Fortive Corporation

This is our first report on Fortive Corporation, a leading provider of provider of essential technologies for connected workflow solutions. The company caters to a wide range of end markets and had quite an excellent quarter with robust broad-based execution over the portfolio. Fortive delivered an all-around beat as software ARR and hardware orders both increased, reflecting a more diversified and resilient product portfolio. In the quarter, orders and demand remained strong despite the rising FX headwinds and higher inflation. Fortive continues to build momentum in its software business with cross-selling and upsell booking, lower churn, and new logo generation contributing to ARR growth of double digits. Services revenue has been expanded in the business, such as Tektronix. Some of the highlights in this quarter include Fluke’s new service offerings and product innovation, including the recently launched Fluke Solar Solutions. ServiceChannel has been continuing to view robust customer demand for managed solutions. In the quarter, Kaizen has been used for utilizing operations and closed-loop production in the company’s Shanghai facilities that accelerate the restart of production, creating new demand opportunities and ensuring supply availability. We initiate coverage on the stock of Fortive Corporation with a ‘Hold’ rating.