KEYS Filings — Keysight Technologies, Inc. - FilingSpy
KEYS
Keysight Technologies, Inc.
A maker of electronic design, simulation, and test tools whose oscilloscopes, analyzers, and generators help engineers across communications, aerospace, defense, automotive, and semiconductors verify their work. Its roots reach back to the Palo Alto garage where Hewlett-Packard was founded in 1939, and it became its own company in 2014 when it was spun off from Agilent. The name blends "key" and "insight" — the power to see what others cannot — a fitting label for a firm built on measurement.
Keysight gross margin rose 6.3 points to 68.6% as a $93M tariff refund offset costs, while revenue rose 31% on AI demand.
A one-time tariff refund reshaped Keysight's quarter. rose 31% to $1.72 billion and expanded 6.3 points to 68.6%, driven by AI-related network investment and a $93 million net tariff refund benefit that lowered cost of goods sold. The underlying business is growing, but the quarter's profitability was lifted by a non-recurring item.
Key takeaways
rose 31% to $1.72 billion, with the Communications Solutions Group up 35% and the Electronic Industrial Solutions Group up 24%, both driven by AI-related high-speed network demand and aerospace/defense strength.
expanded 6.3 percentage points to 68.6%, primarily because of a $93 million net tariff refund benefit that reduced cost of goods sold, along with higher volume and favorable product mix, partially offset by ongoing tariff costs and higher people-related expenses.
Section summaries
Management's Discussion and Analysis
Keysight Q2 FY2026 revenue rose 31% to $1.7B, gross margin expanded 6ppts to 68.6%, aided by $57M net IEEPA tariff refund benefit.
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Total grew 31% to $1,717M, with CSG up 35% and EISG up 24%, driven by AI-related high-speed network demand and aerospace/defense strength.
rose 97% to $407 million and widened 7.9 points to 23.7%, reflecting the gain and operating expenses declining as a share of .
rose 36% to $349 million, as the higher and tariff refund benefit were partially offset by the absence of prior-year derivative gains and higher acquisition-related costs.
Orders rose 56% to $2.05 billion with growth across all regions, while the Spirent Communications acquisition contributed $55 million in incremental for the quarter.
was $501 million for the quarter and $942 million for the six-month period, supported by higher and a $100 million tariff refund receivable.
What changed
The demand correction that began in early 2023 has definitively ended: orders rose 56% in Q2 FY2026, accelerating from 8% growth in FY2025 and confirming the return to growth flagged in prior quarters.
, which had been under pressure from tariffs and unfavorable mix, expanded sharply to 68.6% — but the expansion was driven by a $93 million net tariff refund benefit, not by an underlying improvement in cost structure; prior quarters had flagged tariff-related costs as a persistent .
The Spirent Communications acquisition, flagged as a watch item since Q2 FY2024, closed in FY2025 and contributed $55 million in incremental this quarter, with integration now underway.
The $107 million tax refund lawsuit, flagged repeatedly as a material risk, remains unresolved with no new outcome reported this quarter.
The Electronic Industrial Solutions Group sustained its return to growth, up 24% after growing 15% in Q1 FY2026, suggesting the recovery flagged in FY2025 is not a one-time event.
What to watch
Whether normalizes back toward the 62% range in Q3 FY2026 once the one-time tariff refund benefit drops out of the comparison.
The trajectory of orders after the 56% increase in Q2 FY2026 — whether this pace reflects sustained demand or a pull-forward of customer spending.
The outcome of the $107 million tax refund lawsuit, where an adverse ruling would reverse a previously recognized discrete tax benefit and materially increase the and tax liability.
Whether the Spirent Communications and Synopsys Optical Solutions Group integrations add to operating expenses and in coming quarters, pressuring .
increased 6ppts to 68.6%, primarily from net tariff refund claims ($93M cost offset), higher volume, and favorable mix, partially offset by ongoing tariffs and higher people costs.
rose 8ppts to 23.7%, reflecting gains and lower operating expenses as a percentage of sales.
increased 35% to $349M, driven by higher , favorable mix, and the net tariff refund benefit, partially offset by prior-year derivative gains and higher acquisition-related costs.
was $942M for the six months; the company recorded a $100M tariff refund receivable and a $40M customer surcharge refund liability.
Orders surged 56% to $2,051M, with broad regional growth, while the Spirent acquisition contributed $55M in incremental for the quarter.
Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk appear in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in Part II of our 2025 Annual Report on Form 10-K. In the first quarter of fiscal 2026, we entered into fixed to floating interest rate swap…
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Quantitative and qualitative disclosures about market risk appear in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in Part II of our 2025 Annual Report on Form 10-K.
In the first quarter of fiscal 2026, we entered into fixed to floating interest rate swap contracts with an aggregate notional amount of $600 million in connection with our 2034 Senior Notes. Additionally, in the first quarter of fiscal 2026, we entered into cross-currency swaps with an aggregate notional amount of $300 million to mitigate foreign currency exposure related to a portion of our Japanese Yen net investment in certain foreign subsidiaries. See Note 9, “Derivatives,” in Part I Item 1 of this Form 10-Q for additional information.
There were no other material changes during the six months ended April 30, 2026 to this information reported in our 2025 Annual Report on Form 10-K.
Keysight is defending multiple Centripetal patent cases and pursuing a $107M+ GILTI tax refund lawsuit against the U.S.
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Centripetal Networks alleges patent infringement by Keysight products in U.S. district court, but the case is stayed while appeals continue on four patents after many claims were invalidated.
In Germany, two of three Centripetal patents were invalidated and the third is under appeal with only one claim surviving; Centripetal was ordered to repay Keysight’s defense costs in two cases.
The ITC terminated its Section 337 investigation in Keysight’s favor, and in April 2026 the Federal Circuit affirmed that Keysight did not unfairly import infringing products.
Europe’s Unified Patent Court found no infringement and the EPO revoked the asserted patent; Centripetal is appealing both decisions.
Keysight filed a U.S. Court of Federal Claims lawsuit seeking a tax refund of $107 million plus interest and costs related to GILTI deductions, and warns that losing would likely cause a material increase in its .
The company states there are no matters it currently believes are probable and reasonably possible of having a material impact, but notes litigation outcomes are inherently uncertain.
Tariff policy uncertainty, trade restrictions, and geopolitical turmoil are newly emphasized as material risks to international operations and financial results.
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New U.S. tariffs and retaliatory measures, particularly on China, increase costs and supply chain disruption; the company has filed for refunds after a 2026 Supreme Court ruling but recovery is uncertain.
Trade restrictions and sanctions, especially U.S.-China tensions, could force the company to suspend business with key customers or suppliers with little notice and no adequate alternatives.
Geopolitical conflicts, including the Russia-Ukraine war and Middle East instability, may limit technology transfers, close facilities, and increase cybersecurity and energy costs.
The company's reliance on tax incentives in Singapore (expiring 2029) and Malaysia (expired 2025, renewal pending) creates risk of a higher if incentives are lost or not renewed.
A lawsuit filed in January 2025 seeks a $107 million tax refund related to deductions; an adverse outcome could materially increase the and tax liability.
Ongoing intellectual property litigation with Centripetal is highlighted as a specific, costly dispute that could divert management attention and result in significant damages or restrictions.