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AGILENT TECHNOLOGIES, INC. (A)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 delivered $1.74B revenue (+10.1% reported, +6.1% core), and non-GAAP EPS of $1.37, both above guidance; GAAP EPS was $1.18 . Demand was broad-based across segments and regions, marking a fifth consecutive quarter of sequential core-revenue acceleration .
  • Margin quality was mixed: operating margin held at 25.1%, but gross margin fell to 53.1% YoY on tariffs, currency, and a BioVectra downtime impact; management expects sequential margin improvement of ~200–230 bps in Q4 via volume leverage and Ignite savings .
  • Full-year FY25 guidance was raised: revenue to $6.91–$6.93B and non-GAAP EPS to $5.56–$5.59; Q4 revenue guided to $1.822–$1.842B and non-GAAP EPS to $1.57–$1.60, reflecting confidence in demand and execution despite tariff headwinds .
  • Key near-term catalysts: tariff mitigation actions ramping into FY26 (net FY25 tariff cost now ~$20M vs minimal previously), robust PFAS workflow adoption (low double-digit growth globally with U.S. PFAS CapEx timing uncertainty), accelerating LC/LCMS replacement (Infinity III and Pro iQ LC/MS), and CDMO momentum (NASD high-20s growth; BioVectra stepping up in Q4 post planned downtime) .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based growth: All three segments grew; LDG +14% reported (+7% core), ACG +8% (+5% core), AMG +7% (+5% core) with operating margins of 17.6%, 33.3%, and 21.8% respectively . “All three of our business groups grew, along with all regions and our two largest markets” — CEO .
    • LC/LCMS momentum: Infinity III LC mid-teens growth; Pro iQ LC/MS tracking ahead of launch forecast, winning major pharma accounts; instrument book-to-bill >1 for six consecutive quarters .
    • PFAS workflows: Low double-digit global growth in Q3; strong Europe/Asia performance offset U.S. CapEx hesitation; secular expansion into volatile PFAS (GC/MS sweet spot) supports growth runway .

  • What Went Wrong

    • Gross margin compression: 53.1% in Q3 (vs 54.1% Q2, 54.7% Q1) driven by tariffs, currency, and BioVectra downtime to expand capacity; variable pay also higher on performance .
    • U.S. PFAS CapEx caution: Americas down ~20% on EPA changes impacting CapEx timing; clarity expected late CY25, creating near-term uncertainty for Q4/Q1 .
    • Academia/Government softness: Persistent funding headwinds in U.S.; management guides mid-single-digit decline for A&G in Q4 and implies continued caution near term .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$1.681 $1.668 $1.738
GAAP Diluted EPS ($)$1.11 $0.75 $1.18
Non-GAAP Diluted EPS ($)$1.31 $1.31 $1.37
Gross Margin %54.7% 54.1% 53.1%
Operating Margin %25.1% 25.1% 25.1%
YoY Revenue Growth %1.4% 6.0% 10.1%
Consensus vs ActualQ1 2025Q2 2025Q3 2025
EPS Consensus vs Actual ($)1.272* vs 1.31 1.264* vs 1.31 1.368* vs 1.37
Revenue Consensus vs Actual ($MM)1,669.1* vs 1,681.0 1,626.4* vs 1,668.0 1,665.99* vs 1,738.0
EPS # of Estimates15*16*16*
Revenue # of Estimates13*15*13*
Values retrieved from S&P Global.*

Segment breakdown (Q3 2025 vs Q3 2024):

SegmentRevenue Q3’24 ($MM)Revenue Q3’25 ($MM)YoY %Gross Margin % Q3’25Operating Margin % Q3’25
Life Sciences & Diagnostics (LDG)585 670 14% 50.5% 17.6%
Agilent CrossLab (ACG)691 744 8% 55.1% 33.3%
Applied Markets (AMG)302 324 7% 53.6% 21.8%

KPIs and operating metrics (Q3 2025):

KPIQ3 2025
Instrument book-to-bill>1
Pricing contribution~100 bps YoY
Operating Cash Flow ($MM)$362
Capital Expenditures ($MM)$103
Diluted Shares (MM)285
Tax Rate12%
Net leverage ratio0.9x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY 2025$6.73–$6.81 $6.91–$6.93 Raised
Non-GAAP EPS ($)FY 2025$5.54–$5.61 $5.56–$5.59 Raised (midpoint maintained)
Revenue ($B)Q3 2025$1.645–$1.675 Actual: $1.738 Beat vs prior guide
Non-GAAP EPS ($)Q3 2025$1.35–$1.37 Actual: $1.37 In-line/high end
Revenue ($B)Q4 2025N/A (not given in Q2)$1.822–$1.842 New
Non-GAAP EPS ($)Q4 2025N/A (not given in Q2)$1.57–$1.60 New
Tax RateQ4 2025N/A12% New detail
Other Income ($MM)Q4 2025N/A~$9 New detail
Diluted Shares (MM)Q4 2025N/A~284 New detail
Tariff net cost ($MM)FY 2025Minimal (May guide) ~$20 net; gross ~$70 in H2 Raised net; gross quantified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Tariffs & MitigationIgnite Tariff Task Force; H2 gross exposure $50–$90M; mitigation to fully offset by FY26 Gross H2 tariff costs ~$70M; net FY25 cost ~$20M; mitigation actions implemented by end of FY25, ramp through FY26 Improving mitigation trajectory into FY26
Ignite TransformationPricing, procurement savings; 50–70 bps margin expansion target for FY25; $80M annualized savings ramping H2 Faster decision-making; pricing impact ~2x last year; streamlined layers; double-digit procurement savings; margin leverage expected Q4 Strengthening execution, savings ramp in Q4
LC/LCMS replacement cycleInfinity III launch adoption; rising win rates; orders > revenue; early-stage cycle Mid-teens Infinity III growth; LC/LCMS low-double-digit; funnel conversion improving; book-to-bill >1 for six quarters Accelerating
PFAS workflows+70–75% YoY in Q1/Q2; >$100M annualizing; expanding to food/CAM Low double-digit growth in Q3; U.S. softness on EPA-driven CapEx timing; expansion into volatile PFAS (GC/MS) Mixed near term (U.S. soft), strong long-term
CDMO (NASD/BioVectra)NASD high single-digit nudging double-digit FY25; BioVectra high teens Q2; GLP-1 scale-up NASD high-20s growth; BioVectra downtime in Q3 then step-up in Q4; visibility to double-digit NASD FY25 Positive, Q4 step-up
Regional TrendsChina stimulus wins; stable sequential; India high-teens; EMEA mid-single-digit Asia ex-China +10%; EMEA +7%; China +4% Q3; U.S. mixed (biopharma/A&G soft; small-molecule/CAM strong) Steady to improving ex-U.S.
PricingOn track for ~100 bps FY25 price realization; structured surcharges ~100 bps price improvement in Q3; value-driven pricing double prior year impact Strengthening
A&G fundingPrudence in guide; mid-single-digit decline expected FY25; limited NIH exposure (~1%) Continued softness in U.S.; Q4 mid-single-digit decline guided Soft

Management Commentary

  • “Our third-quarter performance…is a testament to the success of our Ignite Transformation and our laser-like focus on profitable growth and operational excellence.” — CEO Padraig McDonnell .
  • “In a highly dynamic environment, we reorganized supply chains, shifted production…implemented targeted pricing actions. [We] can fully mitigate the impact of tariffs in 2026 at current rates.” — CEO .
  • “For the fourth quarter, we are targeting a sequential operating margin improvement of approximately two–thirty basis points…leveraging our fixed costs…CDMO revenue step-up…and Ignite benefits.” — Interim CFO Rodney Gonsalves .
  • “PFAS remains an excellent opportunity…U.S. EPA changes drove impact…uncertainty around CapEx spend…overall PFAS is going extremely well around the globe.” — CEO .

Q&A Highlights

  • Margins: The ~200 bps YoY operating margin impact was “pretty significant” from tariffs/logistics (~200 bps), plus currency and BioVectra downtime; Q4 margin expected to improve ~200–230 bps sequentially on volume and Ignite savings .
  • PFAS: Americas down ~20% on EPA-related CapEx timing; global PFAS still low double-digit growth; expansion into volatile PFAS supports GC/MS-led runway .
  • Pharma momentum: Small-molecule QA/QC double-digit growth; reduced dependency on executive approvals is broad-based, aiding replacement cycle velocity .
  • NASD/BioVectra: NASD tracking toward double-digit FY25; BioVectra planned Q3 shutdown with higher-throughput process transition, then Q4 ramp .
  • Tariff quantification: $35M gross cost recognized in Q3, similar expected in Q4 ($70M H2); net FY25 cost ~$20M after mitigation; full mitigation targeted in FY26 .

Estimates Context

  • Q3 FY25 beat on both top-line and EPS: Revenue $1,738MM vs $1,666MM consensus; non-GAAP EPS $1.37 vs $1.368 consensus.* Actuals corroborated by 8-K tables .
  • Estimate beats continued intra-year: Q1 EPS/Revenue and Q2 EPS/Revenue both above consensus, indicating consistent execution and positive revisions bias through FY25.*
  • Implication: Street models likely to raise FY25 revenue and Q4 run-rate assumptions; margin trajectories may be adjusted upward for Q4 while FY26 gross margin expected to benefit from tariff mitigation and pricing.* Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Demand breadth and replacement cycle strength underpin raised FY25 revenue guide; Q4 is guided to be the largest revenue quarter, setting a constructive FY26 entry point .
  • Margin recovery is a near-term focus; expect sequential operating margin uplift in Q4 from volume, CDMO mix and Ignite savings, with tariff mitigation tailwinds into FY26 .
  • PFAS remains a structural growth driver despite U.S. CapEx timing noise; look for volatility PFAS expansion (GC/MS) and ex-U.S. water/materials testing to sustain growth .
  • CDMO (NASD + BioVectra) mix is improving; Q4 step-up post BioVectra downtime should support both revenue and margin conversion; watch NASD for double-digit trajectory into FY26 .
  • Pricing capabilities are scaling enterprise-wide; ~100 bps realization in Q3 and “twice last year’s impact” point to sustained pricing tailwinds (with competitive discipline) .
  • Regional composition improving ex-U.S.; India and EMEA strong, China stable with potential stimulus upside late CY25; A&G remains a small but soft pocket in U.S. .
  • Trading setup: Strong prints vs estimates, raised FY guide, and Q4 margin uplift guidance are positive; monitor tariff policy headlines, U.S. PFAS CapEx timing, and execution on Ignite/mitigation for volatility and entry points .

Additional Press Releases (Q3 context)

  • Product innovation continued: Agilent expanded the Dako Omnis family (Aug 4) targeting pathology labs with higher throughput and workflow efficiency, reinforcing Diagnostics portfolio strength .