Data center products and services company Vertiv (NYSE:VRT) announced better-than-expected revenue in Q3 CY2025, with sales up 29% year on year to $2.68 billion. Guidance for next quarter’s revenue was better than expected at $2.85 billion at the midpoint, 0.8% above analysts’ estimates. Its non-GAAP profit of $1.24 per share was 25% above analysts’ consensus estimates.
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Vertiv (VRT) Q3 CY2025 Highlights:
- Revenue: $2.68 billion vs analyst estimates of $2.59 billion (29% year-on-year growth, 3.4% beat)
- Adjusted EPS: $1.24 vs analyst estimates of $0.99 (25% beat)
- Adjusted EBITDA: $620.1 million vs analyst estimates of $543.7 million (23.2% margin, 14% beat)
- Revenue Guidance for Q4 CY2025 is $2.85 billion at the midpoint, roughly in line with what analysts were expecting
- Management raised its full-year Adjusted EPS guidance to $4.10 at the midpoint, a 7.9% increase
- Operating Margin: 19.3%, up from 17.9% in the same quarter last year
- Organic Revenue rose 28.4% year on year vs analyst estimates of 24.1% growth (431.2 basis point beat)
- Market Capitalization: $65.59 billion
StockStory’s Take
Vertiv’s third quarter CY2025 results surpassed Wall Street expectations, yet the market responded negatively. Management attributed outperformance to accelerated demand for data center infrastructure—particularly in the Americas and Asia-Pacific—driven by rapid adoption of artificial intelligence (AI) workloads. CEO Giordano Albertazzi highlighted strong order momentum and a growing backlog, noting that Vertiv’s technology and service capabilities positioned the company as a preferred partner for complex deployments. EMEA performance lagged due to ongoing power and regulatory constraints, and management acknowledged continued operational challenges related to tariffs and supply chain adjustments.
Looking forward, Vertiv’s guidance is supported by a substantial backlog and continued investment in manufacturing, R&D, and services to meet robust AI-driven data center demand. Management plans further capacity expansion, particularly in the Americas, and expects to materially offset current tariff impacts by the end of the next quarter. Albertazzi emphasized, “We are accelerating our funding for the system layer, connecting all critical infrastructure elements...as data centers are becoming increasingly complex.” Risks include ongoing tariff volatility and delayed recovery in Europe, but management expects margin expansion through operating leverage and process improvements.
Key Insights from Management’s Remarks
Management pointed to surging AI-related data center demand and operational execution in the Americas as key contributors to the quarter, while ongoing tariff challenges and slower EMEA growth weighed on results. The Americas and APAC regions experienced the most robust growth, but the company continues to navigate macroeconomic, regulatory, and supply chain hurdles, particularly in EMEA.
• The surge in AI infrastructure projects drove significant growth in the Americas (up 43%) and Asia-Pacific (up 21%). Management cited both new and existing customers ramping deployments, reflecting Vertiv’s technology and execution leadership. • Vertiv’s expanding services portfolio—including advanced diagnostics, predictive analytics, and field engineering—was described as a "superpower" by Albertazzi, supporting recurring revenue and customer retention. While services growth lags equipment in hyper-growth periods, management expects it to accelerate as installed bases mature. • The company’s backlog increased to $9.5 billion, up about 30% year on year, giving Vertiv solid visibility into future quarters. Management stressed that the shape of the backlog remains consistent, indicating demand is not being artificially extended. • Tariffs remained a significant headwind, but management detailed comprehensive mitigation strategies, including pricing actions and supply chain reconfiguration, aiming to materially offset impacts as they exit the next quarter. • EMEA sales and margins were constrained by power availability and regulatory issues; a restructuring program is underway to better position the region for anticipated AI-driven recovery in 2026. Management expects operating leverage to improve as volumes return.
Drivers of Future Performance
Vertiv’s outlook is anchored by sustained AI-driven demand, ongoing investments in capacity and innovation, and efforts to manage tariff exposure and regional challenges. The company’s ability to navigate supply chain dynamics, accelerate manufacturing and engineering spending, and execute on restructuring programs will be pivotal for continued outperformance.
• Capacity expansion and R&D investment: Management is accelerating investments in both manufacturing capacity—especially in North America—and engineering, with R&D spending expected to grow over 20% next year. This is intended to keep Vertiv ahead of evolving AI data center requirements and maintain a competitive edge in system-level solutions. • Tariff mitigation and supply chain optimization: Ongoing efforts to offset tariff costs include proactive pricing adjustments and supply chain changes. Management expects these actions to materially reduce tariff-related headwinds by the end of next quarter, but acknowledges continued volatility as a risk. • EMEA recovery and restructuring: Vertiv is implementing regional restructuring to address EMEA’s challenges, aiming for improved cost structure and readiness for a projected AI infrastructure demand rebound in 2026. The timing of recovery remains uncertain, but management is confident in the underlying market need for in-region AI capacity.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor the pace of AI-driven data center order conversion into revenue, execution of tariff mitigation plans and supply chain adjustments, and the progress of EMEA restructuring and market recovery. Increases in R&D and manufacturing capacity, as well as developments in Vertiv’s service offerings, will also be key indicators of long-term positioning. The interplay between backlog conversion, margin performance, and regional performance will be critical for assessing Vertiv’s trajectory.
Vertiv currently trades at $172.50, down from $174.99 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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