KEYS · Q3 2026 Earnings

Bullish

Keysight Technologies

Reported August 18, 2026

30-second summary

Q3 FY2026 revenue grew 36.6% YoY to $1.846B — $96M above the top of the Q2-issued $1.73–$1.75B guide (5.5% upside) — and non-GAAP EPS of $3.07 blew past the $2.43–$2.49 guide by $0.58, a 23% beat above the high end. Orders of $2.091B (1.13x book-to-bill) sustain the multi-quarter demand extension, and Q4 FY2026 guided to $1.93–$1.95B implies ~37% YoY growth against the $1.42B prior-year base — meaning the FY2026 arc that started at "just above 20%" in Q1 FY2026 and moved to "high 20s" in Q2 FY2026 is now tracking to the low-to-mid 30s.

Headline numbers

EPS

Q3 FY2026

$3.07

Revenue

Q3 FY2026

$1.85B

+36.6% YoY

Gross margin

Q3 FY2026

65.8%

Free cash flow

Q3 FY2026

$0.40B

Operating margin

Q3 FY2026

25.0%

Key financials

Q3 FY2026

Metric	Q3 FY2026	Q3 FY2025	YoY	Q2 FY2026	QoQ
Revenue	$1.85B	$1.35B	+36.5%	$1.72B	+7.5%
EPS	$3.07	$1.72	+78.5%	$2.87	+7.0%
Gross margin	65.8%	61.7%	+415bps	68.6%	-275bps
Operating margin	25.0%	17.3%	+767bps	23.7%	+127bps
Free cash flow	$0.40B	$0.29B	+38.5%	$0.47B	-14.6%

Guidance

Keysight delivered a strong Q3 beat on both revenue and non-GAAP EPS, with revenue exceeding guidance by ~5.5% and EPS surging 23% above the guide high, prompting a material raise in full-year FY2026 growth expectations from the 'high 20s' to mid-30s territory, now expecting Q4 to grow ~37% YoY.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q3 FY2026	$1.730 billion to $1.750 billion	$1.846 billion	+$0.096 billion above high end of guide	Beat
Non-GAAP EPS	Q3 FY2026	$2.43 to $2.49	$3.07	+$0.58 above high end of guide	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	Q4 FY2026	$1.930 billion to $1.950 billion	+35.9% to +37.3% YoY
Non-GAAP EPS	Q4 FY2026	$3.34 to $3.40	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue growth (full year FY2026)	FY 2026	high 20s percent range	Implied by Q3 beat and Q4 guidance: ~33–34% for full year	Significantly above 'high 20s'; now tracking mid-30s	Raised

Product revenue

Q3 FY2026

Segment	Q3 FY2026	Q3 FY2025	YoY
Communications Solutions Group (CSG)	$1.345B	$0.94B	+43.1%
Electronic Industrial Solutions Group (EISG)	$0.501B	$0.412B	+21.6%
Commercial Communications	$1.006B	$0.644B	+56.2%
Aerospace, Defense and Government	$0.339B	$0.296B	+14.5%
Electronic Industrial	$0.501B	$0.412B	+21.6%

Management tone

No earnings transcript was available for Q3 FY2026; the tone section below is grounded in the press-release language and the multi-quarter guidance cadence rather than prepared remarks or Q&A.

Narrative arc: Q4 FY2025 "FY2026 at or above long-term targets" → Q1 FY2026 "compounding momentum, concurrent technology waves" → Q2 FY2026 "AI as the operating regime, multi-year runway" → Q3 FY2026 "record results and outlook, sustained momentum."

The Q3 FY2026 press release language collapses the multi-quarter arc into a single self-referential phrase — "record Q3 results and outlook reflect the growing relevance of our strategy and portfolio" — and pairs it with the confidence-forward statement "we remain confident in our ability to sustain our momentum and deliver long-term value creation." The change from Q2 FY2026 is subtle but real: two quarters ago management was defending the raise ("high 20s") with evidentiary language (H1 AI revenue exceeded all of FY2025). This quarter the raise is implicit in the numbers themselves, and the qualitative frame shifts to sustainability rather than justification. Management is no longer arguing the case; they are pacing the reveal.

The Q4 FY2026 guide setup is the second tone signal. Q4 FY2026 guided to $1.93–$1.95B implies ~37% YoY at midpoint — the highest guided growth rate of the FY2026 sequence, on the toughest sequential compare. Q2 FY2026's guide was set below the just-reported quarter's revenue ($1.74B midpoint vs $1.717B Q2 FY2026 actual) and prior briefs read that as conservatism. This quarter's Q4 FY2026 midpoint of $1.94B sits above the Q3 FY2026 actual of $1.846B by ~5%, breaking that pattern — management is now guiding sequential growth rather than seasonal-typical flat sequencing. The implication: either the visibility has hardened enough that they no longer need the conservatism buffer, or capacity is now sufficient to promise sequential growth into the toughest compare of the year.

The FY2026 growth trajectory has moved 2,000bps in three quarters (from ~14% combined to low-to-mid 30s implied) without a corresponding acquisition. This is pure organic re-baselining, and management has not moved the long-term target language to match. When the Q4 FY2025 call re-anchored organic growth to "at or above the high end of 5–7%," the framework was that AI was the driver above the frame. Three quarters later, the frame has broken. Watch whether the Q4 FY2026 call resets the long-term targets themselves — refusing to raise them despite continued outperformance would be its own tone signal.

Answers to last quarter's watch list

Q3 FY2026 revenue beat magnitude. Q3 FY2026 actual of $1.846B came in $66M above the $1.78B watch-list threshold (which itself sat above the guide top) and $96M above the top of the guide — a 5.5% beat versus the guide top, roughly triple the ~2% "upside beat" bar the watch list set. The Q2 FY2026 guide carried the same conservatism as Q1 FY2026 and Q4 FY2025 did. Capacity constraints, if they exist, are not showing up in the revenue print. Status: Resolved positively

AI revenue dollar disclosure. The press release does not introduce an explicit AI revenue line or growth rate. With no transcript available, whether management provided further AI dollar quantification on the call cannot be assessed from this brief. Status: Continue monitoring

Order book extension past 1.10x book-to-bill. Orders of $2.091B vs revenue $1.846B = 1.13x book-to-bill, comfortably above the 1.10x threshold set by the prior watch list, though below Q2 FY2026's 1.19x. Order dollars grew ~2% QoQ despite the higher revenue base — the order book is extending in absolute terms even as it modestly compresses in ratio. The Q2 FY2026 orders did not include pull-forward. Status: Resolved positively

CSG operating margin holding at 33%. CSG OM came in at 34%, +100bps QoQ from Q2 FY2026's 33% and comfortably above the 30% floor set by the watch list. Q2 FY2026 was not peak operating leverage; operating leverage continues to compound. Status: Resolved positively

Capex execution against $200M raised number. Q3 FY2026 FCF margin came in at 21.8% ($403M on $1.846B), materially below Q2 FY2026's 27.5% and the 25%+ threshold the watch list set. Some of this is likely working capital timing and the elevated capex pace management flagged in Q2 FY2026. Without a transcript, whether the compression is operational, capex-driven, or mix, cannot be disaggregated. Status: Continue monitoring — the H2 FCF margin trend is the single most important thing to reconstruct once transcript is available.

What to watch into next quarter

The gap between segment and total-company margins. Total-company non-GAAP OM rose to 25.0% from 23.7% in Q2 FY2026, yet remains well below the blended segment OM of ~33% (CSG 34%, EISG 31%) — implying elevated corporate/unallocated cost. Watch whether Q4 FY2026 reveals a discrete driver (acquisition integration cost, one-time charge, comp accrual) or whether this is a structural corporate cost step-up that persists.

Q4 FY2026 revenue delivery against the sequentially higher guide. Q4 FY2026 midpoint of $1.94B sits ~5% above Q3 FY2026 actual — the first time in the FY2026 sequence management has guided sequential growth into their toughest compare. A Q4 FY2026 in-line print would confirm the guide has moved from conservative to calibrated; a beat would reset the FY2026 arc yet again. A miss would be the first negative datapoint in the sequence.

AI revenue explicit disclosure on the Q4 FY2026 call. Two quarters running with directional AI language and no dollar base or growth rate. Watch whether Q4 FY2026 introduces an AI revenue segmentation given how central AI has become to the growth narrative — refusal to segment past a certain point becomes its own signal.

FCF margin recovery in Q4 FY2026. Q3 FY2026 came in at 21.8%, well below the 27.5% Q2 FY2026 print and the 25%+ threshold. Watch whether Q4 FY2026 FCF margin recovers to 25%+ (confirming Q3 FY2026 was working capital / capex timing) or whether it stays compressed (confirming the $200M capex plan is now absorbing incremental EBITDA and the leverage story needs re-underwriting).

Long-term target reset. With FY2026 organic growth tracking low-to-mid 30s against a 5–7% long-term revenue target, the framework has broken. Watch whether the Q4 FY2026 call re-anchors the long-term targets upward, or whether management explicitly frames FY2026 as an above-trend year (which would signal FY2027 deceleration) — either framing is informative.

Sources

Keysight Q3 FY2026 press release: https://www.sec.gov/Archives/edgar/data/1601046/000160104626000029/exhibit991-q326pressrelease.htm
Tapebrief Q2 FY2026 brief (prior-quarter guidance baseline, watch list, narrative arc, segment run-rates)
Tapebrief Q1 FY2026 and Q4 FY2025 briefs (FY2026 trajectory anchors, long-term target framework)

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