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FLEX LTD. (FLEX)·Q2 2026 Earnings Summary

Executive Summary

  • FLEX delivered a record Q2 FY26 on most metrics: revenue $6.804B (+4% Y/Y), adjusted operating margin 6.0% (4th straight quarter ≥6%), and record adjusted EPS $0.79; GAAP EPS $0.52 included $41M (~$0.11) of Ukraine missile-strike related costs .
  • Clear beat vs S&P consensus: revenue $6.804B vs $6.706B* and EPS $0.79 vs $0.757*; momentum underpinned by strong data center demand (Cloud + Power) and favorable mix .
  • Guidance raised across FY26: revenue to $26.7–$27.3B, adjusted operating margin to 6.2–6.3%, and adjusted EPS to $3.09–$3.17; Q3 guide: revenue $6.65–$6.95B, adj. EPS $0.74–$0.80 .
  • Stock narrative/catalysts: AI-led data center buildout, launch of Flex AI infrastructure platform (up to 30% faster deployment) and NVIDIA collaboration on modular AI “factories” (including 800V DC ecosystems), plus sustained margins ≥6% suggest further estimate upward bias if execution holds .

What Went Well and What Went Wrong

  • What Went Well

    • Record quarter: “Revenue came in at $6.8 billion… adjusted EPS of $0.79, up 23%” with adjusted operating margin 6.0%, fourth straight quarter at or above 6% .
    • Data center outperformance: business “continues to deliver outstanding results across both cloud and power,” and management still expects “data center revenue to grow at least 35% this year” .
    • Product/portfolio mix accretion: higher-value data center offerings (power, cooling, compute integration) seen as margin accretive; management reiterates sustained improvement in H2 on mix and execution .

  • What Went Wrong

    • Ukraine disruption: GAAP EPS absorbed $41M of asset impairments/inventory write-downs/other charges from the Mukachevo missile strike; revenue headwind ≈1% of company sales (~$100M in 2H) .
    • Consumer/Lifestyle softness: Agility benefited from cloud but faced weaker consumer/lifestyle trends; management flagged reduced lifestyle expectations tied to Ukraine facility shutdown .
    • FX/tariffs remain fluid: tariffs incorporated into guidance and “largely pass-through,” but situation remains dynamic; FX cited as an incremental headwind vs prior guide .

Financial Results

Headline results by quarter

MetricQ4 FY2025Q1 FY2026Q2 FY2026
Revenue ($B)$6.398 $6.575 $6.804
GAAP EPS ($)$0.57 $0.50 $0.52
Adjusted EPS ($)$0.73 $0.72 $0.79
GAAP Operating Income ($M)$305 $311 $296
Adjusted Operating Income ($M)$396 $395 $409

Q2 vs S&P Global consensus

MetricQ2 FY2026 ActualQ2 FY2026 Consensus
Revenue ($B)$6.804 $6.706*
Adjusted EPS ($)$0.79 $0.757*

Margins (Y/Y and sequential context)

MetricQ2 FY2025Q1 FY2026Q2 FY2026
Adjusted Gross Margin %8.5% 9.1% 9.3%
Adjusted Operating Margin %5.5% 6.0% 6.0%

Segment performance (Q2 FY2026)

SegmentRevenue ($B)Y/Y GrowthAdj. Operating Income ($M)Adj. Operating Margin %Y/Y Change
Reliability3.03%1976.5%+105 bps
Agility3.84%2276.0%-5 bps
Corporate/Other——(15)——

KPIs (cash and investment)

KPIQ4 FY2025Q1 FY2026Q2 FY2026
Operating Cash Flow ($M)433 399 453
Net Capex ($M)108 131 148
Free Cash Flow ($M)325 268 305

Additional Q2 cash metrics: net inventory -4% Y/Y, +1% Q/Q; inventory (net of advances) 55 days; buybacks ~$297M (~5.6M shares) .

Non-GAAP adjustments (Q2): Added back stock-based comp ($37M), intangible amortization ($16M), restructuring/impairment ($51M), legal/other ($9M), and tax adjustments (-$17M), producing adjusted net income of $300M and adjusted EPS $0.79 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY2026$25.9–$27.1 $26.7–$27.3 Raised
Adjusted EPS ($)FY2026$2.86–$3.06 $3.09–$3.17 Raised
Adjusted Operating Margin %FY2026N/A6.2%–6.3% Introduced/Up
Interest & Other ($M)FY2026N/A$180–$190 Introduced
Revenue ($B)Q3 FY2026N/A$6.65–$6.95 New
Adjusted Operating Income ($M)Q3 FY2026N/A$405–$435 New
Adjusted EPS ($)Q3 FY2026N/A$0.74–$0.80 New
Interest & Other ($M)Q3 FY2026N/A~$54 New
Adjusted Tax RateQ3 FY2026N/A21% New
Shares (WASO, M)Q3 FY2026N/A377 New

Earnings Call Themes & Trends

TopicQ4 FY2025 (Q-2)Q1 FY2026 (Q-1)Q2 FY2026 (Current)Trend
AI/data center“Strong demand from our data center customers” Strategic focus on data center & power; guidance raised Data center growing ≥35% FY26; launch AI infra platform; NVIDIA collaboration for modular AI factories Accelerating
Mix/marginsRecord adj margin for Q4 and FY25 Adj op margin 6.0% 6.0% again; H2 uplift from product/services mix Sustained/up
Tariffs/supply chainMacro risk acknowledged —Tariffs largely pass-through; embedded in guidance Manageable
Ukraine facility——~$41M GAAP charges; ~1% revenue site; ~$100M 2H headwind Headwind, contained
Automotive——Stabilizing; platform-agnostic compute wins across ICE/hybrid/EV Stabilizing
Capacity/Capex——New Dallas facility; EMEA/NA capacity; meaningful capex ahead for data center Increasing
Services/value-add——~“$1B range” historically referenced; margin lever; expanding Expanding

Management Commentary

  • Strategy: “We achieved a record Q2… shifting our portfolio toward higher margin businesses… confident in our data center position… as they navigate the AI era.” – CEO Revathi Advaithi .
  • Data center outlook: “We remain bullish… expect our data center revenue to grow at least 35% this year,” supported by proprietary products and global manufacturing .
  • Mix and margins: H2 margin improvement driven by growth in higher-margin products and services; both “perform above the Flex average” .
  • Tariffs: “Tariffs are largely a pass-through for us” and incorporated into guidance .
  • Capacity/Capex: Strong capacity in EMEA/NA; Dallas asset, U.S. cooling ramp (JetCool), expansions in Fontana, Colombia; “meaningful” capex over next 2–5 years for data center growth, while maintaining strong cash flow .

Q&A Highlights

  • Data center guide cadence: Management will update full-year data center growth at year-end; reiterated “at least 35%” for FY26 despite raising total revenue guidance by $500M .
  • Margin trajectory: Sequential H2 margin improvement driven by accretive growth in products and services; sustainability into FY27 expected as mix shifts continue .
  • Ukraine impact: Ukraine site ≈1% of revenue; IMPLIED ~$100M 2H headwind, but FY26 guidance raised nonetheless .
  • Cloud silicon mix: Participates in both custom and merchant; customization tends to be favorable; forward mix update planned at investor day .
  • Capacity and investments: Flex sees no near-term constraints; expanding in EMEA/NA; capex to rise with AI demand; continued internal AI/automation initiatives to drive productivity .

Estimates Context

  • Q2 FY26 performance vs S&P consensus: Revenue $6.804B vs $6.706B*; Adjusted EPS $0.79 vs $0.757* — both beats .
  • Forward consensus (S&P): Q3 FY26 EPS $0.786* and revenue $6.836B*; Q4 FY26 EPS $0.849* and revenue $6.895B*. Management’s Q3 guide (rev $6.65–$6.95B; EPS $0.74–$0.80) brackets consensus, implying a likely tighter in-line to modest beat scenario depending on mix and execution .
  • Disclaimer: *Values retrieved from S&P Global.

Forward consensus snapshots (S&P Global)

MetricQ3 FY2026Q4 FY2026
Revenue Consensus Mean ($B)6.836*6.895*
Primary EPS Consensus Mean ($)0.786*0.849*
Primary EPS – # of Estimates7*6*

Key Takeaways for Investors

  • Flex’s AI data center exposure is translating into sustained top-line growth and structurally higher margins (≥6% adj. operating margin four quarters running), with mix levers intact into H2 and FY27 .
  • Raised FY26 guidance across revenue, margins, and EPS signals continued estimate revision momentum; Q3 guide brackets S&P consensus with room to outperform if power/compute mix skews favorable .
  • Ukraine disruption is a contained headwind (~1% of revenue; ~$100M 2H impact), with GAAP EPS noise offset by strong non-GAAP execution and cash generation .
  • Platform strategy (grid-to-chip power, cooling, rack/compute integration) plus NVIDIA collaboration and an AI infrastructure platform (up to 30% faster deployment) deepen competitive moat and shorten deployment timelines for customers .
  • Cash discipline persists amid growth investments: Q2 FCF $305M, OCF $453M, and ongoing buybacks ($297M) while capex scales to capture AI demand .
  • Watch sensitivities: consumer/lifestyle softness and FX/tariffs (largely pass-through) remain variables; management confidence suggests upside skew if macro stabilizes .
  • Near-term trading lens: beat-and-raise quarter with AI catalysts and H2 acceleration implied; any pullbacks on macro/consumer headlines could be opportunities given secular AI buildout and Flex’s mix-driven margin path .

References:

  • Q2 FY26 8-K/Press release and schedules
  • Q2 FY26 earnings call transcript (prepared remarks + Q&A)
  • Q2 FY26 earnings slides (financials, segments, reconciliations)
  • Q1 FY26 8-K/Press release
  • Q4 FY25 8-K/Press release
  • NVIDIA collaboration press release ; Flex AI infrastructure platform press release ; Ukraine facility release

S&P Global estimates: Denoted with an asterisk (*) and used in consensus comparisons and forward estimates. Values retrieved from S&P Global.