Otis’ first quarter was met with a negative market reaction, as shares declined after the company’s organic revenue growth missed expectations despite headline revenue coming in ahead of Wall Street estimates. Management pointed to continued strength in its Service segment, particularly in maintenance and repair, which helped offset weakness in new equipment sales—especially in Asia and China. CEO Judith Marks highlighted robust modernization orders and a solid backlog, but acknowledged “short-term profit pressure in our service business,” attributing this to increased investments for growth, negative portfolio mix, and inflation-related delays.
Is now the time to buy OTIS? Find out in our full research report (it’s free for active Edge members).
Otis (OTIS) Q1 CY2026 Highlights:
- Revenue: $3.57 billion vs analyst estimates of $3.50 billion (6.4% year-on-year growth, 1.7% beat)
- Adjusted EPS: $0.89 vs analyst estimates of $0.90 (in line)
- Adjusted EBITDA: $591 million vs analyst estimates of $589.5 million (16.6% margin, in line)
- The company slightly lifted its revenue guidance for the full year to $15.2 billion at the midpoint from $15.15 billion
- Adjusted EPS guidance for the full year is $4.22 at the midpoint, missing analyst estimates by 0.6%
- Operating Margin: 15.1%, up from 12.3% in the same quarter last year
- Organic Revenue rose 1% year on year (miss)
- Market Capitalization: $29.68 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Otis’s Q1 Earnings Call
- Joseph O'Dea (Wells Fargo) questioned the path to service margin recovery. CFO Cristina Mendez described sequential improvement, projecting a return to margin expansion in the fourth quarter as cost actions and pricing flow through.
- Robert Wertheimer (Melius Research) asked about underperformance in high-value service markets, particularly EMEA. CEO Judith Marks attributed the challenge to execution, emphasizing renewed focus on retention and portfolio growth in the region.
- Jeffrey Sprague (Vertical Research) inquired about the strategic rationale behind the 'we maintain' acquisition and its differentiation. Marks stressed the unique AI-driven service model and integration with Otis ONE to access non-Otis units.
- Nigel Coe (Wolfe Research) sought clarity on the drivers of service margin improvement, especially micro-pricing and cost reductions. Management detailed the margin bridge and expressed confidence in targeted pricing and selective cost takeouts.
- Julian Mitchell (Barclays) pressed on service margin headwinds, especially in China and the U.S. Marks and Mendez underscored the long-term upside from pricing initiatives and the strong modernization pipeline.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be tracking (1) the pace of service margin recovery as new investments and pricing initiatives take hold, (2) execution on modernization and repair backlog conversion, and (3) stabilization in key markets outside China, including improvement in EMEA as Middle East disruptions moderate. Progress in digital platform integration and the impact of the ‘we maintain’ acquisition will also be closely watched.
Otis currently trades at $78.33, in line with $78.87 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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