Keysight Technologies reports Q3 revenue up 8%

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Santa Rosa-based Keysight Technologies (NYSE: KEYS) on Wednesday posted 8% higher revenue and 31% net income gains in its third fiscal quarter, compared with a year before.

The company’s quarterly revenue was $1.09 billion, when compared with $1.00 billion in the same period last year, according to the report. Net income for the company was $159 million, or $0.83 per share, up from $121 million, or $0.63 per share, in the third quarter of 2018.

Keysight, which manufactures electronic test and measurement equipment and software, also showed growth across two of its three main reporting segments.

“Keysight delivered another excellent quarter with both revenue and earnings exceeding the high-end of our guidance. Record third quarter revenue was driven by growth across the majority of our end markets as we continued to capture a significant portion of the demand we see in the marketplace,” said Ron Nersesian, Keysight, president and CEO, in a news release Wednesday.

“We are also driving strong earnings growth with our commitment to operational excellence and raising our revenue outlook for the year,” he said.

Third-quarter revenue bested the company's May projection of $1.02 billion-$1.06 billion. Keysight expects its fourth-quarter revenue to be $1.08 billion to $1.098 billion, and it raised its outlook for the full fiscal year, expecting revenue growth of 9%-10% and earnings growth of 40%-42%.

On an investor earnings call Wednesday, Nersesian also announced the acquisition of PRIMSA, an Italian telecom testing company.

Under the section on cash flow from investing activities, acquisition of businesses and intangible assets, net of cash acquired, the company paid out $90 million.

Keysight’s Communications Solutions Group, which handles 5G next generation cellular networks as well as aerospace defense and government work, reported revenue of $683 million in the third quarter, up 13%, and “driven by strong demand for 5G solutions across the wireless ecosystem” according to a statement from the company Wednesday.

The CSG segment builds electronic design and test solutions including radio frequency and microwave instruments, digital instruments, and various other general purpose test instruments.

Keysight’s Electronic Industrial Solutions Group reported revenue of $295 million in the third quarter, up 3% and driven by strength in automotive and general electronics across a broad set of industries. The company noted these gains were “offset by softness in the semiconductor market as expected.”

The Ixia Solutions Group, which Keysight acquired in 2017, posted revenues of $110 million in the third quarter, down 7% when compared with $119 million in the prior third quarter.

Keysight in a statement said this drop reflected “softness in the network test market, offset by high-single-digit year-over-year growth in network visibility.”

Nersesian noted an earnings call in May that recent U.S. Department of Commerce export control regulations aimed at China and Huawei limiting export of 5G next generation cellular technology will likely have an impact on future revenue, although the company expects continued growth for the rest of the year.

Senior Vice President and Chief Financial Officer Neil Dougherty noted that expectations of decreased business with Chinese telecom giant Huawei would not be as impactful as originally thought.

Huawei is a provider of information and communications technology infrastructure and smart devices according to its website.

“Huawei has historically been a 3% customer for us,” Dougherty said during the investor call Wednesday, referring to revenues. “We would expect Huawei to be a one or 2% customer,” going forward he added.

During a call earlier this year discussing second-quarter results, Dougherty said a Chinese customer accounted for almost 5% of its revenue in the first half of 2019, business it expected to lose because of U.S. China trade disputes.

While it would lose that business, Keysight still expected 7% to 8% revenue growth for the year, he said.

The company’s stock price at the close of trading Wednesday was $89.14 per share but jumped to $95.90 per share in after hours trading.

Note: this story has been updated with how much Keysight spent on acquisitions in the qaurter.

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