Otis’ third quarter results reflected stable performance, with revenue and profit metrics surpassing Wall Street expectations. Management highlighted continued growth in the company’s Service segment, especially from maintenance, repair, and modernization activities. CEO Judith Marks attributed the quarter’s positive momentum to a 6% increase in Service sales and a 14% rise in modernization organic sales. She pointed out that service margin expansion and ongoing investment in operational improvements contributed to both top-line and bottom-line growth. Marks noted, “Our Maintenance portfolio continued to grow 4%, and we are on track to approach 2.5 million units in our service portfolio by year-end.”
Is now the time to buy OTIS? Find out in our full research report (it’s free for active Edge members).
Otis (OTIS) Q3 CY2025 Highlights:
- Revenue: $3.69 billion vs analyst estimates of $3.64 billion (4% year-on-year growth, 1.2% beat)
- Adjusted EPS: $1.05 vs analyst estimates of $1.00 (4.7% beat)
- Adjusted EBITDA: $676 million vs analyst estimates of $650 million (18.3% margin, 4% beat)
- The company reconfirmed its revenue guidance for the full year of $14.55 billion at the midpoint
- Management slightly raised its full-year Adjusted EPS guidance to $4.06 at the midpoint
- Operating Margin: 15.9%, up from 10.2% in the same quarter last year
- Organic Revenue rose 2% year on year vs analyst estimates of 1.2% growth (81 basis point beat)
- Market Capitalization: $35.35 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Otis’s Q3 Earnings Call
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Joseph O'Dea (Wells Fargo) asked about timelines for recovering maintenance retention rates. CEO Judith Marks acknowledged it will take time, noting, “Returning to the 94% retention rate will take sustained time to rebuild customers’ trust.”
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Nigel Coe (Wolfe Research) questioned drivers behind accelerating repair growth. Marks cited aging equipment and backlog conversion efforts, while CFO Cristina Mendez explained that repair and maintenance are best viewed together due to varied contract structures.
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Jeffrey Sprague (Vertical Research) inquired about service pricing trends by region. Marks reported mid-single-digit price increases in the Americas, low single digits in EMEA and Asia Pacific, and ongoing pressure in China, mitigated by density and local strategies.
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C. Stephen Tusa (JPMorgan) pressed for details on sequential retention improvement. Marks said improvements were modest and stressed a focus on daily customer engagement rather than expecting a rapid return to prior levels.
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Julian Mitchell (Barclays) asked about free cash flow dynamics and the impact of business mix changes. Mendez stated that temporary working capital shifts from the transition toward Service should normalize as New Equipment stabilizes.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will closely monitor (1) the pace of service portfolio growth and progress in customer retention initiatives, (2) execution on the modernization backlog as government stimulus and infrastructure upgrades play out, and (3) the impact of cost savings programs, especially in China, on operating margins. We will also watch for any recovery in New Equipment sales, particularly in key regions like the Americas and China.
Otis currently trades at $90.08, down from $91.36 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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