Slide 1: Keysight Technologies Q3 Fiscal Year 2023 Results
Keysight Technologies Q3 Fiscal Year 2023 Results August 17, 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: Q3'23 Highlights
Q3’23 Highlights • Record Q3 revenue of $1.38B at midpoint of guidance range; flat y/y, up 1% on a core* basis Solid Q3 results demonstrate strength of portfolio 1 • Gross margin* of 66%; Record operating margin* of 31%, up 120bps y/y and resilience of financial model • Record non-GAAP EPS of $2.19
Slide 4: Keysight's Planned Acquisition of ESI Group
Keysight’s Planned Acquisition of ESI Group Accelerating growth of Keysight’s simulation software and virtual prototyping capabilities • A portfolio acquisition in the simulation software and virtual prototyping market • Expands software and application layer solutions offering A Strategic • Complem
Slide 5: Q3'23 Non-GAAP Financial Highlights
Q3’23 Non-GAAP Financial Highlights Orders Revenue Operating Margin EPS $1.244B $1.382B 31.3% $2.19 -15%y/y (-15% core*) —y/y (+1% core*) +120 basis points y/y +9%y/y * Core growth excludes the impact of currency, acquisitions or divestitures closed in last twelve months, reconciliations included. 5
Slide 6: Revenue by Segment & by Region
Revenue by Segment & by Region Q3'23 Revenue: $1.382B 6
Slide 7: Revenue Trend by Region
Revenue Trend by Region -1% y/y (-2% core*): Revenue decline in +17% y/y (+17% core*): Revenue growth -4% y/y (-2% core*): Revenue decline in CC partially offset by growth in EI and ADG. in EI, CC, and ADG. CC partially offset by growth in EI and ADG. Key: * Core revenue growth excludes the impact o
Slide 8: Q3'23 Communications Solutions Group Highlights
Q3’23 Communications Solutions Group Highlights Revenue • Gross margin of 67.6%; record operating margin of 30% $918M • Commercial Communications: Investment continued in O-RAN, satellite and -5% y/y (-5% core*) non-terrestrial networks, 5G reduced capability solutions, and data centers for AI/ML wo
Slide 9: Q3'23 Electronic Industrial Solutions Group Highlights
Q3’23 Electronic Industrial Solutions Group Highlights • All-time high revenue; 12th consecutive quarter of DD revenue growth Revenue • Automotive: Record third quarter revenue driven by continued investment in $464M new EV charging and battery test and validation, as well as AV technology. +14% y/y
Slide 10: Q3'23 Revenue By End Market
Q3’23 Revenue By End Market End Market Revenue YoY % Commercial $611M -12% Communications Aerospace, Defense & $307M +11% Government Electronic Industrial $464M +14% Solutions Total $1,382M — 10
Slide 11: 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 12: Guidance and Financial Considerations
Guidance and Financial Considerations Q4'23 Guidance 2023 Guidance (midpoint) Revenue $1.29B – $1.31B $5.45B Non-GAAP Earnings per share $1.83 – $1.89 $8.19 FY23 Financial Considerations • Q4'23 Net Interest and Other Income/Expense: $15M net income • Non-GAAP tax rate of 12%; expected to increase t
Slide 13: Investor Resources
Investor Resources Recent Reports: May 2023 Quick Links 2022 CSR Report: Environmental Why Keysight Sustainability Social Impact Ethical Governance Recent Investor Presentations and Webcasts 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 Nine months ended July 31, July 31, 2023 2022 2023 2022 Income from operations, as reported $ 365 $ 357 $ 1,041 $ 955 Amortization of acquisition-related balances 23 26 71 78 Share-b
Slide 16: Non-GAAP Gross Margin Reconciliation
NON-GAAP GROSS MARGIN RECONCILIATION (In millions, except where noted) (Unaudited) PRELIMINARY Three months ended Nine months ended July 31, July 31, 2023 2022 2023 2022 Gross Profit, as reported $ 896 $ 877 $ 2,688 $ 2,540 Amortization of acquisition-related balances 9 12 29 37 Share-based compensa
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 Nine months ended July 31, July 31, 2023 2022 2023 2022 Net Diluted Net Diluted Net Diluted Net Diluted Income EPS Income EPS Income EPS Income EPS GAAP Net income $ 288
Slide 18: Reconciliation of Core Revenue
RECONCILIATION OF CORE REVENUE (In millions) (Unaudited) PRELIMINARY Year-over-year Percent Q3'23 Q3'22 Inc/(Dec) Revenue $ 1,382 $ 1,376 — Adjustments: Revenue from acquisitions or divestitures (4) — Currency impacts 10 — Core Revenue $ 1,388 $ 1,376 1% Refer to non-GAAP financial measures slide 18
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 Q3'23 Q3'22 YoY % Q3'23 Q3'22 Q3'23 Q3'23 Q3'22 YoY % Communications Solutions Group $ 918
Slide 20: Revenue by End Markets
REVENUE BY END MARKETS (In millions) (Unaudited) PRELIMINARY Percent Q3'23 Q3'22 Inc/(Dec) Aerospace, Defense and Government $ 307 $ 276 11% Commercial Communications 611 694 (12)% Electronic Industrial 464 406 14% Total Revenue $ 1,382 $ 1,376 — Refer to non-GAAP financial measures slide 20
Slide 21: 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