Palantir a high-risk investment with ’a one-of-a-kind growth and margin model’
FARMINGTON, Conn. - On Wednesday, Otis Worldwide Corporation (NYSE:OTIS), the elevator and escalator manufacturer, reported second quarter revenue that missed analyst expectations, despite showing strength in its service segment.
The company’s shares fell sharply by 10.79% in pre-market trading following the earnings release.
The company reported second quarter adjusted earnings per share of $1.05, slightly above the analyst estimate of $1.03, while revenue came in at $3.6 billion, below the consensus estimate of $3.7 billion. Total (EPA:TTEF) organic sales declined 2% compared to the same period last year.
The revenue shortfall was primarily driven by weakness in the New Equipment segment, where sales dropped 10% YoY with organic sales down 11%. This decline was particularly pronounced in China, where sales fell more than 20%, and in the Americas region, which saw a high-single digit decline.
"Otis delivered solid performance led by the strength of our Service segment that continues our steady growth trajectory, and contributed mid-single digit organic sales growth and both year over year and sequential operating profit margin expansion," said Chair, CEO & President Judy Marks.
The company’s Service segment, which represents a larger portion of revenue, was a bright spot with net sales up 6% and organic sales growth of 4% YoY. Service operating profit margin expanded 20 basis points to 24.9%.
For the full year 2025, Otis reaffirmed its earnings outlook, projecting adjusted EPS of $4.00 to $4.10, which aligns with the analyst consensus of $4.08. However, the company now expects annual revenue of $14.5 billion to $14.6 billion, below the consensus estimate of $14.71 billion.
The company’s maintenance portfolio grew 4% in the quarter, while modernization orders increased 22% at constant currency with backlog up 16% at constant currency. New Equipment orders excluding China grew 11%, though overall New Equipment orders declined 1% at constant currency.
During the first half of 2025, Otis repurchased approximately $550 million of its shares and reported adjusted free cash flow of $429 million.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.