OSI Systems (OSIS) Q1 2027 earnings summary

Executive summary

• Q1 FY2027 revenue reached a record $403.5M, up 5% YoY; non-GAAP diluted EPS set a record at $1.66, up 17%, while GAAP diluted EPS rose to $1.51 from $1.18.

• Bookings of $583M drove a 1.4 book-to-bill ratio and record backlog of $2.1B, up from $1.9B at June 30, 2026.

• FY2027 revenue guidance was reaffirmed and non-GAAP diluted EPS guidance raised to $11.28–$11.64.

Financial highlights

• Revenue rose 5% YoY to $403.472M; product revenue was $289.823M and services revenue was $113.649M.

• GAAP net income increased to $24.572M from $20.556M; gross margin declined to 30.7% from 32.0%.

• Adjusted non-GAAP operating margin was 9.5%, versus 10.3% a year ago; GAAP operating margin was 8.3%, versus 8.6%.

• SG&A was $68.7M, up 2.5%; R&D fell 4.9% to $19.4M, and restructuring and other charges declined to $2.1M from $2.7M.

• Operating cash flow was $37.088M versus $17.137M; capital expenditures were $7.655M.

Outlook and guidance

• FY2027 revenue guidance remains $1.875B–$1.930B, representing 5.0%–8.1% YoY growth; non-GAAP diluted EPS guidance rose to $11.28–$11.64, or 9.0%–12.5% growth.

• Q2 revenue is expected to be modestly down YoY amid a difficult Middle East comparison and Mexico program transition; stronger growth is expected in H2.

• Mexico transition headwinds were ~$8M in Q1 and are expected to be ~$11M in Q2; the full-year headwind is expected to remain below $25M and concentrated in H1.

• Strong double-digit service revenue growth is expected for FY2027, accelerating from Q2 through H2; gross and operating margins are expected to improve over the balance of the year.

• Remaining performance obligations were $2.0B at September 30, 2026, with ~64% expected to convert to revenue within 12 months; full-year free cash flow is expected to exceed net income.