APi Group (APG -2.77%), a leading provider of safety, specialty, and industrial services focused on recurring inspections and mandated life safety services, reported earnings for Q2 FY2025 on July 31, 2025. The headline news was an 18.2% year-over-year increase in non-GAAP earnings per share to $0.39, outpacing analyst expectations of $0.37 (non-GAAP). Revenue (GAAP) reached $1.99 billion, beating forecasts by $92.6 million and representing a 15.0% rise in reported net revenues versus the same quarter last year. Adjusted EBITDA advanced to $272 million, This marked a record second-quarter adjusted EBITDA, with year-over-year margin expansion of 30 basis points to 13.7%. The Safety Services segment stood out with strong, margin-boosting growth, while Specialty Services saw revenue gains but a margin decline. Despite a dip in free cash flow and some pressure on consolidated gross margin, management raised its full-year 2025 outlook for both net revenues and adjusted EBITDA, reflecting ongoing strength in core businesses.
Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
---|---|---|---|---|
EPS (Non-GAAP) | $0.39 | $0.37 | $0.33 | 18.2 % |
Revenue (GAAP) | $1.99 billion | $1.90 billion | $1.73 billion | 15.0 % |
Adjusted EBITDA | $272 million | $231 million | 17.7 % | |
Adjusted EBITDA Margin | 13.7 % | 13.4 % | 0.3 pp | |
Free Cash Flow (Non-GAAP) | $56 million | $122 million | -54.1 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Recent Focuses
APi Group is a broad-based industrial and specialty services provider, best known for its focus on recurring, regulated work in the fire safety, security, and critical infrastructure sectors. Its offerings are mainly delivered through two major reporting segments: Safety Services, which focuses on recurring, mandated inspections, service, and monitoring; and Specialty Services, which provides project-driven services tied to infrastructure and industrial contracts.
The company’s recent strategy has emphasized building out predictable, recurring revenue. This is largely achieved by leaning into services required by law or insurance regulation, such as fire system inspections. Another focus is disciplined capital allocation—spending on small acquisitions that match APi’s operational strengths, and aligning technology investments to boost field efficiency. Management sees its decentralized operating model and leadership development as foundation points for long-term growth. Knock-on benefits include a broad customer base, geographic reach, and resilience to economic or sector-specific downturns.
Quarter in Review: Growth and Key Segment Developments
This quarter, APi delivered reported revenue growth of 15.0%, handily beating expectations, with non-GAAP EPS of $0.39 versus the analyst estimate of $0.37 and GAAP revenue of $1,990 million versus the analyst estimate of $1,897.37 million. Non-GAAP EPS grew 18.2%, with adjusted EBITDA margin rising to 13.7% for the three months ended June 30, 2025, up from 13.4% in the prior-year period. Safety Services continued to be the core driver of business strength. Segment revenue increased 15.8%, with 5.6% coming organically and the remainder from acquisitions made in the past year. Adjusted gross margin for Safety Services expanded 70 basis points to 37.2%, and segment earnings climbed 22.1%. This was partly due to pricing discipline and a focus on high-value, recurring-service work, offsetting broader cost pressures.
In contrast, The Specialty Services segment achieved 13.3% organic revenue growth, but this growth came at the expense of margins. Adjusted gross margin for Specialty Services fell 350 basis points to 18.1%, and segment earnings slipped 2.7%. Management attributed these shifts to rising material costs, a higher mix of project-based work, and adverse weather. This demonstrates how project-heavy revenues carry more margin risk than the service-heavy Safety segment, especially during periods with external cost volatility.
Management highlighted that total company adjusted gross margin dipped by 50 basis points year over year to 31.2%. Despite this, adjusted EBITDA grew faster than revenue. Inspection, service, and monitoring revenue lines—by nature recurring and regulated—expanded across the platform. Acquisition-driven growth was a significant contributor, but management kept its focus on bolt-on deals rather than outsized transactions. No single customer represented more than 5% of revenue in 2024, and APi's global footprint now covers more than 500 locations.
Through a disciplined M&A approach, cash-backed investments in technology and systems, and ongoing pruning of low-margin clients, APi is working towards longer-term improvement in both scale and profitability. The company also completed a three-for-two stock split on June 30, 2025, increasing its share base. Recent business enablement investments are intended to position APi for greater scalability.
Financial Outlook and What Comes Next
Following this quarter’s top- and bottom-line beats, management raised full-year 2025 net revenue guidance to a range of $7.65 billion to $7.85 billion, up from $7.4 billion to $7.6 billion previously. Adjusted EBITDA guidance was also raised, with a new full-year 2025 range of $1.005 billion to $1.045 billion. For Q3 2025, management forecasts revenue between $1.99 billion and $2.04 billion, and adjusted EBITDA (non-GAAP) of $270 million to $280 million. Adjusted free cash flow conversion, which measures how effectively the company turns earnings into usable cash, remained below the long-term target in Q2 2025 (36.8%), but management expects this to normalize to around 75% for the full year as working capital levels balance out in the second half.
As the company looks ahead, investors should pay attention to margin movements, especially given the ongoing mix shift toward project work in Specialty Services. Watch for updates on the pace and impact of acquisitions, productivity gains from recent technology investments, and efforts to maintain or improve free cash flow conversion.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.