Snapshot
RTX generated $88.6 billion of revenue, $17.8 billion of gross profit, $9.3 billion of operating income and $7.1 billion of net income in FY2025. Diluted EPS was $4.96 in FY2025, while free cash flow was $7.4 billion in FY2025.
In Q2 FY2026, revenue was $24.7 billion, gross profit was $5.1 billion, operating income was $2.8 billion and net income was $2.2 billion. Diluted EPS was $1.57 in Q2 FY2026, and free cash flow was $2.8 billion in Q2 FY2026. Revenue increased 14.5% in Q2 FY2026 against Q2 FY2025, while operating income was higher than in Q2 FY2025.
Growth
Revenue increased 9.74% in FY2025 against FY2024 to $88.6 billion in FY2025. Revenue compound annual growth was 9.72% in FY2022–FY2025 and 9.38% in FY2020–FY2025. Diluted EPS increased 39.7% in FY2025 against FY2024 to $4.96 in FY2025, with a 12.3% compound annual growth rate in FY2022–FY2025.
Free cash flow increased 89.9% in FY2025 against FY2024 to $7.4 billion in FY2025. Free cash flow compound annual growth was 19.2% in FY2022–FY2025 and 27.3% in FY2020–FY2025. In Q2 FY2026, revenue rose 11.9% from Q1 FY2026 and 14.5% from Q2 FY2025; diluted EPS rose 3.97% from Q1 FY2026 and 28.7% from Q2 FY2025. Free cash flow was $2.8 billion in Q2 FY2026, compared with $1.2 billion in Q1 FY2026 and −$194.0 million in Q2 FY2025.
Profitability
Gross margin was 20.1% in FY2025, up 1.0 percentage point in FY2024–FY2025 and 5.0 percentage points in FY2020–FY2025. Operating margin was 10.5% in FY2025, up 2.4 percentage points in FY2024–FY2025 and 13.8 percentage points in FY2020–FY2025. Net margin was 7.98% in FY2025, up 1.8 percentage points in FY2024–FY2025 and 13.2 percentage points in FY2020–FY2025.
Return on equity was 10.4% in FY2025, compared with 5.20% in FY2021. Return on assets was 4.03% in FY2025, compared with 2.39% in FY2021. Return on invested capital was 5.96% in FY2025, compared with 3.26% in FY2021. In Q2 FY2026, gross margin was 20.8% and operating margin was 11.4%; operating margin was 1.4 percentage points higher than in Q2 FY2025.
Balance sheet
Total debt was $37.9 billion in FY2025, down from $41.3 billion in FY2024. Cash and short-term investments were $7.4 billion in FY2025, and net debt was $30.5 billion in FY2025. Shareholders’ equity was $67.1 billion in FY2025, while working capital was $1.5 billion in FY2025.
Net debt declined to $29.1 billion in Q2 FY2026 from $30.6 billion in Q1 FY2026 and $37.2 billion in Q2 FY2025. The current ratio was 1.0× in Q2 FY2026, and debt to equity was 0.5× in Q2 FY2026. Book value per share was $50.02 in FY2025, compared with $46.49 in FY2024.
Cash flow & capital return
Operating cash flow was $10.6 billion in FY2025, an increase of 47.6% in FY2025 against FY2024. Capital expenditure was $3.1 billion in FY2025, while free cash flow was $7.4 billion in FY2025. Free cash flow represented 105.4% of net income in FY2025.
RTX paid $3.6 billion of dividends and made $50.0 million of net share repurchases in FY2025. Capital returned to shareholders was $3.6 billion in FY2025 and $34.6 billion in FY2021–FY2025. Weighted average shares were 1.3 billion shares in FY2025, and share count changed by −1.21% in FY2020–FY2025. Free cash flow was $2.8 billion in Q2 FY2026, up 132.9% from Q1 FY2026.
Valuation
Market capitalisation was $260.3 billion as of October 20, 2026. P/E was 33.4× as of October 20, 2026, matching both the five-year median of 33.4× and the industry median of 33.4× as of October 20, 2026. P/S was 2.8× as of October 20, 2026, higher than the five-year median of 2.0× and ten-year median of 1.8×, but lower than the industry median of 3.5× as of October 20, 2026.
P/B was 3.8× as of October 20, 2026, higher than both the five-year and ten-year medians of 2.0× and the industry median of 2.9× as of October 20, 2026. EV/Sales was 3.1× as of October 20, 2026, higher than both the five-year and ten-year medians of 2.4× but lower than the industry median of 3.4× as of October 20, 2026. EV/Cash flow was 26.3× as of October 20, 2026, below the five-year median of 37.1× and ten-year median of 35.4×.
What changed since last quarter
Revenue was $24.7 billion in Q2 FY2026, up 11.9% from Q1 FY2026 and 14.5% from Q2 FY2025. Diluted EPS was $1.57 in Q2 FY2026, up 3.97% from Q1 FY2026 and 28.7% from Q2 FY2025. Gross margin was 20.8% in Q2 FY2026, unchanged from Q1 FY2026 and 0.5 percentage points above Q2 FY2025. Operating margin was 11.4% in Q2 FY2026, 0.2 percentage points below Q1 FY2026 and 1.4 percentage points above Q2 FY2025.
The filing does not attribute the Q2 FY2026 changes to specific drivers. For the later quarter ended September 30, 2026, management attributes higher organic sales primarily to higher sales at Raytheon, Collins and Pratt & Whitney, while noting that tariff refunds benefited cost of sales. Management also cites a customer-bankruptcy charge at Pratt & Whitney and higher employee-related costs as offsets to operating-profit growth in that later quarter.
Open questions
- What factors drove the increase in weighted average shares in the latest quarter?
- How much of the decline in net debt reflects operating cash generation, debt repayment or other financing activity?
- What were the underlying drivers of the quarter-on-quarter decline in operating margin?
- How could continuing supply-chain disruptions, inflation and trade restrictions affect costs and delivery timing?
- How will the customer-bankruptcy charge discussed for the later quarter affect future results?
Sources
- Form 10-Q filed October 20, 2026 — management’s discussion and analysis