The Top 5 Analyst Questions From Otis's Q2 Earnings Call

Otis’ second quarter results were met with a negative market reaction as the company’s revenue missed Wall Street expectations and organic sales declined. Management attributed the flat sales to continued softness in the New Equipment segment, especially driven by economic weakness in China and project delays in the U.S. CEO Judy Marks explained that, “the main challenge this quarter was a greater than 20% decline in China New Equipment sales, along with slower project execution in North America due to uncertainty around global trade policies.” Service segment performance remained a bright spot, with maintenance and repair revenue supported by a growing installed base and improved pricing, but these gains were not enough to offset challenges elsewhere.

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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 Otis’s Q2 Earnings Call

• Jeffrey Sprague (Vertical Research): asked about Service revenue growth matching portfolio growth and whether churn or project mix played a role. CEO Judy Marks explained that improved retention, mix, and higher growth in less mature markets like China contributed, rather than increased leakage.
• Nigel Coe (Wolfe Research): inquired about the inflection in Americas New Equipment orders and China’s outlook. Marks confirmed that Americas growth was led by infrastructure projects, with multifamily stabilizing, while China’s improvement is expected to be gradual due to easier comparisons and some government stimulus.
• Nicole DeBlase (Deutsche Bank): requested details on the incremental China transformation savings and their carryover into 2026. CFO Cristina Mendez clarified that additional cost actions will increase run-rate savings and support future margin resilience.
• Julian Mitchell (Barclays): questioned stagnant free cash flow despite earnings growth, and whether industry payment dynamics had shifted. Mendez attributed it to business mix, with Service growing and New Equipment declining, leading to temporary working capital headwinds.
• Chris Snyder (Morgan Stanley): sought clarification on Service margin trends given higher modernization activity. Marks stated that margin expansion would be driven more by repair growth, with modernization also contributing, but to a lesser extent.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will track (1) the pace of Service segment growth, especially modernization and repair backlog execution, (2) stabilization in China’s New Equipment orders and the effectiveness of transformation initiatives, and (3) recovery in U.S. project execution as trade policy uncertainty potentially eases. Additionally, progress on cost savings and margin expansion from UpLift and China transformation programs will be important indicators of operational discipline.

Otis currently trades at $87.20, down from $101 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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