Keysight Technologies Inc.

Good day, ladies and gentlemen, and welcome to Keysight Technologies' fiscal fourth quarter 2025 earnings conference call. My name is Victoria, and I will be your lead operator today. If at any time during the conference you need to reach an operator, please press star zero. This call has been recorded today, Monday, November 24, 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 fourth quarter earnings conference call for fiscal year 2025. Joining me are Satish Dhanasekharan, Keysight's president and CEO, and Neil Doherty, our CFO. During the Q&A session, we will also be joined by Kailash Narayanan, president of the Communications Solutions Group, and Jason Carey, president of the Electronic Industrial Solutions Group. 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 UBS and Barclays. And now I will turn the call over to Satish.

Good afternoon, everyone, and thank you for joining us today. Keysight delivered an outstanding fourth quarter results, exceeding the high end of our guidance. Orders grew 14%, revenue increased 10%, and EPS rose 16%. This was a strong finish to a year of building momentum. Full year orders and revenue rose 8% and EPS increased 14%, surpassing our expectations and our long-term model. Keysight's leadership and differentiated solutions continue to drive demand across our markets. Our portfolio is enabling major innovation waves shaping our markets, AI and accelerated compute, non-terrestrial networks, 6G, next-gen semiconductors, and defense modernization. We enter our fiscal 2026 with a strong solutions roadmap aligned to our customers' priorities, a healthy pipeline of sales opportunities across our end markets, and a broader set of capabilities. In Q4, we advanced our software-centric solution strategy with the acquisitions of Spirant, Synopsys Optical Solutions Group, and Ansys PowerArtist. We're excited about the talent, the technology, and the expanded customer value we can bring to the marketplace. Our operating model continues to generate strong free cash flow, providing us the flexibility to invest in the organic growth of the business, pursue select strategic acquisitions, and return of capital to shareholders. In fiscal 25, we achieved record-free cash flow of $1.3 billion while investing in R&D, completing three acquisitions, and returning approximately $375 million through buybacks. Since the start of 2023, we have repurchased over $1.5 billion of shares, or approximately 45% of free cash flow. Today, I am pleased to announce that our board has authorized an additional $1.5 billion share repurchase program supporting our ongoing capital return. Turning to business segments, the communication solutions group orders grew for the sixth straight quarter, delivering double digit order and high single digit revenue growth for the full year. Wireline orders and revenue grew double digits both in Q4 and for the full year, setting a new record for the business. AI infrastructure build outs and rapid upgrades to the technology stack are driving greater design, emulation, and test intensity across multiple vectors. Our solutions span the entire workflow from silicon design to system validation and secure deployments. The rapid scaling of AI workloads is accelerating new designs across the technology stack from compute to networking, interconnect, memory, and power. These transitions require redesigns across AI silicon, DSPs, switches, and transceivers, all of which are enabled by Keysight solutions. Optical speed refresh cycles are also gaining momentum, moving from the 400 gig to 800 gig to 1.6 tera. In Q4, we collaborated with Broadcom to validate next-gen 1.6 terabit networking silicon and custom AI accelerators. Keysight's silicon photonic solutions continue to drive advancements in CPO and LPO technologies of the future. With the breadth of Keysight's portfolio spanning physical AI solutions and AI emulation solutions built on technologies acquired from Ixia, we're making a meaningful contribution to the entire ecosystem. We're also capitalizing on robust demand from the scaling AI supply chain, including rack and cluster components, interconnects, and AI accelerators. Additionally, Keysight is actively involved with industry leaders and growing number of consortia shaping the future of AI infrastructure. At the Open Compute Project Conference, we partnered with Meta to demonstrate large-scale validation of GPUs and networking prior to deployment into clusters. the recently launched Keysight AI Data Center Builder won the Data Center Innovation Best Product Award at the European Conference on Connectivity in October of 2025. Turning to wireless, orders and revenue grew high single digits for the full year and outperformed expectations driven by ongoing standards evolutions, non-terrestrial networks, and early 6G research. We saw steady 5G demand continue with releases 18 and 19 of the standard, which included enhanced uplink, advanced MIMO, and energy efficiency applications. Momentum increased in non-terrestrial networks, where we are engaged with industry-leading players to advance direct-to-cell connectivity and new LEO designs. Spiron's best-in-class precision location simulators expand Keysight's offering by providing the accuracy and the realism needed to enable the next generation of positioning, navigation, and timing use cases. In 6G, the industry is shifting from pure research to early pre-standards designs. We are engaged with market-defining customers and are well positioned to intercept the industry's priorities. We doubled our 6G collaborations over the past year partnering with customers on several new applications, including channel sounding, network modeling, using digital twins, FR3 spectrum, and advanced MIMO phased antenna design. In aerospace defense and government, we generated record orders while revenue increased by 8% for the year. In an increasingly competitive global security and defense landscape, we're seeing strong customer engagement for defense modernization, enhanced deterrence capabilities, and operational readiness. Opportunities are expanding for Keysight as the traditional primes, direct government entities, and a growing contingent of neoprimes and defense technology companies invest in emerging technologies in space and satellite, autonomous systems, and advanced antenna designs. This quarter, We secured key wins with U.S. prime contractors to accelerate automated device verification. Our advanced component analysis capabilities are enabling fast phased array antenna over-the-air characterization for space, radar, and tactical communication. We won a deal from a U.S. prime contractor for multiple solutions spanning high-performance spectrum analysis, signal generation, and network analysis for radar and air defense applications. In Europe, momentum remains strong as multiple primes invest in radar, EMSO, and space applications. Ministry of Defense in allied nations are leveraging our wide band signal recording capabilities to capture field data for lab analysis. With decades of leadership across RF, digital, and optical technologies, plus a new federal focus capabilities from Spirant, Keysight is well positioned to capture growing defense demand. Now moving to electronic industrial solutions group, orders and revenue both grew in Q4 and for the full year. In our general electronics business, orders grew for the fifth consecutive quarter and were up high single digit in Q4 and double digit for the full year, led by strengthened the broad electronic supply chain, digital health, and education. AI-related innovation and investment fuel demand for our differentiated solutions for high-speed PCB, interconnect, and component test. In digital health, interoperability, connectivity, and latency challenges in the medical device and systems workflow are driving investment. Advanced research spending in semiconductor, 6G, quantum, and photonics initiatives is also continuing at a steady rate, particularly outside of the U.S., where we benefit from our global scale and local engagement. In semiconductor, the pace of innovation and investment remains robust. Our semi-business delivered solid order and revenue growth this quarter, driven by steady demand for wafer test and lithography solutions, as AI-driven capacity expanded for leading-edge nodes, high-bandwidth memory, and silicon photonics. As lithography and foundry customers expand their own advanced packaging offerings, we're enabling them to achieve unprecedented levels of precision and accuracy. Our deep collaboration with the world's leading foundries and integrated device manufacturers, as well as their respective customers, allows us to identify and address their end-to-end needs from early R&D to wafer fabrication. This year, we saw a robust growth in silicon photonics. The investments that we initiated two years ago are allowing us to capture this inflection. While geopolitical and policy uncertainties remain, the outlook for semiconductor capacity and investment and new technology roadmap remains positive in 2026. In automotive, despite mixed headlines, we continue to empower customer innovation and demand has largely stabilized. We're also expanding into new opportunities in grid modernization, where our combination of physical layer power and protocol layer network expertise is a differentiator. Our portfolio of solutions spans software-defined vehicles, EV, charging, grid, and manufacturing. In-vehicle network compliance and security remain customers' priorities, as well as the design and test of new sensing architectures and optical connectivity. The recent acquisition of the Optical Solutions Group expands our photonics portfolio as interconnect and photonics complexity increases across next generation of industrial and automotive applications. We continue to advance our go-to-market and customer engagement model to deepen longstanding strategic relationships while acquiring new customers and opportunities as the global supply chains shift. Over the past year, our teams executed to over 150 strategic engagements with market-defining innovators while expanding our customer base with more than 3,000 new logos. Our Keysight World Events reached thousands of customers globally. We actively participated in industry events such as Mobile World Congress and European Microwave and over 30 standards bodies with industry leaders. We continue to maintain lifecycle engagement with our customers through our growing services business, which has reached record revenue fueled by robust demand for Keysight Care premium offerings. In summary, fiscal year 25 marks a return to growth, and as we look ahead, we're encouraged by the momentum in our business and in markets. The technologies reshaping our world directly match Keysight's strength and we're leaning in with our first-to-market solutions, customer collaborations, and operational discipline. Even in an uncertain environment, we're confident in the fundamentals of our business model and in our ability to deliver long-term shareholder value. I'll now turn it over to Neil to discuss our financial performance and outlook in more detail.