AI Takeaway
Otis delivered 7.3% year-over-year revenue growth to $3.859B and 8.9% net-income growth to $428M in Q2 FY2026, driven by Service growth, but gross and operating margins declined amid higher labor, material, and organizational costs. Source: 10-Q Item 2 MD&A, pp.33-40.
Revenue
$3.86B
++7.34% YoY
EPS (Basic)
$1.12
++12.00% YoY
Operating Income
$575M
++5.12% YoY
Filed · Source: SEC EDGAR 10-Q filing
Otis Worldwide (OTIS) reported Q2 FY2026 revenue of $3.86B, up 7.3% year over year. The company posted net income of $428M, up 8.9% from a year earlier, with diluted EPS of $1.12.
Service revenue increased 11% year over year to $2.580B, with 9% organic growth led by 6% maintenance-and-repair growth and 24% modernization growth. In contrast, New Equipment revenue was essentially flat at $1.279B, while its operating profit fell $28M to $40M and its operating margin contracted to 3.1% from 5.3%, reflecting lower volume, unfavorable price and mix, and organizational costs.
Source: 10-Q Item 2 MD&A, pp.37-40
Cost of products and services sold increased 9% to $2.723B, faster than the 7% increase in net sales. Management attributed the increase primarily to sales volume, higher labor costs—including costs supporting operational execution and productivity—and higher material costs; consequently, gross margin declined 90 basis points to 29.4%.
Source: 10-Q Item 2 MD&A, pp.33-34
Otis stated that UpLift had generated approximately $200M of run-rate savings as of December 31, 2025. Approved UpLift restructuring actions generated approximately $103M of annual recurring savings by the end of 2025, with $51M realized in the first six months of 2026; however, $86M of cash payments remained to complete announced restructuring actions as of June 30, 2026.
Source: 10-Q Item 2 MD&A, pp.31, 34-35
Following a favorable German tax ruling, Otis estimated that $55M remained payable to RTX under the Tax Matters Agreement as of June 30, 2026. The company recorded $5M of related indemnification expense in the first six months of 2026, but noted the estimate could change because the parties continue to dispute the final indemnity amount.
Source: 10-Q Item 2 MD&A, p.31
Six-month operating cash flow rose to $680M from $405M, primarily due to higher net income and favorable working-capital timing, including contract assets and liabilities. At June 30, 2026, Otis had $813M of cash, $8.436B of total debt, and no borrowings under its $1.5B revolving credit facility; it also issued $700M of 4.488% notes in May 2026.
Source: 10-Q Item 2 MD&A, pp.41-43
Otis reported $8.226B of long-term debt and stockholders' equity of negative $5.748B at June 30, 2026. The negative-equity position makes the reported debt-to-equity ratio negative and not economically meaningful, while the absolute debt balance may increase dependence on operating cash generation and refinancing capacity.
Source: 10-Q Balance Sheet (XBRL)
Current assets were $6.839B compared with current liabilities of $8.225B, producing a current ratio of 0.83x. This indicates that reported current liabilities exceeded reported current assets, although the company also generated $680M of operating cash flow in the first six months of 2026.
Source: 10-Q Balance Sheet and Cash Flow Statement (XBRL)
Revenue increased 7.3% year over year, but cost of products and services sold increased 9.0%, reducing gross margin to 29.4% from 30.3%. Operating margin also declined to 14.9% from 15.2%, showing that higher costs can limit the conversion of revenue growth into profit growth.
Source: 10-Q Income Statement (XBRL)
Otis repurchased $807M of shares during the first six months of 2026, up 43.9% year over year, while financing activities used $621M of cash. With negative stockholders' equity and substantial debt, continued large repurchases could reduce balance-sheet flexibility if operating cash flow weakens.
Source: 10-Q Cash Flow Statement and Balance Sheet (XBRL)
Reported EPS of $1.01 versus the $1.03 analyst consensus — a -1.6% miss for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.86B | $3.6B | +7.34% |
Operating Income | $575M | $547M | +5.12% |
Net Income | $428M | $393M | +8.91% |
EPS (Basic) | $1.12 | $1.00 | +12.00% |
EPS (Diluted) | $1.12 | $0.99 | +13.13% |
R&D Expense | $39M | $38M | +2.63% |
SG&A Expense | $520M | $499M | +4.21% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $11.16B | $10.49B | +6.30% |
Current Assets | $6.84B | $6.39B | +7.08% |
Total Liabilities | $16.61B | $15.7B | +5.80% |
Current Liabilities | $8.22B | $7.25B | +13.51% |
Stockholders' Equity | $-5.75B | $-5.37B | -7.10% |
Cash & Equivalents | $813M | $688M | +18.17% |
Long-Term Debt | $8.23B | $7.22B | +13.92% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $680M | $405M | +67.90% |
Investing Cash FlowYTD | $-316M | $-320M | +1.25% |
Financing Cash FlowYTD | $-621M | $-1.72B | +63.94% |
Share BuybacksYTD | $807M | $561M | +43.85% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 14.9% | 15.2% | -0.32% |
Net Margin | 11.1% | — | — |
ROE | -7.4% | — | — |
ROA | 3.8% | — | — |
Current Ratio | $0.831 | — | — |
Debt to Equity | $-2.89 | — | — |
Expected release date, analyst estimates & what to watch
Otis delivered a strong Q1 FY2026 with revenue up 6.4% to $3.57B, operating income surging 31.1% to $539M, and net income jumping 39.9% to $340M, driven by significant margin expansion and robust cash flow generation.
Otis delivered modest revenue growth of 1.2% to $14.4B in FY2025 with improved operating margins, but net income fell 15.9% to $1.38B, largely due to higher SG&A costs and a significant cash reduction driven by heavy financing outflows.
Other companies in Industrial Machinery & Supplies & Components
Otis revenue increased 7.3% year over year to $3.859B in Q2 FY2026. Service revenue rose 11% to $2.580B, while New Equipment revenue was nearly flat at $1.279B. Source: 10-Q Item 2 MD&A, pp.33, 37-40.
Gross margin fell to 29.4% from 30.3%, while operating margin declined to 14.9% from 15.2%. Management cited higher labor and material costs, costs related to organizational initiatives, and unfavorable price, regional, and product mix in New Equipment. Source: 10-Q Item 2 MD&A, pp.33-34, 38-40.
Net income attributable to Otis increased 8.9% to $428M and diluted EPS increased 13.1% to $1.12. Management attributed the net-income increase to higher operating profit and a lower effective tax rate, partly offset by higher interest expense on a year-to-date basis. Source: 10-Q Item 2 MD&A, pp.35-37.
Otis generated $680M of operating cash flow in the first six months of 2026 and had $813M of cash at June 30, 2026. However, it also had $8.436B of total debt, negative $5.560B of total equity, and a 0.83x current ratio. Source: 10-Q Item 2 MD&A, pp.41-43.
The filing reports diluted EPS of $1.12, up from $0.99 in the prior-year quarter, but it does not provide analyst consensus estimates. Therefore, whether Otis beat or missed external earnings estimates cannot be determined from this 10-Q alone. Source: 10-Q Income Statement (XBRL).