Keysight’s second quarter saw revenue and adjusted profits exceed Wall Street expectations, driven by robust order growth across its core businesses. Management pointed to sustained momentum from artificial intelligence (AI) infrastructure investments, continued strength in aerospace and defense, and stable wireless demand as key contributors. CEO Satish Dhanasekaran credited “sustained AI momentum, strong growth in aerospace, defense, government and general electronics,” highlighting the company’s ability to capitalize on multiple technology cycles and customer segments this quarter.
Is now the time to buy KEYS? Find out in our full research report (it’s free).
Keysight (KEYS) Q2 CY2025 Highlights:
- Revenue: $1.35 billion vs analyst estimates of $1.32 billion (11.1% year-on-year growth, 2.7% beat)
- Adjusted EPS: $1.72 vs analyst estimates of $1.67 (2.9% beat)
- Adjusted EBITDA: $371.3 million vs analyst estimates of $355.3 million (27.5% margin, 4.5% beat)
- Revenue Guidance for Q3 CY2025 is $1.38 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q3 CY2025 is $1.82 at the midpoint, above analyst estimates of $1.80
- Operating Margin: 17.3%, in line with the same quarter last year
- Backlog: $2.34 billion at quarter end, up 2.3% year on year
- Market Capitalization: $28.4 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Keysight’s Q2 Earnings Call
- Mark Trevor Delaney (Goldman Sachs) asked if Keysight’s end-market recovery is stronger than previously expected. CEO Satish Dhanasekaran replied that performance has been “slightly even better than what we expected,” though challenges persist in automotive and some market segments.
- Aaron Christopher Rakers (Wells Fargo) inquired whether the long-term 5% to 7% top-line growth model remains realistic given current momentum. CFO Neil Dougherty said the company is tracking at the low end of that range, with optimism for improvements if tariff impacts are absorbed.
- Meta A. Marshall (Morgan Stanley) requested details on which tariffs most affect Keysight and how mitigation is being executed. Dougherty explained that the supply chain’s geographic diversity and pricing adjustments are key strategies, while Dhanasekaran stressed confidence in full mitigation over time.
- Timothy Patrick Long (Barclays) questioned what is driving wireless growth and whether margin targets are achievable post-tariffs. Dhanasekaran cited recovering R&D spending and new AI applications in wireless, while Dougherty said the 40% incremental margin target is still valid once tariffs are normalized.
- Mehdi Hosseini (SIG) sought clarification on the sustainability of strong wireline orders and margin differences between segments. Dhanasekaran pointed to AI-driven demand and a robust pipeline as key, while Dougherty explained that EISG benefits from product mix while both main segments face tariff pressures.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) progress on fully mitigating tariff impacts and restoring targeted margin levels, (2) continued adoption of Keysight’s AI-related solutions in both established and emerging customer segments, and (3) sustained demand in aerospace and defense as global government budgets evolve. The pace of new product rollouts and updates on M&A integration will also be key markers for execution.
Keysight currently trades at $165.32, in line with $163.80 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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