Keysight Technologies Reports Second Quarter 2018 Results

Reports Record Revenue of $990 million and EPS Growth of 23 Percent

SANTA ROSA, Calif. — (BUSINESS WIRE) — May 30, 2018 — Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the second fiscal quarter of 2018 ended April 30, 2018.

“Building on our outstanding start to the year, we delivered another excellent quarter with strong order growth and record revenue and we are raising our core revenue outlook for the year. Total revenue growth of 31 percent and 18 percent growth on a core basis was driven by broad-based core order strength as customers accelerate development in our key focus areas including 5G, automotive & energy and aerospace and defense,” said Ron Nersesian, Keysight president and CEO.

Second Quarter Financial Summary

  • GAAP revenue grew 31 percent to reach $990 million, when compared with $753 million last year. Non-GAAP revenue, which excludes the impact of fair value adjustments to acquisition-related deferred revenue balances, grew 32 percent to reach $999 million. Non-GAAP core revenue, which also excludes the impact of foreign currency changes and revenue associated with businesses acquired within the last twelve months, increased 18 percent.
  • GAAP net income was $64 million, or $0.34 per share, compared with $49 million, or $0.27 per share in the second quarter of 2017. Non-GAAP net income was $158 million, or $0.83 per share using 190 million weighted average shares, compared with $114 million, or $0.64 per share using 179 million weighted average shares in the second quarter of 2017.
  • As of April 30, 2018, cash and cash equivalents totaled $784 million.

First Half of Fiscal Year 2018 Financial Summary

  • GAAP revenue grew 24 percent to reach $1,827 million, when compared with $1,479 million last year. Non-GAAP revenue grew 25 percent to reach $1,855 million and non-GAAP core revenue increased 8 percent.
  • GAAP net income was $158 million, or $0.83 per share, compared with $158 million, or $0.90 per share last year. Non-GAAP net income was $255 million, or $1.34 per share using 190 million weighted average shares, compared with $212 million, or $1.20 per share using 176 million weighted average shares in the 2017 period.
  • Cash flow from operations was $282 million. Deployed capital by repaying $260 million of pre-payable debt and repurchasing 770,000 shares for $40 million under the $350 million share repurchase program authorization.

Reporting Segments

  • Communications Solutions Group (CSG)

CSG revenue grew 27 percent in the second quarter and 11 percent in the first half of fiscal year 2018. CSG reported second quarter revenue of $536 million, driven by 5G-related R&D spending across the wireless ecosystem, early investment in next-generation 400G and PAM-4 network test and strong 27 percent year-over-year growth in the aerospace, defense and government end market.

  • Electronic Industrial Solutions Group (EISG)

EISG revenue grew 16 percent in the second quarter and 11 percent in the first half of fiscal year 2018. EISG reported second quarter revenue of $255 million, driven by strong growth for automotive and energy and general electronics measurement solutions.

  • Ixia Solutions Group (ISG)

ISG revenue was $90 million in the second quarter and $217 million in the first half of fiscal year 2018. ISG market conditions remained consistent with the prior quarter; however, second quarter ISG results were impacted by extensive integration efforts in the quarter. Many of these integration issues are now resolved and the expected annual cost synergies are ramping as planned.

  • Services Solutions Group (SSG)

SSG revenue grew 15 percent in the second quarter and 11 percent in the first half of fiscal year 2018. SSG reported record revenue of $118 million in the second quarter, driven by double-digit growth for our calibration, remarketed and repair services and solutions.

Outlook

Keysight’s third fiscal quarter of 2018 GAAP revenue is expected to be in the range of $937 million to $967 million and non-GAAP revenue for the third fiscal quarter of 2018 is expected to be in the range of $942 million to $972 million.

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