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Call sheet · Q2'26

Keysight Technologies (KEYS)

Q2'26 earnings call · held May 19, 2026 · compared with the Q1'26 call · management-credibility review
6/12
Disclosure score
3 high, 4 medium, 1 low flags
Financial quality
Bottom line
The sleeper story: Keysight hit a wall they didn't see coming, with production capacity, not demand, now the binding constraint forcing a 25% CapEx raise while backlog builds dangerously. Yes, the headline 56% order growth looks spectacular, but management buried the lede: 'We're working really hard to ramp those products more quickly,' translation: we can't ship what we're booking. The metric games are multiplying, with growth rates vanishing in favor of 'record' claims and software mix deteriorating 400 bps despite the AI boom. My view changes if Q3 book-to-bill drops below 1.0x, which would confirm orders were defensive rather than real.

The 30-second version

  • The binding constraint just shifted from demand to supply chain and production capacity
  • AI business crossed $500-600M run rate in H1, matching all of FY25, but conversion velocity is slowing
  • Management stopped disclosing DSO and quietly shifted from percentage growth to absolute dollar amounts

What changed this quarter

MetricQ1'26Q2'26Change
Revenue$1.60B (+23% YoY)$1.72B (+31% YoY)+800 bps YoY acceleration
EPS$2.17 (+19% YoY)$2.87 (+69% YoY)+5000 bps YoY acceleration
Net Income$376M (+19% YoY)$497M (growth not disclosed)Switched to absolute from rate
Operating Income$438M (27.4% margin)Not disclosedMetric disappeared
Orders$1.65B (+30% YoY)$2.05B (+56% YoY)+2600 bps acceleration
Book-to-Bill1.03x1.19xBacklog building faster
CSG Revenue$1.12B (+27% YoY)$1.23B (+35% YoY)+800 bps acceleration
CSG Operating Margin27.5%33.4%+590 bps expansion
EISG Revenue$476M (+15% YoY)$486M (+24% YoY)+900 bps acceleration
EISG Operating Margin27.2%33.1%+590 bps expansion

Accountability tracked

6 new promises made5 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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