Aptiv (APTV -4.36%), a leading provider of automotive technology solutions, posted its earnings release on July 31, 2025. The company announced record adjusted (non-GAAP) earnings per share of $2.12, beating the consensus estimate of $1.83, and revenue of $5.20 billion, surpassing expectations of $5.07 billion. Despite the strong top-line and earnings result, operating cash flow declined compared to the prior year. The overall quarter indicated sound cost discipline and improving margins, but flagged ongoing regional and macroeconomic uncertainties, especially in China and broader operating cash flow trends.
| Metric | Q2 2025 | Q2 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $2.12 | $1.83 | $1.58 | 34.2% |
| Revenue | $5.21 billion | $5.07 billion | $5.05 billion | 3.2% |
| Adjusted Operating Income | $628 million | $606 million | 3.6% | |
| Adjusted EBITDA | $821 million | $788 million | 4.2% | |
| Net Cash from Operating Activities | $510 million | $643 million | (20.7%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Aptiv and Its Business
Aptiv serves the global automotive industry by delivering advanced electrical, electronics, and software systems that power vehicle connectivity, safety, and autonomy. The company’s solutions underpin electric and connected vehicle technologies, including main vehicle wiring, sensor suites, onboard computing, and advanced driver assistance systems (ADAS).
Currently, Aptiv is focused on five core areas: expanding in high-growth Asian markets, especially China; executing the planned spin-off of its Electrical Distribution Systems business; managing supply chain risk and volatile commodity costs; pursuing sustainability and innovation through products and operations; and supporting its workforce and culture to promote innovation. Key elements for success include disciplined cost management, segment margin growth, technology partnerships, and a diverse set of relationships with major auto manufacturers.
Quarterly Highlights and Segment Results
Aptiv set records for both revenue and adjusted EPS (non-GAAP) in the quarter. U.S. GAAP revenue of $5.2 billion represented a 3% increase compared to the prior year period, beating consensus by $128.51 million or 2.53%. This growth was fueled by a particularly strong performance in the Electrical Distribution Systems (EDS) segment, where revenue climbed 7% year over year to $2.21 billion (GAAP). The Engineered Components Group (ECG), which supplies connectors and sensors, posted 6% growth to $1.72 billion.
Adjusted operating income rose to $628 million, compared to $606 million in the prior year period, with margin expanding to 12.1%. By segment, EDS margins rose sharply as cost-cutting delivered an 18% boost in segment adjusted operating income, while ECG margins slipped 4% despite higher revenue. ASUX, though contracting in sales, managed a 5% increase in adjusted operating income, implying better efficiency or a favorable product mix. Adjusted EBITDA hit $821 million, showing margin progress at 15.8%.
Aptiv’s continued emphasis on cost reduction made a noticeable impact in the first quarter. Management noted a 10% reduction in SG&A costs during 2024 and plans for a further 5% decrease in 2025. CEO Kevin Clark commented that the company delivered “record financial results in the second quarter, a testament to our efforts to build a resilient business model that allows us to operate efficiently, even in dynamic environments,””
However, while profit metrics climbed, the company’s operating cash flow fell to $510 million, a 20.7% decrease from the prior year period. This shortfall was mainly due to a working capital build-up, as accounts receivable and inventory both increased over the six months ended June 30, 2025, limiting cash conversion despite earnings growth. Elevated interest expenses, at $91 million compared with $64 million in Q2 2024, also eroded after-tax profit, mainly as a result of higher borrowing used to fund a $3 billion share repurchase completed in the period. Tax expense also increased, with the U.S. GAAP effective tax rate expected to reach 35.0% for full year 2025 due to regulatory changes related to deferred tax assets.
Regional sales trends revealed a mixed picture. Asia recorded 4% sales growth, but China sales declined 1%, marking a reversal from earlier momentum. Both North and South America managed 3% year-over-year GAAP revenue increases, while Europe slipped 1%, highlighting ongoing demand volatility. The drop in China was explained as customer-specific rather than a broader market issue, yet management cited higher uncertainty about demand and production volumes in Asia for the rest of the year. Bookings in China remained healthy, including new programs with local automakers like Xiaomi and JAC, though realized revenue did not keep pace.
The period also included $28 million in separation costs related to the planned spin-off of the EDS business, which is anticipated to close by March 2026. The company also highlighted minimal direct exposure to U.S.–China tariffs due to its local-for-local production model and compliance with North America–focused trade agreements (USMCA), though it continues to pass through remaining cost increases or offset them through supply chain and manufacturing adjustments.
Innovation and product development continue to play a key role for Aptiv, especially in ASUX, which integrates artificial intelligence (AI) into ADAS and autonomous platforms. Recent awards, such as the PACE Pilot Innovation Award for its AI/machine-learning radar, and collaborations with partners like Nvidia and Hyundai (through joint venture Motional), demonstrate the company’s focus on next-generation automotive computing and perception technologies. Despite the dip in ASUX revenue, interest in its intelligent safety and connectivity offerings remains strong, particularly as vehicle manufacturers seek to advance in-car technology content.
Looking Ahead and Guidance
For Q3 2025, Aptiv expects net sales between $4.95 and $5.10 billion and adjusted EPS in the range of $1.60 to $1.80, reflecting flat to modestly lower expected revenue compared to the previous quarter. Full-year 2025 guidance projects sales of $20.0 to $20.3 billion, adjusted EPS of $7.30 to $7.60, and adjusted operating income between $2.37 and $2.47 billion. The company plans for operating cash flow of $2.0 billion and capital expenditures of $780 million for the full year. Management notes these projections for Q3 and the full year include the impact of recently implemented tariffs but do not account for any new or additional trade barriers that might arise.
Investors should monitor several trends in the coming quarters. First, operating cash flow conversion will be closely watched, since lower cash flow in the quarter contrasted with improving earnings. Second, the company’s regional sales trajectory, particularly in Asia and China, will be critical for growth given the segment’s importance to future bookings and revenue. Third, the planned EDS spin-off process is a major strategic milestone that will likely shape Aptiv’s financial and operating structure by early 2026. Finally, with rising borrowing costs and a sharply higher full-year tax rate, after-tax earnings growth may lag operational performance if these headwinds persist or worsen. Management was clear about the limits of its short-term visibility, noting: “it’s really just a volume question in the back half, and there is more uncertainty around that.”
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
