Keysight Technologies Inc. · NYSE:KEYS
Keysight Technologies — Investor Day (March 2023)
126 slides from Keysight Technologies's investor day presentation, Mar 7, 2023
Slide 1: Keysight Technologies 2023 Investor Day
Keysight Technologies 2023 Investor Day March 7, 2023
Slide 2: Introduction and Opening Remarks
Introduction and Opening Remarks Jason Kary VP, TREASURER & INVESTOR RELATIONS
Slide 3: 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 4: Today's Agenda
Today’s Agenda 8:30am Introduction and Opening Remarks Jason Kary | VP, Treasurer & Investor Relations Company Overview and Strategic Direction Satish Dhanasekaran | President & Chief Executive Officer Culture: An Enduring Competitive Advantage Ingrid Estrada | Chief People & Administrative Officer
Slide 5: Company Overview and Strategic Direction
Company Overview and Strategic Direction Market-Defining and Diversified Innovations Driving Value Creation Satish Dhanasekaran PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 6: Keysight at a Glance
Keysight at a Glance (NYSE: KEYS) #1 Market Position1 FY22 Company Highlights Our Purpose: Accelerate innovation to connect and secure the world 30K+ 15K Total customers2 Employees4 FY22 Revenue 41% AMERICAS 100+ 21 Countries served % Recurring revenue 48% / $2.6B 29 Commercial $5.4B FY22 REVENUE Co
Slide 7: Deep, Long-Term Global Customer Relationships
Deep, Long-Term Global Customer Relationships Strengthening market-leading positions with 30,000+ customers Commercial Aerospace, Defense, Electronic Communications & Government Industrial S E R V I N G M A R K E T L E A D E R S 14/15 Top mobile operators 22/25 Top aerospace & defense contractors 10
Slide 8: Track Record of Compounding Growth
Track Record of Compounding Growth Enabled by strong execution of software-centric solutions strategy FY15 – FY22 10% +850 +1,120 18% 17% CAGR bps bps CAGR CAGR $5.42 65.0% $7.63 29.3% $959 56.5% $2.86 18.1% $2.52 $296 Revenue ($B)1 Gross Margin %1,2 Operating Margin %1,2 Free Cash Flow ($M)1, 3 EPS
Slide 9: Achieved FY23 Financial Commitments Ahead of Schedule
Achieved FY23 Financial Commitments Ahead of Schedule Key Accomplishments 2020 Investor Day Target Results since FY19 • Capitalizing on decades-long growth trends to outperform the market and % % Core revenue growth1,2 4-6 8CAGR gain share • Exceeded $1B in software revenue in FY22 with ~50% annuali
Slide 10: Actions Taken Since 2020 to Drive Long-Term Value Creation
Actions Taken Since 2020 to Drive Long-Term Value Creation GROWTH MARGINS CULTURE • Capitalizing on decades-long • Driving active portfolio • Heightening customer-centricity secular growth trends to management and value selling to and leveraging unique, collaborative outperform the market expand gro
Slide 11: Leader in Growing and Attractive Market
Leader in Growing and Attractive Market $ 20.9B Growing served $13.5B $15.5B $17.5B $20.9B addressable market (SAM) 2015 2018 2020 2023 Long-term market growth rate 2-3% 3-5% 3-5% 4-6% 5 $ B+ Pursuing SAM expansion opportunities in attractive adjacencies Software Test Network Analytics Data Manageme
Slide 12: Favorable Long-Term Market Drivers
Favorable Long-Term Market Drivers Technology Trends Transforming Industries Market Dynamics • Next-generation connectivity • Automotive electrification • Government investments and autonomous systems • High-performance computing • Defense modernization driven by AI/ML applications • Digital health
Slide 13: Consistent Software-Centric Solutions Strategy
Consistent Software-Centric Solutions Strategy Accelerating innovation of long-term technology trends First-to-Market Design Sustainable to create and Test Solutions Lifecycle Value Strengthening Customer Value Proposition Time to market • Productivity Stronger Keysight Business Outcomes Acceleratin
Slide 14: Multiple Vectors for Growth
Multiple Vectors for Growth Actioning faster-growth opportunities across the technology stack OF TOTAL $5.4B FY22 REVENUE1 POSITION Increasing digitization and software content ~ % 5 Applications Attractive incremental Complementary adjacencies aligned to customers expanding design & test needs oppo
Slide 15: Physical Layer: Growing Differentiation
Physical Layer: Growing Differentiation PHYSICAL S T R AT E G Y T O W I N Provide high-performance measurement solutions for the most complex and challenging use cases across analog and digital domains The UXR and VSA solution as it stands today is by far the most capable and versatile solution for
Slide 16: Protocol Layer: Expanding Use Cases
Protocol Layer: Expanding Use Cases PROTOCOL S T R AT E G Y T O W I N Move beyond protocol test to emulate complex and real-world systems in the lab Keysight is a strategic customer that enables innovation through their industry-leading platforms, Channel Emulation Platform Highlights leveraging AMD
Slide 17: Applications Layer: Pursuing Attractive Adjacencies
APPLICATIONS Applications Layer: Pursuing Attractive Adjacencies S T R AT E G Y T O W I N Expand portfolio to address new, emerging applications through organic and inorganic investments A full-up workspace in Keysight PathWave System Design with our Sys-Parameters models speeds everything up. It’s
Slide 18: Durable and Sustainable Competitive Advantages
Durable and Sustainable Competitive Advantages Strategic enablers of Keysight’s continued value creation 1 Deep, long-term global customer relationships 2 Unique technology expertise and capabilities 3 Differentiated, first-to-market solutions portfolio 4 Durable and resilient business model 5 Colla
Slide 19: Co-Innovation Model Unlocks Future Growth Opportunities
1 Co-Innovation Model Unlocks Future Growth Opportunities “The signing of this MoU with “Our research with Keysight “Lockheed Martin is leveraging “We see an increasing need Keysight will greatly advance drives many innovations with expertise in the commercial to intensify battery testing Samsung's
Slide 20: World-Class Talent and Technology Capabilities
2 World-Class Talent and Technology Capabilities Feed Robust Innovation Ecosystem INNOVATION ECOSYSTEM Industry-Leading Talent Platform & Unique Innovation Engine • 3,100+ R&D engineers worldwide – >40% with M.S. or Ph.D. degrees – >67% focused on software development – Keysight and IEEE Fellows Tec
Slide 21: Differentiated, First-to-Market Solutions Portfolio
3 Differentiated, First-to-Market Solutions Portfolio Our Approach 1. Select best 2. Create market-leading 3. Maintain high leverage opportunities to maximize solutions across both business lifecycle value through (hardware + software + groups (40%+ solutions design and test services) crossover) Sim
Slide 22: Diversified and Durable Business
4 Diversified and Durable Business Sustained Revenue Growth with Compounding Layers of Innovation (by product introduction year) FY21 to FY22 FY19 to FY20 +50 % Revenue from products released FY17 to FY18 within the last 5 years FY15 to FY16 Through FY14 +90% Top 1,000 customers do business FY13 FY1
Slide 23: Disciplined Capital Allocation Enables Strategy and Creates Value
4 Disciplined Capital Allocation Enables Strategy and Creates Value 1 2 3 Drive Organic Growth Disciplined M&A Return of Capital ~16% of revenue invested in When strategic and NEW $1.5B share R&D; up from 12% at spin financial criteria are met repurchase authorization 23
Slide 24: Creating Value through M&A
4 Creating Value through M&A 5G, Networking, and Computing Solutions Quantum Solutions M&A Capabilities • Highly disciplined with strong strategic and financial criteria to assess value creation potential • Long-term planning to evaluate new Software for Electronic Design and Test Automotive and Ene
Slide 25: Our Culture Continues to Drive Financial Performance and Gain Recognition
5 Our Culture Continues to Drive Financial Performance and Gain Recognition Collaboration Commitment to Results Innovation B U I LT A R O U N D K E Y S I G H T L E A D E R S H I P M O D E L A N D O N E K E Y S I G H T Recent Accolades 25
Slide 26: Strong and Experienced Leadership Team
5 Strong and Experienced Leadership Team Satish Dhanasekaran Neil Dougherty Ee Huei Sin Ingrid Estrada Gooi Soon Chai President and Chief Chief Financial Officer President, Electronic Industrial Chief People and President, Order Fulfillment Executive Officer Solutions Group Administrative Officer an
Slide 27: Raising Long-Term Expectations
Raising Long-Term Expectations Keysight’s Position Favorable of Strength New Targets Long-term Drivers • Differentiated technology stack % • Ecosystems are expanding enables market-leading solutions portfolio aligned to long-term 5–7 Sustainable Core Revenue • Innovation intensity is accelerating Su
Slide 28: Culture: An Enduring Competitive Advantage
Culture: An Enduring Competitive Advantage Value Creation Through the Keysight Leadership Model, Developing a Diverse Workforce, and Enabling a Sustainable Future Ingrid Estrada CHIEF PEOPLE & ADMINISTRATIVE OFFICER
Slide 29: Key Messages
Key Messages 1 2 3 Culture is an enduring Enhancing organizational Environmental, social, and competitive advantage capability in alignment with governance efforts integrated and critical enabler for our strategy and Keysight into strategy and positively our software-centric Leadership Model to deli
Slide 30: Our Diverse, Customer-Focused Culture Accelerates Innovation
Our Diverse, Customer-Focused Culture Accelerates Innovation The Keysight Leadership Model: A Winning Formula Highly Engaged Workforce 15K 30 Employees Countries 86 Self-identified nationalities 5 Generations 7 % Avg. turnover vs. 12YEARS Avg. tenure 13% industry avg.1 Deeply- Customer- Enduring, Co
Slide 31: Our People Strategy Enables Our Business Strategy
Our People Strategy Enables Our Business Strategy Evolving organizational capability to execute software-centric solutions strategy at scale • Evolved organizational design to align with customers and industry solutions, Organization while maintaining technical differentiation and building customer-
Slide 32: Driving High-Performance Culture to Enable Company Strategy
Driving High-Performance Culture to Enable Company Strategy 100% of employees on variable pay program tied to financial performance STEM Education Career Technology Leadership Emeritus Development Development Expertise Development Program • 1.7M+ students1 • >1,300 employees • >67% of R&D roles • 70
Slide 33: Highly Engaged, Productive Team Exemplifies Our Purpose and Values
Highly Engaged, Productive Team Exemplifies Our Purpose and Values Home garage labs Tech talks and Innovation Challenge: STEM labs funded in 14 employee network Keysight Technical during the pandemic annual hackathon women-led university rural India communities groups grew >300% Conference brings te
Slide 34: Comprehensive ESG Actions Deliver Business Value
Comprehensive ESG Actions Deliver Business Value Solutions for a Pathway to Diversity, Equity, Sustainable Future Net Zero by 2040 and Inclusion (DEI) • Clean tech innovations in renewable • Net zero in Scope 1 and Scope 2 • Diverse board and management team; energy and e-mobility ecosystem with int
Slide 35: Our Culture and Commitment to Diversity and Sustainability Are Being Recognized
Our Culture and Commitment to Diversity and Sustainability Are Being Recognized Award for Diversity, Equity, and Inclusion 35
Slide 36: Key Takeaways
Key Takeaways 1 Enhancing 2 Cultivating talent 3 Heightening focus customer-focused skills necessary on ESG culture for growth and delivering solutions to enable world’s best engineers to expand R&D talent pools to build a better planet and continue innovating in software, 6G, and automotive at the
Slide 37: Communications Solutions Group (CSG)
Communications Solutions Group (CSG) Capitalizing on Megatrends in Connectivity, Computing, and Defense Modernization; Expanding Reach in Customer Workflows, and Advancing Future Innovation Kailash Narayanan PRESIDENT, COMMUNICATIONS SOLUTIONS GROUP
Slide 38: Key Messages
Key Messages 1 2 3 4 Building on strong Maximizing growth Driving above- Leveraging track record of opportunities by market growth by solutions synergies outperformance focusing on R&D expanding our and operational to sustain market workflow and key differentiated excellence to leadership secular te
Slide 39: CSG Performance: Delivering Robust, Sustained, Above-Market Growth
CSG Performance: Delivering Robust, Sustained, Above-Market Growth FY22 Highlights Revenue and Operating Margin Communications Solutions 3-year revenue CAGR: ~6%2 for Diverse, Growing Operating margin: +510 bps2 Key End Markets 8% 28.5% $3,803 $4,000 + $3,800 Global talent pool with >2,000 engineers
Slide 40: CSG Business: Serving Diverse and Complementary End Markets
CSG Business: Serving Diverse and Complementary End Markets Commercial Communications Aerospace, Defense, & Government Wireless Wireline Service Providers Communications Space & Satellite Government • Chipsets • Silicon & Enterprises • Spectrum • Space & Research • Devices • Data centers • CSPs oper
Slide 41: Strong Track Record of Creating Value
Strong Track Record of Creating Value What We Said at 2020 Investor Day Actions Taken & Results Investing to expand market position 1 and leadership • Achieved 6% 3-year revenue CAGR for Commercial Communications and Aerospace, Defense & Government Accelerating portfolio transformation to • Capitali
Slide 42: Well-Positioned in Attractive and Growing End Markets
Well-Positioned in Attractive and Growing End Markets Addressable Market1 $ 15B FY22 Commercial Communications Aerospace, Defense, and Government FY22 Revenue $2.6B $1.2B LT Market Growth Rate 4-6%1 3-4%1 2023E ICT global spend of $4.7T expected Combined U.S. and allied nations to increase to $5.8T
Slide 43: CSG Profitable Growth Strategy
CSG Profitable Growth Strategy Capitalize on Secular Accelerate Aerospace, Expand Software Solutions Technology Megatrends Defense, and Government Margins and lifecycle monetization in Commercial Digital transformation Communications and modernization Maximize 5G, 6G, and next-generation technologie
Slide 44: Commercial Communications
Commercial Communications Capitalize on secular technology megatrends: maximize 5G, 6G, and next-generation technologies
Slide 45: Technology Megatrends Drive Sustained Investment and Innovation in ICT Industry
Technology Megatrends Drive Sustained Investment and Innovation in ICT Industry Well-positioned to capitalize on technology waves 5G Regional Deployments Ramping • Subscribers expected to increase from 1B to 5B in 5 years Connectivity & Networking High-Performance Computing • FWA expected to grow fr
Slide 46: Enabling Future Digital Infrastructure; Multiple Tracks of Innovation
Enabling Future Digital Infrastructure; Multiple Tracks of Innovation Overlapping technology waves provide secular growth opportunities 2022 2024 2026 2028 2030 & Beyond 5G – Rel-17 (RedCap, power saving), Rel-18 (NTN evolution, Sidelink), Rel-19 10X Higher Bandwidth Wireless 5G & 6G 6G – Research,
Slide 47: Commercial Communications: How We Win
Commercial Communications: How We Win Enabling next-generation digital infrastructure; covering critical aspects of design workflow Deep Industry First-to-Market Differentiated and Expansion Across Engagements Solutions Broad Portfolio Workflow • Partnering with O-RAN • Launching industry-first • In
Slide 48: Capitalizing on 5G Expansion, Advancing Early 6G Research
Capitalizing on 5G Expansion, Advancing Early 6G Research Extending leadership as standards progress and deployments scale; expanding installed base with new use cases 2017 2024 2025 2027 2030 Strategy to Capture Growth 5G Enable standards progression, Latency • VoNR • 5G Standalone • Multi-Access E
Slide 49: Keysight Enabling New Network Architecture: Network Virtualization
APPLICATIONS Keysight Enabling New Network Architecture: PROTOCOL Network Virtualization Advancing Open RAN and expanding customer base Conformance (3GPP, Open RAN and End-to-End Field Testing Visibility, Assurance RAN) Multivendor & System Performance User & Commissioning & Automation IOT Experienc
Slide 50: Enabling Next-Generation Data Center Networks
Enabling Next-Generation Data Center Networks PROTOCOL Driving wireline innovation in 400G/800G/terabit and photonics PHYSICAL Industry Challenges Differentiated Outcomes • Data traffic continues to increase, and End-to-End Portfolio massive new AI/ML computation • Design and emulation solutions • F
Slide 51: Enabling Emerging Inflection in AI/ML
Enabling Emerging Inflection in AI/ML Keysight advancing solutions for network infrastructure at data centers and hyperscalers Industry Challenges AI/ML DATA CENTER CLUSTER WHAT KEYSIGHT OFFERS • AI/ML workloads require high networking Network Spine Switches bandwidth (800G, 1.6T) and computing Benc
Slide 52: Aerospace, Defense, and Government
Aerospace, Defense, and Government Accelerate defense modernization and digital transformation
Slide 53: Digital Transformation and Geopolitics Driving Investment in Aerospace and Defense
Digital Transformation and Geopolitics Driving Investment in Aerospace and Defense Keysight accelerating defense modernization and advancing research 5G / 6G Favorable Global Spend Environment • LEO satellite market expected to grow at >15% CAGR Spectrum Operations through 20261 Autonomous Systems •
Slide 54: Capturing New Investment in Satellite Networks
APPLICATIONS Capturing New Investment in Satellite Networks PROTOCOL Enabling space connectivity with new modelling and emulation capabilities PHYSICAL Industry Challenge Differentiated Outcomes End-to-End Portfolio • Need for innovation in the satellite • Phased-array antenna design solutions • Ind
Slide 55: Accelerating Global Quantum Innovation
APPLICATIONS Accelerating Global Quantum Innovation PROTOCOL Advancing qubits expansion and control; expanded global engagements to >100 Industry Challenge Differentiated Outcomes End-to-End Portfolio • Enterprise and governments • Portfolio covering emulation, error • Engaged globally with more tha
Slide 56: Expand Software Solutions
Expand Software Solutions Margins and lifecycle monetization
Slide 57: Customer Innovation Workflows Driving Software Expansion Opportunities
APPLICATIONS Customer Innovation Workflows Driving PROTOCOL Software Expansion Opportunities Customers’ connectivity and computing IP becoming increasingly software-centric E X P A N D I N G S O L U T I O N S A N D A D D I N G C A P A B I L I T I E S F O R N E W A P P L I C AT I O N S Software portf
Slide 58: Driving Operational Excellence
Driving Operational Excellence Multiple levers enabling increase in operating margin Leveraging common • Reuse common physical and protocol layer portfolio R&D investment across end markets • 10+ new solutions addressing use cases in both end markets in the next 3 years Driving continuous • Improvin
Slide 59: Key Takeaways
Key Takeaways 1 Capitalizing on steady 2 Deepening customer 3 Broadening industry- 4 Increasing solution investments in engagements in leading solutions and software content long-term overlapping existing workflows and portfolio through and leverage across end technology waves, in advancement of org
Slide 60: Q&A Session
“vy KEYSIGHT Q&A Session
Slide 61: Break
Break
Slide 62: Electronic Industrial Solutions Group (EISG)
Electronic Industrial Solutions Group (EISG) Strengthening and Capitalizing on Market-Leading Position, Advancing Customer Innovation in High-Value Applications, and Driving Automotive Leadership Ee Huei Sin PRESIDENT, ELECTRONIC INDUSTRIAL SOLUTIONS GROUP
Slide 63: Key Messages
Key Messages 1 2 3 4 Consistent track Well-positioned to Competitive Continued market record of sustained capitalize on industry advantage from outperformance by profitable growth mega trends for leveraging Keysight’s capturing new tech through strategy digitization, new broad and deep investments,
Slide 64: EISG Performance: Strong Track Record, Above-Market Growth
EISG Performance: Strong Track Record, Above-Market Growth FY22 Highlights Revenue and Operating Margin Electronic Industrial 3-year revenue CAGR: ~12.5%2 Solutions for a Diverse Set $1,800 Operating margin: +510 bps2 40% of Growing End Markets + 14% 31% $1,600 $1,418 $1,617 38% CUSTOMERS MARKET DRI
Slide 65: Continually Delivering Profitable Growth
Continually Delivering Profitable Growth What We Said at 2020 Investor Day Actions Taken & Results • Accelerated growth, captured market share, and expanded margins through Delivering strong results growth strategies targeting high-value mega trends 1 consistently • Delivered 12.5% revenue CAGR and
Slide 66: Capturing Opportunities from Industry Mega Trends
Capturing Opportunities from Industry Mega Trends Acceleration Automotive Semiconductor in Digitization Industry Evolution Next-Gen Innovation • Immersive technologies expected • ICE to EV transition gains pace • Government investments (U.S. market growth >38% CAGR1,2 • Continued investment in CHIPS
Slide 67: EISG Profitable Growth Strategy
EISG Profitable Growth Strategy Enable Smart Applications Advance Innovation Capitalize on Semiconductor in General Electronics for New Mobility Next-Gen Development and Expansion Driving innovation and expanding Expanding first-to-market solutions Capturing greater wallet share of global into new e
Slide 68: Enable Smart Applications in General Electronics
Enable Smart Applications in General Electronics Innovation and differentiation + emerging megatrends Market Focus and Opportunities STRATEGY TO WIN Digitization, edge computing, and big data drive Drive Innovation in Emerging Verticals high-speed, low-latency technology and security • Target connec
Slide 69: Emerging High-Growth Verticals
Emerging High-Growth Verticals Accelerate speed-to-market by leveraging our broad portfolio Immersive Reality Smart Manufacturing Consumer IoT Devices Digital Health Academia Advanced Research C U S T O M E R AP P L I C AT I O N S F O R H I G H - G R O W T H V E R T I C AL S • High-fidelity audio an
Slide 70: Advance Innovation for New Mobility
Advance Innovation for New Mobility Customers and solutions expansion + first-to-market Market Focus and Opportunities STRATEGY TO WIN Increasing ICE vehicles to EV transition – opportunity Capture Investments in New and due to government-driven shift away from ICE Future Mobility • U.S. goal of 50%
Slide 71: Keysight Automotive and Energy Solutions Enabling Transition to New Mobility Ecosystems
Keysight Automotive and Energy Solutions Enabling Transition to New Mobility Ecosystems Charging Station Grid GNSS Cellular Cellular PC5 C-V2X GB/T, ChaoJi, CCS, Chademo LTE, 5G Lidar GNSS Front Telematics Battery/BMS Invertor PC5 Camera(s) Photovoltai Invertor Rear c H + Camera(s) V M - Sensor Bus
Slide 72: EV | Enabling Customer Success with Industry-First Solutions
EV | Enabling Customer Success with Industry-First Solutions EV Battery EV Charging EV Demand is Driving Investments Expansion of Global EV Infrastructure • Battery performance is key to OEM success • Robust and easy consumer experience • Push for best price/performance – battery packs drive cost, r
Slide 73: AV | Enabling Customer Success with Industry-First Solutions
AV | Enabling Customer Success with Industry-First Solutions Automotive Radar Vehicle-to-Everything (V2X) Communication ADAS Functions are Build-on Radar Modules Essential for AVs • Automotive radar is considered critical for AV/ADAS • Non-line-of-sight communication is critical especially in highly
Slide 74: Capitalize on Semiconductor Next-Gen Development and Expansion
Capitalize on Semiconductor Next-Gen Development and Expansion Leadership + differentiation + adjacent applications Market Focus and Opportunities STRATEGY TO WIN Digital transformation drives continuous demand for Strengthen Market Leadership next-generation semiconductor technology • Enable advanc
Slide 75: Semiconductor Next-Gen Development and Expansion
Semiconductor Next-Gen Development and Expansion Advanced Nodes Development “More than Moore” Application Next-Generation Parametric Test Development • Leverage Keysight technologies and application-specific • Higher density testing components to provide first-to-market solutions for integrated chip
Slide 76: "More than Moore" Application Wafer Level Testing for Semi Capability Expansion
“More than Moore” Application Wafer Level Testing for Semi Capability Expansion Silicon Photonics mmWave Power Semi Parallel Reliability Test First-to-Market Solution First-to-Market Solution Most Complete Solution Most Effective Solution • Optical transceivers for • mmWave (5G, radar) device test •
Slide 77: Key Takeaways
Key Takeaways 1 Executing a 2 Capitalizing on 3 Accelerating 4 Outperforming clear strategy industry mega speed-to-market the market to extend trends by leveraging by maximizing consistent track in digitization, new breadth and depth installed base and record of mobility automotive, of technology ex
Slide 78: Holistic Customer Solutions through Software, Services & Sales
Holistic Customer Solutions through Software, Services & Sales Uniquely Positioned to Address Evolving Customer R&D Needs with First-To-Market Solutions Mark Wallace CHIEF CUSTOMER OFFICER
Slide 79: Key Messages
Key Messages 1 2 3 Growing customer Harnessing the power of our Leveraging our compelling, lifetime value and extending go-to-market approach to customer-centric strategy first-to-market leadership maximize customer success to address evolving needs beyond the solution sale with a broad portfolio of
Slide 80: Sustaining Growth, Differentiating Keysight
R&D and Technical Sales Teams Sustaining Growth, Differentiating Keysight Are Close to Customers Industry-leading Technologies FY22 Highlights • 5,000+ R&D, solution, and service engineers globally near customers 30K+ $6B 14% 33% • Deep connections with top research universities Customers served Tot
Slide 81: Delivering Strong Results: Actions in Place to Accelerate Momentum
Delivering Strong Results: Actions in Place to Accelerate Momentum What We Said at 2020 Investor Day Actions Taken & Results Double frontline sales capacity • More than doubled our sales capacity 1 at a lower cost per order dollar • 47% increase in annual productivity at a 29% lower CPOD (CPOD) from
Slide 82: Harnessing the Power of Our Go-to-Market Approach
Harnessing the Power of Our Go-to-Market Approach Enabling customers to accelerate innovation AD D R E S S I N G C O M P L E X C U S T O M E R C H AL L E N G E S TIME TO MARKET R&D WORKFLOW COMPLEXITY GLOBAL & REGIONAL DYNAMICS Direct Sales Industry Solution & Products Direct Sales Standalone Softwa
Slide 83: Seizing Opportunities to Increase Software Revenue and ARR
APPLICATIONS Seizing Opportunities to Increase Software Revenue and ARR PROTOCOL PHYSICAL $ 1.1B Standalone Software Digital workflow solutions focused on What We Achieved >3x 20 % PathWave design and simulation, automation, test, and assurance ✓ Captured value through business model expansion Drive
Slide 84: Improving Customer Experience and Value Through Keysight Services
Improving Customer Experience and Value Through Keysight Services Services enable a seamless experience, higher-value engagements, and efficiencies across customer lifecycle Customer Services Lifecycle Services Growth Drivers Expanding ARR Acquire and Setup Use KeysightCare 1 • Accelerate the moment
Slide 85: Ecosystem Spotlight
Ecosystem Spotlight Enabling Japan’s advanced optical and wireless communications Industry Challenge Differentiated Outcomes End-to-End Portfolio • A team of commercial companies, • Keysight was selected as the key Customer including NTT and research partner to provide a complete suite • Development
Slide 86: Key Takeaways
Key Takeaways 1 Accelerate 2 Enhance a seamless 3 Grow customer 4 Compound growth customers’ R&D customer experience lifetime value and by leveraging success by extending by harnessing market share through our customer-centric first-to-market the power of our our value-added strategy and leadership
Slide 87: Financial Update
Financial Update Compounding Returns, Increasing Share in Growing Market, Expanding Margins, Improving Cash Generation and Financial Resiliency, and Sustaining Growth Investments Neil Dougherty CHIEF FINANCIAL OFFICER
Slide 88: Key Messages
Key Messages 1 2 3 4 Compounding Increasing financial Leveraging Continuing to returns resilience consistent and raise the bar significantly well-positioned disciplined capital increasing long-term transformed financial for varied macro allocation framework growth expectations performance environmen
Slide 89: Compounding Returns and Record Performance Driven by Strong Execution
Compounding Returns and Record Performance Driven by Strong Execution FY15 - FY22 10% +850 +1,120 18% 17% CAGR bps bps CAGR CAGR $5.42 65.0% $959 29.3% $7.63 56.5% $2.86 18.1% $2.52 $296 Revenue ($B)1 Gross Margin %1,2 Operating Margin %1,2 Free Cash Flow ($M)1 EPS1 • Balanced growth: • Sustained fa
Slide 90: Positioned to Outperform in Current Macro Environment
Positioned to Outperform in Current Macro Environment Durable and resilient financial model Revenue Scenarios -10% FY22 BASELINE +5-7% Revenue $5.4B -300 to 400bps OM1 29% 40% Operating Margin1 Core Operating Leverage2 Enabled by a Flexible Model Durability Proven in Resiliency of Financial Model Co
Slide 91: Strong Balance Sheet and Flexible Capital Structure
Strong Balance Sheet and Flexible Capital Structure Leverage Profile ($M) As of Q1 FY23 ~$3B available liquidity $750M Revolving Credit Facility Undrawn • $2.2B cash, cash equivalents, and restricted cash 4.55% Senior Notes due 2024 $600 4.60% Senior Notes due 2027 $700 • $750M revolving credit faci
Slide 92: Remain Committed to Our Operating Model
Remain Committed to Our Operating Model 1 Long-term secular growth drivers 40 % 2 3 Continued gross margin expansion Sustained growth investment while leveraging infrastructure Operating Leverage 4 Strong FCF conversion at 5% or Greater Core Revenue Growth1 5 Disciplined capital deployment to furthe
Slide 93: Increasing Keysight's Core Growth Expectation to 5-7%
Increasing Keysight’s Core Growth Expectation to 5-7% In an attractive and growing $21B market with $5B+ adjacent opportunities CSG EISG Long-Term Secular FY22 Market Size Growth Trends Commercial Aero, Defense Electronic Comms & Gov’t Industrial Commercial Comms Total Wireless: 5G / 6G Raising Mark
Slide 94: Driving Continued Margin Improvement
Driving Continued Margin Improvement Expanding R&D Mix1 Growing Software and Services1 Increasing Recurring Revenue1 Favorable R&D 12% Hardware 54% Non-recurring Mix Shift 34% Manufacturing 67% Software 21% 79% 21% 33% Recurring Operations Services 12% Solution Strategy Selective vertical First-to-m
Slide 95: Consistent and Disciplined Capital Allocation Priorities
Consistent and Disciplined Capital Allocation Priorities Free Cash Flow ($B) 1 Sustained Investment to Drive Organic Growth $1.1 $1.1 + • R&D: Sustained investment at ~16% of revenue $1.0 $0.9 $0.9 • Sales: Channel capacity, strengthen SW and e-commerce capabilities • Capex: Increase capacity and en
Slide 96: Disciplined M&A Strategy
Disciplined M&A Strategy Strategic Filters SC A LA B LE NETWORK TECHNOLOGIES • Increases addressable market • Offers high software content and/or high recurring revenue • Expands portfolio of high-value solutions • Augments talent and solutions capability Financial Criteria electronic systems • ROIC
Slide 97: Continuing to Raise the Bar
Continuing to Raise the Bar Increasing long-term financial targets1 2015 2018 2020 2023 Increase vs. Investor Day Investor Day Investor Day Investor Day Prior Target NEW Core Revenue Sustainable Sustainable Sustainable Sustainable +100 bps Growth2 4% 4-5% 4-6% 5-7% NEW Gross Margin 61-63% 64-66% 66-
Slide 98: Key Takeaways
Key Takeaways 1 Compounding 2 Increasing Financial 3 Disciplined Capital 4 Continuing to Returns Resilience Allocation Raise the Bar 17% EPS1 CAGR since Well-positioned for Balancing organic Increasing long-term company spin with a variety of macro growth, M&A, and growth expectations runway ahead e
Slide 99: Q&A Session
“vy KEYSIGHT Q&A Session
Slide 100: Closing Remarks
Closing Remarks Satish Dhanasekaran PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 101: Key Takeaways
Key Takeaways 1 Market Leader 2 Consistent Software- 3 Attractive and 4 Compounding and Centric Solutions Growing Market Resilient Business Strong track record Strategy Investing to accelerate Raising long-term of value creation enabled by First-to-market innovation across expectations with high-per
Slide 102: Av KEYSIGHT
Av KEYSIGHT
Slide 103: Appendix
“vy KEYSIGHT Appendix
Slide 104: Reconciliation of GAAP to Non-GAAP Revenue
Reconciliation of GAAP to Non-GAAP Revenue ($M) FY22 FY21 FY20 FY19 FY18 FY17 FY16 FY15 GAAP revenue $ 5,420 $ 4,941 $ 4,221 $ 4,303 $ 3,878 $ 3,189 $ 2,918 $ 2,856 Amortization of acquisition-related balances – – – 9 36 60 12 6 Non-GAAP Revenue $ 5,420 $ 4,941 $ 4,221 $ 4,312 $ 3,914 $ 3,249 $ 2,93
Slide 105: Reconciliation of Income from Operations to Non-GAAP Income from Operations
Reconciliation of Income from Operations to Non-GAAP Income from Operations ($M) FY22 FY21 FY20 FY19 FY18 FY17 FY16 FY15 Income (loss) from operations, as reported $ 1,334 $ 1,080 $ 765 $ 711 $ (394) $ 148 $ 375 $ 390 Goodwill impairment - - - - 709 - - - Amortization of acquisition-related balances
Slide 106: Reconciliation of Gross Profit to Non-GAAP Gross Profit
Reconciliation of Gross Profit to Non-GAAP Gross Profit ($M) FY22 FY21 FY20 FY19 FY18 FY17 FY16 FY15 Gross Profit, as reported $ 3,450 $ 3,069 $ 2,533 $ 2,534 $ 2,111 $ 1,697 $ 1,616 $ 1,576 Amortization of acquisition-related balances 48 118 175 177 219 217 50 21 Share-based compensation expense 23
Slide 107: Reconciliation of Non-GAAP Net Income and Diluted EPS
Reconciliation of Non-GAAP Net Income and Diluted EPS ($M, except per share amounts) FY22 FY21 FY20 FY19 FY18 FY17 FY16 FY15 GAAP Net income (loss) $ 1,124 $ 894 $ 627 $ 621 $ 165 $ 102 $ 335 $ 513 Non-GAAP adjustments: Goodwill impairment - - - - 709 - - - Amortization of acquisition-related balanc
Slide 108: Free Cash Flow
Free Cash Flow ($M) FY22 FY21 FY20 FY19 FY18 FY17 FY16 FY15 Net Cash Provided by Operating Activities $ 1,144 $ 1,322 $ 1,016 $ 998 $ 555 $ 328 $ 420 $ 388 Less : Investments in PP&E (185) (174) (117) (120) (132) (72) (91) (92) Free Cash Flow $ 959 $ 1,148 $ 899 $ 878 $ 423 $ 256 $ 329 $ 296 108
Slide 109: Reconciliation of Gross Debt, Net Cash, and Total Capital
Reconciliation of Gross Debt, Net Cash, and Total Capital As at January 31, 2023 ($M) Senior notes, par value $ (1,800) Gross Debt $ (1,800) Less: Cash and cash equivalents $ 2,228 Restricted cash 16 Net Cash $ 444 Gross Debt, as above $ 1,800 Add: Shareholders' equity 4,404 Total Capital $ 6,204 10
Slide 110: Reconciliation of Operating Leverage
Reconciliation of Operating Leverage Year-over-year Year-over-year Percent Percent ($M) FY22 FY21 Inc/(Dec) FY21 FY20 Inc/(Dec) Revenue $ 5,420 $ 4,941 10% $ 4,941 $ 4,221 17% Adjustments: Revenue from acquisitions or divestitures (11) — (39) — Currency impacts 116 — (43) — Core Revenue $ 5,525 $ 4,
Slide 111: Reconciliation of Net Income to LTM adjusted EBITDA
Reconciliation of Net Income to LTM adjusted EBITDA LTM ($M) January 31, 2023 Net Income $ 1,155 Add: Provision for income taxes 197 Income before taxes $ 1,352 Add: Interest Income (34) Interest Expense 78 Depreciation and amortization 219 EBITDA $ 1,615 Add back: Non-GAAP adjustments Share-based c
Slide 112: 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
Slide 113: Glossary
“vy KEYSIGHT Glossary
Slide 114: Glossary of Terms
Glossary of Terms Industry Terms 3GPP 3rd Generation Partnership Project; standards organization that develop protocols for mobile telecommunications 5G, 6G 5th and 6th Generations of wireless communications 5G-AD 5G-Advanced 5G SA 5G StandAlone; uses the 5G new radio access network on a new 5G netw
Slide 115: Glossary of Terms
Glossary of Terms Industry Terms C-V2X Cellular Vehicle-to-Everything D2D Device-to-Device DC Direct Current DEI Diversity, Equity, and Inclusion Digital Twin A computer model designed to accurately reflect the behavior and performance of a physical object or system DoD Department of Defense DSRC De
Slide 116: Glossary of Terms
Glossary of Terms Industry Terms GAA Gate-All-Around GNSS Global Navigation Satellite System GPS Global Positioning System GPU Graphics Processing Unit HAPS High-Altitude Platform Station; network of aerial stations that operate in the stratosphere at an altitude of around 17-20 km HBCU Historically
Slide 117: Glossary of Terms
Glossary of Terms Industry Terms Long-reach Serializer-Deserializer Physical Layer Interface; physical layer interface for automotive applications, including ADAS, ADS and other MIPI A-PHY surround-sensor applications, including cameras and in-vehicle infotainment (IVI) displays mmWave Millimeter Wa
Slide 118: Glossary of Terms
Glossary of Terms Industry Terms Rel-17/18/19: Releases for 5G standards evolution RF Radio Frequency; the oscillation rate of communication signals at frequencies 20 kHz to 300 GHz RIC RAN Intelligent Controller; a software-defined component of the Open RAN architecture that’s responsible for contr
Slide 119: Glossary of Terms
Glossary of Terms Industry Terms VoNR Voice Over New Radio WBG Wide Band Gap; semiconductor materials which have a larger band gap than conventional semiconductors ZEV Zero-Emissions Vehicle Keysight Specific Terms CSG Communications Solutions Group EISG Electronic Industrial Solutions Group KLM Key
Slide 120: Speaker Bios
“vy KEYSIGHT Speaker Bios
Slide 121: Speaker Bios: Satish Dhanasekaran
Speaker Bios Satish Dhanasekaran PRESIDENT AND CHIEF EXECUTIVE OFFICER Satish Dhanasekaran is the president and chief executive officer of Keysight Technologies, a leading technology company that delivers advanced design, validation, and test solutions to help accelerate innovation to connect and se
Slide 122: Speaker Bios: Neil Dougherty
Speaker Bios Neil Dougherty CHIEF FINANCIAL OFFICER Neil Dougherty is the executive vice president and chief financial officer of Keysight Technologies. He is responsible for Keysight’s global finance operations, including tax, treasury, and investor relations. Before Keysight’s separation from Agil
Slide 123: Speaker Bios: Ee Huei Sin
Speaker Bios Ee Huei Sin PRESIDENT, ELECTRONIC INDUSTRIAL SOLUTIONS GROUP Ee Huei Sin is senior vice president of Keysight Technologies and president of the Electronic Industrial Solutions Group. She oversees a $2 billion global business that addresses the automotive, energy, general electronics, ma
Slide 124: Speaker Bios: Ingrid Estrada
Speaker Bios Ingrid Estrada CHIEF PEOPLE AND ADMINISTRATIVE OFFICER Ingrid Estrada is senior vice president and chief people and administrative officer of Keysight Technologies, as well as chief of staff. She ensures effective and efficient internal company operations and directs Keysight’s global p
Slide 125: Speaker Bios: Kailash Narayanan
Speaker Bios Kailash Narayanan PRESIDENT, COMMUNICATIONS SOLUTIONS GROUP Kailash Narayanan is senior vice president of Keysight Technologies and president of Keysight’s Communications Solutions Group. He leads the multibillion-dollar global business that addresses the end-to-end communications indus
Slide 126: Speaker Bios: Mark Wallace
Speaker Bios Mark Wallace CHIEF CUSTOMER OFFICER Mark Wallace is Keysight Technologies’ senior vice president of global sales and chief customer officer, overseeing the company’s sales, solution engineering, and channel partner operations. He holds responsibility for customer strategy and value capt