Keysight Technologies Reports Third Quarter 2024 Results

Achieves above guidance results; full-year outlook improved

SANTA ROSA, Calif. — (BUSINESS WIRE) — August 20, 2024 — Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the third fiscal quarter ended July 31, 2024.

“Keysight delivered revenue and earnings above the high end of our guidance in market conditions that were stable and consistent with our expectations,” said Satish Dhanasekaran, Keysight’s President and CEO. “The funnel of opportunities supports our outlook for second half orders to be above first half orders, followed by a more gradual recovery in 2025, barring any further macroeconomic degradation."

Third Quarter Financial Summary

  • Revenue was $1.22 billion, compared with $1.38 billion in the third quarter of 2023.
  • GAAP net income was $389 million, or $2.22 per share, which includes a 94-cent year-to-date benefit due to a change in effective tax rate, compared with $288 million, or $1.61 per share, in the third quarter of 2023.
  • Non-GAAP net income was $275 million, or $1.57 per share, which includes a 16-cent year-to-date benefit due to a change in non-GAAP tax rate, compared with $393 million, or $2.19 per share in the third quarter of 2023.
  • Cash flow from operations was $255 million, compared to $241 million last year. Free cash flow was $222 million, compared to $196 million in the third quarter of 2023.
  • As of July 31, 2024, cash and cash equivalents totaled $1.63 billion.

Reporting Segments

  • Communications Solutions Group (CSG)

CSG reported revenue of $847 million in the third quarter, down 8 percent from the prior year, reflecting a 6 percent decline in commercial communications, while aerospace, defense, and government decreased 10 percent.

  • Electronic Industrial Solutions Group (EISG)

EISG reported revenue of $370 million in the third quarter, down 20 percent from the prior year, reflecting continued restraint in general electronics, automotive, and manufacturing-related customer spending.

Outlook

Keysight’s fourth fiscal quarter of 2024 revenue is expected to be in the range of $1.245 billion to $1.265 billion. Non-GAAP earnings per share for the fourth fiscal quarter of 2024 are expected to be in the range of $1.53 to $1.59, based on a weighted diluted share count of approximately 174 million shares and a non-GAAP tax rate of 14%. 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 third quarter FY2024 financial results and its fourth quarter FY2024 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 FY24 Keysight Technologies Inc. Earnings Conference Call” to participate. The call can also be accessed by dialing 1-404-975-4839 or 1-833-470-1428 toll-free (access code 711647). 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 national elections and election results in the U.S. and U.K., slowing demand for products or services, volatility in financial markets, reduced access to credit, increased 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 April 30, 2024.

Segment Data

Segment data reflect 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

Net 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 both the three and nine months ended July 31, 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 Nine months ended
July 31, July 31,

2024

2023

2024

2023

 
Orders

$

1,249

 

$

1,244

 

$

3,688

 

$

3,863

 

 
Revenue

$

1,217

 

$

1,382

 

$

3,692

 

$

4,153

 

 
Costs and expenses:
Cost of products and services

 

462

 

 

486

 

 

1,361

 

 

1,465

 

Research and development

 

226

 

 

215

 

 

686

 

 

664

 

Selling, general and administrative

 

329

 

 

319

 

 

1,052

 

 

994

 

Other operating expense (income), net

 

(5

)

 

(3

)

 

(10

)

 

(11

)

Total costs and expenses

 

1,012

 

 

1,017

 

 

3,089

 

 

3,112

 

 
Income from operations

 

205

 

 

365

 

 

603

 

 

1,041

 

 
Interest income

 

19

 

 

29

 

 

60

 

 

70

 

Interest expense

 

(21

)

 

(19

)

 

(61

)

 

(58

)

Other income (expense), net

 

10

 

 

14

 

 

15

 

 

28

 

 
Income before taxes

 

213

 

 

389

 

 

617

 

 

1,081

 

 
Provision (benefit) for income taxes

 

(176

)

 

101

 

 

(70

)

 

250

 

 
Net income

$

389

 

$

288

 

$

687

 

$

831

 

 
 
Net income per share:
Basic

$

2.23

 

$

1.62

 

$

3.94

 

$

4.66

 

Diluted

$

2.22

 

$

1.61

 

$

3.92

 

$

4.63

 

 
Weighted average shares used in computing net income per share:
Basic

 

174

 

 

178

 

 

174

 

 

178

 

Diluted

 

175

 

 

179

 

 

175

 

 

179

 

 
 
Page 1
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share data)
(Unaudited)
PRELIMINARY
 
July 31, 2024 October 31, 2023
 
ASSETS
 
Current assets:
Cash and cash equivalents

$

1,632

 

$

2,472

 

Accounts receivable, net

 

802

 

 

900

 

Inventory

 

1,026

 

 

985

 

Other current assets

 

536

 

 

452

 

Total current assets

 

3,996

 

 

4,809

 

 
Property, plant and equipment, net

 

776

 

 

761

 

Operating lease right-of-use assets

 

234

 

 

226

 

Goodwill

 

2,391

 

 

1,640

 

Other intangible assets, net

 

637

 

 

155

 

Long-term investments

 

107

 

 

81

 

Long-term deferred tax assets

 

678

 

 

671

 

Other assets

 

504

 

 

340

 

Total assets

$

9,323

 

$

8,683

 

 
LIABILITIES AND EQUITY
 
Current liabilities:
Current portion of long-term debt

$

600

 

$

599

 

Accounts payable

 

280

 

 

286

 

Employee compensation and benefits

 

262

 

 

304

 

Deferred revenue

 

537

 

 

541

 

Income and other taxes payable

 

85

 

 

90

 

Operating lease liabilities

 

43

 

 

40

 

Other accrued liabilities

 

142

 

 

189

 

Total current liabilities

 

1,949

 

 

2,049

 

 
Long-term debt

 

1,196

 

 

1,195

 

Retirement and post-retirement benefits

 

71

 

 

64

 

Long-term deferred revenue

 

207

 

 

216

 

Long-term operating lease liabilities

 

197

 

 

192

 

Other long-term liabilities

 

473

 

 

313

 

Total liabilities

 

4,093

 

 

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 and outstanding shares: 201 million and 200 million, respectively

 

2

 

 

2

 

Treasury stock, at cost; 27.5 million shares and 25.4 million shares, respectively

 

(3,270

)

 

(2,980

)

Additional paid-in-capital

 

2,637

 

 

2,487

 

Retained earnings

 

6,298

 

 

5,611

 

Accumulated other comprehensive loss

 

(437

)

 

(466

)

Total stockholders' equity

 

5,230

 

 

4,654

 

Total liabilities and equity

$

9,323

 

$

8,683

 

 
 
Page 2
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
PRELIMINARY
 
Nine months ended
July 31,

2024

2023

 
Cash flows from operating activities:
Net income

$

687

 

$

831

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation

 

94

 

 

90

 

Amortization

 

108

 

 

72

 

Share-based compensation

 

111

 

 

110

 

Deferred tax expense (benefit)

 

(21

)

 

10

 

Excess and obsolete inventory-related charges

 

26

 

 

19

 

Other non-cash expense (income), net

 

(5

)

 

(13

)

Changes in assets and liabilities, net of effects of businesses acquired:
Accounts receivable

 

130

 

 

32

 

Inventory

 

(51

)

 

(126

)

Accounts payable

 

(4

)

 

(54

)

Employee compensation and benefits

 

(69

)

 

(87

)

Deferred revenue

 

(35

)

 

41

 

Income taxes payable

 

(24

)

 

(28

)

Interest rate swap agreement termination proceeds

 

 

 

107

 

Prepaid assets

 

(25

)

 

(33

)

Long-term tax receivable

 

(165

)

 

 

Other assets and liabilities

 

(64

)

 

59

 

Net cash provided by operating activities (a)

 

693

 

 

1,030

 

 
Cash flows from investing activities:
Investments in property, plant and equipment

 

(116

)

 

(158

)

Acquisition of businesses and intangible assets, net of cash acquired

 

(673

)

 

(85

)

Other investing activities

 

8

 

 

(7

)

Net cash used in investing activities

 

(781

)

 

(250

)

 
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock plans

 

65

 

 

67

 

Payment of taxes related to net share settlement of equity awards

 

(31

)

 

(49

)

Acquisition of non-controlling interests

 

(458

)

 

 

Treasury stock repurchases

 

(289

)

 

(276

)

Repayment of debt

 

(24

)

 

 

Other financing activities

 

(16

)

 

(1

)

Net cash used in financing activities

 

(753

)

 

(259

)

 
Effect of exchange rate movements

 

2

 

 

10

 

 
Net increase (decrease) in cash, cash equivalents, and restricted cash

 

(839

)

 

531

 

Cash, cash equivalents, and restricted cash at beginning of period

 

2,488

 

 

2,057

 

Cash, cash equivalents, and restricted cash at end of period

$

1,649

 

$

2,588

 

 
 
(a) Cash payments included in operating activities:
Interest payments

$

38

 

$

37

 

Income tax paid, net

$

130

 

$

268

 

 
 
Page 3
KEYSIGHT TECHNOLOGIES, INC.
NET INCOME AND DILUTED EPS RECONCILIATION
(In millions, except per share data)
(Unaudited)
PRELIMINARY
 
Three months ended Nine months ended
July 31, July 31,

2024

2023

2024

2023

Net
Income
Diluted
EPS
Net
Income
Diluted
EPS
Net
Income
Diluted
EPS
Net
Income
Diluted
EPS
 
GAAP Net income

$

389

 

$

2.22

 

$

288

$

1.61

$

687

 

$

3.92

 

$

831

$

4.63

Non-GAAP adjustments:
Amortization of acquisition-related balances

 

31

 

 

0.18

 

 

23

 

0.13

 

106

 

 

0.60

 

 

71

 

0.39

Share-based compensation

 

32

 

 

0.18

 

 

27

 

0.15

 

118

 

 

0.68

 

 

111

 

0.62

Acquisition and integration costs

 

16

 

 

0.09

 

 

7

 

0.04

 

56

 

 

0.32

 

 

12

 

0.07

Restructuring and others

 

6

 

 

0.03

 

 

1

 

0.01

 

44

 

 

0.25

 

 

16

 

0.09

Adjustment for taxes (a)

 

(199

)

 

(1.13

)

 

47

 

0.25

 

(203

)

 

(1.16

)

 

95

 

0.53

Non-GAAP Net income

$

275

 

$

1.57

 

$

393

$

2.19

$

808

 

$

4.61

 

$

1,136

$

6.33

 
Weighted average shares outstanding - diluted

 

175

 

 

179

 

175

 

 

179

(a) During the quarter, we amended our tax returns to reflect $165 million, an amortization deduction related to a prior-period corporate restructuring. This reduced our effective non-GAAP tax rate for the nine months ended July 31, 2024 from 17% to 14% and for the three months ended July 31, 2024 to 8%. For the three and nine months ended July 31, 2023, management used 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
Q3'24 Q3'23 Inc/(Dec)
Revenue

$

847

$

918

(8)%

Gross margin, %

 

67%

 

68%

Income from operations

$

223

$

276

Operating margin, %

 

26%

 

30%

 
 
Electronic Industrial Solutions Group Percent
Q3'24 Q3'23 Inc/(Dec)
Revenue

$

370

$

464

(20)%

Gross margin, %

 

58%

 

62%

Income from operations

$

74

$

157

Operating margin, %

 

20%

 

34%

 
 
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
July 31,

2024

2023

Net cash provided by operating activities

$

255

 

$

241

 

Less: Investments in property, plant and equipment

 

(33

)

 

(45

)

Free cash flow

$

222

 

$

196

 

 
 
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
Q3'24 Q3'23 Inc/(Dec)
Aerospace, Defense and Government

$

275

$

307

(10)%

Commercial Communications

 

572

 

611

(6)%

Electronic Industrial

 

370

 

464

(20)%

Total Revenue

$

1,217

$

1,382

(12)%

 
 
Page 7

1 | 2  Next Page »



© 2024 Internet Business Systems, Inc.
670 Aberdeen Way, Milpitas, CA 95035
+1 (408) 882-6554 — Contact Us
ShareCG™ is a trademark of Internet Business Systems, Inc.

Report a Bug Report Abuse Make a Suggestion About Privacy Policy Contact Us User Agreement Advertise