01—Abstract
Summary
Summary of the 10-K filed December 18, 2019. Cited figures are marked; the original filing is the authoritative source.
Keysight Technologies, Inc. (KEYS) reported strong revenue growth of 11% to $4.3 billiona for the fiscal year ended October 31, 2019, driven by its Communications Solutions Group, which benefited from increased investments in 5G and data center technologies.
The company demonstrated improved profitability, with net income increasing significantly year-over-year, largely due to the absence of a large goodwill impairment charge recorded in the prior year and operational efficiencies. Keysight continues to invest in research and development, focusing on emerging technologies like 5G and automotive advancements.
Its diversified business segments—Communications Solutions, Electronic Industrial Solutions, and Ixia Solutions—all contributed to top-line growth, with no single customer accounting for more than 10%b of revenue, indicating a healthy customer base and reduced single-customer dependency. The company's strategy of delivering first-to-market solutions and expanding its software and services portfolio appears to be driving positive results.
02—Key points
Key Highlights
- Net revenue increased by 11% to $4.3 billion in fiscal year 2019, compared to $3.878 billion in fiscal year 2018.
- Net income significantly improved to $621 million in fiscal year 2019, up from $165 million in fiscal year 2018.
- Communications Solutions Group (CSG) revenue grew 12% to $2.688 billion, driven by commercial communications (64% of CSG revenue) and 5G investments.
- Electronic Industrial Solutions Group (EISG) revenue increased by 6% to $1.135 billion, with growth in automotive and energy sectors.
- Ixia Solutions Group revenue grew 9% to $489 million, supported by network visibility and network test solutions.
- The company reported strong operating cash flow of $998 million in fiscal year 2019.
- Keysight maintained a strong liquidity position with $1.6 billion in cash, cash equivalents, and restricted cash as of October 31, 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Keysight Technologies, Inc. kept $0.14.
- Revenue$4.30B100.0%
- Cost of revenue−$1.77B41.1%
- Gross profit$2.53B58.9%
- Operating costs−$1.82B42.4%
- Operating income$711.0M16.5%
- Interest, other & tax−$90.0M2.1%
- Net income$621.0M14.4%
Where FY2019 revenue went
$4.30B- Cost of revenue: $1.77B, 41% of revenue
- SG&A: $1.16B, 27% of revenue
- R&D: $688.0M, 16% of revenue
- Net income: $621.0M, 14% of revenue
- Interest, other & tax: $90.0M, 2.1% of revenue
Kept 14% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed December 18, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $4.30B$3.88B | +11.0% |
| Cost of Revenue | $1.77B$1.77B | +0.1% |
| Gross Profit | $2.53B$2.11B | +20.0% |
| R&D Expenses | $688.00M$624.00M | +10.3% |
| SG&A Expenses | $1.16B$1.21B | −4.1% |
| Operating Expenses | $3.59B$4.27B | −15.9% |
| Operating Income | $711.00M-$394.00M | +280.5% |
| Interest Expense | $80.00M$83.00M | −3.6% |
| Net Income | $621.00M$165.00M | +276.4% |
| EPS (Basic) | $3.31$0.88 | +276.1% |
| EPS (Diluted) | $3.25$0.86 | +277.9% |
| Shares Outstanding (Basic) | 188.00M187.00M | +0.5% |
| Shares Outstanding (Diluted) | 191.00M191.00M | 0.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of Keysight's revenue growth in FY2019?
Keysight's revenue growth in FY2019 was primarily driven by strong performance in the commercial communications market, fueled by customer investments in 5G technology and next-generation data center solutions. The Aerospace, Defense, and Government markets remained stable, while the Electronic Industrial Solutions Group saw growth in automotive and energy sectors. The acquisition of Ixia also contributed to the overall revenue increase.
How did Keysight's profitability change in FY2019 compared to FY2018?
Profitability saw a significant improvement in FY2019. Net income rose to $621 million from $165 million in FY2018. This increase was largely due to the absence of a substantial goodwill impairment charge that impacted the prior year ($709 million in FY2018), combined with higher revenue volume, improved product mix, lower acquisition and integration costs, and operational efficiencies.
What is Keysight's strategy for future growth?
Keysight's growth strategy focuses on investing early to achieve first-to-market solutions in key technology areas such as 5G, automotive (electric and autonomous vehicles), IoT, and defense modernization. They are also expanding their software portfolio, exemplified by the PathWave platform, and aim to provide complete solutions by integrating services. Keysight also emphasizes operational excellence to enhance productivity and reduce costs.
What is the significance of the Ixia acquisition and its impact on reporting?
The acquisition of Ixia, completed in fiscal 2017, significantly expanded Keysight's capabilities in network test, visibility, and security solutions. For FY2019, Ixia Solutions Group revenue grew 9% to $489 million. The company also announced that starting in fiscal year 2020, they would manage the Ixia Solutions Group within their Communications Solutions Group to further align go-to-market strategies and accelerate synergies, effectively reducing the reporting segments to two.
06—Continue