tapebrief
GE · Q2 2025

GE · Q3 2025 Earnings

Bullish

GE Aerospace

Reported October 21, 2025

30-second summary

30-second take: GE Aerospace put up $12.2B revenue (+24% YoY), $1.66 non-GAAP EPS, and $2.36B free cash flow at 134% conversion — then raised every line of the FY25 guide for the second straight quarter. EPS goes to $6.00–6.20 (+40c at midpoint vs. July), FCF to $7.1–7.3B, and LEAP delivery growth above 20% (from 15–20%). Defense did the standout work this quarter — revenue +26%, units +83%, profit +75% — confirming the FlightDeck supply-chain playbook now travels across segments.

Headline numbers

EPS

Q3 FY2025

$1.66

Revenue

Q3 FY2025

$12.20B

+24.0% YoY

Free cash flow

Q3 FY2025

$2.36B

Operating margin

Q3 FY2025

20.3%

Key financials

Q3 FY2025
MetricQ3 FY2025YoYQ2 FY2025QoQ
Revenue$12.20B+24.0%$11.00B+10.9%
EPS$1.66—$1.66+0.0%
Operating margin20.3%—23.0%-270bps
Free cash flow$2.36B—$2.10B+12.5%

Guidance

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

New guidance

MetricPeriodGuideYoY
Interest Expense GuidanceFY2025approximately $850M—
Tax Rate GuidanceFY202517.5%—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
EPS (non-GAAP)
FY2025
$5.60 to $5.80$6.00 to $6.20+$0.40 at midpoint (+7.1%)Raised
Adjusted Revenue Growth
FY2025
Mid-teensHigh-teensMid-teens → High-teens (approximately +4-5 percentage points at range midpoint)Raised
Operating Profit (non-GAAP)
FY2025
$8.2B to $8.5B$8.65B to $8.85B+$0.20B at midpoint (+2.4%)Raised
Free Cash Flow (non-GAAP)
FY2025
$6.5B to $6.9B$7.1B to $7.3B+$0.25B at midpoint (+3.6%)Raised
CES Revenue Growth
FY2025
High-teensLow-twentiesHigh-teens → Low-twenties (approximately +3-5 percentage points)Raised
CES Operating Profit (non-GAAP)
FY2025
—$8.45B to $8.65B—Raised
DPT Revenue Growth
FY2025
Mid-single-digit to high-single-digitHigh-single-digitsNarrowed to high end of prior range; implies low-double-digit acceleration vs. prior guidance midpointRaised
DPT Operating Profit (non-GAAP)
FY2025
—$1.2B to $1.3B—Raised
CES Services Revenue Growth
FY2025
High-teensLow to mid-twentiesHigh-teens → Low-to-mid-twenties (approximately +5-8 percentage points)Raised
LEAP Engine Delivery Growth
FY2025
15% to 20%more than 20%Raised from 15-20% range to >20% (at least +1-5 percentage points above prior high end)Raised

Segment KPIs

Q3 FY2025
SegmentQ3 FY2025YoY
Commercial Engines & Services (CES)$8.88B+27.0%
Defense & Propulsion Technologies (DPT)$2.828B+26.0%

Other KPIs

Q3 FY2025
SegmentQ3 FY2025
Total Orders$12.8B
CES Services Revenue Growth+28%
CES Equipment Deliveries Growth YoY+33%
LEAP Engine Deliveries Growth YoY+40%
Defense Deliveries Growth YoY+83%
CES Operating Profit Margin27.4%
DPT Operating Profit Margin13.6%
Free Cash Flow Conversion134%

Management tone

Q4-2024 anchor (per the prior brief): demand reset → Q1: backlog credibility → Q2: execution story crystallizes → Q3: execution proven, guide raised across the board.

Supply chain shifted from "stabilizing" to "enabling." In Q2 management framed the 95% supplier-delivery print as a hard-won inflection. This quarter the same metric printed for the third consecutive quarter, and material input from priority suppliers grew 35% YoY and high-single-digits sequentially. The Q3 quote — "Our priority suppliers also continue to improve shipments against their targets, shipping more than 95% of committed volume for the third consecutive quarter" — is doing different work than the Q2 version: it's no longer evidence of progress, it's the operating baseline. That's what makes the LEAP >20% raise and the 40% Q3 delivery growth credible rather than aspirational.

LEAP turnaround time moved from "the challenge" to "tangibly improving." Q2 commentary treated LEAP shop-visit cost and turnaround as the gating item for the 2028 margin bridge. This quarter management quantified a 30% reduction in engine disassembly time and 30% YoY growth in internal LEAP shop-visit output. Paired with the durability kit 1A now in the field with a 2x improvement target, the path to "CFM56 durability performance levels on LEAP-1A by 2028" stopped being a slide and started being a sequence of executed steps.

Services growth language inflected from "sustained" to "structurally divergent." Where Q2 introduced the $4B cumulative 2028 services raise, Q3 attached a mechanism: 2025 worldwide shop visits still below 2019 levels, GE90 second shop visits 60–70% heavier than first, external LEAP channel growing 2x YoY. Management explicitly told Deutsche Bank that 2026 should see double-digit engines off-wing growth despite only 3–4% departure growth — the divergence is now a multi-year thesis, not a 2025 anomaly.

2026 framing introduced — and it's a deceleration the company owns. New this quarter: management volunteered that 2026 services growth normalizes from 2025's ~25% toward double-digits, 9X losses more than double YoY, and CES margin expansion is "limited" by 9X drag plus inflation. Framing 2026 as a "stepping stone" toward the 2028 framework is a tell that the bridge math depends on the 2027–28 backend, not on linear progression.

Defense narrative upgraded from afterthought to leverage point. Q2 disclosed +7% DPT revenue with no FY raise. Q3 prints +26%/+75%/+83% on revenue/profit/units and credits commercial sustainment models. Bernstein and BofA both pulled at the defense thread — management's willingness to talk 6th-gen propulsion (NGAP) and T-901 details suggests this segment is being repositioned as a second growth vector rather than a steady-state offset.

Recurring themes management leaned on this quarter:

Supply chain stabilization and operational execution via Flight DeckLEAP delivery acceleration and services revenue growthDefense segment strong double-digit growth (83% units, 75% profit)LEAP turnaround time and capacity expansion progressCustomer wins and long-term services commitmentsNext-generation engine durability and technology advancement

Risks management surfaced:

Much more work required to improve LEAP turnaround times to meet customer expectationsTiming of orders across quarters (equipment orders shifted 3Q to 4Q)Environmental, health, and safety expense reservesCorporate cost timing impacts on total company margins

Q&A highlights

Sheila · Jefferies

How much of the 25% YTD services growth and $750M sequential increase is attributable to volume unlock via flight deck/supply chain versus tariff surcharges, and why the step down in Q4?

Growth driven by improved material availability unlocking higher volume, increased work scopes, and strong demand. LEAP shop visits up 30% YTD. Spare parts growth >25% YTD with strong orders (>30% growth). Q4 seasonal step down typical due to spare parts seasonality and demand normalization, but full-year trajectory remains strong with >$1B incremental services revenue versus July guidance.

25% YTD services growth, raised FY outlook to low-to-mid-20s22% YTD shop visit growth30% LEAP growth YTD>25% spare parts growth YTD

Doug Harted · Bernstein

What gives confidence in achieving 2028 LEAP services margin targets given early-stage PRSV experience and uncertainty around full shop visit costs?

Confidence based on daily management of multiple levers: field performance improvements (durability kit 1A now in field), FlightDeck supply chain execution improving material availability, cost reductions via productivity unlocked by material availability. Management expects 30% YoY internal shop visit growth to continue, external channel growing 2x YoY driving spare parts revenue, repair technology investments reducing shop visit costs, and durability improvements targeting CFM56 performance levels by 2028.

Durability kit 1A now fielded with 2X improvement target30% YoY internal LEAP shop visit growth expected to continueExternal channel LEAP growth 2x YoYRepair technology investments reducing cost per shop visit

Seth Seifman · J.P. Morgan

What's driving spare parts growth to outpace departure growth and 2025 outlook? Is it material availability, LEAP shop outfitting, or other factors, and how does this vary by engine type?

Multiple drivers: (1) pent-up demand—2025 worldwide shop visits still below 2019 levels; (2) increased work scopes, especially wide body (e.g., G90 with 60-70% heavier second shop visits); (3) material availability unlocking deferred demand; (4) external LEAP channel growth. Expects this divergence to continue into 2026 as engines off-wing projected up double digits despite only 3-4% departure growth.

2025 worldwide shop visits still below 2019 levels (pent-up demand)G90: 70% of engines still haven't had second shop visit; second visits 60-70% heavierExternal LEAP channel growth 2x YoY in quarter, mid-teens+ expected for full year 2025, 30% growth expected by 20302026: departure growth 3-4%, engines off-wing projected double-digit growth

Scott Doyle · Deutsche Bank

What is management's 2026 outlook for CES revenue growth, margins, and broader considerations for financial modeling?

2026 expected to show services growth normalizing toward double-digit levels (below 2025's exceptional 25% but above historical low-teens), driven by double-digit engines off-wing, low single-digit price increases on wide body, and continued install base growth. New equipment: ~2,000 LEAP shipments + incremental 9X units (volume assumptions unchanged since July); 9X losses expected to more than double YoY, offsetting services drop-through. DPT expects mid-single-digit revenue growth with margin expansion. Overall: revenue growth and profit growth expected, with limited margin expansion due to 9X losses and inflation headwinds. 2026 viewed as stepping stone toward 2028 framework.

2026 services growth expected to normalize toward double-digit levels (below 2025 25% performance)Double-digit engines off-wing projected in 2026~2,000 LEAP shipments expected in 20269X losses expected to more than double YoY in 2026

Ronald Epstein · Bank of America

Can you detail defense business growth drivers and explain how commercial experience with FlightDeck/supply chain is being leveraged in defense? What is the strategic opportunity?

Defense revenue up 26%, profit up 75% in quarter with defense engine output up 83% (second consecutive quarter at that level). Growth driven by strong backlog and application of commercial best practices (FlightDeck/supply chain management) to defense. Key programs: 6th Gen propulsion via NGAP program (Air Force/Navy opportunities), Apache/Blackhawk upgrades (ITAP/T-901). Strategic opportunity to apply commercial sustainment models and development velocity to defense; focus near-term on reducing delinquency and servicing backlog.

Defense revenue up 26%, profit up 75%Defense engine output up 83% (second consecutive quarter)6th Gen propulsion development underway via NGAP programApache/Blackhawk upgrades via ITAP and T-901 engine

Answers to last quarter's watch list

CES services growth sustain rate — Services grew +28% YoY in Q3 vs. Q2's +29%; FY guide moved from high-teens to low-to-mid-twenties. The Goldman pent-up-demand-front-loading risk did not materialize. Management quantified that 2025 shop visits are still below 2019, and 90% of Q4 spare-parts backlog is already in house. Status: Resolved positively
Supplier committed-volume delivery progression — 95% of committed volume printed for the third consecutive quarter, with priority-supplier material input +35% YoY. No bottleneck callouts. The capacity-expansion math underpinning FY28 has another quarter of evidence under it. Status: Resolved positively
Tariff realization vs. the $500M FY25 embed — Not addressed in the press release; press-release-only coverage means transcript-level granularity on tariff realization is pending. Status: Continue monitoring
GE9X loss progression toward 2026 peak — Management told Deutsche Bank that 9X losses are expected to more than double YoY in 2026 and are explicitly cited as the constraint on 2026 CES margin expansion. The 2026 peak-loss timing the company set in Q2 is being reaffirmed rather than pulled forward. Status: Resolved negatively (the trajectory is as warned — not worse, but not better either)
LEAP delivery cadence — Q3 deliveries +40% YoY; FY guide raised from 15–20% to >20%. The H2 step-up the Q2 guide implied is happening with room to spare. Status: Resolved positively
DPT growth inflection — Q2's +7% became Q3's +26% revenue / +75% profit / +83% units. FY DPT revenue guide moved from mid-to-high-single-digit to high-single-digit, with a new explicit $1.2–1.3B profit disclosure. Status: Resolved positively

What to watch into next quarter

Q4 services growth print vs. the "seasonal step-down" framing: management explicitly told Jefferies to expect a seasonal Q4 services decel. Watch whether it lands above mid-teens — anything below low-teens would undermine the structural-divergence thesis Seifman pulled out.

First explicit 2026 framework on the Q4 call: Doyle got the qualitative shape; the Q4 call will get numbers. Watch the CES revenue growth range and whether 9X losses are sized in dollars. A 2026 CES margin guide below 27% would price in the "limited expansion" warning.

LEAP shop-visit cost per unit disclosure: Bernstein's question on PRSV economics didn't get a dollar answer. Watch for any Q4 disclosure on cost-per-shop-visit reduction trajectory — this is the single most important input to the 2028 LEAP margin parity claim.

Defense backlog and book-to-bill: units +83% for two straight quarters can only continue if orders are pacing. Watch DPT order growth — if it sustains above revenue growth, the segment becomes a structural second engine; if it drops below, +26% revenue is a 2025 phenomenon.

9X delivery cadence and per-unit cost-down progression: with 9X losses guided to more than double in 2026, Q4 disclosure on units shipped and progress against the "30% cost reduction by 50th unit" milestone is the key tell on whether the 2028 bridge math holds.

FY26 services growth vs. the ">double-digit" hint: management offered "normalizing toward double-digits" as Q3 framing. Watch whether the FY26 guide arrives above 15% (validates structural divergence) or settles at 10–12% (services growth is reverting and the 2028 ramp depends entirely on price and 9X economics).

Sources

  1. GE Aerospace Q3 2025 earnings release, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/40545/000004054525000131/ge3q2025earningsrelease.htm
  2. GE Aerospace Q3 2025 earnings call commentary (management remarks and Q&A as captured in extraction inputs)

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