Keysight Technologies reported revenue and earnings above its guidance for the most recent quarter, and indicated that things look good for improvements in the second half and a “gradual” recovery in 2025.
Revenues were down, but less than expected: From $1.38 billion in the year-ago quarter to $1.22 billion in Keysight’s fiscal third quarter for this year. But profits were up, with net income at $389 million compared to $288 million in the same period last year. Keysight also saw improved cash flow metrics for the quarter.
“Keysight delivered revenue and earnings above the high end of our guidance in market conditions that were stable and consistent with our expectations,” said Satish Dhanasekaran, Keysight’s president and CEO, in a press statement. “The funnel of opportunities supports our outlook for second half orders to be above first half orders, followed by a more gradual recovery in 2025, barring any further macroeconomic degradation.”
On the company’s quarterly call with investors, he commented: “In a mixed demand environment, we continue to see stability and pockets of growth, particularly in commercial communications.” That segment grew in the low double-digits, driven by AI-boosted wireline growth combined with a second quarter of relative stability in the company’s wireless business. Dhanasekaran said that Keysight is seeing “robust investment in the re-architecture of data center networks for 400-Gig, 800-Gig and terabit data rates, AI model training and network performance.”
“I think [it] is becoming quite clear that AI is going to be a pretty transformational technology that’s going to lead to evolutions of multiple underlying waves of standards and technologies, but it’s not yet played out,” he told an analyst on the call. Dhanasekaran characterized AI’s current challenges as being the fact that it is “a highly concentrated opportunity set driven by the big investments made by the hyperscalers,” with constricted supply.
In its Electronic Industrial Solutions Group (EISG), Dhanasekaran said that customer spending and market conditions “remain muted” but still with relative stability compared to the fiscal second quarter. Keysight’s semiconductor revenues were down from an all-time high at this time last year, and its automotive-related work slowed.
Asked about the state of Keysight’s proposed acquisition of Spirent Communications, Dhanasekaran said that the companies are still working through the regulatory process and continue to expect the transaction to close in the first half of Keysight’s fiscal 2025.
