10-QPeriod: Q2 FY2023

Keysight Technologies, Inc. Quarterly Report for Q2 Ended Apr 30, 2023

Filed May 31, 2023For Securities:KEYS

Summary

Keysight Technologies, Inc. reported solid financial results for the third quarter and first half of fiscal year 2023, demonstrating resilience amidst macroeconomic headwinds and geopolitical uncertainties. Total revenue increased by 3% to $1,390 million for the quarter and 7% to $2,771 million for the first half, year-over-year, driven by growth in the Electronic Industrial Solutions Group (EISG) and a recovery in the Communications Solutions Group (CSG) in the latter half of the period. Net income saw a healthy increase, rising 10% to $283 million for the quarter and 12% to $543 million for the first half, reflecting improved gross margins and increased interest income. The company continues to invest in key growth areas, including next-generation technologies such as 5G, automotive, IoT, and defense modernization, positioning itself for long-term growth. While acknowledging moderation in demand, particularly within the communications sector, Keysight highlights strong customer engagement and a robust R&D pipeline. The company also strengthened its balance sheet, with a significant increase in cash and cash equivalents and a new, substantial stock repurchase program authorized, underscoring confidence in its financial stability and future prospects.

Financial Highlights

53 data points
Beta

Revenue

$1.39B

65.4% Gross Margin

Net Income

$283.00M

20.4% Net Margin

EPS (Diluted)

$1.58

Total Assets

$8.71B

Cash & Equivalents

$2.51B

Free Cash Flow

$370.00M

Financial Statements
Beta
Revenue$1.39B
Cost of Revenue$481.00M
Gross Profit$909.00M
R&D Expenses$222.00M
SG&A Expenses$337.00M
Operating Expenses$1.04B
Operating Income$354.00M
Interest Expense$20.00M
Net Income$283.00M
EPS (Basic)$1.59
EPS (Diluted)$1.58
Shares Outstanding (Basic)178.00M
Shares Outstanding (Diluted)179.00M

Key Highlights

  • 1Total revenue for the third quarter of fiscal 2023 was $1,390 million, a 3% increase compared to the prior year period.
  • 2Net income for the third quarter was $283 million, or $1.58 per diluted share, a 10% increase year-over-year.
  • 3The Electronic Industrial Solutions Group (EISG) showed strong revenue growth, up 17% year-over-year for the quarter.
  • 4Communications Solutions Group (CSG) revenue saw a slight decrease of 3% for the quarter, but the company noted continued investment in long-range R&D programs and future technologies.
  • 5Gross margin improved to 65.4% for the quarter, up from 63.6% in the prior year period, driven by price increases and favorable mix.
  • 6Operating margin increased to 25.4% for the quarter, up from 24.2% in the prior year period.
  • 7The company authorized a new stock repurchase program of up to $1,500 million and repurchased $125 million of common stock during the first half of the fiscal year.

Frequently Asked Questions

Keysight Technologies, Inc. reported total revenue of $1,390 million for the three months ended April 30, 2023, representing a 3% increase compared to $1,351 million in the same period last year. This growth was primarily driven by the Electronic Industrial Solutions Group (EISG), which increased by 17%, partially offsetting a 3% decline in the Communications Solutions Group (CSG).

Keysight demonstrated improved profitability, with net income for the third quarter of fiscal 2023 rising to $283 million, a 10% increase from $258 million in the prior year. Diluted earnings per share also grew to $1.58 from $1.41. Gross margin improved to 65.4% from 63.6%, and operating margin increased to 25.4% from 24.2%, reflecting effective cost management and pricing strategies.

The primary driver of revenue growth was the Electronic Industrial Solutions Group (EISG), which benefited from strong demand in automotive, energy, and semiconductor sectors. While the Communications Solutions Group (CSG) experienced a revenue decline, Keysight highlighted continued customer investment in next-generation technologies like 5G and 6G, indicating underlying strength and future potential. The company acknowledged moderation in demand within the broader communications ecosystem due to macroeconomic headwinds but expressed confidence in its diversified portfolio and R&D investments.

Keysight generated strong operating cash flow, with $789 million provided by operating activities for the first six months of fiscal 2023, an increase from $522 million in the prior year. The company also announced a new stock repurchase program of up to $1,500 million, replacing a previous authorization. For the six months ended April 30, 2023, the company repurchased $125 million of common stock. This demonstrates a commitment to returning capital to shareholders while maintaining operational flexibility.