Flex Ltd. Q1 FY2026 earnings call

• Flex had an exceptional quarter with $6.6 billion revenue, up 4%, adjusted operating margin 6%, and adjusted EPS $0.72. - Portfolio mix shifts with data center becoming more strategic. Cloud side delivers vertically integrated IT hardware and infrastructure solutions; power side spans full stack. - Global operational scale is a competitive advantage with over 49 million square feet globally. Embedded AI-enabled systems, advanced automation, and localized supply chains. - Americas revenue rose to 49% in fiscal year '25 from 38% in '20, Asia declined. - Bullish on advanced manufacturing capabilities with AI and intelligence systems across factories.

Reliability Solutions: Revenue was $2.9 billion, down 2% year-over-year. Operating income improved to $172 million and segment margin expanded 100 basis points to 6%. Agility Solutions: Revenue totaled $3.7 billion, up 10% year-over-year. Operating income was $240 million with operating margin expanding 120 basis points to 6.5%. Data center business, including cloud and power, is a larger and more strategic contributor, expected to deliver approximately $6.5 billion in revenue, growing at least 35% year-over-year and representing 25% of total revenue.

• Updated FY '26 expectations: revenue between $25.9 billion and $27.1 billion (midpoint increased by ~$600 million), adjusted operating margin between 6% and 6.1%, adjusted EPS between $2.86 and $3.06 per share. - Segment outlook: Reliability Solutions expected to be down low single digit to up mid-single digit; Agility Solutions anticipated modest low to mid-single-digit growth. - Second quarter guidance: Reliability Solutions down low single digit to up low single digit; Agility Solutions up low single digit to up mid-single digit; total Flex revenue range $6.5 billion to $6.8 billion, adjusted operating income $375 million to $415 million, adjusted EPS $0.70 to $0.78 per share.

Q: Strong print and strong margins, margin outlook for the year.

A: Kevin said they held prior margin guided range, revenue volume in back half is cautiously optimistic, tariffs are a headwind.

Q: Data center revenue trends in 1Q, break out cloud and power.

A: Revathi said they feel good about 35% growth forecast, power is stronger than cloud this year.

Q: Amazon's cooling product plans, how Flex fits.

A: Revathi said Amazon's announcement validates need for both manufacturing and technology capability, Flex provides fully integrated solution.

Q: Full year guidance vs 1Q results.

A: Kevin said 1 quarter doesn't make the year, first half has comparison benefit, they're making investments in back half.

Q: Capacity constraints, when to catch up with demand.

A: Revathi said they have growth requiring investment, made investments in Dallas and Poland, aim to keep up with demand.

Q: Non-data center markets, green shoots.

A: Revathi said automotive has upsides, industrial has green shoots in renewables, networking has share gains, health care devices strong.

Q: Tariff impact to full year guide.

A: Kevin said they factored in tariffs as of June view, no USMCA impact, tariffs are pass-through.

Q: Rank order of segments, where to invest.

A: Revathi said prioritized towards higher growth, higher return end markets, data center driving investment in cloud and power.

Q: Data centers, customer engagement with suite and hyperscalers' internal investments.

A: Revathi said most hyperscalers buy whole suite, each hyperscaler has own solution, Flex provides end-to-end solution integrating technology.