Keysight Technologies (KEYS) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 2026 revenue of $1.6 billion, up 23% year-over-year, with double-digit growth across all business segments and regions, driven by robust demand, AI, next-gen connectivity, semiconductor complexity, and defense modernization.

• Net income rose to $281 million (GAAP) and $376 million (non-GAAP), reflecting higher revenue, tax benefits, and gains on derivatives, partially offset by increased costs from acquisitions and tariffs.

• Orders increased 30% year-over-year to $1.645 billion, with backlog reaching a record $2.75 billion.

• Investments and recent acquisitions (Spirent, Optical Design, PowerArtist) have strengthened the portfolio and customer relationships, positioning for continued outperformance.

• Free cash flow remained healthy at $407 million, and share repurchases totaled $87 million (420,000 shares), supporting shareholder value creation.

Financial highlights

• Q1 revenue reached $1.6 billion, up 23% year-over-year; core revenue growth was 14%.

• Orders totaled $1.645 billion, up 30% reported and 22% core; backlog hit $2.75 billion.

• Gross margin (non-GAAP) was 66.7% (up 90 bps y/y); GAAP gross margin was 62.2%, down 1 point due to tariffs and higher costs.

• Operating margin (non-GAAP) was 27.4% (up 20 bps y/y); GAAP operating margin was 15.5%, down from 16.8%.

• Cash and equivalents at $2.2 billion; free cash flow of $407 million; cash flow from operations was $441 million.

Outlook and guidance

• Q2 2026 revenue expected at $1.69–$1.71 billion, representing ~30% year-over-year growth at midpoint.

• Q2 2026 non-GAAP EPS guidance of $2.27–$2.33, up 35% year-over-year at midpoint.

• Fiscal 2026 annual revenue and earnings growth now expected just above 20%.

• FY26 capital expenditures projected at ~$160 million; non-GAAP tax rate of 14% for Q2 and FY26.

• Guidance excludes potential impacts from the February 2026 Supreme Court ruling on IEEPA tariffs.