Vertiv delivered a strong Q4 with exceptional strength across key metrics, with backlog more than doubling YoY, orders more than doubling sequentially, and a significant step-up in book-to-bill ratio. Supported by these strong key metrics and ordering patterns, Vertiv guided for revenue growth to accelerate to 32% YoY in FY26, a more than four point YOY acceleration.
Outside of the financials, external factors also point to durable growth tailwinds, from hyperscaler capex guidance already pointing to YoY growth of 60% this year, data center buildouts accelerating and projected to continue, and advancing thermal requirements with each GPU generation creating solid tailwinds for content opportunities.
For some of our recent coverage on Vertiv, read here and here. For additional info on the product side, read here.here and here. For additional info on the product side, read here.
Backlog More than Doubles in Q4
Starting with backlog, Vertiv reported 109% YoY and 57% QoQ growth to $15 billion in Q4, accelerating sharply from 28% YoY and 12% QoQ in Q3. On a dollar basis, Vertiv added $5.5 billion to its backlog sequentially.
This backlog growth was out of the ordinary for a few reasons – over the last two years, Vertiv’s fastest QoQ backlog growth up until this point was 15%, yet now growth was ~57%.
It also created an entirely new dynamic for backlog-to-revenue ratios. Vertiv has seen its backlog to forward revenue (full year guidance from Q4) ratio hover between 72% to 78% over the last three years, yet now this ratio stands at ~111%, suggesting much more elevated revenue visibility through next year with the majority being firm orders.
It could also be serving as an early indicator of a structural shift higher in demand, currently supported by capex signals with hyperscalers already guiding for ~60% YoY growth, though more confirmation in upcoming quarters is likely needed for this point.
Additionally, Vertiv’s conversion time for this backlog has been pushed out, from its typical 9 months to roughly 15 months, with management stating it expects the backlog to be shipped in the next 12 to 18 months. Vertiv emphasized that the shape of the backlog has not changed much, but instead is more elongated into that 12 to 18 month window consistent with Q4’s large order intake:
Q, Nigel Coe, WolfeQ, Nigel Coe, Wolfe
“Could you just maybe touch on the backlog aging? It seems the guidance implies roughly 15 months of conversion of the backlog. Typically, you do 9 months. So maybe just talk about are we seeing longer duration orders in that backlog?
A, Giordano Albertazzi, Vertiv CEO:A, Giordano Albertazzi, Vertiv CEO:
“Well, so I will start with the aging, so I can address that. We've been already vocal quite a lot already that our customers requested lead time pretty much ranges from 12 to 18 months, especially when we talk about the bigger orders. It's never exact. It's always range. But I would say that 12 to 18 [months] is a good approximation of where the large orders demand the deliveries to be. And typically, it's not even just on bulk, if it is really a large order.
But having said that, if you think about the structure of our order intake this year — sorry, last year, 2025, with a very, very strong second half, relative anyway to a very strong year altogether, but particularly strong in the second half and particularly strong in the last quarter. Then they see that the 12 to 18 months, let's push things into 2027, while we have — we are very happy with how 2026 is covered. So again, as I said in my comments earlier, the shape of the backlog is not something different. It's just a consequence of the phasing of the orders when we receive that. So no big differences in the way the market asks and demands, or expect our deliveries.”
Book-to-Bill Ratio of 2.9X; Q4 Orders Surge 252% YoY (yet are Lumpy)
Aiding the backlog growth was an increase in organic orders in Q4, with Vertiv reporting organic orders up 252% YoY (though against a flat YoY comp).
This marked a substantial 192 point acceleration from 60% YoY growth, while QoQ growth accelerated from 20% in Q3. This strong Q4 order intake drove TTM order growth up to 81% YoY, from 21% YoY in Q3. Despite this surge, management emphasized that the pipeline continues to grow across all regions and has not depleted, with the order growth simply reflecting the level of demand in the market with no abnormalities in purchasing.
Despite this strength, Vertiv's management emphasized that orders are lumpy, and in fact, management plans to drop this metric from future reporting:
“Over time, we have been vocal about the lumpy nature of orders. This lumpiness can generate unnecessary volatility. The dynamics of the market also makes orders very difficult to predict. Consistent with what we said during '25, we have been reflecting on our orders disclosure. We believe that currently, the best approach is to no longer report actual orders, orders forecast or backlog with quarterly earnings. It just seems to lead to excessive volatility that is not representative of the sustained performance of the company and is not beneficial to our investors.”
Full year backlog disclosures will still be provided in annual filings. Although this will be our last quarterly view for orders and backlog, there are a few trends evident within both metrics, as well as book-to-bill, suggesting forward revenue growth is likely to accelerate, which matches consensus.
Driven by Q4’s order growth, Vertiv’s book-to-bill ratio jumped to 2.9X, up from 1.4X in Q3. As is the case with orders, book-to-bill has seen some lumpiness quarter to quarter, though there are some key parallels that we can draw here given the simultaneous strength in orders and backlog.
Current consensus estimates currently point to growth accelerating to the high-30% range by the second half of 2026, though if backlog can be converted on a slightly quicker cadence than the ~15 months management is guiding, growth could potentially accelerate well beyond 40% YoY by Q4.
We'd want to see Vertiv exit FY26 around $1 billion above the initial guide (in similar fashion to FY25), with revenue more heavily weighted towards the back half, such as at $4.3-$4.4 billion in Q4 versus the current $3.98 billion estimate, as this would project growth to roughly 51% YoY.
This was also hinted at in the call:
Q, Andrew Kaplowitz, Citi:Q, Andrew Kaplowitz, Citi:
“If I look at core incrementals that you're modeling, I think you've got pretty close to 30% dialed in, is kind of the low end of your long-term range for Q1 and '26, but I would guess the scale of some of these contracts could be your friend, because they should maximize your ability to leverage your sales. So is it possible to generate higher incrementals given potential operating leverage? Or do we need to be a bit more conservative regarding supply chain? And do you just need a higher level of growth investment to fund all of your revenue growth?
A, Craig Chamberlin, Vertiv CFO & Executive VP:A, Craig Chamberlin, Vertiv CFO & Executive VP:
“Andy, I'll start off by saying you're exactly right. There is a higher level of investment. We are still guiding at that lower end of the 30% to 35% that we've said in the past. I think as we get through the year and the investment that we are putting into place, we can continue to see those go up in our longer-term guidance, and we'll reiterate that in the Investor Day of what we see as that goes forward. But I think you're exactly spot on.”
This implies that Vertiv’s heightened capex plans (discussed below) for the year to build out capacity can provide near-term tailwinds as the year progresses, adding another layer of confidence that Vertiv will be able to translate its surging backlog more smoothly into revenue without major inventory buildup.
More broadly speaking, external signals such as hyperscaler capex and data center construction are another sign of Q4 being the first indicator of a sustainable step-up in demand and potential revenue inflection point. For example, research from Stifel and Aterio suggests data center projects under construction had nearly doubled YoY to more than 40GW as of November; for more specific hyperscaler-dedicated growth, Wells Fargo projects hyperscaler capacity to double from 49GW in 2025 to 98GW by 2027.
It’s important to note here that a single quarter with strength across orders, book-to-bill and backlog growth does not cement in stone blowout quarters throughout each quarter of 2026, but rather it serves as a signal that it has the key ingredients to drive an inflection in revenue growth heading through next year.
Capex Stepping Up to 3-4% to Support Growth
Vertiv also raised its capex forecasts for 2026, projecting a step up to 3-4% of revenue, from its historical 2-3% range; this would project capex to be ~$405 to $540 million this year, up from $220 million in 2025. While it goes to show that Vertiv is not capital-intensive, the decision to boost capex supports the factors described above for revenue to inflect higher.
When asked about what was needed to prevent bottlenecks and seamlessly convert this backlog to revenue and earnings, management explained that it boils down to expanding capacity. Vertiv sees this as a two-pronged approach, one from capex and expanding its manufacturing footprint, and the second from increasing productivity and output from the existing footprint. CEO Giordano Albertazzi explained that Vertiv is currently expanding its factory footprint with a new location coming live, and collaborating closely with the supply chain to execute on the backlog.
CFO and EVP Craig Chamberlain clarified that most of Q4’s capex, which was ~$95 million or 3.3% of revenue, already accelerating above historical levels, “ is in flight, meaning that we're already doing the build-outs, and we understand what we need to do to deliver the capacity for the guide that we put out there for sales.”
Management also stated that they build with ‘wiggle room’ of 20-25% within capacity to accelerate growth when needed, with this framework and incremental capacity being reflected in the capex guide. This will allow Vertiv to begin tackling its backlog and remain prepared if order growth remains robust, such as if hyperscaler capacity additions take off on an accelerated rate through 2026.
Modular Architecture as a Catalyst, End-to-End Capabilities
We have discussed modular AI factories as a catalyst for Vertiv in the past in our Q1 and Q2 earnings write-ups, Vertiv Q1: Inflection Point Muted by APAC, AI Factories Catalyst for 2026 and Vertiv Q2: Margins to Rebound by Q4, Yet Growth is Decelerating:
“For AI, where compute density and thermal loads are significantly higher, modular solutions are particularly ideal as they offer optimized power distribution, advanced liquid cooling integration, and scalable “white space” that can be expanded in phases without disrupting existing operations.
Ultimately, this reduces deployment from years to months and positions Vertiv as a choice partner for the physical layer (power and cooling) for those that specialize in the logic layer (compute and networking).”
There was not much of an update on this front in Q4, though Vertiv highlighted its modular and pre-fab OneCore and SmartRun products that facilitate and accelerate data center deployment at scale. For example, OneCore is Vertiv’s full end-to-end data center building block including power and cooling modules, service modules, chillers and more in a 12.5MW block that allows easy scaling up to a 1GW size. SmartRun is a pre-fab whitespace solution to accelerate data center readiness, bringing high-density power distribution, liquid cooling, networking and containment into a single deliverable platform; it can be stand-alone or integrated with OneCore, and can be scalable across multiple chip generations.
When asked about the bookings acceleration and how it ties into systems such as these, management said that “when it comes to the system question, we clearly see an acceleration” as OneCore and SmartRun are starting to be "quite broadly adopted.” SmartRun in particular was noted as being deployed across multiple customers.
Vertiv is also taking its focus on end-to-end serviceability a step further with its recent acquisition of PurgeRite, which strengthens its fluid management capabilities, such as for chilled water and liquid-cooled systems. Vertiv says this extension of its cooling capabilities improves reliability, reduces downtime and leads to “fewer thermal throttles [and] higher compute throughput,” and expands its high-margin services portfolio.
Vertiv Will Benefit Regardless of Thermal Tech
As a quick reminder, Nvidia’s future design lineup shows continual increases in power consumption, with Vera Rubin expected to boost thermal design power (TDP) by 50% over Blackwell at up to 180 kW to potentially 230kW per rack, with the Rubin Ultra boosting this to 600kW by late 2027. These advancing power requirements place much more emphasis on liquid cooling, fluid management, and related thermal management technology.
Goldman Sachs’ Mark Delaney question about cooling product mix evolution and opportunity per MW, noting that “there was some discussion that Rubin raised racks may not need chillers, and conversely post-Supercompute last fall, there was a proposal from a competitor about stainless steel chillers maybe displacing CDUs.”
Vertiv CEO Giordiano Albertazzi said that this topic is not theirs to confirm, but even if CDUs are reduced, Vertiv stands to benefit as its portfolio spans the entire thermal management chain. He also emphasized that CDUs are likely to persist into the foreseeable future as other cooling tech remains too niche:
“All in all, we see that design continues to be mixed. If anything, this complicates the thermal chain and this complexity is something that we like as someone who has got the entire portfolio, we certainly are perfectly positioned to support our customers. And again, going back to what we're saying enable the right choice for our customers.
Cooling chips directly in other ways than through CDU in this moment is not something that we see. Simply because it would — in most of the cases, it will be niche applications probably, but in most of the cases, that would be too dangerous. Blast radius is a little bit too big, et cetera.”
Financials
Revenue to Accelerate in FY26 to 32%
Vertiv reported a solid Q4 with revenue up 22.8% YoY (19% organic) and 7.6% QoQ to $2.88 billion, decelerating from 29% YoY in Q3. This revenue growth was driven entirely by strength in the Americas with revenue up 50.2% YoY, as Europe and APAC both registered YoY declines – more on this below.
For Q1, Vertiv guided revenue to be $2.5 billion to $2.7 billion, marking a reacceleration to 27.7% YoY and 22% organic growth at midpoint; however, this will mark a QoQ decline of (9.7%) at the midpoint of this forecast, following typical first quarter seasonality (though slightly better compared to Q1 2025’s (13.2%) QoQ decline). As noted above, growth is expected to accelerate towards the 38% range by Q4, supported by orders growth, backlog and book-to-bill.
Looking ahead to FY26, Vertiv laid out initial guidance for revenue to be between $13.25 billion to $13.75 billion, accelerating to 32% YoY from FY25’s 27.7% growth; organic growth is projected to be 27-29% YoY, a slight acceleration from 26%. This also marked a significant beat over consensus estimates for $12.39 billion.
Regional Breakdown
In Q4, Vertiv saw Americas growth continue to accelerate, yet APAC and Europe revenue both declined in the quarter, capping off a sharp two-quarter deceleration.
Americas revenue rose 50.2% YoY and 46.2% organic to $1.89 billion, accelerating from 42.9% YoY growth in both Q2 and Q3, driven by growth across customer segments and product lines. However, for Q1, management is guiding for Americas growth to moderate to the high-30% level.
APAC logged its only decline since the start of 2024 with revenue down (9.6%) YoY and (9.3%) organic to $492 million, impacted by macro headwinds. Growth has decelerated sharply from nearly 37% YoY in Q2. For Q1, APAC growth is expected to rebound sharply to the low-20% range.
Europe revenue declined (8.2%) YoY and (14.1%) organic to $501.7 million, also logging its first decline since the start of 2024 on a YoY basis, due to industry constraints, possibly related to permitting and power transmission delays. Europe is expected to provide a larger drag on growth in Q1 with management projecting revenue down mid-20%.
For some brief commentary on global dynamics, management said they believe the “realization that a lot more infrastructure is needed is now palpable” in EMEA, with certain elements of the pipeline accelerating, while in APAC, the “market demand is not very strong in this moment.”
Vertiv also provided a brief snapshot for regional growth forecasts for 2026. Americas is expected to see continued strength with revenue increasing in the high-30% range, slightly moderating from 41.9% growth in 2025. APAC is forecast to see growth in the mid-20% range, accelerating from 17.5% growth in 2025. Europe is projected to see revenue flat to down mid-single digits, with 2H currently expected to return to YoY growth following a soft 1H; this compares to 1.7% growth in 2025.
Margins Expand Slightly in Q4
Vertiv saw slight gross and operating margin expansion in Q4, though in line with seasonal trends. Q1 margins are projected to take a step down QoQ but remain higher YoY; however, management added that they expect “to have materially offset unfavorable margin impact from tariffs as of the first quarter of this year,” providing more room for upside beginning in Q2.
GAAP gross margin was 38.9% in Q4, up 1.1 points QoQ and 1.8 points YoY.
GAAP operating margin was 20.1%, expanding 0.8 points QoQ and 0.7 points YoY, but coming in below management’s guidance for 20.7%. Adjusted operating margin was 23.2% (versus guidance for 22.4%), expanding 0.9 points QoQ and 1.7 points YoY. Looking ahead to Q1, GAAP operating margin was guided to be 16.3%, down 3.8 points QoQ but up 2 points YoY, while adjusted operating margin was guided to be 19%, down 4.3 points QoQ but up 2.5 points YoY.
GAAP net margin was 15.5%, up 0.6 points QoQ and 9.2 points YoY, as the year-ago quarter recorded a $180 million negative impact related to warrant liabilities. Adjusted net margin was 18.5%, up 0.4 points QoQ and 2.1 points YoY.
Vertiv guided for solid margin expansion for FY26, suggesting that Q2 through Q4 will see much stronger margins to offset Q1’s softness. GAAP operating margin was guided to be 20.5%, up 2.6 points YoY, while adjusted operating margin was guided to be 22.5%, up 2.1 points QoQ. This will flow through to net margin, with GAAP net margin guided at 15.4%, up 2.4 points, and adjusted net margin guided at 17.5%, up 1.5 points YoY.
Earnings
While adjusted EPS decelerated 26 points in Q4 to 37% YoY, Vertiv forecast a sharp rebound in Q1 to 53%, with FY26’s guide implying that growth will persist at a similar rate through the year.
Adjusted EPS was $1.36 in Q4, up 37% YoY but decelerating from 63% in Q3, coming in 4.9% ahead of estimates. GAAP EPS growth was exceptionally strong, up 200% YoY to $1.14, though growth was off a smaller base.
For Q1, Vertiv guided for adjusted EPS to be $0.95 to $1.01, up 53% YoY at midpoint. Estimates point to ~50% growth being maintained in Q2 before a step lower towards the 40-45% range in the second half of the year.
FY26 adjusted EPS was guided to be $5.97 to $6.07, up 43% YoY and decelerating only slightly from 47% growth in FY25.
Cash and Balance Sheet
Driven by the surge in orders and larger advanced payments, Vertiv reported robust cash flows in Q4.
Operating cash flow in Q4 was $1.01 billion for a 34.9% margin, up 15.9 points QoQ and 16.8 points YoY; for the full year, operating cash flow was $2.11 billion (with Q4 accounting for nearly half of that) for a 20.7% margin, up 4.1 point YoY.
Adjusted free cash flow was $910 million, up 151% YoY, representing a 31.6% margin, up 14.3 points QoQ and 16.2 points YoY. For FY25, adjusted FCF was $1.89 billion for an 18.4%, up 4.2 points YoY.
Cash and equivalents were $1.83 billion, while debt was $2.91 billion; however, Vertiv’s net leverage ratio remained at 0.5X.
Inventories increased marginally in Q4, up ~1.8% QoQ to $1.46 billion, while accounts receivable showed a larger jump at 10.6% QoQ to $3.11 billion.
In accordance with the order surge, deferred revenue jumped more than 60% QoQ to more than $1.81 billion, with management noting that order mix and order type are the two drivers, with mix possibly having a larger influence in Q4.
Conclusion
Vertiv’s Q4 was a clear upside surprise with signs demand is strengthening given backlog, order growth, and book-to-bill ratio all moved notably higher. With management guiding to revenue acceleration and external tailwinds from rising capex supporting incremental data center construction, the quarter suggests Vertiv may be approaching a growth inflection. Key metric growth can be lumpy with Vertiv, despite headline numbers remaining steady, therefore, it’s the rare scenario where dropping key metric reporting could actually be a positive. We continue to watch this stock with interest.
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Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
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