Otis Worldwide (OTIS) Q4 2025 earnings summary

Executive summary

• Achieved record adjusted free cash flow of $1.6B for the year and $817M in Q4, with $1.5B returned to shareholders via dividends and buybacks.

• Service-driven business model delivered 5% organic service sales growth and 4% maintenance portfolio growth for the 14th consecutive quarter.

• Modernization orders surged 43% in Q4, with backlog up 30% at constant currency, positioning for multi-year growth.

• Launched new AI-enabled products and expanded IoT connectivity, reaching 1.1M connected units and driving 35% subscription revenue growth.

• Maintained strong operational discipline, with margin expansion and double-digit adjusted EPS growth in Q4.

Financial highlights

• Q4 net sales: $3.8B; organic sales up 1%.

• Adjusted operating profit margin expanded 70 bps to 16.6% in Q4; service margin up 100 bps.

• Adjusted EPS up 11% in Q4 and 6% for the year, reaching $4.05.

• Adjusted free cash flow for FY 2025 was $1.58B, up 20% year-over-year.

• Returned $1.5B to shareholders; invested $100M in bolt-on acquisitions.

Outlook and guidance

• 2026 organic sales expected to rise low- to mid-single digits, led by service growth and moderating new equipment declines.

• Service organic sales projected to accelerate 1-2 points above 2025’s 5% growth, with repair expected to ramp to 10%+.

• Adjusted EPS guidance: mid- to high-single-digit growth; operational profit growth expected to accelerate.

• Adjusted free cash flow guidance: $1.6B–$1.7B; $800M in share repurchases planned.

• New equipment sales in China expected to decline, but backlog and order trends improving.