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Keysight Technologies Boosts FY2025 Outlook Amid Strong Demand

Keysight Technologies reported above-guidance revenue and EPS for Q2 FY2025, raising its growth outlook based on robust operational performance. As demand increases in strategic markets, investors may see favorable effects on stock performance.

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AI Rating:   8

Positive Quarterly Performance
Keysight Technologies, Inc. showcased impressive financial results for Q2 FY2025, with revenue of $1.31 billion and adjusted earnings per share (EPS) of $1.70, surpassing investor expectations. This strong financial performance positions Keysight favourably in the stock market, particularly in light of its raised FY2025 revenue growth outlook.

Revenue Growth and Orders
Orders saw an 8% year-over-year increase, indicating strong market demand, particularly in commercial communications and strategic R&D sectors. The anticipated increase in revenue appears to be supported by high adoption rates in next-generation data center technologies which could lead to sustained revenue growth of mid- to high-single digits.

Margins and Tariff Management
Keysight’s gross margins maintained a robust 65%, while operating margins improved to 25%, up by 100 basis points year-over-year. Despite facing initial tariff costs, the company’s proactive tariff mitigation strategies will likely protect profit margins moving forward, which is a positive sign for investors. The estimated $75 million to $100 million tariff exposure is relatively manageable and their effective strategies to rectify potential issues indicate operational strength.

Free Cash Flow and Shareholder Returns
With $457 million in free cash flow and a strong cash position of $3.1 billion, Keysight has shown its commitment to returning wealth to shareholders, having repurchased over $1.7 billion in shares in the past twelve quarters. The planned acquisitions are aimed at strengthening revenue streams through software and services, which provides a promising outlook for revenue diversifications.

Growth Expectations
Management has raised FY2025 revenue expectations to the midpoint range of 5% to 7% and anticipates EPS growth to slightly exceed 10%—another positive indicator for investors considering stocks with solid growth potential. This level of optimism reflects well on Keysight’s overall market positioning and commitment to innovation, which reinforces investor confidence in its stock.

Stocks:  KEYS