Sign in

Vertiv Holdings Co (VRT) Q2 2025 Earnings Summary

Executive Summary

  • Net sales $2,638.1M (+35.1% YoY) and adjusted diluted EPS $0.95 (+42% YoY); adjusted operating profit $489.3M (+28% YoY). Strength driven by robust data center demand and orders momentum .
  • Orders up ~15% YoY and ~11% sequential; book-to-bill ~1.2x; backlog increased to $8.5B, supporting a higher FY guide and multi-quarter trajectory .
  • Raised FY 2025 guidance: net sales $9,925M–$10,075M (organic +23–25%), adjusted operating profit $1,950M–$2,030M, adjusted EPS $3.75–$3.85, adjusted FCF $1,375M–$1,425M; lowered FY adjusted margin midpoint to ~20% given tariff/transition costs but reiterated ~25% long-term margin target by 2029 .
  • Key catalysts: continued AI-led demand (CoreWeave NVL72 deployment, NVIDIA collaboration), Great Lakes Data Racks & Cabinets acquisition to expand white-space solutions, and Oklo collaboration to co-optimize nuclear power and thermal management for hyperscale/colo data centers .

What Went Well and What Went Wrong

What Went Well

  • Orders and backlog momentum: “We surpassed $3 billion in orders this quarter… book-to-bill ratio of 1.2x… backlog stands strong at $8.5 billion” .
  • Regional growth and mix: AMER +42.9% and APAC +36.9% net sales YoY; APAC margin expanded to 10.6% (from 7.9%) on operational leverage .
  • Guidance raised across key metrics: “We are raising our full-year adjusted diluted EPS, net sales, adjusted operating profit and adjusted free cash flow” .

What Went Wrong

  • Margin compression: adjusted operating margin 18.5%, down 110 bps YoY, driven primarily by tariffs and higher-than-anticipated supply chain/manufacturing transition costs and operational inefficiencies from growth acceleration .
  • EMEA execution challenges: deliberate fixed-cost investments ahead of demand and supply chain shifts created near-term excess capacity; EMEA expected down organically in 2H25 before reacceleration with pipeline conversion .
  • Adjusted FCF down YoY in Q2: $277.0M vs $336.5M due to trade working capital timing despite strong YTD FCF growth (+24%) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$2,346.4 $2,036.0 $2,638.1
GAAP Diluted EPS ($)$0.38 $0.42 $0.83
Adjusted Diluted EPS ($)$0.99 $0.64 $0.95
Operating Profit ($USD Millions)$457.2 $290.7 $442.4
Adjusted Operating Profit ($USD Millions)$504.3 $336.7 $489.3
Operating Margin (%)19.5% 14.3% 16.8%
Adjusted Operating Margin (%)21.5% 16.5% 18.5%
YoY HighlightsQ2 2024Q2 2025
Net Sales ($USD Millions)$1,952.8 $2,638.1
Net Sales YoY Growth (%)—35.1%
Adjusted Operating Margin (%)19.6% 18.5%
Adjusted EPS YoY Growth (%)—42%
Actual vs Company Q2 GuidanceCompany Guidance (Q1 8-K)Actual Q2
Net Sales ($USD Millions)$2,325M–$2,375M $2,638.1
Adjusted Operating Profit ($USD Millions)$420M–$450M $489.3
Adjusted Operating Margin (%)18.0%–19.0% 18.5%
Adjusted Diluted EPS ($)$0.77–$0.85 $0.95
Regional Segment Breakdown (Q2 2025)Net Sales ($USD Millions)YoY Δ ($USD Millions)YoY Δ (%)Organic Δ (%)Adjusted Operating Profit ($USD Millions)Adjusted Margin (%)
Americas (AMER)$1,602.3 $481.2 42.9% 43.2% $384.6 24.0%
Asia Pacific (APAC)$560.2 $151.1 36.9% 36.8% $59.2 10.6%
EMEA$475.6 $53.0 12.5% 7.0% $104.2 21.9%
Total$2,638.1 $685.3 35.1% 34.0% $489.3 18.5%
KPIsQ1 2025Q2 2025
Orders YoY Growth (%)+13% +~15%
Orders Sequential Growth (%)+21% +~11%
TTM Orders Growth (%)~20% ~11%
Book-to-Bill (x)~1.4x ~1.2x
Backlog ($USD Billions)$7.9B $8.5B
Adjusted Free Cash Flow ($USD Millions)$264.5 $277.0
Liquidity ($USD Billions)$2.3B $2.5B
Net Leverage (x)~0.8x ~0.6x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)FY 2025$9,325M–$9,575M $9,925M–$10,075M Raised
Organic Net Sales Growth (%)FY 202516.5%–19.5% 23%–25% Raised
Adjusted Operating Profit ($USD Millions)FY 2025$1,885M–$1,985M (midpoint $1,935M) $1,950M–$2,030M Raised
Adjusted Operating Margin (%)FY 202519.75%–21.25% (midpoint 20.5%) 19.7%–20.3% (midpoint ~20.0%) Lowered
Adjusted Diluted EPS ($)FY 2025$3.45–$3.65 (midpoint $3.55) $3.75–$3.85 Raised
Adjusted Free Cash Flow ($USD Millions)FY 2025$1,250M–$1,350M $1,375M–$1,425M Raised
Net Sales ($USD Millions)Q3 2025—$2,510M–$2,590M New quarterly guide
Organic Net Sales Growth (%)Q3 2025—20%–24% New quarterly guide
Adjusted Operating Profit ($USD Millions)Q3 2025—$490M–$530M New quarterly guide
Adjusted Operating Margin (%)Q3 2025—19.75%–20.25% New quarterly guide
Adjusted Diluted EPS ($)Q3 2025—$0.94–$1.00 New quarterly guide
Interest Expense ($USD Millions)Q3 2025—$20.0 (guidance model) New disclosure
Income Tax Expense ($USD Millions)Q3 2025—$111.0 (guidance model) New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesReinforced AI-led demand; FY25 outlook raised; strong TTM orders iGenius AI factory; NVIDIA GB200/GB300 NVL72 reference designs; “seed planting” paying off First to launch/deploy NVIDIA GB300 NVL72 with CoreWeave/Dell; “one GPU generation ahead” Accelerating
Tariffs/macroNot explicit in Q4 PR guide Detailed tariff mitigation playbook; aim for tariff neutrality exiting 2025 Tariffs drove 110 bps YoY margin compression; higher transition costs; countermeasures underway Mitigation progressing; headwind moderating
Supply chainManufacturing/productivity benefits (Q4 margin expansion) Multi-sourcing, localization, USMCA qualification; resilience theme Temporary inefficiencies from reconfigurations; expected resolution by YE Improving through H2
Product performance (Thermal/liquid cooling)Liquid cooling services launch (Feb) Demand tracks ahead of chip shipments; 3–6 months lead on CDUs Service contracts seen as attractive growth opportunity; scale matters Strengthening
Regional trendsAll regions strong in Q4; EMEA fastest growing EMEA pipelines robust but lag build; AMER/APAC strong EMEA down in 2H25 near term; AMER/APAC strong; capacity/actions in EMEA to absorb when volumes reaccelerate Near-term softness; medium-term reacceleration
White-space integration/modularity—Prefab AI factory example (iGenius) Great Lakes racks to strengthen white space; SmartRun prefab reduces deployment time by order of magnitude Strategic expansion
Power/nuclear——Oklo collaboration to co-optimize nuclear power and Vertiv thermal/power systems Emerging opportunity
Orders/backlog communicationStrong TTM/book-to-bill Emphasized lumpiness; TTM view; strong book-to-bill Transition to annual orders projections post-FY25 to reduce quarter-to-quarter lumpiness impacts Evolving disclosure
Regulatory environment—U.S./EU becoming more conducive to AI infrastructure; Europe lagging but “coil spring” Regulatory backdrop supporting pipelines; optimism for Europe acceleration when resources shift from U.S. Improving

Management Commentary

  • CEO tone on growth and investments: “We are strategically investing in capacity expansion and accelerating our innovation pipeline to capitalize on unprecedented data center growth, particularly in AI-enabled infrastructure” .
  • Long-term opportunity: Executive Chairman Dave Cote: “This is a technological transformation that we believe will drive sustained long-term growth… invest resolutely and rationally… to capitalize on this latest significant development” .
  • Margin actions and guidance confidence: CFO highlighted sequential margin improvement into Q3 and >23% adjusted margin in Q4 as inefficiencies resolve and operational leverage steps up .
  • Technology leadership: “Our infrastructure offering is always at least one GPU generation ahead… first to launch and deploy NVIDIA’s GB300 NVL72” .

Q&A Highlights

  • Margins/inefficiencies: Root causes include tariff-driven footprint transition (new sources/certifications, backlog moves, premium freight) and growth acceleration; actions in place with normalization expected by YE .
  • EMEA outlook: Short-term softness from execution challenges and deliberate fixed-cost investments ahead of demand; healthy pipeline supports reacceleration and absorption of capacity as volumes recover .
  • Liquid cooling services: Complexity and scale of deployments favor Vertiv’s service strength; thermal contract growth expected to be strong .
  • Orders/backlog duration/diversity: Duration broadly similar to history with slightly elongated visibility; diversified across hyperscale/colo/sovereign/new cloud .
  • Disclosure change: Moving to projected full-year orders/backlog starting Q4/FY25 to reduce market overreaction to quarterly lumpiness .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2025 EPS and revenue was unavailable via our data pull, so we benchmarked actuals versus company guidance. Actuals exceeded Q2 guidance ranges on net sales, adjusted operating profit, and adjusted EPS, with adjusted margin landing within guided band .

Key Takeaways for Investors

  • Demand backdrop remains exceptionally strong with AI-led projects driving orders, backlog ($8.5B), and pipeline across regions; supports raised FY top-line and EPS guidance .
  • Near-term margin headwinds are transitory; sequential improvement expected in H2 as tariff countermeasures and process normalization take hold, with >23% adjusted margin guided in Q4 .
  • Strategic expansion into white space (Great Lakes acquisition) and modular solutions (SmartRun) deepens Vertiv’s ability to deliver end-to-end AI infrastructure at speed and scale—an important differentiator vs. component suppliers .
  • Services flywheel: Liquid cooling complexity and lifecycle needs favor Vertiv’s service contracts, providing recurring revenue and margin resilience through technology cycles .
  • EMEA softness is tactical; investments and supply chain shifts position the region for reacceleration as U.S. projects normalize and Europe’s regulatory environment becomes more supportive .
  • Capital structure and FCF: Strong liquidity ($2.5B) and low net leverage (~0.6x) alongside higher FY adjusted FCF ($1.375B–$1.425B) provide capacity for disciplined M&A and organic investments in capacity/R&D .
  • Narrative catalysts: NVIDIA NVL72 leadership, CoreWeave deployment, Oklo collaboration, and updated disclosure on orders reduce perceived lumpiness and highlight sustainable multi-year growth drivers .

Best AI for Equity Research

Performance on expert-authored financial analysis tasks

Fintool-v490%
Claude Sonnet 4.555.3%
o348.3%
GPT 546.9%
Grok 440.3%
Qwen 3 Max32.7%