Rollins (ROL -1.46%), a global pest and wildlife control provider best known for brands like Orkin, announced financial results for the second quarter, released on July 23, 2025. Revenue grew 12.1% year over year and outpaced analyst expectations. Adjusted EPS was $0.30 in Q2 2025, slightly below consensus estimates. However, operating margin (GAAP) slipped by 0.6 percentage points compared to Q2 2024.
Overall, the quarter showed solid top-line growth, robust cash generation, and the continuation of significant investments in both technology and acquisitions. This performance was largely in line with expectations, with GAAP revenue slightly exceeding projections, and EPS closely meeting the consensus.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Adjusted EPS | $0.30 | $0.30 | $0.27 | 11.1% |
| Revenue | $999.5 million | $989.1 million | $891.9 million | 12.1% |
| Operating margin | 19.8% | 20.4% | (0.6 pp) | |
| Adj. EBITDA | $231.2 million | $210.1 million | 10% | |
| Free cash flow | $168 million | $136.4 million | 23.2% |
Source: Rollins. Note: Analyst estimates for the quarter provided by FactSet. Estimate data shown where available.
Business Overview and Success Drivers
Rollins operates in the pest and wildlife control industry, offering both residential and commercial services. Its services address essential needs such as pest eradication, termite protection, and wildlife removal for over 2.8 million customers across more than 800 locations in North America, South America, Europe, Asia, Africa, and Australia. The company’s recurring revenue model is a key strength, as many customers sign up for ongoing service contracts. These arrangements provide predictable income and high revenue visibility throughout the year.
Recent strategic priorities have included expanding its brand portfolio, integrating acquired businesses, and investing in operational technology to enhance efficiency. The integration of proprietary tools such as the Branch Operating Support System (BOSS) allows for real-time service tracking, payment handling, and route management. Success for Rollins depends on maintaining customer retention, operational efficiency, compliance with regulations, and leveraging its scale in a competitive market. The business also invests in salesforce development and marketing to reinforce its position against both local operators and national peers, like Rentokil and Ecolab.
Review of the Quarter: Key Developments and Metrics
The revenue figure for the quarter surpassed analyst expectations, delivering a $10.5 million positive surprise in Q2 2025. Organic revenue, which excludes acquisition-related growth, increased by 7.3% in Q2 2025, while remaining gains resulted from new acquisitions.
Residential services generated $455.7 million in Q2 2025 (up 11.6%, with 4.9% organic growth), while commercial services brought in $320.5 million in Q2 2025 (an 11.4% gain year over year, with 8.4% organic growth), and termite and related services produced $211.9 million in Q2 2025 (a 13.9% jump, 10.3% organic). The recently acquired Saela Pest Control, focused on residential services, bolstered the portfolio with about $15 million in incremental revenue in Q2 2025.
On the profitability front, the operating margin fell to 19.8% from 20.4% a year earlier. SG&A (selling, general, and administrative) expenses rose slightly as a percentage of revenue, attributed to higher investments in marketing and additional workforce. Adjusted EBITDA totaled $231.2 million, reflecting a 10.0% rise year over year, while adjusted net income increased 11.1% year over year. Cost pressures came from rising insurance and claims expenses, as well as increased fleet costs for company vehicles. Legacy auto claims alone had a 0.7 percentage-point impact on adjusted EBITDA margin. The company indicated that ongoing “pulled-forward” investments—such as new marketing campaigns and incremental staffing—are meant to yield efficiencies later in the year.
Rollins generated $168.0 million in free cash flow (non-GAAP), 23.2% higher year over year. Free cash flow is a measure of the money available from operations after capital expenditures, and it is important for understanding a firm’s financial flexibility. The business delivered a high cash conversion rate, meaning the company efficiently converted reported earnings into cash available for use. Balance sheet strength improved, with cash and equivalents up to $123.0 million as of June 30, 2025. Acquisitions, most notably Saela, totaled $226 million. The company finished the quarter with a leverage ratio (net debt to adjusted EBITDAR) of 0.9 times.
The business paid a quarterly dividend of $0.165 per share in the quarter, a 10% increase year over year from the prior year's $0.150 in Q2 2024. Dividends returned to shareholders totaled $79 million.
On the technology front, Rollins continued to roll out efficiency platforms like BOSS and sales enablement apps BizSuite and HomeSuite. The BOSS platform supports routing, service tracking, and customer engagement, enhancing field productivity. The company’s process for integrating acquisitions centers on sharing best practices and deploying proprietary systems to boost revenue, rather than focusing solely on cutting costs.
Competitive pressure in the pest control sector remains high due to low industry barriers and many local operators, but the company maintains options to adjust vehicle replacement plans or shift to alternative vehicles, if needed.
Looking Ahead: Management’s Outlook and Investor Focus
It projects organic revenue growth in the 7%–8% range for the year, with additional growth of 3%–4% from mergers and acquisitions in fiscal 2025. The M&A pipeline remains robust, and leadership continues to emphasize quality in acquisition targets over speed.
Investors should monitor key areas, including margin trends, cost inflation in insurance and fleet expenses, and the pace of integration for newly acquired businesses like Saela. The quarterly dividend was raised 10% to $0.165 per share in Q2 2025 compared to Q2 2024.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
