Waters delivered a strong Q2, beating guidance and raising its full-year outlook, driven by robust legacy growth and a faster-than-expected acceleration in the recently acquired BD businesses. Management highlighted broad-based strength across pharma and academic end markets and provided concrete details on share gains in China and pricing power. Organic revenue grew 9% cc, ahead of guidance, with orders outpacing sales.
Buzzberg readCompany raises all components of FY2026 guidance.Waters delivered a strong Q2, beating guidance and raising its full-year outlook, driven by robust legacy growth and a faster-than-expected acceleration in the recently acquired BD businesses. Management highlighted broad-based strength across pharma and academic end markets and provided concrete details on share gains in China and pricing power. Organic revenue grew 9% cc, ahead of guidance, with orders outpacing sales.Read full analysisCollapse analysis
Waters delivered a strong Q2, beating guidance and raising its full-year outlook, driven by robust legacy growth and a faster-than-expected acceleration in the recently acquired BD businesses. Management highlighted broad-based strength across pharma and academic end markets and provided concrete details on share gains in China and pricing power. Organic revenue grew 9% cc, ahead of guidance, with orders outpacing sales.
Acquired businesses grew 4% as reported (6% ex-China), accelerating 400bps from Q1, and are expected to exit the year at 6%+ growth.
Full-year guidance raised on the back of strong momentum; cost savings of $200M run rate are ahead of schedule.
Data signals a robust instrument replacement cycle underpinned by US pharma reshoring ($100B capex), with 70% of sites at high-share Waters accounts.
Revenue$1.645B
+30% QoQ
EPS$3.05
+13% QoQ
Gross margin44.62%
reported
Op margin-5.23%
reported
What changed this quarter
01
Guidance
Company raises all components of FY2026 guidance.
Guidance · revenue to $6.4455B
02
Demand
GLP-1 testing business grew over 40% in Q2.
Management expressed high confidence and enthusiasm about execution and growth, using phrases like 'ecstatic,' 'A-plus execution,' and 'better positioned today than at any point in recent history.'
03
Growth
Acquired businesses exit 2026 with 6%+ growth.
Acquired businesses grew 4% as reported (6% ex-China), accelerating 400bps from Q1, and are expected to exit the year at 6%+ growth.
04
Pricing
Pricing power improved to 90 basis points from 50.
Full-year guidance raised on the back of strong momentum; cost savings of $200M run rate are ahead of schedule.
AI, capex & demand read
AI
Platform & monetization
Management discussed the role of AI in biosciences, noting that AI models designing antibodies, proteins, and genetic constructs create demand for physical biology testing. They highlighted a partnership with IMU Biosciences to build the world's largest immune dataset, positioning the company as an enabling hardware layer for AI-enabled precision medicine.
Demand
Bookings & conversion
GLP-1 testing business grew over 40% in Q2.. Management expressed high confidence and enthusiasm about execution and growth, using phrases like 'ecstatic,' 'A-plus execution,' and 'better positioned today than at any point in recent history.'
Capex
Investment and capacity
Management highlighted a significant capex opportunity from pharma reshoring, tracking 76 U.S. pharma expansion sites with roughly $100 billion in capex spend, about half under active construction. They expect instrument outfitting to create a revenue tailwind for the analytical sciences division over the next three to five years, with 70% of tracked sites being high-share Waters accounts.
Tone · Upbeat
Management expressed high confidence and enthusiasm about execution and growth, using phrases like 'ecstatic,' 'A-plus execution,' and 'better positioned today than at any point in recent history.'
Supply-chain alpha
A1
China's flow research business, which declined 30% in the first quarter, improved to a mid-single-digit decline in Q2 after doubling export license approvals, a 25-percentage-point swing.
“China flow research, which declined 30% in the full first quarter, improved to mid single digit decline in the second quarter, a swing of approximately 25 percentage points.”
The Bactec FXI new system has over 12,000 legacy systems past due for replacement, with 4,500 in the US alone, and it has received FDA clearance, setting up a multi-year replacement cycle.
Management is tracking 76 US pharma expansion sites linked to reshoring, about half under active construction, representing ~$100B capex, and expects them to be a revenue tailwind for the next 3-5 years.
“We've been tracking 76 expansion sites linked to U.S. pharma investment announcements. Roughly half are now under active construction, representing approximately $100 billion in capex spend”
In the acquired businesses, pricing actions have already lifted annual pricing contribution from a historical 0.5% to 0.9%, with a goal of reaching 1.5% as quickly as possible.
“In Q2 EV, we did 0.9% versus the traditional 0.5. 0.5 was embedded in our guide last time. So we are increasing it to 0.9 for the remainder of the year.”
Waters' GLP-1 testing business is broad-based and includes specific large pharma customers like Eli Lilly, whose manufacturing expansion is driving demand.
“Also in China, where one of the leading contract manufacturers is supporting Eli Lilly in their contract manufacturing where we have a meaningful share.”
Great. Thanks for the questions here and congrats on a great print here. Good to see the BD acceleration here with it. The first one is actually on Waters core instrumentation and GLP-1s. Pharma is clearly strong for you here, but just wanted to see how much contribution you saw from GLP-1s in the quarter and how should we think about that? Trajectory going forward, both in the Deloitte markets and in India as well. I just recalled this being a major contributor that you had talked about at the prior investor day. So I wanted to get some color there.
Let me start and then let Amol add in. GLP-1 testing for part of the business grew over 40% this quarter. Broad-based growth across virtually every geography. America is over 30%, Europe over 36%, India almost doubling the business itself. So very broad-based. And also in China, where one of the leading contract manufacturers is supporting Eli Lilly in their contract manufacturing where we have a meaningful share. So very broad-based growth on GLP-1 testing. And as you look ahead, I mean, there are no signs of slowing down. The pipeline is very good. The funnel looks strong both on instruments as well as on the chemistry side. So really no slowdown on that front. In fact, Moving ahead of what we had promised on the GLP-1 testing contribution.
China's flow research business, which declined 30% in the first quarter, improved to a mid-single-digit decline in Q2 after doubling export license approvals, a 25-percentage-point swing. — The rapid improvement in export license processing is a direct operational fix that could unlock demand in a key market, positively impacting the acquired flow business.
“Biosciences and diagnostic solutions revenue also exceeded our guidance. Revenue outpaced guidance by $15 million and grew 4% on a reported basis versus the prior year comparable period.”
The Bactec FXI new system has over 12,000 legacy systems past due for replacement, with 4,500 in the US alone, and it has received FDA clearance, setting up a multi-year replacement cycle.
… and is now the flagship product of the industry. Depending on daily volume, customers can expect up to 10 days of annualized time savings versus the prior generation systems. And we are already seeing benefits in practice as one of our earlier doctor sites in Japan reported an 80% reduction in hands-on time after switching to FXI. With these notable new advantages, the funnel is building and the commercial opportunity ahead is substantial. With over 12,000 aged back-tech systems past due for replacement, we have a large, well-defined install base that we intend to convert. Much like how Alliance IS has driven durable replacement revenue in HPLC, we expect Bactech FXI to be a multi-year growth engine in microbiology. Beyond our near-term execution, we're also making early strides into high growth adjacency in biosciences that we believe will become increasingly important over time. As AI models grow more capable of designing new antibodies, proteins, and genetic constructs, the limiting factor is shifting from computation to biology. Generating large-scale immune and disease datasets, these models depend on and require physical biology testing. Clositometry is well positioned as …
In the acquired businesses, pricing actions have already lifted annual pricing contribution from a historical 0.5% to 0.9%, with a goal of reaching 1.5% as quickly as possible.
Hi, thank you so much for taking my questions. So you mentioned you're starting to see pricing flow through in the BD business. Maybe walk us through how much of the guidance raised in the acquired business is related to pricing and then how quickly we could ramp to the 150 basis points. And I guess anything you're hearing from customers as you work through these implementations.
Management answer
Amol ChaubalSenior Vice President and Chief Financial Officer
Yeah, so in Q2 EV, we did 0.9% versus the traditional 0.5. 0.5 was embedded in our guide last time. So we are increasing it to 0.9 for the remainder of the year. The goal and aspiration is still to get as quickly as possible to 150 basis points.
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