Aptiv's Q3 2025 Earnings Call: Contradictions in China Strategy, Autonomous Growth, and Non-Auto Opportunities

Date of Call: October 30, 2025

Financials Results

• Revenue: $5.2B, up 6% YOY
• EPS: $2.17 per share, up 19% YOY
• Operating Margin: Expanded 30 basis points YOY (absolute percent not provided)

Guidance:

• Raised full-year 2025 guidance; midpoint revenue outlook $20.3B, ~+2% adjusted YOY.
• Full-year adjusted EBITDA ~$3.22B and operating income ~$2.45B (each ~+4% YOY at midpoint).
• Adjusted EPS $7.55–$7.85 (midpoint +23%); operating cash flow ≈ $2.0B; capex ≈ 4% of revenue.
• Q4: active-weighted vehicle production down ~3%; Q4 adjusted revenue growth ~1% at midpoint; Q4 EPS $1.60–$1.90; Q4 operating margin ~11.8% at midpoint.
• Guidance incorporates ~$80M known customer disruptions, conservatism for semiconductor/trade risks, and elevated copper/FX headwinds.

Business Commentary:

* Record Financial Performance and Share Repurchases: - Aptiv reported record revenue of $5.2 billion, up 6% on an adjusted basis, and record operating income of $654 million, reflecting a 10% increase year-on-year. - The growth was driven by strong execution in a better-than-expected vehicle production environment and double-digit growth in non-auto end markets. - Additionally, the company deployed $250 million for share repurchases and debt paydown.

• Strong Customer Confidence and Business Bookings:
• Aptiv achieved $8.4 billion in new business bookings, including $1.6 billion in its Advanced Safety and User Experience segment and $4.7 billion in Electrical Distribution Systems.

• The strong bookings reflected customer confidence in Aptiv's advanced technologies and capabilities, with significant new program awards in advanced safety, user experience, and electrical distribution systems.

• Electrification and Market Challenges in China:

• Revenues in China were flat despite strong growth in the Engineered Components Group, primarily due to unfavorable customer mix in the Advanced Safety and User Experience segment.

• The challenges were mainly due to program cancellations with Chinese local OEMs and the impact of unfavorable trade policies affecting global supply chains.

• Outlook and Margin Impact:

• For the fourth quarter, Aptiv's revenue growth is expected to be slightly below previous guidance, impacted by customer-specific production disruptions and amplified trade tensions affecting semiconductor supply chains.
• The company anticipates an operating income margin of 11.8% at the midpoint due to factors like the flow-through on weaker volumes and elevated copper prices.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described "record financial results" (revenue, operating income, EPS), raised full‑year guidance (midpoint revenue $20.3B), reported $8.4B bookings in Q3 and $19B YTD, and expressed confidence revenue growth will accelerate in 2026 despite geopolitical and supply-chain uncertainties.

Q&A:

• Question from Chris McNally (Evercore ISI): Kevin, thanks so much for all the detail on the many headwinds on Q4. So if we could just break that down. I think you said $80 million known and then obviously, an added uncertainty because I think the [ NextEra ] is really just starting. I was wondering if we could call out [ Oswego ] as part of the $80 million because obviously, your North America was raised while it looked like your Europe brought down 2%. So it seems like it's focused on Europe. And so I just wanted to see if we can rank kind of where we saw the weakness. And then I'll follow-up on the chip issue.
  Response: The ~$80M includes volume impact from the Oswego facility issue plus other customer‑specific disruptions (notably in Europe); management overlaid additional conservatism tied to geopolitics/trade.

• Question from Chris McNally (Evercore ISI): Okay. Absolutely makes sense. So essentially probably getting into $100 million plus in Q4, which is a 2% headwind. So -- that makes sense. Without speaking about customer specific, could you just -- what is your knowledge of what's going on with NextEra? I mean it seems like it's so much more of a political issue at this point. Obviously, we can resource over time. But there seems like there must be something where the Dutch government and China come to some near-term remedy, or we're going to have a larger -- I think it's an 80% of European chips. Can you just -- how you are framing the issue because it seems like it's something that could be pretty bad over the next couple of weeks.
  Response: Product is flowing in China and Aptiv is not currently impacted; the issue is political (Netherlands‑China) with broad industry alternatives and validated second sources, and Aptiv holds ~3 months inventory so short‑term exposure is limited.

• Question from Joseph Spak (UBS): I want to follow along that conversation and maybe some of the impact to the margin guidance, specifically for the fourth quarter. And I know there's a ton of moving parts here as Kevin and the team as you just sort of went through. But the midpoint of fourth quarter is 11.8%. Even the high end is 12.4%. You just did 12.5%. Now I know it sounds like that third quarter number, if you adjust for that recovery is maybe 20 bps, so it's a little bit lower, and then you're talking about some conservatism in the revenue for fourth quarter. But even that seems like it would only add like 10, 20 bps, if my math is correct. So I'm just wondering, is there anything else going on, on the cost side or on the margin side in the fourth quarter? Because historically, there's been a bigger sequential improvement, if you will, given engineering recoveries, et cetera.
  Response: Margin guide reflects three drivers: flow‑through on weaker volumes (~$80–100M headwind), timing of a ~$15M customer recovery realized in Q3 (not Q4), and elevated copper prices; combined with FX (peso) these pressures materially compress year‑over‑year margin.

• Question from Joseph Spak (UBS): Super helpful. And just on copper, I just want to make sure I get that right. That's a margin impact, but not -- but less of a dollar impact, correct, because it's passed through.
  Response: Copper is largely pass‑through but timing and rapid price moves can create a dollar impact in earnings; the magnitude depends on speed of price changes.

• Question from Joseph Spak (UBS): Okay. Maybe just bigger picture, and maybe we'll hear more about this at the Analyst Day in a couple of weeks. But non-auto, you highlighted, grew 14%. I know smaller numbers, but you're starting to sort of show some of these other areas, the EDS energy storage. Any way to sort of contextualize how big an opportunity you think that is? And is there any opportunity in that -- in, let's say, an energy storage business for the ECG business out there?
  Response: Non‑auto is a large and growing opportunity: non‑auto revenues approaching >$3B, growing high single‑digits to double‑digits; Wind River and energy‑storage/industrial markets present meaningful expansion opportunities that management will detail at Investor Day.

• Question from Dan Levy (Barclays): I wanted to drill down on some of the growth dynamics in the quarter because I think you had given us maybe some parameters early on, some of the customer issues that were going on in China, but on the flip side, there are some launch activity. So maybe you could just help us decompose within the 3Q regional results where we saw North America do really well, Europe underperformed, China underperformed. How much of that was the launch activity coming through versus maybe things like JLR or the Zeekr, NIO issues that are maybe more temporary. So maybe just help us decompose and the line of sight to just growth in aggregate being better and specifically in China.
  Response: Regional variance was driven by discrete OEM issues: North America outperformed due to stronger vehicle production and launches; Europe weakness tied to large German and French OEM production reductions; China impacted by prior program cancellations (NIO/Zeekr) though ECG growth in China was strong.

• Question from Dan Levy (Barclays): As a follow-up, I wanted to maybe follow up to Joe's prior question. And as far as the growth opportunity in some of these adjacent areas inorganically, and I'm sure you're going to double-click on this at your Investor Day in a couple of weeks. But just the rough M&A framework and specifically, how you look at the willingness to do deals when reality is maybe some of the assets you might be pursuing are going to be at multiples that are higher than where you are. What is the willingness to deals that maybe on the surface appear dilutive and what the framework is in approaching that?
  Response: M&A is evaluated case‑by‑case; management will pursue deals that provide meaningful synergies (cost and/or revenue), size and integration fit, and that ultimately enhance shareholder value—dilution only acceptable if long‑term value and synergies justify it.

• Question from James Picariello (BNP Paribas Exane): Can you speak to how active safety growth performed in the quarter and just how you're thinking about the second half? I believe you guys referenced challenges, temporary challenges in China. So curious on the progress and the outlook there. And then also for user experience, I thought the communication was that there's some stabilization on the near-term horizon. So curious what the assessment is there as well.
  Response: Active safety bookings are strong (~$3B YTD) but near‑term growth moderates to low‑single digits due to a few program impacts; User Experience down low‑double digits in H2 (Q3 down 10%) due to legacy roll‑off but expected to return to growth in 2026.

• Question from James Picariello (BNP Paribas Exane): No, no, not at all. And then, yes, I realize this is a sensitive question, but is the company potentially pursuing alternatives beyond just the spin-off of ADS concerning a potential asset sale? Or should we be squarely thinking about the spin-off in the first quarter?
  Response: The announced path is the EDS separation, but the Board will evaluate any alternative that maximizes shareholder value; management controls the timing and will choose the best outcome.

• Question from Itay Michaeli (TD Cowen): Just wanted to revisit -- good to hear the commentary on revenue growth potentially accelerating into 2026. I was hoping you could just share a bit more detail on some of the underlying assumptions for LVP, maybe mix, EV, anything you can share as well as if there are any puts and takes we should think of in terms of the kind of OI margin next year?
  Response: High level: market likely flat to slightly down in 2026 but strong prior bookings and launch cadence should translate to revenue acceleration; electrification headwinds largely annualized; non‑auto growth and China will be tailwinds—management expects margin expansion with revenue growth but will provide details at Investor Day.

• Question from Itay Michaeli (TD Cowen): Yes. That's incredibly helpful. As a super quick follow-up, I'm curious how you frame the opportunity within the Gen 8 radar products, if you think you might be able to gain share from other Tier 1s? Is it more of a CPV? Or there's an opportunity to displace ultrasonics for surround sensing?
  Response: Gen‑8 radar is positioned as industry‑leading with clear share‑gain potential globally; complementary 'Pulse' radar product can replace ultrasonics, improving performance and lowering OEM cost—strong customer pull.

• Question from Mark Delaney (Goldman Sachs): First, I was hoping to better understand the degree of conservatism assumed in guidance from Nexperia as well as broader trade tensions that you referred to for 4Q guidance. It looks like sequentially, 4Q revenue is guided down roughly $160 million. About half of that you said is from customer-specific downtime. So when I look at typical seasonality, it tends to be flat to up. So it would seem to imply there's maybe to $80 million or a little bit more than $80 million from some of these trade factors that's conservatism. But if I'm misunderstanding, are there other ways to better frame that, it would be helpful.
  Response: Management cannot precisely quantify the conservatism tied to Nexperia/trade tensions due to a wide range of outcomes; they reduced schedules where visible and overlaid incremental conservatism instead of assigning a single chip‑risk number.

• Question from Mark Delaney (Goldman Sachs): Understood, Kevin. And then my other question was just around bookings. Your guidance for the year of roughly $31 billion implies a meaningful pickup in the fourth quarter. Maybe if you could talk about what areas you're seeing the most momentum as you look into the fourth quarter bookings. And then also, you did say that potentially some awards may move into '26. Any context as to why that may be occurring?
  Response: Bookings momentum is concentrated in AS&UX (ADAS/user experience) and SVA opportunities across NA, Europe and China; some large awards are timing‑sensitive and may shift into 2026 as OEM decision timing and trade/disruption uncertainty influence schedules.

• Question from Yan Dong (Deutsche Bank) (Winnie Dong for Edison): I wanted to drill a little bit down on the China mix. How much was it as a headwind to your growth over market for the full year? And then maybe just based on your bookings and what you might be seeing in the pipeline for next year, what you might be expecting for China mix into 2026?
  Response: Management would not quantify an exact headwind but noted 85% of bookings this year are with China local OEMs (focused on top‑10 and exporters) and those programs are growing very strongly (~84% YOY for targeted export programs), making China a large, prioritized part of future mix.

• Question from Yan Dong (Deutsche Bank) (Winnie Dong for Edison): Got it. And then my follow-up is on SVA specifically. I was wondering if you can give us maybe a latest update on the bookings you have in place. And then just as you're engaging with your customers, how they are thinking about this particular solution. I think in the market right now, we're seeing maybe a mixture of in-house developments versus outsourcing. So just curious what you're seeing there.
  Response: SVA: active engagements with ~20 OEMs (10 highly focused); pipeline opportunities >$5B; 2025 SVA revenues ~$150–200M growing ~10% annually; activity strongest in China while NA/Europe have slowed but are picking up discussions.

Contradiction Point 1

China Market Mix and Strategic Focus

It highlights inconsistencies in the company's strategic focus and expectations regarding the mix of its business in China, which is critical for international growth and market share.

What was the China mix headwind this year, and how will it change by 2026? - Yan Dong(Deutsche Bank AG, Research Division)

2025Q3: This year, 85% of bookings with China local OEMs showed strong growth. Aptiv focuses on supporting the top 10 local OEMs for international growth. The mix may not perfectly align with production, but Aptiv is strategically focused on high-value opportunities. - Kevin P. Clark(CEO)

When will the China mix normalize, and how will it impact H2 performance? - Colin M. Langan(Wells Fargo)

2025Q2: The goal is to reach the same mix as industrial production in China by year-end. Dynamic market conditions with rapid production changes and different customer strategies impact performance. The focus remains on strategic programs and platforms. - Kevin P. Clark(CEO)

Contradiction Point 2

Autonomous Driving and Safety Systems Growth

It involves differing expectations regarding the growth of autonomous driving and safety systems, which are key components of the company's technology offerings and strategic focus.

How did active safety growth perform in Q3, and what is the outlook for user experience? - James Picariello(BNP Paribas Exane, Research Division)

2025Q3: Active safety growth will be low single digits in the second half due to canceled programs, but new bookings are strong. - Kevin P. Clark(CEO)

What are the growth trajectories for AS and UX revenues, and why are ECG margins declining? - Emmanuel Rosner(Wolfe Research)

2025Q2: AS is expected to grow mid-single digits, impacted by China programs. - Kevin P. Clark(CEO)

Contradiction Point 3

Non-Automotive Growth Opportunity

It highlights inconsistencies in the company's expectations and strategic focus regarding its growth opportunities in non-automotive markets, which are crucial for diversifying revenue streams.

What factors are impacting Q4 margin guidance, and how should we assess the non-auto growth opportunity? - Joseph Spak(UBS Investment Bank, Research Division)

2025Q3: Non-auto growth is substantial, approaching $3 billion, driven by ECG, AS & UX, and EDS. Wind River software revenue is growing north of 20% and will continue to expand. The opportunity in non-auto markets is significant. - Varun Laroyia(CFO), Kevin P. Clark(CEO)

What assumptions support the implied H2 growth, and is a specific product launch driving it? - Dan Meir Levy(Barclays)

2025Q2: Growth is driven by ADAS program launches and EDS, with multiple programs contributing. There's no specific launch that is highly weighted. - Kevin P. Clark(CEO)

Contradiction Point 4

Non-Auto Growth and Segment Performance

It involves the company's expectations and performance in the non-automotive sector, which is a key growth area for Aptiv.

What factors are affecting Q4 margin guidance, and how should we assess non-auto growth opportunities? - Joseph Spak(UBS Investment Bank)

2025Q3: Non-auto growth is substantial, approaching $3 billion, driven by ECG, AS & UX, and EDS. Wind River software revenue is growing north of 20% and will continue to expand. The opportunity in non-auto markets is significant. - Varun Laroyia(CFO)

Does macroeconomic uncertainty affect the EDS spin-off plan? - Dan Levy(Barclays Bank)

2025Q1: For fiscal 2025, we now expect to achieve approximately $1.2 billion to $1.3 billion of non-auto revenue, up from our prior guidance of just over $1 billion. - Varun Laroyia(CFO)

Contradiction Point 5

Nexperia Impact on Financial Outlook

It pertains to the financial implications of the Nexperia situation, impacting Aptiv's revenue projections and investor expectations.

Can you break down the $80 million Q4 impact and update us on NexEra? - Chris McNally(Evercore ISI Institutional Equities)

2025Q3: We are prepared with alternative solutions, and we believe that our margin guidance is consistent given the alternative solutions. - Kevin P. Clark(CEO)

Have there been discussions with OEMs regarding tariff-related contingencies? - Joseph Spak(UBS Investment Bank, Research Division)

2024Q4: We are preparing with alternative solutions. We expect that we will be able to ramp those solutions by the end of this year. - Kevin P. Clark(CEO)