01—Abstract
Summary
Summary of the 10-Q filed July 31, 2025. Cited figures are marked; the original filing is the authoritative source.
Xylem Inc. reported second-quarter 2025 revenue of $2,301 milliona, up 6.1% from $2,169 million a year earlier, with organic revenue growth of 5.5% across all segments, led by Measurement and Control Solutions.
Gross margin rose to 38.8% from 37.8%, and operating income increased to $305 millionb (operating margin of 13.3%) from $253 million. Net income attributable to Xylem was $226 million, or $0.93 per diluted share, compared with $194 million, or $0.80, in the prior-year quarter. Adjusted earnings per share were $1.26, up 15.6%.
Orders reached $2,174 millionc, up 4.1%, while total backlog of $5,018 million was down 2.7% from a year earlier. For the six months ended June 30, 2025, revenue was $4,370 million, up 4.0%, and net income attributable to Xylem was $395 million. Operating cash flow fell to $338 million from $377 million, and free cash flow was $169 million versus $230 million.
Cash and cash equivalents were $1,170 milliond at June 30, 2025, and total debt was $1,996 million. Management raised its 2025 total revenue growth outlook to 4% to 5% and expects organic revenue growth of approximately 4%.
Subsequent to the quarter, Xylem completed the acquisition of EMX Holdings, Inc. (EnviroMix) on July 23, 2025 for $108 million in cash. The filing also notes that the One Big Beautiful Bill Act was enacted on July 4, 2025, and that the company is assessing its impact on its consolidated financial statements.
02—Key points
Key Highlights
- Revenue rose 6.1% to $2,301 million in Q2 2025, with organic growth of 5.5%; for the six months, revenue rose 4.0% to $4,370 million.
- Operating income increased 20.6% to $305 million in Q2, and operating margin expanded 160 basis points to 13.3%; adjusted operating margin was 17.5%.
- Diluted EPS was $0.93 in Q2 versus $0.80 a year earlier (up 16.3%), and adjusted EPS was $1.26 (up 15.6%).
- Orders were $2,174 million in Q2, up 4.1%, while backlog of $5,018 million at June 30, 2025 was down 2.7% from a year earlier.
- Operating cash flow was $338 million for the six months versus $377 million, and free cash flow was $169 million versus $230 million, reflecting receivables growth on long-term contracts and higher tax payments.
- The company raised its 2025 total revenue growth outlook to 4% to 5% and projects organic revenue growth of approximately 4%.
- Subsequent to quarter-end, Xylem acquired EnviroMix for $108 million in cash on July 23, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Xylem kept $0.10.
- Revenue$2.30B100.0%
- Cost of revenue−$1.41B61.2%
- Gross profit$892.0M38.8%
- Operating costs−$587.0M25.5%
- Operating income$305.0M13.3%
- Interest, other & tax−$79.0M3.4%
- Net income$226.0M9.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed July 31, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $2.30B$2.17B | +6.1% |
| Cost of Revenue | $1.41B$1.35B | +4.4% |
| Gross Profit | $892.00M$819.00M | +8.9% |
| R&D Expenses | $58.00M$58.00M | 0.0% |
| SG&A Expenses | $503.00M$485.00M | +3.7% |
| Operating Income | $305.00M$253.00M | +20.6% |
| Net Income | $226.00M$194.00M | +16.5% |
| EPS (Basic) | $0.93$0.80 | +16.3% |
| EPS (Diluted) | $0.93$0.80 | +16.3% |
| Shares Outstanding (Basic) | 243.40M242.57M | +0.3% |
| Shares Outstanding (Diluted) | 243.86M243.54M | +0.1% |
05—Questions
Frequently Asked Questions
What drove the revenue and profit improvement in the second quarter of 2025?
Revenue increased $132 million, or 6.1%, to $2,301 million, of which organic growth contributed $120 million, or 5.5%. Measurement and Control Solutions led with organic growth of 9.4%. Gross margin expanded 100 basis points to 38.8%, driven by 210 basis points of productivity savings and 130 basis points of price realization, partly offset by 180 basis points of inflation. Operating expenses rose 3.7%, which was slower than revenue growth, so operating income grew 20.6%.
How did cash flow and liquidity change in the first half of 2025?
Operating cash flow was $338 million for the six months ended June 30, 2025, down from $377 million, mainly due to receivables on long-term contracts, higher infrastructure cost payments and higher tax payments. Capital expenditures were $169 million, leaving free cash flow of $169 million versus $230 million a year earlier. Cash and cash equivalents totaled $1,170 million, and management said available liquidity was approximately $2.2 billion, including $1 billion of undrawn credit facilities.
What is the company's outlook for 2025?
Xylem raised its total revenue growth outlook to 4% to 5% and expects organic revenue growth of approximately 4% in 2025. Management noted that the outlook reflects current volatility, including geopolitical, trade, macroeconomic and regulatory uncertainty.
Did Xylem make any acquisitions or divestitures that affect future results?
On July 23, 2025, Xylem completed the acquisition of 100% of EMX Holdings, Inc. and its subsidiary EnviroMix for $108 million in cash, subject to adjustments. EnviroMix will be included in the Water Infrastructure segment, and its initial accounting will be reflected in third-quarter 2025 results. In February 2025, the company also sold the Evoqua Magneto business for $61 million in cash, recording an additional loss of $10 million.
What restructuring activity is underway and what does it cost?
Restructuring and asset impairment charges were $26 million in Q2 2025 and $47 million for the six months. Actions commenced in 2025 carry total expected costs of $77 million, of which $40 million remains to be incurred, and are expected to continue through the end of 2026. Management expects to incur between $60 million and $70 million in restructuring costs for the full year related to these actions.
06—Continue