ALLE · Q2 2026 Earnings

Bullish

Allegion

Reported July 23, 2026

30-second summary

30-second take: Revenue grew 12.7% YoY to $1.152B and adjusted EPS reached $2.40 (+17.6% YoY), with organic growth reaccelerating to 6.9% from Q1's 2.6%. Americas adjusted operating margin came in at 30.1% — essentially in line with management's Q1 "flat YoY" pre-flag (+20bps vs. 29.9% prior year) but a strong sequential rebound from H1 math. Management raised FY2026 adjusted EPS to $8.85–$9.00 and organic growth to 3.5–4.5%. International organic remains negative (-1.2%) but improved 410bps sequentially, suggesting the ERP drag is receding. This is the cleanest print in three quarters and validates the H2 recovery thesis Q1 asked investors to underwrite.

Headline numbers

EPS

Q2 FY2026

$2.40

+8.6% vs est.

Revenue

Q2 FY2026

$1.15B

+12.7% YoY

+2.8% vs est.

Gross margin

Q2 FY2026

44.9%

Operating margin

Q2 FY2026

22.1%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$1.15B	$1.02B	+12.7%	$1.03B	+11.4%
EPS	$2.40	$2.04	+17.6%	$1.80	+33.3%
Gross margin	44.9%	45.6%	-70bps	44.0%	+90bps
Operating margin	22.1%	21.5%	+60bps	18.9%	+320bps

Guidance

Company raises full-year FY2026 adjusted EPS and revenue guidance across both reported and organic metrics, driven by Q2 beat and strong Americas momentum.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted EPS	FY 2026	$8.70 to $8.90	$8.85 to $9.00	+$0.15 to +$0.10 at midpoint	Raised
Reported EPS	FY 2026	$7.95 to $8.15	$7.95 to $8.10	-$0.05 at high end	Lowered
Reported Revenue Growth	FY 2026	6% to 8%	7.5% to 8.5%	+1.5pts at low end, +0.5pts at high end	Raised
Organic Revenue Growth	FY 2026	2% to 4%	3.5% to 4.5%	+1.5pts at low end, +0.5pts at high end	Raised

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Allegion Americas	$0.919B	$0.822B	+11.8%
Allegion International	$0.233B	$0.201B	+16.2%
Americas Adjusted Operating Margin	30.1%	29.9%	—
International Adjusted Operating Margin	12.4%	13.1%	—
Americas Organic Growth	8.9%	4.5%	—
International Organic Growth	-1.2%	-2.2%	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Organic Revenue Growth	6.9%	3.2%	—
Adjusted Operating Margin	24.2%	23.7%	—
Share Repurchases	$120 million (0.9M shares)	—	—
Adjusted EBITDA Margin	25.8%	25.3%	—

Management tone

Narrative arc: Q3 programmatic M&A engine → Q4 quieter reset → Q1 operational stumble with confidence intact → Q2 selective reacceleration with regional divergence.

Two quarters ago management was leaning into a share-gain narrative and calling the M&A pipeline a compounding engine. Q1 pivoted defensively to explain an ERP-driven International shortfall and asked investors for patience on a back-half recovery. This quarter the language pivots again — but selectively. From the press release: "Entering the second half of 2026, we see continued strength in our Americas non-residential business and positive momentum in demand indicators there." The Americas half of the story is back to the assertive Q3 2025 posture; the International framing ("team is focused on execution and cost discipline") is not. This is the first quarter management has explicitly separated the two segments in the forward posture rather than treating "Allegion" as one story.

The Q1 recovery commitment has been substantially delivered rather than deferred. Three months ago management said the ERP shortfall would be recouped "over the remainder of 2026" — a phrasing that hedged Q2 and pushed cadence into H2. The Q2 result — International organic improving 410bps sequentially and segment margin recovering 440bps — is a faster recovery than the Q1 language telegraphed. That matters because Q1's credibility depended on the recovery arriving; delivering it in the very next quarter re-anchors the operating cadence.

The acquisition-related dilution framing from Q1 has quietly reversed. In Q1 management called out DCI as a 30bps full-year margin headwind and reframed 2025 M&A as an incremental cost. This quarter organic growth was raised more sharply than reported growth (both up 100bps at midpoint, but organic starts from a lower base — a 33% relative lift versus 14% for reported), signaling the underlying business, not acquisitions, is doing the incremental work. The M&A drag is now math, not narrative.

Answers to last quarter's watch list

Q2 Americas adjusted operating margin — management pre-flagged "flat YoY, not expansionary." Americas adjusted operating margin came in at 30.1% vs. 29.9% prior year — +20bps YoY, essentially in line with the "flat YoY" pre-flag. The sequential recovery from Q1 was strong, but the YoY read is not a positive surprise versus guidance. Status: Resolved in line

International organic ex-ERP — Q1 was -5.3%, watch for isolation of the ERP drag. Segment-level International organic improved to -1.2%, a 410bps sequential improvement. The press release did not explicitly quantify the residual ERP drag versus underlying European demand, but the magnitude of the sequential recovery (paired with segment margin recovering 440bps sequentially to 12.4%, though still down 70bps YoY from 13.1%) suggests the ERP business is at or near normalized production.

Resolved positively

ERP shortfall recovery cadence — committed to "over the remainder of 2026," watch for Q2 catch-up. The 410bps sequential improvement in International organic in a single quarter is faster than Q1's language implied. Recovery is proceeding ahead of the "over the remainder" cadence rather than back-end loaded into Q3/Q4.

Resolved positively

GAAP/non-GAAP wedge — Q1 introduced a widening spread. The wedge is still widening: adjusted EPS $2.40 vs. GAAP $2.15 is a $0.25 gap in Q2, and the FY GAAP guide was trimmed $0.05 at the high end while adjusted was raised $0.15 at the low end. The wedge is now moving in opposite directions on the same guide update, which is the clearest evidence yet that DCI acquisition-related costs (or restructuring/tax) are structurally elevated. The company didn't itemize the wedge in the release.

Resolved negatively

Organic growth lift toward the midpoint — Q1 was 2.6%, FY 2–4% guide implied acceleration. Q2 organic printed 6.9%, well above the 3% midpoint of the prior guide, and management raised the FY guide to 3.5–4.5%. Q2 alone exceeded even the raised full-year top end.

Resolved positively

Electronics growth rate — Q1's mid-single-digit vs. Q4's double-digit was framed as a comp issue. The press release did not disclose Q2 electronics growth separately from Americas non-residential; Americas overall organic at 8.9% is consistent with electronics reaccelerating, but the specific rate wasn't broken out.

Continue monitoring

What to watch into next quarter

Q3 Americas organic — Q2's 8.9% is the strongest print visible; watch whether the raised FY organic guide of 3.5–4.5% (which implies deceleration from here) is sandbagged or whether Q3 normalizes closer to mid-single digits as management previously framed.

International organic crossing back to positive — Q2 at -1.2% is 410bps improved from Q1; a positive Q3 print would confirm the ERP shortfall is fully behind and underlying European demand is stable.

GAAP/non-GAAP wedge disclosure — the wedge is now widening quarter over quarter with opposite-direction FY guide moves. Watch for reconciliation detail identifying whether DCI purchase accounting, restructuring, or something else is responsible; a durable $0.90+ FY wedge is materially different from a one-year DCI amortization step-up.

Americas adjusted operating margin sustainability — 30.1% is a high-water mark, though only +20bps YoY. Watch whether Q3 holds above 29% or whether Q2's mix was favorable in ways that normalize.

Electronics growth rate disclosure — not broken out in Q2's release; the Q1 deceleration to mid-single digits was framed as a comp issue but this quarter offered no reaffirmation. A specific Q3 disclosure would resolve the platform-adoption question.

FY2026 organic guide credibility — Q2 at 6.9% and H1 running roughly 4.7% blended already sits at the high end of the 3.5–4.5% raised range. Either H2 decelerates sharply or the guide gets raised again on the Q3 call.

Sources

Allegion Q2 2026 press release, filed July 23 2026 — https://www.sec.gov/Archives/edgar/data/1579241/000157924126000026/exhibit991-pressreleasedat.htm

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