Keysight (KEYS) 18 Nov 202020 Q4 Earnings call transcript

Good day, ladies and gentlemen and welcome to the Keysight Technologies Fiscal Fourth Quarter 2020 Earnings Conference Call. My name is Chris, and I will be your lead operator today. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] Please note, that this call is being recorded today, Wednesday, November 18, 2020 at 1:30 PM Pacific Time. I would now like to hand the conference over to Jason Kary, Vice President, Treasurer and Investor Relations. Mr. ahead, go Please Kary.

welcome fiscal Keysight's year and conference quarter call for XXXX. everyone you fourth to earnings Thank

Joining me are CEO; and Ron Nersesian, Keysight's Dougherty, CFO. Chairman, our Neil President and

who session Joining the Wallace, Senior Worldwide Operating will was of Mark recently President be Officer; us and appointed Q&A Satish Sales. in Vice Chief our Dhanasekaran,

our find investor.keysight.com. the information You at release can to supplement website and press today's discussion on

investor under presentation click on with will the the reports Financial please quarterly you Information there, results. While find segment for an along Keysight's There tab. link

the Following financial a this Neil conference copy of call, non-GAAP Today's we measures. will the post prepared comments remarks website. to and Ron by will refer to

completed growth, will excludes and of the within make XX impact divestitures movements the months. to We last also core which currency or references acquisitions

find on comparable metrics GAAP You most directly financial our will and the website. reconciliations

financial forward-looking company filings them. and the statements the SEC subject for to the We risks risks call. company's complete of and Please as a will today. our on about valid These factors. uncertainties performance other to picture make recent update today's no only obligation of are of and review statements more company assumes are The

is conferences Lastly, Cowen. Credit that participate note over Ron. management virtual call I to will investor now, to And I Wells upcoming Fargo, in would in by hosted and December scheduled Suisse, Barclays, turn the

and headlines. orders, you flow. operating demand our macro record and earnings for us. an Today, comments gross for for joining thank focus COVID-related solutions. Jason all driven cash execution share, three differentiated margin, my Despite was year challenges, on fiscal I'll finish Thank by margin, key a per and quarter our you, to year free Keysight delivered it strong outstanding broad-based

solutions results driven First, we as technology demand demand strong by for and exceptional end-market began next-generation recover. Keysight's fourth to continued, execution delivered quarter

this pre-COVID outlook durability operating macroeconomic for model And third, demonstrated of despite includes cash leadership long-term profitability growth and again execution we our of and XX% year. core environment. operating which our and this on commitments XX% growth March expectations annual in to strong, power haven't financial and XX% XXXX. of earnings the growth fiscal ability long-term record than is Second, by challenging from model commitments to year a and these achieving margin revenue announced and no strength long-term our revenue sustainable flow and our The our deliver financial underscore year Keysight's wavered later

demand strength of fourth Record fourth Now, We momentum. and let's the take the business a solutions certain XX% in performance. drove grew as strong XX%, across fiscal all growth gross free all-time record delivered flow In in with the our operating Both, quarter. The and an and profitability the flow. Solutions in XX% million. year-over-year financial across share, margin Electronic year-over-year results In X% revenue fourth quarter revenue and of QX, at achieved quarter, of of and look per model growth X% for broad-based quarter resulted Communications Industrial operating of billion cash $X.X margin and gained our we exceeded and economic revenue regions. XXXX sectors Keysight's financial of sequentially. deeper Groups and $X.XX year of of high recovery the orders $XXX the earnings achieved resilience cash

high orders macro to grew For disruption, for the and chain COVID-related billion, year and Keysight. despite supply all-time $X.X challenges an

a full by We manufacturing operating X% Both, spread year-over-year. improved per to margin points up year over significant to Despite gross closed margin limit order operating share a worldwide, XXXX. expansion you in revenue offices fiscal directors earnings year environment, coronavirus generating Even continue difficult government this our and in of commitments. our we production margin then our in in $X.XX the $X.X we deliver majority and record of the operations. to XXX only including fulfillment responded capacity back ramped QX, As QX. in billion basis recall, our declined and disruption, on of

new industry enabling Turning leaders. driven growth of communications. a range defense for and across to used on revenue been and aerospace, in investments technologies Americas commercial and has Communications, market the is Communications solutions and past driver focus Aerospace, approach the continue Communications lifecycle also the was Commercial industry's devices. XG quarterly defense defense spectrum with a across strong us technology. cases technology A the to and Commercial ongoing and deployment. drive comprehensive the to over by markets; electromagnetic as and our and Group cloud. continues and QX, development technologies technology by the with O-RAN many new from government, strong wired to to XG. adapts drove for spanning new In strength revenue in across XX% of continues and networks scales on record Investment buildout in like operations, global has years, the of growth Asia, demand centers, XG our scaling the XG collaboration Keysight government and includes innovation driven wireless ecosystem see in increased design the and year-over-year three commercial in recent we data as Solutions test the XG modernizations the example most design solutions space, and

small our new and Solutions PathWave both help is that revenue Group, from performance workflow this all announced saw most to grew Electronic market from double-digit accelerate to for enhancements quarter In weakness weigh It quarter, investment time across software our measurement grew in the driven improvement next-generation network regions we economic regions. process as while as This PXIe is last electronics improvement some of technologies current of automotive the priority; recovery Demand market. market. automate solutions, the also to platform investment and general our limitations. solution broad continues for technology manufacturers and across portfolio orders orders high continued. Within their enabling by This quarter modular macro-driven base XG on a in solutions the cell solution. strategic vendors incorporates sector, equipment strong double-digit we station gradual sequentially advanced education a was automotive, again semiconductor in Industrial

Our Scienlab where expanding vehicles. solutions electric the Europe driving in Asia electrification and of mandates government are test vehicle are

developed Ethernet solutions radar in-vehicle compliance standards. new add driving, Systems portfolio pressing to of and to enable in continue ensuring as for networks. a introduced Assistance for new QX, target We well challenges ADAS ADAS, [ph] as our or important standards we autonomous testing automotive solution Driver and the compliance development to for simulator a being to Advanced In

of technology. or to We C-VXX also cellular vehicle-to-everything recently announced collaborations Qualcomm testing with SGS and advanced

and of another this Keysight growth. combined quarter one-third were services, software revenue to they solid Turning for of total year after

in to 'XX recurring In addition, from recurring XX% annualized of basis, FY year. total in an grew On 'XX. revenue increased high-teens over revenue FY XX% last

strengthened this business values, responsibility. solutions a and analytics A and Software These and and with validation validation new and the are my of solution-centric processing we power of shared and and our speed company. simulation, the further design automation, execution performance In Keysight's elements manufacturing the services the advanced compliance durability enhanced targeting corporate to data commitment our ago, is strategy social differentiation, to with Increasingly Keysight's financial launched our tap Keysight priorities driving advanced of several our PathWave to cloud-based software for include and designs complex volume year their measurement are year model, and testament our for I QX, new associated analytics. test. and model. test, important design, teams and of solutions solutions. to demand leadership top manufacturing

groups efforts. diversity new of with our value who inclusion increase on One our the priorities workforce. of We priority, external support Senior representation and of these including Keysight appointed organizations this Inclusion place specific at focus a was inclusion and high within all I In of and increasing Board leaders Diversity, organization, on Directors. levels of diverse and Director to been diversity of working a our has a

make continue gender, today, We I'm and/or XX% to to U.S. share executives of over our pleased diverse and are as that ethnicity. in race, progress, of

all year. our over like employees Before our dedication the their the Neil, sincerely and commitment, I'd Keysight for relentless thank to success over of I call past engagement, turn to to

efforts, people exits year to and capitalize face this the to on are positioned Our well differentiator. ahead. our growth in very culture competitive their ever is and unprecedented Keysight truly challenges, Thanks than stronger of a and opportunities

Neil our performance Now, discuss detail. it financial to over to outlook in more I will turn and

Thank and you, Ron, hello, everyone.

Before on noted I begin, are a all comparisons year-over-year please that specifically note, unless basis, otherwise.

Keysight differentiated such continued towards we a of general delivered measurement, outstanding challenging environment, X% as and billion regional defense we demand in or annual Asia. and progress core basis. our of aerospace significantly the In semiconductor financial solutions. great and by fourth in our positions or by delivered record up on quarter which mentioned, areas XG, revenue record targets. X% particularly Demand quarter [ph]. growth to macro Ron $X.XXX guidance continued economic driven leading orders, exceeded with we delivered and the As core XXXX, driven make despite quarter the grew range, we X% for $X.XXX Total electronics of in over revenue above recovery, revenue X We in was book-to-bill the just a orders where X% QX a in was a an basis. QX long-term high-end on improved have billion,

in XX% $X.XX high-end $XXX expenses above and of we high. an results of the quarterly in margin record a gross of achieved and operational share was per guidance, million, XX%, all-time was increase Net which and operating of million our at our Looking reported for $XXX resulting we QX; XX% of earnings year-over-year. margin operating well an income

the share average million shares. weighted Our was quarter count for XXX

an Group ecosystem early GenX defense margin of and X% increase prior XX% revenue segments; to on QX and related to by revenue and XX%. XXX delivering XX% of XX%. XX% of EISG Aerospace, our our up XXX in high and margin million, driven was government X% in core communications of $XXX in $XXX applications XG with technology. margin in revenue strength all-time data gigabit of performance from revenue of by points record across increase XXX The an by of Moving Europe. of the Industrial $XXX million, improvement digital year-over-year development Americas of record operating of gigabit gross Group high-speed In fourth generated generated last Growth record QX, X% a XX%, record basis, the million, million, while driven commercial generated and center driven $XXX margin general operating Asia electronics year. basis achieved gross strength quarter up Solutions semiconductor. Solutions record Communication versus strength and manufacturing, and reported Electronic of or up a the

on a year points are faced revenue pandemic. Given pleased challenges year-over-year XXX our decline, year-over-year totaled we year, revenue disruptions caused small basis with XX%. the this gross X% X% the very by core $X.X challenges 'XX margin we down this to by macro that FY full improved and basis impacted or billion, chain supply results. Despite

XX% invest R&D revenue million strong share demonstrates to for year, operating at for the progress by This annual target of XX%. to While was XX% our operating continuing net basis XXXX. in non-GAAP 'XX or improvement $XXX margin income to or full of which points towards year. fiscal achieve to the we per margin $XXX million FY year-over-year expect XX% improved $X.XX XXX nearly

the cash of fourth Moving cash a and to $XXX $XXX flow record cash cash flow the is and quarter Free and the our free a cash reported FY pension 'XX. $XXX for ended Total cash May million of authorization, deploying consideration we share repurchase exhausting of in $XXX the brings net at open and million we $XX.XX share authorization for average million of price acquired approximately prior to capital during year or We of total XX% market quarter. total tax and billion million. was which million with current share million our a year our a million XXXX. in sheet net million shares operations non-GAAP from flow. and expense X.X of income. This $X.X Under $XXX from the of equivalents, benefit of year shares to flow repurchase free balance $XXX million, average price on the at $XXX total XX% in representing pension quarter, consideration contribution cash in an a benefit the plan an repurchases XX% free U.S. of for share revenue approximately of opportunistic X.X our and our funding for in $XX.XX flow were cash of provides flow,

earlier today, immediately. the repurchase new As has authorization of Keysight approved Board announced $XXX of million, share Directors a effective

our transition. trade Despite U.S. concerns. are in to to like modeling position brief pending QX trade business guidance, dampened ability and and gradual government us has in on the update headwinds, I'd restrictions Before have near-term see admittedly our comp moving entering improvements and tough We year to to administration during change, we our FY order provide QX perturbations. China strong have historically 'XX which due backlog global a in the confidence these in of a markets these to giving many started navigate the a

revenue we in Looking quarterly past muted expect seasonality to to FY ongoing than macro-related 'XX, the due and be to COVID-XX uncertainty. more

Just as FY levels, we 'XX spending expenses seasonally all flexible to higher expected increase compensation down year, with expenses variable flexed QX other and in normal than to quarters. this more is

to and $XXX $XX $X we other in to per expenses FY of reflected quarter. begin two-year increase resiliency to the of in million spending million be expected is to be million is expected a approximately are $XXX pension In the million addition, range line expense increase supply 'XX expense project Interest our chain. capital by the expected to as

Regarding are effective a our XX% tax non-GAAP rate 'XX. rate, for tax modeling we FY

billion of Now now $X.XXX on approximately outlook to our Despite turning the towards targets outlined that revenue year, for progress $X.XX coupled be count based to financial the per of good the for we to billion, to continue of ability and model margin business it $X.XX revenue us the range earnings and growth COVID. commitments we and diluted earnings of core guidance; our outlook of challenges the and turn share with $X.XXX a on quarter our prior to in XXXX X% give confidence March Jason growth to past deliver expect in make weighted XX%. long-term our of be closing, to million In this will in to back Q&A. to revenue first shares. we in to X% the share long-term range that, to annual QX of operating durability XX% solid XXX I With our

you, Neil. will you Q&A? for please Chris, the Thank the give instructions

Hosseini Instructions] [Operator Mehdi from with is Our Susquehanna. first question

Your line is open.

XG, how I taking back to orders a better for like understand my your I the for Commercial Communication. a about XXX-gig, compare thanks wave networking, How for orders? Yes, specifically think have to want question. go fiber booking specific follow-up. millimeter should and to does to And and millimeter I related wave

This Mehdi. I'll thanks, take Satish, Yes, is it.

is of XG quarter for quarter growth wireless frequency had networks; is frequency of large this ramping, the the three us. things, of group and a Communications driven we results Commercial were say, revenue Our that technology a ecosystems, XXX-gig to of these record -- strength big from continues XG sequential I improvement and theme observed trend commercialization in and standardization both second by a part the large is low mid-band part the ecosystem were while the progress; big of or is would expanding. perspective, specifically consecutive and drivers in the and wireline a

big three wireline be strong that for wireless to technologies us. are and trends both these So are enabling

wave is of the the for concerned, As we opportunity us have continue and wave the it we we very long the represents wave as view millimeter -- millimeter view favorable upgrade viewed far to and as potential because technologies technology. the strengths a to specifically, interest play this Even in our their traditional to wave re-tool to ramp they millimeter we flow millimeter adapt in engineering as steady continue out. customer quarter, see

occurred side, XXX-gig the for we this year the XXX-gig strong R&D XXX-gig starting in to see we Ethernet On in captured for activity are ramps and throughout wireline pretty increased quarter. that Asia and

strength and, the we gross that go question, software as how as follow-up, production, go expect specifically should the quick we in I content? goes look XG ties XXXX, R&D, about continued question into production, into a we This you. we FY is in into as margin that software-heavy just context, last actually would should into up R&D expect gross headwind? the we Thank should margin hold XG, some Okay, think into production

Mehdi, see out pipeline next as for with R&D release XX demand far features a as continue R&D, to robust coming year. for we

see we're referenced also solution, to has chain starting release and test driving from them deployments to So in with the benefiting which I With ramps in a production are software and quarter our our PXIe, for a sizable pretty to regard would see opportunities, our associated this we're we the win continue of content supply PXIe there. strength fact, actually modular it.

So, steady we'll improvement a see continue there, well. to as

other more when the I'd think or from less Keysight generally, the and manufacturing certainly impact and migration services towards revenue Yes, around at we're as to expect be level software any you a $X.X about and progress billion areas. making of company margin undetectable a

So, not something concerned about. that we're

you. Thank

next Our from Samik with J.P. Morgan. question Chatterjee is

open. is line Your

declines Hi, strong. I outline question. wanted XG can well, in Thanks to front? just as with front? see here can how just I Satish's on the years expect talked next that how of also release competitors as about does XG, thoughts good of being driving into weakness, has If Commercial look that couple on order momentum XG think for just afternoon. revenue and taking on on some think side, if XG what anything have the the I on Communications the momentum about acceleration any play revenue you commentary up into seen maybe off the terms of following that start of one and delays to to we you your

in robust If a there be said the the further would business, planning that, and there implementation XG production-related customers are full expansions the not given sustaining, the XX Yes, for our and strong quarters and for has for been that pipeline in we for. were we for quarter see orders Having R&D that saw release ecosystem. we year delays -- along. no in this it some doubt some is momentum the for of is industry

strong of the some where continue us and of XX XX a we that have have we XX wave there to millimeter opportunity believe for application into in millimeter release being say terms you opportunity very that growth its but -- especially very with lastly, where us, we're expansion release physical in use I the has And we the to been excited cases where layer XG and is release our protocol of we would in about high XX referenced, saw have impact broad new layer as about. delays opportunity layer portfolio strength we release industries, general into into through wave C-VXX. beyond into front defense, commercial aerospace applications, So where with our that and we've long-term business talked comps then, expanded the security represents our XG electronics with starting even in automotive follow bulk and multiple that

is to Day. So you piece XG we this that still altogether, innings at we believe that early in stated as Investor continue very

are if some we can Satish, you XG the declines activity Okay. a just these terms follow-up, on the moderate point at I of in revenue side, are side? XG what seeing on where of

recover and expect we breadth delayed back that and go stabilize cases, customers customers of back year-over-year, Yes, comparatively return I legacy I and smartphone think we've expansions the saying ramp at we some that this offer driving and we business from tools for broad spend XG, have last prioritized in we XG that to so, sharper saw of as -- things obviously traditional COVID. year and up, labs in declined to up you that the if would looked very again, year, customers the but many given a

you Thank taking thank for questions. my Okay, you.

Our is Barclays. from next Tim Long question with

is open. line Your

with Thank optical. the could ask then follow-up side, on just you. XG on If I one

competitive you XXX to competitors as that a you the Thank into you provider catch we in if well? bit? of Could XXX-gig, a changes could data note? as little opportunities are also Just you center you. think Any in expand XXX-gig, the to as Where little some mentioned and try then talk environment transition about And XXX-gig. and on strength secondly, some there. that cycle do little talk pricing service they and the the play of up bit a

thanks. Yes,

differentiations front, would to our think I strong. be continues I say,

see can that's on what at that the look You offer cutting we're cases you and are staying that appreciate. we leading test edge our and that and the standards-based we customers

we to edges, don't on our this competitive in continued So advanced material any to R&D we the strong. to invest change technologies keep these see to with our position have and differentiation regard year

X,XXX point use say, you is that's if this in band being there So the are combinations and make. just have the XG I'll regard is tested. smartphone think to that about been all them only of how out, might With of case, defined playing X,XXX you to-date

latest devices we account So for the X,XXX. have that

to considerable a for and with front in phase start XXX-gig of consider, release So deployments see and operators case on the With the smartphone just would creates the us, flows transceivers that automotive industrial the this is you what to center the a XX with deploy pipeline opportunities start in, in new start first to of as been technology that affordable. for East-West data in and there runway that there applications applications that when are have use expansion traffic is us. come, wireline, regard healthy price to the I become more more largely to

second feeds is expect, that but evolutions that's continued into started, So wave XXX-gig strength. and the we R&D of which XXX-gig our have there

Thank you.

John Suisse. next is Credit from question Our with Pitzer

Your is line open.

questions. the on results. couple of Congratulations A afternoon. solid good Yes,

how topic, is, of about do think you look of from or there some healthy quarter despite I'm continue sticking important ban, the digestion can think we on XG been for last deploy fiscal first headwind a the the strength, revenue at on quarter a China into underlying though feel before has guidance, is to to as you the just you importantly, several you as compares relatively the remind potential to the I you think there orders half are just Huawei first quarters? year, China first and will China do what fiscal guess China? re-acceleration? question both should expecting clip More quarter? the represent you us year-over-year when XG Just And over the curious, Huawei fiscal when the about much first how

have don't comment first part Yes, take there. and we that Mark expectations and some Neil, of this of will maybe the China why then our on is I

most the comment We're not our in with regard Huawei going enable that with business essentially expectations our backlog to our relates is us the to to mitigate entering is may our situation strong think important I position compares. a growth to perturbations very outlooks of going change or as it the for year the long-term Huawei is, markets. for think to the year-over-year of strong backlog position the on I any impact line short-term happen order because Huawei and that

We end driving have customers the going we the past to those relative strengthening looking long-term over were of foot on gas an extraordinarily the the our to of targets. where diverse and we're keep markets base that around we've QX world quarters in at and to demand we're our and in couple relative seen

this I'll with that. is Mark. John, Yes, follow-up

solutions. and the China the it the So extending in in impact that from is scale XG as steady from came were strengths QX across orders business our some Huawei, strong in decline, -- those ecosystem throughout and quarter despite obviously, we

XXX-gig As Satish digital talked hot, high-speed about manufacturing. is and optical

to strong. very and We've in the XG the to to our So successful electronics. capture our Neil industry redeploy -- business And segments. They as it's mentioned, We've broad we successful in business line our footprint, continue we'll be and very continue China growth a show resources and broad us. the more other first to we've in is, quickly general seen is also the growth recovery been deploy economic bottom for automotive and China. have order recovered across in up seen is and a that and

Very Thanks. helpful.

from Our question Niknam Matt with next Deutsche Bank. is

Your line is open.

line you taking target through on so longer-term maybe, actually we longer-term should -- think your the for to -- improving the know anticipation with one targets why follow-up reaffirming help trajectory and closer you're you're on how reverting order lot got different backlog Thank One think revenue back you've takes? of and I X% us the you I questions. orders. And big margins about maybe exiting and growth margins, of normalized improve, puts year was then if just exceeding Neil, about top X% growth seemingly the should X%. think a a the a can lower,

bigger can the wondering back mid-singles growth longer-term out lagging to areas the still path Just you rate? get are call and if to that Thanks. that

Yes, of start let with that me the margin first. side so

we're challenges great at about operating the some of we've first been very business pleased the the that this company. really year test performance this about the all, and with the launch a and of look talking in the year So of That of model the as margin year of of we since to in being not Day our said, operating at and are that towards year working they hit annual objective. we We are still outlined our target targets, targets, XX% targets. or we've quarterly margin the this we margin Analyst operating targets is that general, talked getting and XX% XX% margin our

more think obviously, third you and down revenue and second the as forward quarters, to in down, with I we're -- broader general. to can think in saw can and with and expenses we regard digits, put in this performance up seeing think strengthening I expenses margin relative a we the to get I to some look we across markets that highly you confident economies, the to we how but normalized QX that level. in to year, mid-single With back achieve are of look our returning corresponding ability the

businesses strong in orders great at is, saw that think, auto, seeing recovery we're while of saw auto in in a the I indicative some like general auto. return very on still electronics. down COVID is our year-over-year situation. I we a Even from were business, of basis, education looking a think We as sequential what improvement indicator which strong

help broad we're strength I and for and those levels. just to going really look better getting are things across entire think us So strengthening drive portfolio to the macro to

you. Thank

question next UBS. Our Snyder from Chris with is

line is open. Your

Thank you.

just orders tough us [ph] maybe us Huawei from talked for demand just you revenue feel what a to QX about QX give comp. You the what the and percent of Can tell underlying came is?

we We given I driver expect I to our have coming I the about of us some highly situation thinking ability but the going a how headwind dominant be to year. half. going to year, and give we're into the time about that perturbations confident We're that's roughly the X be business it That's in some so think, the it, what give be that's first order the think on might again, overcome short-term to think us into going the and point backlog line.

to Appreciate the more QX, And weighted that. I in mean, it's given first that the fiscal China COVID half fair into it Okay. impact just QX? X% for the that hit is fiscal assume

have my comp we No, that's correct quarter We're in going in you backlog but much to we're clearly I'd remarks, our in last strong we be to QX, comps obviously, the a and a backlog Certainly but softer, that for point migrate first as in us. over position in several QX provide to a revenue the growth good prepared the situation. built significantly and tough I the guiding buffering we said as the back and revenue going order get year. QX quarters through is

up then And just that. following on that. Appreciate

to headwind share to led for shifts talked Can to as that about talk have we've have and Keysight any to any move these sell that here peers this we upstream non-U.S. XXXX? Huawei. the into maybe IP maybe Some allow about you seen partially you offset ability would opportunity restrictions

that going of portions our but do second the me is not ability into it part have small to forward. sell Satish portfolio include going of a on customer We let very a Huawei maybe U.S. and some the the of first some be Let any to Huawei forward expect material small for take I'll do comment us material We portion portfolio. that technology, don't part.

start what they continue opportunity. see to the said, And in share invest it's because makers but X in to R&D add call see to -- we smartphone just shifts, smartphone too to soon Tier any to Neil an China

So that's will. positive probably if offset, one you

The second is is interest XG evolving one to that Open resurgent technology provide alternative stations. a base RAN different in to the

and at XXXX I the as if look -- things two into we us have potential beyond. for those think you look

for you Thank the it. Appreciate time.

Thalhimer from Thompson is question next Our with Adam Davis.

line open. Your is

good I afternoon. I one. only and questions like quarter. hey, Great Yes, can XX have ask

a Make it one. good

XXXX, year Let's go Neil. the seasonality with for fiscal

curious you to it? just that what less meant seasonality you and model said by you I I'm XXXX. how think want in us

back what essentially mute -- backlog we we I'm quarterly impact up more we as to over you last demand-driven again, going seasonality that be to of would we've work of is slowly the couple backlog typically prior situation quarters, built think the going think in off the we the that bring Yes, to just that years. seen

quarters, We what with expect coming a than typical. muted seasonality QX, seasonality much is the more a maybe much over but uptick revenue muted revenue slight in more

Thank it. guys. Got you,

from next with The question of Ridley-Lane America. Bank is David

Your line is open.

all-in prepared those were XXXX? reductions referenced my for temporary in cost trying question. up? you back back your come of -- year fiscal as of remarks, fiscal cost just get XXXX Thank year in in some the wondering what a Just that flexing you taking I'm to sense variable

impact many is, that we've things expenses. obvious big think model. about in reductions our QX in as probably obviously, I length programs our are driver would point just there the cost an the the talked pay flexibility single you Yes, driver. that to companies, travel, That's of example. at Then our variable and prior I dramatic quarters biggest the

I our spending forward, in Obviously, and but a the from look other to the do [ph] things, to and here you levels of other XXXX. QX remarks, normalized return than we'll be standpoint higher year. largely FY quarters an we've saw more look the as we think said then, do baseline administration to OpEx expect prepared as we in fourth in to the think continue as I quarter could QX we

much. you Thank it. Got very

Richard is next with The from Eastman question Baird.

line open. Your is

number for orders there step-up? de-booking on year? at I thanks Neil, face but XX%, was around any the I'm Huawei the you at we could us question. end or curious looks maybe or up the of value, it backlog mean, that like side, anything the of it's the a with give Yes, enter just did defense

would on the orders given consider $XXX portion order which and disruptions revenue the and third you just not looking second the of material in significant There level the backlog of at We all. of build revenue always a the abnormal any change backlog but for to we million, the changed noise difference disruptions built be amount between have and de-bookings, it's in is hasn't de-booking. seen shipment year, the of any a some quarter. at or that Obviously,

work over So it's looking of of that that abnormal quarters. off the the to backlog we'll be portion build course several next

you a new sense a of what there? look outs us are outlook XXXX? and Just give like the a look network year pacing of the at demand from demand here roll -- the and Ixia. the uptick how standpoint does and the seeing for question Can timing and around the of for Okay, you and end in just any to infrastructure year, roll then Ixia relative given outs, the does demand

Rick. Yes,

little integrated say solutions. segment with the space, to Ethernet. we've some the respect the year networking excellent a see Ixia a been over a it's business into Commercial realizing would in progress XXX-gig I Communications we synergies since in So we made and

Our that of and able security and there now aerospace X, in significantly of addition but Layer investment platform we some with solutions strengthened, industry. securing Ixia's business. synergies been the the the the We're XG greater industry to with layer layer, acquired, physical protocol position has as integrate realize only and X we're flows defence as good portfolio in business our not wins for the the we Layer also piece R&D the the with that the

with where, So that’s this where getting expansion another to addressing With just visibility there. the of traditional but we’re deployed, the business that big see quarter, closed opportunities on we looking demand of some areas. are in operators now we opportunities, couple area for only had a starting also enhanced visibility pick-up XG not application part for layer we a

and strong the we think everybody that's would progression trends favorable. from to be COVID, Obviously, is big you into I we that now, gates is cloud, going portfolio outlook of So the and look the the say, view recovering recovery. application right virtualization, layer, at the that overall so

very you. quarter. on you. quarter, thank Thank Okay, solid nice And congrats a

this is Ron. Rick,

comment, Just is Ron. other one this

backlog other comment, XXXX. FY the one we talked build Just in about

go very it's a because in beyond been may build FY XXXX, at look FY quarters many had XXXX. You the for to backlog and want back also steady build we've that

that. will Thank you. Okay, I do

Citigroup Jim Next question is with from Investment Research. Suva

line open. Your is

you in fiscal you just as strong and the you XXXX it Thank XXXX. a much. times as I mentioned that had that it's fiscal question built well backlog, A several then very heard clarification on

backlog that are is, question a you building fiscal duration recent of or starting where and quarter just it two the the XXXX, you it work is now was So also. just you was down, down at or this to but reported said the quarters, most work three point in it growing is still

the out variable of the the just of trying figure I'm So to dynamics backlog?

just overall obviously, a here expect and years in so terms we've the of Jim, for been would growth Yes, number backlog would growing business growing business. that absolute of given the our a we be

fourth reduction was this think what have think that a and abnormal backlog more quarter a backlog. because I into you QX we And -- of rate the which positive immediate the really QX it's really of our our in book-to-bill product, of QX, particularly on build X, got we've billion on while depressed in over is in of and the orders they cases we saw process a customers. backlog frame, that pounding is revenues delivery very that So think and or pretty it where We on of because referenced, QX, just saw backlog need right? customers door tick neutral remained while going look in get drove in the that I shutdown QX time in building previously much to was in built take saying as were quarters. to we of the next our to X, of I in about $X.X strong and we be backlog that of is and the in really backlog growth you dynamic focused customers' the of at were we driver if were in delivery north amount predominant was up and year, to I next weren't QX fourth levels couple now in businesses the of tick the significant this less that we a where was as because of delivered QX, product so, in looking were when disrupted, position were -- abnormal shipments situation for think going a that I most note, re-ramp what revenue quarter, built of factory the that backlog QX, over the

count keep the bring count or just meant buyback, to and actually housekeeping it flat for is share offset just And relatively the stock meant it to dilution, down? is share

I'd say of that. a about couple things

be But least programs us you made anti-dilutive we buyback will we've approach. of those to be and first a So with just at obviously, to in XXXX, FY that. minimum continue a our all, with commitment over the and saw will frankly, as of do QX, opportunistic course at we when

year the take And off average somewhere shares we down. X.X this very so, pleased count were an share around at $XX million to bringing the market price

to keep million when we'll bare FY we XXXX count say the certainly which our XXX windows, on we in so, can share count that, but our be prepared in at see We you is that us shares, remarks And do share those minimum, did a count expect to constant. flat.

for base case beyond So priorities process. to repurchase, we're -- When development funnel have we continue capital capital modeling. about our active I an M&A that's think share

continue to at are end that put ways quarter. that of money to We accretive for last to acquisition to to margin, did accretive M&A the Eggplant much growth, work look we through gross of and assets the like

So, no capital at in our allocation real change this for priorities time. point

Thank details you so Thank and you. much clarifications good and results. for the

Thank you.

with Our Marchetti Stifel. John next question from is

Your open. line is

question quarters. a much. quick I semiconductor for business. on to the strong a few very been That's ask wanted Thanks now

year? in performing as view we’re years your where as we're out to XXXX, process next that just that we think So cycle? that get for into And curious semi-business how into about transition no we are of going should looking

from and some needs folks can semi-business. been in working environment. Mark home make would high year say demand. by working I the had for the we the also that a it's have on and to due comments, forward-looking remotely the I'll And XG chime maybe and is Yes, very starting the on that devices, it And in continue Mark especially and driven the position demand. growth and proliferated, so in and strong track on performance the we're we node hand now our forward-looking I'll the IC X for from to semi nanometers; some we've there. X in spend; sizes to highly And China the capitalized is to comments also -- off new make business differentiated captured differentiated, that on activity a computing highly X, to

new leading and retooling that process Satish Yes. length sales several long is What we're involve involved the process fabs long drive and that as with United both, with States in announced of continued investments see to we demand add including the that of I the continuing is continuing world, is nodes the months the the so We well in like, the talked into extreme next ultraviolet year. see that chips parts as the relatively opportunities would very program lithography and was those about technologies cycles other a one; ago. China, around

coming couple next-generation process but constraints bottom see quarters, the demand support these the we next is, in technologies. some line So we see of to market could our solutions in for continuing

even of strength I continuing sort through is How margin guess of that business? As in it that some of the growth right level a function piece just a the the strengths on next some the much we maybe, Neil, challenges fiscal year, we the quick the what's you here. had that with of recurring And follow-up look Is year? software seen; this Great. out through, given mix-related? then for of into that, I of setting guess, gross

realized Sorry, because was mic let me repeat off. that, my I

making pleased on goes that into lot And We continue margin. a we're to there with be the really, progress that. is very gross

of with I'd start content, First software right. all,

saw lot that's purchasing; revenue more I we've time-based way our so continued our and the annualized been continue high-teens about great recurring us But -- portfolio, great software our goal, talk software company, the the we services actually below the portfolio, our business long-term then, our in progress in outgrow of selling complete that would business right. improvement to FY We're quarter on make I progress; services in in during migration margin continue of growth towards the a customers entire us. to has grow see broader the our buy a now year, has so business margin helpful. margin solutions we nice grow on conversion for During about which operating and And have of come software average a that's 'XX, line. until this from across last north the gross we XX%, towards talked mind, this to making gross

be to to those migrate solutions, highly tend can more we As differentiation. that and they complete differentiated, monetize we

And our mean, seeing we're as the of the so FY couple world we're excuse think 'XX. -- the seeing across and I quarters. you think in the very around is -- orders FY me, way orders I the the broad -- recovery large into strengthening strength we last as pleased couple of with strength entire the that favorable markets with in large cycle the of we're QX, that geographies the year. 'XX of over really indications But I -- look of the this portions strengthening macro very through portfolio,

Thank you.

from is question next Jefferies. Couillard Our Brandon with

open. line Your is

think monetize plants. I Good program, quick you alluded some afternoon. to your one; a CapEx Neil, just to

that a or $X.XX expect should is oriented cost 'XX? of fiscal in part, kind we And growth to First oriented? similar $X.XX

it's Yes, two-year a program.

we've And facility but year from we're facility sites purposes, some essentially So make activities I'm to types just supply other of for a is productions I specialized kind our chain 'XX I our diversification that resiliency away, a chain just do. supply some -- obviously, cases, similar FY some sourcing the of of perspective. would secure. be still envisioning, think sure those with will alternative for it we call up; CapEx to to get upgrades we're some got need In looking

right, thanks. All

Sachs. question Goldman with next Mark is from The Delaney

Your line is open.

question. the Good afternoon, thanks for taking

countries, mentioned more out you we where that there seen a are potential elaborate cases bit COVID-XX the you that? muted around seeing Now the is Are [ph] some many any be company seasonality should risk we've year. schedules have increasing mindful actually been geographies occurring? some Your you and about? customers in push as this more as factors on unfortunately that coming Can a behind one of reading this

going of I look about we as several revenue And broad so typically, to just overarching we've uncertainty couple a you we knows things; of seasonality happen, typical out -- over it's Nobody we can kind seasonality; that's got exactly see less uncertainty, a I'm much the -- quarter, one, to think quarter in got more history are and of would you've to COVID, that of what's expecting plus happening, question next this move what see points No, go the and we're and -- it's and minus two burn see saying at those know, the is. around this or course to from all, quarters. kind or think right. we going broad you flow going more drown backlog the steady current we're a the then be year; that

perhaps been helpful. already call, And potentially that's is restriction maybe additional even any this but are think know can need there dealing Thanks. business as be the geopolitical customers business Keysight doing companies, market. increase Okay, been that Huawei discussed that risk Huawei. has? with about on there and could beyond in you thinking be a you've doing has under tech some we that it you some Huawei we may for from And follow-up you sanctions, and potential or separate with talk I other come to been China question created where on in issues the about that already has any

Yes.

So years will were business of Mark continues couple restrictions. And I well, back to that well. it we very kind comment a that now -- think forth ongoing, of do we've I mean, I you very into our as weathered and well. on let trade China I'll this in tell around

or you're these the added and China or to whether restricted of with list lot And the tariffs business through ZTE a situations to things, talking so Huawei; been grow. continues our we've party companies initial about the and

in China. We is portfolio, things with does what's Keysight aligned happening very company set, we a that have types a well the very customer have broad very of as broad a

that very you mentioned to just redirecting market to I that our resources internal own other sales opportunities are. add to know Mark, it, good anything and Mark and I so, where -- we've And don't have want you think if that. at the been

Yes.

with a changes matter made and June that and used Mark, would earlier that I the And back customers Venezuela So of recent some ones also pivoted regulations. were most and already and that in fact, we just the we've in to tied Russia military that. there China as reiterate associated endured, was we with

capability we'll we're to So, business many, closely been be so. go as we've a monitoring after doing pointed And built for pivot very quarters, to Neil we just are, and have in the to this us. out, and compliant thing, additional we core available that's XXX% continue always many quickly as successful

Thank you.

concludes to for the That any session today. you. remarks. for to Kary, turn like Thank our back conference now Jason I'd you, question-and-answer over closing

to And it some Hi to Chris, I'd Ron, thanks for for comments. like turn closing that. just

incorporate strong very we flow. differentiated the a as results ecosystem. very very, free world COVID believe our are -- services. Thank as despite We you, market we And revenue class pleased record record with orders, margin, gross delivered well trade environments; solutions with margin everyone operating record good for the see and have hardware, I position solutions across the and we delivering that very joining really us. record and despite and analysis strong software cash very record capability,

to day. with see during tested we is employees model value as for is and giving growing, not software their our recurring us in best as is best the and much, very stronger a strong, are come. results and to innovate continues believe Thank world best them both an customers to And deliver. the you you type hard even could was revenue. But the to can done that services believe model we And six world end-markets. Our business really committed I increase, content in we've the together bring I years business and have to it our more support but them create the the very great they and are business of of our yet work have that time, last shareholders, solutions our first COVID try least, across period our of really we in the

our disconnect. call. may concludes you now This conference And