ANNUAL REPORT 2021
Accelerating Innovation to Connect & Secure the World
Keysight Technologies Inc.
1400 Fountaingrove Parkway
Santa Rosa California 95403
Ronald S. Nersesian
Chairman, President, & Chief Executive Officer
January 28, 2022
To our stockholders,
Fiscal year 2021 was a record year for Keysight. We delivered 17 percent revenue growth and 45 percent earnings per share growth, or 28 percent on a non-GAAP basis. Our first-to-market,software-centric solutions strategy and strong execution by Keysight employees continue to enable our track record of consistent performance, despite disruptions from the pandemic, trade restrictions, and supply chain constraints.
During the fiscal year, we saw consistently strong demand for our portfolio of differentiated solutions that enable customers across diverse end markets to accelerate innovation to connect and secure the world. Keysight's solutions and strategy are well-aligned with many key long-term secular growth trends, including 5G, next-generation automotive, networking, IoT, quantum, and defense modernization, and we continue to capitalize on broad-based technology investments in these areas.
Since Keysight's inception as a public company in November 2014, we have achieved a 10 percent compound annual revenue growth rate, expanded gross margin by over 800 basis points, increased operating margins by nearly 1,000 basis points, and generated 16 percent annualized EPS growth. We have accomplished all of this while significantly increasing our investment in R&D and sales to drive future growth. During this time, we have also nearly tripled the size of our software revenue and more than doubled recurring revenue.
Across both of our Communications Solutions Group and Electronic Industrial Solutions Group, our software-centric solutions and higher value services continued to drive differentiation, strengthen our competitive position, and capture a higher percentage of our customers' wallet share. In fiscal year 2021, software and services not only delivered double-digit order and revenue growth, but also outpaced Keysight's overall growth. Combined, they represented just over one-third of total Keysight revenue for the year. We also continued to grow annualized recurring revenue, which now exceeds one billion dollars.
The Communications Solutions Group continued enabling the rapid progression of new technologies. Commercial communications' strength was driven by ongoing global 5G deployments and the roll-out of new 5G devices, adoption of open radio access network (ORAN) technology, and sustained investments in 400G and 800G ethernet solutions for data centers. Results for aerospace defense, and government were enabled by continued growth in space, satellite, electromagnetic spectrum operations, 5G, and early 6G research applications.
The Electronic Industrial Solutions Group also had a very strong year. Our semiconductor solutions benefited from ongoing investments in advanced technology nodes and capacity expansion. Growth for automotive and energy solutions was driven by strong investment in technologies for electric and autonomous vehicles. In general electronics, we benefited from demand driven by continued spend on commercial and industrial digital transformation and IoT.
In addition to delivering strong growth and focusing on customers, we maintained financial discipline and executed against the company's capital allocation priorities. We continue to accelerate Keysight's capability to provide industry-leading solutions through strategic acquisitions. During the fiscal year, we acquired Sanjole, a provider of wireless test and measurement solutions for protocol decoding and interoperability; Quantum Benchmark, which brings deep expertise in the performance validation software for quantum computing, and SCALABLE Network Technologies to enhance our software portfolio, with network simulation solutions to model and visualize communications networks and cyber threats for aerospace, defense, and government customers.
While we continued to invest in R&D at 16 percent of revenue or $788 million, Keysight generated free cash flow of $1.1 billion in fiscal year 2021, representing 23 percent of revenue and 99 percent of non-GAAP net income. We also repurchased approximately 4.4 million shares at an average price of $154 for a total consideration of $673 million, or 59 percent of free cash flow. In addition, in November 2021 Keysight's board of directors approved a new share repurchase authorization of $1.2 billion.
Our performance this fiscal year are a reflection of the Keysight Leadership Model, our culture, and our people, which we believe is a competitive advantage. Keysight's culture has long embraced corporate social responsibility (CSR), and this year we committed to achieving net zero emissions in company operations by 2040. We are working to set interim science-based targets to ensure we advance towards this goal. While we continue to make progress in this area, our efforts to-date have been recognized with many awards, including by JUST Capital and with membership in the Dow Jones Sustainability Index.
Diversity, equity, and inclusion are also embodied in the Keysight Leadership Model and remain a CEO priority for the company. In 2021, we published a Keysight Diversity & Inclusion brief that describes our long-standing philosophy, strategy, and goals. We established annual hiring goals for women globally and underrepresented minorities in the U.S. We also committed to diversity training for our managers. While there is more work to do, Keysight remains steadfast in our commitment to CSR and building a better planet.
We exited the year in a strong competitive position. I want to thank all Keysight employees for their exceptional execution and dedication to the company and our customers. Looking forward, I remain optimistic about what is ahead for Keysight and our ability to continue creating value for customers, shareholders, and employees.
Thank you for your continued support.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 2021
or
- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from | to |
Commission File Number: 001-36334 |
KEYSIGHT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware | 46-4254555 |
State or other jurisdiction of | I.R.S. Employer |
Incorporation or organization | Identification No. |
Address of principal executive offices: 1400 Fountaingrove Parkway, Santa Rosa, CA 95403
Registrant's telephone number, including area code: (800) 829-4444
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Common Stock | KEYS | New York Stock Exchange |
par value $0.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No □ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes □ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No □
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No □
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ''large accelerated filer,'' ''accelerated filer,'' ''smaller reporting company,'' and ''emerging growth company'' in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☒ | Accelerated filer | □ |
Non-accelerated filer | □ | Smaller reporting company | □ |
Emerging growth company | □ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes □ No ☒
The aggregate market value of common equity held by non-affiliates as of April 30, 2021 was approximately $19 billion, based upon the closing price of the Registrant's common stock as quoted on New York Stock Exchange on such date. Shares of stock held by officers, directors and 5 percent or more stockholders have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of December 13, 2021, there were 183,042,478 shares of our common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Description | 10-K Part |
Portions of the Proxy Statement for the Annual Meeting of Stockholders (the ''Proxy Statement'') to be held on March 17, 2022 and to be | III |
filed pursuant to Regulation 14A within 120 days after registrant's fiscal year ended October 31, 2021 are incorporated by reference into | |
Part III of this Report. | |
TABLE OF CONTENTS | ||
Page | ||
Forward-LookingStatements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1 | |
PART I | ||
Item 1 | Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2 |
Item 1A | Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 21 |
Item 1B | Unresolved Staff Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 35 |
Item 2 | Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 35 |
Item 3 | Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 35 |
Item 4 | Mine Safety Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 35 |
PART II | ||
Item 5 | Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of | |
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 36 | |
Item 6 | [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 36 |
Item 7 | Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . | 37 |
Item 7A | Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 53 |
Item 8 | Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 55 |
Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . | 101 |
Item 9A | Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 101 |
Item 9B | Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 101 |
PART III | ||
Item 10 | Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 102 |
Item 11 | Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 102 |
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder | |
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 102 | |
Item 13 | Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . | 103 |
Item 14 | Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 103 |
PART IV | ||
Item 15 | Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 104 |
Item 16 | Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 108 |
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 109 |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Keysight Technologies Inc. published this content on 24 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 January 2022 22:26:06 UTC.