Keysight Technologies(US:KEYS)2026-03-05 21:06Financial Performance - Total orders for the three months ended January 31, 2026, were $1,645 million, an increase of 30% compared to the same period last year[125]. - Revenue for the three months ended January 31, 2026, was $1,600 million, an increase of 23% year-over-year, with a favorable impact of 8 percentage points from acquisitions[126]. - Net income for the three months ended January 31, 2026, was $281 million, a 67% increase compared to $169 million for the same period last year[127]. - Total revenue for the three months ended January 31, 2026, was $1,124 million, representing a 27% increase year-over-year[151]. - CSG revenue increased by 33% year-over-year, accounting for 67% of total CSG revenue, driven by R&D spending in terabit solutions and high-speed networks[152]. - Aerospace, defense, and government end market revenue grew by 18% year-over-year, representing 33% of total CSG revenue, primarily due to investments in radar, spectrum operations, and space solutions[153]. - EISG revenue for the three months ended January 31, 2026, was $476 million, a 15% increase year-over-year, supported by AI-driven demand for semiconductor technologies[160]. Expenses - Research and development expenses for the three months ended January 31, 2026, increased by 22% to $303 million, representing 19% of total revenue[132]. - Selling, general and administrative expenses for the three months ended January 31, 2026, increased by 24% to $447 million, also representing 28% of total revenue[132]. - R&D expenses increased by 21% year-over-year to $203 million, driven by costs from acquired businesses and investments in growth opportunities[156]. Margins - Gross margin for the three months ended January 31, 2026, was 62.2%, a decrease of 1 percentage point compared to the same period last year[137]. - Operating margin for the three months ended January 31, 2026, was 15.5%, down 1 percentage point from 16.8% in the same period last year[140]. - Gross margin for EISG increased by 1 percentage point to 62.4%, primarily due to higher revenue volume and favorable impacts from acquisitions[161]. - Gross margin for the three months ended January 31, 2026, was 68.5%, flat compared to the same period last year, impacted by tariffs and higher people-related costs[155]. Cash Flow and Investments - Net cash provided by operating activities increased by $63 million to $441 million for the three months ended January 31, 2026[167]. - Net cash used in investing activities increased by $11 million to $44 million, primarily due to acquisition activities[170]. - Cash and cash equivalents increased to $2,195 million as of January 31, 2026, up from $1,890 million on October 31, 2025[179]. - Non-U.S. cash holdings rose to $1,707 million from $1,317 million, while U.S. cash decreased to $488 million from $573 million[179]. - Capital spending is expected to be approximately $160 million in 2026, primarily for capacity expansion and technology investments[184]. Tax and Audit - The effective tax rate for the three months ended January 31, 2026, was (42%), compared to 15% for the same period last year, primarily due to a favorable audit settlement[145]. - A release of $56 million from uncertain tax positions occurred during the three months ended January 31, 2026, due to an audit settlement[182]. Company Strategy and Plans - The company has a stock repurchase program authorized for up to $1,500 million, with $1,413 million remaining as of January 31, 2026[173]. - The company plans to contribute $10 million to non-U.S. defined benefit plans for the remainder of fiscal 2026[183]. - The company does not expect to contribute to U.S. defined benefit plans for the remainder of fiscal 2026[183]. - The company believes its cash and cash equivalents, along with cash generated from operations, will satisfy cash needs for the foreseeable future[184]. - There were no material changes to cash requirements from the previous fiscal year report[181]. - The company utilizes various funding strategies to ensure cash availability in necessary locations globally[179]. Workforce - Total headcount as of January 31, 2026, was approximately 16,600, an increase from 15,400 in the previous year, primarily driven by acquisitions[143]. Financial Instruments - The company entered into fixed to floating interest rate swap contracts with an aggregate notional amount of $600 million and cross-currency swaps of $300 million in the first quarter of fiscal 2026[186].