Slide 1: Keysight Technologies 2015 Investor & Analyst Day
Keysight Technologies 2015 Investor & Analyst Day September 1, 2015 Page 1
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements (including, without limitation, information and future guidance on the company’s goals, priorities, strategies, revenues, demand, growth opportunities, customer service and innovation plans, new product introductions, financial condit
Slide 3: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A and Break Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Tec
Slide 4: Keysight Technologies – Ron Nersesian
Keysight Technologies Ron Nersesian President and Chief Executive Officer Page 4
Slide 5: Building Strong Track Record as Independent Public Company
Building Strong Track Record as Independent Public Company Independent: Singular focus on Electronic Design & Test Solutions Stabilization Complete: 6 months early; now driving optimization Transforming for Top-Line & Bottom-Line Growth: Investing prudently Executing Strategy: Anite strategi
Slide 6: Key Messages
Key Messages Transformation Objectives Leader in Technology and market leader in Over the Cycle profitable market ever-evolving technology market 4% revenue CAGR Strong Proven operating performance business Deliver >20% model and cash generation across cycles operating margin 8-10% EPS growth
Slide 7: Agenda
Agenda Strong foundation Market opportunities Value creation strategy Page 7
Slide 8: Market and Technology Leader
K E Y S I G HT TO DAY Market and Technology Leader FY15 Revenue by Geography(1) Europe 18% FY15 Revenue Forecast(2) $2.9B Americas 38% FY15 Operating Margin Forecast(3) 19% 44% Asia Pacific FY15 EPS Forecast(2,3) $2.38-2.52 Number of customers(1) >14,000 ~10,200 Headcount (1) Europe Countries served
Slide 9: Our Value to Customers – Unmatched in the Industry
Our Value to Customers – Unmatched in the Industry We help customers bring breakthrough electronic products to market faster and at a lower cost Automotive Wireless base Computers Cloud devices Smart electronics stations & interfaces phones Avionics Surveillance Radar Satellites Simulate Prototype M
Slide 10: Create Value by Transforming to Software-Centric Solutions Company
K E Y S I G HT S TRATE G Y Create Value by Transforming to Software-Centric Solutions Company Software- Hardware-Centric Centric Solutions Products Company Company 1. Be First in 5G 2. Accelerate Pursuit of 3. Expand Leadership Wireless Modular Solutions Position in T&M Software 4. Grow Services Bus
Slide 11: Agenda
Agenda Strong foundation Market opportunities Value creation strategy Page 11
Slide 12: Why Electronic Design and Test is an Attractive Industry for Keysight
Why Electronic Design and Test is an Attractive Industry for Keysight • Opportunity to expand SAM in adjacent SAM Expansion markets • Drive evolving electronic design and New Customer Needs test solutions • Technical knowledge gained only through Deep Experience Required years of practical experienc
Slide 13: Well-Positioned in Our Expanding End Markets
Well-Positioned in Our Expanding End Markets Industrial, Computers, Communications Aerospace / Defense Semiconductor Total Revenue(1) $1B $0.7B $1.2B $2.9B Rev. Mix(1) 33% 23% 44% 100% Market Size(2,4) $5B $3B $5.5B $13.5B Market Share(2) 20% 20% 24% 21% Market Growth(3) 1-2% 2-3% 2-3% 2-3% Anite ac
Slide 14: Multiple Growth Drivers Provide Diversification
Multiple Growth Drivers Provide Diversification Growth Drivers • Evolving standards Communications • All data, all the time • Internet of Things • World instability Aerospace / Defense • Defense modernization Industrial • Electronic content proliferation • Services, data access Computer • Cloud comp
Slide 15: Product Leadership is Necessary but Not Sufficient
Product Leadership is Necessary but Not Sufficient Core Platforms Market Position(1) Simulation Software(2) #1 Network Analyzers #1 Signal Analyzers #1 Signal Sources #1 Oscilloscopes #2 One Box Testers #3 (1) Per Prime Data and Company estimates (2) RF/Microwave design simulation software Page 15
Slide 16: Commitment to Solid Operating Margins Sustainable Throughout the Cycle
Commitment to Solid Operating Margins Sustainable Throughout the Cycle Keysight Operating Model -10% Baseline* +10 % Revenue ($M) $2,700 $3,000 $3,300 Operating Margin 15-16% 18-19% 21-22% * Baseline includes a full year of Anite financials. Not guidance, shown on a non-GAAP basis Page 16
Slide 17: Agenda
Agenda Strong foundation Market opportunities Value creation strategy Page 17
Slide 18: Three-Point Strategy to Create Sustained Earnings Growth
Three-Point Strategy to Create Sustained Earnings Growth 3 Deploy Capital Effectively 2 Leverage Business Model 1 Transform for Growth Page 18
Slide 19: Transform for Growth
S TRATE G Y # 1 Transform for Growth 1 Expand Served Transform Invest in Faster Markets to $13.5B* Organization Growing Opportunities and beyond • Tops-down portfolio • Target markets: • Wireless R&D and allocation – Wireless (5G) Network Test • Shift more resources – Modular • Technology to R&D and
Slide 20: Leverage Business Model
S TRATE G Y # 2 Leverage Business Model 2 • Attractive operating profit and cash OP Margin Proven generation over the cycle Operating • Flexible cost structure Model • Optimized manufacturing and supply chain FY09 • Shift revenue toward R&D markets and Mix Shift software solutions Revenue • Increase
Slide 21: Deploy Capital Effectively
S TRATE G Y # 3 Deploy Capital Effectively 3 Phased approach to return of capital Stabilize as Achieve Committed independent sustainable return of company growth capital Disciplined criteria for acquisitions Page 21
Slide 22: Sustainable Growth in Revenue and EPS
OUR LONG-TERM PLAN Sustainable Growth in Revenue and EPS New Average of 4% sustained growth through cycle Operating profit incremental of 40% when revenue growth is at or greater than 4% Operating profit increases to greater than 20% average over cycle Long-term return of capital EPS growth of 8-10%
Slide 23: Uniquely Positioned to Win
Uniquely Positioned to Win Technology Customer Reach, Scale, Leadership & Operational Insight and and Team Application Excellence Trust Leverage Expertise Business Model Winning Proposition Page 23
Slide 24: Key Messages
Key Messages Transformation Objectives Leader in Technology and market leader in Over the Cycle profitable market ever-evolving technology market 4% revenue CAGR Strong Proven operating performance business Deliver >20% model and cash generation across cycles operating margin 8-10% EPS growth
Slide 25: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A and Break Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Tec
Slide 26: Keysight Technologies – Neil Dougherty
Keysight Technologies Neil Dougherty Senior Vice President and Chief Financial Officer Page 26
Slide 27: Agenda
Agenda Value creation framework Sustainable growth priority Effective business model Acquisition strategy Return of capital Page 27
Slide 28: A Strong Framework for Value Creation
A Strong Framework for Value Creation Organic Business Mergers & Return of Growth Model Acquisitions Capital • R&D • Cost Structure • Strategic • U.S. Cash Investment Flexibility Alignment Generation • SAM • Cost • Growth • Appropriate Expansion Reductions Leverage • Value • Profit • Margin Creation
Slide 29: Agenda
Agenda Value creation framework Sustainable growth priority Effective business model Acquisition strategy Return of capital Page 29
Slide 30: Sustainable Growth Is Our Top Priority
Sustainable Growth Is Our Top Priority Past Today Future 2004-2014 2015 • Growth slower • Focus on faster growing • Sustainable than industry market segments 4% CAGR • Built best-in-class • Increased R&D spend over the cycle business model • Expand SAM New Page 30
Slide 31: We are Addressing Our Growth Imperative
We are Addressing Our Growth Imperative Market • End market growth projected to be 2-3% over 3 years* Growth • FY16 market growth expected to be ~2%* • Targeting faster growing segments (wireless, modular, software) • Expanding our served addressable markets (SAM): Revenue Strategy • Organic: Servic
Slide 32: Investing For Growth From A Strong Foundation
Investing For Growth From A Strong Foundation Well-established market and technology leader Strong products and solutions Deep technology expertise Loyal customers Operational and supply chain excellence Best-in-class business model Page 32
Slide 33: Agenda
Agenda Value creation framework Sustainable growth priority Effective business model Acquisition strategy Return of capital Page 33
Slide 34: Investing For Growth While Maintaining Disciplined Business Model
Investing For Growth While Maintaining Disciplined Business Model Flexible Cost Dynamic Model that Structure Evolves with Business • Minimal fixed cost growth • On-going value engineering to reduce costs • Supply chain outsourcing • Proactive structural cost • Indirect sales channel management • Fle
Slide 35: Superior and Sustainable Financial Performance Throughout the Cycle
Superior and Sustainable Financial Performance Throughout the Cycle Keysight Operating Model -10% Baseline* +10% Revenue ($M) $2,700 $3,000 $3,300 Gross Margin 55%-57% 56-58% 57-59% R&D 14% 13% 13% SG&A 25-27% 24%-26% 23-25% Operating Margin 15-16% 18%-19% 21-22% * Baseline includes a full year of A
Slide 36: Agenda
Agenda Value creation framework Sustainable growth priority Effective business model Acquisition strategy Return of capital Page 36
Slide 37: Keysight's Discipline and Clear Criteria for Acquisitions
Keysight’s Discipline and Clear Criteria for Acquisitions The Example • Aligns with strategic growth priorities Strategic Alignment • Increases proportion of total revenue from R&D market • Expands Served Addressable Market (SAM) Growth • Focuses on faster growing market segments or adds key technol
Slide 38: Anite – Attractive Financial Profile
Anite – Attractive Financial Profile $M Revenue(1) Operating Margin %(1,2) Free Cash Flow(1,3) $191 19% $174 $38 +9% 14% +5 ppts $36 +6% FY14 FY15 FY14 FY15 FY14 FY15 (1) In USD converted at average rate for the respective year. Fiscal year May 1 – April 30, presented on IFRS basis based on Anite’s
Slide 39: Anite Projections and Expected Impact on Keysight
Anite Projections and Expected Impact on Keysight New Revenue Growth(1) • ~7% annually • Weighted towards Keysight’s fiscal Q2 and 1H’16 Seasonality • 60% of FY15 revenue, and 77% of FY15 operating profit were generated in Anite’s fiscal H2 (April year-end) FY16 EPS Accretion(2) • 14-17 cents Integr
Slide 40: Agenda
Agenda Value creation framework Sustainable growth priority Effective business model Acquisition strategy Return of capital Page 40
Slide 41: A Phased Approach to Return of Capital
A Phased Approach to Return of Capital Phase 3 Balanced Return of Capital • Return of capital tied Phase 2 to US cash generation Return Sustained 4% CAGR • Appropriate leverage of Over Cycle and investment grade Capital • M&A is priority use of credit metrics Phase 1 cash • Opportunistic M&A Stabili
Slide 42: Long-Term Expectations
Long-Term Expectations New Revenue Op Margin Profitability Growth Incremental Over the Cycle 40% on Average Sustainable growth of 4% operating margin 4% CAGR or greater of >20%* Committed Return of Capital Yields 8-10% EPS* Growth * Non-GAAP Page 42
Slide 43: A Disciplined Allocation of Resources to Support Growth
IN SUMMARY A Disciplined Allocation of Resources to Support Growth – Clear value creation framework – Effective operating model balanced with investments for growth – Disciplined acquisition strategy – Focused plan for sustainable revenue and earnings growth Page 43
Slide 44: Q&A
Q&A KEYSIGHT TECHNOLOGIES Page 44
Slide 45: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A and Break Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Tec
Slide 46: Keysight Technologies – Jay Alexander
Keysight Technologies Jay Alexander Senior Vice President and Chief Technology Officer Page 46
Slide 47: Chief Technology Officer Priorities
Chief Technology Officer Priorities Internal: Allocate R&D resources • Create competitive Identify growth advantages Grow Revenue opportunities and EPS • Expand addressable market External: Guide strategically aligned acquisitions Page 47
Slide 48: Agenda
Agenda Shift focus – allocate resources for growth Create strong competitive advantages Page 48
Slide 49: Investing to Drive Revenue and Margins
Investing to Drive Revenue and Margins Investment Outcomes Market share Revenue from R&D customers Investment Priorities Revenue from software & services • Software SAM expansion • Modular • Wireless • Services Increasing Page 49
Slide 50: Shifting to a Higher Margin Mix
Shifting to a Higher Margin Mix Keysight Revenue* Keysight Revenue* by Customer Type by Offering Type I&M Services SW MFG R&D HW Shift 1 Shift 2 Increasing revenue from Increasing revenue from R&D customers software and services * FY15 estimates Page 50
Slide 51: Agenda
Agenda Shift focus – allocate resources for growth Create strong competitive advantages Page 51
Slide 52: Leveraged Investments into Multiple Form Factors for Competitive Differentiation
A D VA N TA G E # 1 Leveraged Investments into Multiple Form Factors for Competitive Differentiation Leverage – Multiple Products Feature Rich Boxes • High Performance • Midrange Investment • Economy Leading edge Modular Instruments and proprietary • High Performance technologies • Midrange (hardwar
Slide 53: Leveraged Investments into Multiple Form Factors for Competitive Differentiation
A D VA N TA G E # 1 – E X A M P L E Leveraged Investments into Multiple Form Factors for Competitive Differentiation “X-Chips” Analog Chipset Feature Rich Box • Highly integrated N9030A • High performance Signal Analyzer • Low power Modular M9375A Network Analyzer Proprietary intellectual property d
Slide 54: Cumulative Investments that Span Multiple Product Generations
A D VA N TA G E # 2 Cumulative Investments that Span Multiple Product Generations 4G/5G Many solutions must deliver + capabilities that build on earlier capabilities and 3G 3G previous R&D investments. A wireless communications + + example is shown here. 2G 2G 2G Early Products, Subsequent Current I
Slide 55: Deep Customer Engagement Ensures the Right Solutions are Developed
A D VA N TA G E # 3 Deep Customer Engagement Ensures the Right Solutions are Developed When They are Needed Customer Insight Advantages • Research collaborations Drives R&D toward the most critical unmet needs • Lead customer engagements Ensures a future market • Development partnerships for pro
Slide 56: Keysight's Technology Strategy Drives Growth and Builds Strong Competitive Advantages
IN SUMMARY Keysight’s Technology Strategy Drives Growth and Builds Strong Competitive Advantages – Focused investments in segments that can produce revenue growth and strong margins – Technology leverage to create differentiated solutions in the form factors and time frames required by customers – C
Slide 57: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A and Break Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Tec
Slide 58: Agenda
Agenda Keysight’s software business today Growing our software portfolio via the Anite acquisition Strategy for further growth Page 58
Slide 59: Keysight's Software Business Today – Well-Positioned and Growing
Keysight’s Software Business Today – Well-Positioned and Growing – Revenues over $400M* – $2B market for electronic test software, ~7% CAGR* – Gross margins ~30 points above Keysight aggregate – Growth opportunities across all end markets Simulation Software Measurement Software Simulate Prototype M
Slide 60: Agenda
Agenda Keysight’s software business today Growing our software portfolio via the Anite acquisition Strategy for further growth Page 60
Slide 61: Keysight's Discipline and Clear Criteria for Acquisitions
Keysight’s Discipline and Clear Criteria for Acquisitions The Example • Aligns with strategic growth priorities Strategic Alignment • Increases proportion of total revenue from R&D market • Expands Served Addressable Market (SAM) Growth • Focuses on faster growing market segments or adds key technol
Slide 62: Anite Allows Keysight to Offer a Complete Solution
Anite Allows Keysight to Offer a Complete Solution Two Critical Wireless Device Complete Design and Design and Test Needs Test Solutions Software Layer − Previously Keysight provided (Anite) only hardware layer solutions Hardware Layer (Keysight) − With Anite, Keysight now provides both the hardware
Slide 63: Anite Expands Keysight's Software Revenue Mix
Anite Expands Keysight’s Software Revenue Mix Keysight Revenue Mix(1) Anite Revenue Mix(2) Services HW SW SW HW Anite’s revenue mix advances the shift toward software (1) FY14 (2) Per Anite 2015 annual report ending April 30, 2015. Includes product software and IP licenses, Page 63 plus software mai
Slide 64: Agenda
Agenda Keysight’s software business today Growing our software portfolio via the Anite acquisition Strategy for further growth Page 64
Slide 65: Software Growth Strategy
Software Growth Strategy 1 Expand simulation business − to address growth opportunities in High-Speed Digital and Power design 2 Deliver solutions focused on growth segments − deliver R&D (prototype test) solutions focused on growth segments such as 5G Communications, Power, and Automotive 3 Grow su
Slide 66: Software is an Important Growth Driver for Keysight
IN SUMMARY Software is an Important Growth Driver for Keysight – Keysight is a significant and recognized software leader in our industry – Both organic and inorganic investments will drive the growth of Keysight’s software offerings – The expansion of software offerings will favorably impact growth
Slide 67: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A and Break Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Tec
Slide 68: Keysight Technologies – Guy Séné
Keysight Technologies Guy Séné Senior Vice President, Measurement Solutions & Worldwide Sales Page 68
Slide 69: Agenda
Agenda Keysight’s communications business today Market dynamics The 5G opportunity Growth drivers Page 69
Slide 70: Keysight's Business Today: Leader in Communications Design & Test
Keysight’s Business Today: Leader in Communications Design & Test Profile Performance – Solutions for all customers in communications • Chipsets and components, smartphones and Internet of Revenue FY15* $1B Things (IoT) devices, base stations, network infrastructure, and cloud computing – Very activ
Slide 71: Agenda
Agenda Keysight’s communications business today Market dynamics The 5G opportunity Growth drivers Page 71
Slide 72: Persistent Growth in Data Drives Wireless Investment
Persistent Growth in Data Drives Wireless Investment Drivers Results Connected Devices* – Desire for instantaneous data 30B+ in all devices – IoT significantly increases number 15B of connected devices – Adjacent markets such as Today 2020 Automotive and Medical add to data growth Mobile Data Traffi
Slide 73: Customer Investment Shifting to R&D
Customer Investment Shifting to R&D Manufacturing Peak in 2012 Investment Shifts to More R&D 2012 Comms Market* 2015 Comms Market* 58% 42% 47% 53% Other R&D Other R&D – 4G manufacturing build-out in – 4G enhancements infrastructure and handsets – 5G and IoT infrastructure and – Cost pressure due to
Slide 74: Agenda
Agenda Keysight’s communications business today Market dynamics The 5G opportunity Growth drivers Page 74
Slide 75: 5G Enables Breakthrough in Communications
5G Enables Breakthrough in Communications Mobile Massive Machine Mission-Critical Broadband Communication Machine Communication IoT • All data, all the time • 30 billion “things” • Ultra high-reliability connected • 2 billion people on • Failure not an option social media Page 75
Slide 76: New Design and Measurement Tools Required
New Design and Measurement Tools Required Users Demand New Enabling Customer Technologies “5 bars Tools always” • Faster data • New device designs • New solutions to connections meet wider • New network bandwidth, higher • Everything connected designs frequency needs from cars to across wireless app
Slide 77: Agenda
Agenda Keysight’s communications business today Market dynamics The 5G opportunity Growth drivers Page 77
Slide 78: Keysight Growth Drivers
Keysight Growth Drivers 1 Engaging early in 5G to maximize share and value 2 Strengthening wireless portfolio with Anite Page 78
Slide 79: 5G Collaborations Underway
GROWTH DRIVER #1 5G Collaborations Underway 5G Timeline 2016-2018 2020+ 2010-2015 2018-2020 Develop Commercialize, Early Research Trials Standards Deploy Keysight collaborates with industry leaders and influencers – Major universities conduct 5G research. New York University Wireless, Bristol Univer
Slide 80: Delivering First-to-Market Solutions for 5G
GROWTH DRIVER #1 Delivering First-to-Market Solutions for 5G Simulate Prototype Manufacture Optimize Providing first high-frequency test solutions to market-leading customers Introduced first 5G simulation models at Mobile World Congress 2015 Page 80
Slide 81: Strengthening Wireless Portfolio with Anite
GROWTH DRIVER #2 Strengthening Wireless Portfolio with Anite Anite Profile • A leader in R&D software Simulate Prototype Manufacture Optimize solutions for wireless handsets (~70% of revenue(1)) • A leader in network test applications (~30% of revenue(1)) • $191M revenue(1), $37M operating profit(1,
Slide 82: Adding Solutions for Software Layer Design and Test
GROWTH DRIVER #2 Adding Solutions for Software Layer Design and Test Software Layer (Anite) Hardware Layer (Keysight) • Access to new R&D customers earlier in design cycle • Strengthens relationships with chipset companies and wireless service providers • Complements Keysight’s product portfolio • A
Slide 83: Expanding Served Market with Network Test Solutions
GROWTH DRIVER #2 Expanding Served Market with Network Test Solutions – Anite’s network test portfolio expands Keysight’s served market by $500M* – Primary customers are mobile operators, network equipment manufacturers, and service contractors – Solutions to optimize quality and coverage of wireless
Slide 84: Keysight is Well-Positioned to Capture Growth in Wireless R&D
IN SUMMARY Keysight is Well-Positioned to Capture Growth in Wireless R&D – Keysight is a leader in communication design and test – Keysight is aligned with market dynamics • Increasing focus on R&D • Engaging early in 5G to maximize share • Strengthening wireless portfolio with Anite Page 84
Slide 85: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A and Break Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Tec
Slide 86: Agenda
Agenda Modular solutions dynamics Keysight modular growth Page 86
Slide 87: Modular Solutions Dynamics
Modular Solutions Dynamics Modular Modular will co-exist with other form factors, growing Solutions faster than overall market Keysight Keysight is #2 and growing faster than overall modular Growing Faster solutions with unique differentiation Keysight Application expertise is key and Keysight is a
Slide 88: Keysight Modular: PXI and AXIe Industry Standards
Keysight Modular: PXI and AXIe Industry Standards for Test and Measurement PXI AXIe PCI eXtensions for Instrumentation ATCA* eXtensions for Instrumentation − Maintained by PXI Systems Alliance − Maintained by AXIe Consortium − High-performance for measurement − “Big brother to PXI” and automation ap
Slide 89: Fast Growing Modular Still Small Portion of Total Market
Fast Growing Modular Still Small Portion of Total Market 2014 Modular Solutions 2015 Total Market $1.1 Billion* $13.5 Billion* $B 18 16 14 $625M* 12 43% 57% PXI/AXIe 10 Other PXI/AXIe Modular Modular 8 Modular PXI/AXIe 15% CAGR* 6 Modular to 2020 4 15% CAGR* 2 0 2015 2016 2017 2018 2019 2020 * Per C
Slide 90: Agenda
Agenda Modular solutions dynamics Keysight modular growth Page 90
Slide 91: Strong Keysight Growth in PXI/AXIe Modular Solutions
Strong Keysight Growth in PXI/AXIe Modular Solutions New Key Initiatives Keysight PXI/AXIe Orders − Growing core catalog: Now >150 modular products and solutions − Introducing state-of-the-art modules that are winning new business and ~$150M taking share − Winning systems deals in large 59% accounts
Slide 92: Capturing Growth with Product Leadership
Capturing Growth with Product Leadership Made Possible by Keysight Example: Proprietary Technologies PXI Vector Network Analyzer Only single-slot high-performance VNA, enabling up to 32 ports in one chassis Best performance for fast and accurate measurements Reduces cost of test by simultaneou
Slide 93: Keysight Offers All Form Factors Meeting the Needs of Customer Applications
Unique Value: Keysight Offers All Form Factors Meeting the Needs of Customer Applications Feature Rich Box Modular Handheld • R&D • Manufacturing • Installation • Validation • R&D • Maintenance Customer • Complex device • Validation manufacturing • Full measurement set • Small footprint • Portabilit
Slide 94: Highly Differentiated Position: A Trusted Advisor with >75 Years of Expertise
Highly Differentiated Position: A Trusted Advisor with >75 Years of Expertise – Only supplier that offers all form factors to provide complete solutions that best fit customer needs – Leverage leading-performance technologies into multiple form factors – Use common measurement software across all fo
Slide 95: Keysight Intends to be #1 in Modular Solutions
IN SUMMARY Keysight Intends to be #1 in Modular Solutions Keysight is growing much faster than overall modular solutions Keysight has a highly differentiated position Keysight is the trusted advisor for customers’ application needs Page 95
Slide 96: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A and Break Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Tec
Slide 97: Keysight Technologies – Mike Gasparian
Keysight Technologies Mike Gasparian Senior Vice President, Customer Support and Services & WW Marketing Page 97
Slide 98: Agenda
Agenda Strong services foundation Emerging services opportunities Growth drivers Page 98
Slide 99: Today: Strong Customer Services Foundation
Today: Strong Customer Services Foundation $400M* Services Revenue Business Focus – Calibration Used Calibration Equipment – Repair – Used equipment Repair – Global footprint • Service centers in 30 countries Competitors • Affiliated with 35 calibration standards bodies in 17 – Third-party maintaine
Slide 100: Agenda
Agenda Strong services foundation Emerging services opportunities Growth drivers Page 100
Slide 101: Customer Needs Accelerate Service Opportunities
Customer Needs Accelerate Service Opportunities Emerging Services Customer Needs Opportunities • Reduce total cost of test • Multi-vendor support • Asset utilization • Asset management • Manage capacity • Test consulting • Outsourcing • Systems integration • Expertise, consulting • Training Page 101
Slide 102: Keysight Services is Ideal Growth Opportunity
Keysight Services is Ideal Growth Opportunity Strategy Customer Needs Expands Alignment Alignment Addressable Market Aligns with Reduce costs Adds $1B* in new Keysight solutions addressable services strategy Outsource opportunities New Asset utilization Expertise & consulting $1B Services $0.5B Anit
Slide 103: Attractive Characteristics of the Services Business
Attractive Characteristics of the Services Business – Immediate opportunities large installed base – Increases served addressable market access new dollars – Greater account control strategic selling – Stable revenue stream less cyclicality, multi-year contracts Page 103
Slide 104: Agenda
Agenda Strong services foundation Emerging services opportunities Growth drivers Page 104
Slide 105: Expand Market, Grow Customer Entry Points
GROWTH DRIVER #1 Expand Market, Grow Customer “Entry Points” Traditional Approach + Expanded Approach Keysight New Keysight Products Services Leads to Keysight Leads to product & services incremental Keysight sales product sales Addressable Market Size Expands Page 105
Slide 106: Grow by Expanding Technology Management Services
GROWTH DRIVER #2 Grow by Expanding Technology Management Services Traditional Offerings Expanded Offerings Keysight Repair and Multi-Vendor, Calibration Extended Support Technology Used Equipment Refresh Instrument & Asset Instrument Tracking Management Professional Services Pre-Sales Consulting Bus
Slide 107: Moving Up the Customer Value Chain Drives Growth
GROWTH DRIVER #3 Moving Up the Customer Value Chain Drives Growth Professional services Asset mgmt. and technology Multi-vendor refresh calibration Calibration Repair Page 107
Slide 108: Goal: Increase Services Revenue 50% by 2020
Goal: Increase Services Revenue 50% by 2020 2020 New 2015 $600M Revenue $400M* Revenue Used Used Equipment Calibration Equipment 8% Calibration CAGR “Plus” Repair Repair * FY15 forecast Page 108
Slide 109: Services Key Takeaways
Services Key Takeaways – Strong services foundation – Expanding addressable market – Multiple growth drivers Goal: Increase revenue 50% to $600M by 2020 Page 109
Slide 110: Agenda
Agenda 8:30 am – 12:30 pm Ron Nersesian Opening Remarks and Strategic Overview President and Chief Executive Officer Neil Dougherty Financial Update Sr. Vice President and Chief Financial Officer Q&A Jay Alexander Differentiate Through Technology Leadership Sr. Vice President and Chief Technology Of
Slide 111: Keysight Technologies – Gooi Soon-Chai
Keysight Technologies Gooi Soon-Chai Senior Vice President, Order Fulfillment & Infrastructure Page 111
Slide 112: Agenda
Agenda Industry-leading supply chain Journey of continuous improvement Page 112
Slide 113: Leader in Worldwide Supply Chain Management
Leader in Worldwide Supply Chain Management High technology products & solutions for the electronic measurement market Countries served 100+ Customers >14,000 Industries Multiple Portfolio of solutions Broadest Size of manufacturing operation ~1M sq ft | Handheld Instruments | Modular Solutions | Os
Slide 114: Reliable Performance at Every Step in the Process
Reliable Performance at Every Step in the Process Planning Order Procurement Management Supply Chain Excellence Customers Logistics Manufacturing Engineering Page 114
Slide 115: Our Focus: Lean Plus Innovation
Our Focus: Lean Plus Innovation 1. Process automation and 2. Process re-engineering simplification – Redesign of business – Streamline workflow to processes for efficiency improve productivity and effectiveness Operational Excellence 4. War on “waste” 3. Value engineering – Continuous improvement –
Slide 116: Recognized Industry Leader
Recognized Industry Leader Supply & Demand Chain Global Supply Chain Manufacturing Leadership 100 Award Executive 100 Award Excellence Award – Global Value Chain Award Performance Excellence Supply Chain Operational Innovation High-Tech Supply Chain Award Excellence Award Award of Excellence Excelle
Slide 117: Agenda
Agenda Industry-leading supply chain Journey of continuous improvement Page 117
Slide 118: Operational Excellence & Variable Cost Structure
Operational Excellence & Variable Cost Structure Journey from 2005 to 2015 1. Converged manufacturing footprint rationalized manufacturing from 13 to 3 major hubs established low-cost manufacturing hub in Asia 2. Expanded global procurement capitalized on economies of scale • Gross margin st
Slide 119: Strengths We Are Building On
Strengths We Are Building On Low Cost Region Flexible Advanced Technology Unique Engineering Manufacturing Supply Base Capability Capability • World’s largest • Global sourcing • State of the art • Multi discipline Test & Measurement • Outsourcing technology centers competencies facility in Asia pro
Slide 120: Order Fulfillment Strategy
PRIORITIES GOING FORWARD Order Fulfillment Strategy • Relentless focus on cost savings − LEAN at Keysight • Develop new technologies capability − new materials / new manufacturing process Cost savings to maintain favorable margins • Design for supply chain − rapid launch and ramp-to-volume of
Slide 121: Infrastructure: Separation to Optimization
PRIORITIES GOING FORWARD Infrastructure: Separation to Optimization • Workplace Solutions − Site optimization − Energy efficiency • Expanded − Workplace of the future economies of scale • Optimize infrastructure cost • Information Technology • Safe and secured − Optimize IT Infrastructure environm
Slide 122: Keysight Order Fulfillment and Infrastructure – A Key Competitive Advantage
IN SUMMARY Keysight Order Fulfillment and Infrastructure – A Key Competitive Advantage – Recognized as best-in-class, industry leader – Committed to continuous improvement • major improvements made 2005-2015 • focused on additional improvements to preserve margins and grow the business Page 122
Slide 123: Q&A
Q&A KEYSIGHT TECHNOLOGIES Page 123
Slide 124: Key Messages
Key Messages Transformation Objectives Leader in Technology and market leader in Over the Cycle profitable market ever-evolving technology market 4% revenue CAGR Strong Proven operating performance business Deliver >20% model and cash generation across cycles operating margin 8-10% EPS growth