Home automation and security solutions provider Resideo Technologies (NYSE:REZI) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 22.3% year on year to $1.94 billion. The company expects next quarter’s revenue to be around $1.88 billion, close to analysts’ estimates. Its non-GAAP profit of $0.66 per share was 24.5% above analysts’ consensus estimates.
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Resideo (REZI) Q2 CY2025 Highlights:
- Revenue: $1.94 billion vs analyst estimates of $1.83 billion (22.3% year-on-year growth, 6.1% beat)
- Adjusted EPS: $0.66 vs analyst estimates of $0.53 (24.5% beat)
- Adjusted EBITDA: $210 million vs analyst estimates of $179 million (10.8% margin, 17.3% beat)
- The company lifted its revenue guidance for the full year to $7.5 billion at the midpoint from $7.39 billion, a 1.6% increase
- Management raised its full-year Adjusted EPS guidance to $2.81 at the midpoint, a 19.6% increase
- EBITDA guidance for the full year is $865 million at the midpoint, above analyst estimates of $748.4 million
- Operating Margin: 9.1%, up from 7.7% in the same quarter last year
- Free Cash Flow Margin: 9.3%, up from 4.8% in the same quarter last year
- Market Capitalization: $3.83 billion
"Resideo had an exceptional second quarter, reporting record high results that were above the high-end of the range for all our key financial metrics. We are pleased to report that both the ADI and Products and Solutions segments generated organic net revenue growth, gross margin expansion, and robust Adjusted EBITDA growth," said Jay Geldmacher, Resideo's President and CEO.
Company Overview
Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Resideo’s 9.3% annualized revenue growth over the last five years was solid. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Resideo’s annualized revenue growth of 8.1% over the last two years is below its five-year trend, but we still think the results were respectable. 
We can dig further into the company’s revenue dynamics by analyzing its most important segments, ADI Global Distribution and Products & Solutions, which are 65.7% and 34.3% of revenue. Over the last two years, Resideo’s ADI Global Distribution revenue (wholesale distribution of 450k+ products) averaged 16.4% year-on-year growth. On the other hand, its Products & Solutions revenue (branded offerings) averaged 1.8% declines. 
This quarter, Resideo reported robust year-on-year revenue growth of 22.3%, and its $1.94 billion of revenue topped Wall Street estimates by 6.1%. Company management is currently guiding for a 2.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.
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Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Resideo has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.9%, higher than the broader industrials sector.
Looking at the trend in its profitability, Resideo’s operating margin decreased by 1.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
In Q2, Resideo generated an operating margin profit margin of 9.1%, up 1.4 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Resideo’s EPS grew at an astounding 20% compounded annual growth rate over the last five years, higher than its 9.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Resideo, its two-year annual EPS growth of 26.3% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q2, Resideo reported adjusted EPS at $0.66, up from $0.62 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.
Key Takeaways from Resideo’s Q2 Results
This was a beat and raise quarter. We were impressed by Resideo’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 5.8% to $27.77 immediately after reporting.
Resideo may have had a good quarter, but does that mean you should invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.