Keysight Technologies KEYS · USD

16. SEGMENT INFORMATIONOur operating segments were determined based primarily on how the Chief Operating Decision Maker (“CODM”), President and Chief Executive Officer, views and evaluates our operations. Other factors, including market separation and customer specific applications, go-to-market channels, products and services, and manufacturing are considered in determining the formation of these operating segments. The CODM is regularly provided with and reviews segment revenues and segment income from operations to support decision-making, set strategic goals, allocate resources, and evaluate each segment’s progress against the company’s plan. The CODM also reviews and approves budgets, including capital expenditures, at the segment level. The segment results are not necessarily in conformity with GAAP and exclude items such as share-based compensation expense, amortization of acquisition-related balances, acquisition and integration costs, restructuring costs, interest income, interest expense, and other items.A significant portion of the segments’ expenses arise from allocated corporate charges, as well as expenses related to our centralized sales force, and service, marketing and technology functions that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. Corporate charges include legal, accounting, real estate, insurance services, information technology services, treasury, and other corporate infrastructure expenses. Segment allocations are determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to, or benefits received by, the segments. Newly acquired businesses are not allocated these charges until integrated into our shared services and corporate infrastructure.Descriptions of our two reportable segments are as follows:The Communications Solutions Group (“CSG”) serves customers spanning the global commercial communications and aerospace, defense, and government end markets. The group’s solutions consist of electronic design and test software, instrumentation, systems, and related services. These solutions are used in the design, simulation, validation, manufacturing, installation, and optimization of communication systems in wireless, wireline (data center networking), enterprise, and aerospace, defense, and government end markets.

Disaggregation of RevenueWe 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, CSG and EISG.

14. COMMITMENTS AND CONTINGENCIESCommitments to contract manufacturers and suppliers. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory based on mutually agreed criteria. As of October 31, 2025, our non-cancellable purchase commitments were approximately $450 million. We expect to fulfill most of our purchase commitments for inventory within one year.Other purchase commitments. Other purchase commitments primarily relate to software as a service and other professional services contracts. As of October 31, 2025, our non-cancellable contractual obligations related to these contracts were approximately $111 million, most of which are expected to be fulfilled within two years.We also have long-term power purchase agreements to purchase power at predominantly variable prices. These agreements are expected to support our power consumption needs with more favorable pricing and reliability than our previous supply agreements.Litigation and 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. We challenged the validity of claims of eight of these patents at the U.S. Patent and Trademark Office, with all or most claims being found invalid in each patent. Centripetal is appealing seven of these results. In addition, in February 2022, Centripetal filed complaints in Germany alleging infringement of three of Centripetal’s German patents. Keysight challenged the validity of the claims of these patents in German nullity or European Patent Office (“EPO”) opposition procedures. Two of the three patents were invalidated, and the appeals process has ended. The third patent had all but one claim invalidated at trial and is under appeal. 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.

We challenged the validity of claims of eight of these patents at the U.S. Patent and Trademark Office, with all or most claims being found invalid in each patent. Centripetal is appealing seven of these results. In addition, in February 2022, Centripetal filed complaints in Germany alleging infringement of three of Centripetal’s German patents. Keysight challenged the validity of the claims of these patents in German nullity or European Patent Office (“EPO”) opposition procedures. Two of the three patents were invalidated, and the appeals process has ended. The third patent had all but one claim invalidated at trial and is under appeal. 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. The lawsuit in Federal District Court in Virginia is stayed pending the finalization of appeals of the ITC findings and validity challenges. 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.

11. DEBTThe following table summarizes the components of our debt:October 31,20252024(in millions)2027 Senior Notes at 4.60% ($700 face amount less unamortized costs of $1 and $2)$699 $698 2029 Senior Notes at 3.00% ($500 face amount less unamortized costs of $2 and $2)498 498 2030 Senior Notes at 5.35% ($750 face amount less unamortized costs of $7)743 — 2034 Senior Notes at 4.95% ($600 face amount less unamortized costs of $6 and $6)594 594 Total Debt$2,534 $1,790 Senior Notes2027 Senior NotesIn April 2017, the company issued an aggregate principal amount of $700 million in unsecured senior notes (“2027 Senior Notes”). The 2027 Senior Notes were issued at 99.873 percent of their principal amount. The notes will mature on April 6, 2027 and bear interest at a fixed rate of 4.60 percent per annum. The interest is payable semi-annually on April 6 and October 6, commencing on October 6, 2017. We incurred issuance costs of $6 million in connection with the 2027 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.2029 Senior NotesIn October 2019, the company issued an aggregate principal amount of $500 million in unsecured senior notes (“2029 Senior Notes”). The 2029 Senior Notes were issued at 99.914 percent of their principal amount. The notes will mature on October 30, 2029 and bear interest at a fixed rate of 3.00 percent per annum. The interest is payable semi-annually on April 30 and October 30, commencing on April 30, 2020. We incurred issuance costs of $4 million in connection with the 2029 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.2030 Senior NotesIn April 2025, the company issued an aggregate principal amount of $750 million in unsecured senior notes (“2030 Senior Notes”). The 2030 Senior Notes were issued at 99.760 percent of their principal amount. The notes will mature on July 30, 2030 and bear interest at a fixed rate of 5.35 percent per annum. The interest is payable semi-annually on January 30 and July 30, commencing on January 30, 2026. We incurred issuance costs of $7 million in connection with the 2030 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.2034 Senior NotesIn October 2024, the company issued an aggregate principal amount of $600 million in unsecured senior notes (“2034 Senior Notes”).

5. INCOME TAXESThe domestic and foreign components of income before taxes are: Year Ended October 31, 202520242023 (in millions)U.S. operations$255 $170 $237 Non-U.S. operations827 695 1,120 Total income before taxes$1,082 $865 $1,357 The provision for income taxes consisted of: Year Ended October 31, 202520242023 (in millions)U.S. federal taxes: Current$97 $(52)$185 Deferred(17)(47)(54)Non-U.S. taxes: Current147 31 105 Deferred(29)323 54 State taxes, net of federal benefit: Current18 4 13 Deferred(3)(8)(3)Total provision for income taxes$213 $251 $300 In addition, included in net loss from discontinued operations is income tax expense of $13 million for 2025 related to the divestiture of Spirent’s high-speed ethernet, network security, and channel emulation business lines to Viavi. See Note 2, “Acquisitions,” for additional information.The following table presents the components of the deferred tax assets and liabilities: October 31, 20252024(in millions)Deferred Tax AssetsInventory$29 $27 Intangibles87 127 Property, plant and equipment32 29 Warranty reserves7 8 Pension benefits22 26 Employee benefits, other than retirement39 29 Net operating loss, capital loss, and credit carryforwards606 307 Share-based compensation30 22 Deferred revenue56 48 Lease obligations55 54 Hedging and currency costs1 1 R&D capitalization130 91 Others19 16 Total deferred tax assets1,113 785 Tax valuation allowance(497)(218)Total deferred tax assets less valuation allowance$616 $567 Deferred Tax LiabilitiesInventory$(5)$(3)Intangibles(236)(148)Property, plant and equipment(20)(18)Pension benefits(91)(82)Employee benefits, other than retirement— (1)Unremitted earnings of foreign subsidiaries(19)(18)Deferred revenue(1)(1)ROU lease assets(52)(52)Hedging and currency costs(21)(23)Others(14)(7)Total deferred tax liabilities(459)(353)Total deferred tax assets, net of deferred tax liabilities$157 $214 The increase in deferred tax assets in 2025 as compared to 2024 primarily relates to additional U.K. capital losses from the Spirent acquisition and the capitalization of research and experimental expenditures for the U.S. tax filing group, partially offset by a decrease in deferred tax assets due to the amortization of intangibles in Singapore. The increase in deferred tax liabilities in 2025 as compared to 2024 primarily relates to intangible assets from the Spirent acquisition recognized in purchase accounting which are not deductible for tax purposes when amortized.

The aggregate changes in the balances of our unrecognized tax benefits including all federal, state, and foreign tax jurisdictions are as follows:Year Ended October 31,202520242023 (in millions)Gross balance, beginning of year$222 $266 $234 Additions due to acquisition— 2 — Additions for tax positions related to the current year23 24 37 Additions for tax positions from prior years2 — 1 Reductions for tax positions from prior years— (22)— Settlements with taxing authorities— (45)— Statute of limitations expirations(6)(3)(5)Impact from currency fluctuations— — (1)Gross balance, end of year$241 $222 $266

4. SHARE-BASED COMPENSATIONKeysight 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 RSUs, employee stock purchases made under our ESPP, employee stock option awards, and performance share awards granted to selected members of our senior management under the LTP Program, based on estimated fair values.Description of Keysight’s Share-Based PlansThe 2014 Equity and Incentive Compensation Plan (“2014 Stock Plan”) was adopted on July 16, 2014 and became effective on November 1, 2014. It has been subsequently amended and restated multiple times by our board of directors with the most recent amendments taking effect on March 21, 2024, following stockholders approval. The maximum number of shares of common stock that may be issued under the plan is 28 million. The plan provides for the grants of awards in the form of stock options, stock appreciation rights, restricted stock, RSUs, performance-based shares and units, and cash awards. As of October 31, 2025, approximately 8 million shares were available for future awards.RSUs under our share-based plans are granted to directors, executives, and employees. The estimated fair value of the RSUs granted under the 2014 Stock Plan is determined based on the market price of Keysight common stock on the date of grant. RSUs generally vest, with some exceptions, at a rate of 25 percent per year over a period of four years from the date of grant.Performance share awards under the LTP Program, administered through the 2014 Stock Plan, are granted to the company's executive officers and key employees. Participants in this program are entitled to receive unrestricted company shares after a three-year performance period, contingent upon the achievement of metrics and targets set by the Compensation and Human Capital Committee at the beginning of the performance period. These metrics may include total shareholder return (“TSR”), financial metrics like operating margin (“OM”), cost synergies, and others. For TSR-based awards the peer group comparisons are set at the beginning of the performance period, while OM targets are set each year in the first quarter of the respective year. The final payout under the LTP Program may range from zero to 200 percent of the target award based on actual performance.