10-KPeriod: FY2018

Keysight Technologies, Inc. Annual Report, Year Ended Oct 31, 2018

Filed December 18, 2018For Securities:KEYS

Summary

Keysight Technologies, Inc. reported strong net revenue growth of 22% to $3.88 billion 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 million 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 million, 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.

Financial Highlights

55 data points
Beta

Revenue

$3.88B

54.4% Gross Margin

Net Income

$165.00M

4.3% Net Margin

EPS (Diluted)

$0.86

Total Assets

$5.82B

Cash & Equivalents

$913.00M

Free Cash Flow

$423.00M

Financial Statements
Beta
Revenue$3.88B
Cost of Revenue$1.77B
Gross Profit$2.11B
R&D Expenses$624.00M
SG&A Expenses$1.21B
Operating Expenses$4.27B
Operating Income-$394.00M
Interest Expense$83.00M
Net Income$165.00M
EPS (Basic)$0.88
EPS (Diluted)$0.86
Shares Outstanding (Basic)187.00M
Shares Outstanding (Diluted)191.00M

Key Highlights

  • 1Net revenue increased by 22% to $3.88 billion in FY2018, driven by acquisitions and organic growth across segments.
  • 2The Ixia Solutions Group, acquired in April 2017, contributed significantly to revenue growth, although it also led to a substantial goodwill impairment of $709 million.
  • 3Communications Solutions Group and Electronic Industrial Solutions Group demonstrated strong revenue growth, particularly in commercial communications (driven by 5G) and automotive/energy markets, respectively.
  • 4Operating cash flow was robust at $555 million, indicating strong operational cash generation.
  • 5The company maintained a healthy cash and cash equivalents balance of $913 million as of October 31, 2018.
  • 6Research and development expenses increased by 22% year-over-year, reflecting continued investment in innovation.
  • 7Despite 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.

Frequently Asked Questions

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.

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.

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.

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.