Skip to content
    APTV
    Earnings call· Jun 2026(Q2 FY26)

    Aptiv Q2 FY26 earnings call APTV

    Aug 4, 2026 Source

    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

    17
    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

    5
    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%——

    Operational metrics

    14
    Non-auto revenue growth
    12%
    Q2 FY26

    Strong results in strategically important nonautomotive revenues.

    FX and commodities headwind to margin
    30
    Q2 FY26

    In line with expectations.

    Cash separation costs (Versigent spinoff)
    $70M
    Q2 FY26

    Included in free cash flow, largely incurred year-to-date.

    Stranded costs impact
    —
    Q2 FY26

    Impacted Intelligent Systems and Engineered Components margins following the Versigent spin, aggressively working to eliminate.

    Automotive revenue growth
    -1%
    Q2 FY26

    Absorbing some customer mix headwinds.

    China revenue growth
    5%
    Q2 FY26

    Driven by improved mix with local OEMs, partially offset by slowdown in domestic production.

    New business awards
    $5B$10B YTD
    Q2 FY26

    On track for $20 billion full year target.

    Share repurchases
    $250M$325M YTD
    Q2 FY26

    Intention to repurchase similar amount in H2 2026, bringing full year total to over $600 million.

    Software and services growth rate
    High single, low double digits
    Past several quarters

    Targeting mid-teens growth rate.

    China export platforms revenue mix
    10%
    Current

    Of total revenues in China, mix is more heavily weighted for domestic platforms.

    Energy storage/datacenter revenues
    <$50M
    Current

    Expected to grow at a very rapid rate over the next 3 years.

    China domestic retail sales decline
    20%
    Current

    Significantly weaker than expected, impacting production schedules.

    Launches and ramps contribution to H2 revenue growth
    200Lower by 100 bps than initially anticipated
    H2 FY26

    Due to delayed ramp in production volumes on certain programs in China and a delayed launch with a European OEM.

    Vehicle production outlook headwind to H2 revenue growth
    150
    H2 FY26

    Amplified by customer and program mix due to scheduled changes.

    Industry KPIs

    4
    MetricValueDetails
    EPS$1.63USD
    Revenue$3.3BUSD
    Adjusted EBITDA ebita$613MUSD
    Share buyback capital return$250MUSD

    Product announcements

    8
    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

    4
    Robust AISelection 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.

    NVIDIAExtended 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.

    KyndrylDeployment 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 manufacturerFirst commercial award for drone manufacturing.Over $500M5-year program

    Secured first commercial award from a leading drone manufacturer.

    Risks & headwinds

    8
    Prolonged sales weakness in domestic China marketH2 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 ChinaH2 2026

    Included in $150M H2 revenue impact

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

    Delayed program launches and rampsH2 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 servicesQ3 2026

    $50M impact on revenue guidance

    Mitigation: Expect strong bounce back in Q4.

    Customer mix headwinds in automotiveQ2 FY26

    1% automotive revenue decline in Q2 FY26

    Mitigation: Diversifying business mix in and outside of automotive.

    Stranded costs following Versigent spinQ2 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 fireQ2 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 downFuture years

    General industry headwind

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

    What to watch in Q3 FY26

    5

    China domestic market recovery

    Next quarter
    CurrentRetail sales down 20%
    TargetSigns 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.