Keysight Technologies Inc. · NYSE:KEYS
Keysight Technologies — Stifel 2018 Cross Sector Insight Conference
25 slides from Keysight Technologies's conference presentation, Jun 12, 2018
Slide 1: Stifel 2018 Cross Sector Insight Conference
KEYSIGHT TECHNOLOGIES Stifel 2018 Cross Sector Insight Conference JUNE 12, 2018 KEYSIGHT TECHNOLOGIES ~~ _ af=<_
Slide 2: Forward-looking statements
This communication contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. These forward-looking statements involve risks and uncertainties that could significantly affect the expected results and are based on certain
Slide 3: FY'17 Key Statistics and Revenue Mix
FY’17 KEY STATISTICS FY’17 REVENUE MIX Headquarters Santa Rosa, CA 8% Spin-off Date1 November 1, 2014 13% 32% Market Capitalization2 ~$8.5B $3.2B Free Cash Flow3 $241M Total Revenue4 26% Operating Margin 4 19% 21% Total Customers5 >32,000 Commercial Communications: $1.04B7 Aerospace, Defense and Gov
Slide 4: Market Growth Drivers and Quarterly Results
MARKET GROWTH DRIVERS Revenue 1,2 $999M, +32% y/y, +18% y/y core Orders2 $987M, +23% y/y, +10% y/y core Operating Margin1 20% EPS1 $0.83, +31% y/y 5G Auto & Energy Increasing FY18 Expect to deliver full-year core Revenue revenue growth of 7-8% Aerospace Expectations1,2 Services & Defense 1 Non-GAAP
Slide 5: Smart Technology Connects the World
WIRELESS SMART TECHNOLOGY CONNECTS THE WORLD INNOVATION IS EVERYWHERE NETWORKING / AUTOMOTIVE CLOUD ✓ Devices ✓ Infrastructure ✓ Cities ✓ Defense ✓ Vehicles ✓ Wearables Transforming from AEROSPACE / Hardware-centric Product to IOT DEFENSE Software-centric Solutions Company ACCELERATING INNOVATION TO
Slide 6: Raising Keysight's Core Growth Expectations to 4-5% Over the Cycle
End-Market Market Growth Keysight Segments End Markets Size Rates2 Revenue3 Position4 Share Commercial Communications $4.0B 3 - 5% $1.0B #1 ~25% Communications Solutions Aerospace, Defense & Gov’t $3.0B 2 - 3% $0.7B #1 ~23% Electronic Indust. Solutions Electronic Industrial $4.0B 2 - 3% $0.8B #1 ~20
Slide 7: Customer Coverage and Breadth of Customers
CUSTOMER COVERAGE1 (2017) BREADTH OF CUSTOMERS3 LEADING POSITIONS4 ADI Hittite • Alphabet • Amazon • Arris • AT&T 10 of 10 Top Telecom Equipment Companies Software Revenue BAE Systems • Boeing • Broadcomm • Cisco 10 of 10 Top Semiconductor Suppliers Continental Auto • Daimler • Datang • Delphi #1 Fo
Slide 8: 5G Phases and Keysight 5G Value Proposition
5G PHASES 2010 - 2015 2016 - 2019 2020 - 2025+ Prototyping, Research Commercialize, Deploy & Ramp Standards and Trials KEYSIGHT 5G VALUE PROPOSITION SIGNIFICANT PROGRESS 1. Invested early in broad set of ✓ >60% 5G order CAGR over past 3 years differentiated technology to enable 5G ✓ Strong order res
Slide 9: Increasing Software Content in Wireless Stack
Mobile Network Core Data Chipsets Devices Access Network Center Comms “Stack Layers” Increasing Software Content Layers 5, 6, 7 Management Mobile Network and Application Drive Test Experience Customer Keysight Emulation Network Testing, Visibility and BTS1 Mobile Device Test Security Anite Acquisiti
Slide 10: Automotive Solutions Introduced Over Past 2 Years
INTELLIGENCE CONNECTIVITY POWER SECURITY Electronics Telematics and Battery and Charging Network and Safety Infotainment Infrastructure 70+ • • • Engine Control Unit Body Control Unit Tire Pressure • • Navigation systems Automatic emergency call • • Li-ion cell performance test Charging function and
Slide 11: Network Test, Visibility and Security
Network Design TEST VISIBILITY Harden infrastructure Eliminate blind spots Validate app performance Real-time intelligence Verify provisioning Optimize network tools SECURITY Identify vulnerabilities Network Provide resilient security Network Operations Reduce attack surface Rollout WE CHALLENGE THE
Slide 12: Solutions Across Aerospace and Defense Workflow
SIMULATE PROTOTYPE VALIDATE MANUFACTURE SUSTAIN Solutions Across Aerospace and Defense Communications Workflow Defense Modernization Requires ELECTRONIC SIGNAL SUPPLY OPERATIONS Broad WARFARE AND MONITORING CHAIN Solutions RADAR Threat Simulation Public Safety Subsystems Field and Service • Mission
Slide 13: Real World RF Electronic Warfare Simulation Lab
REAL WORLD RF ELECTRONIC WARFARE SIMULATION LAB Keysight threat simulators selected by U.S. DoD for hardware-in-the-loop simulation 13
Slide 14: Design and Test Software Lifecycle Platform
SIMULATE PROTOTYPE VALIDATE MANUFACTURE OPTIMIZE Lifecycle Phases A breakthrough design and test software solution that accelerates the overall workflow from simulation of early concepts through manufacturing and optimization of deployed systems • Integrates Keysight’s leading software solutions, in
Slide 15: Profitable Growth, Financial Management, Capital Allocation
PROFITABLE GROWTH • First-to-market CAPITAL ALLOCATION • Differentiated solutions • Focus on ROIC • High software content • Flexible, balanced approach • Sustained leadership FINANCIAL MANAGEMENT OPERATIONAL DISCIPLINE • High profit leverage • Laser cost focus (Lean+) • Cost structure flexibility •
Slide 16: Previous and New Financial Targets
Previous Target New Target (2015 Investor Day) Core Revenue Sustainable Sustainable Growth1 4% CAGR 4-5% CAGR Operating 18-19% 22-23% Margin1 EPS 8-10% ≥10% Growth1 • 22-23% operating margin to be achieved in 2021 ASSUMPTIONS: • Share count maintained flat to Q2’18 1 Non-GAAP measure. Core revenue g
Slide 17: Market Leadership, Share Gains, Recurring Revenue, Customer Diversity
MARKET GAINING MARKET INCREASING BROAD CUSTOMER LEADERSHIP SHARE RECURRING REVENUE DIVERSITY Market-leading position Three consecutive years Growing software and 32,000 end customers in diverse and growing of market share gains services solutions annually with no single end markets since separation
Slide 18: Thank you
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Slide 19: Appendix
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Slide 20: Reconciliation of Income from Operations to non-GAAP
Reconciliation of Income from Operations to non-GAAP Income from Operations (in millions) Q218 FY17 Income from operations, as reported $ 100 $ 239 Amortization of acquisition-related balances 65 256 Share-based compensation 15 56 Acquisition and integration costs 17 57 Acquisition-related compensat
Slide 21: Non-GAAP Net Income and EPS Reconciliation
Non-GAAP Net Income and EPS Reconciliation (In millions, except per share amounts) Q218 Q217 GAAP Net income $ 64 $ 49 Non-GAAP adjustments: Amortization of acquisition-related balances 65 26 Share-based compensation expense 15 13 Acquisition and integration costs 17 31 Acquisition-related compensat
Slide 22: Non-GAAP revenue reconciliation
Note: Non-GAAP revenue is defined to exclude the fair value adjustments to the acquisition-related deferred revenue balances. 22
Slide 23: Non-GAAP revenue reconciliation
Note: Non-GAAP revenue is defined to exclude the fair value adjustments to the acquisition-related deferred revenue balances. 23
Slide 24: Non-GAAP revenue reconciliation
Note: Non-GAAP revenue is defined to exclude the fair value adjustments to the acquisition-related deferred revenue balances. 24
Slide 25: FY18 Guidance Reconciliation
FY18 Guidance FY17 Low-end High-end GAAP Revenue $ 3,790 $ 3,820 $ 3,189 Amortization of acquisition-related balances 36 36 60 Non-GAAP Revenue 3,754 3,784 3,249 Less: Revenue from acquisition included in segment results (237) (237) Currency impacts (45) (46) - Non-GAAP Core Revenue $ 3,472 $ 3,501
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