Data center products and services company Vertiv (NYSE:VRT) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 24.2% year on year to $2.04 billion. The company expects next quarter’s revenue to be around $2.35 billion, close to analysts’ estimates. Its non-GAAP profit of $0.64 per share was 4.1% above analysts’ consensus estimates.
Revenue: $2.04 billion vs analyst estimates of $1.93 billion (24.2% year-on-year growth, 5.2% beat)
Adjusted EPS: $0.64 vs analyst estimates of $0.62 (4.1% beat)
Adjusted EBITDA: $359.6 million vs analyst estimates of $358.3 million (17.7% margin, in line)
The company lifted its revenue guidance for the full year to $9.45 billion at the midpoint from $9.2 billion, a 2.7% increase
Management reiterated its full-year Adjusted EPS guidance of $3.55 at the midpoint
Operating Margin: 14.3%, up from 12.4% in the same quarter last year
Free Cash Flow Margin: 13%, up from 6.2% in the same quarter last year
Organic Revenue rose 25.3% year on year (8.1% in the same quarter last year)
Market Capitalization: $29.73 billion
StockStory’s Take
Vertiv’s first quarter results reflected solid execution across its data center infrastructure business, driven by continued growth in AI-related demand and strong order pipelines in the Americas and Asia. Management attributed the quarter’s performance to operational discipline, expanded production capacity, and resilience in navigating supply chain challenges. CEO Giordano Albertazzi highlighted the company’s ability to increase both organic sales and operating margins despite a dynamic tariff environment, stating, "Our Q1 performance demonstrates the strength of our business and the soundness of our strategy."
Looking ahead, the company raised its full-year revenue guidance, citing robust end-market demand and a growing backlog. However, management emphasized caution regarding tariffs, explaining that mitigation efforts—such as supply chain rebalancing and price adjustments—will only fully offset these costs later in the year. CFO David Fallon noted, “We believe the net impact of tariffs will sequentially decline as our countermeasures take effect.” While Vertiv reiterated its adjusted EPS guidance, executives acknowledged that uncertainty around tariffs remains a key variable for the remainder of the year.
Key Insights from Management’s Remarks
Vertiv’s leadership focused on several structural and operational topics shaping quarterly results and the outlook. The main drivers were ongoing data center infrastructure investment, evolving supply chain strategies, and engagement with emerging AI workloads.
AI-Driven Demand Acceleration: Management emphasized that investments in AI infrastructure are expanding data center requirements globally, boosting Vertiv’s order pipelines across multiple regions. They noted that AI-related projects, such as the prefabricated AI factory with NVIDIA and iGenius, are enhancing Vertiv’s technology leadership and customer relationships.
Supply Chain and Tariff Strategy: Vertiv outlined a comprehensive approach to mitigating tariff impacts, including increasing US and Mexico manufacturing capacity, pursuing USMCA (United States-Mexico-Canada Agreement) qualification, and shifting production to lower-tariff regions. Management explained that both pricing adjustments and supply chain reconfiguration are being deployed to counteract tariff-related costs.
Order Backlog and Market Visibility: The company’s backlog expanded to $7.9 billion, supported by a book-to-bill ratio of 1.4. Management cited sequential growth in pipelines and extended order visibility, especially in the Americas and Asia, though EMEA (Europe, Middle East, and Africa) continues to lag in AI-related infrastructure buildouts.
Operational Productivity Initiatives: Vertiv’s operating system (VOS) was credited with driving manufacturing productivity and freeing up capacity. Management pointed to ongoing efforts in process standardization and multi-sourcing to increase supply chain resilience amid geopolitical uncertainties.
New Solutions and Partnerships: The launch of fully integrated, prefabricated AI data center solutions, developed in partnership with NVIDIA, was highlighted as a differentiator. Management believes these projects demonstrate Vertiv’s ability to deliver complex infrastructure that supports rapid AI deployment in regulated industries.
Drivers of Future Performance
Vertiv’s management expects continued top-line growth, supported by secular demand for data center infrastructure, but notes that tariff mitigation, regional dynamics, and operational execution will shape margins and profitability in the coming quarters.
Tariff Mitigation and Margin Impact: Management indicated that supply chain realignment and pricing actions will gradually reduce the impact of tariffs throughout the year, with the largest headwinds occurring in the second quarter. The goal is to reach near-tariff neutrality by year-end.
Regional Expansion and Pipeline Strength: Growth in the Americas and Asia is expected to lead, with management particularly optimistic about accelerating demand in China and India. EMEA is anticipated to recover more slowly, but expanding pipelines could improve its contribution over time.
AI and Modular Solutions Adoption: The company’s investments in modular, prefabricated data center solutions targeting AI workloads are seen as a sustainable driver of future demand. Management believes successful execution on these projects will reinforce Vertiv’s position in next-generation data centers.
Top Analyst Questions
Scott Davis (Melius Research): Asked about the timing and effectiveness of tariff mitigation efforts. Management explained that the impact of countermeasures, including supply chain shifts and repricing, will compound over the year, aiming for tariff neutrality by year-end.
Amit Daryanani (Evercore): Inquired about order durability given industry noise around hyperscaler lease cancellations. CEO Giordano Albertazzi responded that growing pipelines and elongated order visibility indicate durable demand, despite some quarter-to-quarter lumpiness.
Steve Tusa (JPMorgan): Questioned the mix between pricing and supply chain actions in tariff management, and whether Vertiv is gaining market share. Management confirmed both are being used and pointed to relative growth rates as evidence of share gains.
Andrew Obin (Bank of America): Sought clarity on how Vertiv manages production capacity amid reports of large customer cancellations. Management stated that demand remains broad-based and capacity is being filled, with new segments like enterprises showing interest in AI infrastructure.
Nicole DeBlase (Deutsche Bank): Asked about the ability to reprice backlog orders in light of tariffs. Management said customer conversations are ongoing and generally constructive, and that risk has been factored into guidance.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will monitor (1) the pace and effectiveness of tariff mitigation measures, including supply chain and pricing adjustments, (2) sustained growth in order pipelines and backlog, particularly in the Americas and Asia, and (3) the adoption of Vertiv’s new modular solutions for AI-driven data centers. Progress in expanding EMEA’s contribution and managing free cash flow generation will also be important indicators of execution.
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today.
