Q2 2026 Vertiv Holdings Co Earnings Call

July 29, 2026

Speaker #1: And everyone diverted. Q2 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. Please note that this call is being recorded.

Speaker #1: I would now like to turn the program over to your host for today's conference call, Lynn Maxeiner, Vice President, Investor Relations.

Speaker #1: Good morning. My name is Lucas Penner, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv's second quarter 2026 earnings conference call.

Speaker #2: Great. Thank you, Lucas. Good morning, and welcome to Vertiv's Q2 2026 earnings conference call. Joining me today are Vertiv's Executive Chairman, Dave Cote, Chief Executive Officer Gio Albertazzi, and Chief Financial Officer Craig Chamberlin.

Speaker #1: All lines have been placed on mute to prevent any background noise. Please note that this call is being recorded. I would now like to turn the program over to your host for today's conference call, Lynne Maxeiner, Vice President, Investor Relations.

Speaker #2: We have 1 hour for the call today. During the Q&A portion of the call, please be mindful of others in the queue and limit yourself to 1 question, and if you have a follow-up question, please rejoin the queue.

Speaker #2: Great. Thank you, Lucas. Good morning, and welcome to Vertiv's second quarter 2026 earnings conference call. Joining me today are Vertiv's Executive Chairman, Dave Cote, Chief Executive Officer Giò Albertazzi, and Chief Financial Officer Craig Chamberlain.

Speaker #2: Before we begin, I'd like to point out that during the course of this call we will make forward-looking statements regarding future events, including the future financial and operating performance of Vertiv.

Speaker #2: These forward-looking statements are subject to material risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We refer you to the cautionary language, included in today's earnings release, and you can learn more about these risk in our annual and quarterly reports and other filings made with the SEC.

Speaker #2: Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

Speaker #2: These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We refer you to the cautionary language included in today's earnings release, and you can learn more about these risks in our annual and quarterly reports and other filings made with the SEC.

Speaker #2: During this call, we will also present both gap and non-gap financial measures. Our gap results and gap-to-non-gap reconciliations can be found in our earnings press release and in the investor slide deck found on our website, at investors.vertiv.com.

Speaker #2: With that, I'll turn the call over to Executive Chairman Dave Cote.

Speaker #3: I am incredibly pleased by our Q2 performance and outlook for the rest of the year and beyond. We have a great position and a good industry and continue to execute very well.

Speaker #2: During this call, we will also present both GAAP and non-GAAP financial measures. Our GAAP results and GAAP-to-non-GAAP reconciliations can be found in our earnings press release and in the investor slide deck found on our website at investors.vertiv.com.

Speaker #3: Gio and his team stay at the forefront of technology with organic investments and acquisitions. The industry outlook is incredibly good because the digital age has decades to go.

Speaker #2: With that, I'll turn the call over to Executive Chairman Dave Cote.

Speaker #3: I am incredibly pleased by our second quarter performance and outlook for the rest of the year, and beyond. We have a great position and a good industry, and continue to execute very well.

Speaker #3: Our outlook is incredibly good and deservedly so, as we provide the picks and shovels for the digital age. The seed planning Gio and his team have been doing continues to pay off and will do so even more in the future as the benefits from our technology investments unfold over time.

Speaker #3: Q&A team stay at the forefront of technology with organic investments and acquisitions. The industry outlook is incredibly good because the digital age has decades to go.

Speaker #3: And with all that goodness, we still have opportunity to further improve. As Gio likes to say, we are still far from our full potential.

Speaker #3: Our outlook is incredibly good, and deservedly so, as we provide the picks and shovels for the digital age. The seed planting Q&A team has been doing continues to pay off and will do so even more in the future, as the benefits from our technology investments unfold over time.

Speaker #3: The future is so bright we have to wear shades. I love it. With that, I now turn it over to Gio.

Speaker #4: Well, thanks, Dave. And welcome, everyone. Let us go to slide 3. A strong quarter, EPS, margin, profit, and cash convincingly strong. Continuing on a trajectory of strong sales growth, even with some timing elements.

Speaker #3: And with all that goodness, we still have opportunity to further improve. As Giò likes to say, we are still far from our full potential.

Speaker #3: The future is so bright we have to wear shades. I love it. With that, I now turn it over to Giò.

Speaker #4: Pleased with what we see in July and full confidence in H2 execution and backlog. As a result, we have raised our full year outlook.

Speaker #1: Well, thanks Dave. And,

Speaker #4: welcome everyone. Let us go to slide 3. A strong quarter, EPS, margin, profit, and cash convincingly strong. Continuing on a trajectory of strong sales growth, even with some timing elements.

Speaker #4: Net sales were up 24% versus Q2 25, driven by continued strength in the Americas, which grew 29% and APAC also up 29%. Importantly, EMEA returned to positive net sales growth, with a 2% year-on-year increase.

Speaker #4: We are pleased with what we saw in July and have full confidence in our H2 execution and backlog. As a result, we have raised our full-year outlook.

Speaker #4: On an organic basis, net sales grew 18% with additional 5% from acquisitions and 1% from favorable currency. Adjusted operating margin came in at 22.6%, exceeding our guidance and growing 410 basis points year-on-year.

Speaker #4: Net sales were up 24% versus Q2 '25, driven by continued strength in the Americas, which grew 29%. APAC was also up 29%. Importantly, EMEA returned to positive net sales growth, with a 2% year-on-year increase.

Speaker #4: The strong margin performance translated into adjusted operating profit of $738 million, up 51% from a year ago. Adjusted, diluted, EPS were $1.52, or 60% up from Q2 25, driven primarily by high volume and continued operational productivity.

Speaker #4: On an organic basis, net sales grew 18%, with an additional 5% from acquisitions and 1% from favorable currency. Adjusted operating margin came in at 22.6%, exceeding our guidance and growing 410 basis points year-on-year.

Speaker #4: The strong margin performance translated into adjusted operating profit of $738 million, up 51% from a year ago. Adjusted, diluted, EPS were $1.52, or 60% up from second quarter 25, driven primarily by high volume and continued operational productivity.

Speaker #4: Adjusted free cash flow came in at $925 million, a very strong $234% year-on-year growth. Driven by higher operating profit and working capital efficiency. Free cash flow conversion exceeded $150% in the quarter.

Speaker #4: We are raising our full year guidance across all key metrics. Net sales raised to $14 billion, a 250 million increase from previous guidance, up 37% year-on-year.

Speaker #4: Adjusted diluted EPS now at $6.70, a 60% increase from 25. AOP now expected almost 60% up year-on-year, and adjusted free cash flow expected at $2.5 billion.

Speaker #4: We are raising our full-year guidance across all key metrics. Net sales are raised to $14 billion, a $250 million increase from previous guidance, up 37% year-on-year.

Speaker #4: And we achieved a net cash position at the end of Q2. Let's now move to slide 4. And let's start with a market environment on the left.

Speaker #4: Adjusted diluted EPS now at $6.70, a 60% increase from 25. AOP now expected almost 60% up year-on-year, and adjusted free cash flow expected at $2.5 billion.

Speaker #4: Our global pipeline momentum remains very strong. And we expect another year of robust orders growth. Demand signals are clear and broad-based. Regionally, let's start with the Americas, where market continues to be strong.

Speaker #4: And we achieved a net cash position at the end of Q2. Let's now move to slide 4. And let's start with the market environment on the left.

Speaker #4: Pipeline is actually accelerating. Corroborating the long-term growth trajectory of our business. EMEA's momentum is further strengthening. This reinforces our confidence in the acceleration for the second half of the year.

Speaker #4: APAC showed broad-based strength. Pipeline expansion and favorable market conditions. This supports continued growth across the region. Pricing continues to be favorable. We expect positive price-cost in 26, including the current impact of tariffs and countermeasures.

Speaker #4: Now to the right side of this slide, Q2 revenue showed strong growth year-on-year quarter to quarter. We are executing on further acceleration in Q3 and Q4 on strong backlog.

Speaker #4: APAC showed broad-based strength. Pipeline expansion and favorable market conditions support continued growth across the region. Pricing continues to be favorable. We expect positive price-cost in '26, including the current impact of tariffs and countermeasures.

Speaker #4: Additional capacity is online globally. Examples are Johor in Malaysia, five large plants expansions in the Americas, chiller capacity increases in EMEA and many more.

Speaker #4: Now, to the right side of this slide, Q2 revenue showed strong growth year over year and quarter to quarter. We are executing on further acceleration in Q3 and Q4, on a strong backlog.

Speaker #4: During investor day, you saw that this expansion is rapid and broad-based. At speed, but always in a very disciplined fashion. We are delivering data center infrastructure solution at an increasing scale and level of complexity, that's exactly where we want to be.

Speaker #4: Additional capacity is online globally. Examples are Johor in Malaysia; five large plant expansions in the Americas; chiller capacity increases in EMEA and more.

Speaker #4: We experienced a minor timing shifts in Q2 revenue, primarily driven by multi-phase project execution and temporary supply chain dynamics, but the demand is there and the trajectory is strong.

Speaker #4: During investor day, you saw that this expansion is rapid and broad-based—at speed, but always in a very disciplined fashion. We are delivering data center infrastructure solutions at an increasing scale and level of complexity. That's exactly where we want to be.

Speaker #4: Keep in mind there are increasingly large projects underway, think smart run and think even bigger with one core. These come with significant interdependencies, a lot of coordination, a lot the pace of our progress.

Speaker #4: And we get stronger every day. On capital expenditures, we now expect to be at a high end of our range, 4% of 26 sales, as we further expand global capabilities and capacity going into 27.

Speaker #4: Keep in mind, there are increasingly large projects underway—Think Smart Run and Think Even Bigger with One Core. These come with significant interdependencies, a lot of coordination, and a lot of rapid learning. I like the pace of our progress.

Speaker #4: We continue to invest for the long term, in a disciplined manner, in future power architecture, advanced thermal systems, services, and converged infrastructure. These are the building blocks that enable the next generation AI, data centers, and factories.

Speaker #4: And we get stronger every day. On capital expenditures, we now expect to be at the high end of our range, 4% of '26 sales, as we further expand global capabilities and capacity going into '27.

Speaker #4: And we intend to continue to lead the industry. Let's now go to slide 5. I am sure many of you will recall our CTO, Scott Armul's power architecture presentation at our investor day in May.

Speaker #4: We continue to invest for the long term, in a disciplined manner, in future power architectures, advanced thermal systems, services, and converged infrastructure. These are the building blocks that enable the next-generation AI data centers and factories.

Speaker #4: I want to reiterate and build on what we shared there. Multiple power architectures will coexist in the future. Virtue supports each one of them through a complete orchestrated power train.

Speaker #4: And we intend to continue to lead the industry. Let's now go to slide 5. I am sure many of you will recall our CTO, Scott Armell's power architecture presentation at our investor day in May.

Speaker #4: On the left side of the slide, you see the different architectures. Our AC Foundation with, as an example, Virtue Trinity and Energy Core battery storage system and the rest of the Virtue power train, of course.

Speaker #4: I want to reiterate and build on what we shared there. Multiple power architectures will coexist in the future. Vertiv supports each one of them through a complete, orchestrated powertrain.

Speaker #4: This architecture is broadly deployed, growing, and will continue to be used by many categories of customers. The next architecture, serving even higher density, has a medium voltage AC source that feeds low voltage AC to deliver 800 volt DC at rack and pod level.

Speaker #4: On the left side of the slide, you see the different architectures. Our AC foundation with, as an example, Verti Trinity and Energy Core battery storage system and the rest of the Verti power train, of course.

Speaker #4: Here you see a new Virtue technologies like medium voltage BAS UPS and Virtue 800 volt DC sidecars. This is under customer validation in 26 with deployment planned in 27.

Speaker #4: Then the 800 volt DC architecture at data hall level. Here, Virtue Solutions will include MV DC UPS and solid-state transformer. To cover the multiple ways to address the end-to-end power train.

Speaker #4: Here you see a new Verti technologies like medium voltage BAS UPS and Verti 800-volt DC sidecars. This is under customer validation in 26, with deployment planned in 27.

Speaker #4: We're active in development with plan 27 customer validation, supporting 28 deployment. As stated, rather than transitioning to a single architecture, the market is expected to leverage both AC and DC solutions as power requirements continue to evolve for years to come.

Speaker #4: Then the 800-volt DC architecture at data hall level. Here, Verti solutions will include MV, DC UPS, and solid-state transformer. To cover the multiple ways to address the end-to-end power train.

Speaker #4: Now the right side of the slide. This is an example of deploying multiple power architectures as sites evolve and expand. I'm thrilled to highlight our collaboration with NVIDIA and Vision Bay AI.

Speaker #4: We're active in development, with a planned 27 customer validations, supporting 28 deployments. As stated, rather than transitioning to a single architecture, the market is expected to leverage both AC and DC solutions as power requirements continue to evolve for years to come.

Speaker #4: Foxconn's business unit focused on AI supercomputing. At their site in Gaoshang, Taiwan. For the initial phase of this site, Vision Bay AI awarded the Power Thermal and Services business to Virtue for what is Taiwan's first AI data center featuring NVIDIA GB300.

Speaker #4: Now, on the right side of the slide, this is an example of deploying multiple power architectures as sites evolve and expand. I'm thrilled to highlight our collaboration with NVIDIA and Vision Bay AI.

Speaker #4: On top of this, we are collaborating for the world's first AI data center adopting 800 VDC volt DC architectures at the rack and pod level, featuring NVIDIA Vera Rubin.

Speaker #4: Foxconn's business unit focused on AI supercomputing. At their site in Kaohsiung, Taiwan, for the initial phase, this site, Vision Bay AI, awarded the Power, Thermal and Services business to Vertiv for what is Taiwan's first AI data center featuring NVIDIA GB300.

Speaker #4: This is an example of early customer validation of our roadmap and supports the broad power architecture evolution. This is real. This is happening. In a nutshell, as a number of viable power architectures expand and AC and DC coexist to deliver on the 800 volt DC, Virtue's content opportunity per megawatt expands and we're leading this transition.

Speaker #4: On top of this, we are collaborating for the world's first AI data center adopting 800 VDC architectures at the rack and pod level, featuring NVIDIA Vera Rubin.

Speaker #4: This is an example of early customer validation of our roadmap and supports the broad power architecture evolution. This is real, this is happening. In a nutshell, as a number of viable power architectures expand and AC and DC coexist to deliver on the 800-volt DC, Verti's content opportunity per megawatt expands.

Speaker #4: Let us now go to page 6. And let's continue on the topic of technology. I want to spend a moment talking about Virtue's data center cooling architectures and our unique fluid management services.

Speaker #4: When the two are coupled, combined, we ensure our customers to use nearly zero water. As they scale, many customers have been and are adopting closed-loop cooling architectures as they optimize power and water use.

Speaker #4: And we're leading this transition. Let us now go to page 6. And let's continue on the topic of technology. I want to spend a moment talking about Verti's data center cooling architectures and our unique fluid management services.

Speaker #4: A closed-loop cooling architecture is just that, closed or sealed with water recirculating. Typically, it does not require additional water after the fill at startup.

Speaker #4: Virtue's end-to-end thermal chain technologies for both the primary and secondary cooling loops examples are Virtue Trim Cooler, Virtue Cool Chip CDUs, to name a few, fully enable this approach.

Speaker #4: A closed-loop cooling architecture is just that—closed or sealed, with water recirculating. Typically, it does not require additional water after the fill at startup.

Speaker #4: This architecture enables a data center to run on no water consumption. Now let's take the focus on water use a step further. Let's also address the initial system fill.

Speaker #4: Verti's end-to-end thermal chain technologies for both the primary and secondary cooling loops examples are Verti trim cooler, Verti cool chip CDUs, to name a few, fully enable this approach.

Speaker #4: And this is where purge writes near zero comes into the equation. As part of our unique fluid management technology and services, our purge write near zero utilizes a closed-loop recirculation system to capture treat and reuse water during startup.

Speaker #4: This architecture enables a data center to run with no water consumption. Now, let's take the focus on water use a step further. Let's also address the initial system fill.

Speaker #4: This reduces the water normally used in the process by up to 90% during the startup of a data center. For our customers, this means a faster and more cost-effective deployment and commissioning of liquid cooling system and chilled water circuits.

Speaker #4: And this is where Purge Write Near Zero comes into the equation. As part of our unique fluid management technology and services, our Purge Write Near Zero utilizes a closed-loop recirculation system to capture, treat, and reuse water during startup.

Speaker #4: This means a significantly less waste and less disruption on site. More broadly, this expands Virtue's differentiation thermal management services and we're managing fluid performance from start throughout decades of operational life.

Speaker #4: Purge write near zero is scaling through our existing serving network. The capability we believe no one else can replicate at our scale. And with that, over to you, Craig.

Speaker #4: This means a significantly less waste and less disruption on site. More broadly, this expands Verti's differentiation thermal management services and we're managing fluid performance from start throughout decades of operational life.

Speaker #1: Thanks to you. Turn to slide 7. Let's walk through our second quarter financial results in more detail. On adjusted diluted EPS, we delivered $1.52.

Speaker #1: That's up 57 cents or 60% versus prior year. And 12 cents above guidance. The year-over-year improvement was driven by 58 cents from higher adjusted after-tax adjusted operating profit which was driven primarily from higher sales volume and increased profitability.

Speaker #4: Purge write near zero is scaling throughout our existing serving network. This capability, we believe, no one else can replicate at our scale. And with that, over to you, Craig.

Speaker #1: Thanks to you. Turn to slide 7. Let's walk through our second quarter financial results in more detail. On adjusted diluted EPS, we delivered $1.52.

Speaker #1: Looking at net sales, we delivered 3.274 billion in the quarter. That's up 636 million or 24% versus prior year. Organic sales growth was 18% with 5% additional growth contribution from acquisitions and an additional 1% growth contribution from favorable foreign exchange.

Speaker #1: That's up $0.57, or 60% versus prior year, and $0.12 above guidance. The year-over-year improvement was driven by $0.58 from higher adjusted after-tax adjusted operating profits, which was driven primarily by higher sales volume and increased profitability.

Speaker #1: By regions, America's grew 21% organically, APAC grew 26% organically, and EMEA was down 2% organically. Moving to adjusted operating profit, we delivered 738 million.

Speaker #1: Looking at net sales, we delivered $3.274 billion in the quarter. That's up $636 million, or 24%, versus prior year. Organic sales growth was 18%, with 5% additional growth contribution from acquisitions, and an additional 1% growth contribution from favorable foreign exchange.

Speaker #1: That's up 249 million or 51% versus prior year. And 28 million above the midpoint of our guidance. Adjusted operating margin of 22.6% expanded 410 basis points year over year and came in 140 basis points above guidance.

Speaker #1: By regions, the Americas grew 21% organically, APAC grew 26% organically, and EMEA was down 2% organically. Moving to adjusted operating profit, we delivered $738 million.

Speaker #1: The margin expansion was driven by strong operational execution, continued productivity gains, and favorable price cost execution, partially offset by tariff impacts. We're also continuing investing in capacity and engineering R&D to support future business growth.

Speaker #1: That's up $249 million, or 51%, versus the prior year, and $28 million above the midpoint of our guidance. Adjusted operating margin of 22.6% expanded 410 basis points year over year and came in 140 basis points above guidance.

Speaker #1: To round out the quarter, adjusted free cash flow a minimum was outstanding with the quarter ending at 925 million up 648 million or 234% from prior year.

Speaker #1: The margin expansion was driven by strong operational execution, continued productivity gains, and favorable price-cost execution, partially offset by tariff impacts. We're also continuing to invest in capacity and engineering R&D to support future business growth.

Speaker #1: The improvement was driven by higher adjusted operating profit, strong working capital performance, including project milestone collections, which has inclusive of initial advanced payments and lower cash interest.

Speaker #1: These items were partially offset by higher cash taxes and higher spending on CapEx investments. At our quarter end, our net leverage is at negative 1.1 times, providing even more flexibility.

Speaker #1: To round out the quarter, adjusted free cash flow minimum was outstanding. With the quarter ending at 925 million, up 648 million or 234% from prior year.

Speaker #1: Just a quick note on our deferred revenue. You'll see an increase in the quarter. And that's driven by project advanced payments and ongoing milestone collections.

Speaker #1: The improvement was driven by higher adjusted operating profit, strong working capital performance—including project milestone collections, which has included initial advanced payments—and lower cash interest.

Speaker #1: We are very happy with our execution on project milestone development and what you're seeing in deferred revenue is a combination of payments at project initiation, order placement, and ongoing project milestone execution.

Speaker #1: Moving to slide 8, let's look at segment performance. In America's net sales were 2.071 billion up 29% with organic growth of 21%. Organic sales growth remained strong in the quarter.

Speaker #1: Just a quick note on our deferred revenue. You'll see an increase in the quarter, and that's driven by project advanced payments and ongoing milestone collections.

Speaker #1: We are very happy with our execution on project milestone development and what you're seeing in deferred revenue is a combination of the payments at project initiation, order placement, and ongoing project milestone execution.

Speaker #1: As Gio mentioned earlier, some minor timing shifts in two key revenue these shifts were reflected in the America's revenue numbers and were primarily driven by multi-phase project execution and temporary supply chain congestion.

Speaker #1: However, we expect the associated timing delay to resolve in the second half of 2026. Adjusted operating profit was 571 million, driving 360 basis points in adjusted operating margin percentage.

Speaker #1: Flipping to slide 8, let's look at segment performance. In the Americas, net sales were $2.071 billion, up 29%, with organic growth of 21%. Organic sales growth remained strong in the quarter.

Speaker #1: The margin expansion was delivered by ongoing commercial excellence and strong operational execution. Moving to APAC, the region had strong results with net sales at 720 million up 29% with organic growth of 26%.

Speaker #1: We continue to see strong in-market demand and the commercial execution across the team gives us confidence going forward. Adjusted operating margin percentage grew 270 basis points in the quarter due to strong operating leverage realized in the region.

Speaker #1: In EMEA, net sales were 484 million up 2% with organic sales down 2%. We continue to see a strengthening market which supports our position for the region to return to organic sales growth in the second half of 2026.

Speaker #1: EMEA also saw strong growth in adjusted operating margin percent up 380 basis points year on year. The team continues to drive improved operational execution which came through in this strong margin performance.

Speaker #1: In EMEA, net sales were $484 million, up 2%, with organic sales down 2%. We continue to see a strengthening market, which supports our position for the region to return to organic sales growth in the second half of 2026.

Speaker #1: Turning to slide 9, let's walk through our third quarter 2026 guidance. For 3Q, we're projecting adjusted diluted EPS of $1.80 at the midpoint. That represents 45% growth versus prior year.

Speaker #1: EMEA also saw strong growth in adjusted operating margin percent, up 380 basis points year on year. The team continues to drive improved operational execution, which came through in this strong margin performance.

Speaker #1: That year-over-year improvement is driven by continued volume growth and ongoing margin expansion. On net sales, we expect 3.75 billion at the midpoint. That's up 1.074 billion or 40% versus prior year.

Speaker #1: Turning to slide 9, let's walk through our third quarter 2026 guidance. For Q3, we're projecting adjusted diluted EPS of $1.80 at the midpoint. That represents 45% growth versus the prior year.

Speaker #1: Organic sales growth is expected to be up approximately 35% with an additional 5% from acquisitions. By region, we expect America's organic growth in the high 30s APAC in the high 30s and EMEA in the mid-teens.

Speaker #1: That year-over-year improvement is driven by continued volume growth and ongoing margin expansion. On net sales, we expect $3.75 billion at the midpoint. That's up $1.074 billion, or 40%, versus prior year.

Speaker #1: Adjusted operating profit is expected to be 918 million at the midpoint. That's up 322 million or 54% versus prior year. Adjusted operating margin is expected to be 24.5% at the midpoint.

Speaker #1: That's up 220 basis points year over year and is driven by strong organic sales growth, continued operational leverage, and ongoing productivity realization. Now, let's turn to slide 10.

Speaker #1: For our updated full year, 2026 guidance. We're raising our outlook across all key metrics. Starting with adjusted diluted EPS, we now expect $6.70 at the midpoint.

Speaker #1: Adjusted operating profit is expected to be $918 million at the midpoint. That's up $322 million, or 54%, versus the prior year. Adjusted operating margin is expected to be 24.5% at the midpoint.

Speaker #1: That's up $2.50 or 60% versus 2025. The updated range is now at $6.65 to $6.75. This is an increase of 35 cents at the midpoint versus prior guidance.

Speaker #1: That's up 220 basis points year over year, and is driven by strong organic sales growth, continued operational leverage, and ongoing productivity realization. Now, let's turn to slide 10.

Speaker #1: For our updated full year, 2026 guidance. We're raising our outlook across all key metrics. Starting with adjusted diluted EPS, we now expect $6.70 at the midpoint.

Speaker #1: The year-over-year improvement is driven by continued volume growth and ongoing margin expansion. For net sales, we now expect 14 billion at the midpoint. That's up 3.77 billion or 37% versus 2025.

Speaker #1: That's up $2.50 or 60% versus 2025. The updated range is now at $6.65 to $6.75. This is an increase of 35 cents at the midpoint versus prior guidance.

Speaker #1: This represents an increase of 250 million versus our prior guidance. Organic sales growth is expected to be at 31% with 5% growth from acquisitions and 1% growth from favorable currency.

Speaker #1: The year-over-year improvement is driven by continued volume growth and ongoing margin expansion. For net sales, we now expect $14 billion at the midpoint. That's up $3.77 billion, or 37%, versus 2025.

Speaker #1: By region, we expect America's organic growth in the high 30s APAC in the low 30s and EMEA in the low single digits. Moving to adjusted operating profit, we now expect 3.325 billion at the midpoint.

Speaker #1: That's up approximately 1.235 billion or 59% versus 2025. This is an increase of 125 million versus our prior guidance. Adjusted operating margin is expected to be 23.8% at the midpoint, expanding approximately 340 basis points from 2025 and up 50 basis points versus our prior guidance.

Speaker #1: This represents an increase of $250 million versus our prior guidance. Organic sales growth is expected to be at 31%, with 5% growth from acquisitions and 1% growth from favorable currency.

Speaker #1: By region, we expect America's organic growth in the high 30s, APAC in the low 30s, and EMEA in the low single digits. Moving to adjusted operating profit, we now expect $3.325 billion at the midpoint.

Speaker #1: The margin expansion is driven by continued operational leverage and positive price cost execution, which has offsetting some tariff headwinds. Finally, adjusted free cash flow is expected to be 2.5 billion at the midpoint.

Speaker #1: That's up 613 million or 32% versus 2025. The year-over-year improvement is driven by higher adjusted operating profit and lower cash interest, which is partially offset by higher cash taxes and higher investments in capital expenditures.

Speaker #1: The margin expansion is driven by continued operational leverage and positive price-cost execution, which is offsetting some tariff headwinds. Finally, adjusted free cash flow is expected to be $2.5 billion at the midpoint.

Speaker #1: We're delivering strong results. Raising our outlooks and executing with discipline. Based on our performance and momentum, we're very confident in our ability to continue driving results throughout the balance of the year.

Speaker #1: That's up $613 million, or 32%, versus higher adjusted operating profit and lower cash interest, which is partially offset by higher cash taxes and higher investments in capital expenditures.

Speaker #1: With that, I'll send it back to you, Gio.

Speaker #2: Well, thank you. Thank you, Craig. Hey, Craig, let's go to slide 11 to wrap up. Strong Q2 performance. We are delivering and the team continues to raise the bar on what's possible.

Speaker #2: We raised our full year 26 guidance across all key metrics and the momentum is strong. It's broad-based and it's accelerating. We continue to invest with discipline.

Speaker #1: We're delivering strong results. Raising our outlooks. And executing with discipline. Based on our performance and momentum, we're very confident in our ability to continue driving results throughout the balance of the year.

Speaker #1: With that, I'll send it back to you, Gio.

Speaker #2: Not just for the 45% growth we expect in the second half, but for the years beyond. Capacity, innovation, services. On M&A, we closed a thermal key in June, strengthening our heat rejection capabilities.

Speaker #2: Well, thank you. Thank you, Fred. Craig, let's go to slide 11 to wrap up. Strong Q2 performance. We are delivering and the team continues to raise the bar on what's possible.

Speaker #2: We raised our full-year 2026 guidance across all key metrics. The momentum is strong, broad-based, and accelerating. We continue to invest with discipline.

Speaker #2: We closed a strategic thermal labs in April where adding server side liquid cooling and core plate expertise for high density thermal management. Together, these two acquisitions expand what we offer across the full thermal spectrum from heat rejection to direct-to-chip cooling.

Speaker #2: Not just for the 45% growth we expect in the second half, but for the years beyond. Capacity, innovation, services. On M&A, we closed a thermo key in June, strengthening our heat rejection capabilities.

Speaker #2: Allow me to additional spotlights. At the naval postgraduate school in partnership with Nvidia, we delivered a fully engineered package rack power and cooling system into an existing on-prem facility.

Speaker #2: We closed a strategic Thermal Labs in April, where we're adding server-side liquid cooling and core plate expertise for high-density thermal management. Together, these two acquisitions expand what we offer across the full thermal spectrum, from heat rejection to direct-to-chip cooling.

Speaker #2: This includes liquid cooling integration, commissioning, and deployment. And deployment support. This is a repeatable at-scale reference architecture for Nvidia GB300. We call this Vertiv Smart IT solution.

Speaker #2: Allow me to additional spotlights. At the naval postgraduate school in partnership with NVIDIA, we delivered a fully engineered package rack power and cooling system into an existing on-prem facility.

Speaker #2: The project establish an advanced locally operated AI environment for education, research, engineering, modeling, and simulation. This also shows how an existing facility can rapidly be transformed to support next generation accelerated computing.

Speaker #2: This includes liquid cooling integration, commissioning, and deployment—and deployment support. This is a repeatable, at-scale reference architecture for NVIDIA GB300. We call this the Vertiv Smart IT Solution.

Speaker #2: Easy for enterprise and sovereign customers to adopt. In EMEA, Germany, our collaboration with Data4 is a great example of the momentum we're seeing in that region.

Speaker #2: The project establishes an advanced, locally operated AI environment for education, research, engineering, modeling, and simulation. This also shows how an existing facility can rapidly be transformed to support next-generation accelerated computing.

Speaker #2: Vertiv delivers complete power train including switchgear, UPS, and battery systems, etc., and thermal chain like chilled water units, free cooling chillers, and our industry leading services it all will enable Data4's new Frankfurt site.

Speaker #2: Easy for enterprise and sovereign customers to adopt. In EMEA, Germany, our collaboration with Data4 is a great example of the momentum we're seeing in that region.

Speaker #2: This is exactly the kind of optimized end-to-end system deployments where Vertiv excels. To conclude, a more confident in our trajectory today than I've ever been.

Speaker #2: Vertiv delivers a complete powertrain, including switchgear, UPS, and battery systems, etc., and thermal chain like chilled water units, free cooling chillers, and our industry-leading services. It all will enable Data4's new Frankfurt site.

Speaker #2: We're executing, we're investing ahead of the curve, and increasingly our customers are asking us to help them architect their most complex infrastructures. That's the role we've earned.

Speaker #2: And it's the role we intend to further strengthen. With that, let's go to the Q&A.

Speaker #2: This is exactly the kind of optimized end-to-end system deployment where Vertiv excels. To conclude, I am more confident in our trajectory today than I've ever been.

Speaker #1: We will now begin the we will now begin the question and answer session. In order to ask a question, press star then the number one on your telephone keypad.

Speaker #2: We're executing. We're investing ahead of the curve. And increasingly, our customers are asking us to help them architect their most complex infrastructures. That's the role we've earned.

Speaker #1: In the interest of time, please limit yourself to one question. And if you have a follow-up question, please rejoin the queue. We'll pause for just a moment to compile the Q&A.

Speaker #2: And it's the role we intend to further strengthen. With that, let's go to the Q&A.

Speaker #1: The first question comes from the line of Scott Davis. From Melius Research. Scott, please go ahead. A reminder to unmute locally.

Speaker #3: We will now begin the we will now begin the question and answer session. In order to ask a question, press star then the number one on your telephone keypad.

Speaker #3: In the interest of time, please limit yourself to one question. And if you have a follow-up question, please rejoin the queue. We'll pause for just a moment to compile the Q&A.

Speaker #3: Oh, yes. Thanks for the reminder, operator. I haven't figured out my phone yet. Anyway, sorry guys. And good morning. Still good morning. Look, I just want to address a little bit of the issue that may be hurting your stock a little bit today with the timing shifts in Q2 revenues.

Speaker #3: The first question comes from the line of Scott Davis. From Melius Research. Scott, please go ahead. A reminder to unmute locally.

Speaker #3: The supply chain congestion comment. What can you give us a little bit more detail on that and more explicitly is this something I mean, complexity is something that I would imagine is going to just do nothing but increase over the next five years and perhaps forever.

Speaker #4: Operator, I haven't figured out my phone yet. Anyway, sorry, guys, and good morning—still good morning. Look, I just want to address a little bit of the issue that may be hurting your stock a little bit today with the timing shifts in Q2 revenues.

Speaker #3: Is this potentially going to be an ongoing issue not just a one-off and if so, how do you mitigate or kind of manage through it so that it really doesn't disrupt quarters the way that perhaps it can?

Speaker #4: The supply chain congestion comment. What can you give us a little bit more detail on that? And more explicitly, is this something I mean, complexity is something that I would imagine is going to just do nothing but increase over the next five years and perhaps forever.

Speaker #2: Well, thanks, Scott, for the question. And you're right. Complexity is increasing. Some of the projects are not only bigger but multi-dimensional. There could be a lot of supply chain interdependencies.

Speaker #4: Is this potentially going to be an ongoing issue, not just a one-off? And if so, how do you mitigate or kind of manage through it so that it really doesn't disrupt quarters the way that perhaps it can?

Speaker #2: And this supply chain is not necessarily an external supply chain. It can be very often an internal within Vertiv supply chain. Now, clearly, like everything, and like we've done in so far, there is a learning curve.

Speaker #2: I'm pleased with the speed at which we are progressing in this learning curve. And this learning curve is learning curve at the execution on this complexity.

Speaker #2: And this supply chain is not necessarily an external supply chain. It can very often be an internal, within-Vertiv supply chain. Now, clearly, like everything—and like we've done so far—there is a learning curve.

Speaker #2: So I'm pretty confident about our direction of travel and again, these are the first very large projects with this level of complexity. And we are more and more equipped for this, not just from a technology standpoint, but from a logistics and operations in general.

Speaker #2: I'm pleased with the speed at which we are progressing in this learning curve. And this learning curve is a learning curve at the execution on this complexity.

Speaker #2: When it comes to the second part of your question, so what could be the is there an ongoing impact on the future? Well, certainly as I said, there is a learning curve that we are progressing on at speed.

Speaker #2: So I'm pretty confident about our direction of travel. And again, these are the first very large projects with this level of complexity, and we are more and more equipped for this—not just from a technology standpoint, but from a logistics and operations standpoint in general.

Speaker #2: But there is also the fact that we are prudent. Anyway, in our second half, guys, this is true in general also for the future.

Speaker #2: When it comes to the second part of your question, so what could be the is there an ongoing impact on the future? Well, certainly, as I said, there is a learning curve that we are progressing on at speed.

Speaker #2: So if you think about our H2 guidance, we're not assuming all stars align. So we have a wiggle room for this progress on the learning curve not to be perfect.

Speaker #2: Though, of course, speed and perfection is our goal.

Speaker #2: But there is also the fact that we are prudent. Anyway, in our second half, guys, this is true in general also for the future.

Speaker #3: Okay. Fair point. And then just a quick one. Is there a price where you would start buying back stock a little bit more aggressively just given the pullback we're seeing in the entire complex right now?

Speaker #2: So, if you think about our H2 guidance, we're not assuming all stars align. So, we have some wiggle room for this progress on the learning curve not to be perfect.

Speaker #4: I mean, I think we always look at it opportunistically, Scott. And that's the thing that we've talked about even at Investor Day. Given today, it is a good time to look at it, but I think it's always something that we evaluate and take a what do we consider our capital deployment?

Speaker #2: Though, of course, speed and perfection is our goal.

Speaker #4: Okay. Fair point. And then just a quick one. Is there a price where you would start buying back stock a little bit more aggressively just given the pullback we're seeing in the entire complex right now?

Speaker #4: And it's one of the areas we look at. So

Speaker #3: Fair enough. I wish you all the best, guys. Good luck and I'll pass it on.

Speaker #1: I mean, I think we always look at it opportunistically, Scott. And that's the thing that we've talked about even at Investor Day. Given today, it is a good time to look at it.

Speaker #1: The next question comes from the line of Jeff Sprague. With vertical research. Jeff, please go ahead.

Speaker #1: But I think it's always something that we evaluate and look at when we consider our capital deployment, and it's one of the areas we review.

Speaker #5: Hey, thanks. Good morning. Hey, Gio, just on the comment that the pipeline is actually accelerating. I assume that's sort of all hyperscale, but could you give a little bit more context on sort of the nature of the acceleration?

Speaker #1: So

Speaker #4: Fair enough. I wish you all the best, guys. Good luck, and I'll pass it on.

Speaker #3: The next question comes from the line of Jeff Spregue. With vertical research. Jeff, please go ahead.

Speaker #5: Is it scoped to Vertiv? Is it kind of additional customers? Is it existing customers looking to do more quickly? And it seems to support the comment you're making about robust orders for the year, but just love a little bit more color there if you could.

Speaker #5: Hey, thanks. Good morning. Hey, Gio, just on the comment that the pipeline is actually accelerating. I assume that's sort of all hyperscale. But could you give a little bit more context on sort of the nature of the acceleration?

Speaker #2: And start from the end, good agent. Let's start from the end. Yes, of course. This is support, certainly supporting our comments about the about orders.

Speaker #5: Is it scoped to Vertiv? Is it bringing in additional customers? Or is it existing customers looking to do more, more quickly? It seems to support the comment you're making about robust orders for the year.

Speaker #2: When I talk about pipeline, I always like to talk about magnitude of pipeline, if you will, and speed of pipeline. When I talk about speed of pipeline, we talk about acceleration.

Speaker #5: But I would just love a little bit more color there, if you could.

Speaker #2: And start from the end. Good day, John. Let's start from the end. Yes, of course. This is support, certainly supporting our comments about orders.

Speaker #2: It means that the sales cycle within the pipeline can be faster or slower. So we noticed in acceleration, so it becoming faster sales cycle.

Speaker #2: But at the same time, just to be extremely clear, the strength is also in sheer size of the pipeline in terms of quarter to quarter, year on year, year on year growth.

Speaker #2: When I talk about pipeline, I always like to talk about magnitude of pipeline, if you will, and speed of pipeline. When I talk about speed of pipeline, we're talking about acceleration.

Speaker #2: And this is broad-based. It's pretty much across the world. But also it's broad-based across the various customer categories, certainly the whole range, hyperscalers, it is true for enterprise, it's certainly true for colo, neocloud.

Speaker #2: It means that the sales cycle within the pipeline can be faster or slower. So we notice in acceleration. So becoming faster, sales cycle. But at the same time, just to be extremely clear, the strength is also in sheer size of the pipeline in terms of quarter to quarter, year on year, year on year growth.

Speaker #2: So pretty, pretty broad-based.

Speaker #4: And just to add on to that, Jeff, I would also just say, again, as hyperscalers and colos, hyperscalers are sometimes deploying through colos. So to look at it that way, you might get a little bit of a mix there.

Speaker #2: And this is broad-based, is pretty much across the world. But also, it's broad-based across the various customer categories. So certainly, the whole range, hyperscalers, it is true for enterprise.

Speaker #4: So just to ensure, going back to what Gio said, we're seeing it, again, across regions, across products. And that's the way we really look at it.

Speaker #2: It's certainly true for colo. Neo cloud. So pretty, pretty broad-based.

Speaker #4: But that's the way we would view our pipelines and see it accelerating in all those spaces.

Speaker #1: And just to add on to that, Jeff, I would also just say, again, as hyperscalers and colos—hyperscalers are sometimes deploying through colos. So, if you look at it that way, you might get a little bit of a mix there.

Speaker #5: And just a quick one, if I could. Do you have a solid-state transformer solution at scale at this point? Where do you stand on that product evolution?

Speaker #2: Just like one of the slides was describing the solid-state is currently a matter of product development for us. It's in product development phase.

Speaker #1: So just to ensure, going back to what Gio said, we're seeing it, again, across regions, across products. And that's the way we really look at it.

Speaker #1: But that's the way we would view our pipelines, and see it accelerating in all those spaces.

Speaker #5: Thank you. Yeah, thanks.

Speaker #5: And just a quick one, if I could. Do you have a solid-state transformer solution at scale at this point? Where do you stand on that product evolution?

Speaker #1: Your next question comes from Amit Daryanani. With Evercore. Amit, please go ahead.

Speaker #2: Just like one of the slides was describing the solid-state is currently a matter of product development for us. It's in product development phase.

Speaker #6: Yep. Good afternoon, everyone. Thanks for taking my question. I guess, Gio, if you just go back to the supply chain issues and delays, can you just talk about how much revenue is actually pushed out due to these challenges you had in the quarter?

Speaker #5: Thank you. Yep. Thanks.

Speaker #6: I think you missed the street numbers by 100 million, but I'm actually wondering if the supply issues were perhaps much larger than that from a dollar perspective.

Speaker #3: Your next question comes from Amit Daryanani with Evercore. Amit, please go ahead.

Speaker #6: And maybe just on the same lines, can you just talk about, was it a Vertiv specific issue or something at the customer side that led to this impact?

Speaker #6: And then how do you see this going back into the model into the back half? Thank you.

Speaker #2: So good afternoon. First of all, is it customer or is it Vertiv? On the customer side, pretty much we see the same dynamics that we have seen historically.

Speaker #6: I think you missed the street numbers by $100 million, but I'm actually wondering if the supply issues were perhaps much larger than that from a dollar perspective.

Speaker #6: And maybe just along the same lines, can you talk about whether it was a Vertiv-specific issue or something on the customer side that led to this impact?

Speaker #2: So no big differences. When it comes to the Vertiv side and the exact amount, well, we will not be too specific, but the majority of what we're seeing is really coming from those dynamics that I've described during while I was going through my opening remarks.

Speaker #6: And then, how do you see this going back into the model and to the back half? Thank you.

Speaker #2: So good afternoon. First of all, is it customer or is it Vertiv? On the customer side, pretty much we see the same dynamics that we have seen historically.

Speaker #2: But also the conversation with Scott. That is pretty much the dynamics that we see. Is it on the supply chain? The supply chain is always a matter of working the sequence of things.

Speaker #2: There's nothing different than what we have experienced historically. And we're pleased with how we are strengthening our the resilience of our business in general.

Speaker #2: But also the conversation with Scott. That is pretty much the dynamics that we see. Is it on the supply chain? The supply chain is always a matter of working the sequence of things.

Speaker #4: And I mean, I would just add that just to clarify, we're talking about the large project deployments and the learning curve around that, which has confounding effects from both the external supply chain and our own internal supply chain.

Speaker #2: There's nothing different than what we have experienced historically. And we're pleased with how we are strengthening our resilience of our business in general.

Speaker #4: So there are some, I'd say, gray areas in there when we typically can recover from a late part and in our smaller supply chains, when it becomes a larger supply chain, it becomes more confounding.

Speaker #4: So again, not the define that specifically, but that's the areas where we're seeing it the most is in those large project deployments. And we're learning and understanding what that takes to go forward and how to iron those out.

Speaker #1: And I mean, I would just add that just to clarify, we're talking about the large project deployments and the learning curve around that, which has confounding effects from both the external supply chain and our own internal supply chain.

Speaker #4: And then also again, as we talked about, thinking of not always that being perfect in the second half as we look into the guidance.

Speaker #1: So there are some, I'd say, gray areas in there when we typically can recover from a late part and in our smaller supply chains, when it becomes a larger supply chain, it becomes more confounding.

Speaker #1: So again, not to define that specifically, but that's the area where we're seeing it the most—in those large project deployments. We're learning and understanding what it takes to move forward and how to iron those out.

Speaker #1: The next question comes from the line of Dean Dray. With RBC Capital Markets. Dean, please go ahead.

Speaker #3: Thank you. Good morning, everyone. I'll keep it to one question. Really good performance on free cash flow conversion this quarter. But for Craig, I'd be interested in hearing was there any contribution from customer deposits on orders?

Speaker #1: And then also, again, as we talked about, thinking of not always that being perfect in the second half as we look in the guidance.

Speaker #3: I know that's something you all have been looking at. And Dave Cote knows from his air on defense days that that's pretty standard to require deposits on larger orders.

Speaker #3: The next question comes from the line of Dean Dre with RBC Capital Markets. Dean, please go ahead.

Speaker #4: Thank you. Good morning, everyone. I'll keep it to one question. Really good performance on free cash flow conversion this quarter. But for Craig, I'd be interested in hearing, was there any contribution from customer deposits on orders?

Speaker #3: So any contribution there?

Speaker #4: Yeah. Yeah. Yeah, Dean. And again, I want to congratulate you. I know you're retiring in September, so congratulations is a great career. Fantastic career.

Speaker #4: But to your question, yeah, if you look at the face of the balance sheet and you I mean, the face of the balance sheet, you'll see that our deferred revenue did go up.

Speaker #4: I know that's something you all have been looking at. And Dave Cote knows from his Air and Defense days that it's pretty standard to require deposits on larger orders.

Speaker #4: And our deferred revenue is a read-through in terms of those advanced deposits on orders, but it's also ongoing deposits as we go through the milestones of delivering those larger projects.

Speaker #4: So any contribution there?

Speaker #1: Yeah. Yeah. Yeah, Dean. And again, I want to congratulate you. I know you're retiring in September. So congratulations is a great career. Fantastic career.

Speaker #4: So it's a combination of both. But that is driving the working capital and the great cash performance when you look at it across the entire balance sheet.

Speaker #1: But to your question, yeah, if you look at the face of the balance sheet—and I mean the face of the balance sheet—you'll see that our deferred revenue did go up.

Speaker #4: So definitely an indicator of strong commercial performance on both sides.

Speaker #3: Great. Thank you for those kind words. And I appreciate all the support from the team and wish you all continued success. Thanks.

Speaker #1: And our deferred revenue is a read-through in terms of those advance deposits on orders. But it's also ongoing deposits as we go through the milestones of delivering those larger projects.

Speaker #4: Thanks, Dean.

Speaker #1: The next question comes from Nigel Coe. With Wolf Research. Nigel, please go ahead.

Speaker #1: So it's a combination of both. But that is driving the working capital and the great cash performance when you look at it across the entire balance sheet.

Speaker #6: Thanks. Good morning, everyone. Just want to pick up on that topic. I think this is the first time maybe I'm wrong, but the first time I've heard progress collections kind of stage payments.

Speaker #1: So, definitely an indicator of strong commercial performance on both sides.

Speaker #4: Great. Thank you for those kind words, and I appreciate all the support from the team. I wish you all continued success. Thanks.

Speaker #6: Maybe just touch on that. I know you're assortment is changing with One Core and Smart Run. So just maybe just talk about that. What kind of percentage of revenues are we talking about now that actually has progress collections?

Speaker #1: Thanks, Dean.

Speaker #2: Thank you.

Speaker #3: The next question comes from Nigel Ko. With Wolf Research. Nigel, please go ahead.

Speaker #6: Thanks. Good morning, everyone. I just want to pick up on that topic. I think this is the first time—maybe I'm wrong—but the first time I've heard 'progress collections', kind of stage payments.

Speaker #6: And then just this is not a second question, by the way. It's more of a kind of an add-on to the first one. In the balance sheet, the balance sheet numbers moved quite a lot this quarter.

Speaker #6: So I mean, the thermal key acquisition seemed quite small, but did it come with a quite a big balance sheet? Thanks.

Speaker #6: Maybe just touch on that. I know your assortment is changing with One Core and Smart Run, so maybe just talk about that. What kind of percentage of revenues are we talking about now that actually has progress collections?

Speaker #4: No, thermal key didn't come with a large balance sheet. So I'll answer that one first, and then we can go a little bit I'll double-click on it as we go further into your question, Nigel.

Speaker #6: And then—just, this is not a second question, by the way; it's more of a kind of add-on to the first one. In the balance sheet, the balance sheet numbers moved quite a lot this quarter.

Speaker #4: But in terms of the actual progress collections, yeah, there is a portion that we get up front. And there's a portion as we deliver milestones.

Speaker #4: And a lot of that is related to delivering products to the end project. And so that's how you would start phasing it in. And sometimes you get those a couple like a month before you deliver projects.

Speaker #6: So I mean, the thermal key acquisition seemed quite small, but did it come with a quite a big balance sheet? Thanks.

Speaker #1: No, Thermal Key didn’t come with a large balance sheet, so I’ll answer that one first. And then we can go a little bit—I’ll double-click on it as we go further into your question, Nigel.

Speaker #4: Sometimes you get those at the end of design. So they are all phased in different ways. So we would get a portion up front.

Speaker #1: But in terms of the actual progress collections, yeah, there is a portion that we get up front. And there's a portion as we deliver milestones.

Speaker #4: We'd get a portion at the delivery milestones that we set forth. Always in our view, staying ahead of the curve in terms of a cash position in that project.

Speaker #1: And a lot of that is related to delivering products to the end project, and so that's how you would start phasing it in. And sometimes you get those a couple—like a month—before you deliver projects.

Speaker #4: So some of it's going to be related to deliveries where you would see revenue incurred. Some of it might be delivered on terms of a design point, which would be a secondary milestone before revenue occurs.

Speaker #1: Sometimes you get those at the end of design. So they are all phased in different ways. So we would get a portion up front.

Speaker #4: And again, they're all a little different in how we look through them. All the goal being staying ahead of the cash curve and being cash positive on that.

Speaker #1: We'd get a portion at the delivery milestones that we set forth. Always in our view, staying ahead of the curve in terms of a cash position in that project.

Speaker #4: On the other faces of the balance sheet, you mentioned lots of movement. We do have a significant ramp in the second half. So you would see some inventory come on.

Speaker #1: So, some of it's going to be related to deliveries, where you would see revenue incurred. Some of it might be delivered on terms of a design point, which would be a secondary milestone before revenue occurs.

Speaker #4: And as that inventory comes on, you'll see AP come on as well. And we did have a good quarter in terms of sales. So that's where our AR is going up as well.

Speaker #4: So all of this is a reflection of the volume you're seeing. Thermal key had little impact to that.

Speaker #1: And again, they're all a little different in how we look through them, all with the goal being staying ahead of the cash curve and being cash positive on that.

Speaker #5: Great. Thank you.

Speaker #1: On the other faces of the balance sheet, you mentioned lots of movement. We do have a significant ramp in the second half. So you would see some inventory come on.

Speaker #1: The next question comes from Andrew Kaplowitz. With Citigroup. Andrew, please go ahead.

Speaker #1: And as that inventory comes on, you'll see AP come on as well. And we did have a good quarter in terms of sales. So that's where our AR is going up as well.

Speaker #7: Good morning, everyone.

Speaker #2: Good day to you, Andrew.

Speaker #4: Andrew.

Speaker #1: So, all of this is a reflection of the volume you're seeing. Thermal key had little impact to that.

Speaker #7: Good morning. So Gio, you updated us again regarding the evolution toward 800 BDC, potentially in the start to impact Virtus 2027. And I know you commented on an SST and product development of Jeff, but when you step back, how confident are you that Virtus content per megawatt could go up as 800 BDC technologies adopted?

Speaker #5: Great. Thank you.

Speaker #3: The next question comes from Andrew Kapowitz. With Citigroup. Andrew, please go ahead.

Speaker #7: Good morning, everyone.

Speaker #7: As I think you reiterated today, and would you surmise that Virtus 800 BDC offering could be toward the higher end of that 3.25 million to 3.75 million per megawatt range you gave us at the analyst day?

Speaker #2: Good day to you, Andrew.

Speaker #1: Andrew?

Speaker #7: Good morning. So Jill, you updated us again regarding the evolution toward the 800 BDC, potentially starting to impact Virtus in 2027. And I know you commented on the SST and the product development with Jeff.

Speaker #2: Yeah, we're pretty convinced about that. And we're also when we look at all the elements of the powertrain, in the various architectures, and when we think what happens inside the white space, in the gray space, we see value there for Virtus and an expansion of revenue per TAM per megawatt.

Speaker #7: But when you step back, how confident are you that Virtus content per megawatt could go up as 800 BDC technologies adopted? As I think you reiterated today, and would you surmise that Virtus 800 BDC offering could be toward the higher end of that 3.25 million to 3.75 million per megawatt range you gave us at the analyst day?

Speaker #2: Yeah, we're pretty convinced about that. And also, when we look at all the elements of the powertrain in the various architectures, and when we think about what happens inside the white space and in the gray space, we see value there for Vertiv and an expansion of revenue per TAM per megawatt.

Speaker #2: So not differently from our conversations or what we shared at investor day. It's two months ago. We continue to go through that math and the math is corroborated by, of course, all the progress that we're doing on the product development, but also on the activity that we are conducting with customers.

Speaker #2: So not differently from our conversations or what we shared at investor day. It's two months ago. We continue to go through that math. And the math is corroborated by, of course, all the progress that we're doing on the product development, but also on the activity that we are conducting with customers.

Speaker #2: So we should and we would need to go elements per elements in that chain. But again, think about the entire powertrain, all the elements, vis-à-vis what we have today and see that with that density, with that complexity, our content is impacted favorably.

Speaker #2: So we should, and we would need to, go element by element in that chain. But again, think about the entire powertrain, all the elements vis-à-vis what we have today, and see that with that density, with that complexity, our content is impacted favorably.

Speaker #7: Thank you, Gio.

Speaker #1: The next question comes from Andrew Obin. With Bank of America. Andrew, please go ahead.

Speaker #4: Yes, good morning. Just maybe another question on this deferred revenue. So we've been getting lots of questions on this topic. It's a large number, but I guess what folks are trying to figure out, and I know sort of some people have been asking similar questions, has the structure of your deferred revenue sort of changed materially from what it I'm not asking I know that it fluctuates quarter to quarter.

Speaker #7: Thank you, Jill.

Speaker #3: The next question comes from Andrew Obin with Bank of America. Andrew, please go ahead.

Speaker #1: Yes, good morning.

Speaker #8: Morning, Andrew.

Speaker #1: Just maybe another question on this deferred revenue. So we've been getting lots of questions on this topic. It's a large number, but I guess what folks are trying to figure out—and I know sort of some people have been asking similar questions—has the structure of your deferred revenue sort of changed materially from what it... I'm not asking—I know that it fluctuates quarter to quarter.

Speaker #4: I totally get that. But has the structure of what goes into deferred avenue changed materially over. Still, if we look at deferred revenue over the past several quarters, it's apples to apples.

Speaker #7: It's apples to apples, Andrew. Now, what you might be feeling a little bit differently is as we talked about back and forth quarter, we had a large order influx on the inverse solution business where I would say a lot of these milestones are set up in the project-based world as opposed to the point product-based world.

Speaker #1: I totally get that. But has the structure of what goes into deferred revenue changed materially, or if we look at deferred revenue over the past several quarters, is it apples to apples?

Speaker #7: So the project-based world might have more milestones before delivery of revenue. So you would get one at input of order and then one along the way as a design, then one potentially as you start to deliver products.

Speaker #8: Oh, it's apples to apples, Andrew. No, what you might be feeling a little bit differently is, as we talked about back and forth, quarter to quarter, we had a large order influx on the infra solutions business, where I would say a lot of these milestones are set up in the project-based world as opposed to the point product-based world.

Speaker #7: So you have different levels of milestone on those projects. Versus a point product. And we know that the project basis that we've talked about a lot, those larger ones, one core smart runs, we had a large order intake in the fourth quarter of last year that we spoke to.

Speaker #8: So, the project-based world might have more milestones before delivery of revenue. So you would get one at input of order, and then one along the way as a design, then one potentially as you start to deliver products.

Speaker #7: And again, that would be some of the stuff that you might be seeing in the deferred revenue as it comes through throughout the year.

Speaker #7: And then again, it is tied to our regular down payments as well. But no structural change in the way that we would recognize deferred revenue.

Speaker #8: So you have different levels of milestones on those projects versus a point product. And we know that, on the project basis that we've talked about a lot—those larger ones, one core SMART runs—we had a large order intake in the fourth quarter of last year that we spoke to.

Speaker #4: Thank you.

Speaker #1: The next question comes from Chris Snyder. With Morgan Stanley. Chris, go ahead.

Speaker #8: And again, that would be some of the stuff that you might be seeing in the deferred revenue as it comes through throughout the year.

Speaker #6: Thank you. I wanted to follow up on the conversation around the production disruption and some of the supply chain impact. I guess you guys are obviously guiding to a pretty significant organic ramp here into the back half relative to what we saw in the first half.

Speaker #8: And then again, it is tied to our regular down payments as well. But no structural change in the way that we would recognize deferred revenue.

Speaker #1: Thank you.

Speaker #6: So I guess anything that you can provide around confidence that you're seeing in these disruption getting better? I would imagine that as the quarter went on, the monthlies got better.

Speaker #3: The next question comes from Chris Snyder. With Morgan Stanley. Chris, go ahead.

Speaker #4: Thank you. I wanted to follow up on the conversation around the production disruption and some of the supply chain impact. I guess you guys are obviously guiding to a pretty significant organic ramp here into the back half, relative to what we saw in the first half.

Speaker #6: I think you said July was off to a start that presumably supports this ramp. So I guess has it gotten better? Any just kind of color on that monthly payment to give us more confidence in the back half?

Speaker #2: Thank you. Thank you, Rich. I wouldn't use the word disruption. I think we have to I want to be clear about we talk about complexity and interdependencies.

Speaker #4: So, I guess anything that you can provide around the confidence that you're seeing in these disruptions getting better? I would imagine that as the quarter went on, the monthlies got better.

Speaker #2: As I said, very, very often, there's a large approach you will see multiple Virtus factories feeding other factories besides, of course, external suppliers feeding those factories as well.

Speaker #4: I think you said July was off to a start that presumably supports this ramp, so I guess, has it gotten better? Any kind of color on that monthly payment to give us more confidence in the back half?

Speaker #2: So it's really a complexity. So there is an operational aspect to your question that is we are getting stronger and stronger in the operational execution of that complexity.

Speaker #2: Thank you. Thank you, Rich. I wouldn't use the word 'disruption.' I think we have to—I want to be clear about—we talk about complexity and interdependencies.

Speaker #2: As I said, very, very often in these large approaches, you will see multiple vertex factors feeding other factories besides, of course, external suppliers feeding those factories as well.

Speaker #2: But the complexity doesn't go away. But our ability to handle that complexity is certainly accelerating very, very strong. And that's enhanced my questions sorry, enhanced my comments.

Speaker #2: But again, I wouldn't talk in terms of disruption.

Speaker #2: So, it's really a complexity. So, there is an operational aspect to your question—that is, we are getting stronger and stronger in the operational execution of that complexity.

Speaker #4: Agree. I think on your second point of why do we feel comfortable about the second half, as Gio said, it's a learning curve when you have these large projects.

Speaker #2: But the complexity doesn't go away. But our ability to handle that complexity is certainly accelerating, very, very strongly. And that enhances my questions—sorry, enhances my comments.

Speaker #4: And you do have congestion in your supply chain, which again, some of that stuff is normal on point products, which is easier to iron out as you have a learning project for larger project.

Speaker #4: Some of it takes a little bit more time to get smoothed out and understand we're seeing good signs of being able to ratchet up that learning curve.

Speaker #2: But again, I wouldn't talk in terms of disruption.

Speaker #4: And as we think about the second half, we've also assumed some of that congestion continues as we normally would. But on these projects, it might be a little bit further of congestion that we would have assumed than normal.

Speaker #1: Agreed.

Speaker #5: And I think on your second point of why do we feel comfortable about the second half, as Gio said, it's a learning curve. When you have these large projects and you do have congestion in your supply chain, which again, some of that stuff is normal on point products, which is easier to iron out as you have a learning project with a larger project.

Speaker #2: So exactly. So all in all, we believe that we have we're prudent in our second half and very, very well supported for backlog.

Speaker #5: Some of it takes a little bit more time to get smoothed out and understood. We're seeing good signs of being able to ratchet up that learning curve.

Speaker #6: Thank you.

Speaker #5: And as we think about the second half, we've also assumed some of that congestion continues, as we normally would. But on these projects, it might be a little bit further congestion than we would have assumed as normal.

Speaker #1: The next question comes from Nicole DeBlase. With Deutsche Bank. Nicole, please go ahead.

Speaker #5: Yeah, thanks. And good morning, guys. I'm sorry to be the dead horse, but I'm going to. I think with respect to the second half ramp, there's still a lot of questions about what specifically is embedded and what isn't.

Speaker #2: So, exactly. So, all in all, we believe that we were prudent in our second half and very, very well supported the backline.

Speaker #5: Maybe a way to frame it, I'll try this. How much of the second half ramp is based upon this improvement in learning curve and maybe unlocking some of the revenue that was pushed out of QQ versus just the overall capacity ramp that you guys are doing at the same time?

Speaker #4: Thank you.

Speaker #3: The next question comes from Nicole De Blase with Deutsche Bank. Nicole, please go ahead.

Speaker #6: Yeah, thanks. And good morning, guys. I'm sorry to beat a dead horse, but I'm going to. I think, with respect to the second half ramp, there's still a lot of questions about what specifically is embedded and what isn't.

Speaker #5: Just so that we can try to get more comfortable with the step-up in revenues that are embedded in the second half and how much visibility you have into that.

Speaker #5: Thank you.

Speaker #1: Yeah. Thank you.

Speaker #6: Maybe a way to frame it—I'll try this. How much of the second half ramp is based upon this improvement in learning curve and maybe unlocking some of the revenue that was pushed out of Q2 versus just the overall capacity ramp that you guys are doing at the same time?

Speaker #2: Thank you, Nicole. When we talk about unlocking revenue, let's just be clear that the revenues that were let's say a little bit locked in some elements on the second quarter are being delivered, deployed in the second half.

Speaker #6: Just so that we can try to get more comfortable with the step-up in revenues that are embedded in the second half and how much visibility you have into that.

Speaker #2: And we feel extremely well about that. When it comes to some elements of congestion possible elements of congestions as Craig mentioned, we are prudent in our guidance, though we believe that there will be and we see we are seeing certainly a strong acceleration and improvement from an operational standpoint.

Speaker #6: Thank you.

Speaker #2: Yeah. Thank you. Thank you, Nicole. When we talk about unlocking revenue, let's just be clear that the revenues that were let's say a little bit locked in some elements on the second quarter are being delivered, deployed in the second half.

Speaker #2: We still remain prudent in our guidance. There is capacity that is being released. And that is a big element, of course, of also the backlog conversion.

Speaker #2: And we feel extremely well about that. When it comes to some elements of congestion, possible elements of congestion as Craig mentioned, we are prudent in our guidance, though we believe that there will be, and we are seeing certainly, a strong acceleration and improvement from an operational standpoint.

Speaker #2: So look at it as three levels. The operational acceleration in the complex projects, the capacity coming available at this has been coming available in the second quarter even more so in the second half.

Speaker #2: We still remain prudent in our guidance. There is capacity that is being released, and that is a big element, of course, of the backlog conversion as well.

Speaker #2: A very strong backlog coverage. And over and above that, wrap it up with anyway a guidance that it's not an all-star aligned type of guidance.

Speaker #1: The next question comes from Amit Mehrotra. With UBS. Amit, please go ahead.

Speaker #2: We have very strong backlog coverage, and, over and above that, we’ll wrap it up with guidance. Anyway, it's not an all-star aligned type of guidance.

Speaker #4: Thanks, operator.

Speaker #6: Gio, I just would be curious to sort of compare and contrast some of the challenges you're having today to the challenges you had really kind of this time last year and you got back on track pretty quickly from an operational.

Speaker #3: The next question comes from Ahmed Mehutra with UBS. Ahmed, please go ahead.

Speaker #6: But at that time, it wasn't a revenue issue. It was more of a margin issue and an operational issue. And I know at heart you're an operational guy.

Speaker #4: Thanks, operator. Gio, I just want to be curious to sort of compare and contrast some of the challenges you're having today to the challenges you had really kind of this time last year and you got back on track pretty quickly from an operational.

Speaker #6: So just maybe compare and contrast that. And are there multiple points of I just want to maybe explain the complexity within the complexity. What I mean by that is that are there multiple points of challenges or is there sort of one main challenge that sort of cascading across the supply chain that a little bit color there would be helpful?

Speaker #4: But at that time, it wasn't a revenue issue; it was more of a margin issue and an operational issue. And I know, at heart, you're an operational guy.

Speaker #2: Yeah, thank you. Thank you, Amit. And really appreciate you drawing that parallel to exactly a year ago. It was a different nature that stage was Ireland and some executional challenges on the buzzword switch gear that we have amply recouped, as you were saying.

Speaker #4: So maybe just compare and contrast that. And are there multiple points of—I just want to maybe explain the complexity within the complexity. What I mean by that is, are there multiple points of challenges, or is there sort of one main challenge that’s cascading across the supply chain? A little bit of color there would be helpful.

Speaker #2: But I think this highlights the fact that in a business that is moving at this speed, that is growing at this speed, with a number, let's say, of technology with the technology speed sorry, the speed of technology evolution that we are experiencing and indeed driving, there is a lot of complexity to manage.

Speaker #2: Yeah, thank you. Thank you, Ahmed. And I really appreciate you drawing that parallel to exactly a year ago. It was a different nature; that stage was Ireland, and some executional challenges on the busbar switchgear that we have amply recouped, as you were saying.

Speaker #2: And so in many respect, the parallel is similar. You were talking about while that was a margin, this is a revenue. Anyway, it's operational execution that we're concentrating on right now.

Speaker #2: So it may be different in the type of product line, if you will. It's not different in terms of the type of focus and the type of, let's say, recipe that we apply.

Speaker #2: And so, in many respects, the parallel is similar. You were talking about how that was a margin; this is a revenue. Anyway, it's operational execution that we're concentrating on right now.

Speaker #2: And again, it's a matter of really continue to mature operationally as the market, the portfolio, the scope of what we do continues to evolve.

Speaker #2: So, it may be different in the type of product line, if you will. It's not different in terms of the type of focus and the type of, and the type of—let's say—recipe that we apply.

Speaker #2: So I feel very good about it. As I did a year ago.

Speaker #6: Gio, are you failing are you it's not failing, but are you reducing the on-time delivery of the customer? Because one of the USPs has been Vertiv has been one of the few companies that can deliver on-time in full.

Speaker #2: And again, it's a matter of really continuing to mature operationally as the market, the portfolio, and the scope of what we do continue to evolve.

Speaker #6: Are you disappointing customers with this development that opens up market share opportunities for other companies or no?

Speaker #2: So, I feel very good about that, as I did a year ago.

Speaker #2: Well, look, our overall performance is if anything in improving. So I would say that the answer is it's not something that changes our perception in the market, we believe.

Speaker #4: And Gio, are you—are you failing, or you—it's not failing, but are you reducing the on-time delivery to the customer? Because one of the USPs has been Vertiv has been one of the few companies that can deliver on time, in full.

Speaker #4: Are you disappointing customers with this development that opens up market share opportunities for other companies, or no?

Speaker #1: The next question comes from Mark Delaney. With Goldman Sachs. Mark, please go ahead.

Speaker #2: Well, look, our overall performance is, if anything, improving. So I would say that the answer is it's not something that changes our perception in the market, we believe.

Speaker #7: Yes. Thank you for taking my question. One of the key topics that the investor day that we haven't discussed yet on the call this morning is around M&A.

Speaker #7: I think you talked about something in the order of $24 billion that could be deployed in light of some of the pullback and financial market valuations as well as all the opportunities you see on the technology front, including areas like 800 volt.

Speaker #3: The next question comes from Mark Delaney with Goldman Sachs. Mark, please go ahead.

Speaker #7: I'm curious if you could give us your latest thoughts on the M&A opportunity and if the pipeline there is active and that might be something that could be executed upon relatively soon.

Speaker #5: Yes, thank you for taking my question. One of the key topics from Investor Day that we haven't discussed yet on the call this morning is around M&A.

Speaker #7: Thanks.

Speaker #4: I mean, I would say our outlook doesn't change in terms of the M&A world. We still look at it in the same way we looked at it back during investor day.

Speaker #5: I think you talked about something in the order of $24 billion that could be deployed in light of some of the pullback in financial market valuations, as well as all the opportunities you see on the technology front, including areas like 800-volt.

Speaker #4: But it is active. I mean, we do see an active market and we are participating in that active market looking at several targets. But again, it has to fit us and it has to be the right, I'd say, value play for us in terms of fitting our portfolio and what we believe we can grow and what we can return to investors in terms of what we're going to pay.

Speaker #5: I'm curious if you could give us your latest thoughts on the M&A opportunity, and if the pipeline there is active, and whether that might be something that could be executed upon relatively soon.

Speaker #5: Thanks.

Speaker #6: I mean, I would say our outlook doesn't change in terms of the M&A world. We still look at it in the same way we looked at it back during Investor Day.

Speaker #4: Again, I've always talked about we invest in ourselves first and that's capacity and that's R&D and that's development and that's the things we're always going to look at.

Speaker #6: But it is active. I mean, we do see an active market and we are participating in that active market, looking at several targets. But again, it has to fit us, and it has to be the right, I'd say, value play for us in terms of fitting our portfolio and what we believe we can grow and what we can return to investors in terms of what we're going to pay.

Speaker #4: And then we'll look at the external spots where we believe we can get true value out of an acquisition and an add-on, whether it be regional reach or a product that we believe could get us to the market faster or a technology we don't currently have.

Speaker #4: So yes, we are active and we continue to look at it in terms of that framework.

Speaker #6: Again, I've always talked about how we invest in ourselves first—and that's capacity and that's R&D, and that's IT. And then we'll look at the external spots where we believe we can get true value out of an acquisition and an add-on, whether it be regional reach, or a product that we believe could get us to the market faster, or a technology we don't currently have.

Speaker #1: The next question comes from Noah Kaye. With Oppenheimer. Noah, please go ahead.

Speaker #6: Thanks for taking the question. Talking about some of these learning curve developments around what seems to be more of a focus on the infrastructure solutions, the components of these, as we understand them, the building blocks, they're already part of the Vertiv portfolio largely.

Speaker #6: So yes, we are active, and we continue to look at it in terms of that framework.

Speaker #3: The next question comes from Noah Kay with Oppenheimer. Noah, please go ahead.

Speaker #6: But I'm just curious, as you come up this learning curve, to what extent are you increasing your vertical integration across those building blocks and supply chain?

Speaker #5: Thanks for taking the question. Talking about some of these learning curve developments around what seems to be more of a focus on the infrastructure solutions—the components of these, as we understand them—the building blocks—they're already part of the Vertiv portfolio, largely.

Speaker #6: Is that a process that you are undertaking now? Is it something that needs to happen on a go-forward basis to mitigate and manage some of those challenges in architecting these solutions?

Speaker #2: Well, there is clearly always an analysis of make or buy vertical integration and anything we do, be it at point product level and at, let's say, large infrastructure solution level.

Speaker #5: But I’m just curious, as you come up this learning curve, to what extent are you increasing your vertical integration across those building blocks and supply chain?

Speaker #5: Is that a process that you are undertaking now? Is it something that needs to happen on a go-forward basis to mitigate and manage some of those challenges in architecting these solutions?

Speaker #2: When you talk about vertical integration for infrastructure solutions, for us, it's really we are very vertical integrated in the sense that we're putting into our infrastructure solutions products that are Vertiv products.

Speaker #2: Well, there is clearly always an analysis of make-or-buy, vertical integration in anything we do, be it at the point-product level and at, let's say, large infrastructure solution level.

Speaker #2: So then clearly we are in good control of the supply chain. In that respect, and so we feel good in this moment. We do not think there are any major gaps in vertical integration for what we're doing, but that doesn't mean that we will not adjust over time the mix of make or buy, in whichever dimension that could be, depending on the type of business, depending on where we manufacture and auto manufacturing locations are the same in terms of access to a nearby let's say supplier critical mass.

Speaker #2: When you talk about vertical integration for infrastructure solutions, for us, it's really that we are very vertically integrated in the sense that we're putting into our infrastructure solutions products that are Vertiv products.

Speaker #2: So, then, clearly, we are in good control of the supply chain in that respect, and so we feel good in this moment. We do not think there are any major gaps in vertical integration for what we're doing, but that doesn't mean that we will not adjust, over time, the mix of make-or-buy in whichever dimension that could be—depending on the type of business, depending on where we manufacture, and how the manufacturing locations are the same in terms of access to a nearby, let's say, supplier critical mass.

Speaker #2: So it's always dynamic. But we do not perceive in this moment that there are any major gaps. But for example, if you think about an acquisition that we shared with you last quarter, BMarco, that was a move to vertical integrate on our frame construction for our infrastructure solutions.

Speaker #2: So, it's always dynamic. But we do not perceive at this moment that there are any major gaps. For example, if you think about an acquisition that we shared with you last quarter, B-MacRO—that was a move to vertically integrate on our frame construction for our Infrastructure Solutions.

Speaker #2: So that, I think, testament to the dynamic approach that we have when it comes to make or buy.

Speaker #6: Yep. Thank you, Jeff.

Speaker #1: The next question comes from Ananda Barua. With Loop Capital. Nanda, please go ahead.

Speaker #5: Yeah, thanks, guys, for taking the question. Really appreciate it. I'd love to get your guys' view. This is an 800Z 450Z question. For 800Z, how broadly throughout the marketplace are you expecting the next couple of years the technology to be adopted?

Speaker #2: So that, I think, is testament to the dynamic approach that we have when it comes to make or buy.

Speaker #5: Yep. Thank you, Jeff.

Speaker #3: The next question comes from Amanda Barrower with Loop Capital. Amanda, please go ahead.

Speaker #5: And really the genesis for the question is, as you guys may know, there's sort of been speculation last few months that one of the larger AI infrastructure companies could see a push out that would use 800Z.

Speaker #7: Yeah, thanks, guys, for taking the question. Really appreciate it. I'd love to get your guys' view—this is an 800Z/450Z question. For 800Z, how broadly throughout the marketplace are you seeing the technology be adopted?

Speaker #5: As far as in 2029, how if there were a major customer push out, how broad is the tech? Are you guys anticipating the tech to be throughout the industry?

Speaker #7: And really, the genesis for the question is, as you guys may know, there's sort of been speculation the last few months that one of the larger AI infrastructure companies could see a push-out that would use 800Z as far as in 2029.

Speaker #5: And then we've heard really good things on 450Z potential over the next 24 months. What's the right way to think about the impact that could have?

Speaker #5: And could that fill in any white space if there were a meaningful sort of AI infrastructure 800Z customer push out? Thanks. Just any context would be helpful.

Speaker #7: If there were a major customer pushout, how broad is the tech that you guys are anticipating to be throughout the industry?

Speaker #5: Thanks.

Speaker #2: Well, thanks. A multi-dimensional, multi-layer question, Nanda, here. So I will not comment on rumors in the market. As we shared with investors in May, but also earlier today, we believe that the adoption of 800V will be gradual would be convincing.

Speaker #7: And then we've heard really good things about 450Z potential over the next 24 months. What's the right way to think about the impact that could have?

Speaker #7: And could that fill in any white space if there were a meaningful sort of AI infrastructure 800Z customer push-out? Thanks. Just any context would be helpful.

Speaker #7: Thanks.

Speaker #2: We are certainly very invested in that part of the in that part of the portfolio. Whether that happens at the speed that is currently in our roadmaps, and that you saw, or something slower than that, we will be flexible and certainly we are extremely resilient with that because it means that other parts of the architectures that we provide to our customers will certainly be take the share of the market in terms of architecture.

Speaker #2: We are certainly very invested in that part of the in that part of the portfolio. Whether that happens at the speed that is currently in our roadmaps and that you saw or something slower than that, we will be flexible and certainly we are extremely resilient with that because it means that other parts of the architectures that we provide to our customers will certainly be take the share of the market in terms of architecture.

Speaker #2: So whichever way no matter the speed of acceleration, we think that we are in a good place because we have the architectures, we have the technologies, the roadmaps as we shared, but there is a 400VDC question and that 400DCV question is an important one.

Speaker #2: We see that some players are thinking in terms both of 800 and 400. The underlying technology is not dramatically different. And quite honestly, we're involved in both.

Speaker #2: So, whichever way — no matter the speed of acceleration — we think that we are in a good place because we have the architectures, we have the technologies, the roadmaps as we shared. But there is a 400V DC question, and that 100 to 400V DC question is an important one.

Speaker #5: That's really helpful. Thanks so much. Really appreciate it.

Speaker #6: Sure.

Speaker #1: The next question comes from Luke Junk. With Baird. Luke, please go ahead.

Speaker #2: We see that some players are thinking in terms of both 800 and 400. The underlying technology is not dramatically different. And quite honestly, we're involved in both.

Speaker #6: Yeah, thanks for sneaking me in here. Gio, hoping just to get some texture around your ongoing increase in confidence around the MIA A market specifically and we saw a step up in margins sequentially this quarter.

Speaker #7: That's really helpful. Thanks so much—I really appreciate it.

Speaker #6: How do you think about the sustainability there or maybe even the potential for some further improvement in the back half of the year? Thank you.

Speaker #5: Sure.

Speaker #3: The next question comes from Luke Junk with Baird. Luke, please go ahead.

Speaker #2: Yeah, well, thanks for the MIA question. The we are pretty bullish about MIA's as you saw, certainly we believe in a strong second half and back to growth.

Speaker #5: Yeah. Thanks for sneaking me in here. Gio, hoping just to get some texture around your ongoing increase in confidence around the MIA market specifically, and we saw a step up in margins.

Speaker #2: You see MIA performing better than we expected anyway in the second quarter. So very confident in second half. I was vocal about the fact that we were very happy with orders in MIA in the first quarter.

Speaker #5: Sequentially, this quarter, how do you think about the sustainability there, or maybe even the potential for some further improvement in the back half of the year?

Speaker #5: Thank you.

Speaker #2: Yeah. Well, thanks for the MIA question. We are pretty bullish about MIAs, as you saw. Certainly, we believe in a strong second half and back to growth.

Speaker #2: I would say that we like what we see in the second quarter. And there is a backlog formation that is certainly convincing. And we see that the improvement translates in top line and bottom line improvement as demonstrated.

Speaker #2: You see MIA performing better than we expected anyway in the second quarter, so very confident in the second half. I was vocal about the fact that we were very happy with orders in MIA in the first quarter.

Speaker #2: So the market continues to accelerate and we certainly have a very important position in that market.

Speaker #6: And Luke, I'll just hit on the fact that we do and as we've talked about through even back as early as last year, we do see a second half increase in growth for MIA.

Speaker #2: I would say that we like what we see in the second quarter, and there is a backlog formation that is certainly convincing. We see that the improvement translates into both top-line and bottom-line improvement, as demonstrated.

Speaker #6: In terms of where we expect their organic growth to go from a revenue perspective, in terms of the I would say the gain that you saw in margin, was a favorable comp to as Gio had mentioned, the Ireland portion did come through Q2 last year, which was in MIA.

Speaker #2: So, the market continues to accelerate, and we certainly have a very important position in that market.

Speaker #5: And Luke, I'll just hit on the fact that we do, and as we've talked about even back as early as last year, we do see a second half increase in growth for MIA.

Speaker #6: So there's a little bit of a favorable comp in there, but we do still expect margins to be pretty good. Got it. Leave it there.

Speaker #6: Thank you.

Speaker #5: In terms of where we expect their organic growth to go from a revenue perspective, in terms of the or I'd say the gain that you saw in margin was a favorable comp to as Geo had mentioned, the Ireland portion did come through QQ last year, which was in MIA.

Speaker #1: Thank you. This concludes our question and answer session. I would like to turn the conference back to Gio Albertazzi for any closing remarks.

Speaker #2: While thank you. And thank you very much, everyone. Thank you for the questions and thank you for your time today. I am very pleased with what we delivered this quarter and how we positioned for the second half.

Speaker #5: There's a little bit of a favorable comp in there, but we do still expect margins to be pretty good. Got it. We'll leave it there.

Speaker #5: Thank you.

Speaker #2: The team is executing at a high level. Scaling capacity, deepening customer partnership, and advancing our technology portfolio, all simultaneously. It's not easy, but it is but this invigorates us.

Speaker #3: Thank you. This concludes our question-and-answer session. I would like to turn the conference back to Giordano Albertazzi for any closing remarks.

Speaker #2: Well, thank you; and thank you very much, everyone. Thank you for the questions, and thank you for your time today. I am very pleased with what we delivered this quarter and how we are positioned for the second half.

Speaker #2: Pipelines are strong, our operational discipline is sharp, and our customer trusts us to deliver at scale. Just to be clear, I am very encouraged by our trajectory.

Speaker #2: The team is executing at a high level—scaling capacity, deepening customer partnerships, and advancing our technology portfolio, all simultaneously. It's not easy, but this invigorates us.

Speaker #2: I am pleased but certainly never satisfied. With that, thank you all and I wish you all a great rest of the day.

Speaker #2: Pipelines are strong. Our operational discipline is sharp. And our customers trust us to deliver at scale. Just to be clear, I am very encouraged by our trajectory.

Speaker #2: I am pleased, but certainly never satisfied. With that, thank you all, and I wish you all a great rest of the day.

Q2 2026 Vertiv Holdings Co Earnings Call

Request DemoDemo

Vertiv Holdings

Earnings