• Keysight Technologies has released its financial results for the second fiscal quarter of 2020, ending April 30, 2020.
• The U.S. company reported sales of $895 million, a decrease of 18% due to production site and supply chain disruptions related to the COVID-19 pandemic.

 
“While supply chain disruptions dampened our revenue performance during the second half of the quarter, which includes April, our results demonstrated the resiliency of our operating model and durable cash generation as we reached a record cash balance of $1.8 billion,” said Ron Nersesian, Keysight’s Chairman, President and CEO. After site closures and limited capacity in March and April, Keysight announces the re-opening of sites and ramping its production, which we expect to be back to 100% capacity by the end of the third quarter.
 
# Second Quarter Financial Summary

• Orders were $1,089 million, compared with $1,121 million last year, a decrease of 3%.
• GAAP revenue was $895 million, compared with $1,090 million last year.
• Non-GAAP revenue decreased 18 percent on a core basis, which excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months.
• GAAP net income was $71 million compared with GAAP net income of $153 million in the second quarter of 2019.
• Non-GAAP net income was $148 million compared with $233 million in the second quarter of 2019.
  As of April 30, 2020, cash and cash equivalents totaled $1.841 billion.

 
# Reporting Segments

• Communications Solutions Group (CSG)
  CSG reported second quarter revenue of $653 million, down 18 percent, due to supply chain disruption related to the COVID-19 pandemic. From a demand perspective, investment continued in next-generation technologies such as 5G and 400G driving record 5G orders in the quarter; demand was strong in the U.S. for Aerospace Defense and Government solutions.
• Electronic Industrial Solutions Group (EISG)
  EISG reported revenue of $242 million in the second quarter, down 19 percent, due to supply chain disruption related to the COVID-19 pandemic. General electronics, education and automotive markets were weak, slightly offset by continued foundry investment in advanced process node technologies.

 
# Outlook
Industrial site closures reduced production capacity in March and April, but the production activities of Keysight and its suppliers are now operational. According to the US company, the improvement should continue in the third quarter. Third quarter sales, operating margin and earnings are expected to be in line with or above those of the most recent quarter. The achievement of this forecast, which is based based on the order funnel and a strong backlog position, assumes that the supply chain is not subject to additional constraints or business disruptions due to a second wave of the pandemic.