Keysight Technologies (NYSE:KEYS) FY Conference Transcript

Summary of Keysight Technologies FY Conference Call (December 10, 2025) Company Overview - Company: Keysight Technologies (NYSE: KEYS) - Fiscal Year: 2025 - Conference Date: December 10, 2025 Key Industry Insights General Market Performance - 2025 Performance: The company experienced a recovery with growth expectations starting at 5% and finishing at 8% for the year, with guidance for 10% growth in Q1 2026 [1][2] - End-Market Environment: Mixed performance across different business segments, with some areas showing growth while others remained soft [1][2] Technological Trends - AI Impact: AI is significantly influencing the wireline business, contributing to growth and driving new use cases across various sectors [4][5] - Wireless Business Growth: The wireless segment returned to growth, driven by advancements in non-terrestrial networks, early 6G research, and Open RAN [2][3] - Semiconductor Market: The semiconductor sector is rebounding, with increased demand for assurance of supply and AI-driven innovations [3] Defense Sector - Aerospace and Defense: The defense sector is seeing increased budgets from both the U.S. and European allies, with a focus on modernization and new programs like Golden Dome and GCAP [3][27][28] - Record Orders: Despite challenges such as government shutdowns, the aerospace defense business achieved record orders in 2025 [26][27] Financial Performance and Projections Revenue and Growth - Recurring Revenue: Approximately 30% of the business is recurring revenue, with expectations to reach around 40% due to recent acquisitions [14][15] - Operating Margin: The company aims for a 40% operating leverage, with expectations for EPS growth at or above 10% in 2026 despite potential dilution from acquisitions [33][36] Acquisitions and Integration - Recent Acquisitions: Three acquisitions completed in October 2025 are expected to enhance operating margins over the next 12-18 months [34][35] - Cost Efficiency Target: A target of $100 million in cost efficiencies primarily from synergies related to acquisitions [35] Emerging Opportunities AI and Data Centers - AI Data Center Builder: A new product that has received industry awards, aimed at helping hyperscalers with workload emulation and benchmarking [8][9] - Growth in Data Center Capacity: Projections indicate an additional 10-15 gigawatts of capacity in 2026 and 100 gigawatts over the next five years [10][12] Wireless and 6G Development - 5G and Beyond: Continued investment in 5G standards and the emergence of 6G, with significant R&D activities expected to ramp up towards the end of the decade [22][24] - Non-Terrestrial Networks: Growth in direct-to-cell services and satellite constellations, with Keysight positioned to support these developments [20][21] Defense Technology Startups - Emerging Startups: Over 1,400 defense technology startups are entering the market, creating additional demand for Keysight's testing and emulation capabilities [30][31] Conclusion - Positive Outlook: Keysight Technologies is well-positioned for growth across multiple sectors, including AI, wireless communications, and defense, with a strong focus on technological advancements and strategic acquisitions [36]