Executive Summary

Flex delivered a very strong Q3 FY2025: revenue $6.56B (+2% YoY), record adjusted operating margin 6.1% and record non-GAAP EPS $0.77; GAAP EPS was $0.67 .
Results materially exceeded company’s prior Q3 guidance (revenue $6.0–$6.4B; adj. EPS $0.60–$0.66; adj. OI $335–$365M) with $6.56B revenue, $0.77 adj. EPS and $399M adj. operating income, driven by mix and efficiency and outsized strength in data center, health, and consumer-related end markets .
Data center remained the standout: ~45% YoY growth in Q3 with similarly strong growth expected again in Q4; management reiterated multi-year ~20% CAGR view given cyclical digestion patterns but sustained secular drivers (dense compute, power needs) .
FY2025 outlook raised: revenue to $25.4–$25.8B (from $24.9–$25.5B) and adj. EPS to $2.57–$2.65 (from $2.39–$2.51). Q4 guide: revenue $6.0–$6.4B, adj. EPS $0.65–$0.73; adj. tax ~19% and interest/other ~$45M .
S&P Global consensus estimates were not accessible at the time of analysis due to access limits; comparisons vs Street are therefore unavailable. We instead benchmark against company guidance and prior periods (will update upon request).

What Went Well and What Went Wrong

What Went Well
- Record profitability: adjusted operating margin hit 6.1% (first “6-handle”), and non-GAAP EPS reached a record $0.77; management credited portfolio mix and factory efficiency across all business units .
- Data center outperformance: ~45% YoY growth with strength in hyperscale cloud integration and power portfolio; acquisitions (JetCool, Crown) broadened capabilities (direct-to-chip liquid cooling; medium-voltage power) .
- Cash generation and capital returns: Q3 free cash flow $306M; YTD FCF $757M; Q3 share repurchases $200M; net inventory days normalized ~56 .
What Went Wrong
- Auto softness: Automotive remains challenged by weak macro dynamics, muting Reliability segment growth even as power and medical offset .
- Mixed end-market backdrop: Core industrial softer than previously expected; medical equipment still stabilizing though devices remain strong .
- Tax and seasonality headwinds to Q4 EPS: Q4 EPS guided down ~10% sequentially (still up ~20% YoY) due primarily to higher tax rate despite margin holding around 6% .

Financial Results

Flex headline results by quarter (oldest → newest)

Metric	Q1 FY2025	Q2 FY2025	Q3 FY2025
Revenue ($B)	$6.31	$6.55	$6.56
GAAP EPS ($)	$0.34	$0.54	$0.67
Non-GAAP EPS ($)	$0.51	$0.64	$0.77
Adjusted Operating Income ($M)	$306	$358	$399
Adjusted Operating Margin (%)	4.8%	5.5%	6.1%
Gross Margin (%)	7.8%	8.5%	9.3%

Q3 FY2025 vs prior quarter, prior year, and guidance

Metric	Q2 FY2025	Q3 FY2024	Q3 FY2025 Actual	Q3 FY2025 Company Guidance
Revenue ($B)	$6.55	$6.42	$6.56	$6.0–$6.4
GAAP EPS ($)	$0.54	$0.45	$0.67	$0.42–$0.48 (Q3 guide provided in Q2 PR)
Non-GAAP EPS ($)	$0.64	$0.54	$0.77	$0.60–$0.66
Adjusted Operating Income ($M)	$358	$314	$399	$335–$365
Gross Margin (%)	8.5%	—	9.3%	—

Notes: Management cited record Q3 gross profit $610M (9.3% GM) , while the GAAP schedule shows gross profit of $594M (implies ~9.1% on GAAP basis) . The difference likely reflects non-GAAP adjustments; reconciliations are provided in the press release schedules .

Segment breakdown (Q3 FY2025)

Segment	Revenue ($B)	Operating Income ($M)	Operating Margin (%)
Reliability Solutions	$3.0	$198	6.7%
Agility Solutions	$3.6	$227	6.3%

Selected KPIs

KPI	Q2 FY2025	Q3 FY2025
Free Cash Flow ($M)	$219	$306
Net Inventory Days	High 50s	~56 days
Share Repurchases ($M)	$300	$200
Net CapEx ($M)	$100	$107
Cash Balance ($B)	~$2.6	~$2.3
Data Center YoY Growth	~40%	~45%

Guidance Changes

Company-raised FY2025 outlook and Q4 FY2025 guide

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	FY2025	$24.9–$25.5	$25.4–$25.8	Raised
GAAP EPS ($)	FY2025	$1.77–$1.89	$2.02–$2.10	Raised
Adjusted EPS ($)	FY2025	$2.39–$2.51	$2.57–$2.65	Raised
Adjusted Operating Margin (%)	FY2025	5.4%–5.5%	5.6%–5.7%	Raised
Revenue ($B)	Q4 FY2025	—	$6.0–$6.4	New
Adjusted Operating Income ($M)	Q4 FY2025	—	$360–$400	New
GAAP EPS ($)	Q4 FY2025	—	$0.48–$0.56	New
Adjusted EPS ($)	Q4 FY2025	—	$0.65–$0.73	New
Interest & Other ($M)	Q4 FY2025	—	~$45	New
Adjusted Tax Rate	Q4 FY2025	—	~19%	New
Diluted Shares (M)	Q4 FY2025	—	~394	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY2025 and Q2 FY2025)	Current Period (Q3 FY2025)	Trend
AI/Data center growth and strategy	Q1: Unique “grid-to-chip” power + IT integration; long-term ~20% CAGR; strong ramps; power portfolio scaling . Q2: Data center +40% YoY; portfolio announcements (OCP, JetCool partnership), CESS with Musashi; Crown acquisition announced .	Q3: ~45% YoY growth; expect similar in Q4; long-term ~20% CAGR reiterated despite “noise” (e.g., DeepSeek); tailored hyperscaler solutions; JetCool, Crown closed .	Momentum building; confidence intact, portfolio breadth expanding.
Supply chain/tariffs/regionalization	Q1: Prepared to help customers navigate tariffs; resilient footprint . Q2: Continued planning for tariff scenarios; regionalization support .	Q3: Tariffs seen as pass-through; Flex ready to pivot manufacturing; biggest US constraint is labor; automation/AI to lower landed costs .	Ongoing flexibility; sees opportunity amid policy shifts.
Automotive	Q1: Outperform market via content; EV/hybrid agnostic content; some macro pressure . Q2: Macro-related slowing in auto muting 2H .	Q3: Auto remains soft but long-term powertrain/compute transitions intact; Reliability margins still improved .	Near-term headwind; long-term thesis intact.
Health/Med devices	Q1: Med devices strong; med equipment soft but stabilizing . Q2: Power + medical device mix aiding margins .	Q3: Medical devices strong; GLP-1 injector wins; med equipment stabilizing through CY25 .	Strength in devices; equipment bottoming.
Margin trajectory	Q1: Adj op margin 4.8% (up 50 bps YoY) . Q2: Record 5.5%; reiterated path to 6%+ long-term .	Q3: First “6-handle” (6.1%); expect ~6% again in Q4; mix + efficiency across every BU .	Ahead of schedule; sustainable mix/efficiency drivers.
Services/vertical integration	Q1: ~$1B services; expanding across end markets . Q2: EMS + products + services highlighted; cross-sell in data center .	Q3: Tailored hyperscaler solutions; JetCool enhances engineering/cooling IP; Crown adds US power pods/utility connection .	Increasing differentiation via integrated stack.

Management Commentary

“We had a very strong Q3, delivering another record quarterly operating margin and EPS. Revenue came in at $6.6 billion, with operating margins at 6.1% and EPS of $0.77… this is the first quarter we achieved operating margin above 6%... We expect a six handle again in Q4.” — Revathi Advaithi, CEO .
“This consistent margin improvement… is coming from improving mix and efficiency in every business unit… It’s not just one or two driving it.” — Kevin Krumm, CFO .
“Our data center business grew a robust 45% year-over-year… We continue to see sustained demand in our hyperscale cloud integration programs and our power portfolio resulting from AI-driven cloud expansion.” — Revathi Advaithi .
“For Flex, tariffs are a pass-through cost… There can sometimes be a lag in recovery timing, but it hasn’t been a big issue.” — Revathi Advaithi .

Q&A Highlights

Data center trajectory: Management expects 40%+ YoY growth to continue into Q4, with long-term ~20% CAGR to account for digestion cycles; recent AI headlines (e.g., DeepSeek) do not change infrastructure build-out plans heard from customers/suppliers .
Margin sustainability: Achieving 6% ahead of prior FY2027 aspiration; drivers are portfolio mix upgrades and factory efficiencies; expect fluctuations but targeting ~6% again in Q4; FY2026 specifics deferred to next guide .
Manufacturing footrpint and tariffs: Flex can shift production geographically; space is plentiful in the US, with labor the bigger constraint; automation and AI expected to reduce landed costs over time .
Customer diversification in data center: Exposure spans multiple hyperscalers and colos; Crown expands US medium-voltage/power pod capabilities; JetCool enhances liquid cooling; growth primarily via increased wallet share with existing customers .
Q4 seasonality and EPS: Q4 revenue guide reflects typical ~6% sequential decline; EPS down ~10% sequentially mainly due to tax rate shift, still up ~20% YoY; margins expected similar to Q3 (~6.1%) .

Estimates Context

S&P Global consensus (revenue, EPS) was not accessible at the time of analysis due to request limits; therefore, we could not include Street comparisons. We benchmark Q3 results against company guidance instead and will update with SPGI consensus upon request .

Key Takeaways for Investors

Mix-led structural margin story: Crossing 6% adjusted operating margin earlier than planned reflects durable mix and efficiency gains across BUs; management sees runway from additional products, services, and automation .
Data center remains the growth flywheel: ~45% YoY in Q3 with similar growth expected in Q4; strategic M&A (JetCool, Crown) adds cooling and medium-voltage power capabilities to deepen “grid-to-chip” differentiation .
FY25 raised: Revenue and adjusted EPS guidance increased; Q4 guide implies stable margins despite normal seasonality and higher tax rate; execution remains strong .
Auto is the main near-term watch item: Macro softness persists, but content-led and compute/powertrain transitions support longer-term trajectory; Reliability margins still advanced to a record level in Q3 .
Cash returns supported by robust FCF: $306M FCF in Q3; inventory normalized; continued buybacks provide capital return lever while investing in growth .
The narrative that moves the stock: Durable “above-cycle” profitability driven by AI data center seculars and power + cooling content expansion; any signs of sustained 6%+ margins and continued data center momentum are likely to be catalysts, while auto macro and broader demand/seasonality remain balancing factors .

FLEX LTD. (FLEX)·Q3 2025 Earnings Summary