SANTA ROSA, Calif. — (BUSINESS WIRE) — June 6, 2017 — Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the second fiscal quarter of 2017 ended April 30, 2017.

“We delivered a strong second quarter as we continued to execute our strategy and gain momentum in the key growth areas of our market including record orders for 5G, modular and automotive and energy solutions,” said Ron Nersesian, Keysight president and CEO. “We achieved 6 percent order growth, and with our sharp focus on operational excellence, drove solid bottom-line results that were well ahead of our expectations.”

“During the quarter, we closed the acquisition of Ixia ahead of our expected timeline as we efficiently obtained financing and cleared all necessary regulatory approvals. We are excited to have the Ixia team on-board and will now focus our joint efforts on integration, innovation, expanding market leadership and increased value creation,” Nersesian added.

Second Quarter Financial Summary

• GAAP revenue grew to $753 million, when compared with $731 million last year. Non-GAAP revenue, which excludes the impact of fair value adjustment to acquisition-related deferred revenue balances, grew to $758 million when compared with $735 million in the second quarter of 2016. Non-GAAP core revenue, which excludes the impact of currency and revenue from acquisitions completed within the last twelve months, increased 2 percent year-over-year.
• GAAP operating margin was 6 percent, compared with 13 percent in the second quarter of 2016. Non-GAAP operating margin was 19 percent, compared with 18 percent in the second quarter of 2016.
• GAAP net income was $49 million, or $0.27 per share, compared with $88 million, or $0.51 per share in the second quarter of 2016. Non-GAAP net income was $114 million, or $0.64 per share, compared with $106 million, or $0.61 per share in the second quarter of 2016.
• As of April 30, 2017, cash and cash equivalents totaled $983 million.

Reporting Segments

• Communications Solutions Group (CSG)
  CSG revenue was $424 million in the second quarter, compared to $446 million in the prior year second quarter. Strong growth for 5G and optical solutions was offset by declines in 4G and aerospace, defense and government.

• Electronic Industrial Solutions Group (EISG)
  EISG revenue was $220 million in the second quarter, up 14 percent when compared to $193 million in the second quarter of 2016. EISG growth was driven by increased demand for our semiconductor measurement and automotive and energy solutions.

• Ixia Solutions Group (ISG)
  Keysight completed the acquisition of Ixia on April 18 and financial results from the acquired business are reported in the Ixia Solutions Group (ISG). ISG revenue for the period of April 18 through April 30 was $12 million.

• Services Solutions Group (SSG)
  SSG revenue in the second quarter grew 6 percent year-over-year to $102 million when compared with $96 million in the second quarter of 2016. SSG revenue growth was driven by an increase in remarketed solution sales and repair and calibration services.

Third Fiscal Quarter Outlook

Keysight provides guidance based on current market conditions and expectations.

Keysight’s third quarter 2017 GAAP revenue is expected to be in the range of $810 million to $850 million and non-GAAP revenue is expected to be in the range of $840 million to $880 million. Third quarter non-GAAP earnings per share are expected to be in the range of $0.51 to $0.65. Non-GAAP earnings per share as projected for the third quarter of fiscal year 2017 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 “Non-GAAP Measures” below.

Webcast

Keysight’s management will present more details about its second quarter FY2017 financial results and its third quarter FY2017 outlook on a conference call with investors today at 2:00 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 “ Q2 2017 Keysight Technologies Inc. Earnings Conference Call ” to participate. The webcast will remain on the company site for 90 days.