是德科技 (KEYS) 2024 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Keysight Technologies Fiscal Second Quarter 2024 Earnings Conference Call. My name is Sierra, and I will be your lead operator today. (Operator Instructions). This call is being recorded today, Monday, May 20, 2024, at 1:30 p.m. Pacific Time.

女士們、先生們，美好的一天，歡迎參加是德科技 2024 年第二季財報電話會議。我叫 Sierra，今天我將成為你們的首席操作員。 （操作員說明）。本次通話將於今天（2024 年 5 月 20 日星期一）下午 1:30 進行錄音。太平洋時間。

I would now like to hand the call over to Jason Kary, Vice President, Treasurer and Investor Relations. Please go ahead, Mr. Kary.

我現在想將電話轉交給財務主管和投資者關係副總裁 Jason Kary。請繼續，卡里先生。

Thank you, and welcome, everyone, to Keysight's Second Quarter Earnings Conference Call for Fiscal year 2024. Joining me are Keysight's President and CEO, Satish Dhanasekaran; and our CFO, Neil Dougherty. In the Q&A session, we'll be joined by Chief Customer Officer, Mark Wallace. The press release and information to supplement today's discussion are on our website at investor.keysight.com under Financial Information and Quarterly Reports.

感謝並歡迎大家參加是德科技 2024 財年第二季財報電話會議。和我們的財務長尼爾·多爾蒂。在問答環節，首席客戶長馬克華萊士將參加我們的問答環節。新聞稿和補充今天討論的資訊可在我們的網站 Investor.keysight.com 的「財務資訊和季度報告」下找到。

Today's comments will refer to non-GAAP financial measures. We will also make reference to core growth, which excludes the impacts 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 our 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.

今天的評論將涉及非公認會計準則財務指標。我們還將參考核心成長，其中不包括貨幣變動以及過去 12 個月內完成的收購或剝離的影響。最直接可比較的 GAAP 財務指標和調整表位於我們的網站上，除非另有說明，否則我們所有的比較都是逐年比較。我們將在今天的電話會議上對公司的財務表現做出前瞻性陳述。這些聲明存在風險和不確定性，並且僅截至今日有效。我們不承擔更新它們的義務，並鼓勵您查看我們最近向 SEC 提交的文件，以更全面地了解這些風險和其他因素。

Lastly, management is scheduled to participate in upcoming investor conferences hosted by Baird and UBS. And now I will turn the call over to Satish.

最後，管理層計劃參加即將由貝爾德和瑞銀主辦的投資者會議。現在我將把電話轉給薩蒂什。

Good afternoon, everyone, and thank you for joining us today. My comments will focus on 3 key headlines. First, Keysight executed well in a market environment that was largely unchanged from the first quarter, revenue of $1.2 billion and earnings per share of $1.41 exceeded the high end of our guidance. Second, orders of $1.2 billion were in line with prior quarter. We saw pockets of growth and stability across multiple end markets even as customer spending remained constrained. Our base case scenario for the full year is unchanged with the revenue relatively stable from Q2 to Q3 and orders increasing modestly in the second half.

大家下午好，感謝您今天加入我們。我的評論將集中在 3 個關鍵標題上。首先，是德科技在與第一季基本沒有變化的市場環境中表現良好，營收 12 億美元，每股收益 1.41 美元，超出了我們指導的上限。其次，訂單金額為 12 億美元，與上一季持平。儘管客戶支出仍然受到限制，但我們還是看到了多個終端市場的成長和穩定。我們對全年的基本情境沒有變化，第二季到第三季的營收相對穩定，下半年訂單略有增加。

Third, our deep customer collaborations and relationships are strong and continue to inform our future road maps. These engagements reinforce our confidence in the long-term secular growth trends of our markets. 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.

第三，我們與客戶的深入合作和關係非常牢固，並將繼續為我們未來的路線圖提供資訊。這些合作增強了我們對市場長期成長趨勢的信心。多個領域的創新步伐正在加快，在保持紀律的同時，我們正在投資以提高我們的差異化並利用我們面前的技術變革浪潮。

Now let me begin with a brief overview of Keysight's second quarter performance. Revenue of $1.2 billion and earnings per share of $1.41 were above our expectations. Revenue and orders continued to normalize from the strong prior year, but were stable on a sequential basis, excluding ESI seasonality. We delivered operating margin of 24% reflecting a healthy gross margin of 65% and the cost actions and discipline that we have exercised to date.

現在讓我先簡要概述是德科技第二季的業績。營收 12 億美元，每股收益 1.41 美元，超出我們的預期。收入和訂單繼續正常化，較去年強勁，但環比穩定（不包括 ESI 季節性因素）。我們實現了 24% 的營業利潤率，反映了 65% 的健康毛利率以及我們迄今為止所採取的成本行動和紀律。

Turning to our business segments. Communications Solutions Group revenue declined versus prior year, which benefited from robust backlog conversion. On the demand front, orders were flat year-over-year and grew 4% on a sequential basis. Investment in defense modernization continue to drive activity in aerospace, defense and government, and we were pleased to see commercial communications order growth for the first time after 6 consecutive quarters of declines.

轉向我們的業務部門。通訊解決方案集團的營收較上年下降，這得益於強勁的積壓訂單轉換。需求方面，訂單較去年同期持平，較上季成長 4%。國防現代化投資繼續推動航空航太、國防和政府領域的活動，我們很高興看到商業通訊訂單在連續 6 個季度下降後首次增長。

Wireline orders grew on a robust demand for our differentiated AI data center solutions. These include a new AI test platform that is being used by several industry leaders to emulate AI workloads and benchmark network performance.

由於對我們差異化人工智慧資料中心解決方案的強勁需求，有線訂單不斷增長。其中包括一個新的人工智慧測試平台，多家產業領導者正在使用該平台來模擬人工智慧工作負載和基準網路效能。

Hyperscaler customer engagements remained high as they accelerated their AI application development. We deepened our R&D collaboration with NVIDIA on next-generation communication technologies this quarter. We also saw strong demand for AI infrastructure solutions, including test and validation of 400 and 800 gig transceivers and ultra high-speed interconnects in GPU-based compute systems.

隨著超大規模客戶加速人工智慧應用程式開發，他們的參與度仍然很高。本季度我們加深了與 NVIDIA 在下一代通訊技術方面的研發合作。我們也看到了對人工智慧基礎設施解決方案的強勁需求，包括基於 GPU 的運算系統中 400 和 800 GB 收發器以及超高速互連的測試和驗證。

Our advancement of leading-edge network innovation was on display at the Optical Fiber Conference, where we demonstrated the industry's first 1.6 terabit Ethernet test solution in partnership with industry leaders. In wireless, there are some encouraging signs of incremental improvement in the industry outlook as parts of the ecosystem continue to normalize. Our latest suite of 5G solutions launched over the past year is enabling ongoing investment in evolution of 5G standards, nonterrestrial and open RAN.

我們在光纖會議上展示了領先的網路創新進展，在會上我們與產業領導者合作展示了業界首個 1.6 太比特乙太網路測試解決方案。在無線領域，隨著部分生態系統持續正常化，產業前景出現了一些令人鼓舞的逐步改善跡象。我們去年推出的最新 5G 解決方案套件支援對 5G 標準、非地面和開放 RAN 演進的持續投資。

With the first round of NTIA grants to enhance testing of interoperability, performance and security of open RAN networks, we secured key wins with several customers in the U.S. We also saw increased demand for chipset R&D as well as component production.

透過第一輪 NTIA 撥款來加強開放 RAN 網路的互通性、效能和安全性測試，我們贏得了美國多家客戶的關鍵勝利。

Earlier in the quarter, we partnered with industry leaders to showcase new products and solutions at Mobile World Congress including nonterrestrial network chipset development with Qualcomm.

本季早些時候，我們與產業領導者合作，在世界行動大會上展示新產品和解決方案，包括與高通合作開發的非地面網路晶片組。

Turning to Aerospace, Defense and Government, defense modernization spending continued in radar and spectrum operations, space and satellite and signal monitoring. We saw a healthy demand from the U.S. government and primes in the quarter. After several continuing resolutions, the 2024 U.S. defense budget was approved in late March. It includes a 5% increase for research, development, test and evaluation, which is expected to drive incremental program spend.

至於航空航太、國防和政府，國防現代化支出繼續用於雷達和頻譜操作、太空和衛星以及訊號監測。本季我們看到美國政府和優質產品的健康需求。經過多項持續決議，2024年美國國防預算於3月下旬獲得批准。其中包括研究、開發、測試和評估費用增加 5%，預計將推動專案支出增量。

Strong demand for electromagnetic spectrum operation applications resulted in significant wins at U.S. and European Prime. We expect this trend to continue into the second half and 2025.

對電磁頻譜操作應用的強勁需求導致在美國和歐洲 Prime 展會上取得了重大勝利。我們預計這一趨勢將持續到下半年和 2025 年。

Turning to Electronic Industrial Solutions Group, orders and revenue continue to normalize from a record prior year, declining double digits as expected. Customer spending and market conditions remain muted, but we saw relative stability on a sequential basis.

至於電子工業解決方案集團，訂單和收入持續正常化，較前一年創紀錄，預期下降兩位數。客戶支出和市場狀況仍然低迷，但我們看到環比相對穩定。

In semiconductor, the industry outlook is improving with projections of recovery in 2025. Inventories are coming down to more healthy levels and demand is picking up in certain areas such as high-bandwidth memory. Additional new fab installations were announced this quarter, in the near term, foundry customers are working through delays in existing projects and expect production to begin in late '24 and '25. Consistent with this backdrop, we saw improvement in our memory-related business and ongoing steady demand for Keysight's proprietary laser Interferometer positioning systems.

在半導體領域，預計 2025 年將出現復甦，產業前景正在改善。庫存正在下降至更健康的水平，並且高頻寬記憶體等某些領域的需求正在回升。本季宣布安裝更多新晶圓廠，短期內，代工廠客戶正在努力解決現有專案的延誤問題，預計生產將於 24 年末和 25 年開始。與此背景一致的是，我們的記憶體相關業務有所改善，並且對是德科技專有雷射干涉儀定位系統的需求持續穩定。

In automotive, revenue was sequentially stable when excluding acquisitions. We had a steady demand for both our EV and AV solutions. Beyond the headlines, consumer adoption of EV continues to grow, although at a slower pace. The development of cost-effective, longer-range batteries and a more robust charging infrastructure remains a strategic priority for OEMs and governments in a very competitive market.

在汽車領域，排除收購後，營收季比穩定。我們對電動車和自動駕駛解決方案都有穩定的需求。除了頭條新聞之外，消費者對電動車的採用仍在繼續增長，儘管速度較慢。在競爭激烈的市場中，開發具有成本效益、續航里程更長的電池和更強大的充電基礎設施仍然是原始設備製造商和政府的戰略重點。

During the quarter, we expanded our global battery test footprint with a new large Gigafactory customer in Europe. We're also pleased with the addition of ESI to our automotive and simulation software solutions portfolio. The business is tracking well to both top line and profit expectations. This quarter, ESI expanded its multi-decade collaboration with Volkswagen Group, establishing a joint material testing and intelligent simulation lab in Asia. This collaboration will advance automotive simulation technology and drive new to industry standard safety and efficiency forward in the region.

本季度，我們透過歐洲新的大型 Gigafactory 客戶擴大了全球電池測試足跡。我們也很高興將 ESI 添加到我們的汽車和模擬軟體解決方案組合中。該業務的營收和利潤預期均良好。本季度，ESI 擴大了與大眾集團數十年的合作，在亞洲建立了聯合材料測試和智慧模擬實驗室。此次合作將推動汽車模擬技術的發展，並推動該地區新的產業標準安全性和效率的發展。

In general electronics markets, customer spending remains constrained, particularly in manufacturing, China and the distribution channel, we do continue to see growth in digital health and advanced research supported by government funding in Asia and the U.S., such as the CHIPS Act. This quarter, we expanded our partnership with EMVision in Australia to enable innovation in novel point-of-care medical imaging technology and analysis.

在一般電子市場，客戶支出仍然受到限制，特別是在製造業、中國和分銷管道，我們確實繼續看到亞洲和美國政府資助（例如《CHIPS 法案》）支持的數位健康和​​先進研究的成長。本季度，我們擴大了與澳洲 EMVision 的合作夥伴關係，以實現新型護理點醫療影像技術和分析的創新。

As a key element of our solution strategy, software and services orders and revenue growth continued to outpace overall Keysight. At approximately 39% of total revenue, software and services enhance the differentiation of our solutions and are more resilient in current market conditions. Within the chip domain, next-generation performance demands are driving an exponential increase in system level design requirements and complexity. Keysight simulation and emulation software capabilities enable our customers to address these challenges and accelerate time to market for their advanced systems and chips. We recently introduced Quantum Pro, an integrated EDA solution for Cubic design and the development of quantum computers.

作為我們解決方案策略的關鍵要素，軟體和服務訂單以及收入的成長持續超過是德科技的整體成長。軟體和服務約佔總收入的 39%，增強了我們解決方案的差異化，並且在當前市場條件下更具彈性。在晶片領域，下一代效能需求正在推動系統級設計要求和複雜性呈指數級增長。是德科技模擬和模擬軟體功能使我們的客戶能夠應對這些挑戰，並加快其先進系統和晶片的上市時間。我們最近推出了 Quantum Pro，這是一種用於立方設計和量子電腦開發的整合 EDA 解決方案。

In addition, we launched a new solution for die-to-die interconnect simulation, which is a key step in verifying performance of heterogeneous and 3D integrated circuit designs commonly known as chiplets. Looking ahead, the pace of technology innovation and digitization is accelerating and proliferating across multiple industries and use cases. Keysight is investing today both organically and inorganically to capitalize on these future technology waves and inflections.

此外，我們也推出了晶片間互連模擬的新解決方案，這是驗證異構和 3D 積體電路設計（通常稱為小晶片）效能的關鍵步驟。展望未來，技術創新和數位化的步伐正在加快，並在多個行業和用例中激增。是德科技目前正在進行有機和無機投資，以利用這些未來的技術浪潮和變化。

In addition to steady organic investment in R&D, we are expanding our solutions portfolio and our served addressable markets through M&A. This quarter, we announced our intent to acquire Spartan Communications, a highly complementary business in network analytics. We also completed the acquisition of Riscure in the quarter, expanding our automated security assessment capabilities and solutions for semiconductors, embedded systems and connected devices.

除了對研發的穩定有機投資外，我們還透過併購來擴大我們的解決方案組合和服務的目標市場。本季度，我們宣布有意收購 Spartan Communications，這是一家網路分析領域高度互補的業務。我們也在本季完成了對 Riscure 的收購，擴大了我們針對半導體、嵌入式系統和連網設備的自動化安全評估能力和解決方案。

In closing, I would like to thank our employees once again for consistently delivering value to our customers and shareholders. The Keysight team's high performance and winning culture is key to our success and a competitive differentiator. While it's difficult to call the timing of the recovery, we're encouraged by pockets of growth that are emerging, the relative stability of investment levels and the strength of our customer collaborations Consistent with the Keysight leadership model, we remain disciplined and continue to streamline operations to ensure strong financial performance in these dynamic market conditions.

最後，我要再次感謝我們的員工始終如一地為我們的客戶和股東創造價值。是德科技團隊的高績效和致勝文化是我們成功的關鍵，也是我們的競爭優勢。雖然很難預測復甦的時間，但我們對正在出現的成長、投資水平的相對穩定性以及客戶合作的實力感到鼓舞。的市場條件下實現強勁的財務業績。

As we look beyond the current period of normalization, the long-term secular growth trends driving our business are intact. Taken together, our broad portfolio of differentiated solutions, strong customer relationships, technology leadership and durable financial model positions us well into a market recovery. With that, I'll turn it over to Neil to discuss our financial performance and outlook.

當我們超越當前的正常化時期時，推動我們業務的長期長期成長趨勢完好無損。總而言之，我們廣泛的差異化解決方案組合、強大的客戶關係、技術領先地位和持久的財務模式使我們能夠很好地迎接市場復甦。接下來，我將把它交給尼爾來討論我們的財務表現和前景。

Thank you, Satish, and hello, everyone. Second quarter revenue of $1.216 billion was just above the high end of our guidance range and down 13% or 14% on a core basis. Orders of $1.219 billion declined 8% or 9% on a core basis. As a reminder, Keysight's historical first to second quarter seasonality was muted by the cadence of the ESI business with approximately half of ESI orders and revenue recognized in the first quarter of the fiscal year. Excluding ESI, orders grew 4% sequentially, and revenue was in line with Q1. We ended the quarter with $2.3 billion in backlog.

謝謝薩蒂什，大家好。第二季營收為 12.16 億美元，略高於我們指引範圍的上限，但核心收入下降了 13% 或 14%。訂單金額為 12.19 億美元，核心訂單下降 8% 或 9%。需要提醒的是，是德科技第一至第二季度的歷史季節性受到 ESI 業務節奏的影響，約一半的 ESI 訂單和收入是在本財年第一季確認的。不包括 ESI，訂單環比成長 4%，營收與第一季持平。本季末，我們的積壓訂單達到 23 億美元。

Looking at our operational results for Q2, we reported gross margin of 65%. Operating expenses of $496 million were down 2% year-over-year even with the addition of ESI and Riscure. Excluding these acquisitions, SG&A expenses were down 10% or $29 million, reflecting the flexibility of our cost structure and actions taken to date. Q2 operating margin was 24% or 25% on a core basis. Despite a 14% decline in core revenue in the first half, first half operating margin declined 400 basis points, outperforming Keysight's downside model expectations and demonstrating the financial resiliency of the business.

從我們第二季的營運表現來看，我們的毛利率為 65%。即使加入了 ESI 和 Riscure，營運費用仍為 4.96 億美元，年減 2%。不包括這些收購，SG&A 費用下降了 10%，即 2,900 萬美元，反映了我們成本結構和迄今為止採取的行動的靈活性。第二季核心營業利益率為 24% 或 25%。儘管上半年核心收入下降了 14%，但上半年營業利潤率下降了 400 個基點，超出了是德科技的下行模型預期，並展示了該業務的財務彈性。

Turning to earnings. We achieved $247 million of net income and delivered earnings of $1.41 per share. Our weighted average share count for the quarter was 175 million shares.

轉向收益。我們實現了 2.47 億美元的淨利潤，每股收益 1.41 美元。本季我們的加權平均股數為 1.75 億股。

Moving to the performance of our segments. Our Communications Solutions Group generated revenue of $840 million down 10% or 11% on a core basis. Commercial communications revenue of $563 million declined 10% while Aerospace, Defense and Government revenue of $277 million was down 11%. Altogether, CSG delivered gross margin of 68% and operating margin of 27%. The Electronic Industrial Solutions Group generated revenue of $376 million, down 17% or 21% on a core basis. EISG reported gross margin of 58% and operating margin of 19% due to the seasonality of ESI profitability, lower revenue volume and some unfavorability in mix.

轉向我們細分市場的表現。我們的通訊解決方案集團的核心收入為 8.4 億美元，下降了 10% 或 11%。商業通訊收入為 5.63 億美元，下降 10%，而航空航太、國防和政府收入為 2.77 億美元，下降 11%。整體而言，南玻集團的毛利率為 68%，營業利益率為 27%。電子工業解決方案集團的營收為 3.76 億美元，年減 17%，核心收入下降 21%。由於 ESI 獲利能力的季節性、較低的收入量以及組合的一些不利因素，EISG 的毛利率為 58%，營業利潤率為 19%。

Moving to the balance sheet and cash flow. We ended the quarter with $1.7 billion in cash and cash equivalents, generating cash flow from operations of $110 million and free cash flow of $74 million, which reflected higher cash taxes and the timing of collections in the quarter.

轉向資產負債表和現金流量。本季結束時，我們擁有 17 億美元的現金和現金等價物，營運現金流為 1.1 億美元，自由現金流為 7,400 萬美元，反映出本季現金稅和收款時間的增加。

Share repurchases this quarter totaled 302,000 shares at an average price per share of approximately $153 for a total consideration of $46 million.

本季股票回購總計 302,000 股，每股平均價格約 153 美元，總代價為 4,600 萬美元。

Now turning to our outlook. We expect third quarter revenue to be in the range of $1.180 billion to $1.200 billion and Q3 earnings per share to be in the range of $1.30 to $1.36 and based on a weighted diluted share count of approximately 175 million shares. As we look to the full year, our base case scenario remains the same and assumes a mid-single-digit increase in revenue from Q3 to Q4, which implies full year revenue of approximately $4.9 billion.

現在轉向我們的展望。我們預計第三季營收將在 11.80 億美元至 12.00 億美元之間，第三季每股收益將在 1.30 美元至 1.36 美元之間，基於約 1.75 億股的加權稀釋股數。展望全年，我們的基本情境保持不變，並假設第三季到第四季的營收出現中個位數成長，這意味著全年營收約為 49 億美元。

In closing, we remain disciplined and focused on what we control, while investing to capitalize on the best growth opportunities as markets normalize and recover. Keysight's customer focus, technology leadership and broad solutions portfolio give us confidence in the long-term trajectory of the business and the ability to outperform in a variety of market conditions. With that, I will now turn it back to Jason for the Q&A.

最後，我們保持紀律並專注於我們所控制的事情，同時投資以利用市場正常化和復甦時的最佳成長機會。是德科技以客戶為中心、技術領先地位和廣泛的解決方案組合讓我們對業務的長期發展軌跡以及在各種市場條件下脫穎而出的能力充滿信心。現在，我將把它轉回傑森進行問答。

Thank you, Neil. Sierra, would you give the instructions for the Q&A, please?

謝謝你，尼爾。 Sierra，請您指導問答環節好嗎？

(Operator Instructions) Our first question today comes from the line of Rob Mason with Baird.

（操作員說明）我們今天的第一個問題來自 Rob Mason 和 Baird 的對話。

So I'm thinking -- it sounds like your base case for the year, obviously, is still intact. Just thinking through that more thoroughly, the orders typically in the third quarter maybe down -- maybe flat to down slightly sequentially. And then you have better order trends in the fourth quarter seasonally. Should we think this is, again, still tied more to book and ship as you think about the revenue upticking in the fourth quarter? Or any help you can provide just on the clarity for that slope?

所以我在想——聽起來你今年的基本情況顯然仍然完好無損。只要更徹底地思考一下，第三季的訂單通常可能會下降——可能會持平甚至略有下降。然後，第四季的季節性訂單趨勢會更好。 當您考慮第四季度的收入成長時，我們是否應該再次認為這仍然與預訂和運輸更多相關？或者您可以就該坡度的清晰度提供任何幫助嗎？

Yes. So yes. So first of all, I agree with your assessment of the typical seasonality of our business as we typically move from Q2 to Q3, I'd say the small downtick in both orders and revenue would be typical for seasonality, admittedly hard to find over the last couple of years, COVID, recovery supply chain. But if you went back in time, that would have been the typical seasonality. Then with the mid-single-digit uptick into Q4 driven by (inaudible) annualized sales cycle or second half sales cycle as well as the strength of aerospace defense business tied to the government fiscal year-end. And I think that's largely what we're seeing here this year as well as we -- in terms of our expectation for the remainder of the year.

是的。所以是的。首先，我同意您對我們業務的典型季節性的評估，因為我們通常從第二季度轉向第三季度，我想說訂單和收入的小幅下降是季節性的典型現象，誠然很難在過去幾年，新冠疫情、供應鏈復甦。但如果你回到過去，那將是典型的季節性。然後，由於（聽不清楚）年化銷售週期或下半年銷售週期以及與政府財政年度結束相關的航空航天國防業務的實力，推動了第四季度中個位數的成長。我認為這很大程度上就是我們今年在這裡看到的情況以及我們對今年剩餘時間的期望。

Very good. And then just as a follow-up, could you dig a little bit deeper into your overall Wireline business, the AI data center piece, obviously, seeing some strength. I'm just curious with these new platforms that are rolling out, what stage of adoption are we seeing with those? And just comment more broadly on the Wireline business over and beyond the AI data center exposure?

非常好。作為後續行動，您能否更深入地了解整個有線業務，即人工智慧資料中心部分，顯然，您看到了一些優勢。我只是對這些正在推出的新平台感到好奇，我們看到這些平台的採用處於什麼階段？除了人工智慧資料中心之外，還可以更廣泛地評論有線業務嗎？

Thank you, Rob. I think this quarter for the first time in 6 quarters, our commercial communications orders grew, and as a result of the inflection that we're seeing in the wireline business associated with AI. And 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. And I would say it's still very early days even for Keysight's business. So what we're seeing is probably a first inflection, I would say.

謝謝你，羅布。我認為本季我們的商業通訊訂單出現了六個季度以來的首次增長，這是我們在與人工智慧相關的有線業務中看到的變化的結果。現在還處於早期階段，世界仍在繼續關注可以大規模利用人工智慧推出的所有應用程式。我想說，即使對於是德科技的業務來說，現在還處於早期階段。所以我想說，我們所看到的可能是第一個改變。

The big headline that we've seen in the last couple of quarters and that accelerated this quarter was the push from customers to lead in the hardware infrastructure space and how critical it's performance is for cost, for energy and in general for the user experience in the AI application. For Keysight, in our Wireline business, having the breadth of the portfolio that caters to networking, computing, storage, interconnects -- and we're able to make contributions that are broad, but we're just getting started is the way I would frame it up -- the heterogeneous environment there is helping us play a critical role, and we're also engaged in a number of these standards bodies. So we saw strong double-digit growth in the business for the Wireline business this quarter, and also sequentially a strong uptick in Q2.

我們在過去幾個季度看到並在本季度加速發展的重大新聞是客戶推動硬體基礎設施領域處於領先地位，以及其性能對於成本、能源以及整體用戶體驗的重要性。對於是德科技來說，我們的有線業務擁有廣泛的產品組合，可滿足網路、運算、儲存、互連的需求，我們能夠做出廣泛的貢獻，但我認為我們才剛開始框架它——那裡的異質環境幫助我們發揮關鍵作用，我們也參與了許多這樣的標準機構。因此，我們看到本季有線業務實現了兩位數的強勁成長，並且在第二季也出現了強勁的成長。

Next question comes from Mark Delaney with Goldman Sachs.

下一個問題來自高盛的馬克·德萊尼。

This is Will Bryant on for Mark Delaney. So in your press release, you all reiterated that you are assuming modest order growth in the second half of the fiscal year. Can you give us some additional color on what gives you confidence that the orders will pick up in the second half?

這是威爾·布萊恩特（Will Bryant）替馬克·德萊尼（Mark Delaney）發言。因此，在你們的新聞稿中，你們都重申，你們預計本財年下半年的訂單將適度成長。您能否給我們一些額外的信息，說明是什麼讓您對下半年訂單將有所增加充滿信心？

Yes. Thank you. I think what we have said is the market environment remains unchanged. And as we said in the previous call, we're not -- our base case does not assume any significant market recovery, right? So barring that is just a seasonal uptick in Q4 as Neil just referenced coming from our aerospace defense business. But we are continuing to feel that the demand environment is stabilizing. I would say, as I pointed out earlier, Wireline inflections and demand remains strong. I'd say the aerospace defense is stable. And our ISG business, which had -- which had seen 4 quarters, including the current quarter of declines stemming from normalization and manufacturing is also starting to show some seasonal -- or starting to show some sequential growth, I should say, this quarter, all of which we view as sense of stability in the business.

是的。謝謝。我認為我們所說的是市場環境沒有改變。正如我們在先前的電話會議中所說，我們的基本情況並不假設市場出現任何重大復甦，對吧？因此，除非這只是第四季度的季節性上升，正如尼爾剛剛提到的來自我們的航空航天國防業務。但我們繼續感覺到需求環境正在穩定。我想說，正如我之前指出的那樣，有線線路的變化和需求仍然強勁。我想說，航空航天防禦是穩定的。我們的 ISG 業務已經有 4 個季度（包括本季）因正常化而出現下降，製造業也開始出現一些季節性增長，或者我應該說，本季度開始出現一些連續增長，所有這些我們都認為是企業的穩定感。

That's helpful. And just 1 quick follow-up on just thinking about how you guys are managing OpEx as you guys are planning the business in these volatile end markets. Could you give us any additional color about what you want to manage OpEx?

這很有幫助。我想快速跟進一下你們在這些不穩定的終端市場中規劃業務時如何管理營運支出。您能否進一步說明您希望管理哪些營運支出？

Yes. First, I'd remind you of the statements we made a quarter ago that we do expect if excluding the additional OpEx from our acquisitions, our total OpEx spending to be down about 3% on a year-over-year basis with all of that savings coming from the SG&A line items as we look to maintain our investments in R&D to ensure that the business is well positioned to capture the upswing when it occurs. .

是的。首先，我想提醒您注意我們一個季度前所做的聲明，我們確實預計，如果從收購中排除額外的營運支出，我們的總營運支出將同比下降約 3%節省的資金來自銷售管理、行政管理(SG&A) 項目，因為我們希望維持研發投資，以確保業務處於有利位置，並能夠在經濟成長時抓住機會。 。

I think we're looking in terms of the types of actions that we're taking. We're obviously always looking for ways to streamline operations and drive efficiency in our business. I think if you take a look, you'll notice that over the course of the last 4 quarters, our headcounts are down about 5% as we look to absorb attrition. We've provided some incentives for folks to transition into retirement, and been absorbing those during this period of time.

我認為我們正在考慮我們正在採取的行動類型。顯然，我們一直在尋找簡化營運和提高業務效率的方法。我想如果你看一下，你會發現在過去 4 個季度中，我們的員工人數減少了約 5%，因為我們希望吸收人員流失。我們為人們過渡到退休提供了一些激勵措施，並在這段時間吸收了這些激勵措施。

In addition, we obviously have a very flexible cost structure -- cost structure has been flexing as expected, which is also contributing to the financial performance in line with our model.

此外，我們顯然擁有非常靈活的成本結構——成本結構一直按預期靈活變化，這也有助於符合我們模型的財務表現。

Our next question today comes from Aaron Rakers with Wells Fargo.

今天我們的下一個問題來自富國銀行的 Aaron Rakers。

I'll just put them both out there right away. I guess on the EISG segment. I'm curious on the semiconductor space. Can you, first of all, help us appreciate the size of that or any kind of clarity you could give in terms of that piece of ESIG. And within that, how do we think about these fab projects being delayed into late calendar '24 and into '25 and the timing when that starts to turn more positive. And then I'd also be curious on the interconnect side, you mentioned chip-to-chip interconnect simulation stuff. I'm curious how much of an opportunity that presents? Who are you competing against there and just kind of framing that out as far as opportunities as we look forward?

我會立即把它們都放在那裡。我猜是在 EISG 部分。我對半導體領域很好奇。首先，您能否幫助我們了解該 ESIG 的規模或您可以提供的任何清晰度。其中，我們如何看待這些晶圓廠計畫被推遲到 24 年末和 25 年，以及何時開始變得更加積極。然後我對互連方面也很好奇，您提到了晶片到晶片互連模擬的東西。我很好奇這會帶來多少機會？你在那裡與誰競爭，並就我們所期待的機會來闡述這一點？

Yes. So I'll take the first question, sizing of [semi and then] hand it over to Mark to make some comments on the market. What we've said is that our semi business is kind of 10-ish percent of total Keysight maybe a little less.

是的。因此，我將回答第一個問題，即[半成品的規模]，然後將其交給馬克對市場發表一些評論。我們說過，我們的半成品業務佔德科技總業務的 10% 左右，也許還要少一些。

Okay. Yes. And then in terms of the fabs and the delays of timing, we've been watching that closely over the last several quarters, we have seen some movement. We've said before that our funnel gives us about 6 months of visibility out into market timing, and we're starting to see some activity that would suggest that some of those fab expansions that have been delayed the funding associated with them should be beginning to show some signs of CapEx spend towards the end of the calendar year. But we're watching it very closely.

好的。是的。然後就晶圓廠和時間延遲而言，我們在過去幾個季度一直在密切關注，我們看到了一些變化。我們之前說過，我們的漏斗為我們提供了大約 6 個月的市場時機可視性，並且我們開始看到一些活動，表明一些已被推遲的晶圓廠擴張，與其相關的融資應該開始顯示日曆年末資本支出支出的一些跡象。但我們正在非常密切地關注它。

We have very deep relationships with the customers -- and certainly, the underlying drivers for advanced process technologies related back to AI are continuing to be very strong as these applications begin to grow at scale.

我們與客戶有著非常深厚的關係——當然，隨著這些應用程式開始大規模成長，與人工智慧相關的先進製程技術的潛在驅動力將繼續保持強勁。

And then last point of you question was on interconnect -- last part of your question, I didn't want to miss it. It was our interconnect technologies. And as you think about data center coming from today's node sizes of $300,000 or $250,000 to $1 million and beyond. At some point, I think interconnect has become very important. The nature of those interconnects, the high performance requirement associated with them are critical, and therefore, interoperability testing needs are key and key sites, differentiated technologies across our core product line is playing a critical role already, and we'll continue to play a critical role moving forward to help our customers.

你問題的最後一點是關於互連的——你問題的最後一部分，我不想錯過它。這是我們的互連技術。當您想到資料中心的節點規模從當今的 30 萬美元或 25 萬美元到 100 萬美元甚至更高時。在某些時候，我認為互連已經變得非常重要。這些互連的性質以及與之相關的高效能要求至關重要，因此，互通性測試需求是關鍵和關鍵站點，我們核心產品線的差異化技術已經發揮關鍵作用，我們將繼續發揮作用在幫助我們的客戶方面發揮關鍵作用。

Our next question today comes from Meta Marshall with Morgan Stanley.

今天我們的下一個問題來自摩根士丹利的梅塔馬歇爾。

Maybe a couple of questions for me. First, just on ESI, -- any commentary in terms of ability to sell that product to other customers as you get it integrated in or just any commentary on early performance. And then just maybe as a second question, any update on long-dated orders or contribution of orders from long-dated orders worth noting? .

也許有幾個問題想問我。首先，就 ESI 而言——當您將該產品整合到其他客戶中時，有關將該產品銷售給其他客戶的能力的任何評論，或只是有關早期性能的任何評論。然後，也許作為第二個問題，長期訂單的任何更新或長期訂單的訂單貢獻值得注意嗎？ 。

Thank you, Meta. Again, we're quite pleased with the acquisition. The performance in the first half has exceeded our initial plans, so which is good. Again, I view this simulation and emulation as a long-term strategic priority for the company and ESI was clearly -- gave us some differentiated capability to go pursue it. The culture fit 1, 2 quarters in is re-traded because our teams are working seamlessly, the collaborative culture, the focus on technology, all of those things are headed in the right direction. .

謝謝你，梅塔。再次，我們對此次收購感到非常滿意。上半年的表現超出了我們最初的計劃，所以這是好的。再次強調，我認為這種模擬和模擬是公司的長期策略重點，ESI 顯然為我們提供了一些差異化的能力來實現這一目標。適合一、兩個季度的文化被重新交易，因為我們的團隊無縫工作、協作文化、對技術的關注，所有這些都朝著正確的方向發展。 。

And from a revenue acceleration perspective, that's the focus for the team, right? It's -- we're really prioritizing taking ESI's core products into aerospace defense in the U.S. and increasing our exposure with Asian auto manufacturers. I'll let Mark make some comments on how the sales team is doing on that front. But overall, quite pleased with the acquisition.

從收入加速的角度來看，這是團隊的重點，對吧？我們確實優先考慮將 ESI 的核心產品引入美國的航空航天防禦領域，並增加我們與亞洲汽車製造商的接觸。我會讓馬克對銷售團隊在這方面的表現發表一些評論。但總體而言，對此次收購非常滿意。

Thanks, Satish. It's been an exciting quarter and half for us as we've begun to work more closely across different geographies, really the plan that we put in place back in late Q1 continues to be the plan we're executing around our common areas of focus from a customer standpoint in North America, where ESI is underexposed with aerospace defense. And then in both directions around auto, especially in Europe, we're seeing opportunities open for both our classic business and working closely with ESI.

謝謝，薩蒂什。對我們來說，這是一個令人興奮的一個半季度，因為我們開始在不同地區進行更密切的合作，實際上，我們在第一季末制定的計劃仍然是我們圍繞共同關注領域執行的計劃從北美客戶的角度來看，ESI 在航空航天防禦方面的暴露不足。然後，在汽車領域的兩個方向上，尤其是在歐洲，我們看到了我們的經典業務以及與 ESI 密切合作的機會。

So momentum. These are fairly long cycle, sales cycles many months to get to a point of closure, but we're already starting to see some progress in our funnel, and I'm encouraged with the way the teams are working together.

如此勢頭。這是相當長的周期，銷售週期需要好幾個月才能達到終點，但我們已經開始在漏斗中看到一些進展，我對團隊合作的方式感到鼓舞。

And just a quick comment on long-dated orders. The mix of long-dated disorders within the quarter were consistent with the recent past.

只是對長期訂單的快速評論。本季長期失調的情況與最近的情況一致。

Our next question comes from Matt Niknam with Deutsche Bank.

我們的下一個問題來自德意志銀行的馬特·尼克南。

Just 2, if I could. First, maybe big picture if you could talk a little bit about the Spirent deal, why now and maybe some of the strategic rationale behind that deal? And then secondarily, just as we think about operating cash flow, maybe for Neil, if you could just maybe talk a little bit about some of the drivers of relative softness this quarter and how to think about working cap and some of the other items that go into that for the second half of the year?

如果可以的話，就2個。首先，如果您能談談思博倫的交易，也許可以談談大局，為什麼是現在，也許還有該交易背後的一些戰略理由？其次，正如我們考慮營運現金流一樣，也許對尼爾來說，您是否可以談談本季相對疲軟的一些驅動因素，以及如何考慮工作上限和其他一些項目下半年會討論這個嗎？

Thank you. As far as being a company we've known for some time, we used to have a partnership with them. And I think the rationale headlines are: first, it's a SAM expansion opportunity. You think about the portfolio aspirant with focus on service assurance, positioning really a good fit to that network analytics expansion opportunity I laid out at the Investor Day. And then when I think about the financial aspect of this deal, I think it creates value for customers and more scale and synergies inside the Keysight environment, but equally for our shareholders, it's a good deal from a point of view of -- it meets our hurdles, M&A hurdles internally and it's accretive to gross and operating margins post integration.

謝謝。作為一家我們已經認識了一段時間的公司，我們曾經與他們有合作關係。我認為頭條新聞的基本原則是：首先，這是 SAM 擴展的機會。您會想到專注於服務保證的投資組合，其定位確實非常適合我在投資者日上提出的網路分析擴展機會。然後，當我考慮這筆交易的財務方面時，我認為它為客戶創造了價值，並在是德科技環境中創造了更大的規模和協同效應，但同樣對於我們的股東來說，從以下角度來看，這是一筆很好的交易——它滿足我們的障礙、內部併購障礙，以及整合後毛利率和營業利潤率的增加。

So we feel really good about the opportunity. We're continuing to work through the regulatory process right now.

所以我們對這個機會感到非常高興。我們現在正在繼續完成監管程序。

Yes. And then getting to your question on free cash flow and working capital. So obviously, free cash flow is a little bit softer within the quarter, but pointing out north of $350 million through the first half of this year. .

是的。然後回答關於自由現金流和營運資金的問題。顯然，本季的自由現金流稍微疲軟，但今年上半年將超過 3.5 億美元。 。

In terms of within the quarter, as I mentioned in the prepared remarks, we do have seasonably higher tax payments in the second quarter of the fiscal year. That was expected. And then the timing of revenue over the past couple of quarters was not conducive to high collections within the quarter is the best way to say that. We actually entered the quarter with about $90 million lower accounts receivable than we entered the prior quarter. And then because of Lunar New Year and other things, we got off to a bit of a slow start in February. And so that meant that the -- those Q2 revenues that otherwise would have been collectible within the quarter was -- we were off to a slow start.

就本季而言，正如我在準備好的發言中提到的那樣，我們在本財年第二季的納稅額確實出現了季節性增加。這是預料之中的。然後，過去幾季的營收時機不利於本季內的高收款，這是最好的說法。事實上，進入本季時，我們的應收帳款比上一季減少了約 9,000 萬美元。然後由於農曆新年和其他原因，我們在二月的開局有點緩慢。因此，這意味著，那些本來可以在本季內收回的第二季收入是——我們起步緩慢。

I think your question about working capital, just a couple of comments. So while collections were lower within the quarter, we do not have any material increased risk around accounts receivable, our allowance for bad debt is very low, and we tend to not have issues in that area. We do, however, have significantly increased inventory over the past couple of years, largely stemming from various things related to the supply chain. We delayed for a long time, the refresh of our demo portfolio so we could take new products and get them to customers. when supply chains normalize, we did refresh our demo portfolio and took the existing demo equipment and put it under a used equipment pool, which is a benefit now because it gives us yet another opportunity to serve customers. And we also had to make some investments because some of our vendors were cleaning up their part list, we had to make some longer-term investments in the assurance of supply -- in inventory.

我認為你關於營運資金的問題，只是一些評論。因此，雖然本季收款較低，但我們的應收帳款風險並未出現任何實質增加，我們的壞帳準備金非常低，而且我們在該領域往往不會出現問題。然而，過去幾年我們的庫存確實大幅增加，這主要源自於與供應鏈相關的各種因素。我們推遲了很長一段時間來更新我們的演示產品組合，以便我們可以將新產品交付給客戶。當供應鏈正常化時，我們確實更新了我們的演示產品組合，並將現有的演示設備放入二手設備池中，這現在是一個好處，因為它為我們提供了另一個服務客戶的機會。我們還必須進行一些投資，因為我們的一些供應商正在清理他們的零件清單，我們必須在保證供應（庫存）方面進行一些長期投資。

So I feel pretty good about it. I think there is a path to reducing inventory over time, but it's going to be hard to market recovery.

所以我對此感覺很好。我認為隨著時間的推移，減少庫存是有辦法的，但市場復甦將很難。

Our next question today comes from David Ridley-Lane with Bank of America.

今天我們的下一個問題來自美國銀行的戴維‧里德利‧萊恩 (David Ridley-Lane)。

Several competitors have pushed out their own recovery time lines. You're obviously sticking with yours. What are the 1 or 2 things that you would point to in the results that give you the most confidence in that outlook?

一些競爭對手已經推遲了自己的恢復時間表。顯然你還是堅持自己的做法。您認為結果中哪一、兩件事讓您對這種前景最有信心？

Yes. Thank you, David. I think, look, we look at it 1 quarter at a time. And so far, our focus has been on execution in our discussion with customers, I would say that's the most relevant 1 as many customers have commented that they are going through the bottom. -- has their own economics improve. They've come back and they have doubled down on the programs and projects that we've been in discussions with. So that inflecting nature that correlation to their business is perhaps the most important 1 that we look at.

是的。謝謝你，大衛。我想，看，我們一次看一個季度。到目前為止，我們在與客戶討論中的重點一直是執行力，我想說這是最相關的 1，因為許多客戶評論說他們正在經歷谷底。 ——自身經濟有所改善。他們回來了，並且加倍致力於我們一直在討論的計劃和項目。因此，與他們的業務相關的改變性質可能是我們關注的最重要的1。

Big picture, when we start to look at macro factors, I would say, SIA, you look at even smartphone sales, PC sales, other things, you start to see some improvement along with the PMI indices that are growing. So while not calling for timing or magnitude of recovery at this point, we remain focused on execution. The 1 tactical area that we -- the data that we have in-house is on our pipeline, and I'll have Mark make a comment on the pipeline.

從大局來看，當我們開始關注宏觀因素時，我想說，SIA，你甚至看看智慧型手機銷售、個人電腦銷售等其他因素，你會開始看到隨著 PMI 指數的增長而出現一些改善。因此，雖然目前不要求恢復的時間或程度，但我們仍然專注於執行。我們的第一個戰術領域——我們內部擁有的數據正在我們的管道中，我將讓馬克對管道發表評論。

Yes, David, I would just simply say our pipeline supports this expectation of the modest improvement in H2 orders driven by the seasonality in Q4. Funnel intake, which is growth of new business into the funnel is up in pockets with the green shoots that we've already spoken about with AI and wireline memory, and continued demand in the longer-term secular businesses that we've spoken about with aerospace, defense and EV. We have not yet seen the lift from the U.S. defense budget being signed in the middle of March. So we hope to see some of that come through as well.

是的，大衛，我只想簡單地說，我們的管道支持第四季度季節性推動的下半年訂單適度改善的預期。漏斗吸收量，即新業務進入漏斗的增長，隨著我們已經討論過的人工智能和有線存儲器的萌芽，以及我們已經討論過的長期長期業務的持續需求而增長航空航天、國防和電動汽車。我們還沒有看到美國國防預算在三月中旬簽署。所以我們希望看到其中一些也能實現。

And again, velocity is key, and we're starting to see some of that pick up, which shows some confidence in our customers.

再說一遍，速度是關鍵，我們開始看到速度回升，這表明我們對客戶有信心。

Got it. Okay. And just a quick follow-up. Obviously, you have your internal plans in terms of the cost actions you're taking. I was a bit surprised that the sort of the magnitude of the restructuring cost in the quarter though. Did you take expanded actions? Or is this all part of the plan as envisioned 3, 6 months ago?

知道了。好的。只是快速跟進。顯然，您對所採取的成本行動有內部計劃。不過，我對本季重組成本的規模感到有點驚訝。您是否採取了擴大行動？還是這都是3、6個月前設想的計畫的一部分？

No expanded actions. I think if you're looking at the reconciliations that were provided -- the category is actually listed as restricting other and there was a modest legal settlement that occurred within the quarter as well that's skewing that number higher.

沒有展開的動作。我認為，如果您查看所提供的調節表，該類別實際上被列為限制其他類別，並且本季度內還發生了一項適度的法律和解，這使得該數字偏高。

Our next question today comes from Adam Thalhimer with Thompson, Davis.

今天我們的下一個問題來自亞當·塔爾希默和湯普森·戴維斯。

In the EISG segment in the ESG segment, do you see revenue -- do you see further weakness in revenue and margins in the back half? Or do you think things improve versus Q2?

在 ESG 細分市場的 EISG 細分市場中，您是否看到收入——您是否認為下半年收入和利潤率進一步疲軟？或者您認為與第二季相比情況有所改善嗎？

Yes. I think I would say the answer is twofold, right? One is on the order line, we think the demand environment improves a bit as we go into the second half, especially Q4, driven by some of the semiconductor spend that we're expecting to land in Q4, but again, revenue would be offset because some of the business that we book in the EISG does have a bigger percentage of long-dated sort of backlog items. So it is twofold. We expect that Neil can give us -- we would expect that revenue would be -- would face some headwinds in the second half even as orders improve. .

是的。我想我會說答案是雙重的，對嗎？一個是在訂單上，我們認為進入下半年，尤其是第四季度，需求環境會有所改善，這是由我們預計第四季度將出現的一些半導體支出推動的，但同樣，收入將被抵消因為我們在EISG 中登記的一些業務確實有較大比例的長期積壓項目。所以它是雙重的。我們預計尼爾可以為我們帶來——我們預計收入將——在下半年面臨一些阻力，即使訂單有所改善。 。

Yes. As you think about the margin situation in EISG, I highlighted kind of 3 factors, right, the seasonality of ESI, which is strongly profitable in Q1 in a modest loss position in the remainder of the year, that is impacting ISG profit. But by far the biggest -- the biggest driver is the revenue decline, right? So revenues down sharply here in Q2. And I think as long as we're operating in these revenue ranges, it's going to be reasonably range-bound in the current operating margin vicinity.

是的。當你考慮 EISG 的利潤率情況時，我強調了 3 個因素，對吧，ESI 的季節性，它在第一季度盈利強勁，但在今年剩餘時間裡出現適度虧損，這正在影響 ISG 的利潤。但到目前為止，最大的驅動因素是收入下降，對吧？因此，第二季的營收大幅下降。我認為，只要我們在這些收入範圍內運營，它就會在當前營業利潤率附近合理地受到限制。

And just want to add on the order line. The EISG business in Asia went in about 2 quarters after CSP. So that was just lapped at the end of Q2. So that gives us some confidence that the comparison lease will be getting easier in the second half.

只是想添加到訂單行上。亞洲的EISG業務在CSP之後約2季完成。所以這只是在第二季末完成的。因此，這讓我們有信心下半年的比較租約將會變得更加容易。

Okay. And then 1 for commercial communications on -- can you help us frame the AI data center opportunity for you guys versus 5G at the peak?

好的。然後 1 進行商業通訊——您能幫助我們為你們建立人工智慧資料中心與高峰期 5G 的機會嗎？

Well, first of all, from a timing perspective, it's very early days for the AI opportunity primarily because there are obviously logical areas where we engage with customers, but we have several active collaborations underway around silicon, 1 on real-time training of clusters, interconnects, testing methodologies for benchmarking AI, protocol aspects of the new standard [EUEC] transceiver manufacturing interoperability. So while we are in booking some business today, and we have some several active collaborations underway which are quite promising, and the ecosystem of customers that we serve will expand over time.

嗯，首先，從時機的角度來看，人工智慧機會還處於早期階段，主要是因為我們與客戶合作的領域顯然是合乎邏輯的，但我們正在圍繞晶片進行一些積極的合作，1關於集群的實時訓練、互連、人工智慧基準測試方法、新標準 [EUEC] 收發器製造互通性的協議方面。因此，雖然我們今天正在預訂一些業務，但我們正在進行一些非常有前途的積極合作，而且我們服務的客戶生態系統將隨著時間的推移而擴大。

Very hard to compare and contrast with 5G or wireless side. But I think -- the key for the commercial comps business has always been to increase our emphasis in early R&D because we know that it makes us much more strategic and critical to customers. Second is to maintain diversity in application sets. So we have both equal focus on wireless and wireline that give us ways to drive growth by market. And then we feel really good about our competitive position on our portfolio strength and it's only going to grow as we -- as the industry adopts AI at scale.

很難與 5G 或無線方面進行比較和對比。但我認為，商業比較業務的關鍵始終是增加我們對早期研發的重視，因為我們知道這使我們對客戶更具策略性和重要性。其次是保持應用程式集的多樣性。因此，我們對無線和有線都同樣重視，這為我們提供了推動市場成長的方法。然後，我們對我們的產品組合實力的競爭地位感到非常滿意，並且隨著行業大規模採用人工智慧，它只會隨著我們的發展而增長。

Next question comes from Mehdi Hosseini with Susquehanna.

下一個問題來自 Susquehanna 的 Mehdi Hosseini。

Two follow-ups. Satish, I'm trying to better understand how you're managing business beyond the second half -- and I want to go back to the Analyst Day, you talked about the 5% to 7% longer-term revenue growth. And obviously, 2023 -- fiscal year '23, turned out will be a lot worse. So it helps you with a lower base. And if I even think of the low end of that longer-term revenue target range, your revenues in FY '25 and '26 would need to be up double digit. And what I want to understand, as I noted earlier, I want to see how you're planning how you're running the operation. I don't see any 1 killer app on the horizon. There are several smaller killer app. And to what extent M&A is going to be part of your strategy to hit that revenue target? And I have a follow-up.

兩個後續。 Satish，我試圖更好地了解您在下半年之後如何管理業務 - 我想回到分析師日，您談到了 5% 到 7% 的長期收入增長。顯然，2023 年——23 財年的情況將會更糟。所以它可以幫助你降低基礎。如果我考慮到長期收入目標範圍的低端，您在 25 財年和 26 財年的收入將需要成長兩位數。正如我之前指出的，我想了解的是，我想了解您如何計劃如何運作該操作。我沒有看到任何殺手級應用程式即將出現。有幾個較小的殺手級應用程式。併購將在多大程度上成為您實現收入目標策略的一部分？我有一個後續行動。

Yes. Thank you, Mehdi. So I know you asked several questions in one, but let's make sure I hit all of them. But I'll start by saying, look, we feel really good about our long-term growth expectations for the business. And as we laid out the 3-pronged growth strategy at Investor Day, we see these technology trends are accelerating. We see transforming industries increasing our ecosystem of customers we can serve, and we see market dynamics with governments around the world investing for organic IP. So none of those have fundamentally changed, and we feel like we're in a good position. And if you look at our strategy through this downturn is to continue to invest in R&D in a prudent way, but really focus those investments on where our customers need the most help, especially in the R&D labs of our customers making us more strategic and the cost actions that we've taken in navigating this downturn has been largely on the SG&A line. So we feel good about the opportunity that we see ahead. .

是的。謝謝你，邁赫迪。我知道您一併提出了幾個問題，但我們要確保我回答了所有問題。但我首先要說的是，我們對業務的長期成長預期感到非常滿意。當我們在投資者日制定三管齊下的成長策略時，我們看到這些技術趨勢正在加速。我們看到轉型產業不斷擴大我們可以服務的客戶生態系統，我們看到世界各國政府投資有機智慧財產權的市場動態。所以這些都沒有根本性的改變，我們覺得我們處於一個有利的位置。如果你看看我們度過這次低迷的策略，那就是繼續以審慎的方式投資於研發，但真正將這些投資集中在我們的客戶最需要幫助的地方，特別是在我們客戶的研發實驗室，這使我們更具策略性和我們為應對經濟低迷而採取的成本行動主要集中在銷售、管理和行政費用方面。因此，我們對未來看到的機會感到滿意。 。

As far as the -- our ability to deliver to those results, clearly, while we feel good, it is possible that the time line pushes out a bit given the decline that we've had in '24. And so a lot depends on the timing of the recovery. But if history is any measure, every time we've had strong pullbacks, we've had stronger uptrend as well in terms of orders. So we continue to watch that strategically. Software and services has been an area of focus for us. Software and Services now is roughly 40% of the total company, which is a good trend, and we want to keep driving that higher -- and as I've reiterated before, we look at several deals. We've looked at over 350, 400 deals in the company, and we've only done about 20. So we're very selective in our strategy. It's not about revenue. We look strategically at the areas where we feel like we want to make a bigger contribution and where we can bring value to those assets when they come inside Keysight. So there is -- from that point of view, there's really no change. We're an organic first company. We believe in investing with our customers to create long-term value.

就我們實現這些結果的能力而言，顯然，雖然我們感覺良好，但考慮到我們在 24 年的下滑，時間線可能會稍微推遲一些。因此，很大程度上取決於復甦的時間。但如果以歷史為衡量標準的話，每次我們出現強勁回檔時，訂單方面也會出現更強勁的上升趨勢。因此，我們將繼續策略性地關注這一情況。軟體和服務一直是我們關注的重點領域。軟體和服務現在大約占公司總數的 40%，這是一個很好的趨勢，我們希望繼續推動這一比例更高——正如我之前重申的那樣，我們正在考慮幾筆交易。我們檢視了該公司超過 350、400 筆交易，但我們只完成了大約 20 筆。這與收入無關。我們從策略角度著眼於那些我們希望做出更大貢獻的領域，以及當這些資產納入是德科技後我們可以為它們帶來價值的領域。所以從這個角度來看，確實沒有任何改變。我們是一家有機第一的公司。我們相信與客戶一起投資可以創造長期價值。

Great. And then maybe follow-up and put the question to Neil. As you think about these longer-term targets and inventory cash flow normalizing, should we assume that your free cash flow would go back to the historical average of like high-teen percentage of revenue that was very significant when we were going through the up cycle a couple of years ago?

偉大的。然後也許可以跟進並向尼爾提出問題。當您考慮這些長期目標和庫存現金流量正常化時，我們是否應該假設您的自由現金流量會回到收入百分比的歷史平均水平，這在我們經歷上升週期時非常重要幾年前？

Yes. I think over time, Mehdi, but I think in the short run, the way we think about free cash flow internally is we look for a relatively high conversion of non-GAAP net income into free cash flow. And we've talked about running that in the 90% or higher range. And so while we don't have a specific free cash flow guide that we put out there, I think that's how we think about it over the longer term. The 1 thing that I would say, and you can see this by looking back in our history, is that there are periods of time where we have kind of nonstandard cash flow items that can reduce that level of free cash flow conversion. And specifically, I'm thinking about things like restructuring costs. And most notably, given where we are right now, M&A costs, either integration or transaction costs associated with M&A.

是的。我認為隨著時間的推移，Mehdi，但我認為從短期來看，我們內部考慮自由現金流的方式是我們尋求將非公認會計準則淨利潤轉化為自由現金流的相對較高的轉換率。我們已經討論過將其運行在 90% 或更高的範圍內。因此，雖然我們沒有發布具體的自由現金流指南，但我認為這就是我們長期思考的方式。我要說的第一件事，你可以透過回顧我們的歷史來看到這一點，那就是，在某些時期，我們有某種非標準現金流項目，可以降低自由現金流轉換水準。具體來說，我正在考慮重組成本等問題。最值得注意的是，考慮到我們目前的處境，併購成本，無論是整合成本還是與併購相關的交易成本。

So as you start to think of about us now working on the integration of ESI and hopefully in the not-too-distant future, beginning to work on the integration of Spirent, those things will be short-term drains on free cash flow conversion. I think the good news is the ability for us to drive future benefits. We talked about Spirent being ultimately accretive to operating margins, it's ultimately going to drive higher free cash flows going forward once we get through these periods of integration.

因此，當你開始考慮我們現在致力於 ESI 的整合，並希望在不久的將來，開始致力於 Spirent 的整合時，這些事情將是自由現金流轉換的短期消耗。我認為好消息是我們有能力推動未來的利益。我們談到思博倫最終會增加營業利潤，一旦我們經歷了這些整合期，它最終將推動更高的自由現金流。

Thank you all for your questions. That will conclude our Q&A session for today. I would like to turn the call back to Jason Kary for any closing comments.

謝謝大家的提問。我們今天的問答環節到此結束。我想將電話轉回賈森·卡里（Jason Kary）以徵求結束意見。

Thank you, everyone, for joining us, and we appreciate the opportunity to speak with you today. We'll turn it back to Sierra just to wrap up and close the call.

謝謝大家加入我們，我們很高興今天有機會與你們交談。我們會將其轉回 Sierra，以結束並結束通話。

Thank you. That will conclude today's conference call. Thank you all for your participation. You may now disconnect your lines.

謝謝。今天的電話會議到此結束。感謝大家的參與。現在您可以斷開線路。