Keysight Technologies, Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 19 May 2026: press release. Guidance figures: 3 new. The quarter’s numbers.

Key takeaways

Second-quarter revenue rose 31%: Revenue was $1.72 billion against $1.31 billion a year earlier, an increase of 31%. Source
Non-GAAP EPS rose on higher net income: Non-GAAP diluted EPS was $2.87 against $1.70. GAAP diluted EPS was $2.02 against $1.49. Source
Orders rose to $2.05 billion: Orders were $2,051 million against $1,316 million a year earlier; six-month orders were $3,696 million against $2,579 million. Source
Communications Solutions Group grew 35%: CSG revenue was $1,231 million; commercial communications grew 40% and aerospace, defense and government grew 24%. Source
Electronic Industrial revenue rose 24%: EISG revenue was $486 million, up 24%, with double-digit growth across automotive and energy, general electronics and semiconductor. Source
Tariff recovery offset three lines: Offsets to the $100 million tariff receivable were $93 million to cost of sales, $4 million to SG&A and $3 million to interest income. Source
Third-quarter revenue range set: Third-quarter revenue is expected at $1.730 billion to $1.750 billion, with the midpoint representing about 29% year-over-year growth. Source

“Keysight delivered the strongest quarter in the company’s history, capping a record first half with all-time highs in orders, revenue, EPS, and free cash flow”
Satish Dhanasekaran, President and CEO of Keysight

Guidance

Area	Period	Figure	Against last quarter
Revenue Source	Third quarter of fiscal 2026	$1.730 billion to $1.750 billion	New
Revenue growth Source	Third quarter of fiscal 2026	approximately 29%	New
Non-GAAP diluted EPS Source	Third quarter of fiscal 2026	$2.43 to $2.49	New

What changed from last quarter

Guidance raised: Full-year fiscal 2026 expectations raised; the release gives no full-year figures. Source
New guidance: Third-quarter fiscal 2026 guidance given; the prior release gave second-quarter ranges.
New: A $100 million receivable was recorded for recovery of IEEPA tariffs paid and statutory interest. Source

Quarter and first-half results

Second-quarter revenue rose 31%: Revenue was $1.72 billion against $1.31 billion a year earlier, an increase of 31%. Source
Non-GAAP EPS rose on higher net income: Non-GAAP diluted EPS was $2.87 against $1.70. GAAP diluted EPS was $2.02 against $1.49. Source
Operating income nearly doubled: Income from operations was $407 million against $207 million a year earlier, with interest income of $18 million and interest expense of $25 million. Source
First-half revenue rose: Six-month revenue was $3,317 million against $2,604 million in the same period of the prior year. Source
Orders rose to $2.05 billion: Orders were $2,051 million against $1,316 million a year earlier; six-month orders were $3,696 million against $2,579 million. Source

Segment revenue and margins

Communications Solutions Group grew 35%: CSG revenue was $1,231 million; commercial communications grew 40% and aerospace, defense and government grew 24%. Source
CSG margins rose year over year: CSG gross margin was 74% against 67%; operating margin was 33% against 26%, on income from operations of $411 million against $236 million. Source
Electronic Industrial revenue rose 24%: EISG revenue was $486 million, up 24%, with double-digit growth across automotive and energy, general electronics and semiconductor. Source

“The disciplined decisions and strategic investments we have made over the past several years are enabling us to capitalize on accelerating demand and outperform.”
Satish Dhanasekaran, President and CEO of Keysight

Costs, margins and tariff items

Product costs and R&D rose: Cost of products and services was $539 million against $492 million; research and development was $320 million against $250 million. Source
Selling and administrative costs rose: Selling, general and administrative expense was $456 million against $360 million a year earlier. Source
EISG margins rose year over year: EISG gross margin was 68% against 59%; operating margin was 33% against 23%, on income from operations of $161 million against $92 million. Source
Tariff recovery offset three lines: Offsets to the $100 million tariff receivable were $93 million to cost of sales, $4 million to SG&A and $3 million to interest income. Source
Customer surcharge refund reduced revenue: A $40 million liability was recorded for refunding tariff surcharges collected from customers, reducing revenue. Source

Cash flow and balance sheet

Free cash flow was $472 million: Free cash flow was $472 million in the quarter, against $457 million a year earlier, after $29 million of investment in property, plant and equipment. Source
Cash balance reached $2.43 billion: Cash, cash equivalents and restricted cash totaled $2.43 billion at April 30, 2026, up from $1.89 billion at October 31, 2025. Source
Current debt of $699 million: Current portion of long-term debt was $699 million at April 30, 2026, against none at October 31, 2025; long-term debt was $1,832 million. Source
Six-month operating cash flow was $942 million: Operating cash flow was $501 million in the quarter and $942 million for six months, against $484 million and $862 million. Source

“With strong year-to-date momentum and a robust pipeline of opportunities, we are raising our expectations for fiscal 2026.”
Satish Dhanasekaran, President and CEO of Keysight

Cash returns and payments

Six-month buybacks rose: Treasury stock repurchases, including excise tax payments, were $310 million for six months against $228 million; treasury shares rose to 32.0 million. Source
Acquisition spending increased: Acquisitions of businesses and intangible assets were $17 million for six months against $3 million; $14 million of acquisition consideration was paid. Source
Cash interest and taxes paid rose: Interest payments were $70 million for six months against $39 million; income tax paid, net, was $84 million against $44 million. Source

Third-quarter guidance and tariffs

Third-quarter revenue range set: Third-quarter revenue is expected at $1.730 billion to $1.750 billion, with the midpoint representing about 29% year-over-year growth. Source
Third-quarter EPS range set: Non-GAAP EPS is expected at $2.43 to $2.49 on about 173 million weighted diluted shares; no GAAP reconciliation is provided. Source
Prior guidance excluded tariff ruling: The second-quarter guidance excluded IEEPA ruling impacts and later administration actions; the current release records tariff recovery and refund entries.

Figures management reported

Figure	Reported
Orders, second quarter Source	$2,051 million
Commercial Communications revenue Source	$858 million, up 40%
Aerospace, Defense and Government revenue Source	$373 million, up 24%

Risks management discussed

Regulatory: Tariff refunds follow court rulings that directed U.S. Customs and Border Protection to set up refund processes, and the company has booked receivable and liability entries. Source
Financial: Some GAAP tax-rate items relate to future events and cannot yet be estimated, so no GAAP EPS reconciliation is given for the third quarter. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Keysight Technologies Reports Second Quarter 2026 Results

Delivered record results with over $2 billion in orders; full-year outlook raised

SANTA ROSA, Calif., May 19, 2026 - Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the second fiscal quarter ended April 30, 2026.

“Keysight delivered the strongest quarter in the company’s history, capping a record first half with all-time highs in orders, revenue, EPS, and free cash flow,” said Satish Dhanasekaran, President and CEO of Keysight. “The disciplined decisions and strategic investments we have made over the past several years are enabling us to capitalize on accelerating demand and outperform. With strong year-to-date momentum and a robust pipeline of opportunities, we are raising our expectations for fiscal 2026.”

Second Quarter Financial Summary

Revenue was $1.72 billion, compared with $1.31 billion in the second quarter of 2025.
GAAP net income was $349 million, or $2.02 per share, compared with $257 million, or $1.49 per share, in the second quarter of 2025.
Non-GAAP net income was $497 million, or $2.87 per share, compared with $295 million, or $1.70 per share in the second quarter of 2025.
Cash flow from operations was $501 million, compared to $484 million last year. Free cash flow was $472 million, compared to $457 million in the second quarter of 2025.
As of April 30, 2026, cash, cash equivalents, and restricted cash totaled $2.43 billion.

Reporting Segments

Communications Solutions Group (CSG)

CSG reported revenue of $1,231 million in the second quarter, up 35 percent from the prior year, reflecting 40 percent growth in commercial communications and 24 percent growth in aerospace, defense, and government.

Electronic Industrial Solutions Group (EISG)

EISG reported revenue of $486 million in the second quarter, up 24 percent from the prior year, reflecting double-digit growth across all end markets of automotive and energy, general electronics, and semiconductor.

IEEPA Tariff Refund Claim

In February 2026, the United States Supreme Court determined that certain tariffs imposed pursuant to the International Emergency Economic Powers Act (“IEEPA”) were not authorized by law. Subsequent rulings by the United States Court of International Trade have directed U.S. Customs and Border Protection to establish processes to effect refunds of certain tariffs previously collected. Based on these judicial determinations, for the quarter ended April 30, 2026, the Company recorded a receivable of $100 million within “other current assets” in the condensed consolidated balance sheet, representing recovery of tariffs previously paid and statutory interest on IEEPA tariff refunds, with corresponding offsets of $93 million to “cost of sales”, $4 million to “selling, general and administrative expenses”, and $3 million to “interest income” in the condensed consolidated statement of operations. In addition, the Company recorded a $40 million liability within “other accrued liabilities” in the condensed consolidated balance sheet representing the refund of tariff surcharge collected from customers, with a corresponding reduction of revenue in the condensed consolidated statement of operations.

Outlook

Keysight’s third fiscal quarter of 2026 revenue is expected to be in the range of $1.730 billion to $1.750 billion. The mid-point of the revenue range represents year-over-year growth of approximately 29%. Non-GAAP earnings per share for the third fiscal quarter of 2026 are expected to be in the range of $2.43 to $2.49, based on a weighted diluted share count of approximately 173 million shares. Certain items impacting the GAAP tax rate pertain to future events and are not currently estimable with a reasonable degree of accuracy; therefore, no reconciliation of GAAP earnings per share to non-GAAP has been provided. Further information is discussed in the section titled “Use of Non-GAAP Financial Measures” below.

Webcast

Keysight’s management will present more details about its second quarter FY2026 financial results and its third quarter FY2026 outlook on a conference call with investors today at 1:30 p.m. PT. This event will be webcast in listen-only mode. Listeners may log on to the call at www.investor.keysight.com under the “Upcoming Events” section and select “Q2 FY26 Keysight Technologies Inc. Earnings Conference Call” to participate. The call can also be accessed by dialing 1-646-307-1963 or 1-800-715-9871 toll-free (conference ID 81279). The webcast will remain on the company site for 90 days.

Forward-Looking Statements

Forward-looking statements notice

This communication contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The words “assume,” “expect,” “intend,” “will,” “should,” “outlook” and similar expressions, as they relate to the company, are intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could significantly affect the expected results and are based on certain key assumptions of Keysight’s management and on currently available information. Due to such uncertainties and risks, no assurances can be given that such expectations or assumptions will prove to have been correct, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Keysight undertakes no responsibility to publicly update or revise any forward-looking statement. The forward-looking statements contained herein include, but are not limited to, predictions, future guidance, projections, beliefs, and expectations about the company’s goals, revenues, financial condition, earnings, and operations that involve risks and uncertainties that could cause Keysight’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, impacts of global economic conditions such as inflation or recession, slowing demand for products or services, volatility in financial markets, reduced access to credit, increased interest rates, impacts of geopolitical tension and conflict outside of the U.S., export control regulations and compliance, net zero emissions commitments, customer purchasing decisions and timing, tariff and trade policy impacts and order cancellations.

In addition to the risks above, other risks that Keysight faces include those detailed in Keysight’s filings with the Securities and Exchange Commission on Keysight’s annual report on Form 10-K for the period ended October 31, 2025 and Keysight’s quarterly report on Form 10-Q for the period ended January 31, 2026.

Segment Data

Segment data reflect the results of our reportable segments under our management reporting system. Segment data are provided on page 5 of the attached tables.

Use of Non-GAAP Financial Measures

In addition to financial information prepared in accordance with U.S. GAAP (“GAAP”), this document also contains certain non-GAAP financial measures based on management’s view of performance, including:

Non-GAAP Net Income/Earnings
Non-GAAP Net Income per share/Earnings per share
Free Cash Flow

Net Income per share is based on weighted average diluted share count. See the attached supplemental schedules for reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure for the three and six months ended April 30, 2026. Following the reconciliations is a discussion of the items adjusted from our non-GAAP financial measures and the company’s reasons for including or excluding certain categories of income or expenses from our non-GAAP results.

About Keysight Technologies

At Keysight (NYSE: KEYS), we inspire and empower innovators to bring world-changing technologies to life. As an S&P 500 company, we’re delivering market-leading design, emulation, and test solutions to help engineers develop and deploy faster, with less risk, throughout the entire product lifecycle. We’re a global innovation partner enabling customers in communications, industrial automation, aerospace and defense, automotive, semiconductor, and general electronics markets to accelerate innovation to connect and secure the world. Learn more at Keysight Newsroom and www.keysight.com.

	Three months ended		Six months ended
	April 30,		April 30,
	2026	2025	2026	2025
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share data)
(Unaudited)
PRELIMINARY
Orders	$2,051	$1,316	$3,696	$2,579
Revenue	$1,717	$1,306	$3,317	$2,604
Costs and expenses:
Cost of products and services	539	492	1,144	970
Research and development	320	250	623	499
Selling, general and administrative	456	360	903	721
Other operating expense (income), net	(5)	(3)	(8)	(11)
Total costs and expenses	1,310	1,099	2,662	2,179
Income from operations	407	207	655	425
Interest income	18	21	34	40
Interest expense	(25)	(20)	(54)	(40)
Other income (expense), net	18	112	(19)	94
Income before taxes	418	320	616	519
Provision (benefit) for income taxes	69	63	(14)	93
Net income	$349	$257	$630	$426
Net income per share:
Basic	$2.04	$1.49	$3.68	$2.47
Diluted	$2.02	$1.49	$3.64	$2.45
Weighted average shares used in computing net income per share:
Basic	171	172	171	173
Diluted	173	173	173	174

	April 30, 2026	October 31, 2025
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share data)
(Unaudited)
PRELIMINARY
ASSETS
Current assets:
Cash and cash equivalents	$2,412	$1,873
Accounts receivable, net	1,022	939
Inventory	1,038	1,050
Other current assets	570	486
Total current assets	5,042	4,348
Property, plant and equipment, net	741	795
Operating lease right-of-use assets	220	236
Goodwill	3,465	3,424
Other intangible assets, net	1,174	1,304
Long-term investments	169	211
Long-term deferred tax assets	335	373
Other assets	592	610
Total assets	$11,738	$11,301
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$699	$ -
Accounts payable	392	355
Employee compensation and benefits	448	399
Deferred revenue	737	652
Income and other taxes payable	124	207
Operating lease liabilities	52	51
Other accrued liabilities	197	186
Total current liabilities	2,649	1,850
Long-term debt	1,832	2,534
Retirement and post-retirement benefits	76	75
Long-term deferred revenue	251	232
Long-term operating lease liabilities	176	193
Other long-term liabilities	423	536
Total liabilities	5,407	5,420
Stockholders' equity:
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding	-	-
Common stock; $0.01 par value; 1 billion shares authorized; 203 million and 202 million shares issued, respectively	2	2
Treasury stock, at cost; 32.0 million shares and 30.8 million shares, respectively	(4,108)	(3,799)
Additional paid-in-capital	2,982	2,851
Retained earnings	7,705	7,075
Accumulated other comprehensive loss	(250)	(248)
Total stockholders' equity	6,331	5,881
Total liabilities and equity	$11,738	$11,301

	Six months ended
	April 30,
	2026	2025
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
PRELIMINARY
Cash flows from operating activities:
Net income	$630	$426
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	77	64
Amortization	135	70
Share-based compensation	134	98
Deferred tax expense (benefit)	(30)	(40)
Excess and obsolete inventory-related charges	19	22
Gain on sale of investments	(6)	-
Unrealized loss (gain) on investments in equity securities	48	(23)
Other non-cash expenses (income), net	8	2
Changes in assets and liabilities, net of effects of businesses acquired:
Accounts receivable	(89)	123
Inventory	(6)	(18)
Accounts payable	46	7
Employee compensation and benefits	61	20
Deferred revenue	91	52
Income taxes payable	(103)	56
Other assets and liabilities	(73)	3
Net cash provided by operating activities	942	862
Cash flows from investing activities:
Investments in property, plant and equipment	(63)	(59)
Acquisitions of businesses and intangible assets, net of cash acquired	(17)	(3)
Purchase of investments	(17)	(4)
Proceeds from sale of investments	17	-
Net cash used in investing activities	(80)	(66)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock plans	32	31
Payment of taxes related to net share settlement of equity awards	(35)	(29)
Treasury stock repurchases, including excise tax payments	(310)	(228)
Proceeds from issuance of long-term debt	-	748
Payment of acquisition-related consideration	(14)	-
Debt issuance costs	(1)	(7)
Net cash provided by (used in) financing activities	(328)	515
Effect of exchange rate movements	6	10
Net increase in cash, cash equivalents, and restricted cash	540	1,321
Cash, cash equivalents, and restricted cash at beginning of period	1,890	1,814
Cash, cash equivalents, and restricted cash at end of period	$2,430	$3,135

Cash payments included in operating activities:

Interest payments	$70	$39
Income tax paid, net	$84	$44

	Three months ended				Six months ended
	April 30,				April 30,
	2026		2025		2026			2025
	Net Income	Diluted EPS	Net Income	Diluted EPS	Net Income		Diluted EPS	Net Income		Diluted EPS
KEYSIGHT TECHNOLOGIES, INC.
NET INCOME AND DILUTED EPS RECONCILIATION
(In millions, except per share data)
(Unaudited)
PRELIMINARY
GAAP Net income	$349	$2.02	$257	$1.49	$630		$3.64	$426		$2.45
Non-GAAP adjustments:
Amortization of acquisition-related balances	73	0.42	34	0.19	146		0.84	67		0.38
Share-based compensation	58	0.34	37	0.22	135		0.78	99		0.57
Acquisition and integration costs (benefits)	31	0.18	(74)	(0.42)	60		0.35	24		0.14
Restructuring and others	4	0.03	12	0.07	16		0.09	25		0.14
Net loss (gain) on equity investments	(6)	(0.04)	14	0.08	42		0.25	(23)		(0.13)
Adjustment for taxes	(12)	(0.08)	15	0.07	(156)		(0.90)	(6)		(0.03)
Non-GAAP Net income	$497	$2.87	$295	$1.70	$873		$5.05	$612		$3.52
Weighted average shares outstanding - diluted	173		173			173			174

For the three and six months ended April 30, 2026 and 2025, management used a non-GAAP effective tax rate of 14%, respectively.

Please refer to the last page for details on the use of non-GAAP financial measures.

	Q2'26	Q2'25	Inc/(Dec)
KEYSIGHT TECHNOLOGIES, INC.
SEGMENT RESULTS INFORMATION
(In millions, except percentages)
(Unaudited)
PRELIMINARY
Communications Solutions Group			Percent
Revenue	$1,231	$913	35%
Gross margin, %	74%	67%
Income from operations	$411	$236
Operating margin, %	33%	26%
Electronic Industrial Solutions Group			Percent
	Q2'26	Q2'25	Inc/(Dec)
Revenue	$486	$393	24%
Gross margin, %	68%	59%
Income from operations	$161	$92
Operating margin, %	33%	23%

Segment revenue and income from operations are consistent with the respective non-GAAP financial measures as discussed on last page.

	Three months ended		Six months ended
	April 30,		April 30,
	2026	2025	2026	2025
KEYSIGHT TECHNOLOGIES, INC.
FREE CASH FLOW
(In millions)
(Unaudited)
PRELIMINARY
Net cash provided by operating activities	$501	$484	$942	$862
Adjustments:
Investments in property, plant and equipment	(29)	(27)	(63)	(59)
Free cash flow	$472	$457	$879	$803

Please refer to the last page for details on the use of non-GAAP financial measures.

			Percent
	Q2'26	Q2'25	Inc/(Dec)
KEYSIGHT TECHNOLOGIES, INC.
REVENUE BY END MARKETS
(In millions)
(Unaudited)
PRELIMINARY
Aerospace, Defense and Government	$373	$301	24%
Commercial Communications	858	612	40%
Electronic Industrial	486	393	24%
Total Revenue	$1,717	$1,306	31%

KEYSIGHT TECHNOLOGIES, INC.

Non-GAAP Financial Measures

Management uses both GAAP and non-GAAP financial measures to analyze and assess the overall performance of the business, to make operating decisions and to forecast and plan for future periods. We believe that our investors benefit from seeing our results “through the eyes of management” in addition to seeing our GAAP results. This information enhances investors’ understanding of the continuing performance of our business and facilitates comparison of performance to our historical and future periods.

Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies, including industry peer companies, limiting the usefulness of these measures for comparative purposes.

These non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The discussion below presents information about each of the non-GAAP financial measures and the company’s reasons for including or excluding certain categories of income or expenses from our non-GAAP results. In future periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, adjustments for these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual.

Core Revenue/ Margin excludes the impact of foreign currency changes and revenue/ expenses associated with acquisitions or divestitures completed within the last twelve months. We exclude from the current period the impact of foreign currency changes as currency rates can fluctuate based on factors outside our control and may obscure underlying growth trends. To determine this impact, current period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods. Given the nature, size and number of acquisitions can vary significantly from period to period and as compared to our peers, we also exclude revenue/ expenses associated with recently acquired businesses to facilitate comparisons of growth and analysis of underlying business trends.

Percentages and period over period changes are calculated using underlying unrounded values and may not precisely reconcile to the rounded figures presented.

Free cash flow includes cash provided by operating activities adjusted for net investments in property, plant & equipment.

Non-GAAP Income from Operations, Non-GAAP Net Income and Non-GAAP Diluted EPS may include the following types of adjustments:

Acquisition-related Items: We exclude the impact of certain items recorded in connection with business combinations from our non-GAAP financial measures that are either non-cash or not normal, recurring operating expenses due to their nature, variability of amounts and lack of predictability as to occurrence or timing. These amounts may include non-cash items such as the amortization of acquired intangible assets and amortization of items associated with fair value purchase accounting adjustments. We also exclude other acquisition and integration costs associated with business acquisitions that are not normal recurring operating expenses, including gain/loss on foreign exchange contracts and legal, accounting and due diligence costs. We exclude these charges to facilitate a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.
Share-based Compensation Expense: We exclude share-based compensation expense from our non-GAAP financial measures as it is primarily a non-cash charge and can vary significantly from period to period based on the company’s share price, as well as the timing, size and nature of equity awards granted. Management believes the exclusion of this expense facilitates the ability of investors to compare the company’s operating results with those of other companies, many of which also exclude share-based compensation expense in determining their non-GAAP financial measures.
Restructuring and others: We exclude incremental expenses associated with restructuring initiatives including those of acquired entities, usually aimed at material changes in the business or cost structure. Such costs may include employee separation costs, asset impairments, facility-related costs, contract termination fees, and costs to move operations from one location to another. These activities can vary significantly from period to period based on the timing, size and nature of restructuring plans; therefore, we do not consider such costs to be normal, recurring operating expenses.

We also exclude “others,” not normal, recurring, cash operating income/expenses from our non-GAAP financial measures. Such items are evaluated on an individual basis, based on both quantitative and qualitative factors and generally represent items that we do not anticipate occurring as part of our normal business. While not all-inclusive, examples of such items would include significant non-recurring events like realized gains or losses associated with our employee benefit plans, costs and recoveries related to unusual events, gain on sale of assets/divestitures, adjustment attributable to non-controlling interest, etc. We believe that these costs do not reflect expected future operating expenses and do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to our operating performance in other periods.

Net gains/losses on investments: We also exclude net gains and losses on equity investments, which primarily represent profits or losses recognized from changes in the fair value and/or sale of equity securities. Such fluctuations are driven by market conditions and factors beyond our control and are not indicative of the Company’s core operating results.
Estimated Tax Rate: We utilize a consistent methodology for long-term projected non-GAAP tax rate. When projecting this long-term rate, we exclude any tax benefits or expenses that are not directly related to ongoing operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. Additionally, we evaluate our current long-term projections, current tax structure and other factors, such as existing tax positions in various jurisdictions and key tax holidays in major jurisdictions where Keysight operates. This tax rate could change in the future for a variety of reasons, including but not limited to significant changes in geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where Keysight operates. The above reasons also limit our ability to reasonably estimate the future GAAP tax rate and provide a reconciliation of the expected non-GAAP earnings per share for the third quarter of fiscal 2026 to the GAAP equivalent.

Management recognizes these items can have a material impact on our cash flows and/or our net income. Our GAAP financial statements, including our Condensed Consolidated Statement of Cash Flows, portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded costs are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the Condensed Consolidated Statement of Operations prepared in accordance with GAAP. The non-GAAP measures focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance.

Contacts
Liz Morali
+1 707 577 2880 liz.morali@keysight.com
Andrea Mueller
+ 1 408-236-1541 andrea.mueller@keysight.com
Source: IR-KEYS