News & Deep Analysis
DE

Deere Q1 FY26 Results: Mixed Segment Performance

Published: February 19, 2026
DEERE & CO

Direct News

  • Reported Q1 FY26 net income declined 25%; revenues increased 13%.
  • Company operates four segments: Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), Financial Services (FS).
  • FY2025 equipment operations net sales reported at $10,224 million (down 7% vs FY2024); FS revenue $6,289 million (down 3%).
  • Receivables/leases total $56,938 million (down from $59,428 million); agriculture/turf retail notes $26,555 million (81%); CF $6,102 million (19%).
  • FS credit metrics: provision 0.49% of average balance (FY2025); delinquency 1.05% (up from 0.98%).
  • Legal and regulatory risks include an FTC lawsuit (filed 2025) alleging repair restrictions; motion to dismiss denied and preliminary discussions ongoing.
  • Company emphasizes Leap Ambitions (Dec 2025) targeting digital, automation, autonomy and electrification through 2030.
  • Moat assessment: No sustainable economic moat identified; operational and execution advantages (dealer network, tech stack) are the primary competitive edges.

Historical Context

FY2025 closed on November 2, 2025. Relevant prior events include a November 26, 2025 disclosure of a significant decline in fiscal 2025 net income and revenues alongside the completion of the Banco John Deere S.A. divestiture. On December 4, 2025, the board expanded with a new director appointment and an executive retirement. The FTC lawsuit and related repair-market litigation arose in 2025 and remain active as of this February 19, 2026 report. These developments provide backdrop to Q1 FY26 results and the company's Dec 2025 strategic refinement under the Leap Ambitions framework.

Earnings snapshot and what moved the numbers

As of 2026-02-19, Deere reported a 25% drop in net income for Q1 FY26 alongside a 13% rise in revenues. The headline divergence — lower profitability with higher top-line sales — signals mixed underlying performance across the company's operating footprint. The firm's FY2025 equipment operations net sales were reported at $10,224 million, a 7% decline from FY2024, while Financial Services revenue was $6,289 million, down 3% year over year. Detailed per-segment revenue splits for FY2025 are not explicitly provided in the cited segment tables, limiting line-by-line attribution of the quarter's swings.

Segment dynamics and Financial Services trends

Deere's business is organized into PPA, SAT, CF and FS. Public filings emphasize that U.S./Canada remains dominant for large agriculture/turf while growth pockets exist in Europe and India, though segment disclosure in FY2025 10-K tables is limited. Financial Services plays a material role in supporting equipment sales; receivables and leases totaled $56,938 million at FY2025 year-end, down from $59,428 million. Agriculture/turf retail notes comprised $26,555 million (about 81% of retail notes) with CF retail notes at $6,102 million (about 19%). Credit trends show modest pressure: FY2025 provisions were 0.49% of the average financing balance and delinquency rose to 1.05% from 0.98%. Those moves are consistent with the listed macro risks (commodity price pressure, farm income variability and higher interest-rate backdrops) that affect customers’ financing capacity and used-equipment inventories.

Strategy, risks and structural competitive position

Deere is advancing its 'Leap Ambitions' (refined December 2025) to steer investments in digitalization, automation, autonomy and electrification through 2030, and links executive incentives to innovation and sustainability targets. The filings set explicit sustainability goals (50% reduction in Scope 1/2 CO2e and 30% reduction in key Scope 3 categories by 2030, 2021 baseline). Regulatory and legal risks are prominent: an FTC suit filed in 2025 alleges monopolistic repair restrictions and a motion to dismiss was denied; related multidistrict class action claims exist. The company also calls out right-to-repair legislation, tariffs and trade barriers as margin and operational risks. On competitive positioning, the filings and analyst group data do not describe a structural economic moat; Deere's advantages are characterized as executional (dealer network, production systems, and technology integration) rather than legally or technologically insulated barriers to entry.

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