Why This Matters to Distributors: Watsco is making it clear that its next phase of growth will come from technology, acquisitions and digital customer engagement—not simply from a stronger HVAC market. The strategy shows how distributors are using proprietary data, artificial intelligence and customer-facing platforms to deepen relationships, improve operations and capture market share in a mature industry.
Watsco Inc. is betting that technology, acquisitions and digital customer engagement will drive its next phase of growth as the heating, ventilation and air conditioning market returns to more stable operating conditions.
During its second-quarter earnings call, the nation’s largest HVAC distributor outlined a long-term strategy centered on expanding digital platforms, using artificial intelligence to improve operations and customer service, and acquiring distributors that can accelerate regional growth.
“Our technology investments have made us a stronger company with higher growth prospects and a widening competitive moat,” President AJ Nahmad told analysts.
Nahmad said the company’s strategy focuses on four priorities: building the industry’s largest repository of customer, product and pricing data; improving the customer experience through digital tools; making supply chain and branch operations more efficient; and developing technology that helps contractors grow their own businesses.
One of Watsco’s newest initiatives is SupplySync.com, a platform launched during the second quarter to serve large institutional customers. The company said the platform opens a new sales channel while leveraging its existing distribution network and infrastructure.
“We see an incremental growth opportunity beyond our day-to-day business while leveraging our existing scale and infrastructure,” Nahmad said.
The company is also expanding its Vendor Consolidation and Rationalization program, which broadens product availability while simplifying supplier relationships, and continues to develop Hydros, a shared logistics network that replenishes inventory across business units. Executives said the initiatives will strengthen product availability while creating new opportunities to grow sales of non-equipment products.
Digital sales continue to outpace the broader business.
E-commerce revenue increased 13% during the first half of 2026 and now represents 37% of total sales over the past 12 months. In some markets, digital channels account for 60% to 70% of sales. More than 70,000 customers actively use Watsco’s mobile applications each month.
The company’s OnCall Air platform, which helps contractors prepare sales proposals for homeowners, generated more than 340,000 proposals over the past year, representing $1.9 billion in gross merchandise value, a 15% increase from the previous year. Nahmad said contractors using Watsco’s digital platforms are growing faster, remain customers longer and cost less to serve than those using traditional channels.
Artificial intelligence is becoming a larger part of the company’s strategy.
Nahmad said AI is being deployed across the business, while new pricing optimization tools are helping Watsco manage pricing across thousands of products and multiple markets. Executives also said digital ordering platforms encourage customers to purchase complementary products, increasing average order size while improving customer service.
Acquisitions remain another key element of Watsco’s growth strategy.
The company completed its acquisition of Jackson Supply on June 1, adding a distributor with about $230 million in annual revenue and 25 locations across the Sun Belt. Executives said Jackson will continue operating under its existing leadership while gaining access to Watsco’s technology, capital and supplier relationships.
“They have a very aggressive plan to do more of what they’ve been doing with our capital, our relationships, our technology,” Executive Vice President Barry Logan said.
Executives said they believe the HVAC market has stabilized after several years of supply chain disruption and the industry’s transition to A2L refrigerants. With those challenges easing, Watsco said it expects technology investments, digital platforms and acquisitions to become increasingly important drivers of future growth.
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