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    VRT
    Earnings call· Mar 2026(Q1 FY26)

    Vertiv Holdings Q1 FY26 earnings call VRT

    Apr 22, 2026 Source

    Executive summary

    Vertiv Q1 FY26 — Strong Organic Growth and Raised Full-Year Outlook

    Vertiv delivered a strong Q1 FY26, driven by robust organic growth in the Americas and APAC, significant margin expansion, and strong free cash flow generation. The company raised its full-year guidance, reflecting confidence in continued demand, capacity expansion, and operational execution, despite temporary softness in EMEA. Management emphasized the increasing urgency and scale of AI infrastructure build-out, positioning Vertiv for sustained growth.

    Highlights

    5

    • Organic sales increased 23% year-on-year, contributing to a reported growth of 30%.

    • Adjusted operating margin expanded by 430 basis points to 20.8%, surpassing guidance by 180 bps.

    • Adjusted diluted EPS reached $1.17, an 83% increase year-on-year, exceeding guidance by $0.19.

    • Adjusted free cash flow was $653 million, marking a 147% increase from the prior year.

    • Full-year adjusted diluted EPS guidance was raised to $6.35 (up 51% from 2025), and adjusted operating profit guidance was raised to $3.2 billion (up 53% from 2025).

    Concerns

    2

    • EMEA net sales decreased 29% organically, attributed to softer orders experienced in Q2 and Q3 of 2025.

    • Ongoing tariff headwinds partially offset the overall margin expansion achieved during the quarter.

    Guidance & targets

    16
    CategoryTargetConfidence
    Full-year 2026 Adjusted Diluted EPS
    $6.35
    high materiality
    High
    Full-year 2026 Adjusted Operating Profit
    $3.2 billion
    high materiality
    High
    Full-year 2026 Adjusted Operating Margin
    23.3%
    high materiality
    High
    Full-year 2026 Net Sales
    $13.75 billion
    high materiality
    High
    Full-year 2026 Americas Organic Growth Rate
    high 30s
    medium materiality
    High
    Full-year 2026 APAC Organic Growth Rate
    mid-20s
    medium materiality
    High
    Full-year 2026 EMEA Organic Growth Rate
    flat
    medium materiality
    High
    Full-year 2026 Adjusted Free Cash Flow
    $2.2 billion
    high materiality
    High
    Q2 2026 Adjusted Diluted EPS
    $1.40
    high materiality
    High
    Q2 2026 Net Sales
    $3.35 billion
    high materiality
    High
    Q2 2026 Adjusted Operating Profit
    $710 million
    high materiality
    High
    Q2 2026 Adjusted Operating Margin
    21.2%
    high materiality
    High
    Full-year 2026 Orders Performance
    up year-over-year
    medium materiality
    High
    EMEA Sales Growth
    returning to year-over-year sales growth
    medium materiality
    High
    Price/Cost
    positive
    medium materiality
    High
    Overall Sequential Margin
    30% to 35%
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Americas
    Net sales up 53%, with 44% organic growth, reflecting strong broad-based momentum across nearly all product lines. Adjusted operating profit of $490 million, with margins benefiting from operational leverage, disciplined execution, and partial intensity.
    		$1.81 billion53%—$490 million
    APAC
    Net sales up 15%, 12% organically. Organic growth came in below quarterly guidance primarily due to timing. Adjusted operating profit of $67 million was up approximately 48% year-on-year, mainly driven by volume leverage and operating discipline.
    		$514 million15%—$67 million
    EMEA
    Net sales down 29% organically. This is believed to be a temporary reflection of softer orders in Q2 and Q3 of 2025. Margins saw a step down year-over-year due to operating deleverage. Conviction for a second half recovery in EMEA has strengthened, embedded in full-year guidance.
    		$321 million-29%——

    Operational metrics

    8
    Adjusted Operating Profit
    $551 millionUp 64% year-on-year
    Q1 FY26

    Came in $56 million higher than guidance.

    Adjusted Diluted EPS
    $1.17Up 83% versus Q1 FY25
    Q1 FY26

    Exceeded guidance by $0.19.

    Net Leverage
    0.2x
    Q1 FY26

    Provides significant strategic flexibility.

    Organic Net Sales Growth
    23%Year-on-year
    Q1 FY26

    Contributed to overall net sales growth.

    Acquisitions Contribution to Net Sales Growth
    4%
    Q1 FY26

    Contributed to overall net sales growth.

    Favorable FX Contribution to Net Sales Growth
    3%
    Q1 FY26

    Contributed to overall net sales growth.

    Adjusted Operating Margin
    20.8%Expanded by 430 basis points versus last year
    Q1 FY26

    Driven by strong operational leverage on higher volumes, productivity gains, and favorable price cost execution, partially offset by tariff headwinds.

    Incremental Margins
    30% to 35%
    Full Year

    Expected range for overall incremental margins, including services pull-through.

    Industry KPIs

    11
    MetricValueDetails
    Equipment pricingfavorable dynamics
    Service attach mix—
    Orders bookings growthup year-over-year
    Capacity expansion programsustainably higherUSD
    M a acquisition contribution—
    Backlog by segment end marketa little bit more elongated
    Backlog shape delivery window12-18 month delivery windows
    Data center exposure pipelinevery robust growth
    Incremental flow through margin30% to 35%%
    Next gen architecture milestones800-volt architecture
    Customer deposits advance payments—

    Orderbook & backlog

    3
    Backlog Shapea little bit more elongatedQ1 FY26

    Provides good visibility into 2027. Customer requests for delivery windows are typically 12-18 months, with some occasions seeing requests shorten to 9-12 months.

    EMEA Q1 Bookingsvery pleasedQ1 FY26

    Reflects improving market sentiment and accelerating opportunity generation in the region.

    Pipeline GenerationrobustQ1 FY26

    Pipeline momentum continues to be strong and is broad-based across technology ranges and regions.

    Product announcements

    2
    ProductTypeDetails
    SmartRun solutionupdate
    800-volt architectureroadmap

    Deals & partnerships

    3
    Thermal Keyacquisition

    This acquisition will expand Vertiv's thermal management portfolio with heat exchange know-how and a leading range of dry coolers. It is expected to provide capacity and capabilities to better serve customers and expand the technology base.

    B Structuresacquisition

    This acquisition brings custom engineered structural fabrication capabilities, enhancing Vertiv's ability to deliver manufactured and converged infrastructure solutions at scale. It is expected to provide capacity and capabilities to better serve customers and expand the technology base.

    C Power Energypartnership

    This collaboration enables U.S. data centers to utilize their on-site energy assets as grid resources, which helps accelerate speed to power, improve resilience, and reduce costs for data centers and their communities.

    Risks & headwinds

    5
    Tariff HeadwindsOngoing

    Partially offset margin expansion

    Mitigation: Various countermeasures are actively being implemented to mitigate tariff exposures, including recent changes under Section 122 and 232. The company expects to be price/cost positive for the year, inclusive of tariff impact and countermeasures.

    Supply Chain Complexity

    Real

    Mitigation: Manageable through a regionalized footprint, multi-sourcing strategies, and supplier diversification, maintaining stability despite evolving trade dynamics.

    Labor Constraints

    Real

    Mitigation: Manageable, with the company actively scaling its people and service capacity vigorously.

    Inflationary Environment (Commodities and Components)

    Ongoing

    Mitigation: Proactive management of commodities and components, combined with a multi-source model and supplier diversification, provides a critical buffer.

    Geopolitical TensionsOngoing

    Evolving dynamic trade dynamics and tensions in the Middle East

    Mitigation: Focus on supply chain resilience.

    Q&A highlights

    7

    Can you discuss the importance and total addressable market (TAM) for the prefab market, and how Vertiv's content fits in, especially regarding customer perception of its importance?

    Gio explained that prefabrication addresses critical needs like speed (time to token) and alleviates construction site challenges, leveraging Vertiv's integrated technology solutions like One Core and SmartRun. He noted that prefabrication is a concentrator of opportunity for Vertiv, helping them capture more of the TAM by offering optimized, converged systems rather than just integration.

    “For us, prefabrication is not just prefabrication. It's convergence of our solution into a system like [ one core ], not only [ one core ], but [ one core ] SmartRun. It's systems that are designed, converged and optimized already from the beginning on a given set of [ Lowe's ] and silicon.”

    asked by Scott Davis · answered by Giordano Albertazzi

    2 min read6 chapters

    Detailed Narrative

    01

    AI Infrastructure Build-out

    Vertiv highlighted the early stages of AI infrastructure build-out, noting increased urgency, larger scale deployments, and technical complexity. The company's ability to deliver integrated solutions and services at scale positions it as a critical partner for customers' technology roadmaps, with competitive advantages compounding in this environment. Management sees broad-based strength, indicating the depth of demand and Vertiv's capability to capture it.

    02

    Capacity Expansion & Operational Resilience

    Vertiv is accelerating strategic capacity investments globally, particularly in the Americas, across manufacturing and services. These investments are broad-based, covering power management, thermal management, infrastructure solutions, and IT systems. The company is also vigorously scaling its service personnel and capabilities. These efforts aim to meet accelerating demand, bolster overall operational resiliency, and unlock latent capacity through VOS-driven productivity gains.

    03

    Market Dynamics & Regional Performance

    The Americas region delivered outstanding performance with 44% organic growth, driven by strong broad-based momentum across nearly all product lines. EMEA is showing improving market sentiment, with strong Q1 bookings and an expectation to return to year-over-year sales growth in the second half of 2026. APAC also demonstrated positive market dynamics, particularly in Rest of Asia and India, with encouraging pipeline movement in China, positioning the company well for the year.

    04

    Pricing and Cost Management

    Vertiv expects positive price-cost execution in 2026, including effectively managing tariff impact🌐s and implementing countermeasures. Proactive management of commodities and components, combined with multi-sourcing strategies and supplier diversification, provides a critical buffer against the ongoing inflationary environment. The company maintains disciplined cost management, leveraging VOS-driven productivity gains to strengthen resilience.

    05

    Strategic Acquisitions and Partnerships

    The company announced two strategic acquisitions: Thermal Key, which will expand its thermal management portfolio with dry coolers, and B Structures, which brings custom engineered structural fabrication capabilities. These acquisitions are expected to strengthen Vertiv's competitive position, provide capacity, and enhance capabilities. Vertiv also highlighted its partnership with C Power Energy, aimed at enabling U.S. data centers to utilize on-site energy assets as grid resources, improving resilience and reducing costs.

    06

    Technology and Innovation

    Vertiv is investing heavily in engineering capabilities and labs, focusing on next-gen architectures like 800V DC, with portfolio launches expected in the second half of the year. The company is developing solutions for very high-density compute, which will influence the entire powertrain and thermal chain, seeing this as an opportunity for increased content. The SmartRun solution, integrating white space infrastructure, power distribution, and liquid cooling, is highlighted as a successful converged system that changes industry practices.

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