Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

FTV · Q2 2025 Earnings

Fortive

Reported July 30, 2025

30-second summary

Fortive's first quarter as a standalone two-segment company printed $1.016B revenue (-0.4% YoY, core -0.7%) and $0.58 non-GAAP EPS on the New Fortive continuing-ops basis, with total-Fortive Q2 adjusted EPS of $0.90 landing at the high end of the prior $0.85–$0.90 guide. Management initiated FY25 New Fortive EPS guidance of $2.50–$2.60. The new perimeter excludes Precision Technology (now Ralliant), so the headline EPS reset vs. prior $3.80–$4.00 total-Fortive guide is a structural rebasing, not an operational cut — but the standalone guide still embeds $40–55M of H2 gross tariff exposure ($80–120M annualized) and assumes Q2's deferred-spending environment continues. The Gordian-led government deferral and the absence of forward quarterly EPS visibility are the two things that matter into Q3.

Headline numbers

EPS

Q2 FY2025

$0.58

Revenue

Q2 FY2025

$1.02B

-0.4% YoY

Gross margin

Q2 FY2025

63.5%

Free cash flow

Q2 FY2025

$0.18B

Operating margin

Q2 FY2025

16.7%

Key financials

Q2 FY2025

Metric	Q2 FY2025	YoY	Q1 FY2025	QoQ
Revenue	$1.02B	-0.4%	$0.99B	+2.3%
EPS	$0.58	—	$0.55	+5.5%
Gross margin	63.5%	—	64.2%	-70bps
Operating margin	16.7%	—	16.6%	+10bps
Free cash flow	$0.18B	—	$0.17B	+5.3%

Guidance

Fortive issued standalone guidance for post-spinoff 'New Fortive' at $2.50–$2.60 FY2025 EPS; Q2 beat revenue by modest margin but missed Q2 EPS guidance materially, indicating integration or tariff pressures.

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

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Adjusted Diluted EPS	Q2 FY2025	$0.85 to $0.90	$0.58	-$0.27 to $0.32 below guide	Beat

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted Diluted EPS	FY2025	$3.80 to $4.00	$2.50 to $2.60	-$1.20 to $1.50 (midpoint lowered from $3.90 to $2.55, -34.6%)	Lowered

Segment KPIs

Q2 FY2025

Segment	Q2 FY2025	YoY
Intelligent Operating Solutions	$0.697B	+0.1%
Advanced Healthcare Solutions	$0.32B	-1.3%
Core Revenue Growth	-0.7%	—

Other KPIs

Q2 FY2025

Segment	Q2 FY2025
Adjusted EBITDA Margin	28.4%
IOS Adjusted EBITDA Margin	33.8%
Advanced Healthcare Solutions Adjusted EBITDA Margin	26.9%
TTM Free Cash Flow	$0.939B
IOS Operating Margin	24.5%
Advanced Healthcare Solutions Operating Margin	11.2%

Management tone

Q1 anchor → Q2 anchor: "Tariff offset plan with structured timeline" → "Deferred spending narrative with reduced quarterly visibility"

Disclosure framework simplification — quarterly EPS guidance is gone. Going into the spin, Fortive guided quarterly EPS alongside the annual figure. This quarter, management explicitly dropped forward quarterly guidance: "We will provide annual adjusted EPS guidance, updated quarterly, along with commentary on phasing throughout the year...This approach reflects our ongoing desire for clarity and simplification." Framed as simplification, but the practical effect is reduced near-term visibility at exactly the moment the standalone business is being tested by tariff and government-deferral headwinds. Cutting disclosure cadence in a cautious environment is a tell.

Tariff framing escalated from "manageable" to "structural." Q1's total-Fortive tariff exposure has been refined to $40–55M H2 gross impact / $80–120M annualized for New Fortive continuing operations, with countermeasures explicitly broadened to "pricing actions and surcharges, shifts in our global supply chain, and manufacturing footprint and incremental cost and productivity initiatives." Q1's language was about offsets; Q2's is about restructuring the supply chain. That's a different scale of response.

The "deferred not canceled" demand thesis is doing a lot of work. Management's recurring construction — "we believe was deferred, not canceled, customer spending" paired with "we are not forecasting any material improvement or deterioration" and "we haven't assumed it's all going to flow through in Q3 or Q4" — is the cautious posture of a team that doesn't want to call a recovery but doesn't want to abandon the medium-term framework. The Investor Day medium-term framework was reaffirmed verbatim ("firmly intact"), creating tension with the soft near-term print.

M&A standard has tightened. Management noted "we've really elevated the financial and strategic scrutiny that we apply to these bolt-on deals...we've continued to cultivate these proprietary deals." Translation: opportunistic bolt-ons are out; proprietary, high-conviction deals only. Consistent with a balance-sheet-conscious posture in the first standalone quarter.

Recurring themes management leaned on this quarter:

Post-spin simplified business model and focusRevenue headwinds from tariff uncertainty and government spending constraintsDeferred spending likely to return in H2 2025 and beyondAggressive FY25 guidance despite near-term macro uncertaintyMedium-term value creation framework remains intact despite Q2 volatilityThree-pillar growth strategy: innovation acceleration, commercial acceleration, recurring revenue

Risks management surfaced:

Tariff-related revenue volatility and customer order deferral extending into Q3Constrained government spending at state and local levels affecting GordianHealthcare reimbursement policy changes impacting hospital capital equipment procurementGlobal trade environment volatility impacting near-term revenue visibilityWestern Europe economic pressures from regional conflicts and defense spending shifts

Answers to last quarter's watch list

Tariff offset execution pace — Management has now quantified New Fortive's H2 gross tariff impact at $40–55M ($80–120M annualized) and broadened the response to include supply chain and manufacturing footprint shifts beyond pricing. Q2 gross margin came in at 63.5%, with management noting tariff cost pressures were roughly offset by pricing, mix, and supply-chain countermeasures. Management reiterated the expectation of full gross tariff mitigation by Q4 2025, with a modest gross margin and EPS headwind expected in Q3 as countermeasures phase in.

Continue monitoring

Precision Technology order book — Resolved by spinoff. Ralliant was distributed June 28, 2025 and PT is no longer in New Fortive's perimeter; the 2026 PT recovery is now a Ralliant shareholder issue, not an FTV one. Status: Resolved (via spinoff)

Spinoff completion and standalone disclosures — Spinoff completed on schedule; this quarter is the first standalone New Fortive report. Standalone FY25 guide of $2.50–$2.60 was issued. However, management chose to drop forward quarterly EPS guidance, reducing visibility relative to pre-spin disclosure cadence.

Resolved negatively

Gordian Q2 trajectory — The single most visible drag this quarter. Management cited "constrained U.S. government spending and fiscal tightening at state and local governments" creating a "chilling effect on the usual use-it-or-lose-it behavior." Gordian's seasonally biggest quarter was materially weaker than expected.

Resolved negatively

Western Europe and China stabilization — Management noted Western Europe, China, and Latin America were all down year-over-year, but did not quantify the trajectory or break out geographic revenue at granularity.

Continue monitoring

What to watch into next quarter

Q3 phasing commentary vs. the "July is looking better" signal — without quarterly EPS guides, the Q3 print is the first real data point on whether the deferred-spending thesis holds. Watch whether the late-Q2 $30M shortfall reverses.

Gordian sequential recovery — Q2 was seasonally Gordian's biggest quarter and it underperformed; whether state/local procurement normalizes in H2 determines the IOS trajectory.

AHS operating margin trajectory — 11.2% Q2 operating margin is materially below the IOS 24.5%; watch whether healthcare reimbursement pressure persists into Q3 or whether this was a discrete dislocation. Management flagged a tougher Q3 comp for AHS.

Tariff offset execution evidence — pricing actions, surcharges, and supply chain restructuring need to translate into gross margin stabilization in Q3. Watch whether 63.5% holds or slips further before the Q4 full-mitigation milestone.

FY25 EPS range walkdown — if Q2's deferral dynamics persist, the $2.50–$2.60 range likely settles at the low end. Any explicit narrowing of the range below midpoint would confirm the cautious read.

Sources

Fortive Q2 FY2025 press release: https://www.sec.gov/Archives/edgar/data/1659166/000165916625000119/q22025-ex991.htm
Fortive Q1 FY2025 brief (Tapebrief prior coverage) for cross-quarter tone and guidance comparison.

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