Rollins Misses Q3 2026 Estimates as AI Search Disrupts Customer Acquisition

Rollins reported adjusted earnings per share of $0.34 for the third quarter of 2026, missing expectations, and revenue also fell short of what Wall Street expected even as the top line kept growing.

The softest spot in the quarter was residential pest control, where organic revenue growth slowed to just 2.3%. Commercial pest control and termite and ancillary services both grew faster, pointing to a specific problem with finding new homeowner customers.

CEO Jerry Gahlhoff Jr. was direct about the cause: the way consumers discover pest control services is shifting, with AI-driven and large-language-model-powered search channels displacing the traditional digital routes Rollins has long relied on. The company is now reallocating marketing dollars toward those newer discovery channels, and Gahlhoff said the team is acting with urgency. He also noted 100 consecutive quarters of revenue growth, framing the business as durable while its customer acquisition playbook requires a rewrite.

Adjusted operating margin contracted 140 basis points year-over-year to 21.2%, with gross margin narrowing and SG&A rising on higher selling, marketing, insurance, and fleet costs. Free cash flow was a bright spot, rising year-over-year with help from a tax refund.

Rollins stepped up share repurchases sharply during the quarter and paid its quarterly dividend, while Canaccord trimmed its price target to $36.00 in response to the results. Investors will be focused on whether the shift toward AI-driven marketing stabilizes residential organic growth in the fourth quarter.