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    Earnings call· Jul 2025(Q3 FY25)

    AGILENT TECHNOLOGIES, INC. A

    Aug 27, 2025 Source

    Executive summary

    Agilent Q3 FY25 — Strong Revenue Growth and Raised Full-Year Outlook

    Agilent delivered strong Q3 FY25 results, with core revenue growth accelerating for the fifth consecutive quarter, driven by robust performance in Pharma and Chemicals & Advanced Materials. The company raised its full-year revenue guidance, reflecting confidence in continued momentum despite margin pressures from tariffs and increased investments. Management emphasized the effectiveness of its Ignite operating model in mitigating headwinds and driving future growth and market share gains.

    Highlights

    5

    • Q3 revenue of $1.74 billion exceeded guidance.

    • Core revenue growth accelerated to 6.1% in Q3, marking the fifth consecutive quarter of sequential acceleration.

    • Pharma and Chemicals & Advanced Materials end markets grew 9% and 10% respectively.

    • Full-year revenue guidance raised by $150 million at the midpoint, representing 1.5 percentage points of additional core growth.

    • Instrument book-to-bill remained above 1 for the last 6 quarters.

    Concerns

    4

    • Gross margins were down year-on-year, driven by currency, tariffs, and the impact of a BIOVECTRA shutdown.

    • Operating margin was below expectations due to higher tariff costs, increased variable pay, and incremental commercial investments.

    • The PFAS business in Americas declined 20% due to U.S. EPA changes causing CapEx uncertainty.

    • U.S. biopharma spending and the Academia & Government end market remained challenging.

    Guidance & targets

    17
    CategoryTargetConfidence
    Full-year FY25 Revenue
    $6.91 billion to $6.93 billion
    high materiality
    High
    Full-year FY25 Core Revenue Growth
    4.5% at the midpoint
    high materiality
    High
    Full-year FY25 EPS
    $5.56 and to $5.59
    high materiality
    High
    Q4 FY25 Revenue
    $1.82 billion to $1.84 billion
    high materiality
    High
    Q4 FY25 Non-GAAP EPS
    $1.57 and $1.60
    high materiality
    High
    Q4 FY25 Operating Margin Improvement
    approximately 230 basis points
    medium materiality
    High
    Full-year FY25 Net Tariff Cost
    $20 million
    high materiality
    High
    FY26 Tariff Mitigation
    fully mitigate the impact of tariffs
    high materiality
    High
    Full-year FY25 Tax Rate
    12%
    medium materiality
    High
    Full-year FY25 Other Income
    $26 million
    low materiality
    High
    Full-year FY25 Diluted Shares Outstanding
    285 million
    low materiality
    High
    Q4 FY25 Pharma End Market Growth
    mid- to high single-digit growth
    medium materiality
    High
    Q4 FY25 Chemicals & Advanced Materials End Market Growth
    high single-digit growth
    medium materiality
    High
    Q4 FY25 Diagnostics & Clinical End Market Growth
    mid-single-digit growth
    medium materiality
    High
    Q4 FY25 Food End Market Growth
    mid-single-digit growth
    medium materiality
    High
    Q4 FY25 Environmental & Forensics End Market Growth
    very low single-digit growth
    medium materiality
    High
    Q4 FY25 Academia & Government End Market Growth
    mid-single-digit decline
    medium materiality
    High

    Segment performance

    10
    SegmentRevenueYoYQoQMargin
    Life Science and Diagnostics (LDG)
    Growth was led by excellent low double-digit performance for LC and LC/MS instruments, leveraging the Infinity III launch. The CDMO business, including NASD and BIOVECTRA, also had a strong quarter, with BIOVECTRA executing a planned facility shutdown for a key customer.
    LC and LC/MS instruments growth: low double-digitNASD revenue growth: high 20s
    		—7% core——
    Applied Markets Group (AMG)
    Growth was ahead of expectations, with market-leading platforms like GC, GC/MS, and Spectroscopy delivering strong growth. Geographically, Asia ex China and EMEA led, driven by supply chain reshoring, greenfield opportunities, capacity expansion, and replacement from a large installed base. New products like the 8850 GC are ramping up ahead of expectations.
    		—5%——
    Agilent CrossLab Group (ACG)
    Performance was better than guided, despite a $15 million tariff-driven pull forward of sales into Q2. Consumables growth was supported by e-commerce and digital focus. Services business was led by strength in Applied Markets in Europe. Lab activity remains strong, providing confidence for future business.
    Consumables growth: mid-single-digitServices business growth: mid-single-digitCustomer satisfaction (service): >90%
    		—5%——
    Pharma
    Continued steady improvements, with positive momentum in funnel conversion as lab managers gain access to capital budgets. Reduced dependence on executive-level approvals is enabling faster spending. GLP-1s continue to drive demand for analytical lab solutions and BIOVECTRA capabilities.
    Small molecule growth: double digits
    		—9%——
    Chemicals & Advanced Materials
    Broad strength globally, with growth balanced between increased capital investment from Chemicals customers and robust demand in the Advanced Materials space, driven by new semiconductor fab facilities. Market leadership in key product platforms positions the company to capture significant instrument replacement opportunities.
    		—10%——
    Asia ex China
    Capitalizing on opportunities from reshoring of supply chains and increasing safety regulations. India led the region with 20% overall growth, driven by broad strength and investments in semiconductor and EV manufacturing.
    Food markets growth: mid-20s percent
    		—10%——
    India
    Led growth in Asia ex China with broad strength across end markets. Success with Infinity III in pharma QA/QC environments and increased demand from semiconductor and EV manufacturing investments. A strategic growth market for Agilent, with new Biopharma Experience Center opened in Hyderabad.
    		—20%——
    Europe
    Broad-based growth, with double-digit growth in Pharma and Food, and high single-digit results in Chemicals & Advanced Materials and Academia & Government.
    		—7%——
    China
    Results continued to be stable as expected. Some government funding flowed to Academia & Government customers. Expectation for a more meaningful stimulus impact towards the end of the calendar year, primarily in Applied Markets.
    		—4%——
    Americas
    Improved capital spending drove instrument placements. Saw nice low double-digit growth in small-molecule Pharma and Chemicals & Advanced Materials. Challenging conditions persisted for biopharma spending and in the Academia & Government space.
    		—5%——

    Operational metrics

    23
    Core revenue growth
    6.1%YoY
    Q3 FY25

    Fifth consecutive quarter of sequential acceleration.

    Reported revenue growth
    10.1%YoY
    Q3 FY25

    Reported growth for Q3 FY25.

    Currency impact on revenue
    2.1%favorable
    Q3 FY25

    Favorable impact, 1.5% better than estimated.

    M&A impact on revenue
    1.9%
    Q3 FY25

    In line with expectations.

    Gross margin
    53.1%down YoY
    Q3 FY25

    Down year-on-year, driven by currency, tariffs, and BIOVECTRA shutdown impact.

    Operating margin
    25.1%consistent across year
    Q3 FY25

    Consistent across the year in increasingly challenging conditions.

    EPS
    $1.37up 4% YoY
    Q3 FY25

    At the high end of expectations.

    Capital expenditures
    $103 million
    Q3 FY25

    Investment in Q3 FY25.

    Shares purchased
    $85 million
    Q3 FY25

    Amount of shares repurchased.

    Dividends paid
    $71 million
    Q3 FY25

    Amount of dividends paid.

    Net leverage ratio
    0.9x
    Q3 FY25 end

    Very strong balance sheet.

    Full-year FY25 EPS growth
    5.1% to 5.7%YoY
    FY25

    Year-on-year increase.

    Full-year FY25 Net Tariff Cost
    $20 millionup from minimal impact
    FY25

    Anticipated net cost for the year, up from minimal impact guided in May, due to higher revenue and increased tariffs on European imports.

    Q4 FY25 Non-GAAP EPS growth
    7.5% to 9.6%YoY
    Q4 FY25

    Leveraged earnings growth.

    Q4 FY25 Operating Margin Sequential Improvement
    230sequential improvement
    Q4 FY25

    Expected to come from leveraging fixed costs on increased volume, significant CDMO revenue, and Ignite benefits.

    Pricing improvement
    100YoY
    Q3 FY25

    Value-driven pricing delivered results twice the impact of last year (50 bps last year).

    Management layers reduction
    15%
    FY25

    Streamlined the enterprise by reducing management layers by more than 15%.

    Cost savings in key categories
    double-digit
    FY25

    Delivering double-digit savings in key cost categories through consistent enterprise-wide approach to manufacturing and procurement.

    NASD revenue growth
    high 20sYoY
    Q3 FY25

    Continued growing demand for siRNA modalities.

    Infinity III LC platform growth
    mid-teensYoY
    Q3 FY25

    Early adopters coming back for larger follow-on purchases.

    PFAS business growth
    low double digitsYoY
    Q3 FY25

    Against a tough compare of nearly 50% growth last year. Excellent demand outside the Americas.

    PFAS business growth
    -20%YoY
    Q3 FY25

    Due to U.S. EPA changes leading to cautiousness on new capital spending.

    Service customer satisfaction
    >90%
    Q3 FY25

    Achieved by Agilent service.

    Industry KPIs

    10
    MetricValueDetails
    Revenue EPS guidanceFY25 Revenue: $6.91B-$6.93B, FY25 EPS: $5.56-$5.59, Q4 FY25 Revenue: $1.82B-$1.84B, Q4 FY25 EPS: $1.57-$1.60USD
    China revenue exposure4%%
    Pricing price realization100bps
    Diagnostics testing demand—
    M a contribution synergies1.9%%
    Segment organic revenue growthLife Science and Diagnostics: 7% core, Applied Markets Group: 5%, Agilent CrossLab Group: 5%%
    Bioprocessing orders book to billabove 1
    Reshoring US manufacturing tailwind10%%
    Instruments vs consumables services mixInstruments: high single digits, LC and LC/MS instruments: low double digits, Consumables: mid-single-digit, Services: mid-single-digit%
    Organic core revenue growth by end marketPharma: 9%, Chemicals & Advanced Materials: 10%, Food: healthy contribution, Diagnostics & Clinical: healthy contribution, Academia & Government: modest growth, Environmental & Forensics: decline%

    Product announcements

    4
    ProductTypeDetails
    Dako Omnis familylaunch
    Infinity III LC platformupdate
    Pro iQ LC/MS systemlaunch
    8850 GClaunch

    Deals & partnerships

    1
    Key customer (BIOVECTRA)Transition to higher throughput process for CDMO services

    BIOVECTRA delivered on expectations while executing a planned facility shutdown to work with a key customer to transition to a higher throughput process.

    Risks & headwinds

    5
    Higher tariff costsFY25, peaking in Q4 FY25

    $35 million in Q3 FY25, $35 million expected in Q4 FY25, totaling $70 million for H2 FY25. Full-year FY25 net cost of $20 million.

    Mitigation: Reorganizing supply chains, shifting production across global footprint, implementing targeted pricing actions. Full mitigation expected in FY26.

    Muted U.S. biopharma spendingQ3 FY25, persistent

    Biopharma (ex-NASD) was flat in Q3 FY25.

    Mitigation: Capitalizing on improving conditions with deeper visibility into customer needs through lab-wide enterprise service relationships. Expects steady release of capital as interest rates come down.

    U.S. EPA changes impacting Environmental & Forensics (PFAS) businessQ3 FY25, with some question over Q4 FY25 and Q1 FY26

    Americas PFAS business down 20% in Q3 FY25.

    Mitigation: No policy change impacts testing volume, but uncertainty around CapEx spend. Global PFAS business remains strong.

    Academia & Government funding pressures in the U.S.Q3 FY25, expected Q4 FY25

    Mid-single-digit decline expected in Q4 FY25.

    BIOVECTRA facility shutdown for process transitionQ3 FY25

    Delivered on expectations despite shutdown.

    Mitigation: Executed planned shutdown to transition to a higher throughput process with a key customer.

    What to watch in Q4 FY25

    5

    Tariff mitigation progress

    FY26
    Current$70M tariff cost for H2 FY25, peaking in Q4.
    TargetNet impact trending downwards, full mitigation.

    Why it matters

    Successful mitigation of tariffs is crucial for margin expansion and overall profitability, as it was a significant headwind in FY25.

    The headwind will peak in Q4 and the net impact in dollars will trend downwards at the start of '26, and we'll fully mitigate tariffs in '26.

    Q&A highlights

    7

    Can you elaborate on the three factors impacting margins and the expected return on commercial investments for Q4 and FY26?

    Tariffs and logistics costs were the largest impact, peaking in Q4 and expected to trend down in FY26 with full mitigation. Commercial investments are strategic to capture demand from replacement cycles and new product launches, aiming for market share gains.

    “The headwind will peak in Q4 and the net impact in dollars will trend downwards at the start of '26, and we'll fully mitigate tariffs in '26.”

    asked by Daniel Brennan · answered by Padraig McDonnell

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 Performance Highlights

    Agilent reported $1.74 billion in Q3 revenue, exceeding guidance, with core revenue growth accelerating to 6.1%. This marks the fifth consecutive quarter of sequential acceleration, demonstrating durable momentum. The company also delivered $1.37 EPS, at the high end of expectations, growing 4% from a year ago. This strong performance is attributed to laser-focus on customers and a commitment to advancing quality of life.

    02

    End Market Strength and Drivers

    Pharma and Chemicals & Advanced Materials were key growth drivers, expanding 9% and 10% respectively. Small molecule pharma saw double-digit growth, fueled by demand in QA/QC and strong adoption of the Infinity III LC platform, with GLP-1s also contributing. Chemicals & Advanced Materials rebounded globally, supported by new investments in semiconductor and chemical sectors, and a significant instrument replacement opportunity after years of underinvestment. Food and Diagnostics & Clinical end markets also contributed healthily, while Academia & Government returned to modest growth despite funding pressures.

    03

    Ignite Operating Model Impact

    The Ignite enterprise operating model is credited for driving value-driven pricing, which delivered twice the impact of last year. It also streamlined operations by reducing management layers by over 15%, enhancing speed and agility. These efforts have already resulted in double-digit savings in key cost categories. The Ignite tariff task force has been instrumental in reorganizing supply chains and shifting production to mitigate tariff impact🌐s, with full mitigation expected in FY26.

    04

    Innovation and Product Adoption

    Key product platforms are driving both near-term revenue and sustained future growth. The Infinity III LC platform delivered mid-teens growth, with early adopters returning for larger follow-on purchases due to superior performance. The Pro iQ LC/MS system is tracking ahead of launch forecasts, securing key accounts at major pharma customers. Additionally, the newly launched Dako Omnis family expands the automated pathology platform to a broader range of lab sizes, strengthening the diagnostics portfolio.

    05

    Geographic Performance and China Outlook

    All regions demonstrated at least mid-single-digit growth. Asia ex China grew 10%, with India leading at 20% overall growth due to broad strength and investments in semiconductor and EV manufacturing. Europe grew 7%, driven by double-digit growth in Pharma and Food. China remained stable at 4% growth, with expectations for a more meaningful stimulus impact towards the end of the calendar year, particularly in Applied Markets, driven by the 'new quality productive forces' policy.

    06

    Margin Dynamics and Strategic Investments

    While top-line performance was strong, Q3 operating margins were below expectations due to higher tariff costs from increased shipment volumes, higher variable pay, and incremental commercial investments. These strategic investments are aimed at supporting current growth and future market share gains, particularly in response to improving market conditions and successful product launches. The company expects significant sequential operating margin improvement in Q4, driven by increased volume and Ignite benefits.

    AI-generated summary of the company’s earnings call. Not investment advice.