Slide 1: Keysight Technologies Q2 Fiscal Year 2023 Results
Keysight Technologies Q2 Fiscal Year 2023 Results May 16, 2023
Slide 2: Safe Harbor
Safe Harbor This communication contains forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created therein. Statements preceded by, followed by, or that
Slide 3: Q2'23 Highlights
Q2’23 Highlights • Record Q2 revenue of $1.39B at high end of guidance range; up 3% y/y, 5% on a core* basis Strong second quarter financial results cap off a 1 • Record gross margin* of 67%, operating margin* of 30%, and record FCF* of $370M record first half performance • Non-GAAP EPS of $2.12 gre
Slide 4: Q2'23 Non-GAAP Financial Highlights
Q2’23 Non-GAAP Financial Highlights Orders Revenue Operating Margin EPS $1.319B $1.390B 30.4% $2.12 -10%y/y (-8% core*) +3%y/y (+5% core*) +160 basis points y/y +16%y/y * Core growth excludes the impact of currency, acquisitions or divestitures closed in last twelve months, reconciliations included.
Slide 5: Revenue by Segment & by Region
Revenue by Segment & by Region Q2'23 Revenue: $1.390B 5
Slide 6: Revenue Trend by Region
Revenue Trend by Region -8% y/y (-9% core*): Soft revenue in CC, +5% y/y (+9% core*): Revenue growth in +13% y/y (+18% core*): EI and ADG ADG, and EI; order strength in ADG and EI. EI and ADG, partially offset by CC decline. revenue strength. Key: * Core revenue growth excludes the impact of currenc
Slide 7: Q2'23 Communications Solutions Group Highlights
Q2’23 Communications Solutions Group Highlights Revenue • Record gross margin of 68.1% $937M • Commercial Communications: Investment continues in strategic R&D for 5G -3% y/y (-1% core*) Rel. 17, non-terrestrial networks, O-RAN, early 6G, and AI-ML data center networks, while broader wireless sector
Slide 8: Q2'23 Electronic Industrial Solutions Group Highlights
Q2’23 Electronic Industrial Solutions Group Highlights Revenue • All-time record revenue; 11th consecutive quarter of DD revenue growth $453M • Automotive: Record second quarter revenue driven by continued investment in +17% y/y (+19% core*) new EV charging and battery test and validation, as well a
Slide 9: Q2'23 Revenue By End Market
Q2’23 Revenue By End Market End Market Revenue YoY % Commercial $627M -7% Communications Aerospace, Defense & $310M +7% Government Electronic Industrial $453M +17% Solutions Total $1,390M +3% 9
Slide 10: FY22 Non-GAAP Highlights and Annual Trend
FY22 Non-GAAP Highlights and Annual Trend Orders Revenue Operating Margin EPS $5.984B $5.420B 29.3% $7.63 10% CAGR 8% CAGR +1,050 basis points 24% CAGR 5-Year annual trend represents 2018-2022. Reconciliations to closest GAAP equivalent provided for all non-GAAP measures.. Non-GAAP revenue excludes
Slide 11: Guidance and Financial Considerations
Guidance and Financial Considerations Q3'23 Guidance Revenue $1.37B – $1.39B Revenue Growth 0% – 1% Non-GAAP Earnings per share $2.00 – $2.06 FY23 Financial Considerations • Net Interest and Other Income/Expense: $11M – $13M net income / quarter • Non-GAAP tax rate of 12% • Guidance assumes Q3 weigh
Slide 12: Corporate Social Responsibility – Building a Better Planet
Corporate Social Responsibility – Building a Better Planet 2023 CSR Awards and Recognition Barron’s 100 Most Sustainable Companies in America (March 2023) Keysight Ranked #5 on Forbes America's Best Midsize Employers (February 2023) Sustainalytics 2023 ESG Industry Top Rated, and ESG Regional Top Ra
Slide 13: Investor Resources
Investor Resources Recent Reports: May 2023 Quick Links 2022 CSR Report: Environmental Sustainability Why Keysight Social Impact Recent Investor Presentations and Webcasts Ethical Governance The Keysight Leadership Model 2022 DEI Report: Year in Review Corporate Social Responsibility Investor Day Ma
Slide 14: Reconciliations
WW KEYSIGHT Reconciliations
Slide 15: Non-GAAP Operating Margin Reconciliation
NON-GAAP OPERATING MARGIN RECONCILIATION (In millions, except where noted) (Unaudited) PRELIMINARY Three months ended Six months ended April 30, April 30, 2023 2022 2023 2022 Income from operations, as reported $ 354 $ 327 $ 676 $ 598 Amortization of acquisition-related balances 25 26 48 52 Share-ba
Slide 16: Non-GAAP Gross Margin Reconciliation
NON-GAAP GROSS MARGIN RECONCILIATION (In millions, except where noted) (Unaudited) PRELIMINARY Three months ended Six months ended April 30, April 30, 2023 2022 2023 2022 Gross Profit, as reported $ 909 $ 859 $ 1,792 $ 1,663 Amortization of acquisition-related balances 11 13 20 25 Share-based compen
Slide 17: Non-GAAP Net Income and Diluted EPS Reconciliation
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATION (In millions, except per share data) (Unaudited) PRELIMINARY Three months ended Six months ended April 30, April 30, 2023 2022 2023 2022 Net Diluted Net Diluted Net Diluted Net Diluted Income EPS Income EPS Income EPS Income EPS GAAP Net income $ 28
Slide 18: Reconciliation of Core Revenue
RECONCILIATION OF CORE REVENUE (In millions) (Unaudited) PRELIMINARY Year-over-year Percent Q2'23 Q2'22 Inc/(Dec) Revenue $ 1,390 $ 1,351 3% Adjustments: Revenue from acquisitions or divestitures (6) — Currency impacts 35 — Core Revenue $ 1,419 $ 1,351 5% Refer to non-GAAP financial measures slide 1
Slide 19: Reconciliations of Core Revenue by Segment and Region
RECONCILIATIONS OF CORE REVENUE BY SEGMENT AND REGION (In millions) (Unaudited) PRELIMINARY Year-over-Year Revenue from acquisitions or Currency Revenue divestitures Adjustments Core Revenue Revenue by Segment Q2'23 Q2'22 YoY % Q2'23 Q2'22 Q2'23 Q2'23 Q2'22 YoY % Communications Solutions Group $ 937
Slide 20: Revenue by End Markets
REVENUE BY END MARKETS (In millions) (Unaudited) PRELIMINARY Percent Q2'23 Q2'22 Inc/(Dec) Aerospace, Defense and Government $ 310 $ 291 7% Commercial Communications 627 672 (7)% Electronic Industrial 453 388 17% Total Revenue $ 1,390 $ 1,351 3% Refer to non-GAAP financial measures slide 20
Slide 21: Free Cash Flow
FREE CASH FLOW (In millions) (Unaudited) PRELIMINARY Three months ended April 30, 2023 2022 Net cash provided by operating activities $ 423 $ 298 Less: Investments in property, plant and equipment (53) (53) Free cash flow $ 370 $ 245 Refer to non-GAAP financial measures slide 21
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Management uses both GAAP and non-GAAP financial measures to analyze and assess the overall performance of the business, to make operating decisions and to forecast and plan for future periods. We believe that our investors benefit from seeing our results “through the eye