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JABIL INC (JBL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 revenue was $6.73B, core EPS $1.94, and GAAP EPS $1.06; revenue and core EPS exceeded internal expectations and beat S&P Global consensus, driven by strength in capital equipment, cloud/data center infrastructure, and digital commerce .
  • Management raised FY25 outlook: net revenue to $27.9B (from $27.3B), core EPS to $8.95 (from $8.75), and reiterated core margin at 5.4% and adjusted FCF at $1.2B+ .
  • Q3 FY25 guidance calls for revenue of $6.7–$7.3B, GAAP EPS of $1.50–$1.99, and core EPS of $2.08–$2.48; segment guidance highlights continued AI-led growth (+22% YoY) in Intelligent Infrastructure, with prudence in EVs/renewables .
  • AI-related revenue now expected at ~$7.5B in FY25 (~40% YoY), with expanding silicon photonics and liquid-cooling capabilities—key structural growth drivers for margins and mix .
  • Balance sheet and cash generation remain robust: Q2 adjusted FCF $261M, YTD $487M; debt-to-core EBITDA ~1.4x; $1.6B cash; share repurchases of 2.5M shares, $364M remaining under the $1B authorization .

What Went Well and What Went Wrong

What Went Well

  • AI-led demand acceleration: “Contrary to market fears, the deployment of GPU integrated racks and liquid-cooled data centers continues to accelerate,” supported by design/engineering that improves yields at launch .
  • Segment outperformance: Intelligent Infrastructure revenue up 18% YoY to $2.6B; segment core margin 5.3% (+110 bps YoY) on strength in cloud/DCI and capital equipment .
  • FY25 uplift: Raised FY25 revenue to $27.9B and core EPS to $8.95, citing diversified portfolio resilience and robust cash generation expectations (> $1.2B) .

What Went Wrong

  • EVs/renewables caution: Regulated Industries revenue ~$2.7B, down 8% YoY; management remains prudent on EV and renewable markets near term .
  • Connected Living softness: CLDC revenue $1.3B, down 13% YoY; consumer demand remains weaker post-holiday, margins at 4.5% with seasonality headwinds .
  • Inventory days slightly above target: Inventory days rose to 80 (net 61), modestly above the 55–60 target, reflecting timing to support growth in Intelligent Infrastructure .

Financial Results

P&L vs prior year and prior quarter

MetricQ4 2024Q1 2025Q2 2025
Net Revenue ($USD Millions)$6,964 $6,994 $6,728
Gross Profit ($USD Millions)$663 $606 $576
Operating Income (GAAP, $USD Millions)$318 $197 $245
Core Operating Income (Non-GAAP, $USD Millions)$401 $347 $334
Diluted EPS (GAAP, $USD)$1.18 $0.88 $1.06
Core Diluted EPS (Non-GAAP, $USD)$2.30 $2.00 $1.94

Segment breakdown (Q2 FY25)

SegmentRevenue ($USD Billions)YoY ChangeCore Operating Margin (%)
Regulated Industries~$2.7 -8% 4.8%
Intelligent Infrastructure~$2.6 +18% 5.3%
Connected Living & Digital Commerce~$1.3 -13%; +4% ex-Mobility 4.5%

KPIs and Cash

KPIQ2 2025
Inventory Days80
Net Inventory Days (net of deposits)61
Cash from Operations ($USD Millions)$334
Net CapEx ($USD Millions)$73
Adjusted Free Cash Flow ($USD Millions)$261
Debt-to-Core EBITDA (x)~1.4x
Cash Balance ($USD Billions)~$1.6
Shares Repurchased (Q2)2.5M
Authorization Remaining$364M

Versus Wall Street (S&P Global consensus)

MetricConsensusActual
Revenue – Q2 2025 ($USD Billions)$6.40*$6.73
Core/Normalized EPS – Q2 2025 ($USD)$1.83*$1.94

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue ($USD Billions)FY 2025$27.3 $27.9 Raised
Core Operating Margin (%)FY 20255.4% 5.4% Maintained
Core Diluted EPS ($USD)FY 2025$8.75 $8.95 Raised
Adjusted Free Cash Flow ($USD Billions)FY 2025$1.2 $1.2+ Raised (floor)
Revenue ($USD Billions)Q3 2025N/A$6.7–$7.3 New
GAAP Diluted EPS ($USD)Q3 2025N/A$1.50–$1.99 New
Core Diluted EPS ($USD)Q3 2025N/A$2.08–$2.48 New
GAAP Operating Income ($USD Millions)Q3 2025N/A$282–$352 New
Core Operating Income ($USD Millions)Q3 2025N/A$348–$408 New
Segment Revenue – Regulated ($USD Billions)Q3 2025N/A~$3.0 (≈ -1% YoY) New
Segment Revenue – Intelligent Infrastructure ($USD Billions)Q3 2025N/A~$2.8 (≈ +22% YoY) New
Segment Revenue – CLDC ($USD Billions)Q3 2025N/A~$1.2 (≈ -16% YoY) New
Net Interest Expense ($USD Millions)Q3 / FY 2025~ $60 (FY $235) ~ $61 (FY $240–$245) Slightly raised FY
Core Tax Rate (%)Q3 / FY 202521% 21% Maintained
Dividend ($/share)QuarterlyN/A$0.08 (declared Jan 23, 2025) New/Confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY24, Q1 FY25)Current Period (Q2 FY25)Trend
AI/Technology initiativesPositioned at center of AI data center build-outs; investing in liquid cooling and photonics; exiting legacy networking; FY25 Intelligent Infrastructure +$1B adjusted for exits AI revenue now ~$7.5B (~40% YoY); acceleration in GPU racks & liquid cooling; strong ATE demand tied to custom chips; showcasing 1.6T photonics capability Strengthening
Supply chain footprintBalanced global footprint; capacity for >$30B run-rate; near-/reshoring readiness; underutilization headwind 20–30 bps Active customer discussions on local/regional sourcing; supply chain shifts take multiple quarters; US footprint emphasized (30 sites) Preparing/Adaptive
Tariffs/MacroEarly prudence; pass-through costs; EV/renewables cautious post-election Broadened tariff expectations (China/Canada/Mexico/reciprocal); exposure limited; USMCA compliance 80–90% in Mexico; tariffs seen as manufacturing leveler Managed risk
Product performanceCloud/DCI strength; warehouse automation momentum; GLP-1 pipeline; seasonality shift post-Mobility divestiture Cloud/DCI and capital equipment outperformed; CLDC seasonal softness; digital commerce growth; EVs/renewables in line with cautious outlook Mixed/Portfolio resilience
Regional trendsIndia manufacturing expansion (Pune site performance); Croatia/Dominican Republic ramps Gujarat expansion for photonics (MoU); sovereign data center opportunities; India as long-term domestic role Expanding in India
Regulatory/legal/taxAnticipated higher core tax rate beyond FY25 (23–24%) due to Pillar Two Core tax rate maintained at 21% for FY25 Stable FY25
Healthcare/R&D executionGLP-1 expansions; surgical robotics; long qualification cycles; sticky programs Pii CDMO acquisition adds aseptic filling and OSD capabilities; ~$20B TAM; strong interest from pharma Capability expansion

Management Commentary

  • CEO: “As the geopolitical situation continues to evolve, our ability to adapt, combined with our designation as a U.S. domiciled manufacturing service provider and our significant U.S. footprint, is becoming increasingly important for our customers.”
  • CEO on AI: “AI-associated business is now expected to represent approximately $7.5 billion in revenue this fiscal year… demand for servers, racks, photonics, advanced networking gear, storage and testing equipment all continue to climb higher.”
  • CFO: “Core operating income for the quarter came in at $334 million. Core operating margins came in at 5%… Adjusted free cash flow for the quarter came in at $261 million.”
  • CEO on photonics: “We’ll be showcasing 1.6T capability… really well positioned for silicon photonics; smaller base today but future outlook is really good.”

Q&A Highlights

  • Tariffs and reshoring: Jabil views tariffs as pass-through costs and a potential manufacturing leveler; US footprint (30 sites) and USMCA compliance mitigate exposure; customer moves would be end-market dependent; scenario planning underway .
  • AI photonics and CPO: Progress with hyperscalers on 800G/1.6T; leveraging Intel-acquired capabilities; CPO in development with growth expected over next 1–3 years .
  • Segment margins and CLDC roadmap: CLDC margins affected by seasonality and Mobility divestiture; medium-term opportunity in digital commerce and humanoid/warehouse automation .
  • Automotive/EVs: Cautious near term; offsets from China EV OEMs and power programs; portfolio positioned to be technology-agnostic across ICE/hybrid/EV .
  • Supply chain localization: Active discussions; moving full supply chains is multi-quarter; localization/regionalization trends recognized .

Estimates Context

  • Q2 FY25 beats vs S&P Global: Revenue $6.73B vs $6.40B*; core/normalized EPS $1.94 vs $1.83*—strength in AI/cloud/DCI and capital equipment were primary drivers. Values marked with * retrieved from S&P Global .
  • FY25 trajectory: Company guides revenue $27.9B and core EPS $8.95; consensus stood lower at $29.22B and $9.41* respectively at the time; guidance implies prudence in EV/renewables, balanced by AI-led growth. Values marked with * retrieved from S&P Global .
  • Q3 FY25 setup: Guidance revenue $6.7–$7.3B and core EPS $2.08–$2.48 vs consensus of ~$7.07B and ~$2.32*; mix (AI/cloud/DCI) and cautious stance on EV/renewables drive the range. Values marked with * retrieved from S&P Global .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • AI momentum is the core narrative: expanding photonics, liquid cooling, and ATE tied to custom silicon should sustain double-digit Intelligent Infrastructure growth and support margins through mix .
  • FY25 raised outlook reflects confidence while maintaining prudence in EVs/renewables; expect continued back-half margin seasonality and core tax rate of 21% .
  • Cash returns remain robust: adjusted FCF tracking >$1.2B with buybacks ongoing ($364M remaining); dividend maintained at $0.08/share—shareholder-friendly capital allocation .
  • Inventory normalization should follow growth ramps; near-term net inventory days slightly above target due to Intelligent Infrastructure timing—monitor working capital progress through Q3/Q4 .
  • Watch segment guidance: Q3 points to broad-based AI-capex strength (+22% YoY) within Intelligent Infrastructure; CLDC remains seasonal/consumer-sensitive; Regulated Industries stable but cautious .
  • Strategic M&A (Pii) expands healthcare TAM and capabilities, enhancing diversification and long-term stickiness in high-quality, regulated markets .
  • Trading: Near term, beats on AI/cloud/DCI and raised FY guide are positive catalysts; risk is macro/EV/renewables caution and tariff implementation mechanics—company positioning suggests resilience .