Keysight acquired a controlling block of share capital of ESI Group SA in November 2023, which is expected to broaden software capabilities and move upstream into earlier stages of customer design cycles. This acquisition signals a strategic focus on expanding design software offerings.

Orders decreased by 13% YoY to $5.190 billion in FY23, indicating a decline in future revenue pipeline. This decrease is attributed to cautious customer spending and macroeconomic uncertainties.

Keysight continues to invest in key growth opportunities such as 5G, early 6G, high-speed data center, satellite networks, AI-ML, automotive mobility technologies, industrial IoT, and defense modernization. This demonstrates a commitment to long-term growth despite near-term headwinds.

Keysight's operating model incorporates cost structure flexibility, allowing the company to deliver profitability across a range of economic and market conditions. This is achieved through variable pay mechanisms and strategic use of contingent staffing.

Keysight is focused on growing recurring revenue by increasing software content in solutions and delivering value throughout the solution lifecycle. A dedicated global enterprise software sales force is in place to drive this priority.

The company is committed to achieving net zero Scope 1 and Scope 2 emissions by the end of fiscal year 2040. The company plans to meet this commitment by reducing energy consumption through efficiency and conservation measures, investments in renewable energy and selective purchase of certified offsets for residual emissions.

The company acknowledges sensitivity to negative changes in general economic conditions, both inside and outside the United States. Global and regional economic uncertainty, inflation, potential recession or depression has and may continue to impact the business.

Nationalistic economic policies and political trends such as opposition to globalization and free trade, sanctions or trade restrictions, including those on advanced computing and semiconductor manufacturing, withdrawal from or re-negotiation of global trade agreements, tax policies that favor domestic industries and interests, the distancing or potential exit of countries from the European Union, and other similar actions may result in increased transaction costs, reduced ability to hire employees, reduced access to supplies and materials, reduced demand or access to customers, and inability to conduct our operations as they have been conducted historically.

Regional conflicts, including the Russian invasion of Ukraine, which resulted in economic sanctions and the decision to discontinue our operations in Russia, the war between Israel and Hamas, and the risk of increased tensions between China and Taiwan, could limit or prohibit our ability to transfer certain technologies, to sell our products and solutions, and could result in additional closure of facilities in sanctioned countries.

Keysight believes its technology leadership serves as a competitive differentiator. The proprietary software and hardware technologies unavailable in the commercial markets and developed by R&D technology centers around the world enable many Keysight products to deliver differentiated design and measurement solution capability to address customers' engineering requirements.

There is potential for industry consolidation in our markets. As companies attempt to expand, strengthen or hold their market positions in an evolving industry, companies could be acquired or may be unable to continue operations. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.

The company generally sells its solutions in industries that are characterized by increased competition through frequent new solution and service introductions, rapid technological changes and changing industry standards. In addition, many of the markets in which we operate are seasonal and cyclical.

As part of our efforts to streamline operations and to cut costs, we outsource aspects of our manufacturing processes and other functions and continue to evaluate additional outsourcing. If our contract manufacturers or other outsourcers fail to perform their obligations in a timely manner or at satisfactory quality levels, our ability to bring solutions to market and our reputation could suffer.

Because we cannot immediately adapt our production capacity and related cost structures to rapidly changing market conditions, when demand is lower than our expectations, our manufacturing capacity will likely exceed our production requirements. During a general market upturn or an upturn in our business, if we cannot increase our manufacturing capacity to meet product demand, we will not be able to fulfill orders in a timely manner, which could lead to order cancellations, contract breaches or indemnification obligations.

The company is focused on operational excellence and efficiency improvements. The company continues to make strategic investments to expand the R&D mix of revenue and grow the software and services content of our business, which has the added benefit of increasing recurring revenue.

Keysight intends to invest approximately 16% of its revenue in R&D annually. In 2023, R&D investment totaled $882 million. This investment is focused on delivering differentiated, first-to-market solutions.

Keysight employs vertical technology integration that leverages investments in core hardware technology, such as advanced semiconductor capability provided by our in-house fab, custom packaging from our technology centers, and other unique competencies.

Our software test automation platform uses artificial intelligence and machine learning ("AI-ML") to accelerate customer productivity in software test creation and execution.

On March 6, 2023, the board of directors approved a new stock repurchase program authorizing the purchase of up to $1,500 million of the company's common stock, replacing the previously approved November 2021 program authorizing the purchase of up to $1,200 million of the company's common stock

On November 3, 2023, the company acquired 50.6% of the share capital of ESI Group SA ("ESI Group") for approximately $512 million, using existing cash.

Capital spending is expected to be approximately $150 million in 2024, compared to $196 million in 2023. The decrease is primarily due to lower investments in capacity expansion.

In May 2021, the company disclosed its commitment to achieving net zero Scope 1 and Scope 2 emissions by the end of fiscal year 2040. The company plans to meet this commitment by reducing energy consumption through efficiency and conservation measures, investments in renewable energy and selective purchase of certified offsets for residual emissions.

The company has developed Scope 3 reduction and engagement targets across relevant categories as part of our commitment to science-based targets, which were approved by Science Based Target Initiative ("SBTi") on October 27, 2023.

Our core values and culture reflect a commitment to ethical business practices and outstanding corporate citizenship. We adhere to the tenets of the United Nations Guiding Principles on Business and Human Rights, and core International Labor Organization conventions, and we are an affiliate member of the Responsible Business Alliance.

Our global operations continue to be affected by many external headwinds, including inflationary pressures, rising interest rates, currency movements, increased geopolitical tensions, and trade restrictions. These headwinds are also negatively impacting our customers' operations and financial performance.

We and our customers and suppliers are vulnerable to the increasing impact of climate change. Volatile changes in weather conditions, including extreme heat or cold, could increase the risk of wildfires, floods, blizzards, hurricanes and other weather-related disasters.

Global health crises could have a material impact on our global operations, our employees, our customers and our vendors, which could adversely impact our business results and financial conditions.