# How Agilent Technologies makes money

CXProWealth Business Lens · Agilent Technologies (A) · Q3 FY2026

Read from the 10-Q for the period 2026-05-01 to 2026-07-31, filed 2026-09-01 with the SEC (accession 0001090872-26-000064): https://www.sec.gov/Archives/edgar/data/1090872/000109087226000064/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $1.9B (+8.1% on the year)
- Operating income: $444.0M (operating margin 23.6%)
- Net income: $362.0M (net margin 19.3%)
- Gross margin: 55.5%
- Free cash flow: $439.0M (23.4% of revenue)
- Cash conversion (operating cash flow / net income): 1.43x
- Capital expenditure: 4.3% of revenue

## Where the money goes (Q3 FY2026)

- Product → Net revenue: $1.3B
- Services and Other → Net revenue: $545.0M
- Net revenue → Cost of revenue: $836.0M
- Net revenue → Gross profit: $1.0B
- Gross profit → Research and development: $123.0M
- Gross profit → Selling, general and administrative: $475.0M
- Gross profit → Income from operations: $444.0M
- Income from operations → Interest expense: $29.0M
- Income from operations → Income before taxes: $415.0M
- Interest income → Income before taxes: $15.0M
- Other income (expense), net → Income before taxes: $14.0M
- Income before taxes → Provision for income taxes: $82.0M
- Income before taxes → Net income: $362.0M

## Where the revenue comes from

### Products and services (CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited))

| Member | Value | Share |
|---|---:|---:|
| Product | $1.3B | 71.0% |
| Services and Other | $545.0M | 29.0% |

The members sum to total revenue.

### Segments (REVENUE- Revenue by Region (Details))

| Member | Value | Share |
|---|---:|---:|
| Agilent CrossLab | $786.0M | 41.9% |
| Life Sciences and Diagnostics Markets | $746.0M | 39.7% |
| Applied Markets | $346.0M | 18.4% |

The members sum to total revenue.

### Regions (REVENUE- Revenue by Region (Details))

| Member | Value | Share |
|---|---:|---:|
| Americas | $761.0M | 40.5% |
| Asia Pacific | $613.0M | 32.6% |
| Europe | $504.0M | 26.8% |

The members sum to total revenue.

### EndMarkets (REVENUE - Revenue by End Markets (Details))

| Member | Value | Share |
|---|---:|---:|
| Pharmaceutical and Biotechnology Market | $707.0M | 37.6% |
| Chemicals and Advanced Materials Market | $430.0M | 22.9% |
| Diagnostics and Clinical Market | $284.0M | 15.1% |
| Environmental and Forensics Market | $171.0M | 9.1% |
| Food Market | $158.0M | 8.4% |
| Academia and Government Market | $128.0M | 6.8% |

The members sum to total revenue.

## Key insights

### Lab supplies and service out-earn the instruments

With 41.9% of revenue, CrossLab earns the most, suggesting an instrument pays off mainly through the service and supplies that follow.

CrossLab earned $270M of segment operating income on $786M of revenue, a 34.4% margin. Life Sciences and Diagnostics earned $176M on $746M (23.6%) and Applied Markets $86M on $346M (24.9%). Measured against consolidated operating income of $444M, CrossLab's result equals 60.8%. _(from the filing)_
Segment results leave out restructuring and other costs the company does not charge to segments, so the three segment figures add up to more than the $444M consolidated total. The share is a comparison with that total, not a split of it. _(from the filing)_
CrossLab sells repairs, maintenance, compliance support, consumables such as chromatography columns, software and lab automation. The filing says most of the portfolio is vendor neutral, serving labs "regardless of their instrument purchase choices." _(from the filing)_
Analysis: an instrument is a single sale that depends on a customer's capital budget, while supplies and upkeep recur for as long as it runs. A profit base weighted toward the recurring arm should be steadier through budget cycles than the revenue mix alone suggests. _(analysis)_

### Costs fell even as sales grew

Cost of revenue fell 1.7% as revenue rose 8.1%; tariff refunds helped, so part of the gain may not repeat.

Gross profit rose 17.3% to $1,042M, 55.5% of revenue and 4.39 points above a year earlier. Cost of revenue fell to $836M from $850M while revenue grew to $1,878M from $1,738M. _(from the filing)_
The filing credits higher volume, "a net benefit from tariff refunds", targeted price increases, favorable business mix, lower intangible amortization and lower restructuring expense, partly offset by wage increases and higher variable pay. It calls the timing and approval of its remaining refund claims uncertain. _(from the filing)_
The gain carried through to operating income, which rose 23.3% to $444M, a 23.6% margin and 2.93 points above a year earlier, even though selling, general and administrative expense grew 13.9% and R&D 10.8%. _(from the filing)_
Analysis: price, mix and volume are the parts of the gain that can persist; refunds end once the claims are settled. Gross margin in quarters without a refund benefit is the cleaner read of where the business has settled. _(analysis)_

### Net profit lagged as a tax benefit faded

Operating income rose 23.3% but net income only 7.7%, because last year's quarter carried an unusually low tax charge.

The tax provision rose to $82M from $30M. Against income before taxes of $444M and $366M, that is an effective rate of 18.5% this quarter and 8.2% a year earlier. _(from the filing)_
The filing says last year's quarter included a release of tax reserves after a remeasurement of the liability, and that this quarter had no significant discrete items. It adds that the global minimum tax rules have raised its income taxes through top-up taxes. _(from the filing)_
Net income was $362M against $336M, a 19.3% net margin, essentially unchanged. Other income also slipped, to $14M from $18M, so income before taxes grew 21.3%, a little less than operating income. _(from the filing)_
Analysis: the gap comes from a light prior-year tax charge, not a weaker business this quarter. Operating income is the cleaner measure of the period; the tax rate now sits closer to a normal level than the year-earlier one did. _(analysis)_

### Cash caught up with profit this quarter

After a first half where cash trailed net income, operating cash flow reached 1.43 times profit and free cash flow $439M.

Operating cash flow was $519M against net income of $362M, and capital spending was $80M, leaving free cash flow of $439M, 23.4% of revenue. The same quarter a year earlier produced $259M of free cash flow. _(from the filing)_
The first half of the fiscal year was weaker. Operating cash flow was $268M against net income of $305M in the first quarter and $277M against $339M in the second, so cash fell short of profit in both quarters. _(from the filing)_
Inventory days on hand rose to 120 from 107, which the company attributes to "strategic inventory purchases to mitigate tariff-related risks". Days' sales outstanding edged down to 71 from 72. _(from the filing)_
Analysis: quarterly cash flow here swings with the timing of tax payments, incentive pay and inventory, so one strong quarter says less than a full year. The inventory build is cash the company chose to tie up, and it could come back if trade rules settle. _(analysis)_

## For members

Signed-in members read, on the page: the investor's and the founder's views of Agilent Technologies (its fundamentals against its peers, where the profit is made, how the model works, where every $100 of revenue goes against the industry, the path to scale), its performance over time with every line as filed, and the edge and the risks. Membership is free.

## Member research

Signed-in members read, on the page: what Agilent Technologies's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Agilent Technologies 10-Q for the period to 2026-07-31: https://www.sec.gov/Archives/edgar/data/1090872/000109087226000064/ (2026-09-01)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-03 · as of 2026-11-03