Keysight Technologies, Inc.

Previous wording

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This report contains forward-looking statements which include, but are not limited to predictions, future guidance, projections, beliefs, and expectations about the company’s trends, seasonality, cyclicality and growth in, and drivers of, the markets we sell into, our strategic direction, earnings from our foreign subsidiaries, remediation activities, new solution and service introductions, the ability of our solutions to meet market needs, changes to our manufacturing processes, the use of contract manufacturers, the impact of government regulations on our ability to conduct operations, our liquidity position, our ability to generate cash from operations, growth in our businesses, our investments, the potential impact of adopting new accounting pronouncements, our financial results, our purchase commitments, our contributions to our pension plans, the selection of discount rates and recognition of any gains or losses for our benefit plans, our cost-control activities, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, and other regulatory approvals, the integration of our completed acquisitions and other transactions, and our transition to lower-cost regions. The forward-looking statements involve risks and uncertainties that could cause Keysight’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, the impact of global economic conditions such as inflation or potential recession, slowing demand for products or services, volatility in financial markets, reduced access to credit, changes in interest rates, the existence of political or economic instability, uncertainty related to the impact of national elections results in the U.S., U.K., and Europe, impacts of geopolitical tension and conflict in regions outside of the U.S., the impacts of increased trade tensions such as an imposition of or increase in tariffs and tightening of export control regulations, the impact of new and ongoing litigation, impacts related to net zero emissions commitments, and the impact of volatile weather caused by environmental conditions such as climate change. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including but not limited to those risks and uncertainties discussed in Part II Item 1A and elsewhere in this Form 10-Q.

Current wording

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This report contains forward-looking statements which include, but are not limited to predictions, future guidance, projections, beliefs, and expectations about the company’s trends, seasonality, cyclicality and growth in, and drivers of, the markets we sell into, our strategic direction, earnings from our foreign subsidiaries, remediation activities, new solution and service introductions, the ability of our solutions to meet market needs, changes to our manufacturing processes, the use of contract manufacturers, the impact of government regulations on our ability to conduct operations, our liquidity position, our ability to generate cash from operations, growth in our businesses, our investments, the potential impact of adopting new accounting pronouncements, our financial results, our purchase commitments, our contributions to our pension plans, the selection of discount rates and recognition of any gains or losses for our benefit plans, our cost-control activities, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, and other regulatory approvals, the integration of our completed acquisitions and other transactions, and our transition to lower-cost regions. The forward-looking statements involve risks and uncertainties that could cause Keysight’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, the impact of global economic conditions such as inflation or potential recession, the impacts of increased trade tensions such as an imposition of or increase in tariffs and tightening of export control regulations, slowing demand for products or services, volatility in financial markets, reduced access to credit, changes in interest rates, the existence of political or economic instability, uncertainty related to the impact of national elections results in the U.S., U.K., and Europe, impacts of geopolitical tension and conflict in regions outside of the U.S., the impact of new and ongoing litigation, impacts related to net zero emissions commitments, and the impact of volatile weather caused by environmental conditions such as climate change. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including but not limited to those risks and uncertainties discussed in Part II Item 1A and elsewhere in this Form 10-Q.

Previous wording

In April 2025, the U.S. government announced tariffs on products from all countries and additional reciprocal tariffs on certain countries. In response, China and other countries have announced retaliatory tariffs against certain imports from the United States. Subsequently, a 90-day pause was instituted on some of the previously announced tariffs. We continue to monitor and assess the impact of these tariffs on our financial results and have taken action across multiple vectors to reduce the incremental impact of tariffs on our operating results. Our multipronged mitigation approach spans our global manufacturing footprint and sourcing strategies, as well as pricing and cost actions. For additional discussion of risks related to tariffs and trade relations, please refer to the risk factor, in Part II, Item 1A. Risk Factors.

Current wording

Beginning in the second quarter of fiscal 2025, the U.S. government announced tariffs on products from all countries and additional reciprocal tariffs on certain countries. In response, China and other countries announced retaliatory tariffs against certain imports from the United States. There have been recent changes effective August 1, 2025, resulting in broad-based increases in tariff rates. These tariffs have impacted our financial results for the three and nine months ended July 31, 2025. We continue to closely monitor and assess the potential impact of these tariffs on our results and take actions across multiple vectors to reduce the impact. This multipronged mitigation approach spans our global manufacturing footprint and sourcing strategies, as well as pricing and cost actions. For additional discussion of risks related to tariffs and trade relations, please refer to the risk factor, in Part II, Item 1A. Risk Factors.

Previous wording

Total orders for the three and six months ended April 30, 2025 were $1,316 million and $2,579 million, respectively, an increase of 8 percent and 6 percent, respectively, compared to the same periods last year. For the three months ended April 30, 2025, foreign currency movements had an unfavorable impact of 1 percentage point and acquisitions had an immaterial impact on the year-over-year change. For the six months ended April 30, 2025, foreign currency movements had an unfavorable impact of 1 percentage point and acquisitions had a favorable impact of 1 percentage point, on the year-over-year change. For the three months ended April 30, 2025, orders increased in the Americas and Asia Pacific, partially offset by a decline in Europe. For the six months ended April 30, 2025, orders increased across all regions.

Current wording

Total orders for the three and nine months ended July 31, 2025 were $1,340 million and $3,919 million, respectively, an increase of 7 percent and 6 percent, respectively, compared to the same periods last year. For the three and nine months ended July 31, 2025, foreign currency movements had a favorable impact of 1 percentage point and an immaterial impact on the year-over-year change, respectively. For the three and nine months ended July 31, 2025, acquisitions had an immaterial impact on the year-over-year change. For the three months ended July 31, 2025, orders increased in the Americas and Europe, partially offset by a decline in Asia Pacific. For the nine months ended July 31, 2025, orders increased across all regions.

Previous wording

Revenue for the three and six months ended April 30, 2025 was $1,306 million and $2,604 million, respectively, an increase of 7 percent and 5 percent, respectively, compared to the same periods last year. For the three and six months ended April 30, 2025, foreign currency movements had an unfavorable impact of 1 percentage point and acquisitions had an immaterial impact on the year-over-year revenue change. For the three and six months ended April 30, 2025, revenue increased in both the Communications Solutions Group (“CSG”) and the Electronic Industrial Solutions Group (“EISG”). Revenue from CSG and EISG represented 70 percent and 30 percent, respectively, of total revenue for the three months ended April 30, 2025. Revenue from CSG and EISG represented 69 percent and 31 percent, respectively, of total revenue for the six months ended April 30, 2025.

Current wording

Revenue for the three and nine months ended July 31, 2025 was $1,352 million and $3,956 million, respectively, an increase of 11 percent and 7 percent, respectively, compared to the same periods last year. For the three and nine months ended July 31, 2025, foreign currency movements had a favorable impact of 2 percentage points and an immaterial impact on the year-over-year change, respectively. For the three and nine months ended July 31, 2025, acquisitions had an immaterial impact on the year-over-year change. For the three and nine months ended July 31, 2025, revenue increased in both the Communications Solutions Group (“CSG”) and the Electronic Industrial Solutions Group (“EISG”). Revenue from CSG and EISG represented 70 percent and 30 percent, respectively, of total revenue for the three months ended July 31, 2025. Revenue from CSG and EISG represented 69 percent and 31 percent, respectively, of total revenue for the nine months ended July 31, 2025.

Previous wording

Net income for the three and six months ended April 30, 2025 was $257 million and $426 million, respectively, compared to $126 million and $298 million, respectively, for the same periods last year. The increase in net income for the three months ended April 30, 2025 was primarily driven by gains on derivative instruments and higher revenue, partially offset by higher provision for income taxes, unfavorable mix, higher R&D expense and net losses on our equity investments. The increase in net income for the six months ended April 30, 2025 was primarily driven by higher revenue, gains on derivative instruments, lower provision for income taxes and net gains on our equity investments, partially offset by unfavorable mix and higher R&D expense.

Current wording

Net income for the three and nine months ended July 31, 2025 was $191 million and $617 million, respectively, compared to $389 million and $687 million, respectively, for the same periods last year. The decrease in net income for the three months ended July 31, 2025 was primarily driven by a prior year income tax benefit due to one-time discrete tax items, higher people related costs, netimpact of tariffs, losses on derivative instruments and higher acquisition and integration costs, partially offset by higher revenue and net gains on our equity investments. The decrease in net income for the nine months ended July 31, 2025 was primarily driven by a prior year income tax benefit due to one-time discrete tax items, higher people related costs, higher acquisition and integration costs and netimpact of tariffs, partially offset by higher revenue and net gains on our equity investments and derivative instruments.

Previous wording

Our first-to-market solutions strategy enables customers to develop new technologies and accelerate innovation and provides a platform for Keysight's long-term growth. Our customers are expected to continue to make R&D investments in certain next-generation technologies and applications, including evolution of 5G, early 6G, high-speed data center networks and infrastructure, satellite networks, Artificial Intelligence (“AI”), industrial internet of things (“IoT”), defense modernization, and next generation electric vehicles (“EV”) and autonomous vehicles (“AV”). We continue to engage actively with our customers and closely monitor the current macroeconomic environment, including tariffs, trade restrictions and tightening of export control regulations, monetary and fiscal policies, and geopolitical tensions. We remain confident in the long-term secular growth trends of our markets and our ability to outperform in a variety of market conditions.

Current wording

Our first-to-market solutions strategy enables customers to develop new technologies and accelerate innovation and provides a platform for Keysight's long-term growth. Our customers are expected to continue to make R&D investments in certain next-generation technologies and applications, including evolution of 5G, early 6G, high-speed data center networks and infrastructure, satellite networks, Artificial Intelligence (“AI”), industrial internet of things (“IoT”), defense modernization, and next generation electric vehicles and autonomous vehicles. We continue to engage actively with our customers and closely monitor the current macroeconomic environment, including tariffs, trade restrictions and tightening of export control regulations, monetary and fiscal policies, and geopolitical tensions. We remain confident in the long-term secular growth trends of our markets and our ability to outperform in a variety of market conditions.

Previous wording

There were no material changes during the three and six months ended April 30, 2025 to the critical accounting estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.

Current wording

There were no material changes during the three and nine months ended July 31, 2025 to the critical accounting estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.

Previous wording

Results from Operations - Three and six months ended April 30, 2025 and 2024

Current wording

Results from Operations - Three and nine months ended July 31, 2025 and 2024

Previous wording

The following table provides the percent change in revenue for the three and six months ended April 30, 2025 by geographic region and the impact of foreign currency movements as compared to the same period last year.

Current wording

The following table provides the percentage change in revenue for the three and nine months ended July 31, 2025 by geographic region and the impact of foreign currency movements as compared to the same period last year.

Previous wording

Refer to the “Segment Overview” section of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information on changes in revenue during the three and six months ended April 30, 2025.

Current wording

Refer to the “Segment Overview” section of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information on changes in revenue during the three and nine months ended July 31, 2025.

Previous wording

Selling, general and administrative expense for the three and six months ended April 30, 2025 was flat compared to the same periods last year as lower infrastructure costs and amortization of acquisition-related balances were offset by higher acquisition and integration costs and travel costs.

Current wording

Selling, general and administrative expense for the three months ended July 31, 2025 increased 7 percent, compared to the same period last year, primarily driven by higher acquisition and integration costs, people-related costs and infrastructure costs. Selling, general and administrative expense for the nine months ended July 31, 2025 increased 2 percent, compared to the same period last year, primarily driven by higher acquisition and integration costs, people-related costs and travel costs, partially offset by lower infrastructure costs and amortization of acquisition-related balances.

Previous wording

Other operating expense (income), net for the three and six months ended April 30, 2025 was income of $3 million and $11 million, respectively, compared to income of $3 million and $5 million, respectively, for the same periods last year.

Current wording

Other operating expense (income), net for the three and nine months ended July 31, 2025 was income of $4 million and $15 million, respectively, compared to income of $5 million and $10 million, respectively, for the same periods last year.

Previous wording

Interest income for the three and six months ended April 30, 2025 was $21 million and $40 million, respectively, compared to $18 million and $41 million, respectively, for the same periods last year and primarily relates to interest earned on our cash balances. Interest expense for three and six months ended April 30, 2025 and 2024 was $20 million and $40 million, respectively, and primarily relates to interest on our senior notes.

Current wording

Interest income for the three and nine months ended July 31, 2025 was $31 million and $71 million, respectively, compared to $19 million and $60 million, respectively, for the same periods last year and primarily relates to interest earned on our cash balances. Interest expense for three and nine months ended July 31, 2025 was $28 million and $68 million, respectively, compared to $21 million and $61 million, respectively, for the same periods last year and primarily relates to interest on our senior notes. The increase in interest expense for the three and nine months ended July 31, 2025 is primarily driven by interest expense and amortization of debt issuance costs related to our 2030 Senior Notes. (see Note 10, “ Debt,” for additional information).

Previous wording

Other income (expense), net for the three and six months ended April 30, 2025 was income of $112 million and $94 million, respectively, compared to zero and income of $5 million, respectively, for the same periods last year and primarily includes gains (losses) due to currency and derivative instruments, the change in fair value of our equity and other investments, income related to our defined benefit and post-retirement benefit plans, and income attributable to non-controlling interests. The increase in other income (expense), net for the three months ended April 30, 2025 is primarily driven by gains on derivative instruments (see Note 9, “Derivatives,” for additional information) and lower amortization of actuarial losses, partially offset by net losses on our equity investments. The increase in other income (expense), net for the six months ended April 30, 2025 is primarily driven by gains on derivative instruments (see Note 9, “Derivatives,” for additional information), net gains on our equity investments and lower amortization of actuarial losses.

Current wording

Other income (expense), net for the three and nine months ended July 31, 2025 was income of $4 million and $98 million, respectively, compared to income of $10 million and $15 million, respectively, for the same periods last year. The decrease in other income (expense), net for the three months ended July 31, 2025 is primarily driven by losses on derivative instruments (see Note 9, “Derivatives,” for additional information), partially offset by net gains on our equity investments and lower amortization of actuarial losses. The increase in other income (expense), net for the nine months ended July 31, 2025 is primarily driven by net gains on our equity investments, gains on derivative instruments (see Note 9, “Derivatives,” for additional information), and lower amortization of actuarial losses.

Previous wording

As of April 30, 2025 and April 30, 2024 our headcount was approximately 15,400.

Current wording

As of July 31, 2025 and 2024, our headcount was approximately 15,500 and 15,400, respectively.

Previous wording

The effective tax rate for the three and six months ended April 30, 2025 was lower than the U.S. statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, partially offset by U.S. taxes on those earnings and the impact of Pillar Two minimum taxes.

Current wording

The effective tax rate for the three and nine months ended July 31, 2025 was lower than the U.S. statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, partially offset by U.S. taxes on those earnings and the impact of Pillar Two minimum taxes.

Previous wording

The Organization for Economic Cooperation and Development (“OECD”) reached agreement among certain member countries to implement a global minimum tax framework, commonly referred to as Pillar Two, which established a minimum 15 percent income tax rate. Various countries have passed legislation to comply with the Pillar Two model rules. A subset of these rules became effective for Keysight in the current fiscal year. While we expect to meet transitional safe harbor requirements in most jurisdictions, there are a limited number of jurisdictions where we expect Pillar Two taxes to apply. The income tax provision for the three and six months ended April 30, 2025 included the effects of Pillar Two taxes based on currently enacted legislation and administrative guidance. We continue to closely monitor Pillar Two developments, including the release of additional administrative guidance and the U.S. response to Pillar Two.

Current wording

The Organization for Economic Cooperation and Development (“OECD”) reached agreement among certain member countries to implement a global minimum tax framework, commonly referred to as Pillar Two, which established a minimum 15 percent income tax rate. Various countries have passed legislation to comply with the Pillar Two model rules. A subset of these rules became effective for Keysight in the current fiscal year. While we expect to meet transitional safe harbor requirements in most jurisdictions, there are a limited number of jurisdictions where we expect Pillar Two taxes to apply. The income tax provision for the three and nine months ended July 31, 2025 included the effects of Pillar Two taxes.

Previous wording

The income tax expense for the three and six months ended April 30, 2025 included a net discrete expense of $11 million and $10 million, respectively. The income tax expense for the three and six months ended April 30, 2024 included a net discrete benefit of $1 million and a net discrete expense of $1 million, respectively. The discrete tax expense for the three and six months ended April 30, 2025 was higher compared to the same periods last year primarily due to the impact of tax rate changes in non-U.S. jurisdictions.

Current wording

The income tax expense for the three and nine months ended July 31, 2025 was higher compared to the same periods last year primarily due to the inclusion of one-time discrete tax benefits from U.S. amended tax return filings in relation to the Global Intangible Low-Taxed Income (“GILTI”) tax regulations and the settlement of a Malaysia uncertain tax position in the three and nine months ended July 31, 2024. The income tax expense for the three and nine months ended July 31, 2025 included a net discrete expense of $1 million and $11 million, respectively. The income tax expense for the three and nine months ended July 31, 2024 included a net discrete benefit of $179 million and $178 million, respectively. The discrete tax expense for the three and nine months ended July 31, 2025 was higher compared to the same periods last year primarily due to one-time discrete tax benefits from U.S. amended tax return filings in relation to the GILTI tax regulations and the settlement of a Malaysia uncertain tax position in the three and nine months ended July 31, 2024.

Previous wording

On June 14, 2019, the U.S. Department of the Treasury (“Treasury”) issued final regulations relating to GILTI under IRC § 951A (the “tax regulations”). The tax regulations contained language that disallowed GILTI tax deductions for intangible asset amortization resulting from the Singapore restructuring completed in 2018. In the third quarter of 2024, we concluded that Treasury exceeded its regulatory authority and the intangible asset amortization should be deductible. We amended our U.S. federal income tax returns for the open tax years to claim the deduction and filed a lawsuit seeking a tax refund. See Note 13, “Commitments and Contingencies,” for additional information. The GILTI tax benefit resulting from the current year intangible amortization was considered in the tax expense for the three and six months ended April 30, 2025, but not in the comparable period. The Singapore intangible assets will continue to be amortized for GILTI tax purposes until 2033. If we are ultimately unsuccessful in defending our refund claim, we will be required to reverse the benefit previously recorded, which would most likely result in a material increase in the effective tax rate and our income tax liability.

Current wording

On June 14, 2019, the U.S. Department of the Treasury (“Treasury”) issued final regulations relating to GILTI under IRC § 951A (the “tax regulations”). The tax regulations contained language that disallowed GILTI tax deductions for intangible asset amortization resulting from the Singapore restructuring completed in 2018. In the third quarter of 2024, we concluded that Treasury exceeded its regulatory authority and the intangible asset amortization should be deductible. We amended our U.S. federal income tax returns for the open tax years to claim the deduction and filed a lawsuit seeking a tax refund. See Note 13, “Commitments and Contingencies,” for additional information. The Singapore intangible assets will continue to be amortized for GILTI tax purposes until 2033. If we are ultimately unsuccessful in defending our refund claim, we will be required to reverse the benefit previously recorded, which would most likely result in a material increase in the effective tax rate and our income tax liability.

Previous wording

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions. The Malaysia tax incentive expires October 31, 2025. The Singapore tax incentive expires July 31, 2029. The impact of the tax incentives decreased income taxes by $33 million for the six months ended April 30, 2025.

Current wording

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions. The Malaysia tax incentive expires October 31, 2025. The Singapore tax incentive expires July 31, 2029. The impact of the tax incentives decreased income taxes by $49 million for the nine months ended July 31, 2025.

Previous wording

The open tax years for the U.S. federal income tax return and most state income tax returns are from November 1, 2019 through the current tax year. Keysight’s U.S. federal income tax returns for 2021 and 2022 are currently under audit by the Internal Revenue Service (“IRS”). For the majority of our non-U.S. entities, the open tax years are from November 1, 2019 through the current tax year.

Current wording

The open tax years for the U.S. federal income tax return and most state income tax returns are from November 1, 2019 through the current tax year. Keysight’s U.S. federal income tax returns for 2020, 2021 and 2022 are currently under audit by the IRS. For the majority of our non-U.S. entities, the open tax years are from November 1, 2019 through the current tax year.

Previous wording

CSG revenue for the three and six months ended April 30, 2025 increased 9 percent and 7 percent, respectively, compared to the same periods last year. Foreign currency movements had an unfavorable impact of 1 percentage point on the year-over-year revenue change for the three and six months ended April 30, 2025. Acquisitions had an immaterial and favorable impact of 1 percentage point, respectively, on the year-over-year revenue change for the three and six months ended April 30, 2025. Revenue grew across all regions and in both the commercial communications and the aerospace, defense, and government end markets for the three and six months ended April 30, 2025. The increase was primarily driven by higher investments in high-speed networks to support increasing demand for AI capabilities and higher investment in aerospace and defense solutions. Our customers continued to make R&D investments in next-generation technologies and applications, including AI-driven data center expansion, ongoing 5G standards development and deployment, 400G/800G Ethernet, development of new communications technologies (e.g., 6G, Open Radio Access Networks, commercial non-terrestrial networks, quantum), high-speed networking and major defense and government programs worldwide.

Current wording

CSG revenue for the three and nine months ended July 31, 2025 increased 11 percent and 8 percent, respectively, compared to the same periods last year. For the three and nine months ended July 31, 2025, foreign currency movements had a favorable impact of 1 percentage point and an immaterial impact on the year-over-year change. For the three and nine months ended July 31, 2025, acquisitions had an immaterial impact on the year-over-year change. For the three months ended July 31, 2025, revenue increased in the Americas and Asia Pacific, partially offset by a decline in Europe. For the nine months ended July 31, 2025, revenue increased in the Americas and Asia Pacific and was flat in Europe. Revenue increased in both the commercial communications and the aerospace, defense, and government end markets for the three and nine months ended July 31, 2025. The increase was primarily driven by higher investments in high-speed networks to support increasing demand for AI capabilities and higher investment in aerospace and defense solutions. Our customers continued their R&D investments in next-generation technologies and applications, including AI-driven data center expansion, ongoing 5G standards development and deployment, 400G/800G Ethernet, development of new communications technologies (e.g., 6G, Open Radio Access Networks, commercial non-terrestrial networks, quantum), high-speed networking and major defense and government programs worldwide.

Previous wording

Our commercial communications end market revenue for the three and six months ended April 30, 2025 increased 9 percent and 7 percent, respectively, year-over-year and represented 67 percent and 66 percent, respectively, of total CSG revenue. For the three months ended April 30, 2025, revenue increased in Asia Pacific and the Americas, and was flat in Europe. For the six months ended April 30, 2025, revenue grew across all regions. The year-over-year increase in revenue for the three and six months ended April 30, 2025 was primarily driven by R&D investments in terabit solutions and expanding 400G/800G transceiver manufacturing capacity to meet rising demand for AI capabilities. We continued to see investments in high-speed networks due to increasing need for AI capabilities in the data center infrastructure ecosystem, which drove demand for our 400G/800G Ethernet solutions, both in R&D and manufacturing.

Current wording

Our commercial communications end market revenue for the three and nine months ended July 31, 2025 increased 13 percent and 9 percent, respectively, year-over-year and represented 69 percent and 67 percent, respectively, of total CSG revenue. For the three months ended July 31, 2025, revenue increased in the Americas and Asia Pacific, partially offset by a decline in Europe. For the nine months ended July 31, 2025, revenue increased across all regions. The year-over-year increase in revenue for the three and nine months ended July 31, 2025 was primarily driven by R&D investments in terabit solutions and expanding 400G/800G transceiver manufacturing capacity to meet rising demand for AI capabilities. We continued to see investments in high-speed networks due to increasing need for AI capabilities in the data center infrastructure ecosystem, which drove demand for our 400G/800G Ethernet solutions, both in R&D and manufacturing.

Previous wording

Our aerospace, defense, and government end market revenue for the three and six months ended April 30, 2025 increased 9 percent and 7 percent, respectively, year-over-year and represented 33 percent and 34 percent, respectively, of total CSG revenue. For the three months ended April 30, 2025, revenue growth in Asia Pacific and Europe was partially offset by a decline in the Americas. For the six months ended April 30, 2025, revenue grew across all regions. The year-over-year increase in revenue was primarily driven by strong growth in space and satellite solutions and continued investments in radar and spectrum operations.

Current wording

Our aerospace, defense, and government end market revenue for the three and nine months ended July 31, 2025 increased 8 percent and 7 percent, respectively, year-over-year and represented 31 percent and 33 percent, respectively, of total CSG revenue. For the three and nine months ended July 31, 2025, revenue increased in the Americas and Asia Pacific partially offset by a decline in Europe. The year-over-year increase in revenue was primarily driven by strong growth in space and satellite solutions and continued investments in radar and spectrum operations.

Previous wording

Gross margin for the three months ended April 30, 2025 was flat compared to the same period last year, primarily driven by unfavorable mix, higher material costs, and impact of tariffs offset by favorable pricing and higher revenue volume. Gross margin for the six months ended April 30, 2025 decreased 1 percentage point compared to the same period last year, primarily driven by unfavorable mix and impact of tariffs, partially offset by favorable pricing, lower restructuring costs and higher revenue volume.

Current wording

Gross margin for the three months ended July 31, 2025 was flat compared to the same period last year, as thenet impact of tariffs and higher people-related costs were offset by higher revenue volume and favorable pricing. Gross margin for the nine months ended July 31, 2025 decreased 1 percentage point compared to the same period last year, primarily driven by the net impact of tariffs and unfavorable mix, partially offset by favorable pricing and higher revenue volume.

Previous wording

Selling, general and administrative expense for the three months ended April 30, 2025 increased 3 percent compared to the same period last year, primarily driven by higher infrastructure costs. Selling, general and administrative expense for the six months ended April 30, 2025 increased 2 percent compared to the same period last year, primarily driven by higher infrastructure costs and incremental costs from acquired businesses.

Current wording

Selling, general and administrative expense for the three months ended July 31, 2025 increased 8 percent compared to the same period last year, primarily driven by higher people-related costs and infrastructure costs. Selling, general and administrative expense for the nine months ended July 31, 2025 increased 4 percent compared to the same period last year, primarily driven by higher people-related and infrastructure costs, and incremental costs from acquired businesses.

Previous wording

Other operating expense (income), net for the three months ended April 30, 2025 and 2024 was income of $1 million and zero, respectively. Other operating expense (income), net for the six months ended April 30, 2025 and 2024 was income of $3 million and zero, respectively.

Current wording

Other operating expense (income), net for the three months ended July 31, 2025 and 2024 was income of $3 million. Other operating expense (income), net for the nine months ended July 31, 2025 and 2024 was income of $11 million and $8 million, respectively.

Previous wording

EISG serves customers across a diverse set of end markets focused on automotive and energy, semiconductor solutions, and general electronics. The group's solutions consist of electronic design, test and simulation software, instrumentation, systems, and related services. These solutions are used in the simulation, design, validation, manufacturing, installation, and optimization of electronic equipment. The group also provides automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience. In addition, the group provides software with integrated simulation capabilities and automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.

Current wording

EISG serves customers across a diverse set of end markets focused on automotive and energy, semiconductor solutions, and general electronics. The group's solutions consist of electronic design, test and simulation software, instrumentation, systems, and related services. These solutions are used in the simulation, design, validation, manufacturing, installation, and optimization of electronic equipment.

Previous wording

EISG revenue for the three and six months ended April 30, 2025 increased 5 percent and 1 percent, respectively, compared to the same periods last year. Foreign currency movements had an unfavorable impact of 1 percentage point and acquisitions had an immaterial impact, on the year-over-year revenue change for the three and six months ended April 30, 2025. For the three and six months ended April 30, 2025, revenue increased in the Americas and Asia Pacific, partially offset by a decline in Europe. The revenue increase reflects mixed demand across the electronic industrial markets with an increase in semiconductor measurements and general electronics measurement, partially offset by a decline in automotive and energy. Despite delays in near-term spending, driven by macroeconomic uncertainties, customer engagement remained high as they continued to progress in key long-term strategic initiatives, such as R&D for software-defined vehicles and autonomous driving, industrial IoT, digital health, fab capacity, and AI-driven demand for advanced semiconductor technologies.

Current wording

EISG revenue for the three and nine months ended July 31, 2025 increased 11 percent and 5 percent, respectively, compared to the same periods last year. For the three and nine months ended July 31, 2025, foreign currency movements had a favorable impact of 2 percentage points and an immaterial impact on the year-over-year change, respectively. For the three and nine months ended July 31, 2025, acquisitions had an immaterial impact on the year-over-year change. For the three months ended July 31, 2025, revenue increased across all regions. For the nine months ended July 31, 2025, revenue increased in the Americas and Asia Pacific, partially offset by a decline in Europe. The revenue for the three months ended July 31, 2025 increased across all electronic industrial markets. The revenue increase for the nine months ended July 31, 2025 reflected mixed demand across the electronic industrial markets with an increase in semiconductor measurements and general electronics measurement, partially offset by a decline in automotive and energy. Despite macroeconomic uncertainties, customer engagement remained high in their key long-term strategic initiatives, including R&D for AI-driven demand for advanced semiconductor technologies, software-defined vehicles and autonomous driving, industrial IoT, digital health and fab capacity.

Previous wording

Other operating expense (income), net for the three months ended April 30, 2025 and 2024 was income of $2 million and $3 million, respectively. Other operating expense (income), net for the six months ended April 30, 2025 and 2024 was income of $8 million and $5 million, respectively.

Current wording

Other operating expense (income), net for the three months ended July 31, 2025 and 2024 was income of $2 million and $3 million, respectively. Other operating expense (income), net for the nine months ended July 31, 2025 and 2024 was income of $5 million and $3 million, respectively.

Previous wording

Operating margin for the three months ended April 30, 2025 increased 1 percentage point compared to the same period last year, primarily driven by a decrease in operating expenses as a percentage of revenue. Operating margin for the six months ended April 30, 2025 was flat compared to the same period last year, primarily driven by a decrease in operating expenses as a percentage of revenue, partially offset by decline in gross margin.

Current wording

Operating margin for the three months ended July 31, 2025 increased 2 percentage points compared to the same period last year, primarily driven by lower operating expenses as a percentage of revenue. Operating margin for the nine months ended July 31, 2025 increased 1 percentage point compared to the same period last year, primarily driven by lower operating expenses as a percentage of revenue, partially offset by gross margin declines.

Previous wording

Net cash provided by operating activities increased $424 million during the six months ended April 30, 2025 compared to the same period last year.

Current wording

Net cash provided by operating activities increased $491 million during the nine months ended July 31, 2025 compared to the same period last year.

Previous wording

•Net income for the six months ended April 30, 2025 increased $128 million compared to the same period last year. Non-cash adjustments to net income were $31 million lower, primarily due to a $31 million increase in deferred tax benefit, a $17 million increase in unrealized gains on equity and other investments, and a $6 million decrease in amortization, partially offset by a $16 million increase in share-based compensation expense, $4 million increase in excess and obsolete inventory-related charges, and $3 million increase in other non-cash expenses.

Current wording

•Net income for the nine months ended July 31, 2025 decreased $70 million compared to the same period last year. Non-cash adjustments to net income were $45 million lower, primarily due to a $37 million increase in deferred tax benefit, a $32 million increase in unrealized gains on equity and other investments, and a $4 million decrease in amortization, partially offset by a $18 million increase in share-based compensation expense, $4 million increase in excess and obsolete inventory-related charges, and $6 million increase in other non-cash expenses.

Previous wording

•The aggregate change in accounts receivable, inventory and accounts payable provided net cash of $112 million during the first six months of fiscal 2025 compared to net cash provided of $60 million in the same period last year. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventory and accounts payable depends upon the cash conversion cycle, which represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers and can be significantly impacted by the timing of shipments and purchases, as well as collections and payments in a period.

Current wording

•The aggregate change in accounts receivable, inventory and accounts payable provided net cash of $181 million during the first nine months of fiscal 2025 compared to net cash provided of $75 million in the same period last year. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventory and accounts payable depends upon the cash conversion cycle, which represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers and can be significantly impacted by the timing of shipments and purchases, as well as collections and payments in a period.

Previous wording

•Movements in other assets and liabilities provided net cash of $131 million during the first six months of fiscal 2025 compared to net cash used of $144 million in the same period last year, primarily driven by lower income and other tax payments, net of accruals, changes in derivative assets and liabilities (see Note 9, “Derivatives,” for additional information), an increase in deferred revenue, higher payroll-related accruals, net of payments, and changes in other assets and liabilities.

Current wording

•Movements in other assets and liabilities provided net cash of $40 million during the first nine months of fiscal 2025 compared to net cash used of $221 million in the same period last year, primarily driven by lower income and other tax payments, net of accruals (see Note 5, “Income Taxes,” for additional information), changes in derivative assets and liabilities (see Note 9, “Derivatives,” for additional information), lower payroll-related payments, net of accruals, changes in deferred revenue and other assets and liabilities.

Previous wording

Net cash used in investing activities decreased $565 million during the six months ended April 30, 2025 compared to the same period last year, primarily driven by $556 million, net of cash acquired, used in the prior year for payments towards acquisitions, including $477 million paid for acquisition of the controlling block of ESI Group SA (“ESI Group”) shares and $24 million decrease in cash used for purchases of property, plant and equipment, partially offset by a $15 million increase in cash used in other net investing activities.

Current wording

Net cash used in investing activities decreased $684 million during the nine months ended July 31, 2025 compared to the same period last year, primarily driven by $673 million, net of cash acquired, used in the prior year for payments towards acquisitions, including $477 million paid for acquisition of the controlling block of ESI Group SA (“ESI Group”) shares and $26 million decrease in cash used for purchases of property, plant and equipment, partially offset by a $15 million increase in cash used in other net investing activities.

Previous wording

Net cash provided by financing activities increased $1,136 million during the six months ended April 30, 2025 compared to the same period last year, primarily driven by $748 million of proceeds from the issuance of the 2030 Senior Notes, $458 million used in the prior year for the acquisition of the non-controlling interest in ESI Group, and $24 million used in the prior year for repayment of debt assumed as part of the ESI Group acquisition, partially offset by $89 million higher treasury stock repurchases and a $5 million increase in cash used in other net financing activities.

Current wording

Net cash provided by financing activities increased $1,240 million during the nine months ended July 31, 2025 compared to the same period last year, primarily driven by $748 million of proceeds from the issuance of the 2030 Senior Notes, $458 million used in the prior year for the acquisition of the non-controlling interest in ESI Group, $24 million used in the prior year for repayment of debt assumed as part of the ESI Group acquisition and $11 million lower treasury stock repurchases.

Previous wording

On March 6, 2023, our board of directors approved a stock repurchase program authorizing the purchase of up to $1,500 million of the company’s common stock, of which $260 million remained as of April 30, 2025. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. See “Issuer Purchases of Equity Securities” under Part II Item 2 for additional information.

Current wording

On March 6, 2023, our board of directors approved a stock repurchase program authorizing the purchase of up to $1,500 million of the company’s common stock, of which $210 million remained as of July 31, 2025. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. See “Issuer Purchases of Equity Securities” under Part II Item 2 for additional information.

Previous wording

There have been no changes to the principal, maturity, interest rates and interest payment terms of our other senior notes during the six months ended April 30, 2025 as compared to the senior notes described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.

Current wording

There have been no changes to the principal, maturity, interest rates and interest payment terms of our other senior notes during the nine months ended July 31, 2025 as compared to the senior notes described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.

Previous wording

On July 30, 2021, we entered into an amended and restated credit agreement (the “Revolving Credit Facility”), which provides a $750 million five-year unsecured revolving credit facility that expires on July 30, 2026. Borrowings under the facility bear an annual interest rate of SOFR + 1.1 percent along with a facility fee of 0.1 percent per annum. In addition, the Revolving Credit Facility permits the company, subject to certain customary conditions, on one or more occasions to request to increase the total commitments under the Revolving Credit Facility by up to $250 million in the aggregate. We may use amounts borrowed under the Revolving Credit Facility for general corporate purposes. As of April 30, 2025 and October 31, 2024, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the six months ended April 30, 2025.

Current wording

On July 30, 2021, we entered into an amended and restated credit agreement (the “Revolving Credit Facility”), which provides a $750 million five-year unsecured revolving credit facility that expires on July 30, 2026. Borrowings under the facility bear an annual interest rate of SOFR + 1.1 percent including a facility fee of 0.1 percent per annum. In addition, the Revolving Credit Facility permits the company, subject to certain customary conditions, on one or more occasions to request to increase the total commitments under the Revolving Credit Facility by up to $250 million in the aggregate. We may use amounts borrowed under the Revolving Credit Facility for general corporate purposes. As of July 31, 2025 and October 31, 2024, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the nine months ended July 31, 2025.