Revvity Q3 2025 Analysis: Profits Halved as Rising Costs Squeeze Margins

Revvity, a key player in the life sciences and diagnostics sectors, recently released its financial results for the third quarter of 2025. The detailed 10-Q filing with the SEC reveals a complex picture: while the company managed to grow its revenue, profitability faced significant headwinds. Let's break down the numbers to understand what's happening beneath the surface.

Growth on Top, Pressure Below

At first glance, Revvity's top line looks stable. Total revenue for the quarter rose by 2.2% year-over-year, reaching $698.9 million. This growth was largely powered by a standout performance in its service division, where revenue surged an impressive 20.8% to $125.7 million. However, product revenue, the larger part of the business, saw a slight dip of about 1.2% to $573.2 million.

The challenge emerges when we look at costs. The total cost of revenue climbed by 8.4% to $324.3 million, a rate that significantly outpaced revenue growth. This dynamic squeezed gross margins, which fell from 56.3% in Q3 2024 to 53.6% in the current quarter. In simple terms, it became more expensive for Revvity to generate each dollar of sales.

This flow diagram illustrates the sources of revenue and how they are offset by costs and expenses, ultimately leading to the net income for the quarter.

Both of Revvity's main business segments felt this pressure. The Life Sciences segment, which provides tools and services for scientific research, grew its revenue by 1.2% but saw its operating income fall by 8.6%. Similarly, the Diagnostics segment, focusing on reproductive health and immunodiagnostics, increased revenue by 3.2% while its operating income declined by 4.8%.

The Bottom-Line Impact

The combination of compressed margins and largely flat operating expenses (like SG&A and R&D) led to a 16.6% drop in operating income, which landed at $81.9 million.

However, the story doesn't end there. A significant swing in non-operating items dealt another blow to the bottom line. The "Interest and other expense (income), net" line item flipped from a $2.2 million gain in Q3 2024 to a substantial $26.2 million expense in Q3 2025. This was primarily driven by a sharp drop in interest income and unfavorable changes in the fair value of the company's investments.

The cumulative effect was stark: income from continuing operations was nearly halved, plummeting from $93.4 million last year to just $47.2 million this quarter.

Capital Strategy: Aggressive Share Buybacks

Despite the profitability challenges, Revvity has been actively returning capital to shareholders through an aggressive stock buyback program. The company repurchased over $200 million of its own shares in the third quarter alone, bringing the total for the first nine months of 2025 to approximately $650 million. This represents a major use of cash at a time when cash flow from operations has also seen a year-over-year decline.

Looking Ahead

Revvity's Q3 2025 performance highlights a classic business challenge: growing revenue is one thing, but converting that growth into profit is another. The strong expansion of service revenue is a clear bright spot, suggesting successful strategic execution in that area. However, the pressure on product margins and the impact of non-operating expenses have created significant hurdles for the bottom line.

Moving forward, investors will be closely watching whether Revvity can improve its cost structure to stabilize margins. In the highly competitive life sciences and diagnostics market, operational efficiency is just as crucial as innovation. The company's ability to navigate these pressures while continuing to invest in growth and shareholder returns will be key to its future success.