filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)
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 including, without limitation, statements regarding growth opportunities, including for and in our end markets, new product and service introductions, the position and strength of our businesses, products and services, market demand for and adoption of our products and solutions, the ability of our products and solutions to address customer needs and meet industry requirements, our focus on enhancing our customers’ experience, delivering differentiated product solutions and driving productivity improvements, leveraging our product platforms to maximize growth, our investments, including in manufacturing infrastructure, research and development and expanding and improving our applications and solutions portfolios, expanding our position in developing countries and emerging markets, our contributions to our defined benefit plans, our hedging programs and other actions to offset the effects of foreign currency and interest rate movements, our future effective tax rate, unrecognized tax benefits, reimbursement incentives, our ability to satisfy our liquidity requirements, including through cash generated from operations, the potential impact of adopting new accounting pronouncements, indemnification obligations, our sales, our purchase commitments, our capital expenditures, the integration, effects and timing of our acquisitions and other transactions, expense reduction and other results from our restructuring programs and other cost saving initiatives, our stock repurchase program and dividends, macroeconomic and market conditions, including relating to or arising from changes to tariffs, import/export or trade policies, the recovery and health of our end markets, seasonality, mix, future financial results, our operating margin, our geographical diversification, interest rates, inflationary pressures and local regulations and restrictions, that involve risks and uncertainties. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including those discussed in Part II Item 1A and elsewhere in this Form 10-Q.
Basis of Presentation
The financial information presented in this Form 10-Q is not audited and is not necessarily indicative of our future consolidated financial position, results of operations, comprehensive income (loss) or cash flows. Our fiscal year-end is October 31, and our fiscal quarters end on January 31, April 30 and July 31. Unless otherwise stated, these dates refer to our fiscal year and fiscal periods.
Executive Summary
Agilent Technologies, Inc. ("we," "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader in life sciences, diagnostics and applied markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow.
New Segment Structure. In November 2024, we announced a change in our organizational structure to support our market-focused, customer-centric strategy. Our former Diagnostics and Genomics segment combined with our liquid chromatography and liquid chromatography mass spectrometry instrument platforms to form our new Life Sciences and Diagnostics Markets segment. Our chemistries and supplies, laboratory automation, and software and informatics divisions moved from our former Life Sciences and Applied Markets segment to our Agilent CrossLab segment. The remaining divisions in our former Life Sciences and Applied Markets segment which includes our gas chromatography, gas chromatography mass spectrometry, remarketed instruments, spectroscopy and vacuum divisions form our new Applied Markets segment. We began reporting under this new structure with the Quarterly Report on Form 10-Q for the period ended January 31, 2025. All historical financial segment information has been recast to conform to this new presentation in our financial statements and accompanying notes.
Global Tariffs. Recent changes to tariffs and trade policies by the U.S. and other countries have increased risk and uncertainty surrounding our future results of operations. While these changes had no material impact on our results in the first half of fiscal year 2025, we observed increased demand for laboratory consumables in the second quarter which we believe is attributable to customers seeking to mitigate the potential impact of the proposed changes to tariffs and trade policies announced in April 2025. This increased demand in laboratory consumables was offset by customs-related delays in instrument shipments. We continue to monitor these evolving trade dynamics closely, as they may influence future revenue and operational efficiency.
Actual Results
Net revenue of $1,668 million and $3,349 million for the three and six months ended April 30, 2025 increased 6 percent and 4 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year. Net revenue for the three and six months ended April 30, 2025, increased in our Life Sciences and Diagnostics Markets and Agilent CrossLab segments partially offset by decreased revenue in our Applied Markets segment. Revenue from our BIOVECTRA acquisition contributed approximately 2 percentage points in both the three and six months ended April 30, 2025. Revenue generated by our Life Sciences and Diagnostics Markets segment for the three and six months ended April 30, 2025 increased 8 percent and 6 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year. Revenue generated by our Agilent CrossLab segment for the three and six months ended April 30, 2025 increased 7 percent and 4 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points for both periods when compared to the same periods last year. Revenue generated by our Applied Markets segment for the three and six months ended April 30, 2025 decreased 1 percent and 3 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025, had an overall unfavorable impact on revenue growth of 1 percentage point and 2 percentage points, respectively, when compared to the same periods last year.
Net income for the three and six months ended April 30, 2025 was $215 million and $533 million, respectively, compared to net income of $308 million and $656 million for the corresponding periods last year. In the six months ended April 30, 2025, cash provided by operations was $652 million compared to cash provided by operations of $818 million in the same period last year.
Dividends. During the three and six months ended April 30, 2025, we paid cash dividends of $0.248 per common share or $70 million and $0.496 per common share or $141 million, respectively, on the company's common stock. During the three and six months ended April 30, 2024, we paid cash dividends of $0.236 per common share or $69 million and $0.472 per common share or $138 million, respectively, on the company's common stock.
On May 20, 2025, our board of directors declared a quarterly dividend of $0.248 per share of common stock or approximately $70 million which will be paid on July 23, 2025 to all shareholders of record at the close of business on July 1, 2025. The timing and amounts of any future dividends are subject to determination and approval by our board of directors.
2023 Repurchase Program. On January 9, 2023, we announced that our board of directors had approved a share repurchase program (the "2023 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs. The 2023 repurchase program authorizes the purchase of up to $2.0 billion, excluding excise taxes, of our common stock at the company's discretion and has no fixed termination date. The 2023 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. The 2023 repurchase program commenced on March 1, 2023. During both the three and six months ended April 30, 2024, we repurchased and retired 1.594 million shares for $230 million, excluding excise taxes of $1 million, under this authorization. During the three and six months ended April 30, 2025, we repurchased and retired 1.347 million shares for $165 million, excluding excise taxes of approximately $2 million and 1.997 million shares for $255 million, excluding excise taxes of approximately $2 million, respectively, under this authorization. As of April 30, 2025, we had remaining authorization to repurchase up to approximately $119 million of our common stock under the 2023 repurchase program.
Looking Forward. Our primary focus remains on enhancing our customers’ experience, delivering differentiated product solutions and driving productivity improvements. While customer capital budgets, including those of customers receiving funding from the U.S. federal government, continue to be constrained, we anticipate a steady recovery. We also remain optimistic about the long-term health of our key end markets. While we anticipate the recent tariff changes to adversely impact our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact by the end of our fiscal year. While inflationary and tariff-related pressures remain fluid, we are actively pursuing mitigation strategies through supply chain optimization, targeted pricing actions, and other cost-efficiency initiatives to protect margins and sustain long-term growth.
Critical Accounting Policies and Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles ("GAAP") in the U.S. The preparation of condensed consolidated financial statements in conformity with GAAP in the U.S. requires management to make estimates, judgments and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, retirement and post-retirement benefit plan assumptions, valuation of goodwill and purchased intangible assets and accounting for income taxes. There have been no significant changes to our critical accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur could materially change the financial statements.
Adoption of New Pronouncements
See Note 2, "New Accounting Pronouncements," to the condensed consolidated financial statements for a description of new accounting pronouncements.
Restructuring and Other Related costs
Summary of Restructuring Plans. In fiscal year 2025, we announced a restructuring plan designed to optimize our management structure to better serve our customers. In fiscal years 2024 and 2023, we announced restructuring plans that were designed to reduce costs and expenses in response to macroeconomic conditions. These actions impact all three of our business segments. The costs associated with these restructuring plans were not allocated to our business segments' results; however, each business segment will benefit from the future cost savings from these actions. When completed, the restructuring programs are expected to result in the reduction in annual cost of sales and operating expenses over the three business segments.
A summary of our aggregate liability relating to the restructuring plans and the total restructuring expense since inception of those plans are shown in the table below:
| Workforce Reduction Total | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Balance at October 31, 2024 | $ | 13 | |||||||||||||||||||||
| Income statement expense | 1 | ||||||||||||||||||||||
| Cash payments | (9) | ||||||||||||||||||||||
| Balance at January 31, 2025 | $ | 5 | |||||||||||||||||||||
| Income statement expense | 56 | ||||||||||||||||||||||
| Non-cash settlement (accelerated share-based compensation expense) | (5) | ||||||||||||||||||||||
| Cash payments | (5) | ||||||||||||||||||||||
| Currency translation impact | 1 | ||||||||||||||||||||||
| Balance at April 30, 2025 | $ | 52 | |||||||||||||||||||||
| Restructuring expense since inception of all plans: | |||||||||||||||||||||||
| Fiscal Year 2025 Plan | 56 | ||||||||||||||||||||||
| Fiscal Year 2024 Plan | 73 | ||||||||||||||||||||||
| Fiscal Year 2023 Plan | 50 | ||||||||||||||||||||||
| Total restructuring expense since inception of all plans | $ | 179 |
The aggregate restructuring liability of $52 million at April 30, 2025, is recorded in other accrued liabilities on the condensed consolidated balance sheet and reflects estimated future cash outlays.
A summary of the charges in the condensed consolidated statement of operations resulting from the restructuring plans is shown below:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| April 30, | April 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Cost of products and services | $ | 15 | $ | — | $ | 15 | $ | — | ||||||||||||||||||
| Research and development | 3 | — | 3 | 2 | ||||||||||||||||||||||
| Selling, general and administrative | 38 | 1 | 39 | 2 | ||||||||||||||||||||||
| Total restructuring expense | $ | 56 | $ | 1 | $ | 57 | $ | 4 |
Fiscal Year 2025 Plan ("FY25 Plan"). In the second quarter of fiscal year 2025, we announced a restructuring plan designed to optimize our management structure to better serve our customers. The expense associated with this workforce reduction includes severance and other personnel-related costs. We expect to substantially complete these restructuring activities by the second quarter of fiscal year 2026. When completed, the restructuring program is estimated to result in the reduction of approximately $75 million to $80 million in annual cost of sales and operating expenses over our three business segments.
In connection with the FY25 Plan, we have recorded approximately $56 million in restructuring and other related costs in both the three and six months ended April 30, 2025.
A summary of the FY25 Plan activity is shown in the table below:
| Workforce Reduction | |||||
| (in millions) | |||||
| Balance at January 31, 2025 | $ | — | |||
| Income statement expense | 56 | ||||
| Non-cash settlement (accelerated share-based compensation expense) | (5) | ||||
| Cash payments | (1) | ||||
| Currency translation impact | 1 | ||||
| Balance at April 30, 2025 | $ | 51 | |||
| Total restructuring expense since inception of FY25 Plan | $ | 56 |
Fiscal Year 2024 Plan ("FY24 Plan"). In the third quarter of fiscal year 2024, we announced a restructuring plan designed to reduce costs and expenses in response to macroeconomic conditions. The expense associated with this workforce reduction includes severance and other personnel-related costs. As of April 30, 2025, we have substantially completed all workforce management actions and expect to settle the remaining payments by the end of fiscal year 2025. When completed, the restructuring program is expected to result in the reduction of approximately $100 million in annual cost of sales and operating expenses over our three business segments.
In connection with the FY24 Plan, we have recorded approximately $1 million in restructuring and other related costs due to changes in estimates in the six months ended April 30, 2025.
A summary of the FY24 Plan activity is shown in the table below:
| Workforce Reduction | |||||
| (in millions) | |||||
| Balance at October 31, 2024 | $ | 11 | |||
| Income statement expense | 1 | ||||
| Cash payments | (8) | ||||
| Balance at January 31, 2025 | $ | 4 | |||
| Cash payments | (3) | ||||
| Balance at April 30, 2025 | $ | 1 | |||
| Total restructuring expense since inception of FY24 Plan | $ | 73 |
Fiscal Year 2023 Plan ("FY23 Plan"). We have substantially completed all workforce management actions and payments in connection with the FY23 Plan. During the three and six months ended April 30, 2025, we settled cash payments of $1 million and $2 million, respectively.
Foreign Currency
Our revenues, costs and expenses, and monetary assets and liabilities and equity are exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities. Foreign currency movements for the six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 1 percentage point when compared to the same period last year. Typically, when movements in foreign currency exchange rates have a negative impact on revenue, they will also have a positive impact by reducing our costs and expenses or vice versa. We calculate the impact of movements in foreign currency exchange rates by applying the actual foreign currency exchange rates in effect during the last month of each quarter of the current year to both the applicable current and prior year periods. We hedge revenues, expenses and balance sheet exposures that are not denominated in the functional currencies of our subsidiaries on a short term and anticipated basis. We do experience some fluctuations within individual lines of the condensed consolidated statement of operations and balance sheet because our hedging program is not designed to offset the currency movements in each category of revenues, expenses, monetary assets and liabilities. Our hedging program is designed to hedge currency movements on a relatively short-term basis (up to a rolling twelve-month period). We may also hedge equity balances denominated in foreign currency on a long-term basis. To the extent that we are required to pay for all, or portions, of an acquisition price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency movements will impact the U.S. dollar cost of the transaction.
Results from Operations
Net Revenue
| Three Months Ended | Six Months Ended | Year over Year Change | |||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | ||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||||||||||||||
| Products | $ | 1,186 | $ | 1,125 | $ | 2,386 | $ | 2,334 | 5% | 2% | |||||||||||||||||||||||||
| Services and other | 482 | 448 | 963 | 897 | 8% | 7% | |||||||||||||||||||||||||||||
| Total net revenue | $ | 1,668 | $ | 1,573 | $ | 3,349 | $ | 3,231 | 6% | 4% |
Net revenue for the three and six months ended April 30, 2025 increased 6 percent and 4 percent, respectively when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year.
Revenue from products for the three and six months ended April 30, 2025 increased 5 percent and 2 percent, respectively, when compared to the same periods last year. The product revenue growth in the three and six months ended
April 30, 2025 was primarily driven by increases in our consumables, liquid chromatography and liquid chromatography mass spectrometry businesses partially offset by decreases in our gas chromatography, biomolecular analysis and cell analysis businesses when compared to the same periods last year.
Services and other revenue for the three and six months ended April 30, 2025 increased 8 percent and 7 percent, respectively, when compared to the same periods last year. Services and other revenue consist of contract repair, preventative maintenance, compliance services, relocation services, installation services and consulting services related to the companion diagnostics and nucleic acid solutions businesses. For the three and six months ended April 30, 2025, service revenue increases reflected strong growth from contract repair and preventative maintenance services partially offset by declines in per incident services including consulting services, compliance and relocations.
Net Revenue By Segment
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Net revenue by segment: | ||||||||||||||||||||||||||||||||||||||
| Life Sciences and Diagnostics Markets | $ | 654 | $ | 604 | $ | 1,301 | $ | 1,224 | 8% | 6% | ||||||||||||||||||||||||||||
| Agilent CrossLab | 713 | 664 | 1,409 | 1,350 | 7% | 4% | ||||||||||||||||||||||||||||||||
| Applied Markets | 301 | 305 | 639 | 657 | (1)% | (3)% | ||||||||||||||||||||||||||||||||
| Total net revenue | $ | 1,668 | $ | 1,573 | $ | 3,349 | $ | 3,231 | 6% | 4% |
Revenue in the Life Sciences and Diagnostics Markets segment for the three and six months ended April 30, 2025, increased 8 percent and 6 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year. For the three and six months ended April 30, 2025, revenue from our BIOVECTRA business contributed 6 percentage points and 5 percentage points, respectively. For the three and six months ended April 30, 2025, we saw strong revenue growth in the pharmaceutical market led by revenue from our BIOVECTRA business. We also saw strong revenue growth in the diagnostics and clinical market led by revenue from our companion diagnostics and pathology businesses partially offset by a decline in revenue in the academia and government market when compared to the same periods last year.
Revenue in the Agilent CrossLab segment for the three and six months ended April 30, 2025, increased 7 percent and 4 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points for both periods when compared to the same periods last year. For the three and six months ended April 30, 2025, we saw revenue growth across most of our end markets led by strong growth in the pharmaceutical, chemical and advanced materials and food markets when compared to the same periods last year.
Revenue in the Applied Markets segment for the three and six months ended April 30, 2025 decreased 1 percent and 3 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 1 percentage point and 2 percentage points, respectively, when compared to the same periods last year. For the three months ended April 30, 2025, we saw a modest decline in revenue in the chemical and advanced materials market and a significant decline in revenue in the academia and government market partially offset by significant revenue growth in the pharmaceutical market when compared to the same period last year. For the six months ended April 30, 2025, we saw a significant decline in revenue in the chemical and advanced materials and academia and government markets partially offset by significant revenue growth in the food market when compared to the same period last year.
Operating Results
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions, except margin data) | ||||||||||||||||||||||||||||||||||||||
| Total gross margin | 51.9 | % | 54.4 | % | 52.7 | % | 54.6 | % | (2) ppts | (2) ppts | ||||||||||||||||||||||||||||
| Research and development | $ | 112 | $ | 113 | $ | 225 | $ | 241 | (1)% | (7)% | ||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 454 | $ | 380 | $ | 864 | $ | 776 | 19% | 11% | ||||||||||||||||||||||||||||
| Operating margin | 18.0 | % | 23.1 | % | 20.2 | % | 23.1 | % | (5) ppts | (3) ppts | ||||||||||||||||||||||||||||
| Income from operations | $ | 300 | $ | 363 | $ | 676 | $ | 747 | (17)% | (10)% |
Total gross margin for the three and six months ended April 30, 2025 decreased 2 percentage points in both periods when compared to the same periods last year. Gross margin for the three and six months ended April 30, 2025 was unfavorably impacted by product mix, impact of currency movements, higher shipping, customs and duties costs, restructuring expenses, higher wages and variable pay partially offset by targeted price increases and lower warranty costs when compared to the same periods last year.
Research and development expenses for the three and six months ended April 30, 2025 decreased 1 percent and 7 percent, respectively, when compared to the same periods last year. Research and development expenses for the three and six months ended April 30, 2025 decreased due to lower salary expense related to prior year workforce reduction activities partially offset by higher restructuring expenses and variable pay when compared to the same periods last year. Research and development expenses in the six months ended April 30, 2024 also included an impairment of in-process research and development of $6 million.
Selling, general and administrative expenses for the three and six months ended April 30, 2025 increased 19 percent and 11 percent, respectively, when compared to the same periods last year. Selling, general and administrative expenses for the three and six months ended April 30, 2025, increased due to higher restructuring expenses, transformational initiatives, corporate infrastructure costs and variable pay partially offset by lower salary expense related to prior year workforce reduction activities, favorable impact of currency movements and lower share-based compensation expense when compared to the same periods last year.
Total operating margin for the three and six months ended April 30, 2025 decreased 5 percentage points and 3 percentage points, respectively, when compared to the same periods last year. Operating margin for the three and six months ended April 30, 2025 was unfavorably impacted by product mix, higher restructuring expenses, transformational initiatives and the unfavorable impact of currency movements partially offset by higher sales volume and lower salary expense related to prior year workforce reduction activities.
Income from operations for the three and six months ended April 30, 2025, decreased $63 million or 17 percent and $71 million or 10 percent, respectively, on a corresponding revenue increase of $95 million and $118 million, respectively.
Interest income for the three months ended April 30, 2025 and 2024 was $14 million and $19 million, respectively. Interest income for the six months ended April 30, 2025 and 2024 was $29 million and $37 million, respectively. The decrease in interest income in 2025 was primarily due to lower cash balances.
At April 30, 2025, our headcount was approximately 18,000 as compared to approximately 17,600 at April 30, 2024.
Other income (expense), net
For the three months ended April 30, 2025, other income (expense), net of $25 million expense includes a net loss of $28 million on equity securities, $15 million loss on impairment of investments and income of $13 million related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $3 million. The costs associated with these services are reported within income from operations.
For the six months ended April 30, 2025, other income (expense), net of $21 million expense includes a net loss of $27 million on equity securities, $15 million loss on impairment of investments, and income of $26 million related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $6 million. The costs associated with these services are reported within income from operations. For the six months ended April 30, 2025, other income (expense), net also includes expense of $14 million related to the settlement loss of our Netherlands defined benefit pension plan.
For the three months ended April 30, 2024, other income (expense), net of $12 million income includes a net gain of $1 million on equity securities and income of $8 million related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $3 million. The costs associated with these services are reported within income from operations.
For the six months ended April 30, 2024, other income (expense), net of $35 million income includes a net gain of $4 million on equity securities and income of $14 million related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $6 million. The costs associated with these services are reported within income from operations. For the six months ended April 30, 2024, other income (expense), net also includes $8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income (loss).
Income Taxes
For the three and six months ended April 30, 2025, our income tax expense was $45 million with an effective tax rate of 17.3 percent and $94 million with an effective tax rate of 15.0 percent, respectively. For the three and six months ended April 30, 2025, there were no significant discrete items.
For the three and six months ended April 30, 2024, our income tax expense was $66 million with an effective tax rate of 17.6 percent and $121 million with an effective tax rate of 15.6 percent, respectively. For the three and six months ended April 30, 2024, our effective tax rate and the resulting provision for income taxes were impacted by the tax expense of $12 million related to the settlement of an audit in Singapore.
In the U.S., tax years remain open back to the year 2021 for federal income tax purposes and 2020 for significant states. In other major jurisdictions where we conduct business, the tax years generally remain open back to the year 2014.
With these jurisdictions and the U.S., it is reasonably possible that some tax audits may be completed over the next twelve months. However, management is not able to provide a reasonably reliable estimate of the timing of any other future tax payments or change in unrecognized tax benefits, if any.
Segment Overview
In November 2024, we announced a change in our organizational structure to support our market-focused, customer-centric strategy. Our former Diagnostics and Genomics segment combined with our liquid chromatography and liquid chromatography mass spectrometry instrument platforms to form our new Life Sciences and Diagnostics Markets segment. Our chemistries and supplies, laboratory automation, and software and informatics divisions moved from our former Life Sciences and Applied Markets segment to our Agilent CrossLab segment. The remaining divisions in our former Life Sciences and Applied Markets segment which includes our gas chromatography, gas chromatography mass spectrometry, remarketed instruments, spectroscopy and vacuum divisions form our new Applied Markets segment. We began reporting under this new structure with the Quarterly Report on Form 10-Q for the period ended January 31, 2025. All historical financial segment information has been recast to conform to this new presentation in our financial statements and accompanying notes.
Life Sciences and Diagnostics Markets
Our Life Sciences and Diagnostics Markets segment is comprised of seven areas of activity. We provide active pharmaceutical ingredients ("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, our liquid chromatography ("LC") and liquid chromatography mass spectrometry ("LCMS") businesses enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level. Second, our cell analysis business includes instruments, reagents, software, and labware associated with unique live-cell analysis platforms in addition to mainstream flow cytometers, plate-readers, and plate washers/dispensers which are used across a broad range of applications. Third, our contract development and manufacturing organization ("CDMO") business provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices conditions for use as API in a class of drugs that utilize nucleic acid molecules for disease therapy. BIOVECTRA capabilities include microbial fermentation, bioreagents, highly potent active pharmaceutical ingredients, peptide purification and biomanufacturing capabilities in several nucleic acid modalities. Together, our BIOVECTRA and nucleic acid solutions businesses comprise our CDMO offerings to our customers providing clinical-to-commercial scale production capabilities. Fourth, our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry, in situ hybridization, hematoxylin and eosin staining and special staining. This business further provides clinical flow cytometry reagents for routine cancer diagnostics. This business also provides bulk antibodies as raw materials and associated assay development services to in vitro diagnostics manufacturers, biotechnology and pharmaceutical companies. Fifth, we also collaborate with a number of major pharmaceutical companies to develop new potential tissue pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy. Sixth, our genomics business includes reagents to support next-generation sequencing ("NGS") workflows and arrays. This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy. Finally, our biomolecular analysis business provides complete workflow solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples. Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques including NGS, utilized in clinical and life science research applications.
Net Revenue
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 654 | $ | 604 | $ | 1,301 | $ | 1,224 | 8% | 6% |
Life Sciences and Diagnostics Markets segment revenue for the three and six months ended April 30, 2025 increased 8 percent and 6 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year.
Geographically, revenue for the three months ended April 30, 2025 increased 12 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 1 percent in Europe with a 2 percentage point unfavorable currency impact and increased 11 percent in Asia Pacific with a 1 percentage point unfavorable currency impact compared to the same period last year. For the three months ended April 30, 2025, the revenue increase in the Americas was primarily driven by revenue from the BIOVECTRA acquisition as well as strong growth from our pathology and companion diagnostics businesses. Revenue increased in Europe due to strong growth from our cell analysis and companion diagnostics businesses and moderate growth from our liquid chromatography mass spectrometry and pathology businesses, partially offset by declines in our liquid chromatography and biomolecular analysis businesses. Revenue increased in Asia Pacific due to strong growth from our liquid chromatography, liquid chromatography mass spectrometry, pathology and cell analysis businesses.
Revenue for the six months ended April 30, 2025 increased 11 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 2 percent in Europe with a 1 percentage point unfavorable currency impact and increased 2 percent in Asia Pacific with a 2 percentage point unfavorable currency impact compared to the same period last year. The revenue increase in the Americas was primarily driven by revenue from the BIOVECTRA acquisition as well as strong growth from our liquid chromatography and companion diagnostics businesses and moderate growth from our liquid
chromatography mass spectrometry and nucleic acid solutions businesses. Revenue increased in Europe due to strong growth from our liquid chromatography, genomics and companion diagnostics businesses, moderate growth in our liquid chromatography mass spectrometry business and modest growth in our pathology and cell analysis businesses, partially offset by declines in our biomolecular analysis business. Revenue increased in Asia Pacific due to strong growth from our liquid chromatography mass spectrometry, pathology and genomics businesses.
For the three months ended April 30, 2025, strong revenue growth in the pharmaceutical market was mainly due to the BIOVECTRA acquisition and our liquid chromatography mass spectrometry and nucleic acid solutions businesses. We saw strong revenue growth in the diagnostics and clinical market led by our pathology, companion diagnostics, liquid chromatography and biomolecular analysis businesses which was partially offset by a decline in our genomics business. Revenue in the academia and government market declined due to our biomolecular, cell analysis and genomics businesses, partially offset by strong growth in our liquid chromatography mass spectrometry business. Within the applied markets, we saw moderate revenue growth driven by strong growth within the food market.
For the six months ended April 30, 2025, strong revenue growth in the pharmaceutical market was mainly due to the BIOVECTRA acquisition and our liquid chromatography mass spectrometry business and moderate growth in our nucleic acid solutions business. We saw strong revenue growth in the diagnostics and clinical market led by strong growth in our companion diagnostics, liquid chromatography and liquid chromatography mass spectrometry businesses, moderate growth in our biomolecular business and modest growth in our pathology and cell analysis businesses. Revenue in the academia and government market declined due to our biomolecular, cell analysis and genomics businesses, partially offset by strong growth in our liquid chromatography mass spectrometry business. Within the applied markets, we saw modest revenue growth primarily within the environmental and forensics and chemicals and advanced materials markets.
Looking Forward. While we anticipate the recent tariff changes to adversely impact our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact by the end of our fiscal year. Therefore, we remain optimistic about our long-term growth opportunities in our end markets and continue to invest in expanding and improving our applications and solutions portfolio. We continue to leverage our liquid chromatography and liquid chromatography mass spectrometry platforms to maximize our growth via key vectors across our markets, making us optimistic about our long-term growth opportunities in the life sciences markets. We remain positive about the growth in our diagnostic and clinical markets around our OMNIS platforms. Market demand for therapeutic oligo continues to grow, and our CDMO business is well positioned to serve expanding customer requirements. We will also continue to invest in research and development, invest in expanding and improving our applications and solutions portfolio and seek to expand our position in developing countries and emerging markets.
Operating Results
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions, except margin data) | ||||||||||||||||||||||||||||||||||||||
| Gross margin | 52.8 | % | 55.1 | % | 52.8 | % | 55.0 | % | (2) ppts | (2) ppts | ||||||||||||||||||||||||||||
| Research and development | $ | 59 | $ | 64 | $ | 122 | $ | 130 | (7)% | (6)% | ||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 157 | $ | 154 | $ | 319 | $ | 314 | 2% | 2% | ||||||||||||||||||||||||||||
| Operating margin | 19.7 | % | 19.0 | % | 18.9 | % | 18.7 | % | 1 ppt | — | ||||||||||||||||||||||||||||
| Income from operations | $ | 129 | $ | 115 | $ | 246 | $ | 229 | 13% | 8% |
Gross margin for products and services for the three and six months ended April 30, 2025, decreased 2 percentage points in both periods when compared to the same periods last year. Gross margin for the three and six months ended April 30, 2025 was impacted mainly by unfavorable business mix, increased variable pay, increased logistical costs and the unfavorable impact of currency movements which was partially offset by lower warranty expenses and lower salary expense related to prior year workforce reduction activities.
Research and development expenses for the three and six months ended April 30, 2025, decreased 7 percent and 6 percent, respectively, when compared to the same periods last year. Research and development expenses for the three and six
months ended April 30, 2025 decreased primarily due to lower salary expenses related to prior year workforce reduction activities partially offset by increases in variable pay.
Selling, general and administrative expenses for the three and six months ended April 30, 2025, increased 2 percent in both periods when compared to the same periods last year. Selling, general and administrative expenses for the three and six months ended April 30, 2025, increased due to higher commission, travel and variable pay expenses partially offset by lower salary expenses related to prior year workforce reduction activities and the favorable impact of currency movements.
Operating margin for products and services for the three and six months ended April 30, 2025 increased 1 percentage point and was flat, respectively, when compared to the same periods last year. Operating margin for products and services for the three months ended April 30, 2025, increased due to the lower salary expense related to prior year workforce reduction activities partially offset by unfavorable business mix, increased variable pay and increased commissions. Operating margin for products and services for the six months ended April 30, 2025 was flat due to lower salary expense related to prior year workforce reduction activities offset by unfavorable business mix, increased variable pay and increased commissions.
Income from operations for the three and six months ended April 30, 2025 increased $14 million or 13 percent and $17 million or 8 percent, respectively, on a corresponding revenue increase of $50 million and $77 million, respectively.
Agilent CrossLab
Our Agilent CrossLab segment provides an extensive services and consumables portfolio that spans the entire lab, in addition to software and laboratory automation solutions, which are designed to improve customer outcomes and represents a broad range of offerings designed to serve customer needs across end-markets and applications. Our services portfolio includes repairs, parts, maintenance, installations, training, compliance support, software as a service, asset management, consulting and various other custom services to support the customers' laboratory operations. Custom services are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements. Our consumables portfolio is designed to improve customer outcomes. Most of the portfolio is vendor neutral, meaning we can serve and supply customers regardless of their instrument purchase choices. Solutions range from chemistries to supplies. Key product categories in consumables include gas chromatography ("GC") and liquid chromatography ("LC") columns, sample preparation products, custom chemistries, and a large selection of laboratory supplies. Software and informatics solutions include software for instrument control, data acquisition, data analysis, secure storage of results, and laboratory information and workflow management. This software facilitates the compliant use of instruments in pharmaceutical quality assurance and quality control environments. The OpenLab laboratory software suite is a scalable, open software platform that enables customers to capture, analyze, and share scientific data throughout the lab and across the enterprise. Laboratory automation offers automated sample preparation solutions, including liquid handling, plate management, consumables and scheduling software. These solutions range from standalone automation platforms to integrated workflow solutions with seamless integration to our instrumentation.
Net Revenue
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 713 | $ | 664 | $ | 1,409 | $ | 1,350 | 7% | 4% |
Agilent CrossLab segment revenue for the three and six months ended April 30, 2025 increased 7 percent and 4 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points for both periods when compared to the same periods last year.
Geographically, revenue for the three months ended April 30, 2025 increased 4 percent in the Americas with a 2 percentage point unfavorable currency impact, increased 7 percent in Europe with a 2 percentage point unfavorable currency impact and increased 12 percent in Asia Pacific with a 2 percentage point unfavorable currency impact compared to the same period last year. For the three months ended April 30, 2025, revenue growth in the Americas was driven by strength in repair, maintenance and compliance services and our lab automation and consumables businesses partially offset by weakness in our
software and informatics business when compared to the same period last year. Revenue growth in Europe was driven by strength in all services revenue categories and our lab automation and consumables businesses when compared to the same period last year. Revenue growth in Asia Pacific was driven by higher demand in China within our consumables business due to global tariffs when compared to the same period last year.
Revenue for the six months ended April 30, 2025 increased 4 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 4 percent in Europe with a 2 percentage point unfavorable currency impact and increased 5 percent in Asia Pacific with a 2 percentage point unfavorable currency impact compared to the same period last year. Revenue growth in the Americas was driven by strength in repair, compliance, maintenance, and installation services and our lab automation business partially offset by weakness in our software and informatics business when compared to the same period last year. Revenue growth in Europe was driven by strength in repair, maintenance, and compliance services and our consumables business partially offset by weakness in our installation services business when compared to the same period last year. Revenue growth in Asia Pacific was driven by higher demand in China within our consumables business when compared to the same period last year.
For the three months ended April 30, 2025, revenue increased significantly across all end markets. Strong revenue growth in the pharmaceutical market was driven by our consumables, services and lab automation businesses when compared to the same period last year. Strong revenue growth in the chemicals and advanced materials and food market was driven by our consumables and services businesses when compared to the same period last year. Strong revenue growth in the environmental and forensics market was driven by our services and consumables businesses when compared to the same period last year.
For the six months ended April 30, 2025 revenue increased significantly in the chemicals and advanced materials, food, environmental and forensics and diagnostics and clinical markets. Revenue increased moderately in the pharmaceutical market and was flat in the academia and government market. Strong revenue growth in the chemicals and advanced materials market was driven by our consumables and services businesses when compared to the same period last year. Strong revenue growth in the food market and the environmental and forensics market was driven by our services, consumables and lab automation businesses when compared to the same period last year. Moderate revenue growth in the pharmaceutical market was driven by our services and consumables businesses when compared to the same period last year.
Looking Forward. While we anticipate the recent tariff changes to adversely impact our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact by the end of our fiscal year. Agilent CrossLab is well positioned to continue its success in our key end markets by supporting a growing installed base of instruments. Digital and remote capabilities will continue to be a key factor in improving the service quality and the customers' experience. Geographically, the business is well diversified across all regions to take advantage of local market opportunities and to hedge against weakness in any one region.
Operating Results
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions, except margin data) | ||||||||||||||||||||||||||||||||||||||
| Gross margin | 55.5 | % | 56.6 | % | 55.8 | % | 56.8 | % | (1) ppt | (1) ppt | ||||||||||||||||||||||||||||
| Research and development | $ | 27 | $ | 26 | $ | 53 | $ | 55 | 2% | (3)% | ||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 138 | $ | 134 | $ | 281 | $ | 273 | 3% | 3% | ||||||||||||||||||||||||||||
| Operating margin | 32.4 | % | 32.5 | % | 32.1 | % | 32.5 | % | — | — | ||||||||||||||||||||||||||||
| Income from operations | $ | 231 | $ | 216 | $ | 452 | $ | 438 | 7% | 3% |
Gross margin for the three and six months ended April 30, 2025 decreased 1 percentage point in both periods when compared to the same periods last year. Gross margin for the three and six months ended April 30, 2025 was impacted by the unfavorable impact of currency movements, higher wages, variable pay and higher logistics costs partially offset by higher sales volume.
Research and development expenses for the three and six months ended April 30, 2025 increased 2 percent and decreased 3 percent, respectively, when compared to the same periods last year. Research and development expenses for the three months ended April 30, 2025 increased due to higher variable pay, wages and consumables partially offset by the favorable impact of currency movements. Research and development expenses for the six months ended April 30, 2025
decreased primarily due to a lower allocation of corporate infrastructure expenses and the favorable impact of currency movements partially offset by higher variable pay and higher consumables.
Selling, general and administrative expenses for the three and six months ended April 30, 2025 increased 3 percent in both periods when compared to the same periods last year. For the three and six months ended April 30, 2025, selling, general and administrative expenses increased due to higher commissions, variable pay and a higher allocation of corporate infrastructure expenses offset by lower salary expenses related to prior year workforce reduction activities and the favorable impact of currency movements.
Operating margin for products and services for the three and six months ended April 30, 2025 was flat in both periods when compared to the same periods last year. Operating margin for the three and six months ended April 30, 2025 was impacted by higher revenue and lower salary expenses related to prior year workforce reduction activities offset by the unfavorable impact of currency movements, higher wages, commissions, variable pay and higher corporate infrastructure expenses when compared to the same periods last year.
Income from operations for the three and six months ended April 30, 2025 increased $15 million or 7 percent and $14 million or 3 percent, respectively, on a corresponding revenue increase of $49 million and $59 million, respectively.
Applied Markets
Our Applied Markets segment provides application-focused solutions that include instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products. Our gas chromatography ("GC") and gas chromatography mass spectrometry ("GCMS") businesses enable customers to perform a wide variety of testing including measuring volatile and semi-volatile contaminants to assess the safety of our foods, quality of water and consumer products while also enabling testing of fuels and purity of chemicals. Our inductively coupled plasma mass spectrometry, inductively coupled plasma optical emission spectrometry, atomic absorption and microwave plasma-atomic emission spectrometry instruments are vital for our customers to measure metals and elemental signatures in their samples and find uses in the food safety, environmental quality, chemicals manufacture, advanced materials, energy and forensics markets. Our molecular spectroscopy business including the raman, fluorescence and infrared spectroscopy instruments offer both in-field and in-lab testing solutions in a diverse variety of applications including airport security, explosives testing, narcotics, food quality and chemical characterization. Our vacuum business develops cutting edge products and technologies to test vacuum environments and find uses in a diverse variety of industries including semi-conductor, batteries, chemical manufacturing and advanced materials development. Finally, our remarketed instruments business refurbishes and resells certified pre-owned instruments to value-oriented customers who would like Agilent quality and performance at a budget conscious price.
Net Revenue
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 301 | $ | 305 | $ | 639 | $ | 657 | (1)% | (3)% |
Applied Markets segment revenue for the three and six months ended April 30, 2025 decreased 1 percent and 3 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 1 percentage point and 2 percentage points, respectively, when compared to the same periods last year.
Geographically, revenue for the three months ended April 30, 2025 decreased 6 percent in the Americas with a 2 percentage point unfavorable currency impact, increased 4 percent in Europe with a 2 percentage point unfavorable currency impact and decreased 1 percent in Asia Pacific with a 1 percentage point unfavorable currency impact when compared to the same period last year. The revenue decline in the Americas was driven by weakness in our remarketed instruments and vacuum businesses partially offset by strength in the spectroscopy business when compared to the same period last year. The revenue growth in Europe was driven by strength in our vacuum, gas chromatography and spectroscopy businesses partially offset by
weakness in our remarketed instruments businesses when compared to the same period last year. The revenue decline in Asia Pacific was driven by lower demand in China within our gas chromatography and vacuum businesses partially offset by strength in the gas chromatography mass spectrometry and spectroscopy businesses in China when compared to the same period last year.
Revenue for the six months ended April 30, 2025 decreased 2 percent in the Americas with a 2 percentage point unfavorable currency impact, decreased 1 percent in Europe with a 2 percentage point unfavorable currency impact and decreased 4 percent in Asia Pacific with a 1 percentage point unfavorable currency impact when compared to the same period last year. The revenue decline in the Americas was driven by weakness in our vacuum, gas chromatography mass spectrometry and remarketed instruments businesses partially offset by strength in the gas chromatography and spectroscopy businesses when compared to the same period last year. The revenue decline in Europe was driven by weakness in our gas chromatography mass spectrometry, gas chromatography and remarketed instruments businesses partially offset by strength in the vacuum and spectroscopy businesses when compared to the same period last year. The revenue decline in Asia Pacific was driven by lower demand in China within our gas chromatography, spectroscopy and vacuum businesses partially offset by strength in the gas chromatography mass spectrometry and remarketed instruments businesses in China when compared to the same period last year.
For the three months ended April 30, 2025, revenue declined modestly in the chemicals and advanced materials and the diagnostics and clinical markets and declined significantly in the academia and government market partially offset by strong revenue growth in the environmental and forensics and pharmaceutical markets and modest revenue growth in the food market. Revenue in the chemicals and advanced materials market declined due to weakness in our vacuum, gas chromatography, spectroscopy and remarketed instruments businesses partially offset by strength in the gas chromatography mass spectrometry business when compared to the same period last year. Revenue in the academia and government market declined due to weakness in our gas chromatography, gas chromatography mass spectrometry and remarketed instruments businesses partially offset by strength in the spectroscopy business when compared to the same period last year. Strong revenue growth in the environmental and forensics market was driven by strength in our spectroscopy business partially offset by weakness in the remarketed instruments business when compared to the same period last year. Strong revenue growth in the pharmaceutical market was driven by strength in our spectroscopy and vacuum businesses partially offset by weakness in the gas chromatography business when compared to the same period last year. Modest revenue growth in the food market was driven by strength in our gas chromatography mass spectrometry business partially offset by weakness in our spectroscopy business when compared to the same period last year.
For the six months ended April 30, 2025, revenue declined significantly in the chemicals and advanced materials and academia and government markets partially offset by strong revenue growth in the food and diagnostics and clinical markets and moderate revenue growth in the environmental and forensics and pharmaceutical markets. Revenue in the chemicals and advanced materials market declined due to weakness in our spectroscopy, gas chromatography and vacuum businesses partially offset by strength in the gas chromatography mass spectrometry business when compared to the same period last year. Revenue in the academia and government market declined due to weakness in our gas chromatography, gas chromatography mass spectrometry and remarketed instruments businesses when compared to the same period last year. Strong revenue growth in the food market was driven by strength in our gas chromatography mass spectrometry, gas chromatography and spectroscopy businesses when compared to the same period last year. Moderate revenue growth in the environmental and forensics market was driven by strength in our spectroscopy business partially offset by weakness in our gas chromatography mass spectrometry and gas chromatography businesses when compared to the same period last year.
Looking Forward. While we anticipate the recent tariff changes to adversely impact our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact by the end of our fiscal year. We also anticipate continued steady market recovery and are optimistic about our long-term growth opportunities in the applied markets as our broad portfolio of products and solutions are well suited to address customer needs. We will continue to invest in expanding and improving our application-focused solutions that include instruments and software.
Operating Results
| Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||||||||||||||||||||
| April 30, | April 30, | Three | Six | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Months | Months | |||||||||||||||||||||||||||||||||
| (in millions, except margin data) | ||||||||||||||||||||||||||||||||||||||
| Gross margin | 53.5 | % | 54.2 | % | 54.7 | % | 55.3 | % | (1) ppt | (1) ppt | ||||||||||||||||||||||||||||
| Research and development | $ | 23 | $ | 23 | $ | 46 | $ | 48 | — | (4)% | ||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 79 | $ | 78 | $ | 160 | $ | 160 | 1% | — | ||||||||||||||||||||||||||||
| Operating margin | 19.5 | % | 21.0 | % | 22.4 | % | 23.7 | % | (1) ppt | (1) ppt | ||||||||||||||||||||||||||||
| Income from operations | $ | 59 | $ | 64 | $ | 143 | $ | 156 | (8)% | (8)% |
Gross margin for the three and six months ended April 30, 2025, decreased 1 percentage point in both periods when compared to the same periods last year. Gross margin for the three and six months ended April 30, 2025 was impacted by lower sales volume, the unfavorable impact of currency movements, and higher logistics costs partially offset by lower salary expenses related to prior year workforce reduction.
Research and development expenses for the three and six months ended April 30, 2025, were flat and decreased 4 percent, respectively, when compared to the same periods last year. Research and development expenses for the three months ended April 30, 2025 were flat due to lower salary expenses related to prior year workforce reduction and the favorable impact of currency movements offset by higher consumables when compared to the same period last year. Research and development expenses for the six months ended April 30, 2025 decreased driven by lower salary expenses related to prior year workforce reduction, variable pay and the favorable impact of currency movements partially offset by higher consumables cost when compared to the same period last year.
Selling, general and administrative expenses for the three and six months ended April 30, 2025, increased 1 percent and were flat, respectively, when compared to the same periods last year. Selling, general and administrative expenses for the three months ended April 30, 2025 increased due to higher variable pay, commissions and a higher allocation of corporate infrastructure expenses partially offset by lower salary expenses related to prior year workforce reduction, marketing expense and the favorable impact of currency movements. For the six months ended April 30, 2025, selling, general and administrative expenses were flat driven by higher variable pay, commissions and a higher allocation of corporate infrastructure expenses offset by lower salary expenses related to prior year workforce reduction, marketing expense and the favorable impact of currency movements.
Operating margin for the three and six months ended April 30, 2025 decreased 1 percentage point in both periods when compared to the same periods last year. Operating margin for the three and six months ended April 30, 2025 was impacted by lower sales volume, the unfavorable impact of currency movements and higher logistics costs partially offset by lower salary expenses related to prior year workforce reduction when compared to the same periods last year.
Income from operations for the three and six months ended April 30, 2025, decreased $5 million or 8 percent and decreased $13 million or 8 percent, respectively, on a corresponding revenue decrease of $4 million and $18 million, respectively.
FINANCIAL CONDITION
Liquidity and Capital Resources
We believe our cash and cash equivalents, cash generated from operations, and ability to access capital markets and credit lines will satisfy, for at least the next twelve months and beyond, our liquidity requirements, both globally and domestically, including the following: working capital needs, capital expenditures, business acquisitions, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations.
Our financial position as of April 30, 2025 consisted of cash and cash equivalents of $1,486 million as compared to $1,329 million as of October 31, 2024.
We may, from time to time, retire certain outstanding debt of ours through open market cash purchases, privately-negotiated transactions or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Net Cash Provided by Operating Activities
Net cash provided by operating activities was $652 million for the six months ended April 30, 2025 compared to net cash provided by operating activities of $818 million for the same period in 2024. In the six months ended April 30, 2025, we paid approximately $98 million under our variable and incentive pay programs as compared to $105 million paid for the same period in 2024. Net cash paid for income taxes in the six months ended April 30, 2025 was $248 million compared to net cash paid for income taxes of $224 million for the same period in 2024.
In the six months ended April 30, 2025, accounts receivable used cash of $27 million compared to cash provided of $44 million for the same period in 2024. Days’ sales outstanding ("DSO") as of April 30, 2025 was 74 days when compared to 71 days as of April 30, 2024. Cash used by inventory was $41 million for the six months ended April 30, 2025 compared to cash provided of $3 million for the same period in 2024. Inventory days on-hand was 111 days as of April 30, 2025 compared to 126 days as of April 30, 2024. In the six months ended April 30, 2025, accounts payable used cash of $27 million compared to cash provided of $64 million for the same period in 2024. This was mainly due to more expenditures for direct materials as we continue optimizing our inventory levels and in response to the expected impact of proposed tariffs when compared to the same period in 2024.
We contributed approximately $9 million to our defined benefit plans in the six months ended April 30, 2025 and 2024, respectively. Our annual contributions are highly dependent on the relative performance of our assets versus our projected liabilities, among other factors. We expect to contribute approximately $13 million to our defined benefit plans during the remainder of 2025.
Net Cash Used in Investing Activities
Net cash used in investing activities was $208 million for the six months ended April 30, 2025 as compared to net cash used in investing activities of $204 million in the same period of 2024.
Investments in property, plant and equipment were $211 million for the six months ended April 30, 2025 compared to $193 million in the same period of 2024. We expect that total capital expenditures for the current year will be approximately $450 million. These continued investments in property plant and equipment are primarily due to the planned expansion of our manufacturing capacity for production of nucleic acid based therapeutics in Frederick, Colorado. Some of our investment may be eligible to qualify for reimbursement incentives, which will not fully be known until the expansion is substantially complete.
Net Cash Used in Financing Activities
Net cash used in financing activities for the six months ended April 30, 2025 was $296 million compared to net cash used in financing activities of $531 million for the same period of 2024.
Treasury Stock Repurchases. Our 2023 repurchase program authorizes the purchase of up to $2.0 billion, excluding excise taxes, of our common stock at the company's discretion and has no fixed termination date. The 2023 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. The 2023 repurchase program commenced on March 1, 2023. During the six months ended April 30, 2024, we repurchased and retired 1.594 million shares for $230 million, excluding excise taxes of $1 million, under this authorization. During the six months ended April 30, 2025, we repurchased and retired 1.997 million shares for $255 million, excluding excise taxes of approximately $2 million, under this authorization. As of April 30, 2025, we had remaining authorization to repurchase up to approximately $119 million of our common stock under the 2023 repurchase program.
On May 29, 2024, we announced that our board of directors had approved a new share repurchase program (the "2024 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs. The 2024 repurchase program authorizes the purchase of up to $2.0 billion, excluding excise taxes, of our common stock at the company's discretion and has no fixed termination date. The 2024 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. The 2024 repurchase program became effective on August 1, 2024 and will commence upon the termination of our 2023 repurchase program.
During the six months ended April 30, 2025, we paid cash of $10 million for excise taxes related to treasury stock repurchases made in fiscal year 2024 under our 2023 stock repurchase program compared to no payments made in 2024.
Dividends. During the six months ended April 30, 2025 and 2024, we paid cash dividends of $0.496 per common share or $141 million, and $0.472 per common share or $138 million, respectively, on the company's common stock.
On May 20, 2025, our board of directors declared a quarterly dividend of $0.248 per share of common stock or approximately $70 million which will be paid on July 23, 2025 to all shareholders of record at the close of business on July 1, 2025. The timing and amounts of any future dividends are subject to determination and approval by our board of directors.
Credit Facilities. On June 7, 2023, we entered into a credit agreement with a group of financial institutions which provides for a $1.5 billion five-year unsecured credit facility that will expire on June 7, 2028 and an incremental revolving credit facility in an aggregate amount of up to $750 million. During the six months ended April 30, 2025, we made no borrowings or repayments under these credit facilities. As of April 30, 2025, we had no borrowings outstanding under either the credit facility or the incremental revolving credit facility.
On June 2, 2023, we entered into an Uncommitted Money Market Line Credit agreement with Societe Generale which provides for an aggregate borrowing capacity of $300 million. The credit facility is an uncommitted short-term cash advance facility where each request must be at least $1 million. The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance. During the six months ended April 30, 2025 and 2024, we had no borrowings or repayments under this credit facility. As of April 30, 2025, we had no borrowings outstanding under the credit facility.
We were in compliance with the covenants for the credit facilities during the six months ended April 30, 2025.
Commercial Paper. Under our U.S. commercial paper program, the company may issue and sell unsecured, short-term promissory notes in the aggregate principal amount not to exceed $1.5 billion with up to 397-day maturities. At any point in time, the company intends to maintain available commitments under its revolving credit facility in an amount at least equal to the amount of the commercial paper notes outstanding. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The proceeds from issuances under the program may be used for general corporate purposes. During the six months ended April 30, 2025, we borrowed $882 million and repaid $782 million under our commercial paper program compared to no borrowings or repayments in the same period in 2024. As of April 30, 2025 we had borrowings of $140 million outstanding under our U.S. commercial paper program and a weighted average annual interest rate of 4.62 percent.
Term Loan Facility. On April 15, 2022, we entered into a term loan agreement with a group of financial institutions, which provided for a $600 million delayed draw term loan that was paid in full as of October 31, 2024. During the six months ended April 30, 2024, we made a payment of $180 million on this term loan.
Other Loans. In connection with the BIOVECTRA acquisition, we have two interest-free loans from the Strategic Innovation Fund ("SIF"). The loans are repayable in quarterly and yearly installments through 2040 at a weighted average imputed interest rate of 4.7 percent. In addition, we have two interest-free loans with the Atlantic Canada Opportunities Agency ("ACOA"). The loans are repayable in monthly installments through 2029 at a weighted average imputed interest rate of 4.5 percent. As of April 30, 2025, the current portion of these loans of $6 million was recorded in short-term debt and the non-current portion of $21 million (including additional draw and measurement period adjustment) was recorded in long-term debt.
Senior Notes. There have been no changes to the principal, maturity, interest rates and interest payment terms of the Agilent outstanding senior notes in the six months ended April 30, 2025 as compared to the senior notes as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.
Other. Our commitments for indirect material and services increased by $12 million from $136 million as reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024. These commitments are related to a variety of suppliers including IT support service providers. Our commitments to contract manufacturers and suppliers increased by $9 million from $641 million as reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024. These commitments are related to a variety of suppliers, and we use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, we issue purchase orders with estimates of our requirements several months ahead of the delivery dates. These open purchase orders with our suppliers have not yet been received, and our agreements usually provide us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the firm orders being placed. There were no other substantial changes from our Annual Report on Form 10-K for the fiscal year ended October 31, 2024 to our contractual commitments in the first six months of fiscal year 2025. We have no other material non-cancelable guarantees or commitments.
Other long-term liabilities as of April 30, 2025 and October 31, 2024 include $53 million and $115 million, respectively, related to long-term income tax liabilities. Of these amounts, $53 million and $64 million related to uncertain tax positions as of April 30, 2025 and October 31, 2024, respectively. We are unable to accurately predict when these amounts will be realized or released. However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitations or a tax audit settlement.
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