10-QPeriod: Q3 FY2023

Keysight Technologies, Inc. Quarterly Report for Q3 Ended Jul 31, 2023

Filed August 30, 2023For Securities:KEYS

Summary

Keysight Technologies, Inc. (KEYS) reported solid performance for the third quarter of fiscal year 2023, with total revenue of $1.382 billion, largely in line with the prior year's $1.376 billion. Despite facing macroeconomic headwinds such as inflation and rising interest rates, the company demonstrated resilience, driven by strong performance in its Electronic Industrial Solutions Group (EISG), which saw a 14% revenue increase year-over-year. The Communications Solutions Group (CSG) experienced a slight decline, impacted by cautious customer spending. Profitability remained robust, with income from operations increasing by 2% to $365 million and operating margin improving slightly to 26.4%. Net income for the quarter was $288 million, a decrease from $338 million in the prior year, primarily due to higher income tax expenses and R&D investments. The company maintained a strong liquidity position with $2.588 billion in cash, cash equivalents, and restricted cash. Keysight continues to invest in innovation and strategic growth areas, positioning itself for long-term value creation despite near-term market uncertainties.

Financial Highlights

53 data points
Beta

Revenue

$1.38B

64.8% Gross Margin

Net Income

$288.00M

20.8% Net Margin

EPS (Diluted)

$1.61

Total Assets

$8.83B

Cash & Equivalents

$2.59B

Free Cash Flow

$196.00M

Financial Statements
Beta
Revenue$1.38B
Cost of Revenue$486.00M
Gross Profit$896.00M
R&D Expenses$215.00M
SG&A Expenses$319.00M
Operating Expenses$1.02B
Operating Income$365.00M
Interest Expense$19.00M
Net Income$288.00M
EPS (Basic)$1.62
EPS (Diluted)$1.61
Shares Outstanding (Basic)178.00M
Shares Outstanding (Diluted)179.00M

Key Highlights

  • 1Total revenue for Q3 FY23 was $1.382 billion, flat year-over-year.
  • 2Electronic Industrial Solutions Group (EISG) revenue grew 14% year-over-year, while Communications Solutions Group (CSG) revenue decreased 5%.
  • 3Income from operations increased 2% to $365 million, with operating margin improving to 26.4%.
  • 4Net income decreased to $288 million from $338 million in the prior year, impacted by higher taxes and R&D expenses.
  • 5The company reported strong cash flow from operations of $1.030 billion for the nine months ended July 31, 2023.
  • 6Keysight maintained a healthy cash position with $2.588 billion in cash, cash equivalents, and restricted cash as of July 31, 2023.
  • 7The company announced its intention to acquire ESI Group SA for approximately 913 million euros, expected to be funded with existing cash.

Frequently Asked Questions

Keysight Technologies reported total revenue of $1.382 billion for the third quarter of fiscal year 2023, which was largely flat compared to $1.376 billion in the same period last year. The Electronic Industrial Solutions Group (EISG) saw a 14% increase in revenue, while the Communications Solutions Group (CSG) experienced a 5% decrease.

Keysight acknowledges macroeconomic headwinds like inflation and geopolitical tensions but remains confident in long-term growth trends. The company is focusing on investments in next-generation technologies such as 5G, 6G, high-speed data centers, AI/ML, and automotive technologies. They are closely monitoring the economic environment and supply chain challenges to navigate current market uncertainties.

Keysight announced its intention to acquire ESI Group SA for approximately 913 million euros, which is expected to be funded with existing cash. This strategic acquisition aims to enhance Keysight's portfolio of electronic design automation solutions, particularly in simulation and modeling, and is expected to be completed by the end of calendar year 2023. While not directly impacting the reported quarter's financials, it signals a significant future investment and strategic expansion.

Income from operations increased by 2% to $365 million, and the operating margin improved slightly to 26.4% compared to the prior year. However, net income decreased to $288 million from $338 million in the prior year. This decrease was primarily attributed to higher income tax expenses and increased Research and Development (R&D) expenditures.