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AGILENT TECHNOLOGIES, INC. (A)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 delivered $1.681B revenue (+1.4% reported, +1.2% core) and non-GAAP EPS $1.31; instruments book-to-bill was >1, an atypical seasonal positive, driven by strong LC/LC/MS and PFAS workflows .
  • Management lowered FY2025 reported revenue guidance to $6.68–$6.76B on FX headwinds (now ~1.9% YoY), while maintaining core growth (+2.5%–3.5%) and non-GAAP EPS $5.54–$5.61; Q2 guidance set at $1.61–$1.65B revenue and $1.25–$1.28 non-GAAP EPS .
  • China stimulus was a material Q1 tailwind (~$35M recognized; 50% win-rate); management expects a second round later in FY25 but did not include it in guidance (upside risk) .
  • Gross margin compressed to 54.7% and operating margin to 25.1% on mix, currency, and Lunar New Year timing; management reiterated Ignite transformation targets (FY25 +50–70 bps op margin; 3-year +70–100 bps) and reported stronger pricing execution .
  • Wall Street consensus via S&P Global was unavailable due to data limits; relative to company guidance, Q1 revenue was just above the top-end and non-GAAP EPS ahead of expectations, a positive sentiment driver near term .

What Went Well and What Went Wrong

  • What Went Well

    • PFAS workflows accelerated (+70% YoY), contributing ~75 bps to company growth; Europe and CAM demand broadened beyond environmental into food and chemical materials .
    • LC/LC/MS momentum from the October Infinity III launch drove high-single-digit growth in pharma, double-digit ex-China; instruments book-to-bill >1, signaling recovery .
    • China stimulus execution: ~$35M recognized with ~50% win rate; made-in-China manufacturing and local capability positioned Agilent to capture outsized share .

  • What Went Wrong

    • Gross margin compressed 20–30 bps on currency and China stimulus mix; operating margin down vs prior year, reflecting FX and Lunar New Year timing .
    • Academia & Government weakened (~-7% YoY globally), with disproportionate softness in China; management widened Q2 guidance range to reflect U.S. federal funding uncertainty .
    • FX turned materially adverse: incremental ~$110M FY headwind versus prior guide; FY reported revenue lowered while EPS held via hedging and cost actions .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$1.578 $1.701 $1.681
GAAP Diluted EPS ($)$0.97 $1.22 $1.11
Non-GAAP EPS ($)$1.32 $1.46 $1.31
Gross Margin (%)56.0% 55.1% 54.7%
Operating Margin (%)27.4% 27.4% 25.1%
Cash from Operations ($USD Millions)$452 $481 $431

Segment performance (Q1 2025 vs Q1 2024):

SegmentRevenue Q1 2024 ($M)Revenue Q1 2025 ($M)Operating Margin Q1 2024 (%)Operating Margin Q1 2025 (%)
Life Sciences & Diagnostics (LDG)$620 $647 18.4% 18.1%
Agilent CrossLab (ACG)$686 $696 32.4% 31.8%
Applied Markets (AMG)$352 $338 26.1% 25.0%

Key KPIs and operating drivers:

KPIQ3 2024Q4 2024Q1 2025
Instruments Book-to-Bill (Instruments)>1 >1 >1
PFAS Workflow Growth (YoY)N/A (robust demand noted) >40% 70%
China Stimulus Recognized ($M)Initial orders (low single-digit $M) Initial orders (continued) ~$35
FX Headwind (Reported Growth Impact)-1.1 ppt +0.5 ppt tailwind -1.4 ppt in Q1; FY incremental ~$110M vs prior guide

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (Reported)FY 2025$6.79–$6.87B $6.68–$6.76B Lowered (FX headwind ~1.9%)
Core Revenue GrowthFY 2025+2.5%–+3.5% +2.5%–+3.5% Maintained
Non-GAAP EPSFY 2025$5.54–$5.61 $5.54–$5.61 Maintained (covering ~$0.09 FX headwind)
Revenue (Reported)Q2 2025N/A$1.61–$1.65B New
Non-GAAP EPSQ2 2025N/A$1.25–$1.28 New
FX AssumptionFY 2025~0.2% headwind ~1.9% headwind; +$110M vs prior Raised headwind
Intangibles Amortization (Future)Quarterly~$28M/quarter (FY24 outlook) ~$27M/quarter Slightly lower run-rate
Tax Rate (Non-GAAP)FY 202513% 12.5% (used in Q1; FY guide assumes 12.5%) Lower effective rate in Q1; FY assumption reiterated
DividendApr 23, 2025$0.248/share (announced Nov 2024 increase) $0.248/share declared (record Apr 1) Maintained payout policy

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Digital ecosystem & AI/automationSigsense acquisition; ESG; improving recurring revenues Digital orders >$1B in FY2024 Digital orders grew high single-digits; ABB robotics collaboration Improving execution
Supply chain & tariffsDiversification; resilience commentary Tariff exposure ~$10–$15M manageable Mitigation actions; expected ~$5M impact; ability to shift production Managed risk
Product performance (Infinity III LC)Launch late Oct; early traction Prepared for replacement cycle; orders in tens of millions High-single-digit LC/LCMS growth; rising win rates; 9–12 month replacement cycle Strengthening cycle
Regional trends (China)Down 11%; lab activity improving Initial stimulus orders; ~$310–$312M Q4 China revenue ~$35M stimulus recognized; 50% win-rate; second round expected; base business stable Recovery with stimulus tailwinds
Regulatory (PFAS, EU)EU Water Directive drove demand PFAS +40% widespread PFAS +70%; broadening into food/CAM Strengthening
R&D/Transformation (Ignite)$100M annualized savings by FY24 end Re-segmentation; FY25 op margin +50–70 bps target 3-year +70–100 bps op margin; pricing/procurement initiatives Ongoing margin expansion
NASD/CDMO (BIOVECTRA)Announced BIOVECTRA acquisition Closed BIOVECTRA; synergies in GLP‑1/peptides Integration progressing; NASD guide high-single-digit; revenue mix shifts to FY26 Stable to improving

Management Commentary

  • Strategy and transformation: “We have moved from planning to execution on our market-first strategy… seeing the early benefits of our Ignite Transformation to become nimbler and make decisions faster” — Padraig McDonnell, CEO .
  • Demand drivers: “Our instrument book-to-bill was greater than 1 in Q1… another sign of market recovery… led by Infinity III and success in China” — Padraig McDonnell .
  • PFAS workflows: “PFAS grew 70% in the quarter, contributing 75 basis points of growth… our 6495 Triple Quad LC/MS is the most complete instrument in the PFAS testing market” — Bob McMahon, CFO .
  • FX and guidance: “We are now projecting an incremental $110 million in currency headwinds… currency is now expected to represent a 1.9% headwind… full year non-GAAP EPS unchanged at $5.54 to $5.61” — Bob McMahon .

Q&A Highlights

  • Guidance prudence: Wider Q2 range (~$40M) and maintained FY core growth reflect NIH funding uncertainty (<~1% exposure) and tariff risk; no material customer impact observed yet .
  • FX quantification: $110M FY headwind ($0.09 EPS), Q2 $30–$32M revenue headwind ($0.02–$0.03 EPS) .
  • China stimulus: ~$35M recognized in Q1; ~50% win rate; second round expected in H2 but not in guide; roughly half of Q1 stimulus likely pull-forward .
  • Replacement cycle: Infinity III accelerating LC replacements; typical cycle 9–12 months; installed base older than normal; order growth outpaced revenue .
  • Margins: Gross margin pressured by mix (China stimulus) and FX; pricing traction better than expected; Ignite to deliver +50–70 bps in FY25 .

Estimates Context

  • Wall Street consensus (S&P Global) was unavailable due to data limits. As a proxy, results were above internal expectations: Q1 revenue just above the top-end of guidance and non-GAAP EPS ahead of expectations, suggesting a positive setup versus company outlook .
  • Implication: In absence of consensus benchmarks, estimate revisions should reflect stronger PFAS and LC momentum, but offset by FX headwinds and cautious A&G demand .

Key Takeaways for Investors

  • PFAS is a structural growth vector with diversified end-market uptake; Agilent’s workflow-led positioning is driving outsized contribution, supporting top-line resilience even amid FX and funding uncertainty .
  • Infinity III catalyzes an LC replacement cycle with improving win rates and order growth outpacing revenue; expect steady multi-quarter cadence rather than a single-quarter “super-cycle” .
  • China stimulus is an upside lever: ~$35M recognized, strong win-rate, second round likely in H2 but excluded from guide; base China business viewed as stable .
  • Margin trajectory should improve through FY25 on pricing, procurement, and Ignite savings (50–70 bps), but near-term gross margin remains sensitive to mix (stimulus) and FX .
  • FX is the key macro swing factor: incremental ~$110M headwind lowered FY revenue guide while EPS held via hedging and cost actions; monitor USD trends and hedging efficacy .
  • A&G demand is the primary soft spot (~-7%); management widened Q2 range to reflect U.S. federal funding uncertainty; keep watch on February/March spending cadence .
  • NASD/BIOVECTRA integration advances the CDMO thesis in peptides/gene editing; FY25 revenue contribution modest with larger mix shift expected into FY26 as qualifications convert .