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JABIL INC (JBL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY25 delivered $6.99B net revenue, GAAP diluted EPS $0.88, and core diluted EPS $2.00, with core operating margin ~5%; results were stronger than anticipated, driven by Cloud, Data Center Infrastructure, and Digital Commerce end-markets .
  • Guidance increased: FY25 revenue raised to $27.3B (from $27.0B), core EPS to $8.75 (vs $8.65), with core operating margin held at 5.4% and adjusted FCF at $1.2B .
  • Q2 FY25 outlook: revenue $6.1B–$6.7B; GAAP EPS $0.69–$1.27; core EPS $1.60–$2.00; core OI $286M–$346M; core tax rate 21%; net interest expense ~$60M .
  • Catalysts: strengthened AI/Cloud momentum (AI-related revenue raised to ~$6.5B for FY25), deepening hyperscaler relationships, and continued buybacks ($232M in Q1; $768M remaining on $1B authorization) .

What Went Well and What Went Wrong

What Went Well

  • AI/Cloud and Data Center strength: “incremental strength in our Cloud, Data Center Infrastructure, and Digital Commerce end-markets” drove a stronger quarter; core EPS and cash flow were solid .
  • Segment execution: Intelligent Infrastructure revenue up ~5% YoY with core margin 4.8%; Digital Commerce/warehouse automation up ~12% YoY ex-mobility, core margin 5.8% .
  • Capital return and FCF: Adjusted FCF of $226M in Q1; repurchased 1.8M shares for $232M; plan to complete $1B buyback in FY25 (80% of FCF to buybacks) .

What Went Wrong

  • Continued weakness in EV and renewables: Regulated Industries revenue down ~7% YoY; renewables (solar) and EV softness weighed on segment margins .
  • Hurricane impacts: ~10–20bps core margin headwind in Q1 from Helene/Milton; business interruption and impairment charges of $9M recognized .
  • Mobility divestiture drove headline declines: Connected Living & Digital Commerce revenue down 46% YoY, though ex-mobility it grew ~12% .

Financial Results

Headline Financials versus Prior Quarters

MetricQ3 FY24Q4 FY24Q1 FY25
Net Revenue ($USD Billions)$6.77 $6.96 $6.99
GAAP Operating Income ($USD Millions)$261 $318 $197
Core Operating Income ($USD Millions)$350 $401 $347
Gross Profit ($USD Millions)$608 $663 $606
GAAP Diluted EPS ($USD)$1.06 $1.18 $0.88
Core Diluted EPS (Non-GAAP) ($USD)$1.89 $2.30 $2.00

Margin Profile

MarginQ3 FY24Q4 FY24Q1 FY25
Gross Margin %9.0% (608/6,765) 9.5% (663/6,964) 8.7% (606/6,994)
Core Operating Margin %5.2% (350/6,765) 5.8% (401/6,964) ~5.0%

YoY Comparison (Quarterly)

MetricQ1 FY24Q1 FY25
Net Revenue ($USD Billions)$8.39 $6.99
GAAP Diluted EPS ($USD)$1.47 $0.88
Core Diluted EPS (Non-GAAP) ($USD)$2.60 $2.00
GAAP Operating Income ($USD Millions)$303 $197
Core Operating Income ($USD Millions)$499 $347

Segment Breakdown (Q1 FY25)

SegmentRevenue ($USD Billions)Core Margin %
Regulated Industries~$3.0 4.7%
Intelligent Infrastructure~$2.5 4.8%
Connected Living & Digital Commerce~$1.5 5.8%

KPIs (Q1 FY25)

KPIValue
Cash from Operations ($USD Millions)$312
Net CapEx ($USD Millions)$86
Adjusted Free Cash Flow ($USD Millions)$226
Inventory Days (net of deposits)56 days
Cash & Equivalents ($USD Billions)~$2.06–$2.10 (period-end $2.06; balance referenced ~$2.1)
Debt to Core EBITDA~1.4x
Net Interest Expense (Q1)~$60M
Shares Repurchased1.8M for $232M
Normalized Core Tax Rate21% (Q2 & FY25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueQ1 FY25$6.3B–$6.9B $6.99B actual Beat upper end
GAAP Diluted EPSQ1 FY25$0.26–$0.83 $0.88 actual Beat upper end
Core Diluted EPS (Non-GAAP)Q1 FY25$1.65–$2.05 $2.00 actual In-range (high end)
Core Operating IncomeQ1 FY25$304M–$364M $347M actual In-range (high end)
Net RevenueQ2 FY25—$6.1B–$6.7B New
GAAP Diluted EPSQ2 FY25—$0.69–$1.27 New
Core Diluted EPS (Non-GAAP)Q2 FY25—$1.60–$2.00 New
Core Operating IncomeQ2 FY25—$286M–$346M New
Net RevenueFY25$27.0B $27.3B Raised
Core Operating MarginFY255.4% 5.4% Maintained
Core Diluted EPS (Non-GAAP)FY25$8.65 $8.75 Raised
Adjusted Free Cash FlowFY25$1.2B $1.2B Maintained
DividendNext declared—$0.08 per share (rec 2/18/25; pay 3/4/25) Confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY24, Q4 FY24)Current Period (Q1 FY25)Trend
AI/Cloud & HyperscalersTransformation year; AI datacenter growth Stronger-than-anticipated quarter from Cloud/DCI; deepening largest hyperscaler; second hyperscaler wins in silicon photonics; AI revenue outlook raised to ~$6.5B Accelerating
Semi-cap equipment (ATE/WFE)Expecting benefits from semi-cap trends ATE strength; modest WFE recovery; node transitions (3nm→2nm) require added testing Improving H2
Supply chain & rampsManaged transitions; warehouse automation growing Q1 ramps in DCI/warehouse automation weigh on margins early; improving H2 Near-term margin drag; later benefit
Tariffs/MacroGeopolitical sensitivity acknowledged Tariffs historically pass-through; local-for-local China exposure; US/Mexico footprint readiness Manageable
EV/Auto & TransportEnd-market softness EV/renewables weak; cautious post-election; tech-agnostic capabilities across ICE/hybrid/EV Cautious
Health care (GLP-1, CGM)Pipeline and long qualification cycles Croatia site supports GLP-1 by FY27; multi-year stable returns post-ramp Building capacity
US manufacturing footprintGlobal footprint as advantage 30 US sites; rapid site setup capability; battery power mgmt ramps; flexibility to move programs Strategic advantage
Cost optimizationNoted restructuring plans Cost initiatives to lift margins, with biggest benefit in Q4 Margin tailwind H2

Management Commentary

  • “I am very pleased with our first fiscal quarter results…driven by incremental strength in our Cloud, Data Center Infrastructure, and Digital Commerce end-markets… We now anticipate approximately $27.3 billion in net revenue… Core earnings per share now are expected to be $8.75… robust adjusted free cash flow generation of $1.2 billion” — CEO Mike Dastoor .
  • “Core operating margins came in at 5% in spite of a roughly 10 to 20 basis points of hurricane-related impact… Net interest expense in Q1 came in better than anticipated at $60 million” — CFO Greg Hebard .
  • “We continue to deepen our existing relationship with our largest hyperscaler… won programs with a new hyperscaler in the silicon photonics side” — CEO Mike Dastoor .
  • “We repurchased 1.8 million shares for $232 million… $768 million remaining on our current $1 billion share repurchase authorization” — CFO Greg Hebard .

Q&A Highlights

  • Segment margins: Management expects all three segments to be “north of 5%” over time; current drag from underutilization in EV/renewables, with Intelligent Infrastructure above 5% and Connected Living’s Digital Commerce higher-margin growth .
  • AI outlook raised: FY25 AI-related revenue outlook increased to ~$6.5B (+$0.5B), with ~$0.4B uplift from Cloud/DCI and ~$0.1B from semi-cap; deeper hyperscaler engagement and silicon photonics scaling to 800G/1.6T .
  • Capital allocation: 80% of FCF to buybacks; committed to complete $1B authorization in FY25; buybacks weighted to H1 .
  • Tariffs: Historically pass-through to customers; readiness to reverse “lift-and-shift” between Mexico and US; automation/robotics as key enablers .
  • Inventory: Net inventory targeted 55–60 days; back-half expected at lower end of range .
  • H2 margin drivers: Seasonality post-mobility divestiture, semi-cap recovery, and cost optimization support 2H EPS/margin strength .

Estimates Context

  • S&P Global consensus for Q1 and Q2 FY25 EPS and revenue was unavailable due to request limits at time of analysis; comparison to Street estimates cannot be provided. We attempted retrieval via S&P Global and were blocked by the “Daily Request Limit Exceeded.”
  • Recommendation: update this section once S&P Global consensus data is accessible to quantify beats/misses versus Wall Street.

Key Takeaways for Investors

  • Back-half weighted year: Expect stronger margins/EPS in H2 on semi-cap recovery, normalized ramps, and cost optimization execution .
  • AI/Cloud as core growth vector: Raised AI-related revenue outlook to ~$6.5B with expanding hyperscaler programs and silicon photonics scaling; supports Intelligent Infrastructure momentum .
  • Mix and margin dynamics: Early-quarter ramps and hurricane headwinds suppressed margins, but enterprise-level margins in Cloud/DCI and above-enterprise in semi-cap support FY25 core margin target (5.4%) .
  • Capital returns underpin valuation: Ongoing buybacks ($232M in Q1; $768M remaining), stable dividend ($0.08/sh next declared), and strong FCF ($1.2B FY25 target) enhance TSR potential .
  • EV/renewables risk management: Cautious near term outlook; diversified, tech-agnostic capabilities across ICE/hybrid/EV and share gains position for eventual recovery .
  • Operational resilience: Rapid site recovery and setup (hurricanes; new sites like Croatia), robust working capital (net inventory days ~56), and local-for-local strategy mitigate macro/tariff risks .
  • Trading implications: Near-term sentiment supported by raised FY25 outlook and Q1 beats versus internal guidance; watch Q2 progress on segment growth mix (Intelligent Infrastructure vs Regulated Industries) and any additional hyperscaler program updates .