stockrowWhat it does
Otis Worldwide Corporation designs, manufactures, installs, maintains and modernizes elevators and escalators. Founded in 1853 and headquartered in Farmington, the company is led by Chair, President and CEO Judith F. Marks.
Its New Equipment business supplies passenger and freight elevators, escalators and moving walkways for residential and commercial buildings and infrastructure projects. Customers include developers, general contractors and government agencies. Otis sells equipment directly and also uses agents and distributors in some markets.
Its Service business inspects, maintains and repairs elevators and escalators, including equipment made by other manufacturers. It also modernizes older equipment, from updating the appearance of an elevator car to replacing major mechanical components or an entire car. Typical service customers include building owners, facility managers, housing associations and government agencies.
Otis seeks to turn newly installed equipment into maintenance contracts, but the customer buying a service contract is often different from the customer who ordered the equipment. Its maintenance portfolio includes approximately 2.5 million units globally.
The company also connects equipment to digital systems. Otis ONE monitors elevator health and performance remotely, giving technicians and customers information intended to support predictive maintenance. As of December 31, 2025, approximately 1.1 million units in its global portfolio, including units under warranty, were connected.
How it makes money
Otis earns revenue from new equipment projects and from servicing and upgrading equipment already installed. In FY2025, Service generated $9.4 billion of revenue and New Equipment generated $5.0 billion. In Q3 2026, total net sales were $3.9 billion.
New Equipment projects begin with design and engineering and continue through delivery, installation and commissioning. Customers typically make an advance payment when ordering, followed by progress payments at milestones such as delivery to the site and completion of installation. Otis recognizes revenue based on the percentage of a project completed. Most orders are delivered within 12 months of booking, although large projects can take longer.
Service includes maintenance and repair as well as modernization. Maintenance contracts provide recurring work, with duration and coverage varying by customer, location and regulatory requirements. Basic contracts cover inspections consistent with local rules; more extensive tiers can include component replacement. Otis also performs repairs for wear, breakdowns and other equipment problems. Modernization work ranges from smaller interior upgrades to major replacement projects.
In FY2025, maintenance and repair generated $7.6 billion of revenue, while modernization generated $1.9 billion. Service accounted for 91% of segment operating profit in 2025, compared with 9% for New Equipment.
Pricing is part of both equipment bids and service contracts. Otis is rolling out more detailed pricing tools for service work; in Q3 2026, repair pricing contributed to a sequential improvement in the Service operating margin. Maintenance pricing takes longer to flow through because contracts outside China generally run for more than one year.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Maintenance and Repair | $7.6 billion | 52.6% | 5.17% |
| New Equipment | $5.0 billion | 34.6% | −7.04% |
| Modernization | $1.9 billion | 12.9% | 10.4% |
Customers and how it sells
New Equipment customers include real-estate developers and general contractors working on residential, commercial, retail and mixed-use buildings. Government agencies also buy equipment for infrastructure such as airports, railways and metro systems. Service customers are typically the owners or operators of buildings with elevators and escalators, rather than necessarily the parties that bought the original equipment.
Otis sells new equipment mainly through its own sales personnel. Agents and distributors supplement that direct sales force in China and certain other markets. Service is sold directly through a network of service sales personnel. Otis says it is not dependent on any single New Equipment customer and has no single service contract material to the company as a whole.
The company serves customers in over 200 countries and territories and has a direct physical presence in more than 70 countries. In FY2025, United States operations generated $4.2 billion of revenue and China generated $1.7 billion. International operations represented approximately 71% of net sales in 2025.
Named customers illustrate the range of work: Otis maintains more than 420 elevators and escalators for Rutgers University and secured both new equipment and modernization contracts with the Wuhan Metro System. In Q3 2026, China accounted for 17% of Otis’s new equipment revenue, while service represented 51% of its China sales.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Other | $8.6 billion | 59.5% | 6.00% |
| United States Operations | $4.2 billion | 29.0% | −1.11% |
| China | $1.7 billion | 11.4% | −14.0% |
Suppliers and costs
Otis operates 16 factories worldwide, with major locations including China, India, Japan, France, Germany, Spain and the United States. It relies on approximately 400 key suppliers for its manufacturing supply chain and works with several thousand product and non-product suppliers and subcontractors globally.
Many components and systems are available from multiple sources. Some specialized components, however, can be obtained from only one or a limited number of qualified suppliers. Otis uses measures including safety stock, alternative materials, multiple-source qualification and long-term supplier agreements to manage disruption risk.
Field labor is central to service delivery: Otis has a global network of 37,000 Service mechanics, alongside service parts and repair centers. Installation is performed by Otis technicians or subcontractors. Labor, materials, tariffs and productivity affect costs. In 2025, productivity benefits were partially offset by tariffs and inflation, including higher labor costs.
Otis uses locking and hedging strategies and customer pricing to manage commodity cost risk. It said it had locked in almost 98% of its global commodities for the rest of 2026 as of Q2.
- Revenue$14.4B
- Cost of revenue−$10.1B
- Research and development−$152.0M
- Selling, general and administrative−$2.0B
- Other operating costs−$106.0M
- Operating income$2.1B
Competitive position
Otis competes with KONE Oyj, Schindler Group and TK Elevator in both New Equipment and Service globally. It also faces additional competitors in Asia Pacific. Independent service providers and smaller operators compete in most local service markets.
Industry estimates cited by Otis point to hundreds of New Equipment providers and several thousand maintenance and service providers. Independent providers collectively maintain about 50% of service units, although they represent a smaller share of service business measured by value because of the types of equipment and coverage they provide. Competition depends on factors including price, local codes, reputation, delivery, equipment performance and long-term support.
Our reading: Otis’s service footprint is a meaningful competitive advantage because its mechanics, branches and parts centers place it close to installed equipment, while its portfolio includes equipment made by other manufacturers. Our reading: That advantage is contested locally, since independent providers collectively maintain about 50% of service units and customers can change providers when contracts expire.
Our reading: Connected equipment and Otis ONE add support to its service offering through remote monitoring, but the evidence does not establish how difficult those capabilities are for competitors to replicate. Otis also owns approximately 4,600 patents and believes its patents and trade secrets create a competitive advantage; those rights can be challenged or found unenforceable.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| KONE Oyj | New equipment and service globally | High |
| Schindler Group | New equipment and service globally | High |
| TK Elevator | New equipment and service globally | High |
Growth opportunities
Otis seeks to expand its maintenance portfolio by converting newly installed equipment to service contracts, winning units maintained by other providers and making acquisitions. It also sells repair and modernization work to customers with equipment already in service. Modernization can involve partial upgrades or replacement of major systems as equipment ages.
Digital tools are another part of the company’s strategy. Otis is deploying tools to help identify repair and modernization opportunities and to optimize scheduling, dispatch and mechanic routes. It is also rolling out more detailed pricing capabilities across service work.
In Q3 2026, service organic sales grew 7%, including 20% growth in modernization organic sales. Modernization orders increased 10%, and modernization backlog grew 20% at constant currency. New Equipment organic sales grew 3%, with the Americas up 13%; China new equipment sales declined more than 20%.
Otis secured a Wuhan Metro order to supply 113 elevators and escalators and a separate project to modernize 147 elevators. It is also pursuing modernization work in China outside government stimulus programs.
For 2026, Otis expects net sales of $15.1 billion to $15.3 billion, with service organic sales growth in the mid to high single digits and New Equipment organic sales ranging from a low-single-digit decline to flat.
- $14.3BFY2021
- $13.7BFY2022
- $14.2BFY2023
- $14.3BFY2024
- $14.4BFY2025
- $15.1BFY2026 guidance
Structural risks
- Construction and China: A slowdown in building, remodeling or infrastructure spending can reduce demand. China is a major New Equipment market, and changes in its economic and credit conditions can affect equipment sales and future Service growth. Otis’s China new equipment sales declined more than 20% in Q3 2026.
- International exposure: Local economic conditions, currency movements, trade restrictions and tariffs can affect demand, costs and reported results. Otis may be unable to recover all cost increases through pricing.
- Labor and execution: Otis depends on qualified field personnel and must estimate installation and maintenance costs accurately. Labor shortages, disputes, higher wages or errors in estimating contract work can hurt performance.
- Suppliers and materials: Shortages, production disruptions or price increases, particularly for steel, can raise costs or interfere with customer commitments. Some components have only one or a limited number of qualified suppliers.
- Debt and financing: Otis had $7.7 billion of outstanding long-term debt as of December 31, 2025. Debt service reduces cash available for other purposes, and future financing may not be available on favorable terms.
Bottom line
Our reading
Our reading: Otis combines a construction-linked equipment business with a larger service business built around maintaining and upgrading installed elevators and escalators. Its local service network and broad portfolio support that model, but independent providers contest those relationships. Growth in modernization offers another source of work, while China’s equipment market, labor costs and execution remain important exposures.