Keysight Technologies (NYSE: KEYS) delivered a record-breaking fiscal Q1 2026, posting non-GAAP EPS of $2.17 (up 19% YoY) and revenue of $1.60 billion (up 23% YoY), beating analyst estimates. KEYS stock surged approximately 23% the following session on the back of strong guidance for Q2 2026.
About Keysight Technologies
Keysight Technologies (NYSE: KEYS) is an S&P 500 global technology company headquartered in Santa Rosa, California, with approximately 16,600 employees and a market capitalization of roughly $49 billion as of early 2026. Originally founded as part of Hewlett-Packard in 1939 by Bill Hewlett and Dave Packard, Keysight was spun off from Agilent Technologies and became an independent public company in October 2014.
The company designs and manufactures electronic test and measurement hardware and software, serving customers in communications (5G/6G), aerospace and defense, AI data centers, automotive, semiconductor, and general electronics industries. Its solutions span electronic design automation (EDA), signal analysis, network testing, manufacturing test systems, and cybersecurity validation platforms.
Keysight holds over 2,000 patents and serves nearly 32,000 customers worldwide. The company trades at a forward P/E of approximately 31.75x and a trailing P/E of 51.07x, reflecting investor confidence in its AI and next-generation connectivity growth runway.
Top Financial Highlights
- Total Revenue reached $1.600 billion, up 23% year-over-year on a reported basis
- Core Revenue Growth of 14%, excluding the impact of acquisitions and currency fluctuations
- Total Orders reached $1.645 billion, up 30% year-over-year (22% core), a new company record
- Non-GAAP EPS of $2.17, up 19% year-over-year, surpassing the high end of guidance
- GAAP Net Income of $281 million ($1.63 per share), up from $169 million ($0.97 per share) in Q1 FY2025
- Non-GAAP Net Income of $376 million, up 19% year-over-year
- Gross Margin (non-GAAP) of 66.7%, up 90 basis points year-over-year driven by favorable product mix
- Non-GAAP Operating Margin of 27.4%, up 20 basis points year-over-year; core operating margin was 28.9%, up 170 bps
- Cash Flow from Operations of $441 million, up from $378 million in Q1 FY2025
- Free Cash Flow of $407 million, up from $346 million in Q1 FY2025
- Cash and Cash Equivalents totaled $2.200 billion as of January 31, 2026
- Communications Solutions Group (CSG) Revenue of $1.124 billion, up 27% YoY
- Electronic Industrial Solutions Group (EISG) Revenue of $476 million, up 15% YoY
- Q2 FY2026 Revenue Guidance of $1.690 billion to $1.710 billion (midpoint implies ~30% YoY growth)
- Q2 FY2026 Non-GAAP EPS Guidance of $2.27 to $2.33 (~35% YoY growth at midpoint)
Beat or Miss?
Keysight exceeded both revenue and earnings consensus estimates for Q1 FY2026.
| Metric | Reported | Estimated/Expected | Difference / Analysis |
| Revenue | $1.600B | ~$1.54B | Beat by ~$60M (~+3.9%) |
| Non-GAAP EPS | $2.17 | ~$1.99–$2.04 | Beat by $0.13–$0.18 (~+8.5%) |
| Orders | $1.645B | N/A | 30% YoY growth; record quarter |
| CSG Revenue | $1.124B | ~$1.06B | Beat estimate by ~$64M |
| EISG Revenue | $476M | N/A | Up 15% YoY; record for segment |
| Q2 Revenue Guidance | $1.69B–$1.71B | ~$1.54B (prior consensus) | Dramatically above expectations |
| Q2 EPS Guidance | $2.27–$2.33 | ~$1.80 (prior consensus) | ~$0.50 above Street expectations |
Keysight has now outperformed consensus EPS estimates in each of the last four consecutive quarters. The Q2 guidance was the most significant element of the announcement, coming in approximately 26–29% above prior Street estimates for both revenue and EPS.
What Leadership Is Saying?
CEO Satish Dhanasekaran on Strategy and Vision: “Keysight had a strong start to the fiscal year with outstanding results that exceeded our expectations. The investments we have made over the last 3 years are enabling us to capitalize on continued momentum in our markets and deliver value.”
During the earnings call, Dhanasekaran elaborated on secular tailwinds: “This performance reflects the execution of our strategic road map alongside the convergence of several secular tailwinds. These include AI-driven technology transformations, next-generation connectivity, rising semiconductor complexity, and defense modernization.” He noted that wireline orders surpassed wireless for the first time in company history in the quarter, driven by hyperscaler AI infrastructure investments and the rapid transition to 800G and 1.6T optical interconnects.
CFO Neil Dougherty on Financials and Margins: “We achieved record results in Q1, well above the high end of our guidance range, fueled by strong growth across our businesses as we continue to meet increased customer demand for our portfolio of technology solutions.”
Dougherty highlighted the strength of operating leverage: “This result was driven by strength in our core business, which delivered operating margin of 28.9%, up 170 basis points year-over-year as a result of 41% core operating leverage.” He also raised the full-year FY2026 outlook, stating: “With the visibility we currently have, our base case for fiscal ’26 has increased as we now expect total annual revenue and earnings growth just above 20%.”
Historical Performance
Q1 FY2026 vs Q1 FY2025
Year-over-year comparison for Keysight’s key financial metrics:
| Category | Q1 FY2026 | Q1 FY2025 | Change (%) |
| Total Revenue | $1,600M | $1,298M | 23% |
| GAAP Net Income | $281M | $169M | 66% |
| Non-GAAP Net Income | $376M | $317M | 19% |
| Non-GAAP EPS (Diluted) | $2.17 | $1.82 | 19% |
| Gross Margin (non-GAAP) | 66.70% | 65.8% (est.) | +90 bps |
| Operating Margin (non-GAAP) | 27.40% | 27.20% | +20 bps |
| Operating Cash Flow | $441M | $378M | 17% |
| Free Cash Flow | $407M | $346M | 18% |
| Total Orders | $1,645M | $1,263M | 30% |
| CSG Revenue | $1,124M | $883M | 27% |
| EISG Revenue | $476M | $415M | 15% |
The most notable improvement was in GAAP net income, which surged 66% year-over-year, aided by a significant income tax benefit of $83 million in Q1 FY2026 compared to a tax provision of $30 million in Q1 FY2025. On a non-GAAP basis, the 19% EPS growth was consistently ahead of the company’s long-term model targets.
Test and Measurement Competitor Performance: Q1 2026
A comparative look at leading test and measurement sector peers over their respective most recent quarters overlapping calendar Q1 2026:
| Company | Revenue (Q1 / Most Recent) | YoY Revenue Change | Net Income / EPS | Key Notes |
| Keysight Technologies (KEYS) | $1,600M | 23% | Non-GAAP EPS $2.17 | Record revenue; AI and defense tailwinds |
| Ralliant (RAL, incl. Tektronix/Fluke) | Q4 2025: $555M | 1% | Adj. EPS $0.69; net loss incl. $1.4B goodwill impairment | FY2026 revenue target $2.1B–$2.2B; meaningful challenges in EA Elektro-Automatik unit |
| Emerson T&M Division (EMR) | $409M (Q1 FY2026) | 14% | Part of $4.35B total company | Broad-based strength in power, semiconductor, A&D test verticals |
| VIAVI Solutions (VIAV) | $299.1M (Q1 FY2026) | 25.60% | Non-GAAP EPS $0.15 | Data center and A&D demand; acquired Spirent product lines from Keysight |
| Advantest (6857.T) | Q1 FY2025: JPY 263.7B (~$1.8B) | 90% | Operating margin 47% | Primarily semiconductor SoC testers; major AI-driven demand surge |
Keysight’s fiscal year ends October 31, while competitors use different fiscal calendars. Direct quarter-for-quarter comparisons reflect each company’s most recently reported quarter overlapping Q1 calendar 2026. Rohde and Schwarz is privately held and does not report public quarterly financials. NI (National Instruments) was acquired by Emerson in 2023 and is now integrated into Emerson’s Test and Measurement division.
How the Market Reacted?
Keysight’s Q1 FY2026 results triggered one of the strongest single-day stock reactions in the company’s history. Shares of KEYS surged approximately 23% on February 24, 2026, closing at approximately $301.48, following an initial aftermarket uptick of 0.19% after the February 23 earnings release. The stock had been trading in the mid-$240 range before results were announced. The outsized rally was attributed not only to the Q1 beat but more significantly to the dramatically above-consensus Q2 guidance, which implied 30% revenue growth and 35% EPS growth at the midpoint.
Multiple analysts raised price targets following the announcement, with Citigroup among those upgrading their outlook based on improving demand visibility. Over the 30-day window following earnings, KEYS shares were up roughly 39%, and the stock’s 90-day return reached approximately 55%.
At post-earnings levels, KEYS traded at roughly 33x forward earnings, reflecting the market’s expectation of sustained double-digit growth driven by AI infrastructure testing, next-generation wireless (6G/NTN), defense modernization, and semiconductor complexity. The board also authorized a $1.5 billion share buyback program, adding to investor confidence.
