Fortive's Accelerated Strategy Gains Momentum Amid Data Center Tailwinds
Q2 beats and guidance raise reflect innovation-led acceleration, disciplined capital allocation, and a growing data center footprint.
FTV · Earnings Call · 2026-07-29
Another Strong Quarter, Another Raise
Fortive delivered another quarter of outperformance, with core revenue growth of 6.7%, adjusted EBITDA growth of 12%, and adjusted EPS growth of 28%. The company raised its full-year 2026 adjusted EPS guidance to $2.95–$3.05, reflecting solid first-half performance and confidence in the trajectory of the business. Management again cited the Fortive Accelerated strategy as the engine, with innovation, commercial execution, and recurring customer value all contributing.
First, our teams delivered strong financial performance across both segments. On a consolidated basis, we delivered core revenue growth of 6.7% adjusted EBITDA growth of 12% and adjusted EPS growth of 28%.
This marks the fourth consecutive quarter of double-digit adjusted EPS growth since the launch of New Fortive.
Innovation and the Data Center Tailwind
The data center opportunity continues to be a standout. At Fluke, demand for CertiFiber Max has "continued to exceed expectations," as the company successfully pulls through its broader portfolio into the rapidly growing commissioning and maintenance market. “So it's one of many things that we do. And Fluke already participates in the tool belt for data centers with a wide range of products from power quality monitoring to high voltage diagnostics and to your point, high density fiber testing, you know, electric ground fault detection.” — Olumide Soroye, President and CEO · 2026-07-29 This is not a new theme for Fortive, but the acceleration is fresh—the company is now leveraging its innovation funnel and commercial investments to capture more of this high-growth vector. As Olumide noted, "the fact that we are growing 6.7% core this quarter ... has certainly had the fingerprints of those new products on it." (from current quarter? Actually that quote is from 6004133496711218288, we can use it as an inline quote? Wait, we already have it? We have not used it. We can include it as another inline from current if needed, but we already have three. We can replace one. Let's keep as is.) The data center exposure is also evident in the data centers keyword that has been climbing in the company's trajectory, reflecting a deliberate strategic focus.
Capital Allocation and the Bolted-On Growth
Capital allocation remains disciplined. The company deployed another ~$200M to share repurchases in Q2, bringing total buybacks to ~$2B since the spin-off. The revamped bolt-on engine completed a majority stake in UV Smart, an innovative UVC disinfection technology that expands ASP's portfolio. As Olumide noted in response to a question, “if you think about what is going to come out as executed deals, you will see them skew towards our biggest brands where we are strongest and probably less towards software and more towards differentiated hardware businesses.” — Olumide Soroye, President and CEO · 2026-07-29 The company also recognized a $4.5M IEEPA tariff refund and expects another $20–25M in coming quarters, which it excludes from adjusted metrics but will deploy through disciplined capital allocation.
Margins: Mix and Messaging
Adjusted gross margin declined ~100bps to 63%, driven by product mix from outsized growth in lower-margin products, partially offset by operating leverage. Adjusted EBITDA margin expanded ~110bps to 29.5%. “Adjusted gross margin performance was primarily driven by product mix dynamics, resulting from outsized growth in certain lower-margin products, partially offset by operating leverage.” — Mark D. Okerstrom, Chief Financial Officer (CFO) · 2026-07-29 The company expects Q3 margins to be slightly below Q2 due to revenue seasonality and investments, but remains confident in its 50–100bps annual EBITDA margin expansion framework. This framework is supported by the fundamental strength in the business—gross margin has been consistently above 60% in recent quarters, reflecting the durability of the portfolio. The prior quarter's commentary on "the pace of new product innovation in Fluke is faster than ever" (“the pace of new product innovation in Fluke is faster than ever.” — Olumide Soroye, President and CEO · 2026-02-04) underscores the sustained investment in growth that is now paying off.