Keysight (KEYS) 23 Nov 212021 Q4 Earnings call transcript

Good day, ladies and gentlemen. Welcome to the Keysight Technologies Fiscal Fourth Quarter 2021 Earnings Conference Call. My name is Katherine, and I’ll be your lead operator today. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] Please note that today’s call is being recorded today, Monday, November 22, 2021 at 1:30 Pacific Time. to Treasurer conference and like Kary, to now President, Vice Investor would hand over the Jason I Relations. Please go ahead, Mr. Kary.

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

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

and Sales. Joining Officer; Q&A Chief the Vice Senior in will be Wallace, us Dhanasekaran, President Satish session Operating Mark of Global

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

the results. under Information the presentation link for you there, find tab While click will Reports where please on along Quarterly with Financial an investor Keysight’s segment

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

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

You and metrics on noted. GAAP will reconciliations comparisons directly year-over-year on basis the find are comparable All otherwise unless a website. financial most our

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

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

fueling growth Keysight’s across in comments all key full us. gains our quarter of fiscal delivered continues Strong portfolio be where and Today, fiscal fiscal First, year. end strong year. on markets. of Demand solutions be you, XX% our solutions thank regions, with both Thank my fourth for continued expectations. with demand all headlines: grew for off topped focus fourth double-digit record excellent a demand Jason, across in and momentum and we business for exceeding to to the balanced quarter four of end all is differentiated the Keysight across our year quarter I’ll you an for joining the Outstanding order XX%. orders our very continues markets and differentiated

outstanding Keysight environment. around despite tightening the year supply we for world employees fiscal for a delivered quarter and record share by and margin, revenue, the operating execution resulted Exceptional results QX in the Second, earnings per XXXX. fourth margin gross

Third, we robust strong with entered XXXX backlog. market momentum, demand record end and

X%, the loosening of of year, the growth situation a of XXXX we half revenue X% second Assuming while to the in XX% calendar delivering earnings fiscal year supply expect growth.

confident increasingly are to deliver we XXXX, Beyond sustained in results. our ability above-market

a over established the our record has have years only of grown and in earned of position We competitive investment execution, transformation seven past track stronger. strong

opportunities to tremendous Lastly, a for share strength we position through cash organic of investment accordingly, given repurchase the targeted continue $X.X capabilities, and of see in generation, we acquisitions new announced billion. authorization and value-creation disciplined our today,

of delivered quarter and environment. In demand of ended with fourth the XXXX Now, a and tightening and the overall saw strong be two-year the the the operating for percentage of XXXX, per and as In XX% points share. added multiple Group let’s earnings double-digit to X,XXX we the solutions strong environment, of the XX%, Despite solutions. at Solutions faced have year strong. we quarter consecutive semiconductor $X.XX delivered margin of over profitability record growth deeper China growth fiscal of breadth we the revenue to in we regions. headwinds orders to our expectations margin supply grown achieved more operating drove XX% trade outpace of record both demonstrates XX% continues year XX% with which momentum year-over-year. of resulted XX% market, business our this and across our model. order growth XX% XXXX, record XX% expand fiscal exceeded in and highlighting very to and of order of by Broad-based than in a the durability and we grew business growth its dimensions in respectively achieved the revenue overcame a Compared gross X we margin per excellent finish results segments. earnings an grew pre-pandemic and to $X.XX as driven XXXX continue margin in revenue, to revenue quarter XX%, period, our of than delivered Fourth year. share. year XXXX, all of customer Operational continued market-leading annual the headwinds Orders continued stability adding strength The footprint, our financial quarter, in Electronic in base. take We and with business growth customers gross Industrial fifth X% growth fourth look X,XXX performance. our we and and double-digit across Revenue Despite automotive. in profitability more demand excellence XXXX

technology automotive, Another in orders expansion quarter achieved ongoing EV nodes by we revenue advanced fueled of to record Investment remains strong address in the and third and AV for capacity growth. double-digit record quarter and pent-up was of revenue consecutive investments semiconductor technologies. order demand. In

who digital of investments solutions. solutions Group fourth Communications selected delivered was IoT, electronics network demand NIO, X.X the in record advanced announced top industrial by one growth academic digital XG Strong EV health, The double-digit emulation in collaboration quarter. Keysight’s Industrial general for and and Solutions the and transformation, C-VXX we quarter, research. automakers driven This order China’s with continued revenue

for orders trade double in Communications China the and QX digits achieved applications. of quarter record orders by year, driven quarter. and of platform, and the revenue was new another XG fourth record strength adoption all-time Commercial revenue continued restrictions. despite grew industry O-RAN the the impact For our

with like support growth In was of commercial industrial collaboration Keysight’s rapid services like and driven drove partner double-digit cloud ongoing with advance to network saw agile ongoing and communications the and enabling XG. defense announced network defense focus in order In communications mission-critical technology in edge. technologies innovative Lockheed order in In with support a and progression of at and are and R&D for and XXXG investments We the aerospace growth double-digit entire joined visibility. spending new by ecosystem. of we recently first-to-market XXXG winning NEC XG and Martin centers government, XG across Google’s space the engagement solutions NXP, addition, applications. leaders we investments in to Increased the technologies in QX, test MediaTek. initiative network data security orchestration on aerospace, new

XG expands into government, aerospace, progresses opportunities and solutions defense end-to-end automotive life cycle and industrial Our portfolio and new to the applications. continues capture as

our to software-centric threats accelerate continue a industry-leading acquisitions portfolio. We added defense and aerospace, and Technologies best-in-class strategic communication provide and solutions Keysight’s of provider networks capabilities network Network is visualize solutions cyber SCALABLE government SCALABLE solutions customers. simulation to for through and to recently model to

the excited to team We’re Keysight. to welcome SCALABLE

Our year. Combined, of position not and higher software-centric of they strengthen Keysight’s order In capture our over the represented wallet percentage our continue only outpaced a differentiation, competitive revenue but software share. solutions and higher to value delivered fiscal revenue growth. customers’ one-third and services for services and overall also Keysight’s total double-digit growth, just XXXX, drive year

the model, on recurring to further business durability as expansion. well same grow which the drive also and as consistent execution. software-centric solutions our strengthens resiliency $X annualized exceeds We operational services growth the The recurring and Keysight’s billion. to of contributing while now in revenue Keysight’s and our focus time revenue, margin continue at excellence software first-to-market

ago, growth while to performance operating execution we XX% our and XX% accomplishments have Keysight’s record a track same Difficulty] of have growth like values would the EPS a people. nearly of thank our employees and testament basis over model, growing These exceptional to expanded proven and XX%. size all strong recurring annual the gross achieved Keysight period, We for increased have margin by X,XXX dedication. [Technical a are by a our points tripled [Technical as inception resiliency. services seven and Since their revenue points, margin company leadership compound basis years our revenue generated I annualized Difficulty] business Over XXX rate, nearly we public

multiple long-term deliver in above-market and trends year to Difficulty] sustained [Technical innovation across this exit technology continue We continue strong to expect growth. position We and profitable competitive markets. a secular growth

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

and Ron, hello, everyone. you, Thank

or As Ron of we fiscal core $X,XXX XXXX, mentioned, outstanding situation delivered core X% quarter we with the tempered billion chain record The basis delivered million, million Difficulty] within year. improves. Difficulty] quarter the which Group and businesses. contraction total an $X,XXX quarter year demand fourth the which we Solutions further fiscal us a [Technical a supply environment. on a reported enter [Technical on In high as backlog, of and well revenue of was up chain supply [Technical above revenue over Difficulty] delivered will orders, supply XX% the record in outpacing results position and $X in XXXX supply, With the

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

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

Moving our the performance of to segments.

reported of as margin and of $XXX CSG chain U.S. XX% in record Difficulty] delivered by million, Our same and revenue Industrial of operating XXX-gigabit strength impacted operating of EISG communications Asia commercial investment record margin year XXX-gigabit gross generated generated X% government Pacific constraints of Difficulty] last defense Aerospace, and revenue Group the Difficulty] that [Technical record XX%. and up $XXX adoption million, Communications O-RAN Europe. ecosystem, up margin in Solutions XG from Group the offset in gross by revenue Electronic driven across R&D. Solutions The [Technical solid margin achieved XX% slightly growth generated [Technical and and the quarter of was supply

billion, pleased to XX% tightening margin a XX%. and In trade Gross $X.X very headwinds, year-over-year full FYXX, chain results. XX% points constraints we are core revenue totaled or with basis XX Given basis. supply our on improved up year year-over-year

$XXX in XXX XX% margin invest points of revenue basis or to while for million the continue to improved operating R&D We year, at XX%.

up $X.X of target XX%, years share, two plan. ahead the this to XX%. was or we of net $X.XX income margin have operating our of XX% non-GAAP FYXX On per long-term strength performance, billion achieved

balance $XXX the to sheet $XXX generated XX% cash free from income. XX% flow net cash fourth of with of representing of cash $X.X cash year and quarter in our billion for non-GAAP $X.X cash and ended We of the million Total cash billion, free and was operations flow. revenue million. equivalents, flow Moving and flow

the in of our billion, effective we $XXX today, at repurchase consideration $X.X of average repurchase average repurchase $XXX of of approved approximately for total flow. of earlier total announced This X.X to million Under has for the shares our consideration Directors million. share approximately authorization, X.X a million of Board $XXX at cash immediately. a authorization share As quarter of total price brings Keysight share new a prior an share year price the share for million free $XXX or XX% an acquired shares

Now, backdrop, and expectations. chain turning continue to outlook shipment a Despite strong moderate supply demand guidance. to our constraints

range result, range a the million $X.XXX to in based be expect of quarter shares. count As share earnings weighted the XXX to of approximately $X.XXX a in we to first billion on XXXX to be and per QX diluted share revenue $X.XX billion $X.XX of

the chain to forward the we XXXX, in of remain to tight expect first Looking year. supply half

to we capacity supply situation the million and the Interest expect with range be XX% be approximately the $XX in X% the to while to million of expected technology loosening full capital $XXX to delivering half, X%, year be of to expenditures in expense revenue second growth. earnings investments. is a range in increasing expected growth $XXX of are and Assuming million

FYXX, momentum, modeling excellence. change rate, tax operational are In XX% no of to policy. position tax and fiscal record with year a current strong strong for entering Regarding our effective U.S. track a tax a record non-GAAP the we closing, assumes we rate are which backlog

With and profitable We’re dynamics across encouraged competitively to to the going are forward. drive positioned that, it Jason markets turn growth back strong I sustainable end will now by Q&A. our and for the

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

Morgan. JP [Operator Instructions] Chatterjee The question first with is from Samik

Hi. Samik. for first This is is just Cardoso full the guide. My question Joe year on around

your X% I’m more growth, around the -- full that to just seasonality. expectations you’re X% guiding with trying quarter around to flip So, and to commentary last a muted year

of stand revenue something still expectation is such year, I should the that half the head see that does maybe all, does into the that as about of year? as the loosening so, for supply ‘XX, First here similar And to trends as appreciating not back a we as did if I’m revenue expect think there in the cadence full true? we fiscal chain imply the or to benefits of we of

great Yes. Hi, question. It’s a Samik.

did some relaxation in on as the chain quarter, during mentioned yes, supply year. and So, of assume that we the tightened does the will see guidance situation our see call, in half we back that environment the we the

things. say So, if I seasonality was the for thinking two FYXX, about I’d

the I a first that we’d expect right, X% for the I on I and of revenue of that growth And half year that build year. full I’d are of year. so if in the we think, the X% about below to the you throughout slightly year-over-year full X% X% year in as back of that thinking level to to think about above that the that to it all, we basis, level, year. be think the for in of growth, terms half that average X% rates then, X% move our guidance growth quarter-by-quarter are maybe expecting first was rates

it. then, They quarter. this just were my really appreciate color operating question, And there. EISG record Got posted second margin on I strong. the

And some that to there to contributors big margins? we any the or of curious drivers just benefits consider? what margin relative onetime to should the if hear in quarter Just hear there was curious were to the operating

XX% the all immediately -- thing those has strong products we onetime strong. growth The obviously I nice business year been in benefits, No is semi. the year. I Yes. the that business, year but for semi the growth on We’ve strength a business, extraordinarily think on seen continued forefront the for everybody mean the in very the the rebound with comes revenue the seen very automotive to -- this the demand have has press revenue

short OpEx strong and demand essentially really take -- drive them infrastructure levels margin the to run. you allowed their of that operating and high So, which picture leverage in

to continue to opportunities we to to in as investments continue to think we these markets. as grow end serve look invest as I the business forward, see technology great well further

Pitzer The next Credit question from Suisse. John is with

kind could the constraints Good results. on deeper supply Yes. Congratulations I afternoon, there. if of wonder out into of dig little you’re bit that Neil, just a solid guys. some you seeing the

logistical kind dollar fiscal it a of I think amount give hitting fiscal comms. said it’s it fourth curious, is is your constraints? constraints? you comments, Is And guys, impacted in than of you you component bit and I’m everything? prepared EISG first a us can the Is revenue, this stronger quarter? the there little that both in quarter

great It’s John. Thanks, Yes. a question.

So, first all, on than CSG impact the greater businesses. said in EISG of businesses I The was opposite.

be bill about longer If of why complex. products tend materials. They more the you is, to CSG have a that think

on so, into there And parts more go components are instruments that those building average. and

challenges chain. And so nature, increases supply that, that just by the the that risk fulfill have its and to we

the higher be I spectrum. also think, of end products technology the it’s the average on to tend CSG true that at

those And products exist of than products a that so, for more there EISG. the technology are mainstream cutting-edge fewer little bit within suppliers for

in pretty quarter, quarter’s at certain little I a think, seen of typically supply job ship within the phenomenon supply of of have between chain, years. we shift think starting maybe done lump the and past we’ve chain you XXXX impact if together following COVID a think and because to the over if lag XXXX of to to over about you’re I’d really bit portion this couple of last in have grow. of of because delta couple you as those because our an And any at converting our focus looking years, percentage at quarter, fiscal your kind how on order example, the over If one chain, but our to years orders the and that of quarters. But supply of look into full impacts, revenue. right? attention, each seen COVID prior we order quantify history I’d the XXXX, a out time rates, you’re good really another not revenue There’s at about orders

build, if so, years abnormal to I abnormal $XXX million over it you terms couple the estimate And the last kind range. backlog is an backlog we think of $XXX that in in that of of about million think build

opportunity I clear we’ll that backlog, once flush the us that think expect for to we don’t quarter situation chain the look eventually so, that’s as I And fixes a forward that in supply two. or itself.

it that’s over here as remedies think to will of happen has year well. rough time. time what kind the we’ve been the I period what happen the going time because impact over a supply of chain magnitude But, the the are couple of over of -- of

of the potential a actually to you, gives the for network from more what And especially several handsets sort a a on And like applications. incremental guess, strategy I to of can color. third the an size helpful time is of last kind compare you’re is get TAM the trying the was driver. backbone curious, that little which do we, think XG lot color three software of to sort opportunity mobile relative of I a and your about extent the Ron, just I’m backbone five side business like to really next rollout being with world, hoping then, business. to for how That’s the services around, And as of and software being more rollout XG now, to this that just have about bit incremental the seems deploying over and do this been years? a the we that new years, contrast over the you

hardware, our great the seen of product we from very, and services. and Thanks, include outpaced hardware business solution total to hardware a they’ve bigger that solutions move supplier John. software-centric we’ve And and in the continues our software percentage growth provider to services, software bigger obviously a and and very a software our services clear obviously It’s be as growth. and

by decision versus at working invest in Agilent amount. we Looking we’re little XXXX, were eventually more XG, In sure as overall with and in a were did off that going in in we made I let’s contribution Keysight developing XXXX, XG, were announced Agilent, November be make spin a But XG the to cash of, providing started not investing at XXXX. communications in of to to XXXX, XG was which heavily to rollout of we in a we we XG that substantial going where leaders. say, the bit we team

over did earlier. So, software greater we’re provide instance What hardware gone made we And still only growing, as gave into that who capability more, could one opposed I years. us we accordingly, amount more we and now we earlier, to which our sees much not believe growing of is time, to development this it has approximately R&D to lead investment stronger And software over R&D in, much, could consolidated our basically tell turn R&D gave capability. part. a key profile software used XG. going what to us caused XX% roughly be was XG. roughly over invested the for he They together, to results our had We a a starting provider, investing acquisition for and at we offering. the from us separate is having going an anticipate a but but you Anite, growth of in million little moved this called roughly as invested the all XG product company be it bit forward. where really XG. at And whole of consistent We XXXX, in span a enabled Satish, provider facilities to some R&D. to and them and $XXX that divisions. us million about $XXX a organization XX% period in spend to we we’ve And for and leading I’m

Great Ron. you, Thank question.

look strategy. for from application, right? the had is area equally the continue physical percentage drivers and being of that And important the spaces have summary, XG a these I these, pursue record actively. very to application outplayed you total we’ve as rich, at a can side, very and I of in to XX% the that. another think are as So, proposition had deployments, to examples we make forward, space. XG right? We and of think the scaling some new value I’ll range just quarter the protocol application progression we the this is of think I a a XX%, O-RAN software great one on but XX%, As example application few of

getting complex. side, the with XXX-gig, On the XXX-gig protocols more wireline

at MACsec new and spaces SD-WAN, emerging look and the You domain. SASE like security

we’re that very strong So, it’s investing the more really at generating portfolio, you look in to our and results. strategy of one favor being rich pursue, commercial applications comms software-centric we’re and

We from are Citibank. ready Suva for question Jim of the next

a had integration. your vertical about I thought

during to You’re trying this little more like or a be vertically integrated just I’m even And connector much at to companies. chain be sweet other? of want vertical that materially you core are Has the your back vertically cause as how integrated, there spot it now to integration? you more or think other about you. a bottlenecks, Thank you lot the plastics the as or bit supply housing the little that than just you whether things, held benefited or are does

Sure, Jim.

know, important position have of semiconductors. fab on-site the technologies the software have phosphide semiconductors that and probably really we gallium that Rosa, have note leadership makes high-performance very Santa arsenide an and exists to that’s capabilities. indium thing And in our developed first that The given fab as is that differentiating have you that we that is particular outside us

in-house. components are having of a a now lot trouble of build we getting And those custom lot So, components more people custom built.

definitely helped us. So, that has

feel logistical what provided the it look is in We other we there’s makes that to make competitors, anything. plastic that in-house to always obviously product. you but all shape can’t that so in the good It’s you components, only is going whole much order shipping Now, now. not issues doubt the are things about all the pieces We And that get again, to we have the financial right integrate, no are we ship needed to we that. sense. have will good whole not don’t sure are the but ship that world relatively have and like very through. parts, There opportunities if for compared components there

bit are of impacted, overall a we little think good deliver less these others. very times. to organization I than a So, challenging And the done being able job real during has

Congratulations Great. Thank your Keysight. team at and you you. to

Great. Mark And next Delaney to goes the question from Goldman Sachs.

Some of the hoping slowing are of what broad-based that certain portions defense more in budget if could reported appreciate any Keysight strength. to I market slower AD&G of bit talk you primes your if have seeing Defense segment? in that trends, end little order experiencing And spoken But, I segment? you Department on and even you’re outlays, business was a

Yes.

pretty a quarter double orders for growing year aerospace again, digits, So, strong a defense double-digit finishing growth. off with

U.S. globally, that similar look and technology increase, internationally to macro one environment drove capturing. the recovery in towards growth, you the especially what spend, it’s at in continues that and both If we’re

take Lockheed aerospace, Martin customize some XG stack announced. you’ve We year applications, collaboration to that steps took also as our with fact, or technology our last ago, we in probably years seen, and two and defense it concerted for

progression with getting commercial that are we’re we’re technologies So very pleased the adopted. with that making

are these of favorable. pretty all So,

it’s view and that been and has a and are some which a -- that we year-over-year proposed spend in the -- But, place T&E outlays our the us. put that semiconductor, favorable also now, the we for right through that increase budget Congress if has think been as spend if favorable observing approved, budget also Peripherally, it technology we the increased in U.S. has is continuing resolution and and getting perspective or from in a look which sustained you Infrastructure are under line for call dynamic. does if EV Bill at is for item, broadband or the We

more what all you comments a if year? in leading in alleviation my is those you. potential talk comments. And supply to of around coming That’s chain. depth the the on bit fiscal helpful really you follow-up color. this Thank was your half second question for Thank of could And

is we are constant start with and Yes. necessary I our to of time needs are And them are the -- make to this the I guess, have sure dynamic, that chain dialogue I parts mean, we with saying suppliers our situation would meet during supply very are we relationships that. in the procuring customers. close that very period key of by

-- it’s guide reflects the back half, chain in our our in from that situation of the from the a chain think confidence we’ve supply key I and indications -- our got recovery environment. supply stems within suppliers start that a direct and

Tim move Long We’ll over to from Barclays.

millimeter maybe, kind you. us margin bit expansion. been a operating from Two, it’s period then you. of Thank margin kind of of update these about if on you on et and Can give with bit current could FAA, talk levels? particularly kind great view -- potential little you updated and cetera? -- Maybe the wave leverage us talk And an impact delays incremental any little you just C-band Neil, side, could secondly, Thank a I obviously could. these views and on wireless the with the of the growth of C-band, and impacts from a

comments XG. make I’ll on few a

going was stated on, we as before, deployments near-term it As a And the results, fiscal that continuing especially auction strong that big Americas. frequency part XG of by growth are double on the the double-digit in capping full auction the off in that -- quarter, in some world, we’ve the view And C-band the C-band dynamic, the this catalyst. as year. going a we mentioned, related had favorable are in double-digit a XG specifically bands growth driven for a investments I low was strong and across the

strongest perspective, Our our XG Americas and the a business in year-over-year. low business saw frequency our double we -- also was our FRX, from grew regional

the of stable mentioned rise while the to watching the expect Beijing expecting pretty the year. this the we’re that business use Olympics a cases our as all we before, next in very success And Beijing we’re steady millimeter results, millimeter manner emerge been we when year. have to has and occur for that wave strong very the So, wave in to medium continues adoption Olympics term, from

operating yes, is think great the of expansion term, approximately run the we opportunities Yes. Keysight, obviously basis question, margins the since in that within key we Tim, longer basis expansion points margin see about your look to And to X,XXX terms of to over And continue further I point to here forward margins, had adding points gross Keysight second we’ve a XXX birth the for margins. portfolio. as of

return out in associated get normal people office, costs dynamic year year, in obviously, a management a as to look forward over of a our broader general that looking post-COVID the business same Zoom. cost increase really then, and kind I we the At pressures travel it’s on to, And putting terms of supply we’ve rather up next other conducting next pre-COVID than is think back start as little -- we with that’s the hopefully looking a customers more got bit with that the a of pressures includes operating of a seeing facilities to thing return environment, inflationary chain a time, within little the revenue. economy. we’re governor across and or a time, as to and the person bit

maybe invested and we -- under year being of XX% think R&D -- we I just point revenue. that the last this saw in

marketplace. new opportunities and into technology to continue solutions great in invest to I think the see we bring

of you’re into range. next tick likely see year R&D mid-XX% to think kind that I upward

them first-to-market software But may over solutions think solutions term, and both, customers be perspectives, work our portfolio, of of to as to margins portfolio, northward. a So expand longer provide with year. those a drive operating we bit and the lot opportunity a to from with continue I gross continue FYXX our expand catch-up

from question Deutsche comes And next of the Matt Niknam Bank.

Hey, Matthew. on on This is the guys. Nick for Congrats quarter.

So I just that year. to first, should that what’s there a a that like just CapEx, I is guide I into is going the about or picking and future project that’s follow-up. know carry on wanted on, is specific up have uplift years, talk whether want and to sustainable, driving next

expected this supply the of we fiscal years out CapEx to couple elevated did a in this resiliency million our completed CapEx started improve in So, a efforts we result And talked -- or chain. pan we of $XXX that, of that approximately year. recently fact, about to of year as with

I our as continue invest technologies addition necessary our think, capacity investments key to drive to to the own continuing that are we expand of and in investments, incremental in we business. growth see those future

So, were year, I economic the sphere need last increased given on to across that’s time what an think are is, those investments seeing today, additive, spend relative capacity within there here to this money we happening Keysight. everything

lower the of that that communicated but materially million is little believe so, state, state the point, we’re I do And a significantly That steady CapEx -- indicating next year bit is where call we’ve that this approximately for the $XXX difficult lower, million $XXX is than exactly for new the steady not case. at not to FYXX. that

was I just Okay. about thinking wondering That takes makes quick mean, sense. I on environment. follow-up I’m some competitive there provide color. just puts a and could that a And are few you and then,

And the competitors harder On made acquisitions. having sending slightly recently lot create environment? does a one competitors some time different hand, of a shipments, then, a up easy positive angle, pricing that of are your one a

how think forward? EISG competitive Just the going from about landscape you

performance in EISG really starts us I strong off in semiconductor, year strong mentioned, growth new Very as Yes. continue drive a semiconductor last the business. well. year to where double-digit very strength, in as there. again, A Again, our enabling strong of building are wafer to year

taking we’re think regard this to we spin. So, started in Relatively that and been about entry portfolio continuing to for speaking, we’re the market automotive, semiconductor. are we see and there, us. it’s environment we With on growing newer a share definitely invest what when I capitalizing keep to doing

growing growing we -- results the our in extending expansions in We’re XG we partnership look for by any comprehensive at that invest so we’re sector. it is happened in point, you this stack In traditional summary, very that entire competitors shore a we’ve this And fiscal our if with far. contributions And had made doing we’re seeing announced much we’ve technology than pleased are with more the of automotive, to business. EV and at manufacturing C-VXX. and the continuing you all-in-all, in some we’ve what the of wins up AV NIO, as example, is our in at our as it an year, look have portfolio market,

ourselves business. with the EISG pleased with overall, we where So find

was for a of we and are on And that no. your question, tougher second taking which shipments, competitors having ahead answer is little with advantage time going pricing? The

We’re for over back in XX days, the from this original customers. years working the Hewlett-Packard long customers. haul been with with We’ve

and of increases, areas get products costs any hard not our competitive because certain are for to for from others, will position advantage them. customers shipments of or up We’re Where price do we not competitors. but ability in taking

Next the UBS. Snyder line of Chris from comes question of

range in industry Company about organically for Company Keysight X% bps So, four the XXX for annum. been the of But, with in expectations outgrowth the has about the has XXX look we industry. it talked now, at the per over growth years the when above X% growing past to XX% to to last

level last I so So, stronger over this gap? that four industry how a question Can kind guess, of help both? just bridge much unpack of Keysight or more you of driven combination outgrowth my we years growth kind of is, growth the us is just or better by just

a then it turn I’ll comments and make over. couple of

a be. doubt of digitization we’re portfolio, that and in we have of There’s I market we’ve more growth very-diversified growth it’s see there a the as seen doubt, place But, great seeing combination no a the everything, two. is, in semiconductor. no And we is and think XG. to opportunity more

X.X. Industrial in growth seeing We’re

growth and We’re gone seeing markets that the after. our real initiatives across growth all stated we’ve

have industry. think trying are difference huge strategy and, organization, growing how provides and with we it the the overall the on with And faster a market I So, than do pick sales our been a there makes Others hardware, in we force, successful to that execution our team, unmatched that in call market of believe key I have investment the outstanding sales software mimic it are no partnership total our extent. to general. customers But providing makers, is and solutions organization of it, that support we’ll markets is certain with the winning, we doubt we are.

Satish stop I’ll So, and may comment. another want make to there,

think you’re just solutions ecosystem as expanding marketplace products is portfolio to absolutely I to customers, have With see markets focused total out. what remain we right. the on called this end we we’ve the to that from Ron, expanded regard offering we in Yes. our

has Another that angle contribution to this that customer Mark Wallace we’re occurs can the add this that making. expanding adds is

investments Yes. engagement big Thanks, and marketing add a the made Chris, think market, making and in difference. customer I is this, go-to Satish. our to sales we’ve to

heard, markets, the double-digit regions end across we had entire growth As strong all QX, year. for order you’ve and not just for all fiscal but

customers, direct mentioned have our implanting all added So, And, in the than just the our prepared has this we which engage is during with customers, ‘XX, customers a our diversifies add opportunities Ron then, very medium-sized engineers innovate with statements, were as channel. X,XXX to business help quarter more sustaining continue and about And market substantially, new tail our and effect as that customers of forward, sustaining going every small us to year our business. year, not fiscal every we creates leaders it’s solutions have had grown we’ve long grown. for largest

strong distribution more the we’re well. channels seeing us partnership partner and channel continued than helping growth very customers a e-commerce channel have indirect sales with or XX,XXX as year, reach from per our We

our we of part that’s it, too. big these to customers So, multiple have ways deliver great solutions. and a think serve And I

Keysight expected would long industry from it I all in think to frame? everybody. or lasts I kind in to appreciate And of advantage the back or reasonable should addition has? normal peaks, bps be to just given that XXX guess, growth, until guided -- color how XG is terms in investment R&D then, is we levels, of last? I And Company reason that is the ‘XX can the expect Yes. market outgrowth any time which compress that, of the why believe my to scale ‘XX so maybe XXX there that follow-up over the above the

XG. -- total market in returns. we share share, you were to we look a sitting XG, we a have say may to XG. are and XX% we’re past say, there’s you’re But of of, it’s your where whatever on If talking when that, go let’s way XX% diminishing market we’re investing the is going we XX% already ‘XX whether overall, at headroom, range, or XX% in I lot believe or perspective

investing EV. We’re in

and outgrow or that We’re are investing there to years. are of put more that us AV. are the many for And right see, market we being so many, ahead front in opportunities aiming we in many go

differentiator to to broader is be to as million marketplace, in to goes to year ability ability outperform think least that in at The a and over only continue add real indicate would spend a to should I our market the thing our $XXX R&D time. the I what

from Next the Rob line question comes Mason of at Baird.

[Technical Thanks Yes. Difficulty]

Sorry, Rob. We…

out. cut has audio your Rob,

think call. lost the I we just

We to back can come you.

Mr. Mason, your line open. is

me? hear you Can Yes.

can we Rob. ahead. Yes, you, hear Go

what Apologies, did first Okay. just on question have sure I quarter happened. guidance. not a clarification the

below-the-line guidance. to maybe assumption down caught Neil, within that directed I your not Is year-over-year margins I your guidance? totally be the guess, So, you. sure would I’m this

I the year technologies R&D And fourth new see of R&D to a was the tremendous opportunity All than think investment. that lower finished right, point just in us at quarter. via Yes. a and was QX, invest we said bring relative I to for to market. XX.X% to where the It we we line finished amount look

margins. R&D sequential bit on quarter, is we’re to have little we QX, as So, impact extraordinary very did at expect the I I pressure our is shape, that the least, QX do in a a then, some there obviously -- the thing over we mix which see first items more larger favorable could return think only this in And salary basis a that inflationary on Keysight quarter. into also FYXX, we than did would a mid-XX% given a QX. a the of environment kind to bit normal product a little company-wide we other QX, notably have The in, we mix administration for say increase, salary typically less within most that And so. spend range, favorable, course be you typical taking that that are us expect of of will

would... How see. I

XX% operating That very, high a which was margin. record. QX, And compared was very to again that’s

on Right. your assumptions year-over-year expectation within compensation type XX% a How growth, incentive would how out around would EPS your basis? play

Yes.

based our of margins. obviously, the to broader on employee the programs. well two base, for operating as rate organic are incentive the components programs So growth which There’s the our there’s as driven incentive Company

there. the would true those so, And drivers be

the is I longer the think, executive this variable primary source for for EPS, and and cash compensation to ability we term, total based And the over ability -- EPS grow population’s is portion, line. to on the return. its grow of grow top compensation shareholder our

kind And the broader so, inflationary that’s seeing and as environment, FYXX, variable in to programs. up of result we we’re I significantly by broader offset decrease being a wages the forward look pay a of think as

Okay.

would follow-up. you plan, respect quick focus With a on you the point? where this us pipeline, to at -- view Just could M&A your how be give allocation capital maybe where your an just update

Yes. Absolutely, Ron?

or parts no Yes. the total markets, if Again, we’re total target doubt our a in -- as solutions. priority. need, solution to that But, is what of we there provide there’s first we looking that are and do certain be would components

we’re markets. doing thing adjacent second that into The expanding is we’re

and physical in XG, layer layer on solutions providing the the going up security. there, we and in moved into XG then or As and ahead mostly now earlier, layer we mentioned had we’re application protocol Satish can you off started the see

So, opportunities also. That we’re adjacent at. we to continue what looking look is for

have funnel, very a we high robust hurdles. have but very We also

to make the $X.X the So, have cash need shareholders, announced acquisitions return that to and but only buyback to program. share ability we why the not make, we that’s also we billion to

comes question Davis. from Thalhimer of Thompson Next Adam line the of

curious I’m thinking about margin margins. operating you on by segment. improvement one quick guys a Just how are

you, off I You had build creates comp that even at or a tough just a such for result? if year wonder great of can tough EISG. the you had if ‘XX you --

quarter a tough XXs, into obviously, results, the comp up within EISG, reached XX%, full they for the upper year here. very where given Certainly, but strong not the Yes. for just the

have opportunities increase we margins segments. think I to across both

customers. have increase solutions place segments to increase increase bringing software added both in think and I value we’re that content, to to we to content initiatives the across

be on CSG EV but And there’s about not for so, IoT opportunities XG, EISG and quantum I in continue to to in the us to you course, to and XG and And think both accretive defense as do think side, the we of chance aerospace, groups. that just our for opportunity that across ample I think if and, increase margin customers. Keysight add a value brings has market that

Thanks, Adam. Great.

you well, upcoming look all of I’d speaking to So, the concludes us. that conferences. thank many our question-and-answer today. And we at like joining for for session to you forward with

day. So, thanks a again, great and have

call. today’s concludes That

You disconnect. now may