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GE

GENERAL ELECTRIC CO (GE)·Q3 2025 Earnings Summary

Executive Summary

  • GE Aerospace delivered a strong Q3 2025: GAAP revenue $12.18B (+24% YoY), adjusted EPS $1.66 (+44% YoY), and free cash flow $2.36B (+30% YoY), with operating margin flat at 20.3% on higher corporate cost timing .
  • Significant beat vs S&P Global consensus: Adjusted EPS $1.66 vs $1.47*; revenue $12.18B vs $10.41B*, driven by robust commercial services volume, favorable mix and pricing, and improved material availability; tax rate also declined to ~15% aiding EPS .
  • Management raised FY25 guidance across all key metrics: adjusted revenue growth to high-teens, operating profit to $8.65–$8.85B, adjusted EPS to $6.00–$6.20, and FCF to $7.1–$7.3B (>100% conversion), citing strong services and output momentum .
  • Key catalysts: sustained double-digit services growth, record LEAP deliveries (+40% YoY), defense deliveries (+83% YoY), and FlightDeck-driven supply chain improvements; watch GE9X near-term OE losses and seasonal step-down in Q4 .

Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Services outperformance: CES services revenue +28% YoY; internal shop visit revenue +33%; spare parts >+25%, enabled by improved material availability and stronger throughput .
  • Supply chain momentum: priority suppliers shipped >95% of committed volume for the third consecutive quarter; material input up 35% YoY and high-single-digit sequentially, underpinning deliveries and output .
  • Strategic wins and technology progress: record LEAP deliveries (+40% YoY), GE9X second dust test and readiness; commitments from Korean Air and Cathay Pacific; reinforced durability kit on LEAP-1A in production .

“FlightDeck…is how we turn strategy into results…our exceptional third quarter and year-to-date results demonstrate FlightDeck in action” — Larry Culp .

What Went Wrong

  • Margin mixed: total operating margin flat at 20.3% as segment expansion was offset by higher corporate cost timing (EHS reserves) .
  • Orders softness in DPT: defense orders down 5% on timing, though revenue +26% and profit +75% YoY; watch book-to-bill normalization .
  • Near-term headwinds: GE9X OE losses expected to increase with volume; typical seasonal step-down in Q4 spare parts and revenues, and persistent supply-chain inflationary pressure .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenue (GAAP, $B)$9.84 $11.02 $12.18
Adjusted Revenue (Non-GAAP, $B)$8.94 $10.15 $11.31
Operating Profit (Non-GAAP, $B)$1.82 $2.34 $2.30
Profit Margin (GAAP, %)19.2% 21.7% 20.7%
Operating Margin (Non-GAAP, %)20.3% 23.0% 20.3%
Continuing EPS (GAAP, $)$1.56 $1.87 $2.04
Adjusted EPS (Non-GAAP, $)$1.15 $1.66 $1.66
CFOA (GAAP, $B)$1.91 $2.35 $2.56
Free Cash Flow (Non-GAAP, $B)$1.82 $2.11 $2.36

Segment breakdown:

SegmentMetricQ3 2024Q2 2025Q3 2025
CESRevenue ($B)$7.00 $7.99 $8.88
CESOperating Profit ($B)$1.80 $2.23 $2.44
CESOperating Margin (%)25.7% 27.9% 27.4%
DPTRevenue ($B)$2.24 $2.56 $2.83
DPTOperating Profit ($M)$220 $362 $386
DPTOperating Margin (%)9.8% 14.1% 13.6%

Consensus vs actual (S&P Global):

MetricQ3 2025 ConsensusQ3 2025 Actual
Adjusted EPS ($)1.47*1.66
Revenue ($B)10.41*12.18

Values retrieved from S&P Global.*

KPIs and cash:

KPIQ3 2024Q2 2025Q3 2025
FCF Conversion (%)145% —134%
CES Services Revenue YoY (%)—+29% +28%
LEAP Deliveries YoY (%)—+38% +40%
Defense Engine Output YoY (%)—+84% +83%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Revenue GrowthFY2025Mid-teens High-teens Raised
Operating Profit (Non-GAAP)FY2025$8.2–$8.5B $8.65–$8.85B Raised
Adjusted EPS (Non-GAAP)FY2025$5.60–$5.80 $6.00–$6.20 Raised
Free Cash Flow (Non-GAAP)FY2025$6.5–$6.9B (>100%) $7.1–$7.3B (>100%) Raised
Interest ExpenseFY2025—~$850M New
Tax RateFY2025—~17.5% New
CES Operating ProfitFY2025$8.0–$8.2B $8.45–$8.65B Raised
DPT Operating ProfitFY2025$1.1–$1.3B $1.2–$1.3B Raised (midpoint)
Corporate Costs & EliminationsFY2025< $1B ~ $1B Maintained
DividendQ3 2025—$0.36 per share declared, paid Oct 27 Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Supply chain/material availabilityFLIGHT DECK actions, +8% sequential inputs Priority suppliers >95% shipments; +10% sequential inputs >95% shipments 3rd quarter; +35% YoY inputs, high-single-digit sequential Improving
Services growth & mixCES services +17% YoY Services +29% YoY; internal +20%, spares >+25% Services +28% YoY; internal +33%, spares >+25% Strong, sustained
LEAP durabilityKit progress; RISE tests LEAP-1A kit, shop visits capacity expansion LEAP-1A kit in production; 1B certification 1H26; record deliveries Improving durability
GE9X programEndurance/dust tests continuing Most tested engine pre-EIS Second dust test; near-term OE losses rising with volume Advancing; near-term OE drag
Tariffs/macro & pricingTariff offsets; lower departures assumption Price to offset inflation; outlook conservative on departures Seasonal Q4 step-down; inflation remains elevated; pricing offsets Cautious
Safety/regulatorySMS/quality emphasis —Continued safety-first tone Stable
R&D execution/techRISE HPT cooling, open fan tests ~$3B R&D; open fan advocacy Continued investment; hybrid electric partnership with BETA Building for 2026–2030
Capital allocation—Raised returns to $24B (2024–2026) Balanced reinvestment, buybacks, selective M&A; $24B reaffirmed Shareholder-friendly

Management Commentary

  • “We’re raising our full-year guidance across the board” — Larry Culp on strong YTD results and Q4 expectations .
  • “Operating margins were flat at 20.3%, with margin expansion in both segments offset by corporate cost timing” — Rahul Ghai .
  • “Record LEAP deliveries…Defense units were up 83% year over year” — Larry Culp highlighting output momentum .
  • “We are investing nearly $1 billion in our supply chain to expand capacity” — Larry Culp on capacity and supplier investments .
  • “Capital allocation…balanced approach…$24B return of cash to shareholders in 2024–2026” — Larry Culp .

Q&A Highlights

  • Services outperformance drivers: primarily volume unlock from improved material availability, heavier work scopes, strong demand; Q4 seasonal step-down expected, but FY services raised >$1B vs prior guide .
  • LEAP services margin trajectory: confidence to approach overall services margins by 2028, supported by durability kits, external shop mix (to ~30% by 2030), repair technology reducing cost, and pricing discipline .
  • Capital deployment: continue reinvestment and shareholder returns; selective M&A (e.g., $300M BETA stake) within disciplined framework .
  • Supply chain: no single breakthrough; cumulative FlightDeck problem-solving and collaboration, improved linearity, and visibility driving higher first-time yields and throughput .
  • 2026 outlook: revenue and profit growth expected though below 2025’s pace; GE9X losses to more than double YoY in 2026; margin expansion opportunities limited near term .

Estimates Context

  • Q3 2025: GE posted a clear beat — Adjusted EPS $1.66 vs $1.47*, revenue $12.18B vs $10.41B*; tax rate declined to ~15% enhancing EPS; beat driven by services volume/mix/price and improved material availability .
  • Forward consensus (S&P Global): Q4 2025 EPS $1.43*, revenue $11.21B*; Q1 2026 EPS $1.60*, revenue $10.26B* — estimates likely need upward revision for services, partially tempered by seasonal Q4 step-down and GE9X OE losses .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • GE delivered broad-based strength with a material beat and raised FY25 guidance; services remain the core earnings engine and catalyst for estimate revisions .
  • Supply chain execution is improving structurally (FlightDeck), enabling sustained delivery ramps and higher conversion; watch for continued linearity and working capital normalization .
  • LEAP aftermarket profitability is on a credible path to approach overall services margins by 2028; durability kits and external MRO mix are key levers .
  • Near-term risk: GE9X OE losses as volumes ramp and persistent supply-chain inflation; expect seasonal Q4 step-down in spares/parts .
  • Defense momentum is robust (deliveries +83% YoY, backlog $19B), albeit with order timing variability; international defense looks favorable .
  • Capital returns remain a cornerstone ($24B over 2024–2026) alongside targeted innovation investments (e.g., BETA hybrid turbo-generator) .
  • Trading implications: positive narrative anchored on sustained services growth and guidance raise; monitor Q4 seasonality and GE9X loss cadence for near-term volatility .

Appendix: Non-GAAP Considerations

  • Adjusted metrics exclude run-off insurance revenue/costs, U.S. tax equity, non-operating benefit income, restructuring/separation, and certain gains/losses; reconciliations provided (e.g., adjusted revenue $11.31B vs GAAP $12.18B; adjusted EPS $1.66 vs GAAP continuing EPS $2.04) .
  • FCF definition excludes separation/restructuring cash expenditures and includes PP&E/software additions and dispositions; conversion remained >100% .