Test company beat its own guidance but numbers were generally down year-on-year
Keysight Technologies beat its own guidance for its fiscal second quarter and expects revenues to be stable with modest increases in orders during the second half of the year.
Orders for the fiscal second quarter were in line with the first quarter, at $1.2 billion; that figure was slightly down from $1.39 billion in the same period last year. Net income was down significantly, dropping from $283 million in the second quarter of 2023 to to $126 million.
“We saw pockets of growth and stability across multiple end markets even as customer spending remained constrained,” Keysight President and CEO Satish Dhanasekaran told investors on the quarterly call.
Keysight’s Communications Solutions Group (CSG) delivers the bulk of its revenues, and the segment generated $840 million in the fiscal second quarter, a 10% drop year-over-year. That was due to a 10% decline in commercial communications as well as an 11% decline in CSG revenues from aerospace, defense, and government, the company said.
The Electronic Industrial Solutions Group (EISG) saw an even steeper drop in revenues, down 17% year-over-year to $376 million; Keysight said this was due to constrained spending by semiconductor and manufacturing-related customers.
However, Dhanasekaran emphasized the long-term growth trends that Keysight anticipates. “The pace of innovation is accelerating across multiple vectors, and while remaining disciplined, we are investing to increase our differentiation and to capitalize on the waves of technology inflection ahead of us,” he said. One of those is in the data centers supporting artificial intelligence. Dhanasekaran said that Keysight’s new AI test platform is being used by several companies to emulate AI workloads and benchmark network performance, and that the company is seeing “strong demand for AI infrastructure solutions,” including testing and validation of 400G and 800G transceivers and ultra-high speed interconnects for GPU-based compute systems.
He added that in wireless, there are “some encouraging signs of incremental improvement in the industry outlook, as parts of the ecosystem continue to normalize.” Dhanasekaran also noted that Keysight landed several customer wins as part of NTIA grants for testing and development of Open RAN.
Keysight did see its commercial communications orders grow for the first time in six quarters, the executive added, and that was due to what he called “probably a first inflection” of the impact of AI on the wireline business. “It’s still very early days as the world continues to look at all of the applications that could be launched leveraging AI at scale,” he added. Customers are focusing on hardware infrastructure and the critical nature of that infrastructure’s performance in terms of how it influences the cost, energy use and user experience of AI applications.
Asked about Keysight’s bid for Spirent Communications, Dhanasekaran said that that Spirent’s portfolio of service assurance and positioning is “really a good fit” as Keysight looks to expand its network analytics position, as well as providing more scale and synergies for Keysight overall. “We feel really good about the opportunity. We’re continuing to work through the regulatory process right now,” he added.
Keysight expects its revenues for its fiscal third quarter to be between $1.18-$1.2 billion.
