KEYS

Wrapping up Q2 earnings, we look at the numbers and key takeaways for the inspection instruments stocks, including Keysight (NYSE:KEYS) and its peers. Measurement and inspection instrument companies may enjoy more steady demand because products such as water meters are non-discretionary and mandated for replacement at predictable intervals. In the last decade, digitization and data collection have driven innovation in the space, leading to incremental sales. But like the broader industrials sector, measurement and inspection instrument companies are at the whim of economic cycles. Interest rates, for example, can greatly impact civil, commercial, and residential construction projects that drive demand. The 5 inspection instruments stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 2.5% above. While some inspection instruments stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.8% since the latest earnings results. Spun off from Hewlett-Packard in 2014, Keysight (NYSE:KEYS) offers electronic measurement products for use in various sectors. Keysight reported revenues of $1.85 billion, up 36.5% year on year. This print exceeded analysts’ expectations by 5.8%. Overall, it was a stunning quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates. Keysight achieved the biggest analyst estimate beat and highest guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 7.1% since reporting and currently trades at $316.80. Read why we think that Keysight is one of the best inspection instruments stocks, our full report is free. Once known as JDS Uniphase before its 2015 rebranding, Viavi Solutions (NASDAQ:VIAV) provides testing, monitoring and assurance solutions for telecommunications, cloud, enterprise, military, and other critical networks and infrastructure. Viavi Solutions reported revenues of $443.1 million, up 52.5% year on year, outperforming analysts’ expectations by 2.4%. The business had an exceptional quarter with a beat of analysts’ EPS estimates. Viavi Solutions achieved the fastest revenue growth among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 10.9% since reporting. It currently trades at $34.66. Is now the time to buy Viavi Solutions? Access our full analysis of the earnings results here, it’s free. The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries. Badger Meter reported revenues of $222.3 million, down 6.6% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted EPS in line with analysts’ estimates. As expected, the stock is down 9.3% since the results and currently trades at $132.25. Read our full analysis of Badger Meter’s results here. Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ:ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers. Itron reported revenues of $562.9 million, down 7.2% year on year. This result came in 0.5% below analysts’ expectations. Zooming out, it was actually a strong quarter as it produced a solid beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations. Itron had the weakest performance against analyst estimates, weakest guidance update, and slowest revenue growth in the group. The stock is up 12.2% since reporting and currently trades at $95.12. Read our full, actionable report on Itron here, it’s free. Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE:TDY) offers digital imaging and instrumentation products for various industries. Teledyne reported revenues of $1.66 billion, up 9.8% year on year. This number beat analysts’ expectations by 5.3%. Overall, it was a very strong quarter as it also put up full-year EPS guidance beating analysts’ expectations and a beat of analysts’ EPS estimates. The stock is down 3.7% since reporting and currently trades at $623.56. Read our full, actionable report on Teledyne here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Image source: The Motley Fool. Tuesday, Aug. 18, 2026, at 4:30 p.m. ET Vice President of Investor Relations-Liz Morali President and CEO-Satish Dhanasekaran Executive Vice President and CFO-Neil Dougherty President of the Communications Solutions Group-Kailash Narayanan President of the Electronic Industrial Solutions Group-Jason Kary Senior Vice President of Global Sales-Steve Yoon Operator: Good day, ladies and gentlemen, and welcome to Keysight Technologies Fiscal Third Quarter 2026 Earnings Conference Call. My name is Hilary, and I will be your lead operator today. This call is being recorded today, Tuesday, August 18, 2026, at 1:30 p.m. Pacific Time. I would now like to hand the call over to Liz Morali, Vice President of Investor Relations. Please go ahead, Ms. Morali. Liz Morali: Good afternoon, and thank you for joining us for Keysight's Third Quarter Earnings Conference Call for Fiscal Year 2026. Joining me on today's call are Satish Dhanasekaran, President and CEO; Neil Dougherty, Executive Vice President and CFO; Kailash Narayanan, President of the Communications Solutions Group; Jason Kary, President of the Electronic Industrial Solutions Group; and Steve Yoon, Senior Vice President of Global Sales. Following the prepared remarks from Satish and Neil, we will conduct a question-and-answer session. The press release and information to supplement today's discussion can be found on our Investor Relations website, investor.keysight.com. During today's discussion, we will make forward-looking statements about the financial performance of the company. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties. Information about these risks and uncertainties can be found in our most recent Forms 10-K and 10-Q filings with the SEC. We do not intend to update any forward-looking statements. In addition, we will refer to non-GAAP financial measures and reference core growth, which excludes the impact of acquisitions or divestitures completed within the last 12 months and currency movements. The most directly comparable GAAP financial metrics and reconciliations can be found on our Investor Relations website, and all comparisons are on a year-over-year basis, unless otherwise noted. I'll now turn the call over to Satish. Satish Dhanasekaran: Thank you, Liz. Good afternoon, and thank you, everyone, for joining us on today's earnings call. Keysight delivered another outstanding quarter with record results and broad-based growth across our markets. The outperformance was driven by strong execution by the team and demand extending across Keysight's full suite of differentiated products and solutions. Orders grew 56%, revenue grew 36% and earnings per share grew 79% alongside robust free cash flow generation. Given this momentum, we're raising our outlook for Q4 and for the full fiscal year. 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. Our outperformance reflects the differentiation of Keysight's solutions strategy and the increasing value we bring to customers across their innovation life cycle. We remain focused on executing our strategy for long-term value creation, starting with identifying and investing ahead of structural growth opportunities, engaging early and deeply with industry leaders and building differentiated capabilities to solve our customers' mission-critical applications. We remain confident in our ability to sustain our momentum and deliver long-term value. Now to the business segments. Communications Solutions orders grew for the ninth consecutive quarter, establishing a new record and revenue grew 43%, driven by compounding momentum in commercial communications and strength in aerospace, defense and government. In Commercial Communications, we saw the momentum from the first half of the year continue into the second half, driven by rapid scaling of the AI infrastructure ecosystem. As a result, wireline delivered record orders more than doubling year-over-year. The 4 pillars of opportunity associated with this business, AI infrastructure scaling, speed transitions, silicon photonics and system-level emulation all continue to drive growth and pipeline expansion with our customers. The breadth of our portfolio and sustained engagements with customers across this ecosystem are enabling Keysight to participate across the AI innovation life cycle from pre-silicon design through chip and component validation and system-level emulation of data center racks and clusters to high-value manufacturing. The industry continues to scale, and we have seen a meaningful increase in the diversity of applications and a greater opportunity to expand with customers globally. Let me share a few examples of the diversity of our business. First, silicon designers are adopting Keysight's recently introduced high-performance digital and RF solutions for the lab to validate new designs with system-level requirements to ensure interoperability, performance and reliability. Second, interconnect manufacturers are using Keysight's high-fidelity analyzers to characterize the performance of high-speed backplanes to ensure signal integrity and manufacturing yield. Third, switch designers are using Keysight's emulators to validate network performance across AI workloads and protocols. Fourth, transceiver manufacturers are rapidly scaling 800-gig and 1.6 tera optical transceivers using our industry-leading 224-gig digital communication analyzers. Investments in the optical component ecosystem continues to ramp and the key players are adopting our broad portfolio of lab products, including the industry's first 220 gigahertz lightwave component analyzer, which we introduced at OFC this year. And finally, our strategic engagements with hyperscalers continue to deepen as they are integrating our pre-silicon emulation and workload solutions into their development pipelines. Looking ahead, the scaling challenges associated with AI data center deployments are driving a multiyear industry road map for new architectures, evolving technologies and new standards. We're well positioned and continue to invest ahead of transitions to capture these opportunities. Turning to wireless. Orders grew significantly again this quarter with rising customer investment in next-generation connectivity and continued demand across the supply chain supporting AI infrastructure scaling. In June, the 3GPP plenary meeting in Singapore confirmed the time line for 6G with the industry's first standard targeted for March 2029. With that milestone now set, customers are transitioning from exploratory research into funded development programs. Importantly, 6G is shaping up to be much more than the usual vectors of innovation around higher speeds and new spectrum. Three emerging technology areas are AI-RAN, Integrated Sensing and Communication, or ISAC, and non-terrestrial networks, or NTN. Each of these is expanding the ecosystem and creating opportunities for us to provide end-to-end solutions for these use cases, building on our 5G solutions leadership. We're engaged with customers across multiple applications such as evaluating AI-enabled beamforming, high-fidelity digital twins and network traffic steering, and the traction for our solutions continue to build. Our solutions have been architected around a flexible platform that enables customers to validate various candidate technologies by providing insights from the radio channel, network, device and satellite emulators for early 6G use cases across terrestrial and non-terrestrial networks. Keysight's comprehensive portfolio, spanning the physical layer to emulation tools, is helping us secure early wins with industry leaders. Turning to aerospace, defense and government. Orders were up double digits with growth across all regions driven by a heightened global focus on deterrence and defense modernization. Modernization is raising the bar on performance across the market. In radar, the industry is accelerating its shift to advanced radar architectures. These use cases require high-performance validation solutions, leading to rapid adoption of our multichannel RF solutions and next-generation oscilloscopes at prime contractors. New security architectures have also accelerated the adoption of lower-cost autonomous platforms from UAV to LEO satellite constellations that are increasingly delivered by venture-funded defense technology companies moving at commercial speed. We are recognizing this shift and are positioning ourselves to serve this new ecosystem. Our engagements with defense start-ups and neo-primes is scaling. And this year, we achieved key wins across satellite, UAV and phased array radar applications. Resilient positioning, navigation and timing have become a greater priority as GPS disruption around conflict zones increasingly affects security systems. Demand accelerated for Spirent's PNT solutions that emulate various multichannel jamming and spoofing scenarios in the lab, which enable customers to design and develop robust and resilient systems for these mission-critical environments. As we integrate our teams and solutions portfolios, we have a solid set of opportunities on which to build. With record budgets, faster adoption of capabilities by customers and a portfolio that is purpose-built for mission-critical requirements, we see a durable multiyear demand cycle ahead, and we are well positioned to capture it. Moving to Electronic Industrial Solutions Group. We delivered another record quarter for both orders and revenue with revenue growth of 21% and a meaningful double-digit order growth across all 3 markets: general electronics, semiconductors and automotive and energy. In general electronics, growth was once again led by AI-related innovation and infrastructure investment. Test intensity continues to rise for high-performance components such as multilayer PCBs and capacitors in support of next-generation compute. Higher frequencies, tighter tolerances and greater GPU and CPU density are increasing production complexity and quality requirements. Our precision measurement solutions are being adopted to qualify these components in production. In addition, digital health was up double digits with growth across wearables and monitoring applications. And the growth in education was supported by our semiconductor workforce development solutions, particularly in Asia. In semiconductor, we delivered another record quarter driven by ongoing capacity expansion for advanced nodes, high-bandwidth memory and silicon photonics. Given the increasing adoption of optical interconnects, commercial production of silicon photonics is accelerating across leading foundries and IDMs. We also saw healthy demand for our semiconductor R&D solutions. Our engagement with industry leaders remains high and gives us good visibility into their future requirements as we look into next year and beyond. Finally, in automotive and energy, orders grew solid double digits. Investment remains focused on software-defined vehicle architectures with broad-based global demand for in-vehicle network and cybersecurity test, where our solutions provide verifiable compliance in support of new standards. Our energy and charging business also grew this quarter with engagements across both grid and automotive customers and spanning high-power charging, storage, compliance and infrastructure validation applications. In summary, this quarter's results reflect the strength and diversity of our business. Our portfolio is enabling the major waves of innovation shaping our markets, AI and accelerated compute today and 6G, defense modernization, grid and autonomous systems in the years ahead. Every one of these technologies must be designed, validated and proven before reaching the market. Keysight with its differentiated technology stack and consistent R&D investments is well positioned to outperform the market over the long term. I want to acknowledge the entire Keysight team for their hard work and commitment to our customers' success. And with that, I'll pass the call over to Neil. Neil? Neil Dougherty: Thank you, Satish, and hello, everyone. Our momentum continued in fiscal Q3 as we delivered record results that exceeded the high end of our guidance range for both revenue and EPS. These results were driven by further acceleration in our Commercial Communications business and ongoing strength in Electronic Industrial Solutions and aerospace, defense and government. Our portfolio of highly differentiated solutions is resonating with customers, allowing us to expand margins year-over-year. In addition, our cash flow generation was robust, and we are on track to achieve record operating cash flow in fiscal 2026. Moving to the specifics for Q3. Orders of $2.091 billion were up 56% on a reported basis. Acquisitions represented 5 percentage points of growth and currency was a 1 percentage point headwind. On a core basis, excluding those items, orders grew 52%. Revenue of $1.846 billion was up 36% on a reported basis and up 31% on a core basis. Gross margin was 69%, and operating expenses were $661 million. Operating margin was 33.2%, up 820 basis points year-over-year, and exceeded our long-term target range of 31% to 32%. We delivered net income of $531 million and earnings per share of $3.07. Our core business contributed substantially to these results with an operating margin of 34.7% and an operating margin incremental of 66%. From a segment perspective, the Communications Solutions Group generated revenue of $1.345 billion, up 43% on a reported basis and up 36% on a core basis. CSG gross margin was 70.8% and operating margin was 34%. Within CSG, the Commercial Communications business generated its first $1 billion quarter, with revenue of $1.006 billion, up 56% led by outstanding growth in wireline and supported by strong growth in wireless. Wireline revenue exceeded wireless revenue for the first time this quarter. Aerospace, defense and government achieved revenue of $339 million, an increase of 14%. The Electronic Industrial Solutions Group generated a record $501 million in revenue, an increase of 21% with growth across all 3 markets: general electronics, semiconductor and automotive and energy. EISG gross margin was 64.1% and operating margin was 31%. Software and services both grew double digits, now representing approximately 33% of Keysight revenue, while annual recurring revenue was 24% of total mix. Moving to the balance sheet and cash flow. We ended the quarter with $2.605 billion in cash and cash equivalents, generating cash flow from operations of $437 million and free cash flow of $403 million. This quarter, we repurchased approximately 640,000 shares of Keysight's stock at an average price of approximately $326 per share for a total consideration of $210 million. Year-to-date in fiscal 2026, our share repurchases totaled $517 million. Before I turn to our outlook, I wanted to provide an update on our recent acquisitions. Our integration efforts are now largely complete, including systems migrations, 1 quarter ahead of schedule. Given the faster-than-expected integration, our cost synergy realization will accelerate in Q4. We now expect to have 80% to 90% of the $100 million in cost synergies realized on a run rate basis exiting the fiscal year. Now turning to our outlook. For the fourth quarter of 2026, we expect revenue in the range of $1.930 billion to $1.950 billion, representing 37% year-over-year growth at the midpoint. We expect Q4 earnings per share to be in the range of $3.34 to $3.40, representing approximately 76% year-over-year growth at the midpoint. This will result in fiscal year 2026 revenue growth of 32% and EPS growth of approximately 60% at the midpoint. This guidance is based on a weighted diluted share count of approximately 172 million shares. In closing, fiscal 2026 thus far has been a remarkable year with exceptional performance across our business. Our leading portfolio of solutions levered to multiple technology megatrends is driving significant growth and margin expansion. We remain focused on enabling our customers and helping them further accelerate technology innovation in turn, driving continued organic growth, profitability and ultimately, value creation for our shareholders. With that, I will turn the call over to Liz to begin the Q&A session. Liz Morali: Thank you, Neil. Hilary, can you please provide the instructions for the Q&A session? Operator: Your first question comes from the line of Aaron Rakers from Wells Fargo. Aaron Rakers: Congrats on the strong results here. I'm curious there was a lot of commentary around 6G and the setting forth, kind of, the standard path as we move forward. As we think about Keysight's participation in 6G, I'm curious of how you would characterize the opportunity relative to the 5G cycle that we saw several years ago. Any kind of framing of when we should expect to see some materializing revenue from a 6G cycle? And any thoughts on how you would frame that relative TAM opportunity versus, let's say, 5G several years ago? And I have a quick follow-up. Satish Dhanasekaran: Yes. Thank you, Aaron. Yes, it's a great quarter. The team has been executing very well, and we're pleased with that. Relative to 6G, any time you start a new generational cycle, you always look for what's different versus the past. And it's often too -- you can't wait too long to call it. And that's why we've had a focus on making this company about solutions and about first to market. And so we have been engaged with the industry over the last couple of years. And so as I noted in my prepared remarks, we start to see the industry coalescing around early 6G standards in the 2029 time frame. There's the Olympics in the United States. That's the other mile marker. And that's not new. I mean, any time you've had wireless standards evolutions, ironically, it involves a sporting event of some kind. And so that's another mile marker to draw historical parallels. But from a technological standpoint, traditionally, you see new spectrum, and in support of higher speeds and feeds. It's sort of like the base case for any technology, and that is also going to be true in 6G. But as we noted, we're also seeing other vectors of innovation, AI-RAN being one of them, new use cases like ISAC, security infrastructure and also bringing forward the tighter integration of nonterrestrial and terrestrial assets into a communication framework. And all of these are areas we've invested in, and we have the solutions portfolio, and we're working with industry-leading customers. So our base case is the opportunity in 6G is greater than the opportunity that we saw in 5G, and we're well positioned to capitalize on it. Aaron Rakers: Yes. And then as a quick follow-up on the wireline side. I know you had mentioned that this is the first quarter for which you saw wireline surpass the wireless business. As we think about AI and just the continual expansion of the opportunity set around that, is there any way to kind of help us think about how meaningful AI is to your business today, either within the wireline or in aggregate? And how much of a growth driver that appears to continue to be as we look forward? Satish Dhanasekaran: Yes. I mean we're very pleased with the wireline business and the pickup we're seeing in the AI-related demand in that business as a primary. Of course, as the opportunities increase, we will start to see secondary opportunities, but we'll try to frame it up for you in terms of our wireline business. Wireline was greater than wireless, not just this quarter, but even year-to-date, we have seen tremendous momentum in our wireline business, and we're very pleased even the strongest quarter for our AI and wireline opportunities in Q3, and the pipeline continues to grow strongly for us. So the way I see it is it's a -- we are in the early stages of a long adoption of AI, not just in wireline and as things come together, we'll start to see a convergence with wireless and convergence with automotive and many other end markets that we're well positioned to capitalize over the long term. But in the near term, very pleased with the traction we're seeing for our differentiated products and solutions, which is far exceeding our ability to supply at this point, and customers are planning ahead, and we're doing very well with our AI business. Operator: Your next question comes from the line of Meta Marshall from Morgan Stanley. Meta Marshall: Congrats on the quarter. You mentioned kind of a lot of different ways in which more -- there's more markets or more different types of technology to be testing as far as AI. But could you just give a sense of kind of how testing density has changed? So there's a lot of different -- more end markets, but just kind of how the overall content of testing has changed as kind of some of these technologies get a little bit more complex. And then, Neil, very healthy incremental margins again this quarter. Just any guardrails that we should think about just as we kind of progress forward? Satish Dhanasekaran: Yes, Meta, as you've noted, as the year has progressed, not only are we picking up what we would call traditional opportunity associated with CapEx investments that customers are making, but the opportunity set as we see it into the future continues to grow and expand. And it's a function of this ecosystem over the last few years has largely been a homogeneous integrated vertical stack with a finite set of opportunities that we have done extremely well. But by working early, we're also working with other players that are entering the space and the space is increasingly becoming more heterogeneous in nature, all the way from compute to racks and also protocols. I mean the -- we're seeing a growth in the number of protocols at all layers of the stack. And the architectures increasingly involve GPUs, CPUs, DPUs mix. And it's not just for the sake of making things more complex. It's -- the reality is different customers have different strategies. And based on the type of workload they're using, they're trying to pick the right architecture for them. And our tools are increasingly doing very well with customers across the broader tail, which positions us well into the future. I don't know, Kailash, if you have any other comments to add. Kailash Narayanan: Yes. Fundamentally, the design margins are shrinking, right? So with higher data rates, lower latency, AI needs to be lossless. And even if there's a limited amount of gap there, the models won't perform. So what our customers are seeing is they can no longer guarantee anything by design. They also need to test it in production as well. So this is increasing a lot of design emulation and test intensity. If you look at a compute or a switch tray these days, it's gone from tens to hundreds of high-speed pinouts. And that's more insertion points for us. We have our VNAs and oscilloscopes testing things at signal level. We introduced a new portfolio to test things at a bit level, and our AI workload emulators are testing things and emulating things at a protocol and packet level. You look at scaling and things are going from monolithic chips to chiplet architectures. So the interoperability of chiplets need to get emulated and tested. Customers are asking when a chip is exercising a model, we emulate an environment for that chip to get stress tested. And they want to see if the chip shuts down or gets overheated, they want to activate all of the cores and with higher power and higher speeds. So all of these are creating additional opportunities for us. And we're excited about the complete portfolio we have, electrical, optical, RF, digital and protocol. We're bringing all of these capabilities to enable our customers. And we're seeing R&D as well as our manufacturing business grow significantly. Neil Dougherty: Yes. And Meta, to your second question, obviously, we've seen really strong core operating leverage this quarter. And I think as we look forward, I continue, at least as it relates to '27 to feel confident in our ability to continue to outperform our 40% leverage target, particularly given the synergy realization that we'll see. I mentioned that we've largely completed our integration of the recently completed acquisitions. You put the question in the context of guardrails. The only thing I would just caution people to pay attention to is we did have the onetime tariff impacts this year that kind of artificially pulled up '26 profitability that won't repeat. So if you adjust for that and think about it on an operational basis, I would expect we'll continue to outperform the 40% metric. Operator: Your next question comes from the line of Mark Delaney from Goldman Sachs. Mark Delaney: Congratulations on the strong results. I was hoping to talk around demand sustainability to start. I think orders have been over $2 billion for 2 quarters in a row now. And as you look into the fourth quarter and next year, do you think this level of demand is sustainable or even a level that Keysight can grow from? Satish Dhanasekaran: Yes, Mark, we think it is. I'll just say our base case is orders slightly up from Q3, in line with seasonality and then following that seasonal trend into Q1 of '27. Steve, I know the pipeline, you may make some comments there. Sung Yoon: Thanks, Satish. Well, let me start by saying it's great to be head of sales at Keysight right now. We had an outstanding Q3. We delivered our highest quarter ever for the third consecutive quarter. And with the traditional uplift that we expect in Q4, we're confident in delivering another record quarter and surpassing $2 billion for the third consecutive quarter. Even more promising, despite these record quarter results, our pipeline has continued to grow throughout the year and now stands at an all-time high. I think this is a proof that our go-to-market strategy and priorities are working. Our top priority has been to really spend more time with customers as much as possible, identifying those new opportunities and find those unarticulated needs and capturing new logos. As a case in point, year-to-date, we've added nearly 3,000 new customers, representing more than $100 million of incremental business. And we're also partnering closely with marketing to broaden our reach and get to those customers earlier in their buying process. In addition, one of our focus has been to elevate our engagement with our top customers. So our largest customers are doing well, performing up high double digits for the year. And more importantly, we're really expanding our reach across their entire ecosystem. We're also adding capacity in markets and high-growth areas. Southeast Asia is a good example. We've more than doubled our business and is our fastest-growing region for the quarter and for the year. So all in all, we further accelerated our momentum this quarter, resulting in our highest ever monthly funnel intake just last month and our new record for rolling 12-month funnel. Mark Delaney: Very helpful context. My other question was on supply and the ability to meet this level of demand the company has seen. So can you double-click a bit more on Keysight's ability to meet demand at these types of volumes, both in terms of the supply chain and the ability to get enough parts as well as your own ability from a manufacturing standpoint? Satish Dhanasekaran: Yes. Thank you, Mark. As you heard from Steve, we're seeing broad-based strength in demand. I think one of the points that in addition to everything Steve said is we're seeing demand across the globe, and our portfolio is doing very well. Now from a supply chain perspective, our team has done a great job this year, continuing to scale with discipline, as you see from our gross margins at record levels as well. And we're continuing to meet our customers' demand needs. as we go through the year. It's also true that the supply environment is less flexible today than, let's say, a year ago. And so we're working with our suppliers to deconstrain the supply chain, especially at these levels of demand, and we remain confident in the guide that we have laid out for Q4. Operator: Your next question comes from the line of Tim Long from Barclays. Timothy Long: I'll ask one then come back with my follow-up. I want to go back to commercial comms and the strong AI business on the wireline side. You talked about some of the applications and the use cases that are helping there. Curious if you can just give us a little update on how that business is looking from an R&D standpoint versus manufacturing. If you can give us a little update on any movements that you've seen in the AI-related business? Then I have a follow-up. Neil Dougherty: Yes. As it relates to R&D and manufacturing, and I'll talk about it from the wireline side of things where we put out the numbers previously. Historically, this has been a business that's been among the most heavily levered toward R&D. We've talked about it at about 80-20. We've more recently said with the addition of manufacturing business in the support of the AI data center build-out that's shifted to more like 70-30. And I think if you look at it over a shorter horizon over the last couple of quarters, it's probably more like 2/3, 1/3. But we're still heavily levered toward R&D within wireline even as we're servicing this entire ecosystem and servicing Keysight's customers as they take products out of R&D into manufacturing and ultimately deploy them into the marketplace. Timothy Long: Okay. Great. Great. And then my second question, my follow-up, there was a mention in there about the hyperscalers. I'm curious if you can just touch maybe at a high level on how important of a customer cohort is that? Are they -- is there a margin difference? Is there more product they take because they're involved in a lot of technologies? And would that be just the 4 or 5 big ones? Or do you see that spreading to the next level of neo-clouds and others playing in the industry? Satish Dhanasekaran: Yes, I would say, Tim, the hyperscalers and our early engagement started about 5 years ago with our acquisition of Ixia, who had more of a relationship with them in the early days. Right now, I would say our relationship with hyperscalers not only is in the U.S., but I also would add some of the model companies that are driving a lot of the demand for the ecosystem. So it is strategic in that sense because of the tremendous capital that they're deploying and that sort of moves downstream into the ecosystem. So understanding their needs are important. Also, many of them, I think, publicly disclosed their own silicon -- in-house silicon and efforts to make their own chips. So they are a very important customer base for us. From a revenue concentration point of view, they're actually the smaller of the entire, you'd say, roughly 10% of our business is from that cohort of companies directly, but they do have a lot of downstream effect and influence across the ecosystem. So it's very important. What's also important is to recognize that even as we're winning today in R&D and in manufacturing applications that -- where the industry is scaling, we're also uncovering new opportunities such as with regard to emulating the workloads because that's where the future is going to be, and we're in a very good position with our emulation platforms to be able to help the industry to uncover the various heterogeneous emulation of workloads associated with AI because as Kailash mentioned earlier, that is going to be critical, especially given the latency requirements of AI and the scaling data across the AI network. Operator: Your next question comes from the line of Adrienne Colby from Citi. Adrienne Colby: It's Adrienne for Atif Malik. I was hoping you could talk a little bit more about the sequentially slower growth in aerospace, defense and government segment. You described a lot of strong demand dynamics and double-digit order growth, but we did see a bit of a step down in the growth rate there. Satish Dhanasekaran: Yes, Adrienne, I've said this, you heard me say this on the call, Aerospace and defense is a business I can easily call years out. Very difficult to call in a given quarter just because it's got government budgets, it moves at its own pace. But this year, we're quite pleased with the growth and adoption of our solutions, including our newly acquired PNT offerings from Spirent. So Neil, any specific comments? Neil Dougherty: Yes, I would just reiterate that we're still up double digits. There is some quarter-to-quarter perturbations in these end markets. I -- my honest feeling is you're probably -- there's probably nothing to see there from that perspective. Adrienne Colby: And then just as a follow-up, could you comment on if the run rate that you were seeing in business within wireline is consistent with last quarter? Yes, please. Satish Dhanasekaran: Yes. Let me just make one more comment that we built backlog in the business. So if you're looking at revenue and drawing that conclusion, that's a function of supply and supply chain. So I would not read too much into it, as Neil mentioned. Please go ahead. Neil Dougherty: Can you repeat your follow-on question? Adrienne Colby: Yes. I just wanted to confirm or rather to ask if the run rate of the business, the AI business within the wireline segment was consistent with what you were seeing last quarter or if you've seen that expand at all? Satish Dhanasekaran: It has expanded. Operator: Your next question comes from the line of Andrew Spinola from UBS. Andrew Spinola: You reported another strong quarter in the EISG segment. I think you highlighted some of the strength in semi and general electronics. And I wonder if you could unpack that a little bit. You said last quarter, you're seeing some of the demand from AI expand into some of these segments. I'm wondering if you're seeing that and if you think that there's a fairly meaningful expansion still ahead in those segments. And I'd also like you to comment on the operating margin, which was quite strong in EISG in the quarter and how you're thinking about the sustainability of that going forward? Satish Dhanasekaran: Yes, Andrew, pleased with the double-digit growth we're seeing in our EISG business year-to-date. Recovery in auto is another theme along with strength in semi. But we have Jason here, and he'll touch upon those points. Jason Kary: Yes. Thank you, Andrew, for your question. And specifically with regards to the AI tailwinds that we're seeing in the rest of the business, we've talked frequently about the leverage of our communications technologies and our IP into end markets. We do have some specific technologies around semiconductor wafer test, where we're seeing significant capacity expansion there across multiple dimensions, including advanced nodes, memory, silicon photonics. As far as looking forward, the forecast around wafer fab equipment and capital going into those markets continues to expand. And so that is robust. In the general electronics space, what you're seeing is, again, to the earlier question from Meta about test intensity, you're seeing a lot of that multilayer, high-density heterogeneity that's coming through at the component level, resulting in higher test intensity on the production side, which Kailash mentioned, we see that in some of our end markets in general electronics. And again, that's moving from the board level to the component level where the tolerances are getting increasingly tighter as you look at higher frequency and higher data throughput and just expectations of high performance in small spaces. So I think that's the challenge that customers face. And the beauty of our solutions is we address those all the way from R&D into production, and so strong leverage there. On the operating margin side, yes, we're pleased with the progress that we're making there. I think historically, that business had suffered a little bit. And over the last 12 to 18 months, we've really focused on driving top line growth because that's where it always starts and then transforming pieces of the business. We're investing more in some of the software elements of the business with ESI and the Optical Solutions group. And there's been rationalization of certain pieces of the business where perhaps lower margin, and at the same time, pursuing other opportunities that we've talked about related to digital health and the grid. So I think in summary, despite the different profile and composition of the businesses within EISG today, we're confident of our ability to continue to achieve higher levels of profitability as we move forward. Andrew Spinola: I appreciate that color, Jason. That's helpful. I just had one follow-up question for Neil. In prior commentary, you discussed potentially the synergies being $100 million plus from the acquisitions. And I'm wondering now that you've completed the integration, is your estimate of those synergies potentially larger? And I'm just sort of thinking about what sort of contribution I can assume for Q4, Q1? Neil Dougherty: Yes. I would say that at this point, given where we're at, we certainly have direct line of sight to the $100 million. So I think that's -- to the extent there was risk in that, that's substantially derisked. And I think as this business now begins to operate more holistically within the Keysight framework, we'll continue to look for additional opportunities. So I don't have a quantification for you, but I think history would suggest that when the initial kind of wave of synergies come out that there is admittedly smaller dollars, but some additional follow-on efficiencies that tend to materialize. If you think about it on an incremental basis, as you move from FY '26 to FY '27, I'd be thinking on the order of $50 million. I think we realized close to $40 million, again, ramping throughout the year as you thought about it from Q1 through Q4. And again, I expect that we're going to be kind of close to 90% of that $100 million realized as we enter next fiscal year. Operator: Your next question comes from the line of Joseph Cardoso from JPMorgan. Marc Vitenzon: This is Marc Vitenzon on for Joseph Cardoso. I guess you guys have given us a lot of detail on the strength in AI-related wireline. So I wanted to ask about traditional non-AI portion of wireline. How does growth look like in that business? And what are you seeing there? Satish Dhanasekaran: Yes. I think we're seeing a convergence, I think, Marc, is what -- how I would characterize it. And I think that is to be expected as such a disruptive technology starts to intercept multiple end markets. I'll give you an example. The wireless customer base, historically, maybe never had to think about AI, and now AI is entering the RAN. That's an example of an application. The wireless ecosystem has a known set of contract manufacturing companies that play into the telco market. Many of them have now started to invest in building their own racks for AI. That's another example of some of the applications that are now emerging that we're well positioned to capitalize given our strength and reputation in this ecosystem. Marc Vitenzon: Got it. And then you guys mentioned that software and services was roughly 33% of revenue. I guess I'm curious like where do you think that number eventually goes, especially following the recent acquisitions? Satish Dhanasekaran: Yes. I think, look, the strategy for the company is to become a solutions company. This has been what we have worked hard to building. And inherently, that implies providing more software-centric solutions and also offering differentiated services to build the life cycle value contributions. And we do it at the pace of our markets and at the pace of our customers. It's all about our customers' needs. And so we're not trying to force a business model into the marketplace. And so yes, we've trended as high as 40% a year or so ago, and now we're at 33%. But I just want to say on a dollar basis, this is record levels for software and services, and we'll continue to keep innovating to stay differentiated in the marketplace. Neil Dougherty: I would also maybe just add that our software and services businesses are also growing double digits. They're just not growing as fast as the hardware businesses at this point in time. Operator: Your next question comes from the line of Matt Niknam from Truist Securities. Matthew Niknam: Congrats on the results. Just 2, if I could. First, on the 4Q revenue guide. So it's implied to only increase about 5% sequentially. I know that's pretty normal in terms of seasonality, but your book-to-bill has been north of 1.1 for 2 straight quarters. So I'm wondering if you can speak to any sort of supply constraints that are inhibiting or limiting that revenue guide for the fourth quarter? And if there's any color in terms of how much of the backlog that's been growing is going to ship next fiscal year? And then on a related note, I think the last several years, you've given some initial color or framework in terms of next fiscal year on the third quarter call. I'm curious if there's any initial thoughts you're ready to provide just given the momentum you're seeing across the business. Satish Dhanasekaran: Maybe I'll take the 2027 commentary, Neil, and then you could cover the remaining. It's a great question. Look, we have no doubt a strong setup as we enter fiscal '27, even as we remain cognizant of the outperformance you're seeing in 2026 on top of the growth year in '25. Supply chain will remain the governor of near-term revenue. I think I mentioned that earlier. But when I look at the broader end market, I just have to look at the technology trends and say the complexity of these technologies are only growing. The intensity and the pace at which our customers are innovating across our end markets globally, it's relentless right now, and that intensity is matched with their investment. And we're well positioned as a company to capitalize because of all the investments we made in the downturn in R&D that is now going to generate and has already started a good refresh cycle for our new products, which are already being enthusiastically received by our customers. So we're well positioned from that point of view. We also are taking a -- given this demand that is consistently now for a few quarters, and we're executing well on a quarterly basis, but we've taken a longer-term view, 18-month-plus view of our supply chain planning, and we're working to create additional flexibility, but those come with a lag because I'll give you an example. We'll have to redesign some products on the margin to accommodate second sources and enter into some more longer-term agreements with our customers. So we're already starting to take those actions. And so I put it all together, I feel good about the setup. We'll give you more specific guidance for Q1 when we report in Q4. Neil? Neil Dougherty: Yes. I mean I think you said most of it. I think if I was just going to recap. Right now, supply is not the limiter, right? Excuse me, demand is not the limiter. We do have some supply chain limitations. It's a little bit of a mixed bag. I think if we think back 3 months to the biggest supply chain challenges we were facing, most of them were internally -- internal capacity related around ramping some NPIs that have seen kind of unprecedented early demand from the marketplace. We've made tremendous progress in that area. I think the challenges have shifted more toward incoming parts which are under high demand as demand has ramped and continues to ramp across the ecosystem, right? You've got numerous players that are all competing for supply from a similar set of component suppliers. And so I just think that the supply situation is likely to be nonlinear and will likely be a governor of our ability to convert demand into revenue for the next several quarters. Sung Yoon: If I can just add a couple of comments about 2027 outlook. We just had the biggest refresh of our core RF microwave and high-speed digital products since we formed Keysight. And we reinforced this at our worldwide annual sales training event in June, where we trained our entire sales team on this portfolio as well as Spirent products. So as these solutions are rolled out and introduced to more and more customers, I expect this to be a strong tailwind for us for many years, many quarters to come. Satish Dhanasekaran: And years, Steve. Sung Yoon: Years. Operator: Your next question comes from the line of Quinn Fredrickson from Baird. Quinn Fredrickson: I wanted to go back to the orders discussion. Good to see the $2 billion orders number again, but it's been unusual typically to see orders grow sequentially in the third quarter. So could you just unpack what the drivers were? And do you think you saw any tailwinds for possible future sovereign transceiver restrictions or customers getting ahead of any other constraints or supply issues? Satish Dhanasekaran: There was nothing unusual about the demand. In fact, we saw conversion of the pipeline in a very orderly fashion, no pull-ins. We are looking for it. It's just an environment where the markets are stronger and Keysight's differentiated position in its core markets, starting within commercial comms, which really outperformed for us relative to our expectation even with AI. And equally, the demand from our prime contractors in aerospace defense remains strong as they're building out capacity. Sovereign investments in Europe is another tailwind for our defense business. And the EISG business is clearly outperforming with the semiconductor business doing exceptionally well. So strong broad-based demand, and we expect, as Steve mentioned before, we expect that to continue into Q4. Quinn Fredrickson: And Neil, gross margin came in at 69%. I think you had said mid-67% range. Was the difference just all incremental volume or mix? Just if you could unpack that? And then any color on how to think about sustainability into 4Q or even '27? Neil Dougherty: Yes. I mean I think if you go back a quarter and adjust for the tariff thing, we were 68% last quarter, we're 69% this quarter. It's obviously volume is helping, but I think it gets to the differentiation of the solutions that we're bringing forward across end markets, whether that's early 6G, AI, semiconductor, we have a highly differentiated set of solutions. Mix does -- we do have a broad range of gross margins across the portfolio. So mix does matter. But I do think this upper 60s percent is a sustainable level for us. Operator: Your final question comes from the line of Bastien Faucon-Morin from SIG. Bastien Faucon-Morin: This is Bastien filling in for Mehdi. You saw some momentum in wireline. It was up 56% year-on-year. And you mentioned the mix going toward 70%, 30% production R&D from 80-20. Could you give us a breakdown on how you expect R&D and production to look like in revenues in the coming quarter? Satish Dhanasekaran: I should say, Bastien, it's one of those things that moves -- things move around on a quarterly basis. So we tend to look at it over a longer-term horizon because in a given quarter, if a customer comes in and they're doing an expansion in production line, that could dominate a certain part of the segment. But as I've called out, I think we said 2/3 in R&D, 1/3 in manufacturing. On the margin, we're seeing in our pipeline greater activity as the customers are scaling. They're ramping production of 1.6 terabit as we speak right now, and the demand is very, very strong, right? So in a given quarter like Q4, I can easily see that mix even trend more toward production, and we're meaningfully participating across the workflow. And that's the important message is our R&D business is growing, as Kailash mentioned. We're very pleased with the diversity of that business, and we're also happy that we're participating in the volume part of the data center build-out as well. Bastien Faucon-Morin: Got it. Very helpful. And then as a follow-up, how should we think about the long-term mix of R&D versus production given that the ramp and adoption of new transceivers are accelerating? Your volume is kind of ramping, but you also have more complexity when it comes to testing those new technologies. Is there a way to think about that long-term R&D and production mix as we're reaching higher deployments of optical transceivers? Satish Dhanasekaran: Yes. I mean I would just say, look, our strategy, as we have laid out, it's really to be an innovation accelerator for our customers. That's sort of our core purpose. We're focused on building our tech stacks, optical, electrical, both of them to be able to help our customers go through in R&D. And what we're seeing now is pretty unprecedented that the rate of adoption of these technology curves or technology waves it's accelerating to a point where you're seeing concurrent adoption across many dimensions, right? 800 gig is still sort of the underlying technology, but 1.6 is scaling. And typically, that would have been spaced out a little more. So it's really hard for us to make sense for how long this goes and how broad this goes. But I do know customers are already engaging us on 3.2 tera. We did a demo at a conference earlier this year. So the intensity associated with technology change and the economics for companies to find the latest technology remains high, and we're participating in this, and I feel good about our position heading into '27. Operator: That concludes our question-and-answer session for today. I would like to turn the call back to Liz Morali for any closing comments. Liz Morali: Thank you, Hilary, and thank you all for joining us today. A replay of today's call will be available on the Investor Relations website later today, and we appreciate your interest in Keysight. Operator: Thank you for attending. This concludes today's call. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Keysight Technologies. The Motley Fool has a disclosure policy. Keysight (KEYS) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Keysight’s second quarter results were met with a positive market reaction, as the company delivered revenue and adjusted earnings per share above Wall Street’s expectations. Management attributed this outperformance to broad-based demand across its key markets, highlighting the impact of accelerating investment in artificial intelligence (AI) infrastructure, next-generation semiconductors, and defense modernization. CEO Satish Dhanasekaran credited growth in both the Communications Solutions and Electronic Industrial Solutions segments, emphasizing that, “Our outperformance reflects the differentiation of Keysight's solutions strategy and the increasing value we bring to customers across their innovation life cycle.” Is now the time to buy KEYS? Find out in our full research report (it’s free). Revenue: $1.85 billion vs analyst estimates of $1.75 billion (36.5% year-on-year growth, 5.8% beat) Adjusted EPS: $3.07 vs analyst estimates of $2.48 (23.7% beat) Revenue Guidance for Q3 CY2026 is $1.94 billion at the midpoint, above analyst estimates of $1.82 billion Adjusted EPS guidance for Q3 CY2026 is $3.37 at the midpoint, above analyst estimates of $2.68 Operating Margin: 25%, up from 17.3% in the same quarter last year Market Capitalization: $52.91 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Aaron Rakers (Wells Fargo) asked about the timing and scale of Keysight’s opportunity in the 6G cycle. CEO Satish Dhanasekaran said the 6G opportunity should surpass 5G and is developing ahead of the 2029 standards timeline. Meta Marshall (Morgan Stanley) asked how testing complexity is evolving with AI. President Kailash Narayanan noted increasing design complexity and testing density, with shrinking design margins and more insertion points for Keysight’s solutions. Mark Delaney (Goldman Sachs) probed the sustainability of current demand levels. Head of Sales Steve Yoon said the pipeline stands at an all-time high, and management expects record orders to continue into next quarter. Adrienne Colby (Citi) inquired about the slower sequential growth in aerospace and defense. Dhanasekaran explained that government-related timing drives quarterly variability, but underlying demand is strong and durable. Bastien Faucon-Morin (SIG) asked about the mix of R&D versus production in the wireline segment. Dhanasekaran indicated the mix can shift quarter-to-quarter but expects increased production activity as adoption of new transceivers accelerates. Looking ahead, the StockStory team will be monitoring (1) the pace of AI infrastructure and optical transceiver adoption across end markets, (2) continued progress on integrating and realizing cost synergies from recent acquisitions, and (3) Keysight’s ability to address supply chain constraints to convert record demand into revenue. Execution on product rollouts, especially for new communications and semiconductor solutions, will also be key indicators of sustained momentum. Keysight currently trades at $311.60, down from $341 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Better-than-expected earnings can be a compelling catalyst when strong quarterly results are paired with favorable earnings revisions, improving guidance, or attractive fundamentals. That combination is showing up in Keysight Technologies (KEYS), Macro Bank BMA), and ZIM Integrated Shipping Services ZIM) stock. All three recently exceeded earnings expectations, with KEYS and BMA sporting a Zacks Rank #2 (Buy) and ZIM landing the coveted Zacks Rank #1 (Strong Buy). Providing electric design and test instrumentation systems, Keysight delivered standout results for its fiscal third quarter with adjusted EPS surging 78% year over year to a quarterly peak of $3.07, and topping the consensus estimate of $2.46 by nearly 25%. Revenue climbed 36% to a record $1.84 billion, exceeding Q3 expectations by more than 5%. AI infrastructure has become an increasingly powerful growth driver. Keysight's Communications Solutions Group revenue jumped 43% YoY to $1.35 billion, including 56% growth in commercial communications, while wireline orders more than doubled. Orders topped $2 billion for a second consecutive quarter as demand remained strong across AI infrastructure, next-generation communications, semiconductors, and defense. More importantly, momentum appears to be carrying into Q4. Management expects revenue of $1.93-$1.95 billion and adjusted EPS of $3.34-$3.40, with both figures coming in above Wall Street’s expectations. With analyst estimates likely to keep rising, Zacks projections already call for Keysight’s fiscal 2026 revenue and earnings to be up 32% and roughly 44%, respectively. Plus, Keysight’s 30X forward earnings multiple isn't an overly stretched premium to the benchmark S&P 500 and is noticeably beneath its Zacks Electronics-Measuring Instruments Industry average of 45X. Image Source: Zacks Investment Research Macro Bank, the leading bank in Argentina, also delivered a much better-than-expected quarter, with Q2 adjusted EPS reaching $2.29, rising 17% YoY and crushing expectations of $1.59 per share by 44%. This came as Q2 sales increased 26% to $1.05 billion and topped estimates of $864.78 million by 22%. The balance sheet remains another encouraging component of BMA's investment case. Total financing increased 3% sequentially, while deposits were up 4% from a year ago. Furthermore, Macro Bank ended Q2 with a very strong 28% Tier 1 capital ratio, underscoring its balance sheet strength and ample cushion above global regulatory standards, while liquid assets equaled a noteworthy 74% of deposits. Management also raised its full-year adjusted return on equity (ROE) outlook to roughly 12% from 8%, although weak consumer demand prompted the bank to reduce its real loan-growth forecast to a range of 2%-5%. That said, what also strengthens the investment case is that BMA shares are trading at a reasonable 11X forward earnings multiple with a very generous 7.48% annual dividend yield. Along with a Zacks Rank #2 (Buy), BMA currently earns an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum, Image Source: Zacks Investment Research Among these three top-rated stocks, ZIM delivered the most dramatic earnings surprise. The global container shipping company delivered adjusted Q2 EPS of $0.64, crushing expectations that called for a loss of $0.10 per share and soaring 236% from $0.19 in the comparative period. Revenue increased over 9% to $1.78 billion and topped Q2 estimates of $1.62 billion by more than 9% as well. Improving freight economics helped drive the rebound. ZIM carried 922,000 TEUs during Q2, up 3%, while its average freight rate increased roughly 8% to $1,590 per Twenty-Foot Equivalent Unit (TEU). More intriguingly, adjusted EBITDA increased 4% to $491 million, adjusted net income surged to $77 million from $24 million a year ago, and ZIM generated a robust $386 million in free cash flow. The company also held a $2.46 billion net cash position when excluding lease liabilities. ZIM now expects full-year adjusted EBITDA of $2-$2.4 billion and adjusted EBIT of $700 million-$1.1 billion, with substantially stronger second-half performance anticipated. Adding another catalyst, Hapag-Lloyd's pending acquisition of ZIM would pay shareholders $35 per share in cash, which is nearly 25% above its current stock price and is targeted to close in Q4, although regulatory approvals are still required. Notably, ZIM is trading at 8X forward earnings and, in addition to its strong buy rating, has an overall "A" Zacks Style Scores grade. Image Source: Zacks Investment Research Keysight Technologies arguably offers the strongest underlying growth story of these top-rated stocks, as surging AI infrastructure investment is driving higher demand for its testing and design solutions. Macro Bank provides a more value-oriented opportunity backed by improving profitability and substantial capital reserves, while ZIM's earnings rebound, cash generation, and pending $35-per-share acquisition provide a unique event-driven setup. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Macro Bank Inc. (BMA) : Free Stock Analysis Report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report ZIM Integrated Shipping Services Ltd. (ZIM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Keysight Technologies Inc.? Here are five stocks we like better. Record Q3 performance: Keysight reported revenue of $1.85 billion, up 36% year over year, while orders climbed 56% and EPS increased 79% to $3.70. Operating margin expanded to 33.2%, above the company’s long-term target range. AI and defense demand drove growth: Communications revenue rose 43%, with commercial communications surpassing $1 billion as AI infrastructure boosted wireline demand. Aerospace and defense revenue increased 14%, while electronic industrial solutions revenue reached a record $501 million. Outlook raised despite supply constraints: Keysight forecast fourth-quarter revenue of $1.93 billion to $1.95 billion and expects fiscal 2026 revenue growth of about 32% and EPS growth of approximately 60%. Management said demand remains strong, but supply-chain availability could limit revenue conversion over the next several quarters. Keysight: The AI and Defense Stock Seeing Big Price Target Boosts Keysight Technologies (NYSE:KEYS) reported record fiscal third-quarter 2026 results, with revenue, orders and earnings exceeding the high end of its guidance range, as demand accelerated across AI infrastructure, semiconductor, aerospace and defense, and industrial markets. Chief Executive Officer Satish Dhanasekaran said orders increased 56% year over year, revenue rose 36%, and earnings per share grew 79%. He said the company was raising its outlook for the fiscal fourth quarter and full year, citing broad-based customer investment in increasingly complex engineering applications. → Datavault AI Locks Down CyberCatch in $94M Security Rollup MarketBeat Week in Review – 03/16 - 03/20 “The outperformance was driven by strong execution by the team and demand extending across Keysight's full suite of differentiated products and solutions,” Dhanasekaran said. He identified AI infrastructure, advanced semiconductors, defense modernization and next-generation communications as major growth drivers. Chief Financial Officer Neil Dougherty said third-quarter orders totaled $2.09 billion, up 56% on a reported basis. Acquisitions added 5 percentage points of growth, while currency reduced growth by 1 percentage point; core orders growth was 52%. → Nasdaq’s 23-Hour Trading Push Could Turn Global Liquidity Into a Growth Engine Keysight: The Quiet Winner in the AI and Defense Spending Boom Revenue was $1.85 billion, up 36% reported and 31% on a core basis. Gross margin was 69%, while operating margin rose 820 basis points year over year to 33.2%, above the company’s long-term target range of 31% to 32%. Keysight reported net income of $531 million, or $3.70 per share. The core business produced a 34.7% operating margin and 66% operating-margin incremental. Cash flow from operations was $437 million. Free cash flow was $403 million. Cash and cash equivalents totaled $2.61 billion at quarter-end. The company repurchased about 640,000 shares for $210 million during the quarter, at an average price of about $326 per share. Fiscal-year-to-date share repurchases totaled $517 million. → Tesla's Cybercab Launch Could Reshape Margins for Uber and Lyft Software and services revenue both grew at double-digit rates and represented about 33% of total revenue. Annual recurring revenue accounted for 24% of the company’s revenue mix. The Communications Solutions Group generated $1.35 billion in revenue, up 43% reported and 36% on a core basis. Its operating margin was 34%, and gross margin was 70.8%. Commercial communications revenue reached its first billion-dollar quarter, rising 56% to $1.01 billion. Wireline revenue exceeded wireless revenue for the first time, supported by AI-related demand. Dougherty said wireline was also larger than wireless on a year-to-date basis. Dhanasekaran said wireline orders more than doubled from a year earlier, driven by AI infrastructure scaling, speed transitions, silicon photonics and system-level emulation. Keysight cited demand from silicon designers, interconnect manufacturers, switch designers, transceiver manufacturers and hyperscalers. The company said customers are expanding production of 800G and 1.6T optical transceivers and are already engaging with Keysight regarding 3.2T technology. Management said the AI-related wireline business expanded from the prior quarter, while demand for differentiated products exceeded the company’s current ability to supply them. Management also highlighted developing opportunities in 6G. Dhanasekaran said the industry’s first 6G standard is targeted for March 2029, following a June 3GPP meeting. The company expects the 6G opportunity to be greater than the 5G cycle, citing emerging applications including AI-RAN, integrated sensing and communications, and non-terrestrial networks. Aerospace, defense and government revenue increased 14% to $339 million, while orders rose by a double-digit percentage across regions. Dhanasekaran pointed to defense modernization, advanced radar architectures, autonomous platforms and resilient positioning, navigation and timing systems as sources of demand. He said demand accelerated for Spirent’s positioning, navigation and timing solutions, which help customers emulate jamming and spoofing scenarios. The company said its engagements with defense startups and “neo-prime” contractors expanded during the year, including wins in satellite, UAV and phased-array radar applications. The Electronic Industrial Solutions Group recorded $501 million in revenue, a 21% increase and another quarterly record. The segment posted a 64.1% gross margin and 31% operating margin. Management said growth occurred across general electronics, semiconductors, and automotive and energy. Jason Kary, president of the Electronic Industrial Solutions Group, said semiconductor demand was supported by capacity expansion for advanced nodes, high-bandwidth memory and silicon photonics. In general electronics, higher component density, tighter tolerances and greater data throughput were increasing production-test requirements. Automotive and energy orders grew at a solid double-digit rate, driven by software-defined vehicle architectures, cybersecurity testing, charging, storage and grid-validation applications. For the fiscal fourth quarter, Keysight forecast revenue of $1.93 billion to $1.95 billion, representing 37% year-over-year growth at the midpoint. The company projected earnings per share of $3.34 to $3.40, or about 76% year-over-year growth at the midpoint. At the midpoint of its outlook, Keysight expects fiscal 2026 revenue growth of 32% and earnings-per-share growth of approximately 60%. The outlook assumes a weighted diluted share count of about 172 million shares. Dougherty said acquisition integrations were largely complete, including system migrations completed one quarter ahead of schedule. The company now expects to realize 80% to 90% of its targeted $100 million in cost synergies on a run-rate basis exiting fiscal 2026. Management said demand was not limiting growth, but supply-chain availability could constrain the conversion of demand into revenue over the next several quarters. Dhanasekaran said Keysight is taking an 18-month-plus view of supply planning, including pursuing second sources for some products and longer-term customer agreements. Dougherty said the company remains confident in its fourth-quarter outlook despite constraints involving incoming parts that are in high demand across the broader technology ecosystem. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Keysight Technologies Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Keysight Technologies, Inc. KEYS reported solid third-quarter fiscal 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate.The leading electronic design and testing solutions provider reported a 36% year-over-year increase in revenues, supported by broad-based demand across its key end markets and continued customer investments in emerging technologies. Artificial Intelligence (AI) infrastructure, next-generation connectivity and increasing adoption of advanced technologies continued to boost the company’s performance. 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. Keysight Technologies Inc. price-consensus-eps-surprise-chart | Keysight Technologies Inc. Quote 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. 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. 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. 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. Keysight currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 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. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Texas Instruments Incorporated (TXN) : Free Stock Analysis Report Silicon Motion Technology Corporation (SIMO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Keysight Technologies, Inc. KEYS used its third-quarter fiscal 2026 earnings call to emphasize accelerating AI infrastructure demand and a stronger fiscal 2027 setup, while warning that supply availability will govern near-term revenue conversion. Non-GAAP earnings were $3.07 per share versus the $2.46 Zacks Consensus Estimate, while revenue of $1.85 billion topped the $1.75 billion consensus. Keysight Technologies Inc. price-consensus-eps-surprise-chart | Keysight Technologies Inc. Quote President and CEO Satish Dhanasekaran said AI infrastructure scaling drove commercial communications momentum, with wireline orders more than doubling year over year. Commercial communications also posted its first $1 billion revenue quarter. Communications Solutions Group president Kailash Narayanan said higher speeds, lower latency and denser architectures are lifting test intensity across design and production, creating more opportunities in signal, protocol and workload validation. CFO Neil Dougherty said wireline's recent mix has moved to about two-thirds R&D and one-third manufacturing from a historical 80-20% split. Dhanasekaran said the fiscal fourth quarter could tilt further toward production as 1.6-terabit transceiver volumes ramp. Keysight guided fiscal fourth-quarter revenue to $1.930 billion-$1.950 billion and non-GAAP earnings to $3.34-$3.40 per share. At the midpoint, fiscal 2026 revenue is expected to grow 32% and earnings about 60%. CFO Dougherty said third-quarter operating margin reached 33.2%, above Keysight's 31-32% long-term target range. He expects fiscal 2027 operating leverage to remain above the company's 40% target after adjusting for one-time tariff effects that lifted fiscal 2026 profitability. Dougherty also said acquisition integration is largely complete one quarter early. Keysight expects 80-90% of its $100 million cost-synergy target on a run-rate basis exiting fiscal 2026, with about $50 million of incremental benefit into fiscal 2027. CEO Dhanasekaran said demand is not the constraint entering fiscal 2027. Supply availability will determine how quickly Keysight can convert its expanding order pipeline into revenue. CFO Dougherty said bottlenecks have shifted from internal capacity around new-product ramps toward incoming components facing strong ecosystem demand. He expects supply to remain nonlinear and constrain revenue conversion for the next several quarters. Dhanasekaran said Keysight is extending supply planning beyond 18 months, pursuing second sources and redesigning some products to improve flexibility. Management still expressed confidence in meeting fiscal fourth-quarter guidance. Dhanasekaran said Keysight's base case is that the 6G opportunity exceeds the 5G cycle. He highlighted AI-RAN, integrated sensing and communication, and non-terrestrial networks as new opportunity areas. Electronic Industrial Solutions Group president Jason Kary said semiconductor demand is benefiting from capacity expansion in advanced nodes, high-bandwidth memory and silicon photonics. EISG revenue reached a record $501 million, up 21%. Dhanasekaran said aerospace, defense and government orders rose double digits, supported by defense modernization and Spirent positioning, navigation and timing solutions. He described the demand cycle as durable across multiple years. A Baird analyst asked whether strong third-quarter orders reflected pull-ins tied to restrictions or supply concerns. Dhanasekaran said there were no unusual pull-ins and described pipeline conversion as orderly and broad-based. A Truist Securities analyst pressed management on the fourth-quarter revenue guide and fiscal 2027 setup. Dhanasekaran said Keysight has a strong fiscal 2027 starting position but will provide specific fiscal first-quarter guidance with the fiscal fourth-quarter report. Senior vice president of Global Sales Sung Yoon said the pipeline reached an all-time high, while nearly 3,000 new customers added more than $100 million of incremental year-to-date business. He expects another record order quarter in the fourth quarter. CEO Dhanasekaran centered the strategy on investing ahead of AI, 6G, semiconductor and defense transitions while expanding Keysight's role from R&D into manufacturing and system-level emulation.Management's tone remained confident on demand but cautious on conversion, with supply identified as the near-term governor as Keysight carries fiscal 2026 momentum into fiscal 2027. KEYS carries a Zacks Rank #2 (Buy), a favorable signal within the estimate-revision framework. Its Growth Score of B is favorable, but the Value Score of D, Momentum Score of F and VGM Score of D show weaker readings across the other style dimensions.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks Style Scores complement the Rank, with A and B grades preferred alongside a Zacks Rank #1 or #2. The current combination is mixed rather than uniformly strong, and the Zacks Rank can change as estimates are revised after the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Keysight (KEYS) came out with quarterly earnings of $3.07 per share, beating the Zacks Consensus Estimate of $2.46 per share. This compares to earnings of $1.72 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +24.80%. A quarter ago, it was expected that this electronic measurement technology company would post earnings of $2.33 per share when it actually produced earnings of $2.87, delivering a surprise of +23.18%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Keysight, which belongs to the Zacks Electronics - Measuring Instruments industry, posted revenues of $1.85 billion for the quarter ended July 2026, surpassing the Zacks Consensus Estimate by 5.55%. This compares to year-ago revenues of $1.35 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Keysight shares have added about 77.7% since the beginning of the year versus the S&P 500's gain of 13.1%. While Keysight has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Keysight was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.72 on $1.84 billion in revenues for the coming quarter and $10.30 on $6.92 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Measuring Instruments is currently in the top 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the broader Zacks Computer and Technology sector, DocuSign (DOCU), is yet to report results for the quarter ended July 2026. The results are expected to be released on September 3. This provider of electronic signature technology is expected to post quarterly earnings of $1.08 per share in its upcoming report, which represents a year-over-year change of +17.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. DocuSign's revenues are expected to be $868.04 million, up 8.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report Docusign Inc. (DOCU) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Keysight (KEYS) reported $1.85 billion in revenue for the quarter ended July 2026, representing a year-over-year increase of 36.5%. EPS of $3.07 for the same period compares to $1.72 a year ago. The reported revenue represents a surprise of +5.55% over the Zacks Consensus Estimate of $1.75 billion. With the consensus EPS estimate being $2.46, the EPS surprise was +24.8%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Keysight performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Revenue- Communications Solutions Group: $1.35 billion versus the two-analyst average estimate of $1.25 billion. The reported number represents a year-over-year change of +43.1%. Revenue- Commercial Communications: $1.01 billion versus $910.05 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +56.2% change. Revenue- Aerospace, Defense & Government: $339 million versus $344.84 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +14.5% change. Revenue- Electronic Industrial Solutions Group: $501 million versus the two-analyst average estimate of $494.01 million. The reported number represents a year-over-year change of +21.6%. Income from operations- Communications Solutions Group: $458 million versus the two-analyst average estimate of $351.37 million. Income from operations- Electronic Industrial Solutions Group: $155 million compared to the $138.02 million average estimate based on two analysts. View all Key Company Metrics for Keysight here>>> Shares of Keysight have returned +15% over the past month versus the Zacks S&P 500 composite's +4% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research