Item 1. Condensed Consolidated Financial Statements (Unaudited)

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Item 1. Condensed Consolidated Financial Statements (Unaudited)

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share data)

(Unaudited)


	Three Months Ended
	January 31,
		2025		2024
Revenue:
Products		$	983	$	952
Services and other		315		307
Total revenue		1,298		1,259
Costs and expenses:
Cost of products		375		351
Cost of services and other		103		95
Total costs		478		446
Research and development		249		232
Selling, general and administrative		361		362
Other operating expense (income), net		(8)		(2)
Total costs and expenses		1,080		1,038
Income from operations		218		221
Interest income		19		23
Interest expense		(20)		(20)
Other income (expense), net		(18)		5
Income before taxes		199		229
Provision for income taxes		30		57
Net income		$	169	$	172

Net income per share:
Basic		$	0.97	$	0.98
Diluted		$	0.97	$	0.98

Weighted average shares used in computing net income per share:
Basic		173		175
Diluted		174		176

The accompanying notes are an integral part of these condensed consolidated financial statements.

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)


	Three Months Ended
	January 31,
		2025		2024
Net income		$	169	$	172
Other comprehensive income (loss):

Gain (loss) on derivative instruments, net of tax benefit (expense) of zero and $1		(1)		(2)
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero		(5)		(2)
Foreign currency translation, net of tax benefit (expense) of zero		(73)		27
Net defined benefit pension cost and post-retirement plan costs:
Change in net actuarial loss, net of tax expense of zero and $1		—		1
Other comprehensive income (loss)		(79)		24
Total comprehensive income		$	90	$	196

The accompanying notes are an integral part of these condensed consolidated financial statements.

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(in millions, except par value and share data)

(Unaudited)


	January 31, 2025		October 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	2,060	$	1,796

Accounts receivable, net	797		857
Inventory	1,039		1,022
Other current assets	560		582
Total current assets	4,456		4,257
Property, plant and equipment, net	764		774
Operating lease right-of-use assets	224		234
Goodwill	2,354		2,388
Other intangible assets, net	556		607
Long-term investments	147		110
Long-term deferred tax assets	365		378
Other assets	521		521
Total assets	$	9,387	$	9,269
LIABILITIES AND EQUITY
Current liabilities:


Accounts payable	$	289	$	313
Employee compensation and benefits	253		295
Deferred revenue	594		561
Income and other taxes payable	131		90
Operating lease liabilities	43		43
Other accrued liabilities	199		125
Total current liabilities	1,509		1,427

Long-term debt	1,790		1,790
Retirement and post-retirement benefits	79		81
Long-term deferred revenue	209		206
Long-term operating lease liabilities	187		197
Other long-term liabilities	426		463
Total liabilities	4,200		4,164
Commitments and contingencies (Note 13)

Stockholders’ equity:
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding	—		—
Common stock; $0.01 par value; 1 billion shares authorized; 202 million and 201 million shares issued, respectively	2		2
Treasury stock, at cost; 28.9 million shares and 28.4 million shares, respectively	(3,497)		(3,422)
Additional paid-in-capital	2,731		2,664
Retained earnings	6,394		6,225
Accumulated other comprehensive loss	(443)		(364)
Total stockholders' equity	5,187		5,105


Total liabilities and equity	$	9,387	$	9,269

The accompanying notes are an integral part of these condensed consolidated financial statements.

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)

(Unaudited)


	Three Months Ended
	January 31,
	2025		2024
Cash flows from operating activities:
Net income	$	169	$	172
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	31		30
Amortization	35		38
Share-based compensation	62		48
Deferred tax expense (benefit)	(10)		6
Excess and obsolete inventory-related charges	9		8
Unrealized loss (gain) on equity and other investments	(37)		(4)
Other non-cash expenses (income), net	1		—
Changes in assets and liabilities, net of effects of businesses acquired:
Accounts receivable	53		124
Inventory	(26)		(42)
Accounts payable	(16)		1
Employee compensation and benefits	(38)		(74)
Deferred revenue	43		27
Income taxes payable	34		38




Other assets and liabilities	68		(44)
Net cash provided by operating activities	378		328
Cash flows from investing activities:
Investments in property, plant and equipment	(32)		(47)
Acquisitions of businesses and intangible assets, net of cash acquired	—		(478)


Other investing activities	(1)		14
Net cash used in investing activities	(33)		(511)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock plans	31		32
Payment of taxes related to net share settlement of equity awards	(29)		(28)
Acquisition of non-controlling interests	—		(458)
Treasury stock repurchases	(75)		(93)

Other financing activities	(1)		(1)
Net cash used in financing activities	(74)		(548)
Effect of exchange rate movements	(8)		8
Net increase (decrease) in cash, cash equivalents, and restricted cash	263		(723)
Cash, cash equivalents, and restricted cash at beginning of period	1,814		2,488
Cash, cash equivalents, and restricted cash at end of period	$	2,077	$	1,765
Supplemental cash flow information:
Interest payments	$	—	$	—
Income tax paid, net	$	9	$	12
Investments in property, plant and equipment included in accounts payable	$	13	$	15

The accompanying notes are an integral part of these condensed consolidated financial statements.

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(in millions, except number of shares in thousands)

(Unaudited)


	Common Stock					Treasury Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Number of Shares	Treasury Stock at Cost		Retained Earnings		Accumulated Other Comprehensive Loss		Non-controlling Interests		Total Stockholders' Equity
Balance as of October 31, 2024	201,008	$	2	$	2,664	(28,424)	$	(3,422)	$	6,225	$	(364)	$	—	$	5,105
Net income	—	—		—		—	—		169		—		—		169
Other comprehensive income (loss), net of tax	—	—		—		—	—		—		(79)		—		(79)
Issuance of common stock	673	—		31		—	—		—		—		—		31
Taxes related to net share settlement of equity awards	—	—		(29)		—	—		—		—		—		(29)
Share-based compensation	—	—		65		—	—		—		—		—		65
Repurchase of common stock	—	—		—		(449)	(75)		—		—		—		(75)
Balance as of January 31, 2025	201,681	$	2	$	2,731	(28,873)	$	(3,497)	$	6,394	$	(443)	$	—	$	5,187

Balance as of October 31, 2023	199,771	$	2	$	2,487	(25,449)	$	(2,980)	$	5,611	$	(466)	$	—	$	4,654
Net income	—	—		—		—	—		172		—		4		176
Other comprehensive income (loss), net of tax	—	—		—		—	—		—		24		—		24
ESI Group acquisition	—	—		—		—	—		—		—		458		458
Issuance of common stock	850	—		32		—	—		—		—		—		32
Taxes related to net share settlement of equity awards	—	—		(28)		—	—		—		—		—		(28)
Share-based compensation	—	—		52		—	—		—		—		—		52
Repurchase of common stock	—	—		—		(625)	(93)		—		—		—		(93)
Acquisition of non-controlling interests	—	—		4		—	—		—		—		(462)		(458)
Balance as of January 31, 2024	200,621	$	2	$	2,547	(26,074)	$	(3,073)	$	5,783	$	(442)	$	—	$	4,817

The accompanying notes are an integral part of these condensed consolidated financial statements.

KEYSIGHT TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview. Keysight Technologies, Inc. (“we,” “us,” “our,” “Keysight” or “the company”), incorporated in Delaware on December 6, 2013, is a global innovator in the computing, communications and electronics market, committed to advancing our customers’ business success by helping them solve critical challenges in the development and commercialization of their products and services. Our mission, “accelerating innovation to connect and secure the world,” speaks to the value we provide our customers in a world of ever-increasing technological complexity. We deliver this value through a broad range of design and test solutions that address the critical challenges our customers face in bringing their innovations to market on ever-shorter schedules.

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 quarters.

Basis of Presentation. We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The accompanying financial statements and information should be read in conjunction with our Annual Report on Form 10-K.

In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly our financial position as of January 31, 2025 and October 31, 2024, results of operations for the three months ended January 31, 2025 and 2024, and cash flows for the three months ended January 31, 2025 and 2024.

Principles of consolidation. The condensed consolidated financial statements include the accounts of the company and our wholly- and majority-owned subsidiaries. All significant inter-company transactions have been eliminated. The condensed consolidated financial statements also reflect the impact of non-controlling interests. Non-controlling interests do not have a significant impact on the condensed consolidated results of operations; therefore, net income attributable to non-controlling interests for the three months ended January 31, 2024 of $4 million is not presented separately and is included in “other income (expense), net” in the condensed consolidated statements of operations.

Use of Estimates. The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates.

Update to Significant Accounting Policies. There have been no material changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.

New Accounting Pronouncements.

Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that requires disclosure of significant segment expenses and other segment items used by the Chief Operating Decision Maker (“CODM”) on an annual and interim basis as well as provide in interim periods substantially all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, the ASU requires the disclosure of the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no impact on our results of operations, cash flows or financial condition. We will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements upon adoption.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. In December 2023, the FASB issued guidance that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax related disclosures. This standard is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In November 2024, the FASB issued guidance that requires disclosure of additional expense information on an annual and interim basis, including inventory purchases, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption. This standard is effective for fiscal years beginning after December 15, 2026. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

Other amendments to GAAP that do not require adoption until a future date are not expected to have a material impact on our condensed consolidated financial statements upon adoption.

2. ACQUISITIONS

On November 3, 2023, we acquired 50.6% of the share capital of ESI Group SA (“ESI Group”) for $477 million, net of cash acquired, using existing cash. During January 2024, we completed the acquisition of the remaining share capital of ESI Group for $458 million, using existing cash. The company entered into put/call agreements valued at $7 million for certain ESI Group equity awards, subject to a holding period that may extend beyond the explicit vesting period, for the right to receive a cash payment equal to the public tender offer consideration of 155 euros per share, which was substantially paid in the third quarter of fiscal year 2024.

The following represents pro forma operating results as if ESI Group had been included in the company's consolidated statements of operations as of the beginning of fiscal 2023 (in millions, except per share amounts):


	Three Months Ended
	January 31, 2024
Net revenue	$	1,259
Net income	$	186
Net income per share - Basic	$	1.07
Net income per share - Diluted	$	1.06

The unaudited pro forma financial information for the three months ended January 31, 2024 combines the historical results of Keysight and ESI Group for the three months ended January 31, 2024, assuming that the companies were combined as of November 1, 2022 and includes business combination accounting effects from the acquisition including amortization charges from acquired intangible assets and tax-related effects. The pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2023.

3. REVENUE

Disaggregation of Revenue

We disaggregate our revenue from contracts with customers by geographic region, end market, and timing of revenue recognition, as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregated revenue is presented for each of our reportable segments, Communications Solutions Group (“CSG”) and Electronics Industrial Solutions Group (“EISG”).


	Three Months Ended
	January 31,
	2025						2024
	CSG		EISG		Total		CSG		EISG		Total
	(in millions)
Region
Americas	$	448	$	103	$	551	$	417	$	97	$	514
Europe	137		122		259		132		123		255
Asia Pacific	298		190		488		290		200		490
Total revenue	$	883	$	415	$	1,298	$	839	$	420	$	1,259

End Market
Aerospace, Defense & Government	$	311	$	—	$	311	$	295	$	—	$	295
Commercial Communications	572		—		572		544		—		544
Electronic Industrial	—		415		415		—		420		420
Total revenue	$	883	$	415	$	1,298	$	839	$	420	$	1,259

Timing of Revenue Recognition
Revenue recognized at a point in time	$	700	$	346	$	1,046	$	654	$	346	$	1,000
Revenue recognized over time	183		69		252		185		74		259
Total revenue	$	883	$	415	$	1,298	$	839	$	420	$	1,259

Contract Balances

Contract assets

Contract assets consist of unbilled receivables that are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to solutions and support arrangements when transfer of control has occurred, but we have not yet invoiced. The contract assets balance was $116 million and $88 million as of January 31, 2025 and October 31, 2024, respectively, and is included in “accounts receivables, net” and “other assets” in the condensed consolidated balance sheet.

Contract costs

We capitalize costs incurred to acquire contracts for which the associated revenue is expected to be recognized in future periods. We have determined that certain employee and third-party representative commission programs meet the requirements to be capitalized. These costs are initially deferred and typically amortized over the term of the customer contract, which corresponds to the period of benefit. Capitalized contract costs were $33 million and $35 million as of January 31, 2025 and October 31, 2024, respectively, and are included in “other current assets” and “other assets” in the condensed consolidated balance sheet. The amortization expense associated with these capitalized costs was $14 million and $16 million for the three months ended January 31, 2025, and 2024, respectively.

Contract liabilities

Our contract liabilities consist of deferred revenue that arises when we receive consideration in advance of providing the goods or services promised in the contract. Contract liabilities are primarily generated from customer deposits received in advance of shipments for products or rendering of services and are recognized as revenue when products are shipped or services are provided to the customer. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue.

The following table provides a roll-forward of our contract liabilities, current and non-current:


	Three Months Ended
	January 31, 2025
	(in millions)
Balance at October 31, 2024	$	767
Deferral of revenue billed in current period, net of recognition	246

Revenue recognized that was deferred as of the beginning of the period	(204)
Foreign currency translation impact	(6)
Balance at January 31, 2025	$	803

Remaining Performance Obligations

Our expected remaining performance obligations, excluding contracts that have an original expected duration of one year or less, was approximately $550 million as of January 31, 2025, and represents the company’s obligation to deliver products and services and obtain customer acceptance on delivered products. As of January 31, 2025, we expect to fulfill 47 percent of these remaining performance obligations during the remainder of 2025, 32 percent during 2026, and 21 percent thereafter.

4. SHARE-BASED COMPENSATION

Keysight accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including restricted stock units (“RSUs”), employee stock purchases made under our Employee Stock Purchase Plan (“ESPP”), and performance share awards granted to selected members of our senior management under the Long-Term Performance (“LTP”) Program, based on estimated fair values. The impact of share-based compensation expense on the condensed consolidated statement of operations was as follows:


	Three Months Ended
	January 31,
		2025		2024
		(in millions)
Cost of products and services		$	11	$	8
Research and development		16		13
Selling, general and administrative		35		29
Total share-based compensation expense		$	62	$	50

Share-based compensation capitalized within inventory was $6 million as of January 31, 2025 and $4 million as of January 31, 2024.

Performance awards based on total shareholder return (“TSR”) are valued using a Monte Carlo simulation model, which requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock. The valuation is performed annually in the first quarter at the time of annual grants. The estimated fair value of RSUs and the financial metrics-based performance awards (both operating margin and earnings per share) is determined based on the market price of Keysight’s common stock on the grant date. The compensation cost for financial metrics-based performance awards reflects the cost of awards that are probable to vest at the end of the performance period.

The following assumptions were used to estimate the fair value of TSR-based performance awards:


	Three Months Ended
	January 31,
		2025		2024
Volatility of Keysight shares		32	%	29	%
Volatility of peer group		31	%	18	%
Price-wise correlation with peer group		31	%	69	%

The above assumptions reflect the impact of a change in the peer group comparison for the performance awards granted in fiscal year 2025 from the S&P 500 index to the individual constituents of the S&P 500 index.

5. INCOME TAXES

The following table provides income tax details:


	Three Months Ended
	January 31,
		2025			2024
		(in millions, except percentages)
Income before taxes		$	199		$	229
Provision for income taxes		$	30		$	57
Effective tax rate		15.3		%	24.5		%

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

The Organization for Economic Cooperation and Development (“OECD”) reached agreement among certain member countries to implement a minimum 15 percent tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Assorted countries have enacted legislation to adopt Pillar Two model rules. A subset of rules are effective for Keysight in the current year, with the remaining rules effective as of November 1, 2025. While Keysight expects to qualify for transitional safe harbor relief in most jurisdictions in which Pillar Two rules are in effect, there are a limited number of jurisdictions where Keysight expects Pillar Two minimum taxes to potentially apply. The income tax provision for the three months ended January 31, 2025 includes the effects of Pillar Two minimum taxes based on currently enacted legislation and administrative guidance. Keysight continues to closely monitor Pillar Two developments, including the release of additional administrative guidance and the U.S. response to Pillar Two minimum taxes.

The tax expense for the three months ended January 31, 2025 was lower compared to the same period last year, primarily due to decreases in Global Intangible Low Taxed Income (“GILTI”) tax and income before taxes.

On June 14, 2019, the U.S. Department of the Treasury (“Treasury”) issued final regulations relating to GILTI under IRC § 951A (the “tax regulations”). The tax regulations contained language that disallowed GILTI tax deductions for intangible asset amortization resulting from the Singapore restructuring completed in 2018. In the third quarter of 2024, we concluded that Treasury exceeded its regulatory authority, and the intangible asset amortization should be deductible. We amended our U.S. federal income tax returns for the open tax years to claim the deduction and filed a lawsuit seeking a tax refund. See Note 13, “Commitments and Contingencies,” for additional information. The GILTI tax benefit resulting from the current year intangible amortization is considered in the tax expense for the three months ended January 31, 2025, but not in the comparable period. The Singapore intangible assets will continue to be amortized for GILTI tax purposes until 2033. If we are ultimately unsuccessful in defending our refund claim, we will be required to reverse the benefit previously recorded, which would most likely result in a material increase in the effective tax rate and income tax liability.

The income tax expense for the three months ended January 31, 2025 included a net discrete benefit of $1 million. The income tax expense for the three months ended January 31, 2024 included a net discrete expense of $2 million.

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions. The Malaysia tax incentive expires October 31, 2025. The Singapore tax incentive expires July 31, 2029. The impact of the tax incentives decreased income taxes by $12 million for the three months ended January 31, 2025.

The open tax years for the U.S. federal income tax return and most state income tax returns are from November 1, 2019 through the current tax year. For the majority of our non-U.S. entities, the open tax years are from November 1, 2019 through the current tax year.

At this time, management does not believe that the outcome of any future or currently ongoing examination will have a material impact on our consolidated financial statements. We believe that we have an adequate provision for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. Given the numerous tax years and matters that remain subject to examination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be inconsistent with management’s current expectations. If that were to occur, it could have an impact on our effective tax rate in the period in which such examinations are resolved.

6. NET INCOME PER SHARE

The following table presents the calculation of basic and diluted net income per share:


	Three Months Ended
	January 31,
		2025		2024
		(in millions, except per-share amounts)
Net income		$	169	$	172
Basic weighted-average shares		173		175
Potential common shares		1		1
Diluted weighted-average shares		174		176
Net income per share - basic		$	0.97	$	0.98
Net income per share - diluted		$	0.97	$	0.98

Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share. The number of shares excluded was not material for the three months ended January 31, 2025 and 2024.

7. GOODWILL AND OTHER INTANGIBLE ASSETS

The goodwill balances as of January 31, 2025 and October 31, 2024, and the activity for the three months ended January 31, 2025 for each of our reportable segments were as follows:


	CSG		EISG		Total
	(in millions)
Goodwill at October 31, 2024	$	1,240	$	1,148	$	2,388
Foreign currency translation impact	(11)		(23)		(34)

Goodwill at January 31, 2025	$	1,229	$	1,125	$	2,354

There were no impairments of goodwill for the three months ended January 31, 2025 and 2024. As of January 31, 2025 and October 31, 2024, the accumulated impairment loss on goodwill was $709 million as recorded within the CSG reportable segment.

Other intangible assets as of January 31, 2025 and October 31, 2024 consisted of the following:


	January 31, 2025						October 31, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in millions)
Developed technology	$	1,386	$	1,036	$	350	$	1,377	$	1,018	$	359
Backlog	37		27		10		37		25		12
Trademark/Tradename	38		37		1		38		36		2
Customer relationships	582		409		173		587		398		189

Total amortizable intangible assets	$	2,043	$	1,509	$	534	$	2,039	$	1,477	$	562
In-Process R&D	22		—		22		45		—		45
Total	$	2,065	$	1,509	$	556	$	2,084	$	1,477	$	607

During the three months ended January 31, 2025, we transferred $22 million from in-process R&D to developed technology as projects were successfully completed. During the three months ended January 31, 2025, foreign exchange translation had an unfavorable impact of $19 million on other intangible assets. Amortization of other intangible assets was $32 million and $38 million for the three months ended January 31, 2025 and 2024, respectively.

Goodwill is assessed for impairment on a reporting unit basis at least annually in the fourth quarter of each year, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. The company has not identified any triggering events that indicate an impairment of goodwill for the three months ended January 31, 2025.

Estimated intangible assets amortization expense for each of the five succeeding fiscal years is as follows:


	Amortization expense
	(in millions)
2025 (remainder)	$	93
2026	$	113
2027	$	101
2028	$	98
2029	$	89
2030	$	15
Thereafter	$	25

8. FAIR VALUE MEASUREMENTS

The authoritative guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The guidance establishes a fair value hierarchy that prioritizes inputs used in valuation techniques into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, for the asset or liability such as: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in less active markets; or other inputs that can be derived principally from, or corroborated by, observable market data.

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2025 and October 31, 2024 were as follows:


	Fair Value Measurements at
	January 31, 2025										October 31, 2024
	Total		Level 1		Level 2		Level 3		Other		Total		Level 1		Level 2		Level 3		Other
	(in millions)
Assets:
Short-term
Money market funds	$	1,361	$	1,361	$	—	$	—	$	—	$	1,141	$	1,141	$	—	$	—	$	—
Derivative instruments (foreign exchange contracts)	8		—		8		—		—		38		—		38		—		—
Long-term

Equity investments	116		116		—		—		—		80		80		—		—		—
Investments - other	31		—		—		—		31		29		—		—		—		29
Total assets measured at fair value	$	1,516	$	1,477	$	8	$	—	$	31	$	1,288	$	1,221	$	38	$	—	$	29
Liabilities:
Short-term
Derivative instruments (foreign exchange contracts)	$	52	$	—	$	52	$	—	$	—	$	6	$	—	$	6	$	—	$	—
Long-term
Deferred compensation liability	35		—		35		—		—		34		—		34		—		—
Total liabilities measured at fair value	$	87	$	—	$	87	$	—	$	—	$	40	$	—	$	40	$	—	$	—

Our money market funds and equity investments with readily determinable fair values are measured at fair value using quoted market prices and, therefore, are classified within Level 1 of the fair value hierarchy. Equity and fixed income investments or convertible notes without readily determinable fair values that are either measured at cost, adjusted for observable changes in price or impairments, or accounted for under a measurement alternative are not categorized in the fair value hierarchy and are presented as “investments - other” in the table above. Our deferred compensation liability is classified as Level 2 because the inputs used in the calculations are observable, although the values are not directly based on quoted market prices. Our derivative financial instruments are classified within Level 2 as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.

Equity investments, including securities that are earmarked to pay the deferred compensation liability, are reported at fair value, with gains or losses resulting from changes in fair value recognized in earnings within “other income (expense), net” in the condensed consolidated statement of operations. Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in “accumulated other comprehensive income (loss).”

There were no realized gains or losses from the sale of investments for the three months ended January 31, 2025 and 2024, respectively. Net unrealized gain (loss) on our equity and other investments was as follows:


	Three Months Ended
	January 31,
		2025		2024
		(in millions)

Net unrealized gain (loss) on equity and other investments still held		$	38	$	7

9. DERIVATIVES

We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business. As part of our risk management strategy, we use derivative instruments, primarily forward contracts, to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates.

Cash Flow Hedges

We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities based on a rolling

period of up to twelve months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance.

In 2020, we entered into forward-starting interest rate swaps with an aggregate notional amount of $600 million in connection with future interest payments on the issuance of $600 million in unsecured senior notes (“2034 Senior Notes”). In 2023, we terminated the interest rate swap agreements, resulting in a deferred gain of $107 million recognized in “accumulated other comprehensive income (loss)” that is being amortized to interest expense over the term of the 2034 Senior Notes. The remaining gain to be amortized related to the interest rate swap agreements was $103 million as of January 31, 2025.

Non-designated Hedges

Additionally, we periodically enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in currencies other than the functional currency of our subsidiaries.

In 2024, we entered into foreign exchange forward contracts with an aggregate notional amount of 1.2 billion pounds sterling to mitigate the currency exchange risk associated with a planned acquisition. These foreign exchange contracts do not qualify for hedge accounting treatment and are not designated as hedging instruments. For the three months ended January 31, 2025, the net unrealized loss on outstanding contracts was $68 million, recorded in “other income (expense), net” in the condensed consolidated statement of operations. As of January 31, 2025, the net unrealized loss on outstanding contracts was $45 million, recorded in “other accrued liabilities” in the condensed consolidated balance sheet.

In connection with the acquisition of ESI Group, we entered into foreign exchange forward contracts to mitigate the currency exchange risk associated with the payment of the purchase price in euros. The aggregate notional amount of the currencies hedged was 930 million euros as of October 31, 2023. These foreign exchange contracts did not qualify for hedge accounting treatment and were not designated as hedging instruments. For the three months ended January 31, 2024, these foreign exchange forward contracts were settled using existing cash of $63 million, resulting in a loss of $18 million recorded in “other income (expense), net” in the condensed consolidated statement of operations.

The number of open foreign exchange forward contracts designated as “cash flow hedges” and “not designated as hedging instruments” was 218 and 86, respectively, as of January 31, 2025. The aggregated notional amounts by currency and designation as of January 31, 2025 were as follows:


	Derivatives in Cash Flow Hedging Relationships		Derivatives Not Designated as Hedging Instruments
	Forward Contracts		Forward Contracts
Currency	Buy/(Sell)		Buy/(Sell)
	(in millions)
Euro	$	17	$	9
Pounds Sterling	15		1,578
Singapore Dollar	33		28

Malaysian Ringgit	110		6
Japanese Yen	(136)		(57)
Other currencies	(41)		26
Total	$	(2)	$	1,590

Derivative instruments are subject to master netting arrangements and are disclosed at their gross fair value in the condensed consolidated balance sheet. The gross fair values and balance sheet presentation of derivative instruments held as of January 31, 2025 and October 31, 2024 were as follows:


Fair Values of Derivative Instruments
Assets Derivatives					Liabilities Derivatives
	Fair Value					Fair Value
Balance Sheet Location	January 31, 2025		October 31, 2024		Balance Sheet Location	January 31, 2025		October 31, 2024
(in millions)
Derivatives designated as hedging instruments:
Cash flow hedges
Foreign exchange contracts
Other current assets	$	7	$	8	Other accrued liabilities	$	4	$	2



Derivatives not designated as hedging instruments:
Foreign exchange contracts
Other current assets	1		30		Other accrued liabilities	48		4
Total derivatives	$	8	$	38		$	52	$	6

The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated as hedging instruments in the condensed consolidated statement of operations was as follows:


	Three Months Ended
	January 31,
		2025		2024
		(in millions)
Derivatives designated as hedging instruments:
Cash flow hedges


Foreign exchange contracts:
Gain (loss) recognized in accumulated other comprehensive income (loss)		$	(1)	$	(3)
Gain (loss) reclassified from accumulated other comprehensive income (loss) into earnings:
Cost of products		$	2	$	3
Selling, general and administrative		$	—	$	(1)
Interest expense		$	3	$	—



Gain (loss) excluded from effectiveness testing recognized in earnings based on amortization approach:
Cost of products		$	1	$	1

Derivatives not designated as hedging instruments:
Gain (loss) recognized in:

Other income (expense), net		$	(72)	$	(17)

The estimated amount as of January 31, 2025 expected to be reclassified from accumulated other comprehensive income (loss) to earnings within the next twelve months is a gain of $12 million.

10. DEBT

The following table summarizes the components of our debt:


	January 31, 2025		October 31, 2024
	(in millions)
2027 Senior Notes at 4.60% ($700 face amount less unamortized costs of $2 and $2)	$	698	$	698
2029 Senior Notes at 3.00% ($500 face amount less unamortized costs of $2 and $2)	498		498
2034 Senior Notes at 4.95% ($600 face amount less unamortized costs of $6 and $6)	594		594
Total debt	$	1,790	$	1,790

Senior Notes

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

The fair value of our debt, calculated from quoted prices that are Level 1 inputs under the accounting guidance fair value hierarchy, is approximately $1,732 million and $1,739 million as of January 31, 2025 and October 31, 2024, respectively.

Revolving Credit Facility

On July 30, 2021, we entered into an amended and restated credit agreement (the “Revolving Credit Facility”), which provides a $750 million five-year unsecured revolving credit facility that expires on July 30, 2026. Borrowings under the facility bear an annual interest rate of SOFR + 1.1 percent along with a facility fee of 0.125 percent per annum. In addition, the Revolving Credit Facility permits the company, subject to certain customary conditions, on one or more occasions to request to increase the total commitments under the Revolving Credit Facility by up to $250 million in the aggregate. We may use amounts borrowed under the Revolving Credit Facility for general corporate purposes. As of January 31, 2025 and October 31, 2024, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the three months ended January 31, 2025.

Bridge Facility

On March 28, 2024, we entered into a bridge credit agreement (the “Bridge Facility”) pursuant to which certain lenders agreed to provide a senior unsecured bridge credit facility of up to 1,350 million pounds sterling for the purpose of providing the financing to support a planned acquisition. On July 25, 2024, the Bridge Facility was decreased to 1,232 million pounds sterling. We incurred costs in connection with the Bridge Facility of $7 million that are included in “other current assets” in the condensed consolidated balance sheet and are being amortized to interest expense over the term of the Bridge Facility.

Letters of Credit

As of January 31, 2025 and October 31, 2024, we had $39 million and $43 million, respectively, of outstanding letters of credit and surety bonds that were issued by various lenders.

11. RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS

For the three months ended January 31, 2025 and 2024, our net pension and post-retirement benefit cost (benefit) consisted of the following:


	Pensions
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				U.S. Post-Retirement Benefit Plan
	Three Months Ended
	January 31,
	2025		2024		2025		2024		2025		2024
	(in millions)
Service cost—benefits earned during the period	$	4	$	4	$	2	$	2	$	—	$	—
Interest cost on benefit obligation	10		10		9		9		2		2
Expected return on plan assets	(13)		(12)		(15)		(13)		(3)		(3)

Amortization of net actuarial loss (gain)	1		2		(1)		2		—		—


Net periodic benefit cost (benefit)	$	2	$	4	$	(5)	$	—	$	(1)	$	(1)

We record the service cost component of net periodic benefit cost (benefit) in the same line item as other employee compensation costs. The non-service components of net periodic benefit cost (benefit), such as interest cost, expected return on assets, amortization of prior service cost, and actuarial gains or losses, are recorded within “other income (expense), net” in the condensed consolidated statement of operations.

We did not contribute to our U.S. defined benefit plans or U.S. post-retirement benefit plan during the three months ended January 31, 2025 and 2024. We contributed $3 million to our non-U.S. defined benefit plans during the three months ended January 31, 2025 and 2024.

For the remainder of 2025, we do not expect to contribute to our U.S. defined benefit plan and U.S. post-retirement benefit plan, and we expect to contribute $7 million to our non-U.S. defined benefit plans. The amounts we contribute depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, employee retirements, market conditions, interest rates and other factors.

12. SUPPLEMENTAL FINANCIAL INFORMATION

The following tables provide details of selected balance sheet items:

Cash, cash equivalents, and restricted cash


	January 31, 2025		October 31, 2024
	(in millions)
Cash and cash equivalents	$	2,060	$	1,796

Restricted cash included in other assets	17		18
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	2,077	$	1,814

Restricted cash relates primarily to deficit reduction contributions to an escrow account for one of our non-U.S. defined benefit pension plans and deposits held as collateral against bank guarantees.

Inventory


	January 31, 2025		October 31, 2024
	(in millions)
Finished goods	$	380	$	375
Purchased parts and fabricated assemblies	659		647
Total inventory	$	1,039	$	1,022

Leases

The following table summarizes the components of our lease cost:


	Three Months Ended
	January 31,
		2025		2024
		(in millions)
Operating lease cost		$	15	$	15
Variable lease cost		$	5	$	7

Supplemental information related to our operating leases was as follows:


	Three Months Ended
	January 31,
	2025		2024
	(in millions)
Cash payment for operating leases	$	14	$	14
Right-of-use assets obtained in exchange for operating lease obligations	$	6	$	12

Standard warranty

Warranties on products sold through direct sales channels are primarily for one year. Warranties for products sold through distribution channels are primarily for three years. We accrue for standard warranty costs based on historical trends in warranty charges. The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates. Estimated warranty charges are recorded within “cost of products” at the time related product revenue is recognized.

Activity related to the standard warranty accrual, which is included in “other accrued liabilities” and “other long-term liabilities” in the condensed consolidated balance sheet, is as follows:


	Three Months Ended
	January 31,
	2025		2024
	(in millions)
Beginning balance	$	31	$	36
Accruals for warranties, including change in estimates	5		7
Settlements made during the period	(6)		(7)
Ending balance	$	30	$	36

Accruals for warranties due within one year	$	18	$	22
Accruals for warranties due after one year	12		14
Ending balance	$	30	$	36

Other current assets


	January 31, 2025		October 31, 2024
	(in millions)
Prepaid assets	$	298	$	287
Tax receivables	144		138
Other current assets	118		157
Total other current assets	$	560	$	582

Prepaid assets include deposits paid in advance to contract manufacturers of $198 million and $200 million as of January 31, 2025 and October 31, 2024, respectively.

13. COMMITMENTS AND CONTINGENCIES

Commitments

During the three months ended January 31, 2025, there were no material changes to the purchase commitments as reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.

Contingencies

On January 1, 2022, Centripetal Networks filed a lawsuit in Federal District Court in Virginia, alleging that certain Keysight products infringe certain of Centripetal’s patents. In addition, in February 2022 Centripetal filed complaints in Germany alleging infringement of certain of Centripetal’s German patents, and in April 2022 Centripetal filed a complaint with the International Trade Commission (“ITC”) requesting that they investigate whether Keysight violated Section 337 of the Tariff Act (“Section 337”) and should be enjoined from importing certain products that are manufactured outside of the U.S. and which are alleged to infringe Centripetal patents. On December 5, 2023, the ITC issued its Notice of Determination that Keysight did not unfairly import products in violation of Section 337 and the investigation was terminated. Centripetal has appealed this determination. On August 21, 2024, Keysight was served in Germany with a complaint filed in the Unified Patent Court alleging that certain Keysight products sold in Germany, France, Italy and the Netherlands infringe a European Centripetal patent. We deny the allegations and are aggressively defending each case.

On June 14, 2019, the U.S. Treasury issued final regulations relating to GILTI under the tax regulations. The tax regulations contained language which disallowed GILTI tax deductions for intangible asset amortization resulting from the Singapore restructuring completed in 2018. During the third quarter of fiscal year 2024, we concluded, in response to recent U.S. Supreme Court decisions on a number of relevant cases, the evolving global tax landscape and other changes in circumstances, that Treasury exceeded its regulatory authority and the intangible asset amortization should be deductible. In response, we amended our U.S. federal income tax returns for the open tax years to claim the deduction and recognized the discrete benefit in the condensed consolidated financial statements. We believe the position meets the more likely than not recognition threshold.

On January 23, 2025, we filed a lawsuit against the United States of America in the United States Court of Federal Claims seeking a tax refund of $107 million, or such greater amount allowed by law, plus any other amount, including interest and cost, allowed by law. We intend to vigorously defend our position. The outcome cannot be predicted with certainty. If we

are ultimately unsuccessful in defending our refund claim, we will be required to reverse the benefit previously recorded, most likely resulting in a material increase in the effective tax rate and income tax liability.

Although there are no matters pending that we currently believe are probable and reasonably possible of having a material impact to our business, consolidated financial position, or results of operations or cash flows, the outcome of litigation is inherently uncertain and is difficult to predict. An adverse outcome in any outstanding lawsuit or proceeding could result in significant monetary damages or injunctive relief. If adverse results are above management’s expectations or are unforeseen, management may not have accrued for the liability, which could impact our results in future periods.

We are also involved in lawsuits, claims, investigations and proceedings, including, but not limited to, patent, employment, commercial and environmental matters, which arise in the ordinary course of business.

14. STOCKHOLDERS' EQUITY

Stock Repurchase Program

On March 6, 2023, our board of directors approved a stock repurchase program authorizing the purchase of up to $1,500 million of the company’s common stock, of which $410 million remained as of January 31, 2025.

Under our stock repurchase program, shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. All such shares and related costs are held as treasury stock and accounted for at the trade date using the cost method. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date.

For the three months ended January 31, 2025, we repurchased 448,413 shares of common stock for $75 million. For the three months ended January 31, 2024, we repurchased 624,961 shares of common stock for $93 million.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component and related tax effects for the three months ended January 31, 2025 and 2024 were as follows:


	Foreign currency translation		Net defined benefit pension cost and post-retirement plan costs		Gains (losses) on derivatives		Total

	(in millions)
As of October 31, 2024	$	(136)	$	(317)	$	89	$	(364)
Other comprehensive income (loss) before reclassifications	(73)		—		(1)		(74)
Amounts reclassified out of accumulated other comprehensive gain (loss)	—		—		(5)		(5)
Tax benefit (expense)	—		—		—		—
Other comprehensive income (loss)	(73)		—		(6)		(79)
As of January 31, 2025	$	(209)	$	(317)	$	83	$	(443)

As of October 31, 2023	$	(167)	$	(388)	$	89	$	(466)
Other comprehensive income (loss) before reclassifications	27		—		(3)		24
Amounts reclassified out of accumulated other comprehensive gain (loss)	—		2		(2)		—
Tax benefit (expense)	—		(1)		1		—
Other comprehensive income (loss)	27		1		(4)		24
As of January 31, 2024	$	(140)	$	(387)	$	85	$	(442)

Reclassifications out of accumulated other comprehensive loss into earnings for the three months ended January 31, 2025 and 2024 were as follows:


Details about accumulated other comprehensive loss components		Amounts reclassified from accumulated other comprehensive loss				Affected line item in statement of operations
	Three Months Ended
	January 31,
		2025		2024
		(in millions)
Gain (loss) on derivatives		$	2	$	3	Cost of products
		—		(1)		Selling, general and administrative
		3		—		Interest expense
		—		—		Benefit (provision) for income tax
		5		2		Net of income tax

Net defined benefit pension cost and post-retirement plan costs:
Net actuarial loss		—		(2)		Other income (expense), net


		—		1		Benefit (provision) for income tax
		—		(1)		Net of income tax

Total reclassifications for the period		$	5	$	1	Net of income tax

15. SEGMENT INFORMATION

We report our results in two reportable segments: CSG and EISG. The results of our reportable segments are based on our management reporting system and are not necessarily in conformity with GAAP. The performance of each segment is measured based on several metrics, including income from operations. These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments.

The profitability of each of the segments is measured after excluding share-based compensation expense, amortization of acquisition-related balances, acquisition and integration costs, restructuring costs, interest income, interest expense and other items as noted in the reconciliations below.


	Three Months Ended
	January 31,
	2025						2024
	CSG		EISG		Total		CSG		EISG		Total
	(in millions)
Revenue	$	883	$	415	$	1,298	$	839	$	420	$	1,259
Segment income from operations	$	240	$	114	$	354	$	226	$	129	$	355

The following table reconciles total reportable operating segments’ income from operations to our income before taxes, as reported:


	Three Months Ended
	January 31,
		2025		2024
		(in millions)
Total reportable segments' income from operations		$	354	$	355
Share-based compensation		(62)		(50)
Amortization of acquisition-related balances		(33)		(38)
Acquisition and integration costs		(28)		(17)
Restructuring and other		(13)		(29)
Income from operations, as reported		218		221
Interest income		19		23
Interest expense		(20)		(20)
Other income (expense), net		(18)		5
Income before taxes, as reported		$	199	$	229

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