A · Q3 2025 Earnings

Bullish

Agilent Technologies

Reported August 27, 2025

30-second summary

Agilent delivered Q3 FY2025 revenue of $1.738B (+10.1% reported, +6.1% core), beating the high end of its prior guide by 3.8% and accelerating core growth for a fifth consecutive quarter (1.2% → 5.3% → 6.1%). Management raised FY2025 revenue by ~$150M at the midpoint and lifted core growth guidance by ~145bps, but held FY non-GAAP EPS flat at $5.56–$5.59 — implying the revenue beat is being absorbed by ~200bps of YoY margin compression from a higher-than-expected $35M Q3 tariff hit ($10M above plan), with FY net tariff cost now $20M versus the "minimal" impact guided in May. The setup into FY2026 is the real story: management quantified three stacking tailwinds — Ignite (100+ bps), full tariff mitigation, and volume leverage — and called for ~+230bps sequential margin improvement in Q4 off the Q3 base of 25.1%, implying ~27.4%.

Headline numbers

EPS

Q3 FY2025

$1.37

Revenue

Q3 FY2025

$1.74B

+10.1% YoY

Gross margin

Q3 FY2025

51.1%

Operating margin

Q3 FY2025

20.7%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$1.74B	+10.1%	$1.67B	+4.2%
EPS	$1.37	—	$1.31	+4.6%
Gross margin	51.1%	—	51.9%	-80bps
Operating margin	20.7%	—	18.0%	+272bps

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q3 FY2025	$1.645B to $1.675B	$1.738B	+$0.063B to $0.093B above guide	Beat
Revenue Growth (Reported)	Q3 FY2025	4.2% to 6.1%	10.1%	+3.9 to +5.9 pts above guide	Beat
Revenue Growth (Core)	Q3 FY2025	1.7% to 3.6%	6.1%	+2.5 to +4.4 pts above guide	Beat
Non-GAAP EPS	Q3 FY2025	$1.35 to $1.37	$1.37	at high end of guide	Beat

New guidance

Metric	Period	Guide	YoY
Non-GAAP EPS Growth YoY	FY2025	5.1% to 5.7%	—
Revenue	Q4 FY2025	$1.822B to $1.842B	—
Revenue Growth (Reported)	Q4 FY2025	7.1% to 8.3%	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY2025	$6.73B to $6.81B	$6.91B to $6.93B	+$0.18B to $0.20B midpoint increase	Raised
Revenue Growth (Reported)	FY2025	3.4% to 4.6%	6.2% to 6.5%	+2.6 to +2.9 pts	Raised
Revenue Growth (Core)	FY2025	2.5% to 3.5%	4.3% to 4.6%	+1.1 to +2.1 pts	Raised

Reaffirmed unchanged this quarter: Non-GAAP EPS ($5.56 to $5.59)

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
Life Sciences and Diagnostics Markets Group	$0.67B	+14.0%
Agilent CrossLab Group	$0.744B	+8.0%
Applied Markets Group	$0.324B	+7.0%
Life Sciences and Diagnostics Markets Group Core Growth	7%	—
Agilent CrossLab Group Core Growth	5%	—
Applied Markets Group Core Growth	5%	—

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Core Revenue Growth	6.1%
Life Sciences and Diagnostics Operating Margin	17.6%
Agilent CrossLab Operating Margin	33.3%
Applied Markets Operating Margin	21.8%
FY2025 Non-GAAP EPS Guidance (Midpoint)	$5.575

Management tone

Narrative arc: Q2 tariff-absorption hedging → Q3 durable acceleration with quantified FY2026 bridge.

Three quarters ago Agilent was framing Ignite as a forward-looking org redesign with annualized savings beginning in H2; this quarter management is treating Ignite as the operating model that delivered the tariff response in real time. The verbatim anchor: "Our Ignite Tariff Task Force has shown the power of the model in action. In a highly dynamic environment, we reorganized supply chains, shifted production across our global footprint, and implemented targeted pricing actions, giving us confidence we can fully mitigate the impact of tariffs in 2026 at current rates." The shift reframes tariffs from a margin threat into an operational variable Agilent has already engineered around — and it shifts the FY2026 setup from "hope" to a quantified bridge.

In Q2, management leaned on a tariff-driven consumables pull-forward to explain why Q3 reported growth would step down. This quarter the framing is the opposite — five consecutive quarters of sequential core acceleration with an improving two-year stack. Padraig McDonnell's anchor: "Our fiscal 2025 third quarter marks our fifth consecutive quarter of sequential core revenue acceleration... For this fiscal year, we've gone from 1.2% in Q1 to 5.3% in Q2 and now 6.1% in Q3. Just as important, our two-year growth stack also is improving, showing that this is a durable momentum, not just a short-term bounce." The deliberate emphasis on the two-year stack is management pre-empting the "easy comp" pushback.

The pharma-recovery narrative tightened materially. Last quarter management talked about pharma orders up low-single digits with cautious sign-off behavior. This quarter the framing has shifted to structural budget normalization: "There is reduced dependence on executive level approvals that have slowed or stopped spending in the recent past." If accurate, that's a durable demand-velocity unlock — not an inventory restock — and it explains why book-to-build has now run above 1.0 for six consecutive quarters.

What management did not soften: margin pressure was real and acknowledged. "We did have higher expectations for margin improvement in the quarter." Tariffs ran $10M above plan in Q3, and the Q4 sequential ~+230bps margin guide is now the credibility test.

Recurring themes management leaned on this quarter:

Sequential revenue acceleration with durable momentum validated by improving two-year growth stackIgnite operating model as differentiating driver enabling speed, pricing discipline, and cost leveragePlatform innovation driving growth: Infinity Tree LC, ProIQ LCMS, Daco-Ombus winning key accountsBroad-based pharma and chemical/advanced materials strength offsetting biopharma weaknessTariff mitigation confidence through supply chain optimization and pricing actionsIndia emerging as strategic high-growth market with 20% growth and new experience center investment

Risks management surfaced:

Tariff expense volatility and inventory build impacting near-term margins despite FY26 mitigation confidenceBiopharma and academia/government spending pressures persisting, particularly in USEnvironmental forensics market headwind from EPA regulatory changes impacting capital spendingCurrency exchange rate exposure affecting reported growth translationChina stimulus timing uncertainty regarding magnitude and impact to applied markets

Q&A highlights

Dan Brennan · TD Cowan

Requested detailed breakdown of three margin variables: tariff/logistics spending, inventory purchases, and variable pay/incremental spend. Asked about ROI on investments and whether benefits extend into 2026.

Management identified tariffs and logistics as the biggest impact (~200 bps year-over-year). Confirmed tariff headwind will peak in Q4 and trend downward starting 2026, with full mitigation expected by 2026. Explained commercial investments are being made proactively to capture demand from replacement cycles and product launches (Infinity Tree, ProIQ LCMS). Variable pay and commercial investment equally contributing to margin pressure.

Tariffs and logistics costs: ~200 basis points YoY impactTariff headwind peaks in Q4, mitigates starting 2026Full tariff mitigation expected in 2026Infinity Tree growing mid-teens

Tyco Peterson · Jeffries

Asked about pharma sign-off dependency reduction (geographic scope, CDMOs vs large pharma) and pent-up demand. Also probed PFAS softness in US and commercial investment timing.

Confirmed reduction in approval sign-off dependencies across all geographies, particularly small molecule, enabling faster budget release and larger quotes. Attributed PFAS US weakness (-20%) to EPA regulatory changes creating capex uncertainty in Q4/Q1, though global PFAS remains strong. Commercial investments were dynamic response to momentum and competitive positioning, not pre-planned.

PFAS up 10% overall, 50% YTD growthPFAS Americas down 20% due to EPA changesSign-off dependency reduction enabling faster decision-making at lab/site manager levelUncertainty around PFAS capex spend in Q4 and Q1

Rachel Wadenathal · JP Morgan

Asked about 2026 expectations and moving pieces. Q4 guide implies ~5.5% organic growth; requested walkthrough of whether Q4 growth rate is reasonable baseline for 2026. Also asked about budget assumptions embedded in Q4 guidance.

Management deferred 2026 detailed guidance but highlighted strong H2 25 momentum as positive indicator, with revenue and margin tailwinds identified: tariff mitigation (full in 2026), Ignite savings continuation, and volume leverage. Confirmed quotes (not orders) are being tracked for year-end budget flush, described as 'standard year end' after several years, with early indications of budget normalization and larger customer quotes.

H2 25 meaningfully stronger than first halfTariffs to be fully mitigated within 2026Ignite driving margin gains200 bps sequential margin improvement expected Q3 to Q4

Michael Riskin · Bank of America

Asked about strong chemicals and advanced materials growth (10%, broad-based) given mixed market data. Requested geographic breakdown and confirmation of no pull-forward. Also asked for full-year 2025 tariff quantification and clarification on 2026 mitigation math.

Management attributed CAM strength to three drivers: capacity growth from supply chain regionalization, greenfield investments in chemicals and advanced materials, and replacement momentum in LC and GC platforms. Confirmed no pull-forward seen. Provided tariff quantification: ~$35M in Q3 vs $25M expected (+$10M), expecting same level in Q4 (totaling ~$70M for H2). Mitigation actions being implemented by end of Q4 and ramping through 2026.

CAM growth: 10% in Q3, broad-based across chemicals and advanced materialsTariff costs: $35M in Q3 (vs $25M expected), expecting ~$35M in Q4Total H2 tariffs: ~$70MTariff mitigation to be implemented by end of Q4, ramping through 2026

Patrick Donnelly · Citi

Asked if 2026 is shaping up as an outsized margin year given tariff headwinds in 2025 won't recur, combined with Ignite and growth. Also requested pricing color and whether it's offsetting volume challenges.

Management identified three key 2026 margin tailwinds: Ignite savings continuation, tariff mitigation (higher, ramping through year), and volume leverage. Reiterated 100+ bps from Ignite program as credible guidance. Noted Q4 margins expected to increase 200 bps sequentially vs Q3. On pricing: 100 bps improvement in Q3 YoY (vs ~50 bps prior year). Acknowledged tariff surcharges not yet realized but expect pricing benefit to flow Q4/2026.

Q4 expected 200 bps sequential margin improvement vs Q3Pricing improvement: 100 bps YoY in Q3 vs ~50 bps prior yearIgnite target: 100+ basis points for out yearsTariff surcharges and pricing to flow through Q4 and 2026

Answers to last quarter's watch list

NASD H2 trajectory — Management disclosed NASD grew "well into the 20s" in Q3 and reiterated increasing confidence in the double-digit full-year NASD outlook.

Resolved positively

Q3 ACG core growth — ACG delivered +5% core, landing squarely in the "mid-single digits normalized" range management telegraphed in Q2 (Q2 tariff-driven pull-forward absorbed cleanly).

Resolved positively

Applied Markets inflection — AMG flipped from -1% reported in Q2 to +7% reported / +5% core in Q3, with management attributing the move to broad-based chemicals and advanced materials demand (CAM +10%) and explicitly denying pull-forward. This is the cleanest positive surprise in the print.

Resolved positively

Gross margin recovery — Non-GAAP gross margin landed at 53.1%, down YoY on currency, tariffs, and BioVectra downtime; operating margin compressed 230bps YoY due to $35M of tariffs ($10M above plan) plus commercial reinvestment. H2 pricing and Ignite savings did not yet outpace the tariff hit; recovery is deferred to Q4 (~+230bps sequential commitment) and FY2026.

Resolved negatively

PFAS contribution sustainability — Global PFAS up low double digits in Q3, +50% YTD, but PFAS Americas down 20% on EPA regulatory uncertainty. The volatile-air opportunity remains pipeline commentary; no disclosed wins yet.

Continue monitoring

What to watch into next quarter

Q4 sequential operating margin: did Agilent deliver the ~+230bps step-up? Q3 operating margin was 25.1%; the guide implies ~27.4% in Q4. A miss here breaks the FY2026 margin-bridge narrative.

FY EPS landing point within $5.56–$5.59: the reaffirmed range despite a $150M revenue raise is the squeeze point. Landing at the low end signals tariff costs ran hotter than the latest $35M Q4 estimate.

NASD trajectory into FY2026: management expressed tentative confidence in carryover momentum but declined to call FY2026. Watch for explicit NASD quantification on the Q4 print.

PFAS Americas trajectory: down 20% in Q3 on EPA uncertainty. Watch whether Q4/Q1 capex visibility improves or whether the US PFAS air pocket persists into FY2026.

Initial FY2026 framework: management deferred but pre-positioned three tailwinds (Ignite 100+ bps, tariff mitigation, volume leverage). Watch the Q4 call for whether the initial FY2026 revenue/margin algorithm validates the implied mid-single-digit growth + meaningful margin expansion.

Book-to-build sustainability: above 1.0 for six consecutive quarters per management. Watch whether the streak extends and whether the order-book conversion shows up as Q1 revenue strength.

Sources

Agilent Technologies Q3 FY2025 Press Release, August 27, 2025 — https://www.sec.gov/Archives/edgar/data/1090872/000109087225000034/exhibit991-q325pressrelease.htm
Q3 FY2025 earnings call Q&A (analyst exchanges with TD Cowen, Jefferies, JP Morgan, Bank of America, Citi)
Tapebrief Q2 FY2025 brief on Agilent Technologies (cross-quarter context)

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