Revenue Growth Driven by Steady Demand
Xylem grew Q1 2026 revenue by 2.7% YoY to $2.125B (from $2.069B), reflecting continued demand across its water technology segments. Gross profit expanded 4.6% to $803M, outpacing revenue growth and signaling improving product mix or pricing power.
Margin Expansion Across the Board
Gross margin improved to 37.79% from 37.12% a year ago (+0.67 pp), and operating margin edged up to 11.48% from 11.16% (+0.32 pp). Net margin reached 9.08%, reflecting disciplined cost management even as SG&A rose 2.6% to $472M.
Strong Operating Cash Flow Recovery
Operating cash flow surged 227.3% YoY to $108M from just $33M in Q1 2025, indicating significantly improved working capital management and earnings quality. This recovery supports the company's ability to fund capital allocation priorities.