tapebrief
ROK · Q1 2026

ROK · Q2 2026 Earnings

Bullish

Rockwell Automation

Reported May 5, 2026

30-second summary

Rockwell printed +12% reported revenue ($2.24B), +9% organic, $3.30 adjusted EPS, and 22.5% operating margin — and management responded with the operational raise that was absent in Q1. FY26 adjusted EPS midpoint moves $1.00 higher to $12.80, organic sales growth lifted from 2–6% to 5–9%, and the enterprise operating margin guide steps up 150bps to 21.5%. The Q3 guide ("roughly flat sequentially" with EPS up only ~$0.05 QoQ) is the one tell that management still expects H2 inflation and mix to bite.

Headline numbers

EPS

Q2 FY2026

$3.30

Revenue

Q2 FY2026

$2.24B

+12.0% YoY

Gross margin

Q2 FY2026

50.2%

Free cash flow

Q2 FY2026

$0.28B

Operating margin

Q2 FY2026

22.5%

Key financials

Q2 FY2026
MetricQ2 FY2026YoYQ1 FY2026QoQ
Revenue$2.24B+12.0%$2.10B+6.4%
EPS$3.30—$2.75+20.0%
Gross margin50.2%—48.3%+190bps
Operating margin22.5%—20.7%+180bps
Free cash flow$0.28B—$0.17B+61.8%

Guidance

Strong Q2 beat drives significant full-year EPS and growth guidance raises: non-GAAP EPS guidance raised $0.90-$1.10 midpoint, organic sales growth raised to 5-9% from 2-6%, and enterprise operating margin increased 150bps to 21.5%.

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

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026slightly up sequentially$2.239Bbeat qualitative guide with 12% YoY growthBeat
Adjusted EPSQ2 FY2026low single digits sequentially$3.3beat sequential growth expectationBeat

New guidance

MetricPeriodGuideYoY
Reported SalesQ3 FY2026roughly flat sequentially—
Adjusted EPSQ3 FY2026up about $0.05 sequentially; mid to high teens YoY+13% to +19% YoY

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Organic Sales Growth
FY2026
2% - 6%5% - 9%+3pts at low end, +3pts at high endRaised
Reported Sales Growth
FY2026
3% - 7%5% - 9%+2pts at low end, +2pts at high endRaised
Adjusted EPS
FY2026
$11.40 - $12.20$12.50 - $13.10+$1.10 at low end, +$0.90 at high endRaised
Enterprise Operating Margin
FY2026
~20%21.5%+150bpsRaised
Diluted EPS (GAAP)
FY2026
$10.75 - $11.55$11.88 - $12.48+$1.13 at low end, +$0.93 at high endRaised
Organic ARR Growth
FY2026
high single digit growthhigh single digitsreaffirmed verbally with emphasis on cloud-native software leadershipRaised

Reaffirmed unchanged this quarter: Free Cash Flow Conversion (100%)

Segment KPIs

Q2 FY2026
SegmentQ2 FY2026YoY
Intelligent Devices$1.008B+13.0%
Software & Control$0.684B+20.0%
Lifecycle Services$0.547B+2.0%

Other KPIs

Q2 FY2026
SegmentQ2 FY2026YoY
North America$1.412B+10.0%
EMEA$0.43B+20.0%
Asia Pacific$0.257B+13.0%
Latin America$0.14B+9.0%
Total ARRUp 6% YoY—
Organic Sales Growth9%—
Intelligent Devices Operating Margin20.9%—
Software & Control Operating Margin34.9%—
Lifecycle Services Operating Margin14.6%—
Pre-tax Margin19.7%—
Free Cash Flow Conversion74%—
Adjusted ROIC17.2%—

Management tone

Q3 FY25 cost program graduates → Q4 FY25 offensive posture → Q1 FY26 selective upside with explicit guardrails → Q2 FY26: guardrails come off, operational raise lands.

The defining shift this quarter is that management abandoned the Q1 "we aren't seeing enough to change our sales and margin guide" posture. One quarter ago Christian Rothe explicitly said the EPS floor raise was tax-driven and that the operating range would not move without "additional evidence of accelerating capital spend across additional verticals." This quarter, on the strength of +9% organic and a Q2 enterprise operating margin that cleared the medium-term ~22% target, management raised the floor and the ceiling on adjusted EPS, lifted both organic and reported sales bands by three points, and stepped the enterprise margin guide up 150bps to 21.5%. The Q1 guardrails are gone; the operational raise is here.

The data center narrative completed its multi-quarter arc from speculative emerging opportunity (Q3 FY25) → confirmed strong end market (Q4 FY25) → the cleanest growth driver on the call this quarter, with management citing "sales more than doubling year over year" and naming it as one of the strongest end markets in the quarter. Yet management explicitly declined Scott Davis's request to size data center as a percentage of sales, deferring to year-end — the one place tone read evasive rather than confident.

The bifurcation thesis that dominated Q1 — products accelerating while Lifecycle Services lagged — narrowed this quarter. Lifecycle Services reported growth turned positive (+2% YoY) on the back of the Q1 1.16 book-to-bill, though organic is still -1%. Management's language shifted from "customers temporarily delaying" (Q1) to a posture that now treats Lifecycle as part of broadening demand rather than the laggard. That removes a structural overhang from the FY guide, though the organic line bears watching.

Inflation has now overtaken tariffs as the named back-half pressure. Three quarters ago tariffs were the dominant cost theme; this quarter management explicitly stated "we continue to expect pricing actions to fully recover tariff costs this year" while flagging "memory costs continue to increase in Q2 and are now expected to represent a double-digit million-dollar headwind in the back half." The cost lever has rotated. Tariffs are now operationally managed; memory and component inflation are the new watch item — and the Q3 guide's flat sequential profile suggests management is taking that risk seriously.

The Q&A confirmed that the demand backdrop is genuine. Julian Mitchell asked directly whether order patterns reflected pull-forwards; Blake Moret was unambiguous in denying it ("no pull-forwards in orders"), and noted Logix grew 20%+ with strong data center conversions. Q2 book-to-bill ran "slightly above" the 0.95–1.1 normal corridor; H1 was within it. Combined with the segment margin lift, this is the cleanest read management has offered on demand authenticity in five quarters.

Recurring themes management leaned on this quarter:

Broadening end-market demand across discrete, hybrid, and process industriesData center and AI-driven investment accelerationMargin expansion through volume leverage and positive price-cost dynamicsAutonomous mobile robot adoption expanding into new verticalsCloud-native software and digital solutions driving recurring revenueTariff and component cost management through pricing realization

Risks management surfaced:

Persistent trade volatility and geopolitical uncertainty delaying large capital investments in automotive and consumer packaged goodsMemory costs expected to represent double-digit million-dollar headwind in back half of fiscal 2026Customers deferring larger projects and prioritizing smaller scope investments in lifecycle servicesMiddle East conflict pausing near-term customer activity mainly in lifecycle servicesSequential margin pressure expected in second half despite above-50% incremental margins for full year

Q&A highlights

Andy Kaplowitz · Citigroup

Asked about raised forecasts for CapEx-intensive end markets (semicon, energy, chemicals), whether there's an unlock in larger projects versus short-cycle, drivers of durability, and specifics on operating leverage with focus on incrementals moving from 40% to 50% in 2026.

Management confirmed broadening capital investment across e-commerce, warehouse automation, data center, semiconductor, and energy. However, noted no wholesale unlock in automotive and CPG—those gains come from modernizations and channel strength. On incrementals, reaffirmed 35% long-term flow-through target despite 50% guidance for 2026, stating revisit would happen under overall growth algorithm umbrella.

Semicon, energy, e-commerce, warehouse automation, and data center showing capital deploymentAutomotive and CPG still lack wholesale capital unlock2026 incremental margin guidance: 50%Long-term incremental margin target: 35%

Scott Davis · Nelius Research

Asked for explicit sizing of data center market opportunity given doubling growth, and clarification on how modernization vs. larger CapEx projects differ in content intensity.

Management declined to quantify data center TAM explicitly, only confirming 'low single digits' as modest base revenue and deferring percentage disclosure to year-end. Explained data center comes from three sources: power distribution (cubic), industrial PLC adoption vs. commercial controls, and HVAC/chiller demand. Modernizations involve same products as CapEx projects but with heavier lifecycle services mix.

Data center revenue: low single digits of total salesThree revenue drivers: power distribution (cubic), PLC adoption, HVAC/chiller demandModernizations include heavier lifecycle services involvementProduct mix similar between modernizations and CapEx projects

Julian Mitchell · Barclays

Questioned why enterprise operating margin guidance of ~22% in H2 implies sequential margin decline from Q2's 22.5%, historically unusual. Also asked about order surge patterns, book-to-bill, and logics platform growth.

Management attributed H2 margin guidance to inflationary pressures (memory, raw commodities, supplier costs), additional spending on new product introductions, and typical Q4 lifecycle services/engineered lineup mix shift. Q2 was called an outperform with convergence of volume, cost discipline, and price realization. Confirmed no pull-forwards in orders; Logix grew 20%+ organically with strong data center conversions.

Q2 operating margin: 22.5% (above 22% medium-term target)H2 headwinds: memory inflation, raw commodity inflation, supplier inflation, accelerated new product spendQ4 typical margin headwind: lifecycle services and engineered lineup mix shiftLogix growth: 20%+ organic

Chris Snyder · Morgan Stanley

Asked to confirm book-to-bill above normal range and clarify normal range; asked whether customer conversations on US manufacturing relocation have accelerated from prior hesitation, and about structural margin opportunity remaining post-Investor Day targets.

Confirmed normal book-to-bill corridor 0.95–1.1 for Q1–Q3 (Q4 typically below 1.0). Q2 slightly above, H1 within. Customer sentiment positive on US manufacturing but tariffs and geopolitical uncertainty still delaying CPG and automotive. Emphasized productivity pipeline expanding—more projects today than prior years, though individual project sizes smaller. Operationalizing productivity as core operating rhythm, not one-time heroics.

Book-to-bill normal corridor: 0.95–1.1 (Q1–Q3); Q4 typically <1.0Q2 book-to-bill: slightly above corridorProductivity pipeline: growing, with more projects YoY despite smaller average sizeOperationalizing productivity into Rockwell operating model

Amit Mehrotra · UBS

Asked whether warehouse automation growth is driven by few large customers restarting spend or broader demand, margin profile vs. company average, and whether international regions (EMEA, Asia-Pac) are catching up to North America-led growth.

Warehouse automation demand is broad-based across data center, new fulfillment centers, production logistics (CPG efficiency gains), and parcel handling. Revenue mix weighted toward hardware (standard products: logics, motion, sensors). Margin profile similar to other offerings, varying by product vs. solution mix per customer. International growth improving: EMEA machine builders strong (Germany, Italy high single-to-double digits), Asia driven by semiconductor/Taiwan and systems integrators. Q2 comps easier in EMEA/Asia as they were down YoY.

Warehouse automation: four drivers—data center, new fulfillment, production logistics, parcel handlingProduct mix: logics, motion control, sensors (hardware-heavy)Margin profile: similar to overall portfolio, dependent on product vs. solution mixEMEA growth: high single digit (Germany), low double digit (Italy)

Answers to last quarter's watch list

Whether Q2 segment margin expands sequentially as guided. Q2 enterprise operating margin came in at 22.5%, +330bps sequential from Q1's ~19.2% — and +350bps YoY vs. the <100bps YoY segment-margin guide. The FY >100bps expansion guide is now well-secured; the FY guide stepped up 150bps to 21.5%. Status: Resolved positively
Intelligent Devices margin direction off the 17.3% Q1 print. ID margin advanced to 20.9% in Q2, +320bps YoY (from 17.7%) and ~350bps sequential. The segment is now within ~110bps of the 22% lower bound of the 22–24% target corridor. Status: Resolved positively
Free cash flow conversion bounce-back from 55%. Q2 FCF conversion was 74% — better than Q1, still well below the 100% FY target. H1 cumulative conversion ~65% means H2 needs to clear ~130% to land the guide. Status: Continue monitoring
Lifecycle Services revenue conversion of the 1.16 book-to-bill. Lifecycle Services reported revenue turned positive at +2% YoY (organic -1%), suggesting the Q1 bookings outperformance is starting to convert though the organic line is still slightly negative. Status: Partially resolved
Whether management raises the EPS ceiling (not just the floor) at H1. Adjusted EPS guide raised on both ends — floor +$1.10 to $12.50, ceiling +$0.90 to $13.10. This is the clean operational raise that Q1's tax-driven floor-only move was not. Status: Resolved positively
Specific dollar disclosure on new U.S. capacity expansion orders. Management again declined to quantify capacity expansion orders in dollar or unit terms. Scott Davis explicitly pressed on data center TAM and was deflected to year-end disclosure. The "share gains decoupled from CapEx" thesis remains qualitatively asserted rather than quantified. Status: Continue monitoring

What to watch into next quarter

Whether Q3 actual sales clear "roughly flat sequentially" with a positive surprise. Implied Q3 revenue is ~$2.24B; anything materially above (e.g. +3% QoQ) would suggest the Q3 guide repeats Q1's sandbagging pattern. Anything below would validate the memory/component inflation concern.

Q3 enterprise operating margin holding at or above 22%. Management guided "correspondingly flat" sequentially — i.e. ~22.5%. A sub-22% print would suggest H2 inflation is biting harder than the FY 21.5% guide assumes, since H2 average needs to clear ~21% to land the year.

Organic ARR re-accelerating to high single digits. Total ARR at +6% sits below the FY organic ARR high-single-digit guide, though the two are not strictly comparable post-Sensia. A third sub-7% Total ARR quarter would force a closer look at the underlying organic trajectory.

H2 free cash flow conversion needs to clear ~130% to land the 100% FY target. Q3 conversion below 100% would make the FY guide mechanically unachievable without an exceptional Q4.

Intelligent Devices margin clearing 22% — the lower bound of the target corridor. Q2 hit 20.9%; the next 110bps will determine whether the 22–24% corridor is FY26-achievable or remains a multi-year horizon.

Lifecycle Services organic growth turning positive. Reported is +2% but organic is -1%. A Q3 print where organic clears zero would validate the Q1 book-to-bill conversion thesis cleanly.

Memory-cost headwind sized vs. realized. Management quantified "double-digit million-dollar" back-half memory inflation. A Q3 gross margin print materially below 50% would suggest the headwind is running hotter than guided; sustained 50%+ would validate the FY raise.

Sources

  1. Rockwell Automation Q2 FY2026 earnings press release (SEC filing): https://www.sec.gov/Archives/edgar/data/1024478/000102447826000020/q2fy26ex99.htm
  2. Rockwell Automation Q2 FY2026 earnings conference call commentary (as referenced in Q&A extraction)

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