Xylem Inc. (NYSE: XYL) posted fourth‑quarter 2025 revenue of $2.40 billion, up 6.3 % from $2.256 billion in Q4 2024, and adjusted earnings per share of $1.42, a 20 % increase over the $1.18 EPS reported in the same quarter last year. The company’s adjusted EBITDA margin expanded to 23.2 %, up 220 basis points from 21.0 % in Q4 2023, while net income attributable to Xylem rose to $335 million, with adjusted net income of $348 million after removing one‑time charges.
The revenue growth was driven by a 10 % increase in Measurement & Control Solutions revenue and a 5.1‑percentage‑point expansion in Water Infrastructure margin, offsetting modest declines in other segments. Pricing power in the Water Solutions and Services segment helped lift overall margins, while cost controls in the Applied Water division mitigated inflationary pressure. The company’s digital business, Xylem Vue, doubled its revenue in 2025, contributing to the margin expansion and signaling a shift toward higher‑margin digital offerings.
Xylem’s EPS beat the consensus estimate of $1.42 by a narrow margin of $0.01, largely due to disciplined cost management and a favorable mix shift toward higher‑margin segments. The company’s pricing strategy, supported by a robust backlog of $4.6 billion and a book‑to‑bill ratio near one, allowed it to maintain profitability even as volume growth slowed. The slight EPS beat reflects the company’s ability to translate revenue gains into earnings while controlling operating expenses.
For 2026, Xylem guided full‑year revenue of $9.10 billion to $9.20 billion, a range that sits below analyst consensus estimates of $9.42 billion. The company also projected an adjusted EBITDA margin of 22.9 % to 23.3 %, slightly lower than the 23.2 % margin achieved in Q4 2025. Management cited the “peak of purposeful walkaways from lower‑quality revenue” and the acceleration of its 80/20 simplification program as reasons for the cautious outlook, indicating near‑term top‑line headwinds but a focus on higher‑quality earnings.
Investors reacted cautiously to the guidance, with market sentiment focused on the lower revenue forecast and the expected impact of the simplification program. The company’s strong Q4 performance was offset by concerns about operational challenges in China, project delays in the Measurement & Control Solutions segment, and the broader macro environment, leading to a muted market response.
Matthew Pine, Xylem’s CEO, said the quarter “capped a year of solid execution and transformation across Xylem,” highlighting the company’s progress in its operating model transformation. CFO William Grogan noted that the company achieved “record revenue, EBITDA and earnings per share” for the quarter, emphasizing the role of a $4.6 billion backlog and a balanced book‑to‑bill ratio in sustaining growth.
William Grogan also highlighted a 10 % revenue increase in Measurement & Control Solutions and a 5.1‑percentage‑point margin expansion in Water Infrastructure, underscoring the company’s focus on high‑margin segments and digital growth.
The company’s dividend was increased by 8 % to $0.43 per share, reflecting its strong cash position and commitment to returning capital to shareholders.
Xylem’s balance sheet remains robust, with cash and cash equivalents rising and long‑term debt decreasing, positioning the company to support its strategic initiatives and navigate near‑term headwinds.
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