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Sequential revenue growth drives strong operating margin and cash flow

SANTA ROSA, Calif.(BUSINESS WIRE)$KEYS #earningsKeysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the third fiscal quarter of 2020 ended July 31, 2020.

Keysight delivered stronger-than-expected third quarter results as we ramped production capacity back to nearly 100% by quarter-end. Our execution and financial performance demonstrated the exceptional resilience of our business for the second quarter in a row, even with continued macro challenges. The Keysight team rapidly adapted to a new operating environment, while delivering on our commitments to customers, partners, and shareholders, said Ron Nersesian, Keysights Chairman, President and CEO. Despite near-term uncertainty, we expect to achieve year-over-year revenue and earnings growth in the fourth quarter.

Third Quarter Financial Summary

Reporting Segments

CSG reported third quarter revenue of $760 million, down 4 percent, due to a challenging macroeconomic environment. From a demand perspective, investment continued in next-generation technologies such as 5G, with growth in 5G network rollouts and commercial launches, as well as 400G-related data center investment. Demand remained strong in the U.S. for aerospace defense and government solutions.

EISG reported revenue of $251 million in the third quarter, down 15 percent, due to a challenging macroeconomic environment. Weakness in general electronics and automotive markets was slightly offset by continued investment in advanced semiconductor process node technologies.

Outlook

Keysights fourth fiscal quarter of 2020 revenue is expected to be in the range of $1,170 million to $1,190 million. Non-GAAP earnings per share for the fourth fiscal quarter of 2020 are expected to be in the range of $1.42 to $1.48, which 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 Use of Non-GAAP Financial Measures below.

Webcast

Keysights management will present more details about its third quarter FY2020 financial results and its fourth quarter FY2020 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 http://www.investor.keysight.com under the Upcoming Events section and select Q3 2020 Keysight Technologies Inc. Earnings Conference Call to participate or dial +1 833-968-2178 (U.S. only) or +1 778-560-2837 (International) and enter passcode 8298476. 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. These forward-looking statements involve risks and uncertainties that could significantly affect the expected results and are based on certain key assumptions of Keysights 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, information and future guidance on the companys goals, priorities, revenues, demand, financial condition, earnings, impacts of US export control regulations, the expected growth of the markets the company sells into, operations, operating earnings, and tax rates that involve risks and uncertainties that could cause Keysights results to differ materially from managements current expectations. Such risks and uncertainties include, but are not limited to, government mandated shutdowns, disruption in the supply chain causing delays in our ability to manufacture or deliver products and solutions to customers, the impact of social distancing requirements, slowdown in customer purchasing, order cancelations, and labor shortages caused by pandemic conditions such as the novel coronavirus (COVID-19); changes in the demand for current and new products, technologies, and services; customer purchasing decisions and timing; the risk that we are not able to realize the savings or benefits expected from integration or restructuring activities; increased trade tension and tightening of export control regulations. The words estimate, expect, intend, will, should, forecast, and similar expressions, as they relate to the company, are intended to identify forward-looking statements.

In addition to the risks above, other risks that Keysight faces include those detailed in Keysights filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended Oct. 31, 2019 and Keysights quarterly report on Form 10-Q for the period ended April 30, 2020.

Segment Data

Segment data reflects the results of our reportable segments under our management reporting system. Segment revenue excludes the impact of fair value adjustments to acquisition-related deferred revenue balances. Segment data are provided on page 6 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 managements view of performance, including:

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 July 31, 2020. Following the reconciliations is a discussion of the items adjusted from our non-GAAP financial measures and the companys reasons for including or excluding certain categories of income or expenses from our non-GAAP results.

About Keysight Technologies

Keysight Technologies, Inc. (NYSE: KEYS) is a leading technology company that helps enterprises, service providers and governments accelerate innovation to connect and secure the world. Keysights solutions optimize networks and bring electronic products to market faster and at a lower cost with offerings from design simulation, to prototype validation, to manufacturing test, to optimization in networks and cloud environments. Customers span the worldwide communications ecosystem, aerospace and defense, automotive, energy, semiconductor and general electronics end markets. Keysight generated revenues of $4.3B in fiscal year 2019. More information is available at http://www.keysight.com.

Additional information about Keysight Technologies is available in the newsroom at http://www.keysight.com/go/news and on Facebook, LinkedIn, Twitter and YouTube.

Source: IR-KEYS

Three months ended

July 31,

Percent

2020

2019

Inc/(Dec)

$

1,067

$

1,110

(4)%

$

1,011

$

1,087

(7)%

405

444

(9)%

169

168

1%

259

281

(8)%

(4)

(3)

29%

829

890

(7)%

182

197

(8)%

1

7

(85)%

(20)

(20)

(3)%

22

15

37%

185

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Keysight Technologies Reports Third Quarter 2020 Results - Web Hosting | Cloud Computing | Datacenter | Domain News - Daily Host News