Q2 2025 Earnings Summary
- Jabil's AI-related revenue is expected to reach $7.5 billion in FY '25, representing a 40% year-over-year growth. This strong growth is driven by robust demand in cloud data center infrastructure and semiconductor capital equipment testing, with no signs of slowdown despite industry concerns .
- Jabil is well-positioned in the rapidly growing silicon photonics market, thanks to the acquisition from Intel that provided advanced capabilities, including 1.6T transceiver modules . The company is actively working with hyperscalers and expects significant future growth in this area .
- Jabil's liquid cooling acquisition is performing exceptionally well, opening new opportunities for vertical and customized solutions in data center infrastructure. This segment holds significant potential for future growth that is not yet included in the company's forecasts.
- Reduced Outlook in 5G Infrastructure: The company has lowered its forecast for networking and health care for fiscal '25, primarily due to uncertainties in the 5G infrastructure market and with network providers. This reduction reflects challenges and potential headwinds in these sectors.
- Projected Revenue Deceleration: The guidance for the year implies a meaningful deceleration in revenue as the company moves through the summer months into the fall. This slowdown may be a result of cautiousness due to uncertain demand, potential tariff impacts, and broader macroeconomic factors.
- Weakness in Connected Living & Digital Commerce Margins: The margins in the Connected Living & Digital Commerce segment have shown weakness, attributed to lower revenue leverage and seasonality effects. This softness in a key segment could impact the company's overall profitability.
| Metric | YoY Change | Reason |
|---|---|---|
Net Revenue | –0.6% (from $6.767B in Q2 2024 to $6.728B in Q2 2025) | A modest decline reflecting ongoing market softness and lower demand in key end markets, consistent with previous period trends where competitive pressures and demand adjustments were evident. |
Gross Profit | –8.6% (from $630M in Q2 2024 to $576M in Q2 2025) | An 8.6% decline in gross profit suggests margin pressure and a less favorable product mix compared to the prior year, where higher cost pressures and changes in revenue composition were already impacting profitability. |
Operating Income | –78% (from $1.131B in Q2 2024 to $245M in Q2 2025) | A drastic drop of nearly 78% is primarily due to increased operating expenses and likely one-off costs or restructuring items compounded by the lower revenue base; earlier period high-margin contributions dwindled as divestitures and cost adjustments carried forward had a heavy impact. |
Net Income | –87% (from $927M in Q2 2024 to $117M in Q2 2025) | An 87% decline in net income reflects the severe reduction in operating income combined with tax, interest, and extraordinary expense impacts—effects that were already emerging in the prior period and have now intensified in the current quarter. |
Basic EPS | –85% (from $7.31 in Q2 2024 to $1.06 in Q2 2025) | The over 85% drop in Basic EPS is a direct consequence of lower net income along with potential changes in share count due to treasury actions, echoing the dramatic bottom-line compression seen in the prior period's earnings. |
Segment Spotlight – Regulated Industries | –7% (decline from $2,957M in Q1 2025 to $2,741M in Q2 2025) | A 7% decline in revenue for the Regulated Industries segment is attributable to continued weakness in underlying markets like renewable energy and automotive sectors, building on soft performance observed in the previous quarter. |
Geographic Composition – Foreign Revenue | Decrease to 77.0% in Q2 2025 (down from higher levels previously) | Foreign revenue now represents 77.0% of total revenue, reflecting a downward trend likely driven by the divestiture of high foreign-revenue generating businesses and a relative shift toward domestic revenue, as noted by earlier period adjustments. |
Operating Cash Flow | Declined to $334M in Q2 2025 (vs. stronger performance previously) | A reduction in operating cash flow indicates that working capital adjustments—such as increases in receivables, inventories, and contract assets—were more pronounced in the current period, following trends seen earlier where timing issues began impacting cash generation. |
Net Cash Used in Financing Activities | Improvement from –$620M in Q1 2024 to –$434M in Q2 2025 | A decrease in cash outflows for financing is driven by lower share repurchase spending and reduced debt repayments compared to the previous period, reflecting a moderation in capital allocation activities. |
Balance Sheet Snapshot (Stockholders’ Equity) | High leverage with equity at $1,358M vs. assets of $17,396M (liabilities $16,038M) | The balance sheet shows a high leverage profile, resulting from cumulative low net income, sizable treasury stock and dividend payments, and slower equity growth relative to liabilities—factors that have been accumulating over previous periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Company Revenue | Q3 2025 | $6.1B to $6.7B | $6.7B to $7.3B | raised |
Core Operating Income | Q3 2025 | $286M to $346M | $348M to $408M | raised |
GAAP Operating Income | Q3 2025 | $183M to $263M | $282M to $352M | raised |
Core Diluted EPS | Q3 2025 | $1.60 to $2.00 | $2.08 to $2.48 | raised |
GAAP Diluted EPS | Q3 2025 | $0.69 to $1.27 | $1.50 to $1.99 | raised |
Quarterly Net Interest Expense | Q3 2025 | $60 million | $61 million | raised |
Quarterly Core Tax Rate | Q3 2025 | 21% | 21% | no change |
Regulated Industries Revenue | Q3 2025 | no prior guidance | $3 billion (down 1% YoY) | no prior guidance |
Intelligent Infrastructure Revenue | Q3 2025 | no prior guidance | $2.8 billion (up 22% YoY) | no prior guidance |
Connected Living & Digital Commerce Revenue | Q3 2025 | no prior guidance | $1.2 billion (down 16% YoY) | no prior guidance |
FY Total Revenue | FY 2025 | $27.3 billion | $27.9 billion | raised |
FY Core Operating Margins | FY 2025 | 5.4% | 5.4% | no change |
FY Core EPS | FY 2025 | $8.70 | $8.95 | raised |
FY Free Cash Flow | FY 2025 | $1.2 billion | Exceed $1.2 billion | raised |
FY Net Interest Expense | FY 2025 | $235 million | $240 million to $245 million | raised |
FY Net Capital Expenditures | FY 2025 | no prior guidance | 1.5% to 2% of revenue | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q2 2025 | $6.1B to $6.7B | $6.728B | Beat |
GAAP Operating Income | Q2 2025 | $183M to $263M | $245M | Met |
GAAP Diluted EPS | Q2 2025 | $0.69 to $1.27 | $1.05 | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
AI Revenue Growth | Consistently cited with strong year‐on‐year increases and expanded guidance in Q1 2025, Q4 2024, and early Q3 2024 | Q2 2025 call emphasized robust AI-related revenue growth, with guidance increased to $7.5B and strong momentum in data cloud and intelligent infrastructure | Consistently positive with accelerating guidance and higher growth outlook |
Cloud Data Center Infrastructure Demand | Mentioned in Q1 2025 and Q4 2024 highlighting growing demand but also noting pricing and capacity concerns; Q3 2024 addressed technology transitions | Q2 2025 stressed strong demand and momentum with a focus on GPU-led system design and capacity expansion | Positive and strengthening demand with improved technological positioning |
Semiconductor Capital Equipment Testing and ATE Expansion | Q1 2025 and Q4 2024 discussed growth in Automated Test Equipment driven by new chip technologies; Q3 2024 noted softness and delayed recovery | Q2 2025 reiterated robust performance and sequential growth tied to increased testing requirements, driven by evolving technologies | Generally positive outlook amid technical transitions, though earlier periods highlighted early softness |
Silicon Photonics | Addressed across Q1 2025, Q4 2024, and Q3 2024 with emphasis on initial growth from Intel acquisition and emerging hyperscale opportunities | Q2 2025 featured strong positioning, revenue from hyperscalers, and an optimistic outlook with upcoming technology showcases | Improving significantly with enhanced capabilities and expanded customer opportunities |
Liquid Cooling Acquisition | Q1 2025 and Q4 2024 discussed the strategic acquisition for engineering capabilities and its long-term potential; Q3 2024 noted transition from legacy cooling | Q2 2025 highlighted strong performance and its role in verticalizing customized data center solutions, with ongoing customer discussions | Positive long-term impact with growing recognition as a strategic differentiator |
5G Infrastructure | Q4 2024 and Q3 2024 reflected market softness and reduced forecasts with notable declines; Q1 2025 had no mention | Q2 2025 reported reduced outlook for 5G infrastructure citing uncertainty with network providers and offsetting Intelligent Infrastructure strength | Continuing weakness and bearish sentiment on future short-term growth |
Revenue Deceleration and Macroeconomic Headwinds | Consistently noted in Q1 2025, Q4 2024, and Q3 2024 with emphasis on revenue declines, tariff impacts, and cost pressures | Q2 2025 again emphasized cautious guidance amid uncertain macroeconomic conditions, with segmented performance offset by headwinds | Persistent caution with stable negative sentiment despite strong segments in parts |
Operating Margin Pressures vs. Margin Improvement Prospects | Q1 2025 and Q3 2024 noted seasonality, capacity issues, and transitional pressures alongside prospects from cost optimization; Q4 2024 detailed mix and underutilization challenges | Q2 2025 reported improved margins in key segments (e.g. Intelligent Infrastructure up 110bp) while acknowledging pressures in segments like Regulated Industries | Mixed sentiment with clear improvement prospects in high-growth areas despite ongoing pressures |
Weakness in Connected Living & Digital Commerce margins | Q1 2025 identified distinct pressures in consumer-driven Connected Living versus strengths in Digital Commerce; Q4 2024 briefly noted subdued consumer demand; Q3 2024 did not mention | Q2 2025 noted current margin weakness (e.g. 4.5% core margin) driven by divestitures and seasonal effects but optimism for digital commerce growth remains | Persistent challenges in consumer segments while digital parts offer a cautious positive counterbalance |
Intelligent Infrastructure Segment Performance | Receives consistent focus in Q1 2025, Q4 2024, and indirectly in Q3 2024, with mentions of steady revenue growth and strategic exits boosting growth metrics | Q2 2025 highlighted significant revenue growth (18% y/y) and margin improvements with robust AI-driven outcomes and promising near-term guidance | Consistently strong and emerging as a key growth driver with very positive sentiment |
Challenges in Renewable Energy and EV Markets | Q1 2025 and Q4 2024 noted softness and capacity underutilization; Q3 2024 highlighted overcapacity and soft automotive recoveries | Q2 2025 again communicated challenges with renewable energy (down 8% y/y) and ongoing cautious sentiment on EVs | Continuing negative near-term sentiment with cautious outlook on recovery |
Portfolio Optimization and Business Reshaping Strategies | Q4 2024 and Q3 2024 provided explicit details on divestitures (mobility, legacy networking) and restructuring to focus on higher-margin areas | Q2 2025 implied portfolio optimization through reference to exits (legacy networking) and focus on AI/data center growth, but with less explicit discussion | A recurring theme with a slightly reduced active emphasis in Q2 2025 compared to earlier deep dives |
GLP-1 Drugs Demand and Capacity Expansion in Healthcare | Q4 2024 and Q3 2024 addressed GLP-1 impacts on medical devices and capacity expansions; Q1 2025 noted sustained over-demand and long ramp cycles | Q2 2025 emphasized very strong demand supported by a recent pharmaceutical acquisition, expanded U.S. manufacturing space, and growth potential in drug delivery | Emerging as a bright spot with robust demand and capacity expansion plans, indicating large future impact |
Healthcare Segment Challenges in Medical Devices | Q4 2024 and Q3 2024 discussed decreased volumes in medical devices due to the impact of GLP-1 drugs and shifting device demand; Q1 2025 mentioned lengthy ramp cycles and evolving qualification challenges | Q2 2025 had no specific discussion on medical devices challenges, suggesting a relative de‐emphasis in the current period | Potentially less emphasized in Q2 2025, though challenges remain a factor for long-term performance |
Geopolitical Risks and Robust Supply Chain Positioning | Q1 2025, Q4 2024 and Q3 2024 emphasized strong global manufacturing etc., with a focus on adapting to tariffs and geopolitical shifts | Q2 2025 reiterated strong U.S. positioning, robust global footprint, and minimal tariff exposure as key competitive advantages | Consistently robust and reassuring across periods, with steady positive sentiment regarding resilience |
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Tariff Impacts
Q: How will tariffs affect your guidance and operations?
A: Michael explained that their exposure to tariffs is minimal, with little impact from China, Canada, or Mexico. They are being prudent in their guidance but see potential opportunities as tariffs could level the manufacturing playing field. Reciprocal tariffs remain uncertain, but they believe they are well-positioned to navigate these complexities. -
Intelligent Infrastructure Growth
Q: What's driving the increased confidence and growth in Intelligent Infrastructure?
A: Michael noted significant growth in their Intelligent Infrastructure segment, driven by strong performance in semiconductor capital equipment, particularly automated testing, and continued momentum in cloud data center infrastructure. AI revenue has been increased to $7.5 billion, reflecting a 40% growth rate year-over-year. -
Silicon Photonics Opportunity
Q: Can you elaborate on the opportunity with silicon photonics?
A: Michael highlighted that their silicon photonics business is progressing well. The acquisition from Intel provided capabilities in clean rooms and engineering. They are showcasing 1.6T capability and see strong potential, with current revenue of $300 million to $400 million with a hyperscaler and plans to expand further. -
Margin Outlook in Connected Living & Digital Commerce
Q: What's causing weakness in margins for Connected Living & Digital Commerce?
A: Michael explained that the year-over-year comparison is skewed due to the previous inclusion of Mobility. Despite seasonality effects, margins are progressing reasonably well, and they are excited about growth opportunities in Digital Commerce, including humanoids and warehouse automation. -
Prudent Guidance Amid Uncertainty
Q: Are you being cautious in your guidance due to demand concerns?
A: Gregory stated that they are exercising prudence in their guidance, given the current environment. This caution is applied broadly across all end markets, despite strong demand in areas like cloud and data center. -
Supply Chain Dynamics
Q: Has there been a change in how customers manage sourcing due to supply chain dynamics?
A: Michael acknowledged ongoing discussions about localizing supply chains but noted that significant shifts would take multiple quarters. No major changes have occurred yet, but they are actively engaging with customers on this topic. -
Auto and Transport Segment Outlook
Q: How confident are you in EV production forecasts for the second half?
A: Michael mentioned that they are being more prudent with forecasts in the Auto and Transport segment. While there are reductions, they are offset by strong performance with a Chinese OEM and other projects, resulting in a balanced outlook. -
Impact of Divestitures on Growth Rates
Q: How do divestitures affect your year-over-year growth comparisons?
A: Gregory explained that excluding the legacy networking business, their year-over-year growth would have been 8.5%, and Intelligent Infrastructure growth would have been 37% instead of the reported 18%. -
M&A and New Capabilities
Q: Are there opportunities for new capabilities through M&A?
A: Michael highlighted their recent pharmaceutical acquisition, which is generating strong interest from pharmaceutical companies. They continue to seek capability-driven acquisitions to fill gaps and open new markets, following their historical approach of making strategic tuck-in acquisitions. -
GPU Racks and Liquid Cooling Acceleration
Q: Can you elaborate on the acceleration in GPU racks and liquid cooling?
A: Michael attributed improved yields at launch to their design architecture and engineering capabilities. The liquid cooling acquisition is opening new opportunities for vertical solutions and customized offerings, with significant growth potential expected in the medium to long term. -
Tweaked Down Networking and Healthcare Forecasts
Q: Why did you reduce networking and healthcare forecasts for fiscal '25?
A: Michael stated that the slight reduction is mainly due to uncertainty in the 5G infrastructure segment, while other areas like switch gear remain strong. -
Co-Packaged Optics (CPO) Positioning
Q: How is Jabil positioned for Co-Packaged Optics developments?
A: Michael affirmed that they are well-positioned in CPO, especially in switching gear development lines. With capabilities in silicon photonics and embedded laser technology, they anticipate significant growth in the next few years.
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