Keysight Technologies Inc (NYSE: KEYS) stock rose over 4.2% on 21st November pre market session (Source: Google finance) given their better than expected results for the fourth quarter of 2018. 2018 was a record year for KEYS with total order growth up 20% or 12% on core growth. This brought the total orders for the year to over $4 billion, a new milestone for the Company. Total revenue grew 20% to a record $3.9 billion. On a core basis, revenue grew 13%, which was above the company’s 11% expectation.
KEYS in the fourth quarter of FY 18, has reported the adjusted earnings per share of $1.01, beating the analysts’ estimates for the adjusted earnings per share of 90 cents. The company had reported the adjusted revenue growth of 16 percent to $1.05 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $1.02 billion.
Revenue of the software solutions grew strong double-digits in 2018 and represents greater than 15% of the total revenue. This growth was driven by strong demand for the 5G solutions, high-frequency measurement application software, and digital and photonics application software, as well as the addition of ISG. In services, KEYS has achieved all-time highs for both orders and revenue, as well as record double-digit order and revenue growth for the fourth quarter and for the full year. Services are an increasingly important element of the solutions-centric engagement model with customers. KEYS is building momentum in services as the company increase full solutions sale in key end markets such as automotive and 5G.
In automotive and energy, customer demand remains high and the company delivered the eighth consecutive quarter of double-digit order growth with strong growth across multiple applications. During the quarter, growth from the top accounts was enhanced by wins with many new customers. In 5G, the company are leading and delivering very strong growth in Q4, resulting in record 5G orders.
KEYS has also delivered $1.1 billion in orders in the quarter, which were up 9% in total and 10% on a core basis. Looking at the operational results for Q4, the company has reported gross margin of 61% and operating expenses of $408 million, resulting in operating margin of 22.3% which is the highest level in Keysight’s history. The company has also achieved record net income of $193 million and delivered $1.01 in earnings per share, which was up 42%. The company has weighted average share count for the quarter was 191 million shares.
KEYS has posted GAAP net loss for the quarter of $114 million. The company has recorded a non-cash goodwill impairment charge of $700 million net of tax, primarily due to weaker-than-expected market dynamics experienced in the Ixia Solutions Group.