Xylem (XYL) Q4 2025 earnings summary

Executive summary

• Achieved record revenue, adjusted EBITDA, and EPS for Q4 and full year 2025, reflecting strong execution, productivity, and healthy demand across most end markets.

• Transformation and portfolio optimization focused on simplifying structure, increasing speed and accountability, and improving business processes.

• Entering phase II in 2026, leveraging improvements for growth via sales force effectiveness, product management, and innovation.

• 2026 will see purposeful walkaways from lower-quality revenue, creating a short-term top-line headwind but improving earnings quality.

• Book-to-bill ratio remained around 1x, with a $4.6B backlog supporting future growth.

Financial highlights

• Q4 2025 revenue reached $2,397M, up 6% year-over-year; full-year revenue was $9,035M, up 6% year-over-year.

• Q4 adjusted EBITDA margin was 23.2%, up 220 bps; full-year adjusted EBITDA margin was 22.2%.

• Record quarterly adjusted EPS of $1.42, a 20% increase over prior year; full-year adjusted EPS was $5.08, up 19%.

• Year-end backlog at $4.6 billion; book-to-bill near 1 for both Q4 and full year.

• Free cash flow for 2025 was $910 million, with a free cash flow margin of 11%.

Outlook and guidance

• 2026 revenue guidance: $9.1–$9.2 billion, 1%–3% reported growth, 2%–4% organic.

• Adjusted EBITDA margin expected at 22.9%–23.3%, up 70–110 bps.

• Adjusted EPS guidance: $5.35–$5.60, up 8% at midpoint.

• Free cash flow margin expected at 10.2–11% for FY 2026.

• Segment outlook: Measurement and Control Solutions and Water Solutions and Services expected to grow mid-single digits; Water Infrastructure and Applied Water to grow low-single digits.