Keysight Technologies Reports Fourth Quarter and Fiscal 2016 Results

Highlights:

  • Q4 revenue of $751 million; GAAP EPS of $0.53; non-GAAP EPS of $0.64
  • Fiscal 2016 revenue of $2.9 billion; GAAP EPS of $1.95; non-GAAP EPS of $2.43

SANTA ROSA, Calif. — (BUSINESS WIRE) — November 17, 2016 — Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the fourth fiscal quarter and fiscal year ended Oct. 31, 2016.

“The fourth quarter was a strong close to the year with revenue coming in at the high-end of our guidance as customers increased investments in next-generation technologies,” said Ron Nersesian, Keysight president and CEO.

“We are pleased with our performance throughout the fiscal year as we navigated a challenging market environment and continued to execute our strategy to transform Keysight for long-term growth. We increased our investments in research and development, while at the same time generating solid profitability and cash flow. We believe we are delivering above-market results and the strategic actions we have taken are strengthening our market position,” Nersesian added.

Fourth Quarter Financial Summary

  • Revenue was $751 million, compared with $750 million on a GAAP basis and $756 million on a non-GAAP basis in the fourth quarter of 2015. Non-GAAP core revenue, which excludes the impact of currency and revenue from acquisitions completed within the last twelve months, declined 2 percent year-over-year.
  • GAAP operating margin was 14 percent, compared with 15 percent in the fourth quarter of 2015. Non-GAAP operating margin was 19 percent, compared with 21 percent in the fourth quarter of 2015.
  • GAAP net income was $92 million, or $0.53 per share, compared with $277 million, or $1.61 per share in the fourth quarter of 2015, which included the recognition of a $201 million tax benefit. Non-GAAP net income was $110 million, or $0.64 per share, compared with $122 million, or $0.71 per share in the fourth quarter of 2015.
  • As of Oct. 31, 2016, cash and cash equivalents totaled $783 million.

Fiscal Year 2016 Financial Summary

  • Revenue grew 2 percent over last year and totaled $2.9 billion.
  • GAAP operating margin was 14 percent, compared with 15 percent in fiscal 2015. Non-GAAP operating margin was 19 percent, compared with 20 percent in fiscal 2015.
  • GAAP net income was $335 million, or $1.95 per share, compared with $513 million, or $3.00 per share in fiscal 2015, which included the recognition of a $213 million tax benefit. Non-GAAP net income was $419 million, or $2.43 per share, compared with $432 million, or $2.52 per share in fiscal 2015.

Reconciliations between GAAP and non-GAAP information are contained in the attached tables and discussed in the section titled “Non-GAAP Measures.”

Reporting Segments

  • Communications Solutions Group (CSG)
    • CSG revenue was $442 million in the fourth quarter, a 2 percent decline when compared with $453 million in prior year fourth quarter. Growth in our commercial communications end market was offset by a decline in aerospace, defense and government sales in Russia and China.
    • For fiscal 2016, CSG generated $1.8 billion in revenue, compared with revenue of $1.7 billion in fiscal 2015.
  • Electronic Industrial Solutions Group (EISG)
    • EISG revenue grew 1 percent in the fourth quarter to $201 million when compared with $200 million in the fourth quarter of 2015, driven by strong growth for leading-edge semiconductor process technologies and automotive applications, partially offset by ongoing weakness for general electronics solutions, particularly in Europe.
    • For fiscal 2016, EISG generated $776 million in revenue, compared with revenue of $758 million in fiscal 2015.
  • Services Solutions Group (SSG)
    • SSG revenue in the fourth quarter grew 5 percent year-over-year to reach a new record of $108 million which compares with $103 million in the fourth quarter of 2015. SSG revenue growth was driven by an increase in remarketed solution sales.
    • For fiscal 2016, SSG generated $402 million in revenue, compared with revenue of $401 million in fiscal 2015.

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