Keysight Technologies Inc.
KEYS · NYSE
Next quarter
Expected to report Nov 23, 2026 — estimated from last year’s reporting date.
Consensus is $3.09 EPS for Oct 2026 across 2 estimates, ranging $3.07 to $3.11.
KEYS Jul 2026
- 30.56%
- -6.32%
- $2.16
- $2.82
- —
- $1.85B
Reported results
- $1.85B
- 65.87%
- $461.00M
- 24.97%
- $397.00M
- $2.30
Highlights
- Record revenue: Q3 FY2026 revenue was $1.846 billion, up 36.6% year over year from $1.352 billion and 7.3% sequentially from $1.72 billion.
- EPS beat: The supplied reported result was EPS of $2.82 versus consensus of $2.16, a 30.56% surprise; the release reported GAAP diluted EPS of $2.30 and non-GAAP EPS of $3.07.
- Orders momentum: Orders exceeded $2 billion for the second consecutive quarter, reaching $2.091 billion versus $1.340 billion a year ago.
- Communications strength: Communications Solutions Group revenue rose 43% to $1.345 billion, led by 56% growth in commercial communications and 14% growth in aerospace, defense and government.
- Industrial growth: Electronic Industrial Solutions Group revenue increased 21% to $501 million, with growth across semiconductor, general electronics, automotive and energy.
- Sharp profit expansion: GAAP operating income nearly doubled to $461 million from $234 million, while net income rose to $397 million from $191 million.
- Margin improvement: CSG operating margin expanded to 34% from 26%, and EISG operating margin rose to 31% from 22%; segment gross margins also increased to 71% and 64%, respectively.
- Cash generation: Operating cash flow increased to $437 million from $322 million, while free cash flow rose to $403 million from $291 million.
- Raised near-term outlook: Q4 FY2026 revenue is expected at $1.930-$1.950 billion, implying approximately 37% year-over-year growth at the midpoint, with non-GAAP EPS of $3.34-$3.40.
Analysis
Keysight's Q3 FY2026 was a broad acceleration quarter, with revenue, orders and profitability all reaching records. Revenue of $1.846 billion increased 36.6% from $1.352 billion a year ago and 7.3% from $1.72 billion in Q2 FY2026. GAAP diluted EPS was $2.30, up from $1.10 last year and $2.02 in the prior quarter. The supplied reported result shows EPS of $2.82 against consensus of $2.16, or a 30.56% surprise; separately, Keysight reported non-GAAP EPS of $3.07, versus $1.72 a year ago.
The defining feature was demand strength in communications, where CSG revenue grew 43% and commercial communications increased 56%. EISG also grew 21%, making the quarter relatively broad rather than dependent on one market. Operating leverage was substantial: GAAP operating income rose 97% year over year to $461 million, while segment margins expanded by 8-9 percentage points. Orders of $2.091 billion, following more than $2 billion in Q2, support continued momentum. Management's Q4 outlook calls for $1.930-$1.950 billion of revenue and $3.34-$3.40 of non-GAAP EPS, improving the full-year outlook and pointing to another sequential step-up.
Revenue and orders
Keysight delivered its second consecutive record quarter for orders, with Q3 bookings of $2.091 billion, up from $1.340 billion in the year-ago quarter. Revenue of $1.846 billion grew 36.6% year over year and 7.3% sequentially. Orders exceeded revenue by approximately $245 million, providing a favorable near-term demand signal, although the release does not provide a formal backlog figure.
- Year-to-date scale: Nine-month revenue reached $5.163 billion versus $3.956 billion in the prior-year period, while orders rose to $5.787 billion from $3.919 billion.
- Profit conversion: Nine-month GAAP operating income increased to $1.116 billion from $659 million, and net income rose to $1.027 billion from $617 million.
Communications solutions
CSG was the principal growth engine. Revenue increased 43% to $1.345 billion from $940 million, accounting for roughly 73% of company revenue. Commercial communications was the standout end market, growing 56% to $1.006 billion, while aerospace, defense and government revenue rose 14% to $339 million.
- Operating leverage: CSG gross margin improved to 71% from 67%, and operating margin expanded to 34% from 26%.
- Operating income: CSG operating income increased to $458 million from $246 million, a larger increase than revenue alone would imply.
Electronic industrial solutions
EISG provided a second source of growth, with revenue rising 21% to $501 million from $412 million. Keysight cited growth across semiconductor, general electronics, automotive and energy, indicating that the recovery extended beyond communications-related demand.
- Margin expansion: EISG gross margin increased to 64% from 57%, while operating margin rose to 31% from 22%.
- Operating income: EISG operating income climbed to $155 million from $92 million, a 68% increase on 21% revenue growth.
Profitability and cash flow
GAAP operating income reached $461 million, up from $234 million a year ago and $407 million in Q2. GAAP net income was $397 million, versus $191 million last year and $349 million in the prior quarter. Non-GAAP net income was $531 million, or $3.07 per diluted share, compared with $297 million, or $1.72 per share, a year ago.
- Non-GAAP bridge: Q3 non-GAAP results excluded $72 million of acquisition-related amortization, $47 million of share-based compensation, $28 million of acquisition and integration costs, and $4 million of restructuring and other costs, partly offset by a $11 million investment gain.
- Cash generation: Operating cash flow rose to $437 million from $322 million, and free cash flow increased to $403 million from $291 million after $34 million of capital expenditures.
- Liquidity and capital allocation: Cash, cash equivalents and restricted cash totaled $2.622 billion at quarter-end. Keysight repurchased $520 million of stock in the first nine months of fiscal 2026.
Fourth-quarter outlook
Management expects Q4 FY2026 revenue of $1.930-$1.950 billion, with the midpoint representing approximately 37% year-over-year growth. The company forecasts non-GAAP EPS of $3.34-$3.40 based on approximately 172 million diluted shares. Keysight did not provide a GAAP EPS reconciliation because certain future tax-rate items cannot be estimated with reasonable accuracy.
- Sequential implication: The revenue midpoint of $1.940 billion would be approximately 5.1% above Q3 revenue of $1.846 billion.
- Outlook direction: The company described the full-year outlook as improved, extending the momentum signaled by two consecutive quarters of orders above $2 billion.
