Strong execution drives above guidance
results
Keysight Technologies, Inc. (NYSE: KEYS) today reported
financial results for the fourth fiscal quarter and fiscal year
ended October 31, 2024.
“Keysight executed well and delivered fourth quarter revenue and
earnings per share above the high end of guidance under market
conditions which remained consistent with our expectations,” said
Satish Dhanasekaran, Keysight’s President and CEO. “As we look
ahead, the strength of our differentiated portfolio, deep
engagement with customers, and the accelerating pace of technology
innovation give us confidence in our ability to outperform as
markets recover.”
Fourth Quarter Financial Summary
- Revenue was $1.29 billion, compared with $1.31 billion last
year.
- GAAP net loss was $73 million, or $0.42 per share, compared
with a GAAP net income of $226 million, or $1.28 per share, in the
fourth quarter of 2023. This loss reflects a $315 million tax
expense related to a new Singapore tax incentive and corresponding
decrease in deferred tax assets.
- Non-GAAP net income was $288 million, or $1.65 per share,
compared with $352 million, or $1.99 per share in the fourth
quarter of 2023.
- Cash flow from operations was $359 million, compared with $378
million last year. Free cash flow was $328 million, compared with
$340 million in the fourth quarter of 2023.
- As of October 31, 2024, cash and cash equivalents totaled $1.80
billion.
Fiscal Year 2024 Financial Summary
- Revenue was $4.98 billion, compared with $5.46 billion last
year.
- GAAP net income was $0.61 billion, or $3.51 per share, compared
with $1.06 billion, or $5.91 per share in fiscal 2023.
- Non-GAAP net income was $1.10 billion, or $6.27 per share,
compared with $1.49 billion, or $8.33 per share in fiscal year
2023.
- Cash flow from operations was $1.05 billion, compared with
$1.41 billion last year. Free cash flow was $0.91 billion, compared
with $1.21 billion in fiscal year 2023.
Reporting Segments
- Communications Solutions Group (CSG) CSG reported revenue of
$894 million in the fourth quarter, flat over last year, reflecting
4 percent growth in commercial communications driven by AI-related
investment, while aerospace, defense, and government declined 6
percent versus a record high quarter last year.
- Electronic Industrial Solutions Group (EISG) EISG reported
revenue of $393 million in the fourth quarter, down 6 percent over
last year, reflecting ongoing constraint in manufacturing-related
customer spending.
Outlook
Keysight’s first fiscal quarter of 2025 revenue is expected to
be in the range of $1.265 billion to $1.285 billion. Non-GAAP
earnings per share for the first fiscal quarter of 2025 are
expected to be in the range of $1.65 to $1.71. Certain items
impacting the GAAP tax rate pertain to future events and are not
currently estimable with a reasonable degree of accuracy;
therefore, no reconciliation of GAAP earnings per share to non-GAAP
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 fourth
quarter and fiscal year 2024 financial results and its first
quarter FY2025 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 “Q4 2024 Keysight
Technologies Inc. Earnings Conference Call” to participate or dial
+1 833-470-1428 (Toll-Free) or +1 404-975-4839 (Local) and enter
passcode 116445. The webcast will remain on the company site for 90
days.
Forward-Looking Statements
This communication contains forward-looking statements as
defined in the Securities Exchange Act of 1934 and is subject to
the safe harbors created therein. The words "assume," “expect,”
“intend,” “will,” “should,” "outlook" and similar expressions, as
they relate to the company, are intended to identify
forward-looking statements. These forward-looking statements
involve risks and uncertainties that could significantly affect the
expected results and are based on certain key assumptions of
Keysight’s management and on currently available information. Due
to such uncertainties and risks, no assurances can be given that
such expectations or assumptions will prove to have been correct,
and readers are cautioned not to place undue reliance on such
forward-looking statements, which speak only as of the date hereof.
Keysight undertakes no responsibility to publicly update or revise
any forward-looking statement. The forward-looking statements
contained herein include, but are not limited to, predictions,
future guidance, projections, beliefs, and expectations about the
company’s goals, revenues, financial condition, earnings, and
operations that involve risks and uncertainties that could cause
Keysight’s results to differ materially from management’s current
expectations. Such risks and uncertainties include, but are not
limited to, impacts of global economic conditions such as inflation
or recession, uncertainty relating to the impact of election
results in the U.S. and U.K., slowing demand for products or
services, volatility in financial markets, reduced access to
credit, changes in interest rates; impacts of geopolitical tension
and conflict outside of the U.S., export control regulations and
compliance; net zero emissions commitments; customer purchasing
decisions and timing; and order cancellations.
In addition to the risks above, other risks that Keysight faces
include those detailed in Keysight’s filings with the Securities
and Exchange Commission on Keysight’s yearly report on Form 10-K
for the period ended October 31, 2023, and Keysight’s quarterly
report on Form 10-Q for the period ended July 31, 2024.
Segment Data
Segment data reflects the results of our reportable segments
under our management reporting system. Segment data are provided on
page 5 of the attached tables.
Use of Non-GAAP Financial Measures
In addition to financial information prepared in accordance with
U.S. GAAP (“GAAP”), this document also contains certain non-GAAP
financial measures based on management’s view of performance,
including:
- Non-GAAP Net Income/Earnings
- Non-GAAP Net Income per share/Earnings per share
- Free Cash Flow
Income per share is based on weighted average diluted share
count. See the attached supplemental schedules for reconciliations
of each non-GAAP financial measure to its most directly comparable
GAAP financial measure for the three months ended October 31, 2024
and fiscal year 2024. Following the reconciliations is a discussion
of the items adjusted from our non-GAAP financial measures and the
company’s reasons for including or excluding certain categories of
income or expenses from our non-GAAP results.
About Keysight Technologies
At Keysight (NYSE: KEYS), we inspire and empower innovators to
bring world-changing technologies to life. As an S&P 500
company, we're delivering market-leading design, emulation, and
test solutions to help engineers develop and deploy faster, with
less risk, throughout the entire product lifecycle. We're a global
innovation partner enabling customers in communications, industrial
automation, aerospace and defense, automotive, semiconductor, and
general electronics markets to accelerate innovation to connect and
secure the world. Learn more at Keysight Newsroom and
www.keysight.com.
KEYSIGHT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (In millions, except per share
data) (Unaudited) PRELIMINARY Three
months ended Year ended October 31, October
31,
2024
2023
2024
2023
Orders
$
1,345
$
1,327
$
5,033
$
5,190
Revenue
$
1,287
$
1,311
$
4,979
$
5,464
Costs and expenses: Cost of products and services
485
467
1,846
1,932
Research and development
233
218
919
882
Selling, general and administrative
343
313
1,395
1,307
Other operating expense (income), net
(4
)
(4
)
(14
)
(15
)
Total costs and expenses
1,057
994
4,146
4,106
Income from operations
230
317
833
1,358
Interest income
21
32
81
102
Interest expense
(23
)
(20
)
(84
)
(78
)
Other income (expense), net
20
(53
)
35
(25
)
Income before taxes
248
276
865
1,357
Provision for income taxes
321
50
251
300
Net income (loss)
$
(73
)
$
226
$
614
$
1,057
Net income (loss) per share: Basic
$
(0.42
)
$
1.28
$
3.53
$
5.95
Diluted
$
(0.42
)
$
1.28
$
3.51
$
5.91
Weighted average shares used in computing net income (loss)
per share: Basic
173
176
174
178
Diluted
173
177
175
179
Page 1
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (In millions, except
par value and share data) (Unaudited) PRELIMINARY
October 31, 2024 October 31, 2023
ASSETS Current assets: Cash and cash equivalents
$
1,796
$
2,472
Accounts receivable, net
857
900
Inventory
1,022
985
Other current assets
582
452
Total current assets
4,257
4,809
Property, plant and equipment, net
774
761
Operating lease right-of-use assets
234
226
Goodwill
2,388
1,640
Other intangible assets, net
607
155
Long-term investments
110
81
Long-term deferred tax assets
378
671
Other assets
521
340
Total assets
$
9,269
$
8,683
LIABILITIES AND EQUITY Current liabilities:
Current portion of long-term debt
$
—
$
599
Accounts payable
313
286
Employee compensation and benefits
295
304
Deferred revenue
561
541
Income and other taxes payable
90
90
Operating lease liabilities
43
40
Other accrued liabilities
125
189
Total current liabilities
1,427
2,049
Long-term debt
1,790
1,195
Retirement and post-retirement benefits
72
64
Long-term deferred revenue
206
216
Long-term operating lease liabilities
197
192
Other long-term liabilities
472
313
Total liabilities
4,164
4,029
Stockholders' equity: Preferred stock; $0.01 par value; 100
million shares authorized; none issued and outstanding
—
—
Common stock; $0.01 par value; 1 billion shares authorized; issued
shares: 201 million and 200 million, respectively
2
2
Treasury stock, at cost; 28.4 million shares and 25.4 million
shares, respectively
(3,422
)
(2,980
)
Additional paid-in-capital
2,664
2,487
Retained earnings
6,225
5,611
Accumulated other comprehensive loss
(364
)
(466
)
Total stockholders' equity
5,105
4,654
Total liabilities and equity
$
9,269
$
8,683
Page 2
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In
millions) (Unaudited) PRELIMINARY Year
ended October 31,
2024
2023
Cash flows from operating activities: Net income
$
614
$
1,057
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
126
120
Amortization
144
92
Share-based compensation
137
135
Deferred tax expense (benefit)
268
(3
)
Excess and obsolete inventory-related charges
35
27
Other non-cash expenses (income), net
(1
)
(1
)
Changes in assets and liabilities, net of effects of businesses
acquired: Accounts receivable
71
14
Inventory
(49
)
(148
)
Accounts payable
26
(62
)
Employee compensation and benefits
(36
)
(43
)
Deferred revenue
(12
)
61
Income taxes payable
30
(40
)
Interest rate swap agreement termination proceeds
—
107
Prepaid assets
14
7
Tax receivables
(202
)
(4
)
Other assets and liabilities
(113
)
89
Net cash provided by operating activities(a)
1,052
1,408
Cash flows from investing activities: Investments in
property, plant and equipment
(154
)
(197
)
Proceeds from government incentives
7
1
Acquisitions of businesses and intangible assets, net of cash
acquired
(681
)
(85
)
Purchase of investments
(11
)
(7
)
Other investing activities
20
—
Net cash used in investing activities
(819
)
(288
)
Cash flows from financing activities: Proceeds from issuance
of common stock under employee stock plans
66
67
Payment of taxes related to net share settlement of equity awards
(31
)
(49
)
Acquisition of non-controlling interests
(458
)
—
Treasury stock repurchases, including excise tax payments
(443
)
(702
)
Proceeds from issuance of long-term debt
599
—
Repayment of debt
(624
)
—
Debt issuance costs
(12
)
—
Other financing activities
(10
)
(3
)
Net cash used in financing activities
(913
)
(687
)
Effect of exchange rate movements
6
(2
)
Net increase (decrease) in cash, cash equivalents, and
restricted cash
(674
)
431
Cash, cash equivalents, and restricted cash at beginning of year
2,488
2,057
Cash, cash equivalents, and restricted cash at end of year
$
1,814
$
2,488
(a) Cash payments included in operating activities:
Interest payments
$
75
$
75
Income tax paid, net
$
146
$
343
Page 3
KEYSIGHT TECHNOLOGIES, INC. NET
INCOME AND DILUTED EPS RECONCILIATION (In millions, except
per share data) (Unaudited) PRELIMINARY
Three months ended Year ended October 31,
October 31,
2024
2023
2024
2023
Net Income Diluted EPS(a) Net Income
Diluted EPS Net Income Diluted EPS Net
Income Diluted EPS Net income (loss), as reported
$
(73
)
$
(0.42
)
$
226
$
1.28
$
614
$
3.51
$
1,057
$
5.91
Non-GAAP adjustments: Amortization of acquisition-related balances
33
0.19
19
0.11
139
0.80
90
0.50
Share-based compensation
27
0.15
25
0.14
145
0.83
136
0.76
Acquisition and integration costs
19
0.11
48
0.27
75
0.43
60
0.34
Restructuring and others
8
0.05
32
0.18
52
0.30
48
0.27
Adjustment for taxes(b)
274
1.57
2
0.01
71
0.40
97
0.55
Non-GAAP Net income
$
288
$
1.65
$
352
$
1.99
$
1,096
$
6.27
$
1,488
$
8.33
Weighted average shares outstanding - diluted
173
177
175
179
(a) EPS impact on non-GAAP adjustments and non-GAAP net
income is based on an adjusted shares outstanding of 174 million
for three months ended October 31, 2024. (b) Q4'24 GAAP net loss
reflects a $315 million tax expense related to a new Singapore tax
incentive and corresponding decrease in deferred tax assets. For
both the three and twelve months ended October 31, 2024, management
uses a non-GAAP effective tax rate of 14%. For both the three and
twelve months ended October 31, 2023, management uses a non-GAAP
effective tax rate of 12%. Please refer last page for
details on the use of non-GAAP financial measures.
Page 4
KEYSIGHT TECHNOLOGIES, INC. SEGMENT RESULTS
INFORMATION (In millions, except where noted)
(Unaudited) PRELIMINARY Communications
Solutions Group Percent Q4'24 Q4'23
Inc/(Dec) Revenue
$
894
$
891
—
%
Gross margin, %
67
%
68
%
Income from operations
$
249
$
257
Operating margin, %
28
%
29
%
Electronic Industrial Solutions Group
Percent Q4'24 Q4'23 Inc/(Dec) Revenue
$
393
$
420
(6
)%
Gross margin, %
58
%
61
%
Income from operations
$
83
$
127
Operating margin, %
21
%
30
%
Segment revenue and income from operations are
consistent with the respective non-GAAP financial measures as
discussed on last page. Page 5
KEYSIGHT
TECHNOLOGIES, INC. FREE CASH FLOW (In millions)
(Unaudited) PRELIMINARY Three months
ended Year ended October 31, October 31,
2024
2023
2024
2023
Net cash provided by operating activities
$
359
$
378
$
1,052
$
1,408
Adjustments: Investments in property, plant and equipment
(38
)
(39
)
(154
)
(197
)
Proceeds from government incentives
7
1
7
1
Free cash flow
$
328
$
340
$
905
$
1,212
Please refer last page for details on the use
of non-GAAP financial measures. Page 6
KEYSIGHT
TECHNOLOGIES, INC. REVENUE BY END MARKETS (In
millions) (Unaudited) PRELIMINARY
Percent Percent Q4'24 Q4'23
Inc/(Dec) FY24 FY23 Inc/(Dec)
Aerospace, Defense and Government
$
303
$
323
(6
)%
$
1,149
$
1,250
(8
)%
Commercial Communications
591
568
4
%
2,271
2,435
(7
)%
Electronic Industrial
393
420
(6
)%
1,559
1,779
(12
)%
Total Revenue
$
1,287
$
1,311
(2
)%
$
4,979
$
5,464
(9
)%
Page 7
Non-GAAP Financial Measures Management
uses both GAAP and non-GAAP financial measures to analyze and
assess the overall performance of the business, to make operating
decisions and to forecast and plan for future periods. We believe
that our investors benefit from seeing our results “through the
eyes of management” in addition to seeing our GAAP results. This
information enhances investors’ understanding of the continuing
performance of our business and facilitates comparison of
performance to our historical and future periods. Our non-GAAP
financial measures may not be comparable to similarly titled
measures used by other companies, including industry peer
companies, limiting the usefulness of these measures for
comparative purposes. These non-GAAP measures should be considered
supplemental to and not a substitute for financial information
prepared in accordance with GAAP. The discussion below presents
information about each of the non-GAAP financial measures and the
company’s reasons for including or excluding certain categories of
income or expenses from our non-GAAP results. In future periods, we
may exclude such items and may incur income and expenses similar to
these excluded items. Accordingly, adjustments for these items and
other similar items in our non-GAAP presentation should not be
interpreted as implying that these items are non-recurring,
infrequent or unusual. Core Revenue is GAAP/non-GAAP revenue (as
applicable) excluding the impact of foreign currency changes and
revenue associated with material acquisitions or divestitures
completed within the last twelve months. We exclude the impact of
foreign currency changes as currency rates can fluctuate based on
factors that are not within our control and can obscure revenue
growth trends. As the nature, size and number of acquisitions can
vary significantly from period to period and as compared to our
peers, we exclude revenue associated with recently acquired
businesses to facilitate comparisons of revenue growth and analysis
of underlying business trends. Free cash flow includes cash
provided by operating activities adjusted for net investments in
property, plant & equipment. Non-GAAP Income from Operations,
Non-GAAP Net Income and Non-GAAP Diluted EPS may include the
following types of adjustments:
- Acquisition-related Items: We exclude the impact of certain
items recorded in connection with business combinations from our
non-GAAP financial measures that are either non-cash or not normal,
recurring operating expenses due to their nature, variability of
amounts and lack of predictability as to occurrence or timing.
These amounts may include non-cash items such as the amortization
of acquired intangible assets and amortization of items associated
with fair value purchase accounting adjustments. We also exclude
other acquisition and integration costs associated with business
acquisitions that are not normal recurring operating expenses and
legal, accounting and due diligence costs. We exclude these charges
to facilitate a more meaningful evaluation of our current operating
performance and comparisons to our past operating performance.
- Share-based Compensation Expense: We exclude share-based
compensation expense from our non-GAAP financial measures because
share-based compensation expense can vary significantly from period
to period based on the company’s share price, as well as the
timing, size and nature of equity awards granted. Management
believes the exclusion of this expense facilitates the ability of
investors to compare the company’s operating results with those of
other companies, many of which also exclude share-based
compensation expense in determining their non-GAAP financial
measures.
- Restructuring and others: We exclude incremental expenses
associated with restructuring initiatives, usually aimed at
material changes in the business or cost structure. Such costs may
include employee separation costs, asset impairments,
facility-related costs, contract termination fees, and costs to
move operations from one location to another. These activities can
vary significantly from period to period based on the timing, size
and nature of restructuring plans; therefore, we do not consider
such costs to be normal, recurring operating expenses. We also
exclude “others”, not normal, recurring, cash operating
income/expenses from our non-GAAP financial measures. Such items
are evaluated on an individual basis, based on both quantitative
and qualitative factors and generally represent items that we do
not anticipate occurring as part of our normal business. While not
all-inclusive, examples of such items would include net unrealized
gains on equity investments still held, significant non-recurring
events like realized gains or losses associated with our employee
benefit plans, costs and recoveries related to unusual events, gain
on sale of assets/divestitures, adjustment attributable to
non-controlling interest, etc. We believe that these costs do not
reflect expected future operating expenses and do not contribute to
a meaningful evaluation of the company’s current operating
performance or comparisons to our operating performance in other
periods.
- Estimated Tax Rate: We utilize a consistent methodology for
long-term projected non-GAAP tax rate. When projecting this
long-term rate, we exclude any tax benefits or expenses that are
not directly related to ongoing operations and which are either
isolated or cannot be expected to occur again with any regularity
or predictability. Additionally, we evaluate our current long-term
projections, current tax structure and other factors, such as
existing tax positions in various jurisdictions and key tax
holidays in major jurisdictions where Keysight operates. This tax
rate could change in the future for a variety of reasons, including
but not limited to significant changes in geographic earnings mix
including acquisition activity, or fundamental tax law changes in
major jurisdictions where Keysight operates. The above reasons also
limit our ability to reasonably estimate the future GAAP tax rate
and provide a reconciliation of the expected non-GAAP earnings per
share for the first quarter of fiscal 2025 to the GAAP
equivalent.
Management recognizes these items can have a material impact on our
cash flows and/or our net income. Our GAAP financial statements,
including our Condensed Consolidated Statement of Cash Flows,
portray those effects. Although we believe it is useful for
investors to see core performance free of special items, investors
should understand that the excluded costs are actual expenses that
may impact the cash available to us for other uses. To gain a
complete picture of all effects on the company’s profit and loss
from any and all events, management does (and investors should)
rely upon the Condensed Consolidated Statement of Operations
prepared in accordance with GAAP. The non-GAAP measures focus
instead upon the core business of the company, which is only a
subset, albeit a critical one, of the company’s performance. Page 8
Source: IR-KEYS
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version on businesswire.com: https://www.businesswire.com/news/home/20241119979476/en/
INVESTOR CONTACT: Paulenier Sims +1 707-577-2310
paulenier.sims@keysight.com
MEDIA CONTACT: Claire Rowberry + 1 339-200-9518
claire.rowberry@non.keysight.com
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