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    VRT
    Earnings call· Dec 2025(Q4 FY25)

    Vertiv Holdings Q4 FY25 earnings call VRT

    Feb 11, 2026 Source

    Executive summary

    Vertiv Holdings Co Q4 FY25 — Record Orders and Strong Backlog Drive Growth

    Vertiv delivered a strong Q4 FY25, marked by exceptional order growth and a record backlog, driven by accelerating AI-driven infrastructure build-out. The company is strategically expanding capacity and investing in technology to convert its substantial order book into future revenue, while navigating regional market dynamics and optimizing its services portfolio. Management expressed confidence in continued market leadership and growth trajectory.

    Highlights

    5

    • Q4 organic orders were up 252% year-over-year and 117% sequentially, reflecting strong market demand.

    • The book-to-bill ratio reached 2.9x, indicating robust order intake relative to sales.

    • Backlog stands at a record $15 billion, more than double last year's and up 57% sequentially.

    • Full-year adjusted free cash flow was approximately $1.9 billion, with an adjusted free cash flow conversion of 115%.

    • Q4 adjusted diluted EPS was $1.36, up 37% from Q4 FY24 and $0.10 above prior guidance.

    Concerns

    3

    • APAC sales were down 9% organically in Q4 FY25, primarily due to macroeconomic conditions in China.

    • EMEA sales were down 14% organically in Q4 FY25, reflecting continued market softness, though recovery signs are emerging.

    • The company will no longer report actual orders, orders forecast, or backlog with quarterly earnings due to perceived lumpiness and volatility.

    Guidance & targets

    18
    CategoryTargetConfidence
    Full-year 2026 Adjusted Diluted EPS
    $6.02
    high materiality
    High
    Full-year 2026 Organic Sales Growth
    28%
    high materiality
    High
    Full-year 2026 Net Sales
    $13.5 billion
    high materiality
    High
    Full-year 2026 Adjusted Operating Profit
    $3.04 billion
    high materiality
    High
    Full-year 2026 Adjusted Operating Margin
    22.5%
    high materiality
    High
    Full-year 2026 Adjusted Free Cash Flow
    $2.2 billion
    medium materiality
    High
    Full-year 2026 Americas Sales Growth
    High 30s percent
    medium materiality
    High
    Full-year 2026 APAC Sales Growth
    Mid-20% growth
    medium materiality
    High
    Full-year 2026 EMEA Sales Growth
    Flat to down mid-single digits
    medium materiality
    Medium
    Q1 2026 Adjusted Diluted EPS
    $0.98
    medium materiality
    High
    Q1 2026 Net Sales
    $2.6 billion
    medium materiality
    High
    Q1 2026 Americas Sales Growth
    High 30s percent
    medium materiality
    High
    Q1 2026 APAC Sales Growth
    Low 20% growth
    medium materiality
    High
    Q1 2026 EMEA Sales Growth
    Mid-20% range (down)
    medium materiality
    High
    Q1 2026 Adjusted Operating Profit
    $495 million
    medium materiality
    High
    Q1 2026 Adjusted Operating Margin
    19%
    medium materiality
    High
    Tariff Margin Impact
    Materially offset
    low materiality
    High
    Orders
    Up
    low materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Americas
    Continued to be the primary engine of growth, with strong and broad-based sales across products and customer segments. Strong end market demand combined with ability to deliver. Full-year sales up 41%.
    Organic Growth: 46%Adjusted Operating Profit Growth: 77%Adjusted Operating Margin Expansion: 450 bps
    		—50%—$568 million
    APAC
    Sales decline primarily due to macroeconomic conditions in China, though the rest of Asia remains strong. Margin pressured by volume deleverage. Full-year sales up 18%.
    Organic Growth: -9%Adjusted Operating Margin: 9.9%Adjusted Operating Margin Decline: 270 bps
    		—-10%—$49 million
    EMEA
    Sales decline due to continued market softness, but seeing signs of recovery from strong Q4 orders performance. Expect to return to sales growth in the second half of 2026. Margin pressure reflects lower operating leverage. Full-year sales down 2%.
    Organic Growth: -14%Adjusted Operating Margin: 22.1%Adjusted Operating Margin Decline: from 26.6% prior year
    		—-8%—$111 million

    Operational metrics

    10
    Adjusted Operating Profit
    $668 millionup 33% from prior year
    Q4 FY25

    Exceeded prior guidance by $29 million.

    Adjusted Operating Margin
    23.2%up 170 bps from Q4 FY24
    Q4 FY25

    Driven by strong operational leverage on higher volumes, productivity gains, and favorable price/cost execution.

    Net Leverage
    0.5x
    Q4 FY25

    Exited the quarter with this leverage, providing significant strategic flexibility.

    Adjusted Diluted EPS
    $4.20up 47%
    FY25

    Exceeded guidance by $0.10.

    Net Sales
    $10.2 billion
    FY25

    Exceeded guidance by $30 million.

    Adjusted Operating Profit
    $2.1 billionup 35%
    FY25

    Exceeded guidance by $30 million.

    Operating Margin
    20.4%expanded 100 bps
    FY25

    Driven primarily by productivity and positive price cost.

    Adjusted Free Cash Flow Conversion
    115%
    FY25

    Conversion rate.

    Field Service Headcount
    Approaching 5,000
    Q4 FY25

    Following similar trajectories to delivery capacity.

    Production Capacity Utilization
    20-25%
    Q4 FY25

    Designed with wiggle room to accelerate growth if needed.

    Industry KPIs

    12
    MetricValueDetails
    Equipment pricingFavorable
    Book to bill ratio2.9xratio
    Service attach mixNorth of 25%%
    Orders bookings growth252%%
    Capacity expansion program3% to 4%% of sales
    M a acquisition contributionPurgeRite
    Backlog by segment end market$15 billionUSD
    Backlog shape delivery window12- to 18-monthsmonths
    Data center exposure pipelineAccelerating
    Incremental flow through margin31%%
    Next gen architecture milestonesTrim Cooler
    Customer deposits advance paymentsIncreased

    Orderbook & backlog

    4
    Organic Orders Growth252%Q4 FY25

    up YoY

    Also up 117% sequentially.

    Trailing 12-month Organic Orders Growth81%Q4 FY25
    Book-to-bill ratio2.9xQ4 FY25
    Backlog$15 billionQ4 FY25

    more than double last year's; up 57% sequentially

    Shape is more elongated into 12- to 18-months window, consistent with strong Q4 order intake.

    Product announcements

    4
    ProductTypeDetails
    OneCorelaunch
    SmartRunlaunch
    PurgeRiteupdate
    Trim Coolerroadmap

    Deals & partnerships

    1
    PurgeRiteacquisition

    The acquisition fits within Vertiv's service paradigm, enhancing its ability to optimize flow at startup and maintain balance, cleanliness, and fluid performance across the life cycle of data centers. Expected to scale globally through existing services network.

    Capital programs

    1
    Capacity Expansion Programunderway
    Period spend: 3% to 4% of sales

    Benefit: Support growth trajectory; deliver capacity for sales guide

    Stepping up CapEx from historical 2-3% of sales in FY26. Most of this CapEx is in flight, with build-outs already in progress. Expected to normalize around 2-3% of sales long-term.

    Risks & headwinds

    6
    Macroeconomic conditions in ChinaQ4 FY25, persisting into FY26

    APAC sales down 9% organically in Q4 FY25

    Mitigation: Focus on robust acceleration in India and rest of Asia; well-positioned to capture that growth.

    Market softness in EMEAQ4 FY25, continuing into Q1 FY26

    EMEA sales down 14% organically in Q4 FY25

    Mitigation: Seeing signs of recovery from strong Q4 orders; expect return to sales growth in H2 2026.

    Higher cash taxQ4 FY25, continuing into FY26

    Partially offset Q4 adjusted free cash flow

    Mitigation: Anticipated and factored into FY26 adjusted free cash flow guidance.

    Increased CapEx to support growthFY26

    CapEx 3-4% of sales in FY26, up from historical 2-3%

    Mitigation: Prudently investing ahead of demand; most of the CapEx is in flight; expected to normalize around 2-3% long-term.

    Investment in capacity and technology advancementFY26

    Partially offsets margin expansion

    Mitigation: Strategic investment to drive long-term growth and maintain market leadership; long-term margin trajectory unchanged.

    Capacity-ramp drag on near-term incremental marginsNear-term (Q1 FY26)

    Incremental margins at lower end of 30-35% range

    Mitigation: Investments are being made to support future growth; long-term incremental margin targets remain.

    Q&A highlights

    7

    Is the dollar value per megawatt content increasing beyond the $3M-$3.5M framework, and what is the sales output multiple for incremental CapEx?

    Management stated that $3M-$3.5M per megawatt remains a good framework, but evolving technology and complexity suggest future upside. For CapEx, they noted the increase from 2-3% to 3-4% of sales correlates with growth, emphasizing gradual capacity expansion steps rather than a specific sales multiple.

    “I think the best way of looking at it is to look at 2% to 3% CapEx as a percent of sales move into 3% to 4%, call it 3.5%. That is you can certainly correlate that to our growth in our trajectory.”

    asked by C. Stephen Tusa · answered by Giordano Albertazzi

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Driven Infrastructure Growth

    Vertiv is capitalizing on the accelerating AI-driven infrastructure build-out, positioning itself strongly in the data center market. The company emphasizes its technology leadership, global scale, and operational capabilities as key differentiators, enabling it to capture significant growth opportunities in this secular trend. Management noted that the market is still in the early innings of this growth trend, with Vertiv's position continuously strengthening.

    02

    Strategic Capacity Expansion

    To meet surging demand and convert its record backlog, Vertiv is prudently expanding its manufacturing capacity. This includes increasing CapEx to 3-4% of sales in 2026, up from historical 2-3%, and working closely with suppliers to ensure scalability and timely delivery. The company employs a two-pronged approach: expanding physical footprint and increasing productivity from existing facilities, with most of the planned CapEx already in flight.

    03

    Evolving Product Portfolio and System Solutions

    Vertiv is driving rapid technological evolution, integrating traditional 'grey space' expertise with 'white space' infrastructure. Solutions like OneCore, an end-to-end full data center solution scaling gigawatts in 12.5MW blocks, and SmartRun, a prefabricated white space infrastructure solution, are being deployed. These offerings simplify and accelerate customer deployments, reflecting a system-level thinking that makes orders larger and more comprehensive.

    04

    Critical Service Capabilities and Acquisitions

    The company's service portfolio is a key competitive advantage and a robust source of recurring revenue, with life cycle services orders growing over 25% year-on-year. The acquisition of PurgeRite significantly strengthens Vertiv's fluid management capabilities end-to-end, crucial for chilled water and liquid-cooled AI data centers. This acquisition enhances reliability and efficiency for customers, creating a differentiated capability that addresses a growing critical need.

    05

    Regional Market Dynamics and Outlook

    Americas continues to be the primary growth engine, with high 30s sales growth expected in FY26, driven by broad-based strength. EMEA shows signs of recovery, with strong Q4 orders and anticipated sales growth in the second half of 2026, as market sentiment improves. APAC, despite muted China due to macroeconomic conditions, sees robust acceleration in India and other Asian markets, where Vertiv is well-positioned to capture growth.

    06

    Orders Disclosure Policy Change

    Vertiv announced a change in its orders disclosure policy, stating it will no longer report actual orders, orders forecast, or backlog with quarterly earnings. Management explained this decision is due to the inherent lumpiness and volatility of orders, which they believe is not representative of the company's sustained performance. Full-year historical disclosure regarding sales and backlog will continue to be provided in the Form 10-K.

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