Xylem (XYL) Q1 2025 earnings summary

Executive summary

• Q1 2025 results exceeded expectations, with revenue reaching $2.07 billion (up 2% reported, 3% organic), driven by strong demand and execution across all segments, and a book-to-bill ratio above one.

• Adjusted EPS grew 14% to $1.03, and net income attributable to shareholders was $169 million, with net income margin up to 8.2%.

• Margin expansion and operational agility were supported by productivity, pricing, and simplification initiatives.

• The company reaffirmed its full-year 2025 guidance for revenue and EPS, citing strong execution and momentum.

• Sustainability leadership continued, with all 2025 customer sustainability goals exceeded ahead of schedule and new 2030 goals set.

Financial highlights

• Q1 revenue was $2,069 million, up 2% year-over-year; organic revenue growth was 3%.

• Adjusted EBITDA margin expanded 120 basis points to 20.4%; adjusted net income was $251 million.

• EPS was $1.03, up 14% year-over-year and 8 cents above guidance midpoint.

• Free cash flow was negative $38 million, down from positive $15 million in the prior year, due to higher working capital and outsourced water projects.

• Net income margin increased to 8.2%; operating income was $231 million (11.2% margin), adjusted operating income $325 million (15.7% margin).

Outlook and guidance

• Full-year 2025 revenue expected at $8.7–$8.8 billion (1–2% reported, 3–4% organic growth).

• Full-year adjusted EBITDA margin expected at 21.3–21.8%, up 70–120 basis points.

• Adjusted EPS guidance reaffirmed at $4.50–$4.70; free cash flow margin target remains 9–10%.

• Q2 2025 revenue guidance at ~$2.2 billion, with 1–2% total growth and 2–3% organic growth; Q2 EPS guided at $1.12–$1.16.

• Guidance reflects ongoing market volatility, including geopolitical, macroeconomic, and regulatory uncertainty.