| | | Keysight expects FY 2026 revenue growth at or above 7% target while expanding AI and 6G initiatives
Nov. 24, 2025 7:55 PM ET
AI-Generated Earnings Calls Insights
Earnings Call Insights: Keysight Technologies (KEYS) Q4 2025
Management View- Satish Dhanasekaran, President and CEO, reported "Keysight delivered an outstanding fourth quarter results exceeding the high end of our guidance. Orders grew 14%, revenue increased 10% and EPS rose 16%." He described full year orders and revenue growth of 8% and EPS up 14%, noting, "Keysight's leadership and differentiated solutions continue to drive demand across our markets."
- Dhanasekaran highlighted the company's portfolio is "enabling major innovation waves shaping our markets, AI and accelerated compute, nonterrestrial networks, 6G, next-gen semiconductors and defense modernization." He pointed to acquisitions of Spirent, Synopsys Optical Solutions Group and Ansys Power Artist as advancing Keysight's software-centric strategy.
- He announced, "our Board has authorized an additional $1.5 billion share repurchase program supporting our ongoing capital return."
- Dhanasekaran stated, "Wireline orders and revenue grew double digits both in Q4 and for the full year, setting a new record for the business," and described AI infrastructure build-outs as a key driver. He also noted, "Wireless orders and revenue grew high single digits for the full year and outperformed expectations, driven by ongoing standards evolutions, nonterrestrial networks and early 6G research."
- Neil Dougherty, Executive VP & CFO, said, "Fourth quarter revenue of $1.419 billion was above the high end of our guidance range, up 10% on a reported basis or 9% on a core basis. Orders of $1.533 billion were up 14% on a reported basis or 12% on a core basis." Dougherty added, "We generated $331 million of net income and delivered earnings per share of $1.91, which increased 16% year-over-year."
Outlook- Dougherty stated, "For the first quarter of 2026, we expect revenue in the range of $1.530 billion to $1.550 billion, representing 19% year-over-year growth at the midpoint. Excluding the recent acquisitions, this guidance assumes 10% year-over-year revenue growth."
- For the full year, he said, "we expect FY '26 revenue growth, excluding acquisitions, to be at or above the high end of our 5% to 7% long-term target."
- He noted acquisitions are expected to contribute approximately $375 million of revenue in FY '26 and "we are working to realize in excess of $100 million of synergies and other operational efficiencies across Keysight."
- Dougherty indicated the acquisitions "are expected to be accretive to Keysight's earnings 12 months post close. While this implies some mild dilution in FY '26, we expect the strength of our core business to enable FY '26 EPS growth at or above our long-term 10% target."
Financial Results- Dougherty reported, "For the full year, Keysight generated revenue of $5.375 billion, up 8% as reported or 7% on a core basis. Gross margin was 65% and operating margin was 26%. FY '25 earnings per share of $7.16 was up 14%."
- Communications Solutions Group (CSG) revenue was $990 million, up 11%. Commercial Communications revenue reached $660 million, up 12%. Aerospace, defense and government revenue was $330 million, up 9%.
- Electronic Industrial Solutions Group (EISG) revenue was $429 million, up 9%.
- Software and services accounted for approximately 37% of revenue, with annual recurring revenue at 29% of total.
- The company ended the quarter with $1.9 billion in cash and cash equivalents, generating $225 million in cash flow from operations and $188 million in free cash flow; $1.7 billion was deployed for acquisitions.
Q&A- Mehdi Hosseini, Susquehanna Financial Group: Asked about wireless trends. Dhanasekaran responded, "wireless exceeded expectations this year, in part driven by stabilization in 5G, which is normalized and then some of the advanced technology areas that we have made investments in starting to show some early results even prior to 6G hitting inflection."
- Samik Chatterjee, JPMorgan: Inquired about order acceleration and drivers. Dhanasekaran replied, "the revenue outperformance was driven by the broad order strength that we saw with both our CSG and EISG businesses growing double digits this quarter," and added, "the volume of the pipeline or the velocity of the pipeline or the conversion rate... they're all trending up."
- Andrew Spinola, UBS: Asked about wireline business timing and hyperscaler impact. Dhanasekaran indicated, "the AI cluster and infrastructure build-outs are occurring, driven by the hyperscaler spend."
- Atif Malik, Citi: Questioned 6G adoption timeline with new AI partnerships. Dhanasekaran stated, "we're thinking '28, '29-ish time frame when that process comes to some level of maturity before global deployments may occur."
- Robert Mason, Baird: Asked about positioning capabilities from Spirent acquisition. Dhanasekaran called positioning "a crown jewel... very unique capabilities with regard to positioning, navigation and time."
- David Ridley-Lane, BofA Securities: Asked about EPS dilution. Dougherty replied, "I described it in the prepared remarks as mild. So I think you could think of it on a percentage basis is low single digits."
- Mark Delaney, Goldman Sachs: Inquired about growth by business line and tariffs. Dougherty explained, "wireline, we're clearly benefiting from the investment wave in AI" and added, "our pricing and surcharging mitigations are ramping a little faster than expected."
- Aaron Rakers, Wells Fargo: Asked about operating margin targets. Dougherty stated, "it's further out" for reaching 31%-32% operating margin, citing the recent downturn.
- Meta Marshall, Morgan Stanley: Asked about strength in Aerospace and Defense and automotive. Dhanasekaran said, "record bookings this year builds backlog again."
- Tim Long, Barclays: Asked about AI and software/services growth. Dhanasekaran noted, "our wireline business had a record year, growing double digits this year," and software and services are expected to reach 40% with M&A.
- Rob Jamieson, Vertical Research Partners: Inquired about R&D investment. Dhanasekaran said, "we're in between that refresh phase of investment right now and over the next 18 months, feel really good about the new product introductions."
Sentiment Analysis- Analyst sentiment showed cautious optimism, pressing for specifics on wireless, AI, synergy realization, and margin expansion. Questions focused on growth sustainability and acquisition integration.
- Management maintained a confident and positive tone, using language such as "we feel good about this, and we reflected that in our guide," and "we are confident in the fundamentals of our business model." There was no sign of defensiveness or hesitation in responses.
- Compared to the previous quarter, both analyst and management tone remained positive but showed more confidence due to accelerated growth and strong order momentum.
Quarter-over-Quarter Comparison- Guidance language shifted from "gradual recovery" in Q3 to more robust expectations, with FY '26 revenue growth forecast at or above the high end of the 5%-7% target.
- Strategic focus expanded with three acquisitions completed, adding software-centric capabilities.
- Analyst questions this quarter focused more on AI-driven growth, acquisition integration, and cadence of M&A contributions, versus last quarter's tariff mitigation and order visibility.
- Management confidence increased, with Dhanasekaran and Dougherty citing strong pipelines and robust order growth, compared to a more cautious optimism in Q3.
- Key metrics such as EPS, revenue, and order growth all improved quarter-over-quarter.
Risks and Concerns- Management identified ongoing geopolitical and policy uncertainties.
- Dougherty mentioned "mild dilution in FY '26" from acquisitions, expecting it to be offset by core business strength.
- Tariff impacts remain a focus, but mitigation strategies are proceeding ahead of schedule.
- Analysts pressed on the sustainability of growth, integration of acquisitions, and timing of synergy realization.
Final Takeaway
Keysight Technologies closes fiscal 2025 with strong momentum, highlighted by double-digit order and revenue growth in Q4, robust contributions from AI and 6G, and successful integration of new acquisitions. Management signals confidence in further accelerating revenue and EPS growth for FY 2026, supported by a healthy pipeline, expanding software and services portfolio, and proactive capital return strategies, while closely monitoring geopolitical and integration risks.
Read the full Earnings Call Transcript |
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