Summary
Keysight Technologies, Inc. reported total net revenue of $1,011 million for the third quarter ended July 31, 2020, a decrease of 7% compared to the same period in the prior year. This decline was primarily attributed to the impact of COVID-19 related site closures and supply chain disruptions. Despite the revenue decrease, net income saw a modest increase to $176 million from $159 million in the prior year's third quarter. This was driven by a lower income tax provision and favorable revenue mix, which helped offset the revenue decline. For the nine months ended July 31, 2020, net revenue was $3,001 million, down 6% year-over-year, with net income at $410 million compared to $426 million in the prior year. The company made a significant acquisition during the period (Eggplant Topco Limited) for $319 million, which contributed to an increase in goodwill. Keysight maintained a strong liquidity position with $1,703 million in cash, cash equivalents, and restricted cash, and continued its share repurchase program, though at a reduced pace compared to the prior year. Investors should note the ongoing impact of the COVID-19 pandemic on revenue and operations, as well as the company's strategic investments in R&D, particularly in areas like 5G. The company's outlook suggests continued demand in next-generation technologies while acknowledging headwinds in other markets.
Financial Highlights
53 data points| Revenue | $1.01B |
| Cost of Revenue | $405.00M |
| Gross Profit | $606.00M |
| R&D Expenses | $169.00M |
| SG&A Expenses | $259.00M |
| Operating Expenses | $829.00M |
| Operating Income | $182.00M |
| Interest Expense | $20.00M |
| Net Income | $176.00M |
| EPS (Basic) | $0.94 |
| EPS (Diluted) | $0.93 |
| Shares Outstanding (Basic) | 187.00M |
| Shares Outstanding (Diluted) | 190.00M |
Key Highlights
- 1Total net revenue for Q3 FY2020 was $1,011 million, a 7% decrease year-over-year, impacted by COVID-19 disruptions.
- 2Net income increased to $176 million in Q3 FY2020 from $159 million in Q3 FY2019, supported by a lower effective tax rate.
- 3The company acquired Eggplant Topco Limited for $319 million, contributing to a significant increase in goodwill on the balance sheet.
- 4Operating cash flow for the nine months ended July 31, 2020, was $678 million, a decrease from $735 million in the prior year, reflecting working capital changes and lower net income.
- 5Keysight ended the quarter with a strong cash position of $1,703 million, providing ample liquidity.
- 6The Communications Solutions Group (CSG) revenue decreased 4% year-over-year for the quarter, while the Electronic Industrial Solutions Group (EISG) saw a larger 15% decline.
- 7The company continues to invest in R&D, with R&D expenses increasing slightly year-over-year for both segments.