Earnings Recap — Q3 FY2026
CY Q3 2026 · Reported August 18, 2026 · Beat 7 of last 7 quarters
The Buildout is a website built on agentic AI tools, currently in beta, and could have factual errors.
Keysight's record quarter underscores the accelerating AI infrastructure buildout, with wireline orders more than doubling and commercial comms crossing $1B for the first time. The company's exposure across the AI lifecycle—from pre-silicon design to system-level emulation and manufacturing test—positions it as a key enabler of data center scaling. Supply chain constraints highlight the intensity of demand across the ecosystem.
Keysight delivered record Q3 results with orders up 56% YoY to $2.091B, revenue up 36% to $1.846B, and EPS up 79% to $3.07, all above guidance. Growth was broad-based, led by Commercial Communications (first $1B quarter, up 56%) and EISG (record $501M, up 21%). Wireline revenue exceeded wireless for the first time, driven by AI infrastructure scaling. Gross margin was 69%, operating margin 33.2%, and free cash flow $403M. The company repurchased $210M of stock during the quarter.
Management raised Q4 and full-year guidance, citing sustained demand across AI infrastructure, defense modernization, and next-gen communications. Q4 revenue is expected between $1.930B and $1.950B (37% YoY growth at midpoint) and EPS between $3.34 and $3.40 (76% YoY growth). For FY2026, they now expect revenue growth of 32% and EPS growth of ~60% at the midpoint. They highlighted a multiyear AI infrastructure roadmap, early 6G funded programs (first standard targeted March 2029), and a durable defense modernization cycle. Supply chain remains a constraint, and management is working to deconstrain capacity and remains confident in Q4 guidance. They expect to realize 80-90% of the $100M cost synergies exiting FY2026.
“Customers are investing to solve increasingly complex engineering challenges across our end markets, such as AI infrastructure, advanced semiconductors, defense modernization and next-generation communications.”
on Demand drivers
“We remain focused on executing our strategy for long-term value creation.”
on Supply constraints
“We remain focused on executing our strategy for long-term value creation.”
on Product cycle
How would you characterize the 6G opportunity relative to the 5G cycle, and when should we expect materializing revenue?
Satish noted the industry is coalescing around early 6G standards in 2029, with the U.S. Olympics as another milestone. He highlighted new vectors beyond speed/spectrum—AI-RAN, ISAC, and NTN—and said the base case is that the 6G opportunity is greater than 5G, with Keysight well positioned.
How has testing density changed with AI complexity, and what guardrails should we consider for incremental margins?
Kailash explained that design margins are shrinking, driving more test intensity across signal, bit, and protocol levels, with compute/switch trays now having hundreds of high-speed pinouts. Neil said core operating leverage should continue to outperform the 40% target into FY2027, but cautioned that onetime tariff impacts in FY2026 won't repeat.
Do you think the $2B+ order level is sustainable, and can you comment on supply chain ability to meet demand?
Satish said orders should be slightly up in Q4 with seasonality. Steve noted the pipeline is at an all-time high, with ~3,000 new customers added YTD. On supply, Satish said the environment is less flexible than a year ago, but they are working to deconstrain and remain confident in Q4 guidance.