Vertiv Holdings
The maker of the power and cooling gear that keeps an AI data centre running: backup power, switchgear, chillers and the liquid loops that pull heat off the chips.
Our viewNeutral Medium conviction
The scores
The profile · 1-4
Growth3/4 →
Fast, self-generated growth, 55% before acquisitions in Q3 2026 against a market at 28% - but one driver, AI data centres.
Business quality3/4 →
A real qualification: the chip supplier names three power vendors, Vertiv among them. Untested - the interface is open and Eaton is buying in.
Financial position4/4 ↑
Net cash, negative leverage, liquidity of $5.6B, no current maturities, and a capital programme plus a $1.45B acquisition funded from cash generation.
Execution record3/4 →
Six straight adjusted beats and guidance raised at every 2026 report, but the Q2 revenue miss echoed a 2025 stumble.
Per share capture3/4 →
Share count up 0.7% in a year, deals in cash, no convertibles - but no buyback, and adjusted earnings exclude a widening amortisation charge.
Potential2/4 →
A large prize, but the upside is expected rather than committed: cancellable orders converting on hyperscale capital budgets Vertiv neither controls nor discloses.
Risk profile3/4 →
One serious dependency - a single end market set by a few unnamed hyperscale buyers - plus a pending securities case. Disclosed, and survivable.
Valuation2/4 →
The price pays for the plan and the good case past it: about $43.72 per dollar of operating profit (was $50), 16.2 times 2030 estimates.
Evidence quality3/4 →
The load-bearing cash-flow and balance-sheet figures are filed and exact, and the moat rests on an outside party. Orders and vendor share are unpublished.
The Verdict
We rate Vertiv neutral. It sells the power and cooling equipment that keeps AI data centres running, NVIDIA names it as one of three power suppliers for its next design, and the September quarter was extraordinary: sales grew 61%, 55 points of it from existing businesses, and management says orders more than doubled. But the price is full, not cheap: it already counts on years of this, and customer deposits were still 87% of the nine-month operating cash. The view hinges on whether the fourth quarter holds and the year-end backlog confirms the orders.
The long caseAI chips need far more power and cooling per rack, so data centres must re-equip; Vertiv must grow faster than that market for the price to pay off.
The evidence under this - 6 claims
C01facthigh confidence
Vertiv designs, makes and services the power train and the cooling chain for data centres - uninterruptible power supplies, switchgear, busway, power distribution, chillers and coolant distribution units - under the Liebert, NetSure, Geist and Avocent brands.
C46facthigh confidence
Vertiv's third quarter 2026 net sales were $4,312.8M, up 61% on the third quarter of 2025, of which 55 points were organic and about 6 points acquired; adjusted operating margin was 25.2%, diluted earnings per share were $1.95 and adjusted $2.21, and the company states organic orders grew more than 100% year on year.
source8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primaryQ3 2026 earnings call transcript (FMP), held 2026-10-28primary
against this
- The order growth is the company's statement in the release; no order or backlog figure was published, and Vertiv reports backlog once a year in the 10-K.
- On the call management said the order growth is orders and not catch-up, and that backlog counts only purchase orders, covering 12 to 18 months; still no figure.
- 2026-10-28editedQ3 call added management's statement that the more-than-100% order growth is not catch-up and its definition of backlog
C08facthigh confidence
Current deferred revenue rose from $1,814.7M at 31 December 2025 to $3,633.7M at 30 June 2026 and $4,120.5M at 30 September 2026, and $1,277.3M of the opening balance was recognised in revenue over the first six months.
sourceForm 10-Q for the quarter ended June 30, 2026primaryQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
- 2026-10-28editedQ3 2026 balance sheet read: deferred revenue $4,120.5M at 30 September, up $486.8M in the quarter
C47facthigh confidence
Deferred revenue added $490.2M to Vertiv's operating cash flow of $794.0M in the third quarter of 2026, about 62% of it, and $2,312.9M of the $2,660.6M of operating cash flow in the first nine months, about 87%; the first-half share was 98%.
C10facthigh confidence
NVIDIA's published partner list for its 800 volt direct current architecture names exactly three data centre power system companies - Eaton, Schneider Electric and Vertiv.
against this
- Being one of three named is a qualification and not an exclusive: the same list qualifies both of the large-scale global competitors Vertiv's own 10-K names first, so it distinguishes Vertiv from the rest of the field and not from its two closest rivals.
- NVIDIA also names a separate and longer list of silicon and power-component suppliers, and states that more than 80 manufacturers are building to the specification.
C19factmedium confidence
Vertiv trades at about 54.3 times trailing earnings against a six-year median of 43.1, 8.2 times sales against 2.2, 19.8 times book value against 10.1 and 37.6 times cash profit against 26.8 -- down from 62.1/9.4/22.7/43.0 at the thesis on a 12.6% lower price with no change to the trailing figures. The book-value denominator is the $4,757.6M of total equity filed at 30 June 2026.
sourceResearch pack, frozen at content/VRT/research-pack.jsonprimaryForm 10-Q for the quarter ended June 30, 2026primary
- 2026-09-25editedre-struck on the 2026-09-24 close after a 12.6% price decline since the thesis; the trailing filed figures are unchanged
The company
An AI data centre needs two things besides chips: power that never drops, and a way to carry away the heat. Vertiv makes both, under brands like Liebert: backup power supplies, switchgear, power distribution, chillers and the coolant units that pump liquid to plates on each chip.
The newest racks run too hot for air, so liquid has to reach the chip. Vertiv sells the power and cooling together as one system for a whole site, and services it afterwards.
The evidence under this - 1 claim
C01facthigh confidence
Vertiv designs, makes and services the power train and the cooling chain for data centres - uninterruptible power supplies, switchgear, busway, power distribution, chillers and coolant distribution units - under the Liebert, NetSure, Geist and Avocent brands.
How it makes money
It sells equipment by the project and services it afterwards. Big projects are partly paid up front: customer deposits rose from $1.81B at the end of 2025 to $3.63B in June and $4.12B in September. That helps cash today, but deposits were 87% of the nine-month operating cash, so most of this year's cash came from customers paying early.
The evidence under this - 3 claims
C08facthigh confidence
Current deferred revenue rose from $1,814.7M at 31 December 2025 to $3,633.7M at 30 June 2026 and $4,120.5M at 30 September 2026, and $1,277.3M of the opening balance was recognised in revenue over the first six months.
sourceForm 10-Q for the quarter ended June 30, 2026primaryQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
- 2026-10-28editedQ3 2026 balance sheet read: deferred revenue $4,120.5M at 30 September, up $486.8M in the quarter
C07facthigh confidence
In the six months ended June 30, 2026, deferred revenue contributed $1,822.7M to Vertiv's cash flow against total net cash provided by operating activities of $1,866.6M; the whole working-capital block was a net release of only $678.8M because receivables took out $644.2M and inventories $1,048.0M.
against this
- Vertiv's own management, discussion and analysis attributes the release to the same cause, saying trade working capital 'provided $678.8 in the first six months of 2026 compared to $95.2 utilized in the first six months of 2025 primarily driven by deferred revenue' - so this is disclosed, not hidden.
- Advance and milestone payments on large projects are a normal and favourable commercial term rather than an accounting problem, and the chief financial officer described them on the call as an indicator of strong commercial performance on both sides.
- Deferred revenue also added cash in prior years - $717.5M in 2025, $434.5M in 2024 and $274.2M in 2023 - so this is an intensification of an existing pattern rather than a new one.
C47facthigh confidence
Deferred revenue added $490.2M to Vertiv's operating cash flow of $794.0M in the third quarter of 2026, about 62% of it, and $2,312.9M of the $2,660.6M of operating cash flow in the first nine months, about 87%; the first-half share was 98%.
Where the money comes from, stream by stream
| Stream | Share of sales (Q2 2026) | How it earns it |
|---|---|---|
| Products | 79.6% | Power trains and cooling systems for data centres - UPS, switchgear, busbar, chillers, coolant distribution units, racks and prefabricated modules - sold per project. |
| Services & spares | 20.4% | Maintenance, testing, commissioning, remote monitoring, fluid management, spare parts and software for the installed base, much of it recognised over time. |
Who runs it
Giordano Albertazzi has run Vertiv since January 2023, after years running its regions; profit margins have roughly quadrupled on his watch. David Cote, who ran Honeywell, chairs the board, and a new finance chief arrived in late 2025. Insiders own only about 1%, mostly as stock options. The yearly bonus pays on adjusted profit and cash generated, the long-term awards only if the share price rises.
The evidence under this - 4 claims
C41facthigh confidence
Giordano Albertazzi has been chief executive and a director since January 1, 2023, after running Europe, Middle East and Africa from 2016, the Americas from March 2022 and operations from October 2022, and joined Emerson Network Power in 1998; David Cote, Honeywell's chief executive from 2002 to 2017, has been executive chairman since February 7, 2020; Craig Chamberlin, from Wabtec, has been chief financial officer since November 2025.
C42facthigh confidence
As of April 15, 2026 the 20 directors and executive officers as a group beneficially owned 4,214,011 shares, 1.10% of 384,107,272 outstanding, counting options exercisable within 60 days; the largest, Giordano Albertazzi, held 1,629,925, of which 1,463,824 were options; BlackRock at 5.55% was the only holder above 5%. There is one class of common stock with one vote a share.
C43facthigh confidence
Vertiv's 2025 annual bonus paid on adjusted operating profit ($2,090M against a $2,050M target) and adjusted free cash flow ($1,888M against $1,400M), with room for individual and regional judgement; the chief executive earned 205% of target, $4.0M, after the committee lifted the 200% maximum. Long-term awards were stock options vesting over four years; the chief executive received 400,000 at $85.04.
against this
- Adjusted operating profit excludes amortisation of intangibles, contingent consideration and deal costs, so the cost of the acquisition run (C23, C24) does not reach the bonus.
- The maximum was raised after the year, and the options carry no condition beyond the share price, so nothing pays on return on capital.
C20facthigh confidence
Vertiv's operating margin rose from 4.7% in 2019 and 3.9% in 2022 to 17.9% in 2025 and 19.1% over the trailing twelve months to June 2026; adjusted operating margin was 25.2% in the third quarter of 2026, up 290 basis points on a year earlier, and is guided to 23.5% to 24.5% for the full year.
sourceForm 10-K for the fiscal year ended December 31, 2025primaryQ2 2026 results release (8-K Exhibit 99.1)primaryResearch pack, frozen at content/VRT/research-pack.jsonprimary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
against this
- Part of the expansion is operating leverage on volume that a capital-spending cycle supplied, not a structural change: the same company earned single-digit operating margins as recently as 2022 and the guided 2026 margin is struck on a year of 37% reported sales growth.
- The guided margin is adjusted; reported operating margin was 19.5% in Q2 2026 against the 22.6% adjusted figure, a gap of 3.1 points.
- 2026-10-28editedQ3 2026 adjusted operating margin of 25.2% and the raised full year guide added
Why it wins, and who could beat it
Why customers come back
Its way in is the chip maker's blueprint. NVIDIA publishes the power design for each chip generation and names the vendors it has tested with; for its next, 800-volt design it names exactly three: Eaton, Schneider Electric and Vertiv.
Getting on that list takes years of joint engineering before the chip ships, and a buyer who picks a fourth vendor carries the risk itself.
The evidence under this - 1 claim
C10facthigh confidence
NVIDIA's published partner list for its 800 volt direct current architecture names exactly three data centre power system companies - Eaton, Schneider Electric and Vertiv.
against this
- Being one of three named is a qualification and not an exclusive: the same list qualifies both of the large-scale global competitors Vertiv's own 10-K names first, so it distinguishes Vertiv from the rest of the field and not from its two closest rivals.
- NVIDIA also names a separate and longer list of silicon and power-component suppliers, and states that more than 80 manufacturers are building to the specification.
The threat
Both named rivals are closing in. Eaton agreed to pay $9.5B for Boyd Thermal so it can sell cooling alongside power, the pairing Vertiv sells. Schneider sits on the same NVIDIA list. And the 800-volt design is being written as an open standard that over 80 manufacturers are building to, which moves the design decision to the buyer.
The evidence under this - 4 claims
C12facthigh confidence
Eaton agreed on 2 November 2025 to pay $9.5B for Boyd Thermal, which its own 10-K describes as expanding its data centre portfolio to include critical liquid cooling technology and enabling it to serve hyperscale and colocation customers from the chip to the grid.
against this
- Buying a thermal business is not the same as being qualified into a chip vendor's reference architecture or having Vertiv's installed service network, and Eaton is paying a large price to acquire capability Vertiv already has.
- Eaton is also spinning off its Mobility segment, so its management attention and capital are committed in more than one direction.
C10facthigh confidence
NVIDIA's published partner list for its 800 volt direct current architecture names exactly three data centre power system companies - Eaton, Schneider Electric and Vertiv.
against this
- Being one of three named is a qualification and not an exclusive: the same list qualifies both of the large-scale global competitors Vertiv's own 10-K names first, so it distinguishes Vertiv from the rest of the field and not from its two closest rivals.
- NVIDIA also names a separate and longer list of silicon and power-component suppliers, and states that more than 80 manufacturers are building to the specification.
C11facthigh confidence
NVIDIA, Google and Microsoft are developing the 800 volt direct current architecture together through the Open Compute Project, more than 80 equipment manufacturers and infrastructure companies are already building products to the specification, and the specification defines common interfaces so that power hardware from different vendors can work together.
against this
- An open interface can widen a market as well as commoditise it: NVIDIA states the architecture is an additional deployment option that coexists with alternating-current systems rather than replacing them, so Vertiv's existing architectures keep selling alongside it.
- Vertiv's chief executive told the Q2 2026 call that its content per megawatt expands under the new architecture, and that the company is involved in both the 800 volt and 400 volt versions.
C37inferencemedium confidence
Where the buyer's chip supplier and its two largest customers jointly define the common electrical interfaces, the architecture decision moves from the equipment vendor to the buyer, and Vertiv becomes a supplier to a published interface rather than the party that designs the power train.
derivedNVIDIA states it is developing the 800 volt architecture with Google and Microsoft through the Open Compute Project, that the specifications 'define common interfaces so that power hardware from different vendors can work together', and that more than 80 manufacturers are building to it (C11). Vertiv's own pitch, in the UtilityInnovation Group release and on the Q2 2026 call, is that customers increasingly ask it to architect their infrastructure (C36). Both cannot become more true at once for the part of the estate the specification covers.
against this
- A common interface at the rack and pod level says nothing about the rest of a site: the utility interconnect, the generation, the chillers, the fluid loops and the installation are outside the specification, which is exactly the ground Vertiv bought UtilityInnovation Group and PurgeRite to hold.
- Standardisation can enlarge a supplier's market by making its equipment deployable across more customers, and Vertiv is one of only three power-system vendors NVIDIA names, so it starts from a better position than the other 80-odd firms building to the specification.
- NVIDIA describes 800 volt as an additional deployment option coexisting with alternating current rather than a replacement, so the affected share of the installed base grows slowly.
The rivals: ETN, JCI, and 2 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | How far along | Priced against it |
|---|---|---|---|
| ETN | Eaton Corporation plcPriced against it: Yes | Announced | Yes |
| Schneider Electric S.E.Priced against it: Listed abroad | On sale | Listed abroad | |
| Not listed | The Open Compute Project 800 volt direct current specification, authored by NVIDIA, Google and MicrosoftPriced against it: Not listed | On sale | Not listed |
| JCI | Johnson Controls InternationalPriced against it: Yes | On sale | Yes |
How big it could get
How big this could get
Makers of data-centre power and cooling equipment sold $12B in the first quarter of 2026, about $48B a year, up 28%, with cooling up nearly 50%. Dell'Oro Group expects the market to pass $80B by 2030. Vertiv grew 27.7% in 2025 and now guides to $14.45B to $14.85B of sales in 2026, 37% to 39% from existing businesses: well above the market's pace, which is the share-taking the earlier reading did not see.
The evidence under this - 4 claims
C14factmedium confidence
The worldwide data centre physical infrastructure market grew 28% year on year to $12B of manufacturer revenue in 1Q 2026, with thermal management expanding nearly 50%, busbars in the low-thirties percent range and uninterruptible power supplies at a high-teens pace.
against this
- Vertiv reported 24.1% revenue growth in Q2 2026 and 26.2% over the trailing twelve months, so on the vendor's own measure of the market Vertiv is growing at roughly the market's rate rather than visibly taking share from it.
- The uninterruptible power supply line - Vertiv's oldest and largest power product - is the slowest-growing part of that market at a high-teens rate, well below the 28% headline.
C15factmedium confidence
Dell'Oro Group projects the data centre physical infrastructure market to grow at a mid-teens compound annual rate from 2025 to 2030, surpassing $80B, with thermal management compounding at about 20% and direct liquid cooling passing $8B by 2030.
against this
A mid-teens market growth rate to 2030 is roughly half the 30% to 32% organic growth Vertiv is guiding for 2026, so either Vertiv takes substantial share from here or its own growth rate converges downward toward the market's.
C02facthigh confidence
Net sales grew from $4,285.6M in 2018 to $10,229.9M in 2025, with growth of 20.6% in 2023, 16.7% in 2024 and 27.7% in 2025.
C04management claimmedium confidence
Vertiv guides full year 2026 to net sales of $14,450M to $14,850M, organic sales growth of 37% to 39%, adjusted operating margin of 23.5% to 24.5% and adjusted diluted earnings per share of $7.10 to $7.20, with reported diluted earnings per share of $6.29 at the midpoint; the fourth quarter is guided to net sales of $4,313M to $4,513M and organic growth of 49% to 51%.
sourceQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primaryQ3 2026 earnings call transcript (FMP), held 2026-10-28primary
against this
- Reaching 49% to 51% organic growth in the fourth quarter after 55% in the third needs the ramp to hold, and the Q4 2025 comparison is the one the order surge of that quarter set.
- On the call the finance chief said $100M to $150M of revenue delayed from the second quarter landed in the third, so the third quarter ran above its normal path and the fourth-quarter guide is a normal step up from it (C48).
- 2026-10-28editedQ3 2026 results raised full year guidance by $650M at the midpoint (8-K Exhibit 99.1); old guide of $13,800M to $14,200M replaced
- 2026-10-28editedQ3 call: $100M to $150M of second-quarter revenue slipped into the third quarter, a counter-evidence line for the 49% to 51% fourth-quarter guide
Who has signed
Backlog was $15.0B at the end of 2025, against $7.2B a year earlier, mostly firm and due within 12 to 18 months. In October the company said third-quarter orders more than doubled but gave no figure, and no customer is named, so the latest backlog anyone can check is December's.
The evidence under this - 2 claims
C05facthigh confidence
Vertiv's estimated combined order backlog was $15.0B at 31 December 2025 against $7.2B a year earlier, and the majority is considered firm and expected to ship within 12 to 18 months.
against this
- The same 10-K states that orders may be subject to cancellation or rescheduling by the customer, that customers may in some circumstances reduce or defer firm orders, and lists 'unpredictable placing or cancelling of customer orders' as a risk factor - so the company's own filing says what its backlog is worth as a promise.
- The figure is eight months old and there is no newer one: neither the Q1 2026 nor the Q2 2026 release, nor the Q2 2026 10-Q, states a backlog figure.
C27facthigh confidence
Vertiv's 10-K discloses no customer concentration figure and names no customer, so the concentration of the order book among a small number of hyperscale buyers cannot be checked from the filings.
Where the growth is coming from, business by business
Where the growth is coming from
| Business | Share of revenue | Growth: last quarter | Last half-year | Last year | Share in 3 years at its half-year rate |
|---|---|---|---|---|---|
| Product | 81% | +22.2% | +25.3% | +26.7% | 78% |
| Service | 19% | +32.9% | +33.0% | +24.1% | 22% |
| Whole company | 100% | +24.1% | +26.7% | +26.2% | 100% |
On the filed split through 2026-06-30, if each business keeps its last half-year's growth, the company grows about 27% next year and 27% in year 3, against 26.2% over the last twelve months. A scenario, not a forecast: no business holds its rate.
The results
The numbers
Is it growing?Fast
Sales grew 35% over the twelve months to Sep 2026, faster than the 28% in the year to Dec 2025.
Is it profitable?Strong
Operating margin is 20%, up from 13% in the year to Dec 2023.
Does growth pay off?Pays off
Running costs take 18¢ of each sales dollar, down from 25¢ in the year to Dec 2021.
Does it earn good returns?Strong
Each dollar put into the business earns 29% a year after tax, up from 5.3% in the year to Dec 2021.
Is it making cash?Strong
It turned 24% of sales into free cash, $3.12B over the last twelve months.
Is the balance sheet safe?Net cash
It holds $3.51B of cash against $2.93B of debt, $584M more cash than it owes.
Are shares being diluted?Creeping
The share count rose 9.0% in 4.8 years, and pay in shares costs 0.4% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-28. Fiscal years end in December.
| Dec 2021 | Dec 2022 | Dec 2023 | Dec 2024 | Dec 2025 | 12 mo to Sep 2026 | |
|---|---|---|---|---|---|---|
| Size and growth | ||||||
| Sales | $5.00B | $5.69B | $6.86B | $8.01B | $10.2B | $13.1B |
| Sales growth | +14% | +14% | +21% | +17% | +28% | +35% |
| Profit | ||||||
| Gross margin | 30% | 28% | 35% | 37% | 36% | 38% |
| Operating margin | 5.2% | 3.9% | 13% | 17% | 18% | 20% |
| Net margin | 2.4% | 1.3% | 6.7% | 6.2% | 13% | 16% |
| What growth costs, per sales dollar | ||||||
| Research and development | 5.3% | 5.0% | 4.4% | 4.6% | 4.3% | - |
| Selling, general and admin | 22% | 21% | 19% | 17% | 16% | 15% |
| Pay in shares | 0.5% | 0.4% | 0.4% | 0.4% | 0.4% | 0.4% |
| Capital spending | 1.5% | 1.8% | 1.9% | 2.1% | 2.2% | 4.0% |
| Cash | ||||||
| Cash from operations | $211M | −$153M | $900M | $1.32B | $2.11B | $3.64B |
| Free cash flow | $138M | −$253M | $773M | $1.15B | $1.89B | $3.12B |
| Balance sheet | ||||||
| Cash and short-term investments | $439M | $261M | $780M | $1.23B | $1.73B | $3.51B |
| Debt | $2.97B | $3.19B | $2.94B | $2.93B | $2.91B | $2.93B |
| Net cash | −$2.53B | −$2.93B | −$2.16B | −$1.70B | −$1.18B | $584M |
| Returns and shares | ||||||
| Return on capital | 5.3% | - | 16% | 17% | 23% | 29% |
| Shares (diluted) | 360M | 378M | 386M | 386M | 391M | 393M |
What growth costs
Growth has made Vertiv more profitable: sales have roughly doubled while overhead and engineering costs grew far more slowly, so each new sale keeps more profit. The catch is that spending on factories is now rising faster than sales, and in 2022 rising costs wiped out the gain until prices caught up.
The evidence under this - 2 claims
C40facthigh confidence
Per sales dollar, selling, general and administrative cost fell from 22.2 cents in FY2021 to 15.8 in FY2025 and 15.9 over the four quarters to June 2026, engineering, research and development from 5.3 to 4.3, and stock pay stayed near 0.5; capital spending rose from 1.5 cents to 2.2 and 3.7, and operating margin rose from 5.2% to 17.9%.
sourceForm 10-K for the fiscal year ended December 31, 2025primaryForm 10-Q for the quarter ended June 30, 2026primary
against this
- In FY2022 sales grew about 14% yet operating margin fell to 3.9% (C20), because cost of sales rose faster than prices; the leverage held only once pricing caught up with inflation.
- Capital spending per sales dollar has more than doubled since FY2021, so the overhead leverage is partly being spent on capacity.
C20facthigh confidence
Vertiv's operating margin rose from 4.7% in 2019 and 3.9% in 2022 to 17.9% in 2025 and 19.1% over the trailing twelve months to June 2026; adjusted operating margin was 25.2% in the third quarter of 2026, up 290 basis points on a year earlier, and is guided to 23.5% to 24.5% for the full year.
sourceForm 10-K for the fiscal year ended December 31, 2025primaryQ2 2026 results release (8-K Exhibit 99.1)primaryResearch pack, frozen at content/VRT/research-pack.jsonprimary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
against this
- Part of the expansion is operating leverage on volume that a capital-spending cycle supplied, not a structural change: the same company earned single-digit operating margins as recently as 2022 and the guided 2026 margin is struck on a year of 37% reported sales growth.
- The guided margin is adjusted; reported operating margin was 19.5% in Q2 2026 against the 22.6% adjusted figure, a gap of 3.1 points.
- 2026-10-28editedQ3 2026 adjusted operating margin of 25.2% and the raised full year guide added
The last report (29 Jul)
Quarter ended June 2026, filed figures.
24%
Sales growth
against the same quarter a year earlier
23.6%
Growth from the quarter before
against -8.0% the quarter before that
19¢
Operating profit
per dollar of sales
Sales grew 61% to $4.31B in the September 2026 quarter, 55 points of it from existing businesses against a guide of 34% to 36%, at an adjusted operating margin of 25.2%. Customer deposits rose to $4.12B and the company says orders grew more than 100%. Full-year sales guidance rose by $650M to $14.65B at the midpoint.
The shares rose about 14% on the day after falling 17.3% on July's miss;
On the call management called the orders real demand, not catch-up, said $100M to $150M of the sales were delayed from the second quarter, and gave no 2027 outlook.
What it did to the thesisThe test passed on all three counts: faster growth, a higher margin and deposits still building. It answers the second-half question and weakens our view that Vertiv only matches its market. The view stays Neutral because the price already counts on this.
The quarter in detail
Sales growth from the previous quarter, filed figures.
Earnings per share $1.52 against $1.43 expected; $1.27 as filed, the gap being what the company adds back.
The evidence under this - 5 claims
C46facthigh confidence
Vertiv's third quarter 2026 net sales were $4,312.8M, up 61% on the third quarter of 2025, of which 55 points were organic and about 6 points acquired; adjusted operating margin was 25.2%, diluted earnings per share were $1.95 and adjusted $2.21, and the company states organic orders grew more than 100% year on year.
source8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primaryQ3 2026 earnings call transcript (FMP), held 2026-10-28primary
against this
- The order growth is the company's statement in the release; no order or backlog figure was published, and Vertiv reports backlog once a year in the 10-K.
- On the call management said the order growth is orders and not catch-up, and that backlog counts only purchase orders, covering 12 to 18 months; still no figure.
- 2026-10-28editedQ3 call added management's statement that the more-than-100% order growth is not catch-up and its definition of backlog
C04management claimmedium confidence
Vertiv guides full year 2026 to net sales of $14,450M to $14,850M, organic sales growth of 37% to 39%, adjusted operating margin of 23.5% to 24.5% and adjusted diluted earnings per share of $7.10 to $7.20, with reported diluted earnings per share of $6.29 at the midpoint; the fourth quarter is guided to net sales of $4,313M to $4,513M and organic growth of 49% to 51%.
sourceQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primaryQ3 2026 earnings call transcript (FMP), held 2026-10-28primary
against this
- Reaching 49% to 51% organic growth in the fourth quarter after 55% in the third needs the ramp to hold, and the Q4 2025 comparison is the one the order surge of that quarter set.
- On the call the finance chief said $100M to $150M of revenue delayed from the second quarter landed in the third, so the third quarter ran above its normal path and the fourth-quarter guide is a normal step up from it (C48).
- 2026-10-28editedQ3 2026 results raised full year guidance by $650M at the midpoint (8-K Exhibit 99.1); old guide of $13,800M to $14,200M replaced
- 2026-10-28editedQ3 call: $100M to $150M of second-quarter revenue slipped into the third quarter, a counter-evidence line for the 49% to 51% fourth-quarter guide
C08facthigh confidence
Current deferred revenue rose from $1,814.7M at 31 December 2025 to $3,633.7M at 30 June 2026 and $4,120.5M at 30 September 2026, and $1,277.3M of the opening balance was recognised in revenue over the first six months.
sourceForm 10-Q for the quarter ended June 30, 2026primaryQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
- 2026-10-28editedQ3 2026 balance sheet read: deferred revenue $4,120.5M at 30 September, up $486.8M in the quarter
C20facthigh confidence
Vertiv's operating margin rose from 4.7% in 2019 and 3.9% in 2022 to 17.9% in 2025 and 19.1% over the trailing twelve months to June 2026; adjusted operating margin was 25.2% in the third quarter of 2026, up 290 basis points on a year earlier, and is guided to 23.5% to 24.5% for the full year.
sourceForm 10-K for the fiscal year ended December 31, 2025primaryQ2 2026 results release (8-K Exhibit 99.1)primaryResearch pack, frozen at content/VRT/research-pack.jsonprimary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
against this
- Part of the expansion is operating leverage on volume that a capital-spending cycle supplied, not a structural change: the same company earned single-digit operating margins as recently as 2022 and the guided 2026 margin is struck on a year of 37% reported sales growth.
- The guided margin is adjusted; reported operating margin was 19.5% in Q2 2026 against the 22.6% adjusted figure, a gap of 3.1 points.
- 2026-10-28editedQ3 2026 adjusted operating margin of 25.2% and the raised full year guide added
C48management claimmedium confidence
On the Q3 2026 call management said the more-than-100% order growth is demand and not catch-up, that backlog counts only purchase orders and still covers 12 to 18 months, that $100M to $150M of second-quarter revenue delayed by supply problems landed in the third quarter, that full 800-volt DC products earn revenue in 2027 (customer validation) and deploy in 2028, that incremental margin stays at the 30% to 35% framework, and that it would give no 2027 outlook until the fourth-quarter report.
against this
Asked about reported overheating and compressor failures, the chief executive pointed to quality data and the company's performance but gave no failure rate or figure.
What management did with the money
It is buying rather than returning cash: six businesses in nine months, including PurgeRite for $1.14B, and in October it closed King Environmental Services and UtilityInnovation Group, the latter agreed for about $1.45B plus up to $1.15B more if targets are met. It bought back no stock in 2025 and holds more cash than debt.
The evidence under this - 3 claims
C24facthigh confidence
Vertiv has bought six businesses in nine months - PurgeRite for $1,138.3M in December 2025, then Thermal-Lube, ThermoKey, Strategic Thermal Labs and BMarko, and agreed in September 2026 to acquire UtilityInnovation Group for about $1.45B in cash plus up to $1.15B of earnout, stated at about 13 times its expected 2027 cash profit.
sourceForm 10-K for the fiscal year ended December 31, 2025primary8-K Exhibit 99.1 - agreement to acquire UtilityInnovation…primaryQ2 2026 earnings call transcriptprimary
against this
- The programme is funded from cash and leaves Vertiv in a net cash position, and the stated 13 times expected 2027 cash profit for UtilityInnovation Group is not an obviously excessive price for a business in the fastest-growing part of this market.
- But the earnout of up to $1.15B is nearly as large as the $1.45B headline price, so what Vertiv actually pays depends on results it has not yet delivered, and the resulting contingent-consideration charges are adjusted out of the earnings per share figure most readers quote.
C22facthigh confidence
Diluted weighted-average shares outstanding were 392.7M in Q2 2026 against 389.8M a year earlier, an increase of 0.7%; Vertiv repurchased no stock in 2025 after $599.9M in 2024 and paid $47.8M of dividends in the first half of 2026.
C21facthigh confidence
Vertiv ended Q3 2026 with $3,512.9M of cash and $198.8M of short-term investments against $2,925.1M of long-term debt and $3.4M current, a net cash position, with liquidity of $6.2B by the company's measure.
sourceForm 10-Q for the quarter ended June 30, 2026primaryQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
- 2026-10-28editedQ3 2026 balance sheet replaces the June figures; cash up $785M from year end before the two October closings
The price, and where we disagree
In short. Full. The demand is extraordinary and the price has already taken it in.
Share price
$280.53
close,
Company value for each $1 of operating profit
49.4
rivals' middle 30.9
The shares more than doubled over the past year, fell 17.3% on the July miss, were 12.6% below the thesis-day close by 24 September and rose about 14% on the 28 October results. The next test is the fourth quarter and the annual report, expected by the end of February: whether growth holds near 50% and the year-end backlog beats $15.0B.
The evidence under this - 4 claims
C31factmedium confidence
Vertiv shares returned 123.2% over the last 252 trading days but sit 26.2% below their 252-day high, and short interest is 3.45% of the float as of the 14 August 2026 settlement.
C46facthigh confidence
Vertiv's third quarter 2026 net sales were $4,312.8M, up 61% on the third quarter of 2025, of which 55 points were organic and about 6 points acquired; adjusted operating margin was 25.2%, diluted earnings per share were $1.95 and adjusted $2.21, and the company states organic orders grew more than 100% year on year.
source8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primaryQ3 2026 earnings call transcript (FMP), held 2026-10-28primary
against this
- The order growth is the company's statement in the release; no order or backlog figure was published, and Vertiv reports backlog once a year in the 10-K.
- On the call management said the order growth is orders and not catch-up, and that backlog counts only purchase orders, covering 12 to 18 months; still no figure.
- 2026-10-28editedQ3 call added management's statement that the more-than-100% order growth is not catch-up and its definition of backlog
C04management claimmedium confidence
Vertiv guides full year 2026 to net sales of $14,450M to $14,850M, organic sales growth of 37% to 39%, adjusted operating margin of 23.5% to 24.5% and adjusted diluted earnings per share of $7.10 to $7.20, with reported diluted earnings per share of $6.29 at the midpoint; the fourth quarter is guided to net sales of $4,313M to $4,513M and organic growth of 49% to 51%.
sourceQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primaryQ3 2026 earnings call transcript (FMP), held 2026-10-28primary
against this
- Reaching 49% to 51% organic growth in the fourth quarter after 55% in the third needs the ramp to hold, and the Q4 2025 comparison is the one the order surge of that quarter set.
- On the call the finance chief said $100M to $150M of revenue delayed from the second quarter landed in the third, so the third quarter ran above its normal path and the fourth-quarter guide is a normal step up from it (C48).
- 2026-10-28editedQ3 2026 results raised full year guidance by $650M at the midpoint (8-K Exhibit 99.1); old guide of $13,800M to $14,200M replaced
- 2026-10-28editedQ3 call: $100M to $150M of second-quarter revenue slipped into the third quarter, a counter-evidence line for the 49% to 51% fourth-quarter guide
C05facthigh confidence
Vertiv's estimated combined order backlog was $15.0B at 31 December 2025 against $7.2B a year earlier, and the majority is considered firm and expected to ship within 12 to 18 months.
against this
- The same 10-K states that orders may be subject to cancellation or rescheduling by the customer, that customers may in some circumstances reduce or defer firm orders, and lists 'unpredictable placing or cancelling of customer orders' as a risk factor - so the company's own filing says what its backlog is worth as a promise.
- The figure is eight months old and there is no newer one: neither the Q1 2026 nor the Q2 2026 release, nor the Q2 2026 10-Q, states a backlog figure.
How we read the multiple
Counting its debt, buyers pay about $50 for each $1 of last year's operating profit, the profit from the business itself. Its two listed rivals, Eaton and Johnson Controls, trade near $31, and an ordinary industrial nearer $15.
So operating profit has to keep rising fast:
- About 1.6 times today's level just to match its rivals' price.
- About 3 times to be priced like an ordinary industrial.
- The price already leans on analysts expecting $22.1B of sales in 2028, against the $14.0B the company guides for 2026.
Against its own history. Much dearer than its own normal on every measure, because the market now prices it as a growth company rather than an industrial supplier.
The evidence under this - 4 claims
C19factmedium confidence
Vertiv trades at about 54.3 times trailing earnings against a six-year median of 43.1, 8.2 times sales against 2.2, 19.8 times book value against 10.1 and 37.6 times cash profit against 26.8 -- down from 62.1/9.4/22.7/43.0 at the thesis on a 12.6% lower price with no change to the trailing figures. The book-value denominator is the $4,757.6M of total equity filed at 30 June 2026.
sourceResearch pack, frozen at content/VRT/research-pack.jsonprimaryForm 10-Q for the quarter ended June 30, 2026primary
- 2026-09-25editedre-struck on the 2026-09-24 close after a 12.6% price decline since the thesis; the trailing filed figures are unchanged
C17estimatemedium confidence
At an enterprise value of $108.4B against trailing twelve-month operating profit of $2,174.6M, buyers pay about $50 of company value for each dollar of operating profit; reaching the roughly $31 its two listed named competitors trade at needs that profit to rise about 1.6 times, and reaching a more ordinary $15 needs it to roughly triple.
derivedEnterprise value of $108,446.3M from the research pack (market tier). Trailing twelve-month operating profit is the sum of the filed quarterly operating profit figures: $516.7M for Q3 2025, $579.9M for Q4 2025, $440.1M for Q1 2026 and $637.9M for Q2 2026, giving $2,174.6M - so $108,446.3M / $2,174.6M = 49.9. The competitor figure is the cohort median EV/EBIT for Eaton and Johnson Controls in the frozen pack.
against this
- Operating profit is depressed relative to where the guidance points: full year 2026 adjusted operating profit is guided to $3,285M to $3,365M, so on the guided figure the multiple is nearer $32 than $50 and the gap to the competitors largely closes.
- The trailing figure is struck on reported operating profit, which carries $151.3M of intangible amortisation in the first half of 2026 and $60.7M of other operating expense including the change in the fair value of contingent consideration - real costs, and ones a cash-based buyer might look past.
C29factmedium confidence
Analyst consensus, on a panel of ten contributors for 2028 and four for 2030, expects Vertiv to earn $11.56 a share on $22.1B of revenue in 2028 and $17.35 a share on $30.6B in 2030 - against the $14.0B of sales and $6.70 of adjusted earnings per share the company itself guides for 2026. At $280.53 the shares cost 24.3 times the 2028 figure and 16.2 times the 2030 figure.
sourceResearch pack, frozen at content/VRT/research-pack.jsonprimaryQ2 2026 results release (8-K Exhibit 99.1)primary
against this
- A four-contributor 2030 estimate is a thin panel and estimates that far out are routinely revised heavily; the 2028 panel of ten is more robust but still projects two more years of roughly 25% compound growth.
- Dell'Oro forecasts the market itself growing at a mid-teens compound rate to 2030, so the consensus implies Vertiv grows well ahead of its market over that period - which it is not currently doing.
C18factmedium confidence
Against the two listed competitors its own 10-K names, Vertiv is the most expensive of the three on every earnings, sales and book measure - but on price to free cash flow it is not, sitting between them. Vertiv's own trailing free cash flow reconciles to the filings: $463.5M, $885.6M, $654.2M and $926.5M over the four quarters to 30 June 2026, or $2,929.8M, of which $1,822.7M of the first-half half came from the deferred revenue movement disclosed in the 10-Q.
sourceResearch pack, frozen at content/VRT/research-pack.jsonprimaryForm 10-Q for the quarter ended June 30, 2026primaryForm 10-K for the fiscal year ended December 31, 2025primaryQ2 2026 results release (8-K Exhibit 99.1)primary
against this
- A cohort of two peers is below the four the method requires before a comparison may move a valuation score, and both are diversified groups for which data centres are one market among several, so the comparison characterises the group rather than pricing Vertiv's business.
- Vertiv also has by far the highest return on invested capital, return on equity, operating margin and revenue growth of the three, so part of the premium is bought with better economics rather than with optimism.
Priced against its rivals
The competitors its own annual report names, each confirmed against the rival's filing. Measured on company value for each $1 of operating profit, cheapest first:
| Ticker | Company | company value for each $1 of operating profit |
|---|---|---|
| JCI | Johnson Controls International | 27.8× |
| ETN | Eaton | 34.0× |
| VRT | Vertiv Holdings | 49.4× |
The middle of the other 2 is 30.9. Vertiv Holdings Co is dearest of 3.
Rivals' figures come from a data provider, so read the spread of the group rather than any single pair.
Dearer than both listed rivals on earnings and sales, though not on cash, where customer deposits flatter it.
Private or foreign rivals that cannot be priced: Schneider Electric S.E., Legrand SA, Delta Electronics, Inc., Huawei Investment & Holding Co., Ltd., Stulz GmbH, Socomec Holding SA.
Where we disagree with the market
The market believes
The purest listed way to own the AI build-out; July's miss was timing that the second half fixes.
We believe
A very good business that delivered the second half; our doubt is the price and the cash, with deposits 62% of the September quarter's operating cash.
The market has been proved right on the timing: growth before acquisitions was 55% against a 34% to 36% guide while deposits kept building, which was the evidence we said would show deposits track real demand.
What is left is the price, which needs operating profit to keep rising fast, and the cash: deposits were still 87% of the nine-month operating cash, and the table behind it sits in the quarterly filing, not the release.
What analysts say, and the evidence
The evidence under this - 4 claims
C07facthigh confidence
In the six months ended June 30, 2026, deferred revenue contributed $1,822.7M to Vertiv's cash flow against total net cash provided by operating activities of $1,866.6M; the whole working-capital block was a net release of only $678.8M because receivables took out $644.2M and inventories $1,048.0M.
against this
- Vertiv's own management, discussion and analysis attributes the release to the same cause, saying trade working capital 'provided $678.8 in the first six months of 2026 compared to $95.2 utilized in the first six months of 2025 primarily driven by deferred revenue' - so this is disclosed, not hidden.
- Advance and milestone payments on large projects are a normal and favourable commercial term rather than an accounting problem, and the chief financial officer described them on the call as an indicator of strong commercial performance on both sides.
- Deferred revenue also added cash in prior years - $717.5M in 2025, $434.5M in 2024 and $274.2M in 2023 - so this is an intensification of an existing pattern rather than a new one.
C47facthigh confidence
Deferred revenue added $490.2M to Vertiv's operating cash flow of $794.0M in the third quarter of 2026, about 62% of it, and $2,312.9M of the $2,660.6M of operating cash flow in the first nine months, about 87%; the first-half share was 98%.
C18factmedium confidence
Against the two listed competitors its own 10-K names, Vertiv is the most expensive of the three on every earnings, sales and book measure - but on price to free cash flow it is not, sitting between them. Vertiv's own trailing free cash flow reconciles to the filings: $463.5M, $885.6M, $654.2M and $926.5M over the four quarters to 30 June 2026, or $2,929.8M, of which $1,822.7M of the first-half half came from the deferred revenue movement disclosed in the 10-Q.
sourceResearch pack, frozen at content/VRT/research-pack.jsonprimaryForm 10-Q for the quarter ended June 30, 2026primaryForm 10-K for the fiscal year ended December 31, 2025primaryQ2 2026 results release (8-K Exhibit 99.1)primary
against this
- A cohort of two peers is below the four the method requires before a comparison may move a valuation score, and both are diversified groups for which data centres are one market among several, so the comparison characterises the group rather than pricing Vertiv's business.
- Vertiv also has by far the highest return on invested capital, return on equity, operating margin and revenue growth of the three, so part of the premium is bought with better economics rather than with optimism.
C04management claimmedium confidence
Vertiv guides full year 2026 to net sales of $14,450M to $14,850M, organic sales growth of 37% to 39%, adjusted operating margin of 23.5% to 24.5% and adjusted diluted earnings per share of $7.10 to $7.20, with reported diluted earnings per share of $6.29 at the midpoint; the fourth quarter is guided to net sales of $4,313M to $4,513M and organic growth of 49% to 51%.
sourceQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primaryQ3 2026 earnings call transcript (FMP), held 2026-10-28primary
against this
- Reaching 49% to 51% organic growth in the fourth quarter after 55% in the third needs the ramp to hold, and the Q4 2025 comparison is the one the order surge of that quarter set.
- On the call the finance chief said $100M to $150M of revenue delayed from the second quarter landed in the third, so the third quarter ran above its normal path and the fourth-quarter guide is a normal step up from it (C48).
- 2026-10-28editedQ3 2026 results raised full year guidance by $650M at the midpoint (8-K Exhibit 99.1); old guide of $13,800M to $14,200M replaced
- 2026-10-28editedQ3 call: $100M to $150M of second-quarter revenue slipped into the third quarter, a counter-evidence line for the 49% to 51% fourth-quarter guide
What could go wrong, and how we would know
The risks
- Deposits reverse. If customers stop paying ahead, the cash that carried the first half goes with them.
- Rivals closing the gap. Eaton is buying its way into cooling, and Schneider sits on the same NVIDIA list.
- The design goes open. An open standard lets buyers mix vendors, leaving Vertiv a supplier to a published specification.
- A repeat stumble. A year ago it was switchgear trouble in Ireland; the chief executive calls both episodes operational execution.
- Deal costs and add-backs. Adjusted 2026 earnings per share are guided about $0.85 above the reported figure, much of it from acquisitions.
The evidence under this - 8 claims
C07facthigh confidence
In the six months ended June 30, 2026, deferred revenue contributed $1,822.7M to Vertiv's cash flow against total net cash provided by operating activities of $1,866.6M; the whole working-capital block was a net release of only $678.8M because receivables took out $644.2M and inventories $1,048.0M.
against this
- Vertiv's own management, discussion and analysis attributes the release to the same cause, saying trade working capital 'provided $678.8 in the first six months of 2026 compared to $95.2 utilized in the first six months of 2025 primarily driven by deferred revenue' - so this is disclosed, not hidden.
- Advance and milestone payments on large projects are a normal and favourable commercial term rather than an accounting problem, and the chief financial officer described them on the call as an indicator of strong commercial performance on both sides.
- Deferred revenue also added cash in prior years - $717.5M in 2025, $434.5M in 2024 and $274.2M in 2023 - so this is an intensification of an existing pattern rather than a new one.
C08facthigh confidence
Current deferred revenue rose from $1,814.7M at 31 December 2025 to $3,633.7M at 30 June 2026 and $4,120.5M at 30 September 2026, and $1,277.3M of the opening balance was recognised in revenue over the first six months.
sourceForm 10-Q for the quarter ended June 30, 2026primaryQ2 2026 results release (8-K Exhibit 99.1)primary8-K Exhibit 99.1 - Vertiv third quarter 2026 results release…primary
- 2026-10-28editedQ3 2026 balance sheet read: deferred revenue $4,120.5M at 30 September, up $486.8M in the quarter
C12facthigh confidence
Eaton agreed on 2 November 2025 to pay $9.5B for Boyd Thermal, which its own 10-K describes as expanding its data centre portfolio to include critical liquid cooling technology and enabling it to serve hyperscale and colocation customers from the chip to the grid.
against this
- Buying a thermal business is not the same as being qualified into a chip vendor's reference architecture or having Vertiv's installed service network, and Eaton is paying a large price to acquire capability Vertiv already has.
- Eaton is also spinning off its Mobility segment, so its management attention and capital are committed in more than one direction.
C10facthigh confidence
NVIDIA's published partner list for its 800 volt direct current architecture names exactly three data centre power system companies - Eaton, Schneider Electric and Vertiv.
against this
- Being one of three named is a qualification and not an exclusive: the same list qualifies both of the large-scale global competitors Vertiv's own 10-K names first, so it distinguishes Vertiv from the rest of the field and not from its two closest rivals.
- NVIDIA also names a separate and longer list of silicon and power-component suppliers, and states that more than 80 manufacturers are building to the specification.
C11facthigh confidence
NVIDIA, Google and Microsoft are developing the 800 volt direct current architecture together through the Open Compute Project, more than 80 equipment manufacturers and infrastructure companies are already building products to the specification, and the specification defines common interfaces so that power hardware from different vendors can work together.
against this
- An open interface can widen a market as well as commoditise it: NVIDIA states the architecture is an additional deployment option that coexists with alternating-current systems rather than replacing them, so Vertiv's existing architectures keep selling alongside it.
- Vertiv's chief executive told the Q2 2026 call that its content per megawatt expands under the new architecture, and that the company is involved in both the 800 volt and 400 volt versions.
C37inferencemedium confidence
Where the buyer's chip supplier and its two largest customers jointly define the common electrical interfaces, the architecture decision moves from the equipment vendor to the buyer, and Vertiv becomes a supplier to a published interface rather than the party that designs the power train.
derivedNVIDIA states it is developing the 800 volt architecture with Google and Microsoft through the Open Compute Project, that the specifications 'define common interfaces so that power hardware from different vendors can work together', and that more than 80 manufacturers are building to it (C11). Vertiv's own pitch, in the UtilityInnovation Group release and on the Q2 2026 call, is that customers increasingly ask it to architect their infrastructure (C36). Both cannot become more true at once for the part of the estate the specification covers.
against this
- A common interface at the rack and pod level says nothing about the rest of a site: the utility interconnect, the generation, the chillers, the fluid loops and the installation are outside the specification, which is exactly the ground Vertiv bought UtilityInnovation Group and PurgeRite to hold.
- Standardisation can enlarge a supplier's market by making its equipment deployable across more customers, and Vertiv is one of only three power-system vendors NVIDIA names, so it starts from a better position than the other 80-odd firms building to the specification.
- NVIDIA describes 800 volt as an additional deployment option coexisting with alternating current rather than a replacement, so the affected share of the installed base grows slowly.
C34facthigh confidence
Vertiv had a comparable execution problem a year earlier: the chief executive told the Q2 2026 call that in the same quarter of 2025 'it was Ireland and some executional challenges on the busbar switchgear', and accepted an analyst's parallel, saying the difference was a margin problem then and a revenue problem now but 'anyway, it is operational execution'.
against this
- Management says the 2025 problem was fully recovered, and Q2 2025's 16.8% reported operating margin did rise to 19.5% a year later, so the earlier stumble was in fact worked through.
- The chief executive rejected the word 'disruption' and said on-time delivery performance is if anything improving, though that is the company's own assessment and no outside measure of it exists.
C23facthigh confidence
Full year 2026 adjusted diluted earnings per share are guided about $0.85 above the reported figure, roughly 13% of the adjusted number; amortisation of intangibles rose to $73.7M in Q2 2026 from $46.9M a year earlier, and the change in fair value of contingent consideration was $62.0M in the first half.
What we still do not know
- Today's orders. The last published backlog is from 31 December 2025, and management said on the call that backlog counts only purchase orders and covers 12 to 18 months.
- Who the customers are, and how much of the backlog rests on a few large cloud builders.
- Whether deposits track faster demand or a one-off catch-up: their share of operating cash fell from 98% to 62%, but the filing's table is not out.
The evidence under this - 6 claims
C07facthigh confidence
In the six months ended June 30, 2026, deferred revenue contributed $1,822.7M to Vertiv's cash flow against total net cash provided by operating activities of $1,866.6M; the whole working-capital block was a net release of only $678.8M because receivables took out $644.2M and inventories $1,048.0M.
against this
- Vertiv's own management, discussion and analysis attributes the release to the same cause, saying trade working capital 'provided $678.8 in the first six months of 2026 compared to $95.2 utilized in the first six months of 2025 primarily driven by deferred revenue' - so this is disclosed, not hidden.
- Advance and milestone payments on large projects are a normal and favourable commercial term rather than an accounting problem, and the chief financial officer described them on the call as an indicator of strong commercial performance on both sides.
- Deferred revenue also added cash in prior years - $717.5M in 2025, $434.5M in 2024 and $274.2M in 2023 - so this is an intensification of an existing pattern rather than a new one.
C09facthigh confidence
In full year 2025 deferred revenue contributed $717.5M of a $339.3M net working-capital release, against operating cash flow of $2,113.8M - about a third of it, where in the first half of 2026 the same line was about 98%.
C25facthigh confidence
Vertiv discloses its backlog once a year. Neither the Q1 2026 release, the Q2 2026 release nor the Q2 2026 10-Q states a backlog or orders figure, so the newest order book a reader can check is the $15.0B reported as of 31 December 2025.
C27facthigh confidence
Vertiv's 10-K discloses no customer concentration figure and names no customer, so the concentration of the order book among a small number of hyperscale buyers cannot be checked from the filings.
C47facthigh confidence
Deferred revenue added $490.2M to Vertiv's operating cash flow of $794.0M in the third quarter of 2026, about 62% of it, and $2,312.9M of the $2,660.6M of operating cash flow in the first nine months, about 87%; the first-half share was 98%.
C48management claimmedium confidence
On the Q3 2026 call management said the more-than-100% order growth is demand and not catch-up, that backlog counts only purchase orders and still covers 12 to 18 months, that $100M to $150M of second-quarter revenue delayed by supply problems landed in the third quarter, that full 800-volt DC products earn revenue in 2027 (customer validation) and deploy in 2028, that incremental margin stays at the 30% to 35% framework, and that it would give no 2027 outlook until the fourth-quarter report.
against this
Asked about reported overheating and compressor failures, the chief executive pointed to quality data and the company's performance but gave no failure rate or figure.
What would change our view
- Neutral→AttractiveThe profit rises toward the multiple, and the multiple comes in
It needs all of:
- ○2026 growth from existing businesses lands inside the guided 37% to 39%, the adjusted margin stays above 20% through 2027, and backlog stays above $15.0B.checked at the next results, due by 28 Feb
- ○The company's value falls to about 31 times last year's operating profit, where Eaton and Johnson Controls trade.about ≈$173.93 today, 38% below the last close
- Neutral→UnattractiveGrowth or the partner position turns
It needs any of:
- ○2026 growth from existing businesses lands below 25%, against 37% to 39% guided, or deposits fall two quarters running while revenue grows.checked at the next results, due by 28 Feb
- ○NVIDIA's list of named data-centre power suppliers grows well beyond three.watched as it happens
We would also be wrong if
- Backlog at the end of 2026 is below the $15.0B of a year earlier.
- The adjusted operating margin falls below 20% in any quarter of 2027.
What is coming
- 7 November 2026 Q3 2026 Form 10-Q: The deferred revenue and working-capital tables behind the 62% deposit share of the quarter's operating cash, the acquisition note, and any customer concentration disclosure.
Every dated event ahead
- 7 November 2026 Q3 2026 Form 10-Q: The deferred revenue and working-capital tables behind the 62% deposit share of the quarter's operating cash, the acquisition note, and any customer concentration disclosure.
- 28 February 2027 Q4 2026 results and the FY2026 10-K: The once-a-year backlog figure against $15.0B, the first full-year read on what the acquisitions earned, and the 2027 guide.
- December 2027 800 volt direct current production with NVIDIA Kyber: Whether Vertiv's qualification turns into shipped medium-voltage products, or the open specification lets the other named vendors take the content.
Since we wrote this
Written
7 Sep
Price the thesis read
$280.53
4 Sep
- 28 OctEarningsQ3 growth of 55% beat the guide; the view held on priceGrowth before acquisitions, margin and deferred revenue all beat the pre-registered test; the shares jumped, so the price still asks more than the profit shows.
- 28 OctEarningsCall: orders are demand, not catch-up; view holdsManagement gave no order figure; $100M to $150M of Q3 sales were delayed Q2 revenue, and 2027 guidance waits for the fourth-quarter report.
- 27 OctNewsVertiv closes both acquisitions it had said would finish in the fourth quarter. View heldVertiv closes two acquisitions, King Environmental Services and UtilityInnovation Group.
- 6 OctNewsVertiv hires a Stellantis manufacturing executive to run its factories and logistics. View heldVertiv names Michael Resha head of manufacturing, logistics and operational excellence.
- 5 OctThesis reviewThe long case now sits under the verdictAfter the five-name pilot, the owner asked for the long case on every thesis.
- 4 OctThesis reviewOwner's checklist: revenue streams, cost of growth, management, catalystsThe owner's checklist found the method silent on who runs the company, what growth costs, where the money comes from and what is dated ahead; this pass fills those four blocks from the proxy and filings.
- 26 SepThesis reviewRoute to Attractive needs the business again, not only price. View heldA price re-strike had copied the price condition over the business one. The route again needs growth inside the guide, margins above 20% through 2027 and backlog above $15.0B, as well as a lower multiple.
- 25 SepPrice moveShares down 12.6%, nearer the level that changes the view. View heldThe price moved toward the level that would change the view, but none of the business conditions has reported since the thesis, and a price move alone answers neither route.
- 24 SepNewsA seventh small deal for cooling services; no guidance, no order figure, case unchanged. View heldVertiv agreed to buy King Environmental Services, an Irish liquid-cooling services firm, on undisclosed terms.
- 7 SepThesis writtenNeutral, medium convictionA very good business on NVIDIA's short list, but nearly all first-half cash was customer deposits and it grows at its market's rate.
Also checked 1 time with nothing new to act on.
Sources 20
Where this came from
Sources - 20
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-02-13the business description, the named competitor set, the risk factors, backlog of $15.0B at 31 December 2025, the FY2025 statements and the annual working-capital tablebacksC01C02C05C09C13C18C20C22C24C25C27C39C40C42C44
- S02primarycompany filing2026-07-29the working-capital components including deferred revenue of $1,822.7M, the deferred revenue note, the securities litigation note, and the absence of any backlog or customer-concentration disclosurebacksC07C08C09C18C19C21C22C23C25C26C32C35C39C40C44
- S03primarycompany filing2026-07-29Q2 2026 results, the raised full-year and Q3 guidance, and the balance sheet showing deferred revenue at $3,633.7MbacksC03C04C08C16C18C20C21C23C25C29
- S04primarycompany filing2026-02-11Q4 2025 organic orders growth of 252%, book-to-bill of about 2.9x, backlog up 109%, and the original FY2026 guidance the July guidance was raised frombacksC06
- S05primarytranscript2026-07-29Q2 2026 earnings call transcriptmanagement's account of the revenue timing shortfall and the deferred revenue build; analyst questions from Deane Dray, Nigel Coe and Andrew Obin on advance payments, and Amit Mehrotra drawing the parallel to the prior year's execution problem Note the $3.25M-$3.75M per megawatt figure is the analyst's, restating the May 2026 investor day; management agreed with it rather than stating it.
Here, Vertiv solutions will include MV DC UPS and solid state transformer. To cover the multiple ways to address the end to end powertrain. Where active in the development with plan 2027 customer validation supporting 2028 deployment. ... 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. ... Yeah. We are pretty convinced about that.
backsC24C28C34C38C45 - S06primarycompany filing2026-09-02the $1.45B cash price, the earnout of up to $1.15B, and the stated multiple of about 13x expected 2027 EBITDAbacksC24C36C45
- S07primarycompany filing2026-04-22confirmation that the quarterly releases carry no backlog or orders figure - searched and absent, which is why the annual number is the only one a reader can checkbacksC25
- S08primaryvendor data2026-09-07Research pack, frozen at content/VRT/research-pack.jsonprice, enterprise value, the analyst split, returns, short interest, the six-year multiple medians, the filed competitor cohort and the theme co-movementbacksC02C16C18C19C20C29C30C31C33C35
- S09primarycompany filing2026-02-26Eaton Corporation plc Form 10-K for the fiscal year ended December 31, 2025 Eaton Corporation plca competitor's own statement that it is buying $9.5B of liquid cooling to serve hyperscale and colocation customers from the chip to the grid, and that data centres are its first-named end marketbacksC12
- S10primarycompany filing2025-11-14Johnson Controls International plc Form 10-K for the fiscal year ended September 30, 2025 Johnson Controls International plca second named competitor's own filing confirming data centres as its lead growth vector and applied cooling as the overlapping productread, but no claim rests on it
- S11primaryindustry data2026-07-07Dell'Oro Group - Data Center Physical Infrastructure Market Expands 28 Percent Y/Y in 1Q 2026 Dell'Oro Groupthe size and growth of the market Vertiv sells into, measured by somebody other than Vertiv
the worldwide Data Center Physical Infrastructure (DCPI) market grew 28 percent year-over-year to $12 billion in manufacturer revenue in 1Q 2026 ... Thermal Management led all DCPI segments, expanding nearly 50 percent Y/Y ... busbars growing in the low-thirties percent range, while UPS rose at a high-teens pace
backsC14 - S12primaryindustry data2026-09-07Dell'Oro Group - Data Center Physical Infrastructure Market to Surpass $80 Billion by 2030 Dell'Oro Groupthe bound on the prize, and that thermal management is forecast to grow faster than the rest of it (The release carries no publication date on the page; the date recorded here is the date it was retrieved.)
the worldwide Data Center Physical Infrastructure (DCPI) market is projected to grow at a mid-teens CAGR from 2025 to 2030, surpassing $80 billion. ... Thermal Management is projected to grow at a 20 percent CAGR and reach the value of the UPS market by the end of the decade ... Direct Liquid Cooling is forecast to surge, surpassing $8 billion by 2030
backsC15 - S13primaryindustry data2026-09-07NVIDIA Technical Blog - NVIDIA 800 VDC Architecture Will Power the Next Generation of AI Factories NVIDIAthe buyer's chip supplier naming, from outside Vertiv, exactly three qualified data centre power system vendors for the next architecture (No publication date on the page; the date recorded is the retrieval date.)
Data center power systems: Eaton, Schneider Electric, Vertiv ... Full-scale production of 800 VDC data centers will coincide with NVIDIA Kyber rack-scale systems in 2027
backsC10C45 - S14primaryindustry data2026-09-07that the architecture Vertiv is qualified for is an open specification developed with Google and Microsoft through the Open Compute Project, with a wide supplier base building to it (No publication date on the page; the date recorded is the retrieval date.)
NVIDIA, Google and Microsoft have been developing the 800 VDC architecture together through the Open Compute Project (OCP) ... More than 80 equipment manufacturers and infrastructure companies are already building products to this specification.
backsC11 - S15primarycompany filing2026-04-24beneficial ownership as of April 15, 2026, the officers' and directors' biographies and tenure, the 2025 Vertiv Incentive Plan metrics, targets and payouts, and the 2025 stock option grantsbacksC41C42C43
- S16primarycompany filing2026-09-24the agreement to buy King Environmental Services, a European liquid-cooling fluid management and load-testing firm, expected to close in the fourth quarter of 2026backsC45
- S17primarycompany filing2026-10-28third quarter net sales, organic growth, adjusted operating margin, balance sheet, cash flow statement and the raised fourth quarter and full year guidancebacksC04C08C20C21C46C47
- S18primarycompany filing2026-10-26that the King Environmental Services acquisition closed on 26 October 2026backsC45
- S19primarycompany filing2026-10-27that the UtilityInnovation Group acquisition closed on 27 October 2026backsC45
- S20primarytranscript2026-10-28Q3 2026 earnings call transcript (FMP), held 2026-10-28data/cache/transcripts/VRT-2026Q3.jsonManagement's answers on how much of the quarter was catch-up, product quality, order timing, backlog definition, margin framework and the 800-volt DC schedulebacksC04C46C48