OSI Systems (OSIS) Q2 2025 earnings summary

Executive summary

• Achieved record Q2 revenues of $420 million, up 12% year-over-year, with all divisions contributing to growth, especially Security (up 16%), and supported by a key acquisition.

• Net income for Q2 FY25 was $37.8 million, up from $36.6 million in the prior year; non-GAAP EPS reached $2.42, and GAAP EPS was $2.22.

• Book-to-bill ratio for Q2 was 1.2, with a record backlog exceeding $1.8 billion as of December 31, 2024.

• Operating cash flow reached $53 million in Q2, a significant increase over the prior year quarter.

• New CEO Ajay Mehra highlighted robust execution in Security and Optoelectronics, and a healthy pipeline for future growth.

Financial highlights

• Q2 non-GAAP adjusted EPS reached a record $2.42; GAAP EPS was $2.22.

• Gross margin was 35.1% in Q2, down from 37.9% in the prior year quarter, reflecting product mix.

• SG&A expenses were $71 million (16.8% of sales), down from 19.2% of sales last year, showing improved cost leverage.

• Adjusted operating margin was 15.0% (non-GAAP) and 13.8% (GAAP) in Q2.

• Net interest and other expenses rose to $8.6 million due to higher borrowings and acquisition activity.

Outlook and guidance

• Fiscal 2025 revenue guidance raised to $1.685–$1.710 billion, representing 9.5%–11.1% growth.

• Non-GAAP adjusted EPS guidance increased to $9.10–$9.40, up 11.9%–15.6% year-over-year.

• Management expects available funds, credit facilities, and cash flow from operations to be sufficient for operational needs for at least the next 12 months.

• Expectation for strong operating cash flow in the second half, with Q4 typically the strongest quarter.

• Revenue from remaining performance obligations as of December 31, 2024 was $776.1 million, with 61% expected to be recognized in the next 12 months.