Keysight Technologies Reports First Quarter 2022 Results|||

Accomplished All-time Record Orders and Record Q1 Revenue and Earnings

SANTA ROSA, Calif.–(Concern WIRE)–$KEYS #400G–Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the first financial quarter ended January 31, 2022.

“The Keysight squad delivered a strong start to the year, exceeding the high end of our acquirement and EPS guidance. Continued robust demand for our differentiated solutions resulted in record orders,” said Ron Nersesian, Keysight’southward Chairman, President and CEO. “By enabling the rapid progression of disruptive technologies and accelerating innovation to connect and secure the world, nosotros are improve positioned than ever to capitalize on long-term secular growth trends and deliver above-market place growth.”

First Quarter Financial Summary

  • Orders grew 22 pct to reach $1.50 billion, compared with $1.22 billion last yr, or 23 percent on a core basis, which excludes the impact of foreign currency changes and orders associated with businesses acquired or divested inside the terminal twelve months.
  • Revenue grew 6 percentage to achieve $one.25 billion, compared with $1.18 billion last yr, or 7 percent on a cadre basis, which excludes the impact of foreign currency changes and revenue associated with businesses caused or divested inside the terminal twelve months.
  • GAAP internet income was $229 million, or $i.24 per share, compared with $172 million, or $0.92 per share, in the starting time quarter of 2021.
  • Not-GAAP net income was $305 1000000, or $1.65 per share, compared with $270 1000000, or $ane.43 per share in the start quarter of 2021.
  • Cash menstruum from operations was $224 million, compared with $295 million last year. Free cash flow was $182 one thousand thousand, compared with $267 meg in the kickoff quarter of 2021.
  • Keysight caused approximately i.13 million shares in the open market at an average share price of $182.nineteen, for a full consideration of $206 million.
  • As of January 31, 2022, cash and greenbacks equivalents totaled $ane.98 billion.

Reporting Segments

  • Communications Solutions Grouping (CSG)

CSG reported revenue of $878 meg in the first quarter, up 3 percentage over last year, driven by connected investments in 5G, O-RAN adoption, 400G, 800G and terabit R&D, and wireline applications.

  • Electronic Industrial Solutions Group (EISG)

EISG reported revenue of $372 million in the first quarter, up 13 per centum over final year, driven past semiconductor measurement solutions and side by side-generation automotive and energy technologies, with growth across all regions.

Outlook

Keysight’due south 2d fiscal quarter of 2022 revenue is expected to exist in the range of $1.29 billion to $i.31 billion. Not-GAAP earnings per share for the second fiscal quarter of 2022 are expected to be in the range of $one.63 to $1.69, which exclude items that pertain to time to come events and are not currently estimable with a reasonable caste of accuracy. Therefore, no reconciliation to GAAP amounts has been provided. Further data is discussed in the section titled “Use of Non-GAAP Financial Measures” below.

Webcast

Keysight’s management will nowadays more details about its first quarter FY2022 fiscal results and its second quarter FY2022 outlook on a briefing telephone call with investors today at 1:30 p.chiliad. PT. This issue will be webcast in listen-only mode. Listeners may log on to the call at www.investor.keysight.com under the “Upcoming Events” department and select “Q1 2022 Keysight Technologies Inc. Earnings Conference Call” to participate or dial +1-844-200-6205 (U.S. simply) or +1-929-526-1599 (International) and enter passcode 452858. The webcast will remain on the company site for xc days.

Frontward-Looking Statements

This communication contains frontward-looking statements as divers in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The words “wait,” “intend,” “volition,” “should,” and similar expressions, as they relate to the company, are intended to identify frontward-looking statements. These forward-looking statements involve risks and uncertainties that could significantly touch the expected results and are based on certain key assumptions of Keysight’s direction and on currently available information. Due to such uncertainties and risks, no assurances tin be given that such expectations or assumptions volition show to have been right, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak just as of the appointment hereof. Keysight undertakes no responsibility to publicly update or revise any forward-looking argument. The forward-looking statements independent herein include, simply are non express to, predictions, future guidance, projections, beliefs, and expectations almost the visitor’south goals, revenues, financial condition, earnings, impacts of US export control regulations, and operations that involve risks and uncertainties that could cause Keysight’south results to differ materially from direction’southward electric current expectations. Such risks and uncertainties include, but are not limited to, impacts to the supply chain; government mandates related to pandemic atmospheric condition such as Covid-xix and its variants; net aught emissions commitments; increasing geopolitical tension in regions outside of the U.S.; increases in compunction and our ability to retain primal personnel; changes in the demand for current and new products, technologies, and services; customer purchasing decisions and timing; and society cancellations.

In add-on to the risks to a higher place, other risks that Keysight faces include those detailed in Keysight’s filings with the Securities and Exchange Commission on Keysight’s yearly report on Class 10-K for the period concluded October 31, 2021.

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Segment Information

Segment data reverberate the results of our reportable segments under our direction reporting system. Segment information are provided on folio five of the fastened tables.

Use of Non-GAAP Financial Measures

In improver to financial information prepared in accordance with U.S. GAAP (“GAAP”), this document also contains sure not-GAAP financial measures based on direction’s view of performance, including:

  • Cadre Revenue
  • Not-GAAP Cyberspace Income/Earnings
  • Non-GAAP Net Income per share/Earnings per share
  • Gratis Cash Flow

Income per share is based on weighted average diluted share count. See the attached supplemental schedules for reconciliations of each not-GAAP financial measure to its most directly comparable GAAP financial mensurate for the iii months ended Jan 31, 2022. 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 sure categories of income or expenses from our non-GAAP results.

Nearly Keysight Technologies

Keysight delivers advanced design and validation solutions that help accelerate innovation to connect and secure the world. Keysight’south dedication to speed and precision extends to software-driven insights and analytics that bring tomorrow’s technology products to marketplace faster across the development lifecycle, in pattern simulation, prototype validation, automatic software testing, manufacturing assay, and network functioning optimization and visibility in enterprise, service provider and cloud environments. Our customers span the worldwide communications and industrial ecosystems, aerospace and defense, automotive, energy, semiconductor and general electronics markets. Keysight generated revenues of $4.9B in financial year 2021. For more information well-nigh Keysight Technologies (NYSE: KEYS), visit united states at world wide web.keysight.com.

Boosted information about Keysight Technologies is available in the newsroom at www.keysight.com/become/news and on Facebook, LinkedIn, Twitter and YouTube.

Source: IR-KEYS

KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED Statement OF OPERATIONS
(In millions, except per share data)
(Unaudited)
PRELIMINARY
Three months ended
January 31,

Percent

2022

2021

Inc/(Dec)

Orders

$

i,495

$

1,223

22%

Revenue

$

ane,250

$

1,180

half-dozen%

Costs and expenses:
Cost of products and services

446

473

(6)%

Research and development

210

199

5%

Selling, general and authoritative

326

301

ix%

Other operating expense (income), net

(3

)

(5

)

(38)%

Total costs and expenses

979

968

1%

Income from operations

271

212

27%

Involvement income

ane

ane

3%

Involvement expense

(twenty

)

(20

)

i%

Other income (expense), cyberspace

12

2

787%

Income earlier taxes

264

195

35%

Provision for income taxes

35

23

53%

Net income

$

229

$

172

33%

Net income per share:
Basic

$

ane.25

$

0.93

Diluted

$

i.24

$

0.92

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

183

186

Diluted

184

188

Folio 1
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED Balance Canvas
(In millions, except par value and share data)
(Unaudited)
PRELIMINARY
January 31, October 31,

2022

2021

Assets
Current assets:
Cash and cash equivalents

$

1,977

$

2,052

Accounts receivable, net

708

735

Inventory

804

777

Other current avails

319

270

Total electric current assets

3,808

three,834

Belongings, plant and equipment, net

672

650

Operating lease right-of-use avails

218

227

Goodwill

1,623

1,628

Other intangible assets, net

250

272

Long-term investments

65

70

Long-term deferred tax avails

695

711

Other assets

397

389

Total avails

$

seven,728

$

7,781

LIABILITIES AND Disinterestedness
Current liabilities:
Accounts payable

$

294

$

287

Employee compensation and benefits

247

355

Deferred revenue

495

478

Income and other taxes payable

86

74

Operating lease liabilities

40

41

Other accrued liabilities

95

74

Total electric current liabilities

1,257

1,309

Long-term debt

1,791

1,791

Retirement and post-retirement benefits

154

167

Long-term deferred revenue

190

187

Long-term operating lease liabilities

183

191

Other long-term liabilities

343

352

Total liabilities

3,918

3,997

Stockholders’ Equity:
Preferred stock; $0.01 par value; 100 one thousand thousand shares authorized; none issued and outstanding

Common stock; $0.01 par value; i billion shares authorized; 198 million shares at January 31, 2022 and 197 million shares at October 31, 2021 issued

2

two

Treasury stock at toll; 16.2 million shares at January 31, 2022 and 15.i meg shares at October 31, 2021

(1,631

)

(1,425

)

Additional paid-in-capital

two,231

2,219

Retained earnings

3,659

3,430

Accumulated other comprehensive loss

(451

)

(442

)

Full stockholders’ equity

iii,810

3,784

Total liabilities and disinterestedness

$

7,728

$

7,781

Page ii
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED Argument OF CASH FLOWS
(In millions)
(Unaudited)
PRELIMINARY
3 months ended
January 31,

2022

2021

Cash flows from operating activities:
Net income

$

229

$

172

Adjustments to reconcile net income to cyberspace cash provided past operating activities:
Depreciation

30

28

Amortization

27

59

Share-based compensation

fifty

43

Deferred tax expense

9

i

Excess and obsolete inventory-related charges

half dozen

7

Other non-greenbacks expense (income), internet

5

vii

Changes in assets and liabilities:
Accounts receivable

25

(38

)

Inventory

(32

)

Accounts payable

(4

)

4

Employee compensation and benefits

(117

)

(54

)

Deferred revenue

28

50

Income taxes payable

14

(1

)

Retirement and postal service-retirement benefits

(ix

)

(1

)

Other avails and liabilities

(37

)

xviii

Net cash provided past operating activities(a)

224

295

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

(42

)

(28

)

Acquisition of businesses and intangible assets, cyberspace of cash acquired

(seven

)

(96

)

Cyberspace cash used in investing activities

(49

)

(124

)

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

31

28

Payment of taxes related to cyberspace share settlement of equity awards

(72

)

(49

)

Treasury stock repurchases

(206

)

(20

)

Payment of acquisition-related contingent consideration

(2

)

Net greenbacks used in financing activities

(247

)

(43

)

Effect of commutation rate movements

(iv

)

viii

Net increase in cash, greenbacks equivalents and restricted cash

(76

)

136

Cash, greenbacks equivalents and restricted cash at first of menstruation

two,068

1,767

Cash, cash equivalents and restricted cash at end of flow

$

one,992

$

ane,903

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

$

$

Income tax paid, net

$

12

$

22

Page 3
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KEYSIGHT TECHNOLOGIES, INC.
RECONCILIATION OF CORE Revenue
(In millions)
(Unaudited)
PRELIMINARY
Yr-over-yr compare
Q1’22 Q1’21 Pct
Inc/(Dec)
Acquirement

$

1,250

$

one,180

half dozen%

Adjustments:
Acquirement from acquisitions or divestitures

(iv

)

Currency impacts

12

Core Revenue

$

1,258

$

1,180

vii%

Delight refer concluding folio for discussion on our non-GAAP financial measures.
Folio 4
KEYSIGHT TECHNOLOGIES, INC.
SEGMENT RESULTS INFORMATION
(In millions, except where noted)
(Unaudited)
PRELIMINARY
Communications Solutions Group YoY
Q1’22 Q1’21 % Chg
Acquirement

$

878

$

852

iii%

Gross margin, %

67.3

%

64.6

%

Income from operations

$

237

$

224

Operating margin, %

27

%

26

%

Electronic Industrial Solutions Group YoY
Q1’22 Q1’21 % Chg
Revenue

$

372

$

328

xiii%

Gross margin, %

62.6

%

63.4

%

Income from operations

$

114

$

96

Operating margin, %

31

%

29

%

Segment revenue and income from operations are consistent with the respective non-GAAP financial measures every bit discussed on last folio.
Page 5
KEYSIGHT TECHNOLOGIES, INC.
Not-GAAP NET INCOME AND DILUTED EPS RECONCILIATION
(In millions, except per share data)
(Unaudited)
PRELIMINARY
Three months ended
January 31,

2022

2021

Net
Income
Diluted
EPS
Net
Income
Diluted
EPS
GAAP Cyberspace income

$

229

$

ane.24

$

172

$

0.92

Non-GAAP adjustments:
Acquittal of acquisition-related balances

26

0.xiv

58

0.31

Share-based bounty

51

0.27

43

0.23

Acquisition and integration costs

3

0.02

three

0.01

Restructuring and others

iii

0.02

7

0.04

Adjustment for taxes(a)

(vii

)

(0.04

)

(xiii

)

(0.08

)

Not-GAAP Net income

$

305

$

ane.65

$

270

$

1.43

Weighted average shares outstanding – diluted

184

188

(a)
For the iii months ended January 31, 2022 and 2021, direction uses a non-GAAP constructive tax rate of 12%.
Please refer last page for details on the use of non-GAAP financial measures.
Page half dozen
KEYSIGHT TECHNOLOGIES, INC.
FREE CASH FLOW
(In millions)
(Unaudited)
PRELIMINARY
Three months concluded
January 31,

2022

2021

Internet cash provided by operating activities

$

224

$

295

Less: Investments in property, plant and equipment

(42

)

(28

)

Free cash flow

$

182

$

267

Please refer last folio for details on the use of non-GAAP financial measures.
Page 7
Not-GAAP Financial Measures
Management uses both GAAP and non-GAAP financial measures to analyze and appraise the overall operation of the concern, to make operating decisions and to forecast and plan for time to come periods. Nosotros believe that our investors benefit from seeing our results “through the eyes of management” in add-on to seeing our GAAP results. This information enhances investors’ agreement of the continuing functioning of our business and facilitates comparison of performance to our historical and future periods.
Our non-GAAP fiscal 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 fiscal information prepared in accordance with GAAP. The discussion below presents information well-nigh each of the not-GAAP financial measures and the company’s reasons for including or excluding sure categories of income or expenses from our not-GAAP results. In hereafter periods, we may exclude such items and may incur income and expenses like to these excluded items. Accordingly, adjustments for these items and other similar items in our non-GAAP presentation should non be interpreted as implying that these items are non-recurring, infrequent or unusual.
Non-GAAP Revenue
generally relates to an acquisition and includes recognition of acquired deferred revenue that was written downward to fair value in purchase accounting. Management believes that excluding fair value buy accounting adjustments more closely correlates with the ordinary and ongoing course of the acquired company’due south operations and facilitates analysis of revenue growth and business organisation trends. We may not take not-GAAP revenue in all periods.
Core Acquirement
is GAAP/non-GAAP acquirement (as applicable) excluding the impact of strange currency changes and revenue associated with fabric acquisitions or divestitures completed within the last twelve months. We exclude the impact of strange currency changes as currency rates tin fluctuate based on factors that are not within our command and tin can obscure revenue growth trends. Equally the nature, size and number of acquisitions can vary significantly from catamenia to flow and equally compared to our peers, we exclude revenue associated with recently acquired businesses to facilitate comparisons of revenue growth and analysis of underlying business trends.
Costless greenbacks menstruum
includes net greenbacks provided by operating activities adjusted for investments in holding, constitute & equipment.
Non-GAAP Income from Operations, Not-GAAP Net Income and Not-GAAP Diluted EPS
may include the following types of adjustments:
  • Acquisition-related Items:
    We exclude the impact of sure items recorded in connexion with business combinations from our not-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 acquittal of acquired intangible avails and amortization of items associated with fair value buy accounting adjustments, including recognition of acquired deferred revenue (come across Non-GAAP Acquirement above). We as well exclude other acquisition and integration costs associated with business acquisitions that are not normal recurring operating expenses, including amortization of amounts paid to redeem acquires’ unvested stock-based bounty awards, 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 operation.
  • Share-based Compensation Expense:
    We exclude share-based bounty expense from our non-GAAP financial measures because share-based compensation expense can vary significantly from flow to menstruation based on the company’s share price, as well as the timing, size and nature of equity awards granted. Direction 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 as well exclude share-based bounty expense in determining their not-GAAP financial measures.
  • Gain on insurance settlement:
    We exclude certain other significant income or expense items that may occur occasionally and are not normal and recurring from our non-GAAP financial measures. This represents price and recoveries related to the 2017 Northern California wildfires.
  • Restructuring and others:
    We exclude incremental expenses associated with restructuring initiatives, usually aimed at material changes in the business concern 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 menstruum to catamenia based on the timing, size and nature of restructuring plans; therefore, we practice 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 fiscal measures. Such items are evaluated on an individual footing, based on both quantitative and qualitative factors and generally stand for items that we do non conceptualize occurring as part of our normal business. While non all-inclusive, examples of such items would include net unrealized gains on equity investments still held, meaning not-recurring events like realized gains or losses associated with our employee benefit plans, costs and recoveries related to unusual events, proceeds on sale of assets/divestitures, etc. Nosotros believe that these costs do non reflect expected future operating expenses and practise not contribute to a meaningful evaluation of the company’due south current operating performance or comparisons to our operating functioning in other periods.

  • Estimated Tax Charge per unit:
    Nosotros utilize a consequent methodology for long-term projected non-GAAP tax rate. When projecting this long-term charge per unit, we exclude whatever 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 electric current long-term projections, electric current tax structure and other factors, such as existing tax positions in various jurisdictions and cardinal tax holidays in major jurisdictions where Keysight operates. This tax rate could change in the futurity for a diverseness of reasons, including merely not limited to significant changes in geographic earnings mix including acquisition activity, or cardinal tax law changes in major jurisdictions where Keysight operates. The higher up reasons as well limit our power to reasonably guess the hereafter GAAP taxation rate and provide a reconciliation of the expected non-GAAP earnings per share for the 2nd quarter of fiscal 2022 to the GAAP equivalent.
Management recognizes these items tin can take a material touch on our cash flows and/or our net income. Our GAAP financial statements, including our Condensed Consolidated Argument of Greenbacks Flows, portray those furnishings. Although we believe it is useful for investors to see cadre performance gratuitous of special items, investors should sympathise that the excluded costs are actual expenses that may impact the cash available to u.s.a. for other uses. To gain a complete picture of all effects on the visitor’s profit and loss from any and all events, direction 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 disquisitional one, of the company’due south performance.
Page eight
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