Executive Summary

Q2 2025 continuing operations delivered revenue of $1.02B (-0.4% YoY), adjusted EBITDA $288M (28.4% margin), and adjusted EPS of $0.58; consolidated adjusted EPS was $0.90 at the high-end of guidance .
Versus S&P Global consensus, Fortive slightly missed on adjusted EPS ($0.58 vs $0.593*) but modestly beat on revenue ($1.016B vs $1.013B*); management cited late-quarter demand deferrals tied to tariff uncertainty, constrained government spend, and healthcare reimbursement changes .
Guidance introduced for “new Fortive” (post-Ralliant spin): FY 2025 adjusted EPS $2.50–$2.60, with tariff impact expected to be fully mitigated by Q4; Q3 EPS modeled slightly below Q2 and Q4 meaningfully higher, aided by FX tailwinds, lower interest expense, and a low Q4 tax rate .
Catalysts: backlog conversion at Fluke, normalization of government procurement, stabilization in healthcare equipment capex, and clarity on tariff countermeasures; spin completion and capital redeployment (debt paydown, buybacks) support multiple/FCF narrative .

What Went Well and What Went Wrong

What Went Well

“Pivotal” quarter: completed Ralliant spin-off and launched “new Fortive,” with consolidated adjusted EPS at the high-end of guidance and strong free cash flow generation .
IOS segment expanded adjusted EBITDA margin to 33.8% (+50 bps YoY) despite tariff pressures, supported by cost discipline and higher-margin software growth .
Management reiterated confidence: “medium-term financial framework we shared at our recent Investor Day remains firmly intact,” with tariff headwinds expected to be fully mitigated by Q4 .

What Went Wrong

Late-June demand deferrals reduced revenue by ~$30M below internal expectations, driven by tariff-related pricing uncertainty at Fluke and constrained state/local government spending impacting Gordian “use-it-or-lose-it” behavior .
Healthcare equipment capex deferrals (ASP sterilization and Fluke Health QA devices) tied to reimbursement policy changes pressured AHS revenue (-1.3% YoY, -1.9% core), though AHS software outperformed .
Tariffs created a ~$0.02 adjusted EPS headwind in Q2 net of countermeasures; adjusted gross margins were flat YoY as pricing and mix gains offset tariff costs .

Financial Results

Fortive Continuing Operations (YoY)

Metric	Q2 2024	Q2 2025
Revenue ($USD Millions)	$1,020	$1,016
GAAP Net Income ($USD Millions)	$112	$112
GAAP Net Income Margin (%)	11.0%	11.0%
Adjusted EBITDA ($USD Millions)	$291	$288
Adjusted EBITDA Margin (%)	28.6%	28.4%
GAAP Diluted EPS – Continuing Ops ($USD)	$0.32	$0.33
Adjusted Diluted EPS – Continuing Ops ($USD)	$0.56	$0.58

Consolidated Totals (trend; includes Precision Technologies)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$1,620.3	$1,474.2	$1,518.8
GAAP Diluted EPS ($USD)	$0.60	$0.50	$0.49
Adjusted Diluted EPS ($USD)	$1.17	$0.85	$0.90

Note: Continuing operations (new Fortive) exclude Precision Technologies (Ralliant). Consolidated figures include PT pre-spin and are not strictly comparable to continuing ops.

Segment Breakdown – Continuing Operations

Segment	Metric	Q2 2024	Q2 2025
IOS	Revenue ($USD Millions)	$697	$697
IOS	GAAP Operating Margin (%)	24.9%	24.5%
IOS	Adjusted EBITDA ($USD Millions)	$232	$236
IOS	Adjusted EBITDA Margin (%)	33.3%	33.8%
AHS	Revenue ($USD Millions)	$324	$320
AHS	GAAP Operating Margin (%)	11.0%	11.2%
AHS	Adjusted EBITDA ($USD Millions)	$86	$86
AHS	Adjusted EBITDA Margin (%)	26.6%	26.9%

KPIs – Continuing Operations

KPI	Q2 2024	Q2 2025
Operating Cash Flow ($USD Millions)	$218	$205
Free Cash Flow ($USD Millions)	$198	$180
TTM Operating Cash Flow ($USD Millions)	$912	$1,029
TTM Free Cash Flow ($USD Millions)	$826	$939
H1 2025 Share Repurchases ($USD Millions)	—	$345
Ralliant Separation Dividend ($USD Billions)	—	$1.15
Debt Paydown from Dividend ($USD Millions)	—	~$725

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Diluted EPS (Consolidated pre-spin)	FY 2025	$3.80–$4.00	—	Superseded by spin; scope changed
Adjusted Diluted EPS (Continuing Ops)	FY 2025	—	$2.50–$2.60	Introduced post-spin
Reported Revenue Phasing	H2 2025	—	Q3 broadly similar to Q4	New phasing detail
Core Revenue Growth Phasing	H2 2025	—	H2 core growth broadly in line with H1	New phasing detail
AHS Core Growth	H2 2025	—	Similar to Q2; tougher YoY comp in Q3	New segment detail
Tariffs (gross impact)	H2 2025 / Annualized	—	$40–$55M H2; $80–$120M annualized; fully mitigated by Q4	Detailed quantification; mitigation timeline
Adjusted Effective Tax Rate	FY/Q3/Q4 2025	—	FY mid-teens; Q3 high teens; Q4 single digits	New detail
Interest Expense	H2 2025	—	Lower vs H1 due to lower debt balances	New detail
Capital Allocation	H2 2025	—	Remaining Ralliant dividend for share repurchases	New detail

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Tariffs/Macro	Broad macro/tariff inclusion in guidance; updated FY’25 outlook	Late-June demand deferrals; ~$0.02 EPS headwind; H2 tariff impact quantified and mitigation plan to Q4	Heightened near term; mitigation underway
Government Spend	Not a focal negative	State/local “use-it-or-lose-it” procurement weakened in June; Gordian impacted	Temporary headwind
Healthcare Policy	Not highlighted as a headwind	Reimbursement changes led to capex deferrals (ASP, Fluke Health)	Temporary headwind; signs of recovery
AI/Tech Initiatives	FBS-driven innovation; portfolio strength	AI-enabled customer workflows (Provation); Fluke innovation awards; ARR growth	Strengthening
Regional Trends	POS strength and steady demand	NA double-digit POS; Western Europe/APAC flattish; China bottoming	Mixed; NA strong
Supply Chain/Costs	Margin expansion and execution	Pricing and cost actions offset tariff pressure; backlog build at Fluke	Resilient
R&D/Commercial	Strong execution across segments	AHS reinvestment into R&D/S&M; IOS commercial wins; LatAm double-digit growth	Ongoing investment
Capital Allocation	Guidance and repurchases	Debt paydown (~$725M); buybacks with remaining dividend; bolt-on M&A discipline	Active, disciplined

Management Commentary

CEO: “The second quarter of 2025 was pivotal for Fortive… we completed our spin-off of Ralliant… Despite uncertainty related to trade, healthcare and government spending policy… we delivered strong earnings and free cash flow… The medium-term financial framework… remains firmly intact.”
CFO: “We finished the month approximately $30 million below our expectations… Adjusted gross margins roughly flat YoY… tariff costs created a roughly $0.02 headwind to EPS.”
CFO: “We now expect the gross tariff impact… approximately $40–$55M in the second half of 2025… $80–$120M annualized… Assuming tariff conditions continue… we expect gross tariffs to be mitigated fully by the fourth quarter.”
CEO: “Our new leadership team is focused on executing our Fortive Accelerated strategy… disciplined capital allocation… build investor trust.”

Q&A Highlights

Phasing and EPS cadence: Q3 EPS slightly below Q2, Q4 meaningfully higher due to fully-phased tariff countermeasures, FX tailwinds, lower interest, and a single-digit Q4 tax rate .
Segment dynamics: IOS backlog expected to burn over H2; AHS growth similar to Q2 given tougher comps; government procurement normalizing but timing uncertain .
Regional outlook: NA strong POS; Western Europe/APAC flattish; China showing signs of bottoming as tariff clarity improves .
Capital allocation: ~$1.15B dividend from Ralliant used for ~$725M debt paydown; remaining for buybacks; bolt-on M&A “open for business” with elevated strategic/financial scrutiny .
Cost structure: ~50% of stranded costs already addressed; further efficiency initiatives to reallocate dollars to highest use .

Estimates Context

Metric	Q4 2024	Q1 2025	Q2 2025
Adjusted EPS (Actual $USD)	$1.17	$0.85	$0.58
Adjusted EPS Consensus Mean ($USD)	—	0.851*	0.593*
Revenue (Actual $USD Millions)	1,620.3	1,474.2	1,016.4 (continuing ops)
Revenue Consensus Mean ($USD Millions)	—	1,492.8*	1,013.3*

Values retrieved from S&P Global.*

Q2 2025: Adjusted EPS slight miss; revenue modest beat. Q1 2025: Adjusted EPS in line; revenue below consensus (consolidated scope). Q3 context: management expects Q3 EPS below Q2 and Q4 stronger; S&P currently indicated Q3 actual EPS at $0.68 vs consensus $0.569* and revenue $1.027B vs $1.007B*, post-quarter reporting. Values retrieved from S&P Global.* [GetEstimates]

Key Takeaways for Investors

Backlog normalization and policy clarity are near-term swing factors: expect Fluke backlog burn and improved Gordian activity as “use-it-or-lose-it” dynamics normalize; watch hospital capex resumptions post-reimbursement clarity .
Tariff headwinds quantified and mitigation plan credible: pricing, supply chain shifts, and productivity initiatives set to fully offset by Q4—supportive of margin/EPS recovery trajectory .
New Fortive’s FCF/margin profile remains intact: TTM FCF up 14% YoY to $939M; IOS margin expansion and AHS software resilience underpin quality of earnings .
Capital redeployment strengthens equity case: dividend from Ralliant used to delever; remaining proceeds for buybacks; disciplined bolt-on M&A to enhance growth/recurrence without overpaying .
Guidance simplification: annual adjusted EPS framework with detailed phasing aids modeling; expect Q4 strength on FX, tax, and interest tailwinds .
Segment mix supports durability: software and recurring revenue contributions offset hardware cyclicality in both IOS and AHS, supporting medium-term margin expansion .
Monitor regional cadence: NA remains robust; Western Europe/APAC flattish; China stabilization could provide incremental tailwind if tariff clarity persists .

Appendix: Additional Relevant Q2 2025 Press Releases

Ralliant spin-off completion and new CEO appointment; commentary on late-quarter demand pressures and consolidated adjusted EPS near mid-point of guidance .
Q2 2025 earnings press release: summary financials and continuing-ops framing; FY 2025 adjusted EPS guidance for new Fortive .

Fortive Corp (FTV)·Q2 2025 Earnings Summary