Keysight Technologies (KEYS) Q3 2026 earnings summary

Executive summary

• Achieved record Q3 2026 results with revenue of $1.846B, up 36% year-over-year, and orders exceeding $2B, up 56% year-over-year, driven by strong demand in AI, communications, and defense markets, and recent acquisitions.

• Net income rose to $397M for Q3, with non-GAAP net income at $531M ($3.07 per share), up 79% year-over-year.

• Free cash flow for Q3 was $403M, with significant share repurchases of $210M in the quarter and $517M year-to-date.

• Integration of recent acquisitions completed ahead of schedule, with 80–90% of $100M cost synergies expected by year-end.

• Raised FY26 outlook, targeting revenue growth above 30% and non-GAAP EPS growth around 60%, citing momentum in AI infrastructure, advanced semiconductors, defense modernization, and next-gen communications.

Financial highlights

• Q3 orders: $2.091B, up 56% year-over-year; Q3 revenue: $1.846B, up 36% year-over-year; gross margin 69%, operating margin 33.2%.

• Net income: $397M (GAAP), non-GAAP net income: $531M; diluted EPS: $2.30 (GAAP), $3.07 (non-GAAP); free cash flow: $403M.

• Segment revenue: CSG $1.345B (+43% YoY), EISG $501M (+21% YoY); CSG operating margin 34%, EISG 31%.

• Software and services grew double digits, now 33% of revenue; annual recurring revenue is 24% of total.

• Regional revenue growth: Americas +29%, Europe +41%, Asia Pacific +42% year-over-year.

Outlook and guidance

• Q4 2026 revenue expected at $1.93B–$1.95B (37% YoY growth at midpoint); Q4 non-GAAP EPS $3.34–$3.40.

• FY26 revenue growth projected at 32–37%, non-GAAP EPS growth at 60% at midpoint.

• Management remains confident in long-term secular growth trends, with continued R&D investments in 5G/6G, AI, quantum, and automotive technologies.

• Supply chain remains a governor for near-term revenue; long-term demand outlook remains strong due to technology trends and product refresh cycle.

• Ongoing monitoring of macroeconomic, tariff, and geopolitical risks is emphasized.