GE · Q4 2025 Earnings

Bullish

GE Aerospace

Reported January 22, 2026

30-second summary

30-second take: GE Aerospace closed FY25 with Q4 revenue of $12.7B (+18% YoY), $1.57 non-GAAP EPS, and $1.76B free cash flow, taking the full year to $45.9B revenue (+18%), $6.37 EPS, and $7.69B FCF — beating every line of the guide raised just one quarter ago. The FY26 setup is the real news: $7.10–7.40 EPS (+15% at midpoint), $9.85–10.25B operating profit (up ~$1B / ~+11% at midpoint off the FY25 base of $9.06B), and $8.0–8.4B FCF — pulling the $10B profit milestone from the 2024 investor day two years early, with management explicitly saying "$10 billion of profit in 26, two years earlier than our outlook had spent." Backlog is $190B and CES services growth is guided to mid-teens after printing +31% in Q4, so the deceleration management telegraphed in Q3 is now sized — and the 9X drag doubling in 2026 is the offset that keeps CES margin guidance flat.

Headline numbers

EPS

Q4 FY2025

$1.57

Revenue

Q4 FY2025

$12.72B

+18.0% YoY

Free cash flow

Q4 FY2025

$1.76B

Operating margin

Q4 FY2025

19.2%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$12.72B	+18.0%	$12.20B	+4.2%
EPS	$1.57	—	$1.66	-5.4%
Operating margin	19.2%	—	20.3%	-110bps
Free cash flow	$1.76B	—	$2.36B	-25.5%

Guidance

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
EPS (non-GAAP)	FY2025	$6.00 - $6.20	$6.37	+$0.17 above high end of guide	Beat
Adjusted Revenue Growth	FY2025	high-teens	18%	at high end of high-teens range	Beat
Operating Profit (non-GAAP)	FY2025	$8.65B - $8.85B	$9.81B	+$0.96B above high end	Beat
Free Cash Flow (non-GAAP)	FY2025	$7.1B - $7.3B	$7.694B	+$0.394B above high end	Beat
CES Revenue Growth	FY2025	low twenties	24%	+4pts above 'low twenties' range	Beat
CES Services Revenue Growth	FY2025	low to mid twenties	+31%	+7-11pts above 'low to mid twenties' range	Beat
CES Equipment Revenue Growth	FY2025	high-teens to 20%	within range	in-line	Met
DPT Revenue Growth	FY2025	high single digits	13%	+4-5pts above 'high single digits' range	Beat
CES Operating Profit	FY2025	$8.45B - $8.65B	$9.14B (implied)	+$0.49B - $0.69B above range	Beat
DPT Operating Profit	FY2025	$1.2B - $1.3B	within range	in-line	Met

New guidance

Metric	Period	Guide	YoY
EPS (non-GAAP)	FY2026	$7.10 - $7.40	+11.3% - +16.2%
Adjusted Revenue Growth	FY2026	low double digits	—

Segment KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Commercial Engines & Services (CES)	$9.468B	+24.0%
Defense & Propulsion Technologies (DPT)	$2.839B	+13.0%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Total Orders	$27.0B
CES Services Revenue Growth	+31%
LEAP Engine Deliveries Growth	+28%
Defense Deliveries Growth	+30%
CES Operating Profit Margin	24.0%
DPT Operating Profit Margin	8.9%
Free Cash Flow Conversion	106%
Backlog	$190B

Management tone

Q4-2024 demand reset → Q1 backlog credibility → Q2 execution story crystallizes → Q3 across-the-board raise → Q4 pulling forward the 2028 outlook.

The 2028 profit milestone is now a 2026 milestone. Management explicitly said the $10B operating profit target set at the 2024 investor day for 2028 will be delivered in 2026 — "$10 billion of profit in 26, two years earlier than our outlook had spent." With FY25 op profit landing at $9.06B and the FY26 midpoint at $10.05B, the $10B milestone is being crossed two years ahead of the spin framework. The forward question stops being "can GE hit the 2028 framework" and becomes "what does 2027–28 look like once $10B is in the base" — management still pointing to $11.5B in 2028.

Flight Deck shifted from program to operating model. In Q2 it was "FlightDeck practices" enabling supplier delivery. In Q3 it had "traveled into DPT." In Q4 it's the unifying language for everything: "As we further embed Flight Deck, we'll unlock greater value for our customers and shareholders." The shift is from a process-improvement initiative referenced in passing to the explicit framing for sustained margin expansion. That's the language of management claiming a durable structural moat, not a transient operational tailwind.

Supply chain language migrated from "delivering 95%" to "compounding." Three quarters ago suppliers delivering 95% of committed volume was the headline; this quarter the headline is "material input from our priority suppliers growing over 40% year over year in 2025, and up double digits sequentially in the fourth quarter." The 95% figure has dropped out — it's now operating baseline. The 40% YoY input growth is what enables the LEAP delivery +28% and the FY26 guide of double-digit revenue growth on a much larger base.

Services framing inverted from "support function" to "third-party ecosystem as profit driver." Q2 introduced the $4B services revision; Q3 attached mechanisms; Q4 quantified the ecosystem — "we added MTU Dallas as our sixth premier MRO partner... around 15% of total LEAP shop visits" and LEAP installed base "expected to roughly triple between 24 and 30." The architecture for services growth past 2026 is now disclosed: third-party MRO scales, internal LEAP capacity doubles, GE captures the spare-parts attach.

Capacity expansion language got more concrete and forward-loaded. Q2's "40% capacity expansion by 2030" became Q4's specific site list: Malaysia, Selma, Dallas, on-wing Dubai, plus the LEAP internal capacity doubling. The shift is from a target to a fixed-asset build-out plan, which mechanically anchors the 2026–28 cash conversion question (inventory growth as working-capital headwind, called out explicitly in risks).

Recurring themes management leaned on this quarter:

Flight Deck embedding as organizational lever unlocking customer and shareholder valueMRO network capacity expansion and third-party partnerships tripling LEAP installed baseSupply chain partnerships (40% YoY growth) compounding incremental output gainsDurability and cost-of-ownership improvements (time on wing 2-3x improvements) driving customer retentionDefense growth acceleration (30% unit deliveries, 113 F-404 order) expanding backlog resilienceServices revenue growth (26% YoY, mid-teens 2026 guidance) offsetting OE mix headwinds

Risks management surfaced:

Lower spare engine ratio impacting equipment profit mix9X and OE growth investments partially offsetting services margin expansionInventory growth required to support 2026 output acceleration creating working capital headwindInflation and mix headwinds in Defense Propulsion & Technologies offsetting volume gainsContinued need for R&D investment (~$3B annually) to maintain competitive positioning

Q&A highlights

John Godden · Citigroup

Elaboration on commercial aftermarket momentum, whether it has continued into the start of 2026, and assumptions underlying mid-teen services growth guidance with potential to outperform.

Management confirmed no early-year concerns about demand tailwinds. Cited $190B backlog, LEAP narrow-body growth, and opportunities to leverage unit volume with expanded work scopes and pricing. Acknowledged mid-teens growth target with ambition to exceed, noting bottleneck is spare parts availability and internal shop visit capacity rather than demand. Referenced organizational moves to improve supply chain efficiency.

$190 billion backlogMid-teens services growth guidance for 2026Supply chain priority suppliers delivered 40% improvement year-over-year in 202515%+ of LEAP shop visits performed by third-party channels

Miles Walton · Wolf Research

LEAP OE break-even or profitability timing for 2026, and supply chain investment requirements to achieve 2,500 output by 2028 without isolating new make from aftermarket demand.

Confirmed LEAP OE will be profitable in 2026 as planned. Noted improved visibility and supply chain readiness but acknowledged work remains; declined to commit to specific capital investment levels, stating suppliers must speak to their own plans. Emphasized confidence in ability to support both aftermarket and new delivery growth despite noting 40% annual increases are unlikely.

LEAP OE expected to be profitable in 20262,500 output target by 2028Improved visibility further out and deeper into supply chain achieved in 202540% year-over-year improvements unlikely to repeat annually

Douglas Harnett · Bernstein

Clarification on turnaround time improvements (10% across LEAP, CFM 56, GE 90), whether they apply to internal and third-party shops, what levers enable them, and how improvements reflect in financials.

Clarified TAT improvement is internally-oriented metric driven by material availability and efficient shop floor execution. 40% improvement from priority suppliers at 90%+ commitment delivery creates operational leverage. Improvements translate to more shop visits completed (revenue) and considerable productivity gains by eliminating idle time waiting for parts.

10% turnaround time improvement across platforms in Q440% year-over-year improvement from priority suppliers90%+ commitment delivery rates from suppliersTAT improvements internally focused across shop network

Scott Doishley · Deutsche Bank

Quantification of GE 9X losses in 2025 and incremental profit headwind in 2026; commentary on quarterly earnings cadence expectations for CES in 2026.

9X losses ended ~$200 million in 2025, in line with expectations. 2026 will see 9X losses double year-over-year as volume grows, fully incorporated in guidance. Q1 2026 expected to show high-teens revenue growth with strong engine and shop visit output growth. CES and DPT both expected above full-year guidance in Q1. Services strong due to 27% order growth and 85% Q1 spare parts already backlogged.

GE 9X losses ~$200 million in 2025GE 9X losses expected to double in 2026Q1 2026 expects high-teens company revenue growth27% services order growth ending 2025

Sheila Kayalu · Jefferies

CES profit margin guidance implying flat margins despite strong services growth; request to walk through margin drivers including 9X headwinds, spare ratio compression, LEAP double-digit growth vs flat CFM.

Margins flat by design as $3.5B services revenue growth at healthy drop-through is offset by OE shipment growth, spare engine ratio gradual decline, 9X shipments, and R&D spending. Noted margins ended 70bps better than October guidance, so higher starting point makes flat outlook positive trajectory. LEAP becoming bigger share of services mix but still expecting strong drop-through.

$3.5 billion services revenue growth expected in 2026Actual 2025 margins 70bps better than October 2024 guidanceFlat margin guidance for CES in 2026Spare engine ratio gradually declining as expected

Answers to last quarter's watch list

Q4 services growth print vs. seasonal step-down framing — CES services grew +31% in Q4, accelerating from Q3's +28%. The seasonal decel management telegraphed to Jefferies did not materialize at the quarter level; the deceleration arrives in 2026 via the mid-teens guide, not in Q4 print. Structural divergence thesis intact for now. Status: Resolved positively

First explicit 2026 framework with CES margin range and 9X dollar sizing — Got both. CES operating profit guided to $9.6–9.9B against the revised FY25 base of $8.6B — +$1.0–1.3B / ~+12–15% YoY, with CES margin guided roughly flat as services drop-through absorbs 9X and OE mix. 9X losses sized at ~$200M for 2025 and explicitly guided to double in 2026 (~$400M). Flat CES margin guidance came in better than the Q3 "limited expansion" warning had implied, because the 2025 starting point was 70bps higher than expected. Status: Resolved positively

LEAP shop-visit cost per unit disclosure — Not disclosed in the press release. Management discussed turnaround time improvement (10% in Q4) and time-on-wing improvements (2–3x) qualitatively, but no dollar-per-shop-visit reduction figure was put on the table. The 2028 LEAP margin parity claim still rests on undisclosed unit economics. Status: Continue monitoring

Defense backlog and book-to-bill — Q4 DPT revenue +13% with deliveries +30% YoY, and the company highlighted a 113-unit F-404 order as a backlog anchor. Total orders of $27.0B vs $12.8B in Q3 imply company-wide book-to-bill well above 1, and management cited defense book-to-bill above 2 in Q4 with full-year DPT book-to-bill of 1.5 and defense backlog at $21B. FY26 DPT operating profit guided to $1.55–1.65B (+19–27% vs implied FY25 of ~$1.30B) signals management treating defense as a second growth vector, not a 2025 phenomenon. Status: Resolved positively

9X delivery cadence and per-unit cost-down progression — Losses sized for the first time (~$200M FY25), trajectory confirmed (~doubling in 2026), and LEAP OE profitability in 2026 confirmed as the offset. No per-unit cost data against the "30% by 50th unit" milestone disclosed. The bridge math holds on the disclosed envelope but the underlying unit economics remain a black box. Status: Resolved negatively (loss trajectory is as warned — doubling — and unit cost progression remains undisclosed)

FY26 services growth vs. >double-digit hint — Guide landed at mid-teens, in the middle of the 10–12% reversion / 15%+ structural-divergence band Q3 set up. Mid-teens validates structural divergence relative to single-digit departure growth but represents a clear step down from FY25's ~26% services growth and Q4's +31%. Not the bear case, not the bull case — the base case. Status: Continue monitoring

What to watch into next quarter

Q1 2026 print against the "high-teens revenue growth" cadence guidance. Management explicitly told Deutsche Bank to expect high-teens in Q1 vs. the low-double-digit FY guide. Anything below mid-teens would be a meaningful tell that the front-loaded backlog conversion thesis is softer than represented.

CES margin in Q1 2026 against the flat-FY framing. The Q4 print of 24.0% (vs. Q3 27.4%) shows how much sequential variance there is on mix. Watch whether Q1 sits above or below the 23.5–24.5% implied annual range — Q1 should benefit from the CMR charge non-repeat tailwind Doishley pulled out.

GE9X dollar disclosure on units shipped and any per-unit cost progression. With losses now sized (~$200M to ~$400M trajectory), Q1 is the first opportunity to see how the cost-down curve is executing on a quantified base. A widening loss without unit cost improvement disclosure would be the highest-significance negative signal.

DPT margin recovery from Q4's 8.9% print. The FY26 operating profit guide of $1.55–1.65B against ~$2.8B+ revenue base implies low-double-digit margin restoration. Q4's compression needs to reverse quickly or the DPT-as-second-engine thesis weakens.

Working capital and Q1 free cash flow. Inventory growth to support 2026 output was explicitly flagged as a risk. FCF conversion stepping from 113% to ~81% at the FY26 guide midpoint is a real change — watch whether Q1 FCF lands negative or modestly positive, and how management frames the inventory build cadence.

Spare engine ratio disclosure. Management cited gradual decline as a headwind but hasn't quantified it. With LEAP installed base tripling 2024–2030, the spare ratio normalization curve is now a load-bearing input to medium-term CES profit; any quantification in Q1 would be material.

Sources

GE Aerospace Q4 2025 earnings release, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/40545/000004054526000005/ge4q2025earningsrelease.htm
GE Aerospace Q4 2025 earnings call commentary (management remarks and Q&A)

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