Resideo Technologies (REZI) Financials

Resideo Technologies (NYSE: REZI) showed a mixed but generally improving operating profile in Q1 2026, even though cash flow remained under pressure. Revenue rose modestly year over year, operating profit improved, and the company continued to generate positive earnings. However, the quarter also showed a sharp swing to negative operating cash flow, and leverage remains elevated relative to equity.

• Revenue continued to grow: Q1 2026 revenue was $1.912 billion, up from $1.895 billion in Q4 2025 and $1.770 billion in Q1 2025.
• Operating income improved: Operating income rose to $102 million in Q1 2026 versus $140 million in Q4 2025 and $136 million in Q1 2025, showing the business is still profitable at the operating level.
• Gross profit remained solid: Gross profit was $551 million, indicating Resideo is still maintaining a reasonable spread between revenue and cost of goods sold.
• Cash balance increased sequentially: Cash and equivalents increased to $438 million from $345 million in Q3 2025 and $577 million in Q1 2025, helping provide liquidity.
• Book equity improved versus the prior year: Total equity reached $2.922 billion, up from $2.771 billion in Q3 2025 and well above $2.604 billion in Q1 2023.
• Margins remain decent but not exceptional: Q1 2026 gross margin was about 28.8% ($551 million gross profit on $1.912 billion revenue), which is stable but leaves limited room for error.
• Share count remains fairly stable: Weighted average diluted shares were 155 million in Q1 2026, near recent periods, so earnings growth is still being driven mainly by operations rather than buybacks.
• Goodwill and intangibles are large: Goodwill of $3.096 billion and intangibles of $1.069 billion make up a meaningful portion of assets, which is normal for an acquisition-driven company but worth watching.
• Debt remains a major balance-sheet item: Long-term debt was $3.165 billion, and total liabilities were $5.285 billion, so the capital structure is still heavily leveraged.
• Operating cash flow turned negative: Q1 2026 operating cash flow was negative $145 million, a sharp deterioration from positive $299 million in Q4 2025 and $200 million in Q2 2025.
• Working capital was a big drag: Changes in operating assets and liabilities reduced cash by $254 million in the quarter, suggesting a seasonal or structural cash conversion challenge.
• Net income fell sharply from the prior quarter: Net income attributable to common shareholders dropped to $26 million from $143 million in Q4 2025.
• Interest expense still weighs on profits: Q1 2026 interest expense was $47 million, a large claim on operating earnings.
• Leverage limits flexibility: With liabilities of $5.285 billion against equity of $2.922 billion, Resideo is still carrying a meaningful debt burden.

Bottom line: Resideo’s latest quarter shows a company that can still grow sales and earn operating profit, but cash generation was weak and balance-sheet leverage remains a concern. For retail investors, the key question is whether the stronger revenue and operating income trend can translate into consistently positive free cash flow.