Revvity, Inc. Q2 FY2026 earnings call

Core Business & AI Opportunity

• Revity delivered stronger than expected Q2 2026 results, with total revenue and adjusted EPS coming in above the high end of prior guidance, driven by underlying operational outperformance, timing of tax planning, and a one-time $16 million tariff refund.
• The company is seeing tangible, accelerating demand tied to AI-driven drug discovery: traditional and new non-traditional AI-focused customers are ordering more instruments and reagents to test and validate hypotheses generated by AI models, in what customers call a "lab in the loop" workflow. Revity is uniquely positioned to capture this demand across its instrument, reagent, and software portfolio.
• High content screening, led by the new flagship Opera Phoenix Opt IQ instrument, is seeing robust double-digit year-over-year growth, with order velocity outpacing near-term production capacity even after adding additional resources in Q2. This backlog positions the company well for H2 2026, and installed instrument capacity will drive future reagent demand.

Software Segment Updates

• The Signals software business performed in line with expectations in Q2, with double-digit growth in annualized portfolio value (APV) and mid-20s ARR growth. Several new products are launching or rolling out in 2026: BioDesign (large molecule workflows, commercially available and gaining traction), Synthereca (AI models as a service, in initial beta rollout), Labgistics (end-to-end workflow coordination, on track for late 2026 launch), and Signals AI (embedded LLM capabilities, recently launched). A new Anthropic connector enables customers to use Anthropic models with their proprietary data directly within the Signals platform.
• A new commercial program, Signals for Startups, was launched to make the Signals platform accessible to early-stage biotech companies, driving early adoption and future scale.

Diagnostics Segment Updates

• The diagnostics franchise delivered 11% organic growth, accelerating from high single-digit growth in Q1 2026. Performance was broad-based, even after excluding the Genomics England contract contribution. Reproductive health grew mid-teens, driven by strong newborn screening demand. Immunodiagnostics outside of China grew high single digits despite continued latent TB headwinds.

Corporate & Operational Progress

• A definitive agreement for the divestiture of the China immunodiagnostics business has been signed, on terms matching initial expectations, with closing expected by the end of 2027. This divestiture will allow Revity to refocus on higher-return core end markets.
• Integration of the acquired ACD Labs software business is progressing faster than expected, with early synergy realization and product interoperability momentum.
• Operational efficiency initiatives are well underway, with benefits expected to materialize in H2 2026 and 2027. The company generated strong free cash flow with 117% conversion of adjusted net income, and paid off a maturing 500 million euro note in mid-July 2026, putting the company on track to hit year-end leverage targets.

All figures below are presented on a pro forma basis, excluding the China immunodiagnostics business pending divestiture:

1. Life Sciences Segment: Generated $359 million in total revenue, a 2% reported and 3% organic decline year-over-year. This segment contributed 50.5% of Revity's total Q2 2026 revenue. The 20% organic decline in the Signals software business (driven by difficult year-ago comparisons and contract timing) was the primary driver of the segment's overall decline. Excluding software, life sciences solutions (instruments and reagents) grew low single digits organically, with strong order growth held back by shipment timing that pushed revenue into the subsequent quarter.

• Full Year 2026 Organic Growth Guidance: Raised to 4-5% from the prior 3-4% outlook (pro forma, excludes divested China business). FX is expected to contribute 50 basis points to total growth, and the ACD Labs acquisition is expected to add 75 basis points, bringing total pro forma 2026 revenue to a range of $2.83 to $2.86 billion.
• Full Year 2026 Adjusted Operating Margin Guidance: Raised 30 basis points to 28.7%, driven by the benefits of tariff refunds and stronger organic growth, partially offset by planned incremental reinvestment in strategic initiatives, supply chain, and workforce. Additional future tariff refunds are expected to be immaterial.
• Full Year 2026 Adjusted EPS Guidance: Raised by 10 cents to a range of $5.30 to $5.40. Half of the increase comes from the net impact of tariff refunds after reinvestment, and half from stronger organic revenue and operating margins. The full-year adjusted tax rate remains unchanged at 18%, as Q2's lower rate was just timing-related and will be offset in Q4.
• Q3 2026 Guidance: Expects 4-6% organic growth, with total revenue in the range of $685 to $700 million. Pro forma adjusted operating margin is expected to be 29%, unchanged from prior outlooks despite incremental reinvestment spending. Adjusted EPS is expected to equal approximately 24% of the full-year guidance range.
• Within the Life Sciences segment, full-year instrument (platforms) growth guidance was raised from low single-digit to mid-single-digit positive growth, reflecting stronger order momentum.

• The divestiture of the China immunodiagnostics business is not expected to close until the end of 2027, and GAAP results will continue to include the business' performance until closing, creating a pro forma/GAAP reporting difference.
• AI-driven demand growth is still in very early innings, and the magnitude of the long-term opportunity cannot yet be accurately sized, creating uncertainty for future projections.
• Current guidance does not assume further acceleration of the improving pharma and biotech end market trend; faster-than-expected improvement would not be captured in current projections, while a reversal would lead to underperformance.
• High content screening order growth currently outpaces manufacturing capacity, leading to near-term revenue being pushed into future quarters and requiring incremental capital investment to expand capacity.

Q: Can you detail the size of the current instrument backlog, the contribution of high content screening to that backlog, and full-year growth expectations for instruments and reagents? / A: Management states end-of-quarter backlog is the strongest it has been in 3-4 years, driven by accelerating order growth in Q2. Most of the backlog is for non-commoditized high content screening instruments (including the Opera Phoenix Opt IQ), which saw double-digit order growth in Q2. Some backlog stems from shipment timing pushed into Q2, and some from large reagent orders that will also be fulfilled in Q3. Full-year instrument growth guidance is raised from low single-digit to mid-single-digit positive growth, with reagents expected to see low single-digit growth in Q3 followed by a step up to mid-single-digit growth by Q4. High content screening capacity expansion is a key area for incremental reinvestment of tariff refund proceeds to meet growing demand.

Q: Who are the new non-traditional AI customers driving new demand, and how does this new demand square with Q2's soft Life Sciences performance? / A: Non-traditional customers include standalone AI drug discovery companies, non-profits focused on AI research, and new teams within traditional pharma building AI-driven discovery platforms. All of these customers need instruments and reagents to generate the biological data required to validate AI-generated hypotheses. Q2's soft Life Sciences organic performance was entirely driven by expected difficult year-ago comparisons and contract timing in the Signals software segment. The accelerating order growth that created the current backlog did spill over into Q3, but the new demand trend is clear and becoming more established.

Q: What is driving management's confidence that Signals software will return to double-digit growth in H2, and how are new AI capabilities creating cohesion across the Signals portfolio? / A: The expected return to double-digit growth is driven by simple timing: a larger portion of annual contract renewals are scheduled for H2, creating the natural quarter-over-quarter bump that the company has already planned for. Recent AI launches (Signals AI and the Anthropic MCP connector) are designed to increase cohesion and value of the core Signals platform: these capabilities let customers use leading LLMs on their proprietary preclinical data without moving data outside the secure Signals environment. Upcoming launches like Labgistics will further add cohesion by connecting workflows across discovery through manufacturing, turning Signals into the central core platform for preclinical R&D in the AI era.

Q: How durable is the strong current performance of newborn screening within reproductive health, even amid declining birth rates? / A: Newborn screening revenue grew double digits in the first half of 2026, even with declining birth rates. Reagent growth alone was high single digits, with additional growth coming from instrument placements completed in the first half. Higher instrument placement in the first half is actually a positive long-term driver, as it will support future recurring reagent revenue as the new instruments are utilized. The Genomics England contract is tracking to $25 million in full-year 2026 revenue, in line with expectations, and Revity is in active discussions to extend the partnership.