Financial Data and Key Metrics Changes - Net revenue for Q1 2026 was $299.1 million, exceeding guidance of $290 million to $298 million, representing a 3% sequential increase and a 25.6% year-over-year increase [4] - Operating margin for Q1 was 15.7%, above guidance of 14.6% to 15.4%, and increased by 130 basis points sequentially and 570 basis points year-over-year [4] - EPS for the quarter was $0.15, above guidance of $0.13 to $0.14, and increased by $0.02 sequentially and $0.09 year-over-year [4] Business Segment Data and Key Metrics Changes - NSC revenue was $216 million, above guidance of $208 million to $214 million, with a year-over-year increase of 35.5% driven by strong demand from the data center ecosystem and the acquisition of Inertia Labs [5] - OSB revenue was $83.1 million, in line with guidance of $82 million to $84 million, and up 5.5% year-over-year, primarily due to strength in anti-counterfeiting products [6] Market Data and Key Metrics Changes - Total cash and short-term investments at the end of Q1 were $549.1 million, compared to $429 million in the previous quarter [7] - Cash flow from operating activities for the quarter was $31 million, up from $13.5 million in the same period last year [7] Company Strategy and Development Direction - The company expects continued strong demand in NSC driven by the data center ecosystem and aerospace and defense customers, with a focus on integrating the recently acquired Spirent Communications product lines [9][10] - The company plans to report NSC as one business segment going forward, leveraging complementary product portfolios [10] Management's Comments on Operating Environment and Future Outlook - Management noted strong momentum from Q4 2025, with expectations for continued growth in NSC driven by data center demand and aerospace and defense [11][12] - The service providers' business was stable, with gradual recovery in fiber offset by soft demand for wireless products [13] Other Important Information - The company successfully refinanced $250 million in convertible notes and repurchased approximately 2.7 million shares for about $30 million [7] - The acquisition of Spirent Communications is expected to add about $200 million in annual revenue run rate, higher than the previous estimate of $188 million [8][44] Q&A Session Summary Question: Update on revenue mix between core telecom service provider and new products - Management indicated a shift in revenue mix to approximately 45% service provider, 40% data center ecosystem, and 15% aerospace and defense, with data center revenue approaching service provider levels [18][19] Question: Growth breakdown in core NSC business - Management noted strong demand from data center and aerospace and defense sectors, with traditional field instruments seeing increased demand from hyperscalers [20][22] Question: Operating margin guidance for NSC - Management expects operating margins to improve with Spirent's contribution, projecting around $165 million in quarterly revenue from Spirent [24][25] Question: Impact of wireless business recovery on earnings - Management acknowledged that recovery in the wireless segment could significantly enhance earnings, with potential for EPS to approach $1 if trends continue positively [27][28] Question: Margin profile of Spirent Communications business - Management stated that Spirent has a higher gross margin than the average NSC and is expected to be accretive post-integration [51][52]

Core Insights - Keysight Technologies, Inc. has completed the acquisition of Spirent Communications plc, marking a significant milestone for the company [1] Group 1: Acquisition Details - The acquisition combines Keysight's expertise in design, emulation, and testing with Spirent's strengths in satellite emulation, positioning, and network automation [1] - This strategic move aims to expand Keysight's portfolio to better serve its customers [1]

Core Insights - Keysight Technologies has launched the AE6980T nGBASE-AU Optical Automotive Ethernet Transmitter Test Solution, the first platform to qualify next-generation optical automotive Ethernet PHYs in compliance with the IEEE 802.3cz standard [1][5] - The new solution aims to enhance in-vehicle networking for software-defined and autonomous vehicles by providing low-latency, EMI-immune links with high bandwidth and reduced cabling weight [2][3] Product Features and Benefits - The AE6980T is built on Keysight's FlexDCA platform and integrates advanced Transmitter Distortion Figure of Merit (TDFOM) measurement capabilities, which are essential for assessing optical signal quality [4][7] - The solution automates complex test setups and generates comprehensive HTML reports, improving efficiency for validation and engineering teams [4][5] - Keysight collaborated with KD, a leader in nGBASE-AU multigigabit optical automotive Ethernet technology, to develop the IEEE 802.3cz standard and TDFOM test specifications [5][6] Industry Impact - The introduction of optical automotive Ethernet technology is seen as a transformative step in the in-vehicle network landscape, supporting the shift towards centralized zonal architectures and higher levels of automation in vehicles [3][6] - Keysight's solutions are positioned to redefine automotive connectivity, setting new benchmarks for performance and reliability in the industry [6][9]

Core Insights - Keysight Technologies, Inc. has launched the UALink 1.0 transmitter test solution, which is a dedicated compliance test tool for UALink devices [1] - The new test application facilitates high-speed validation in advanced computing and AI interconnect systems, automating essential electrical measurements to ensure signal integrity and compliance with standards at 200 Gb/s link speeds [1] - The UALink 1.0 technology was introduced in 2024, indicating a forward-looking approach in technology development [1]

Core Insights - Keysight's 6G solutions have been selected by the University of Texas at Austin for research on digital twins [1] Company Summary - Keysight is actively involved in the development of 6G technology, indicating its commitment to advancing telecommunications research [1]

Group 1 - Keysight Technologies will showcase data center infrastructure solutions for AI/ML applications at ECOC 2025 [1] - The event will take place from September 29 to October 1, 2025, at Bella Centre in Copenhagen, Denmark [1] - Keysight will present optical test innovations at their booth C2120 [1]

Summary of Keysight (KEYS) 2025 Conference Call Company Overview - **Company**: Keysight Technologies (KEYS) - **Date**: September 03, 2025 Key Industry Insights 1. Growth Expectations - Full year guidance for fiscal 2025 has been raised from 5% to 7% over two quarters, indicating stronger than expected performance driven by several factors [2][3][4] 2. Performance by Segment - **Wireline**: Strong growth, driven by AI and semiconductor markets, with expectations for continued momentum into FY 2026 [3][6] - **Wireless**: Initially expected to stabilize, but has shown unexpected growth, contributing significantly to overall company growth [3][4] - **Aerospace and Defense**: Anticipated strong performance due to increased U.S. defense budgets and commitments from NATO allies [7][36] - **Automotive**: Caution noted due to challenges in EV manufacturing, although there is investment in software-defined vehicles [7][9] 3. Technological Advancements - Transition to higher speeds in wireline technology (400G to 1.6T) is ongoing, with significant R&D activity in both 800G and early 1.6T developments [20][21] - AI-driven acceleration is propelling growth in wireline business, particularly among chipset manufacturers and data center interconnects [12][18] 4. Wireless Market Dynamics - The 5G market is transitioning, with ongoing R&D and a focus on non-terrestrial networks (satellite applications) [22][24][26] - Six G research is gaining traction, with expectations for commercialization by the end of the decade [62][66] Financial Performance 5. Software Business - Software now constitutes approximately 25% of the company's revenue, with a significant recurring revenue component [49] - The software business is expected to provide margin benefits and stability, with ongoing updates to keep pace with industry standards [50][51] 6. M&A Activity - Keysight is pursuing three pending acquisitions aimed at expanding capabilities in live wireless networks and precision GPS markets, with regulatory approvals in progress [52][54] - The acquisitions are expected to enhance the design engineering software portfolio and support growth in aerospace and defense sectors [55][56] Strategic Outlook 7. Capital Allocation - The company plans to maintain a balanced capital allocation strategy, focusing on integration of acquisitions while continuing to return capital to shareholders [57][58] 8. Market Positioning - Keysight has a broad and deep portfolio across various sectors, including aerospace, defense, and telecommunications, positioning it well for future growth [68][70] 9. R&D Investment - The company has consistently invested more in R&D than competitors, which is expected to support market share gains as industry trends evolve [70] Conclusion - Keysight Technologies is experiencing robust growth across multiple segments, driven by technological advancements and strategic investments. The company is well-positioned to capitalize on emerging opportunities in the wireline, wireless, and aerospace defense markets while maintaining a strong focus on software and R&D.

Financial Data and Key Metrics Changes - Keysight reported a revenue increase of 11% year over year to $1.4 billion and earnings per share of $1.72, exceeding guidance [5][20] - Orders increased by 7%, with growth across both the Communication Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments [5][20] - Gross margin was reported at 64%, with operating margin at 25%, reflecting a 60 basis point increase year over year [20] Business Segment Data and Key Metrics Changes - CSG generated revenue of $940 million, up 11% year over year, with commercial communications revenue of $644 million, also up 13% [22] - EISG revenue reached $412 million, an 11% increase year over year, with growth across automotive, energy, semiconductor, and general electronics [22] - CSG delivered a gross margin of 67% and an operating margin of 26%, while EISG had a gross margin of 57% and an operating margin of 22% [22] Market Data and Key Metrics Changes - The aerospace, defense, and government sectors saw robust demand due to elevated defense spending globally, particularly in the U.S. and Europe [11][12] - The wireless business remained stable, with momentum in non-terrestrial networks and continued R&D activity in 5G Advanced [10] - Demand in the automotive sector improved sequentially, with stable year-over-year performance [15] Company Strategy and Development Direction - Keysight is capitalizing on the ongoing AI momentum and investing in advanced physical layer solutions and silicon photonics capabilities [6][7] - The company is focused on leading the industry into the next generation of innovation, particularly in 6G research and development [10][11] - Keysight's strategy includes enhancing collaboration with customers and leveraging a solid pipeline of opportunities [6][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving trade and tariff environment while maintaining healthy margins and strong free cash flow [19] - The demand environment remains resilient despite macroeconomic uncertainties, leading to an upward revision of the full-year growth outlook [25] - Management noted that while some end markets are recovering, challenges remain in sectors like automotive [29] Other Important Information - Keysight's cash flow from operations was $322 million, with free cash flow of $291 million for the quarter [23] - The company repurchased approximately 300,000 shares at an average price of $164, totaling $50 million [23] - The pending acquisition of Spirent is expected to close in the fiscal fourth quarter, with regulatory reviews progressing [23][24] Q&A Session Summary Question: Can you help investors understand your view of the end markets now? - Management noted strong order growth and positive customer activity despite geopolitical challenges, indicating a better-than-expected performance [28][29] Question: What is supporting the revenue outlook into Q4? - Management highlighted the timing of large deals and expected more normal sequential seasonality in orders compared to revenue [31][32] Question: How should we think about the long-term growth rate? - Management indicated a bullish outlook for fiscal 2026, with a focus on executing Q4 and navigating tariff impacts [38] Question: What is the contribution of AI to Keysight's story? - Management emphasized that AI is driving demand across multiple end markets, particularly in wireline, with expectations for continued growth [40][41] Question: Can you outline the tariff impacts? - Management clarified that tariffs are expected to increase exposure by approximately $75 million annually, with mitigation strategies in place [48][51] Question: What is the outlook for the aerospace and defense market? - Management expressed confidence in ongoing demand due to robust backlogs and government budgets, with a steady growth trajectory expected [52][54] Question: How is the semiconductor business performing? - Management noted strong growth in the semiconductor business, driven by advanced nodes and increased customer interest in silicon photonics [90][91] Question: What is the impact of tariffs on orders? - Management stated that there has been no material pull-in of orders due to tariff changes, and demand profiles remain stable [104][105]

Q3 2025 Financial Performance - Q3 revenue reached $1.352 billion, an increase of 11% year-over-year[5, 6, 11] - Earnings per share (EPS) stood at $1.72, reflecting a 9% year-over-year growth[5, 6] - Core operating margin increased by 110 basis points year-over-year to 25.4%[5] - YTD free cash flow amounted to $1.1 billion[5] Segment and Regional Revenue - Communications Solutions Group (CSG) revenue was $940 million, up 11% year-over-year[21] - Electronic Industrial Solutions Group (EISG) revenue was $412 million, also up 11% year-over-year[26, 33] - Americas region revenue grew by 13% year-over-year[15, 39] - Asia Pacific region revenue increased by 15% year-over-year[19, 39] Forward Guidance and Outlook - The company raised its full-year outlook, expecting revenue growth of 7% and non-GAAP EPS growth of approximately 13% for FY25[5] - Q4 2025 revenue is guided to be between $1.370 billion and $1.390 billion, with non-GAAP EPS between $1.79 and $1.85[34] Strategic Initiatives and Tariff Mitigation - The company is progressing with regulatory clearances for the Spirent acquisition, expecting closure in Q4 FY25[5] - The company is actioning a multi-pronged approach to reduce the impact of tariffs, with an incremental gross impact of tariff increases announced on August 1 being $75 million on an annualized basis[5]

Financial Data and Key Metrics Changes - Net revenue for Q4 2025 was $290.5 million, up 2% sequentially and 15.3% year over year, at the high end of guidance [6][11] - Operating margin for Q4 was 14.4%, a decrease of 230 basis points from the prior quarter but an increase of 350 basis points year over year [6][7] - EPS for Q4 was $0.13, down $0.02 sequentially but up $0.05 year over year [7][11] - Full year revenue for 2025 was $1.084 billion, up 8.4% year over year [11] Business Segment Data and Key Metrics Changes - Network and Service Enablement (NSE) revenue for Q4 was $209.1 million, up 14.8% year over year, driven by strong demand in fiber lab and production products [8][11] - NSE gross margin for Q4 was 62.2%, up 10 basis points year over year, while operating margin was 4.7%, an increase of 290 basis points year over year [8][9] - OSP revenue for Q4 was $81.4 million, up 16.6% year over year, primarily due to strength in anti-counterfeiting products [9][10] - OSP gross margin was 54.7%, up 170 basis points year over year, and operating margin was 39.4%, an increase of 460 basis points year over year [10] Market Data and Key Metrics Changes - The revenue growth was mainly driven by strong demand from the data center ecosystem and aerospace and defense sectors [11][21] - The company noted a decline in spending for wireless and cable products by NEMS and service providers, but growth was observed in aerospace and defense products [11][21] Company Strategy and Development Direction - The company is focusing on diversifying its revenue streams, with approximately 30% of revenue now coming from the data center ecosystem, a significant increase from previous years [50] - The acquisition of Inertia Labs is expected to contribute to growth in aerospace and defense, with the company prioritizing capital allocation towards M&A [13][21] - The company anticipates continued strong demand from the data center ecosystem and aerospace and defense customers, which is expected to mitigate traditional revenue seasonality [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in mitigating tariff impacts, estimating a total impact of around $1.5 million, which has been largely addressed through pricing adjustments and supply chain realignment [26] - The company expects NSE revenue to be slightly up quarter on quarter, driven by strong demand from the data center ecosystem and aerospace and defense sectors [19][21] - Management indicated that the wireless business remains mixed, with healthy demand for wireless field instruments but sluggish recovery in infrastructure testing [19][41] Other Important Information - The company successfully priced and allocated a $600 million Term Loan B to fund acquisitions and general corporate purposes [16] - The company has approximately $200 million remaining under its current authorized share repurchase program [13] Q&A Session Summary Question: Impact of tariffs on revenue - Management indicated that the tariff impact is primarily on North American sales, with a total impact of around $1.5 million, which has been mitigated [26] Question: Competitive dynamics in the data center market - Management noted strong demand for their 1.6 terabit test solutions, with significant engagement from leading semiconductor vendors and optical module developers [30][34] Question: End markets performance in NSE - Management highlighted that fiber demand is driving growth, particularly from data center operators and specialty fiber companies [40] Question: Guidance for Q1 and seasonality - Management expects Q1 to be slightly up compared to Q4, driven by strong demand from the data center ecosystem, despite traditional seasonality [44][62] Question: Size of the data center business - Management indicated that approximately 30% of NSE revenue comes from the data center ecosystem, with expectations for continued growth in this segment [50] Question: Margin expectations for NSE - Management aims to move NSE operating margins into the mid to high teens as the business recovers, with long-term goals of reaching the twenties [58]