01—Abstract
Summary
Summary of the 10-K filed December 17, 2021. Cited figures are marked; the original filing is the authoritative source.
Keysight Technologies, Inc. reported strong performance in fiscal year 2021, with total revenue reaching $4.94 billiona, a significant 17% increase year-over-year.
This growth was primarily driven by robust demand across both its Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments, reflecting strong customer investments in key technology areas like 5G, automotive, and semiconductors. The company's strategy to expand its software-centric solutions and focus on recurring revenue streams, alongside investments in first-to-market solutions and complete customer offerings, appears to be paying off. Keysight demonstrated improved profitability with operating margins increasing to 21.9%b in 2021.
Furthermore, the company ended the fiscal year with a strong backlog of $2.115 billionc, indicating continued demand for its products and services. Financially, Keysight generated substantial operating cash flow and maintained a healthy liquidity position.
The company also actively repurchased its stock under an authorized program, signaling confidence in its financial health and commitment to shareholder returns. Looking ahead, Keysight remains optimistic about long-term secular market growth trends, despite ongoing monitoring of macroeconomic factors and supply chain challenges.
02—Key points
Key Highlights
- Total revenue increased by 17% to $4.94 billion in fiscal year 2021, driven by strong demand in both Communications Solutions Group and Electronic Industrial Solutions Group.
- Operating income increased by 42% year-over-year, reflecting improved profitability and operational efficiency.
- The company's backlog grew significantly to $2.115 billion by the end of fiscal year 2021, indicating robust future demand.
- Keysight is strategically expanding its software-centric solutions and subscription-based business models to drive recurring revenue and enhance customer value.
- Acquisitions of Sanjole and Eggplant in fiscal years 2021 and 2020 respectively, are expected to strengthen Keysight's capabilities in wireless test and software test automation.
- Operating cash flow reached $1.32 billion, demonstrating strong cash generation from operations.
- Keysight continued to return capital to shareholders through stock repurchases, with $673 million repurchased in fiscal year 2021 under an expanded program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Keysight Technologies, Inc. kept $0.18.
- Revenue$4.94B100.0%
- Cost of revenue−$1.87B37.9%
- Gross profit$3.07B62.1%
- Operating costs−$1.99B40.3%
- Operating income$1.08B21.9%
- Interest, other & tax−$186.0M3.8%
- Net income$894.0M18.1%
Where FY2021 revenue went
$4.94B- Cost of revenue: $1.87B, 38% of revenue
- SG&A: $1.20B, 24% of revenue
- Net income: $894.0M, 18% of revenue
- R&D: $811.0M, 16% of revenue
- Interest, other & tax: $186.0M, 3.8% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed December 17, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $4.94B$4.22B | +17.1% |
| Cost of Revenue | $1.87B$1.69B | +10.9% |
| Gross Profit | $3.07B$2.53B | +21.2% |
| R&D Expenses | $811.00M$715.00M | +13.4% |
| SG&A Expenses | $1.20B$1.10B | +8.9% |
| Operating Expenses | $3.86B$3.46B | +11.7% |
| Operating Income | $1.08B$765.00M | +41.2% |
| Interest Expense | $79.00M$78.00M | +1.3% |
| Net Income | $894.00M$627.00M | +42.6% |
| EPS (Basic) | $4.84$3.35 | +44.5% |
| EPS (Diluted) | $4.78$3.31 | +44.4% |
| Shares Outstanding (Basic) | 185.00M187.00M | −1.1% |
| Shares Outstanding (Diluted) | 187.00M189.00M | −1.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Keysight's revenue growth in fiscal year 2021?
Keysight's revenue growth in fiscal year 2021 was primarily driven by strong demand across its Communications Solutions Group and Electronic Industrial Solutions Group. This demand was fueled by customer investments in emerging technologies such as 5G/6G, automotive (including electric and autonomous vehicles), Internet of Things (IoT), and aerospace/defense modernization.
How is Keysight shifting its business model, and what impact is this having?
Keysight is actively expanding its software-centric solutions and transitioning towards subscription-based business models for its software portfolio and services (like KeysightCare). This strategy aims to increase recurring revenue, provide customers with regular updates, and offer predictable expense outlays, thereby enhancing customer stickiness and driving more predictable revenue streams.
What is Keysight's approach to acquisitions?
Keysight strategically invests in acquisitions to enhance its technology portfolio and market reach. Notable acquisitions in recent years include Sanjole Inc. (wireless test and measurement for protocol decoding and interoperability) and Eggplant Topco Limited (software test automation). These acquisitions are aimed at strengthening their solutions in critical growth areas.
How did the COVID-19 pandemic impact Keysight's operations, and what is the current status?
The COVID-19 pandemic caused disruptions to Keysight's supply chain, impacting the procurement of components and leading to product delivery delays. While operations were affected, Keysight successfully reopened most of its global sites and ramped up production and services. The company continues to monitor supply chain challenges and the evolving pandemic situation, implementing safety protocols and adapting its operations.
06—Continue