Keysight Technologies Inc.

your operator today if at any time during the conference you need to reach an operator please press star zero this call is being recorded today tuesday february 25th 2025 at 1 30 p.m pacific time i know dan the call over to harry blunt head of investor relations please go ahead mr blunt thank you and welcome everyone to keysight's first quarter earnings conference call for fiscal year 2025.

My name is Harry Blount. I have long admired Keysight as a market leader in accelerating innovation, and I'm delighted to join Keysight as head of investor relations. Joining me are Keysight's president and CEO, Satish Dhanasekharan, and our CFO, Neil Doherty. In the Q&A section, we will be joined by Chief Customer Officer, Mark Wallace. The press release and information to supplement today's discussion are on our website at investor.keysight.com under financial information and quarterly reports. Today's comments will refer to non-GAAP financial measures. We will also make reference to core growth, which excludes the impact of currency movements and acquisitions or divestitures completed within the last 12 months. The most directly comparable GAAP financial metrics and reconciliations are on our website, and all comparisons are on a year-over-year basis, unless otherwise noted. We will make forward-looking statements about the financial performance of the company on today's call. These statements are subject to risks and uncertainties and are only valid as of today. We assume no obligation to update them and encourage you to review our recent SEC filings for a more complete view of these risks and other factors. Lastly, management is scheduled to participate in the upcoming investor conferences hosted by Susquehanna Financial Group and Morgan Stanley. And now I will turn the call over to Satish.

Good afternoon, everyone, and thank you for joining us today. My comments will focus on three key headlines. First, Keysight delivered strong first quarter results. Revenue of $1.3 billion and earnings per share of $1.82 both exceeded the high end of our guidance. Core revenues grew for the first time in six quarters, reflecting strength in the communication solutions group and stabilization in our electronic industrial solutions group. Second, orders grew year over year for a second consecutive quarter up 4% to $1.3 billion. We're seeing incrementally positive signals in our sales funnel and customer engagements. Our view of 2025 remains unchanged. We continue to expect gradual recovery even as we monitor the policy changes contemplated by the new administration in the United States. We're well positioned for the future. The world's most technologically advanced companies trust us to deliver market-leading products and solutions at the physical, protocol, and application layers. The underlying technological trends of more memory, faster processing, greater bandwidths, and with lower power remain intact. We are engaging with our customers earlier and more broadly, which gives us confidence in our ability to create value for our stakeholders. Now let's begin with an overview of Keysight's first quarter business performance. Communication Solutions Group revenue grew 5% reflecting continued momentum in wireline, stability in wireless, and growth in aerospace defense and government. Orders grew for the third consecutive quarter driven by growth in both wireline and wireless. In wireline, Demand remains strong for our physical layer and AI workload emulation solutions, and we saw record orders again this quarter. Keysight is enabling the expansion of the AI data center network and the design of electrical and optical technologies for higher speeds and bandwidth. We continue to see strong engagement from a broad ecosystem, chipset designers, network equipment manufacturers, and hyperscaler customers. At DesignCon, Keysight demonstrated an industry-leading 400 gig per lane test solution, enabling 3.2 terabit speeds, along with industry-leading low-power DDR6 memory compliance tests. We believe AI will be a long-term secular tailwind for the design of next-generation technologies in the network data center and communications ecosystem. Our wireless business performed in line with expectations and consistent with the stability of the past two quarters with ongoing activity related to standards progression in 5G advanced non-terrestrial networks and research in early 6G. We saw relative strength in network infrastructure with ongoing innovation in radio access networks and early 6G while demand remains muted in the smartphone supply chain. In Q1, we launched our flagship PNAX Pro network analyzer to enable the design of advanced components and modules for early 6G research, aerospace defense, and non-terrestrial networks. This solution delivers high-performance capabilities and unmatched measurement speeds while dramatically improving the efficiency of our customers' design workflows. At the upcoming Mobile World Congress, we will be demonstrating PNAX Pro, along with other solutions addressing AI, 6G, open radio access networks, and satellite connectivity, many of which will be highlighted in collaboration with industry-leading customers. Turning to aerospace defense and government, revenues grew to a first-quarter record with strength in both the U.S. and Asia. The funnel of opportunities remained strong in EMSO, secure communications, space and satellite, while orders were down in the quarter due to ongoing continuing resolutions. Keysight continues to develop differentiated RF and microwave capabilities for security applications such as radar, spectrum operations, and signal monitoring. This quarter, Keysight had a notable win with a European prime for advanced threat simulation solution. Turning to Electronic Industrial Solutions Group, revenue was down 1% and orders were stable reflecting mixed demand across end markets. In semiconductor, fab capacity investment and AI-driven demand for advanced node technologies, high bandwidth memory, and silicon photonics continue to drive strong customer engagement. New fab projects are ramping, helping drive a third consecutive quarter of strong order growth for our parametric wafer test solutions. In automotive, market conditions remain challenged. reflecting muted activity in manufacturing and EV battery development. Despite the near-term headwinds, customer engagement and innovation remain high in R&D for software-defined applications and autonomous driving. Next-generation autos will require optical technologies for high-bandwidth data transfer and processing within the vehicle. This quarter, Keysight partnered with Fabulous Semiconductor Company to deliver a new multi-gigabit optical Ethernet test solution. In general electronics, orders grew for the second consecutive quarter. Customer spending in our industrial end markets was driven by high-speed PCB and connectivity applications and inventory normalization in the distribution channel. We also saw strong growth in advanced research, particularly in Europe and Asia. We have made strategic progress in growing software and services, which accounted for approximately 40% of Keysight revenue, while recurring revenue was approximately 31% of total revenue. We are seeing growing customer engagement in our design engineering software solutions, and in ESI, we saw new demand in aerospace defense as well as industrial customers. In closing, we're pleased that we've returned the company to growth, our robust innovation pipeline, strategic customer relations, and strong operating and capital discipline position us well to create value for all our stakeholders. I'd like to sincerely thank our employees once again for all their outstanding contributions, commitment, and track record of execution. With that, I'll turn it over to Neil to discuss our financial performance and outlook.