Keysight Technologies Inc.

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 over 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 an upcoming investor conference hosted by Baird. And now I will turn the call over to Satish.

Good afternoon, everyone, and thank you for joining us today. During the second quarter, Keysight delivered revenue of $1.3 billion and earnings per share of $1.70, both of which exceeded the high end of our guidance. This marks the second consecutive quarter of revenue growth driven by continued momentum in CSG and return to growth in EISG. The demand environment was solid in the quarter with orders growing 8% year-over-year and 4% sequentially to $1.3 billion. Even as we are monitoring the overall macro environment, we entered the second half with a healthy pipeline of opportunity and strong customer engagements. Neil will have more details on the tariff impact in his remarks. Overall, our business results demonstrate the resilience of our business and the durability of our financial operating model which is underpinned by a flexible cost structure, supply chain, and operating capabilities that allow us to quickly adapt to external dynamics. As a result of our multi-year investments, we have a diversified global supply chain, which is largely based in Southeast Asia with minimal exposure in China. Despite the near-term uncertainty, we're confident in our market leadership, the strength of our operating model, and our ability to generate value for our stakeholders. Our capital allocation priorities have not changed. We are investing for the long term while also pursuing a balanced return of capital enabled by a strong free cash flow conversion. Over the past 12 quarters, we have returned over $1.7 billion, or roughly 50% of free cash flow, to investors via repurchases. Turning to business segments, in CSG, commercial communications orders grew double digits. Demand remains robust in wireline, where the ongoing data center infrastructure expansion is driving order strength. We saw continued deployment of 400 and 800 gig Ethernet technologies in AI data center applications. R&D investments in 1.6 terabit electrical and optical technologies, as well as expansion of new protocols in AI data center networks, are fueling demand as the entire industry is innovating and developing new applications and services. This quarter at OFC, we demonstrated the industry's first solution for 448 gig per lane optical transmission, a key building block in the deployment of 1.6 and 3.2 terabit networks. The depth and breadth of Keysight's capabilities in the electrical and optical and wireline protocol stacks positions us well to enable ongoing innovation in high-performance computing, memory, and networking. Wireless orders grew in Q2. We saw a steady pace of R&D activity related to 5G advanced and early 6G research, as well as investments in non-terrestrial networks. While smartphone supply chain activity remained stable, innovation and investment in R&D in radio access networks continued to grow. Keysight's new digital twin and system emulation capabilities are enabling non-terrestrial applications and expanding our customer engagements. In aerospace defense and government, orders grew this quarter driven by strength in the U.S. and Europe. Ongoing investment in spectrum operations and space applications drove growth. Although the U.S. will be operating under a continuing resolution for most of the year, overall demand and pipeline of opportunities remains robust with prime contractor backlogs at record levels. Investments in defense modernization remains a top priority for many countries, as reflected in the increased budget proposals in U.S., Europe, and Asia. Keysight is a trusted partner in this ecosystem, delivering advanced high-fidelity test capabilities that simulate real-world electronic threats in lab environments. This quarter, Keysight won a notable deal with a major defense agency in Europe, to modernize its testing capabilities for antenna radar applications, which are key to mission-critical applications. Our innovation pipeline is driving a steady cadence of new products and solutions, which this quarter included a higher-frequency extension to our phase noise analyzer for defense applications and a new digital communications analyzer for 224-gig transceiver tests, enabling wireline and general-purpose use cases. Turning to electronics industrial solutions group, the demand environment remains mixed while the revenue returned to growth after six quarters of decline. In semi, the demand for our wafer test solutions from large foundry and IDM customers remained strong. Leading edge process node investment was augmented by rapid growth in high bandwidth applications. Customer engagements for silicon photonics, co-packaged optics accelerated within the quarter as the industry works to address performance limitations across latency, bandwidth, and power in the AI data center. In automotive, while orders and revenues were down, the business has largely stabilized. Engagements with OEM customers remain steady, with investments in software-defined vehicle capabilities including cybersecurity, radar scene emulation, and ADAS chipset development. This quarter, we secured a key win with a major automotive OEM for design and test of their home energy management systems. General electronics orders grew for the third consecutive quarter, although at a lower rate. Growth in multi-industrial and medtech customers for both R&D and manufacturing solutions was partially offset by contraction in U.S. education funding and continued normalization in the distribution channel. Moving to software. Design engineering software orders grew double digits, reflecting a healthy demand for our RF EDA solutions. We're seeing growing interest from industrial customers looking to apply simulation and virtual prototyping in the mechanical domain. With respect to our recent ESI acquisition, we're enabling next generation industrial design by delivering a panel forming solution to a large European auto OEM that will drive efficiencies through their manufacturing processes and optimize their production timelines. In closing, we're pleased with the recovery that's underway. Our end markets have largely performed in line with our expectations heading into this year, and I'm once again proud of the Keysight team's execution in this quarter in what remains a dynamic environment. Keysight's broad portfolio of differentiated solutions positions the company to outperform in a variety of market environments. We continue to make deliberate multi-year investments aligned with long-term technology trends, creating opportunities now and into the future. As we move through the second half, we remain focused on executing on what we control and continuing to deliver value to our customers and stakeholders. With that, I'll turn it over to Neil to discuss our financial performance and outlook.

Thank you, Satish, and hello, everyone. Second quarter revenue of $1,306,000,000 was above the high end of our guidance range of 7% on a reported basis and 8% on a core basis. Orders of $1,316,000,000 were up 8% on both the reported and core basis. Looking at our operational results for Q2, we reported gross margin of 65%. Operating expenses were $516,000,000 up 4%, Q2 operating margin was 25% and increased 100 basis points over last year. Turning to earnings, we achieved $295 million of net income and delivered earnings per share of $1.70. Our weighted average share count for the quarter was 173 million shares. Our Q2 results included approximately $7 million of new tariff expenses in cost of sales, which had a 60 basis point unfavorable impact on both gross and operating margins and resulted in an approximately 4 cent reduction in earnings per share. Moving to the performance of our segments, the communications solutions group generated second quarter revenue of $913 million, up 9% on a reported and core basis. Commercial communications revenue of $612 million was up 9%, reflecting sustained strength in wireline and growth in wireless. Aerospace Defense and Government achieved revenue of $301 million, an increase of 9%. Altogether, CSG delivered 67% gross margin and 26% operating margin. The Electronic Industrial Solutions Group generated $393 million in revenue, an increase of 5%, with growth in semiconductor and general electronics more than offsetting a decline in automotive and energy. EISG delivered 59% gross margin and 23% operating margin. Software and services accounted for approximately 36% of Keysight revenue, while annual recurring revenue was 28% of total mix. Moving to the balance sheet and cash flow, we ended the quarter with $3,118,000,000 in cash and cash equivalents, generating cash flow from operations of $484,000,000 and free cash flow of $457 million. In April, we issued senior notes for an aggregate principal amount of $750 million. We intend to use the net proceeds for general corporate purposes, which may include partially funding the previously announced acquisition of Spirant. With regard to pending acquisitions, the UK Competition and Markets Authority cleared the Spirant transaction in March. We are progressing through the review process with other regulatory agencies and expect the transaction to close in Keithight's third fiscal quarter. In addition, the acquisition of Optical Solutions Group and Power Artist is anticipated to close shortly after the Synopsys to ANSYS transaction is completed. Lastly, we have purchased 1,042,000 shares this quarter at an average price of approximately $144 for a total consideration of $150 million. Now turning to the current environment, tariffs, and our outlook. We have a diversified global supply chain with minimal exposure to China and have already taken action across multiple factors to reduce the incremental impact of tariffs. Our multi-pronged mitigation approach spans our global manufacturing footprint and sourcing strategies, as well as pricing and cost actions. Based on actions taken to date, we estimate our annual exposure at approximately $75 to $100 million. We are working to further reduce this exposure and offset any remaining impact. Given the high priority that we place on maintaining our long-term customer relationships, our pricing actions were not applied to pre-tariff backlog. As a result, and assuming tariff rates remain at the current levels, the most significant tariff impact is expected in Q3 with full mitigation by the end of the fiscal year. Keysight currently has $2.4 billion in backlog and enters Q3 with a solid scheduled shipment position, despite the dynamics and uncertainty of the current macroeconomic environment. As Satish mentioned earlier, at this point we have not seen any material adverse effects on demand from tariffs and are therefore raising our full year growth expectations. We now expect FY25 revenue growth at the midpoint of our 5% to 7% long-term target and annual EPS growth slightly above our long-term 10% target. For the third quarter, we expect revenue in the range of $1,305,000,000 to $1,325,000,000 and Q3 earnings per share in the range of $1.63 to $1.69 based on a weighted diluted share count of approximately 173 million shares. Implied in this guidance is the assumption that tariffs remain at current levels for the year. With that, I will turn it back to Paulina for the Q&A.