Otis Worldwide Corporation reported its fourth‑quarter and full‑year 2025 results on January 28, 2026, delivering a mixed picture that underscored the company’s shift toward a service‑centric model. The quarter’s net sales totaled $3.8 billion, a 1% year‑over‑year increase driven almost entirely by a 5% rise in service revenue, while new‑equipment sales fell 5% to $1.3 billion, reflecting a 20% decline in China and broader market softness.
GAAP earnings per share for the quarter were $0.95, a 14% decline from the $1.10 reported in Q4 2024, and fell short of the consensus estimate of $1.04 by $0.09. Adjusted EPS came in at $1.03, missing the $1.04 consensus by $0.01. The narrow miss on both metrics was largely attributable to the weaker new‑equipment segment, which saw a 6% drop in organic sales and a 110‑basis‑point contraction in operating margin to 3.6%. In contrast, the service segment posted $2.5 billion in sales and $638 million in operating profit, expanding its margin to 25.5% from 24.5% a year earlier, thanks to higher pricing power and a favorable mix of high‑margin modernization contracts.
Management highlighted that modernization orders grew 43% in the quarter, adding a robust backlog that is expected to support service growth in 2026. CEO Judy Marks emphasized the “service flywheel” as the engine of profitability, noting that the company’s highest adjusted operating‑profit margin expansion and EPS growth in 2025 were driven by strong service sales and a 5% organic rise in that segment. She also pointed to a 30% increase in the service backlog and a 2% rise in the new‑equipment backlog, positioning the company for continued upside in the modernization cycle.
Looking ahead, Otis guided for 2026 organic sales growth in the low‑to‑mid‑single digits and adjusted EPS growth in the mid‑to‑high single digits, signaling confidence in the service‑driven model despite ongoing headwinds in the new‑equipment market. The company reaffirmed its capital discipline, having repurchased $800 million of shares and raised its dividend, underscoring its commitment to returning value to shareholders while investing in modernization and service capabilities.
The market reaction was muted, with the stock falling 7.03% in pre‑market trading. The decline reflected investors’ focus on the slight miss in both EPS and revenue, which fell short of consensus estimates of $1.04 and $3.89 billion, respectively. Analysts noted that while the service segment’s strength mitigated the impact of new‑equipment weakness, the overall miss underscored the challenges the company faces in China and the broader cyclical nature of the elevator and escalator market.
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