Keysight's Q4 Earnings Surpass Estimates, Revenues Rise Y/Y

Keysight Technologies Inc. KEYS reported strong fourth-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 $229 million or $1.33 per share against a GAAP net loss of $73 million or 42 cents per share in the year-ago quarter.

Non-GAAP net income in the reported quarter was $331 million or $1.91 per share compared with $288 million or $1.65 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 6 cents.

KEYS’ Q4 Revenues

Quarterly net sales improved to $1.42 billion from the year-ago quarter’s $1.29 billion, exceeding the high end of the guidance. Total orders increased 14% year over year to $1.53 billion. The company is witnessing incrementally positive signals in its sales funnel and customer engagement. The top line beat the Zacks Consensus Estimate by $29 million.

Communication Solutions Group (CSG) generated $990 million in revenues, up from the year-ago quarter’s $894 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, non-terrestrial networks, 5G Advanced and early 6G research. Aerospace, defense and government end markets grew backed by healthy demand trends in the space, satellite and security/defense communications growth. The growing defense modernization initiative is a positive factor. The top line beat our estimate of $965 million.

The Electronic Industrial Solutions Group (EISG) segment’s revenues increased to $429 million from $393 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 industrial and digital health is driving growth in the general electronics vertical. The top line beat our revenue estimate of $414.2 million.

Region-wise, Asia-Pacific revenues aggregated $581 million compared with $508 million in the prior-year quarter. The company reported a 6% year-over-year improvement in revenues from the Americas to $581 million. Revenues from Europe were $257 million, up 12% from the year-ago quarter's $230 million.

Other Details of KEYS

During the quarter, the company’s non-GAAP gross profit totaled $912 million compared with $829 million in the year-ago quarter, with gross margins of 64.3% and 64.5%, respectively. The non-GAAP operating margin was 26.3%, up from 25.8% in the prior-year quarter.

CSG reported a non-GAAP operating margin of 26.7%, down 120 basis points (bps) year over year. EISG reported a non-GAAP operating margin of 25.4%, up 430 bps year over year, largely due to a higher mix of software.

Cash Flow & Liquidity of KEYS

During the quarter, Keysight generated $225 million in cash from operating activities compared with $359 million a year ago. As of Sept. 30, 2025, the company had $1.9 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 $1.53-$1.55 billion. Non-GAAP earnings per share are estimated to be between $1.95 and $2.01.

KEYS’ Zacks Rank & Stocks to Consider

KEYS currently carries a Zacks Rank #4 (Sell).

Celestica Inc. CLS sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, it delivered an earnings surprise of 7.48%. The growing proliferation of AI-based applications and generative AI tools across industries presents a solid growth opportunity for Celestica. Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries.

CommScope Holdings Inc. COMM sports a Zacks Rank #1. CommScope’s comprehensive, differentiated portfolio allows it to hold a dominant position in the communication infrastructure industry.

In the last reported quarter, COMM delivered an earnings surprise of 67.57%. With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, CommScope is dedicated to developing solutions designed to support wireline and wireless network convergence, which will be essential for the success of 5G technology.
  
Ericsson ERIC carries a Zacks Rank #2 (Buy) at present. It delivered an earnings surprise of 23.08% in the last reported quarter.

Ericsson is well positioned to cash in on the market momentum with its competitive 5G product portfolio. The company continues to execute its strategy to become a leading mobile infrastructure provider and establish a focused enterprise business. The combination of strategic buyouts and continuous innovation are expected to accelerate commercial expansion and solidify Ericsson’s position in the wireless equipment market.

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