Service International posted second quarter results that modestly exceeded Wall Street expectations, with management attributing the steady performance to robust preneed cemetery sales and stable funeral service activity. CEO Thomas Ryan discussed how high single-digit growth in preneed cemetery sales and increased trust fund income supported revenue gains, while cost control efforts kept operating margins stable year-over-year. The company also saw improved average revenue per funeral service and highlighted ongoing operational shifts, such as deferring earn deliveries and transitioning more preneed sales to insurance-funded products, as factors shaping the quarter’s financial outcomes.
Is now the time to buy SCI? Find out in our full research report (it’s free for active Edge members).
Service International (SCI) Q2 CY2026 Highlights:
- Revenue: $1.10 billion vs analyst estimates of $1.08 billion (3.6% year-on-year growth, 1.8% beat)
- Adjusted EPS: $0.90 vs analyst estimates of $0.89 (1.4% beat)
- Management reiterated its full-year Adjusted EPS guidance of $4.20 at the midpoint
- Operating Margin: 21%, in line with the same quarter last year
- Funeral Services Performed: in line with the same quarter last year
- Market Capitalization: $11.67 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Service International’s Q2 Earnings Call
- Albert Rice (UBS) asked about the move to more fixed compensation for sales staff and whether it was improving salesforce retention and performance. CEO Thomas Ryan and COO Sumner Waring said it was primarily a retention tool, and early results suggest it is contributing to stronger sales execution.
- Scott Schneeberger (Oppenheimer) pressed management on the sustainability of preneed sales growth and the potential for demographic tailwinds. Ryan said he expects to see demographic impacts begin to materialize more meaningfully from 2026 onward, though external trends could have a minor influence.
- Joanna Gajuk (Bank of America) inquired about the rollout of cremation-focused sales initiatives and their impact in additional markets. Ryan confirmed the expansion beyond the initial ten test markets, reporting incremental uptake and plans for broader rollout through early 2027.
- Parker Snure (Raymond James) sought detail on the low cemetery revenue recognition rate and timing for backlog conversion to revenue. CFO Eric Tanzberger explained that recognition rates fluctuate with the sales mix and that higher recognition is expected in the second half, in line with historical patterns.
- Tomohiko Sano (JPMorgan) questioned the impact of digital and AI investments on sales effectiveness. Waring and Ryan highlighted early adoption of AI for sales training and lead management, with expectations for improved efficiency and higher conversion rates as adoption grows.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace and breadth of preneed sales growth, especially as cremation-focused initiatives expand; (2) sustained margin improvements as operational transitions reach steady state; and (3) the impact of trust fund income on both revenue recognition and future backlog value. We will also watch for further developments in salesforce training and digital investments as signposts of execution.
Service International currently trades at $85.60, in line with $85.68 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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