OSI Systems' Q4 2025: Key Contradictions in Service Revenue, Mexico Impact, and Growth Outlook

Service revenue growth and margins, Mexico revenue and its impact on growth, security division growth, accounts receivable and cash flow, and growth expectations are the key contradictions discussed in OSI Systems' latest 2025Q4 earnings call.



Record Revenue and Earnings Growth:
- OSI Systems reported record revenue of $505 million for Q4, with a 5% year-over-year increase, and a record non-GAAP adjusted earnings per share of $3.24.
- The growth was driven by a 28% increase in Security division service revenues and a 10% increase in Optoelectronics division revenues.

Strong Security Division Performance:
- The Security division's revenue increased by 7% year-over-year, with a significant 28% increase in service revenues.
- Growth was attributed to broad-based demand across airport and international border security customers, major program advances, and new contracts.

Optoelectronics Division Recovery:
- The Optoelectronics division achieved a record $113 million in Q4, including intercompany sales, with a 10% year-over-year increase.
- This was driven by stabilized OEM customer inventories and new orders from healthcare innovators.

Outlook and Strategic Investments:
- Fiscal '26 guidance includes revenues between $1.805 billion to $1.85 billion, reflecting year-over-year growth of 5.4% to 8%.
- The company plans strategic investments and continues to evaluate M&A opportunities to drive long-term growth.