Free cash flow conversion remains efficient with a 27.5% FCF margin in 2026Q2, even as the company navigates a $144 million outflow in working capital.
| Metric | TTM | Oct'25 | Oct'24 | Oct'23 | Oct'22 | Oct'21 | Oct'20 | Oct'19 | Oct'18 | Oct'17 | Oct'16 | Oct'15 | Oct'14 | Oct'13 | Oct'12 |
|---|
| Cash from Operations | 1.49B | 1.41B | 1.05B | 1.41B | 1.14B | 1.32B | 1.02B | 998M | 555M | 313M | 416M | 376M | 563M | 566M | 724M |
| Operating CF Margin % | - | 26.21% | 21.13% | 25.77% | 21.11% | 26.76% | 24.07% | 23.19% | 14.31% | 9.81% | 14.26% | 13.17% | 19.2% | 19.6% | 21.84% |
| Operating CF Growth % | 9.13% | 33.94% | -25.28% | 23.08% | -13.46% | 30.12% | 1.8% | 79.82% | 77.32% | -24.76% | 10.64% | -33.21% | -0.53% | -21.82% | - |
| Net Income | 1.05B | 846M | 614M | 1.06B | 1.12B | 894M | 627M | 621M | 165M | 102M | 335M | 513M | 392M | 457M | 841M |
| Depreciation & Amortization | 184M | 131M | 126M | 212M | 223M | 293M | 326M | 308M | 310M | 225M | 134M | 99M | 84M | 77M | 65M |
| Stock-Based Compensation | 122M | 162M | 137M | 135M | 125M | 103M | 92M | 82M | 59M | 56M | 49M | 55M | 43M | 41M | 38M |
| Deferred Taxes | -102M | -112M | 268M | -3M | 7M | -53M | 41M | -2M | -789M | -47M | 1M | -158M | 23M | 14M | -118M |
| Other Non-Cash Items | 628M | 305M | 178M | 133M | 69M | 49M | -13M | 24M | 730M | -38M | 16M | 38M | 28M | 23M | 15M |
| Working Capital Changes | -393M | 77M | -271M | -126M | -404M | 36M | -57M | -35M | 80M | 15M | -119M | -171M | -7M | -46M | -117M |
| Change in Receivables | -242M | 23M | 71M | 14M | -204M | -122M | 75M | -26M | -89M | -11M | -42M | -20M | -25M | 44M | -3M |
| Change in Inventory | 55M | 43M | 35M | -148M | -125M | -43M | -73M | -92M | -61M | -4M | -22M | -25M | -31M | -53M | -46M |
| Change in Payables | 65M | 26M | 26M | -62M | 56M | 53M | -33M | 13M | 22M | 15M | -8M | 18M | 32M | -24M | -23M |
| Cash from Investing | -1.74B | -1.73B | -819M | -288M | -251M | -353M | -442M | -196M | -116M | -1.72B | -90M | -671M | -82M | -85M | -172M |
| Capital Expenditures | -132M | -128M | -154M | -196M | -185M | -174M | -117M | -120M | -132M | -72M | -91M | -92M | -70M | -69M | -103M |
| CapEx % of Revenue | 2.17% | 2.38% | 3.09% | 3.59% | 3.41% | 3.52% | 2.77% | 2.79% | 3.4% | 2.26% | 3.12% | 3.22% | 2.39% | 2.39% | 3.11% |
| Acquisitions | -2.04B | -2.02B | -681M | -85M | -33M | -178M | -357M | -88M | -11M | -1.7B | -10M | -574M | -11M | -1M | -69M |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 509M | 507M | 27M | 0 | -216M | -1M | 32M | 5M | 27M | 8M | 10M | 1M | -1M | 0 | 0 |
| Cash from Financing | -458M | 385M | -913M | -687M | -861M | -671M | -413M | -122M | -335M | 1.44B | -25M | -19M | 335M | -481M | -552M |
| Debt Issued (Net) | -741M | 740M | -25M | 0 | 0 | 0 | -7M | -4M | -260M | 958M | -1M | 0 | 1.06B | 0 | 0 |
| Equity Issued (Net) | -345M | -314M | -377M | -635M | -786M | -614M | -353M | -92M | -56M | -12M | -19M | 26M | -940M | 0 | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -440M | -377M | -443M | -702M | -849M | -673M | -411M | -159M | -120M | 0 | -62M | 0 | -940M | 0 | 0 |
| Other Financing | 628M | -41M | -511M | -52M | -75M | -57M | -53M | -26M | -19M | 494M | -5M | -45M | 211M | -481M | -552M |
| Net Change in Cash | -1.48B | 76M | -674M | 431M | -11M | 301M | 167M | 683M | 95M | 35M | 300M | -327M | 810M | 0 | 0 |
| Free Cash Flow | 1.45B | 1.28B | 898M | 1.21B | 959M | 1.15B | 899M | 878M | 423M | 241M | 325M | 284M | 493M | 497M | 621M |
| FCF Margin % | 23.77% | 23.83% | 18.04% | 22.18% | 17.69% | 23.23% | 21.3% | 20.4% | 10.91% | 7.56% | 11.14% | 9.94% | 16.81% | 17.21% | 18.73% |
| FCF Growth % | 7.5% | 42.65% | -25.91% | 26.38% | -16.46% | 27.7% | 2.39% | 107.56% | 75.52% | -25.85% | 14.44% | -42.39% | -0.8% | -19.97% | - |
| FCF per Share | 8.36 | 7.40 | 5.13 | 6.77 | 5.27 | 6.14 | 4.76 | 4.60 | 2.21 | 1.32 | 1.89 | 1.66 | 2.95 | 2.98 | 3.72 |
| FCF Conversion (FCF/Net Income) | 1.38x | 1.67x | 1.71x | 1.33x | 1.02x | 1.48x | 1.62x | 1.61x | 3.36x | 3.07x | 1.24x | 0.73x | 1.44x | 1.24x | 0.86x |
| Interest Paid | -39M | 0 | 75M | 75M | 75M | 75M | 75M | 76M | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | -44M | 0 | 146M | 343M | 191M | 130M | 84M | 103M | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Geopolitical Export Control Exposure
As reported in recent financial filings, Keysight’s operating cash flow to net income ratio reached 1.44 in 2026Q2, demonstrating a consistent ability to generate cash in excess of accounting profits, which suggests that the company's earnings quality remains high despite the inherent complexities of its hardware-software business model.
The consistent premium of operating cash flow over net income indicates that non-cash charges and accruals are not masking underlying operational weakness. Investors should monitor this conversion ratio, as it suggests that the company's transition toward recurring software revenue is successfully translating into tangible liquidity.
Based on the provided cash flow data, Keysight’s free cash flow margin has trended toward 27.5% in 2026Q2, reflecting a significant recovery from the 6.1% low observed in 2024Q2 and highlighting the company's improved ability to convert top-line growth into discretionary cash flow for capital allocation.
The upward trajectory in FCF margins appears to be a direct result of the company's successful scaling of its software-centric revenue streams. This trend suggests that the business is becoming less capital-intensive over time, which may provide management with greater flexibility to navigate future R&D cycles.
According to recent SEC filings, Keysight maintained a capital expenditure to revenue ratio of just 1.7% in 2026Q2, a figure that remains significantly below the 9.0% peak observed in 2025Q4, suggesting that the company is not currently burdened by excessive maintenance or growth-related infrastructure spending requirements.
The low capital intensity relative to revenue implies that the company's existing manufacturing and testing infrastructure is sufficient to support current demand levels. This disciplined approach to capital expenditure appears to be a key driver of the company's robust free cash flow generation.
As indicated by the quarterly cash flow statements, working capital changes have been highly volatile, swinging from a $125 million inflow in 2025Q2 to a $144 million outflow in 2026Q2, which suggests that inventory and receivables management remains sensitive to the company's lumpy, project-based order cycles.
The significant fluctuations in working capital appear to be driven by the timing of large-scale aerospace and government contracts. Investors should monitor these swings, as they may temporarily obscure the underlying cash-generating capability of the core business during periods of rapid inventory build-up.
Based on reported figures, Keysight utilized $204 million for share repurchases in 2026Q2, a significant increase from previous periods, which suggests that management is prioritizing the return of excess cash to shareholders over aggressive M&A activity following the substantial $2 billion acquisition outlay in 2025Q4.
The shift toward share repurchases indicates a potential maturation of the company's capital allocation strategy as it balances growth investments with shareholder returns. This approach appears to be supported by the company's healthy balance sheet and consistent ability to generate free cash flow.
Quick answers to the most common questions about buying KEYS stock.
Keysight Technologies, Inc. (KEYS) generated $1.41B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Keysight Technologies, Inc. (KEYS) generated $1.28B in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Keysight Technologies, Inc. (KEYS) spent $128.0M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Keysight Technologies, Inc. (KEYS) spent $377.0M on share repurchases. This shows the company's commitment to returning capital to its equity investors.