stockrowWhat it does
Keysight Technologies is a global provider of electronic design, simulation, measurement and test solutions for computing, communications and electronics markets. Its hardware, software and services help customers design, validate, manufacture, deploy and optimize electronic products and systems before and after they reach the market.
Its instruments measure and generate electrical signals, analyze communications networks, inspect electronic components and characterize power, radio-frequency, microwave and optical systems. Its software ranges from instrument applications to tools for simulation, emulation, test automation, virtual prototyping, computer-aided engineering and data management. Services include repairs, calibration, technical support, installation, training and engineering assistance.
The company operates through Communications Solutions Group, which serves commercial communications plus aerospace, defense and government markets, and Electronic Industrial Solutions Group, which serves automotive and energy, semiconductor and general-electronics markets. Its customers use the portfolio across wired and wireless communications, data centers, satellite systems, defense equipment, electric vehicles, energy infrastructure, chips and industrial electronics.
Keysight was founded in 2014 and is headquartered in Santa Rosa. Satish Dhanasekaran is President and Chief Executive Officer. Management said on the call that its solutions participate in AI data-center work from pre-silicon design through component validation, system emulation and manufacturing.
How it makes money
Keysight sells products, software and services either separately or as application-specific systems. Products revenue was $4.1 billion in FY2025, or 75.6% of revenue, while services and other revenue was $1.3 billion, or 24.4%. Hardware includes instruments such as signal, network and power analyzers, oscilloscopes, signal generators, power supplies and network-test products. Software can add application-specific measurements to an instrument, connect multiple instruments into a test system, or operate as standalone design, simulation, emulation, automation and quality-assurance software.
The company earns revenue primarily from research-and-development applications, with additional revenue from manufacturing and operations. It sells Communications Solutions Group offerings for communication-system design, simulation, validation, manufacturing, installation and optimization. Electronic Industrial Solutions Group sells design, test and simulation software, instruments, systems and related services for automotive and energy, semiconductors and general electronics.
The company is increasing software and services content, including subscriptions and renewals, to provide ongoing software enhancements and support through a solution’s lifecycle. Management said on the call that software and services represented approximately 33% of revenue in Q3 2026 and annual recurring revenue was 24% of total mix.
FY2025 revenue was $5,375 million; Q3 2026 revenue was $1,846,000,000.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Products | $4.1 billion | 75.6% | 9.31% |
| Services and other | $1.3 billion | 24.4% | 3.96% |
Customers and how it sells
Keysight serves customers in over 100 countries, including communications companies, aerospace and defense contractors, government research agencies, automotive manufacturers and suppliers, energy-system suppliers, semiconductor and semiconductor-equipment companies, industrial businesses, universities and research organizations. It conducts business with approximately 40,000 end customers each year, including many Fortune 1000 companies.
Commercial-communications customers include semiconductor, chipset, module and device suppliers; network-equipment manufacturers; enterprises; network service providers; and cloud computing service providers. Aerospace, defense and government customers include research agencies, government departments and ministries, security agencies, prime contractors, subcontractors and component suppliers.
More than 80 percent of business comes from the direct sales organization. The company also has over 800 channel-partner agreements with distributors, resellers and manufacturers’ representatives, alongside strategic solution partners, electronic commerce and telesales.
In FY2025, Rest of the World revenue was $2.6 billion, Asia Pacific revenue was $2.2 billion, Americas revenue was $2.2 billion, Europe revenue was $956.0 million, China revenue was $938.0 million and United States revenue was $1.9 billion. Management said on the call that direct sales to hyperscalers and model companies account for roughly 10.0% of the business.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Rest of the World | $2.6 billion | 23.9% | 10.4% |
| Asia Pacific | $2.2 billion | 20.6% | 11.2% |
| Americas | $2.2 billion | 20.5% | 7.40% |
| UNITED STATES | $1.9 billion | 17.4% | 5.65% |
| Europe | $956.0 million | 8.89% | 2.36% |
| China | $938.0 million | 8.73% | 6.11% |
Suppliers and costs
Keysight uses in-house manufacturing and qualified contract manufacturers. Its in-house operations focus on complex and technically differentiated production, while contract manufacturers primarily support assembly and printed-circuit-board fabrication. Its Penang, Malaysia hub performs final assembly, tuning, calibration and testing for many advanced instruments; it also has manufacturing operations in the United States and specialized technology centers in California, Colorado and Germany.
The company buys semiconductors, electromechanical components, assemblies, plastic resins and sheet metal from global suppliers. Some custom-designed parts are not readily available from alternative suppliers because of their design or the time required to redesign them. The company uses multiple sources where possible, redesigns solutions for alternative components and may buy incremental inventory to protect the supply chain.
In FY2025, tariffs and unfavorable mix reduced gross margin, while pricing, volume and lower restructuring costs partly offset those effects. Management said on the call that supply limitations had shifted toward incoming parts facing high demand.
- Revenue$5.4B
- Cost of revenue−$2.0B
- Research and development−$1.0B
- Selling, general and administrative−$1.5B
- Other operating costs−−$20.0M
- Operating income$876.0M
Competitive position
Keysight operates in a competitive, rapidly changing global market for electronic design, measurement, simulation, emulation and test solutions. It competes with companies and divisions that have sales, marketing, research and financial resources, as well as regional specialists in particular markets. The company also faces competition from new entrants and from consolidation among industries or customers. No individual competitors are identified in the company’s competition description.
The company’s stated competitive sources include proprietary software and hardware technology, research-and-development centers, customer relationships, a broad installed base, a global technical direct-sales force, services, and a portfolio spanning hardware, software and application-specific systems. Its technology centers develop proprietary components and subsystems, including microwave integrated circuits, optical components, high-speed probes and advanced modules. It also participates in standards bodies and industry consortia and collaborates with university and industry research programs.
Our reading: Customer relationships, technical sales coverage and the installed base provide a meaningful route to repeat upgrades and services, supported by the company’s stated global direct-sales and service model. [item1]
Our reading: Proprietary hardware, software and specialized manufacturing capabilities are a meaningful moat where customer requirements demand measurement performance or integrated workflows that cannot be met by standard components alone. [item1]
Growth opportunities
Keysight identifies rising engineering complexity and faster technology-development cycles as long-term demand drivers. Its growth priorities are to invest in first-to-market solutions, expand into adjacent markets, grow recurring revenue from software and services, and deploy capital across organic investment, acquisitions and shareholder returns.
The company is investing in 5G evolution, early 6G, high-speed data-center networks, satellite networks, AI, industrial IoT, defense modernization, electric vehicles and autonomous vehicles. It acquired Spirent, Optical Solutions Group and PowerArtist in October 2025 to extend communications test, optical-design and computer-aided-engineering capabilities.
Management said on the call that AI infrastructure scaling, speed transitions, silicon photonics and system-level emulation were driving pipeline expansion. It also said wireline revenue exceeded wireless revenue in Q3 2026. Management said customers were engaging the company on 3.2T technology and that early 6G standards were expected to coalesce in the 2029 timeframe.
Management said on the call that fiscal-2026 year-to-date new customers numbered 3,000 and represented $100.0 million of incremental business. It also said non-terrestrial-network revenue was 1.00% on an annualized basis and that its quantum solutions enable 1,000 quantum computers across multiple organizations.
- $4.9BFY2021
- $5.4BFY2022
- $5.5BFY2023
- $5.0BFY2024
- $5.4BFY2025
Structural risks
- Economic conditions, inflation, recession, reduced customer purchasing power and delayed or cancelled orders can reduce demand, create price pressure and increase excess or obsolete inventory.
- Tariffs, trade restrictions, export controls, sanctions, geopolitical conflict and foreign-currency movements can restrict sales, raise costs, interrupt transport and affect operations across countries.
- The company depends on its ability to identify customer needs, develop and commercialize new technologies promptly, differentiate offerings, price competitively, manufacture at volume and deliver on time.
- Supply-chain disruptions and shortages can affect incoming parts and production. Some custom-designed components are not readily available from alternate suppliers.
- Acquisitions require integration of operations, product definitions, pricing, contracts, delivery and technical support, while retaining employees and customers and realizing anticipated synergies and growth opportunities.
- Debt can require operating cash flow for interest payments, reduce cash available for corporate purposes and limit flexibility during adverse economic or industry conditions.
Bottom line
Our reading
Our reading: Keysight is a global test, measurement, design and simulation business whose revenue is tied mainly to customers’ research-and-development and technology-deployment cycles across communications, chips, defense and industrial electronics. Its broad hardware, software and service portfolio, technical sales model and specialized production capabilities support its position, while supply availability, economic cycles, trade restrictions and execution on acquisitions remain material constraints. [item1; item1a; call_prepared]