Xylem Q3 FY2026: margins expand, revenue slips, full-year guide cut
Xylem delivered better profits on less revenue: sales fell 3.0% to $2.201 billion, adjusted EPS of $1.44 landed just under the $1.4638 consensus, and management cut full-year revenue guidance to about $8.95 billion. The offset is margin — gross margin of 41.2% and an adjusted EBITDA margin of 23.9%. Read it as a shrinking top line with a better-quality earnings line, which makes the quarter Neutral.
1 · Expected vs. Actual
Free preview belowGAAP EPS of $1.25 was up 34.0% from $0.93, while adjusted EPS of $1.44 rose 5.0% from $1.37. Measured against the $1.4638 consensus, adjusted EPS missed by roughly $0.02 — small, but still a miss. Adjusted results also got help from $33 million of IEEPA tariff refunds, so the underlying beat quality is thinner than the headline implies.
Revenue of $2.201 billion fell 3.0% from $2.268 billion a year ago and was flat organically, with management pointing to project timing and more cautious customer spending. Orders were $2.331 billion, up 7.0% reported and 10.0% organically, with book-to-bill at 106% — demand is being booked even when it is not shipping. Product revenue slipped to $1.807 billion and service revenue to $394 million.
Full-year revenue guidance moved to approximately $8.95 billion, down 1.0% reported and flat organically, versus prior guidance of up 2.0% and up 2.0% to 3.0% organic. Adjusted EPS guidance was cut to $5.40 to $5.45 from $5.55 to $5.70, and free cash flow margin to approximately 10.2% from 10.2% to 11.0%. Adjusted EBITDA margin is still guided to about 23.2%, 100 basis points above 2025 adjusted results — costs are being held even as sales shrink.
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Figures on this page come from the company's original SEC filings. The analysis is generated automatically and checked against validation rules, but may still contain errors or omissions. Not investment advice. · Generated 2026-11-03
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