Keysight provides guidance based on current market conditions and expectations.
Keysight’s fourth quarter 2016 revenue is expected to be in the range of $715 million to $755 million. Fourth quarter non-GAAP earnings per share are expected to be in the range of $0.57 to $0.71. Non-GAAP earnings per share as projected for the fourth quarter of fiscal year 2016 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 "Non-GAAP Measures" below.
Keysight’s management will present more details about its third quarter FY2016 financial results and its fourth 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 to the call under the “ Upcoming Events” section and select " Q3 2016 Keysight Technologies Inc. Earnings Conference Call” to participate. 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, Aug. 17 through Aug. 24 by dialing +1 855-859-2056 (or +1 404-537-3406 from outside the U.S.) and entering pass code 43627647.
This news release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements contained herein include, but are not limited to, information regarding Keysight’s future revenues, earnings and profitability; the future demand for the company’s products and services; and customer expectations. These forward-looking statements 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, unforeseen changes in the strength of our customers’ businesses; unforeseen changes in the demand for current and new products, technologies, and services; customer purchasing decisions and timing, and the risk that we are not able to realize the savings or benefits expected from integration and restructuring activities.
In addition, other risks that Keysight faces include those detailed in Keysight’s filings with the Securities and Exchange Commission, including our Form 10-Q for the fiscal quarter ended April 30, 2016. Forward-looking statements are based on the beliefs and assumptions of Keysight’s management and on currently available information. Keysight undertakes no responsibility to publicly update or revise any forward-looking statement.
Keysight uses a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. The definitions of these non-GAAP financial measures may differ from similarly titled measures used by others, and such non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. Keysight generally uses non-GAAP financial measures to facilitate management’s comparisons to historic operating results, to competitors’ operating results and to guidance provided to investors. In addition, Keysight believes that the use of these non-GAAP financial measures provides greater transparency to investors of information used by management in its financial and operational decision-making.
Non-GAAP revenue for Q3 FY16 and as projected for Q4 FY16 excludes the impact of fair value adjustment to acquisition-related deferred revenue balances. Core revenue is defined as non-GAAP revenue excluding the impact of currency and revenue from acquisitions until the first anniversary of the acquisition closing date. Reconciliations between GAAP revenue, non-GAAP revenue and core revenue are provided on page 5 of the attached tables.
Segment data reflect the results of our reportable segments under its management reporting system, which are not necessarily in conformity with GAAP financial measures. Segment revenue and income from operations are consistent with the non-GAAP measure as described below. Segment data are provided on page 8 of the attached tables, along with additional information regarding the use of this data.
Non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share and non-GAAP earnings per share as projected for Q4 FY16 exclude primarily the impacts of share-based compensation, restructuring and related costs, separation and related costs, acquisition and integration costs, acquisition-related fair value adjustments, asset impairments and non-cash intangible amortization. Keysight also excludes 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. Earnings per share is based on diluted shares. The reconciliation between non-GAAP operating margin and GAAP operating margin is set forth on page 6, and the reconciliation between non-GAAP net income and GAAP net income is set forth on page 7 of the attached tables, along with additional information regarding the use of these non-GAAP measures.
Keysight is utilizing a fixed long-term projected non-GAAP tax rate.
When projecting this long-term rate, Keysight excludes 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, Keysight evaluates its
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.