Keysight Technologies Inc.

Psych Technologies Fiscal Third Quarter 2025 Earnings Conference Call. My name is Regan, and I will be your lead operator today. If at any time during the conference you need to reach out to an operator, please press star zero. This call is being recorded today, Tuesday, August 19, 2025, at 1.30 p.m. Pacific time. I would now like to hand the call over to Paulina Sims, Director of Investor Relations.

Please go ahead, Ms. Sims. Thank you and welcome, everyone, to Keysight's third quarter earnings conference call for fiscal year 2025. Joining me are Keysight's president and CEO, Satish Nanashapran, our CFO, Neil Doherty, and our senior vice president of global sales, Dave Yoon. 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 upcoming investor conferences hosted by Deutsche Bank, Citibank, JPMorgan, and Goldman Sachs. And now I will turn the call over to Satish.

Good afternoon, everyone, and thank you for joining us today. In the third quarter, Keysight's strong execution resulted in 11% year-over-year increase in revenue to $1.4 billion and earnings per share of $1.72, both of which exceeded the high end of our guidance. On the demand front, orders increased by 7% with growth across both the CSG and EISG segments. We saw sustained AI momentum, strong growth in aerospace defense government, and general electronics with stability in wireless and automotive. We're executing our strategy and capitalizing on opportunities across our end markets. The ongoing pace of innovation is driving deeper collaboration with customers based on our solid pipeline of opportunities and customer engagements were once again raising our outlook for the full fiscal year. Turning to the business segments, the communication solutions group delivered solid order and revenue growth year over year. In wireline, our early recognition of AI as a transformative technology chef led us to make strategic investments a few years ago to align our portfolio to the multi-year innovation roadmap we saw unfolding. As the industry accelerates investments in compute, memory, networking, and interconnect technologies, we're capitalizing today while investing to position Keysight for the long term. The emerging AI ecosystem is fueling massive growth in digital infrastructure. which in turn drives the need for rapid innovation across the technology stack. To meet this challenge, we're delivering advanced physical layer solutions and new silicon photonics capabilities that enhance R&D workflows and address customers' signal integrity and performance requirements. At the same time, networking technologies are advancing rapidly to keep pace with escalating performance needs. Our interconnected Solutions are enabling this evolution, supporting scale-up and scale-out architectures with higher network speeds and more advanced switching capabilities. This quarter, we delivered the industry's first protocol layer solution for validating 1.6 terabit performance, a major milestone for next-generation networks. We also partnered with AMD to achieve early PCIe Gen 6 compliance validation laying the groundwork for next wave of AI-ready high-speed interfaces. With growing complexity in data center at scale, it's critical to model and test not just individual devices and components, but their interactions at the system level. This prevents bottlenecks within the data center, optimizing system efficiency and performance for AI applications. We're working closely with industry leaders to model complex workloads, training environments, and inter-cluster interactions. Our software solutions enable emulation of real-world scenarios, exposing system-level challenges early in the design process. This quarter, we saw a broader adoption of Keysight AI solutions as customers look to streamline integration, accelerate deployment of AI infrastructure. The wireless business remains stable. Current momentum in non-terrestrial networks and continued R&D activity in 5G advanced is contributing to steady demand. We're actively partnering with industry leaders to support emerging applications like direct-to-cell connectivity and low Earth orbit networks. While broader 6G commercialization is still years away, we're focused on leading the industry into next generation of innovation. We're deeply engaged in progressing early 6G research and shaping the standards that will define its implementation. This quarter, we collaborated with NTT to demonstrate a breakthrough in sub-terrahertz component characterization at ultra-high data rates. We're working with key customers on advancing new spectrum utilization, sensing, and next-generation MIMO technologies that will drive long-term transformation across wireless. Moving to aerospace defense and government, elevated defense spending globally and modernization priorities are driving robust demand, particularly in the U.S. and Europe. We secured key wins at EU prime contractors for radar and electromagnetic spectrum operation applications, leveraging our multi-decade experience in high performance capabilities and complex system integration. Our differentiated platforms emulate complex 3D radio channel conditions and enable customers to model dynamic signals for satellite, vehicle, airborne, and terrain scenarios. Keysight is well positioned to capitalize on growing defense and government budgets around the world. Our enablement of sovereign research and innovation continued. This quarter, we collaborated with AIST in Japan to establish a 1,000 qubit platform. This sets a new benchmark for furthering quantum computing research and results from our commitment to long-term innovation and investments in advanced R&D. Turning to Electronic Industrial Solutions Group, orders and revenues grew both year-over-year and sequentially. In our broad general electronics business, orders grew strongly in the quarter and year-to-date. In consumer industrial, High-performance requirements in AI data centers are translating into investment in high-speed PCBs and interconnects. Digital health continued to grow driven by advancements in the validation and production of medical devices. This momentum extended to ensuring compliance in wireless and wired connectivity for monitoring systems. Advanced research and education also grew this quarter, driven by leading-edge semiconductor, 6G, and photonics initiatives with growth across EU and Asia-Pac regions. In automotive, demand improved sequentially and was stable year-over-year as we lapped higher compares. Our solutions are enabling OEMs and their partners to advance new software-defined architectures as well as advance radar and sensing. Leveraging Keysight's broad portfolio, we're engaging with customers in the design and validation of in-vehicle network compliance and security applications. This quarter, we enabled NIO to validate the compliance of their smart electric vehicles with global wireless connectivity standards. In addition, our ESI and design engineering software renewal rates with major OEMs were strong across all regions. We also recently delivered and installed a state-of-the-art R&D battery test lab for a leading European OEM customer. Despite headwinds, these collaborations illustrate the industry's ongoing commitment to innovation as it transitions to smart, connected vehicles. In semiconductor, robust demand for our wafer test solutions continued. Keysight's differentiation and customer focus is driving tighter engagement with leading foundries and IDMs. Our advanced node, high bandwidth memory, and silicon photonic solutions are enabling customers to address increasing AI compute intensity and power efficiency requirements. Investment and growth expectations remain favorable, supported by sovereign priorities around the world. Moving to software and service, Keysight's simulation and emulation portfolio is unlocking faster and smarter innovation for our customers, helping them to achieve faster time to market, reduce risk, and superior product performance. This quarter, we saw a healthy demand for our RF EDA solutions, driven by increased government, aerospace, and defense spending, as well as the need for high-speed digital simulation capabilities in the AI data center supply chain. Keysight services business continues to grow, driven by expansion of managed services and value delivered through Keysight Care. This quarter, we saw strength in aerospace, defense, and government, as well as data centers, markets where high-value services and maximum uptime are mission-critical to our customers' success. Our new products and solutions continue to accelerate customer innovation. At the International Microwave Symposium in June, Keysight showcased multiple high-performance products that address the needs of next-generation radio frequency and digital design. This includes industry's first handheld millimeter-wave signal analysis solution advanced phased array antenna test capabilities, and phase noise measurement systems, all with applications across multiple end markets. In summary, Keysight is capitalizing on market opportunities and multiple waves of technology innovation underway. I'd like to thank our team for their relentless customer focus and collaboration, which positions us well for both near and long-term value creation. We remain confident in our ability to navigate the evolving trade and tariff environment to deliver healthy margins and strong free cash flow with our financial model and operational flexibility, reinforcing our ability to invest, adapt, and lead. With that, I will turn it over to Neil to discuss our financial performance and outlook.