Satish Dhanasekaran
President and Chief Executive Officer at Keysight Technologies
Thank you, Jason. Good afternoon, everyone and thank you for joining us today. Keysight delivered an exceptional first quarter financial results, posting revenue. Our performance and consistent execution demonstrate the resilience of our business, and despite the challenging macro dynamics, we believe Keysight is well-positioned to build on our success and expand our leadership across our end-markets.
I'll focus my comments today on three key headlines. First, we achieved strong financial results, revenue was a first-quarter record and grew 14% on a core basis, driven by strength in both business segments and across all geographies. We again demonstrated the durability of our financial model and delivered $2.02 in earnings per share.
Second, we started to see a normalization of what has been a robust and prolonged period of investment by our customers. Over the past two years, significant demand for Keysight solutions resulted in a 15% compound order growth and a book-to-bill of 1.09. As demand slows in the near-term, Keysight's exposure to multiple end-markets, its differentiated portfolio and our strong operating discipline, positions us well to weather the current macro-dynamics.
Third, we remain confident in the secular long-term growth trends across our markets. Our software-centric solution strategy is well-aligned with the needs of our customers, which we expect will enable us to outperform the market. We look-forward to providing you a more comprehensive update on our long-term growth strategies and financial objectives at our upcoming Investor Day.
Now let's take a deeper look at our first-quarter results. Orders declined 13% Year-over-Year, against a strong compare of 22% growth in the last year's first-quarter. The slowing demand and business-specific headwinds that we anticipated last quarter materialized largely as expected. These included the year-over-year impact of currency, our exit of Russia, and incremental of China trade sanctions, which together contributed to a six point drag on the compare.
We saw customers exercise caution in response to macroeconomic uncertainty. This was most notable amongst our largest customers in commercial communications, who were impacted by sharp demand decline in consumer electronics and computing segments. They are restructuring and reassessing their near-term priorities, as the industry digests inventory, while at the same time maintaining investments across key strategic programs.
While the duration is difficult to predict, we expect these dynamics to weigh on our customers for at least the next couple of quarters.
Despite macro challenges, revenue grew 10%, or 14% on a core basis. Strong execution and operational discipline, resulted in gross margin of 65%, operating margin of 30% and earnings per share growth of 22%.
Turning to our business segments. The Electronics Industrial Solutions Group, revenue grew 19% and delivered double-digit revenue growth for the 10th consecutive quarter, which underscores the diversity of our industry exposure.
In automotive, we achieved record revenue and strong double-digit growth across all regions. Sales of electric vehicles continued to grow significantly in 2022, further fueling investment in EV and AV technologies and manufacturing.
This quarter, we secured multiple strategic wins with large OEMs and Tier-1 suppliers across a breadth of applications such as 5G, autonomous driving emulation, battery and charging infrastructure design and in-vehicle networks. To strengthen our position in this market and capitalize on this growing decades-long opportunity, we continue to expand our portfolio of solutions. An example is our current collaboration with Jiyun Technologies to develop a high-efficiency compact battery test system to help accelerate the launch of new electric vehicles.
In general electronics, double-digit revenue growth was driven by continued strength in emerging verticals such as digital health and IoT. We also secured wins in advanced research, as R&D investment remains robust in quantum photonics and Beyond 5G.
Semiconductor solutions revenue growth was driven by continued fab investments in new wafer capacity and advanced nodes. While the inventory adjustments are pacing demand, foundries continued to execute their long-term plans to globalize the production. We see significant opportunities in this market and our investing in solutions for emerging semiconductor applications such as silicon photonics high-power semis and millimeter-wave.
Turning to our Communications Solutions Group, revenue grew 7% with growth across both end-markets and all regions. Commercial communications revenue grew 11% on a core basis to reach a record Q1, which was driven by ongoing strategic investments and communications ecosystem. We saw strength in 5 G R&D and deployments, Open RAN and data center networking with increased focus on 800 gigabit and terabit Communication Solutions. These programs remain a priority and are driving demand for Keysight's first-to-market solutions.
As a trusted advisor, we remain actively engaged with our customers as they adapt to the current macroenvironment. We recently-announced our collaboration with Qualcomm to accelerate 5G non-terrestrial network communications for broadband in remote areas. And enabled device makers to speed development and verification of 3GPP Release 17 compliant designs. We continue to support the progression of standards and submitted the first 3GPP Release 16 protocol conformance test, enabling new use cases such as private and industrial networks, and autonomous vehicles.
Investments in early 6G is underway and Keysight joined forces with 16 organizations to create 6G sandbox, a pan-European test-bed for 6G experimentation and validation of 5G-Advanced and 6G capabilities.
Nokia recently selected Keysight's sub-terahertz testbed to validate D band and E band technology to accelerate R&D critical to 5G-Advanced and 6G use cases, and millimeter-wave and sub-terahertz frequency spectrum. We also announced industry's first and highest density networks Cyber Security Test platform, which provides datacenter network infrastructure and cloud providers with leading 400 gigabit Ethernet, security validation capabilities. These solutions reinforce our leadership across wireless and wireline ecosystems. We are also looking-forward to the Mobile World Congress in Barcelona next week, Keysight will be engaged with many customers and industry leaders, and showcasing our solutions for advancing 5G standards, including Release 17 and early research in 6G, and intelligent automation.
Turning to our Government, Defense and Aerospace business. Record Q1 revenue grew 9% on a core basis, achieving its second-highest revenue quarter, driven by increased US government spending and strength in space and satellite, including new applications for non terrestrial networks. We recently won a five-year contract with US Army, who chose Keysight's field fox handheld spectrum analyzer for field use. We expect US government budget appropriations to ramp spending in new programs in the second-half of this year. We also anticipate an increase in defense budget worldwide and growing investments in new technologies such as 5G, space and satellite, quantum and advanced research.
Consistent with our strategy, we continue to expand our software capabilities. We recently completed the acquisition of Cliosoft, whose data and IP management software tools, enhance our portfolio of electronic design automation solutions.
In addition, Eggplant's Test automation platform was recently recognized as a leader by the Forrester Wave. About one third of our total revenue, the growing mix of software and services is integral to the durability of our financial model. Keysight's differentiation is a function of our software-centric solution strategy, collaboration with our customers and the investments we're making to ensure that we address the most challenging technology needs of today and into the future. We are prioritizing high-conviction growth opportunities to solidify our competitive position for the long-term, while at the same, time accelerating initiatives to drive further efficiencies consistent with our financial model. We remain committed to creating long-term value for business stakeholders and positively impacting the global community. I'm proud that Keysight has been named to the Dow Jones Sustainability Index for the fourth year in a row. I'd like to thank all our Keysight employees for their dedication and relentless execution, which drives our strong track-record of performance and is a testament to the Keysight leadership model, our values and to our people.
With that, I'll now turn the call over to Neil, to discuss our financial performance and outlook.
