Otis Worldwide 2025 Q2 Earnings Misses Targets, Net Income Falls 6%

Otis Worldwide (OTIS) reported its fiscal 2025 Q2 earnings on Jul 22nd, 2025. The company's results fell short of expectations as revenue remained flat year-over-year at $3.60 billion. However, Otis revised its full-year guidance, projecting net sales to rise between 1% and 2%, with adjusted EPS expected to increase by 4% to 7%. These adjustments reflect a cautious optimism amid ongoing challenges in the New Equipment segment, especially in China and the Americas.

Revenue
Otis Worldwide's total revenue for 2025 Q2 was $3.60 billion, slightly down from the previous year. The New Equipment segment generated $1.28 billion, while the Service segment brought in $2.32 billion, contributing to the total net sales figure.

Earnings/Net Income
In Q2 2025, Otis Worldwide's EPS decreased by 2.9% to $1.00 from $1.03 in the previous year. Net income declined by 6.0% to $423 million compared to 2024 Q2. This performance reflects some challenges, as earnings indicators suggest a downturn.

Price Action
The stock price of Otis Worldwide rose 2.63% during the latest trading day, increased 1.62% over the past week, and gained 5.56% month-to-date.

Post-Earnings Price Action Review
Otis Worldwide's post-earnings price action strategy historically delivered moderate returns over the past three years. The approach involved purchasing shares after a revenue increase quarter-over-quarter and holding them for 30 days. This strategy yielded a compound annual growth rate (CAGR) of 11.45%, although it lagged behind the benchmark by 17.05%. Despite a maximum drawdown of 0% and a Sharpe ratio of 0.51 indicating a low-risk profile, the strategy exhibited volatility of 22.66%, suggesting potential short-term fluctuations. Investors faced a trade-off between moderate returns and higher volatility, underscoring the importance of risk management in this approach.

CEO Commentary
"Otis delivered solid performance led by the strength of our Service segment that continues our steady growth trajectory, contributing mid-single digit organic sales growth and both year-over-year and sequential operating profit margin expansion," said Judy Marks, Chair, CEO & President. The company experienced a 6% increase in Service net sales, driven by a 4% organic sales growth, while modernization orders surged by 22%. Despite challenges in New Equipment sales, particularly in China and the Americas, the leadership remains confident in the execution of their Service-driven strategy and reconfirms their EPS outlook for 2025.

Guidance
Otis is revising its full-year outlook to net sales of $14.5 to $14.6 billion, reflecting an increase of 1% to 2%. The company expects organic sales to rise approximately 1%, with organic Service sales anticipated to grow around 5%. Additionally, adjusted EPS is guided to be between $4.00 and $4.10, marking an increase of 4% to 7%. Adjusted free cash flow is projected to be between $1.4 and $1.5 billion.

Additional News
In recent developments, JPMorgan upgraded Otis Worldwide's investment rating to 'Overweight', highlighting the company's potential to rebound following tariff-related challenges. This upgrade reflects confidence in Otis's stable earnings outlook. Additionally, Otis announced a quarterly dividend increase, enhancing its appeal to income-focused investors. The dividend was raised to $0.42 per share, representing a 7.7% increase from the previous quarter. Furthermore, Otis has been actively repurchasing its shares, with $550 million spent on buybacks this year. These strategic moves aim to boost shareholder value and underscore the company's commitment to returning capital to investors.