01—Abstract
Summary
Summary of the 10-K filed December 18, 2018. Cited figures are marked; the original filing is the authoritative source.
Keysight Technologies, Inc. reported strong net revenue growth of 22% to $3.88 billiona for the fiscal year ended October 31, 2018, up from $3.19 billion in 2017.
This growth was significantly driven by acquisitions, including Ixia, which expanded the company's offerings in network test and visibility solutions. The Communications Solutions Group and Electronic Industrial Solutions Group showed robust performance, with the latter benefiting from strong demand in automotive and energy sectors. However, the company incurred a substantial goodwill impairment charge of $709 millionb related to the Ixia Solutions Group, leading to a net loss of $165 million for the year, a significant decrease from the $102 million net income in the prior year.
Despite the net loss, operating cash flow remained strong at $555 millionc, and the company ended the year with a healthy cash position. Keysight continues to invest in R&D for future growth, particularly in areas like 5G and autonomous vehicles.
02—Key points
Key Highlights
- Net revenue increased by 22% to $3.88 billion in FY2018, driven by acquisitions and organic growth across segments.
- The Ixia Solutions Group, acquired in April 2017, contributed significantly to revenue growth, although it also led to a substantial goodwill impairment of $709 million.
- Communications Solutions Group and Electronic Industrial Solutions Group demonstrated strong revenue growth, particularly in commercial communications (driven by 5G) and automotive/energy markets, respectively.
- Operating cash flow was robust at $555 million, indicating strong operational cash generation.
- The company maintained a healthy cash and cash equivalents balance of $913 million as of October 31, 2018.
- Research and development expenses increased by 22% year-over-year, reflecting continued investment in innovation.
- Despite revenue growth, a significant goodwill impairment charge resulted in a net loss of $165 million for FY2018, compared to a net income of $102 million in FY2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Keysight Technologies, Inc. kept $0.04.
- Revenue$3.88B100.0%
- Cost of revenue−$1.77B45.6%
- Gross profit$2.11B54.4%
- Operating costs−$2.50B64.6%
- Operating income−$394.0M10.2%
- Interest, other & tax$559.0M14.4%
- Net income$165.0M4.3%
04—Financials
Financial Highlights
Figures from 10-KFY2018filed December 18, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $3.88B$3.19B | +21.6% |
| Cost of Revenue | $1.77B$1.49B | +18.8% |
| Gross Profit | $2.11B$1.70B | +24.0% |
| R&D Expenses | $624.00M$507.00M | +23.1% |
| SG&A Expenses | $1.21B$1.06B | +13.9% |
| Operating Expenses | $4.27B$3.04B | +40.5% |
| Operating Income | -$394.00M$148.00M | −366.2% |
| Interest Expense | $83.00M$80.00M | +3.8% |
| Net Income | $165.00M$102.00M | +61.8% |
| EPS (Basic) | $0.88$0.57 | +54.4% |
| EPS (Diluted) | $0.86$0.56 | +53.6% |
| Shares Outstanding (Basic) | 187.00M180.00M | +3.9% |
| Shares Outstanding (Diluted) | 191.00M182.00M | +4.9% |
05—Questions
Frequently Asked Questions
What was Keysight's overall financial performance in fiscal year 2018?
Keysight Technologies reported a 22% increase in net revenue to $3.88 billion for fiscal year 2018, up from $3.19 billion in 2017. This growth was fueled by contributions from acquisitions, particularly Ixia, and solid performance in its Communications and Electronic Industrial Solutions segments. However, a significant goodwill impairment charge of $709 million related to the Ixia Solutions Group led to a net loss of $165 million for the year, a reversal from the $102 million net income in 2017.
How did the Ixia acquisition impact Keysight's financials?
The acquisition of Ixia in April 2017 expanded Keysight's capabilities in network test and visibility solutions. While it contributed positively to revenue growth, the integration and market performance led to a $709 million goodwill impairment charge in fiscal year 2018. This impairment significantly impacted the company's net income for the year.
What are Keysight's key growth drivers and strategic focus areas?
Keysight is focused on delivering electronic design and test solutions for rapidly evolving markets. Key growth drivers include investments in 5G technology within the commercial communications sector and solutions for the automotive industry, particularly electric, hybrid, and autonomous vehicles. The company also emphasizes its technology leadership, broad portfolio, and customer focus as core strengths.
What is the company's financial health and liquidity position?
Keysight maintained a strong financial position with $913 million in cash and cash equivalents at the end of fiscal year 2018. Operating cash flow was also healthy at $555 million. The company has access to a $450 million revolving credit facility, and no borrowings were outstanding under it as of October 31, 2018, indicating a solid liquidity position.
06—Continue