Keysight Technologies Shares Plummet Following Q3 Earnings

Keysight Technologies' shares fell following its fiscal Q3 results. The company specializes in electronic design, test, and measurement solutions. Net sales are distributed across commercial communications (45.6%), automotive and consumer electronics (31.3%), and aerospace and defense (23.1%). Geographically, net sales are split between the United States (35.5%), the Americas (5.7%), China (17.8%), Asia/Pacific (22.2%), and Europe (18.8%).

Keysight Technologies, Inc. (NYSE: KEYS) reported its fiscal Q3 results, showing revenue of $1.35 billion, up 11% year-over-year compared to FactSet's estimate of $1.32 billion [1]. The company's net income was $191 million, or $1.10 per share, a significant decrease from the same period last year due to higher tax rates and lower operating income [2]. Despite the decline in net income, the company's cash flow from operations and free cash flow improved, reaching $322 million and $291 million, respectively.

The Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) both reported strong revenue growth. CSG's revenue increased by 13% to $940 million, driven by growth in commercial communications and aerospace, defense, and government segments. EISG's revenue grew by 11% to $412 million, reflecting growth across semiconductor, general electronics, and automotive and energy markets [2].

Keysight's CEO, Satish Dhanasekaran, stated, "Keysight delivered strong results this quarter, exceeding the high end of our guidance for both revenue and earnings per share. We are executing our strategy and capitalizing on the opportunities in our end markets" [2]. The company raised its full-year revenue outlook to approximately 7% growth, with non-GAAP earnings per share growth expected to be around 13% [2].

However, the company's shares fell post-announcement, likely due to the significant decline in net income compared to the same period last year. The market may have also been surprised by the higher-than-expected tax rate, which was not fully anticipated [2].

Keysight's strong performance in the third quarter suggests that the company is well-positioned to capitalize on growth opportunities in its end markets. However, the significant decline in net income and the higher-than-expected tax rate may have contributed to the share price decline following the announcement.

References:
[1] https://www.marketscreener.com/news/earnings-flash-keys-keysight-technologies-inc-reports-q3-revenue-1-35b-vs-factset-est-of-1-3-ce7c51dddf8df327
[2] https://www.businesswire.com/news/home/20250819500355/en/Keysight-Technologies-Reports-Third-Quarter-2025-Results