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Keysight (KEYS) Q4 Earnings & Revenues Beat Estimates, Up Y/Y

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Keysight Technologies KEYS reported fourth-quarter fiscal 2021 non-GAAP earnings of $1.82 per share, outpacing the Zacks Consensus Estimate by 10.3% and increasing 12.3% year over year.

Revenues increased 6% year over year to $1.29 billion, surpassing the Zacks Consensus Estimate by 1.4%. The upside can be attributed to double-digit growth across segments as well as geographies served.

Core revenues (excluding the impact of currency and revenues from acquisitions in a year’s time) rose 5% on a year-over-year basis.

Keysight shares have returned 45.3% year to date, underperforming the Zacks Electronics- Measuring Instruments industry’s return of 169.5% but outperforming the Computer & Technology sector’s return of 28.5%.

Top Line in Detail

Orders increased 21% on a year-over-year basis to $1.49 billion in the reported quarter.

Keysight Technologies Inc. Price, Consensus and EPS Surprise

Keysight Technologies Inc. Price, Consensus and EPS Surprise
Keysight Technologies Inc. Price, Consensus and EPS Surprise

Keysight Technologies Inc. price-consensus-eps-surprise-chart | Keysight Technologies Inc. Quote

Communications Solutions Group (“CSG”) revenues were $919 million, up 2% year over year. The increase was driven by continued strength across the 5G and aerospace, defense and government end-markets, as well as investment in 400G and 800G research & development.

Electronic Industrial Solutions Group (“EISG”) revenues increased 18% year over year to $375 million. Solid demand for the company’s semiconductor measurement solutions, and next-generation automotive and energy technologies drove top-line growth.

In terms of end markets, Aerospace, Defense and Government revenues were unchanged on a year-over-year basis at $297 million. Commercial Communications (“CC”) climbed 3% year over year to $622 million. Electronic Industrial (“EI”) revenues were $375 million, up 18% year over year.

In terms of geography, revenues from Americas were $546 million, up 9% (up 8% on a core basis) year over year, driven by strength in EI and CC.

Revenues from Europe increased 4% (up 3% on a core basis) on a year-over-year basis to $193 million.

Revenues from Asia Pacific increased 4% (up 4% on a core basis) on a year-over-year basis to $555 million.

Operating Details

Keysight reported non-GAAP gross margin of 66% that expanded 10 basis points (bps) in the fiscal fourth quarter. CSG gross margin of 66.1% contracted 20 bps while EISG’s gross margin of 65.7% expanded 100 bps on a year-over-year basis.

Non-GAAP operating expenses were $456 million in the fiscal fourth quarter of 2021, up 2.2% year over year.

Non-GAAP operating margin expanded 140 bps to 30.7%. While CSG operating margin contracted 50 bps, EISG’s operating margin expanded 570 bps on a year-over-year basis.

Balance Sheet & Cash Flow

As of Oct 31, 2021, Keysight had cash & cash equivalents of $2.05 billion compared with $2.15 billion as of Jul 31, 2021.

Long-term debt, as of Oct 31, was $1.79 billion, unchanged from Jul 31.

Cash flow from operations in the reported quarter was $368 million compared with $257 million reported in the prior quarter.

In fourth-quarter fiscal 2021, Keysight acquired approximately 4.4 million shares on the open market at an average price of $154.29, totaling $673 million.

Guidance

For first-quarter fiscal 2022, Keysight anticipates revenues in the range of $1.225-$1.245 billion. Non-GAAP earnings are projected between $1.50 and $1.56 per share.

Zacks Rank & Upcoming Earnings to Watch

Keysight currently has a Zacks Rank #3 (Hold).

Investors interested in the Computer & Technology sector are eagerly awaiting earnings releases from players like Hewlett Packard HPE, salesforce CRM, and Jabil JBL.

Hewlett Packard is set to release its fourth-quarter fiscal 2021 results on Nov 30. The Zacks Consensus Estimate for earnings is pegged at 49 cents per share, unchanged over the past 30 days. Hewlett Packard sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hewlett Packard shares have returned 24.6% year to date compared with the Zacks Computer-Integrated Systems industry’s growth of 0.4% and the Computer & Technology sector’s return of 28.5%.

salesforce, a Zacks Rank #2 (Buy) stock, is scheduled to release third-quarter fiscal 2022 results on Nov 30. The Zacks Consensus Estimate for earnings stands at 92 cents per share, unchanged over the past 30 days.

salesforce shares have returned 33.4% year to date, underperforming the Zacks Computer-Software industry’s rise of 45%. However, the stock has outperformed the Computer & Technology sector’s return of 28.5% year to date.

Jabil is likely to release first-quarter fiscal 2022 results on Dec 16. The Zacks Consensus Estimate for earnings stands at $1.80 per share, unchanged over the past 30 days.

Jabil shares have returned 46.4% year to date against the Zacks Electronics - Manufacturing Services industry’s rally of 32.2%. The stock has outperformed the Computer & Technology sector’s return of 28.5% year to date.


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