Skip to content
    KEYS
    Earnings call· Jan 2026(Q1 FY26)

    Keysight Technologies Q1 FY26 earnings call KEYS

    Feb 23, 2026 Source

    Executive summary

    Keysight Technologies Q1 FY26 — Robust Growth Across All Segments Driven by AI and Defense Modernization

    Keysight delivered outstanding Q1 FY26 results, driven by strong demand across all business segments and key regions. The company is capitalizing on secular tailwinds including AI-driven technology transformations, next-generation connectivity, and defense modernization. Management expressed confidence in continued momentum, raising its full-year FY26 revenue and earnings growth outlook to just above 20%.

    Highlights

    5

    • Q1 FY26 revenue of $1.600 billion, up 23% reported and 14% on a core basis, exceeding guidance.

    • Q1 FY26 orders of $1.645 billion, up 30% reported and 22% on a core basis, marking the seventh consecutive quarter of YoY order growth.

    • Q1 FY26 EPS of $2.17, up 19% YoY, also above guidance.

    • Communication Solutions Group (CSG) revenue grew 27% reported and 16% core, with record orders in Wireline and strong growth in Aerospace, Defense & Government (up 18%).

    • Electronic Industrial Solutions Group (EISG) revenue increased 15%, with double-digit growth across all three markets.

    Concerns

    1

    • No material concerns were explicitly highlighted by management during the call; the quarter was characterized by broad-based strength and positive momentum.

    Guidance & targets

    9
    CategoryTargetConfidence
    Q2 FY26 Revenue
    $1.690 billion to $1.710 billion
    high materiality
    High
    Q2 FY26 Revenue Growth (YoY)
    30% at midpoint
    high materiality
    High
    Q2 FY26 Earnings Per Share
    $2.27 to $2.33
    high materiality
    High
    Q2 FY26 EPS Growth (YoY)
    35% at midpoint
    high materiality
    High
    Q2 FY26 Weighted Diluted Share Count
    ~173 million shares
    low materiality
    High
    FY26 Acquisition-Related Revenue
    $375 million
    medium materiality
    High
    FY26 Run Rate Cost Synergies
    More than $100 million
    medium materiality
    High
    FY26 Total Annual Revenue Growth
    Just above 20%
    high materiality
    High
    FY26 Total Annual Earnings Growth
    Just above 20%
    high materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Communication Solutions Group (CSG)
    Revenue grew 16% on a core basis. Experienced robust order growth outpacing revenue growth.
    Gross Margin: 68.5%
    		$1.124 billion27%—27.5% operating margin
    Commercial Communications (within CSG)
    Growth driven by both wireless and wireline. Wireline delivered record orders, surpassing wireless for the first time, driven by R&D and manufacturing solutions.
    		$758 million33%——
    Aerospace, Defense & Government (within CSG)
    Achieved record Q1 orders and growth across all regions, reflecting increased global focus on deterrence and defense modernization.
    		$366 million18%——
    Electronic Industrial Solutions Group (EISG)
    Orders grew for the third consecutive quarter. Revenue growth across all three markets: general electronics, semiconductors, and automotive.
    Gross Margin: 62.4%
    		$476 million15%—27.2% operating margin
    General Electronics (within EISG)
    Growth driven by AI-related innovation and infrastructure investments, particularly in high-performance PCBs. Digital health also grew.
    		—double digits——
    Semiconductors (within EISG)
    Pace of investment accelerated, with robust demand for wafer-level test and characterization solutions due to high-bandwidth memory and AI-driven capacity expansion. Silicon photonics programs are picking up speed.
    		—double digits——
    Automotive and Energy (within EISG)
    Overall business environment stable, with orders growing for the second consecutive quarter. Healthy annual renewals in ESI simulation portfolio and key wins with EV and robotaxi customers.
    		—double digits——

    Operational metrics

    18
    Gross Margin
    66.7%up 90 bps YoY
    Q1 FY26

    Reported gross margin for the quarter.

    Operating Margin
    27.4%up 20 bps YoY
    Q1 FY26

    Reported operating margin for the quarter.

    Core Operating Margin
    28.9%up 170 bps YoY
    Q1 FY26

    Operating margin for the core business, excluding acquisitions and currency.

    Core Operating Leverage
    41%
    Q1 FY26

    Leverage delivered by the core business, above the target of 40% on mid-single digit growth.

    Software and Services Revenue Mix
    40%
    Q1 FY26

    Proportion of total Keysight revenue from software and services.

    Annual Recurring Revenue (ARR) Mix
    29%
    Q1 FY26

    Proportion of total Keysight revenue that is annual recurring revenue.

    Cash and Cash Equivalents
    $2.200 billion
    Q1 FY26 end

    Balance sheet item at the end of the quarter.

    Share Repurchases
    $87 million
    Q1 FY26

    Amount spent on share repurchases during the quarter.

    Board Authorized Stock Buyback
    $1.5 billion
    Ongoing

    Total amount authorized by the board for stock buybacks.

    Revenue Growth (Reported)
    23%YoY
    Q1 FY26

    Total company revenue growth on a reported basis.

    Revenue Growth (Core)
    14%YoY
    Q1 FY26

    Total company revenue growth excluding acquisitions/divestitures and currency movements.

    Orders Growth (Reported)
    30%YoY
    Q1 FY26

    Total company orders growth on a reported basis.

    Orders Growth (Core)
    22%YoY
    Q1 FY26

    Total company orders growth excluding acquisitions/divestitures and currency movements.

    Acquisition Contribution to Revenue Growth
    8 points
    Q1 FY26

    Impact of acquisitions on reported revenue growth.

    Currency Impact on Revenue Growth
    1 point
    Q1 FY26

    Impact of currency movements on reported revenue growth.

    AI Exposure (Q4 FY25 run rate)
    ~10%
    Q4 FY25

    Estimated proportion of company revenue related to AI as of the previous quarter's run rate.

    AI Business Order Growth
    significantly above company average
    Q1 FY26

    Order growth for the AI-related business, relative to the total company's 30% reported order growth.

    Wireline Growth Streak
    9th consecutive quarter
    Q1 FY26

    Wireline business achieved its ninth consecutive quarter of growth.

    Industry KPIs

    10
    MetricValueDetails
    M a contribution8 pointspoints
    Orders book to bill$1.645 billionUSD
    Segment revenue growth—
    Ai data center content revenue~10%% of company revenue
    Design wins product cycle ramps—
    Order visibility backlog policy—
    Recurring software services mix40%%
    Supply demand imbalance lead times—
    End market revenue mix organic growth—
    Operating margin incremental leverage41%%

    Orderbook & backlog

    3
    Orders$1.645 billionQ1 FY26 end

    up 30% reported YoY, up 22% core YoY

    Seventh consecutive quarter of year-over-year order growth.

    Funnel Intakeall-time highQ1 FY26 end

    Both total funnel and new funnel intake are at all-time highs.

    Late-Stage Funnelhigh double digitsQ1 FY26 end

    up high double digits

    Provides strong near-term visibility for Q2 and into H2 FY26.

    Product announcements

    4
    ProductTypeDetails
    Digital Communication Analyzerlaunch
    Lightwave Component Analyzerlaunch
    RaySim AI-RAN offeringlaunch
    Megawatt Charging Solutionslaunch

    Deals & partnerships

    2
    Samsungcollaboration

    Achieved a live NR-NTN connection in a 3GPP-defined satellite frequency band, furthering standardization in non-terrestrial networks.

    MediaTekcollaboration

    Collaborated to progress standards around integrated sensing and communication use cases for 6G research.

    Risks & headwinds

    2
    Tariff impact assessmentOngoing

    Not yet quantified

    Mitigation: Company is assessing the impact of the recently announced Supreme Court decision regarding tariffs.

    Memory price increasesNear-term

    Prices going up on the margin

    Mitigation: Keysight does not have volume usage for high-end, high-bandwidth memories, limiting exposure. Price increases factored into outlook and guidance. Monitoring the situation.

    Q&A highlights

    7

    How much are the AI-driven wireline growth drivers contributing to the business, and is the customer base expanding?

    Keysight's AI exposure was ~10% of company revenue in Q4 FY25, with robust order growth significantly above the company average in Q1 FY26. Demand is broadening across the customer base, including silicon companies, manufacturing ecosystems, hyperscalers, and emerging neoclouds, with increasing international business.

    “roughly, we sized our AI exposure last year in Q4 to be just about 10% of the company revenue. And on top of that, this quarter, on that run rate, I should say, we had robust order growth and significantly above company average.”

    asked by Aaron Rakers · answered by Satish Dhanasekaran

    2 min read5 chapters

    Detailed Narrative

    01

    AI Infrastructure and High-Speed Networking

    Keysight is experiencing significant demand driven by AI infrastructure scaling, with record Wireline orders surpassing Wireless for the first time. This momentum is fueled by hyperscalers and their ecosystems investing in scale-up and scale-out architectures, requiring validation across the entire infrastructure stack. The industry's shift to 800-gig and 1.6-tera optics, alongside 3.2 tera development, and Ethernet-based AI fabrics, creates substantial test opportunities for Keysight's high-speed digital, optical, and protocol solutions.

    02

    Optical Interconnects and System-Level Validation

    Rising bandwidth and power demands in AI data centers are accelerating the adoption of optical interconnects, including co-packaged optics, optical circuit switching, and silicon photonics. Keysight's differentiated optical capabilities and recently introduced products like the Digital Communication Analyzer and Lightwave Component Analyzer are crucial for standards compliance. Additionally, the company's workload emulation solutions assist customers in solving deployment challenges by emulating real AI workloads for system-level validation and benchmarking.

    03

    Wireless and Aerospace, Defense & Government Momentum

    Wireless business saw healthy growth driven by non-terrestrial networks (NTN), 6G research, and AI at the edge applications. Keysight achieved a live NR-NTN connection with Samsung, furthering standardization. The Aerospace, Defense & Government segment reported record Q1 orders and growth across all regions, reflecting increased global focus on deterrence and defense modernization. This includes program expansions, production automation, and new system deployments for spectrum operations, space, satellite, and radar applications.

    04

    Electronic Industrial Solutions Group (EISG) Performance

    EISG orders grew for the third consecutive quarter, and revenue reached a record high, with double-digit growth across general electronics, semiconductors, and automotive and energy markets. Growth in general electronics was driven by AI-related innovation and increasing complexity of high-performance PCBs. The semiconductor business saw accelerated investment due to high-bandwidth memory and AI-driven capacity expansion, while automotive and energy remained stable with healthy renewals in ESI simulation and key EV/robotaxi wins.

    05

    Strong Funnel and Future Outlook

    Keysight's sales organization reported its highest Q1 orders ever, excluding acquisitions, and the seventh consecutive quarter of year-over-year order growth. The company's funnel dynamics are at an all-time high, with total funnel and new funnel intake reaching record levels and late-stage funnel up high double digits. This strong visibility provides confidence for the near-term and into the second half of the fiscal year, supporting the increased full-year guidance for revenue and earnings growth.

    AI-generated summary of the company’s earnings call. Not investment advice.