Keysight Technologies makes the tools that engineers use to design, test, and prove that electronics actually work. When a company wants to build a faster 5G phone chip, a safer electric vehicle battery, or a new radar system for the military, it needs precise instruments to measure signals, check performance, and catch errors before anything goes into mass production. Keysight sells those instruments, along with the software that runs them and the services that keep them calibrated and supported. Most of its money comes from hardware like oscilloscopes, signal analyzers, and network test systems, but the company is deliberately pushing more of its revenue toward software subscriptions and ongoing service contracts, which tend to be steadier than one-time equipment orders. It serves roughly 40,000 customers in over 100 countries, across communications, aerospace and defense, automotive, semiconductor, and general electronics markets. The diagram below traces where the money goes.
Five years of financial data tell a story with a clear dip in the middle. Revenue climbed from $4.9 billion in 2021 to $5.5 billion in 2023, then fell to $5.0 billion in 2024 before recovering to $5.4 billion in 2025. That 2024 drop was not a fluke. Customers paused their spending after a heavy investment cycle, and orders fell across most regions. The company acknowledged this openly, noting that revenue declined 9 percent in 2024 and that net income fell 42 percent that year compared to 2023.
The gross margin line, meaning the percentage of each dollar of revenue left after making and delivering products, stayed in a narrow band across all five years. It ran between 62 and 65 percent, which signals that Keysight has pricing power and does not have to slash prices to win business. Even in the down year of 2024, gross margin held at 62.9 percent. In 2025, tariffs on goods crossing borders pushed it down slightly to 62.1 percent, but the company said it offset some of that impact through pricing and manufacturing adjustments.
Free cash flow, the actual cash generated after capital spending, remained positive every single year across the five-year window. It ranged from $0.9 billion in 2024, the weakest year, to $1.3 billion in 2025. That consistency matters because it shows the business kept generating cash even when revenue was shrinking. Operating cash flow in 2025 reached $1.4 billion, matching the 2023 peak.
The balance sheet shifted in 2025. For the first four years shown, Keysight carried more cash than debt, meaning net debt was negative (a good sign). In 2025, after spending heavily on acquisitions including Spirent Communications for $1.4 billion net of cash, plus two additional deals from Synopsys and Ansys, net debt flipped to positive $0.7 billion. The company used its own cash pile to fund most of these deals. Research and development spending also crossed $1 billion for the first time in 2025, reaching $1,007 million, up 10 percent from the prior year.
Keysight's revenue swings up and down with how much its customers choose to spend on research and development. When big technology companies, chip makers, and defense contractors increase their R&D budgets, Keysight tends to benefit. When those same customers tighten their belts, as they did in 2024, Keysight feels it quickly. This cyclicality is the central feature of the business model and the main reason the 2024 dip should not be read in isolation.
The risks Keysight faces are concrete, not theoretical. Tariffs are already affecting results. The company said in its 2025 filing that U.S. tariffs starting in early 2025, and retaliatory tariffs from China and other countries, hurt both its cost of making products and the willingness of customers to place orders. Keysight has manufacturing in Malaysia, the United States, and Germany, and it sources parts globally, so tariff changes ripple through the business from multiple directions.
Export controls add another layer of pressure. The U.S. government restricts what technology companies can sell to certain countries. Keysight already stopped operations in Russia. If China, which is a major market for the company, faces tighter export restrictions, or if key Chinese customers get added to restricted trade lists, Keysight could lose significant revenue with little warning and few immediate substitutes. The company paid a $6.6 million fine in 2021 for past export violations and said the matter was fully resolved by 2024, but the underlying complexity of operating in restricted markets remains.
There is also a live tax dispute. In January 2025, Keysight filed a lawsuit seeking a $107 million tax refund related to a restructuring in Singapore. If the company loses that case, it would have to reverse a benefit it already recorded. Separately, its Singapore tax incentive, which allows it to pay lower taxes on certain earnings, expires in July 2029. Its Malaysia tax incentive expired in October 2025 and is being renewed, with no guarantee of success.
Inventory is a quieter but real risk. Keysight commits to buying parts from suppliers in advance, before it knows exactly how many orders will arrive. If demand drops suddenly, as it did in 2024, the company can end up holding excess inventory it already paid for. Excess and obsolete inventory charges were $43 million in 2025, up from $27 million in 2023.