RTX · Q3 2025 Earnings

Bullish

RTX Corporation

Reported October 21, 2025

30-second summary

Revenue grew 12% to $22.48B with organic growth of 13% and $4.0B of free cash flow that more than covers Q2's strike-impacted breakeven. Management raised FY adjusted sales to $86.5–$87.0B (from $84.75–$85.5B) and adjusted EPS to $6.10–$6.20 (from $5.80–$5.95) — a clean ~5% midpoint EPS raise that recovers the Q2 tariff cut and then some. Segment-level bands moved with the headline: commercial aftermarket raised to mid-teens (from low teens), commercial OE to ~10% (from high single digits), and defense reaffirmed at mid single digits — a coherent, demand-led raise rather than a one-line headline bump.

Headline numbers

EPS

Q3 FY2025

$1.70

Revenue

Q3 FY2025

$22.48B

+12.0% YoY

Free cash flow

Q3 FY2025

$4.03B

Operating margin

Q3 FY2025

11.2%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$22.48B	+12.0%	$21.58B	+4.2%
EPS	$1.70	—	$1.56	+9.0%
Operating margin	11.2%	—	9.9%	+130bps
Free cash flow	$4.03B	—	$-0.07B	+5690.3%

Guidance

RTX significantly raised full-year revenue and EPS guidance on strong momentum, but withdrew segment-level growth disclosures and tariff/tax guidance.

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

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY2025	$84.75 - $85.5 billion	$86.5 - $87.0 billion	+$1.75 - $1.5 billion at low/high end	Raised
Adjusted EPS	FY2025	$5.80 - $5.95	$6.10 - $6.20	+$0.30 - $0.25 at low/high end	Raised
Organic Sales Growth	FY2025	6% to 7%	8% to 9%	+2 percentage points at both low and high end	Raised
Commercial Aftermarket Sales Growth	FY2025	Low teens	Withdrawn — no replacement	—	Withdrawn
Commercial OE Sales Growth	FY2025	High single digits	Withdrawn — no replacement	—	Withdrawn
Defense Sales Growth	FY2025	Mid single digits	Withdrawn — no replacement	—	Withdrawn
Tariff Costs (net of mitigations)	FY2025	~$500 million	Withdrawn — no replacement	—	Withdrawn
Effective Tax Rate	FY2025	19.5%	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Free Cash Flow ($7.0 - $7.5 billion)

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
Collins Aerospace	$7.621B	+8.0%
Pratt & Whitney	$8.423B	+16.0%
Raytheon	$7.045B	+10.0%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Adjusted Operating Profit Margin	13.2%
Organic Sales Growth	13%
Company Backlog	$251 billion
Commercial Backlog	$148 billion
Defense Backlog	$103 billion
New Awards	$37 billion
Collins Aerospace Operating Margin	15.7%
Pratt & Whitney Operating Margin	8.9%

Management tone

Narrative arc: Tariff defense (Q2) → Backlog execution and operational scale-up (Q3).

The GTF narrative shifted from risk-management to measured operational milestone. This quarter the press release and commentary quantify it precisely — Pratt MRO output up 21% YTD, on track for ~30% growth for the full year, with record Gate 3 starts exiting Q3. This is management telegraphing the 2026+ FCF step-up well in advance.

Raytheon's bottleneck reframed from demand to supply. Q3 escalates with "the headline story here is just continued exceptionally strong demand" and explicitly identifies supply chain execution as the gating factor. The Q3 book-to-bill of 2.27 at Raytheon — combined with $16B of new orders in the segment — signals the demand cycle is intensifying, not normalizing.

Tariff language went from quantified annual figure to per-segment quarterly impact. Q3 reaffirmed the headwind explicitly ("no change to the net tariff headwind we discussed on our last earnings call") and disclosed Q3 impact at ~$90M each at Collins and Pratt. The disclosure narrowed to the per-quarter, per-segment level while preserving the underlying envelope.

Commercial aftermarket runway language got more structural. The V2500 framing this quarter — "1.5% of the V-2500 fleet retired so far this year" alongside the installed-base math at Pratt Canada (nearly 70,000 engines in service, 15%+ aftermarket growth YTD) — converts a single-year aftermarket guide into a multi-decade installed-base thesis. Investors are now buying the installed-base math alongside the raised mid-teens aftermarket guide.

Recurring themes management leaned on this quarter:

GTF fleet AOG stabilization and MRO output acceleration as operational inflectionRaytheon supply chain execution becoming the binding constraint, not demandDefense international backlog and mix providing structural margin tailwind (44% international)Commercial aerospace aftermarket runway from V2500 and GTF installed bases offsetting new aircraft deliveriesBoeing 737 MAX and 787 production ramp supporting Collins through absorption of fixed overheadFree cash flow conversion improvement as GTF compensation normalizes

Risks management surfaced:

Supply chain health and deconfliction of suppliers needed to meet defense production rampsTariff headwinds ($90M per segment in Q3) requiring continued mitigation via USMCA treatment and pricingNegative engine margin on GTF ($150-200M headwind) persisting through 2025Boeing production rate execution dependent on continued supply chain robustnessWorking capital management complexity during heavy growth period

Answers to last quarter's watch list

Tariff trajectory post-August 1 rate decisions — RTX explicitly reaffirmed the net tariff headwind ("no change to the net tariff headwind we discussed on our last earnings call"), with Q3 impact quantified at ~$90M each at Collins and Pratt. The EPS raise was driven by operational performance dropping through, not by tariffs landing below the envelope. Status: Resolved — tariff envelope held, mitigations executing.

Pratt H2 cash recovery — Q3 FCF came in at $4.03B, with YTD FCF of $4.7B against an FY guide of $7.0–$7.5B that was reaffirmed without raising.

Resolved positively

Pratt aftermarket H2 deceleration math — Pratt revenue grew +16% YoY in Q3, commercial aftermarket up 23% at Pratt, and the FY commercial aftermarket guide was raised to mid-teens from low teens.

Resolved positively

Raytheon book-to-bill sustainability — Q3 Raytheon book-to-bill landed at 2.27 with $16B of new orders. The supply-not-demand framing now anchors the segment narrative.

Resolved positively

What to watch into next quarter

Q4 FCF and FY landing point — with YTD FCF at $4.7B and FY guide reaffirmed at $7.0–$7.5B, Q4 needs $2.3–$2.8B to land in range. Watch whether the FY range gets raised at the January call or quietly overrun.

Collins OE mix and margin trajectory — Collins adjusted margin expanded only 20bps YoY against +11% organic growth, with management citing unfavorable commercial OE mix and ~$90M of tariff drag. Watch whether the 787 mix headwind and tariff mitigations (USMCA qualification, pricing) bend the margin trajectory in Q4 and into 2026.

Pratt 30% MRO output growth target landing — management committed to ~30% MRO output growth for full-year 2025; Q3 YTD ran +21%. Q4 needs an inflection to hit the target. Below 30% implies risks slipping the GTF AOG resolution timeline; above 30% implies 2026 FCF baseline math accelerates.

Raytheon supply chain throughput — 10 consecutive quarters of material receipt growth, but management flagged that the rate needs to accelerate into 2026 to convert the $72B Raytheon backlog into revenue. Watch microelectronics and rocket motor flow specifically.

Sources

RTX Corporation Q3 2025 Earnings Press Release (Form 8-K Exhibit 99), SEC EDGAR, October 21, 2025.
RTX Corporation Q3 2025 Earnings Conference Call prepared remarks, October 21, 2025.

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