Keysight Technologies Reports First Quarter 2016 Results

Board of Directors Authorizes $200 Million Share Repurchase Program

Highlights:

  • GAAP net income of $64 million, or $0.37 per share
  • Non-GAAP net income of $95 million, or $0.55 per share(1)
  • GAAP revenue of $721 million, up 3 percent year-over-year
  • Non-GAAP revenue of $726 million, up 4 percent year-over-year(2)

SANTA ROSA, Calif. — (BUSINESS WIRE) — February 18, 2016 — Keysight Technologies, Inc. (NYSE: KEYS) today reported GAAP revenue of $721 million and non-GAAP revenue of $726 million for the first fiscal quarter ended Jan. 31, 2016, with non-GAAP revenue up 4 percent, or down 1 percent on a core basis, which excludes the impact of currency and acquisitions, compared with one year ago.(2)

“Keysight delivered strong first quarter results with both revenue and earnings above the midpoint of our guidance. Our results this quarter were driven by our operational discipline and continued execution on our key initiatives to transform our business and create value for our customers, partners and shareholders,” said Ron Nersesian, Keysight president and CEO.

“While macroeconomic headwinds continue to impact our near-term market outlook, we are building momentum with our new leading-edge technologies and solutions and remain committed to investing in our business and delivering solid profitability in-line with our operating model. The share repurchase program we are announcing today reflects our confidence in our long-term market opportunities and strong cash flow generation, and demonstrates our commitment to create value for shareholders,” added Nersesian.

Compared with the first quarter of last year, communications market revenue grew 8 percent, driven by our acquisition of Anite and increased 5G sales, which was partially offset by cautious capital spending sentiment. Aerospace & defense market revenue declined 1 percent as a strong increase in sales to prime contractor customers in North America was offset by continued slower demand in parts of Europe and Asia. Industrial, computer and semiconductor market revenue grew 3 percent driven by strength in computer and semiconductor markets. From a geographic perspective, total revenue grew year-over-year in the Americas, Europe and most notably in Japan, where revenue increased 13 percent.

First quarter GAAP gross margin of 54.0 percent decreased 0.6 percentage points year-over-year. Non-GAAP gross margin of 56.6 percent increased 1.0 percentage points as the mix of R&D and software revenue improved.(1)

First quarter GAAP operating income was $98 million, or 13.6 percent of revenue and non-GAAP operating income was $129 million, or 17.8 percent of revenue.(1)

First-quarter GAAP net income was $64 million, or $0.37 per share.(1) First-quarter non-GAAP net income was $95 million, or $0.55 per share,(1) which excludes other net adjustments of $31 million.

Second Fiscal Quarter Outlook

Keysight provides guidance based on current market conditions and expectations.

Keysight’s second-quarter 2016 non-GAAP revenue is expected to be in the range of $695 million to $735 million.(2) Second-quarter non-GAAP earnings per share are expected to be in the range of $0.48 to $0.62.(3)

Share Repurchase Authorization

Keysight’s Board of Directors authorized a new share repurchase program for up to $200 million of its common stock. The new repurchase program goes into effect immediately and 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 program may be commenced, suspended or discontinued at any time at the company’s discretion.

Webcast

Keysight’s management will present more details about its first-quarter FY2016 financial results and its second-quarter FY2016 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 and select Q1 2016 Keysight Technologies Inc. Earnings Conference Call in the Investor News & Events – Upcoming Events section at www.investor.keysight.com. The webcast will remain on the company site for 90 days.

A telephone replay of the conference call will be available at approximately 4:30 p.m. PT, Feb. 18 through Feb. 22 by dialing +1 855 859 2056 (or +1 404 537 3406 from outside the U.S.) and entering pass code 9907493.

About Keysight Technologies

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