Keysight Technologies Reports Third Quarter 2018 Results

Record Revenue and Earnings Exceed Guidance

SANTA ROSA, Calif. — (BUSINESS WIRE) — August 21, 2018 — Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the third fiscal quarter of 2018 ended July 31, 2018.

“We delivered another excellent quarter with record Q3 orders of $1 billion and record revenue of $1 billion, and we are raising our core revenue outlook for the year. Third quarter GAAP revenue growth of 21 percent, or 15 percent on a non-GAAP core basis, was driven by broad-based order strength for our differentiated solutions as customers accelerate development in our key focus areas including 5G, automotive & energy and aerospace & defense,” said Ron Nersesian, Keysight president and CEO.

Third Quarter Financial Summary

  • GAAP revenue grew 21 percent to reach $1,004 million, when compared with $832 million last year. Non-GAAP revenue, which excludes the impact of fair value adjustments to acquisition-related deferred revenue balances, grew 17 percent to reach $1,008 million. Non-GAAP core revenue, which also excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months, increased 15 percent.
  • GAAP net income was $121 million, or $0.63 per share, compared with a GAAP net loss of $18 million, or a loss of $0.10 per share, in the third quarter of 2017. Non-GAAP net income was $170 million, or $0.89 per share using 191 million weighted average shares, compared with $115 million, or $0.61 per share using 188 million weighted average shares in the third quarter of 2017.
  • As of July 31, 2018, cash and cash equivalents totaled $742 million.

Reporting Segments

  • Communications Solutions Group (CSG)

CSG reported third quarter revenue of $515 million, up 23 percent, driven by 5G-related R&D spending across the wireless ecosystem, early investment in next-generation 400G and PAM-4 network test and strong growth in the aerospace, defense and government end market.

  • Electronic Industrial Solutions Group (EISG)

EISG revenue grew 19 percent in the third quarter to $258 million, driven by solid double-digit growth for automotive and energy, general electronics and semiconductor measurement solutions.

  • Ixia Solutions Group (ISG)

ISG revenue was $119 million in the third quarter, compared with $120 million in the prior year third quarter. ISG's revenue improved sequentially following extensive integration activities last quarter. ISG's pipeline of activities continued to grow, including increased demand for visibility and 400G Ethernet test solutions.

  • Services Solutions Group (SSG)

SSG revenue grew 9 percent in the third quarter to $116 million, driven by growth in our calibration, remarketed and repair services and solutions.

Outlook

Keysight’s fourth fiscal quarter of 2018 GAAP revenue is expected to be in the range of $996 million to $1,016 million and non-GAAP revenue for the fourth fiscal quarter of 2018 is expected to be in the range of $1,000 million to $1,020 million.

Non-GAAP earnings per share for the fourth fiscal quarter of 2018 are expected to be in the range of $0.85 to $0.91, which exclude items that pertain to future events and are not currently estimable with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP amounts has been provided. Further information is discussed in the section titled “Use of Non-GAAP Financial Measures” below.

Webcast

Keysight’s management will present more details about its third quarter FY2018 financial results and its fourth quarter FY2018 outlook on a conference call with investors today at 1:30 p.m. PT. This event will be webcast in listen-only mode. Listeners may log on to the call at www.investor.keysight.com under the “ Upcoming Events” section and select “ Q3 2018 Keysight Technologies Inc. Earnings Conference Call” to participate or dial +1 866-393-4306 (U.S. only) or +1 734-385-2616 (International) and enter passcode 1275356.

The webcast will remain on the company site for 90 days. A telephone replay of the conference call will be available at approximately 4:30 p.m. PT after the call and remain available for one week. The replay may be accessed by dialing +1 855-859-2056 (or +1 404-537-3406 from outside the U.S.) and entering passcode 1275356.

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