Keysight Technologies, Inc. (KEYS): BCG Matrix [Dec-2025 Updated]

Honestly, looking at Keysight Technologies' fiscal year 2025 performance, mapping their business units onto the BCG Matrix is surprisingly clear; you've got high-octane 'Stars' like AI Data Center Testing driving growth right alongside dependable 'Cash Cows' delivering $1.28 billion in Free Cash Flow, anchored by 29% recurring software revenue. The real decision point, however, rests on the 'Question Marks'-think Quantum Computing, where the market could explode but Keysight only holds about 6.2% share-and how you plan to handle the legacy 'Dogs.' Keep reading to see the precise breakdown of where Keysight is winning now and where the big bets for tomorrow are being placed.

Background of Keysight Technologies, Inc. (KEYS)

You're looking at Keysight Technologies, Inc. (KEYS), which builds the essential hardware, software, and services engineers use to design, emulate, and test complex electronic systems across telecom, semiconductors, aerospace/defense, and automotive markets. Honestly, they sell the critical tools-think oscilloscopes and network emulators-for the modern tech build-out. For the full fiscal year 2025, which ended on October 31st, Keysight Technologies, Inc. brought in total revenue of $5.375 billion, marking an 8% increase as reported over the prior year, or 7% on a core basis.

The company organizes its business into two primary groups. First is the Communications Solutions Group (CSG), which was the larger contributor, making up roughly 70% of total sales. CSG saw its fourth-quarter revenue hit $990 million, up 11% reported year-over-year, driven by investments in AI data center infrastructure and defense modernization. The second group is the Electronic Industrial Solutions Group (EISG), which accounted for the remaining 30% of revenue. EISG posted Q4 revenue of $429 million, showing a 9% reported increase, fueled by growth in semiconductor and general electronics testing.

Looking at profitability, Keysight Technologies, Inc. finished fiscal 2025 with a solid operating margin of 26% on the full year. The company generated record free cash flow of $1.3 billion in fiscal 2025, demonstrating strong cash generation capabilities. To be fair, the mix is shifting toward more predictable revenue streams; software and services made up about 37% of total revenue for the year, with annual recurring revenue sitting at 29% of the total. They also maintain a heavy focus on innovation, with R&D spending hovering around 13% of revenue.

Keysight Technologies, Inc. (KEYS) - BCG Matrix: Stars

You're looking at the business units that are defining Keysight Technologies, Inc.'s current momentum. These are the areas where the company has a strong foothold in markets that are expanding rapidly. Stars, by definition, consume cash to maintain that high growth and market position, but they are the future Cash Cows if the market growth rate eventually moderates.

Keysight Technologies, Inc. closed fiscal year 2025 with total revenue of $5.37 billion, an 8% increase year-over-year from fiscal year 2024's $4.98 billion. The fourth quarter of fiscal 2025 was particularly strong, with revenue hitting $1.42 billion, a 10% year-over-year jump, supported by a 14% year-over-year increase in Q4 orders to $1.5 billion, building a backlog of $2.7 billion.

The primary drivers for this Star performance are concentrated in the Communications Solutions Group (CSG) and the Electronic Industrial Solutions Group (EISG).

AI Data Center Infrastructure Testing: Driving the 12% Q4 growth in Commercial Communications, high-growth market with a leading position.

This area is clearly a Star, showing leadership in a market demanding massive capital expenditure for AI build-out. The Commercial Communications portion of the CSG saw its revenue grow by 12% year-over-year in Q4 2025. The entire CSG segment generated $990 million in Q4 2025 revenue, marking an 11% increase over the prior year.

Here's a look at the segment performance that frames these Stars:

6G/Next-Generation Wireless Solutions: Early-stage, high-growth market where Keysight is a defintely key R&D partner.

This represents the future growth engine, requiring significant upfront investment to secure future market share. Strength in this area is evidenced by order growth in wireless solutions within the CSG. The company is actively involved in early 6G research, positioning itself as an essential partner for the next wireless standard.

• CSG orders grew for the 6th consecutive quarter.
• Demand is driven by non-terrestrial networks, 5G-Advanced, and early 6G research.
• Acquisitions like Spirent are aligned with long-term secular growth drivers, including 6G.

Leading-Edge Semiconductor Testing: Fueling the Electronic Industrial Solutions Group's (EISG) 9% Q4 growth, focused on advanced AI chips.

The EISG's growth is directly tied to the semiconductor industry's need to test increasingly complex components, particularly those powering AI. The EISG posted Q4 2025 revenue of $429 million, which was up 9% year-over-year. This growth was explicitly fueled by the semiconductor business, which saw robust order growth from foundries expanding capacity for leading-edge applications driven by AI.

High-Speed Digital and Wireline Solutions: Strong demand for high-bandwidth test equipment in a rapidly expanding data ecosystem.

This ties into the AI data center theme but focuses on the underlying physical layer connectivity. Orders within the wireline segment of the CSG showed growth, indicating sustained demand for high-bandwidth testing equipment necessary for next-generation data center interconnects and network infrastructure. The company's overall order growth of 14% in Q4 2025 reflects this broad-based strength across digital infrastructure.

Finance: review the cash burn rate for R&D in CSG versus EISG for Q1 2026 by next Tuesday.

Keysight Technologies, Inc. (KEYS) - BCG Matrix: Cash Cows

You're looking at the bedrock of Keysight Technologies, Inc.'s financial stability-the Cash Cows. These are the established business units where market share is high, and the growth rate has naturally slowed down. They don't need massive promotional spending; instead, they are the engines that fund the company's future bets.

The focus here is on maintaining efficiency and milking the gains passively. For Keysight Technologies, Inc., this stable cash generation is critical for covering corporate overhead, servicing debt, and funding shareholder returns through buybacks.

Here's a look at the specific areas that fit this profile based on the latest figures:

• Aerospace, Defense & Government (ADG): This segment is a high-barrier-to-entry area showing consistent performance.
• Annual Recurring Revenue (ARR) from Software and Services: This stream is highly predictable and carries high margins.
• Core Electronic Industrial Solutions Group (EISG) Test Equipment: These mature product lines reliably convert sales into operational cash.
• Foundational 5G and mmWave Test Solutions: These represent established network infrastructure revenue streams from the mature phase of the 5G cycle.

Aerospace, Defense & Government (ADG) Segment Strength

The Aerospace, Defense & Government segment is a prime example of a market leader in a mature, high-barrier space. For the fourth quarter of fiscal year 2025, this segment brought in $330 million in revenue. That represented a 9% increase year-over-year for the quarter. This segment's stability is a key component of the overall cash flow picture for Keysight Technologies, Inc..

High-Margin Recurring Revenue Base

The shift toward subscription and service models is what makes a Cash Cow truly valuable, as it smooths out revenue volatility. For the full fiscal year 2025, Annual Recurring Revenue (ARR) derived from software and services made up 29% of Keysight Technologies, Inc.'s total revenue. This predictable, high-margin stream is exactly what management aims to maximize through infrastructure support investments rather than aggressive marketing.

Cash Flow Generation from Established Groups

The consistent cash flow from established product lines, like those within the Electronic Industrial Solutions Group (EISG), directly fuels the corporate treasury. For the full fiscal year 2025, Keysight Technologies, Inc. generated a Free Cash Flow (FCF) of $1.28 billion. This substantial cash generation is the hallmark of a successful Cash Cow portfolio, providing the necessary capital for other strategic needs.

To put the segment performance in context, here is a snapshot of the latest reported segment revenues:

The ability to generate this level of cash flow allows Keysight Technologies, Inc. to maintain its market position without heavy reinvestment in these mature areas. The company's focus shifts to using this capital to improve internal infrastructure for greater efficiency, which further boosts cash flow.

The composition of Keysight Technologies, Inc.'s revenue streams highlights the Cash Cow strategy:

• FY2025 Software and Services Revenue Mix: 37% of total revenue.
• FY2025 Annual Recurring Revenue (ARR) Mix: 29% of total revenue.
• FY2025 Total Revenue: $5.375 billion.

The $1.28 billion in FY2025 Free Cash Flow is the direct result of these mature, high-market-share businesses performing reliably. That cash is what you want to see funding the next generation of Stars and Question Marks.

Keysight Technologies, Inc. (KEYS) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Keysight Technologies, Inc. reported total fiscal year 2025 revenue of $5.37 billion. The company's strong overall performance, with fiscal year 2025 GAAP net income reaching $846 million, is largely driven by segments experiencing high growth, which contrasts with the profile of a Dog.

The primary revenue contributors in fiscal year 2025 highlight where Keysight Technologies, Inc. is focusing resources, implicitly showing which areas are not Dogs:

The focus on AI data center infrastructure, non-terrestrial networks, and leading-edge semiconductor solutions within CSG and EISG suggests these are not the Dog categories. The cash position as of October 31, 2025, stood at $1.87 billion in cash and cash equivalents. This liquidity suggests resources are available, but the strategy for Dogs is avoidance and minimization.

The following product areas, based on their description as legacy, niche, or mature, fit the profile of Dogs within the Keysight Technologies, Inc. portfolio:

• Legacy General Purpose Test Equipment: Older, standardized instruments facing intense commoditization and slower market growth.
• Non-Strategic, Low-Volume Product Lines: Niche products with minimal R&D investment and low relative market share in stagnant sub-markets.
• Certain Mature Wireline Communications Test Gear: Segments of wireline testing that are being displaced by newer, higher-speed digital standards.

For these Dog categories, the expectation is that they frequently break even, meaning their contribution to the fiscal year 2025 $5.37 billion revenue is minimal, and they consume little cash, unlike the $1.5 billion share repurchase program announced.

Expensive turn-around plans usually do not help. The strategic action for these units is divestiture. The Q1 2025 revenue was $1.30 billion, providing a baseline for the overall business health against which the low-share Dog segments must be measured.

Keysight Technologies, Inc. (KEYS) - BCG Matrix: Question Marks

Question Marks represent those parts of Keysight Technologies, Inc. business that operate in high-growth markets but currently hold a low market share. These units consume significant cash to fund their growth trajectory but have not yet generated substantial returns, meaning they currently lose the company money. The strategic imperative here is clear: invest heavily to rapidly gain share, or divest.

Quantum Computing Test and Measurement

This area is characterized by extremely high market growth potential, with the broader Quantum Control System market projected to grow at a Compound Annual Growth Rate (CAGR) of 27.3% from its $74.24 million valuation in 2024, reaching $383.71 million by 2031. Keysight Technologies, Inc. is an active participant, having delivered the world's largest commercial quantum control system supporting over 1,000 qubits to AIST in Japan in Q3 2025. Despite this high-profile activity and the overall market's explosive nature, the prompt defines this as having an estimated 32.5% CAGR and a current Keysight market share of approximately 6.2%. This low penetration in a rapidly expanding field places it squarely in the Question Mark quadrant, demanding a decision on whether to aggressively fund its climb toward Star status.

• The Quantum Control System market size in 2024 was $74.24 million.
• The top three players accounted for 67.1% of revenue in 2024.
• Keysight Technologies, Inc. has made strategic moves, including the acquisition of Quantum Benchmark in 2021.

Emerging Cybersecurity Testing Solutions

The broader Security Testing Market is expected to grow from $14.5 billion in 2024 to $43.9 billion by 2029 at a 24.7% CAGR. Keysight Technologies, Inc. is an emerging player in this space, particularly bolstered by the integration of Spirent's network security expertise, which now falls under the Communications Solutions Group (CSG). The scenario dictates this segment is a high-growth market, estimated to reach $14.5 billion by 2026, but Keysight's current penetration remains low. This segment requires capital to scale its offerings and capture share from established players in a market where the overall cybersecurity revenue is forecast to reach $334 billion in 2026. The CSG segment, which houses these solutions, generated $990 million in revenue in Q4 2025.

Automotive/EV and Autonomous Driving Testing

The Automotive/EV and Autonomous Driving Testing segment, part of the Electronic Industrial Solutions Group (EISG), shows mixed signals. While the overall market is massive and future-facing, the Q4 2025 performance indicated stability rather than acceleration. EISG reported Q4 2025 revenue of $429 million, up 9% year-over-year, but the automotive portion within that was described as stable in Q4 2025. This stability in a segment poised for massive future growth-spanning software-defined vehicles, EV, charging, and sensing architectures-signals a need for significant capital deployment now to secure future market share. The segment operating margin for EISG in Q4 2025 was 25%.

Recently Acquired Businesses (e.g., Spirent integration)

The integration of recently acquired businesses, most notably Spirent Communications plc, represents a classic Question Mark scenario. Keysight Technologies, Inc. spent $1.7 billion on Mergers and Acquisitions (M&A) in fiscal year 2025, with the Spirent transaction alone totaling approximately £1.16 billion (around US $1.46 billion). The future market share and profitability from these integrations are unproven in the consolidated results, requiring substantial near-term investment to realize expected synergies. Spirent itself showed resilience in H1 2025 with Order Intake up 9% to $206.5 million. Keysight projects that post-integration cost synergies from the Spirent deal will contribute 150-200 basis points of operating margin improvement by fiscal 2026. The success of these integrations will determine if these acquisitions become Stars or if the investment drains cash without sufficient return.

• Total M&A spending in FY 2025: $1.7 billion.
• Spirent acquisition consideration: approx. $1.46 billion.
• Projected margin accretion from synergies: 150-200 bps by FY 2026.

Finance: draft 13-week cash view by Friday.