KEYS - Earnings call transcript Q1 2025 | Keysight Technologies, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Keysight Technologies Fiscal First Quarter 2025 Earnings Conference Call. My name is Joel and I will be your operator today. [Operator Instructions]. This call is being recorded today, Tuesday, February 25, 2025, at 1:30 p.m. Pacific time.

hand Relations. over Blount. Please to Head Harry like Investor of go now the to call Blount, I'd ahead, Mr.

Harry Blount

you, accelerating XXXX. Head to Call everyone, admired Keysight Keysight Blount, and as Quarter market long I'm Thank Conference leader delighted a Earnings join in I Keysight's have Relations. for and name of My First Year Investor as is innovation, Harry Fiscal welcome, to

Q&A CFO, Keysight's Wallace. are Satish and we Neil by Dougherty. joined President the Mark our me Joining Dhanasekaran; Chief In CEO, section, Officer, be will and Customer

today's The under are press release Reports. to and information and Information measures. our to Today's investor.keysight.com supplement at financial will refer discussion non-GAAP website Quarterly comments on Financial

of last comparisons and within a reconciliations currency divestitures unless completed We metrics months. GAAP website, XX or and movements all are growth, will also make impact to acquisitions the reference most on our and core otherwise financial on directly The are noted. comparable basis the which year-over-year excludes

We our statements about for subject performance obligation them you call. uncertainties on assume financial will as today. make company more and of review filings We and These are risks and risks view and update of to to these no forward-looking only of recent today's valid statements SEC to the are a encourage the complete other factors.

conferences Susquehanna Financial by hosted Group is management investor Stanley. in to scheduled Morgan upcoming Lastly, the participate and

to call the Satish. And over turn now I'll

Satish Dhanasekaran

thank X and everyone, joining today. on key afternoon, Good focus for comments us My you headlines. will

our Group in time in quarters, for exceeded the strength earnings the X revenue guidance. $X.X Industrial Group. of and both share our first reflecting Communications per of results, quarter First, Solutions end grew in $X.XX stabilization Solutions the Core revenues strong and Electronic of Keysight delivered first high billion

for in year-over-year quarter, up grew consecutive customer sales a incrementally signals funnel our to positive $X.X engagements. We're billion. second seeing orders and X% Second,

we as continue changes by to monitor the unchanged, the contemplated even expect in Our new gradual recovery XXXX we remains administration the view of policy States. United

most us products future, and the with power the of Third, we're underlying trust physical world's remain positioned processing, deliver bandwidths for market-leading the faster The layers. and memory, greater advanced trends technologically lower companies technological application well more and intact. solutions protocol at to

We and gives are customers engaging confidence our for stakeholders. to broadly, our earlier which create with ability us more our in value

Now Keysight's first aerospace, begin quarter performance. overview let's wireline, in momentum X%, grew continued for grew and in design solutions, in optical for and the orders third Orders wireless. is and enabling electrical stability In driven and an of Group consecutive quarter wireline layer by we Solutions AI AI government. Communications reflecting again wireline, data business growth the the demand wireless growth speeds with the revenue in bandwidth. defense technologies record center remained workload and network this emulation higher for quarter. and physical of strong Keysight our expansion and and saw of both

and from We a ecosystem, continue designers, manufacturers customers. see strong equipment network engagement to chipset hyperscaler broad

with along industry-leading next-generation speeds in demonstrated be tests. enabling technologies the will data believe low-power memory We communications Keysight secular industry-leading AI XXX gig long-term test lane network, for X.X an solution, and DesignCon, per At of design tailwind DDRX center the terabit compliance ecosystem. a

radio networks standards access strength Our XG. supply relative saw early advanced, and wireless with quarters business performed innovation past activity smartphone in nonterrestrial and demand while XG of ongoing in XG the net the and infrastructure X progression line the with in remains in networks research early with consistent to muted with expectations chain. ongoing stability in related in We

our speeds delivers the Pro aerospace, PNA-X solution improving early unmatched high-performance components addressing defense be be and will networks. the which radio other we XG XG, Network demonstrating design Pro PNA-X with collaboration In access of design the open upcoming measurement along highlighted Analyzer advanced enable nonterrestrial solutions workflows. in customers. with of flagship we connectivity customers' research, AI, for This will efficiency dramatically to many of and while industry-leading Congress, World networks capabilities Mobile QX, launched At and our and satellite modules

to continues and such as were capabilities RF orders Turning for while Revenues microwave security Enzo defense opportunities U.S. due and spectrum record continuing ], funnel to resolutions. government. in radar, space operations down in communications, Asia. and secure The the with and strong, both first ongoing satellite, develop a grew signal quarter to monitoring. [ strength Keysight aerospace, to of quarter the applications remain differentiated and

This notable Keysight prime had solution. simulation advanced for a European quarter, win a with

were to photonics continue to Electronic drive end orders stable Turning across and investment reflecting semiconductor, and fab demand Group, node memory and for markets. X% was mixed technologies customer advanced silicon demand revenue In AI-driven down high-bandwidth Industrial engagement. capacity Solutions strong

order strong wafer New our are consecutive parametric Xrd helping a solutions. growth fab projects ramping, test quarter for of drive

automotive, muted near-term remain conditions In in innovation the applications high R&D customer and battery in Despite software-defined for autonomous EV market and development. reflecting manufacturing remain activity and engagement challenged, headwinds driving.

require Next-generation the for processing high-bandwidth technologies transfer data vehicle. and within optical autos will

This quarter deliver company with Keysight multi-gigabit partner optical ethernet solution. to test [indiscernible] new a semiconductor

in was second and markets industrial the our inventory connectivity In the General Electronics, end applications spending quarter. distribution normalization orders and by grew consecutive driven channel. PCB Customer for high-speed in

in advanced saw growth research, also particularly We in Europe and strong Asia.

strategic approximately recurring We Keysight growing revenue and for XX% which progress total revenue. XX% of in revenue accounted have made while of Software approximately was Services

in as growing our Design seeing industrial new as defense engagement in are customers. customer Solutions. ESI, in Software Engineering well And demand saw We we aerospace

strategic we've all like and to relations stakeholders. and discipline position pipeline, to we're growth, outstanding capital innovation execution. company returned that once create us our closing, contributions, and the employees customer again track all robust record for thank well operating to for our strong their a sincerely commitment pleased value of In I'd

performance and outlook. our With discuss financial that, turn over it to to I'll Neil

Neil Dougherty

everyone. Satish, and you, Thank hello,

basis. guidance was basis, of and a on at core First Backlog high and on X% the quarter up core billion. $X.XXX range X% quarter billion revenue finished were billion $X.XXX of orders above of and a our while reported end the $X.X reported up

operational Looking for gross X% was up we QX, and were of of operating expenses XX%. at year-over-year million $XXX reported margin Operating results QX margin XX.X%. our

of We to net and earnings delivered $XXX achieved earnings. of Turning million income per share $X.XX.

the Our XXX million weighted count average share shares. quarter for was

million, due Moving million of Communications which Communications base. operating Solutions or anchor aerospace, performance X% quarter Industrial The margin and [ $XXX revenue revenue core increased of delivered on our million to Commercial of reported generated reported X%. a of first mix $XXX Group the segments. Group ] operating $XXX government Altogether, gross of up Solutions margin, a Electronic software. XX% revenue CSG X% year-over-year margin. and down XX% gross revenue generated XX% of on higher XX% million a flat The and EISG to largely defense $XXX and margin basis.

to consideration average We cash and an at cash of million. for of from the of $XXX Moving million cash and $XXX balance We operations flow quarter of ended sheet cash cash with $XX equivalents, free quarter the shares generating total XXX,XXX flow. price in $X a million. this approximately flow and billion repurchased $XXX

outlook. our to turning Now

a $X.XXX per revenue quarter million to approximately to billion, weighted second $X.XX share in earnings the the billion QX XXX share of of expect diluted be range shares. $X.XXX Based of to We range count in on $X.XX.

first quarter of seasonality the by be As the a business. reminder, revenue second ESI Keysight's will historical muted to cadence

case continue target. our the for growth this, revenue policy target remains macro assumptions gradual Despite with is to next, stemming XX% to actions. environment end long-term to with from for scenario growth the the Looking U.S. including base our our half, second expected and to uncertainty 'XX recovery low earnings FY of X% at be and X% consistent potential unchanged,

we closing, as recovery our and the well across are executing In evolves it end on markets. capitalizing

provides deep and base, broad year solutions a portfolio, expanding robust customer engagements, solid for ahead. Our customer the pipeline foundation diverse innovation

I will that, turn back Q&A. to With Harry for the it

Harry Blount

Operator, you, Thank please Neil. the instructions give you Q&A. for will

Operator

from [Operator Samik JPMorgan. of with the Chatterjee Instructions] is question The line first

Priyanka Thapa

for on Chatterjee. Samik Thapa Priyanka

oh, So from Commercial regarding my -- is upside question Communication the hi. the

segment. from upsides versus you this So of you that to wireline a strong will regarding of wireless lot in And growth Commercial you the kind on segment, quarter wireline that be? to could Since and my due is anticipate had breakdown had between provide in you stability the factors? contribution question Communications what wireless the AI

Satish Dhanasekaran

saw I it We very uptick Yes, and infrastructure portion stability well. wireless is as in our getting you wireless the operator CapEx business think in some characterized of outlook better.

continues be ecosystem in smartphone the So its muted recovery. to

strong But the wireline really, AI. the was that the in demand stability highlight for our in we orders that's saw by offerings and growth driven wireless. picture So

Priyanka Thapa

uptick going stable? if you to in trend And you future, Or be you expect smartphone do what an it's anticipate the system that think eco do wireline be still improves? if the anything? Do to

Satish Dhanasekaran

thinking. wireless term, upside continues at we our ramps could That's customers our with of continue area. least strongly have in infrastructure base -- to stable. the today. feel the shared along be and outlook in that be case be as There we sort spending It's some short think in that AI that to But drivers the innovation with very investment us robust our

Operator

is Stanley. Meta The next Morgan from Marshall with question

Meta Marshall

weakness kind used of federal? of AI? how on as kind the kind way us of allow to second resolutions the seeing of And you're any contextualize on for reason there you're of budget maybe kind environment the contextualize would noted of is wireline just of some then on and Kind question, around to the strength defense, order that about as current talking kind things of specifically of continuing kind but kind order a aerospace

Satish Dhanasekaran

I will , Meta.

and let to the start get defense other aerospace with So then piece. me we the

stable look, difficult modernization on GDP towards you call quarterly long-term up businesses an increasing one most I but keep view, defense modernization. our every I've a to of think, portion to defense is probably of we it's that technology [indiscernible] before, going with business call it's call really and basis, what or take the said because a

opportunities change long-term at If of no continue trend. I to look pipeline where strong. that to the are we engaged remain in So

data backlog demand points, remains point strong. level contractors right? customers at of for from a solutions prime The is I'd to our you record and the some

think typical in issues I a timing administration change. balancing terms of resolution of combined continuing deals with just those we're

and some we near-term minor strong a iteration seeing. any again, growth delivered worked quarter year aerospace of as business So what get our last from as quarters. solutions we're to we had That's have out But we a well. that revenue the booked typically this defense tends few

and we're seeing solutions. capitalizing environment AI well remains multiple the to as manufacturing is equally at capabilities, flows AI supply say would the dimensions of regard us coming for point. we're in opportunity products these on those longer-term With we're and capital sorts through, that for chain in high-end uptick and and a strong But exciting constrained Keysight's positioned this for for

the accelerated and increased such [ of look from LT way And gig at gig XXX R&D I the adoption technologies DDRX, would GenX, around you the in say you all ] to as to terabit PCI speeds. [indiscernible] at look activity XXX

as customers clusters, contribution challenges time. they're really we're a of facing a matches these work to collaborations of going that. this on that that we very the the we only And able we're start All and AI with of space the I grow complex robust to high-speed they of feel start put about of last creates and meaningful capitalize because really with the opportunities pipeline growing to year, we CapEx in and good implementing that that's number some some areas had think to invested are in making have that quite

Operator

is question Susquehanna. Mehdi next The you. Hosseini Thank from with

Satish Dhanasekaran

Hi Mehdi?

Mehdi Hosseini

Okay.

from hard One one term. Sorry. a I longer of short -- apologies follow-ups there. me. had unmuting, A couple term near-term, time

at And several decade, some to the be this complementing which I point Let commercialization a say your And me commercialization start of over at next, have would follow-up. there [indiscernible]? look would a think activity of you term. with next some but about Satish, years. evolution don't and pros sort that XG point or be in the where Neil, latter R&D a substitution, want the part comp? more and And of satellite Could XG cellular looking we, I of communication. -- of How of cons longer plus we should over versus the the when the

Satish Dhanasekaran

contribution we're Yes, us to for the major then that's leads eventually our both satellite [indiscernible] seeing are the in And R&D at [indiscernible], more communications, term. this I leads fair we incremental XG, want Mehdi, it networks commercial about security opportunity and clearly think development to deployment especially and is It's that's that investments to come. and driver medium than an nonterrestrial for a for that wireless think other to as ecosystem the in its business if point technology characterization, and things but fall for applications. standardization increased that growing

Mehdi Hosseini

neutral, Keysight, Is would what's for But no the Keysight? be Keysight incremental for neutral on impact opportunities? -- that actually net Sure. net

Satish Dhanasekaran

you is because it's period there see at back of go new of to in that I to steam. of of and XG time. company. that you're full That's our of Whenever expanding capable complexity. invest And take no been in safe greater [indiscernible] longer you of our did just can you if the we're ability not back that deploying a And But should lose of staring just our mention, any of we're I SAM, mean still growing you, our doubt solution really going XG think tell the the the early not say capabilities generation XG, technology, to that focus. ahead to terms from innings has I last extent one grown away doesn't downturn every business, in history at is a we and year the over quite time, and of it think looking think

stronger customers, in participate In our early continue pilots. ability fact, in to we of to to terms yes say our grow

any Hard good on. definitely the big say is bigger, So to how to exactly capitalize gauge our we're SAM will and if But will I about prepared feel opportunity be. be the position. R&D really history

Operator

next Thompson with from The question Adam is Davis. Thalhimer

Adam Thalhimer

more positive about customer engagements. quarter. give color? and sales You Nice Can funnel a you talked encouraging little a

demand -- to Just environment? a might curious closer environment an demand that's we mixed solid indicator in if that be a

Mark Wallace

and multiple months what which What is say funnel about can Yes, with last And it's recovery funnel, here is and spoke that X-month out in since and line steady improving incrementally ways. improvement in is goes which speaking spoken X the months, gradual time improving about we been in XXXX. ago, I it's Adam. X we've our we've about, that the

coming was we new first the through markets improving, in demand is is pipeline increasing solid The it's funnel occurring. business important the recover to me. to begin and most that as intake and do That's new see and

business in velocity. making at how we improving, is and That and how particular that in -- second quarter. terms much The is many fast means are that look created of closed customers a decisions is how and

is And in support QX then meaning growing part, goal months, third is our a the short-term funnel, the the which and out having end looking is our obviously, guide. And X is funnel. funnel of

visibility think So ago. than the summary X is have we did months better I we

gradual signals supports generally and moving Our the recovery are more incrementally positive during it our thesis of a year.

Adam Thalhimer

just EV color, All right. can you And on are there? expectations then trending, comment Good are Mark. sales the also, how what

Mark Wallace

part? Which

Satish Dhanasekaran

or sales? EV

Mark Wallace

sales? are EV, easy Electric. Yes. Oh, How

our in So battery -- for development We automotive sales, remained in focus the has is so is overall. which activity in R&D see around EV yes, e-mobility general constrained. really

hardware increase. terms the So the in speeds automobiles as software and in communication begin to and software-defined architectures disaggregate vehicles of

what as that But We and seeing and is an are last EV what as far remains us our from we're test now, seeing and that in customers. our the investment tells quarter soft. funnel uptick battery focus right in

Neil Dougherty

remains Auto well manufacturing soft. as

Operator

David The America. of next question Ridley-Lane is with from Bank

David Ridley-Lane

that sort acquisition? Good your we are afternoon. on of get on the that software forth. Can constraints other so margin for following aspect the of on also question. Is group, progressing targets how of facing an And ESI and of budget sort the you update performance sort

Neil Dougherty

Yes.

renewal back that was quarter. talked to to our just product customers, newer customers kind the we the markets remains recurring auto that of would as those business. offset, think and in softness I get it's the with our perspective. started I about But defense relative were So aerospace, within did we from upsell think perspective a expectations. unfavorably said rates in industrial the auto in of then we as the ESI a -- saw high say synergy a you as with prepared track quarter And Mark revenue The target on do the acquisition markets of for I know, and portfolio. consistent realization remarks kind traction

David Ridley-Lane

And pending meaningful [indiscernible] Ansys, deals Are from right? have side on you terms Optical of house, then from the you You a have earnings or X Synopsys the Group Synopsys. acquisitions coming And on have the then pipe? the going of to software Solutions these out deal, the on how combined of way in of revenue Ansys are Ansys. the these in basis contingent through? quantifying just And some what's other

Neil Dougherty

this transactions. sized Yes. engineering they not to The our X those on design point, are of contingent we transactions portfolio. transaction. And excited Synopsys, to X support add to Ansys closure But were have the the them

the we and both they're in well to portfolio. physical business inside have power so management our that as air optical as have [indiscernible] tools currently We

Operator

question is from next with Sachs. Mark Goldman The Delaney

Mark Delaney

Mark, upcoming the give well you wish you retirement role your and let me my in on and congratulations [indiscernible]. Harry best

Mark Wallace

it. Mark. Appreciate you, thank Well,

Mark Delaney

so, a thinking we over been And on for still understand call. I more. [indiscernible] fiscal perspective. some Maybe based how year? expect more much? from an couple I 'XX, the you A last spoke Maybe some revenue earnings company on increments expenses, back, financials, the call could. if in on expect comments was variable the on I've I operating know well OpEx you looking comes structure the of OpEx from course if looking can the that OpEx And for think growth X% investments you'd incremental of the up, what on a as your as was the bit about I only year this think, have. some you bit When as mid-single-digit I some the last help was look in as of us the your it that Should year-on-year. I about business cost And at quarter,

Neil Dougherty

Yes.

is year-over-year QX about So basis, on QX. versus I a showed by total X% up OpEx

bit in were a we than reduction you cost of you one mode -- maybe Obviously, more a what reasons I a I muted year. the expected. see bit last little of think was

of All in QX. those not realized were

we reductions. into need always kind first of as QX, quarter. we administration salary our variable quarter And the the through And as on to year here the not made progress roll pay in only through ratchet then so seen expense year we do We up. the have of midway

So Year QX. well quarter, New do -- guide, sequential from those is about in what's expect year the of full in to as OpEx. as move the with in which quarter holidays you think QX a pressure a significantly our long full up OpEx also we implied QX We'll a have on as increase salary the Chinese which PTO obviously, as were holidays usage puts lower Christmas increases, as QX -- as upward you

I and the Satish already to during as continue to the on growth, to ability start think and think XG, business our as on and keep programs on fund to you and layer to to about now dollars core like is quantum incremental returns some alluded there's investments, shortage about, potentially we're this, for track excited us opportunities this capturing investment. continue something incremental things to no us opportunity market for computing that AI downturn of

Mark Delaney

XX% for framework digits top the And margins, year? the guys line about mid-single Neil. if the grow that [indiscernible] you incremental is right

Neil Dougherty

Yes, I would [indiscernible]. say, on better, growing think that or you average XX% for quarters where about X% we're can

Mark Delaney

just then And gross Okay. question my around other was margins.

was like bit and on speak down you was a price/cost a Maybe factors it think what I could year-on-year. little mix. driving that bit

Neil Dougherty

Yes. It's related. mix mostly

pretty benefiting 'XX. last of backlog If we in QX And into some sale saw back the even down were QX from the still, step look significant function the you and extent, FY of year. lines, at to go we a of to QX trend then

gross the that gross So from in margin performance QX a last had the tough this up is but bit favorable we've the gross performance we was last quarters, put was compare a just standpoint, by really in past highest to margin margin the mix favorable. quarters, ago, but some X X year little a incremental revenue relative the mix, to ESI the compared less again, aided our

Satish Dhanasekaran

more I little think just bit to add a color.

role talked company margins to businesses, In leading the that value term, that was that and you work XX%. You so between compare CSG, to indexed much the the and this a is more are play year, at Jason wide more create I about we which the to gross in feel new But his that at these roll a customers that's about, good R&D longer are in greater look dispersion in going solutions businesses just to at our opportunity them to and business, last portfolio continue mix do the at company lot we manufacturing as the contributions R&D was on if mark R&D value as favorable we believe continue there's but for to XX%, level. look more the EISG out. the

Operator

you. next with is Niknam The Matt Thank Bank. Deutsche question from

Matthew Niknam

Just two, if I could.

but continuing in think government to on terms in on And moving conversations? I'm if recovery in in you can new BC about orders potential with Neil, some First, then sizing orders, maybe just wondering of on of tied softness sort front, business? in your how the of of what's XQ parts sequentially on resolutions. ongoing orders and any a if any referenced from administration fiscal if secondly, just defense aerospace maybe, any the help those framework ] [ to the going terms you there's in some light with Satish, been risk gradual efficiency ESI. terms business in Just frame of

Neil Dougherty

first I'll question. go sequential and So I deal with the don't why

about season. think QX about think business historically, tend you If this to to would we QX

of of recognize of ESI quarter with then digits excluding be XX% their remaining up mid-single ESI quarter remainder that this year. to pullback the in Now XX% order over offset Keysight's to sequentially, is by and evenly the the XX% is fiscal first close is a spread would that first in then kind relatively the in

forward. that So think it and -- way think fair a about to going I is

Satish Dhanasekaran

picture. I backlog contractor and from already prime believe customers levels, be to is are there's at programs that to of continue our big the that our aerospace their many the unlikely that to a to defense, would record that regard say customers With change and in

that's record So likely level, as at continue a already that to mentioned. those and big I are on, pretty flight things a in

one. So that's number

a at their is which in Europe And go geopolitical Asia spending to defense and global scenario, GDP of the to emerge to when where picture see and start realities, percentage likely a look likely up. you given is you the as

As a as taking just today spending you watch fact, the U.K. matter up well. just today, of if confirmed defense

think we'll be to capabilities, I and likely in I to capitalize good think So opportunities. trend. given continue a that's position be And that's technology the -- on our those to

regard it's direct a technology ], out. advancement sitting RDT&E with and base is to government one we're what line watching unlikely to until But [indiscernible].But something cut defense. we see will telling thinking With the that's customers regard But the that's that things us remain [ the and ] -- [ no for really are item well. sort that these a of there's our significant to scenario where play security case knows one as no

to So that. we're monitor continuing

Operator

with The next Wells Fargo. Aaron question is Rakers from

Aaron Rakers

on some results. want prior questions back go to a Congrats good margin. I of to around kind of the

in clear that I had So of margin what back we EISG, I'm -- gross sure then outlined think I to On that business, a into you And saying. in XX%. see as you're do do make to all, we think can consider margin, recovery want Satish, first Neil, on kind operating are some range? of XX% mid-XX% you you that

X%, XX to of that margin you do that Day. the 'XX? we gross growth it's to the or target If XX conceivable that could think think way of at continue still a targeted [ profile X% back all QX X% growth kind to the Analyst I in looking see in we in range that see of ]

Neil Dougherty

Yes.

Okay. both questions. don't and I explain Why those address

margin it were to take ESI think It's bit mix do of to gross very it's to it's we in 'XX, up dependent. I dependent. addition mix to going the to excluding exam to a XX%, putting be of climb little that time I the -- of So that again, prior see. think relates we'll fiscal we ESI EISG, back likely north operating the levels running

alluded dispersion margins Satish and talked portfolio. as many about gross As that within that of a times, to we've broader

recovery nature of are depends this to really businesses which on the So relative is it others. what up and

here likely regard That not and remains to real regard have it [indiscernible] me I've out, back. is out In think the our With scenario targets. 'XX on about of X% multiple margin to XX we XX% how FY if we previously, lost to your years. to rough long growth going said could still of your lay operating question margin With which second that sight Yes, to achievement -- for XXXX it case, goal, that, remind quick. X% particularly ], XX% slip XX% get on incrementals the you target. X operating that you are that if growth, the [ math is. plays and takes

I think to allows we're that we more point, accelerate optimistic that that bounce get a a bit momentum. little of at some back us

us to high those at of contemplated businesses ultimately gross not ability achieve may while time, the the on certainly, objectives. then but help the And closure pending and acquisitions synergies margin to realize

Satish Dhanasekaran

are worth highlighting for to tremendous groups, work X differences organizational do the The Neil's have the while we synergies fundamentally gross is thing between -- other between with point customers. there margin we our

quarter, profit on. spot this groups even operating the differences, see even will were the gross you so margin with between X And the

so... XX%, So

Operator

The next with Long Barclays. question from Tim is

Timothy Long

the hoping we was could business. back I Satish, to AI go

bit. just that could you If a maybe on double-click little

like the in past, I kind hoping the was I you've quantify really through think you scale currently. top business walk the cases and get tail cases? look you business? base use X increasing of use new us and the kind I talked, will know what or where for Just you But a customer could of X AI can't kind sense of trying to with of the that are of

there XX% for Services. we got decline to looks And pretty steady a about It and recurring Software on bit think up then be you would like been this talk is would Or about it be XX%, of Could transition? a the XX%. about and something the going Should how that still forward? that should or kind little and follow-up to steady transition that slow accelerate we revenues, right? it's the

Satish Dhanasekaran

about say, we take near in take a here puts I'd and lot look, a me let say, and the the just online. an Well, data world, one. takes going the consuming term XX,XXX next to the there's centers power. of of have today that In gigawatts Well, are projected gigawatts go centers there's few XX stage data first future and of years, XX in additional

layer a training and Then about applications. of difference think that's processor and AI of signs top let's seeing on it, on Just then we're to there's overlay applications cards, increased all fact. between that and edge you designs, grow, inferencing inferencing. the accelerator going And you therefore, as reaching already inferencing of an

picture picture for long-term to be robust their we great enable and we in see see innovation. that intercept is position us, our and we're able to here towards picture, customers pretty and a the that moving So that

of things. that term, we're is side of investment would bets silicon we We happening, well the business X-nanometer that months come. the that's meaningfully our say one ago positions I an meaningfully be quarter is call customers. strong good it's a to noted near we're with the in out things, had on This And semi a proving to in us which made we've push also the and photonics, in again the promising XX participate of very technology on compute the customers participating compute side working and made work about to with to

we're all memory let's is position higher the when mean, XXX factor. rapid XXX because look again, XXX at at in a [ of that's at going again, pace of of an I high where areas look those you a speeds forget, this very you And it move a area to of you meaningfully of these an not we If that to ] high DDRX, are requires AI again, cost clearly today, interconnects cluster. interconnects participating. ], HBMs failure participate that put networking, to the [ testing from X, And lot

On to get cost the we've this center workloads launched and emulation AI side, which train into data utilization, time our platform insight customers high-scale allows to that model. is a emulate builder, latency the meaningful first AI to AI

very excited in about. long-term stack, down short feel medium congruent that opportunity and strategy. up our participating really see we're this So term positioned we're like I'm We well bigger again, the and the with and

with the company We That's on felt core from the then really sustainable see solutions and milestone it. journey, like customers a software-centric as where means. to a And as transformation. question, obviously, we're and areas starting XX% to we not of company our of as we second we're this always our regard transformation add we part can a any a that focused help we've in in call contribution way by -- identify meaningful done

new is organic continue ]. that product there think [ to launch I we'll this more introduction capabilities

hardware to software far at to take hardware So software. our introductions software hardware our ratio look introductions or launch does introductions than longer outpaced, introductions

expand Synopsys be alluded that's to start we've feeling a revenue. to good. out recurring to [ And phase will higher we in then to continue capabilities bring Neil So as the some with announced that ] earlier, of the them will in our as to contributions contribute still, we start new played to design

Operator

last from Rob is question The Baird. with Mason

Robert Mason

think test. some earlier participating build have that? semiconductor. quarter Satish that parametric in backlog to conversion consecutive in even for -- I'm your revenue And visibility starting you're your the curious And in just if about on where business? I if case, you if third that's mentioned you you what's talked your participation I'm of good -- you're response, last

Neil Dougherty

mean side I we of growth on this that have in that you to noted, outlook we favorable given as a new fab the as parametric and Yes. continue coming multiple quarters forward these opportunities of are online. -- here some of opportunity so look test business.

that obviously, X the quarters, within acceptance that again, We months. are last our that reminding accepting have opportunities shippable but we're built is order X primary some of backlog will window you over and

conversion the into is of short. those So revenue relatively orders

Robert Mason

Understood.

emerged, emerged, if to are when the general? have I'm things environment? how what yourself you in been just trend to on volatility into? obstacles current business saw Just to you opportunities. so, you're saw you new finding pivot you Obviously, needing if I -- the asked curious your leaning touch could pivot business have geopolitical just What China able you've -- follow-up, And during within as quarter. you probably know a it's

Satish Dhanasekaran

Yes.

just restrictions, post ago, to headwind continued strength a our the geopolitical basis. few in months of which trade years I First be to happened customer few China on a and X-point to the we've ago used X- relationships strong say Huawei, would sort foremost, I a was of a with continues

have to we that And of so of business learn focus manufacturing a customers have huge you of Asia their North efforts, of transact Southeast to pivoting that's it, or It's And supporting surprise relocating that the China permitting not [indiscernible] a something with them, is sort many that can global that's strategy. call we're with. of to global also our the the parts when probably America. their are customers through whether we relationships it we're

at but doubt as to the positioned is all So I day, it globally, landscape, shifting of company. the a we're customers think our that are is technology mean key and a innovations well I end there no

Operator

you. call comments. I'd Blount That our any That question-and-answer back question our today. to and concludes Harry like turn -- for session closing the concludes Thank for sorry? to

Harry Blount

you, great you on Thank a us joining day. call. for today and thank operator, the Have

Operator

conference our call. concludes This

now may You disconnect.

Keysight (KEYS) 25 Feb 252025 Q1 Earnings call transcript