10-Q · May 4, 2026
OSI Systems, Inc. reported a solid performance for Q3 2026, with revenues rising to $453.2 million, up 2.0% from $444.3 million in Q3 2025. Gross margins slightly declined to 33.2%, and diluted EPS improved to $2.60,…
Earnings analysis · 10-K
OSIS earnings analysis
Filed August 21, 2026 · Our reading of the company's report
The latest report
OSI delivered another year of revenue and earnings growth, with fiscal 2026 revenue up 4.2% to $1.786 billion, diluted EPS up to $8.95, and operating cash flow rising to $275.9 million. The Security division remains the…
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OSI delivered another year of revenue and earnings growth, with fiscal 2026 revenue up 4.2% to $1.786 billion, diluted EPS up to $8.95, and operating cash flow rising to $275.9 million. The Security division remains the primary growth and strategic platform, supported by $1.8 billion of remaining performance obligations and expanding international revenue, while Optoelectronics and Manufacturing also accelerated. However, margin compression, Healthcare declines, Middle East-related delivery delays, semiconductor availability and the runoff of large international contracts temper the outlook; the sizable share repurchase program and improved liquidity support a constructive but more execution-sensitive view.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $8.95
What stood out
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Three-Year Growth Continued
Fiscal 2026 revenue increased 4.2% to $1.786 billion from $1.713 billion in fiscal 2025 and $1.539 billion in fiscal 2024. Diluted EPS rose to $8.95 from $8.71 and $7.38, respectively, although gross margin declined to 33.2% from 34.3% and 34.5%.
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Security-Led, Vertically Integrated Model
Security remains the core franchise, representing 69.9% of fiscal 2026 revenue, while Optoelectronics and Manufacturing grew 7.7% to $375.3 million. Management describes the company as a vertically integrated designer and manufacturer serving homeland security, healthcare, defense and aerospace markets.
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$1.8 Billion Backlog Visibility
Remaining performance obligations were approximately $1.8 billion at June 30, 2026, with approximately 59% expected to convert to revenue over the next 12 months. This provides substantial forward revenue visibility, though timing remains dependent on customer milestones and acceptance procedures.
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Sharp Cash-Flow Improvement
Operating cash flow increased to $275.9 million from $97.6 million in fiscal 2025, primarily due to improved working capital and collections on large Security projects. Cash and equivalents increased to $359.8 million from $106.4 million.
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Aggressive Share Repurchases
Capital allocation shifted decisively toward repurchases: OSI repurchased 1,111,825 shares for $271.9 million in fiscal 2026, versus 531,314 shares for $80.4 million in fiscal 2025. On August 20, 2026, the Board authorized another 1,000,000 shares, bringing remaining authorization to 1,078,731 shares.
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International Revenue Expansion
International exposure remains a growth engine: external revenue in the United Kingdom rose to $503.5 million from $373.0 million, while Asia-Pacific revenue increased to $316.4 million from $295.7 million. Total EMEA revenue reached $581.3 million and Asia-Pacific revenue $316.4 million in fiscal 2026.
What to watch
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Middle East Delivery Disruptions
The filing states that Middle East conflicts affected fourth-quarter fiscal 2026 results through delays in shipments, customer acceptance procedures, project schedules and new orders. OSI generated $581.3 million of fiscal 2026 external revenue in EMEA, including $77.9 million from Europe, the Middle East and Africa excluding the United Kingdom, underscoring international execution exposure.
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Semiconductor Supply Constraints
The company reports tighter supply and higher costs for memory and semiconductor components tied to demand from data-center and AI infrastructure. Continued component constraints could adversely affect operations; fiscal 2026 gross margin already fell to 33.2% from 34.3%, with tariffs, logistics and component costs cited as factors affecting profitability.
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Contract Runoff and Higher Debt
Revenue from three significant international Security contracts declined from $404 million in fiscal 2024 to $231 million in fiscal 2025 and $79 million in fiscal 2026, with management expecting relatively lower revenue from these contracts in fiscal 2027 and beyond. At the same time, total debt increased to $1.001 billion from $649.6 million, including $575.0 million of 0.50% convertible notes due 2031.
Management's outlook
The 10-K does not provide quantitative annual revenue or EPS guidance. Management states that approximately 59% of the $1.8 billion of remaining performance obligations is expected to be recognized over the next 12 months.
Earlier filings 4
10-K · August 25, 2025
OSI Systems describes itself as a vertically integrated designer and manufacturer serving security, healthcare and defense/aerospace end markets through three operating divisions. The company’s stated strategy…
10-Q · January 24, 2025
OSI Systems, Inc. reported a strong quarter with revenue rising to $419.8 million, up 12.4% from $373.2 million in the previous year's quarter. The diluted EPS increased to $2.22 from $2.11 year-over-year, reflecting a…
10-Q · October 25, 2024
OSI Systems reported quarterly revenue of $344,007,000 (three months ended September 30, 2024), up $64,797,000 or 23.2% from $279,210,000 in the prior-year quarter, driving higher gross profit of $121,502,000 and net…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.