Breaking Down Keysight Technologies, Inc. (KEYS) Financial Health: Key Insights for Investors

You're looking at Keysight Technologies, Inc. and wondering if the test and measurement giant's recent momentum is sustainable, especially as we close out 2025. The short answer is that the company is defintely executing well, positioning itself at the center of critical, high-growth tech trends like 5G-Advanced, 6G research, and the proliferation of electronic content in vehicles. Management is projecting full-year fiscal 2025 revenue growth of approximately 7% and non-GAAP earnings per share (EPS) growth of about 13%, showing solid expansion in a choppy market. We saw this play out in the third quarter, which delivered $1.35 billion in revenue, and the fourth-quarter guidance points to continued strength with revenue expected between $1.370 billion and $1.390 billion. But, to be fair, the stock's premium valuation-its price-to-earnings ratio (P/E) is notably higher than industry peers-suggests a lot of future growth is already priced in, and you need to understand the integration risks from recent acquisitions like Spirent Communications. So, what specific financial signals should you be watching to determine if the expected upside, which analysts peg at an average price target around $192.18, is truly achievable?

Revenue Analysis

You need a clear picture of where Keysight Technologies, Inc. (KEYS) is making its money, especially with the fiscal year 2025 numbers now largely in view. The direct takeaway is that Keysight is successfully navigating a complex market by leaning into high-growth areas like AI and defense, with the company projecting a solid full-year revenue growth of approximately 7 percent for FY2025.

This growth is expected to push the total fiscal year 2025 revenue to an estimated $5.34 billion, up from the $4.98 billion reported for FY2024. This is a defintely positive reversal after a slight dip in the previous year, showing the underlying demand for their electronic design and test solutions (oscilloscopes, network analyzers, etc.) remains strong.

Breaking Down the Primary Revenue Streams

Keysight's revenue is fundamentally split between its two main operating groups and, importantly, a growing mix of software and services. This dual-engine approach provides both product-driven sales and a stable, recurring revenue base, which is crucial for long-term predictability.

• Communications Solutions Group (CSG) is the powerhouse.
• Electronic Industrial Solutions Group (EISG) drives diversification.
• Software and services provide the recurring backbone.

In the third quarter of FY2025, software and services revenue accounted for a significant 36 percent of Keysight's total revenue, with recurring revenue making up 28 percent of the overall mix. This high percentage of recurring revenue acts as a financial shock absorber.

Segment Contribution and Growth Drivers

The company's structure clearly maps to its end markets. The Communications Solutions Group (CSG) is the dominant segment, typically representing about 70% of total revenue, while the Electronic Industrial Solutions Group (EISG) makes up the remaining 30%. Here's the quick math on their recent performance:

CSG's 11 percent year-over-year growth in Q3 FY2025 was driven by a 13 percent jump in commercial communications, fueled by massive investments in AI data center infrastructure and next-generation wireline/wireless technology. Also, the Aerospace, Defense, and Government sector within CSG showed solid growth of 8 percent, reflecting ongoing global government spending.

Shifting Opportunities and Near-Term Actions

The Electronic Industrial Solutions Group (EISG) also grew by 11 percent in Q3 FY2025, but what this growth hides is a strategic shift. EISG is benefiting heavily from the semiconductor industry's push into advanced nodes for AI chips, memory, and Silicon Photonics (SiPh), which requires Keysight's wafer test solutions. To be fair, while the automotive and energy markets have been mixed, the strong demand from AI-related semiconductor customers is more than compensating.

This trend means you should watch the CSG and EISG segments for sustained double-digit growth, especially as the company progresses with its strategic acquisitions, like the planned close of Spirent Communications in Q4 FY2025, which will further bolster its communications testing capabilities. For a deeper dive into the long-term strategic direction, you should review the Mission Statement, Vision, & Core Values of Keysight Technologies, Inc. (KEYS).

Profitability Metrics

You want to know if Keysight Technologies, Inc. (KEYS) is a high-margin business, and the short answer is yes-it's a premium performer in a specialized industry. The company's latest quarterly figures show best-in-class operational efficiency, with a Gross Margin of 64% in Q3 2025, significantly outpacing the industry average of 49.2%.

This wide gap is your first signal that Keysight Technologies, Inc. holds a strong competitive position, likely due to its proprietary technology in electronic test and measurement equipment. The high gross margin suggests excellent cost management and pricing power over its cost of goods sold (COGS). Honestly, that kind of margin is defintely a quality indicator for a technology hardware company.

Margin Analysis: Keysight vs. Industry

A deeper look at the margins shows just how efficient Keysight Technologies, Inc. is at turning revenue into profit compared to its peers in the Scientific & Technical Instruments sector. The company's ability to control both production costs and operating expenses is clear in the numbers.

The 25.0% non-GAAP Operating Profit Margin in Q3 2025 is a critical number. It tells you that after paying for all the variable costs and fixed operating expenses-like R&D, sales, and administration-Keysight Technologies, Inc. keeps a quarter of every revenue dollar. This margin improved by 60 basis points over Q3 2024, showing a clear trend of increasing operational efficiency.

Operational Efficiency and Profit Trends

The consistent strength in gross margin, hovering around the 64% mark, is driven by the mix of high-value solutions. Keysight's business is split between the Communications Solutions Group (CSG) and the Electronic Industrial Solutions Group (EISG). The CSG, which makes up about 70% of revenue, delivered an even higher gross margin of 67% in Q3 2025, fueled by strong demand for AI data center infrastructure and aerospace/defense work.

This product mix is the engine of their high profitability. Plus, the company has successfully managed its operating expenses, which is evident in the TTM Operating Margin of 20.96% as of November 2025. The Net Profit Margin of 10.36% (TTM) is also healthy, beating the industry average of 9.1% and demonstrating solid bottom-line performance. Keysight Technologies, Inc. is a margin leader, not just a revenue grower.

For the full fiscal year 2025, management is guiding for non-GAAP Earnings Per Share (EPS) growth of approximately 13%, which is a strong signal of confidence in their ability to translate revenue growth into bottom-line profit. This growth is a direct result of that operational discipline, not just market tailwinds. You can read more about the drivers in Exploring Keysight Technologies, Inc. (KEYS) Investor Profile: Who's Buying and Why?

Your action here is simple: Verify the sustainability of the Gross Margin. Look closely at the split between the high-margin CSG and the slightly lower-margin EISG. If CSG's revenue contribution continues to grow, expect the overall gross margin to stay elevated, supporting a premium valuation.

Debt vs. Equity Structure

Keysight Technologies, Inc. (KEYS) maintains a deliberately conservative capital structure, which is a key strength in the volatile technology sector. You want to see a company finance its growth without taking on too much risk, and Keysight is defintely doing that.

As of the third fiscal quarter ending July 31, 2025, Keysight's financial leverage remains modest. The company reported $2.533 billion in long-term debt, which is a significant figure but manageable given their strong cash flow generation. Their total current liabilities, which act as a proxy for short-term debt obligations like accounts payable and deferred revenue, stood at $1.560 billion for the same period.

Keysight's Debt-to-Equity Ratio: A Clear Signal

The most telling metric here is the Debt-to-Equity (D/E) ratio, which measures how much debt a company uses to finance its assets relative to the value of shareholders' equity. For Keysight, the D/E ratio as of November 2025 is approximately 0.45.

Here's the quick math: with total shareholders' equity at about $5.670 billion as of Q3 2025, a D/E of 0.45 means the company is using less than 45 cents of debt for every dollar of equity. That is a very healthy balance.

• Keysight D/E Ratio (Nov 2025): 0.45
• Communication Equipment Industry Average D/E: 0.47
• Technology Sector Average D/E: Around 0.48

Keysight's ratio sits just below the average for the broader Technology and Communication Equipment sectors, signaling a lower reliance on debt compared to its peers. This is what a 'relatively conservative financial policy' looks like in practice.

Recent Debt and Financing Strategy

The company's approach to financing is opportunistic and strategic, not driven by necessity. Keysight uses debt primarily to fund major acquisitions that accelerate its market position in high-growth areas like 5G, AI, and cybersecurity.

A prime example is the debt issuance in 2025:

• On April 17, 2025, Keysight issued $750 million in 5.350% Notes due 2030.
• The net proceeds were earmarked to partially finance the proposed acquisition of Spirent Communications.

This is smart capital allocation. They're using low-cost debt to buy a strategic asset, which should generate returns well above the 5.350% interest rate. The company also executed a debt-for-debt swap in late 2024, issuing $600 million in new notes to repay maturing debt, which is just standard treasury management.

This disciplined approach is reflected in its investment-grade credit ratings. S&P Global assigned a 'BBB' rating to the new notes and affirmed Keysight's 'BBB' issuer rating with a positive outlook in April 2025, while Fitch Ratings affirmed a 'BBB+' rating with a stable outlook. These ratings confirm that the debt is not a major risk to the balance sheet. Keysight's stated financial policy is to keep its leverage below a 1.5x downgrade trigger, which provides a significant cushion for investors.

To dig deeper into the full picture of their financial health, you should read Breaking Down Keysight Technologies, Inc. (KEYS) Financial Health: Key Insights for Investors. Your next step should be to model the impact of the Spirent acquisition on Keysight's future cash flows to see if the growth justifies the new debt load.

Liquidity and Solvency

You need to know if Keysight Technologies, Inc. (KEYS) can cover its near-term obligations, and the answer is a resounding 'yes.' The company's liquidity position is defintely strong, anchored by excellent current and quick ratios and robust operating cash flow, even while they invest heavily in growth.

A quick look at the balance sheet shows a very comfortable buffer. As of late 2025, Keysight Technologies, Inc. holds a current ratio of 3.59 and a quick ratio (acid-test ratio) of 2.94. This is an exceptionally healthy position. A current ratio above 2.0 is generally considered strong, meaning the company has $3.59 in current assets for every dollar of current liabilities. The quick ratio, which strips out inventory, is also high at nearly 3.0, proving they can meet short-term debts even if they couldn't sell a single piece of equipment quickly.

Working Capital and Cash Flow Trends

The working capital trend is clearly positive, driven by strong core business cash generation. Here's the quick math on their cash movements for the first nine months of fiscal year 2025 (ending July 31, 2025):

• Operating Cash Flow (CFO): Keysight Technologies, Inc. generated a powerful $1.184 billion in net cash from operations. This is the most important number-it shows their core business is a cash machine.
• Investing Cash Flow (CFI): They used a net of $781 million in investing activities. This is a strategic use of cash, with $673 million going toward acquisitions, net of cash acquired, and $90 million for capital expenditures (property, plant, and equipment). They are buying growth, not just maintaining the status quo.
• Financing Cash Flow (CFF): The company's financing activities reflect a mix of debt and shareholder returns. Total debt increased to $2.533 billion as of July 31, 2025, up from $1.790 billion at the end of the last fiscal year, to finance planned deals. They also returned capital to shareholders, spending $275 million on share repurchases during the first nine months of the fiscal year.

The firm ended Q3 2025 with a substantial cash, cash equivalents, and restricted cash balance of $3.40 billion. This war chest gives them tremendous flexibility for future acquisitions, R&D, and managing any economic slowdown. For more on their strategic direction, you can read their Mission Statement, Vision, & Core Values of Keysight Technologies, Inc. (KEYS).

Liquidity Strengths and Risks

The primary strength is the sheer volume of cash generated and held, which provides a significant margin of safety. Their high liquidity ratios mean they are not reliant on selling inventory or struggling to collect receivables to pay bills.

What this estimate hides is the risk associated with the acquisitions. The $673 million spent on M&A is a major outflow, and while it fuels future growth, integrating new businesses always carries execution risk. Still, the underlying operating cash flow is so strong-with a YTD free cash flow of over $1.09 billion-that they have the financial horsepower to absorb any integration hiccups. The balance sheet is liquid, but you should monitor the regulatory clearances on acquisitions like Spirent, which is expected to close in Q4 FY25.

Valuation Analysis

You're looking at Keysight Technologies, Inc. (KEYS) and asking the core question: is the market pricing this stock correctly? The quick answer is that Keysight is richly valued on traditional earnings multiples, but analysts see enough near-term growth to justify the current price and then some. It's a classic growth-stock valuation dilemma.

As of November 2025, the stock trades around the $172.71 mark. The debate isn't about the quality of the business-which is excellent, especially in 5G-Advanced and 6G testing-but about whether future growth is already fully priced in.

The Multiples: High Price for High Growth

When we look at the core valuation multiples, Keysight Technologies, Inc. looks expensive. Its Price-to-Earnings (P/E) ratio is a clear flag, sitting at approximately 57.00x. To be fair, the company operates in a high-growth, high-tech sector, but this multiple is significantly higher than the industry average of about 23.4x. Here's the quick math on the key ratios:

• Price-to-Earnings (P/E): 57.00x. This is far above the estimated fair P/E of around 32.0x, implying investors are paying a premium for expected earnings growth.
• Enterprise Value-to-EBITDA (EV/EBITDA): The ratio is around 21.62 as of November 20, 2025. This is high, but it's a better metric for capital-intensive tech companies, as it accounts for debt and cash, giving a cleaner view of operating value.
• Price-to-Book (P/B): The latest figure is 5.1x (as of October 2024). This high P/B confirms the market values Keysight Technologies, Inc.'s intellectual property and future earnings power-not just its tangible assets (book value).

The market is defintely betting on Keysight Technologies, Inc.'s ability to execute on its Mission Statement, Vision, & Core Values of Keysight Technologies, Inc. (KEYS), especially in next-generation wireless testing.

Stock Trend and Shareholder Returns

The stock price trend over the last 12 months shows resilience, but not a runaway rally. The stock price has only risen by about 1.42% over the past year, but it has seen significant volatility, trading in a 52-week range between a low of $121.43 and a high of $187.67. This volatility suggests the market is constantly reassessing its growth prospects against broader economic headwinds.

If you're looking for income, Keysight Technologies, Inc. is not the right fit. The company does not currently pay a dividend, meaning its TTM dividend payout is $0.00 and the dividend yield is 0.00%. They prioritize reinvesting all earnings back into the business, which is typical for a growth-focused technology leader.

Analyst Consensus and Actionable Takeaway

Wall Street's professional analysts lean toward optimism. The consensus rating for Keysight Technologies, Inc. is a Moderate Buy. Out of 10 recent analyst ratings, 6 are a Buy and 4 are a Hold, with zero Sell ratings.

The average 12-month price target is approximately $194.33, which suggests a potential upside of around 12.48% from the current price of $172.71. What this estimate hides is the execution risk in the transition to 6G and the cyclical nature of capital equipment spending.

Here is a summary of the key valuation metrics:

Action: If you are a long-term investor, treat Keysight Technologies, Inc. as a high-multiple growth stock. Your next step should be to model the revenue impact of 6G adoption over the next five years to see if it justifies a P/E above 50x.

Risk Factors

You're looking at Keysight Technologies, Inc. (KEYS) and seeing strong growth in AI and 6G, but you need to know what could trip up their impressive momentum. Honestly, the biggest risks right now aren't internal; they're macro-level shifts and geopolitical friction. The company is performing well-Q3 2025 non-GAAP EPS was $1.72, beating estimates-but external forces can still erode that performance defintely.

The core challenge is that Keysight sells complex, high-value test and measurement equipment, making their revenue highly sensitive to global capital expenditure (CapEx) cycles. When customers like major telecom or semiconductor firms get nervous about the economy, they push out big equipment orders. That's why you see the company consistently citing global economic conditions, like inflation or a potential recession, as a primary risk in its filings. The whole business depends on their customers' willingness to spend on next-gen technology.

External and Market Headwinds

The biggest near-term risks are tied to global trade and specific market segments. You need to keep an eye on two things: tariffs and the Electric Vehicle (EV) market slowdown. The trade tensions are a real, quantifiable financial drag; Keysight has estimated the incremental gross impact of recent tariff increases to be about $75 million on an annualized basis. That's not a small number, but they are working a multi-pronged approach to mitigate it.

Also, the Electronic Industrial Solutions Group (EISG) is feeling the pain from a slowing pace of EV adoption. The EISG segment experienced weakness here, which is a specific, operational risk you can map to a product line. Plus, you can't ignore the constant threat of industry consolidation, where a competitor could gain significant leverage through a major merger, leading to sudden price pressure across the board.

• Global economic volatility slows CapEx.
• Trade tariffs impose a direct $75 million annualized cost.
• Slower EV adoption hurts the EISG segment.
• Geopolitical tension impacts export control compliance.

Operational and Financial Exposures

While Keysight is guiding for strong full-year 2025 revenue growth of approximately 7% and non-GAAP EPS growth of roughly 13%, there are operational risks that could derail those forecasts. The company's backlog was a strong $2.4 billion heading into Q4, but customer purchasing decisions and the risk of order cancellations are always present. A big customer delaying a major 6G or AI-related project could instantly impact quarterly revenue.

Here's the quick math on their financial cushion: as of July 31, 2025, they had a strong cash position of $3.40 billion. That liquidity helps them weather short-term volatility, but it doesn't solve the long-term strategic risk of falling behind on innovation. This is a technology race, not a marathon. For a deeper dive into who is betting on Keysight's ability to manage these risks, check out Exploring Keysight Technologies, Inc. (KEYS) Investor Profile: Who's Buying and Why?

Mitigation and Strategic Defense

Keysight's defense against these risks is their strategic spending and focus on high-growth, next-generation markets. They are actively managing the operational risks by aggressively investing in R&D-a 10.6% increase in Q3 2025 R&D spending to $250 million year-over-year shows they're not pulling back. This investment is aimed at maintaining their technology lead in areas like quantum computing, pre-6G, and AI-driven infrastructure. They're trying to future-proof the business. This disciplined approach to costs is also why they maintained a solid core operating margin of 25.4% in Q3, even with rising input costs. They're not just hoping for the best; they are executing a plan.

Your action item is simple: Monitor their quarterly orders and backlog. If the order growth rate starts to lag significantly behind the revenue growth, it signals that the market risks are starting to hit their operational pipeline, and you'll need to adjust your valuation models accordingly.

Growth Opportunities

You're looking for a clear map of where Keysight Technologies, Inc. (KEYS) goes from here, and the answer is simple: their future is tied directly to the biggest, most complex tech infrastructure projects globally. Keysight is not just selling hardware; they are embedding themselves in the design and emulation phase (Electronic Design Automation, or EDA), which is a much stickier business.

The company raised its full fiscal year 2025 revenue growth expectation to approximately 7 percent, up from an initial 5 percent forecast, which is defintely a bullish signal. Earnings are tracking even better, with non-GAAP earnings per share (EPS) growth for FY2025 expected to be approximately 13 percent. This is a business built on non-negotiable precision, and their strategic moves in 2025 highlight exactly where that growth comes from.

Key Growth Drivers and Market Expansion

The near-term growth is being propelled by three massive, non-cyclical trends. First is the explosion of Artificial Intelligence (AI) infrastructure, which requires high-speed digital testing for data centers. Their Wireline segment, which services this, is a standout performer. Second is the push into next-generation wireless, and third is the stable, high-margin Aerospace and Defense sector.

Here's the quick math on where the momentum is:

• AI/Wireline: Double-digit growth in the Wireline segment, driven by the need to test and validate 800G and 1.6 terabit technologies for AI-driven data centers.
• 6G and Space: Keysight is an early leader in 5G-Advanced and non-terrestrial networks, and they are actively involved in 6G research, positioning them to set the testing standards for the next decade.
• Automotive: Product innovation like the AE6980T nGBASE-AU solution addresses the high-speed in-vehicle networking required for advanced driver-assistance systems.

Strategic Initiatives and Competitive Edge

The most important action Keysight took in 2025 was a trio of strategic acquisitions, valued at approximately $1.7 billion, which significantly shifts their business mix toward higher-margin software and simulation. They are buying their way into deeper customer relationships. This is smart.

The completed acquisitions of Spirent Communications, the Optical Solutions Group, and PowerArtist are expected to be accretive to EPS within 12 months. This move is estimated to increase their served addressable market by about $1.25 billion. Plus, their R&D spending is up 10.6% to $250 million (Q3 2025), focusing on areas like quantum computing and pre-6G. You can see a deeper dive into their overall financial position in our full piece, Breaking Down Keysight Technologies, Inc. (KEYS) Financial Health: Key Insights for Investors.

This focus on software is their true competitive advantage (moat). Recurring revenue is approaching 30% of the total, with software contributing 25% of revenue-and that software has a much higher gross margin than their hardware. They are moving from being a test equipment vendor to a full-stack design, emulation, and test partner.

What this estimate hides is the integration risk from those frequent acquisitions, and still, macroeconomic uncertainty could impact customer spending. But looking ahead, the analyst consensus for next year (FY2026) EPS growth is a strong 18.04% to $7.46 per share, showing confidence that the software-centric strategy will pay off. Your next step should be to monitor the Q4 2025 earnings call for details on the Spirent integration plan.