Skip to content
    ROK
    Earnings call· Mar 2026(Q2 FY26)

    ROCKWELL AUTOMATION Q2 FY26 earnings call ROK

    May 5, 2026 Source

    Executive summary

    Rockwell Automation, Inc. Q2 FY26 — Strong Operating Performance and Broadening Demand

    Rockwell Automation delivered strong Q2 FY26 results, with sales, margins, and EPS all exceeding expectations, driven by broadening customer demand in e-commerce, data centers, and semiconductors. The company achieved significant operating leverage and margin expansion, while navigating persistent trade volatility and geopolitical uncertainties that continue to delay large capital investments in some sectors. Management is focused on managing inflationary pressures and accelerating new technology releases, including AI capabilities, to sustain growth and profitability.

    Highlights

    5

    • Q2 organic sales grew 9% year-over-year, exceeding expectations.

    • Adjusted EPS of $3.30 was up over 30% year-over-year, well above expectations.

    • Enterprise operating margin expanded 350 basis points year-over-year to 22.5%.

    • Orders grew double-digits year-over-year, with book-to-bill slightly above historical average.

    • Data center sales more than doubled year-over-year, becoming one of the strongest end markets.

    Concerns

    4

    • Lifecycle Services organic sales were down 1% year-over-year due to customers deferring larger projects.

    • Persistent trade volatility and geopolitical uncertainty continued to delay large capital investments in automotive and consumer packaged goods.

    • Memory costs are expected to represent a double-digit million dollar headwind in the back half of FY26.

    • Sequential margin pressure is expected in the second half of FY26 due to inflationary costs and mix shift.

    Guidance & targets

    23
    CategoryTargetConfidence
    Full-year FY26 Reported Sales Growth
    5% to 9%
    high materiality
    High
    Full-year FY26 Organic Sales Growth
    5% to 9%
    high materiality
    High
    Full-year FY26 Positive Currency Contribution to Sales
    1.5 points
    medium materiality
    High
    Full-year FY26 Organic Annual Recurring Revenue (ARR) Growth
    high single digits
    medium materiality
    High
    Full-year FY26 Enterprise Operating Margin
    21.5%
    high materiality
    High
    Full-year FY26 Adjusted EPS
    $12.50 to $13.10
    high materiality
    High
    Full-year FY26 Free Cash Flow Conversion
    100%
    medium materiality
    High
    Full-year FY26 Total Price Contribution
    250 basis points
    medium materiality
    High
    Full-year FY26 Capital Expenditures
    about 3% of sales
    medium materiality
    High
    Full-year FY26 Adjusted Effective Tax Rate (ETR)
    19.5%
    low materiality
    High
    Full-year FY26 Share Repurchases
    approximately $850 million
    medium materiality
    High
    Full-year FY26 Average Diluted Shares Outstanding
    about 112.1 million shares
    low materiality
    High
    Full-year FY26 Intelligent Devices Reported Revenue Growth
    high single digits
    medium materiality
    High
    Full-year FY26 Intelligent Devices Segment Operating Margin
    around 20%
    medium materiality
    High
    Full-year FY26 Software & Control Reported Revenue Growth
    low double digits
    medium materiality
    High
    Full-year FY26 Software & Control Segment Operating Margin
    low 30s
    medium materiality
    High
    Full-year FY26 Lifecycle Services Reported Revenue
    down about $100 million
    medium materiality
    High
    Full-year FY26 Lifecycle Services Segment Operating Margin
    flat to slightly up year-over-year
    medium materiality
    High
    Full-year FY26 Corporate and Other Expense
    around $110 million
    low materiality
    High
    Full-year FY26 Net Interest Expense
    about $120 million
    low materiality
    High
    Q3 FY26 Total Company Reported Sales
    roughly flat sequentially
    medium materiality
    High
    Q3 FY26 Enterprise Operating Margin
    flat sequentially
    medium materiality
    High
    Q3 FY26 Adjusted EPS
    up about $0.05 sequentially or up mid- to high teens year-over-year
    medium materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Intelligent Devices
    Organic sales grew 9% year-over-year, driven by strong growth in Motion, I/O, and Safety & Sensing businesses. Margin expansion was due to positive price/cost, higher sales volume, and favorable mix, partially offset by higher compensation.
    Segment Operating Margin: 20.9%YoY Margin Change: +320 bpsIncremental Margin: mid-40s
    		—9%—20.9%
    Software & Control
    Organic sales grew 17% year-over-year, well above expectations, driven by continued double-digit sales growth of Logix, especially in North America and with data center customers. Margin expansion was due to strong sales volume and positive price/cost, partially offset by compensation.
    Segment Operating Margin: 34.9%YoY Margin Change: +480 bpsIncremental Margin: high 50s
    		—17%—34.9%
    Lifecycle Services
    Organic sales were down 1% year-over-year, largely in line with expectations, as customers deferred larger projects. Margin was flat year-over-year due to good project execution and productivity, offset by higher compensation. The dissolution of the Sensia joint venture is complete.
    Segment Operating Margin: 14.6%YoY Margin Change: flatBook-to-bill: 1.07
    		—-1%—14.6%
    United States
    Organic sales in the U.S. were up 10% versus prior year, and North America is expected to be the strongest region in fiscal '26.
    		—10%——
    Discrete Industries
    Sales grew mid-teens, led by better-than-expected growth in automotive, e-commerce, warehouse, and semiconductor. Data center business was a strongest end market, more than doubling sales.
    Automotive Sales Growth: mid-teens YoYE-commerce and Warehouse Automation Sales Growth: >30% YoYSemiconductor Sales Growth: high teens YoYData Center Sales Growth: >100% YoY
    		—mid-teens——
    Hybrid Industries
    Sales grew high single digits, led by strong growth in food and beverage. Life Sciences grew low single digits year-over-year and double digits sequentially.
    Food & Beverage Sales Growth: high single digitsLife Sciences Sales Growth: low single digits YoY, double digits sequentially
    		—high single digits——
    Process Industries
    Sales grew mid-single digits with solid growth across energy, metals, pulp and paper, and chemicals. Energy sales were above expectations, particularly in the Americas.
    Energy Sales Growth: mid-single digits
    		—mid-single digits——

    Operational metrics

    15
    Annual Recurring Revenue (ARR)
    up over 6%YoY
    Q2 FY26

    Includes high single-digit growth from software ARR and mid-single-digit growth from recurring services.

    Software ARR Growth
    high single-digitYoY
    Q2 FY26

    Part of total ARR growth.

    Recurring Services ARR Growth
    mid-single-digitYoY
    Q2 FY26

    Part of total ARR growth, with slower growth due to customers temporarily delaying spend.

    Gross Margin
    >50%+160 bps YoY
    Q2 FY26

    Driven by volume, ongoing benefits from productivity, and favorable mix.

    SG&A Spend Growth
    2%YoY
    Q2 FY26

    Primarily due to higher compensation, reflecting annual merit increase and strong outperformance.

    Engineering and Development Spend Growth
    11%YoY
    Q2 FY26

    On pace with sales growth, reflecting continued investment for the future.

    Total Innovation Spend
    8%
    Q2 FY26

    As a percentage of sales.

    Adjusted Effective Tax Rate
    20.6%
    Q2 FY26

    Slightly higher than expectations for the quarter.

    Total Rockwell Incremental Margin
    low 50s
    Q2 FY26

    Incremental margin on year-over-year sales growth, repeating strong incrementals from prior quarter.

    Core Performance Impact on Adjusted EPS
    $0.80
    Q2 FY26

    Driven by volume, price/cost, productivity, and mix, partially offset by higher compensation.

    Currency Tailwind on Adjusted EPS
    $0.15
    Q2 FY26

    Offset by a $0.15 tax headwind.

    Tax Headwind on Adjusted EPS
    $0.15
    Q2 FY26

    Offset a $0.15 currency tailwind.

    Share Repurchases
    $450 million
    Q2 FY26

    Amount spent on repurchasing shares in the quarter.

    Memory Cost Headwind
    double-digit million dollar
    H2 FY26

    Expected impact in the back half of the fiscal year.

    Sensia Dissolution Sales Impact
    $100 million reduction
    FY26

    Reduction in reported sales guide due to the dissolution of the Sensia JV, partially offset by a $200 million increase in organic sales forecast.

    Industry KPIs

    5
    MetricValueDetails
    Equipment pricing250 basis pointsbps
    Book to bill ratioslightly higher than historical average
    Orders bookings growthDouble-digit%
    Data center exposure pipelinemore than doubling%
    Incremental flow through marginlow 50s%

    Orderbook & backlog

    2
    Company Book-to-bill ratioslightly higher than historical averageQ2 FY26

    Historical average corridor is between 0.95 and 1.1. For the first half, it was within that corridor, and full year is expected to be within that corridor. Orders were particularly strong, especially in products.

    Lifecycle Services Book-to-bill ratio1.07Q2 FY26

    Product announcements

    1
    ProductTypeDetails
    Clock Tower Farmslaunch

    Deals & partnerships

    2
    Sensiadivestiture

    The dissolution of the Sensia joint venture is now complete and executed as planned on April 1, 2026.

    BHPpartnership

    Strategic partnership to support BHP in advancing the next generation of autonomous operations in mining, combining Rockwell's leadership in automation and AI with BHP's operational expertise.

    Risks & headwinds

    4
    Persistent trade volatility and geopolitical uncertainty

    Delayed large capital investments

    Mitigation: Managing cost increases in affected areas; accelerating new technology release.

    Memory costsH2 FY26

    double-digit million dollar headwind

    Mitigation: Actively managing pressures, including increased safety stock to secure supply and protect operations; additional pricing actions.

    Inflationary costsH2 FY26

    step up

    Mitigation: Additional pricing actions (250 bps total price for FY26); increased safety stock.

    Middle East conflict

    paused some near-term customer activity

    Mitigation: Limited impact to results today; potential for reinvestment as customers restore operations over time.

    Q&A highlights

    10

    Can you size the data center market for Rockwell and discuss its total addressable market, given its rapid growth?

    Blake Moret stated that data center revenue is currently low single digits as a percentage of total sales. He explained that Rockwell's data center offerings come from power distribution (Cubic technology), industrial PLCs (Logix) replacing commercial-grade controls, and participation with HVAC customers. He noted that the company will review the numbers at year-end to determine if more explicit dimensioning is needed.

    “data center for us comes from, I'd say, 3 main places in our offering. The first would be the power distribution, largely through our Cubic technology... The second would be the growing trend to replace commercial grade controls with industrial PLCs... And then participating with some of our large HVAC customers.”

    asked by Scott Davis · answered by Blake Moret

    2 min read6 chapters

    Detailed Narrative

    01

    Market Dynamics & Demand Broadening

    Rockwell Automation observed an improvement in customer demand across a broader range of industries in Q2 FY26, including e-commerce, warehouse automation, data center, semiconductor, and energy. This broadening demand contributed to double-digit year-over-year growth in orders, sales, and earnings. However, persistent trade volatility and geopolitical uncertainty🌐 continued to delay large capital investments in other industries, such as automotive and consumer packaged goods, despite good results in these verticals driven by modernizations and new offerings like autonomous mobile robots.

    02

    Operational Excellence & Margin Expansion

    The company delivered strong margin performance in Q2 FY26, with enterprise operating margin expanding 350 basis points year-over-year to 22.5%. This was driven by higher volume, positive price/cost, favorable mix, and productivity initiatives. Beginning in Q2, Rockwell is reporting enterprise operating profit and margin, which include corporate expenses, due to SEC requirements. This change is in presentation only and does not impact net income, EPS, or cash flow.

    03

    Strategic Wins & Technology Adoption

    Rockwell secured several strategic wins, including supporting NASA's Artemis II mission with ground control systems and a significant OTTO AMR win with Subaru of Indiana Automotive. The company also saw strong performance with data center customers, exemplified by a win with ATS Automation for an AI data center in Texas using Logix PLCs. Other notable wins include Prometeon Tyre Group selecting cloud-native Fix software, Agropur adopting digital services, and Butantan Institute expanding its PharmaSuite MES footprint, showcasing broad technology adoption across diverse industries.

    04

    Sensia Joint Venture Dissolution

    The dissolution of the Sensia joint venture was completed as planned on April 1, 2026. This dissolution is expected to lower reported revenue, increase Lifecycle Services and total Rockwell margin percentages, and be EPS neutral for the full fiscal year. The company provided pro forma information for the past four quarters to help update models, noting a $100 million reduction in the full-year reported sales guide due to Sensia, partially offset by a $200 million increase in organic sales forecast.

    05

    Productivity & Innovation Focus

    Rockwell continues to prioritize productivity and innovation, with ongoing programs underpinning efficiency gains across the organization. The company is accelerating the release of new technology, including incorporating AI capabilities within months of their initial market release, leveraging investments in cloud-native software and modern development tools. This focus on continuous improvement and operational rhythm is expected to drive future productivity opportunities and sustain strong performance.

    06

    Regional Performance & Outlook

    Q2 FY26 saw broad-based growth across most regions, with U.S. organic sales up 10% year-over-year, and North America expected to be the strongest region for the full fiscal year. Growth in Europe was largely driven by strong machine builder activity in Germany and Italy, including machinery bound for the U.S. and other global markets. Asia saw growth in China, particularly in semiconductor, and other countries, primarily from systems integrators, engineering firms, users, and machine builders.

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