10-Q · July 28, 2026
Xylem delivered modest 1.5% Q2 revenue growth to $2.336 billion but materially improved profitability, with gross margin up 240 bps to 41.2%, operating margin up 340 bps to 16.7%, and GAAP EPS up 19.4% to $1.11. Order…
Earnings analysis · 10-Q
XYL earnings analysis
Filed October 27, 2026 · Our reading of the company's report
The latest report
Xylem delivered Q3 revenue of $2.201 billion and reported EPS of $1.25, with revenue below both the $2.34 billion prior quarter and $2.27 billion year-ago quarter. Orders grew 7% reported and 10% organically, and…
Read full summary
Xylem delivered Q3 revenue of $2.201 billion and reported EPS of $1.25, with revenue below both the $2.34 billion prior quarter and $2.27 billion year-ago quarter. Orders grew 7% reported and 10% organically, and adjusted EBITDA margin expanded 70 basis points to 23.9%, but adjusted EPS of $1.44 narrowly missed the $1.45 estimate. Management lowered full-year 2026 revenue guidance to approximately $8.95 billion and adjusted EPS guidance to $5.40-$5.45, keeping the overall tone neutral despite strong orders and margin expansion.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.25
What stood out
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Orders strong despite revenue softness
Q3 revenue was $2.201 billion, down approximately 5.9% from $2.34 billion in Q2 2026 and approximately 3.0% from $2.27 billion in Q3 2025. Reported EPS was $1.25, while adjusted EPS was $1.44 versus the $1.45 estimate.
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Orders and backlog remained resilient
Orders increased 7% on a reported basis and 10% organically, indicating demand and backlog remained supportive despite lower-than-expected revenue of $2.201 billion.
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Adjusted EBITDA margin expanded
Adjusted EBITDA margin expanded 70 basis points to 23.9%, demonstrating margin improvement despite the softer revenue outcome and cost pressures.
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Significant share repurchases continued
The company repurchased 3,167,972 shares during the quarter under its $1.5 billion authorization, leaving approximately $105 million available at September 30, 2026.
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No control deficiencies reported
The filing states that disclosure controls were effective at the reasonable assurance level as of the period end, and that there were no changes in internal control over financial reporting that materially affected, or were reasonably likely to materially affect, controls.
What to watch
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Full-year revenue outlook lowered
Full-year 2026 revenue guidance was reduced to approximately $8.95 billion, representing down 1% reported and flat organic growth versus prior guidance of up 2% on both measures.
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Earnings outlook reduced
Adjusted EPS guidance was reduced to $5.40-$5.45, while Q3 adjusted EPS was $1.44 versus the $1.45 estimate. The guidance reduction increases execution risk for the remainder of 2026.
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Higher debt and interest burden
The company issued $1.0 billion of senior notes on September 29, 2026, consisting of 5.250% notes due 2029, 5.450% notes due 2032, and 5.850% notes due 2037. The additional financing could increase interest expense and leverage sensitivity.
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Limited new risk-factor disclosure
The filing reports no material changes to the risk factors in the 2025 Annual Report, so no new quantified risk-factor change was identified. Separately, only approximately $105 million remained under the share-repurchase authorization after 3,167,972 shares were repurchased in the quarter.
Management's outlook
Full-year 2026 revenue guidance was reduced to approximately $8.95 billion, down 1% reported and flat organically, versus prior guidance of up 2% on both reported and organic bases. Adjusted EBITDA margin is expected at approximately 23.2%, and free-cash-flow margin at 10.2% versus prior guidance of 10.2%-11.0%.
Earlier filings 4
10-Q · April 28, 2026
Xylem reported Q1 2026 revenue of $2,125 million, up 2.7% year-over-year, driven by a $65 million favorable FX impact and slight organic decline of $9 million. Gross margin expanded 70 bps to 37.8% and operating margin…
10-K · February 25, 2026
Xylem reported record 2025 results with revenue of $9,035 million (up 5.5% vs. 2024) and expanding margins (gross margin 38.5%, operating margin 13.5%). Adjusted operating income rose to $1,612 million (adjusted…
10-Q · July 31, 2025
Xylem reported Q2 2025 revenue of $2,301 million, up 6.1% year-over-year, with gross margin expanding to 38.8% (up 100 bps) and operating margin to 13.3% (up 160 bps). GAAP diluted EPS was $0.93 (up 16.3% YoY); adjusted…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.