A · Q2 2025 Earnings
CautiousAgilent Technologies
Reported May 28, 2025
30-second summary
Agilent posted Q2 revenue of $1.668B (+6% YoY, 5.3% core) and non-GAAP EPS of $1.31, with management raising both ends of the FY revenue range while absorbing 55bps of incremental tariff costs in gross margin (54.1% non-GAAP, which would have expanded ex-tariff). The headline Q3 guide looks soft — reported growth of 4.2-6.1% steps down from Q2's pace — but ~$15M of consumables shifted from Q3 into Q2 ahead of mid-April tariff announcements, normalizing Q3 core to mid-single digits. PFAS (+75% YoY per Q&A; >70% per press release, annualizing >$100M) and NASD/BioVector (high-teens) are doing the heavy lifting; Applied Markets remains in contraction at -1%.
Headline numbers
EPS
Q2 FY2025
$1.31
Revenue
Q2 FY2025
$1.67B
+6.0% YoY
Gross margin
Q2 FY2025
51.9%
Operating margin
Q2 FY2025
18.0%
Key financials
Q2 FY2025| Metric | Q2 FY2025 | YoY |
|---|---|---|
| Revenue | $1.67B | +6.0% |
| EPS | $1.31 | — |
| Gross margin | 51.9% | — |
| Operating margin | 18.0% | — |
Guidance
Prior quarter data unavailable — comparison not possible.
Segment KPIs
Q2 FY2025| Segment | Q2 FY2025 | YoY |
|---|---|---|
| Life Sciences and Diagnostics Markets | $0.654B | +8.0% |
| Agilent CrossLab | $0.713B | +7.0% |
| Applied Markets | $0.301B | -1.0% |
Other KPIs
Q2 FY2025| Segment | Q2 FY2025 |
|---|---|
| Life Sciences and Diagnostics Markets Gross Margin | 52.8% |
| Life Sciences and Diagnostics Markets Operating Margin | 19.7% |
| Agilent CrossLab Gross Margin | 55.5% |
| Agilent CrossLab Operating Margin | 32.4% |
| Applied Markets Gross Margin | 53.5% |
| Applied Markets Operating Margin | 19.5% |
| Core Revenue Growth | 5.3% |
Management tone
The dominant posture from executives was operational confidence backed by specific order-book commitments (NASD H2 double-digit, $80M annualized run-rate savings from spans-of-control changes beginning H2, plus >$50M annualized procurement savings by end-2025) rather than hedging language. Management explicitly framed Q2's flat YoY operating margin as "expansion ex-tariff," signaling they want investors to underwrite a margin recovery story in H2 driven by pricing (~100bps embedded for the year, with H2 tariff surcharges incremental), Ignite cost actions, and supply chain mitigation. The Ignite spans-of-control program — a 30% increase in spans of control as part of the organizational redesign — is the primary lever behind the $80M annualized run-rate savings.
The strategic-account/reshoring discussion was notably more measured: management acknowledged conversations at "the highest levels" but flagged a 2-3 year minimum timeline with no concrete commitments. That's an honest framing investors should anchor to — pharma reshoring is optionality, not a 2025 or 2026 driver.
Q&A highlights
Patrick Donnelly · Citi
Order trends progression through Q2, tariff pull-forward in pharma, comparison of orders vs. revenue, and NASD/BioVector visibility including order books extending into 2026.
Book-to-bill greater than one; orders grew low single digits in Q2, mid-single digits in H1. No pharma pull-forward observed; stable business across regions. NASD showing high single-digit growth with expectation of double-digit growth in H2. BioVector performing in high teens. Revenue mix in NASD evolving from 50-50 to 60-40 toward commercial. Orders in house for H2 double-digit growth commitment.
Matt Sykes · Goldman Sachs
Differences in ordering patterns between clinical QA/QC vs. early-stage research pharma; PFAS growth sustainability given potential easing of U.S. water regulation; offsetting growth potential in food and product testing.
Majority of pharma business is QA/QC and development; small molecule grew 10% in Q2. PFAS grew 75% YoY; Europe and China doubled. Water testing expected to continue despite regulatory uncertainty. Industrial-based testing (wastewater, soil, discharges) primary U.S. driver due to litigation concerns and EPA enforcement. Emerging air/volatile PFAS application opportunity: currently 2-3% of market, expected to grow to 8-12% in 12-18 months with high Agilent win rate.
Jack Meehan · Nefron Research
Customer rationale for consumables pull-forward in China; instrument revenue recapture timing in Q3 and beyond; operating margin implications for full year.
Customers pulled forward consumables orders to get ahead of tariffs announced mid-April; inventory was in-country. Longer customs processing times offset consumables pull-forward with instrumentation delays. No net Q2 revenue impact; reversal expected in Q3. Operating margins expected flat YoY for year, but would show expansion ex-55 bps tariff impact. Margin recovery driven by pricing, Ignite savings, and tariff mitigation in H2.
Rachel Badenstall · JP Morgan
Concrete pharma capacity buildout discussions and timeline for onshoring tailwinds; pricing realization ability and embedded pricing assumptions in guidance.
Strategic account discussions at highest levels but early stage; no concrete commitments yet. Timeline for capacity buildout impact: 2-3 years minimum (following site plans, construction, qualification, then lab buildout). Well-positioned with large install bases and QA/QC focus benefits from reshoring. Pricing: enterprise pricing surcharges applied in structured manner. Already achieved full-year 2024 price contribution in first 6 months of 2025. Embedded ~100 bps price realization for year, possibly higher with tariff mitigation surcharges. Balancing price increases with supply chain permanent mitigations and customer competitiveness.
Vijay Kumar · Evercore ISI
ACG guidance slowdown from Q2 performance to low singles in Q3; overall company growth step-down of 250 bps seems conservative; margin profile and restructuring charges; implications of Ignite cost actions.
ACG growth normalizes after tariff-driven consumables pull-forward. Q2 included ~$15M consumables pulled from Q3; adjusted for that, ACG guidance mid-single digits on normalized basis. Full-year fundamentals remain strong. Gross margin: flat YoY inclusive of 55 bps tariff headwind; ex-tariff, tracking for expansion. Restructuring charges: GAAP-only impact related to organizational health and span-of-control increases (30% increase in spans). Ignite delivering $80M annualized savings starting H2 (~$40M in H2 FY25).
What to watch into next quarter
NASD H2 trajectory: management committed to double-digit growth in H2 vs. high-single in Q2. Watch whether NASD revenue actually inflects in Q3 — if it stays at high-single digits, the FY guide gets harder.
Q3 ACG core growth: management says ~mid-single digits normalized for the $15M pull-forward; reported ACG growth materially below ~3-4% would suggest the pull-forward was larger than disclosed or underlying demand softened.
Applied Markets inflection: AMG at -1% in Q2 with no visible catalyst discussed. Watch whether this segment returns to positive growth in Q3 or whether weakness deepens.
Gross margin recovery: Q2 non-GAAP gross margin was 54.1% with a 55bps tariff drag. Watch whether H2 pricing surcharges and Ignite savings deliver enough to drive year-on-year expansion ex-tariff.
PFAS contribution sustainability: PFAS added ~80bps to Q2 growth and is annualizing above $100M. Watch whether the volatile/air PFAS opportunity begins generating disclosed wins or remains pipeline commentary.
Sources
- Agilent Technologies Q2 FY2025 Press Release, May 28, 2025 — https://www.sec.gov/Archives/edgar/data/1090872/000109087225000013/exhibit991-q225pressrelease.htm
- Q2 FY2025 earnings call Q&A (analyst exchanges with Citi, Goldman Sachs, Nephron Research, JP Morgan)
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