Vertiv Holdings VRT reported first-quarter 2025 non-GAAP earnings of 64 cents per share, which beat the Zacks Consensus Estimate by 3.23%. The figure jumped 48.8% year over year.

Net sales increased 24.2% year over year to $2.04 billion, which surpassed the Zacks Consensus Estimate by 6.26%. Net sales on an organic basis increased 25.3% year over year.

VRT’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 10.42%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

VRT Prospects Ride on Strong Backlog

Organic orders (excluding foreign exchange) rose 20% year over year, and the book-to-bill ratio was roughly 1.4x in the first quarter. The backlog at the end of the first quarter was $7.9 billion. Backlog was 10%, higher than the end of 2024 and up 25% from the year-ago quarter.

Product revenues (which accounted for 81% of total revenues) jumped 29.9% year over year to $1.65 billion. Service revenues (19% of total revenues) grew 4.7% year over year to $386.3 million.

Americas revenues increased 28.1% year over year (28.8% organic) to $1.19 billion and accounted for 58.2% of total revenues. Product revenues climbed 33.8% year over year (34.4% organic) to $958.3 million. Service & spares revenues increased 8.7% (9.6% organic) to $227 million in the reported quarter.

Asia and Pacific (APAC) revenues increased 34.6% year over year (36.4% organic) to $447.2 million and accounted for 22% of total revenues. Product revenues increased 49% year over year (50.7% organic) to $333.8 million. Service & spares revenues grew 4.7% (6.7% organic) to $113.4 million in the reported quarter.

Europe, Middle East, and Africa (EMEA) revenues increased 5.7% year over year (7.2% organic) to $403.5 million and accounted for 19.8% of total revenues. Product revenues increased 7.3% year over year (8.4% organic) to $319 million. Service & spares revenues remained flat (2.7% organic) at $84.5 million in the first quarter of 2025.

VRT’s Operating Details

Selling, general and administrative (SG&A) expenses increased 10.3% year over year to $346.3 million. As a percentage of sales, SG&A expenses decreased 210 basis points (bps) year over year to 17%.

Adjusted operating profit jumped 35.4% year over year to $336.7 million. The first-quarter non-GAAP operating margin was 16.5%, up 140 bps year over year.

Americas’ adjusted operating profit surged 38.3% year over year to $259.7 million. EMEA’s adjusted operating profit jumped 11.9% to $78.7 million. APAC’s adjusted operating profit surged 50.3% year over year to $45.7 million.

VRT’s Balance Sheet Remains Strong

As of March 31, 2025, cash, cash equivalents and marketable securities totaled $1.47 billion, compared with $1.23 billion as of Dec. 31, 2024.

Long-term debt at the end of the first quarter was $2.904 billion, down from $2.907 billion reported in the previous quarter.

Cash flow from operating activities was $303.3 million for the reported quarter, down from $425.2 million in the prior quarter. Free cash flow was $265 million for the first quarter.

VRT Raises 2025 Guidance

For 2025, revenues are now expected between $9.325 billion and $9.575 billion. Organic net sales growth is expected between 16.5% and 19.5%.

Vertiv expects adjusted operating profit between $1.885 billion and $1.985 billion. Operating margin is expected in the 19.75-21.25% range.

VRT expects 2025 non-GAAP earnings per share between $3.45 and $3.65. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $3.47 per share, suggesting year-over-year growth of 21.75%.

Free cash flow for 2025 is expected to be between $1.25 billion and $1.35 billion.

For second-quarter 2025, revenues are expected to be between $2.325 billion and $2.375 billion. Organic net sales are expected to increase in the 19% to 23% range.

Vertiv expects adjusted operating profit between $420 million and $450 million. Operating margin is expected in the 18-19% range.

VRT expects second-quarter 2025 non-GAAP earnings per share between 77 cents and 85 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at 87 cents per share, suggesting year-over-year growth of 29.85%.

Zacks Rank

Currently, Vertiv carries a Zacks Rank #3 (Hold). 

StoneCo STNE, Baidu BIDU and Qorvo QRVO are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. While StoneCo sports a Zacks Rank #1 (Strong Buy), Baidu and Qorvo carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

StoneCo shares have appreciated 65.8% year to date. StoneCo is set to report its first-quarter 2025 results on May 8.

Baidu shares are up 4.7% year to date. Baidu is slated to report its first-quarter 2025 results on May 21.

Qorvo shares have lost 10.7%, year to date. Qorvo is scheduled to report its fourth-quarter fiscal 2025 results on April 29.

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