Rentokil Initial’s Q1 Revenue Rises, But US Division Struggles to Keep Pace

Rentokil Initial, a global leader in pest control and hygiene services, reported a modest 0.7% organic revenue growth for its North American division in Q1 2025, overshadowed by lackluster performance in its core US pest control business. While the company’s international markets delivered robust gains, the underwhelming results from its largest geographic segment—a region accounting for 60% of total revenue—raised concerns about near-term growth prospects.

North American Performance: A Mixed Picture
The North American division reported total revenue of $951 million, a mere 0.5% increase year-on-year. Pest Control, the cornerstone of the region’s business, grew just 0.2% in reported terms and 0.5% organically, with CEO Andy Ransom citing “subdued inbound lead flow and contract sales” as key headwinds. Digital lead generation, critical for customer acquisition, remained weak despite a partial rebound in March. Hygiene & Wellbeing revenue, however, surged 9.3% (5.9% organically), though this category represents a smaller slice of North American revenue.

Strategic initiatives aim to address these challenges. The rollout of 36 new satellite branches and a refreshed brand strategy are designed to boost lead generation, while the “Trusted Advisor” program—which incentivizes technicians to engage in sales—showed progress, with participation rates rising to 60% (up 9 percentage points). Customer and colleague retention also improved to 80.4% and 79.8%, respectively, suggesting operational stability.

Global Strength vs. US Weakness
While North America faltered, international markets delivered a 4.7% organic revenue rise in Pest Control, driven by strong demand in Europe, Asia, and Sub-Saharan Africa. The UK’s hygiene business, however, faced headwinds due to unfavorable comparisons in asbestos remediation work. Rentokil’s global diversification has historically insulated it from regional downturns, but the US’s outsized weight in its portfolio complicates this buffer.

Analyst Sentiment and Outlook
Jefferies analysts highlighted risks to full-year expectations, noting the US division’s weak start and macroeconomic uncertainties. Rentokil chose not to reaffirm its annual outlook, reflecting cautious optimism. The company’s ability to revive US Pest Control demand—through improved lead generation and brand revitalization—will be pivotal.

Conclusion: Navigating Crosscurrents
Rentokil Initial’s Q1 results underscore a critical tension: global resilience contrasts with US-specific challenges. While international markets and hygiene services provide tailwinds, the US’s pest control segment remains a drag, reliant on fixes to its lead generation pipeline. The 71% surge in Terminix’s five-star reviews and improved retention metrics suggest foundational improvements, but these gains must translate into revenue.

Investors should monitor two key indicators: (1) whether US Pest Control lead flow stabilizes beyond March’s modest rebound, and (2) the efficacy of the satellite branches and brand initiatives in driving market share. With 80% of North American revenue tied to recurring contracts, the company’s long-term stability remains intact, but near-term growth hinges on turning around its US operations.

Rentokil’s diversified customer base and global footprint provide a safety net, but its stock (RTO.L) is unlikely to rally until US performance improves meaningfully. For now, patience—and a close eye on lead generation metrics—seems prudent.