And we also see some of that. I’ll have Mark make some comments on the funnel of opportunities as we look ahead. On the Defense side of the business, again, not only in the US but across the globe, the increased spending in technology investments in Aerospace and Defense is a trend that’s playing out. In the US, I would say the prime contractors have been referencing growth in backlog and growth in orders. And I think all of that, we’ve seen a stronger uptick, I should say, in the Aerospace Defense business, in the most recent quarter. But equally, that bodes well for 2024. Obviously, we watch the Defense budget getting passed because that’s an important milestone for that business. But I think given the bipartisan support that exists, we can be reasonably confident about the outlook for Aerospace and Defense in fiscal ’24.
I’ll have Mark make some comments.
Mark Wallace: Yes. There’s not much to add. Satish has covered it well. But what we’ve seen is this pattern of R&D and manufacturing on the wireline side. And we saw an uptick in 800 gigabit manufacturing spend for optical transceivers, feeding into network build-out and data center upgrades. So we saw a sequential improvement and the funnel would support that continuing. We saw AI server and GPU infrastructure testing also on the physical side. So there’s some demand growth there. And as you pointed out, our broader portfolio in protocol solutions was reflected in some of our network visibility growth, particularly from enterprise customers. So these are all strengths that we were able to capture during Q4.
Tim Long: Okay. Thank you.
Operator: Our next question comes from David Ridley-Lane with Bank of America. Please proceed.
David Ridley-Lane: Good evening. Thank you. So just really quick question on the margins. If I’m understanding sort of the seasonality comments on the ESI Group, that actually should be very modest, but it should be a tailwind to margins in the first quarter? So I completely understand the revenue guidance, but is there anything onetime that’s implied in the first quarter margin?
Neil Dougherty: You should be able to bridge from the Q4 results that we just put up to the Q1 guide, even if you adjust for the ESI, really with two bridging items. The first is the increase in the tax rate from 12% to 17%. And the second is the implied reduction in revenue, right, which we just talked about, goes from $1,311 million to $1,185 million so about $125 million reduction in revenue should be sufficient to bridge the delta.
David Ridley-Lane: Okay. And then for the full year, I know there were several project push-outs in semiconductors and other areas, maybe more broadly in China. But could you size sort of the full year impact of orders in fiscal ’23, from those kind of project push-outs. And then look, it’s always uncertain, but if the construction time line has stayed intact, should we expect sort of a similar magnitude to show up in fiscal ’24?
Neil Dougherty: I’m not sure I follow your question. If people are pushing out and we have confidence that they’re ultimately going to take delivery of product, generally speaking, we leave those orders on the books.
Mark Wallace: Are you speaking about semi specifically with fabs? Is that?
David Ridley-Lane: It was revenue and so if it was an order that tied to a semi fab, where the construction itself got pushed, that status orders, and you would just recognize the revenue later.
Neil Dougherty: So you’re talking about where deliveries got pushed out of three out of ’23 and ’24 and beyond?
David Ridley-Lane: Yes.
Mark Wallace: Yes. So on semi specifically, I think there’s two factors. One is the forward-looking demand, some of that has been pushed out because of delays in the fabs. And then the second part is delays of backlog. And I think you characterized it right going into late ’24 and early ’25.
David Ridley-Lane: Thank you very much.
Neil Dougherty: Thank you.
Mark Wallace: Thank you.
Operator: Thank you for your question. That concludes our Q&A session for today. I would like to now turn the call back to Jason Kary for any closing remarks.
Jason Kary: Thank you, Sarah, and thank you, everyone, for joining us. Just to wrap up the call, I’ll turn it over to Satish, and over to you.
Satish Dhanasekaran: Thank you, Jason. I want to thank all our shareholders for your support of Keysight. And I want to let you know, we remain incredibly confident in our future, and we’re continuing to invest for growth around next-generation technology teams, which have strong customer validation. While doing so, we’re also prudent in our spending and maintaining a strong discipline from an operating perspective in factoring in the current environment. And finally, we’re also very confident in the free cash flow position of the business, and you’ve seen us in the most recent quarter, buy back over 100% of our free cash flow in our own shares, given the valuation at this time. Thank you very much and hope you have a good rest of your day.
Operator: That concludes our conference call. You may now disconnect your lines.
