Executive Summary
RTX delivered a resilient QQ2 2025, with revenue of $21.58 billion, up 9.4% year over year and 6.3% quarter over quarter, underscoring the resilience of its diversified aerospace and defense portfolio. Gross margin remained solid at approximately 20.3%, and operating margin approached 9.8%, benefiting from operating leverage on higher volumes across Collins Aerospace and Pratt & Whitney. Net income of $1.66 billion drove diluted EPS of $1.22–$1.24, supported by favorable mix and cost discipline, though the company continues to incur meaningful capital expenditure and working capital pressures.
Cash flow remained positive from operations at $458 million in the quarter, but free cash flow was negative by about $72 million, driven by a sizable working capital outflow (-$2.34 billion) and capex of roughly $0.53 billion. RTX maintains a large balance sheet with total debt of $43.6 billion and net debt of about $38.8 billion, alongside cash of $4.78 billion, resulting in a cash ratio near 0.09 and a current ratio just over 1.0. Management commentary emphasized ongoing cost optimization, execution discipline, and a deliberate mix shift toward higher-margin defense programs, while noting that the civil aviation cycle and supply chain dynamics continue to pose near-term headwinds. The earnings backdrop suggests RTX remains well-positioned to benefit from defense budget durability and a gradual normalization of service and after-market revenues, but near-term cash flow and leverage remain pivotal considerations for investors.
Key Performance Indicators
QoQ: 7.95% | YoY:1 392.79%
QoQ: 7.83% | YoY:1 388.60%
Key Insights
Revenue: $21.581 billion in Q2 2025, up 9.4% YoY and 6.28% QoQ.
Gross Profit: $4.376 billion; Gross Margin: 20.28% (≈0.203).
Operating Income: $2.106 billion; Operating Margin: 9.76%.
Net Income: $1.658 billion; Net Margin: 7.68%.
EBITDA: $3.596 billion; EBITDA Margin (EBITDA / revenue): 16.66%.
Interest Expense: $0.480 billion; Depreciation & Amortization: $1.076 billion.
Income Before Tax: $2.040 billion; Tax Expense: $0.315 billion; Effective Tax Rate: ~15.4%.
EPS (GAAP): $1.24; Dilute...
Financial Highlights
Revenue: $21.581 billion in Q2 2025, up 9.4% YoY and 6.28% QoQ.
Gross Profit: $4.376 billion; Gross Margin: 20.28% (≈0.203).
Operating Income: $2.106 billion; Operating Margin: 9.76%.
Net Income: $1.658 billion; Net Margin: 7.68%.
EBITDA: $3.596 billion; EBITDA Margin (EBITDA / revenue): 16.66%.
Interest Expense: $0.480 billion; Depreciation & Amortization: $1.076 billion.
Income Before Tax: $2.040 billion; Tax Expense: $0.315 billion; Effective Tax Rate: ~15.4%.
EPS (GAAP): $1.24; Diluted EPS: $1.22; Weighted Avg Shares (GAAP): 1.3406 billion; Diluted: 1.354 billion.
Operating Cash Flow: $0.458 billion; Free Cash Flow: -$0.072 billion; Capex: -$0.530 billion.
Net Change in Cash: -$0.366 billion; Cash at End of Period: $4.783 billion; Cash at Beginning: $5.193 billion.
Balance Sheet (as of 6/30/2025): Cash & Equivalents: $4.782B; Total Current Assets: $54.657B; Total Assets: $167.139B; Total Liabilities: $102.892B; Total Stockholders’ Equity: $62.398B; Net Debt: $38.813B.
Liquidity & Leverage: Current Ratio 1.01; Quick Ratio 0.75; Debt to Capitalization 0.411; Debt to Equity 0.699; Interest Coverage 4.39.
Dividend & Payout: Dividends paid $0.910B; Payout Ratio 54.9%; Free Cash Flow Yield (approximate): negative per share (-$0.054 per share).
Note: YoY and QoQ comparisons reflect provided ratios: Revenue YoY +9.4%, QoQ +6.3%; Gross Profit YoY +22.2%, QoQ +6.3%; Operating Income YoY +47.8%, QoQ +3.7%; Net Income YoY +1,393%, QoQ +7.95%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
21.58B |
9.43% |
6.28% |
| Gross Profit |
4.38B |
22.23% |
6.32% |
| Operating Income |
2.11B |
47.79% |
3.69% |
| Net Income |
1.66B |
1 392.79% |
7.95% |
| EPS |
1.24 |
1 388.60% |
7.83% |
Key Financial Ratios
operatingProfitMargin
9.76%
operatingCashFlowPerShare
$0.34
freeCashFlowPerShare
$-0.05
dividendPayoutRatio
54.9%
Management Commentary
Transcript insights require access to the earnings call transcript. The dataset provided contains no management quotes or transcript text. Consequently, no thematically grouped quotes or quotes from named executives can be inserted here. Recommend sourcing the official RTX QQ2 2025 earnings call transcript (or KerEx Exhibit) for verbatim quotes to enrich this section.
Transcript not provided in the dataset.
—
Transcript not provided in the dataset.
—
Forward Guidance
RTX did not publish explicit full-year guidance in conjunction with QQ2 2025 results within the provided dataset. In the absence of formal targets, the following factors will drive the outlook:
- Defense demand: The company benefits from durable U.S. and allied defense budgets, which support Collins Aerospace and Raytheon platforms and after-market services. Any incremental budget approvals or modernization programs could sustain revenue momentum.
- Civil aerospace cycle: A gradual recovery in commercial aviation volumes could influence Pratt & Whitney engine activity and aftermarket demand, introducing cyclicality to revenue and margin dynamics.
- Cost discipline: Ongoing cost controls and productivity initiatives could help sustain operating margins despite a high working-capital cadence and continued capex intensity.
- Balance sheet normalization: Leverage remains elevated; a path to deleveraging would enhance financial flexibility and investment appeal if free cash flow improves through working capital optimization and favorable product mix.
- Cash flow: Near-term free cash flow pressure due to working capital outflows suggests the need for optimization of receivables, payables, and inventory alongside capex management.
Overall assessment: Absent new explicit targets, the implied trajectory hinges on defense program wins, normalization of civil aviation demand, and improving working capital efficiency. A constructive stance would depend on visibility into sustained order backlogs, program execution, and demonstrable progress on cash conversion cycles.