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Keysight (KEYS) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

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Keysight Technologies, Inc. (KEYS - Free Report) reported first-quarter fiscal 2022 (ended Jan 31, 2022) non-GAAP earnings of $1.65 per share, beating the Zacks Consensus Estimate by 5.1% and increasing 15.4% year over year.

Revenues increased 5.9% year over year to $1,250 million, surpassing the Zacks Consensus Estimate by 0.3%. The upside was driven by growth in both Communications Solutions Group (“CSG”) and Electronic Industrial Solutions Group (“EISG”) segments.

Core revenues (excluding the impact of foreign currency changes and revenues associated with businesses acquired or divested in the past 12 months) grew 6.6% year over year to $1,258 million.

Keysight Technologies Inc. Price, Consensus and EPS Surprise Keysight Technologies Inc. Price, Consensus and EPS Surprise

Keysight Technologies Inc. price-consensus-eps-surprise-chart | Keysight Technologies Inc. Quote

Top Line in Detail

Orders increased 22% on a year-over-year basis to $1,495 million in the quarter.

By segment, CSG revenues were $878 million, up 3% year over year. The increase was driven by investments in 5G, O-RAN adoption, 400G, 800G and terabit R&D and wireline applications.

EISG revenues increased 13% year over year to $372 million. This was driven by semiconductor measurement solutions and next-generation automotive and energy technologies, with growth across all regions.

In terms of end markets, Aerospace, Defense and Government revenues remained unchanged year over year at $294 million. Commercial Communications climbed 5% to $584 million. Electronic Industrial Solutions revenues were $372 million, up 13% year over year.

By region, revenues from the Americas were $483 million, up 3% year over year. Revenues from Europe increased 12% to $226 million. Revenues from the Asia Pacific increased 6% to $541 million.

Operating Details

CSG gross margin of 67.3% expanded 270 basis points (bps) while EISG’s gross margin of 62.6% contracted 80 bps on a year-over-year basis. CSG operating margin of 27% expanded 100 bps and EISG’s operating margin of 31% jumped 200 bps.

Cash Flow & Liquidity

During the fiscal first quarter, Keysight generated $224 million of cash from operating activities compared with $295 million in the prior-year quarter. As of Jan 31, 2022, the company had $1,977 million in cash and cash equivalents with $1,791 million of long-term debt.

Guidance

For the second quarter of fiscal 2022, Keysight expects revenues in the range of $1.29-$1.31 billion. Non-GAAP earnings are estimated between $1.63 and $1.69 per share.

Zacks Rank & Other Stocks to Consider

Keysight currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vocera Communications, Inc. (VCRA - Free Report) is another top-ranked stock in the broader Zacks Computer and Technology sector that sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 4.9% over the past 60 days.

Vocera Communications pulled off a trailing four-quarter earnings surprise of 115.4%, on average. The stock has returned 73.7% in the past year.

SeaChange International, Inc. (SEAC - Free Report) carries a Zacks Rank #2. The consensus estimate for current-year earnings has been revised upward by 10% over the past 60 days.

SeaChange International delivered a trailing four-quarter earnings surprise of 37.2%, on average. The stock has, however, declined 15.5% in the past year.

Qualcomm, Inc. (QCOM - Free Report) , carrying a Zacks Rank #2, is also a solid pick for investors. The consensus estimate for current-year earnings has been revised 12.2% upward over the past 60 days.

Qualcomm delivered a trailing four-quarter earnings surprise of 12.2%, on average. It has appreciated 15.1% in the past year.