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 in AI, next-gen connectivity, semiconductors, and defense modernization.

• Net income rose to $281 million (GAAP) and $376 million (non-GAAP), with EPS of $1.63 (GAAP) and $2.17 (non-GAAP), reflecting higher revenue, tax benefits, and portfolio expansion from recent acquisitions.

• Orders increased 30% year-over-year to $1.645 billion, with backlog reaching a record $2.75 billion and broad-based growth across wireline, wireless, commercial communications, aerospace, defense, and government.

• Investments and acquisitions over the past three years have strengthened the portfolio, expanded the customer base globally, and positioned the company to capitalize on secular tailwinds.

• Free cash flow was $407 million, and $87 million in share repurchases were completed, supporting shareholder value creation.

Financial highlights

• Q1 revenue reached $1.6 billion, up 23% year-over-year; core revenue (excluding acquisitions and currency) grew 14%.

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

• Gross margin (non-GAAP) was 66.7%, up 90 basis points; operating margin (non-GAAP) was 27.4%, up 20 basis points.

• GAAP gross margin was 62.2%, down 1 percentage point year-over-year due to tariffs and higher costs.

• Free cash flow for Q1 was $407 million, up from $346 million year-over-year.

Outlook and guidance

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

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

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

• $375 million in acquisition-related revenue expected for fiscal 2026; synergy target of $100 million in run-rate cost synergies remains unchanged.

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