Keysight Technologies (NYSE:KEYS) reported fiscal first-quarter 2026 results that management said exceeded the high end of its guidance range, driven by broad-based demand across segments and regions. On the company’s earnings call, executives pointed to multiple secular tailwinds—including AI-driven infrastructure buildouts, next-generation connectivity, rising semiconductor complexity, and defense modernization—as factors supporting accelerated growth.
First-quarter results and segment performance
Executive Vice President and CFO Neil Dougherty said Keysight delivered “record results” in the quarter. Total revenue was $1.6 billion, up 23% year over year on a reported basis. Acquisitions contributed eight percentage points and currency added one point; on a core basis, revenue grew 14%.
Net income was $376 million and earnings per share were $2.17, both up 19%. Dougherty also highlighted “41% core operating leverage” and said core operating margin was 28.9%, up 170 basis points year over year.
By segment:
- Communication Solutions Group (CSG): Revenue of $1.124 billion, up 27% reported and up 16% core. CSG gross margin was 68.5% and operating margin was 27.5%. Within CSG, commercial communications revenue was $758 million, up 33%, while aerospace, defense, and government (ADG) revenue was $366 million, up 18%.
- Electronic Industrial Solutions Group (EISG): Revenue of $476 million, up 15%, with growth across general electronics, semiconductors, and automotive/energy. EISG gross margin was 62.4% and operating margin was 27.2%.
Software and services represented about 40% of quarterly revenue, and annual recurring revenue was 29% of total mix. Dougherty added that software specifically was “above 25%,” around 26% to 27%.
AI and wireline momentum, plus wireless and 6G activity
CEO Satish Dhanasekaran said CSG saw robust order growth, with orders outpacing CSG revenue growth of 27% in the quarter, driven by both commercial communications and ADG markets. He noted wireline delivered record orders and “surpassing wireless for the first time,” marking the ninth consecutive quarter of wireline growth.
Dhanasekaran outlined four demand drivers he expects to shape wireline activity:
- Rapid scaling of AI infrastructure, increasing the need for end-to-end validation across the stack.
- Higher speeds and a shift to Ethernet-based AI networking (including 800G and 1.6T optics and development toward 3.2T).
- Increasing importance of optical interconnects, alongside emerging architectures such as co-packaged optics, optical circuit switching, and silicon photonics.
- Greater focus on system-level validation and benchmarking, including workload emulation.
In Q&A, Dhanasekaran said the company previously sized its AI exposure at about 10% of total revenue run rate, and that AI-related orders in the quarter grew “significantly above” the company’s average order growth of 30%. He also said Keysight has “doubled the number of customers” contributing to that demand and emphasized that its top two customers remain non-AI customers, which he said reflects broader demand.
On wireless, management described “healthy growth” driven by non-terrestrial networks (NTN), 6G research, AI at-the-edge applications, and stability in 5G. Dhanasekaran said Keysight achieved a live NR NTN connection with Samsung in a 3GPP-defined satellite band. He also said early 6G R&D engagements expanded as the industry prepares for large-scale technology demos at the Los Angeles Olympics in 2028, with commercialization viewed by 2030. The company also cited multiple wins for its newly launched RaceSIM AI RAN offering.
Aerospace and defense: record orders and expanding scope
Dhanasekaran said ADG posted record first-quarter orders and growth across all regions, driven by deterrence and defense modernization priorities. He cited orders tied to program expansions, production automation, and new deployments across spectrum operations, space/satellite, and radar.
Management highlighted several examples, including wins in North America for high-performance threat emulators, selection of digital transceiver module payload testing by a Canadian prime contractor, and broader activity in Europe supported by rising defense budgets. Dhanasekaran said the newly acquired PNT portfolio had a solid quarter as defense organizations test anti-jam and anti-spoof avionics in contested environments.
EISG: record revenue, semiconductor and automotive/energy updates
Dhanasekaran said EISG revenue was a record and orders grew for the third consecutive quarter, with double-digit growth in general electronics, semiconductors, and automotive/energy.
He attributed general electronics strength to AI-related innovation and infrastructure investments and said rising PCB complexity is driving higher test intensity. He also noted digital health grew again, with wins spanning medical device manufacturing, R&D, and biomedical research. In education and advanced research, he said lower U.S. funding was offset by strength in Asia, supported by sovereign programs investing in semiconductor research and workforce development.
In semiconductors, Dhanasekaran said investment accelerated, citing high-bandwidth memory and broader AI-driven capacity expansion driving demand for wafer-level test and characterization. He said silicon photonics programs and production timelines across major foundry customers are “picking up speed and intensity,” and that customers’ technology roadmaps and capacity plans improved sequentially.
In automotive and energy, he described a stable environment with a mixed end market, citing healthy annual renewals in the ESI simulation portfolio and wins with EV and robotaxi customers in software-defined vehicle-related manufacturing. He also said Keysight introduced two new megawatt charging solutions aimed at helping customers meet global and local standards.
Guidance, cash flow, buybacks, and acquisition integration
For fiscal second-quarter 2026, Keysight guided for revenue of $1.69 billion to $1.71 billion and earnings per share of $2.27 to $2.33. Dougherty said the guidance does not contemplate any impact from a “recently announced Supreme Court decision regarding tariffs,” which the company is still assessing.
Dougherty said integrations are on track and reiterated expectations for $375 million in acquisition-related revenue for fiscal 2026. He also reaffirmed a synergy target of more than $100 million in run-rate cost synergies and operational efficiencies, with realization “heavily weighted” to late 2026 due to ERP migration timing. In Q&A, he added the acquisitions were operating at lower margins initially and are currently dilutive, but are expected to become accretive once synergies are realized.
For the full year, Dougherty said Keysight’s base case increased, and the company now expects total annual revenue and earnings growth “just above 20%” on an all-in basis. He said Keysight typically has strong visibility one quarter out, decent visibility two quarters out, and less clarity beyond that, while noting potential upside if momentum continues.
Keysight ended the quarter with about $2.2 billion in cash and cash equivalents. Operating cash flow was $441 million and free cash flow was $407 million. The company repurchased about 420,000 shares for $87 million at an average price of about $207 per share, and Dougherty said the board has authorized $1.5 billion for share repurchases.
About Keysight Technologies (NYSE:KEYS)
Keysight Technologies is a global provider of electronic design, test, measurement and optimization solutions for communications, electronics and related industries. The company was formed as a corporate spin-off from Agilent Technologies in 2014; its origins trace back to the electronic measurement business that was part of Hewlett‑Packard before Agilent. Keysight develops hardware and software used throughout the product development lifecycle, from design and simulation to prototype validation and manufacturing test.
Keysight’s product portfolio includes electronic test and measurement instruments such as oscilloscopes, network and spectrum analyzers, signal generators, vector network analyzers and modular PXI-based systems, together with software platforms for simulation, automated test and data analysis.
