Keysight’s first quarter results came in ahead of Wall Street’s revenue and profit expectations, reflecting steady demand across its core markets. Management credited the performance to strong order growth in the Communications Solutions Group, particularly from data center infrastructure and wireline network customers, as well as stabilization in the Electronic Industrial Solutions Group. CEO Satish Dhanasekaran highlighted that “R&D investments in 1.6 terabyte electrical and optical technologies, as well as expansion of new protocols in AI data center networks, are fueling demand,” emphasizing a technology-driven recovery.
Is now the time to buy KEYS? Find out in our full research report (it’s free).
Keysight (KEYS) Q1 CY2025 Highlights:
- Revenue: $1.31 billion vs analyst estimates of $1.28 billion (7.4% year-on-year growth, 1.8% beat)
- Adjusted EPS: $1.70 vs analyst estimates of $1.65 (3.3% beat)
- Adjusted EBITDA: $361.4 million vs analyst estimates of $352.5 million (27.7% margin, 2.5% beat)
- Revenue Guidance for Q2 CY2025 is $1.32 billion at the midpoint, above analyst estimates of $1.30 billion
- Adjusted EPS guidance for Q2 CY2025 is $1.66 at the midpoint, below analyst estimates of $1.69
- Operating Margin: 15.8%, up from 14.6% in the same quarter last year
- Backlog: $2.35 billion at quarter end, up 4.3% year on year
- Market Capitalization: $28.28 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 Keysight’s Q1 Earnings Call
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Tim Long (Barclays) asked about the significance of AI-related activity and pipeline visibility for the second half. CEO Satish Dhanasekaran said AI is a long-term opportunity, with double-digit wireline growth and a solid project pipeline supporting their outlook.
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Matt Niknam (Deutsche Bank) sought clarity on the sources of improved guidance and strong cash flow. Dhanasekaran attributed the higher outlook to order momentum and backlog, while CFO Neil Dougherty noted working capital improvements and a one-time gain on a currency hedge.
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Mark Delaney (Goldman Sachs) questioned the magnitude and mitigation of tariff exposure. Dougherty explained the $75–100 million annualized gross impact would be gradually offset by supply chain changes and price adjustments, with full mitigation by next year.
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Aaron Rakers (Wells Fargo) inquired about incremental operating margins above 5% revenue growth and the wireless business’s sustainability. Dougherty reiterated the 40% incremental margin target, noting tariffs as a temporary drag, while Dhanasekaran highlighted stronger infrastructure demand in wireless.
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Meta Marshall (Morgan Stanley) asked about defense order trends and China’s tariff exposure. Dhanasekaran said U.S. and European defense orders grew despite government budget constraints, while Dougherty estimated China-related tariff exposure at less than 10% of the total.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor (1) the pace of AI-driven demand and adoption of new networking standards, (2) the effectiveness and timing of Keysight’s tariff mitigation initiatives, and (3) continued growth in software and simulation revenue as a share of the total business. Updates on regulatory approvals and integration for pending acquisitions will also be key factors to watch.
Keysight currently trades at $164.69, up from $162.51 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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