Earnings call transcript: Vertiv Holdings Co. beats Q1 2026 EPS forecast, stock dips

Vertiv Holdings Co. reported robust first-quarter results for 2026, surpassing analyst expectations with an earnings per share (EPS) of $1.17, compared to the forecasted $1.00. This 17% surprise was accompanied by actual revenue of $2.65 billion, slightly above the $2.63 billion forecast. Despite these positive results, Vertiv’s stock fell 1.75% in pre-market trading, reflecting broader market concerns or investor expectations.

Vertiv Holdings Co. demonstrated strong operational execution in Q1 2026, with a significant year-over-year revenue increase of 30%. The company attributed this growth to robust market demand and effective execution across its business segments, particularly in the Americas, which saw a 53% increase in net sales. Vertiv’s ability to leverage operational efficiencies and favorable pricing dynamics contributed to its impressive financial performance.

Vertiv’s Q1 2026 EPS of $1.17 exceeded the forecasted $1.00, resulting in a 17% positive surprise. Revenue also surpassed expectations slightly, coming in at $2.65 billion against a forecast of $2.63 billion. The EPS surprise is notable, reflecting Vertiv’s strong operational leverage and market demand.

Despite the positive earnings surprise, Vertiv’s stock declined by 1.75% in pre-market trading. The stock’s last price was $306.98, down from the previous close of $312.44. This reaction may indicate investor caution or macroeconomic concerns affecting broader market sentiment.

The pullback comes after an extraordinary run, with the stock delivering a 336% return over the past year and a 93% gain year-to-date. According to InvestingPro analysis, Vertiv currently trades above its Fair Value, placing it among the platform’s most overvalued stocks. The stock’s high beta of 2.05 also suggests significant volatility, which may explain the sharp pre-market movement despite strong fundamentals.

Vertiv raised its full-year 2026 guidance, reflecting confidence in continued market momentum. The company now expects an adjusted EPS midpoint of $6.35, representing a 51% increase from 2025. Revenue guidance was also increased to a midpoint of $13.75 billion, indicating a 34% growth year-over-year.

The optimism is supported by analyst sentiment, with InvestingPro data showing seven analysts have revised earnings upward for the upcoming period. Despite trading at a P/E ratio of 87.6, the company’s PEG ratio of 0.54 suggests the stock is attractively priced relative to its near-term earnings growth potential. For deeper insights, investors can access Vertiv’s comprehensive Pro Research Report, one of 1,400+ available on InvestingPro, which transforms complex Wall Street data into clear, actionable intelligence.

CEO Albertazzi highlighted the success of Vertiv’s converged infrastructure solutions, noting that the company’s strategic shift in data center design is driving significant momentum. He emphasized the role of Vertiv’s prefabrication strategy in enhancing deployment efficiency and system optimization.

During the earnings call, analysts inquired about Vertiv’s capacity expansion plans and the potential impact of geopolitical tensions on its supply chain. Executives reassured stakeholders of their proactive strategies to manage these challenges, emphasizing their regionalized footprint and multi-sourcing approach.

InvestingPro assigns Vertiv a "GREAT" financial health score of 3.45 out of 5, with particularly strong marks for price momentum and profitability. Subscribers gain access to 21 additional ProTips for VRT, along with advanced screening tools, Fair Value estimates, and expert analysis across 1,400+ US equities.

Amit Mehrotra, Analyst, UBS7: Good morning. My name is Jeannie and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv’s first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. Please note that this call is being recorded. I would now like to turn the program over to your host for today’s conference call, Lynne Maxeiner, Vice President of Investor Relations.

Amit Mehrotra, Analyst, UBS2: Great. Thank you, Jeannie. Good morning and welcome to Vertiv’s first quarter 2026 earnings conference call. Joining me today are Vertiv’s Executive Chairman, Dave Cote, Chief Executive Officer, Gio Albertazzi, and Chief Financial Officer, Craig Chamberlin. We have one hour for the call today. During the Q&A portion of the call, please be mindful of others in the queue and limit yourself to one question. If you have a follow-up question, please rejoin the queue. Before we begin, I would like to point out that during the course of this call, we will make forward-looking statements regarding future events, including the future financial and operating performance of Vertiv. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

We refer you to the cautionary language included in today’s earnings release, and you can learn more about these risks in our annual and quarterly reports and other filings made with the SEC. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. During this call, we will also present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP to non-GAAP reconciliations can be found in our earnings press release and in the investor slide deck found on our website at investors.vertiv.com. With that, I’ll turn the call over to Executive Chairman Dave Cote.

Dave Cote, Executive Chairman, Vertiv Holdings Co.: I’m very pleased with how we started the year. The momentum we’re seeing across the business is strong, and it’s translating into the kind of performance that gives us confidence to raise our outlook for the full year. What we’re seeing in customer conversations is different than six months ago. The urgency has increased, the scale of deployments is larger, and the technical complexity is creating opportunities for companies that can solve system-level problems, which is exactly where we excel. We’re seeing broad-based strength, and that tells you something about the depth of demand and our ability to capture it. I like what we’re seeing in the industry and the continued evolution of Vertiv. We’re still in the early stages of the infrastructure build-out for AI. Our competitive advantages are compounding.

If you can deliver products, systems, integrated solutions, and services at scale, you become even more important to your customers’ technology roadmaps. We’re also managing the challenges well. Tariffs, supply chain complexity, labor constraints. These are real, but they’re manageable. Additionally, they raise the bar in ways that favor established players like us. Gio and the team are executing very well in this rapid growth environment, balancing aggressive growth and share gain with operational discipline. We’re expecting a strong year ahead and strong years in the future. With that, let me turn it over to Gio to discuss it further. Gio?

Gio Albertazzi, Chief Executive Officer, Vertiv Holdings Co.: Well, thank you very much, Dave. Let us go to slide 3. Well, I’m quite pleased with how we started 2026. Q1 was very strong with organic sales up 23% year-over-year. We reported growth of 30% when we include M&A and FX. From a regional perspective, America was the primary engine with 44% organic growth. APAC was up 12% organically, while EMEA was down 29% organically. In the few slides, you will hear us elaborate on some of the encouraging dynamics we’re seeing in EMEA. Adjusted operating margin came in at 20.8%, up 430 basis points year-over-year, and 180 basis points above our guidance. Margin performance and strong top-line growth drove adjusted operating profit of $551 million, up 64% year-over-year. Adjusted diluted EPS of $1.17 were up 83% versus Q1 2025 and exceeded our guidance by $0.19.

Adjusted free cash flow of $653 million was up 147% versus the prior year, driven by higher operating profit and continued working capital improvement. We are raising our full year guidance, and we now expect adjusted diluted EPS of $6.35, up 51% from 2025. This is supported by raising our adjusted operating profit guidance to $3.2 billion, up 53% from 2025. Adjusted operating margin is now expected to be 23.3%, 290 basis points higher than 2025. Let’s go to slide 4. Let’s start with the market environment. Our pipeline momentum continues to be strong. Our pipeline generation is robust, and we’re still expecting another year of strong orders performance in 2026. We anticipate orders to be up year-over-year, which reflects the sustained demand environment we’re seeing across our markets. Americas continues to show remarkable strength. The market momentum is broad-based and robust.

Our pipeline in the region continues to expand as we convert opportunities. In EMEA, the spring continues to uncoil. We’re seeing improving market sentiment throughout the quarter with momentum building. I know we do not disclose orders, but we are very pleased with EMEA’s Q1 bookings. We feel good about EMEA returning to year-over-year sales growth in the second half, which you see embedded in our guidance. When it comes to APAC, we see positive market dynamics across the region. Rest of Asia and India are showing convincingly strong pipelines and dynamics with robust momentum building. China is also showing encouraging pipeline movement, and this positions us well as we move through the year. On pricing, we continue to see favorable dynamics. We expect positive price cost in 2026, including the impact of tariffs and tariff countermeasures.

From a manufacturing and supply chain perspective, we’re expanding while continuing to strengthen our resi