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Aptiv (APTV) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 4, 2026

Source: earnings call transcript

Executive summary

Aptiv Q2 FY26 — Guidance Cut Amid China Weakness, Non-Auto Growth Strong

Aptiv navigated a challenging Q2 FY26 with strong non-automotive growth and significant new business awards, yet faced headwinds from a deteriorating China domestic market and program delays, leading to a full-year guidance reduction. The company remains committed to portfolio diversification, margin expansion, and shareholder returns, with increased share repurchases planned. Management acknowledged not being conservative enough in prior assumptions, particularly around launches and ramps.

Highlights

4

  • Generated 2% revenue growth and 10 basis points of EBITDA margin expansion in Q2 FY26.

  • Achieved double-digit non-auto revenue growth of 12% in Q2 FY26.

  • Secured $5 billion in new business awards during Q2 FY26, bringing year-to-date total to $10 billion, on track for $20 billion full year target.

  • Repurchased $250 million of shares in Q2 FY26, bringing year-to-date total to $325 million, with plans for over $600 million for the full year.

Concerns

4

  • Lowered full-year 2026 revenue guidance by $300 million at the midpoint to a range of $12.6 billion to $12.8 billion.

  • Reduced full-year 2026 adjusted EPS guidance to a range of $5.60 to $5.80.

  • Lowered full-year 2026 free cash flow guidance to a range of $625 million to $725 million.

  • Experienced prolonged sales weakness in the domestic China market and reduced schedules from luxury European OEMs exporting to China, impacting H2 revenue by $150 million.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Revenue
$12.6B-$12.8B
high materiality
Medium
Full-year 2026 Adjusted EBITDA
$2.31B-$2.37B
high materiality
Medium
Full-year 2026 Adjusted EBITDA Margin
18.4%
high materiality
Medium
Full-year 2026 Adjusted EPS
$5.60-$5.80
high materiality
Medium
Full-year 2026 Free Cash Flow
$625M-$725M
high materiality
Medium
Q3 2026 Adjusted Revenue Growth
1%
medium materiality
Medium
Q3 2026 Adjusted EBITDA
$560M
medium materiality
Medium
Q3 2026 Adjusted EBITDA Margin
17.7%
medium materiality
Medium
Q3 2026 EPS
$1.30
medium materiality
Medium
Share Repurchases
Additional $300M
high materiality
High
Share Repurchases
Approximately 50% of free cash flow
high materiality
High
Annual Revenues from Robotics and Drone Markets
$300M
medium materiality
High
Intelligent Systems Revenue Growth
Approximately flat
medium materiality
Medium
Engineered Components Revenue Growth
Low to mid-single digits
medium materiality
Medium
Intelligent Systems EBITDA Margin
Mid-teens level
medium materiality
Medium
Engineered Components EBITDA Margin
Approximately 22%
medium materiality
Medium
Software Business Growth Rate
Double-digit sort of growth rate
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Intelligent Systems
Revenue was flat year-over-year, with strength in non-auto (driven by software and services) offset by automotive weakness with certain European OEMs and lower production at a North American OEM due to a supplier fire. Adjusted EBITDA margin declined primarily due to investments in non-auto markets and the impact of stranded costs. Full year revenue expected to be approximately flat, with mid-teens EBITDA margin.
$1.5BFlat—Declined 120 bps (Adjusted EBITDA margin)
Engineered Components
Revenue grew 3% year-over-year, driven by double-digit growth in non-auto markets, specifically diversified industrials and aerospace and defense, while automotive revenues were essentially flat. Adjusted EBITDA margin increased due to flow-through on volume growth, favorable timing of recoveries, and performance initiatives, partially offset by stranded costs. Full year revenue expected to grow low to mid-single digits, with approximately 22% EBITDA margin.
$1.8B3%—Increased 100 bps (Adjusted EBITDA margin)
North America
Revenue grew 10% in Q2 FY26, driven by strength across both Intelligent Systems and Engineered Components segments.
—10%——
Europe
Revenue was down 8% in Q2 FY26, primarily reflecting volume pressures with select luxury OEMs, predominantly in Intelligent Systems.
—Down 8%——
Asia Pacific
Revenue increased 6% in Q2 FY26, including 5% growth in China, driven by improved mix with local OEMs, partially offset by a slowdown in production for the domestic market.
—6%——

APTV operating KPIs by quarter

APTV operating KPIs stated on its earnings calls, by fiscal quarter
KPI Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change vs prior quarter
New business awards
$7B We secured $7 billion of new business awards while also delivering solid financial results, including revenue of over $5 billion, an increase of 1% versus the prior year despite a deterioration in underlying vehicle production. Source: earnings call transcript
$5B This list represents a small portion of the $5 billion of new business awards during the second quarter, bringing our year-to-date total to $10 billion, putting us on track for our $20 billion full year target. Source: earnings call transcript
-28.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Advanced Occupancy Classification Systemlaunch
Gen 8 Radarlaunch
High-voltage bus barslaunch
High-performance interconnectslaunch
Integrated cockpit controllerlaunch
High-performance interconnect product linesexpansion
Optimized power solutions for 800-volt DC architecturesroadmap
Cybersecurity rating for enterprise Linux operating systemmilestone

Deals & partnerships

Robust AI Selection of intelligent perception solutions and compute for Gen 3 Carter robot.

Robust AI selected Aptiv's intelligent perception solutions and compute, including AI and ML-based sensor fusion powered by PULSE Center, for its Gen 3 Carter robot.

NVIDIA Extended partnership to provide active production-grade software to edge AI customers.

Aptiv extended its partnership with NVIDIA to provide active production-grade software to edge AI customers using NVIDIA compute.

Kyndryl Deployment of Aptiv's Wind River software as part of its mission-critical solutions portfolio.

Kyndryl will deploy Aptiv's Wind River software as an extension of Aptiv's enterprise partner ecosystem.

Leading drone manufacturer First commercial award for drone manufacturing. Over $500M 5-year program

Secured first commercial award from a leading drone manufacturer.

Risks & headwinds

Prolonged sales weakness in domestic China market H2 2026

$150M impact on H2 revenue guidance

Mitigation:Incorporating additional conservatism in H2 guidance; improving mix with local OEMs; diversifying business outside automotive.

Reduced schedules from luxury European OEMs exporting to China H2 2026

Included in $150M H2 revenue impact

Mitigation:Incorporating additional conservatism in H2 guidance; diversifying business outside automotive.

Delayed program launches and ramps H2 2026

100 bps lower contribution to H2 revenue growth than anticipated

Mitigation:Incorporating additional conservatism in H2 guidance.

Timing of enterprise sales in software and services Q3 2026

$50M impact on revenue guidance

Mitigation:Expect strong bounce back in Q4.

Customer mix headwinds in automotive Q2 FY26

1% automotive revenue decline in Q2 FY26

Mitigation:Diversifying business mix in and outside of automotive.

Stranded costs following Versigent spin Q2 FY26 and ongoing

Impacted Intelligent Systems and Engineered Components margins

Mitigation:Aggressively working to eliminate.

Lower production at a North American OEM due to supplier fire Q2 FY26

Impacted Intelligent Systems revenue in Q2 FY26

Mitigation:Expected to unwind from a comp perspective in H2.

IHS growth outlook for future vehicle production brought down Future years

General industry headwind

Mitigation:Focus on strong bookings, non-auto diversification.

What to watch in Q3 FY26

China domestic market recovery

Next quarter
Current Retail sales down 20%
Target Signs of stabilization or government support

Why it matters

The China market's weakness significantly impacted current guidance; any stabilization or government intervention would be a key positive for automotive volumes.

The China domestic market, which has and continues to be a more volatile region, has clearly deteriorated relative to when we last updated you. And second, we were not conservative enough in certain assumptions, particularly around launches and ramps.

Find out whether APTV delivers this. Inve re-checks your case every morning.

Q&A highlights

How do the current changes, particularly in H2 2026, inform the prior 4% to 7% long-term growth rate for 2027 and beyond?

Kevin Clark stated that Aptiv's long-term view of the business's capabilities remains intact, despite a dynamic environment and IHS bringing down the growth outlook for future vehicle production. He highlighted strong automotive bookings and faster-than-expected non-auto opportunities, but deferred specific 2027 guidance until later in the year.

“Listen, our long-term view of what the business is capable of remains intact. Clearly, drivers of growth are constantly changing, especially in environment that is dynamic as this environment is, when you look at the automotive sector, IHS has brought down the growth outlook for future vehicle production.”

asked by Itay Michaeli · answered by Kevin P. Clark

2 min read 5 chapters

Detailed narrative

China Market Headwinds and Guidance Revision

Aptiv significantly lowered its full-year 2026 revenue guidance by $300 million at the midpoint, primarily due to prolonged sales weakness in the domestic China market. This weakness is causing local OEMs to reduce second-half production schedules and luxury European OEMs to cut vehicle exports to China. Management acknowledged that previous assumptions were not conservative enough, particularly regarding program launches and ramps, and has now incorporated an additional element of conservatism for the second half of the year.

Accelerated Non-Automotive Diversification

The company reported strong double-digit non-automotive revenue growth of 12% in Q2 FY26, driven by software and services, diversified industrials, and aerospace and defense. Aptiv is seeing opportunities materialize faster than anticipated in robotics and drones, with an expectation of achieving $300 million in annual revenues from these markets within the next few years. These new markets offer higher margin profiles and leverage existing automotive technologies with minimal new capital investment.

Strategic Product Innovations and New Business Awards

Aptiv secured $5 billion in new business awards in Q2 FY26, bringing the year-to-date total to $10 billion, on track for a $20 billion full-year target. Key awards include a Gen 8 Radar for Volvo Cars' next-gen software-defined vehicle platform, high-voltage bus bars for EV battery packs in North America and China, and intelligent perception solutions for Robust AI's Gen 3 Carter robot. Product launches included an advanced occupancy classification system and an integrated cockpit controller for commercial vehicles.

Capital Allocation and Shareholder Returns

Aptiv repurchased $250 million of its shares in Q2 FY26, bringing the year-to-date total to $325 million. The company intends to repurchase an additional $300 million in the second half, targeting over $600 million for the full year. Management reiterated its commitment to returning approximately half of its free cash flow to shareholders through share repurchases over the next few years, while also pursuing smaller bolt-on M&A transactions for diversification.

Software and Services Business Dynamics

The software and services business experienced a $50 million reduction in enterprise bookings due to timing, leading to a softer Q3 but an expected strong bounce back in Q4. While growth has been in the high single to low double digits, the company aims for a mid-teens growth rate. Aptiv is seeing increased opportunities for software development in areas like middleware as OEMs transition to software-defined vehicles, countering some insourcing trends.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.