10-QPeriod: Q2 FY2019

Keysight Technologies, Inc. Quarterly Report for Q2 Ended Apr 30, 2019

Filed May 30, 2019For Securities:KEYS

Summary

Keysight Technologies, Inc. reported strong financial results for the six months ended April 30, 2019, with total net revenue increasing by 15% year-over-year to $2,096 million. This growth was driven by robust performance across all segments, particularly the Communications Solutions Group and the Ixia Solutions Group. Net income also saw a significant increase to $267 million, up from $158 million in the prior year's comparable period. The company benefited from a 10% increase in total orders for the six-month period, reflecting strong customer demand for its design and test solutions. Key to this performance was the successful integration and growth of the Ixia Solutions Group, which saw substantial revenue increases. Furthermore, Keysight successfully navigated the adoption of new revenue recognition standards (ASC 606) with minimal impact on reported results. The company maintained a healthy financial position with substantial cash and cash equivalents, indicating strong operational cash generation.

Financial Highlights

53 data points
Beta

Revenue

$1.09B

59.4% Gross Margin

Net Income

$153.00M

14.0% Net Margin

EPS (Diluted)

$0.80

Total Assets

$6.19B

Cash & Equivalents

$1.28B

Free Cash Flow

$192.00M

Financial Statements
Beta
Revenue$1.09B
Cost of Revenue$442.00M
Gross Profit$648.00M
R&D Expenses$171.00M
SG&A Expenses$300.00M
Operating Expenses$905.00M
Operating Income$185.00M
Interest Expense$20.00M
Net Income$153.00M
EPS (Basic)$0.81
EPS (Diluted)$0.80
Shares Outstanding (Basic)188.00M
Shares Outstanding (Diluted)191.00M

Key Highlights

  • 1Total net revenue for the six months ended April 30, 2019, increased 15% to $2,096 million, driven by growth in all segments.
  • 2Net income for the six months ended April 30, 2019, significantly increased to $267 million from $158 million in the prior year.
  • 3Total orders grew 10% for the six months ended April 30, 2019, indicating robust customer demand.
  • 4The Communications Solutions Group and Ixia Solutions Group showed strong revenue growth, contributing significantly to overall performance.
  • 5Keysight adopted new revenue recognition standards (ASC 606) effective November 1, 2018, with a reported immaterial impact on financial statements.
  • 6The company ended the period with strong liquidity, holding $1,280 million in cash, cash equivalents, and restricted cash.
  • 7Operating margins improved significantly year-over-year, reflecting increased revenue volume and favorable mix.

Frequently Asked Questions

Keysight's revenue growth in the first half of fiscal year 2019 was primarily driven by strong performance across all its operating segments. The Communications Solutions Group and the Ixia Solutions Group, in particular, demonstrated significant revenue increases, reflecting robust customer demand for their electronic design and test solutions.

Keysight adopted ASC 606 effective November 1, 2018, using a modified retrospective approach. The company reported that the impact of adopting the new standard was immaterial on its overall financial statements, with only minor adjustments to revenue and net income for the periods presented.

Keysight maintained a strong liquidity position as of April 30, 2019, with $1,280 million in cash, cash equivalents, and restricted cash. This indicates a healthy ability to meet short-term obligations and fund ongoing operations and strategic initiatives.

The Ixia Solutions Group showed substantial growth, with revenue increasing by 32% for the three months and 14% for the six months ended April 30, 2019, compared to the prior year. This strong performance was attributed to growth in network visibility and network test solutions, overcoming prior integration challenges.