Revvity's AI Inflection: From China Exit to Lab-in-the-Loop Growth

Q2 beat, guidance raise, and a definitive divestiture signal a portfolio pivot toward AI-driven science and software monetization.

RVTY · Earnings Call · 2026-08-04

The AI Flywheel Starts to Turn

Revvity (RVTY) is having a moment. The stock has rallied ~39% over the past 90 days, and this morning's Q2 2026 print confirms the thesis is shifting from hope to execution. The company raised its full-year pro forma organic growth to 4%-5% (from 3%-4%), adjusted EPS to $5.30-$5.40, and adjusted operating margin to 28.7%. The beat came from a mix of operational strength, tax timing, and an “unanticipated contribution” of tariff refunds, as CFO Max Krakowiak explained: “we generated significant cash in the quarter with exceptional cash flow conversion of our adjusted net income of 117%” — Maxwell Krakowiak, Senior Vice President and Chief Financial Officer · 2026-08-04. Tariff refunds drove about half of the EPS upside, but management chose to reinvest half of that benefit into capacity and R&D rather than bank it, a clear signal that they see a durable opportunity.

The deeper story is the AI inflection. CEO Prahlad Singh described a step-change in demand from both traditional pharma/biotech and new, non-traditional customers building AI-driven drug discovery platforms.

These organizations are building AI-driven drug discovery platforms and are seeking capabilities that sit squarely within Revvity's portfolio.
Prahlad Singh, President and Chief Executive Officer · 2026-08-04

The high-content screening business is seeing double-digit order growth, with order velocity outpacing manufacturing capacity. Max added: “for this quarter, it was double-digit order and organic growth performance for that business” — Maxwell Krakowiak, Senior Vice President and Chief Financial Officer · 2026-08-04. This is feeding into a Signals platform that is becoming the connective tissue for Lab-in-the-Loop workflows.

From China Exit to Software Superpowers

The other big headline is the definitive agreement to divest the China immunodiagnostics business, a deliberate de-risking of a structurally challenged market. Prahlad is confident: “We have now signed a definitive agreement with the buyer on terms consistent with our initial expectations” — Prahlad Singh, President and Chief Executive Officer · 2026-08-04. This is a continuation of a strategic pivot that has been years in the making. In the prior quarter, Prahlad had already framed the AI opportunity: “Synthetica for me is not an AI. It's even more potentially important in the near term as it is in the longer term because what it does is it brings to action how drug discovery happens.” — Prahlad Singh, President and Chief Executive Officer · 2026-02-02 That vision is now showing up in orders, not just narrative. The earlier expectation was that software would decline ~20% in Q2 due to tough comps: “In the second quarter, we do have tougher comps. And so we expect that business to be down approximately 20% in the second quarter.” — Maxwell Krakowiak, Senior Vice President and Chief Financial Officer · 2026-05-05 That came through, but the company expects a return to strong double-digit growth in the back half as Signals AI and the new Anthropic connector roll out.

Financially, the company is in a healthy spot despite the GAAP/adjusted accounting gap. Total revenue reached $711M in Q2, up 7% YoY, but remains far below the $1.3B peak in 2021. The balance sheet is improving as they paid down a EUR 500M note and expect gross leverage below 3x by year-end. The Genomics England contract continues to provide a backdrop, but the real call option is the AI-driven demand for high-content screening and the software ecosystem that monetizes the data.