AGILENT TECHNOLOGIES INC

Previous wording

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This report contains forward-looking statements including, without limitation, statements regarding growth opportunities, including for revenue and our end markets, strength and drivers of the markets into which we sell, sales funnels, our strategic direction, new product and service introductions and the position of our current products and services, market demand for and adoption of our products, the ability of our products and solutions to address customer needs and meet industry requirements, our focus on differentiating our product solutions, improving our customers’ experience and growing our earnings, future financial results, our operating margin, mix, 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 focus on balanced capital allocation, our contributions to our pension and other defined benefit plans, impairment and adjustments of goodwill and other intangible assets, the impact of foreign currency movements, our hedging programs and other actions to offset the effects of tariffs and foreign currency movements, our future effective tax rate, tax valuation allowance and unrecognized tax benefits, the impact of local government regulations on our ability to pay vendors or conduct operations, our ability to satisfy our liquidity requirements, including through cash generated from operations, the potential impact of adopting new accounting pronouncements, indemnification, source and supply of materials used in our products, our sales, our purchase commitments, our capital expenditures, the integration and effects of our acquisitions and other transactions, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, our stock repurchase program and dividends, macroeconomic environment and geopolitical uncertainties, interest rate and inflationary pressures, 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 II Item 1A and elsewhere in this Form 10-Q.

Current wording

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our 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, our strategic direction, new product and service introductions and the position of our current 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 differentiating our product solutions, improving our customers’ experience and productivity, future financial results, our operating margin, 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, impairment and adjustments of goodwill and other intangible assets, the impact of foreign currency movements, 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, our sales, our purchase commitments, our capital expenditures, the integration, effects and timing of our acquisitions and other transactions, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, our stock repurchase program and dividends, macroeconomic conditions, market conditions, the recovery and health of our end markets, our geographical diversification, interest rate and inflationary pressures, 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 II Item 1A and elsewhere in this Form 10-Q.

Previous wording

Net revenue of $1,573 million and $3,231 million for the three and six months ended April 30, 2024 decreased 8 percent and 7 percent, respectively, when compared to the same periods last year. Overall, foreign currency movements for the three and six months ended April 30, 2024 had no impact on revenue growth in both periods, when compared to the same periods last year. Net revenue for the three and six months ended April 30, 2024, declined in our life sciences and applied markets and diagnostics and genomics segments partially offset by revenue growth in our Agilent Crosslab segment. Revenue declined in all regions, particularly in China, and in all of our end markets we serve, most significantly in the pharmaceutical market due to our customers' continued capital expenditure pressures compared to the same periods last year. Revenue generated by our life sciences and applied markets business in the three and six months ended April 30, 2024 decreased 14 percent and 12 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended

Current wording

Net revenue of $1,578 million and $4,809 million for the three and nine months ended July 31, 2024 decreased 6 percent and 7 percent, respectively, when compared to the same periods last year. Overall, foreign currency movements for the three and nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point for both periods when compared to the same periods last year. Net revenue for the three and nine months ended July 31, 2024, declined in our life sciences and applied markets and diagnostics and genomics segments partially offset by revenue growth in our Agilent Crosslab segment. Revenue declined in all regions, particularly in China, and in nearly all of our end markets we serve, most significantly in the pharmaceutical market due to our customers' continued capital expenditure pressures. Revenue generated by our life sciences and applied markets business in the three and nine months ended July 31, 2024 decreased 8 percent and 11 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2024, had an overall unfavorable impact on revenue growth of 1 percentage point for both periods when compared to the same periods last year. Revenue generated by our diagnostics and genomics business for the three and nine months ended July 31, 2024 decreased 9 percent and 8 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year. Revenue generated by our Agilent CrossLab business in the three and nine months ended July 31, 2024 increased 4 percent and 5 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year.

Previous wording

Net income for the three and six months ended April 30, 2024 was $308 million and $656 million, respectively, compared to net income of $302 million and $654 million for the corresponding periods last year. In the six months ended April 30, 2024, cash provided by operations was $818 million compared to cash provided by operations of $694 million in the same period last year.

Current wording

Net income for the three and nine months ended July 31, 2024 was $282 million and $938 million, respectively, compared to net income of $111 million and $765 million for the corresponding periods last year. In the nine months ended July 31, 2024, cash provided by operations was $1,270 million compared to cash provided by operations of $1,256 million in the same period last year.

Previous wording

Dividends. During the three and six months ended April 30, 2024, we paid cash dividends of $0.236 per common share or $69 million and $0.472 per common share or $138 million, respectively, on the company's common stock. During the three and six months ended April 30, 2023, we paid cash dividends of $0.225 per common share or $66 million and $0.450 per common share or $133 million, respectively, on the company's common stock.

Current wording

Dividends. During the three and nine months ended July 31, 2024, we paid cash dividends of $0.236 per common share or $68 million and $0.708 per common share or $206 million, respectively, on the company's common stock. During the three and nine months ended July 31, 2023, we paid cash dividends of $0.225 per common share or $66 million and $0.675 per common share or $199 million, respectively, on the company's common stock.

Previous wording

2021 Repurchase Program. During the three and six months ended April 30, 2023, we repurchased and retired 162,399 shares for $24 million and 1 shares for $99 million, respectively, under this authorization. On March 1, 2023, the 2021 repurchase program was terminated and the remaining authorization of $339 million expired.

Current wording

2021 Repurchase Program. During the nine months ended July 31, 2023, we repurchased and retired 661,739 shares for $99 million under this authorization. On March 1, 2023, the 2021 repurchase program was terminated and the remaining authorization of $339 million expired.

Previous wording

2023 Repurchase Program. On January 9, 2023, we announced that our board of directors had approved a share repurchase program (the "2023 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 2023 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 2023 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 2023 repurchase program commenced on March 1, 2023, and also terminated and replaced the 2021 repurchase program. During both the three and six months ended April 30, 2023, we repurchased and retired 443,690 shares for $61 million under this authorization. During both the three and six months ended April 30, 2024, we repurchased and retired 1.594 million shares for $230 million, excluding excise taxes of $1.0 million, under this authorization. As of April 30, 2024, we had remaining authorization to repurchase up to approximately $1.294 billion of our common stock under the 2023 repurchase program.

Current wording

2023 Repurchase Program. On January 9, 2023, we announced that our board of directors had approved a share repurchase program (the "2023 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 2023 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 2023 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 2023 repurchase program commenced on March 1, 2023, and also terminated and replaced the 2021 repurchase program. During the three and nine months ended July 31, 2023, we repurchased and retired 2.812 million shares for $335 million, excluding excise taxes of $2.4 million and 3.256 million shares for $396 million, excluding excise taxes of $2.4 million, respectively, under this authorization. During the three and nine months ended July 31, 2024, we repurchased and retired 4.397 million shares for $585 million, excluding excise taxes of $5.4 million and 5.991 million shares for $815 million, excluding excise taxes of $6.4 million, respectively, under this authorization. As of July 31, 2024, we had remaining authorization to repurchase up to approximately $709 million of our common stock under the 2023 repurchase program.

Previous wording

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 will become effective on August 1, 2024 and will commence upon the termination of our existing repurchase program.

Current wording

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 will commence upon the termination of our 2023 repurchase program.

Previous wording

Looking forward, we continue to be focused on improving our customers’ experience, differentiating product solutions and productivity. While we anticipate a challenging macroeconomic environment, particularly in China, and an overall pressure on our customers' capital expenditures to continue in the near-term, we remain optimistic about our long-term growth opportunities in all of our key end markets. We expect to continue to face inflationary pressures which we will continue to mitigate through targeted pricing and various other cost savings strategies.

Current wording

Looking forward, we continue to be focused on improving our customers’ experience, differentiating product solutions and productivity. While market conditions remain challenging, particularly in China, and customer capital budgets continue to be constrained, we expect a slow and steady recovery in the short-term and remain optimistic about the long-term health of our key end markets. Though inflationary pressures have moderated, we will continue to mitigate through targeted pricing and various other cost savings strategies.

Previous wording

The restructuring and other related costs of $6 million at April 30, 2024, are recorded in other accrued liabilities on the condensed consolidated balance sheet and reflect estimated future cash outlays.

Current wording

The aggregate restructuring liability of $46 million at July 31, 2024, is recorded in other accrued liabilities on the condensed consolidated balance sheet and reflects estimated future cash outlays.

Previous wording

A summary of the charges in the condensed consolidated statement of operations resulting from the restructuring plan is shown below:

Current wording

A summary of the charges in the condensed consolidated statement of operations resulting from both restructuring plans is shown below:

Previous wording

On May 29, 2024, we announced a new restructuring plan ("FY24 Plan") designed to further reduce costs and expenses in response to the 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. The costs associated with this action include severance and other personnel costs related to the workforce reduction and is currently estimated to be approximately $55 million. When completed, the restructuring program is expected to result in the reduction of approximately $100 million in annual cost of sales and operating expenses. We expect most of these activities to be completed by the end of fiscal year 2024.

Current wording

Fiscal Year 2024 Plan ("FY24 Plan"). In the third quarter of fiscal year 2024, we announced 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. The timing and scope of the workforce reductions will vary based on local legal requirements. The costs associated with this workforce reduction include severance and other personnel-related costs. While the majority of the workforce reduction will be completed by the end of fiscal year 2024, we expect to substantially complete the remaining restructuring activities by the second quarter of fiscal year 2025. When completed, the restructuring program is expected to result in the reduction of approximately $100 million in annual cost of sales and operating expenses over our three business segments.

Previous wording

A summary of total restructuring activity is shown in the table below:

Current wording

A summary of the FY24 Plan activity is shown in the table below:

Previous wording

In the fourth quarter of fiscal year 2023, we initiated a restructuring plan ("FY23 Plan") designed to reduce costs and expenses in response to the current 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.

Current wording

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 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.

Previous wording

In connection with this plan, we have recorded approximately $1 million and $4 million in restructuring and other related costs in the three and six months ended April 30, 2024, for a total of $50 million since inception. The restructuring plan costs include severance and other personnel costs associated with the workforce reduction. The consolidation of excess facilities includes accelerated depreciation expenses of right-of-use ("ROU") and machinery and equipment assets, and other facilities-related costs. The timing and scope of the workforce reductions will vary based on local legal requirements. These actions impact all three of our business segments. The costs associated with this restructuring plan have not been allocated to our business segments' results; however, each business segment will benefit from the future cost savings from these actions. When completed, the restructuring program is expected to result in the reduction of $80 million in annual cost of sales and operating expenses over the three business segments. While the majority of the workforce reduction was completed in the first quarter of 2024, we expect to substantially complete the remaining restructuring activities by the end of fiscal year 2024.

Current wording

In connection with this plan, we have recorded approximately zero and $4 million in restructuring and other related costs in the three and nine months ended July 31, 2024, respectively. The restructuring plan costs include severance and other personnel costs associated with the workforce reduction. The consolidation of excess facilities includes accelerated depreciation expenses of right-of-use ("ROU") and machinery and equipment assets, and other facilities-related costs. The timing and scope of the workforce reductions will vary based on local legal requirements. While the majority of the workforce reduction was completed in the first quarter of 2024, we expect to substantially complete the remaining restructuring activities by the end of fiscal year 2024. When completed, the restructuring program is expected to result in the reduction of $80 million in annual cost of sales and operating expenses over our three business segments.

Previous wording

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. Overall, foreign currency movements for the six months ended April 30, 2024 had no impact on revenue growth when compared to the same period last year. Typically, when movements in foreign currency exchange rates have a positive impact on revenue, they will also have a negative impact by increasing 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 condensed 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.

Current wording

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. Overall, foreign currency movements for the nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point when compared to the same period last year. Typically, 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 condensed 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.

Previous wording

Net revenue of $1,573 million and $3,231 million for the three and six months ended April 30, 2024 decreased 8 percent and 7 percent, respectively, when compared to the same periods last year. Overall, foreign currency movements for the three and six months ended April 30, 2024 had no impact on revenue growth in both periods, when compared to the same periods last year.

Current wording

Net revenue of $1,578 million and $4,809 million for the three and nine months ended July 31, 2024 decreased 6 percent and 7 percent, respectively, when compared to the same periods last year. Overall, foreign currency movements for the three and nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point for both periods when compared to the same periods last year.

Previous wording

Revenue from products for the three and six months ended April 30, 2024 decreased 12 percent and 10 percent, respectively, when compared to the same periods last year. The product revenue decline in the three and six months ended April 30, 2024 was primarily driven by decreases in our liquid chromatography, mass spectrometry and cell analysis businesses partially offset by increases in our consumables and pathology businesses when compared to the same periods last year. Overall, product revenue declined due to our customers' continued capital expenditure pressures and mostly impacted the pharmaceutical market within our life sciences and applied markets and diagnostics and genomics segments.

Current wording

Revenue from products for the three and nine months ended July 31, 2024 decreased 8 percent and 10 percent, respectively, when compared to the same periods last year. The product revenue decline in the three and nine months ended July 31, 2024 was primarily driven by decreases in our liquid chromatography, mass spectrometry and cell analysis businesses partially offset by increases in our consumables and pathology businesses when compared to the same periods last year. Overall, product revenue declined due to our customers' continued capital expenditure pressures and mostly impacted the pharmaceutical market within our life sciences and applied markets and diagnostics and genomics segments.

Previous wording

Services and other revenue for the three and six months ended April 30, 2024 increased 1 percent and 2 percent, respectively, when compared to the same periods last year. 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. For the three and six months ended April 30, 2024, service revenue increases 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.

Current wording

Services and other revenue for the three and nine months ended July 31, 2024 increased 1 percent and 2 percent, respectively, when compared to the same periods last year. 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. For the three and nine months ended July 31, 2024, service revenue increases 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.

Previous wording

Revenue in the life sciences and applied markets business for the three and six months ended April 30, 2024 decreased 14 percent and 12 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year. For the three and six months ended April 30, 2024, revenue declined in all of our end markets. We saw a significant decline in revenue in the pharmaceutical, food and chemical and advanced materials markets when compared to the same periods last year.

Current wording

Revenue in the life sciences and applied markets business for the three and nine months ended July 31, 2024 decreased 8 percent and 11 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point for both periods when compared to the same periods last year. For the three months ended July 31, 2024, revenue declined in nearly all of our end markets. We saw a significant decline in revenue in the pharmaceutical, chemical and advanced materials and academia and government markets when compared to the same period last year. For the nine months ended July 31, 2024, revenue declined in all of our end markets. We saw a significant decline in revenue in the pharmaceutical, chemical and advanced materials and academia and government markets when compared to the same period last year.

Previous wording

Revenue in the diagnostics and genomics business for the three and six months ended April 30, 2024, decreased 9 percent and 7 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2024 had an unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year. For the three and six months ended April 30, 2024, we saw a significant decline in revenue in the pharmaceutical market due to lower sales in our cell analysis and nucleic acid solutions businesses when compared to the same periods last year.

Current wording

Revenue in the diagnostics and genomics business for the three and nine months ended July 31, 2024, decreased 9 percent and 8 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year. For the three and nine months ended July 31, 2024, we saw a significant decline in revenue in the pharmaceutical market due to lower sales in our cell analysis, nucleic acid solutions and genomics businesses when compared to the same periods last year.

Previous wording

Revenue generated by Agilent CrossLab in the three and six months ended April 30, 2024, increased 4 percent and 5 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year. For the three months ended April 30, 2024, we saw revenue growth across most of our end markets led by strong revenue growth in the pharmaceutical and moderate revenue growth in the chemical and applied materials and environmental and forensics markets when compared to the same period last year. For the six months ended April 30, 2024, we saw revenue growth across all of our end markets led by strong revenue growth in the pharmaceutical, chemical and applied materials and environmental and forensics markets when compared to the same period last year.

Current wording

Revenue generated by Agilent CrossLab in the three and nine months ended July 31, 2024, increased 4 percent and 5 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2024 had an overall unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year. For the three months ended July 31, 2024, we saw revenue growth across most of our end markets led by strong revenue growth in the pharmaceutical, environmental and forensics and diagnostics and clinical markets and moderate revenue growth in the chemical and applied materials and food markets when compared to the same period last year. For the nine months ended July 31, 2024, we saw revenue growth across all of our end markets led by strong revenue growth in the pharmaceutical, diagnostics and clinical and environmental and forensics markets when compared to the same period last year.

Previous wording

Total gross margin for the three and six months ended April 30, 2024 increased 1 percentage point and was flat, respectively, when compared to the same periods last year. Gross margin for the three months ended April 30, 2024 was favorably impacted by targeted price increases, lower shipping costs, variable pay and intangible amortization expense partially offset by lower sales volume and the unfavorable impact of currency movements. In addition, gross margin was impacted by savings from restructuring and business exit activities that occurred in the fourth quarter of fiscal year 2023. Gross margin for the six months ended April 30, 2024 was favorably impacted by lower shipping costs, intangible amortization expense and variable pay offset by lower sales volume, higher inventory charges and the unfavorable impact of currency movements. In addition, gross margin was impacted by savings from restructuring and business exit activities that occurred in the fourth quarter of fiscal year 2023.

Current wording

Total gross margin for the three and nine months ended July 31, 2024 increased 15 percentage points and 5 percentage points, respectively, when compared to the same periods last year. Gross margin for the three and nine months ended July 31, 2023 was significantly impacted by asset impairment charges of $253 million primarily related to the shutdown of our Resolution Bioscience business. Excluding these asset impairment charges in 2023, gross margin for the three and nine months ended July 31, 2024 was relatively flat in both periods when compared to the same periods last year. Gross margin for the three months ended July 31, 2024 was favorably impacted by targeted price increases, lower intangible amortization expense, shipping costs, inventory charges and salary expense related to workforce reduction activities offset by lower sales volume, restructuring charges primarily related to recent actions, higher variable pay and the unfavorable impact of currency movements. Gross margin for the nine months ended July 31, 2024 was favorably impacted by targeted price increases, lower shipping costs, intangible amortization expense and variable pay partially offset by lower sales volume, restructuring charges primarily related to recent actions, the unfavorable impact of currency movements and higher share-based compensation expense.

Previous wording

Research and development expenses for the three and six months ended April 30, 2024 decreased 10 percent and 3 percent, respectively, when compared to the same periods last year. Research and development expenses for the three months ended April 30, 2024 decreased primarily due to savings from restructuring and business exit activities that occurred in the fourth quarter of fiscal year 2023 and lower variable pay when compared to the same period last year. Research and development expenses for the six months ended April 30, 2024 decreased primarily due to savings from restructuring and business exit activities that occurred in the fourth quarter of fiscal year 2023 and lower variable pay partially offset by an impairment of in-process research and development when compared to the same period last year.

Current wording

Research and development expenses for the three and nine months ended July 31, 2024 increased 8 percent and were flat, respectively, when compared to the same periods last year. Research and development expenses for the three months ended July 31, 2024 increased due to restructuring charges primarily related to recent actions and higher variable pay partially offset by lower salary expense related to workforce reduction activities and transformational initiatives when compared to the same period last year. Research and development expenses for the nine months ended July 31, 2024 slightly increased due to restructuring charges primarily related to recent actions and an impairment of in-process research and development mostly offset by lower salary expense related to workforce reduction activities and lower transformational initiatives and variable pay when compared to the same period last year.

Previous wording

Interest income for the three months ended April 30, 2024 and 2023 was $19 million and $12 million, respectively. Interest income for the six months ended April 30, 2024 and 2023 was $37 million and $21 million, respectively. 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.

Current wording

Interest income for the three months ended July 31, 2024 and 2023 was $19 million and $13 million, respectively. Interest income for the nine months ended July 31, 2024 and 2023 was $56 million and $34 million, respectively. 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.

Previous wording

At April 30, 2024, our headcount was approximately 17,600 as compared to approximately 18,400 at April 30, 2023.

Current wording

At July 31, 2024, our headcount was approximately 17,400 as compared to approximately 18,300 at July 31, 2023.

Previous wording

In the three and six months ended April 30, 2024, other income and expense, net includes a net gain of $1 million and $4 million, respectively, on equity securities and $8 million and $14 million, respectively, of income related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). In the three and six months ended April 30, 2024, other income and expense, net also includes income of $3 million and $6 million, respectively, related to the provision of site service costs to, and lease income from Keysight Technologies, Inc. The costs associated with these services are reported within income from operations. In the six months ended April 30, 2024, other income and expense, net also includes $8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income (loss).

Current wording

In the three and nine months ended July 31, 2024, other income and expense, net includes a net gain of $2 million and a net gain of $6 million, respectively, on equity securities. In the three and nine months ended July 31, 2024, other income and expense, net includes income of $5 million and $19 million, respectively, related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). In the three and nine months ended July 31, 2024, other income and expense, net also includes income of $3 million and $9 million, respectively, related to the provision of site service costs to, and lease income from Keysight Technologies, Inc. The costs associated with these services are reported within income from operations. In the nine months ended July 31, 2024, other income and expense, net also includes $8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income (loss).

Previous wording

In the three and six months ended April 30, 2023, other income and expense, net includes a net loss on equity securities of $4 million and $15 million, respectively. In the three and six months ended April 30, 2023, other income and expense, net includes income of $3 million and $7 million, respectively, related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). In the three and six months ended April 30, 2023 other income and expense, net also includes income of $3 million and $6 million, respectively, related to the provision of site service costs to, and lease income from Keysight Technologies, Inc. The costs associated with these services are reported within income from operations.

Current wording

In the three and nine months ended July 31, 2023, other income and expense, net includes a net gain of $1 million and a net loss of $13 million, respectively, on equity securities. In the three and nine months ended July 31, 2023, other income and expense, net includes income of $3 million and $10 million, respectively, related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss and prior service credits). In the three and nine months ended July 31, 2023 other income and expense, net also includes income of $3 million and $8 million, respectively, related to the provision of site service costs to, and lease income from Keysight Technologies, Inc. The costs associated with these services are reported within income from operations.

Previous wording

For the three and six months ended April 30, 2024, our income tax expense was $66 million with an effective tax rate of 17.6 percent and $121 million with an effective tax rate of 15.6 percent, respectively. For the three and six months ended April 30, 2024, our effective tax rate and the resulting provision for income taxes were impacted by the tax expense of $12 million related to the settlement of an audit in Singapore.

Current wording

For the three and nine months ended July 31, 2024, our income tax expense was $61 million with an effective tax rate of 17.8 percent and $182 million with an effective tax rate of 16.3 percent, respectively. For the three months ended July 31, 2024, there were no significant discrete items. For the nine months ended July 31, 2024, our effective tax rate and the resulting provision for income taxes were impacted by the tax expense of $12 million related to the settlement of an audit in Singapore.

Previous wording

For the three and six months ended April 30, 2023, our income tax expense was $75 million with an effective tax rate of 19.9 percent and $133 million with an effective tax rate of 16.9 percent, respectively. For the three months ended April 30, 2023, there were no significant discrete items. For the six months ended April 30, 2023, our effective tax rate and the resulting provision for income taxes were impacted by the excess tax benefits from stock-based compensation of $13 million along with the expiration of various foreign statutes of limitations which resulted in the recognition of previously unrecognized tax benefits of $9 million.

Current wording

For the three and nine months ended July 31, 2023, our income tax expense was $21 million with an effective tax rate of 15.9 percent and $154 million with an effective tax rate of 16.8 percent, respectively. For the three and nine months ended July 31, 2023, our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of $63 million due to the asset impairment charge related to the shutdown of our Resolution Bioscience business. For the nine months ended July 31, 2023, our effective tax rate and the resulting provision for income taxes were also impacted by the excess tax benefits from stock-based compensation of $13 million along with the expiration of various foreign statutes of limitations which resulted in the recognition of previously unrecognized tax benefits of $10 million.

Previous wording

Revenue for the six months ended April 30, 2024 decreased 12 percent in the Americas with no currency impact, decreased 7 percent in Europe with a 3 percentage point favorable currency impact and decreased 14 percent in Asia Pacific with a 1 percentage point unfavorable currency impact when compared to the same period last year. The revenue decline in the Americas was driven by weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to the same period last year. The revenue decline in Europe was driven by weakness in our liquid chromatography, gas chromatography and gas chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to the same period last year. The revenue decline in Asia Pacific was driven by lower demand in China within our liquid chromatography, liquid chromatography mass spectrometry and gas chromatography mass spectrometry businesses when compared to the same period last year.

Current wording

Geographically, revenue for the three months ended July 31, 2024 decreased 7 percent in the Americas with no currency impact, decreased 5 percent in Europe with no currency impact and decreased 11 percent in Asia Pacific with a 2 percentage point unfavorable currency impact when compared to the same period last year. The revenue decline in the Americas was driven by weakness in our liquid chromatography, gas chromatography mass spectrometry and gas chromatography businesses partially offset by strength in the consumables business when compared to the same period last year. The revenue decline in Europe was driven by weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to the same period last year. The revenue decline in Asia Pacific was driven by lower demand in China within our liquid chromatography, spectroscopy and liquid chromatography mass spectrometry businesses when compared to the same period last year.

Previous wording

Geographically, revenue for the three months ended April 30, 2024 decreased 9 percent in the Americas with no currency impact, decreased 9 percent in Europe with a 1 percentage point favorable currency impact and decreased 19 percent in Asia Pacific with a 2 percentage point unfavorable currency impact when compared to the same period last year. The revenue decline in the Americas was driven by weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to the same period last year. The revenue decline in Europe was driven by weakness in our liquid chromatography, gas chromatography and gas chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to the same period last year. The revenue decline in Asia Pacific was driven by lower demand in China within our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to the same period last year.

Current wording

Americas was driven by weakness in our liquid chromatography, liquid chromatography mass spectrometry and gas chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to the same period last year. The revenue decline in Europe was driven by weakness in our liquid chromatography, gas chromatography and gas chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to the same period last year. The revenue decline in Asia Pacific was driven by lower demand in China within our liquid chromatography, liquid chromatography mass spectrometry and spectroscopy businesses when compared to the same period last year.

Previous wording

For the three months ended April 30, 2024, revenue declined across all end markets. Revenue in the pharmaceutical market declined significantly due to weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to the same period last year. Revenue in the food market declined significantly due to weakness in our liquid chromatography, liquid chromatography mass spectrometry and gas chromatography mass spectrometry businesses when compared to the same period last year. Revenue in the chemicals and advanced materials market declined significantly due to weakness in liquid chromatography, gas chromatography and gas chromatography mass spectrometry businesses partially offset by strength in our consumables business when compared to the same period last year

Current wording

For the three months ended July 31, 2024, revenue declined across most end markets. Revenue in the pharmaceutical market declined significantly due to weakness in our liquid chromatography and gas chromatography businesses when compared to the same period last year. Revenue in the chemicals and advanced materials market declined significantly due to weakness in spectroscopy, gas chromatography and liquid chromatography businesses partially offset by strength in our consumables business when compared to the same period last year. Revenue in the academia and government market declined significantly due to weakness in our liquid chromatography, liquid chromatography mass spectrometry and spectroscopy businesses when compared to the same period last year.

Previous wording

For the six months ended April 30, 2024, revenue declined across all end markets. Revenue in the pharmaceutical market declined significantly due to weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to the same period last year. Revenue in the chemicals and advanced materials market declined significantly due to weakness in our liquid chromatography and spectroscopy businesses partially offset by strength in our consumables businesses when compared to the same period last year. Revenue in the food market declined significantly due to weakness in our liquid chromatography, spectroscopy and gas chromatography mass spectrometry businesses partially offset by strength in our consumables business when compared to the same period last year

Current wording

For the nine months ended July 31, 2024, revenue declined across all end markets. Revenue in the pharmaceutical market declined significantly due to weakness in our liquid chromatography, liquid chromatography mass spectrometry and gas chromatography businesses when compared to the same period last year. Revenue in the chemicals and advanced materials market declined significantly due to weakness in our liquid chromatography, spectroscopy and gas chromatography businesses partially offset by strength in our consumables business when compared to the same period last year. Revenue in the food market declined significantly due to weakness in our liquid chromatography, gas chromatography mass spectrometry and spectroscopy businesses partially offset by strength in our consumables business when compared to the same period last year. Revenue in the academia and government market declined significantly due to weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to the same period last year.

Previous wording

Looking forward, despite the challenging macroeconomic environment, our customers' capital expenditure pressures and geopolitical uncertainties, we are optimistic about our long-term growth opportunities in the life sciences and 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 applications and solutions portfolio.

Current wording

Looking forward, despite the challenging market conditions and customer capital budget constraints, we are optimistic about our long-term growth opportunities in the life sciences and 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 applications and solutions portfolio.

Previous wording

Gross margin for products and services for the three and six months ended April 30, 2024, was relatively flat and decreased 1 percentage point, respectively, when compared to the same periods last year. Gross margin for the three and six months ended April 30, 2024 was impacted by lower sales volume, higher warranty costs and the unfavorable impact of currency movements which were offset by lower shipping costs and variable pay when compared to the same periods last year. In addition, gross margin was impacted by savings from restructuring activities that occurred in the fourth quarter of fiscal year 2023.

Current wording

Gross margin for products and services for the three and nine months ended July 31, 2024, was flat and decreased 1 percentage point, respectively, when compared to the same periods last year. Gross margin for the three months ended July 31, 2024 was impacted by lower sales volume and the unfavorable impact of currency movements offset by lower salary expense related to workforce reduction activities and lower shipping costs when compared to the same period last year. Gross margin for the nine months ended July 31, 2024, decreased due to lower sales volume, the unfavorable impact of currency movements and higher warranty costs which were partially offset by lower salary expense related to workforce reduction activities, variable pay and shipping costs when compared to the same period last year.

Previous wording

Research and development expenses for the three and six months ended April 30, 2024, decreased 9 percent and 4 percent, respectively, when compared to the same periods last year. Research and development expenses for the three months ended April 30, 2024 decreased due to savings from restructuring activities that occurred in the fourth quarter of fiscal year 2023, lower variable pay and the favorable impact of currency when compared to the same period last year. Research and development expenses for the six months ended April 30, 2024 decreased due to savings from restructuring activities that occurred in the fourth quarter of fiscal year 2023 and lower variable pay which were partially offset by the unfavorable impact of currency and higher program investments in our digital lab when compared to the same period last year.

Current wording

Selling, general and administrative expenses for the three and nine months ended July 31, 2024, increased 1 percent and decreased 3 percent, respectively, when compared to the same periods last year. Selling, general and administrative expenses for the three months ended July 31, 2024, increased due to higher selling commission expenses and variable pay which were partially offset by lower salary expense related to workforce reduction activities and the favorable impact of currency movements when compared to the same period last year. Selling, general and administrative expenses for the nine months ended July 31, 2024, decreased due to lower salary expense related to workforce reduction activities, variable pay, marketing and communications costs and the favorable impact of currency movements when compared to the same period last year.

Previous wording

Operating margin for products and services for the three and six months ended April 30, 2024 decreased 3 percentage points in both periods when compared to the same periods last year. Operating margin was impacted by lower sales volume, higher warranty costs and the unfavorable impact of currency movements partially offset by savings from restructuring activities that occurred in the fourth quarter of fiscal year 2023, lower variable pay and shipping costs when compared to the same period last year.

Current wording

Operating margin for products and services for the three and nine months ended July 31, 2024 decreased 3 percentage points in both periods when compared to the same periods last year. 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, and shipping costs when compared to the same period last year.

Previous wording

Diagnostics and genomics business revenue for the three and six months ended April 30, 2024 decreased 9 percent and 7 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2024 had an unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year.

Current wording

Diagnostics and genomics business revenue for the three and nine months ended July 31, 2024 decreased 9 percent and 8 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2024 had an unfavorable impact on revenue growth of 1 percentage point and no impact, respectively, when compared to the same periods last year.

Previous wording

2024, the revenue decline in the Americas was primarily driven by our cell analysis, genomics and nucleic acid solutions businesses. Revenue increased in Europe due to strong performance in our pathology, genomics and biomolecular analysis businesses partially offset by a decline in our cell analysis business. The revenue decline in Asia Pacific was driven by our cell analysis business.

Current wording

Geographically, revenue for the three months ended July 31, 2024 decreased 14 percent in the Americas with no currency impact, increased 4 percent in Europe with a 1 percentage point unfavorable currency impact and decreased 16 percent in Asia Pacific with a 3 percentage point unfavorable currency impact compared to the same period last year. For the three months ended July 31, 2024, the revenue decline in the Americas was primarily driven by our cell analysis, genomics and nucleic acid solutions businesses. Revenue increased in Europe due to strong performance in our pathology, reagent partnership and biomolecular analysis businesses. The revenue decline in Asia Pacific was driven by our cell analysis and biomolecular analysis businesses partially offset by increased revenue in our reagent partnership business.

Previous wording

Revenue for the six months ended April 30, 2024 decreased 11 percent in the Americas with no currency impact, increased 3 percent in Europe with a 2 percentage point favorable currency impact and decreased 13 percent in Asia Pacific with a 3 percentage point unfavorable currency impact. For the six months ended April 30, 2024, the revenue decline in the Americas was primarily driven by our cell analysis, genomics and nucleic acid solutions businesses. Revenue increased in Europe due to strong performance in our pathology, genomics and biomolecular analysis businesses partially offset by a decline in our cell analysis business. The revenue decline in Asia Pacific was driven by our cell analysis business which was partially offset by strong performance in pathology.

Current wording

Revenue for the nine months ended July 31, 2024 decreased 12 percent in the Americas with no currency impact, increased 3 percent in Europe with a 2 percentage point favorable currency impact and decreased 13 percent in Asia Pacific with a 2 percentage point unfavorable currency impact. For the nine months ended July 31, 2024, the revenue decline in the Americas was primarily driven by our cell analysis, genomics and nucleic acid solutions businesses. Revenue increased in Europe due to strong performance in our pathology, genomics and biomolecular analysis businesses partially offset by a decline in our cell analysis business. The revenue decline in Asia Pacific was driven by our cell analysis business partially offset by increased revenue in our reagent partnership business.