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GE

GENERAL ELECTRIC CO (GE)·Q2 2025 Earnings Summary

Executive Summary

  • GE Aerospace delivered a strong Q2 2025, with GAAP revenue $11.02B (+21% y/y), adjusted revenue $10.15B (+23%), adjusted EPS $1.66 (+38%), and free cash flow $2.10B (+92%); continuing GAAP EPS was $1.87 (+56%) .
  • Results materially beat S&P Global consensus: Q2 adjusted EPS $1.66 vs. $1.43 est. (+16% beat), revenue $11.02B vs. $9.56B est. (+15% beat), and EBITDA $2.61B vs. $2.45B est. (+7% beat).
  • Management raised 2025 guidance (adjusted revenue growth to mid-teens; operating profit to $8.2-$8.5B; adjusted EPS to $5.60-$5.80; FCF to $6.5-$6.9B) and lifted 2028 outlook (operating profit ~$11.5B, adjusted EPS ~$8.40, FCF ~$8.5B) .
  • Capital returns were increased ~20% for 2024-2026 to ~$24B, with at least 70% of FCF targeted for dividends/buybacks beyond 2026, subject to board approval .
  • Commercial Engines & Services (CES) led performance: revenue +30% y/y to $7.99B, operating profit +33% to $2.23B, margin 27.9% (+50 bps); total engine units +45% y/y, services revenue +29% .

What Went Well and What Went Wrong

What Went Well

  • CES strength: “services revenue up 29%… driven by spare parts and internal shop visit revenue,” with equipment revenue +35% on unit volume and price; CES profit +33%, margin +50 bps .
  • Supply chain progress: “material input at priority supplier sites improved 10% sequentially… suppliers delivering more than 95% of committed volume,” aiding output and shop turnaround (CFM56 TAT <80 days at Celma) .
  • Guidance/outlook raised: “We are raising our 2025 guidance and 2028 outlook… operating profit and robust commercial services outlook underpinning higher revenue, earnings, and cash growth expectations” — CEO Larry Culp .

What Went Wrong

  • Tariffs: net impact still expected at roughly $500M in 2025, offset by cost controls and pricing actions .
  • DPT margins compressed slightly (-20 bps y/y to 14.1%) amid self-funded next-gen investments and inflation; revenue +7%, profit +5% .
  • Second-half cadence: analyst concern on implied H2 step-down vs. historical seasonality due to GE9X OE ramp, lower spare engine ratio, higher corporate/R&D in H2 — management maintained conservatism on departures outlook .

Financial Results

Core Financials vs. Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($USD Billions, GAAP)$10.81 $9.94 $11.02
Adjusted Revenue ($USD Billions, Non-GAAP)$9.88 $9.00 $10.15
Continuing EPS (GAAP, $)$1.75 $1.83 $1.87
Adjusted EPS (Non-GAAP, $)$1.32 $1.49 $1.66
Profit Margin (GAAP, %)21.2% 22.6% 21.7%
Cash from Operating Activities ($USD Billions, GAAP)$1.32 $1.54 $2.35
Free Cash Flow ($USD Billions, Non-GAAP)$1.52 $1.44 $2.11

Actual vs. S&P Global Consensus

MetricQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Primary EPS Consensus Mean ($)1.04*1.32 1.27*1.49 1.43*1.66
Revenue Consensus Mean ($USD Billions)9.47*10.81 9.05*9.93 9.56*11.02
EBITDA Consensus Mean ($USD Billions)1.96*3.35 2.23*2.48 2.45*2.61

Values retrieved from S&P Global.*

Segment Performance

SegmentMetricQ4 2024Q1 2025Q2 2025
CESOrders ($MM)$12,947 $9,583 $11,690
CESRevenue ($MM)$7,650 $6,977 $7,990
CESOperating Profit ($MM)$2,158 $1,920 $2,232
CESOperating Margin (%)28.2% 27.5% 27.9%
DPTOrders ($MM)$2,840 $2,897 $2,897
DPTRevenue ($MM)$2,523 $2,324 $2,563
DPTOperating Profit ($MM)$241 $296 $362
DPTOperating Margin (%)9.6% 12.7% 14.1%

KPIs

KPIQ4 2024Q1 2025Q2 2025
Total Orders ($B)$15.5 $12.3 $14.2
CES Services Revenue y/y (%)+12% +17% +29%
Total Engine Deliveries y/y (%)+18% H2 vs H1 ref.—+45%
Spare Parts Revenue y/y (%)Higher (Q4) >20% >25%
Internal Shop Visit Revenue y/y (%)Higher (Q4) +11% >20%

Guidance Changes

MetricPeriodPrevious Guidance (Apr 22, 2025)Current Guidance (Jul 17, 2025)Change
Adjusted Revenue GrowthFY 2025Low-double-digits Mid-teens Raised
Operating Profit (Non-GAAP)FY 2025$7.8–$8.2B $8.2–$8.5B Raised
Adjusted EPS (Non-GAAP)FY 2025$5.10–$5.45 $5.60–$5.80 Raised
Free Cash Flow (Non-GAAP)FY 2025$6.3–$6.8B; >100% conversion $6.5–$6.9B; >100% conversion Raised
CES Operating ProfitFY 2025$7.6–$7.9B $8.0–$8.2B (updated outlook) Raised
DPT Operating ProfitFY 2025$1.1–$1.3B $1.1–$1.3B Maintained
Operating Profit (Non-GAAP)2028 Outlook~$10B (Mar 2024) ~$11.5B Raised
Adjusted EPS (Non-GAAP)2028 OutlookNot given (prior) ~$8.40 New
Free Cash Flow (Non-GAAP)2028 Outlook~$7.0B (implied prior) ~$8.5B Raised
Capital Returns2024–2026~$19B ~$24B Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 & Q1’25)Current Period (Q2’25)Trend
Supply Chain & FLIGHT DECK26% input increase H2’24 vs H1’24; plan to integrate Tech & Ops Priority supplier inputs +10% q/q; 95% delivery to commitments; Celma CFM56 TAT <80 days Improving
Tariffs/Macro2025 guidance assumed tariff impact; maintaining FY guide Net tariff impact ~$500M in 2025, offset via cost/pricing; departures low-single-digit growth Managed headwind
Product Performance (LEAP/CFM56/GE90)LEAP-1A HPT durability kit certified; services growth LEAP-1A kit fully in production; -1B durability kit expected 1H’26; services revenue +29% Strong
GE9X Ramp2026 EIS ambition; testing milestones Most tested engine (>30k cycles); initial shipments with peak losses near EIS, losses tapering post-2026 Ramp with near-term OE headwind
Safety/SMSFocus on safety culture First manufacturer with FAA-accepted SMS; AI-enabled inspection tools deployed Enhanced processes
DefenseSolid momentum; T901 progress DPT orders +24%; profit +5%; NGAP/GCAP progress; hypersonics investments Steady growth

Management Commentary

  • “We are raising our 2025 guidance and 2028 outlook, with our operating performance and robust commercial services outlook underpinning our higher revenue, earnings, and cash growth expectations.” — CEO Larry Culp .
  • “Priority supplier sites improved 10% sequentially… suppliers delivering more than 95% of committed volume,” contributing to higher output and services revenue .
  • “We now expect free cash flow to be in a range of $6.5–$6.9 billion… driven by our improved profit outlook” — CFO Rahul Ghai .
  • “We won the largest widebody engine deal in GE Aerospace history… 400+ GE9X and GEnx with Qatar Airways” .
  • “AI-enabled blade inspection tool… reducing inspection time ~50% and improving accuracy” .

Q&A Highlights

  • Second-half cadence: Management explained implied H2 EBIT step-down vs. historical seasonality due to GE9X OE ramp, lower spare engine ratio, higher corporate/R&D; maintained conservative departures outlook yet still expects y/y profit growth in H2 .
  • Pricing and retirements: Net spare parts pricing mid-single-digit gross, low-single-digit net; CFM56 retirements expected to rise toward 3–4% by 2027 as fleets age and airframer deliveries accelerate .
  • LEAP aftermarket profitability: Key drivers include fixed-cost leverage, improved pricing in new service contracts, more external shop visits (~30% by decade-end), and repair industrialization to reduce cost .
  • GE9X losses trajectory: Peak losses near EIS in 2026; cost-down actions target ~30% reduction by 50th unit and another ~30% by 250th unit; program expected profitable into the 2030s .
  • Supply chain and inflation: Environment remains tight; pricing actions expected to offset inflation; improved linearity of inputs helping productivity .

Estimates Context

  • Q2 2025 beat across metrics: adjusted EPS $1.66 vs. $1.43 est.; revenue $11.02B vs. $9.56B est.; EBITDA $2.61B vs. $2.45B est.
  • Beats in Q4 2024 and Q1 2025 suggest rising estimate trajectories; management raised FY 2025 guide across all key metrics, likely prompting upward estimate revisions .
MetricQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Primary EPS Consensus Mean ($)1.04*1.32 1.27*1.49 1.43*1.66
Revenue Consensus Mean ($USD Billions)9.47*10.81 9.05*9.93 9.56*11.02
EBITDA Consensus Mean ($USD Billions)1.96*3.35 2.23*2.48 2.45*2.61

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • CES momentum is the primary driver; double-digit services growth with strong pricing and expanding workscopes supports elevated margins and cash conversion above 100% .
  • The quarter delivered broad-based beats vs. Street on EPS, revenue, and EBITDA; management’s guidance raise and capital return increase are positive stock catalysts .
  • Near-term OE headwind from GE9X ramp is well-telegraphed; cost-down milestones and long-term profitability trajectory mitigate risk into the 2030s .
  • Tariffs (~$500M in 2025) and persistent supply chain tightness are manageable with pricing, productivity, and FlightDeck execution; watch departures trajectory and external shop mix .
  • DPT steady with improving margins; international defense momentum and localization initiatives offer upside optionality .
  • LEAP durability programs and external shop expansion should lift aftermarket profitability and reduce turnaround times, reinforcing CES margin resilience .
  • With FCF raised and payout targets increased, buybacks/dividends are likely ongoing supports; consider buy-the-beat and own on compounding FCF and services-led growth .