OTIS Q3 Earnings & Revenues Beat Estimates on Strong Service Growth

Otis Worldwide CorporationOTIS reported third-quarter 2026 results, wherein adjusted earnings beat the Zacks Consensus Estimate but remained flat year over year. Net sales also surpassed the consensus mark and increased from the year-ago quarter.

OTIS' performance reflected strong Service growth, supported by modernization and repair activity, alongside improved New Equipment sales. Strong modernization orders and expanding backlog highlighted healthy demand across the business. However, weaker New Equipment profitability weighed on overall margins.

Following the results, OTIS' shares declined 0.9% during today's pre-market trading session.

Inside OTIS' Q3 Headlines

Otis posted adjusted earnings of $1.05 per share, beating the Zacks Consensus Estimate of $1 by 5%. The bottom line was unchanged from the year-ago quarter.

Otis Worldwide Corporation Price and EPS Surprise

Otis Worldwide Corporation price-eps-surprise | Otis Worldwide Corporation Quote

Net sales of $3.91 billion surpassed the consensus mark of $3.85 billion by 1.7% and increased 6% from $3.69 billion in the prior-year period. Organic sales advanced 6%, driven by growth in both Service and New Equipment. Modernization orders increased 10% at constant currency, while modernization backlog expanded 20% year over year.

Adjusted operating profit slipped $6 million to $626 million from $632 million. The adjusted operating margin contracted 110 basis points (bps) to 16% from 17.1%, reflecting unfavorable segment performance, partly offset by a favorable business mix.

Segment Details of OTIS

Service:Net sales from the segment increased 8% year over year to $2.62 billion from $2.43 billion. Organic sales rose 7%, driven by broad-based demand across the business. Organic maintenance and repair sales increased 4%, while organic modernization sales jumped 20%. Our model estimated organic sales for the segment to grow 0.3%.

Segment operating profit increased to $633 million from $621 million a year ago. However, operating margin contracted 130 basis points (bps) to 24.2% from 25.5%. Higher labor costs, ongoing strategic investments and an unfavorable mix partly offset benefits from higher volumes, favorable pricing and employment-related cost reductions.

Service operating margin improved 100 bps sequentially. Management highlighted investments in field capability and AI-enabled pricing as contributors to double-digit modernization growth and high-single-digit repair growth.

New Equipment:Net sales increased 3% year over year to $1.3 billion from $1.26 billion. Organic sales also rose 3%, driven by low-teens growth in the Americas, mid-single-digit growth in EMEA and high-single-digit growth in Asia Pacific. This was partly offset by a more than 20% decline in China. Our model predicted organic sales for the New Equipment segment to increase 6.1%.

New Equipment orders increased 1% at constant currency, with growth across the Americas, EMEA and Asia Pacific partly offsetting a low-teens decline in China. Backlog increased 4% at both actual and constant currency.

Segment operating profit declined to $42 million from $59 million. Operating margin contracted 150 bps to 3.2% from 4.7%, primarily due to unfavorable pricing and mix, partly offset by productivity gains and higher volume.