Keysight FQ3 net income up by 11 percent annually  

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Keysight Technology FQ2 cash balance strong despite COVID-19 impact
Image: Keysight Technologies

Keysight Technologies, Inc.’s fiscal third-quarter financial results revealed an 11 percent net income improvement from last year. The semiconductor company also topped Wall Street’s adjusted FQ3 earnings estimate by 41.7 percent. With its production capacity nearly recovered from coronavirus related disruption, the firm expects continued growth in the fiscal fourth-quarter.

Keysight’s FQ3 Financial Results

In the period ending July 31, Keysight made $1.11 billion with net income of $176 million and earnings per share (EPS) of $0.94. Though the firm’s sales fell by 7 percent year-over-year, its net income and EPS both increased by over 10.5 percent. The company’s revenue and profit also jumped by 12.96 and 147.8 percent from the fiscal second quarter, respectively.

The brand’s July period revenue topped Zacks Equity Research revenue projection by 10.1 percent and its adjusted EPS estimate by 41.7 percent.

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Like many electronic components manufacturers, Keysight encountered production shutdowns and diminished demand because of the global health crisis. The firm suffered double-digit revenue and profit regressions last period and declined to offer fiscal third-quarter guidance as a result. However, the brand reported its supply chain has almost fully recovered, and its financial results reflected that restoration.

The company explained its financial recovery was driven by strong demand for its 5G, data center, and aerospace components. However, the firm reported seeing weakened demand for its general electronics and automotive products in July.

Keysight’s Positive FQ4 Outlook

Because it resolved its supply chain issues, Keysight felt confident enough to forecast sales of $1.17 billion to $1.19 billion in FQ4 with adjusted EPS of $1.42 to $1.48. Based on its FQ4 2019 results, the firm expects no revenue growth but anticipates an adjusted profit upgrade of 6.79 to 11.27 percent. The brand’s guidance also represents sequential gross revenue and adjusted EPS improvement of 5.40 to 7.20 percent and 19.3 to 24.3 percent, respectively.

Keysight’s forecast outpaces Zack’s sales estimate by 2.63 to 4.38 percent and its adjusted EPS outlook by 7.57 to 12.12 percent.

The Santa Rosa, California-based semiconductor firm’s ability to meet its guidance is dependent upon the development of the coronavirus pandemic. If a second wave of the viral ailment prompts another wave of manufacturing sector shutdowns, the brand’s income will suffer. The company might end up posting negative full-year financial results in that scenario. But if conditions remain relatively stable or improve, it will exit FQ4 2020 in a strong position.

Hopefully, Keysight has moved past the worst of the pandemic’s impact on its operations and profitability.

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