Bruker's Q3 2025: Contradictions Emerge on Backlog Impact, Cost-Saving Initiatives, and Fiscal '26 Growth

Date of Call: November 03, 2025

Financials Results

• Revenue: $860.5M, down 0.5% YOY (organic -4.5%); FX tailwind +2.9%; acquisition contribution +1.1%
• EPS: $0.45 diluted non-GAAP EPS, down 25% YOY (Q3'24 $0.60); sequentially up from $0.32 in Q2'25 (GAAP loss per share $(0.41) reflecting $119.4M impairment and $34.5M restructuring)
• Gross Margin: 50.1% non-GAAP, down 110 bps YOY
• Operating Margin: 12.3% non-GAAP, down 260 bps YOY; improvement vs Q2'25 (9.0%)

Guidance:

• Full-year 2025 revenue expected $3.41B–$3.44B (organic decline -4% to -5%).
• Reported revenue growth guidance 1%–2% (acquisitions +3.5%, FX tailwind ~+2.5%).
• FY25 operating margin expected to decline ~250 bps YOY (60 bps M&A, 60 bps tariffs, 65 bps FX, 65 bps organic).
• FY25 non-GAAP EPS $1.85–$1.90 (includes $0.07 MCP dilution); MCP to be ~$(0.20) dilutive to FY26 EPS.
• Q4'25 organic revenue mid- to high-single-digit decline; Q4 EPS to improve sequentially but down YOY.
• Targeting $100M–$120M cost savings (driving significant margin expansion and double-digit EPS growth in FY26).

Business Commentary:

* Revenue and Financial Performance: - Bruker Corporation reported revenues of $860.5 million for Q3 2025, which included a 2.9% foreign exchange tailwind, but a 4.5% organic decline year-over-year. - The decline was primarily due to soft demand in academic and research instruments, particularly in the ACA/GOV market.

• Order Growth and Strength:
• Bruker's ACA/GOV orders grew in the high teens percentage year-over-year in Q3 2025, driven by robust order growth outside the United States, which offset continued softness in the U.S.

• This growth was supported by increased demand in both academic and biopharma markets.

• Cost and Margin Expansion Initiatives:

• Bruker's cost savings initiatives are progressing towards the high end of the $100 million to $120 million target for fiscal year 2026.

• These initiatives are expected to deliver significant margin expansion and double-digit EPS growth in 2026.

• Regional Performance Variations:

• Bruker's performance in China showed improvement, with double-digit organic revenue growth in the third quarter, potentially aided by stimulus funding.
• However, the company's European operations also experienced a strong recovery in Q3, particularly in the ACA/GOV market.

Sentiment Analysis:

Overall Tone: Neutral

• Management said results were "ahead of our expectations" and highlighted sequential margin improvement (Q2 9.0% -> Q3 12.3%) and bookings strength, but also reiterated Q3 revenue and EPS were down YOY and lowered FY25 outlook; emphasized cost cuts ($100M–$120M) to drive margin and double-digit EPS growth in 2026.

Q&A:

• Question from Puneet Souda (Leerink Partners LLC): First one on the book-to-bill, good to see more than 1, and congrats on the quarter, just given the order momentum you're seeing here. But just wondering how has that trended in the fourth quarter? Are you continuing to see the mid-teens organic order growth here? And maybe could you elaborate a bit just a number of moving parts here. How is the international momentum continued? Is it more ACA/GOV versus pharma? And maybe tell us a bit more on the academic side of the U.S. Are you starting to see some recovery there given the points you mentioned, DNP and a couple of other points you mentioned in the slide.
  Response: Too early to comment on Q4; Q3 ACA/GOV order strength was primarily outside the U.S. with some sequential U.S. improvement—encouraging but one quarter only, and full confirmation requires Q4 order data.

• Question from Puneet Souda (Leerink Partners LLC): Got it. That's very helpful. And anything on the ultra-high frequency GigaHertz NMRs, how are you thinking about those? Obviously, the tougher comp in the third quarter. But as you go into '26, how is the momentum there? I know we've been waiting for U.S. to acquire more of those instruments.
  Response: Momentum unclear in the U.S.; expect at least one GigaHertz-class order in Q4 (likely outside the U.S.), but visibility is limited and timing can slip into next year.

• Question from Avantika Dhabaria (BofA Securities): Could you give us the impact of the government shutdown that you're seeing in 4Q? And is that baked into the updated outlook?
  Response: Not formally baked in; assumed relatively minor so far but an extended multi-week/month shutdown could delay grants, orders and installations beyond current guidance.

• Question from Avantika Dhabaria (BofA Securities): Understood. And then I know that you're not formally guiding on 2026 today, but you called out meaningful improvement versus the minus 4% to 5% organic in '25. Is it fair to assume that you can grow revenues in 2026? Or are we looking at flat year-over-year?
  Response: No 2026 revenue guidance today—management will wait for Q4 orders; even with flat revenue, planned cost savings should drive significant margin expansion and double-digit non-GAAP EPS growth in 2026.

• Question from Tycho Peterson (Jefferies LLC): Frank, I want to pick up on that margin point. So it sounds like you are committing to the 300 basis points of margin expansion even if the top line is flat. I guess, given that you're running at the high end of the $100 million to $120 million cost savings target in the near term, should we interpret the upper end of savings is simply kind of increasing confidence in hitting that margin target next year? Or could you think you could potentially do better?
  Response: Company is driving toward the high end of the $100M–$120M savings and that increases confidence in substantial margin expansion and double-digit EPS growth, though specific figures for 2026 aren't being confirmed today.

• Question from Tycho Peterson (Jefferies LLC): Okay. And then just probing a little bit on your assumptions. We're not talking numbers for '26, but just ANG, the outlook there, assuming flattish NIH budget. I mean, just talk a little bit about some of the gives and takes around multiyear grants. I assume you're not expecting any budget flush here in the near term. But then as we think about next year, do you think ANG orders will grow? And then can you flesh out your comments on China stimulus? How material was that? And how do you think about that for next year?
  Response: Q3 saw a mini NIH funding flush (notably in September) contributing to some orders but Q3 academic strength was mainly outside the U.S.; China stimulus produced modest (<$10M) green-shoot orders—encouraging but small and needs Q4 follow-up.

• Question from Tycho Peterson (Jefferies LLC): Okay. And then lastly, you just mentioned an order pushout. Can you quantify how large that was in the one you mentioned in your prepared comments?
  Response: Several large orders received late in September were pushed into FY26 due to customer site readiness, so material portions of those September orders will convert to revenue next year, though no precise dollar figure was provided.

• Question from Luke Sergott (Barclays Bank PLC): I just want to talk on China. You're coming in flat here, things kind of improved sequentially. Just talk about what you're seeing there more broadly. pull forward, you talked a little bit about the stimulus, the matter drove key questions. But how are you guys thinking about 4Q and the exit rate? And ultimately, are we kind of seeing some type of stabilization here? Or is this just kind of like a one-off?
  Response: China sequentially improved in Q3 vs Q2 with small stimulus-related orders (~$6M); it's a tentative green shoot rather than confirmed stabilization—won't draw Q4 exit-rate conclusions until Q4 results are in.

• Question from Luke Sergott (Barclays Bank PLC): All right. And then turning to the spatial and the demand that you guys are seeing there, can you talk a little bit about the cadence for the instruments versus the consumables? And then the push here and ability to use your existing scale as this kind of hits the core to push further with academic government customers or deeper into pharma?
  Response: Spatial biology demand improved (instruments and consumables); CosMx/CellScape drive near-term consumables and some upgrades can run on existing systems, while newer products (e.g., PainScape) are early-stage and will ramp more slowly.

• Question from Subhalaxmi Nambi (Guggenheim Securities, LLC): Frank, some of the niche end markets in 2026, like diagnostics and maybe semis, what do those look like next year? Can ELITech be a low double-digit grower in your mind?
  Response: Diagnostics (incl. ELITech, MALDI Biotyper) is performing well—ELITech placements far ahead of plan with strong consumables aftermarket; semi market is flattish in 2025 and expected to improve in 2026, both are material margin contributors.

• Question from Subhalaxmi Nambi (Guggenheim Securities, LLC): Just a follow-up. Can you unpack where you saw orders incrementally positive from a product perspective? Is it the lower-priced equipment? And then how have consumables being impacted? Any color you could share there?
  Response: Q3 order strength came mainly from larger ASP instruments (ACA/GOV, biopharma, applied) particularly in Europe; optics/AXS contributed volume at lower ASPs; diagnostics was not the primary driver of the Q3 order improvement.

• Question from Casey Woodring (JPMorgan Chase & Co): On orders, historically, orders improved sequentially in 4Q in your business, but you've talked here today about some catch-up in academic and government in 3Q. So can you just maybe walk through what the range of outcomes looks like in 4Q from an order exit rate perspective? How safe is it to assume orders step up sequentially? Or are there scenarios wherein orders could be flat to down in 4Q? Then I have a follow-up.
  Response: Q4 should be sequentially stronger than Q3 (typical seasonality), but the key question is year-over-year trend versus prior Q4—outcomes depend on Q4 order performance and remain uncertain until those orders are concrete.

• Question from Casey Woodring (JPMorgan Chase & Co): Got it. And then my second one, just quickly on backlog. I think last quarter, you noted you had 6.5 months, and you talked about that going down to 5 months in a normalized environment. Maybe just walk through kind of how you're seeing that play out over the course of '26.
  Response: Backlog increased to ~7 months in Q3 (from 6.5 months in Q2); based on current guide, significant backlog will carry into 2026, with final phasing depending on Q4 revenue performance.

• Question from Brandon Couillard (Wells Fargo Securities, LLC): Just a couple of housekeeping items. Can you give us an updated interest expense number for the year? What's the run rate for the fourth quarter? And is that a good figure to assume for '26? And is the impact of the share count from the MCP offering about 13 million shares?
  Response: MCP share impact is roughly ~13 million; interest modeling is more complex due to FX gains and other items—management did not provide a single run-rate number and advised using updated modeling inputs.

• Question from Joshua Waldman (Cleveland Research Company LLC): Two for you. First, I wondered if you could talk a bit more about what you're seeing in Europe. Was it primarily ACA/GOV accounts that improved there? Or did you also see pharma and applied accounts improve as well? And then I guess, at this point, what's your confidence level on the sustainability and strong orders? I mean, were there any one-off funding programs or anything like that, that released in the third quarter that leave you, I guess, nervous about the durability of stronger orders there?
  Response: Europe saw broad strength across ACA/GOV, applied and biopharma with no specific one-off driving the trend; management is encouraged and more confident but still needs Q4 order confirmation for durability.

• Question from Joshua Waldman (Cleveland Research Company LLC): Got it. Okay. And then a follow-up. I wondered if you could provide more color on what you're seeing out of pharma. I mean it sounds like you saw a sequential improvement in bookings. I forget if you commented what orders look like year-over-year. And does it seem like accounts are trying to push orders through by year-end? Or does this seem like maybe a change in how they're viewing medium-term investment in research tools?
  Response: Biopharma orders were strong globally in Q3 with sequential improvement (especially in the U.S.); management sees this as renewed investment in discovery tools rather than a year-end push—reflects strategic investment to improve drug discovery productivity.

• Question from Douglas Schenkel (Wolfe Research, LLC): Gerald, how do we balance what you've talked about in terms of on the cost savings initiatives? And like you sound as good as ever on those. You've exhibited some confidence about what you can do in 2026 from a margin expansion standpoint, seemingly in any growth environment. I mean at one point, I think last quarter, you talked about getting 300 basis points of margin expansion next year even in a flat growth environment. On the other hand, I think you increased your assumption for organic operating margin headwinds by 45 basis points for the year, which is pretty material with one quarter to go. So I'm just trying to figure out like how do we balance these things? And is there some risk that the benefits that you expect to occur over time are going to take a little bit longer to show up in the P&L just because of maybe the environment we're in and the fact that I think a lot of these changes that you're making are being done outside the U.S. where regulations can work against you. Again, I'm just trying to think about this as we try to set you guys up to succeed with realistic targets for 2026.
  Response: Company expects to hit the high end of $100M–$120M cost savings for FY26 with ~95% of actions underway; timing means some savings will hit more in Q2'26 than Q1, but management remains confident in substantial margin expansion (~300 bps range) even under weaker revenue scenarios.

Contradiction Point 1

Backlog Impact on Growth

It involves the expected impact of the backlog on growth, which is crucial for financial forecasting and investor expectations.

How does the book-to-bill ratio exceeding 1 impact 4Q trends? Is international growth driven by ACA/GOV or pharma? Is the U.S. academic market improving, particularly with DNP programs? - Puneet Souda (Leerink Partners)

2025Q3: Backlog is leveraged, and we expect deliveries to be doable, especially in Q4. - Frank H. Laukien(CEO)

Why isn't the backlog contributing this year, and how should we assess Q4 recovery? Are there expectations for fiscal 2026? - Puneet Souda (Leerink Partners)

2025Q2: Backlog is leveraged, and we expect deliveries to be doable, especially in Q4. - Frank H. Laukien(CEO)

Contradiction Point 2

Cost Saving Initiatives

It involves the company's approach to cost-saving initiatives, which are critical for managing expenses and profitability.

Can you detail the discussed order pushout and quantify its size? - Tycho W. Peterson (Jefferies LLC)

2025Q3: We started cost-saving initiatives earlier this year. $30 million of savings will impact fiscal '25, with most in '26. - Frank H. Laukien(CEO)

Why weren’t cost-cutting measures implemented earlier? Are you committed to $100 million to $120 million in cost reductions regardless of top-line revenue recovery? - Tycho W. Peterson (Jefferies LLC)

2025Q2: We started cost-saving initiatives earlier this year. $30 million of savings will impact fiscal '25, with most in '26. - Frank H. Laukien(CEO)

Contradiction Point 3

Growth Expectations for Fiscal '26

It involves the expected growth for fiscal year 2026, which is crucial for financial forecasting and investor expectations.

What impact is the government shutdown having on 4Q results? Is it reflected in the updated outlook? - Michael Ryskin (BofA Securities, Research Division)

2025Q3: We're less optimistic about growth in '26 due to U.S. academic and China stimulus delays, biopharma weakness, and industrial research investments. - Frank H. Laukien(CEO)

Will Blackwell's Q4 revenue be additive, and what is the expected gross margin exit rate? - Stacy Rasgon (Bernstein Research)

2025Q2: We expect NIH budgets down 10% to 20% for '26, with fiscal '25 down 20%-25%. We're prepared for a reduction, but a better outcome would benefit us significantly. - Frank H. Laukien(CEO)

Contradiction Point 4

Order Book and Backlog Stability

It involves the stability and utilization of the company's order book and backlog, which are critical indicators of demand and future revenue.

Can you explain the order pushout and quantify its size? - Tycho Peterson (Jefferies LLC, Research Division)

2025Q3: Backlog remains solid at 7 months despite some order pushouts. - Frank Laukien(CEO)

Can you quantify the order book and backlog, and whether they can offset declining orders? - Michael Ryskin (BoA)

2025Q1: The backlog remains at 7 months, providing a buffer to offset lower orders. - Gerald Herman(CFO)

Contradiction Point 5

Impact of Government Shutdown

It involves the impact of a government shutdown on the company's operations and revenue, which can affect investor expectations and strategic planning.

Could you clarify the impact of the government shutdown on 4Q results? Has the impact been reflected in the updated outlook? - Michael Ryskin (BofA Securities, Research Division)

2025Q3: No formal impact in outlook. Assume minor impact. Shutdown could delay new grants/installations. - Frank Laukien(CEO)

Are tariff-driven pull-forward effects and cancellations of UHF gigahertz magnets in China or the U.S. accounted for in the guidance? - Puneet Souda (Leerink Partners)

2025Q1: There are delays and uncertainty in China, but no cancellations yet. In the U.S. and ACA/GOV, there are uncertainties, but no cancellations either. - Frank Laukien(CEO)