01—Abstract
Summary
Summary of the 10-Q filed March 5, 2026. Cited figures are marked; the original filing is the authoritative source.
Keysight Technologies, Inc. reported strong financial results for the three months ended January 31, 2026, showcasing significant year-over-year growth.
Total revenue increased by 23% to $1.6 billiona, driven by robust demand across both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments. This top-line growth translated into a substantial increase in net income, which more than doubled to $281 million from $169 million in the prior year period. The company's strategic acquisitions, including Spirent Communications plc and Synopsys' Optical Solutions Group, are beginning to contribute positively to revenue and are being integrated effectively, as evidenced by the addition of goodwill and intangible assets.
Despite increased costs associated with acquisitions, tariffs, and higher operating expenses, Keysight demonstrated improved operational leverage. The company's financial condition remains solid, with a healthy increase in cash and cash equivalents.
The strong performance underscores Keysight's strategic positioning in key growth markets such as AI, high-speed networks, and defense modernization, suggesting continued momentum. Investors should note the company's ongoing investment in R&D to maintain its competitive edge and its positive outlook on long-term secular growth trends.
02—Key points
Key Highlights
- Revenue surged 23% year-over-year to $1.6 billion, driven by strong performance in both CSG and EISG segments.
- Net income more than doubled to $281 million ($1.63/share diluted) from $169 million ($0.97/share diluted) in the prior year quarter.
- The company successfully integrated recent acquisitions, contributing to revenue growth and the addition of goodwill.
- Operating cash flow increased by $63 million year-over-year, reaching $441 million, indicating strong operational efficiency.
- Keysight's balance sheet remains robust with a significant increase in cash and cash equivalents to $2.18 billion.
- The company's outlook remains positive, citing continued customer R&D investments in next-generation technologies like AI, 6G, and advanced automotive/defense solutions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Keysight Technologies, Inc. kept $0.18.
- Revenue$1.60B100.0%
- Cost of revenue−$605.0M37.8%
- Gross profit$995.0M62.2%
- Operating costs−$747.0M46.7%
- Operating income$248.0M15.5%
- Interest, other & tax$33.0M2.1%
- Net income$281.0M17.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed March 5, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $1.60B$1.30B | +23.3% |
| Cost of Revenue | $605.00M$478.00M | +26.6% |
| Gross Profit | $995.00M$820.00M | +21.3% |
| R&D Expenses | $303.00M$249.00M | +21.7% |
| SG&A Expenses | $447.00M$361.00M | +23.8% |
| Operating Expenses | $1.35B$1.08B | +25.2% |
| Operating Income | $248.00M$218.00M | +13.8% |
| Net Income | $281.00M$169.00M | +66.3% |
| EPS (Basic) | $1.64$0.97 | +69.1% |
| EPS (Diluted) | $1.63$0.97 | +68.0% |
| Shares Outstanding (Basic) | 172.00M173.00M | −0.6% |
| Shares Outstanding (Diluted) | 173.00M174.00M | −0.6% |
05—Questions
Frequently Asked Questions
What were the key drivers of Keysight's revenue growth in this quarter?
Revenue growth was primarily driven by strong demand across both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments. Key contributing factors include customer R&D investments in next-generation technologies such as AI, high-speed data centers, advanced semiconductor technologies, software-defined vehicles, and defense modernization programs. The recent acquisitions of Spirent Communications plc and Synopsys' Optical Solutions Group also contributed significantly to the top-line increase.
How did the recent acquisitions impact the financial results?
The acquisitions of Spirent Communications plc and Synopsys' Optical Solutions Group have positively impacted revenue, contributing to the overall 23% year-over-year increase. These acquisitions have also resulted in the recognition of significant goodwill and intangible assets. While these acquisitions brought incremental costs, they are viewed as strategic for expanding Keysight's portfolio and market reach, particularly in areas like AI and advanced communications.
What is the company's outlook for the coming quarters?
Keysight maintains a positive outlook, anticipating continued customer R&D investments in evolving technologies like 5G evolution, early 6G, quantum computing, high-speed data center networks, satellite networks, AI, industrial IoT, defense modernization, and electric/autonomous vehicles. The company is closely monitoring the macroeconomic environment, including tariffs, trade restrictions, and geopolitical tensions, but remains confident in its ability to outperform in various market conditions.
How has the company's tax situation evolved?
For the three months ended January 31, 2026, Keysight recorded a significant income tax benefit of $83 million, resulting in a highly unusual effective tax rate of (42%). This was largely due to discrete items, including a $93 million benefit from a favorable audit settlement and an $8 million release of reserves. The company also noted a decrease in long-term income tax liabilities for unrecognized tax benefits, primarily due to the release of uncertain tax positions following the audit settlement.
06—Continue