In closing out its fiscal Q4, Watsco Inc. is accelerating its use of digital platforms and early artificial intelligence (AI) tools as it works to improve sales margins and drive growth following a year marked by regulatory disruption in the HVAC market.
For the year ended Dec. 31, Watsco revenue declined 5% to $7.24 billion, down from $7.62 billion in 2024, according to the company’s earnings report. Net income attributable to Watsco fell 7% to $497.0 million, compared with $536.3 million a year earlier. Earnings per share were $12.25, down from $13.30 in 2024.
Company executives said the financial results reflected softer unit volumes tied to the industrywide transition to A2L refrigerants, which disrupted replacement demand and weighed on fourth-quarter sales. Management said the transition is now largely complete, creating a more stable operating environment entering 2026.
On AI, executives said Watsco has begun applying AI to pricing, customer engagement and operational efficiency. Aaron Nahmad, co-vice chairman and president, said AI tools are helping the company “match the right price for the right product for the right customer,” while emphasizing that the strategy is not based on across-the-board price increases.
Watsco digital sales in Q4 2025
Against that backdrop, Watsco highlighted steady growth in digital engagement and sales in Q4. Ecommerce accounted for 35% of companywide sales in 2025, representing $2.5 billion in revenue, Watsco executives said on the company’s Feb. 17 earnings call. In certain U.S. markets, digital transactions exceeded 60% of sales.
Watsco also reported a 15% increase in contractor engagement with its mobile applications during the year. That brought its total number of active users to approximately 73,000. Executives described mobile adoption as a key driver of contractor loyalty and repeat purchasing.
Watsco’s OnCallAir platform — a contractor-facing digital sales and quoting tool — reached an annual gross merchandise value (GMV) run rate of $1.8 billion, up 20% from 2024, management said. The platform is used by contractors to generate quotes and present system options directly to homeowners.
Executives tied the expansion of digital tools to Watsco’s longer-term margin strategy. The company reiterated its goal of reaching 30% gross margin over time and said it is continuing to expand pricing optimization technology across additional branches, customers and products.
Management also pointed out a newer initiative focused on the non-equipment portion of the business, which includes parts and supplies. Executives said the effort is aimed at improving purchasing decisions, inventory positioning and redistribution across Watsco’s network, with the goal of supporting both margin and growth.
Watsco ended 2025 debt-free and said it generated record Q4 operating cash flow, which executives said provides flexibility to continue investing in technology, acquisitions and branch expansion as market conditions normalize.
Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s our last update on Watsco ecommerce sales.
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