APi Group raises 2026 revenue outlook to $9.25 billion after strong third-quarter growth
Key Facts
APi Group raised its fiscal 2026 revenue outlook to a range of $9.20 billion to $9.25 billion and increased its adjusted EBITDA estimate to between $1.235 billion and $1.255 billion after reporting results for the third quarter ended September 30. Quarterly revenue was $2.554 billion, up 22.5% year over year, while organic growth was 15.7%. The results showed adjusted earnings expanding alongside sales growth, with adjusted EBITDA at $350 million. The higher outlook reflects continued strong demand for inspection, service and monitoring activities and projects, alongside contributions from acquisitions and pricing improvements. The results put the annual guidance update in the context of strong operating growth, while cost pressures and business mix continued to weigh on some margins.
The company raised its annual revenue range from the guidance issued on July 30, which was between $8.875 billion and $9.025 billion, to the new range of $9.20 billion to $9.25 billion. It also raised the low and high ends of its adjusted EBITDA outlook from $1.205 billion and $1.245 billion to $1.235 billion and $1.255 billion. The July update had itself raised revenue guidance from a range of $8.660 billion to $8.860 billion and increased the adjusted EBITDA estimate from $1.177 billion to $1.237 billion. This means the company revised its outlook twice during the period covered by its filings, with successive increases in revenue and adjusted earnings estimates. The third-quarter revision sets a higher range for both metrics than the July guidance, while both remain estimates for the full fiscal year.
Third-quarter adjusted EBITDA rose 24.6% to $350 million, from $281 million in the year-earlier period. The adjusted EBITDA margin widened to 13.7% from 13.5%, an increase of 20 basis points year over year. By contrast, gross margin fell to 30.1% from 31.3%, a decline of 120 basis points. The company attributed the decline to project and business mix, as well as higher materials and fuel costs and other expenses. The results show two different margin trends in the quarter: an improvement in adjusted earnings before interest, taxes, depreciation and amortization margin, alongside a contraction in gross margin under pressure from mix and costs.
Reported net income was $114 million in the third quarter, compared with $93 million a year earlier, while diluted earnings per share rose to $0.24 from $0.20. Net income increased 22.6% year over year, compared with a 20% rise in diluted earnings per share, according to the filing. The company linked revenue growth to increased inspection, service and monitoring activity, strong growth in project revenue, acquisitions and pricing improvements. Chief Executive Ross Beaker said, "Strong demand across our inspection, service and monitoring businesses, robust project activity and disciplined execution supported momentum in both segments." He added that the company was entering the fourth quarter with a growing backlog, according to the earnings release.
The annual guidance comes within APi Group’s long-term framework, known as its 10/16/60+ targets, which aims for revenue exceeding $10 billion by 2028 and an adjusted EBITDA margin of at least 16% that year. The framework also calls for inspection, service and monitoring revenue to account for more than 60% of net revenue, and cumulative adjusted free cash flow to exceed $3 billion through 2028. The framework defines the margin target as adjusted EBITDA margin, not general profit margin, a distinction that matters when reading the company’s targets. As for its next guidance, management said it intends to announce the company’s budget and fiscal 2027 outlook in February, in line with its usual practice. That sets the next annual guidance release as the upcoming milestone the company has identified for investors.