01—Abstract
Summary
Summary of the 10-K filed February 25, 2026. Cited figures are marked; the original filing is the authoritative source.
Xylem Inc. (NYSE: XYL) reported 2025 revenue of $9.04 billiona, up 5.5% from $8.56 billion in 2024, with organic growth of $419 million and favorable foreign currency impacts of $71 million.
Operating income rose 21.2% to $1.22 billionb, with operating margin of 13.5% versus 11.8% in 2024. Net income attributable to Xylem was $957 million, or $3.92 per diluted share, compared with $890 million, or $3.65 per diluted share, in 2024. Adjusted net income was $1.24 billion, or $5.08 per diluted share, up 19.0% from $4.27 in 2024.
Adjusted operating margin expanded to 17.8% from 16.0%, driven by productivity savings and price realization, partially offset by inflation. Orders grew 2.0% to $8.90 billionc, but total backlog declined 9.0% to $4.62 billion at December 31, 2025 from $5.07 billion a year earlier. Management expects about 60% of year-end backlog to convert to revenue in 2026.
Cash flow was steady: operating cash flow was $1.24 billiond, down 2%, and free cash flow was $910 million, down 3%. The company ended 2025 with approximately $2.5 billion of available liquidity, comprising $1.5 billion of cash and $1 billion of undrawn credit facilities. For 2026, Xylem guides to total revenue growth of 1% to 3% and organic revenue growth of 2% to 4%.
The filing also highlights ongoing risks, including tariffs and trade actions, supply chain constraints involving semiconductors and rare earths, cybersecurity exposure, and a pending Swedish tax assessment that the company continues to contest. Goodwill and indefinite-lived intangibles totaled roughly $9 billion, and the auditor identified goodwill impairment testing for one Water Solutions and Services reporting unit as a critical audit matter. No impairment was recognized in 2025.
02—Key points
Key Highlights
- 2025 revenue of $9.04 billion, up 5.5% from $8.56 billion, with organic growth of $419 million across all segments.
- Operating income of $1.22 billion, up 21.2%, with operating margin expanding 170 basis points to 13.5%; adjusted operating margin reached 17.8% versus 16.0%.
- Diluted EPS of $3.92 (GAAP) and $5.08 adjusted, up 19.0% on an adjusted basis, supported by productivity savings and price realization.
- Total backlog fell 9.0% to $4.62 billion at year-end 2025, though orders rose 2.0% to $8.90 billion.
- Free cash flow of $910 million, down 3% from 2024, with operating cash flow of $1.24 billion; dividends paid rose to $391 million.
- 2026 outlook calls for total revenue growth of 1% to 3% and organic revenue growth of 2% to 4%.
- Tariff uncertainty, semiconductor and rare earth supply risks, and a contested Swedish tax assessment (approximately $91 million USD plus penalties and interest in the 2022 trial court decision) remain key watch items.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2025, Xylem kept $0.11.
- Revenue$9.04B100.0%
- Cost of revenue−$5.56B61.5%
- Gross profit$3.48B38.5%
- Operating costs−$2.25B24.9%
- Operating income$1.22B13.5%
- Interest, other & tax−$266.0M2.9%
- Net income$957.0M10.6%
Where FY2025 revenue went
$9.04B- Cost of revenue: $5.56B, 62% of revenue
- SG&A: $1.92B, 21% of revenue
- Net income: $957.0M, 11% of revenue
- R&D: $226.0M, 2.5% of revenue
- Other operating costs: $103.0M, 1.1% of revenue
- Interest, other & tax: $266.0M, 2.9% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2025filed February 25, 2026Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $9.04B$8.56B | +5.5% |
| Cost of Revenue | $5.56B$5.35B | +3.9% |
| Gross Profit | $3.48B$3.21B | +8.2% |
| R&D Expenses | $226.00M$230.00M | −1.7% |
| SG&A Expenses | $1.92B$1.91B | +0.6% |
| Operating Income | $1.22B$1.01B | +21.2% |
| Net Income | $957.00M$890.00M | +7.5% |
| EPS (Basic) | $3.93$3.67 | +7.1% |
| EPS (Diluted) | $3.92$3.65 | +7.4% |
| Shares Outstanding (Basic) | 243.37M242.58M | +0.3% |
| Shares Outstanding (Diluted) | 243.99M243.52M | +0.2% |
05—Questions
Frequently Asked Questions
How did Xylem perform financially in 2025?
Revenue grew 5.5% to $9.04 billion, and operating income increased 21.2% to $1.22 billion. Net income attributable to Xylem was $957 million, or $3.92 per diluted share, compared with $890 million, or $3.65 per share, in 2024. Adjusted EPS was $5.08, up from $4.27.
What drove the improvement in margins?
Gross margin rose 100 basis points to 38.5%, driven by 230 basis points of productivity savings and 140 basis points of price realization, partly offset by 190 basis points of inflation and 60 basis points of unfavorable mix. Restructuring charges increased to $103 million from $62 million.
Is Xylem's order and backlog trend a concern?
Orders grew 2.0% to $8.90 billion, but backlog declined 9.0% to $4.62 billion at year-end 2025. Management expects roughly 60% of year-end backlog to be recognized as revenue in 2026, so backlog conversion will be a key factor to monitor.
What is Xylem's 2026 guidance?
Xylem anticipates total revenue growth of 1% to 3% in 2026, with organic revenue growth of 2% to 4%. Management also estimates annual net savings from 2025 restructuring actions of approximately $80 million to $120 million beginning in 2026.
What are the main risks highlighted in the filing?
Key risks include tariffs and trade protection measures, supply disruptions in semiconductors and rare earth minerals, cybersecurity incidents, goodwill and intangible impairment risk on roughly $9 billion of such assets, and a pending Swedish tax assessment that the company is appealing.
06—Continue