Resideo Beats Q2, but Q3 Outlook and OEM Security Weakness Overshadow Strong Demand
Resideo Technologies (NYSE: REZI) delivered a second-quarter earnings beat, but a cautious revenue forecast and softness in one big security customer are muddying the story.
The home automation and security company posted $1.98 billion in revenue for the second quarter of calendar 2026, up 2% year over year and ahead of consensus. Adjusted earnings came in at $0.83 per share, about 23% above analyst expectations. Management described the quarter as broad-based, with volume-led growth across nearly all channels and product families.
CEO Thomas Surran said the company "exceeded the high end of the second quarter outlook ranges for all metrics, both at the consolidated and business segment level." The gains, though, were partly offset by inflation in input costs and legal settlement expenses, which weighed on margins.
The bigger issue is the guidance. Resideo expects third-quarter revenue of roughly $717.5 million at the midpoint, about 63.4% below what analysts were modeling. The company pointed to continued weakness in the residential market and an expected decline in revenue from a major OEM security customer. Management also expects semiconductor and metals costs to stay elevated.
"We anticipate some continued weakness in the OEM security channel," Surran said, while noting that new product launches and manufacturing optimization will be the main levers for protecting margins through the rest of the year.
The results capture a familiar pattern for companies exposed to housing and construction: strong product demand can be overshadowed by segment-specific drags. In Resideo's case, the OEM security pullback and a still-soft residential backdrop are the key risks, while the pace of adoption for new smoke, CO detector and security products is the upside watch item. Facility consolidations and other cost actions could provide a cushion, but much will depend on how long the OEM channel stays weak and whether material costs keep rising.
Shares traded at $21.82 shortly after the release, down from $25.74 before the earnings report. The full StockStory research report on Resideo is available free for active Edge members.
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