Johnson Controls’ third quarter was marked by strong revenue growth and clear operational progress, prompting a significant positive market reaction. Management credited robust demand in data center thermal management and ongoing execution of its proprietary business system for the company’s performance. CEO Joakim Weidemanis highlighted improvements in sales capacity and factory on-time delivery, stating, “Our team manufacturing key chillers in North America improved on-time delivery to over 95%.” These targeted operational initiatives supported both sales momentum and customer satisfaction.
Is now the time to buy JCI? Find out in our full research report (it’s free for active Edge members).
Johnson Controls (JCI) Q3 CY2025 Highlights:
- Revenue: $6.44 billion vs analyst estimates of $6.34 billion (3.1% year-on-year growth, 1.6% beat)
- Adjusted EPS: $1.26 vs analyst estimates of $1.20 (4.7% beat)
- Adjusted EBITDA: $1.27 billion vs analyst estimates of $1.17 billion (19.7% margin, 8.7% beat)
- Revenue Guidance for Q4 CY2025 is $5.59 billion at the midpoint, below analyst estimates of $5.73 billion
- Adjusted EPS guidance for the upcoming financial year 2026 is $4.55 at the midpoint, beating analyst estimates by 2.7%
- Operating Margin: 6.7%, down from 11.9% in the same quarter last year
- Organic Revenue rose 3.6% year on year vs analyst estimates of 1.4% growth (224.5 basis point beat)
- Market Capitalization: $79.8 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Johnson Controls’s Q3 Earnings Call
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Amit Mehrotra (UBS) asked about the drivers behind the 50% operating leverage target. CFO Marc Vandiepenbeeck explained that EMEA and APAC would be primary contributors, with continued progress in productivity and SG&A efficiency.
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Nigel Coe (Wolfe Research) questioned the sustainability and breakdown of incremental margin improvements. CEO Joakim Weidemanis said margin gains are expected to extend beyond this year as operational initiatives mature, including responsible cost reductions and productivity work.
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Patrick Baumann (JPMorgan) probed the impact of portfolio actions and restructuring charges on margins. Vandiepenbeeck clarified that recent impairments and divestitures accounted for most onetime charges, and stranded cost reductions are incremental to margin improvement.
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Christopher Snyder (Morgan Stanley) asked about content growth in data center cooling as the industry shifts from air to liquid technologies. Management answered that both airside and chiller solutions remain in demand, with new requirements for precision and capacity supporting growth.
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Nicole DeBlase (Deutsche Bank) sought details on order growth by vertical. Weidemanis noted that data centers, biologics manufacturing, universities, and hospitals are driving backlog growth, while service business provides recurring revenue stability.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor (1) the pace of adoption for Johnson Controls’ new liquid cooling and heat pump solutions in data centers and European energy markets, (2) sustained improvements in operational efficiency and margin expansion across global regions, and (3) progress on divestitures and targeted acquisitions that may reshape the company’s portfolio. Additionally, execution of the proprietary business system and customer retention in mission-critical service contracts will be key indicators of long-term success.
Johnson Controls currently trades at $120.90, up from $111.02 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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