54.2% is the odd number in Keysight’s latest report. That is how much accounts receivable increased compared with the same nine-month period last year, reaching $1.1B. Revenue grew 36.5% year over year to $1.8B, so the company is selling much more, but more of the sale is still sitting on the balance sheet.
The income statement looks considerably cleaner. Operating income nearly doubled to $461.0M, lifting operating margin from 17.3% to 25.0%. Net income rose 107.9% to $397.0M. Operating cash flow, by contrast, increased 16.5% to $1.4B.
That is the filing’s central trade-off: Keysight is converting growth into profit at a much faster rate than it is converting growth into cash. Inventory barely moved, up 2.5%, and capex rose 7.8%, so the conspicuous working-capital change is receivables. Keysight does not say why they grew faster than sales.
Management attributes the margin expansion to several identifiable factors, including volume, mix, acquisitions, and tariff refunds. The nine-month gross-margin explanation also includes the cost of keeping those gains, with ongoing tariffs, people-related costs, and acquisition amortization listed as offsets.
"Gross margin for the nine months ended July 31, 2026 increased 3 percentage points compared to the same period last yea r, primarily driven by higher revenue volume, favorable mix, net IEEPA tariff refund claims, and incremental gross margin impact from acquisitions, partially offset by higher amortization of acquisition-related balances, higher people-related costs, and the impact of ongoing tariffs."
Keysight, 10-Q filed September 2, 2026
The arithmetic is favorable, but not all of the margin help has the same shelf life. Acquisition amortization is a non-cash accounting expense. The company also bought Synopsys’ Optical Solutions Group for $581M in October 2025, using existing cash.
The revenue engine itself is concentrated in the faster-growing Communications Solutions Group, which rose 43.1% to $1,345.0M. Electronic Industrial Solutions Group revenue increased 21.6% to $501.0M. Keysight says customers’ research spending on terabit solutions and expanded transceiver capacity are supporting demand tied to AI capabilities.
"The year-over-year increase in revenue was primarily driven by our customers R&D spend in terabit solutions and expanding 400G/800G/1.6 terabit transceiver manufacturing capacity to meet rising demand for AI capabilities."
Keysight, 10-Q filed September 2, 2026
That explanation matters because the growth is not just a broad recovery from last year’s base. The company is tying the increase to specific customer spending and capacity expansion, while research and development rose 24.8% to $312.0M. At the same time, the annual record shows revenue of $5.4B in 2025, after a 2024 decline, so the latest acceleration arrives after a reset rather than from a perfectly straight line.
Investors are paying for a substantial continuation of that acceleration: Keysight trades at 65.0x earnings and 10.4x enterprise value to sales. The latest close was $319.24, down 1.1% on September 1, while the shares are up 95.3% over 12 months. Those figures do not explain the daily move, but they set the scale of the operating proof required by the current price.
Keysight’s next 10-Q will put the unresolved piece on the table: whether accounts receivable has moved back toward the pace of sales growth and how much of the margin support still comes from tariff refunds.
Keysight is growing margins faster than it is collecting the growth.