10-QPeriod: Q3 FY2021

Keysight Technologies, Inc. Quarterly Report for Q3 Ended Jul 31, 2021

Filed August 31, 2021For Securities:KEYS

Summary

Keysight Technologies, Inc. (KEYS) reported strong financial results for the nine months ended July 31, 2021, demonstrating significant year-over-year growth across key metrics. Total revenue increased by 22% to $3.65 billion, driven by robust performance in both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG). Net income surged by 49% to $612 million, reflecting improved operational efficiency and revenue growth. The company also reported substantial growth in operating cash flow, which increased by 41% to $954 million. During the third quarter, Keysight continued its growth trajectory with revenue up 23% year-over-year to $1.25 billion and net income rising 44% to $254 million. The company's strategic investments in R&D and its focus on next-generation technologies appear to be paying off, as evidenced by the strong demand across its market segments. Keysight's financial position remains solid, with a healthy cash balance and a renewed credit facility, positioning it well for continued growth and operational excellence.

Financial Highlights

53 data points
Beta

Revenue

$1.25B

63.2% Gross Margin

Net Income

$254.00M

20.4% Net Margin

EPS (Diluted)

$1.36

Total Assets

$7.80B

Cash & Equivalents

$2.17B

Free Cash Flow

$217.00M

Financial Statements
Beta
Revenue$1.25B
Cost of Revenue$458.00M
Gross Profit$788.00M
R&D Expenses$207.00M
SG&A Expenses$302.00M
Operating Expenses$962.00M
Operating Income$284.00M
Interest Expense$20.00M
Net Income$254.00M
EPS (Basic)$1.38
EPS (Diluted)$1.36
Shares Outstanding (Basic)184.00M
Shares Outstanding (Diluted)186.00M

Key Highlights

  • 1Total revenue for the nine months ended July 31, 2021, increased 22% year-over-year to $3,647 million, demonstrating strong top-line growth.
  • 2Net income for the nine months ended July 31, 2021, rose 49% year-over-year to $612 million, indicating significant profitability improvement.
  • 3Operating cash flow for the nine months ended July 31, 2021, increased 41% to $954 million, highlighting strong cash generation capabilities.
  • 4Gross margin improved by 2 percentage points to 61.2% for the nine months ended July 31, 2021, indicating enhanced operational efficiency and pricing power.
  • 5The company repurchased $320 million of common stock during the nine months ended July 31, 2021, demonstrating a commitment to returning value to shareholders.
  • 6Both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments showed significant revenue growth, with CSG up 17% and EISG up 35% for the nine-month period.
  • 7The company renewed its unsecured revolving credit facility, providing a $750 million commitment, ensuring continued financial flexibility.

Frequently Asked Questions

For the nine months ended July 31, 2021, Keysight reported a 22% increase in total revenue to $3,647 million, compared to $3,001 million in the prior year. This growth was driven by strong demand across all regions and within both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments. The company specifically noted strength in aerospace, defense, and government markets, as well as commercial communications and electronic industrial markets, including automotive and energy.

Keysight demonstrated significant profitability improvement. Net income for the nine months ended July 31, 2021, increased by 49% to $612 million, up from $410 million in the same period last year. This was supported by a 2 percentage point increase in gross margin to 61.2%, reflecting higher revenue volume and improved operational efficiencies, along with lower amortization expenses.

Keysight generated strong operating cash flow, with $954 million provided by operating activities for the nine months ended July 31, 2021, an increase of 41% year-over-year. The company maintained a healthy liquidity position with $2,170 million in cash, cash equivalents, and restricted cash as of July 31, 2021. They also renewed a $750 million unsecured revolving credit facility, indicating continued financial flexibility. Additionally, the company actively repurchased $320 million of its common stock during the period, signaling a commitment to shareholder returns.

The filing mentions several risks and uncertainties. These include the ongoing impact of the COVID-19 pandemic on global operations, supply chains, and customer demand, as well as the global semiconductor chip shortage. Other risks include general economic uncertainty, international trade disputes, foreign currency exchange rate fluctuations, and the potential for cybersecurity attacks. The company also notes the importance of timely introduction of new solutions and services in a rapidly evolving technological landscape.