$ROL · ROLLINS INC
Rollins Inc. filed its 10-Q for Q3 FY2026 (period ended September 30, 2026). Revenue grew 6.2% YoY to $1.09B. GAAP EPS of $0.33 missed the prior-year $0.34, with net income down 3.4% to $157.9M. Gross margin compressed 90 bps to 53.5% and operating margin fell 140 bps to 20.5%, pressured by a doubling of insurance & claims expense to $23.0M. Free cash flow was a standout at $235.5M, up 28.8% YoY.
- Revenue rose 6.2% YoY to $1.09B, driven by customer services growth.
- GAAP EPS fell to $0.33 from $0.34; net income declined 3.4% to $157.9M.
- Gross margin contracted 90 bps to 53.5%; operating margin fell 140 bps to 20.5%.
- Insurance & claims expense more than doubled to $23.0M from $11.1M in Q3 2025.
- Free cash flow surged 28.8% to $235.5M; operating cash flow up 26.4% to $241.9M.
Stock flat in extended hours at $35.31 (+0.09% vs filing-time price). The modest revenue beat appears offset by margin compression concerns, with the market showing little directional conviction on a $16.99B cap name.
Rollins' margin compression story is intensifying: a doubling of insurance costs in one quarter signals structural cost pressure that even 6%+ revenue growth can't outrun.
Rollins' margin erosion mirrors a broader services-sector trend where labor and insurance inflation outpace pricing gains. The 28.8% free cash flow jump stands out against peers struggling to convert revenue to cash.
Insurance and claims expense doubled YoY ($23.0M vs $11.1M), signaling rising casualty/liability costs that could persist. Macroeconomic uncertainty is explicitly cited as complicating estimates, with management noting severity and duration of economic trends remain unpredictable.
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