Snapshot
Fortive Corp reported $2.14B of revenue in Q1 2026, up 7.7% year over year, with diluted EPS of $0.44 and an operating margin of 9.0%.
- Revenue
- $2.14B
- YoY growth
- +7.7%
- Diluted EPS
- $0.44
- Operating margin
- 9.0%
What management said
- •Our statements on period-to-period increases or decreases refer to year-over-year comparisons unless otherwise specified, and our results and outlook discussed today are on a continuing operations basis.
- •On a consolidated basis, we delivered core revenue growth of just over 5%, adjusted EBITDA growth of 13%, and adjusted EPS growth of over 25%.
- •Please note that our core revenue growth in the quarter was aided by approximately 150 basis points of tailwind from additional year-over-year selling days in the quarter.
- •Second, we continue our disciplined capital allocation approach with a relentless focus on optimizing shareholder returns over the medium to long term.
- •Lastly, we are reaffirming our full-year adjusted EPS guidance range of $2.90-$3.00.
- •Starting with the first pillar, delivering faster profitable organic growth, powered by our Fortive Business System amplified.
- •This quarter, we continued to increase our innovation velocity with several notable hardware product milestones and AI-enhanced product launches.
- •On the commercial side, we continue to focus on faster-growing end markets and regions where we've made deliberate, targeted investments to capture growth.
- •At Fluke, we continue to invest in commercial expertise across high-growth verticals such as data centers, defense, and distributed energy, and we're seeing solid early traction from our focused efforts.
- •We're also advancing ASP's growth strategies in EMEA with the European commercial launch of STERRAD ULTRA GI.
- •On our recurring customer value initiatives, we continued to make progress on driving deeper customer lifecycle engagement and improving revenue durability.
- •In Q1, recurring revenue again grew faster than consolidated revenue in both segments.
What went well
- •Consolidated core revenue grew just over 5%, adjusted EBITDA grew 13%, and adjusted EPS grew over 25%, marking the third consecutive quarter of double-digit adjusted EPS growth.
- •Both segments delivered solid performance with price and volume growth, and recurring revenue again grew faster than consolidated revenue in both segments.
- •The company completed approximately $500 million of share repurchases in Q1, reducing share count by just over 10% since the July 2025 spin-off.
- •Fluke's CertiFiber Max data center testing solution drove customer response that significantly exceeded expectations and is pulling through other Fluke products into data center applications.
- •Adjusted EBITDA margin expanded approximately 140 basis points year-over-year to just over 29%, and the company generated $194 million of free cash flow with trailing 12-month conversion above 100%.
- •Order growth outpaced revenue growth and was broad-based across both segments, including Fluke, FAL, ISC, and ASP.
What went wrong
- •Adjusted gross margin declined about 100 basis points year-over-year, driven mostly by the net impact of tariffs introduced last year, with the headwind expected to persist into the third quarter.
- •Hospital capital spending pressures continued to persist, with hospitals remaining cautious about discretionary-timing capital equipment, particularly in the U.S.
- •Reported core revenue growth was aided by roughly 150 basis points of tailwind from additional year-over-year selling days, so normalized growth was lower than headline.
- •Gross debt to adjusted EBITDA rose modestly to 2.8x, reflecting increased commercial paper used to fund share repurchases.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Adjusted EPS (full-year) | FY2026 | $2.90-$3.00 | $2.90-$3.00, trending toward the upper half | Reaffirmed; now expected toward upper half of range |
| Core revenue growth | FY2026 | 2%-3% | Tracking toward the higher end (top half) of 2%-3% | Tracking to high end |
| Adjusted EBITDA margin expansion | FY2026 and FY2027 (each year) | 50-100 bps per year | 50-100 bps per year; less expansion in back half of 2026 than first half | Reaffirmed framework |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Consolidated revenue | Up almost 8% reported, just over 5% core | Price and volume growth at both segments plus an approximately 150 bps tailwind from additional selling days; strong software revenue growth. |
| Adjusted EBITDA | Up about 13% to $314 million | Operating leverage, structural cost savings, and favorable FX, partially offset by continued innovation and commercial growth investments. |
| Intelligent Operating Solutions (IOS) revenue | Up about 8% reported, about 5% core | Price and volume growth across professional instrumentation, facility and asset lifecycle solutions, and gas detection; roughly 100 bps benefit from additional selling days. |
| IOS adjusted EBITDA | Up 8% to $255 million | Operating leverage, structural cost savings, and favorable FX, partially offset by targeted growth investments. |
| Advanced Healthcare Solutions (AHS) revenue | Up approximately 8% reported, approximately 6% core, to $326 million | Solid demand for healthcare consumables, services, and software in North America; roughly 300 bps benefit from additional selling days; modest improvement in low temperature sterilization capital demand. |
| AHS adjusted EBITDA | Up approximately 18% to $84 million | Operating leverage, structural cost savings, and favorable FX, partially offset by targeted growth investments; margin expanded about 200 bps to just under 26%. |
| Adjusted EPS | Up over 25% to $0.70 | Growth in adjusted EBITDA and the positive year-over-year impact of share repurchases. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Fortive Accelerated strategy execution | — | Third consecutive quarter of performance ahead of expectations as new Fortive; confidence building across all three pillars. | rising |
| Data center opportunity at Fluke | CertiFiber Max launched late Q4 | Customer response continues to exceed expectations, pulling through other Fluke products; durable operations and maintenance opportunity ahead. | rising |
| AI-powered product innovation | — | AI deployed on proprietary data-rich software (ServiceChannel AI, Provation Mira Documentation Assist) driving faster growth; software revenue growing ahead of overall business. | rising |
| Tariff impact on gross margin | Headwind seen last quarter | Continued net tariff headwind to gross margins, fully countermeasured to the bottom line; expected to dissipate by Q4 as countermeasures lap. | steady |
| Disciplined capital allocation and bolt-on M&A | ~$1.8B repurchased since spin; M&A engine revamped | Another ~$500M repurchased in Q1; bolt-on team rebuilt, Corbin Walburger joining to lead corporate development, building pipeline. | rising |
| Hospital capital equipment demand (AHS) | Q2 2025 was toughest quarter on reimbursement pressure | Modest sequential improvement since Q2 2025; hospitals still cautious on discretionary-timing capital, but funnel strong. | rising |
Q&A summary
How should Q2 core growth and margins compare to Q1 given the selling-days impact and easier comp?
Management said Q2 lacks the selling-days benefit but has a slightly easier comp, with FX plus M&A adding about 150 bps; momentum is building across both segments with IOS slightly ahead of AHS, and these trends are expected to continue through the full year.
How did the FAL portfolio perform and how is AI a positive rather than a negative there?
Management said AI deployed on FAL's mission-critical proprietary data-rich software is driving faster growth; FAL grew faster than the IOS core growth of 5.2% with all brands contributing and ServiceChannel leading, especially in North America, and ARR, GDR and NDR metrics are all healthy.
What is the data center opportunity for Fluke and how do new technologies like optical switching position it?
Management said Fluke already participates broadly in data center tooling (power quality, high-voltage diagnostics, fiber testing, calibration), that new technologies like optical switching will create additional demand, and that CertiFiber Max is pulling through Fluke's full suite while the team works to get specced into hyperscaler maintenance toolsets; the magnitude is still ahead.
What are price/cost expectations for the year and the ability to offset tariffs?
Management said price cost was north of one in Q1 and is expected to persist, with FBS driving value engineering and cost efficiencies; tariffs remain a gross margin headwind but are fully countermeasured to the bottom line, persisting into Q3 and dissipating as countermeasures lap in Q4.
Why does guidance imply earnings moderating in a quarter, and what is needed to raise guidance?
Management said it is early in the year with one quarter completed, so they don't want to get ahead of themselves; the commentary that full-year adjusted EPS is trending toward the upper half of the range reflects their confidence in the momentum they see.
What is the M&A outlook now that the company has its post-separation footing?
Management said capital allocation is a critical pillar, the M&A approach has been revamped toward bolt-ons with rigorous criteria and a rebuilt team; two bolt-ons executed in the back half are tracking well, Corbin Walburger is joining to lead global corporate development, and they are building pipeline to act proactively when M&A becomes the best use of capital.