DE · Q3 2026 Earnings

Cautious

Deere & Company

Reported August 20, 2026

30-second summary

Q3 FY2026 revenue rose 5% YoY to $12.61B with GAAP EPS of $5.10, and management raised the FY2026 net income floor to $4.75–5.00B (from $4.50–5.00B) — a $250M floor lift and $125M midpoint raise that answers last quarter's watch item positively but reveals a sharper problem underneath. Newly-disclosed FY segment sales guides frame the shape of the year: Production & Precision Ag down ~10% (vs. -6% nine-month actual, implying a materially worse Q4), Small Ag & Turf up ~15%, and Construction & Forestry up ~20%. The diversified portfolio is doing exactly what management said it would; the large-ag trough is deepening on the way through it.

Headline numbers

EPS

Q3 FY2026

$5.10

Revenue

Q3 FY2026

$12.61B

+5.0% YoY

Gross margin

Q3 FY2026

27.8%

Operating margin

Q3 FY2026

14.7%

Key financials

Q3 FY2026

Metric	Q3 FY2026	Q3 FY2025	YoY	Q2 FY2026	QoQ
Revenue	$12.61B	$12.02B	+4.9%	$13.37B	-5.7%
EPS	$5.10	$4.75	+7.4%	$6.55	-22.1%
Gross margin	27.8%	—	—	29.8%	-200bps
Operating margin	14.7%	13.0%	+166bps	16.7%	-200bps

Guidance

Deere raised FY2026 net income guidance low-end by $250M to $4.75B–$5.0B, with new segment-level full-year guidance indicating Production Ag deterioration (~–10% sales) offset by Construction & Forestry strength (~+20% sales).

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

New guidance

Metric	Period	Guide	YoY
Production & Precision Ag Net Sales	FY 2026	Down ~10%	—
Small Ag & Turf Net Sales	FY 2026	Up ~15%	—
Construction & Forestry Net Sales	FY 2026	Up ~20%	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Net Income	FY 2026	$4.5B–$5.0B	$4.75B–$5.0B	Low end raised $250M (+5.6%)	Raised
Financial Services Net Income	FY 2026	~$860M	~$870M	+$10M (+1.2%)	Raised

Segment KPIs

Q3 FY2026

Segment	Q3 FY2026	Q3 FY2025	YoY
Production & Precision Agriculture	$3.998B	$4.273B	-6.4%
Small Agriculture & Turf	$3.383B	$3.025B	+11.8%
Construction & Forestry	$3.618B	$3.059B	+18.3%
Financial Services	$1.371B	$1.418B	-3.3%
Financial Services Net Income	$219M	—	—

Other KPIs

Q3 FY2026

Segment	Q3 FY2026	Q3 FY2025	YoY
Production & Precision Agriculture Operating Margin	13.2%	13.6%	—
Small Agriculture & Turf Operating Margin	18.4%	16.0%	—
Construction & Forestry Operating Margin	12.1%	7.7%	—
Tariff Recoveries Q3	$110M	—	—
Net Sales & Revenues YoY Growth	5.0%	—	—
Nine Months Net Sales & Revenues YoY Growth	7.0%	—	—
FY2026 Net Income Guidance	$4.75B - $5.00B	—	—

Management tone

Cycle-bottom confidence → market volatility acknowledgment → diversified-portfolio defense → cycle-bottom confirmation with narrowed floor.

No transcript was available for this quarter; tone read is anchored in press-release qualitative statements and the guidance actions.

Three quarters ago management framed 2026 as "the bottom of the cycle." Q1 pivoted to "2026 represents the bottom of the current cycle and provides a strong foundation for accelerated growth." Q2 softened to a defense of "the strength of our diversified portfolio." Q3 restates the anchor sharply: "we continue to believe 2026 will mark the bottom of the current ag equipment cycle." The rhetorical arc has moved from prospective to defensive to reaffirmative — management is now willing to name the trough again because the floor lift and the C&F/S&T momentum give them something concrete to point at, even as PPA gets a worse sales guide.

The qualitative anchor list is the tell: "early order program trends, improving used-equipment inventories, and increasing customer adoption of our advanced technologies give us confidence that Deere is well positioned for long-term value creation." All three cited drivers are forward-looking, not current-quarter — management is asking investors to look past a worse-than-expected large ag Q4 to the recovery. The used-equipment inventory line is new emphasis; in Q4 FY2025 it was flagged as "priority number one" without quantification, and by Q2 FY2026 management had disclosed a mid-teens reduction in MY22/MY23 used 8R tractor inventory. Naming used inventory as a foundation for confidence — rather than an unresolved problem — is a small but meaningful shift.

The Q3 raise is disproportionately about C&F and S&T durability, not about a large ag inflection. Two quarters ago management chose to reaffirm the enterprise range while raising C&F specifically; this quarter management chose to raise the enterprise floor while cutting PPA sales guidance to "down ~10%." The through-line: management's confidence is in the diversified portfolio's ability to defend $4.75B, not in the large ag cycle bottoming imminently. That is a more restrained thesis than the language suggests.

Answers to last quarter's watch list

PPA Q3 revenue trajectory versus the FY "down 5–10%" guide. PPA revenue printed -6% YoY in Q3 — inside the prior FY band. But the new FY sales guide is "down ~10%," which implies Q4 PPA revenue lands meaningfully below the Q4 FY2025 comp of $4.74B. Q3 margin held at 13.2% (top of the 11–13% band). Volume trajectory continues to deteriorate; margin discipline is real. Status: Resolved negatively (on the sales trajectory question).

Whether the FY2026 net income guide gets raised on the Q3 print. Yes — the floor lifted $250M to $4.75B, midpoint up $125M (+2.6%). The ceiling held at $5.00B for a third consecutive quarter, which either reads as sandbagging on H2 upside or as a genuine cap management sees but won't yet reveal. The floor lift validates the "cycle-bottom is firming" thesis; the unchanged ceiling qualifies it.

Resolved positively

C&F operating margin ex-IEEPA refund: holding inside the raised 10–12% band. C&F printed 12.1% in Q3 — the top of the raised band — without the refund tailwind that flattered Q2's 14.8%. Revenue +18% YoY (versus +29% in Q2) also decelerated but tracks the FY +20% guide. The Q2 raise is durable on standalone quarterly economics.

Resolved positively

Brazil ag demand: deepening drag or stabilization. The press release does not provide a quantified Brazil update. The South America industry guide was cut to down ~15% in Q2; whether that further worsened is not disclosed on the print. Status: Not resolved (company didn't disclose).

Whether the ~$1.2B gross tariff figure holds for a third consecutive quarter. Q3 tariff recoveries of $110M were disclosed, bringing cumulative FY recoveries to ~$382M (including Q2's $272M IEEPA refund). The press release does not restate the underlying ~$1.2B gross exposure. Direction of travel is favorable — recoveries continue — but the gross figure itself is not confirmed.

Continue monitoring

Precision ag engagement metrics. The press release does not disclose updated MAU, engaged-acres, or JDLink Boost Kit figures. The Q2 datapoints (~440,000 MAU, engaged acres +~10% YoY, 12,500+ Boost Kits since H2 2024) remain the last quantifications available.

Continue monitoring

What to watch into next quarter

Q4 PPA revenue landing at "down ~10%" implies a materially worse quarter versus the Q4 FY2025 comp of $4.74B. The specific print — and whether Q4 PPA operating margin still holds inside the 11–13% band on that volume degradation — is the cleanest test of whether the FY guide floor holds structurally or was set with buffer that Q4 will consume.

Whether the FY2026 net income ceiling ($5.00B) gets raised on the Q4 print. The ceiling has held for three consecutive quarters while the floor has stepped up twice. A Q4 raise to the ceiling would signal the cycle bottom is firming further; another reaffirm at $5.00B into the initial FY2027 disclosure would signal that management sees the ceiling as a real limit rather than sandbagged.

Initial FY2027 net income and segment framework on the Q4 call. Q4 is when Deere sets the following-year baseline. Whether FY2027 is guided above the FY2025 actual of $5.03B — which would confirm the "bottom-of-cycle" thesis by putting a number on the recovery — is the single most important disclosure of the next print.

Cumulative tariff recovery run-rate. Q2 IEEPA refund $272M plus Q3 $110M = ~$382M year-to-date recoveries. Whether Q4 delivers another disclosure, and whether management provides a net FY tariff figure (gross ~$1.2B minus recoveries), determines the durable margin base heading into FY2027.

PPA operating margin recovery path in FY2027 disclosure. FY2026 PPA margin band of 11–13% is well below the 15.5–17% band that anchored FY2025's initial guide. Any FY2027 PPA margin band that lifts back toward the mid-teens would confirm the trough thesis; a repeated 11–13% would signal a structural reset.

Financial Services annualized run-rate vs. the ~$870M FY guide. Q3 $219M annualizes to ~$920M; a further raise in Q4 is likely, and the magnitude will signal whether the portfolio's earnings power on spreads and provisioning is genuinely improving or just outperforming a conservative bar.

Sources

Deere & Company Q3 FY2026 press release, filed with the SEC 2026-08-20: https://www.sec.gov/Archives/edgar/data/315189/000110465926098904/de-20260820xex99d1.htm
Tapebrief DE Q2 FY2026, Q1 FY2026, Q4 FY2025, and Q3 FY2025 briefs for cross-quarter guidance trajectory, tariff arc, and segment margin baselines.

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