Oct 28, 2026 earnings call — Raised full year EPS guidance
Raised full year 2026 adjusted EPS guidance to $3.10-$3.14 per share, midpoint up 15% year-over-year.
Revenue $1.1B (est $1.1B) · EPS $0.77 (est $0.70)
Key quotes
"Third, our Fortive Accelerated Strategy is translating into improving business performance across the portfolio."
"This quarter, we deployed another $300 million towards share repurchases, bringing total capital returned through share repurchases since the launch of new Fortive to $2.3 billion, representing 13% of shares outstanding."
"At Fluke, we expanded our innovation funnel with several new product introductions, including iSee Pro thermal and acoustic imagers, which broaden our reach to early-in-career technicians with intuitive entry-level diagnostic capabilities."
Analyst Q&A 9
AHS margins and growth investments
Q (Julian Mitchell · JPMorgan): He asked why AHS margins have been flat and whether current investments are to raise organic growth or just to defend share. He also asked about drivers and sustainability of IOS industrial and manufacturing growth.
A: Management said AHS is being set up for multi-year growth and margin expansion. They are making deliberate, time-bounded investments this year in install base, commercial capacity, and innovation. For IOS they said the industrial strength is broad-based across geos, brands, product categories, price and volume, which supports sustainability.
"The work we're doing this year is to set up AHS for a great run of multi-year acceleration in growth and margin expansion." — Olumide Soroye (CEO)
Data center needs and hospital budgets
Q (Scott Davis · Melius): He asked if serving data centers needs different products, service, or sales effort. He also asked what hospitals are saying about capital spending and replacement cycles.
A: They said they participate in both build-out and ongoing operations for data centers and already have a broad portfolio of market-leading solutions. The team is ramping innovation for hyperscaler needs, gave CertiFiber Max as an example, and is adding specialized commercial capacity. On hospitals they said U.S. procedure volumes remain healthy, capital spending trends are more supportive than last year but still somewhat constrained, and outside the U.S. is strong.
"The exciting work that our team's doing now is really ramping up the pace of innovation to come up with new products that solve problems that are new, for these hyperscaler data centers that didn't exist with conventional data centers." — Olumide Soroye (CEO)
Innovation and recurring revenue trends
Q (Alexander Virgo · Evercore): He asked how much innovation is contributing to organic growth in IOS and for more color on recurring revenue growth.
A: They said both recurring and non-recurring revenue grew strongly this quarter, and non-recurring actually grew faster driven by Fluke. They noted recurring revenue is a durability indicator but many hardware businesses show durable demand through brand and replacement cycles. Innovation shows up as pricing power, volume, and customer retention across brands.
"Overall, strong growth on both sides, but just interesting that the non-recurring actually grew faster in this quarter." — Olumide Soroye (CEO)
Q4 growth drivers and AHS pricing
Q (Quinn Fredrickson · Baird): He asked what is driving the deceleration in 4Q core growth and whether the higher AHS price contribution is sustainable.
A: They said full-year core growth is expected just north of 5% and the primary Q4 normalization is the days factor. They quantified the days impact as 150 basis points on a consolidated basis, $50 million-$20 million on a reported basis, with roughly 100 basis points to IOS and about 300 basis points to AHS. On pricing they said a couple of hundred basis points, give or take, is a good marker going forward.
"As you called out, there are the days factor, which is the primary sort of normalization in the quarter." — Mark Okerstrom (CFO)
Data center revenue and sales investments
Q (Brandon Knutson · Morgan Stanley): He asked for examples showing ROI from sales force and product investments for data centers and what percent of revenue is from data centers. He also asked if the multi-site retailer mix headwind in IOS is growing.
A: They said data center revenue is still low single digits of Fortive revenue and they are still very early. Investments include a data-center-focused innovation roadmap, deep discovery with hyperscalers, new Fluke products, and added commercial coverage globally, and they are supply constrained on talent. On the IOS mix item Mark said the ServiceChannel merchant-of-record arrangements gross up the P&L but the dynamic was broadly consistent this quarter and not expected to increase going forward.
"today, if you estimate how much of overall Fortive revenues is from data center ecosystem, it is still low single digits that we are talking about." — Olumide Soroye (CEO)
Inflation effects and software updates
Q (Nigel Coe · Wolfe): He asked how inflation is affecting margins, especially memory, and asked for an update on FAL software and AHS software including AI and Accruent.
A: They said inflation had increased impact this quarter but price cost was strongly positive and teams offset inflation with value engineering, procurement, and supply chain actions. They saw particular inflation on electrical and electronic componentry and higher freight, while modest gross margin contraction came from mix and stronger consumables growth in Asia and Latin America. On software they said FAL (ServiceChannel and Gordian) and healthcare software are performing well, Accruent is improving, and AI features are being adopted at ServiceChannel and Provation.
"We did see particular inflation this quarter on electrical and electronic componentry." — Mark Okerstrom (CFO)
Components used and Q4 headwinds
Q (Scott Graham · Seaport Research Partners): He asked whether they buy mostly memory or logic in components. He also asked if the 100 basis point AHS headwind applies to IOS for Q4.
A: They said the bill of material has a little bit of logic and some memory, but not high-bandwidth memory, and they manage supply by multiple sources and targeted inventory. They said the EBITDA margin headwind was predominantly in AHS with a little in IOS, and on a full-year basis they still expect Adjusted EBITDA margin expansion in the 50-100 basis point range around the midpoint.
"The bill of material has a little bit of logic in it." — Olumide Soroye (CEO)
Fortive Accelerated progress and regions
Q (Andy Kaplowitz · Citi): He asked if Fortive is ahead of plan on innovation and commercialization and whether innovation contribution will be larger in 2027. He also asked for regional IOS demand color including China.
A: They said tracking just north of 5% core growth for the full year suggests they are ahead of the 3%-4% medium-term framework for 2026 and 2027. They credited both stronger markets this year and ramping innovation and said conviction is growing that the "plus plus" for 2028 and beyond is available. Regionally they said North America is fastest, Europe bounced back, Middle East small but strong, China remains challenged and choppy while India and rest of APAC helped compensate.
"I think that's kind of a fair indication that we're ahead of what we expected in terms of the 3%-4% 2026, 2027 medium-term financial framework." — Olumide Soroye (CEO)
M&A vs buybacks and AHS bolt-ons
Q (Andrew Buscaglia · BNP Paribas): He asked what return hurdles would make M&A more attractive than buybacks and whether M&A is needed to boost AHS organic growth.
A: They said they have preferred repurchases recently but view M&A and share repurchase as interchangeable based on relative returns. They revamped the M&A engine, seek deals with return on invested capital ahead of WACC, and compare free cash flow per share and EPS accretion versus buybacks. For AHS they said organic innovation and commercial work is primary and bolt-on M&A is a targeted, surgical sweetener, citing UV Smart as an example.
"We do view M&A and share repurchase as interchangeable based upon relative returns." — Mark Okerstrom (CFO)