Third fiscal quarter 2026
Filed Aug 18, 2026Second consecutive record quarter with orders over $2 billion; full-year outlook improved
Third-quarter revenue rose 36% to $1,846 million, orders reached $2,091 million, both reported segments grew, GAAP and non-GAAP diluted EPS increased sharply, free cash flow rose to $403 million, and fourth-quarter revenue guidance calls for approximately 37% year-over-year growth at the midpoint.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Ordersother | $2,091 million | – | – |
| RevenueGAAP | $1,846 million | – | 36% |
| Cost of products and servicesGAAP | $630 million | – | – |
| Research and developmentGAAP | $312 million | – | – |
| Selling, general and administrativeGAAP | $446 million | – | – |
| Other operating expense (income), netGAAP | $(3) million | – | – |
| Total costs and expensesGAAP | $1,385 million | – | – |
| Income from operationsGAAP | $461 million | – | – |
| Interest incomeGAAP | $20 million | – | – |
| Interest expenseGAAP | $(26) million | – | – |
| Other income (expense), netGAAP | $22 million | – | – |
| Income before taxesGAAP | $477 million | – | – |
| Provision for income taxesGAAP | $80 million | – | – |
| Net incomeGAAP | $397 million | – | – |
| Diluted earnings per shareGAAP | $2.30 | – | – |
| Basic earnings per shareGAAP | $2.33 | – | – |
| Non-GAAP net incomenon-GAAP | $531 million | – | – |
| Non-GAAP diluted earnings per sharenon-GAAP | $3.07 | – | – |
| Weighted average shares outstanding - dilutedGAAP | 173 million | – | – |
| Cash flow from operationsGAAP | $437 million | – | – |
| Free cash flownon-GAAP | $403 million | – | – |
| Aerospace, Defense and Government revenueother | $339 million | – | 14% |
| Commercial Communications revenueother | $1,006 million | – | 56% |
| Electronic Industrial revenueother | $501 million | – | 21% |
| Nine-month revenueGAAP | $5,163 million | – | – |
| Nine-month net incomeGAAP | $1,027 million | – | – |
| Nine-month diluted earnings per shareGAAP | $5.93 | – | – |
| Nine-month non-GAAP net incomenon-GAAP | $1,404 million | – | – |
| Nine-month non-GAAP diluted earnings per sharenon-GAAP | $8.11 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Communications Solutions Group (CSG)Reflecting 56 percent growth in commercial communications and 14 percent growth in aerospace, defense, and government. Gross margin was 71% versus 67%, income from operations was $458 million versus $246 million, and operating margin was 34% versus 26%. | $1,345 million | – | 43% |
| Electronic Industrial Solutions Group (EISG)Reflecting growth across the semiconductor, general electronics and automotive and energy markets. Gross margin was 64% versus 57%, income from operations was $155 million versus $92 million, and operating margin was 31% versus 22%. | $501 million | – | 21% |
Fourth fiscal quarter of 2026 outlook
- Revenue$1.930 billion to $1.950 billion
- NoteThe mid-point of the revenue range represents year-over-year growth of approximately 37%.
- NoteNon-GAAP earnings per share is expected to be in the range of $3.34 to $3.40.
- NoteWeighted diluted share count of approximately 172 million shares.
- NoteNo reconciliation of GAAP earnings per share to non-GAAP has been provided because certain items impacting the GAAP tax rate pertain to future events and are not currently estimable with a reasonable degree of accuracy.
Capital returns
- Treasury stock repurchases, including excise tax payments, were $520 million for the nine months ended July 31, 2026, compared with $278 million for the nine months ended July 31, 2025.
- Treasury stock was $(4,319) million as of July 31, 2026, compared with $(3,799) million as of October 31, 2025.
What drove it
- Orders were $2,091 million, marking the second consecutive record quarter with orders over $2 billion.
- Commercial Communications revenue grew 56% to $1,006 million.
- Aerospace, Defense and Government revenue grew 14% to $339 million.
- Electronic Industrial revenue grew 21% to $501 million, with growth across semiconductor, general electronics and automotive and energy markets.
- CSG gross margin increased to 71% from 67%, while EISG gross margin increased to 64% from 57%.
- CSG operating margin increased to 34% from 26%, while EISG operating margin increased to 31% from 22%.
Concerns
- Fourth-quarter GAAP earnings per share guidance and a reconciliation to non-GAAP earnings per share were not provided because items impacting the GAAP tax rate are not currently estimable with reasonable accuracy.
- Interest income was $20 million, compared with $31 million in the third quarter of 2025.
- Interest expense was $(26) million, compared with $(28) million in the third quarter of 2025.
- The company cites risks including global economic conditions, slowing demand, geopolitical tension and conflict outside the U.S., export control regulations and compliance, tariff and trade policy impacts, customer purchasing decisions and timing, and order cancellations.
What to watch
- Whether fourth-quarter revenue falls within the guided range of $1.930 billion to $1.950 billion.
- Whether fourth-quarter non-GAAP earnings per share reaches the guided range of $3.34 to $3.40.
- Commercial Communications growth after 56% growth in the third quarter.
- Sustainability of segment gross-margin and operating-margin expansion.
- Order trends following $2,091 million of third-quarter orders.
- The impact of the $700 million current portion of long-term debt.
Balance sheet and cash flow
- Cash, cash equivalents, and restricted cash totaled $2.62 billion as of July 31, 2026.
- Cash and cash equivalents were $2,605 million as of July 31, 2026, compared with $1,873 million as of October 31, 2025.
- Current portion of long-term debt was $700 million as of July 31, 2026, compared with $— as of October 31, 2025.
- Long-term debt was $1,817 million as of July 31, 2026, compared with $2,534 million as of October 31, 2025.
- Nine-month net cash provided by operating activities was $1,379 million, compared with $1,184 million.
- Nine-month investments in property, plant and equipment were $(97) million, compared with $(90) million.
- Nine-month free cash flow was $1,282 million, compared with $1,094 million.
- Nine-month net increase in cash, cash equivalents, and restricted cash was $732 million, compared with $1,583 million.
Analysis
Keysight reported a strong third fiscal quarter, with revenue of $1,846 million versus $1,352 million a year earlier and orders of $2,091 million versus $1,340 million. The release describes this as the second consecutive record quarter with orders over $2 billion. Revenue growth was broad across reported end markets, led by Commercial Communications, which increased 56% to $1,006 million. Aerospace, Defense and Government rose 14% to $339 million, while Electronic Industrial increased 21% to $501 million.
Profitability increased substantially. GAAP income from operations was $461 million versus $234 million, while GAAP net income was $397 million, or $2.30 per diluted share, versus $191 million, or $1.10 per diluted share. Non-GAAP net income rose to $531 million and non-GAAP diluted EPS rose to $3.07 from $1.72. The non-GAAP reconciliation included $72 million of acquisition-related amortization, $47 million of share-based compensation, and $28 million of acquisition and integration costs in the quarter.
The segment data show improved profitability in both operating groups. CSG revenue increased 43% to $1,345 million, with gross margin of 71% versus 67% and operating margin of 34% versus 26%. EISG revenue grew 21% to $501 million, with gross margin of 64% versus 57% and operating margin of 31% versus 22%. The release identifies commercial communications as the principal growth contributor within CSG, while EISG growth spanned semiconductor, general electronics, automotive and energy markets.
Cash generation also strengthened. Cash flow from operations was $437 million versus $322 million, and free cash flow was $403 million versus $291 million. For the first nine months, Keysight generated $1,379 million of operating cash flow and repurchased $520 million of treasury stock, including excise tax payments. Cash, cash equivalents and restricted cash totaled $2.62 billion at July 31, 2026. The balance sheet reported $700 million of current long-term debt and $1,817 million of long-term debt.
Fourth-quarter revenue guidance of $1.930 billion to $1.950 billion implies approximately 37% year-over-year growth at the midpoint, and non-GAAP EPS guidance is $3.34 to $3.40 on approximately 172 million weighted diluted shares. Management did not provide GAAP EPS guidance or a reconciliation because future items affecting the GAAP tax rate are not estimable with reasonable accuracy. The filing did not include the prior-quarter outlook, so reported results cannot be assessed against prior guidance.
Management, verbatim
Keysight’s record Q3 results and outlook reflect the growing relevance of our strategy and portfolio, which is enabling customers to solve complex engineering challenges across our end markets.
Satish Dhanasekaran, President and CEO
We remain confident in our ability to sustain our momentum and deliver long-term value creation.
Satish Dhanasekaran, President and CEO
Not in the filing
stated, not guessed- Previous quarterly outlook or prior guidance for comparison
- Fourth fiscal quarter of 2026 GAAP earnings per share guidance
- Fourth fiscal quarter of 2026 GAAP to non-GAAP earnings per share reconciliation
- Fourth fiscal quarter of 2026 gross margin guidance
- Fourth fiscal quarter of 2026 operating expenses guidance
- Fourth fiscal quarter of 2026 tax-rate guidance
- Total consolidated gross margin
- Total consolidated operating margin
- Quarterly dividend information
- Sequential comparisons for third-quarter revenue, orders, segments, earnings and cash flow
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.