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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
(MARK ONE) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2022
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)
Delaware46-4254555
(State or other jurisdiction of(IRS employer
incorporation or organization)Identification no.)
1400 Fountaingrove Parkway 
Santa RosaCalifornia95403
(Address of principal executive offices)(Zip Code)
 
Registrant’s telephone number, including area code: (800) 829-4444  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareKEYSNew York Stock Exchange
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 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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 Section13(a)of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes No  
The number of shares of common stock outstanding at August 26, 2022 was 178,796,275.



TABLE OF CONTENTS
 
   Page
Number
 
 
  
  
  
  
 
 
 
 
 
 
 
  


2

PART I. FINANCIAL INFORMATION
 
Item 1. Condensed Consolidated Financial Statements (Unaudited)
 
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(Unaudited)
 
Three Months EndedNine Months Ended
 July 31,July 31,
 2022202120222021
Revenue:  
Products$1,140 $1,021 $3,282 $2,987 
Services and other236 225 695 660 
Total revenue1,376 1,246 3,977 3,647 
Costs and expenses:
Cost of products410 370 1,175 1,151 
Cost of services and other89 88 262 264 
Total costs499 458 1,437 1,415 
Research and development206 207 626 615 
Selling, general and administrative317 302 962 900 
Other operating expense (income), net(3)(5)(3)(14)
Total costs and expenses1,019 962 3,022 2,916 
Income from operations357 284 955 731 
Interest income4 1 6 2 
Interest expense(20)(20)(59)(59)
Other income (expense), net5 5 15 (1)
Income before taxes346 270 917 673 
Provision for income taxes8 16 92 61 
Net income $338 $254 $825 $612 
Net income per share:  
Basic$1.89 $1.38 $4.56 $3.31 
Diluted$1.87 $1.36 $4.52 $3.27 
Weighted average shares used in computing net income per share:
Basic179 184 181 185 
Diluted181 186 182 187 

The accompanying notes are an integral part of these condensed consolidated financial statements.


3

KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
Three Months EndedNine Months Ended
 July 31,July 31,
 2022202120222021
Net income$338 $254 $825 $612 
Other comprehensive income (loss):
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of $3, $7, $(7) and $(4)
(11)(22)29 18 
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero
(1)(1)(3)(1)
Foreign currency translation, net of tax benefit (expense) of zero
(20)(7)(106)10 
Net defined benefit pension cost and post retirement plan costs:
Change in net actuarial loss, net of tax expense of $3, $6, $7 and $16
6 13 22 44 
Other comprehensive income (loss)(26)(17)(58)71 
Total comprehensive income$312 $237 $767 $683 
    
The accompanying notes are an integral part of these condensed consolidated financial statements.


4

KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions, except par value and share data)
(Unaudited)

 July 31, 2022October 31, 2021
ASSETS  
Current assets:  
Cash and cash equivalents$1,847 $2,052 
Accounts receivable, net882 735 
Inventory837 777 
Other current assets395 270 
Total current assets3,961 3,834 
Property, plant and equipment, net668 650 
Operating lease right-of-use assets225 227 
Goodwill1,606 1,628 
Other intangible assets, net216 272 
Long-term investments73 70 
Long-term deferred tax assets661 711 
Other assets442 389 
Total assets$7,852 $7,781 
LIABILITIES AND EQUITY
Current liabilities:  
Accounts payable$328 $287 
Employee compensation and benefits275 355 
Deferred revenue496 478 
Income and other taxes payable63 74 
Operating lease liabilities40 41 
Other accrued liabilities110 74 
Total current liabilities1,312 1,309 
Long-term debt1,792 1,791 
Retirement and post-retirement benefits131 167 
Long-term deferred revenue200 187 
Long-term operating lease liabilities192 191 
Other long-term liabilities305 352 
Total liabilities3,932 3,997 
Commitments and contingencies (Note 12)
Stockholders’ equity:  
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding
  
Common stock; $0.01 par value; 1 billion shares authorized; 199 million shares at July 31, 2022 and 197 million shares at October 31, 2021 issued
2 2 
Treasury stock at cost; 19.7 million shares at July 31, 2022 and 15.1 million shares at October 31, 2021
(2,148)(1,425)
Additional paid-in-capital2,311 2,219 
Retained earnings4,255 3,430 
Accumulated other comprehensive loss(500)(442)
Total stockholders' equity3,920 3,784 
Total liabilities and equity$7,852 $7,781 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
Nine Months Ended
 July 31,
 20222021
Cash flows from operating activities:  
Net income$825 $612 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation 88 87 
Amortization80 149 
Share-based compensation102 83 
Deferred tax expense (benefit)19 (49)
Excess and obsolete inventory-related charges18 20 
Loss on settlement of pension plan 16 
Other non-cash expense (income), net30 7 
Changes in assets and liabilities:  
Accounts receivable(166)(64)
Inventory(88)(30)
Accounts payable41 10 
Employee compensation and benefits(81)(12)
Deferred revenue69 86 
Income taxes payable(59)8 
Retirement and post-retirement benefits(21)5 
Other assets and liabilities(111)26 
Net cash provided by operating activities746 954 
Cash flows from investing activities:  
Investments in property, plant and equipment(127)(101)
Acquisition of businesses and intangible assets, net of cash acquired(33)(136)
Purchase of investments(30) 
Other investing activities (1)
Net cash used in investing activities(190)(238)
Cash flows from financing activities:  
Proceeds from issuance of common stock under employee stock plans63 59 
Payment of taxes related to net share settlement of equity awards(74)(53)
Treasury stock repurchases(723)(320)
Payment of acquisition-related contingent consideration (2)
Other financing activities (1)
Net cash used in financing activities(734)(317)
Effect of exchange rate movements(27)4 
Net increase (decrease) in cash, cash equivalents, and restricted cash(205)403 
Cash, cash equivalents, and restricted cash at beginning of period2,068 1,767 
Cash, cash equivalents, and restricted cash at end of period$1,863 $2,170 
Supplemental cash flow information:
Interest payments$37 $37 
Income tax paid, net$157 $100 
Investments in property, plant and equipment included in accounts payable$23 $27 
The accompanying notes are an integral part of these condensed consolidated financial statements.

6

KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(in millions, except number of shares in thousands)
(Unaudited)
 Common StockTreasury Stock  
 Number of SharesPar ValueAdditional Paid-in CapitalNumber of SharesTreasury Stock at CostRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balance as of April 30, 2022198,229 $2 $2,254 (18,101)$(1,920)$3,917 $(474)$3,779 
Net income— — — — — 338 — 338 
Other comprehensive income (loss), net of tax— — — — — — (26)(26)
Issuance of common stock287 — 32 — — — — 32 
Taxes related to net share settlement of equity awards— —  — — — —  
Share-based compensation— — 25 — — — — 25 
Repurchase of common stock— — — (1,639)(228)— — (228)
Balance as of July 31, 2022198,516 $2 $2,311 (19,740)$(2,148)$4,255 $(500)$3,920 
Balance as of October 31, 2021197,248 $2 $2,219 (15,094)$(1,425)$3,430 $(442)$3,784 
Net income— — — — — 825 — 825 
Other comprehensive income (loss), net of tax— — — — — — (58)(58)
Issuance of common stock1,268 — 63 — — — — 63 
Taxes related to net share settlement of equity awards— — (73)— — — — (73)
Share-based compensation— — 102 — — — — 102 
Repurchase of common stock— — — (4,646)(723)— — (723)
Balance as of July 31, 2022198,516 $2 $2,311 (19,740)$(2,148)$4,255 $(500)$3,920 
Balance as of April 30, 2021196,901 $2 $2,152 (12,461)$(992)$2,894 $(511)$3,545 
Net income— — — — — 254 — 254 
Other comprehensive income (loss), net of tax— — — — — — (17)(17)
Issuance of common stock318 — 30 — — — — 30 
Taxes related to net share settlement of equity awards— — (1)— — — — (1)
Share-based compensation— — 19 — — — — 19 
Repurchase of common stock— — — (569)(80)— — (80)
Balance as of July 31, 2021197,219 $2 $2,200 (13,030)$(1,072)$3,148 $(528)$3,750 
Balance as of October 31, 2020195,661 $2 $2,110 (10,732)$(752)$2,536 $(599)$3,297 
Net income— — — — — 612 — 612 
Other comprehensive income (loss), net of tax— — — — — — 71 71 
Issuance of common stock1,558 — 59 — — — — 59 
Taxes related to net share settlement of equity awards— — (52)— — — — (52)
Share-based compensation— — 83 — — — — 83 
Repurchase of common stock— — — (2,298)(320)— — (320)
Balance as of July 31, 2021197,219 $2 $2,200 (13,030)$(1,072)$3,148 $(528)$3,750 

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

KEYSIGHT TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.    OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Overview. Keysight Technologies, Inc. ("we," "us," "Keysight" or the "company"), incorporated in Delaware on December 6, 2013, is a technology company that helps enterprises, service providers and governments accelerate innovation to connect and secure the world by providing electronic design and test solutions that are used in the simulation, design, validation, manufacture, installation, optimization and secure operation of electronics systems in the communications, networking and electronics industries. We also offer customization, consulting and optimization services throughout the customer's product development lifecycle, including start-up assistance, asset management, up-time services, application services and instrument calibration and repair.
Our fiscal year-end is October 31, and our fiscal quarters end on January 31, April 30 and July 31. Unless otherwise stated, these dates refer to our fiscal year and fiscal quarters.
Basis of Presentation. We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The accompanying financial statements and information should be read in conjunction with our Annual Report on Form 10-K.
In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly our financial position as of July 31, 2022 and October 31, 2021, results of operations for the three and nine months ended July 31, 2022 and 2021, and cash flows for the nine months ended July 31, 2022 and 2021.
Use of Estimates. The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates.
Update to Significant Accounting Policies. Except as set forth in the "new accounting pronouncements" section below, there have been no material changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021.
New Accounting Pronouncements.
ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In October 2021, the Financial Accounting Standards Board (“FASB”) issued guidance that requires entities to apply Accounting Standards Codification Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. We adopted this guidance effective November 1, 2021. The adoption of this guidance did not have a material impact to our condensed consolidated financial statements.
Other amendments to GAAP that do not require adoption until a future date are not expected to have a material impact on our condensed consolidated financial statements upon adoption.
2.    REVENUE
Disaggregation of Revenue
We disaggregate our revenue from contracts with customers by geographic region, end market, and timing of revenue recognition, as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregated revenue is presented for each of our reportable segments, Communications Solutions Group ("CSG") and Electronics Industrial Solutions Group ("EISG").

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Three Months Ended
July 31,
20222021
CSGEISGTotalCSGEISGTotal
 (in millions)
Region
Americas$468 $94 $562 $418 $81 $499 
Europe121 86 207 122 79 201 
Asia Pacific381 226 607 335 211 546 
Total revenue$970 $406 $1,376 $875 $371 $1,246 
End Market
Aerospace, Defense & Government$275 $ $275 $280 $ $280 
Commercial Communications695  695 595  595 
Electronic Industrial 406 406  371 371 
Total revenue$970 $406 $1,376 $875 $371 $1,246 
Timing of Revenue Recognition
Revenue recognized at a point in time$807 $349 $1,156 $729 $322 $1,051 
Revenue recognized over time163 57 220 146 49 195 
Total revenue$970 $406 $1,376 $875 $371 $1,246 
Nine Months Ended
July 31,
20222021
CSGEISGTotalCSGEISGTotal
 (in millions)
Region
Americas$1,340 $268 $1,608 $1,228 $223 $1,451 
Europe395 256 651 380 222 602 
Asia Pacific1,076 642 1,718 996 598 1,594 
Total revenue$2,811 $1,166 $3,977 $2,604 $1,043 $3,647 
End Market
Aerospace, Defense & Government$860 $ $860 $845 $ $845 
Commercial Communications1,951  1,951 1,759  1,759 
Electronic Industrial 1,166 1,166  1,043 1,043 
Total revenue$2,811 $1,166 $3,977 $2,604 $1,043 $3,647 
Timing of Revenue Recognition
Revenue recognized at a point in time$2,342 $1,006 $3,348 $2,172 $907 $3,079 
Revenue recognized over time469 160 629 432 136 568 
Total revenue$2,811 $1,166 $3,977 $2,604 $1,043 $3,647 
Our point-in-time revenues are generated predominantly from the sale of various types of design and test software and hardware, and per-incident repair and calibration services. Perpetual software and the portion of term software subscription revenue in this category represents revenue recognized up front upon transfer of control at the time of electronic delivery. Revenue on per-incident repair and calibration services is recognized when services are performed. Over-time revenues are generated predominantly from the repair and calibration contracts, extended warranties, technical support for hardware and software, certain software subscription and Software as a Service ("SaaS") product offerings, and professional services. Technical support for software and when-and-if available software updates and upgrades are sold either together with our software licenses and software subscriptions, including SaaS, or separately as part of our customer support programs.
Additionally, we provide custom solutions that include combinations of hardware, software, software subscriptions, installation, professional services, and other support services, and revenue may be recognized either up front on delivery or over time depending upon the terms of the contract.

9

Contract Balances
Contract assets
Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to solutions and support arrangements when transfer of control has occurred but we have not yet invoiced. The contract assets balance was $59 million and $84 million as of July 31, 2022 and October 31, 2021, respectively, and is included in "accounts receivables, net" and "other assets" in our condensed consolidated balance sheet.
Contract costs
We capitalize direct and incremental costs incurred to acquire contracts for which the associated revenue is expected to be recognized in future periods. We have determined that certain employee and third-party representative commission programs meet the requirements to be capitalized. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Capitalized contract costs were $37 million and $39 million as of July 31, 2022 and October 31, 2021, respectively, and are included in “other current assets” and “other assets” in the condensed consolidated balance sheet. The amortization expense associated with these costs was $19 million and $64 million for the three and nine months ended July 31, 2022, respectively, and $20 million and $58 million for the corresponding periods last year.
Contract liabilities
Our contract liabilities consist of deferred revenue that arises when we receive consideration in advance of providing the goods or services promised in the contract. Contract liabilities are primarily generated from customer deposits received in advance of shipments for products or rendering of services and are recognized as revenue when services are provided to the customer. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue.
The following table provides a roll-forward of our contract liabilities, current and non-current:
Nine Months Ended
July 31,
2022
(in millions)
Balance at October 31$665 
Deferral of revenue billed in current period, net of recognition479 
Revenue recognized that was deferred as of the beginning of the period(425)
Foreign currency translation impact(23)
Balance at July 31$696 
Of the $425 million of revenue recognized in the nine months ended July 31, 2022 that was deferred as of the beginning of the period, approximately $88 million was recognized in the three months ended July 31, 2022.
Remaining Performance Obligations
Our remaining performance obligations, excluding contracts that have an original expected duration of one year or less, was approximately $399 million as of July 31, 2022, and represents the company’s obligation to deliver products and services and obtain customer acceptance on delivered products. As of July 31, 2022, we expect to fulfill 16 percent of these unsatisfied performance obligations during the remainder of 2022, 43 percent during 2023, and 41 percent thereafter.

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3.    SHARE-BASED COMPENSATION
Keysight accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including restricted stock units ("RSUs"), employee stock purchases made under our Employee Stock Purchase Plan (“ESPP”), and performance share awards granted to selected members of our senior management under the Long-Term Performance (“LTP”) Program, based on estimated fair values. The impact of share-based compensation expense on our condensed consolidated statement of operations was as follows:
Three Months EndedNine Months Ended
July 31,July 31,
 2022202120222021
 (in millions)
Cost of products and services$5 $3 $19 $16 
Research and development6 4 22 17 
Selling, general and administrative