Keysight's Q3 Earnings Surpass Estimates, Revenues Rise Y/Y

Keysight Technologies, Inc. KEYS reported strong third-quarter fiscal 2025 results, wherein both bottom and top lines beat the Zacks Consensus Estimate. Based in Santa Rosa, CA, the leading electronic design and testing solution provider reported higher year-over-year revenues, backed by strength in the AI data-center market, aerospace, defense and government end markets. Management’s focus on expanding its business through collaborations with established sector players is another positive.

Net Income of KEYS

Net income on a GAAP basis was $191 million or $1.10 per share compared with $389 million or $2.22 per share in the year-ago quarter.

Non-GAAP net income in the reported quarter was $297 million or $1.72 per share compared with $275 million or $1.57 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 4 cents.

KEYS’ Q3 Revenues

Quarterly net sales improved to $1.35 billion from the year-ago quarter’s $1.22 billion, exceeding the high end of the guidance. Total orders increased 7% year over year to $1.34 billion. The company is witnessing incrementally positive signals in its sales funnel and customer engagement. The top line beat the Zacks Consensus Estimate by $38 million.

Communication Solutions Group (CSG) generated $940 million in revenues, up from the year-ago quarter’s $847 million. The 11% year-over-year growth was primarily driven by healthy traction in the commercial communications end market, induced by strong demand for AI data-center network solutions and applications. Aerospace, defense and government end markets grew backed by healthy demand trends in the United States and Asia. The growing defense modernization initiative is a positive factor. The top line beat our estimate of $909.4 million.

The Electronic Industrial Solutions Group (EISG) segment’s revenues increased to $412 million from $370 million in the prior-year quarter. Growing investment in AI-driven advanced nodes, high-bandwidth memory and silicon photonics is induced by high AI-performance requirements driving growth in the semiconductor vertical. Strength in advanced research and digital health is driving growth in the general electronics vertical. The top line beat our revenue estimate of $401.3 million.


Region-wise, Asia-Pacific revenues aggregated $569 million compared with $496 million in the prior-year quarter. The company reported a 13% year-over-year improvement in revenues from the Americas to $566 million. Revenues from Europe were $217 million, down 2% from the year-ago quarter's $221 million.

Other Details of KEYS

During the quarter, the company’s non-GAAP gross profit totaled $864 million compared with $781 million in the year-ago quarter, with gross margins of 63.9% and 64.1%, respectively. The non-GAAP operating margin was 25%, up from 24.4% in the prior-year quarter.

CSG reported a non-GAAP operating margin of 26.1%, down 20 basis points (bps) year over year. EISG reported a non-GAAP operating margin of 22.3%, up 220 bps year over year, largely due to a higher mix of software.

Cash Flow & Liquidity of KEYS

During the quarter, Keysight generated $322 million in cash from operating activities compared with $255 million a year ago. As of July 31, 2025, the company had $2.63 billion in cash and cash equivalents and $2.53 billion of long-term debt.

KEYS’ Outlook

For the fourth quarter of fiscal 2025, Keysight expects revenues in the range of $1.37-$1.39 billion. Non-GAAP earnings per share are estimated to be between $1.79 and $1.85.

KEYS’ Zacks Rank & Stocks to Consider

KEYS currently carries a Zacks Rank #3 (Hold).

Ubiquiti Inc. UI carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last reported quarter, it delivered an earnings surprise of 61.29%. Ubiquiti spends significantly on research and development activities for developing innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help to increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.

Jabil, Inc. JBL currently carries a Zacks Rank #2. In the last reported quarter, it delivered an earnings surprise of 9.44%.

Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target of “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. This initiative should position Jabil well on the growth trajectory.

InterDigital, Inc. IDCC currently carries a Zacks Rank #2. The company delivered an earnings surprise of 54.27% in the trailing four quarters.

InterDigital’s global footprint, diversified product portfolio and the ability to penetrate in different markets are impressive.It is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. Apart from it’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings are likely to drive considerable value, considering the massive size of the market it licenses. 

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