Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 30, 2026 · Beat 5 of last 6 quarters
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APi's record backlog and robust project growth, particularly in data centers, underscore the sustained physical buildout of AI infrastructure. Management's commentary on larger project sizes, disciplined selection, and the potential for recurring inspection/service revenue once facilities are operational highlights the long-tail opportunity for services providers. The international data center lag catching up could provide further upside for APi's global safety business.
APi Group delivered another strong quarter with net revenues up 13.3% to $2.25B and organic growth of 10.1%, driven by robust project and service growth across both segments. Safety Services grew 4.7% organically with North America up high single digits, while International Safety was flat but returned to growth in the back half of the quarter. Specialty Services outperformed with 22% organic growth, and segment earnings margin expanded 60 bps to 11.9%. Adjusted EBITDA grew 14.3% with margin up 10 bps to 13.8%, and adjusted EPS of $0.44 beat consensus. The company closed the Onyx-Fire and Wtech acquisitions, completed 3 bolt-ons, and repurchased 1.6 million shares for $66 million under its new $1 billion program.
Management raised full-year 2026 guidance for revenue and adjusted EBITDA, citing strong first-half performance and an improved outlook. Full-year net revenues are now expected at $8.875B-$9.025B (7%-9% organic growth), up from $8.66B-$8.86B, and adjusted EBITDA of $1.205B-$1.245B (16%-20% growth), up from $1.177B-$1.237B. The guidance incorporates ~$30M in FX headwinds to revenue and $5M to EBITDA. For Q3, they expect net revenues of $2.375B-$2.425B (8%-10% organic) and adjusted EBITDA of $325M-$335M (13.8% margin at midpoint). Management reiterated confidence in the 10/16/60+ long-term targets, including 16%+ adjusted EBITDA margin by 2028. They also plan to scale bolt-on M&A deployment from $250M to $350M annually, with a robust pipeline and strong balance sheet flexibility.
“Our size, scale, technical expertise and established customer relationships position us well to support the data center and related infrastructure build-out while creating long-term opportunities for recurring high-margin inspection, service and monitoring revenue once the data centers are operational.”
on Data center opportunity
“We are a services-first business and we will not lose track of that.”
on Business model focus
“If you look at the demand curve versus the capacity curve, the demand curve is going to far outweigh the capacity curve. And so strength will continue through 2030.”
on Data center demand outlook
Can you comment on the average size of projects, how that relates to margins, and whether the mix of project work is an inhibitor to long-term margin goals?
Russ noted project sizes are larger—e.g., large data center fire jobs have grown from $7-8M to ~$20M—but pricing has improved due to complexity and location, allowing better gross margins on larger work. He acknowledged project gross margins are typically 10 points lower than service, but on larger work the gap narrows, and he reaffirmed confidence in achieving the 16% 2028 margin target.
Can you touch on what you're seeing in Safety, bifurcating North America and Europe, and any strategic actions to accelerate margin performance?
Russ said North America Safety continues to perform well with high single-digit organic growth. International Safety is still converting to an inspection-first mindset, but is seeing positive results from that push, with a robust project environment and data center opportunities starting to materialize internationally. He noted the global accounts capability is gaining traction with pipeline and backlog up.
On the guide raise, what changes does it incorporate in terms of growth expectations for Safety Services versus Specialty?
David said the back half reflects continued solid strength in North America Safety, a modest improvement in International Safety, and a continuation of robust project and service growth in Specialty Services.