Keysight Technologies Reports Fourth Quarter 2020 Results
Achieved Record Orders, Revenue, Gross Margin, Operating Margin, Free Cash Flow
Announces $750 Million Share Repurchase Program
SANTA ROSA, Calif., November 18, 2020
Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the fourth fiscal quarter of 2020 ended October 31, 2020.
"Keysight delivered an outstanding quarter and finish to our fiscal year, driven by strong execution and broad-based demand for our differentiated solutions. Despite COVID-related macro challenges, it was a record year for orders, gross margin, operating margin, earnings per share and free cash flow," said Ron Nersesian, Keysight's Chairman, President and CEO. "Our people and culture are a competitive differentiator and, in the face of unprecedented challenges, Keysight exits this year stronger than ever, and well-positioned to capitalize on our growth opportunities ahead."
Fourth Quarter Financial Summary
- Revenue grew 9 percent to reach $1.22 billion, when compared with $1.12 billion last year. Non-GAAP revenue grew 7 percent on a core basis, which excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months.
- GAAP net income was $217 million, or $1.15 per share, compared with $195 million, or $1.02 per share, in the fourth quarter of 2019.
- Non-GAAP net income was $305 million, or $1.62 per share, compared with $254 million, or $1.33 per share in the fourth quarter of 2019.
- Keysight acquired approximately 2.2 million shares in the open market at an average share price of $96.55, for a total consideration of $215 million, exhausting the $500 million share repurchase authorization from May 2019.
- As of October 31, 2020, cash and cash equivalents totaled $1.76 billion.
Fiscal Year 2020 Financial Summary
- Revenue declined 2 percent over last year and totaled $4.22 billion. Non-GAAP revenue declined 3 percent on a core basis.
- GAAP net income was $627 million, or $3.31 per share, compared with $621 million, or $3.25 per share in fiscal 2019. Non-GAAP net income was $919 million, or $4.85 per share, compared with $902 million, or $4.72 per share in fiscal 2019.
- Keysight acquired approximately 4.3 million shares in the open market at an average share price of $95.90, for a total consideration of $410 million during fiscal year 2020, exhausting the $500 million share repurchase authorization from May 2019.
- Communications Solutions Group (CSG)
CSG reported revenue of $901 million in the fourth quarter, up 8 percent over last year, driven by continued strength in next-generation commercial communications technologies and increased global aerospace defense and government investment.
- Electronic Industrial Solutions Group (EISG)
EISG reported revenue of $319 million in the fourth quarter, up 12 percent over last year, driven by strength in our broad portfolio of products that serve the general electronics market and continued strong demand for semiconductor measurement solutions.
Share Repurchase Program
Keysight also announced today that its Board of Directors authorized a new share repurchase program for up to $750 million of its common stock. The new repurchase program is effective immediately. Shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. The repurchase authorization may be commenced, suspended or discontinued at any time at the company's discretion.
Keysight's first fiscal quarter of 2021 revenue is expected to be in the range of $1.14 billion to $1.16 billion. Non-GAAP earnings per share for the first fiscal quarter of 2021 are expected to be in the range of $1.32 to $1.38, 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.
Keysight's management will present more details about its fourth quarter FY2020 financial results and its first quarter FY2021 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 2020 Keysight Technologies Inc. Earnings Conference Call" to participate or dial +1 833-968-2178 (U.S. only) or +1 778-560-2837 (International) and enter passcode 7488342. The webcast will remain on the company site for 90 days.
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 "expect," "intend," "will," "should," "forecast," 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, information and future guidance on the company's goals, revenues, financial condition, earnings, impacts of US export control regulations, 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, government mandated shutdowns, disruption in the supply chain, and labor shortages caused by pandemic conditions; changes in the demand for current and new products, technologies, and services; customer purchasing decisions and timing; order cancellations; increased trade tensions and tightening of export control regulations.
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 quarterly report on Form 10-Q for the period ended July 31, 2020.
Segment data reflects the results of our reportable segments under our management reporting system. Segment revenue excludes the impact of fair value adjustments to acquisition-related deferred revenue balances. Segment data are provided on page 6 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 Core Revenue
- Non-GAAP Net Income
- Non-GAAP Net Income 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, 2020 and fiscal year 2020. 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
Keysight Technologies, Inc. (NYSE: KEYS) is a leading technology company that helps enterprises, service providers and governments accelerate innovation to connect and secure the world. Keysight's solutions optimize networks and bring electronic products to market faster and at a lower cost with offerings from design simulation, to prototype validation, to manufacturing test, to optimization in networks and cloud environments. Customers span the worldwide communications ecosystem, aerospace and defense, automotive, energy, semiconductor and general electronics end markets. Keysight generated revenues of $4.2B in fiscal year 2020. More information is available at www.keysight.com.
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