10-QPeriod: Q2 FY2021

Keysight Technologies, Inc. Quarterly Report for Q2 Ended Apr 30, 2021

Filed May 28, 2021For Securities:KEYS

Summary

Keysight Technologies, Inc. reported strong financial results for the second quarter and first half of fiscal year 2021, demonstrating significant year-over-year growth. Total revenue for the second quarter increased by 36% to $1.221 billion, and for the first half of the year, it grew by 21% to $2.401 billion. This growth was driven by robust performance in both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG), with revenue increases across all regions and end markets. Net income also saw a substantial rise, more than doubling in the second quarter to $186 million ($0.99 diluted EPS) and increasing by over 50% in the first half to $358 million ($1.91 diluted EPS). The company's operational efficiency improved, with gross margin increasing and operating margin expanding significantly in both segments. This performance highlights Keysight's ability to navigate market dynamics and capitalize on opportunities in key growth areas such as 5G, automotive, and IoT. The company's strong cash flow generation and solid balance sheet provide a stable foundation for continued investment in innovation and strategic growth initiatives.

Financial Highlights

52 data points
Beta

Revenue

$1.22B

60.4% Gross Margin

Net Income

$186.00M

15.2% Net Margin

EPS (Diluted)

$0.99

Total Assets

$7.69B

Cash & Equivalents

$2.01B

Free Cash Flow

$369.00M

Financial Statements
Beta
Revenue$1.22B
Cost of Revenue$484.00M
Gross Profit$737.00M
R&D Expenses$209.00M
SG&A Expenses$297.00M
Operating Expenses$986.00M
Operating Income$235.00M
Interest Expense$19.00M
Net Income$186.00M
EPS (Basic)$1.01
EPS (Diluted)$0.99
Shares Outstanding (Basic)185.00M
Shares Outstanding (Diluted)187.00M

Key Highlights

  • 1Revenue increased by 36% year-over-year to $1.221 billion for the second quarter and by 21% to $2.401 billion for the first half of fiscal year 2021.
  • 2Net income more than doubled in the second quarter to $186 million, with diluted earnings per share of $0.99, up from $0.37 in the prior year period.
  • 3Both Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) showed strong revenue growth across all regions and end markets.
  • 4Gross margin improved to 60.4% in the second quarter and 60.1% for the first half, indicating enhanced operational efficiency.
  • 5Operating margin expanded significantly, rising 8 percentage points to 19.3% in the second quarter and 3 percentage points to 18.6% in the first half.
  • 6The company generated strong operating cash flow of $697 million for the first six months of the fiscal year, an increase of $202 million compared to the prior year period.
  • 7Keysight repurchased $240 million of its common stock during the first six months of the fiscal year, demonstrating a commitment to returning value to shareholders.

Frequently Asked Questions

Keysight's revenue growth was primarily driven by strong demand across all regions and end markets, particularly in the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG). This growth was fueled by investments in next-generation technologies such as 5G, automotive, IoT, and defense modernization.

Profitability improved significantly. Gross margins increased due to higher revenue volume, and operating margins expanded considerably in both segments. Net income more than doubled in the second quarter and increased by over 50% in the first half, reflecting efficient operations and strong top-line growth.

Keysight remains confident in its long-term growth prospects, driven by its strategy of delivering first-to-market solutions. The company anticipates continued R&D investments in next-generation technologies like 5G/6G, automotive, IoT, and defense modernization. While monitoring macro trends such as trade, supply chain issues (like the semiconductor chip shortage), and the ongoing pandemic, Keysight believes its operating model and market position are strong for sustained growth.

Keysight demonstrated strong cash flow generation from operations, with $697 million in the first six months of fiscal 2021, an increase from the prior year. The company has a healthy cash position of $2.009 billion and maintained no borrowings under its revolving credit facility. Additionally, Keysight actively repurchased $240 million of its common stock in the first half of the year, indicating a balanced approach to capital allocation.