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

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-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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