Results
Agilent Technologies Inc.
12/22/2025 | Press release | Distributed by Public on 12/22/2025 05:01
Annual Report for Fiscal Year Ending October 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. This report contains forward-looking statements including, without limitation, statements regarding growth opportunities, including for and in our end markets, new product and service introductions, the position and strength of our businesses, products and services, market demand for and adoption of our products and solutions, the ability of our products and solutions to address customer needs and meet industry requirements, our focus on enhancing our customers' experience, delivering differentiated product solutions and driving productivity improvements, leveraging our product platforms to maximize growth, our investments, including in manufacturing infrastructure, research and development and expanding and improving our applications and solutions portfolios, expanding our
position in developing countries and emerging markets, our contributions to our defined benefit plans, our hedging programs and other actions to offset the effects of foreign currency and interest rate movements, our future effective tax rate, unrecognized tax benefits, reimbursement incentives, our ability to satisfy our liquidity requirements, including through cash generated from operations, the potential impact of adopting new accounting pronouncements, indemnification obligations, our sales, our purchase commitments, our capital expenditures, the integration, effects and timing of our acquisitions and other transactions, expense reduction and other results from our restructuring programs and other cost saving initiatives, our stock repurchase program and dividends, macroeconomic and market conditions, including relating to or arising from changes to tariffs, import/export or trade policies, the recovery and health of our end markets, seasonality, mix, future financial results, our operating margin, our geographical diversification, interest rates, inflationary pressures and local regulations and restrictions, that involve risks and uncertainties. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including those discussed in Part I Item 1A and elsewhere in this Annual Report on Form 10-K.
Overview and Executive Summary
Agilent Technologies, Inc. ("we," "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader in life sciences, diagnostics and applied markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow.
New Segment Structure
In November 2024, we announced a change in our organizational structure to support our market-focused, customer-centric strategy. Our former Diagnostics and Genomics segment combined with our liquid chromatography and liquid chromatography mass spectrometry instrument platforms to form our new Life Sciences and Diagnostics Markets segment. Our chemistries and supplies, laboratory automation, and software and informatics divisions moved from our former Life Sciences and Applied Markets segment to our Agilent CrossLab segment. The remaining divisions in our former Life Sciences and Applied Markets segment which includes our gas chromatography, gas chromatography mass spectrometry, remarketed instruments, spectroscopy and vacuum divisions formed our new Applied Markets segment.
Following this re-organization, we have three business segments- Life Sciences and Diagnostics Markets, Agilent CrossLab and Applied Markets, each of which comprises a reportable segment. All historical financial segment information has been recast to conform to this new presentation.
Global Tariffs
Recent changes to tariffs and trade policies by the U.S. and other countries have increased risk and uncertainty surrounding our future results of operations. In the first half of fiscal year 2025, changes to tariffs and trade policies did not have a material impact on our results of operations. In the second half of fiscal year 2025, the U.S. government introduced additional measures related to tariffs, including certain increases, exemptions and pauses, and other countries have responded with preliminary agreements and retaliatory actions. The ultimate impact of changes to tariffs and trade policies will depend on various factors, including the timing, amount, scope, and nature of any tariffs or trade policies implemented and our ability to respond to mitigate the impact of such tariffs and trade policies. While the recent tariff changes adversely impacted our costs of revenue beginning in the second half of fiscal year 2025, we expect to substantially mitigate the impact during our fiscal year 2026. With inflationary and tariff-related pressures remaining fluid, we are actively pursuing mitigation strategies through supply chain optimization, targeted pricing actions, and other cost-efficiency initiatives to protect margins and sustain long-term growth. We continue to monitor these evolving trade dynamics closely, as they may influence future revenue and operational efficiency.
Actual Results
Agilent's net revenue of $6,948 million in 2025 increased 7 percent when compared to 2024. The overall effect of foreign currency movements had no impact on revenue growth in the year ended October 31, 2025 when compared to 2024. For the year ended October 31, 2025, net revenue growth came from all of our segments, all geographic regions we serve and most of our key end markets when compared to the same period last year. Revenue from our BIOVECTRA acquisition contributed approximately 2 percentage points in 2025. Revenue in the Life Sciences and Diagnostics Markets segment increased 11 percent in 2025 when compared to 2024. The overall effect of foreign currency movements had a 1 percentage point favorable impact on revenue growth in 2025 when compared to 2024. Revenue from our BIOVECTRA acquisition contributed approximately 5 percentage points in 2025. Revenue in the Agilent CrossLab business increased 6 percent in 2025
when compared to 2024. The overall effect of foreign currency movements had no impact on revenue growth in 2025 when compared to 2024. Revenue in the Applied Markets segment increased 1 percent in 2025 when compared to 2024. The overall effect of foreign currency movements had a 1 percentage point unfavorable impact on revenue growth in 2025 when compared to 2024.
Agilent's net revenue of $6,510 million decreased 5 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023. Net revenue declined in our Life Sciences and Diagnostics Markets and Applied Markets segments, mostly in the pharmaceutical market, due primarily to the overall pressures on our customers' capital expenditure spending which continued in 2024. Revenue declines were partially offset by revenue growth in our Agilent CrossLab segment. Revenue in the Life Sciences and Diagnostics Markets segment decreased 11 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023. Revenue in the Agilent CrossLab segment increased 3 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had a 1 percentage point unfavorable impact on revenue growth in 2024 when compared to 2023. Revenue in the Applied Markets segment decreased 7 percent in 2024 when compared to 2023.The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023.
Net income was $1,303 million in 2025 compared to net income of $1,289 million and $1,240 million in 2024 and 2023, respectively. Net income in 2025 was favorably impacted by several tax benefits that reduced our overall tax provision. Net income in 2024 was impacted by cost-saving initiatives and higher interest income. Net income in 2023 was impacted by the asset impairment charges primarily related to the exit of our Resolution Bioscience business and lower tax expense. As of October 31, 2025 and 2024, we had cash and cash equivalents balances of $1,789 million and $1,329 million, respectively.
2021 Repurchase Program.During the year ended October 31, 2023, we repurchased and retired 661,739 shares for $99 million, excluding excise taxes, under this authorization. On March 1, 2023, the 2021 repurchase program was terminated and the remaining authorization of $339 million expired.
2023 Repurchase Program. The 2023 repurchase program commenced on March 1, 2023, and was completed in September 2025. During the year ended October 31, 2023, we repurchased and retired 3.9 million shares for $476 million, excluding excise taxes, under this authorization. During the year ended October 31, 2024, we repurchased and retired 8.4 million shares for $1,150 million, excluding excise taxes, under this authorization. During the year ended October 31, 2025 we repurchased and retired 3.0 million shares for $374 million, excluding excise taxes, under this authorization. As of October 31, 2025, we had no remaining authorization to repurchase our common stock under the 2023 repurchase program.
2024 Repurchase Program.On May 29, 2024, we announced that our board of directors had approved a new share repurchase program (the "2024 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs. The 2024 repurchase program authorizes the purchase of up to $2.0 billion, excluding excise taxes, of our common stock at the company's discretion and has no fixed termination date. The 2024 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. The 2024 repurchase program became effective on August 1, 2024 and commenced upon completion of our 2023 repurchase program in September 2025. During the year ended October 31, 2025 we repurchased and retired 381,670 shares for $51 million excluding excise taxes, under this authorization. As of October 31, 2025, we had remaining authorization to repurchase up to approximately $1.9 billion of our common stock under the 2024 repurchase program.
Excise Taxes.The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. We record the applicable excise taxes payable related to repurchases of our common stock as an incremental cost of the shares repurchased and a corresponding liability for the excise tax payable in other accrued liabilities on our consolidated balance sheet. For share repurchases made during the year ended October 31, 2025, we recorded the applicable excise taxes payable of approximately $3 million. During fiscal year 2024 and 2023, we recorded the applicable excise taxes payable of approximately $10 million and $3 million, respectively, which were paid in the fiscal year following the repurchases.
Dividends.During the year ended October 31, 2025, cash dividends of $0.992 per share, or $282 million were declared and paid on the company's outstanding common stock. During the year ended October 31, 2024, cash dividends of $0.944 per share, or $274 million were declared and paid on the company's outstanding common stock. During the year ended October 31, 2023, cash dividends of $0.900 per share, or $265 million were declared and paid on the company's outstanding common stock.
On November 19, 2025, we declared a quarterly dividend of $0.255 per share of common stock, or approximately $72 million which will be paid on January 28, 2026, to shareholders of record as of the close of business on January 6, 2026. The timing and amounts of any future dividends are subject to determination and approval by our board of directors.
Looking Forward.Our primary focus remains on enhancing our customers' experience, delivering differentiated product solutions and driving productivity improvements. After an extended period of constrained capital spending, many customers' ability to spend capital budgets has begun to normalize, with the exception of customers receiving funding from the U.S. federal government. We remain optimistic about the long-term health of our key end markets. While the recent tariff changes adversely impacted our costs of revenue beginning in the second half of fiscal year 2025, we expect to substantially mitigate the impact during our fiscal year 2026. With inflationary and tariff-related pressures remaining fluid, we are actively pursuing mitigation strategies through supply chain optimization, targeted pricing actions, and other cost-efficiency initiatives to protect margins and sustain long-term growth.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management's best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur could materially change the financial statements. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, retirement and post-retirement plan assumptions, valuation of goodwill and purchased intangible assets, restructuring and accounting for income taxes.
Revenue Recognition. We enter into contracts to sell products, services or combinations of products and services. Products may include hardware or software and services may include one-time service events or services performed over time.
We derive revenue primarily from the sale of analytical and diagnostics products and services. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under Accounting Standard Codification Topic 606, Revenue from Contracts with Customers, ("ASC 606''). Revenue is recognized when control of the promised products or services is transferred to our customers and the performance obligation is fulfilled in an amount that reflects the consideration that we expect to be entitled in exchange for those products or services, the transaction price. For equipment, consumables, and most software licenses, control transfers to the customer at a point in time. We use present right to payment, legal title, physical possession of the asset, and risks and rewards of ownership as indicators to determine the transfer of control to the customer. For products that transfer control over time, revenue is recognized as the performance obligation is satisfied. Product over time revenue is assessed against the following criteria: the performance creates an asset that the customer controls as the asset is created; the asset has no alternative use; and we have an enforceable right to payment. Where acceptance is not a formality, the customer must have documented their acceptance of the product or service. For products that include installation, if the installation meets the criteria to be considered a separate performance obligation, product revenue is recognized when control has passed to the customer, and recognition of installation revenue occurs once completed. Product revenue, including sales to resellers and distributors is reduced for provisions for warranties, returns, and other adjustments in the period the related sales are recorded.
Service revenue includes extended warranty, customer and software support including: Software as a Service, post contract support, consulting including companion diagnostics, and training and education. Instrument service contracts and software maintenance contracts are typically annual contracts, which are billed at the beginning of the contract or maintenance period. Revenue for these contracts is recognized on a straight-line basis to revenue over the service period, as a time-based measure of progress best reflects our performance in satisfying this obligation. There are no deferred costs associated with the service contract, as the cost of the service is recorded when the service is performed. Service calls not included in a support contract are recognized to revenue at the time a service is performed.
We have sales from standalone software. These arrangements typically include software licenses and maintenance contracts, both of which we have determined are distinct performance obligations. We determine the amount of the transaction price to allocate to the license and maintenance contract based on the relative standalone selling price of each performance obligation. Software license revenue is recognized at the point in time when control has been transferred to the customer. The revenue allocated to the software maintenance contract is recognized on a straight-line basis over the maintenance period,
which is the contractual term of the contract, as a time-based measure of progress best reflects our performance in satisfying this obligation. Unspecified rights to software upgrades are typically sold as part of the maintenance contract on a when-and-if-available basis.
Our multiple-element arrangements are generally comprised of a combination of instruments, installation or other start-up services, and/or software, and/or support or services. Hardware and software elements are typically delivered at the same time and revenue is recognized when control passes to the customer. Service revenue is deferred and recognized over the contractual period or as services are rendered and accepted by the customer. Our arrangements generally do not include any provisions for cancellation, termination, or refunds that would significantly impact recognized revenue.
For contracts with multiple performance obligations, we allocate the consideration to which we expect to be entitled to each performance obligation based on relative standalone selling prices and recognize the related revenue when or as control of each individual performance obligation is transferred to customers. We estimate the standalone selling price by calculating the average historical selling price of our products and services per geographic region for each performance obligation. Stand-alone selling prices are determined for each distinct good or service in the contract, and then we allocate the transaction price in proportion to those standalone selling prices by performance obligations.
A portion of our revenue relates to lease arrangements. Standalone lease arrangements are outside the scope of ASC 606 and are therefore accounted for in accordance with ASC 842, Leases ("ASC 842"). Each of these contracts is evaluated as a lease arrangement, either as an operating lease or a sales-type finance lease using the current lease classification guidance. In a lease arrangement that is a multiple-element arrangement, the revenue associated with the lease component is treated under the lease accounting standard ASC 842, whereas the revenue associated with the non-lease component is recognized in accordance with the ASC 606 revenue standard.
Inventory Valuation.Inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of market value. We assess the valuation of our inventory on a periodic basis and make adjustments to the value for estimated excess and obsolete inventory based upon estimates and assumptions about future demand, economic conditions and actual usage, which require management judgment. Such estimates are difficult to make under most economic conditions. The excess balance determined by this analysis becomes the basis for our excess inventory charge. Our excess inventory review process includes analysis of inventory levels, sales trends and forecasts, managing product rollovers and working with manufacturing to maximize recovery of excess inventory and to estimate and record reserves for excess, slow-moving and obsolete inventory. If actual market conditions are less favorable than those projected by management, additional write-downs may be required. If actual market conditions are more favorable than anticipated, inventory previously written down may be sold to customers, resulting in lower cost of sales and higher income from operations than expected in that period.
Retirement and Post-Retirement Benefit Plan Assumptions.Retirement and post-retirement benefit plan costs are a significant cost of doing business. They represent obligations that will ultimately be settled sometime in the future and therefore are subject to estimation. Pension accounting is intended to reflect the recognition of future benefit costs over the employees' average expected future service to Agilent based on the terms of the plans and investment and funding decisions. To estimate the impact of these future payments and our decisions concerning funding of these obligations, we are required to make assumptions using actuarial concepts within the framework of accounting principles generally accepted in the U.S. Two critical assumptions are the discount rate and the expected long-term return on plan assets. Other important assumptions include expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnover, retiree mortality rates, and portfolio composition. We evaluate these assumptions at least annually.
The discount rate is used to determine the present value of future benefit payments at the measurement date - October 31 for both U.S. and non-U.S. plans. For 2025 and 2024, the U.S. discount rates were based on the results of matching expected plan benefit payments with cash flows from a hypothetically constructed bond portfolio. In 2025, discount rates for the U.S. post-retirement benefit plans decreased compared to the previous year due to the decrease in the corporate bond rates. For 2025 and 2024, the discount rates for non-U.S. defined benefit plans were generally based on published rates for high quality corporate bonds and in 2025, mostly increased compared to the previous year. If we had changed our discount rate by 1 percent, the impact would have been approximately $1 million on U.S. defined benefit plans and post-retirement benefit plans expense and $12 million on non-U.S. defined benefit plans expense for the year ended October 31, 2025. Lower discount rates usually increase present values of the pension benefit obligation and subsequent year pension expense; higher discount rates usually decrease present values of the pension benefit obligation and subsequent year pension expense.
The company uses alternate methods of amortization as allowed by the authoritative guidance which amortizes the actuarial gains and losses on a consistent basis for the years presented. For U.S. defined benefit plans, gains and losses are amortized over the average future lifetime of participants using the corridor method. For most non-U.S. defined benefit plans
and U.S. post-retirement benefit plans, gains and losses are amortized over the average remaining future service period using a separate layer for each year's gains and losses.
In the U.S., target asset allocations for our retirement and post-retirement benefit plans were approximately 50 percent to equities and approximately 50 percent to fixed income investments as of October 31, 2025. Our Deferred Profit-Sharing Plan target asset allocation is approximately 60 percent to equities and approximately 40 percent to fixed income investments. Approximately 1 percent of the retirement and post-retirement plans consists of limited partnerships. Outside the U.S., our target asset allocation (excluding annuity contracts in the U.K.) ranges from zero percent to 60 percent to equities, from 38 percent to 100 percent to fixed income investments, and from zero to 25 percent to real estate, depending on the plan. All plans' assets are broadly diversified. Due to fluctuations in equity and bond markets, our actual allocations of plan assets at October 31, 2025, may differ from the target allocation. Our policy is to bring the actual allocation in line with the target allocation.
Equity securities include exchange-traded common stock of companies from broadly diversified industries. Fixed income securities include a global portfolio of corporate bonds of companies from diversified industries, government securities, mortgage-backed securities, asset-backed securities, derivative instruments and other. The annuity contracts are insurance buy-in contracts issued by a third-party insurance company to cover the benefit obligations of all participants under the U.K. defined benefit plan and are funded with existing pension plan assets with no adjustment made to the benefit obligations. Real estate securities include holdings of managed investment funds which invest primarily in the equity instruments of real estate investment trusts and other similar real estate investments. Other investments include a group trust consisting primarily of private equity partnerships.
The expected long-term return on plan assets is estimated using current and expected asset allocations as well as historical and expected returns. Plan assets are valued at fair value. If we had changed our estimated return on assets by 1 percent, the impact would have been $5 million on U.S. defined benefit plans and post-retirement benefit plans expense and $9 million on non-U.S. defined benefit plans expense for the year ended October 31, 2025. The total net periodic pension and post-retirement benefit costs recorded were a $24 million benefit in 2025, $9 million benefit in 2024 and $6 million expense in 2023. These costs included a loss on settlement of $15 million, $2 million and $4 million, for the years ended October 31, 2025, 2024 and 2023, respectively. In 2025, a settlement loss of $14 million was recognized in connection with the buy-out of our Netherlands defined benefit pension plan.
Goodwill and Purchased Intangible Assets.We assess our goodwill and purchased intangible assets for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Under the authoritative guidance, we have the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The accounting standard gives an entity the option to first assess qualitative factors to determine whether performing the quantitative test is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (i.e., greater than 50% chance) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required.
The guidance includes examples of events and circumstances that might indicate that a reporting unit's fair value is less than its carrying amount. These include macro-economic conditions such as deterioration in the entity's operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers.
If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then we are required to perform a quantitative impairment test on goodwill to identify and measure the amount of a goodwill impairment loss to be recognized. A goodwill impairment loss, if any, is measured as the amount by which a reporting unit's carrying value, including goodwill, exceeds its fair value, not to exceed the carrying amount of goodwill. As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. We aggregate components of an operating segment that have similar economic characteristics into our reporting units.
At the beginning of fiscal year 2025, in connection with the change in our segment reporting, we assessed goodwill impairment for our three reporting units which consisted of our three segments: Life Sciences and Diagnostics Markets, Agilent CrossLab and Applied Markets. We performed a quantitative test for goodwill impairment of the three reporting units as of November 1, 2024, due to the change in our segment structure, and based on the results, there was noimpairment of goodwill.
In fiscal year 2025, we again assessed goodwill impairment for our three reporting units which consisted of our three operating segments: Life Sciences and Diagnostics Markets, Agilent CrossLab and Applied Markets. We performed a
qualitative test for goodwill impairment of the three reporting units, as of September 30, 2025, our annual impairment test date. Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair values of these reporting units are greater than their respective carrying values. Each quarter we review the events and circumstances to determine if goodwill impairment is indicated. There was no impairment of goodwill during the years ended October 31, 2025, 2024 and 2023.
Purchased intangible assets consist primarily of acquired developed technologies, proprietary know-how, trademarks, and customer relationships and are amortized using the best estimate of the asset's useful life that reflects the pattern in which the economic benefits are consumed or used up or a straight-line method ranging from 2 years to 13 years. Our determination of the fair value of the intangible assets acquired involves the use of significant estimates and assumptions. Specifically, our determination of the fair value of the developed product technology and in-process research and development ("IPR&D") acquired involves significant estimates and assumptions related to revenue growth rates and discount rates. Our determination of the fair value of customer relationships acquired involves significant estimates and assumptions related to revenue growth rates, discount rates, and customer attrition rates. Our determination of the fair value of the trade name acquired involves the use of significant estimates and assumptions related to revenue growth rates, royalty rates and discount rates. We value backlog using the discounted cash flows based on the estimated revenue from pending orders. We value license agreements based on the expected future cash receipts from license agreements, discounted to present value over the term of the agreement. We believe that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use. Actual results could differ materially from these estimates. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When the IPR&D project is complete, it is reclassified as an amortizable purchased intangible asset and is amortized over its estimated useful life. If an IPR&D project is abandoned, we will record a charge for the value of the related intangible asset to our consolidated statement of operations in the period it is abandoned.
We continually monitor events and changes in circumstances that could indicate carrying amounts of finite-lived intangible assets may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of finite-lived intangible assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.
Our indefinite-lived intangible assets are IPR&D intangible assets. The accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the issued impairment testing guidance for goodwill and allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset to determine whether it is more-likely-than-not (i.e., greater than 50% chance) that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. As of October 31, 2025 and 2024, we do not have any indefinite-lived intangible assets.
During fiscal years 2025 and 2023, there were no impairments of indefinite-lived intangible assets. During fiscal year 2024, we recorded an impairment of in-process research and development of $6 million in research and development in the consolidated statement of operations related to a project in our Applied Markets segment.
Restructuring.The main components of our restructuring plan are related to workforce reductions, consolidation of excess leased facilities and site closures. Workforce reduction charges are accrued when payment of benefits becomes probable that the employees are entitled to the severance and the amounts can be estimated. Consolidation of facilities costs primarily consists of accelerated depreciation of right-of-use assets classified as held and used. In accordance with the accounting guidance, it was determined that certain assets had been abandoned, and an assessment was made of the remaining useful lives and potential alternative uses. If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated, the actual amounts of restructuring and other related charges could be materially different, either higher or lower, than those we have recorded. See Note 16, "Restructuring and Other Related Costs" to the consolidated financial statements for additional information.
Accounting for Income Taxes. We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions, and in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as interest and penalties related to uncertain tax positions. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period. On a quarterly basis, we provide for income taxes based upon an estimated annual effective tax rate. The effective tax rate is highly dependent upon the geographic composition of worldwide earnings, tax regulations governing each region, availability of tax credits and
the effectiveness of our tax planning strategies. We monitor the changes in many factors and adjust our effective income tax rate on a timely basis. If actual results differ from these estimates, this could have a material effect on our financial condition and results of operations.
Significant management judgment is also required in determining whether deferred tax assets will be realized in full or in part. When it is more-likely-than-not that all or some portion of deferred tax assets may not be realized, a valuation allowance must be established against such deferred tax assets. We consider all available positive and negative evidence on a jurisdiction-by-jurisdiction basis when assessing whether it is more likely than not that deferred tax assets are recoverable. We consider evidence such as our past operating results, the existence of losses in recent years and our forecast of future taxable income.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax law and regulations in a multitude of jurisdictions. Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds will continue to require significant judgment by management. In accordance with the guidance on the accounting for uncertainty in income taxes, for all U.S. and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes and interest will be due. The ultimate resolution of tax uncertainties may differ from what is currently estimated, which could result in a material impact on income tax expense. If our estimate of income tax liabilities proves to be less than the ultimate assessment, a further charge to expense would be required. If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. We include interest and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations.
Adoption of New Pronouncements
See Note 2, "New Accounting Pronouncements," to the consolidated financial statements for a description of new accounting pronouncements.
Restructuring and Other Related Costs
Summary of Restructuring Plans.In fiscal year 2025, we announced a restructuring plan designed to optimize our management structure to better serve our customers. In fiscal years 2024 and 2023, we announced restructuring plans that were both designed to reduce costs and expenses in response to macroeconomic conditions. These actions impact all three of our operating segments. The costs associated with these restructuring plans were not allocated to our operating segments' results; however, each operating segment will benefit from the future cost savings from these actions. When completed, the restructuring programs are expected to result in the reduction in annual cost of sales and operating expenses over the three operating segments.
A summary of our aggregate liability related to the restructuring plans and the total restructuring expense since inception of those plans are shown in the table below:
|
Workforce Reduction |
Consolidation of Excess Facilities | Total | |||||||||||||||
| (in millions) | |||||||||||||||||
| Balance at October 31, 2023 | $ | 31 | $ | 5 | $ | 36 | |||||||||||
| Income statement expense | 75 | 1 | 76 | ||||||||||||||
| Non-cash settlements | (7) | (1) | (8) | ||||||||||||||
| Cash payments | (86) | (5) | (91) | ||||||||||||||
| Balance at October 31, 2024 | $ | 13 | $ | - | $ | 13 | |||||||||||
| Income statement expense | 82 | - | 82 | ||||||||||||||
| Non-cash settlements | (18) | - | (18) | ||||||||||||||
| Cash payments | (60) | - | (60) | ||||||||||||||
| Currency translation impact | 1 | - | 1 | ||||||||||||||
| Balance at October 31, 2025 | $ | 18 | $ | - | $ | 18 | |||||||||||
| Restructuring expense since inception of all plans: | |||||||||||||||||
| Fiscal Year 2025 Plan | $ | 81 | |||||||||||||||
| Fiscal Year 2024 Plan | $ | 73 | |||||||||||||||
| Fiscal Year 2023 Plan | $ | 50 | |||||||||||||||
| Total | $ | 204 | |||||||||||||||
Non-cash settlements include accelerated share-based compensation expense related to workforce reductions and accelerated depreciation expense of right-of-use and machinery and equipment assets related to the consolidation of excess facilities. The aggregate restructuring liability of $18 million at October 31, 2025, was recorded in other accrued liabilities on the consolidated balance sheet and reflects estimated future cash outlays.
A summary of the charges in the consolidated statement of operations resulting from the restructuring plans is shown below:
| Years Ended | ||||||||||||||||||||
| October 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Cost of products and services | $ | 21 | $ | 13 | $ | 11 | ||||||||||||||
| Research and development | 5 | 21 | 6 | |||||||||||||||||
| Selling, general and administrative | 56 | 42 | 29 | |||||||||||||||||
| Total restructuring costs | $ | 82 | $ | 76 | $ | 46 | ||||||||||||||
Fiscal Year 2025 Plan ("FY25 Plan")
In the second quarter of fiscal year 2025, we announced a restructuring plan designed to optimize our management structure to better serve our customers. The expense associated with this workforce reduction includes severance and other personnel-related costs. We expect to substantially complete these restructuring activities by the second quarter of fiscal year 2026. In connection with the FY25 Plan, we recorded restructuring expenses of $81 million in fiscal year 2025. When completed, the restructuring program is estimated to result in the reduction of approximately $75 million to $80 million in annual cost of sales and operating expenses over our three business segments.
A summary of the FY25 Plan activity is shown in the table below:
| Workforce Reduction | |||||
| (in millions) | |||||
| Balance at October 31, 2024 | $ | - | |||
| Income statement expense | 81 | ||||
| Non-cash settlements | (18) | ||||
| Cash payments | (46) | ||||
| Currency translation impact | 1 | ||||
| Balance at October 31, 2025 | $ | 18 | |||
| Total restructuring expense since inception of FY25 Plan | $ | 81 | |||
Non-cash settlements include accelerated share-based compensation expense related to workforce reductions.
Fiscal Year 2024 Plan ("FY24 Plan")
In the third quarter of fiscal year 2024, we initiated a new restructuring plan designed to further reduce costs and expenses in response to current macroeconomic conditions. The plan includes a reduction of our total headcount by approximately 500 regular employees, representing approximately 3 percent of our global workforce.
In connection with the FY24 Plan, we recorded restructuring expenses of $1 million and $72 million in fiscal years 2025 and 2024, respectively. The costs associated with this workforce reduction included severance, accelerated share-based compensation expense and other personnel-related costs. We have completed all workforce management actions and payments in connection with the FY24 Plan.
A summary of the FY24 Plan activity is shown in the table below:
| Workforce Reduction | |||||
| (in millions) | |||||
| Balance at October 31, 2023 | $ | - | |||
| Income statement expense | $ | 72 | |||
| Non-cash settlements | $ | (7) | |||
| Cash payments | $ | (54) | |||
| Balance at October 31, 2024 | $ | 11 | |||
| Income statement expense | $ | 1 | |||
| Cash payments | $ | (12) | |||
| Balance at October 31, 2025 | $ | - | |||
| Total restructuring expense since inception of FY24 Plan | $ | 73 | |||
Non-cash settlements include accelerated share-based compensation expense related to workforce reductions.
Fiscal Year 2023 Plan ("FY23 Plan")
In the fourth quarter of fiscal year 2023, we initiated a restructuring plan designed to reduce costs and expenses in response to the macroeconomic conditions. The plan included a reduction of our total headcount by approximately 400 regular employees, representing approximately 2 percent of our global workforce, and the consolidation of our excess facilities, including some site closures.
In connection with the FY23 Plan, we recorded restructuring expenses of $4 million and $46 million in 2024 and 2023, respectively. The restructuring plan expenses included severance, accelerated share-based compensation expense and other personnel costs associated with the workforce reduction. The consolidation of excess facilities included accelerated depreciation expenses of right-of-use and machinery and equipment assets, and other facilities-related costs. We have completed all workforce management actions and payments in connection with the FY23 Plan.
A summary of the FY23 Plan activity is shown in the table below:
|
Workforce Reduction |
Consolidation of Excess Facilities | Total | |||||||||||||||
| (in millions) | |||||||||||||||||
| Balance at October 31, 2023 | $ | 31 | $ | 5 | $ | 36 | |||||||||||
| Income statement expense | 3 | 1 | 4 | ||||||||||||||
| Non-cash settlements | - | (1) | (1) | ||||||||||||||
| Cash payments | (32) | (5) | (37) | ||||||||||||||
| Balance at October 31, 2024 | $ | 2 | $ | - | $ | 2 | |||||||||||
| Cash payments | (2) | - | (2) | ||||||||||||||
| Balance at October 31, 2025 | $ | - | $ | - | $ | - | |||||||||||
| Total restructuring expense since inception of the FY23 Plan | $ | 50 | |||||||||||||||
Non-cash settlements include accelerated depreciation expense of right-of-use and machinery and equipment assets related to the consolidation of excess facilities.
Foreign Currency
Our revenues, costs and expenses, and monetary assets and liabilities and equity are exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities. The overall effect of changes in foreign currency exchange rates had no impact on revenue growth in the year ended October 31, 2025 when compared to the same period in 2024. The overall effect of changes in foreign currency exchange rates had no impact on revenue growth in the year ended October 31, 2024 when compared to the same period in 2023. When movements in foreign currency exchange rates have a negative impact on revenue, they will also have a positive impact by reducing our costs and expenses. We calculate the impact of movements in foreign currency exchange rates by applying the actual foreign currency exchange rates in effect during the last month of each quarter of the current year to both the applicable current and prior year periods. We hedge revenues, expenses and balance sheet exposures that are not denominated in the functional currencies of our subsidiaries on a short term and anticipated basis. We do experience some fluctuations within individual lines of the consolidated statement of operations and balance sheet because our hedging program is not designed to offset the currency movements in each category of revenues, expenses, monetary assets and liabilities. Our hedging program is designed to hedge currency movements on a relatively short-term basis (up to a rolling twelve-month period). We may also hedge equity balances denominated in foreign currency on a long-term basis. To the extent that we are required to pay for all, or portions, of an acquisition price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency movements will impact the U.S. dollar cost of the transaction.
Results from Operations
Net Revenue
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||||||||
| Products | $ | 4,944 | $ | 4,672 | $ | 5,051 | 6% | (7)% | |||||||||||||||||||||
| Services and other | $ | 2,004 | $ | 1,838 | $ | 1,782 | 9% | 3% | |||||||||||||||||||||
| Total net revenue | $ | 6,948 | $ | 6,510 | $ | 6,833 | 7% | (5)% | |||||||||||||||||||||
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| % of total net revenue: | |||||||||||||||||||||||||||||
| Products | 71 | % | 72 | % | 74 | % | (1) ppt. | (2) ppts. | |||||||||||||||||||||
| Services and other | 29 | % | 28 | % | 26 | % | 1 ppt. | 2 ppts. | |||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||
Agilent's net revenue of $6,948 million for the year ended October 31, 2025, increased 7 percent when compared to 2024. The overall effect of foreign currency movements had no impact on revenue growth in the year ended October 31, 2025 when compared to 2024. For the year ended October 31, 2025, net revenue growth came from all of our segments, all geographic regions we serve and most of our key end markets when compared to the same period last year. Revenue from our BIOVECTRA acquisition contributed approximately 2 percentage points in 2025. Agilent's net revenue of $6,510 million decreased 5 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023. For the year ended October 31, 2024, net revenue declined in our Life Sciences and Diagnostics Markets and Applied Markets segments, mostly in the pharmaceutical and chemical and applied materials markets, due primarily to the overall pressures on our customers' capital expenditure spending which continued in 2024. Revenue declines were partially offset by revenue growth in our Agilent CrossLab segment.
Product revenue includes revenue generated from the sales of our analytical instrumentation, software and consumables. Revenue from products increased 6 percent for the year ended October 31, 2025, when compared to 2024. Product revenue was primarily driven by increases in our contract development and manufacturing organization, liquid chromatography, liquid chromatography mass spectrometry, and consumables businesses partially offset by decreases in our cell analysis and vacuum businesses when compared to 2024. Revenue from products decreased 7 percent for the year ended October 31, 2024, when compared to 2023. The product revenue decline was primarily driven by decreases in our liquid chromatography, mass spectrometry, cell analysis and nucleic acid solutions businesses partially offset by increases in our consumables and pathology businesses when compared to 2023. Overall, product revenue declined due to our customers' continued capital expenditure pressures and mostly impacted the pharmaceutical market within our Life Sciences and Diagnostics Markets and our Applied Markets segments.
Services and other revenue consist of contract repair, preventative maintenance, compliance services, relocation services, installation services, and consulting services related to the companion diagnostics and nucleic acid solutions businesses. Services and other revenue increased 9 percent in 2025 as compared to 2024. Services and other revenue increases reflected strong growth from contract repair and preventative maintenance services and modest revenue growth in per incident services including relocation and education and compliance services. Services and other revenue increased 3 percent in 2024 as compared to 2023. Services and other revenue reflected strong growth from contract repair and preventative maintenance services partly offset by declines in installation services related to the decline of the product revenues.
Net Revenue By Segment
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net revenue by segment: | |||||||||||||||||||||||||||||
| Life Sciences and Diagnostics Markets | $ | 2,726 | $ | 2,466 | $ | 2,780 | 11% | (11)% | |||||||||||||||||||||
| Agilent CrossLab | $ | 2,908 | $ | 2,747 | $ | 2,656 | 6% | 3% | |||||||||||||||||||||
| Applied Markets | $ | 1,314 | $ | 1,297 | $ | 1,397 | 1% | (7)% | |||||||||||||||||||||
| Total net revenue | $ | 6,948 | $ | 6,510 | $ | 6,833 | 7% | (5)% | |||||||||||||||||||||
Revenue in the Life Sciences and Diagnostics Markets segment increased 11 percent in 2025 when compared to 2024. The overall effect of foreign currency movements had a 1 percentage point favorable impact on revenue growth in 2025 when compared to 2024. In 2025, we saw strong revenue growth in the pharmaceutical market led by revenue from our contract development and manufacturing organization, liquid chromatography and liquid chromatography mass spectrometry businesses. We also saw strong revenue growth in the diagnostics and clinical market led by revenue from our companion diagnostics and pathology businesses partially offset by a decline in revenue in the academic and government markets when compared to 2024. Revenue in the Life Sciences and Diagnostics Markets segment decreased 11 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023. In 2024, we saw revenue decline in all our end markets, most significantly in the pharmaceutical market, due to lower sales in our liquid chromatography, nucleic acid solutions and cell analysis businesses when compared to 2023.
Revenue in the Agilent CrossLab segment increased 6 percent in 2025 when compared to 2024. The overall effect of foreign currency movements had no impact on revenue growth in 2025 when compared to 2024. For the year ended October 31, 2025, we saw revenue growth across most of our end markets led by strong growth in the pharmaceutical, chemical and advanced materials and food markets when compared to 2024. Revenue in the Agilent CrossLab segment increased 3 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had a 1 percentage point unfavorable impact on revenue growth in 2024 when compared to 2023. For the year ended October 31, 2024, we saw revenue growth across all of our end markets led by strong revenue growth in the chemical and advanced materials and environmental and forensics markets when compared to 2023.
Revenue in the Applied Markets segment increased 1 percent in 2025 when compared to 2024. The overall effect of foreign currency movements had a 1 percentage point unfavorable impact on revenue growth in 2025 when compared to 2024. For the year ended October 31, 2025, we saw significant revenue growth in the food and pharmaceutical markets partially offset by a decline in revenue in the chemical and advanced materials and academic and government markets when compared to 2024. Revenue in the Applied Markets segment decreased 7 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023. For the year ended October 31, 2024, revenue declined in most of our end markets. We saw a significant decline in revenue in the chemical and advanced materials, food and environmental and forensics markets when compared to 2023.
Costs and Expenses
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions, except margin data) | |||||||||||||||||||||||||||||
| Gross margin on products | 54.8 | % | 56.7 | % | 51.9 | % | (2) ppts. | 5 ppts. | |||||||||||||||||||||
| Gross margin on services and other | 46.7 | % | 48.3 | % | 47.3 | % | (2) ppts. | 1 ppt. | |||||||||||||||||||||
| Total gross margin | 52.4 | % | 54.3 | % | 50.7 | % | (2) ppts. | 4 ppts. | |||||||||||||||||||||
| Research and development | $ | 455 | $ | 479 | $ | 481 | (5)% | - | |||||||||||||||||||||
| Selling, general and administrative | $ | 1,709 | $ | 1,568 | $ | 1,634 | 9% | (4)% | |||||||||||||||||||||
| Operating margin | 21.3 | % | 22.9 | % | 19.8 | % | (2) ppts. | 3 ppts. | |||||||||||||||||||||
Total gross margin for the year ended October 31, 2025 decreased 2 percentage points when compared to 2024. Total gross margin was unfavorably impacted by higher tariffs and shipping costs, unfavorable business mix (including lower gross margin from our specialty CDMO business), higher wages, restructuring expenses and variable pay partially offset by higher
sales volume, targeted pricing increases, lower warranty costs and amortization of intangible assets when compared to 2024. Total gross margin for the year ended October 31, 2024 increased 4 percentage points when compared to 2023. Total gross margin as well as gross margin on products for 2024 improved from the prior year as 2023 had asset impairment charges of $253 million primarily related to the exit of our Resolution Bioscience business. In addition, total gross margin was favorably impacted by targeted price increases, lower shipping costs and intangible amortization expense partially offset by lower sales volume, higher share-based compensation expense, higher wages and restructuring charges.
Gross inventory charges were $45 million in 2025, $45 million in 2024 and $40 million in 2023. Sales of previously written down inventory were $15 million in 2025, $16 million in 2024 and $9 million in 2023.
Research and development expenses for the year ended October 31, 2025 decreased 5 percent when compared to 2024. Research and development expenses decreased due to lower restructuring expenses and salary expense related to workforce reduction activities partially offset by higher variable pay when compared to 2024. Research and development expenses for the year ended October 31, 2024 were flat when compared to 2023. Research and development expenses slightly decreased due to lower salary expense related to workforce reduction activities mostly offset by restructuring charges and an impairment of in-process research and development when compared to 2023.
Selling, general and administrative expenses increased 9 percent in 2025 when compared to 2024. Selling, general and administrative expenses increased primarily due to higher transformational initiatives, corporate infrastructure expenses, variable pay and restructuring expenses. Selling, general and administrative expenses decreased 4 percent in 2024 compared to 2023. Selling, general and administrative expenses decreased due to lower intangible amortization expenses, transformational initiatives, advertising expenses, variable pay and salary expense related to workforce reduction activities partially offset by higher restructuring charges and share-based compensation expense.
Total operating margin for the year ended October 31, 2025 decreased 2 percentage points when compared to 2024. Total operating margin for the year ended October 31, 2025 was impacted by higher tariffs and shipping costs, unfavorable product mix, higher transformational initiatives, wages and variable pay partially offset by higher sales volume and targeted pricing increases. Total operating margin for the year ended October 31, 2024, increased 3 percentage points when compared to 2023. Total operating margin for the year ended October 31, 2024 increased mostly due to lower impairment charges in 2024 compared to 2023 partially offset by restructuring charges.
Interest income for the years ended October 31, 2025, 2024 and 2023 was $62 million, $80 million and $51 million, respectively. The decrease in interest income in 2025 was primarily due to lower cash balances. The increase in interest income in 2024 was primarily due to higher cash balances and increases in interest rates related to our cash and cash equivalents.
Interest expense, net of capitalized interest for the years ended October 31, 2025, 2024 and 2023 was $112 million, $96 million and $95 million, respectively, and primarily relates to the interest charged on our senior notes, term loan, credit facilities and commercial paper. The increase in interest expense in 2025 is primarily related to additional interest from our new senior notes.
Our headcount was approximately 18,100 at October 31, 2025 and 17,900 at October 31, 2024.
Other income (expense), net
For the year ended October 31, 2025, other income (expense), net of $6 million income includes a net loss of $36 million on equity securities, $15 million loss on impairment of investments, and $40 million income related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss, prior service credits and settlement loss). Other income (expense), net also includes expense of $14 million related to the settlement loss of our Netherlands defined benefit pension plan. The provision of site service costs to, and lease income from Keysight Technologies, Inc. ("Keysight") contributed income of $12 million. The costs associated with these services are reported within income from operations.
For the year ended October 31, 2024, other income (expense), net of $49 million income includes $8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income (loss) and $12 million income related to the provision of site service costs to, and lease income from, Keysight. The costs associated with these services are reported within income from operations. Other income (expense), net also includes $25 million income related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss, prior service credits and settlement loss).
For the year ended October 31, 2023, other income (expense), net of $33 million income includes $43 million income related to the net gain on the divestiture of our Resolution Bioscience business and $12 million income related to the provision of site service costs to, and lease income from, Keysight. The costs associated with these services are reported within income from operations. Other income (expense), net also includes income of $10 million income related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss, prior service credits and settlement loss) partially offset by the net loss on the fair value of equity securities of approximately $41 million.
Income Taxes
| Years Ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Provision (benefit) for income taxes | $ | 132 | $ | 232 | $ | 99 | |||||||||||
For 2025, our income tax expense was $132 million with an effective tax rate of 9.2 percent. For the year ended October 31, 2025, our effective tax rate and the resulting provision for income taxes were impacted by the federal tax benefit of $57 million related to the intra-entity transfer of assets. The income taxes for the year ended October 31, 2025, also include the tax benefit of $29 million related to foreign-derived intangible income along with the tax benefit of $28 million related to the release of tax reserves due to a remeasurement of the liability.
For 2024, our income tax expense was $232 million with an effective tax rate of 15.3 percent For the year ended October 31, 2024, our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of $47 million related to foreign-derived intangible income.
For 2023, our income tax expense was $99 million with an effective tax rate of 7.4 percent. For the year ended October 31, 2023, our effective tax rate and the resulting provision for income taxes were impacted by the federal tax benefit of $104 million related to the realized loss on the divestiture of a business. The income taxes for the year ended October 31, 2023, also include the tax benefit of $41 million related to foreign-derived intangible income along with the tax benefit of $30 million related to the release of tax reserves in the U.S. due to the settlement of the audit with the Internal Revenue Service ("IRS") for tax years 2018 and 2019.
We have negotiated a tax holiday in Singapore. The tax holiday provides a lower rate of taxation on certain classes of income and requires various thresholds of investments and employment or specific types of income. The tax holiday in Singapore was renegotiated and extended through 2030. As a result of the incentive, the impact of the tax holiday decreased income taxes by $102 million, $84 million, and $54 million in 2025, 2024, and 2023, respectively. The benefit of the tax holiday on net income per share (diluted) was approximately $0.36, $0.29, and $0.18 in 2025, 2024 and 2023, respectively.
The Organization for Economic Co-operation and Development. ("OECD") has introduced rules to establish a global minimum tax rate of 15 percent, commonly referred to as the Pillar Two rules. We have considered the impact of currently enacted Pillar Two rules and determined that we became subject to such rules starting in fiscal year 2025 in some jurisdictions, and it did not have a material impact on our consolidated financial results for the periods presented. Additionally, the United States enacted the One Big Beautiful Bill Act ("OBBBA") on July 4, 2025, including adjustments to effective tax rates on certain types of income and an elective deduction for domestic Research and Development (R&D), which are generally applicable to Agilent in fiscal years 2026 and 2027. We expect our income taxes to increase in fiscal year 2026 due to top-up taxes under Pillar Two along with the implementation of the OBBBA rules.
In the U.S., tax years remain open back to the year 2022 for federal income tax purposes and 2021 for significant states. In other major jurisdictions where we conduct business, the tax years generally remain open back to the year 2014.
With these jurisdictions and the U.S., it is reasonably possible that some tax audits may be completed over the next twelve months. However, management is not able to provide a reasonably reliable estimate of the timing of any other future tax payments or change in unrecognized tax benefits, if any.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax law and regulations in a multitude of jurisdictions. Although the guidance on the accounting for uncertainty in income taxes prescribes
the use of a recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds will continue to require significant judgment by management. In accordance with the guidance on the accounting for uncertainty in income taxes, for all U.S. and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes and interest will be due. The ultimate resolution of tax uncertainties may differ from what is currently estimated, which could result in a material impact on income tax expense. If our estimate of income tax liabilities proves to be less than the ultimate assessment, a further charge to expense would be required. If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. We include interest and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations.
Segment Overview
In November 2024, we announced a change in our organizational structure to support our market-focused, customer-centric strategy. Our former Diagnostics and Genomics segment combined with our liquid chromatography and liquid chromatography mass spectrometry instrument platforms to form our new Life Sciences and Diagnostics Markets segment. Our chemistries and supplies, laboratory automation, and software and informatics divisions moved from our former Life Sciences and Applied Markets segment to our Agilent CrossLab segment. The remaining divisions in our former Life Sciences and Applied Markets segment which includes our gas chromatography, gas chromatography mass spectrometry, remarketed instruments, spectroscopy and vacuum divisions formed our new Applied Markets segment.
Following this re-organization, we have three business segments- Life Sciences and Diagnostics Markets, Agilent CrossLab and Applied Markets, each of which comprises a reportable segment. All historical financial segment information has been recast to conform to this new presentation.
Life Sciences and Diagnostics Markets
Our Life Sciences and Diagnostics Markets segment is comprised of seven areas of activity. We provide active pharmaceutical ingredients for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, our liquid chromatography and liquid chromatography mass spectrometry businesses enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level. Second, our cell analysis business includes instruments, reagents, software, and labware associated with unique live-cell analysis platforms in addition to mainstream flow cytometers, plate-readers, and plate washers/dispensers which are used across a broad range of applications. Third, our specialty contract development and manufacturing organization ("CDMO") business provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices conditions for use as active pharmaceutical ingredients in a class of drugs that utilize nucleic acid molecules for disease therapy. BIOVECTRA capabilities include microbial fermentation, bioreagents, highly potent active pharmaceutical ingredients, peptide purification and biomanufacturing capabilities in several nucleic acid modalities. Together, our BIOVECTRA and nucleic acid solutions businesses comprise our specialty CDMO offerings to our customers providing clinical-to-commercial scale production capabilities. Fourth, our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry, in situ hybridization, hematoxylin and eosin staining and special staining. This business further provides clinical flow cytometry reagents for routine cancer diagnostics. This business also provides bulk antibodies as raw materials and associated assay development services to in vitro diagnostics manufacturers, biotechnology and pharmaceutical companies. Fifth, we also collaborate with several major pharmaceutical companies to develop new potential tissue pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy. Sixth, our genomics business includes reagents to support next-generation sequencing workflows and arrays. This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy. Finally, our biomolecular analysis business provides complete workflow solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples. Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques including next-generation sequencing, utilized in clinical and life science research applications.
Net Revenue
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net revenue | $ | 2,726 | $ | 2,466 | $ | 2,780 | 11% | (11)% | |||||||||||||||||||||
Life Sciences and Diagnostics Markets segment revenue increased 11 percent in 2025 compared to 2024. The overall effect of foreign currency movements had a 1 percentage point favorable impact on revenue growth in 2025 when compared to the same period last year. Revenue from our BIOVECTRA acquisition contributed approximately 5 percentage points in 2025. Geographically, revenue increased 16 percent in the Americas with no currency impact, increased 9 percent in Europe with a 2 percentage point favorable currency impact and increased 3 percent in Asia Pacific with a 1 percentage point unfavorable currency impact. The revenue increase in the Americas was primarily driven by revenue from the BIOVECTRA acquisition as well as strong growth from our nucleic acid solutions, liquid chromatography, liquid chromatography mass spectrometry and companion diagnostics businesses and moderate growth from our pathology business, partially offset by declines in our cell analysis, biomolecular analysis and genomics businesses. Revenue increased in Europe due to strong growth from our liquid chromatography, liquid chromatography mass spectrometry, pathology and companion diagnostics businesses and moderate growth in our cell analysis and genomics businesses, partially offset by a decline in our biomolecular analysis business. Revenue increased in Asia Pacific due to strong growth from our liquid chromatography, liquid chromatography mass spectrometry and genomics businesses and moderate growth from our pathology business, partially offset by a decline in our biomolecular analysis business.
In 2025, strong revenue growth in the pharmaceutical market was mainly due to the BIOVECTRA acquisition and strong growth in our nucleic acid solutions, liquid chromatography and liquid chromatography mass spectrometry businesses. We saw strong revenue growth in the diagnostics and clinical market led by strong growth in our companion diagnostics, biomolecular analysis, liquid chromatography and liquid chromatography mass spectrometry businesses and moderate growth in our pathology business. Revenue in the academic and government market declined across all of our businesses. Within the applied markets, we saw strong revenue growth primarily within the chemicals and advanced materials markets.
Life Sciences and Diagnostics Markets segment revenue in 2024 decreased 11 percent compared to 2023. The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023. Geographically, revenue decreased 13 percent in the Americas with no currency impact, decreased 1 percent in Europe with a 1 percentage point favorable currency impact and decreased 18 percent in Asia Pacific with a 1 percentage point unfavorable currency impact. The revenue decline in the Americas was primarily driven by our liquid chromatography, liquid chromatography mass spectrometry, cell analysis, genomics and nucleic acid solutions businesses. Revenue decreased in Europe due to declines in our cell analysis business partially offset by strong performance in our pathology, genomics and biomolecular analysis businesses. The revenue decline in Asia Pacific was driven by our liquid chromatography, liquid chromatography mass spectrometry and cell analysis businesses partially offset by increased revenue in our pathology business.
In 2024, revenue performance in the pharmaceutical market declined significantly due to our liquid chromatography, liquid chromatography mass spectrometry, specialty CDMO and cell analysis businesses which were impacted by the continuing slow availability of customer capital budgets and by unfavorable mix in our nucleic acid solutions business when compared to the same period last year. We also saw modest revenue growth in the diagnostics and clinical markets primarily from our pathology business which was partially offset by a decline in our liquid chromatography, liquid chromatography mass spectrometry, and genomics businesses. Revenue in the academia and government markets declined due to our liquid chromatography, liquid chromatography mass spectrometry and cell analysis businesses. Within the applied markets, revenue declined primarily due to lower sales from our liquid chromatography and liquid chromatography mass spectrometry businesses into the chemical and advanced materials markets partially offset by revenue growth in per and polyfluoroalkyl substances ("PFAS") into the environmental market.
Looking Forward.While the recent tariff changes adversely impacted our costs of revenue for the second half of fiscal year 2025, we expect to substantially mitigate the impact during our fiscal year 2026. Therefore, we remain optimistic about long-term growth in our end markets and continue investing to enhance our applications and solutions portfolio. The rising demand for several of the modalities provided by our specialty CDMO business positions us well to serve expanding customer demand. By leveraging our liquid chromatography and liquid chromatography mass spectrometry platforms, we are driving growth across key markets and remain optimistic about long-term life sciences opportunities. Our diagnostic and clinical markets continue to grow with the OMNIS platforms. We will continue investing in research and development, advancing our applications and solutions portfolio, and expanding our position in developing and emerging markets
Gross Margin and Operating Margin
The following table shows the Life Sciences and Diagnostics Markets segment's margins, expenses and income from operations for 2025 versus 2024, and 2024 versus 2023.
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions, except margin data) | |||||||||||||||||||||||||||||
| Total gross margin | 52.3 | % | 54.5 | % | 56.7 | % | (2) ppts. | (2) ppts. | |||||||||||||||||||||
| Research and development | $ | 248 | $ | 250 | $ | 269 | (1)% | (7)% | |||||||||||||||||||||
| Selling, general and administrative | $ | 641 | $ | 611 | $ | 633 | 5% | (4)% | |||||||||||||||||||||
| Operating margin | 19.7 | % | 19.6 | % | 24.2 | % | - | (5) ppts. | |||||||||||||||||||||
| Income from operations | $ | 536 | $ | 484 | $ | 673 | 11% | (28)% | |||||||||||||||||||||
Gross margin decreased 2 percentage points in 2025 when compared to 2024. Gross margin was impacted mainly by increased tariffs and shipping costs, unfavorable business mix (including lower gross margin from our specialty CDMO business) and increased variable pay which was partially offset by targeted pricing increases and lower warranty expenses. Gross margin decreased 2 percentage points in 2024 when compared to 2023. Gross margin was impacted by lower sales volume, product mix and higher infrastructure costs which were partially offset by lower salary expense related to workforce reduction activities and expenses attributed to business exit activities.
Research and development expenses decreased 1 percent in 2025 when compared to 2024. Research and development expenses decreased primarily due to lower salary expenses related to workforce reduction activities partially offset by additional expenses from our BIOVECTRA acquisition and higher variable pay. Research and development expenses decreased 7 percent in 2024 when compared to 2023. Research and development expenses decreased primarily due to lower expenses attributed to business exit activities and salary expenses related to workforce reduction activities.
Selling, general and administrative expenses increased 5 percent in 2025 when compared to 2024. Selling, general and administrative expenses increased due to higher allocation of corporate infrastructure expenses, additional expenses from our BIOVECTRA acquisition, higher commission, travel and variable pay expenses. Selling, general and administrative expenses decreased 4 percent in 2024 when compared to 2023. Selling, general and administrative expenses decreased due to lower expenses attributed to business exit activities, lower variable pay and lower salary expense related to workforce reduction activities partially offset by higher infrastructure costs.
Operating margin was relatively flat in 2025 when compared to 2024. Operating margin was flat due to lower salary expense related to workforce reduction activities and lower warranty costs offset by increased tariffs and shipping costs, unfavorable business mix and increased variable pay. Operating margin decreased 5 percentage points in 2024 when compared to 2023. Operating margin decreased due to lower revenue, higher infrastructure costs and higher wages partially offset by lower variable pay and salary expense related to workforce reduction activities and expenses attributed to business exit activities.
Income from Operations
Income from operations in 2025 increased by $52 million or 11 percent when compared to 2024 on a revenue increase of $260 million. Income from operations in 2024 decreased by $189 million or 28 percent when compared to 2023 on a revenue decrease of $314 million.
Agilent CrossLab
Our Agilent CrossLab segment provides an extensive services and consumables portfolio that spans the entire lab, in addition to software and laboratory automation solutions, which are designed to improve customer outcomes and represents a broad range of offerings designed to serve customer needs across end-markets and applications. Our services portfolio includes repairs, parts, maintenance, installations, training, compliance support, software as a service,asset management, consulting and various other custom services to support the customers' laboratory operations.Custom services are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements. Our consumables portfolio is designed to improve customer outcomes. Most of the portfolio is vendor neutral, meaning we can serve and supply customers regardless of their instrument purchase choices. Solutions range from chemistries to supplies. Key product categories in consumables include gas chromatography and liquid chromatography columns, sample preparation products, custom chemistries, and a large selection of laboratory supplies.Software and informatics solutions include software for instrument control, data acquisition, data analysis, secure storage of results, and laboratory information and workflow management. This software facilitates the compliant use of instruments in pharmaceutical quality assurance and quality control environments. The OpenLab laboratory software suite is a scalable, open software platform that enables customers to capture, analyze, and share scientific data throughout the lab and across the enterprise. Laboratory automation offers automated sample preparation solutions, including liquid handling, plate management, consumables and scheduling software. These solutions range from standalone automation platforms to integrated workflow solutions with seamless integration to our instrumentation.
Net Revenue
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Total net revenue | $ | 2,908 | $ | 2,747 | $ | 2,656 | 6% | 3% | |||||||||||||||||||||
Agilent CrossLab segment revenue increased 6 percent in 2025 when compared to 2024. The overall effect of foreign currency movements had no impact on revenue growth in 2025 when compared to 2024. Geographically, revenue increased 4 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 9 percent in Europe with a 2 percentage point favorable currency impact and increased 5 percent in Asia Pacific with a 1 percentage point unfavorable currency impact. During the year ended October 31, 2025, revenue growth in Americas was driven by strength in repair, maintenance and compliance services, our lab automation and consumables businesses when compared to the same period last year. Revenue growth in Europe was driven by strength across all our businesses when compared to the same period last year. Revenue growth in Asia Pacific was driven by higher demand within our consumables business in China and higher growth in repair, maintenance and compliance services and our software and informatics business when compared to 2024.
Agilent CrossLab segment revenue increased 3 percent in 2024 when compared to 2023. The overall effect of foreign currency movements had a 1 percentage point unfavorable impact on revenue growth in 2024 when compared to 2023. Geographically, revenue increased 4 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 6 percent in Europe with a 2 percentage point favorable currency impact and was flat in Asia Pacific with a 2 percentage point unfavorable currency impact. During the year ended October 31, 2024, revenue in all three regions reflected consistent high demand for repair and maintenance services and consumables across the entire portfolio. In Americas and Europe, revenue growth was partially offset by weakness in installation service, software and informatics and lab automation revenues. In the Asia Pacific region, weakness in installation, service and software and informatics revenue offset the revenue growth seen from repair and maintenance services and consumables.
In 2025, revenue increased significantly in the pharmaceutical, chemicals and advanced materials, food, environmental and forensics and diagnostics and clinical markets, and revenue increased modestly in the academic and government market. Strong revenue growth in the pharmaceutical market was driven by repair, maintenance and compliance service and our consumables and lab automation businesses when compared to the same period last year. Strong revenue growth in the chemicals and advanced materials, food, environmental and forensics and diagnostics and clinical markets was driven by repair, maintenance and compliance services and our consumables business when compared to the same period last year. Modest revenue growth in the academic and government market was driven by repair, maintenance and compliance services and our consumables business when compared to the same period last year. In 2024, we saw strong revenue growth in the chemicals and advanced materials, diagnostics and clinical and environmental and forensics markets, mainly driven by our services and consumables businesses, when compared to 2023.
Looking Forward. While the recent tariff changes adversely impacted our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact during our fiscal year 2026. Agilent CrossLab is well positioned to continue its success in our key end markets by supporting a growing installed base of instruments. Digital and remote capabilities will continue to be a key factor in improving the service quality and the customers' experience. Geographically, the business is well diversified across all regions to take advantage of local market opportunities and to hedge against weakness in any one region.
Gross Margin and Operating Margin
The following table shows the Agilent CrossLab segment margins, expenses and income from operations for 2025 versus 2024 and 2024 versus 2023.
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions, except margin data) | |||||||||||||||||||||||||||||
| Total gross margin | 55.4 | % | 56.9 | % | 55.3 | % | (1) ppt. | 2 ppts. | |||||||||||||||||||||
| Research and development | $ | 106 | $ | 105 | $ | 103 | - | 2% | |||||||||||||||||||||
| Selling, general and administrative | $ | 559 | $ | 532 | $ | 526 | 5% | 1% | |||||||||||||||||||||
| Operating margin | 32.5 | % | 33.7 | % | 31.6 | % | (1) ppt. | 2 ppts. | |||||||||||||||||||||
| Income from operations | $ | 946 | $ | 925 | $ | 839 | 2% | 10% | |||||||||||||||||||||
Gross margin decreased 1 percentage point in 2025 when compared to 2024. Gross margin was impacted by higher tariffs and shipping costs, higher wages and variable pay partially offset by higher sales volume and targeted price increases. Gross margin increased 2 percentage points in 2024 when compared to 2023. Gross margin was impacted by targeted price increases, well-controlled variable costs, and lower salary expense related to workforce reduction activities.
Research and development expenses were relatively flat in 2025 when compared to 2024. Research and development expenses were flat primarily due to lower salary expenses related to workforce reduction activities partially offset by higher variable pay. Research and development expenses increased 2 percent in 2024 when compared to 2023. Research and development expenses increased due to higher wages and program investments in our software and informatics business partially offset by lower salary expense related to workforce reduction activities.
Selling, general and administrative expenses increased 5 percent in 2025 when compared to 2024. Selling, general and administrative expenses increased due to a higher allocation of corporate infrastructure expenses and higher variable pay partially offset by lower salary expenses related to workforce reduction activities when compared to the same period in 2024. Selling, general and administrative expenses increased 1 percent in 2024 when compared to 2023. The increase was due to higher commissions partially offset by lower travel expenses and other discretionary spending and salary expense related to workforce reduction activities.
Operating margin decreased 1 percentage point in 2025 when compared to 2024. Operating margin was impacted by higher tariffs and shipping costs, higher wages, variable pay and higher corporate infrastructure expenses partially offset by higher sales volume and targeted price increases when compared to 2024. Operating margin increased 2 percentage points in 2024 when compared to 2023. Operating margin increased mostly driven by targeted price increases, well controlled variable costs and lower salary expense related to workforce reduction activities.
Income from Operations
Income from operations in 2025 increased by $21 million or 2 percent when compared to 2024 on a revenue increase of $161 million. Income from operations in 2024 increased by $86 million or 10 percent when compared to 2023 on a revenue increase of $91 million.
Applied Markets
Our Applied Markets segment provides application-focused solutions that include instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products. Our gas chromatography and gas chromatography mass spectrometry businesses enable customers to perform a wide variety of testing including measuring volatile and semi-volatile contaminants to assess the safety of our foods, quality of water and consumer products while also enabling testing of fuels and purity of chemicals. Our inductively coupled plasma mass spectrometry, inductively coupled plasma optical emission spectrometry, atomic absorption and microwave plasma-atomic emission spectrometry instruments are vital for our customers to measure metals and elemental signatures in their samples and find uses in the food safety, environmental quality, chemicals manufacture, advanced materials, energy and forensics markets. Our molecular spectroscopy business including the raman, fluorescence and infrared spectroscopy instruments offer both in-field and in-lab testing solutions in a diverse variety of applications including airport security, explosives testing, narcotics, food quality and chemical characterization. Our vacuum business develops cutting edge products and technologies to test vacuum environments and find uses in a diverse variety of industries including semi-conductor, batteries, chemical manufacturing and advanced materials development. Finally, our remarketed instruments business refurbishes and resells certified pre-owned instruments to value-oriented customers who would like Agilent quality and performance at a budget conscious price.
Net Revenue
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net revenue | $ | 1,314 | $ | 1,297 | $ | 1,397 | 1% | (7)% | |||||||||||||||||||||
Our Applied Markets segment revenue in 2025 increased 1 percent compared to 2024. The overall effect of foreign currency movements had a 1 percentage point unfavorable impact on revenue growth in 2025 when compared to the same period last year. Geographically, revenue increased 1 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 6 percent in Europe with a 1 percentage point favorable currency impact and decreased 1 percent in Asia Pacific with no currency impact. Revenue growth in the Americas was driven by strength in our gas chromatography business partially offset by weakness in the vacuum business when compared to the same period last year. The revenue growth in Europe was driven by strength in our gas chromatography, vacuum and spectroscopy businesses when compared to the same period last year. The revenue decline in Asia Pacific was driven by lower demand in China within our gas chromatography, spectroscopy and vacuum businesses partially offset by strength in the gas chromatography mass spectrometry and remarketed instruments businesses in China when compared to the same period last year.
In 2025, revenue increased significantly in the food and pharmaceutical markets and increased moderately in the environmental and forensics market partially offset by significant revenue decline in the academic and government market and modest revenue decline in the chemicals and advanced materials market when compared to the same period last year. Strong revenue growth in the food market was driven by strength in our gas chromatography mass spectrometry, gas chromatography, and remarketed instruments businesses when compared to the same period last year. Strong revenue growth in the pharmaceutical market was driven by strength across all businesses when compared to the same period last year. Moderate revenue growth in the environmental and forensics market was driven by strength in our spectroscopy and vacuum businesses partially offset by weakness in our gas chromatography mass spectrometry business when compared to the same period last year. Revenue declined significantly in the academic and government market due to weakness in our gas chromatography, gas chromatography mass spectrometry and remarketed instruments businesses when compared to the same period last year. Revenue declined modestly in the chemicals and advanced materials market due to weakness in our vacuum and spectroscopy businesses partially offset by strength in our gas chromatography mass spectrometry, gas chromatography and remarketed instruments businesses when compared to the same period last year.
Our Applied Markets segment revenue in 2024 decreased 7 percent compared to 2023. The overall effect of foreign currency movements had no impact on revenue growth in 2024 when compared to 2023. Geographically, revenue decreased 7 percent in the Americas with no currency impact, decreased 6 percent in Europe with a 1 percentage point favorable currency impact and decreased 8 percent in Asia Pacific with a 1 percentage point unfavorable currency impact. The revenue decline in
the Americas was driven by weakness in our gas chromatography mass spectrometry and gas chromatography businesses when compared to 2023. The revenue decline in Europe was driven by weakness in our gas chromatography, gas chromatography mass spectrometry and vacuum businesses partially offset by strength in the remarketed instruments business when compared to 2023. The revenue decline in Asia Pacific was driven by lower demand in China within our gas chromatography mass spectrometry, spectroscopy and gas chromatography businesses partially offset by strength in the remarketed instruments business when compared to 2023.
End market revenue performance in 2024 declined in most of our end markets when compared to 2023. Revenue in the chemicals and advanced materials market declined significantly due to weakness in our gas chromatography, gas chromatography mass spectrometry and vacuum businesses when compared to 2023. Revenue in the food market declined significantly due to weakness in our gas chromatography mass spectrometry and spectroscopy businesses partially offset by strength in our remarketed instruments business when compared to 2023. Revenue in the environmental and forensics market declined significantly due to weakness in our gas chromatography mass spectrometry, spectroscopy and gas chromatography businesses when compared to 2023. Revenue in the pharmaceutical market declined significantly due to weakness in our gas chromatography and gas chromatography mass spectrometry businesses partially offset by strength in our remarketed instruments business when compared to 2023.
Looking Forward. While the recent tariff changes adversely impacted our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact during our fiscal year 2026. We also anticipate continued market recovery and are optimistic about our long-term growth opportunities in the applied markets as our broad portfolio of products and solutions are well suited to address customer needs. We will continue to invest in expanding and improving our application-focused solutions that include instruments and software.
Gross Margin and Operating Margin
The following table shows the Applied Markets segment margins, expenses and income from operations for 2025 versus 2024, and 2024 versus 2023.
| Years Ended October 31, | 2025 over 2024 Change | 2024 over 2023 Change | |||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (in millions, except margin data) | |||||||||||||||||||||||||||||
| Total gross margin | 54.4 | % | 55.2 | % | 56.0 | % | (1) ppt. | (1) ppt. | |||||||||||||||||||||
| Research and development | $ | 93 | $ | 94 | $ | 100 | (1)% | (6)% | |||||||||||||||||||||
| Selling, general and administrative | $ | 321 | $ | 311 | $ | 319 | 3% | (3)% | |||||||||||||||||||||
| Operating margin | 22.9 | % | 24.0 | % | 26.0 | % | (1) ppt. | (2) ppts. | |||||||||||||||||||||
| Income from operations | $ | 301 | $ | 312 | $ | 363 | (4)% | (14)% | |||||||||||||||||||||
Gross margin decreased 1 percentage point in 2025 compared to 2024. Gross margin was impacted by higher tariffs and shipping costs, higher variable pay, and the unfavorable impact of currency movements partially offset by lower warranty cost and higher sales volume when compared to 2024. Gross margin decreased 1 percentage point in 2024 compared to 2023. Gross margin was impacted by lower sales volume, unfavorable impact of currency movements and higher warranty costs which were partially offset by lower salary expense related to workforce reduction activities, lower material cost and logistics costs when compared to 2023.
Research and development expenses decreased 1 percent in 2025 when compared to 2024. Research and development expenses decreased due to lower salary expenses related to workforce reduction activities partially offset by higher consumables costs and higher variable pay when compared to 2024. Research and development expenses decreased 6 percent in 2024 when compared to 2023. Research and development expenses decreased due to lower salary expense related to workforce reduction activities and lower consumables costs when compared to 2023.
Selling, general and administrative expenses increased 3 percent in 2025 compared to 2024. Selling, general and administrative expenses increased due to a higher allocation of corporate infrastructure expenses and higher variable pay partially offset by lower salary expenses related to workforce reduction activities when compared to 2024. Selling, general and administrative expenses decreased 3 percent in 2024 compared to 2023. Selling, general and administrative expenses decreased due to lower salary expense related to workforce reduction activities and variable pay when compared to 2023.
Operating margin decreased 1 percentage point in 2025 compared to 2024. Operating margin was impacted by higher tariffs and shipping costs, higher variable pay and the unfavorable impact of currency movements partially offset by lower warranty cost, lower salary expenses related to workforce reduction activities and higher sales volume when compared to 2024. Operating margin decreased 2 percentage points in 2024 compared to 2023. Operating margin was impacted by lower sales volume and the unfavorable impact of currency movements partially offset by lower salary expense related to workforce reduction activities, lower variable pay and logistics costs when compared to 2023.
Income from Operations
Income from operations in 2025 decreased by $11 million or 4 percent when compared to 2024 on a revenue increase of $17 million. Income from operations in 2024 decreased by $51 million or 14 percent when compared to 2023 on a revenue decrease of $100 million.
Financial Condition
Liquidity and Capital Resources
We believe our cash and cash equivalents, cash generated from operations, and ability to access capital markets and credit lines will satisfy, for at least the next twelve months and beyond, our liquidity requirements, both globally and domestically, including the following: working capital needs, capital expenditures, business acquisitions, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations.
Our financial position as of October 31, 2025 consisted of cash and cash equivalents of $1,789 million as compared to $1,329 million as of October 31, 2024.
We may, from time to time, retire certain outstanding debt of ours through open market cash purchases, privately-negotiated transactions or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Net Cash Provided by Operating Activities
Net cash provided by operating activities was $1,559 million in 2025 compared to net cash provided of $1,751 million in 2024 and net cash provided of $1,772 million in 2023. Net cash paid for income taxes was approximately $318 million in 2025 compared to income taxes paid of $314 million in 2024 and $199 million, in 2023. For the years ended October 31, 2025, 2024 and 2023, other assets and liabilities provided cash of $30 million, used cash of $49 million and provided cash of $47 million, respectively.
In 2025, accounts receivable used cash of $149 million, compared to cash provided of $7 million in 2024, and cash provided of $132 million in 2023. Days' sales outstanding as of October 31, were 72 days in 2025, 70 days in 2024 and 69 days in 2023. The use of cash from accounts receivable in 2025 was primarily due to strong revenue growth late in the year, which resulted in higher receivable balances and an increase in days' sales outstanding compared to the prior year. The change in accounts payable provided cash of $16 million in 2025, provided cash of $103 million in 2024 and used cash of $171 million in 2023. The lower cash inflow in 2025 was mainly due to higher inventory purchases related to tariff mitigation and the timing of payments. Cash used for inventory was $97 million in 2025 compared to cash provided of $34 million in 2024 and cash used of $33 million in 2023. Inventory days on-hand decreased to 106 days in 2025 compared to 111 days in 2024 and 120 days in 2023.
The employee compensation and benefits liability provided cash of $69 million in 2025 compared to cash used of $12 million in 2024 and cash used of $91 million in 2023. The change in 2025 was primarily due to higher accruals for variable and incentive pay programs compared to 2024 as well as an increase in the employee flexible time off liability. In 2024, the change was largely due to a decrease in variable and incentive pay compared to 2023. We paid approximately $98 million in 2025 under our variable and incentive pay programs compared to $105 million in 2024 and $185 million in 2023.
We made no contributions to our U.S defined benefit plans in 2025, 2024 and 2023. We contributed $22 million in 2025 and $20 million in 2024 and $21 million in 2023 to our non-U.S. defined benefit plans, respectively. We did not contribute to our U.S. post-retirement benefit plans in 2025, 2024 and 2023. Our non-U.S. defined benefit plans are generally funded ratably throughout the year. Our annual contributions are highly dependent on the relative performance of our assets versus our
projected liabilities, among other factors. We do not expect to contribute to our U.S. plans and U.S. post-retirement benefit plans during 2026. We expect to contribute $21 million to our non-U.S. defined benefit plans during 2026.
Net Cash Used in Investing Activities
Net cash used in investing activities was $394 million in 2025 compared to net cash used of $1,258 million in 2024 and net cash used of $310 million in 2023.
Investments in property, plant and equipment were $407 million in 2025, $378 million in 2024 and $298 million in 2023. Our anticipated capital expenditures for fiscal year 2026 will be approximately $500 million. These continued investments in property plant and equipment are primarily due to the planned expansion of our manufacturing capacity for production of nucleic acid based therapeutics in Frederick, Colorado. Some of our investment may be eligible to qualify for reimbursement incentives, which will not fully be known until the expansion is substantially complete.
In 2025, we received net cash of $4 million primarily related to a measurement period adjustment from our BIOVECTRA acquisition compared to $862 million cash used primarily for our acquisition of BIOVECTRA and one other acquisition in 2024 and $51 million for two acquisitions in 2023. In 2023, proceeds from the divestiture of our Resolution Bioscience business were $50 million.
Net Cash Used in Financing Activities
Net cash used in financing activities was $715 million in 2025 compared to net cash used of $752 million in 2024 and net cash used of $930 million in 2023. Net cash from financing activities consisted primarily of cash flows associated with the issuances and repurchases of common stock, payments of cash dividends, borrowings and repayments under credit facilities and commercial paper, issuances and repayments of long term debt and payments of contingent consideration.
Treasury Stock Repurchases.In 2025, we repurchased and retired 3.4 million shares for $425 million, excluding excise tax liability of approximately $3 million compared to repurchases in 2024 of 8.4 million shares for $1,150 million, excluding excise tax liability of approximately $10 million which was paid in 2025 and repurchases in 2023 of 4.6 million shares for $575 million, excluding excise tax liability of approximately $3 million, which was paid in 2024.
The activity of our repurchases and remaining authorization by repurchase program follows:
| 2025 | 2024 | 2023 | Remaining | ||||||||||||||||||||||||||||||||||||||
| Shares | Cost | Shares | Cost | Shares | Cost | Authorization | |||||||||||||||||||||||||||||||||||
| Repurchase Program | (in millions) | (in billions) | |||||||||||||||||||||||||||||||||||||||
| 2021 Repurchase program | - | $ | - | - | $ | - | 0.7 | $ | 99 | $ | - | ||||||||||||||||||||||||||||||
| 2023 Repurchase program | 3.0 | 374 | 8.4 | 1,150 | 3.9 | 476 | $ | - | |||||||||||||||||||||||||||||||||
| 2024 Repurchase program | 0.4 | 51 | - | - | - | - | $ | 1.9 | |||||||||||||||||||||||||||||||||
| Total | 3.4 | $ | 425 | 8.4 | $ | 1,150 | 4.6 | $ | 575 | ||||||||||||||||||||||||||||||||
Dividends. For the years ended October 31, 2025, 2024 and 2023, cash dividends of $282 million, $274 million and $265 million were paid on the company's outstanding common stock, respectively.
On November 19, 2025, we declared a quarterly dividend of $0.255 per share of common stock, or approximately $72 million which will be paid on January 28, 2026 to shareholders of record as of the close of business on January 6, 2026. The timing and amounts of any future dividends are subject to determination and approval by our board of directors.
Short-term and Long-term Debt
Credit Facilities. On June 7, 2023, we entered into a new credit agreement with a group of financial institutions which provides for a $1.5 billion five-year unsecured credit facility that will expire on June 7, 2028, and an incremental revolving credit facility in an aggregate amount of up to $750 million. During the years ended October 31, 2025 and 2024, we made no borrowings or repayments under these credit facilities. As of both October 31, 2025 and 2024, we had no borrowings outstanding under either the credit facility or the incremental revolving credit facility.
On June 2, 2023, we entered into an Uncommitted Money Market Line Credit agreement with Societe Generale which
provides for an aggregate borrowing capacity of $300 million. The credit facility is an uncommitted short-term cash advance facility where each request must be at least $1 million. The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance. During the year ended October 31, 2025, we made no borrowings or repayments under this credit facility. During the year ended October 31, 2024, we borrowed and repaid $215 million under this credit facility. As of October 31, 2025 and 2024, we had no borrowings outstanding under the credit facility.
We were in compliance with the covenants for the credit facilities during the year ended October 31, 2025.
Commercial Paper. Under our U.S. commercial paper program, we may issue and sell unsecured, short-term promissory notes in the aggregate principal amount not to exceed $1.5 billion with up to 397-day maturities. At any point in time, the company intends to maintain available commitments under its revolving credit facility in an amount at least equal to the amount of the commercial paper notes outstanding. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The proceeds from issuances under the program may be used for general corporate purposes. During the year ended October 31, 2025, we borrowed $1.39 billion and repaid $1.43 billion under our U.S. commercial paper program. During the year ended October 31, 2024, we borrowed $1.19 billion and repaid $1.15 billion under our U.S. commercial paper program. As of October 31, 2025, we had no borrowings outstanding under our U.S. commercial paper program. As of October 31, 2024, we had borrowings of $40 million outstanding under our U.S. commercial paper program and had a weighted average interest rate of 4.92 percent.
Other Loans.In connection with the BIOVECTRA acquisition, we have two interest-free loans from the Strategic Innovation Fund ("SIF"). The loans are repayable in quarterly and yearly installments through 2040 at a weighted average imputed interest rate of 4.7 percent. In addition, we have two interest-free loans with the Atlantic Canada Opportunities Agency ("ACOA"). The loans are repayable in monthly installments through 2029 at a weighted average imputed interest rate of 4.5 percent. As of October 31, 2025 and 2024, the current portion of these loans of $4 million and $5 million, respectively, was recorded in short-term debt. As of October 31, 2025 and 2024, the non-current portion of these loans of $20 million (including additional draw and measurement period adjustment) and $19 million, respectively, was recorded in long-term debt.
In 2024, proceeds from the issuance of long-term debt of $1,197 million related to the issuance of our 2027 and 2034 senior notes. Repayments of long-term debt of $600 million related to the full payment of the outstanding principal amount of our term loan. As of October 31, 2024, the term loan facility was terminated.
Senior Notes. In 2025, we reclassified our 2026 senior notes to short-term debt. All outstanding senior notes listed below are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness.
| Senior Notes | Year Issued | Principal Amount ($M) | Interest Rate | Interest payable | Maturity Date | ||||||||||||||||||||||||
| 2026 Senior Notes | 2016 | $300 | 3.05% |
semi-annually
|
September, 2026 | ||||||||||||||||||||||||
| 2027 Senior Notes | 2024 | $600 | 4.20% |
semi-annually
|
September, 2027 | ||||||||||||||||||||||||
| 2029 Senior Notes | 2019 | $500 | 2.75% |
semi-annually
|
September, 2029 | ||||||||||||||||||||||||
| 2030 Senior Notes | 2020 | $500 | 2.10% |
semi-annually
|
June, 2030 | ||||||||||||||||||||||||
| 2031 Senior Notes | 2021 | $850 | 2.30% |
semi-annually
|
March, 2031 | ||||||||||||||||||||||||
| 2034 Senior Notes | 2024 | $600 | 4.75% |
semi-annually
|
September, 2034 | ||||||||||||||||||||||||
Contingent Consideration Payment. During the year ended October 31, 2023, we paid a total of $72 million in contingent consideration payments, of which $4 million is included as an outflow in cash from operations. We paid $65 million related to the achievement of a certain technical milestone associated with our acquisition of Resolution Bioscience and $7 million related to other acquisitions.
Off Balance Sheet Arrangements and Other
Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and some of which arise from fluctuations related to global economics and markets. Our cash balances are generated and held in many locations throughout the world. Local government regulations may restrict our ability to move cash balances to meet cash needs under certain circumstances. We do not currently expect such regulations and restrictions to impact our ability to pay vendors and conduct operations throughout our global organization.
Contractual Commitments
Our cash flows from operations are dependent on a number of factors, including fluctuations in our operating results, accounts receivable collections, inventory management, and the timing of tax and other payments. As a result, the impact of contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with such factors.
The following table summarizes our total contractual obligations at October 31, 2025, for Agilent operations and excludes amounts recorded in our consolidated balance sheet (in millions):
|
Less than one year |
One to three years | Three to five years | More than five years | ||||||||||||||||||||
| Commitments to contract manufacturers and suppliers | $ | 673 | $ | 20 | $ | - | $ | - | |||||||||||||||
| Other purchase commitments | 143 | 3 | - | - | |||||||||||||||||||
| Total | $ | 816 | $ | 23 | $ | - | $ | - | |||||||||||||||
Commitments to Contract Manufacturers and Suppliers.We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, we issue purchase orders with estimates of our requirements several months ahead of the delivery dates. The above amounts represent the commitments under the open purchase orders with our suppliers that have not yet been received. However, our agreements with these suppliers usually provide us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. We expect to fulfill most of our purchase commitments for inventory within one year.
Other Purchase Commitments. We have categorized "other purchase commitments" related to contracts with professional services suppliers. Typically, we can cancel contracts with professional services suppliers without penalties. For those contracts that are not cancelable without penalties, there are termination fees and costs or commitments for continued spending that we are obligated to pay to a supplier under each contact's termination period before such contract can be cancelled. Our contractual obligations with these suppliers under "other purchase commitments" were approximately $146 million.
We had no material off-balance sheet arrangements as of October 31, 2025, or October 31, 2024.
On Balance Sheet Arrangements
The following table summarizes our total contractual obligations on our October 31, 2025 balance sheet (in millions):
|
Less than one year |
One to three years | Three to five years | More than five years | ||||||||||||||||||||
| Senior notes | $ | 300 | $ | 600 | $ | 1,000 | $ | 1,450 | |||||||||||||||
| Other loans - BIOVECTRA | 4 | 5 | 3 | 11 | |||||||||||||||||||
| Interest expense | 107 | 169 | 131 | 124 | |||||||||||||||||||
| Transition tax | 51 | - | - | - | |||||||||||||||||||
| Operating leases | 51 | 71 | 33 | 64 | |||||||||||||||||||
| Total | $ | 513 | $ | 845 | $ | 1,167 | $ | 1,649 | |||||||||||||||
Other long-term liabilities as of October 31, 2025 and October 31, 2024 include $28 million and $115 million, respectively, related to long-term income tax liabilities. Of these amounts, $28 million and $64 million related to uncertain tax positions as of October 31, 2025 and October 31, 2024, respectively. We are unable to accurately predict when these amounts will be realized or released. However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitations or a tax audit settlement.
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