Keysight Technologies reports second quarter 2020 results

Keysight Technologies, Inc. has reported financial results for the second fiscal quarter of 2020 ended April 30, 2020.

“Keysight delivered strong operating margin and free cash flow due to solid execution in a challenging environment. While supply chain disruptions dampened our revenue performance during the second half of the quarter, which includes April, our results demonstrated the resiliency of our operating model and durable cash generation as we reached a record cash balance of $1.8 billion,” said Ron Nersesian, Keysight’s Chairman, President and CEO. “Keysight is committed to the health and safety of our employees, customers and suppliers and acted quickly to implement risk mitigation measures in response to the pandemic. After site closures and limited capacity in March and April, we are pleased to announce that we are re-opening sites and ramping our production, which we expect to be back to 100% capacity by the end of the third quarter.”

Second Quarter Financial Summary

• Orders were $1,089 million, compared with $1,121 million last year, a decrease of 3%.GAAP revenue was $895 million, compared with $1,090 million last year. Non-GAAP revenue decreased 18 percent on a core basis, which excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months.
• GAAP revenue was $895 million, compared with $1,090 million last year. Non-GAAP revenue decreased 18 percent on a core basis, which excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months.
• GAAP net income was $71 million, or $0.37 per share, compared with GAAP net income of $153 million, or $0.80 per share, in the second quarter of 2019.
• Non-GAAP net income was $148 million, or $0.78 per share, compared with $233 million, or $1.22 per share in the second quarter of 2019.
• As of April 30, 2020, cash and cash equivalents totaled $1.841 billion.

Reporting Segments

• Communications Solutions Group (CSG)
• CSG reported second quarter revenue of $653 million, down 18 percent, due to supply chain disruption related to the COVID-19 pandemic. From a demand perspective, investment continued in next-generation technologies such as 5G and 400G driving record 5G orders in the quarter; demand was strong in the U.S. for Aerospace Defense and Government solutions.
• Electronic Industrial Solutions Group (EISG)
• EISG reported revenue of $242 million in the second quarter, down 19 percent, due to supply chain disruption related to the COVID-19 pandemic. General electronics, education and automotive markets were weak, slightly offset by continued foundry investment in advanced process node technologies.

Outlook

After site closures resulted in limited production capacity in March and April, Keysight’s production operations and those of its suppliers are now ramping capacity.  Continued progress is expected in the third quarter with third-quarter revenue, operating margin and earnings expected to be in line with, or better than, the most recent quarter.  These expectations are based on the order funnel and a strong backlog position, and assume limited incremental supply chain constraints or disruption from additional shutdowns or a second wave of the pandemic.

—CT Bureau