Sensata (ST) Q2 Revenue Tops Estimates

Key Points

• Revenue (GAAP) for Q2 2025 surpassed analyst consensus by $8.0 million, reaching $943.4 million, but declined 8.9% from the prior year period.

• Adjusted earnings per share came in at $0.87, beating estimates for non-GAAP EPS and GAAP revenue despite a 5.4% year-over-year drop.

• Free cash flow rose 17.4% year-over-year to $115.5 million, with continued shareholder returns through dividends and buybacks.

• These 10 stocks could mint the next wave of millionaires ›

Sensata Technologies Plc (NYSE:ST), an industrial technology manufacturer specializing in mission-critical sensors and electrical protection components, released its quarterly earnings on July 29, 2025, reporting results for the second quarter of fiscal 2025. The most notable news from the release saw the company deliver revenue of $943.4 million and adjusted earnings per share (EPS) of $0.87—both figures exceeding consensus estimates by $8.0 million (GAAP revenue) and $0.03 (non-GAAP EPS), respectively. However, both key measures declined compared to the prior year, with revenue (GAAP) was down 8.9% and adjusted EPS down 5.4%. The quarter was marked by progress in cash flow and operational efficiency, but ongoing volume declines continued in Sensata’s core Performance Sensing business, mainly as a result of portfolio divestitures and deliberate product lifecycle actions. Overall, the quarter showed execution on efficiency and cash flow priorities, but highlighted the firm's continuing challenge to offset declines from divestitures and cyclical end-market pressures.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Focus

Sensata Technologies designs, manufactures, and provides a wide range of sensors and controls—hardware that detects and measures variables such as temperature, pressure, motion, and electrical current—for automotive, heavy vehicle, industrial, aerospace, and select energy markets. Its components are embedded in systems that play a safety or performance-critical role for original equipment manufacturers (OEMs) around the globe.

Recently, the company has sharpened its focus on several key areas: expanding its role in electrification, advancing research and development, increasing global reach, driving operational efficiency, and embracing sustainability. These strategic areas are vital for Sensata's ability to capitalize on long-term trends, such as the global shift to electric vehicles and growing demand for advanced industrial automation. Success factors include maximizing outgrowth from electrification initiatives, sustaining high customer retention, maintaining strong operating margins, and converting operational efficiencies into solid free cash flow.

Quarter Highlights: Financials, Operations, and Product Developments

During the period, Sensata outperformed revenue (GAAP) and earnings (non-GAAP) expectations, but both benchmarks fell below last year’s levels due chiefly to previously announced divestitures and shifts in its product portfolio. Revenue (GAAP) of $943.4 million exceeded analyst consensus by $8.0 million but fell 8.9% from the previous year’s $1,035.5 million (GAAP). Adjusted EPS at $0.87 topped consensus by $0.03, yet slipped 5.4% from the $0.92 reported last year. Net income declined by 15.4% year-over-year. The overall adjusted operating margin remained steady at 19.0% year-over-year.

The core Performance Sensing segment, which supplies sensors and controls mainly for auto and heavy vehicle/off-road markets, saw its revenue drop 9.9% to $652.2 million (GAAP), with segment adjusted operating income also falling and margin holding near last year's levels at 22.5% (GAAP). This decline resulted from both portfolio management actions—such as dropping low-growth or lower-margin products—and ongoing weakness in automotive end markets.

Sensing Solutions—the segment focused on industrial, aerospace, and heating, ventilation, and air conditioning (HVAC) applications—grew revenue by 8.6% to $291.2 million year-over-year, and operating income increased by 10.5% year-over-year. The segment also improved its operating margin to 30.2%. Management highlighted particularly strong backlog and steady growth in aerospace sensors and controls, as well as notable advances in industrial leak detection sensor lines for new HVAC environmental standards. The “Other” segment, consisting of divested or deprioritized businesses, now reports no revenue, compared to $43.5 million (GAAP) last year.

The company’s end markets remain heavily weighted toward the automotive sector, which accounted for 55.9% of revenue, and heavy vehicle/off-road (17.3% of total revenue), with HVAC (4.6% of total revenue), and aerospace (5.0% of total revenue). Regional sales mix shifted modestly toward Asia, although the Americas still make up the largest share at 40.3% of total sales.

Electrification remains a strategic goal, as Sensata aims to increase its content in electric vehicles (EVs)—which management says is approximately double that in internal combustion engine vehicles, with this expectation over the next several years. New product launches for 800-volt EV platforms are expected to ramp up through 2025 and into 2026. However, as CEO Stephan von Schuckmann described, recent customer wins in China and Japan remain “small-to-medium” and have not yet materially changed the total company revenue base.

Operationally, free cash flow showed strong improvement, reaching $115.5 million, up 17.4% year-over-year. Importantly, ongoing cost control also helped Sensata maintain a flat year-over-year adjusted operating margin of 19.0%, even as top-line revenue (GAAP) fell. The firm’s ongoing focus includes benchmarking production efficiency across its network to best-in-class industry standards, and working on further improvements in procurement and inventory levels—areas management describes as offering “continued room for improvement.”

Sensata continued to return capital to shareholders, delivering $37.7 million through dividends and share buybacks. For the first six months of 2025, total capital returns reached $156.1 million. Balance sheet strength remains a focus, as the company finished the quarter with $661.8 million in cash and cash equivalents and a net debt position of $2.56 billion. The net leverage ratio stayed at a stable 3.0x.

Business Model, Products, and Strategic Positioning

Sensata’s business is built around the design and manufacturing of mission-critical sensor and control products. Its primary product families include electromechanical sensors (measuring pressure, position, and temperature) and electrical protection devices (circuit breakers and high-voltage relays). The acquisition of GIGAVAC and Dynapower has helped Sensata expand into high-voltage protection and power conversion systems, directly supporting growth in electrification and renewable energy end markets.

First is electrification, with the company investing in EV subsystems and charging infrastructure opportunities. Second is ongoing innovation, including research and development to develop new products such as sensors for environmental leak detection in HVAC applications. Third is maintaining a global footprint, with manufacturing and engineering support that allows the company to serve multinational OEMs across the Americas, Europe, and Asia. Operational efficiency and supply chain excellence form the fourth pillar, underpinned by investment in automation and production system standardization. Finally, Sensata increasingly integrates sustainability into its product strategy—by offering solutions that can improve energy efficiency and enable cleaner technologies for end users.

Outlook and What to Watch Going Forward

For the third quarter of fiscal 2025, management guided to revenue between $900 million and $930 million—a sequential decline that reflects anticipated lower automotive production in North America, according to updated third-party industry forecasts. Adjusted EPS is expected in the range of $0.81 to $0.87, adjusted operating margins held flat at 19.0%. The outlook assumes approximately $15 million of pass-through tariff revenue, which does not impact overall margin, as additional costs are recovered from customers and revenue is recorded with zero margin contribution.

Leadership cautioned on potential further headwinds in major end markets, stating that revenue headwinds of $20–30 million per quarter could persist in the second half of 2025 due to weaker North American automotive volumes. Meanwhile, the Sensing Solutions segment is expected to provide relative stability. While Sensata continues to book wins in electrification—including new programs for next-generation EV platforms—these are currently contributing modestly to overall results. Investors may want to monitor Sensata’s progress on both electrification ramp and operational efficiency improvements.

The quarterly dividend was maintained at $0.12 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,039%* — a market-crushing outperformance compared to 182% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of July 29, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.