Home automation and security solutions provider Resideo Technologies (NYSE:REZI) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 19.1% year on year to $1.77 billion. On top of that, next quarter’s revenue guidance ($1.83 billion at the midpoint) was surprisingly good and 5% above what analysts were expecting. Its non-GAAP profit of $0.63 per share was significantly above analysts’ consensus estimates.

Is now the time to buy Resideo? Find out in our full research report.

Resideo (REZI) Q1 CY2025 Highlights:

Revenue: $1.77 billion vs analyst estimates of $1.72 billion (19.1% year-on-year growth, 3% beat) Adjusted EPS: $0.63 vs analyst estimates of $0.31 (significant beat) Adjusted EBITDA: $168 million vs analyst estimates of $168.5 million (9.5% margin, in line) The company reconfirmed its revenue guidance for the full year of $7.39 billion at the midpoint Adjusted EPS guidance for the full year is $2.35 at the midpoint, beating analyst estimates by 6% EBITDA guidance for the full year is $765 million at the midpoint, above analyst estimates of $730.3 million Operating Margin: 7.7%, in line with the same quarter last year Free Cash Flow was -$96 million compared to -$19 million in the same quarter last year Market Capitalization: $2.61 billion

"Resideo had a strong first quarter, reporting results at or above the high-end of the range for all of our key financial metrics. The ADI and Products and Solutions teams continued their excellent operational execution, with both segments generating organic net revenue growth, continued gross margin expansion, and healthy Adjusted EBITDA growth. We are re-affirming our 2025 outlook," said Jay Geldmacher, Resideo's President and CEO.

Company Overview

Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.

Sales Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Resideo’s sales grew at a mediocre 7.3% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.Resideo Quarterly Revenue

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Resideo’s recent performance shows its demand has slowed as its annualized revenue growth of 4.8% over the last two years was below its five-year trend.

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Resideo Year-On-Year Revenue Growth

This quarter, Resideo reported year-on-year revenue growth of 19.1%, and its $1.77 billion of revenue exceeded Wall Street’s estimates by 3%. Company management is currently guiding for a 15.2% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

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Operating Margin

Resideo has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.6%, higher than the broader industrials sector.

Looking at the trend in its profitability, Resideo’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.Resideo Trailing 12-Month Operating Margin (GAAP)

In Q1, Resideo generated an operating profit margin of 7.7%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Resideo’s EPS grew at an astounding 77.2% compounded annual growth rate over the last five years, higher than its 7.3% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t expand and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.Resideo Trailing 12-Month EPS (Non-GAAP)

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Resideo’s two-year annual EPS growth of 3.1% was subpar and lower than its 4.8% two-year revenue growth.

In Q1, Resideo reported EPS at $0.63, up from $0.47 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Resideo’s Q1 Results

We were impressed by how significantly Resideo blew past analysts’ EPS expectations this quarter. We were also glad its full-year EBITDA guidance trumped Wall Street’s estimates. On the other hand, its EBITDA guidance for next quarter slightly missed. Zooming out, we think this quarter featured some important positives. The stock traded up 5.3% to $18.38 immediately after reporting.

Indeed, Resideo had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.

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