Xylem Inc. (NYSE:XYL), a global water technology company, reported third-quarter 2025 results on Tuesday that topped Wall Street estimates.

Xylem reported adjusted earnings of $1.37 per share, surpassing the consensus estimate of $1.23 and a 23% increase from $1.11 per share a year earlier.

Revenue for the quarter rose 7.8% year over year to $2.27 billion from $2.10 billion, exceeding analysts’ expectations of $2.22 billion.

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Adjusted operating margin expanded to 18.9% from 16.6% in the same period last year, while adjusted EBITDA margin expanded to 23.2% from 21.2% a year ago.

The company’s cash and cash equivalents stood at $1.19 billion at the end of the quarter.

In the third quarter of 2025, Xylem’s Water Infrastructure segment generated $656 million in revenue, up 5% year over year. Applied Water revenue rose 2% to $456 million. Measurement and Control Solutions segment delivered $522 million, a 14% increase from last year. Meanwhile, Water Solutions & Services revenue climbed 10% to $634 million.

Financial Outlook

The company raised its full-year 2025 adjusted earnings guidance to $5.03 to $5.08 per share, up from its prior outlook of $4.70 to $4.85, and above the analyst consensus estimate of $4.84.

The company also lifted its full-year sales forecast to around $9.0 billion, compared with its previous range of $8.90 billion to $9.00 billion and slightly above the consensus estimate of $8.95 billion.

For the full year 2025, Xylem expects an adjusted EBITDA margin of approximately 22.0% to 22.3% and the free cash flow margin is still expected to be around 9% to 10%.

CEO Commentary

Matthew Pine, Xylem’s president and CEO, stated, “The team delivered another strong quarter, exceeding expectations with disciplined execution on continuing commercial momentum. Revenue grew across all segments, with double-digit gains in Measurement and Control Solutions and Water Solutions and Services. Record adjusted EBITDA margin reflected the impact of our simplification initiatives, with strong margin expansion contributing to 23% adjusted EPS growth.”

“Resilient market demand for our solutions and our team’s accelerating performance give us the confidence to raise our full-year guidance. We are solidly on track to deliver our long-term financial framework and drive sustainable growth and value creation over the cycle.”

Tariffs Impact

Tariff costs remain a significant factor, with the company facing an estimated $275 million in annualized tariff impact on $1.1 billion in imports, though proactive pricing actions and supply chain management have helped contain net tariff exposure to $180 million.

Notably, impacts from China, the EU, and Section 232 contribute to this total, while about 75% of Mexico imports are USMCA-compliant and largely exempt.

Price Action: XYL shares were trading higher by 0.67% to $150.41 at last check Tuesday.

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