Electronic measurement provider Keysight (NYSE: KEYS) reported Q2 CY2026 results beating Wall Street’s revenue expectations, with sales up 36.5% year on year to $1.85 billion. On top of that, next quarter’s revenue guidance ($1.94 billion at the midpoint) was surprisingly good and 6.3% above what analysts were expecting. Its non-GAAP profit of $3.07 per share was 23.7% above analysts’ consensus estimates.

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Company Overview

Spun off from Hewlett-Packard in 2014, Keysight (NYSE: KEYS) offers electronic measurement products for use in various sectors.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Keysight grew its sales at a mediocre 6.2% compounded annual growth rate. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about Keysight.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Keysight’s annualized revenue growth of 14.7% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Keysight reported wonderful year-on-year revenue growth of 36.5%, and its $1.85 billion of revenue exceeded Wall Street’s estimates by 5.8%. Company management is currently guiding for a 36.7% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 13.5% over the next 12 months, similar to its two-year rate. Still, this projection is commendable and indicates the market sees success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Keysight has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 21.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Keysight’s operating margin decreased by 4.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Keysight generated an operating margin profit margin of 25%, up 7.7 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Keysight’s EPS grew at 10.7% compounded annual growth rate over the last five years, higher than its 6.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Keysight’s earnings to better understand the drivers of its performance. A five-year view shows that Keysight has repurchased its stock, shrinking its share count by 7%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Keysight, its two-year annual EPS growth of 23.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q2, Keysight reported adjusted EPS of $3.07, up from $1.72 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Keysight’s full-year EPS to grow 14.3% from $10.02 to $11.45.

Key Takeaways from Keysight’s Q2 Results

We were impressed by Keysight’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 3.5% to $353.05 immediately after reporting.

Keysight put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).