Keysight Q3 Earnings Beat Estimates, Revenues Up Y/Y on Solid Demand

Net Income

Net income on a GAAP basis was $397 million or $2.30 per share compared with $191 million or $1.10 per share in the prior-year quarter. Strong top-line growth boosted the bottom line during the quarter. 

Non-GAAP net income in the reported quarter was $531 million or $3.07 per share compared with $297 million or $1.72 per share in the prior-year quarter. The bottom line comfortably surpassed the Zacks Consensus Estimate of $2.46.

Revenues

Net sales during the quarter increased to $1.85 billion from $1.35 billion in the year-ago quarter. owing to healthy growth in both the Communication Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments. The top line beat the Zacks Consensus Estimate of $1.75 billion. Total orders were $2.09 billion compared with $1.34 billion in the year-ago quarter.

CSG generated $1.35 billion in revenues, up from the year-ago quarter’s $940 million. The 43% year-over-year increase was driven by strong performance in wireline and wireless, as well as continued momentum in AI infrastructure and aerospace, defense and government. Emerging 6G and non-terrestrial network opportunities also supported demand. 

EISG segment’s revenues increased to $501 million from $412 million in the prior-year quarter, driven by AI-related investments and capacity expansion in advanced semiconductors, along with solid demand for software-defined vehicles, cybersecurity and EV charging solutions. 

Region-wise, Asia-Pacific revenues aggregated $810 million compared with $569 million in the prior-year quarter. The company reported a 29% year-over-year improvement in revenues from the Americas to $729 million. Revenues from Europe were $307 million, up 41% from the year-ago quarter's $217 million.

During the quarter, revenues from Aerospace, Defense and Government increased to $339 million from $296 million in the year-ago quarter. The company reported a 56% year-over-year improvement in revenues from Commercial Communications to $1.01 billion. Electronic Industrial generated $501 million in revenues, up from the year-ago quarter’s $412 million.

Other Details

During the quarter, the company’s non-GAAP gross profit totaled $1.27 billion, up from $864 million in the year-ago quarter, with respective gross margins of 69% and 63.9%. Non-GAAP operating income totaled $614 million compared with $338 million in the year-ago period, with operating margins of 34.7% and 25%, respectively. 

CSG reported a non-GAAP operating income of $458 million compared with $246 million in the year-ago period. EISG non-GAAP operating income increased to $155 million from $92 million in the prior-year quarter.

Cash Flow & Liquidity

In the third quarter of fiscal 2026, Keysight generated $437 million of net cash from operating activities compared with $322 million in the year-ago quarter. In the first nine months of fiscal 2026, the company generated $1.38 billion in cash compared with $1.18 billion in the year-ago period.  As of July 31, 2026, the company had $2.61 billion in cash and cash equivalents and $1.82 billion of long-term debt.

Outlook

For the fourth quarter of fiscal 2026, Keysight expects revenues in the range of $1.93-$1.95 billion. Non-GAAP earnings per share are estimated to be between $3.34 and $3.40.

KEYS’s Zacks Rank

Keysight currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

Silicon Motion Technology Corporation SIMO sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 14.08%. 

It is benefiting from growing demand for NAND flash storage solutions driven by AI, data centers, PCs, smartphones and automotive applications. Its focus on advanced controller technologies, PCIe Gen5 solutions and expanding embedded storage offerings is expected to support long-term growth and strengthen its position in the storage semiconductor market.

Texas Instruments Incorporated TXN carries a Zacks Rank #2 at present. It delivered an earnings surprise of 12.04% in the last reported quarter. 

The company is experiencing strong demand for analog and embedded processing solutions across industrial, automotive, communications and personal electronics markets. Its focus on product innovation, manufacturing capacity expansion and embedded processing technologies is likely to drive long-term growth.

Amazon.com, Inc. AMZN carries a Zacks Rank #2 at present. It delivered an earnings surprise of 2.73% in the last reported quarter.

Amazon continues to gain from strong demand for e-commerce, cloud computing, and digital advertising services, supported by the growing adoption of AI. Its expanding Amazon Web Services business, investments in generative AI and cloud infrastructure, and growing fulfillment network support sustained growth and strengthen its competitive position.

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