Keysight Technologies Inc ((KEYS)) has held its Q4 earnings call. Read on for the main highlights of the call.
TipRanks Black Friday Sale
- Claim 60% off TipRanks Premium for the data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
Keysight Technologies Inc. recently held its earnings call, revealing a strong financial performance characterized by significant growth in orders, revenue, and earnings per share (EPS). The company also reported record free cash flow and strategic acquisitions that are expected to bolster future growth prospects. While challenges such as tariff impacts and short-term dilution from acquisitions were acknowledged, the overall sentiment was positive, with robust growth and strategic positioning for future opportunities outweighing the negatives.
Strong Financial Performance
Keysight Technologies demonstrated impressive financial results in the fourth quarter, with orders growing by 14%, revenue increasing by 10%, and EPS rising by 16%. For the full year, orders and revenue rose by 8%, while EPS increased by 14%. These figures underscore the company’s robust financial health and its ability to deliver consistent growth.
Record Free Cash Flow
The company achieved a record free cash flow of $1.3 billion, which allowed it to invest in research and development, complete three strategic acquisitions, and return approximately $375 million to shareholders through buybacks. This achievement highlights Keysight’s strong cash generation capabilities and its commitment to enhancing shareholder value.
Acquisitions and Strategic Investments
Keysight advanced its software-centric solution strategy through the acquisitions of Spirent, Synopsys Optical Solutions Group, and ANSYS PowerArtist. These acquisitions are expected to contribute approximately $375 million in revenue by fiscal year 2026, aligning with the company’s strategic growth initiatives.
Communication Solutions Group Growth
The Communication Solutions Group at Keysight experienced growth for the sixth consecutive quarter, delivering double-digit order growth and high single-digit revenue growth for the full year. This consistent performance underscores the group’s strength and its contribution to the company’s overall success.
Positive Outlook for FY 2026
Looking ahead, Keysight expects revenue growth for fiscal year 2026, excluding acquisitions, to be at or above the high end of its 5% to 7% long-term target. This optimistic outlook is supported by the company’s strategic investments and operational performance.
Tariff Impacts
Keysight faced challenges from tariffs, but the company expects to fully mitigate the impact of the August tariff increase by the first quarter of 2026. This proactive approach demonstrates Keysight’s resilience in navigating external challenges.
Dilution from Acquisitions
While the recent acquisitions are expected to be mildly dilutive to fiscal year 2026 earnings, they are anticipated to become accretive twelve months post-close. This strategic move is expected to enhance long-term shareholder value.
Guidance
During the earnings call, Keysight provided robust guidance, reflecting its strong performance and strategic growth initiatives. The company projects revenue growth between $1.53 billion and $1.55 billion in the first quarter of fiscal 2026, with EPS expected to range from $1.95 to $2.01. Despite expected mild EPS dilution due to acquisitions, Keysight aims for EPS growth at or above its long-term 10% target, supported by strong operational performance and strategic investments in AI, 6G, and semiconductor technologies.
In summary, Keysight Technologies Inc. presented a positive earnings call, showcasing strong financial performance and strategic initiatives that position the company for future growth. Despite some challenges, the overall sentiment was optimistic, with the company’s robust growth and strategic positioning outweighing any negatives.