Resideo’s Q1 Earnings Show Resilience Amid Growth—Here’s What Investors Need to Know

Resideo Technologies (NYSE: REZI) has long been a quiet giant in the home comfort and building technology sector, but its Q1 2025 earnings report, released on May 6, 2025, has placed it squarely in the spotlight. With net revenue surging 19% year-over-year to $1.77 billion and Adjusted EBITDA hitting $168 million, the quarter underscores Resideo’s ability to navigate a challenging economic environment. The results also reaffirm its 2025 outlook, suggesting the company is on track to deliver sustained growth. Here’s what investors should take away.

Key Drivers of Q1 Performance

The revenue jump reflects Resideo’s dual focus on residential HVAC systems and smart building solutions, both of which are benefiting from secular trends. The residential segment, driven by demand for energy-efficient heating and cooling systems, grew 18% year-over-year. Meanwhile, commercial and industrial customers, particularly those in retrofitting older buildings for energy efficiency, contributed to a 21% rise in the commercial segment.

Resideo’s Adjusted EBITDA margin dipped slightly to 9.5% from 10.2% in Q1 2024, a result of higher raw material costs and investments in R&D for next-generation products like its Z-Wave smart thermostats. However, management emphasized that cost discipline remains a priority, and the margin decline is temporary as new pricing strategies and operational efficiencies take hold.

Reaffirmed Outlook: A Vote of Confidence

Resideo’s reaffirmed 2025 outlook—projecting $7.2–$7.4 billion in revenue—suggests management sees no major headwinds. This confidence is bolstered by two key factors:
1. Residential Demand Resilience: Despite a cooling U.S. housing market, demand for high-margin replacement HVAC systems (which typically last 15–20 years) remains robust.
2. Commercial and Industrial Tailwinds: Governments and corporations are accelerating spending on energy-efficient infrastructure, a trend Resideo is positioned to capitalize on through its building automation systems.

Investor Takeaways and Risks

The Q1 results and reaffirmed guidance are positive, but investors should remain mindful of risks:
- Supply Chain Volatility: While Resideo has diversified its suppliers, disruptions in copper or semiconductor availability could pressure margins.
- Economic Sensitivity: Residential HVAC spending is discretionary; a prolonged recession could delay replacement cycles.
- Competitive Pressure: Rivals like Honeywell and Emerson are accelerating their smart home offerings, potentially squeezing Resideo’s market share.

Conclusion: A Solid, if Not Spectacular, Play

Resideo’s Q1 results and outlook paint a picture of a company that’s executing well within its core markets. The 19% revenue growth, while impressive, is largely a function of secular tailwinds rather than transformative innovation. The stock’s 12-month performance—up 14% versus the S&P 500’s 8%—reflects this, but it’s not yet a breakout story.

Investors should focus on execution in the second half of 2025. If Resideo can expand its EBITDA margin back to 10%+ while maintaining revenue growth above 15%, its valuation—currently trading at 12x projected 2025 EBITDA—could prove undervalued. However, with the company’s exposure to cyclical industries like construction and real estate, a cautious stance is warranted until macroeconomic clarity emerges.

In short, Resideo offers a low-risk, steady-growth option for investors willing to bet on the enduring demand for energy efficiency and smart home technology. But for those seeking high-flying returns, there may be better bets elsewhere.