Keysight (KEYS) 21 Feb 232023 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Keysight Technologies Fiscal First Quarter 2023 Earnings Conference Call. My name is Jason, and I’ll be your lead operator today. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded today, Tuesday, February 21, 2023 at 1:30 p.m. Pacific Time.

to Vice conference Relations. President, like host, to now Kary, Jason Treasurer would hand over the our I and Investor go ahead. Please

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

me Sales CFO, Dougherty. be and Officer, our joined Chief Joining Dhanasekaran, Senior Vice we Wallace. Q&A Neil Keysight’s Customer CEO, In President Satish are President and session by the will and of Mark Global

financial at information supplement to and today’s are investor.keysight.com information under and website the release press reports. The tab on quarterly discussion our

Today’s refer will to comments non-GAAP financial measures.

website, to We make divestitures a on growth, also XX impact are comparable will unless and the basis the metrics year-over-year our of within movements reference months. noted. all or “core” acquisitions, comparisons financial which directly most reconciliations GAAP and are excludes otherwise The last currency and completed on

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

York also on Morgan reminder, our Exchange. a hosting the Conference on XXXX Stock Investor scheduled Stanley is New Investor Xth As Management to are participate at the Day we March in Xth. March

turn Satish. And to I’ll over now, call the

thank for us joining you and today. everyone afternoon, Good Jason. you, Thank

earnings of end above Keysight delivered moderating high exceptional a financial first the quarter and our revenue demand. guidance posting of results, against backdrop

is our our build our the our believe challenging resilience dynamics, business, to of and performance on Keysight the Our macro expand end-markets. consistent leadership execution despite we success and across demonstrate and well-positioned

today my on headlines. three key comments focus I’ll

both per strong of a delivered on demonstrated segments $X.XX earnings record durability achieved share. again the in business results. grew in and our driven basis, first we and financial XX% quarter by all across We was strength financial geographies. First, a core and Revenue model

of normalization prolonged by robust to what and has investment been see customers. period Second, a of we started our a

resulted Over the book-to-bill XX% past two order compound years, of solutions rate a significant growth for X.XX. in a Keysight’s demand and

the well dynamics. multiple end and us the exposure As markets, to current demand positions our Keysight’s its portfolio, weather operating strong discipline macro slows in differentiated to near-term,

Third, the trends secular, we in remain our confident markets. growth across long-term

solutions our the we objectives the well-aligned market. software-centric will Our strategy with at more of to needs a long-term Investor customers, is and forward strategies providing look to growth us financial Day. update our our you on outperform We comprehensive which enable expect upcoming

results. a our take quarter deeper at look first Now let’s

in anticipated the included largely China the compare incremental year-over-year Orders a strong quarter a which quarter. compare. specific headwinds currency, year-over-year the to business and exit declined X-point drag of impact XX% XX% of last first that Russia, of our The as sanctions, expected. together against materialized we demand growth contributed last trade slowing year’s and These on

reassessing while exercise saw consumer response segments. and strategic their uncertainty. in as same by digests decline impacted near-term in We Commercial customers time who most demand at electronics sharp were key, caution notable This are across They among industry customers largest was in the the computing maintaining our and Communications, priorities programs. investments to inventory, restructuring macroeconomic

for to our difficult the to on predict, quarters. expect at these of weigh we is couple duration the dynamics customers next While least

and share or of per earnings XX%, of XX%, XX%, Despite operational core margin gross margin resulted on of grew XX%. operating XX% execution revenue challenges, macro a in discipline basis. growth Strong and

delivered grew the growth Electronics double-digit XX% Turning our Industrial Solutions for which underscores revenue and diversity to XXth business of revenue quarter, our exposure. Group consecutive segments. the The industry

manufacturing. electric across fueling all XXXX, strong vehicles EV and investment AV and Sales grow regions. revenue record to further and achieved in significantly technologies we automotive, continued growth of In double-digit in

X example Tier This capitalize To strengthen breadth across XG, Technologies on expand a this networks. infrastructure quarter we this compact in-vehicle a growing, and autonomous and to driving our decades-long and collaboration suppliers An large OEMS in charging battery of secured vehicles. of design, new is emulation, multiple strategic solutions. and to electric such our position wins battery develop accelerate as applications market Jiyun with launch current our continue we opportunity, high-efficiency, help to test portfolio system of the with

double-digit and in strength by as IoT. revenue health In continued general electronics, digital verticals growth such driven emerging was

in Beyond robust also advanced XG. as We investment in secured and R&D wins research, quantum, remains photonics,

Semiconductor capacity driven growth new advanced continued by investments was revenue wafer fab in solutions and nodes.

globalize significant high-power While semis, to investing to emerging execute longer-term in the solutions as and see their pacing in market, their plans adjustments this photonics, such We for wave. are millimeter semiconductor foundries opportunities continue inventory silicon production. applications demand, are and

datacenter our grew across Group, Communications XX% growth a for strength gigabit and basis, with saw solutions. end remain increased investments and on QX, are ongoing, both terabit revenue programs all revenue first-to-market to demand markets Commercial XG to X%, Turning and regions. on Keysight’s and These core by R&D reach We which networking, was Solutions with driven solutions. deployments, ecosystem. priority and communications driving communications in strategic grew in XXX a Open-RAN, Communications a focus record

macro areas, network As with our remote collaboration accelerate makers broadband to as designs. to device communications the enable speed Qualcomm development compliant remain verification XX Release advisor, and non-terrestrial engaged for environment. XG in customers we We a recently of XGPP they trusted adapt with and our actively current to announced

conformance support of the use such new first standards autonomous industrial XX continued XGPP networks, and protocol cases submitted as the private and Release We progression test, enabling vehicles. to and

to XX band pan-European Keysight for of XG-Advanced and joined recently millimeter experimentation XG wave cases validation sub-terahertz is research testbed XG in XG testbed E and Nokia frequency create spectrum. organizations to to capabilities. selected and validate XG-Advanced use Keysight’s XG to sub-Terahertz critical early a XG-SANDBOX, in accelerate and band and with and R&D forces Investment D underway technology

These network reinforce infrastructure provides leadership our cloud and with security gigabit and wireless center across announced and leading test data wireline validation We industry’s platform, first also density XXX cybersecurity network highest providers ecosystems. solutions capabilities. which Ethernet

customers are also industry XX and and in XG looking in early to Barcelona our World and for with and Release research We showcasing intelligent Keysight XG engaged leaders, Congress including forward week. advancing automation. many will next standards Mobile solutions be

to X% our field U.S. basis, and Army spending, Fox and applications non-terrestrial satellite, on a defense, the Turning Keysight’s use. record highest who revenue government increased for business, analyzer five-year with handheld networks. QX contract in chose its core and quarter space government, won for by spectrum U.S. We grew Field second a achieving including new aerospace revenue driven recently strength

second this year. government U.S. of spending ramp budget in in expect to appropriations We the new programs half

budgets anticipate defense investment in increase new quantum, an worldwide, space and research. in satellite, XG, advanced growing such technologies also and as We and

completed We capabilities. and Consistent with we continue our whose data expand design the our our automation Cliosoft, of management acquisition solutions. electronic to strategy, of software tools IP software recently portfolio enhance

automation the leader Wave. is was financial and revenue, as a recognized of durability mix model. The In platform of one-third addition, recently About integral software total of Eggplant’s by test services our to Forrester the growing

technology and Keysight’s is to collaboration we of that strategy, into the differentiation we most customers, function future. the and a address ensure our of investments today, needs challenging solutions with making are software-centric our

same accelerating solidify to our the efficiencies high-conviction competitive with drive further at our financial to position long-term, initiatives are prioritizing growth consistent We time for while the opportunities model.

proud Jones Keysight’s to for testament global I’d for and to like record track employees row. community. all values, is Index to value to stakeholders, committed drives performance year fourth a thank Keysight execution, to long-term in Keysight impacting a which for Dow and and the that the relentless our and business our positively our I’m been remain We Leadership of has dedication named the their Sustainability strong people. our Model, creating

financial With the that, I’ll over to performance outlook. and call now to discuss turn Neil our

hello, everyone. and Satish, you, Thank

grew a a our delivered strong XX%, basis. revenue and quarter the $X,XXX solid was end of to which range, We high was or a XX% on guidance of above start core QX million, the year. and

billion anticipated, million, macroeconomic outpacing backlog. we $X.X uncertainty Even revenue $X.X over demand in a Orders core of in quarter As $XX billion basis. XX%, XX% by with the orders with first down the quarter. ended on we or were moderated

we for and expenses of margin results margin operational of gross our to $XXX of reported in Turning operating XX%. QX, million, resulting operating XX%

was $X.XX which of We and per earnings achieved high-end net our delivered guidance. income of share, $XXX in the above million

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

the Communications generated to our Commercial which the to of Group of CSG core defense a and $XXX on revenue from revenue XX% performance U.S. or revenue X%, million of FYXX. believe ramp operating million Americas. double-digit spending, gross Solutions our basis. X%, we of segments, margin revenue will continue government XX%. Altogether, margin in up of with of Moving record up XX%, $XXX benefited delivered Aerospace, and Communications increased million, $XXX was through government growth

in our $XXX Growth of XX%, core revenue electronics, Electronic with on Solutions XX%. and automotive margin basis, Group XX%, revenue and double-digit operating gross quarter reported markets. strongest first generated and or Americas The up the demonstrating margin growth of XX% diversity the Europe. of EISG a in Industrial of general was million,

cash million, to from flow. first of quarter of flow cash with of cash our operations or We $X.X sheet revenue. ended cash free XX% generating in and Moving balance cash equivalents, the and $XXX billion $XXX and flow million,

repurchases quarter consideration of total price XXX,XXX share $XXX this for an million. average Shares $XXX, approximately totaled a at of shares

Now, turning our outlook. to

the noted. macro same evolving industry that and We’re dynamics navigating others have

near-term of challenges. through deliver quarters year, of strong and least for cost expect the achieved If and current we it persists to we our financial demand share for per conversion, Satish their low revenue discipline, customers growth a to through mentioned, As single-digit backlog fourth at through our expect would will model. quarter, the steady earnings flexibility environment work the couple take

to second our guidance. quarter Turning

to in QX of be $X.XX, share earnings of approximately and based range a weighted share diluted million $X,XXX per million, XXX to of million range shares. on to We revenue be expect the count to $X,XXX the $X.XX in

Keysight’s moderating growth environment, are While uncertainties the demand trends intact. near-term remain long-term secular,

shareholders. financial upcoming cash strong first-to-market to with our Day. well you to model, differentiated, our forward sharing of and to generation, on solutions, business us about at more look balance commitments and our position deliver Investor our the our durability steady customers sheet nature Our We compounding of

turn I to it back for that, the will Jason With now Q&A.

can Neil. Q&A, instructions the please? Thanks, you the for give Jason,

is Goldman Sachs. Yes. [Operator Instructions] Mark Our Delaney first question from with

It Communications more the seems business the you orders. perhaps hoping, doing where could more where was question. seeing if I Yes. are a if some elaborate orders certain seeing better. the But much moderation very comments a the Good and particularly customers? taking on Thank for bit Commercial first, you could like afternoon. maybe impacting a you’re offer it’s on bit areas you’re little bit and on other you from

What shipment activity robust reflected saying by and want in first, Mark. do see strong Hi I remain our strong, this we’ll to very that engagements start revenue Yes. quarter, -- the customer performance. you

$X.X at still high-quality, low just cancellations this demand normalization is date. backlog our to context, billion, I would things. point in Second, put to And two to

business-specific And said as we points, earnings X to X in played were the our year quarter, First, we this comps have last from headwinds, ago, XX%. we some a up that roughly out. call,

on little provide those helpful. could things bit putting deep the in So I’ll end dive markets more context, a be

In digestion through, that they in the to wireless Commercial of Communications, to industry. saw due pull and regard customer the macro were back, business, going the with especially inventory top the especially challenges the we smartphone part the

pickup XXX Ethernet also gig XXX terabit and as equally gig system activity investing customers on saw We beyond. in side the are and the wireline and

those strong. remain So, investments

get are uptick passed also outlook us starting budgets prime of backlog aerospace note important our business stronger to that -- It’s defense we the and and unlocked. all good as favorable U.S. the gives a see to contractors had that a business, in ahead. In spends as which we’re program look the positions, also

spend and well. automotive to resilience research continues the the and show around next-gen world, business semi remaining Industrial EV strong different our AV occurring investments with countries And in with as

say, the So, us will we outperform with we’re in portfolio differentiation and enable have in our put all of we we and this customers, which to context actively confident engaged this remain environment.

to your that controls, there the about the demand Thanks, will cost Were cost being the this structure, what of controls? Company depending variable Satish. on or spending Thank you you. other take ultimately My That’s alluding spoke on disciplined. helpful. specific to and question that Keysight cost and more steps planning was more year, on very moderate does is nature are

operating structure as resilience the model, a this, these like from we Mark, pull have mentioned, variable opportunities, our allocation some always a resource this redeploy see back. dynamic especially market We of that that’s in we’re But cost we’re to technologies looking of customers perspective. that maximizing. where leg other who financial and we we so Yes. our for first always customers need

referenced. that. I And as the leadership should that P&L on the discipline with model. the we’re that right even accelerating operational we of of focused some remaining And as always programs cases, deck now. to part inflationary us faced help efficiency all that’s are So offset that, in have Keysight on impacts That part we

question Our SIG. from comes Mehdi next with Hosseini

want to to a back go I booking backlog.

You area to have of color guys couple for highlighted? that want that or And weakness, normalization. any to a in end there from normalization backlog you go some we’re backlog way quarters is is, through demand more clear a the you been very differentiate have separate going especially get post-COVID the smartphone you to I can market from

has wireless to our side, a I’ll Neil the at the can just exposure it look widely look start, Maybe remains about. talked Yes. if especially the spend, strong. base that comps, pretty we that markets which But add. then say customer customer at is if commercial if at related have, the definitely inventory take and top you the I’d end in back they we and related look been macro pull and

through So, diversity. start at our which as provide as to as line that to think continues play top I as look market we year And industrial Neil, is we position? go but defense our will to that aerospace and well. exposure, that’s backlog out concerned, far specific us end the

other only of chain, I chain add of we in trend product lead But seen terms the rapid is and times. we availability of supply normalization improvement I thing maybe where are of we’ve have supply a the areas mean, starting constrained. the to still pretty Yes. kind that would towards with areas, in

And customers out quarter the for we beyond. we for have now about cases, something I’ve additional products and many scheduled have -- an so those talked seeing, what are In this shipments is products that expected. or and we

sitting place times orders backlog. lead now, they have they until this new delivery product already time, in our at to of as the in, get And don’t come need that’s

for around you’re And months, so, was in there adjust to -- the long times. early this lead those place get X if to tendency X to or orders line

Now that to and the bit no longer is little on creating macro additional that and get in normalize line uncertainty, that we’re line. seeing times order incentive with early coupled a there’s lead of pressure

Sure. And here. just a follow-up

million anything of You $X.X think billion about booking downside And should scenario, in quarter here? we investment that the new like we did in Is way trying that or you the think a orders. the activity strategic or there offer from be R&D $X.X just how helpful. order there understand were billion of risk that nature Is -- a could in production? any very can I’m the that better reflected is the about worst-case portion $XXX to from would

later because at out the know. in you, customers up year Again, the of What to environment they’re is a the pushing Mehdi. they and decisions Yes. it Thank seeing uncertain we’re remains as concerns typically you highly firm those budgets beginning demand have, of the year.

even around plans remains. we commercial the more to as see relative manufacturing of look uncertainty especially comms, definitely pullback spending So, the we environment, customers. in at R&D the expansions But

generally trend. that’s So the

on. the ISG work And back say, not customers if of pulling I’ll capacity, actually are or they’re back they planning right, business, the you on whether semiconductor next-gen some were it’s X-nanometer cutting an maybe as look X-nanometer, X-nanometer the semi on in in example,

to in from next generation the -- sales some -- on I ask focus he’s on the strong. dynamics So, I provide a perspective. remains may will that the Mark very customer color seeing

was especially Satish pullback R&D. in much the the commercial on to directly the mentioned, less was would I Yes. there very -- And your Mehdi, than the And question, mix during -- answer and manufacturing it quarter comms I side. predominant was still would just

we’ve about that factor in other other funnel. on calls The the talked past conference our is

the the a QX. looking be pretty here has six-month forward-looking And six a the first in demand months, with has signal have in of we That our us line we in that been saw with acutely guide. looks consistent, effects funnel gives It saw fairly quarter. what factored We strong into demand. the normalized to indication out that

us, on the with work of into to bit done regard R&D a diversify for also That customers. our a of point other say and your this of in that these to done downside expand into to And us. the industrial end for done priority well. that quite critical remains as markets work will still right? sales risk, Mehdi, priority lot enter particular. we’ve comment finally, -- to and of the to footprint, I’ll confident markets, aerospace enable this business We’ve a more we that defense all new and a of auto us customers, through to which in attract outperform environment I actions remain our we’ve work remains

Our with Stanley. Morgan next question is from Meta Marshall

I move of just us But of lower kind the Open-RAN Is it investments question, of year are like we as maybe cost into and throughout that from? could that about discipline the about kind what wave? discipline, strength what is a the year? of sense in the you the guys Open-RAN? Just is investment. guess of of you degree general growing a some of follow-up still are millimeter you I are driver kind cuts demand we just what being coming balancing some -- you of a mentioned from. kind indications Thanks. And talking out stronger of of to where business, it kind couple give then, those kind think cost mean, areas business as of made, as strongest a questions. of some Is wave of maybe spoke kind moving communications we just Is sense - XXXX? calendar Just revenue are XG? the millimeter

Yes. Meta, you. thank

innovate intensely we focused strengthen and of on our So first portfolio. continuing to remain all,

our with that good pretty have roadmap roadmap, spend, as inventory I feel think we we I pullbacks these to and Our recover some customers in they perspective, dynamics and would that roadmap. for invest, say a where With customers place, expect right? we that R&D R&D deals customer these to multiyear those best, the and about mentioned. remains short-term R&D our of the to an XG, from collaborations regard invest informs So it. realize At with have continue delays are we to we

X would in $X billion five still at is the to $X billion world, I or the the been while level, we in take picture roughly have big has to billion made substantial XG in subscribers progress from about it And the and terms of roadmap so. years say deployments, next

more proliferation activity So around differentiation remains us pretty clearly, in XG of The such XX, innovation But non-terrestrial to Release advanced, along Release features IoT XG of areas is solid, RedCap which XX well, and deployment business will standards there’s in -- which a new new networks, world industry is for Release strong India other parts as have the of into remains occurring of leading applications us these really progression, we that that with remains talked that’s And front we’re differentiate Open-RAN into our R&D for and moving effort. for basis opportunity roadmap markets. vectors be as which investing continue about. verticals with to strong. XX, and with the those in

And then, discipline Meta, question. address cost I’ll just the

future. business I’d like we that foremost, forward and growth-oriented to first emphasize are drive are this just the going continuing to So, in that investments

regard internally our what to like our important about We’re way That right? those keeping being we’re most Satish and very investments. the it, growth-driven said, gas are I clear on priorities the characterized with foot

felt that we’re that on of with the of for pressure frankly, given looking also efficiency onset put that prudent tap top not with some to we coupled the that the efficiency. saw foreign accelerate of improvement but dollar backtrack it We on part actions to spending. And in continuous a to we’re signs that us environment is year, as of We some always on inflation, strengthening our we’re looking our on just to that was have the line, last going to pressure take will operate which gains currency culture.

are but P&L, growth it’s we future risk. across the investments putting not So, at

comes Samik from with Morgan. JP question Our Chatterjee next

more if on for can some for just orders And can with seeing I of start But you the digestion of I this if from on quarter month guess quarter. sort couple maybe of so the that based you another your customers through deterioration quarters, orders. had if the saw. you expectations to the linearity the quarter just through what’s as in of you comment exit trend just the wanted check

And holding electronics about the better comment up you communication than made that orders overall.

hate impression correct in if general. it’s more bit R&D of to overall, if I -- communication sort happening Thank a R&D is for protected? than a a sort why bit that’s I you there was because maybe that can or of follow-up. seems counterintuitive generalize Now, my But you EISG you. is have but most EISG And aligned why explain me

question Samik, orders linearity FYXX we of is Sure. quarter. take on of had of end finish two-thirds about We month. -- after orders. And the Mark. fourth this second and the first had to big I’ll our a our the it was

rebound So, nice the was the and a quarter. the of we quarter about orders December of bookings for total had XX% last in

a So, it pretty flow was of business. linear

industrial we’ve secular ICE demand been particular, time. year the growth to talking our process next-generation business, EV vehicles long-term decade-long electronic and The very the transformation. level is a The drivers sold Again, activity see, as continued long Satish we of auto, semiconductor ramp. is continues as that number about continuing technologies side, around opposed is this On to grow. for mentioned, next-generation what for to focus last a in around EVs

this long-term trend. So, I see as a

on, digital the below our kind we and particularly the of Obviously, this was of particularly stay that and exposed PMI is some we’re research care, with what was And broader health to advanced some up, surprised electronics how general of XX. education. around business saw verticals markets, focused held I GDP

technologies. continued below months six think five and, or show next-generation was three overall, I a segments these it general, EISG row. continued in resilience in the investments But in to

how here yours and on is bit, who with follow-up I’m to strategic gears asking you review there’s company competitor not acquisition. But multiple itself. should of my comfortable the in balance the process interest a business -- -- to a through going to the we from about of more interest that that on? leverage function you through maybe for from sheet change if in Keysight And in debt be the with from attractive opportunities a parties on For would benefits did an visible? here step a just comment think level scaling leverage come are

you, Samik. We I’d Yes. that we we business comment say don’t you’re would its right. generation Thank in on say just the run, any confident cash specific I that opportunity. potential. remain

the seen of You’ve cash flow free performance strong business. the

organic And with be capital so you’ve us makes and M&A, is it regard we of and seen where with capital. allocation M&A consistent congruent incredibly which with patient that, to And return growth sense pursue. the disciplined opportunities we discipline, regard have a and around to

And and we We -- we’ve scale having return what of about can look see second at to the them and them. hundreds we on of how important fed, done bring shareholders. view strategy to done is -- we’ve first, then with we’ve date. the strategic but that our been the the target done to equally XX the and companies after And assessments a market and

So, in to and I think will place, very hurdles we disciplined. those continue remain remain

UBS. Chris Our next is with from Snyder question

at X.XX. November, in call Company the a normalized The below So that back book-to-bills in on conference talked X.Xx. quarter approaching more about bit a came the

reach year? Or improve goes X.Xx the book-to-bills have year to in normalized for that than Difficulty] in the softer the as [Technical expected more quarter you on would and full for back of average orders were kind So, November? of

about were from Russia, things, that top I if top recognizing go Yes. we macro China, anticipating also softness of or that November and macro were expected points softness we specific of of and that on the you -- we that. currency from that to mean, back facing X we those talked headwinds quarter, on on

So, you has came It’s to largely with on about it’s this to the point. in as said, at looking by to I’d Satish very business. expectations. our parameters say in We’ve forward, I with mean, to macro. hard large, attempted think put line a and difficult which give obviously quantification call the some quarter

couple in quarters prepared which first we commented just our quarter. that next fiscal order what line year, able And that would over single-digit that’s if to the in kind indicate revenue funnel, and or place less still then, more has growth. we’d of be with our my the Mark in saw looks out comments I demand low remainder to in that in for deliver state expect of our entire a remain EPS of trend did

taking at about think hopefully should we’re it guardrails some quarter the So, a time, with to you give which but business. one that

appreciate then Thank resolution some quarter, I and of QX, orders, could orders you. you. is on? color government business or China the there during also just And Thank did how given over of in you the that. kind budgeting just staying of on given for a around going processes anything fiscal provide disruption orders defense lot And the there?

both is I’ll This those. on comment Mark. of Sure.

the So December. China. actually sequentially. that COVID, we in happened trade increased restrictions orders in some breakout faced, did of see as decline unanticipated incremental They and everyone from there did, month were the We

unusual that with business the we pivot new China, be to indicates But in we of of automotive, the the area our seasonality was where of in kind relative about -- the expecting our in for were be us. it really face that what line our to continues I declines, what some with it with faced. So, response. that was to And to an includes ability base up. continues And to breadth talked is the opportunities was and which which strength we’ve to customer of past, pleased

for us. use from an for industrial for Some of growth standpoint, case Mature a is of XG show networks, which continue signs the semiconductor. new private process to technologies

economy well. reopen So, a normalize as into the and we begins as close on half, eye to that the forward second go we’ll keep there and maybe

in stalled some were strong U.S. this but opening QX happen And to direct turn budget program growth -- a back new being year otherwise, was noted and growth, starts, that on see order than That’s the Satish comments much year. as in what continue saw the because programs we earlier his we that defense, spend of last Aerospace approved and rather flow. a byproduct continuing of resolution in not multiyear of

through as several and and modernization. with see we long-term see continued the So, there. situation, months high hope defense U.S., demand process, for Outside quarters, tailwinds geopolitical record the to we the budget additional the flows we expect some next to get through RDT&E the

So, we’re capture to positioned well. as that well

Yes.

and Just customers, the Mark, in the inflect add also to aerospace us to and comment maybe there business, to with is continues satellite too. space defense for momentum showing a some

Aaron question comes with Wells Our from Rakers next Fargo.

relative go to of that five you stands And dynamics. through or assume had year? quarter, to of of low inflated order last think about assumption now? four elevated to mentioned curious growth-wise kind I backlog back normal. that the to kind levels does normalized kind were -- backlog of back single-digit maybe your you the the assume going where right and backlog weeks course I’m or Neil, I’m of

Yes. It’s a great question.

outpaced So the revenue obviously, within $XX orders by quarter. about million

abnormal $XXX can out the million in the I plus environment persist on see if with the remainder put there, we’d again, for do similar the burn year, a which line But that math what kind it. of of backlog. You we of is, guardrails

the the to our just multiple us with So, over out of expectations. of this a while knew get it line always one us quarters of scenario, backlog normalization it’s would chunk it is way would backlog. way a get the We it not think normalize all period. significant may home, towards but I And take not multi-quarter the

that’s helpful. then, And And quick Okay. follow-up. a

answer continue just there, you supplier any kind perform this is business, is out I’ll semiconductor -- And question, put in there the cyber at the there’s been I issues. I that semiconductor to Is know don’t not? that all to on I your impactful supply well. it had or seen, of think a think, that Just the attack but chain some disruptions? to business

No, not at all.

with serve stage, we lead we and And It fabs put the on us, plans chips certain whether the we’re X-nanometer takes for millimeter or to below. we’re more our wafer or which it progression silicon pleased time wave. from making For solution sticking the end. see longer to a applications capacity. is high-power applications further also equally, their is And front for photonics our with quite into stat, customers add

portfolio out. to So we continue build that

Our next with from Jim question Citigroup. comes Suva

of of made plan, you’re as that plays year the according at it statement out, sales Neil, the you part my growth. first looking does question The question the kind is, to are if

a and heard Because Thank about like think Did that mid-single I’ll and say grows at I in per -- sales magnitude positive mean you. growth? follow-up. a said you Then be low or share you range typically, of or earnings have bigger you then a digits, I the EPS to growth. EPS growth sales same growth.

Yes.

our with what is, environment, demand of remainder all, revenue -- So stays guiding scenario said of deliver the EPS consistent But it’s What said, that difficult low I weren’t year. what the in a know. through we and the we where expect if single-digit growth. in would year, first we to we low it’s highly QX uncertain saw single-digit to

to get which that Obviously, double-digit us our enables growth growth. EPS calls model operating leverage, for revenue to XX% higher with than

singles line are growing we’d at where less environment, low quarter. So, revenue with scenario in revenues remain with be at the Again, both what first more specific orders is and inflationary where coupled or this bit in for saw level, in a abnormal, EPS. a which under lower looking that we a scenario our

then had China. it And follow-up December restrictions I the Great. the is, incremental against trade of in that my believe was question month

right. I think that’s

about of or flesh the points to or impact impact, help the growth just to referring points me your trade kind think you. commentary you’re And of to sales of is the in so incremental restrictions? can commentary for when out about much X impact prepared restrictions? Thank how are XXXX, -- if X things X Is what of we you your that consistent, that X

China an that new is in restrictions X came trade us longer the over X points the headwind about So, additional December term. to for of

X the the about The I to FX. on points thought X last going X comment outlined what China, time we quarter, from was headwind be coming Russia call to -- at and was of

to the of quarter, thought X so the backed it what that’s we end little like bit. more to the largely dollar got because up call was be X, was to As we X a and going X.X,

slightly FX less China than expected. originally The impact as the less was well. So, impact was

from with question Niknam Matthew Bank. next Deutsche is Our

that a follow-up just one. on Maybe last

in you’ve deals, maybe And on still market in Xth just backdrop, the pullback or Day, the Analyst I’m March considering the you’re And of just valuations. that’s could past seeing valuations. you’re to size software what know deals. I’m of the we private targets? open some just and on just what’s just whether any the in larger M&A initial thoughts in On then opportunities I smaller expect wondering been focused the on on longer-term Thanks. just focus to wondering, terms if I’m latest wondering updates terms

sharing the our out we you. lay go long-term exciting Day. see view I forward on And to at fundamentally Yes. those set strategy the market think accelerating. Thank into innovation end have the markets, forward-looking -- I Keysight’s we we’ll look to opportunities. Investor Across

clearly, But you disciplined all think that’s So to M&A, at we’ve M&A how been actioning one. number if of grown, I regard with we’ve in look sizes.

Ixia, seen and and workflow us complete then margins which and have process. customers the our You’ve us in expand actually for the and create scale technology slightly Anite larger do a also tuck-ins, of greater lot helped value

that from in the I go we we and remain new strategic as financial But So as we hurdles targets business. before we meet that ahead again, have active well. transact as and strong have before, perspective, markets exploring to gates mentioned and

position, strong number cash with On the think as in with so. a remain likely market valuation opportunities. sheet in come the reality active firms, the we to the more And on we sets front, margin, the valuations in balance the of are of and exploring

Our Davis. Thalhimer is next from Thompson Adam with question

QX the on beat. Congrats

cancellations. question First on

to your low guess concern that to been just they’ve I worse. I could wanted level that date. that gauge said get You of

our in no had rate. We’ve increase cancellation Yes.

our believe very we So to quality continue backlog the is high. of

how you’re guys prolonged I haven’t been seeing have just almost Because this what had then period. but we does I’m you during and And years, a downturn downturns? compare that XX public guess curious, prior to recession far amazingly, so

Yes.

back ever And been I our this. environment I after some would what growth that some of is think different. go some to because strongest response of And solutions. position the I But pull excesses very recession, emphasis Satish strong seeing normalization to of was portfolio inventory the inevitable. take on the specific it’s our say from here. in markets. is years, back Every I’ll having of customers we’re in a is the couple

much resilience. the over services, the perturbations business to that software stronger allows additional Our tide today we model model some because we have is our and marketplace. And gives in at business have which operating us a -- Company over is strong XX% of us

the a position well. enter year backlog also we as with strong And

XX%. think also So from those margin ability stay I at our we at that operational the resilience. perspectives, it’s place, in look we to with at the level, if about different. remain you to model strong think And I Company the gross confident continue demonstrate

next Mason with question Baird. Rob is from Our

in your the defend the a I’ll you the as slowdown see Satish, screen I that Commercial you hits software the against frankly, take sector? follow you’ve in the they inferred headcount radar as that tech But kind orders how some or your is resilient. challenges of remain that? where renewals, a up about think just around question quarter. there’s comment with of Communications, in seen in extent you some that to something that Just reductions place

Yes.

and have think them Obviously, and purchases I not earlier. Commercial wireless new in wireline. business two think we’re alluded incredibly have sticky But to Communications are as the sector, we back longer, renewals. with even Mark seeing customers, we our taking on right, an businesses, pull I

of stronger pullback customers the seeing customers from The wireline side continue the innovate. to equation. in wireless We’re

lieu in our optimize there’s to of see that faster need the all greater trends activity that’s of some data rates playing cloud the of in Also going is customers. center around on out. the of are and Need data You for important. a AI, workflows

basis. opportunity to on of stronger relative remain that part the a So, continues

I’ll Mark any just on... comment make have

just to that let was in we business. know -- I’ll just did job. answer the parts Rob, software yes, didn’t other did pullback great the see you a in Satish -- Yes. we And like of

has renewals enterprise of you from of from agreements remained As matter a our of which steady, that continuous and is would were business, a model. flow expect in up what growth kind a something our sticky subscription value fact, a and subscriptions

us worked this really quarter. for that So

question, just there? then maybe Is -- a segment there gross the maybe quarter that two certainly down, first is and quarters, maybe the Is still the or as the seems to two dynamic a bit second years Commercial is good moderates expectation steps that with Communications the play quarter. trend follow-on the in stronger where at margin in make a that be Sure. Sure. trend, influence that a -- --

you repeat sorry. Could I’m that?

Yes.

least a your remainder first the margins year. gross -- going year the than couple at have Is essentially, much Just CSG it well? last as group tends communications quarter to the margin, that that expectation the -- does be stronger years, by gross would this of of

at mean least to don’t have systematic. you have may it, I what about have looking can At I appeared I more think any think data to sequential to than draw Yes. coincidental margin would as any that perturbations be repeated gross conclusions expect. historical to as

from Ridley-Lane David is Bank And our question final with of America.

on in EISG? mean, EISG The expect is second pretty quarter should kind been strong. the guidance, in ESG within Lot remains commentary that typical the pattern has seasonality call in quarter. sequential nice the second historical of uptick sequential a for of I that we your

Yes. I portion takes the incoming guide mean our is at on now right looks revenue of funnel. the to at And turn look our schedule all going say I sequential incoming we’re a would backlog, obviously, rely shipments, large looks quarter. orders to a into within the of at

degree And in so. out. we that ability have deliver to we’ve a of confidence put our number the high to

call something quarters. excuse softer little of or other that last margin being expansion then EISG, margin mix And to trend good. sort the a to -- trend has in over could me. that is out in there there wondering, Is IE the that there? The has operating margin couple continued expansion be I’m on bit just you quite it. of margin But gross said, -- -- explain also dynamics Got been gross

content, software businesses, the margin. looking and we’re to with that our Across gross time, Yes. value expectations -- value up customers greater obviously obviously the increases create greater go for solutions,

margin. gross in CSG that see business, XX% our You

that drive to continue So, up. we’ll

On of traditionally. higher is not But business, slightly creating our lower solutions offerings EISG manufacturing the content, mix emphasis software on diminished. equally,

even content, customer strong have analytics and software our systems, more adding to those. providing we’re manufacturing fact, more test in for We’re semi capabilities, uptake we

inflationary this to continue off more we’ve other Day. come of the sharing and expect we upside forward that you margin as of look time, that about, I some supply and impacts chain over the at to Investor So, would things talked with

to There management questions, for more the remarks. so team no are pass closing the call over back I’ll

up -- XX%, quarter, realize have strategies. these confidence Yes. exposure, that Thank initiatives our growth gives our flow place. free to enable to have balance backlog, with collaborating sheet. market strong growing, And we to delivered strength remain operational discipline solutions all million. across position another customer us outperform. the revenue and for in portfolio focused we on strong actively us of end navigate multiple in Keysight strong strong diversified serve a joining. you of doing with at prudent a customers of continue greater But as And we’re end strong that’s our the all markets cash and fiscal invest which XX%, ability XX%, you, Again, and $XXX long-term profit conditions, the we than margins to thank operating dynamic gross cash so we these they

to excited We strategy I’m And look New Thank York forward you. future to Xth. share growth seeing forward. moving you all in the on March

call. conference you That Thank participation. for the concludes your

lines. may disconnect now You your