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Keysight Technologies, Inc. 8-K Report, Financial Results (Feb 20, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 20, 2024
Period End
February 20, 2024
Security
KEYS
In the record · 2016–202610-K1110-Q338-K96

KEYS filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 96 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Apr ’17Apr ’17
  2. Leadership change8-K · May ’22May ’22
  3. Leadership change8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 8-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.

Keysight Technologies (KEYS) reported first fiscal quarter 2024 results (quarter ended January 31, 2024) that beat the high end of its own guidance, though the top line declined year over year.

Revenue was $1.259 billiona, down about 9% from $1.381 billion, as Communications Solutions Group revenue fell 11% and Electronic Industrial Solutions Group revenue fell 5%. GAAP net income was $172 million ($0.98 diluted EPS), down from $260 million ($1.45), while non-GAAP net income was $286 million ($1.63 per share) versus $363 million ($2.02) a year earlier. Management attributed the weakness to constrained demand in commercial communications and semiconductor/manufacturing end markets, while citing order growth in aerospace, defense, government, and AI-driven network and data center applications.

The balance sheet shifted meaningfully during the quarter. Cash fell to $1.75 billionb from $2.47 billion at fiscal year-end, driven by about $478 million of acquisition spending (including the ESI acquisition, completed ahead of schedule in January) and $458 million to acquire non-controlling interests. Goodwill rose to $2.25 billion from $1.64 billion and other intangibles rose to $616 million from $155 million, reflecting the acquisition.

Operating cash flow was $328 millionc and free cash flow was $281 million, both below the prior year, and the company continued share repurchases of $93 million. For the second fiscal quarter of 2024, Keysight guided revenue to $1.19 billion to $1.21 billion and non-GAAP EPS to $1.34 to $1.40 on roughly 175 million diluted shares. Investors will likely focus on whether order momentum in aerospace, defense, and AI-related data center demand can offset continued softness in commercial communications and semiconductors, and on how the ESI integration contributes to revenue and margins going forward.

02—Key points

Key Highlights

  1. Revenue of $1.259 billion declined about 9% year over year, with CSG down 11% (to $839 million) and EISG down 5% (to $420 million), while the company said results were above the high end of guidance.
  2. GAAP diluted EPS was $0.98 versus $1.45 a year ago; non-GAAP diluted EPS was $1.63 versus $2.02, reflecting lower income from operations (GAAP operating income of $221 million vs. $322 million).
  3. Cash and equivalents dropped to $1.75 billion from $2.47 billion at October 31, 2023, primarily due to the ESI acquisition (about $478 million) and $458 million paid to acquire non-controlling interests.
  4. Goodwill increased to $2.25 billion from $1.64 billion and other intangible assets to $616 million from $155 million, reflecting the acquired business.
  5. Operating cash flow was $328 million and free cash flow was $281 million, both lower than the prior-year quarter's $366 million and $306 million.
  6. Q2 FY2024 guidance calls for revenue of $1.19 billion to $1.21 billion and non-GAAP EPS of $1.34 to $1.40 on about 175 million diluted shares.
  7. Management highlighted order growth in aerospace, defense, government, and AI-driven network and data center applications, even as total orders fell to $1.22 billion from $1.30 billion.

03—Questions

Frequently Asked Questions

  1. Did Keysight beat expectations this quarter?

    Management said first quarter revenue and results came in above the high end of its own guidance. The filing does not include analyst consensus estimates, so the comparison is only to the company's internal guidance.

  2. Why did revenue and earnings decline year over year?

    Revenue fell 9%, with commercial communications down 14% and semiconductor and manufacturing-related spending constrained. Income from operations declined to $221 million from $322 million, and GAAP net income fell to $172 million from $260 million, with the company citing a constrained overall demand environment.

  3. How did the ESI acquisition affect the balance sheet and cash position?

    The company completed the ESI acquisition ahead of schedule in January 2024. Goodwill and intangibles rose sharply, and cash used in investing was $478 million for acquisitions, which, together with $458 million for acquiring non-controlling interests, drove cash down to $1.75 billion from $2.47 billion at fiscal year-end.

  4. What is the outlook for the second quarter of fiscal 2024?

    Keysight expects Q2 FY2024 revenue of $1.19 billion to $1.21 billion and non-GAAP EPS of $1.34 to $1.40 on approximately 175 million diluted shares. No GAAP EPS reconciliation was provided because certain tax items are not currently estimable.

  5. Are the non-GAAP results materially different from GAAP, and why should investors care?

    Non-GAAP net income of $286 million ($1.63 per share) exceeds GAAP net income of $172 million ($0.98 per share) mainly due to excluded share-based compensation ($50 million), amortization of acquisition-related balances ($38 million), restructuring and other items ($15 million), and acquisition and integration costs ($13 million). These are real expenses, and the filing notes that GAAP results should be relied upon for a complete picture.

04—Continue

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