided by operating activities	1,409	1,052
Cash flows from investing activities:
Investments in property, plant and equipment	(128)	(154)
Proceeds from government incentives	1	7
Acquisitions of businesses and intangible assets, net of cash acquired	(2,022)	(681)
Proceeds from divestiture	399	-
Proceeds from sale of investments	30	11
Others Investing activities	(7)	(2)
Net cash used in investing activities	(1,727)	(819)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock plans	63	66
Payment of taxes related to net share settlement of equity awards	(39)	(31)
Acquisition of non-controlling interests	-	(458)
Treasury stock repurchases, including excise tax payments	(377)	(443)
Proceeds from issuance of long-term debt	748	599
Repayment of debt	-	(624)
Debt issuance costs	(8)	(12)
Other financing activities	(2)	(10)
Net cash provided by (used in) financing activities	385	(913)
Effect of exchange rate movements	9	6
Net increase (decrease) in cash, cash equivalents, and restricted cash	76	(674)
Cash, cash equivalents, and restricted cash at beginning of year	1,814	2,488
Cash, cash equivalents, and restricted cash at end of year	$1,890	$1,814

Cash payments included in operating activities:

Interest payments	$77	$75
Income tax paid, net	$120	$146

	Three months ended						Year ended
	October 31,						October 31,
	2025				2024		2025				2024
	Net Income		Diluted EPS		Net Income	Diluted EPS	Net Income		Diluted EPS		Net Income		Diluted EPS
KEYSIGHT TECHNOLOGIES, INC.
NET INCOME AND DILUTED EPS RECONCILIATION
(In millions, except per share data)
(Unaudited)
PRELIMINARY
GAAP Net income (loss)	$229		$1.33		$(73)	$(0.42)	$846		$4.89		$614		$3.51
Less: Loss from discontinued operations, net of income taxes	(23)		(0.13)		-	-	(23)		(0.13)		-		-
Income (loss) from continuing operations, net of income taxes		252		1.46	(73)	(0.42)		869		5.02		614		3.51
Non-GAAP adjustments:
Amortization of acquisition-related balances	41		0.24		33	0.19	141		0.81		139		0.80
Share-based compensation	45		0.26		27	0.15	176		1.02		145		0.83
Acquisition and integration costs	36		0.21		19	0.11	106		0.61		75		0.43
Restructuring and others	(59)		(0.35)		8	0.05	(63)		(0.36)		52		0.30
Adjustment for taxes	16		0.09		274	1.57	11		0.06		71		0.40
Non-GAAP Net income	$331		$1.91		$288	$1.65	$1,240		$7.16		$1,096		$6.27
Weighted average shares outstanding - diluted	173				173		173					175

For both the three months and year ended October 31, 2025 and 2024, management uses a non-GAAP effective tax rate of 14%.

EPS impact on non-GAAP adjustments and non-GAAP net income is based on an adjusted shares outstanding of 174 million for three months ended October 31, 2024.

Please refer to the last page for details on the use of non-GAAP financial measures.

	Q4'25	Q4'24	Inc/(Dec)
KEYSIGHT TECHNOLOGIES, INC.
SEGMENT RESULTS INFORMATION
(In millions, except where noted)
(Unaudited)
PRELIMINARY
Communications Solutions Group			Percent
Revenue	$990	$894	11%
Gross margin, %	66%	67%
Income from operations	$264	$249
Operating margin, %	27%	28%
Electronic Industrial Solutions Group			Percent
	Q4'25	Q4'24	Inc/(Dec)
Revenue	$429	$393	9%
Gross margin, %	60%	58%
Income from operations	$109	$83
Operating margin, %	25%	21%

Segment revenue and income from operations are consistent with the respective non-GAAP financial measures as discussed on last page.

	Three months ended		Year ended
	October 31,		October 31,
	2025	2024	2025	2024
KEYSIGHT TECHNOLOGIES, INC.
FREE CASH FLOW
(In millions)
(Unaudited)
PRELIMINARY
Net cash provided by operating activities	$225	$359	$1,409	$1,052
Adjustments:
Investments in property, plant and equipment	(38)	(38)	(128)	(154)
Proceeds from government incentives	1	7	1	7
Free cash flow	$188	$328	$1,282	$905

Please refer to the last page for details on the use of non-GAAP financial measures.

			Percent			Percent
	Q4'25	Q4'24	Inc/(Dec)	FY25	FY24	Inc/(Dec)
KEYSIGHT TECHNOLOGIES, INC.
REVENUE BY END MARKETS
(In millions)
(Unaudited)
PRELIMINARY
Aerospace, Defense and Government	$330	$303	9%	$1,238	$1,149	8%
Commercial Communications	660	591	12%	2,488	2,271	10%
Electronic Industrial	429	393	9%	1,649	1,559	6%
Total Revenue	$1,419	$1,287	10%	$5,375	$4,979	8%

KEYSIGHT TECHNOLOGIES, INC.

Non-GAAP Financial Measures

Management uses both GAAP and non-GAAP financial measures to analyze and assess the overall performance of the business, to make operating decisions and to forecast and plan for future periods. We believe that our investors benefit from seeing our results “through the eyes of management” in addition to seeing our GAAP results. This information enhances investors’ understanding of the continuing performance of our business and facilitates comparison of performance to our historical and future periods.

Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies, including industry peer companies, limiting the usefulness of these measures for comparative purposes.

These non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The discussion below presents information about each of the non-GAAP financial measures and the company’s reasons for including or excluding certain categories of income or expenses from our non-GAAP results. In future periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, adjustments for these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual.

Core Revenue/ Margin excludes the impact of foreign currency changes and revenue/ expenses associated with acquisitions or divestitures completed within the last twelve months. We exclude from the current period the impact of foreign currency changes as currency rates can fluctuate based on factors that are not within our control and can obscure growth trends. As the nature, size and number of acquisitions can vary significantly from period to period and as compared to our peers, we also exclude revenue/ expenses associated with recently acquired businesses to facilitate comparisons of growth and analysis of underlying business trends.

Free cash flow includes cash provided by operating activities adjusted for net investments in property, plant & equipment.

Non-GAAP Income from Operations, Non-GAAP Net Income and Non-GAAP Diluted EPS may include the following types of adjustments:

Acquisition-related Items: We exclude the impact of certain items recorded in connection with business combinations from our non-GAAP financial measures that are either non-cash or not normal, recurring operating expenses due to their nature, variability of amounts and lack of predictability as to occurrence or timing. These amounts may include non-cash items such as the amortization of acquired intangible assets and amortization of items associated with fair value purchase accounting adjustments. We also exclude other acquisition and integration costs associated with business acquisitions that are not normal recurring operating expenses, including gain/loss on foreign exchange contracts and legal, accounting and due diligence costs. We exclude these charges to facilitate a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.
Share-based Compensation Expense: We exclude share-based compensation expense from our non-GAAP financial measures because share-based compensation expense can vary significantly from period to period based on the company’s share price, as well as the timing, size and nature of equity awards granted. Management believes the exclusion of this expense facilitates the ability of investors to compare the company’s operating results with those of other companies, many of which also exclude share-based compensation expense in determining their non-GAAP financial measures.
Restructuring and others: We exclude incremental expenses associated with restructuring initiatives including those of acquired entities, usually aimed at material changes in the business or cost structure. Such costs may include employee separation costs, asset impairments, facility-related costs, contract termination fees, and costs to move operations from one location to another. These activities can vary significantly from period to period based on the timing, size and nature of restructuring plans; therefore, we do not consider such costs to be normal, recurring operating expenses.

We also exclude “others,” not normal, recurring, cash operating income/expenses from our non-GAAP financial measures. Such items are evaluated on an individual basis, based on both quantitative and qualitative factors and generally represent items that we do not anticipate occurring as part of our normal business. While not all-inclusive, examples of such items would include net gains or losses on equity investments, significant non-recurring events like realized gains or losses associated with our employee benefit plans, costs and recoveries related to unusual events, gain on sale of assets/divestitures, adjustment attributable to non-controlling interest, etc. We believe that these costs do not reflect expected future operating expenses and do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to our operating performance in other periods.

Estimated Tax Rate: We utilize a consistent methodology for long-term projected non-GAAP tax rate. When projecting this long-term rate, we exclude any tax benefits or expenses that are not directly related to ongoing operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. Additionally, we evaluate our current long-term projections, current tax structure and other factors, such as existing tax positions in various jurisdictions and key tax holidays in major jurisdictions where Keysight operates. This tax rate could change in the future for a variety of reasons, including but not limited to significant changes in geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where Keysight operates. The above reasons also limit our ability to reasonably estimate the future GAAP tax rate and provide a reconciliation of the expected non-GAAP earnings per share for the first quarter of fiscal 2026 to the GAAP equivalent.

Management recognizes these items can have a material impact on our cash flows and/or our net income. Our GAAP financial statements, including our Condensed Consolidated Statement of Cash Flows, portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded costs are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the Condensed Consolidated Statement of Operations prepared in accordance with GAAP. The non-GAAP measures focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance.

Contacts
+1 707-577-6915
Investor.Relations@Keysight.com
Andrea Mueller
+ 1 408-236-1541 andrea.mueller@keysight.com
Source: IR-KEYS