Keysight Technologies(US:KEYS)2025-02-26 04:01Financial Data and Key Metrics Changes - Keysight reported first-quarter revenue of $1,298 million, exceeding guidance and reflecting a 3% year-over-year increase on both reported and core basis [22] - Earnings per share were $1.82, with net income of $317 million [22] - Orders grew 4% year-over-year to $1,263 million, with a backlog of $2.3 billion at the end of the quarter [22] Business Line Data and Key Metrics Changes - The Communication Solutions Group (CSG) generated revenue of $883 million, up 5% year-over-year, with commercial communications and aerospace, defense, and government each increasing by 5% [24] - The Electronic Industrial Solutions Group (EISG) saw revenue decline by 1% to $415 million, with stable orders reflecting mixed demand across end-markets [24][16] Market Data and Key Metrics Changes - Strong demand in wireline offerings driven by AI, while wireless business remained stable with ongoing activity related to 5G and early 6G [11][13] - Aerospace, defense, and government revenues reached a first-quarter record, although orders were down due to continuing resolutions [15] Company Strategy and Development Direction - Keysight is focused on leveraging technological trends such as increased memory, faster processing, and greater bandwidth to drive future growth [10] - The company is well-positioned for future opportunities in AI, 6G, and advanced semiconductor technologies, with a robust innovation pipeline [20][12] Management Comments on Operating Environment and Future Outlook - Management expects a gradual recovery in 2025, despite monitoring potential policy changes in the U.S. [9] - The company remains optimistic about long-term growth opportunities in defense spending and technology modernization [41][100] Other Important Information - Approximately 40% of Keysight's revenue now comes from software and services, with recurring revenue at about 31% [19] - The company repurchased 450,000 shares at an average price of approximately $167, totaling $75 million [26] Q&A Session Summary Question: Upsides from the Commercial Communications segment - Management noted stability in wireless and strong growth in wireline driven by AI, with expectations for continued infrastructure spending [35][36] Question: Current budget environment for aerospace and defense - Management indicated a stable long-term outlook for defense budgets, with strong demand for solutions despite near-term continuing resolution issues [41][44] Question: Performance of the ESI Group and software aspect - The acquisition remains on track, with consistent renewal rates, although softness in the auto market impacted upsell opportunities [72][73] Question: Visibility on revenue conversion for parametric test orders - Management confirmed building backlog in the parametric test business, with a short order acceptance window for revenue conversion [128] Question: Business trends in China amid geopolitical volatility - Management emphasized strong customer relationships in China and a pivot towards supporting customers' global strategies [131]