Keysight Technologies (KEYS): Q2 FY25 Earnings Live Coverage

Heading into the release, we highlighted that expectations were stable but not euphoric, with some concern about uneven macro indicators. The above-consensus Q2 revenue and EPS, combined with the raised full-year growth forecast, directly address these concerns. With $1.70 in non-GAAP EPS, the company beat not just the street’s $1.65 estimate, but also reinforced margin strength across both divisions.

Importantly, Keysight lifted its FY revenue growth expectations toward the midpoint of its long-term 5–7% CAGR — a subtle but powerful vote of confidence amid tech-sector earnings volatility. The stock is up 3.75% after-hours.

Keysight Technologies reported Q2 2025 results ahead of expectations, lifting its full-year outlook and reinforcing confidence in its multi-segment strategy. Revenue reached $1.31 billion, up 7% year over year and exceeding the high end of guidance. Non-GAAP EPS landed at $1.70, topping consensus estimates of $1.65.

GAAP net income more than doubled to $257 million ($1.49 per share) from $126 million ($0.72 per share) in the year-ago period. Free cash flow surged to $457 million, up sharply from $74 million last year, driven by operating margin expansion and tight cost discipline.

By segment, Communications Solutions Group posted $913 million in revenue (+9% YoY), while Electronic Industrial Solutions Group delivered $393 million (+5%). Management raised FY25 growth guidance to the midpoint of its long-term 5–7% range, citing robust demand across commercial and aerospace verticals.

short interest in KEYS sits near 1.3% of float, down from earlier this year, signaling that bearish bets have been unwound as the stock rallied +20% in the past month. The sentiment has improved but remains tepid: many analysts are neutral-to-positive, with few strong buy convictions. Options flow shows a tilt toward moderate upside (calls clustered around $170–$180), and institutional accumulation has resumed.

The stock still trades at a discount to peers like Teradyne and Ansys on forward P/E — a setup that could offer upside if margins and backlog trends confirm a bottoming cycle.

Keysight’s last two calls have signaled cautious optimism. CEO Satish Dhanasekaran stressed that the company is seeing “early signs of recovery,” particularly in wireline AI infrastructure, aerospace/defense, and semiconductor R&D. Orders improved for the second straight quarter — a key reversal from early 2024 softness.

Management was bullish on AI’s role in boosting test demand across data center, chip, and comms networks. KEYS also touted wins with hyperscalers and European defense integrators, and emphasized strength in its EDA software portfolio, including traction from its ESI acquisition. CFO Neil Dougherty reiterated their 5–7% long-term revenue growth goal, with operating leverage returning as the backlog clears.

“AI is driving a broadening wave of investment — and we are positioned across every layer of that stack.”

On the last earnings call and at investor events, KEYS highlighted strength in wireline infrastructure testing tied to AI data center expansion. AI-driven buildouts across hyperscalers have fueled demand for 400G–800G protocol test equipment. Meanwhile, aerospace and defense remain a stabilizing force, with European and U.S. demand holding steady and RF/microwave systems seeing new contract flow.

The wireless testing business remains in “stability” mode, with no major 5G ramp underway and early 6G research still pre-revenue. One standout development is Keysight’s growth in design software and digital twins, especially for vehicle and defense platforms. Management also flagged new traction for its ESI simulation tools in aerospace — a business acquired in 2023 and now spreading across verticals.