Q1 results above high end of guidance, robust
innovation pipeline drives return to growth
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
- Revenue was $1.30 billion, compared with $1.26 billion in the
first quarter of 2024.
- GAAP net income was $169 million, or $0.97 per share, compared
with $172 million, or $0.98 per share, in the first quarter of
2024.
- Non-GAAP net income was $317 million, or $1.82 per share,
compared with $286 million, or $1.63 per share in the first quarter
of 2024.
- Cash flow from operations was $378 million, compared to $328
million last year. Free cash flow was $346 million, compared to
$281 million in the first quarter of 2024.
- As of January 31, 2025, cash and cash equivalents totaled $2.06
billion.
Reporting Segments
- Communications Solutions Group (CSG)
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.
- Electronic Industrial Solutions Group (EISG)
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.com under 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:
- Non-GAAP Net Income/Earnings
- Non-GAAP Net Income per share/Earnings per share
- Free Cash Flow
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 Newsroom and
www.keysight.com.
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
19
23
Interest expense
(20
)
(20
)
Other income (expense), net
(18
)
5
Income before taxes
199
229
Provision for income taxes
30
57
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
Page 1
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
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
90
Operating lease liabilities
43
43
Other accrued liabilities
199
125
Total current liabilities
1,509
1,427
Long-term debt
1,790
1,790
Retirement and post-retirement benefits
79
81
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
2
2
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
Page 2
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
31
30
Amortization
35
38
Share-based compensation
62
48
Deferred tax expense (benefit)
(10
)
6
Excess and obsolete inventory-related charges
9
8
Unrealized loss (gain) on equity and other investments
(37
)
(4
)
Other non-cash expense (income), net
1
—
Changes in assets and liabilities, net of effects of businesses
acquired: Accounts receivable
53
124
Inventory
(26
)
(42
)
Accounts payable
(16
)
1
Employee compensation and benefits
(38
)
(74
)
Deferred revenue
43
27
Income taxes payable
34
38
Other assets and liabilities
68
(44
)
Net cash provided by operating activities(a)
378
328
Cash flows from investing activities: Investments in
property, plant and equipment
(32
)
(47
)
Acquisition of businesses and intangible assets, net of cash
acquired
—
(478
)
Other investing activities
(1
)
14
Net cash used in investing activities
(33
)
(511
)
Cash flows from financing activities: Proceeds from issuance
of common stock under employee stock plans
31
32
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
)
(1
)
Net cash used in financing activities
(74
)
(548
)
Effect of exchange rate movements
(8
)
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
(a) Cash payments included in operating activities:
Interest payments
$
—
$
—
Income tax paid, net
$
9
$
12
Page 3
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
33
0.19
38
0.21
Share-based compensation
62
0.36
50
0.29
Acquisition and integration costs
98
0.56
13
0.08
Restructuring and others
(24
)
(0.14
)
15
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
(a) For the three months ended January 31, 2025 and
2024, management used a non-GAAP effective tax rate of 14% and 17%,
respectively. Please refer to the last page for details on
the use of non-GAAP financial measures. Page 4
KEYSIGHT TECHNOLOGIES, INC. SEGMENT RESULTS
INFORMATION (In millions, except where noted)
(Unaudited) PRELIMINARY Communications
Solutions Group Percent Q1'25 Q1'24
Inc/(Dec) Revenue
$
883
$
839
5%
Gross margin, %
68
%
68
%
Income from operations
$
240
$
226
Operating margin, %
27
%
27
%
Electronic Industrial Solutions Group
Percent Q1'25 Q1'24 Inc/(Dec) Revenue
$
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. Page 5
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. Page 6
KEYSIGHT TECHNOLOGIES, INC. REVENUE BY END MARKETS
(In millions) (Unaudited) PRELIMINARY
Percent Q1'25 Q1'24 Inc/(Dec)
Aerospace, Defense and Government
$
311
$
295
5%
Commercial Communications
572
544
5%
Electronic Industrial
415
420
(1)%
Total Revenue
$
1,298
$
1,259
3%
Page 7
Non-GAAP Financial Measures
Management uses both GAAP and non-GAAP financial measures to
analyze and assess the overall performance of the business, to make
operating decisions and to forecast and plan for future periods. We
believe that our investors benefit from seeing our results “through
the eyes of management” in addition to seeing our GAAP results.
This information enhances investors’ understanding of the
continuing performance of our business and facilitates comparison
of performance to our historical and future periods. Our
non-GAAP financial 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 financial
information prepared in accordance with GAAP. The discussion below
presents information about each of the non-GAAP financial measures
and the company’s reasons for including or excluding certain
categories of income or expenses from our non-GAAP results. In
future periods, we may exclude such items and may incur income and
expenses similar to these excluded items. Accordingly, adjustments
for these items and other similar items in our non-GAAP
presentation should not be interpreted as implying that these items
are non-recurring, infrequent or unusual. Core Revenue is
revenue excluding the impact of foreign currency changes and
revenue associated with acquisitions or divestitures completed
within the last twelve months. We exclude the impact of foreign
currency changes as currency rates can fluctuate based on factors
that are not within our control and can obscure revenue growth
trends. As the nature, size and number of acquisitions can vary
significantly from period to period and as compared to our peers,
we exclude revenue associated with recently acquired businesses to
facilitate comparisons of revenue growth and analysis of underlying
business trends. Free cash flow includes cash provided by
operating activities adjusted for net investments in property,
plant & equipment. Non-GAAP Income from Operations,
Non-GAAP Net Income and Non-GAAP Diluted EPS may include the
following types of adjustments:
Acquisition-related Items: We exclude the impact of certain items
recorded in connection with business combinations from our non-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 amortization
of acquired intangible assets and amortization of items associated
with fair value purchase accounting adjustments. We also exclude
other acquisition and integration costs associated with business
acquisitions that are not normal recurring operating expenses 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 performance.
Share-based Compensation Expense: We exclude share-based
compensation expense from our non-GAAP financial measures because
share-based compensation expense can vary significantly from period
to period based on the company’s share price, as well as the
timing, size and nature of equity awards granted. Management
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 also exclude share-based
compensation expense in determining their non-GAAP financial
measures.
Restructuring and others: We exclude incremental expenses
associated with restructuring initiatives including those of
acquired entities, usually aimed at material changes in the
business 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
period to period based on the timing, size and nature of
restructuring plans; therefore, we do 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
financial measures. Such items are evaluated on an individual
basis, based on both quantitative and qualitative factors and
generally represent items that we do not anticipate occurring as
part of our normal business. While not all-inclusive, examples of
such items would include net unrealized gains on equity investments
still held, significant non-recurring events like realized gains or
losses associated with our employee benefit plans, costs and
recoveries related to unusual events, gain on sale of
assets/divestitures, adjustment attributable to non-controlling
interest, etc. We believe that these costs do not reflect expected
future operating expenses and do not contribute to a meaningful
evaluation of the company’s current operating performance or
comparisons to our operating performance in other periods.
Estimated Tax Rate: We utilize a consistent methodology for
long-term projected non-GAAP tax rate. When projecting this
long-term rate, we exclude any 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 current long-term
projections, current tax structure and other factors, such as
existing tax positions in various jurisdictions and key tax
holidays in major jurisdictions where Keysight operates. This tax
rate could change in the future for a variety of reasons, including
but not limited to significant changes in geographic earnings mix
including acquisition activity, or fundamental tax law changes in
major jurisdictions where Keysight operates. The above reasons also
limit our ability to reasonably estimate the future GAAP tax rate
and provide a reconciliation of the expected non-GAAP earnings per
share for the second quarter of fiscal 2025 to the GAAP equivalent.
Management recognizes these items can have a material impact
on our cash flows and/or our net income. Our GAAP financial
statements, including our Condensed Consolidated Statement of Cash
Flows, portray those effects. Although we believe it is useful for
investors to see core performance free of special items, investors
should understand that the excluded costs are actual expenses that
may impact the cash available to us for other uses. To gain a
complete picture of all effects on the company’s profit and loss
from any and all events, management 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 critical one, of the company’s performance. Page 8
Source: IR-KEYS
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version on businesswire.com: https://www.businesswire.com/news/home/20250225189884/en/
INVESTOR CONTACT: Harry Blount +1 707-577-2349
harry.blount@keysight.com
MEDIA CONTACT: Andrea Mueller + 1 408-236-1541
andrea.mueller@keysight.com
Keysight Technologies (NYSE:KEYS)
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