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    WAT
    Earnings call· Sep 2025(Q3 FY25)

    WATERS CORP /DE/ WAT

    Nov 4, 2025 Source

    Executive summary

    Waters Corporation Q3 FY25 — Strong Growth Across Segments Driven by Innovation and Strategic Expansion

    Waters Corporation delivered strong Q3 FY25 results, driven by robust instrument replacement cycles, successful new product introductions like Xevo CDMS, and strategic expansion into high-growth areas such as GLP-1 and bioseparations. The company is well-positioned for continued momentum into FY26, reinforced by a stable policy environment and the pending combination with BD's Biosciences & Diagnostic Solutions business, which is expected to unlock significant synergies and long-term value.

    Highlights

    5

    • Sales grew 8% as reported and 8% in constant currency, exceeding the high end of guidance.

    • Non-GAAP EPS grew 16% to $3.40, which was $0.20 above the midpoint of guidance.

    • Instrument sales grew 11% quarter-over-quarter, with orders exceeding shipments and Alliance iS sales up over 300% YoY.

    • GLP-1 testing-related revenue more than doubled, and PFAS orders grew approximately 30%.

    • Pharma segment revenue grew 11%, driven by double-digit growth in Americas and Asia, and over 20% growth in China.

    Concerns

    4

    • Chemistry growth of 13% was partially offset by pull-forward dynamics from the second quarter.

    • Academic & Government segment sales grew only 1%, with a low single-digit decline in the United States.

    • Certain customer groups like CROs, biotechs, and branded generics in China are still slower or on the sidelines.

    • Q4 guidance for chemistry growth at 6% is below historical sequential increases, partly due to Q2 pull-forward dynamics.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year 2025 Constant Currency Sales Growth
    6.7% to 7.3%
    high materiality
    High
    Full-year 2025 Reported Sales Growth
    6.5% to 7.1%
    medium materiality
    High
    Full-year 2025 Gross Margin
    approximately 59.2%
    medium materiality
    High
    Full-year 2025 Adjusted Operating Margin
    approximately 31%
    medium materiality
    High
    Full-year 2025 Net Interest Expense
    $36 million
    low materiality
    High
    Full-year 2025 Average Diluted Share Count
    59.7 million
    low materiality
    High
    Full-year 2025 Tax Rate
    16.5%
    low materiality
    High
    Full-year 2025 Adjusted EPS
    $13.05 to $13.15
    high materiality
    High
    Q4 2025 Constant Currency Sales Growth
    5% to 7%
    medium materiality
    High
    Q4 2025 Reported Sales Growth
    5.2% to 7.2%
    medium materiality
    High
    Q4 2025 Adjusted EPS
    $4.45 and $4.55
    high materiality
    High
    BD Biosciences & Diagnostic Solutions Combination Completion
    around the end of the first quarter of calendar year 2026
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Pharma
    Driven by robust instrument replacement activity, key wins in greenfield CapEx projects, and new instrument system deployment in bioanalytical characterization. Significant market uptake on new chemistry products serving bioseparations.
    Americas growth: low double-digitAsia growth: low double-digitEurope growth: high single-digitChina growth: >20%
    		—11%——
    Industrial
    TA performed better than expected and returned to growth due to improving macro sentiment and stabilizing tariff volatility.
    Waters division growth: mid-single digitsTA division growth: 2%Food and environmental testing growth: mid-teens
    		—mid-single digits——
    Academic & Government
    Growth led by China due to stimulus tender opportunities. Americas spending came in better than assumptions.
    China growth: approximately 20%Americas growth: low single-digit decline
    		—1%——
    Asia
    China growth driven by double-digit growth in Pharma and Academic & Government. India reflects continued strength in Pharma Generics.
    China sales growth: 12%India sales growth: high teens
    		—13%——
    Europe
    Strong performance across the region.
    		—5%——
    Americas
    Strong performance across the region.
    		—5%——

    Operational metrics

    20
    Instrument sales growth
    6%YoY
    Q3 FY25

    Reflects continued strong performance beyond the first year of the instrument replacement cycle.

    Recurring revenue growth
    9%YoY
    Q3 FY25

    Strong chemistry performance driven by price optimization, volume growth, and new product introductions, offsetting Q2 pull-forward dynamics.

    GLP-1 testing-related revenue growth
    more than doubledYoY
    Q3 FY25

    Reflects continued wins in development and manufacturing settings in Americas and Europe, and expanding demand from generic semaglutide manufacturing build-outs in India.

    Alliance iS sales growth
    over 300%YoY
    Q3 FY25

    Customer adoption of flagship HPLC product remains a clear success.

    Xevo TQ Absolute platforms growth
    30%YoY
    Q3 FY25

    Continued strength bolstered by the launch of the new Xevo TQ Absolute XR earlier this year.

    New products (last 5 years) growth
    approximately 50%
    Q3 FY25

    Key contributor to chemistry growth.

    Chemistry growth YTD
    11%
    YTD Q3 FY25

    Reflects strong performance driven by innovation in bioseparations.

    Gross margin
    59%70 bps sequential increase
    Q3 FY25

    Reflecting normalization of tariff remediation costs.

    Adjusted operating margin
    30.3%
    Q3 FY25

    Strong operating performance in the quarter.

    Operating tax rate
    approximately 14%
    Q3 FY25

    Lower than full-year guidance due to timing of discrete items.

    Capital expenditures
    $25M
    Q3 FY25

    Funding for capital projects in the quarter.

    Transaction-related expenses
    $14M
    Q3 FY25

    Expenses related to the pending BD combination.

    Net debt
    $948M
    End of Q3 FY25

    Balance at the end of the third quarter.

    Reported sales increase QoQ
    4%QoQ
    Q3 FY25

    Momentum remained strong with sequential sales increase.

    Q4 Reported sales increase QoQ assumption
    16%QoQ vs Q3
    Q4 FY25

    Assumed at the midpoint of Q4 guidance, prudently below the seasonal pattern observed last year (18%) and historical average (22%).

    Q4 additional day tailwind
    100
    Q4 FY25

    Due to one additional day in the fourth quarter versus the prior year.

    Empower users
    450,000
    Current

    Empower is the compliant informatic software of choice for pharma customers.

    Xevo CDMS Total Addressable Market
    $350Mgrowing between high single digits and low double digits
    Current

    The Xevo CDMS system is relevant for a significant portion of the large molecule pharmaceutical pipeline.

    BD Kiestra platform growth
    10% to 20%
    Last couple of years

    Significant growth in Europe, with low penetration in the U.S. indicating significant opportunity.

    Instrument replacement cycle CAGR
    low single-digit
    vs 2019

    Reflects steady mean reversion toward the long-term historical rate of 5%, indicating meaningful runway ahead.

    Industry KPIs

    8
    MetricValueDetails
    Revenue EPS guidanceFY25 CC sales 6.7%-7.3%, Adj EPS $13.05-$13.15%, USD
    China revenue exposure12%%
    Pricing price realization200bps
    Diagnostics testing demand30%%
    M a contribution synergiesEPS accretive
    Bioprocessing orders book to billOrders exceeded shipments
    Instruments vs consumables services mix6%%
    Organic core revenue growth by end market11%%

    Product announcements

    2
    ProductTypeDetails
    Xevo Charge Detection Mass Spectrometer (CDMS)launch
    Empower Informatics Platformroadmap

    Deals & partnerships

    1
    BD (Becton Dickinson & Company)Combination of BD's Biosciences & Diagnostic Solutions business with Waters Corporation

    Integration planning is well underway and progressing rapidly. Two highly energizing integration summits hosted at Milford headquarters, bringing together 120 leaders from both organizations to establish a unified vision. Refined pre-day 1, day 1, and day 100 master plans. Achieved alignment on operationalization of transition service agreements. Synergy delivery action plan, 6 business unit work streams, and 10 functional work streams are fully mobilized and focused on day 1 readiness. Revenue synergies include improving service plan attachment, deploying premium service plans to LCMS customers, getting into new customer segments, and implementing pricing discipline.

    Risks & headwinds

    5
    Chemistry pull-forward dynamicsQ3 FY25, Q4 FY25

    Partially offset Q3 chemistry growth; impacts Q4 guidance (6% growth vs. historical high single-digit sequential increase).

    Mitigation: None explicitly stated, but management is aware and guiding prudently.

    Academic & Government spending slowdown in AmericasQ3 FY25

    Low single-digit decline in Americas.

    Mitigation: Teams delivered strong results at customers' fiscal year-end, mitigating a larger decline.

    Slower customer groupsOngoing

    CROs, biotechs, and branded generics in China are still a bit slower or on the sidelines.

    Mitigation: Expect CROs to come into the mix towards the end of the year, adding to the replacement cycle in 2026. Branded generics in China and drug discovery will eventually need to consider replacement as instruments age.

    Tariff structure impactFY25

    Current tariff structure, including recent increases, is incorporated into full-year 2025 guidance.

    Mitigation: Management has incorporated the impact into financial guidance.

    Academic & Government stimulus volatilityPost-stimulus

    Stimulus-related revenue can be temporary.

    Mitigation: Management acknowledges that stimulus money often just moves from one year to another, and an 'air pocket' can follow once stimulus is done. Waters models China for low to mid-single digits in the 5-year timeframe, reflecting this caution.

    What to watch in Q4 FY25

    5

    BD Integration Progress

    Q1 CY26
    CurrentIntegration planning well underway, master plans refined, synergy action plan mobilized.
    TargetCompletion of combination, initial synergy realization, EPS accretion.

    Why it matters

    Successful integration and synergy capture are key to the value creation thesis for this significant acquisition.

    We remain on track to complete the combination of BD's Biosciences & Diagnostic Solutions business with Waters Corporation around the end of the first quarter of calendar year 2026.

    Q&A highlights

    6

    Seeking more color on the strong pharma growth in Americas and China, the durability of China's momentum, and the factors driving double-digit chemistry growth.

    Udit Batra attributed pharma growth to replacement cycles, new products (Alliance iS up 300%, Xevo TQ Absolute up 30%), GLP-1 testing (doubled), and bioseparations. China's growth was driven by CDMOs supporting local biotech and new product uptake, with India generics also strong. Chemistry growth (13% Q3, 11% YTD) is due to innovation in bioseparations, particularly MaxPeak Premier and new SEC/Affinity columns. Amol Chaubal added that new product launches can add $20M-$25M annually to chemistry sales.

    “Alliance iS sales grew over 300% as the customer adoption of our flagship HPLC product remains a clear success.”

    asked by Tycho Peterson · answered by Udit Batra

    2 min read6 chapters

    Detailed Narrative

    01

    Innovation and Product Momentum

    Waters highlighted breakthrough innovations like Xevo CDMS, a new mass spectrometer for large molecule therapeutics, and the continued success of Alliance iS, which grew over 300% year-over-year, and Xevo TQ Absolute platforms, up 30%. These products are driving the ongoing instrument replacement cycle and new capacity investments, reflecting strong customer adoption and market reception.

    02

    Strategic Growth Drivers

    The company's idiosyncratic growth drivers continue to perform strongly. GLP-1 testing-related revenue more than doubled, driven by wins in development and manufacturing in the Americas, Europe, and India. PFAS orders grew approximately 30% across all major regions, including strong demand in Japan and the U.S. India's generics market also delivered high-teens revenue growth, benefiting from the patent cliff of blockbuster drugs.

    03

    Bioseparations and Bioanalytical Characterization

    Waters is making significant progress in large molecule workflows, with strong growth in multi-angle light scattering instruments for pharma QA/QC and BioAccord LC-MS Systems for bioprocessing. Chemistry grew 13%, fueled by new SEC and Affinity Bioseparation Columns, demonstrating the success of deliberate long-term strategy and investments in addressing unmet needs in bioseparations.

    04

    Empower Platform Evolution

    The Empower informatics platform is evolving into a modern, cloud-native system leveraging AI and machine learning. This will introduce premium features to reduce manual interventions, save analyst time, minimize compliance risks, and enhance instrument utilization through predictive maintenance. This shift aims to accelerate customer transition to a subscription-based model, unlocking long-term growth and deepening customer engagement.

    05

    Biosimilar Regulatory Tailwinds

    New draft FDA guidance for biosimilar drugs, emphasizing advanced analytical characterization over routine comparative clinical efficacy studies, presents a significant opportunity. This potential shift aligns perfectly with Waters' strategy and portfolio in bioanalytical characterization, including BioAccord LC-MS, multi-angle light scattering, and flow cytometry, potentially increasing demand for their instruments and compliant workflows.

    06

    BD Biosciences & Diagnostic Solutions Integration

    Integration planning for the pending combination with BD's Biosciences & Diagnostic Solutions business is well underway. Two integration summits have established a unified vision, refined master plans for pre-day 1, day 1, and day 100, and mobilized work streams for synergy delivery. The transaction is on track to close around the end of Q1 CY26, with confidence in immediate EPS accretion and long-term value creation.

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