ACQUISITIONS

12 Months Ended

Oct. 31, 2025

Business Combination [Abstract]

ACQUISITIONS

2.    ACQUISITIONS AND DIVESTITURES

2025 Acquisitions

Acquisition of Spirent Communications plc

On October 15, 2025, we completed the acquisition of the entire share capital of Spirent Communications plc (“Spirent”) for $1,564 million, using existing cash, which reflects cash consideration of 199 pence (pounds sterling) per Spirent share, and includes $14 million consideration for outstanding awards and unvested options under Spirent’s compensation plans. Total purchase consideration was determined as follows:

	(in millions)
Cash consideration, net of cash acquired, outstanding awards, and currency impact	$	1,415
Consideration for share-based awards	14
Cash and cash equivalents assumed upon acquisition	127
Currency impact	8
Total consideration	$	1,564

For the year ended October 31, 2025, revenue and net loss attributable to Spirent from the acquisition date was $9 million and $40 million, respectively, including the loss on discontinued operations of $19 million.

The Spirent acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets and assumed liabilities were recorded at their estimated fair values. We determined the estimated fair values with the assistance of valuations performed by third-party specialists, discounted cash flow analysis, and estimates made by management. The acquisition of Spirent complements our position in communications test and expands our serviceable available market. These factors, among others, contributed to a purchase price in excess of the estimated fair value of Spirent's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.

Goodwill of $653 million and $45 million was assigned to the Communications Solutions Group (“CSG”) and Electronic Industrial Solutions Group (“EISG”) reportable segments, respectively, reflecting the expected benefits and synergies that are likely to be realized from the Spirent acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

A portion of the overall purchase price was allocated to acquired intangible assets. Amortization expense associated with acquired intangible assets is not deductible for tax purposes. Therefore, a deferred tax liability of $168 million was established primarily for the future amortization of these intangibles and is included in “other long-term liabilities” in the table below.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date:

	October 15, 2025
	(in millions)
Cash and cash equivalents	$	127
Inventory	40
Accounts receivable	71
Assets held for sale	433
Other current assets	28
Property, plant and equipment	28
Operating lease right-of-use assets	11
Goodwill	698
Other intangible assets	528
Other assets	8
Total assets acquired	1,972
Accounts payable	(13)
Employee compensation and benefits	(40)
Deferred revenue	(44)
Operating lease liabilities	(3)
Liabilities held for sale	(34)
Other accrued liabilities	(70)
Long-term deferred revenue	(14)
Long-term operating lease liabilities	(9)
Other long-term liabilities	(181)
Net assets acquired	$	1,564

Assets and liabilities held for sale primarily included Spirent’s high-speed ethernet, network security, and channel emulation business lines, which were sold to Viavi Solutions Inc. (“Viavi”) in connection with satisfying the regulatory conditions set out as part of the Spirent acquisition. Assets held for sale primarily comprises goodwill of $55 million, other intangible assets of $346 million, consisting primarily of developed technology of $295 million and customer relationships of $50 million, inventory of $26 million, and other assets of $6 million allocated to the divestiture on the relative fair value basis. Developed technology and customer relationships were valued using the relief from royalty and multi-period excess earnings valuation methods, respectively. Liabilities held for sale primarily represents deferred revenue and other accruals. See “Spirent-related divestiture” below for further details.

The fair values of cash and cash equivalents, accounts receivable, other current assets, accounts payable, employee compensation and benefits, and deferred revenue were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values of acquired inventory, property, plant and equipment, and intangible assets were determined with the input from third-party valuation specialists. The fair values of certain other assets and liabilities were determined internally using historical carrying values and estimates made by management. In connection with the acquisition and determination of the fair values of acquired assets and assumed liabilities, the company is in the process of obtaining additional information to refine its initial fair value estimates related to income taxes, intangible assets, inventory, and property, plant and equipment. We expect to finalize this allocation in the second quarter of fiscal year 2026. As additional information becomes available, we may revise the preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material.

Valuation of Intangible Assets Acquired

The components of intangible assets acquired in connection with the Spirent acquisition were as follows:

	Estimated Fair Value		Estimated useful life	Valuation Method
	(in millions)		(in years)
Developed technology	$	370	6	Relief from royalty
Customer relationships	145		8	Multi-period excess earnings
Backlog	9		1	Multi-period excess earnings
Trademark/Tradename	4		1	Relief from royalty
Total intangible assets	$	528

As noted above, the intangible assets were valued using various income approach methods and significant assumptions. Significant assumptions related to developed technology included royalty rate, obsolescence rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. Significant assumptions related to customer relationships included customer attrition rate, developed technology royalty rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. Similar significant assumptions were used to value developed technology and customer relationships included in assets held for sale for the Spirent-related divestiture.

Acquisition and integration costs directly related to the Spirent acquisition are included in selling, general and administrative and other income (expense), net and were $42 million for the year ended October 31, 2025. For the year ended October 31, 2025, we incurred $7 million of acquisition-related compensation expense to redeem certain of Spirent's outstanding unvested stock awards as of the date of the acquisition that were determined to relate to post-merger service periods.

Spirent-related divestiture

On October 16, 2025, we sold Spirent’s high-speed ethernet, network security, and channel emulation business lines for $399 million to Viavi, resulting in an immaterial pre-tax loss. In connection with the sale, we agreed to provide transitional services to the buyer on a short-term basis. We do not have any material continuing involvement with this business and have presented its results in discontinued operations.

The following table summarizes the selected financial information of discontinued operations:

	Year ended
	October 31, 2025
	(in millions)
Net loss from discontinued operations before income taxes	$	(6)
Provision for income taxes (see Note 5, “Income Taxes”)	(13)
Net loss from discontinued operations, net of income taxes	$	(19)

Net loss from discontinued operations before income taxes includes $5 million of acquisition-related compensation to redeem certain outstanding unvested stock awards as of the date of the acquisition that were determined to relate to post-merger service periods.

Acquisition of Synopsys’ Optical Solutions Group

On October 17, 2025, we acquired the Optical Solutions Group business (“OSG”) from Synopsys, Inc. for $581 million, using existing cash, including $3 million consideration for outstanding awards and unvested options under Synopsys’ compensation plans. For the year ended October 31, 2025, the OSG acquisition had an immaterial impact on our revenue and net earnings.

The OSG acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets and assumed liabilities were recorded at their estimated fair values. We determined the estimated fair values with the assistance of valuations performed by third-party specialists, discounted cash flow analysis, and estimates made by management. The acquisition of OSG expands our design engineering software portfolio and computer-aided engineering capabilities, enabling customers to take innovative designs to market faster. These factors, among others, contributed to a purchase price in excess of the estimated fair value of OSG's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.

Goodwill of $67 million and $231 million was assigned to the CSG and EISG reportable segments, respectively, reflecting the expected benefits and synergies that are likely to be realized from the OSG acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date:

	October 17, 2025
	(in millions)
Accounts receivable	$	15
Other current assets	1
Property, plant and equipment	1
Operating lease right-of-use assets	2
Goodwill	298
Other intangible assets	275
Total assets acquired	592
Deferred revenue	(8)
Operating lease liabilities	(1)
Long-term deferred revenue	(1)
Long-term operating lease liabilities	(1)
Net assets acquired	$	581

The fair values of accounts receivable, other current assets, and deferred revenue were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values of intangible assets were determined with the input from third-party valuation specialists. The fair values of certain other assets and liabilities were determined internally using historical carrying values and estimates made by management. In connection with the acquisition and determination of the fair values of acquired assets and assumed liabilities, the company is in the process of obtaining additional information to refine its initial fair value estimates related to intangible assets. We expect to finalize this allocation in the second quarter of fiscal year 2026. As additional information becomes available, we may revise the preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material.

Valuation of Intangible Assets Acquired

The components of intangible assets acquired in connection with the OSG acquisition were as follows:

	Estimated Fair Value		Estimated useful life	Valuation Method
	(in millions)		(in years)
Developed technology	$	180	6	Relief from royalty
Customer relationships	86		8	Multi-period excess earnings
Backlog	3		2	Multi-period excess earnings
Trademark/Tradename	1		1	Relief from royalty
Total amortizable intangible assets	270
In-process research and development	5			Relief from royalty
Total intangible assets	$	275

As noted above, the intangible assets were valued using various income approach methods and significant assumptions. Significant assumptions related to developed technology included royalty rate, obsolescence rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. Significant assumptions related to customer relationships included customer attrition rate, developed technology royalty rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. The in-process research and development was valued by discounting forecasted cash flows directly related to the products expecting to result from the projects, net of returns on contributory assets. A discount rate of 11% was used to value the research and development projects to reflect the additional risks inherent in the acquired projects. The primary in-process projects acquired relate to next generation products which will be released in the near future. Total costs to complete for all OSG in-process research and development were estimated at approximately $2 million as of the close date.

Acquisition and integration costs directly related to the OSG acquisition are included in selling, general and administrative expenses and were $18 million for the year ended October 31, 2025. For the year ended October 31, 2025, we incurred $1 million of acquisition-related compensation expense to redeem certain of Synopsys’ outstanding unvested stock awards as of the date of the acquisition that were determined to relate to post-merger service periods.

Acquisition of Ansys’ PowerArtist

On October 17, 2025, we acquired PowerArtist business from Ansys, Inc. for $26 million, expanding our design engineering software portfolio and computer-aided engineering capabilities, enabling customers to take innovative designs to market faster. We recognized goodwill and other intangible assets of $2 million and $17 million, respectively, based on the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. Goodwill was assigned to the CSG and EISG reportable segments, reflecting the expected benefits and synergies that are likely to be realized from the acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

2024 Acquisitions

Acquisition of ESI Group SA

On November 3, 2023, we acquired 50.6% of the share capital of ESI Group SA (“ESI Group”) for $477 million, net of cash acquired, using existing cash. During January 2024, we completed the acquisition of the remaining share capital of ESI Group for $458 million, using existing cash. The company entered into put/call agreements valued at $7 million for certain ESI Group equity awards, subject to a holding period that may extend beyond the explicit vesting period, for the right to receive a cash payment equal to the public tender offer consideration of 155 euros per share, which was fully paid as of the third quarter of fiscal year 2025. For the year ended October 31, 2024, ESI Group's net revenue was $141 million and net loss attributable to Keysight shareholders was $68 million.

The ESI Group acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets and assumed liabilities were recorded at their estimated fair values. We determined the estimated fair values with the assistance of valuations performed by third-party specialists, discounted cash flow analysis, and estimates made by management. The acquisition of ESI Group expands our application layer portfolio with simulation capabilities that are critical to accelerate innovation in multiple end markets. These factors, among others, contributed to a purchase price in excess of the estimated fair value of ESI Group's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.

Goodwill was assigned to the CSG and EISG reportable segments, based on the expected benefits and synergies that are likely to be realized from the ESI Group acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

A portion of the overall purchase price was allocated to acquired intangible assets. Amortization expense associated with acquired intangible assets is not deductible for tax purposes. Therefore, a deferred tax liability of $98 million was established primarily for the future amortization of these intangibles and is included in “other long-term liabilities” in the table below.

The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date:

	November 3, 2023
	(in millions)
Cash and cash equivalents	$	35
Short-term investments	12
Accounts receivable	28
Other current assets	18
Property, plant and equipment	4
Operating lease right-of-use assets	8
Goodwill	603
Other intangible assets	494
Other assets	3
Total assets acquired	1,205
Accounts payable	(8)
Employee compensation and benefits	(23)
Deferred revenue	(14)
Income and other taxes payable	(11)
Operating lease liabilities	(3)
Other accrued liabilities	(18)
Debt	(24)
Retirement and post-retirement benefits	(7)
Long-term operating lease liabilities	(5)
Other long-term liabilities	(115)
Net assets acquired	$	977

The fair values of cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, employee compensation and benefits, and deferred revenue were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values of intangible assets were determined with the input from third-party valuation specialists. The fair values of property, plant and equipment and certain other liabilities were determined internally using historical carrying values and estimates made by management.

Valuation of Intangible Assets Acquired

The components of intangible assets acquired in connection with the ESI Group acquisition were as follows:

	Estimated Fair Value		Estimated useful life	Valuation Method
	(in millions)		(in years)
Developed technology	$	270	6	Multi-period excess earnings
Customer relationships	160		6	With and without
Backlog	15		3	Multi-period excess earnings
Trademark/Tradename	2		2	Relief from royalty
Total amortizable intangible assets	447
In-process research and development	47			Multi-period excess earnings
Total intangible assets	$	494

As noted above, the intangible assets were valued using different income approach methods. The significant assumptions used to estimate the fair value of the acquired intangible assets included revenue growth rates, earnings before interest and taxes, customer attrition rate, discount rate, obsolescence rate, and total operating expenses. The in-process research and development was valued by discounting forecasted cash flows directly related to the products expecting to result from the projects, net of returns on contributory assets. A discount rate of 12% was used to value the research and development projects to reflect the additional risks inherent in the acquired projects. The primary in-process projects acquired relate to next generation products which will be released in the near future. Total costs to complete for all ESI Group in-process research and development were estimated at approximately $7 million as of the close date.

Acquisition and integration costs directly related to the ESI Group acquisition are included in research and development, selling, general and administrative, other operating expense (income), net and other income (expense), net and were $39 million for the year ended October 31, 2024. For the year ended October 31, 2024, we incurred $10 million of acquisition-related compensation expense to redeem certain of ESI Group's outstanding unvested stock awards as of the date of the acquisition that were determined to relate to post-merger service periods.

Acquisition of Riscure Holding B.V.

On February 21, 2024, we acquired all the outstanding share capital of Riscure Holding B.V. (“Riscure”) for $78 million, net of cash acquired, expanding our automated security assessment capabilities and solutions for semiconductors, embedded systems, and connected devices. We recognized goodwill and other intangible assets of $52 million and $35 million, respectively, based on the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. Goodwill was assigned to the CSG reportable segment, based on the expected benefits and synergies that are likely to be realized from the Riscure acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

Acquisition of AnaPico AG

On June 12, 2024, we acquired all the outstanding share capital of AnaPico AG (“AnaPico”) for $117 million, net of cash acquired, accelerating our strategy to expand our customer base in commercial communications, automotive, aerospace, defense, and government markets. We recognized goodwill and other intangible assets of $60 million and $53 million, respectively, based on the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. The identified intangible assets primarily consist of developed technology of $28 million, customer relationships of $12 million, backlog of $1 million, and in-process research and development of $12 million. The estimated useful lives of developed technology is 9 years, customer relationships is 9 years, and backlog is 1 year. Goodwill was assigned to the CSG and EISG reportable segments, based on the expected benefits and synergies that are likely to be realized from the AnaPico acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

Supplemental Pro Forma Information (Unaudited)

The following represents pro forma operating results as if Spirent and OSG had been consolidated effective at the beginning of fiscal 2024, and ESI Group had been consolidated effective at the beginning of fiscal 2023:

	Year Ended October 31,
	2025		2024
	(in millions, except per-share amounts)
Net revenue	$	5,726	$	5,332
Net income	$	901	$	436
Net income per share - Basic	$	5.23	$	2.50
Net income per share - Diluted	$	5.20	$	2.49

The unaudited pro forma financial information for the fiscal years 2025 and 2024 combines the historical results of Keysight, Spirent, OSG, and ESI Group, assuming Spirent and OSG were combined as of November 1, 2023, and ESI Group was combined as of November 1, 2022. The pro forma information includes business combination accounting effects from the acquisition including amortization and depreciation charges from acquired intangible assets and property, plant and equipment, stock-based compensation expense, acquisition-related transaction costs, and tax-related effects. Gains resulting from our foreign exchange contracts to hedge the Spirent acquisition price of $51 million and $23 million were included in 2025 and 2024, respectively. Losses resulting from our foreign exchange contracts to hedge the ESI Group acquisition price of $18 million was included in 2024. The pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2024.

Pro forma results of operations for other acquisitions in 2025 and 2024 have not been presented because the effects of the acquisitions were not material to the company’s financial results.