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 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, 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 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, 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 II Item 1A and elsewhere in this Form 10-Q.

Previous wording

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 form our new Applied Markets segment. We are reporting under this new structure beginning with this Quarterly Report on Form 10-Q for the period ended January 31, 2025. All historical financial segment information has been recast to conform to this new presentation in our financial statements and accompanying notes.

Current wording

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 form our new Applied Markets segment. We began reporting under this new structure with the Quarterly Report on Form 10-Q for the period ended January 31, 2025. All historical financial segment information has been recast to conform to this new presentation in our financial statements and accompanying notes.

Previous wording

Net revenue of $1,681 million for the three months ended January 31, 2025 increased 1 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to the same period last year. Net revenue for the three months ended January 31, 2025, increased in our Life Sciences and Diagnostics Markets and Agilent CrossLab segments partially offset by decreased revenue in our Applied Markets segment. Revenue from our BIOVECTRA acquisition contributed approximately 2 percentage points in the three months ended January 31, 2025. Revenue generated by our Life Sciences and Diagnostics Markets segment for the three months ended January 31, 2025 increased 4 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025 had an overall unfavorable impact on revenue growth of 1 percentage point when compared to the same period last year. Revenue generated by our Agilent CrossLab segment for the three months ended January 31, 2025 increased 1 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to the same period last year. Revenue generated by our Applied Markets segment for the three months ended January 31, 2025 decreased 4 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025, had an overall unfavorable impact on revenue growth of 2 percentage points when compared to the same period last year.

Current wording

Net revenue of $1,668 million and $3,349 million for the three and six months ended April 30, 2025 increased 6 percent and 4 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year. Net revenue for the three and six months ended April 30, 2025, increased in our Life Sciences and Diagnostics Markets and Agilent CrossLab segments partially offset by decreased revenue in our Applied Markets segment. Revenue from our BIOVECTRA acquisition contributed approximately 2 percentage points in both the three and six months ended April 30, 2025. Revenue generated by our Life Sciences and Diagnostics Markets segment for the three and six months ended April 30, 2025 increased 8 percent and 6 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year. Revenue generated by our Agilent CrossLab segment for the three and six months ended April 30, 2025 increased 7 percent and 4 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points for both periods when compared to the same periods last year. Revenue generated by our Applied Markets segment for the three and six months ended April 30, 2025 decreased 1 percent and 3 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025, had an overall unfavorable impact on revenue growth of 1 percentage point and 2 percentage points, respectively, when compared to the same periods last year.

Previous wording

Net income for the three months ended January 31, 2025 was $318 million compared to net income of $348 million for the corresponding period last year. In the three months ended January 31, 2025, cash provided by operations was $431 million compared to cash provided by operations of $485 million in the same period last year.

Current wording

Net income for the three and six months ended April 30, 2025 was $215 million and $533 million, respectively, compared to net income of $308 million and $656 million for the corresponding periods last year. In the six months ended April 30, 2025, cash provided by operations was $652 million compared to cash provided by operations of $818 million in the same period last year.

Previous wording

Dividends. During the three months ended January 31, 2025, we paid cash dividends of $0.248 per common share or $71 million on the company's common stock. During the three months ended January 31, 2024, we paid cash dividends of $0.236 per common share or $69 million on the company's common stock.

Current wording

Dividends. During the three and six months ended April 30, 2025, we paid cash dividends of $0.248 per common share or $70 million and $0.496 per common share or $141 million, respectively, on the company's common stock. 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.

Previous wording

On February 19, 2025, our board of directors declared a quarterly dividend of $0.248 per share of common stock or approximately $71 million which will be paid on April 23, 2025 to all shareholders of record at the close of business on April 1, 2025. The timing and amounts of any future dividends are subject to determination and approval by our board of directors.

Current wording

On May 20, 2025, our board of directors declared a quarterly dividend of $0.248 per share of common stock or approximately $70 million which will be paid on July 23, 2025 to all shareholders of record at the close of business on July 1, 2025. The timing and amounts of any future dividends are subject to determination and approval by our board of directors.

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. During the three months ended January 31, 2024, we repurchased and retired no shares under this authorization. During the three months ended January 31, 2025, we repurchased and retired 649,857 shares for $90 million under this authorization. As of January 31, 2025, we had remaining authorization to repurchase up to approximately $284 million 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. 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 million, under this authorization. During the three and six months ended April 30, 2025, we repurchased and retired 1.347 million shares for $165 million, excluding excise taxes of approximately $2 million and 1.997 million shares for $255 million, excluding excise taxes of approximately $2 million, respectively, under this authorization. As of April 30, 2025, we had remaining authorization to repurchase up to approximately $119 million of our common stock under the 2023 repurchase program.

Previous wording

Looking forward, our primary focus remains on enhancing our customers’ experience, delivering differentiated product solutions and driving productivity improvements. While customer capital budgets continue to be constrained, we anticipate a steady recovery in the near-term. We also remain optimistic about the long-term health of our key end markets. Although inflationary pressures are uncertain, we will continue to mitigate their impact through targeted pricing strategies and various other cost-saving initiatives.

Current wording

Looking Forward. Our primary focus remains on enhancing our customers’ experience, delivering differentiated product solutions and driving productivity improvements. While customer capital budgets, including those of customers receiving funding from the U.S. federal government, continue to be constrained, we anticipate a steady recovery. We also remain optimistic about the long-term health of our key end markets. While we anticipate the recent tariff changes to adversely impact our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact by the end of our fiscal year. While inflationary and tariff-related pressures remain 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.

Previous wording

Summary of Restructuring Plans. 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 business segments. The costs associated with these restructuring plans were not allocated to our business segments' results; however, each business 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 business segments.

Current wording

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 designed to reduce costs and expenses in response to macroeconomic conditions. These actions impact all three of our business segments. The costs associated with these restructuring plans were not allocated to our business segments' results; however, each business 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 business segments.

Previous wording

A summary of our aggregate liability relating to both restructuring plans and the total restructuring expense since inception of those plans are shown in the table below:

Current wording

A summary of our aggregate liability relating to the restructuring plans and the total restructuring expense since inception of those plans are shown in the table below:

Previous wording

The aggregate restructuring liability of $5 million at January 31, 2025, is recorded in other accrued liabilities on the condensed consolidated balance sheet and reflects estimated future cash outlays.

Current wording

The aggregate restructuring liability of $52 million at April 30, 2025, 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 both restructuring plans is shown below:

Current wording

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

Previous wording

Fiscal Year 2024 Plan ("FY24 Plan"). In the third quarter of fiscal year 2024, we announced a restructuring plan designed to reduce costs and expenses in response to macroeconomic conditions. The costs associated with this workforce reduction include severance and other personnel-related costs. While the majority of the workforce reduction was 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.

Current wording

Fiscal Year 2024 Plan ("FY24 Plan"). In the third quarter of fiscal year 2024, we announced a restructuring plan designed to reduce costs and expenses in response to macroeconomic conditions. The expense associated with this workforce reduction includes severance and other personnel-related costs. As of April 30, 2025, we have substantially completed all workforce management actions and expect to settle the remaining payments by the end 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

In connection with the FY24 Plan, we have recorded approximately $1 million in restructuring and other related costs due to changes in estimate in the three months ended January 31, 2025.

Current wording

In connection with the FY24 Plan, we have recorded approximately $1 million in restructuring and other related costs due to changes in estimates in the six months ended April 30, 2025.

Previous wording

Fiscal Year 2023 Plan ("FY23 Plan"). We have substantially completed all workforce management actions in connection with the FY23 Plan. During the three months ended January 31, 2025, we settled cash payments of $1 million, and the remaining accrual of $1 million will be settled in our second quarter of fiscal year 2025.

Current wording

Fiscal Year 2023 Plan ("FY23 Plan"). We have substantially completed all workforce management actions and payments in connection with the FY23 Plan. During the three and six months ended April 30, 2025, we settled cash payments of $1 million and $2 million, respectively.

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. Foreign currency movements for the three months ended January 31, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points 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.

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. Foreign currency movements for the six months ended April 30, 2025 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 or vice versa. 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

Revenue from products for the three months ended January 31, 2025 decreased 1 percent when compared to the same period last year. The product revenue decline in the three months ended January 31, 2025 was primarily driven by decreases in our gas chromatography, cell analysis and spectroscopy businesses partially offset by increases in our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to the same period last year.

Current wording

April 30, 2025 was primarily driven by increases in our consumables, liquid chromatography and liquid chromatography mass spectrometry businesses partially offset by decreases in our gas chromatography, biomolecular analysis and cell analysis businesses when compared to the same periods last year.

Previous wording

Services and other revenue for the three months ended January 31, 2025 increased 7 percent when compared to the same period 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 months ended January 31, 2025, service revenue increases reflected strong growth from contract repair and preventative maintenance services partially offset by declines in per incident services including consulting services, compliance and relocations.

Current wording

Services and other revenue for the three and six months ended April 30, 2025 increased 8 percent and 7 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, 2025, service revenue increases reflected strong growth from contract repair and preventative maintenance services partially offset by declines in per incident services including consulting services, compliance and relocations.

Previous wording

Revenue in the Life Sciences and Diagnostics Markets segment for the three months ended January 31, 2025, increased 4 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025 had an overall unfavorable impact on revenue growth of 1 percentage point when compared to the same period last year. For the three months ended January 31, 2025, we saw strong revenue growth in the pharmaceutical market led by revenue from our BIOVECTRA business. We also saw strong revenue growth in the diagnostics and clinical market and moderate revenue growth from the environmental and forensics market partially offset by a decline in revenue in the academia and government market when compared to the same period last year.

Current wording

Revenue in the Life Sciences and Diagnostics Markets segment for the three and six months ended April 30, 2025, increased 8 percent and 6 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year. For the three and six months ended April 30, 2025, revenue from our BIOVECTRA business contributed 6 percentage points and 5 percentage points, respectively. For the three and six months ended April 30, 2025, we saw strong revenue growth in the pharmaceutical market led by revenue from our BIOVECTRA business. 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 academia and government market when compared to the same periods last year.

Previous wording

Revenue in the Agilent CrossLab segment for the three months ended January 31, 2025, increased 1 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to the same period last year. For the three months ended January 31, 2025, we saw revenue growth across most of our end markets led by strong growth in the environmental and forensics, diagnostics and clinical, and food markets partially offset by a decline in the academia and government market when compared to the same period last year.

Current wording

Revenue in the Agilent CrossLab segment for the three and six months ended April 30, 2025, increased 7 percent and 4 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points for both periods when compared to the same periods last year. For the three and six months ended April 30, 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 the same periods last year.

Previous wording

Revenue in the Applied Markets segment for the three months ended January 31, 2025 decreased 4 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to the same period last year. For the three months ended January 31, 2025, we saw a significant decline in revenue in the chemical and advanced materials and academia and government markets partially offset by significant revenue growth in the food market when compared to the same period last year.

Current wording

Revenue in the Applied Markets segment for the three and six months ended April 30, 2025 decreased 1 percent and 3 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an overall unfavorable impact on revenue growth of 1 percentage point and 2 percentage points, respectively, when compared to the same periods last year. For the three months ended April 30, 2025, we saw a modest decline in revenue in the chemical and advanced materials market and a significant decline in revenue in the academia and government market partially offset by significant revenue growth in the pharmaceutical market when compared to the same period last year. For the six months ended April 30, 2025, we saw a significant decline in revenue in the chemical and advanced materials and academia and government markets partially offset by significant revenue growth in the food market when compared to the same period last year.

Previous wording

Total gross margin for the three months ended January 31, 2025 decreased 1 percentage point when compared to the same period last year. Gross margin for the three months ended January 31, 2025 was unfavorably impacted by product mix, impact of currency movements and higher wages partially offset by targeted price increases, lower inventory charges, warranty and variable pay when compared to the same period last year.

Current wording

Total gross margin for the three and six months ended April 30, 2025 decreased 2 percentage points in both periods when compared to the same periods last year. Gross margin for the three and six months ended April 30, 2025 was unfavorably impacted by product mix, impact of currency movements, higher shipping, customs and duties costs, restructuring expenses, higher wages and variable pay partially offset by targeted price increases and lower warranty costs when compared to the same periods last year.

Previous wording

Research and development expenses for the three months ended January 31, 2025 decreased 12 percent when compared to the same period last year. Research and development expenses in the three months ended January 31, 2024 included an impairment of in-process research and development of $6 million. Research and development expenses for the three months ended January 31, 2025 also decreased due to lower salary expense related to prior year workforce reduction activities, lower variable pay and stock-based compensation expense when compared to the same period last year.

Current wording

Research and development expenses for the three and six months ended April 30, 2025 decreased 1 percent and 7 percent, respectively, when compared to the same periods last year. Research and development expenses for the three and six months ended April 30, 2025 decreased due to lower salary expense related to prior year workforce reduction activities partially offset by higher restructuring expenses and variable pay when compared to the same periods last year. Research and development expenses in the six months ended April 30, 2024 also included an impairment of in-process research and development of $6 million.

Previous wording

Total operating margin for the three months ended January 31, 2025 decreased 1 percentage point when compared to the same period last year. The decrease in total operating margin for the three months ended January 31, 2025 was unfavorably impacted by product mix, impact of currency movements and higher corporate infrastructure expenses partially offset by lower salary expense related to prior year workforce reduction activities.

Current wording

Total operating margin for the three and six months ended April 30, 2025 decreased 5 percentage points and 3 percentage points, respectively, when compared to the same periods last year. Operating margin for the three and six months ended April 30, 2025 was unfavorably impacted by product mix, higher restructuring expenses, transformational initiatives and the unfavorable impact of currency movements partially offset by higher sales volume and lower salary expense related to prior year workforce reduction activities.

Previous wording

Interest income for the three months ended January 31, 2025 and 2024 was $15 million and $18 million, respectively. The decrease in interest income in 2025 was primarily due to lower cash balances.

Current wording

Interest income for the three months ended April 30, 2025 and 2024 was $14 million and $19 million, respectively. Interest income for the six months ended April 30, 2025 and 2024 was $29 million and $37 million, respectively. The decrease in interest income in 2025 was primarily due to lower cash balances.

Previous wording

At January 31, 2025, our headcount was approximately 17,900 as compared to approximately 17,700 at January 31, 2024.

Current wording

At April 30, 2025, our headcount was approximately 18,000 as compared to approximately 17,600 at April 30, 2024.

Previous wording

For the three months ended January 31, 2025, other income (expense), net of $4 million income includes a net gain of $1 million on equity securities and income of $13 million 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). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $3 million. The costs associated with these services are reported within income from operations. For the three months ended January 31, 2025, other income (expense), net also includes expense of $14 million related to the settlement loss of our Netherlands defined benefit pension plan.

Current wording

For the six months ended April 30, 2025, other income (expense), net of $21 million expense includes a net loss of $27 million on equity securities, $15 million loss on impairment of investments, and income of $26 million 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). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $6 million. The costs associated with these services are reported within income from operations. For the six months ended April 30, 2025, other income (expense), net also includes expense of $14 million related to the settlement loss of our Netherlands defined benefit pension plan.

Previous wording

For the three months ended January 31, 2024, other income (expense), net of $23 million income includes a net gain of $3 million on equity securities and income of $7 million 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). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $3 million. The costs associated with these services are reported within income from operations. For the three months ended January 31, 2024, other income (expense), net also includes $8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income (loss).

Current wording

For the six months ended April 30, 2024, other income (expense), net of $35 million income includes a net gain of $4 million on equity securities and income of $14 million 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). The provision of site service costs to, and lease income from Keysight Technologies, Inc. contributed income of $6 million. The costs associated with these services are reported within income from operations. For the six months ended April 30, 2024, other income (expense), net also includes $8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income (loss).

Previous wording

For the three months ended January 31, 2025, our income tax expense was $49 million with an effective tax rate of 13.4 percent. For the three months ended January 31, 2025, there were no significant discrete items.

Current wording

For the three and six months ended April 30, 2025, our income tax expense was $45 million with an effective tax rate of 17.3 percent and $94 million with an effective tax rate of 15.0 percent, respectively. For the three and six months ended April 30, 2025, there were no significant discrete items.

Previous wording

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 form our new Applied Markets segment. We are reporting under this new structure beginning with this Quarterly Report on Form 10-Q for the period ended January 31, 2025. All historical financial segment information has been recast to conform to this new presentation in our financial statements and accompanying notes.

Current wording

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 form our new Applied Markets segment. We began reporting under this new structure with the Quarterly Report on Form 10-Q for the period ended January 31, 2025. All historical financial segment information has been recast to conform to this new presentation in our financial statements and accompanying notes.

Previous wording

Life Sciences and Diagnostics Markets segment revenue for the three months ended January 31, 2025 increased 4 percent when compared to the same period last year. Foreign currency movements for the three months ended January 31, 2025 had an unfavorable impact on revenue growth of 1 percentage point when compared to the same period last year.

Current wording

Life Sciences and Diagnostics Markets segment revenue for the three and six months ended April 30, 2025 increased 8 percent and 6 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months ended April 30, 2025 had an unfavorable impact on revenue growth of 2 percentage points and 1 percentage point, respectively, when compared to the same periods last year.

Previous wording

Geographically, revenue for the three months ended January 31, 2025 increased 10 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 3 percent in Europe with a 1 percentage point unfavorable currency impact and decreased 5 percent in Asia Pacific with a 1 percentage point unfavorable currency impact compared to the same period last year. For the three months ended January 31, 2025, the revenue increase in the Americas was primarily driven by revenue from the BIOVECTRA acquisition as well as strong growth from our liquid chromatography, liquid chromatography mass spectrometry and companion diagnostics businesses. Revenue increased in Europe due to strong growth from our liquid chromatography, liquid chromatography mass spectrometry, genomics and companion diagnostics businesses. The revenue decline in Asia Pacific was driven by our liquid chromatography, cell analysis and pathology businesses partially offset by increased revenue in our liquid chromatography mass spectrometry and genomics businesses.

Current wording

Geographically, revenue for the three months ended April 30, 2025 increased 12 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 1 percent in Europe with a 2 percentage point unfavorable currency impact and increased 11 percent in Asia Pacific with a 1 percentage point unfavorable currency impact compared to the same period last year. For the three months ended April 30, 2025, the revenue increase in the Americas was primarily driven by revenue from the BIOVECTRA acquisition as well as strong growth from our pathology and companion diagnostics businesses. Revenue increased in Europe due to strong growth from our cell analysis and companion diagnostics businesses and moderate growth from our liquid chromatography mass spectrometry and pathology businesses, partially offset by declines in our liquid chromatography and biomolecular analysis businesses. Revenue increased in Asia Pacific due to strong growth from our liquid chromatography, liquid chromatography mass spectrometry, pathology and cell analysis businesses.

Previous wording

For the three months ended January 31, 2025, revenue performance in the pharmaceutical market had strong growth mainly due to the BIOVECTRA acquisition, strong growth in our liquid chromatography mass spectrometry business and moderate growth in our liquid chromatography business. We saw strong revenue growth in the diagnostics and clinical market led by our liquid chromatography, liquid chromatography mass spectrometry, companion diagnostics, cell analysis and biomolecular analysis businesses which was partially offset by a decline in our pathology business. Revenue in the academia and government market declined due to our biomolecular, cell analysis and genomics businesses, partially offset by modest growth in our liquid chromatography and liquid chromatography mass spectrometry businesses. Within the applied markets, we saw modest revenue growth primarily within the environmental and forensics markets.

Current wording

For the six months ended April 30, 2025, strong revenue growth in the pharmaceutical market was mainly due to the BIOVECTRA acquisition and our liquid chromatography mass spectrometry business and moderate growth in our nucleic acid solutions business. We saw strong revenue growth in the diagnostics and clinical market led by strong growth in our companion diagnostics, liquid chromatography and liquid chromatography mass spectrometry businesses, moderate growth in our biomolecular business and modest growth in our pathology and cell analysis businesses. Revenue in the academia and government market declined due to our biomolecular, cell analysis and genomics businesses, partially offset by strong growth in our liquid chromatography mass spectrometry business. Within the applied markets, we saw modest revenue growth primarily within the environmental and forensics and chemicals and advanced materials markets.

Previous wording

Looking forward, we are optimistic about our long-term growth opportunities in our end markets and continue to invest in expanding and improving our applications and solutions portfolio. We continue to leverage our liquid chromatography and liquid chromatography mass spectrometry platforms to maximize our growth via key vectors across our markets, making us optimistic about our long-term growth opportunities in the life sciences markets. We remain positive about the growth in our diagnostic and clinical markets around our OMNIS platforms. Market demand for therapeutic oligo continues to grow, and our CDMO business is well positioned to serve expanding customer requirements. We will also continue to invest in research and development, invest in expanding and improving our applications and solutions portfolio and seek to expand our position in developing countries and emerging markets.

Current wording

Looking Forward. While we anticipate the recent tariff changes to adversely impact our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact by the end of our fiscal year. Therefore, we remain optimistic about our long-term growth opportunities in our end markets and continue to invest in expanding and improving our applications and solutions portfolio. We continue to leverage our liquid chromatography and liquid chromatography mass spectrometry platforms to maximize our growth via key vectors across our markets, making us optimistic about our long-term growth opportunities in the life sciences markets. We remain positive about the growth in our diagnostic and clinical markets around our OMNIS platforms. Market demand for therapeutic oligo continues to grow, and our CDMO business is well positioned to serve expanding customer requirements. We will also continue to invest in research and development, invest in expanding and improving our applications and solutions portfolio and seek to expand our position in developing countries and emerging markets.

Previous wording

Gross margin for products and services for the three months ended January 31, 2025, decreased 2 percentage points when compared to the same period last year. Gross margin for the three months ended January 31, 2025 was impacted mainly by unfavorable business mix and impact of currency movements which was partially offset by lower salary expense related to prior year workforce reduction activities.

Current wording

Gross margin for products and services for the three and six months ended April 30, 2025, decreased 2 percentage points in both periods when compared to the same periods last year. Gross margin for the three and six months ended April 30, 2025 was impacted mainly by unfavorable business mix, increased variable pay, increased logistical costs and the unfavorable impact of currency movements which was partially offset by lower warranty expenses and lower salary expense related to prior year workforce reduction activities.

Previous wording

Research and development expenses for the three months ended January 31, 2025, decreased 6 percent when compared to the same period last year. Research and development expenses for the three months ended January 31, 2025 decreased primarily due to lower salary expenses related to prior year workforce reduction activities and variable pay.

Current wording

Research and development expenses for the three and six months ended April 30, 2025, decreased 7 percent and 6 percent, respectively, when compared to the same periods last year. Research and development expenses for thethree and six months ended April 30, 2025 decreased primarily due to lower salary expenses related to prior year workforce reduction activities partially offset by increases in variable pay.

Previous wording

Operating margin for products and services for the three months ended January 31, 2025 was flat when compared to the same period last year. Operating margin for products and services for the three months ended January 31, 2025, was flat due to unfavorable business mix and higher corporate infrastructure expense allocation offset by lower salary expense related to prior year workforce reduction activities.

Current wording

Operating margin for products and services for the three and six months ended April 30, 2025 increased 1 percentage point and was flat, respectively, when compared to the same periods last year. Operating margin for products and services for the three months ended April 30, 2025, increased due to the lower salary expense related to prior year workforce reduction activities partially offset by unfavorable business mix, increased variable pay and increased commissions. Operating margin for products and services for the six months ended April 30, 2025 was flat due to lower salary expense related to prior year workforce reduction activities offset by unfavorable business mix, increased variable pay and increased commissions.

Previous wording

For the three months ended January 31, 2025, we saw growth across the majority of our end markets. We saw strong growth in the environmental and forensics market and the diagnostics and clinical market driven by our services, consumables and lab automation businesses. We saw modest growth in our chemicals and advanced materials market mainly driven by our services and consumables businesses. We saw moderate growth in our food market mainly driven by our services, consumables and lab automation businesses. Revenue from the pharmaceutical market was flat year on year with growth from the service business offset by weakness in our other businesses.

Current wording

For the three months ended April 30, 2025, revenue increased significantly across all end markets. Strong revenue growth in the pharmaceutical market was driven by our consumables, services and lab automation businesses when compared to the same period last year. Strong revenue growth in the chemicals and advanced materials and food market was driven by our consumables and services businesses when compared to the same period last year. Strong revenue growth in the environmental and forensics market was driven by our services and consumables businesses when compared to the same period last year.

Previous wording

Looking forward, 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.

Current wording

Looking Forward. While we anticipate the recent tariff changes to adversely impact our costs of revenue in the second half of fiscal year 2025, we expect to substantially mitigate the impact by the end of our fiscal year. 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.

Previous wording

Selling, general and administrative expenses for the three months ended January 31, 2025 increased 3 percent when compared to the same period last year. For the three months ended January 31, 2025, selling, general and administrative expenses increased due to higher allocation of corporate infrastructure expenses partially offset by lower salary expenses related to prior year workforce reduction activities, variable pay and the favorable impact of currency movements.

Current wording

Selling, general and administrative expenses for the three and six months ended April 30, 2025 increased 3 percent in both periods when compared to the same periods last year. For the three and six months ended April 30, 2025, selling, general and administrative expenses increased due to higher commissions, variable pay and a higher allocation of corporate infrastructure expenses offset by lower salary expenses related to prior year workforce reduction activities and the favorable impact of currency movements.