Otis Q1 2026: service organic sales up 5%, modernization backlog up 30%; FY26 guidance reaffirmed

Transcript intelligence

What changed

Organic sales rose 1% with service up 5% and modernization backlog up 30% at constant currency, while new equipment declined 5%. Adjusted EPS of $0.89 came in slightly below the $0.896 consensus and revenue of $3.566B modestly beat the $3.505B estimate. Management reaffirmed FY26 guidance, announced a 5% dividend increase, completed $400M of buybacks in Q1, and disclosed a majority investment in an AI-enabled elevator service provider (We Maintain) plus the launch of the Otis Robust product line. The stock moved down about 2.3% against the benchmark (versus a ~1% SPY gain) on roughly 2.4x normal volume.

Guidance delta

Reaffirmed FY26 guidance, unchanged: net sales of $15.1-15.3B, adjusted EPS of $4.20-4.24, and adjusted free cash flow of $1.6-1.65B. No change from prior quarter.

Key takeaways

• Service organic sales grew 5%, with modernization backlog up 30% at constant currency, underpinning near-term revenue visibility.
• New equipment sales fell 5% YoY on mixed conditions, led by softness in China.
• Management is investing roughly $50M in 2026 to build field/sales resources, deploy AI micro-pricing, and fund a cost-takeout program targeting up to $20M of run-rate savings.
• FY26 guidance held at net sales of $15.1-15.3B, adjusted EPS of $4.20-4.24, and adjusted free cash flow of $1.6-1.65B.
• Completed $400M of share repurchases in Q1 toward an $800M annual target, and raised the dividend 5%.

Management priorities

• Scale field and sales resources to support high-value service markets.
• Roll out a micro-pricing AI algorithm across high-value countries to restore service margins.
• Expand the Otis Robust and Otis Veeva product families, including heavy-duty and mission-critical elevator lines.
• Continue the cost-takeout program targeting up to $20M of run-rate savings.
• Complete the $800M share repurchase program within the year.