Keysight Technologies reported a strong performance in the third quarter of fiscal year 2024, with revenue reaching $1.2 billion, surpassing expectations despite a challenging market environment. The Communications Solutions Group (CSG) was a significant contributor, showcasing resilience and growth in critical areas such as optical networking and wireless technologies. While CSG’s revenue declined by 8% year-over-year, the group saw strong growth in wireline orders, driven by investments in 400G, 800G, and terabit Ethernet technologies, which are essential for data center network re-architectures and AI-driven workloads. Wireless technologies, including Open Radio Access Network (O-RAN) deployments and advancements in 5G and early 6G, also demonstrated stability, reflecting ongoing customer investment in R&D.
In addition to the Communications Solutions Group, Keysight’s Electronic Industrial Solutions Group (EISG) faced a more challenging quarter, with revenue declining 20% year-over-year due to softened demand in semiconductor and automotive markets. Despite these headwinds, the group maintained stable sequential performance, with pockets of growth in high-bandwidth memory and silicon photonics technologies, driven by AI workload demands. The company remains focused on capturing opportunities in these areas and anticipates a gradual market recovery.
• Total Revenue: Keysight reported Q3 revenue of $1.2 billion, exceeding guidance.
• Communications Solutions Group (CSG):
• Revenue: $847 million, down 8% year-over-year.
• Wireline Growth: Strong investment in 400G, 800G, and terabit Ethernet for AI and data centers.
• Wireless Stability: Continued demand for O-RAN, 5G, and early 6G development, with a focus on non-terrestrial networks.
• Operating Margins: CSG achieved a gross margin of 67% and an operating margin of 26%.
• Electronic Industrial Solutions Group (EISG):
• Revenue: $370 million, down 20% year-over-year.
• Semiconductor Focus: Orders grew in high-bandwidth memory and silicon photonics, driven by AI.
• Automotive Challenges: Lower demand in EV battery testing and automotive manufacturing.
• Operating Margins: EISG reported a gross margin of 58% and an operating margin of 20%.
• Overall Financial Performance:
• Gross Margin: 64% overall.
• Operating Expenses: $484 million, reflecting cost management efforts.
• Share Repurchases: $150 million in share buybacks during the quarter.
• Outlook: Keysight projects Q4 revenue between $1.245 billion and $1.265 billion, with earnings per share ranging from $1.53 to $1.59.
“In an uncertain macro environment, we are executing on the dimensions that we control, capturing the current market opportunities, and positioning Keysight for success as markets recover.” — Neil Dougherty, CFO of Keysight Technologies.