Keysight Technologies : First Quarter 2025 Press Release

Published: 2025-02-25 16:12:12 ET KEYS

Keysight Technologies Reports First Quarter 2025 Results

Q1 results above high end of guidance, robust innovation pipeline drives return to growth

SANTA ROSA, Calif., February 25, 2025 - Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the first fiscal quarter ended January 31, 2025.

"Keysight delivered strong first quarter results, reflecting year-over-year growth in revenues and orders. The demand environment remains consistent with our view of a gradual recovery in 2025," said Satish Dhanasekaran, Keysight's President and CEO. "The world's most technologically advanced companies trust Keysight to deliver critical enabling technologies across a broad spectrum of next generation use cases and we are well-positioned to create long-term value for our stakeholders."

First Quarter Financial Summary

Reporting Segments

CSG reported revenue of $883 million in the first quarter, up 5 percent from the prior year, reflecting a 5 percent growth in commercial communications and 5 percent growth in aerospace, defense, and government.

EISG reported revenue of $415 million in the first quarter, down 1 percent from the prior year, reflecting mixed demand across end markets.

Outlook

Keysight's second fiscal quarter of 2025 revenue is expected to be in the range of $1.27 billion to $1.29 billion. Non- GAAP earnings per share for the second fiscal quarter of 2025 are expected to be in the range of $1.61 to $1.67, 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 first quarter FY2025 financial results and its second quarter FY2025 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.comunder the "Upcoming Events" section and select "Q1 FY25 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 992044). 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, 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:

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 the three months ended January 31, 2025. 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 Newsroomand www.keysight.com.

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INVESTOR CONTACT: Harry Blount

+1 707-577-2349

[email protected]

MEDIA CONTACT:

Andrea Mueller

Source: IR-KEYS

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except per share data)

(Unaudited)

PRELIMINARY

Three months ended

January 31,

2025

2024

Orders

1,263

1,220

Revenue

1,298

1,259

Costs and expenses:

Cost of products and services

478

446

Research and development

249

232

Selling, general and administrative

361

362

Other operating expense (income), net

(8)

(2)

Total costs and expenses

1,080

1,038

Income from operations

218

221

Interest income

Interest expense

(20)

Other income (expense), net

(18)

Income before taxes

199

229

Provision for income taxes

Net income

169

172

Net income per share:

Basic

0.97

0.98

Diluted

0.97

0.98

Weighted average shares used in computing net income per share:

Basic

173

175

Diluted

174

176

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET (In millions, except par value and share data)

(Unaudited)

PRELIMINARY

January 31, 2025

October 31, 2024

ASSETS

Current assets:

Cash and cash equivalents

2,060

1,796

Accounts receivable, net

797

857

Inventory

1,039

1,022

Other current assets

560

582

Total current assets

4,456

4,257

Property, plant and equipment, net

764

774

Operating lease right-of-use assets

224

234

Goodwill

2,354

2,388

Other intangible assets, net

556

607

Long-term investments

147

110

Long-term deferred tax assets

365

378

Other assets

521

Total assets

9,387

9,269

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

289

313

Employee compensation and benefits

253

295

Deferred revenue

594

561

Income and other taxes payable

131

Operating lease liabilities

Other accrued liabilities

199

125

Total current liabilities

1,509

1,427

Long-term debt

1,790

Retirement and post-retirement benefits

Long-term deferred revenue

209

206

Long-term operating lease liabilities

187

197

Other long-term liabilities

426

463

Total liabilities

4,200

4,164

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; 202 million and 201

million shares issued, respectively

Treasury stock, at cost; 28.9 million shares and 28.4 million shares, respectively

(3,497)

(3,422)

Additional paid-in-capital

2,731

2,664

Retained earnings

6,394

6,225

Accumulated other comprehensive loss

(443)

(364)

Total stockholders' equity

5,187

5,105

Total liabilities and equity

9,387

9,269

KEYSIGHT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions) (Unaudited)

PRELIMINARY

Three months ended

January 31,

2025

2024

Cash flows from operating activities:

Net income

169

172

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

Depreciation

Amortization

Share-based compensation

Deferred tax expense (benefit)

(10)

Excess and obsolete inventory-related charges

Unrealized loss (gain) on equity and other investments

(37)

(4)

Other non-cash expenses (income), net

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

Accounts receivable

124

Inventory

(26)

(42)

Accounts payable

(16)

Employee compensation and benefits

(38)

(74)

Deferred revenue

Income taxes payable

Other assets and liabilities

(44)

Net cash provided by operating activities(a)

378

328

Cash flows from investing activities:

Investments in property, plant and equipment

(32)

(47)

Acquisitions of businesses and intangible assets, net of cash acquired

(478)

Other investing activities

(1)

Net cash used in investing activities

(33)

(511)

Cash flows from financing activities:

Proceeds from issuance of common stock under employee stock plans

Payment of taxes related to net share settlement of equity awards

(29)

(28)

Acquisition of non-controlling interests

(458)

Treasury stock repurchases

(75)

(93)

Other financing activities

(1)

Net cash used in financing activities

(74)

(548)

Effect of exchange rate movements

(8)

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

263

(723)

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

1,814

2,488

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

2,077

1,765

Interest payments

Income tax paid, net

KEYSIGHT TECHNOLOGIES, INC.

NET INCOME AND DILUTED EPS RECONCILIATION

(In millions, except per share data)

(Unaudited)

PRELIMINARY

Three months ended

January 31,

2025

2024

Net Income

Diluted EPS

Net Income

Diluted EPS

GAAP Net income

169

0.97

172

0.98

Non-GAAP adjustments:

Amortization of acquisition-related balances

0.19

0.21

Share-based compensation

0.36

0.29

Acquisition and integration costs

0.56

0.08

Restructuring and others

(24)

(0.14)

0.08

Adjustment for taxes(a)

(21)

(0.12)

(2)

(0.01)

Non-GAAP Net income

317

1.82

286

1.63

Weighted average shares outstanding - diluted

174

176

Please refer to the last page for details on the use of non-GAAP financial measures.

KEYSIGHT TECHNOLOGIES, INC. SEGMENT RESULTS INFORMATION (In millions, except where noted) (Unaudited)

PRELIMINARY

Communications Solutions Group

Percent

Revenue

Q1'25

Q1'24

Inc/(Dec)

883

839

Gross margin, %

68%

Income from operations

240

226

Operating margin, %

27%

Electronic Industrial Solutions Group

Percent

Revenue

Q1'25

Q1'24

Inc/(Dec)

415

420

(1)%

Gross margin, %

61%

65%

Income from operations

114

129

Operating margin, %

27%

31%

Segment revenue and income from operations are consistent with the respective non-GAAP financial measures as discussed on last page.

KEYSIGHT TECHNOLOGIES, INC.

FREE CASH FLOW

(In millions) (Unaudited)

PRELIMINARY

Three months ended

January 31,

2025

2024

Net cash provided by operating activities

378

328

Less: Investments in property, plant and equipment

(32)

(47)

Free cash flow

346

281

Please refer to the last page for details on the use of non-GAAP financial measures.

KEYSIGHT TECHNOLOGIES, INC.

REVENUE BY END MARKETS

(In millions) (Unaudited)

PRELIMINARY

Percent

Q1'25

Q1'24

Inc/(Dec)

Aerospace, Defense and Government

311

295

Commercial Communications

572

544

Electronic Industrial

415

420

(1)%

Total Revenue

1,298

1,259

Disclaimer

Keysight Technologies Inc. published this content on February 25, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 25, 2025 at 21:11:12.923.