10-QPeriod: Q1 FY2021

Keysight Technologies, Inc. Quarterly Report for Q1 Ended Jan 31, 2021

Filed March 3, 2021For Securities:KEYS

Summary

Keysight Technologies, Inc. reported solid financial results for the third quarter ended January 31, 2021. Total revenue increased by 8% year-over-year to $1.18 billion, driven by growth in both the Communications Solutions Group and the Electronic Industrial Solutions Group. Net income also saw a healthy increase of 5.5% to $172 million, or $0.92 per diluted share. This performance demonstrates the company's resilience and continued execution amidst a dynamic market environment. The company's operational efficiency remains strong, with a consistent gross margin of 59.9%. While operating margin saw a slight decrease of 1 percentage point, this was largely due to a one-time prior-period gain from an insurance settlement in the prior year's comparable quarter. The acquisition of Sanjole Inc. for $96 million in the quarter indicates strategic investment for future growth. The balance sheet remains robust, with cash and cash equivalents increasing to $1.89 billion.

Financial Highlights

52 data points
Beta

Revenue

$1.18B

59.9% Gross Margin

Net Income

$172.00M

14.6% Net Margin

EPS (Diluted)

$0.92

Total Assets

$7.49B

Cash & Equivalents

$1.90B

Free Cash Flow

$267.00M

Financial Statements
Beta
Revenue$1.18B
Cost of Revenue$473.00M
Gross Profit$707.00M
R&D Expenses$199.00M
SG&A Expenses$301.00M
Operating Expenses$968.00M
Operating Income$212.00M
Interest Expense$20.00M
Net Income$172.00M
EPS (Basic)$0.93
EPS (Diluted)$0.92
Shares Outstanding (Basic)186.00M
Shares Outstanding (Diluted)188.00M

Key Highlights

  • 1Total revenue grew 8% to $1.18 billion, demonstrating continued demand for Keysight's solutions.
  • 2Net income increased by 5.5% to $172 million, indicating strong profitability.
  • 3Diluted EPS rose to $0.92, up from $0.86 in the prior year's quarter.
  • 4The company completed the acquisition of Sanjole Inc. for $96 million, signaling strategic investment in growth areas.
  • 5Operating cash flow significantly improved, increasing to $295 million from $197 million year-over-year.
  • 6Keysight maintained a healthy gross margin of 59.9%, showcasing effective cost management.
  • 7Cash and cash equivalents increased to $1.89 billion, reflecting a strong liquidity position.

Frequently Asked Questions

Revenue growth was driven by increases in both the Communications Solutions Group and the Electronic Industrial Solutions Group, fueled by strength in aerospace, defense and government, semiconductor measurement, and general electronics measurement markets. This was partially offset by a decline in commercial communications.

The acquisition of Sanjole Inc. contributed $41 million to goodwill and $51 million to other intangible assets. The financial impact on revenue and net income for this specific quarter is not explicitly detailed as a standalone figure, but the acquisition represents a strategic investment in wireless test and measurement solutions.

Keysight expects continued R&D investment to align with market trends and position the company for growth, particularly in emerging technologies like 5G, next-generation automotive, IoT, and defense modernization. They remain confident in long-term secular market growth trends and their operating model despite monitoring the macro environment.

Keysight's liquidity position is strong, with cash, cash equivalents, and restricted cash totaling $1.90 billion as of January 31, 2021. The company believes this, combined with cash generated from operations and access to capital markets, will satisfy liquidity requirements for at least the next twelve months.