Keysight Technologies Reports Fourth Quarter and Fiscal Year 2021 Results
Achieved Record Orders, Revenue, Gross Margin, and Operating Margin
Announces $1.2 Billion Share Repurchase Program
SANTA ROSA, Calif. November 22, 2021
Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the fourth fiscal quarter and fiscal year ended October 31, 2021.
"Keysight delivered a record quarter and strong finish to our fiscal year. Despite tight supply conditions, exceptional execution drove all-time high orders, revenue, gross margin, and operating margin," said Ron Nersesian, Keysight's Chairman, President and CEO. "Demand for our first-to-market solutions is strong, resulting in double-digit, year-over-year order growth across all end markets and regions. Our momentum is being fueled by the success of our software-centric solutions strategy as we capitalize on long-term secular growth trends in our markets. We exit this year in a strong position, and expect to continue to deliver sustained, above-market, profitable growth."
Fourth Quarter Financial Summary
- Orders grew 21 percent to reach $1.49 billion, compared with $1.23 billion last year.
- Revenue grew 6 percent to reach $1.29 billion, compared with $1.22 billion last year, or 5 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 $282 million, or $1.52 per share, compared with $217 million, or $1.15 per share, in the fourth quarter of 2020.
- Non-GAAP net income was $338 million, or $1.82 per share, compared with $305 million, or $1.62 per share in the fourth quarter of 2020.
- Cash flow from operations was $368 million, compared with $338 million last year. Free cash flow was $295 million, compared with $308 million in the fourth quarter of 2020.
- Keysight acquired approximately 2.1 million shares in the open market at an average share price of $171.12, for a total consideration of $353 million.
- As of October 31, 2021, cash and cash equivalents totaled $2.05 billion.
Fiscal Year 2021 Financial Summary
- Orders grew 18 percent to reach $5.36 billion, compared with $4.53 billion last year.
- Revenue grew 17 percent and totaled $4.94 billion, compared with $4.22 billion last year, or 15 percent on a core basis.
- GAAP net income was $894 million, or $4.78 per share, compared with $627 million, or $3.31 per share in fiscal 2020.
- Non-GAAP net income was $1.16 billion, or $6.23 per share, compared with $919 million, or $4.85 per share in fiscal year 2020.
- Cash flow from operations was $1.32 billion, compared with $1.02 billion last year. Free cash flow was $1.15 billion, compared with $899 million in fiscal year 2020.
- Keysight acquired approximately 4.4 million shares in the open market at an average share price of $154.29, for a total consideration of $673 million during fiscal year 2021.
- Communications Solutions Group (CSG)
CSG reported revenue of $919 million in the fourth quarter, up 2 percent over last year, driven by strength across the 5G and aerospace, defense and government ecosystems, as well as investment in 400G and 800G R&D.
- Electronic Industrial Solutions Group (EISG)
EISG reported revenue of $375 million in the fourth quarter, up 18 percent over last year, driven by semiconductor measurement solutions and next-generation automotive and energy technologies, with growth across all regions.
Share Repurchase Program
Keysight also announced today that its Board of Directors authorized a new share repurchase program for up to $1.2 billion of its common stock. The new repurchase program is effective immediately and replaces the previously authorized $750 million program from 2020 of which $77 million remained. 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 2022 revenue is expected to be in the range of $1.225 billion to $1.245 billion. Non-GAAP earnings per share for the first fiscal quarter of 2022 are expected to be in the range of $1.50 to $1.56, 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 FY2021 financial results and its first quarter FY2022 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 2021 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 8024718. 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," 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, 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 impacts to the supply chain; government mandates related to pandemic conditions such as Covid-19 and its variants; net zero emissions commitments; changes in the demand for current and new products, technologies, and services; 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 quarterly report on Form 10-Q for the period ended July 31, 2021.
Segment data reflects the results of our reportable segments under our management reporting system. 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:
- Core Revenue
- 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, 2021 and fiscal year 2021. 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 delivers advanced design and validation solutions that help accelerate innovation to connect and secure the world. Keysight's dedication to speed and precision extends to software-driven insights and analytics that bring tomorrow's technology products to market faster across the development lifecycle, in design simulation, prototype validation, automated software testing, manufacturing analysis, and network performance 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 fiscal year 2021. For more information about Keysight Technologies (NYSE: KEYS), visit us at www.keysight.com.
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