Slides for today's call, as well as a copy of the earnings press release, are available on the investor relations section at flex.com. These statements reflect expected results for the full fiscal year and did not give effect to the planned spin-off of the Cloud and Power Infrastructure segment. Please note, all growth metrics will be on a year-over-year basis unless stated otherwise. In Q1, our teams delivered another exceptional quarter while continuing to prepare two industry-leading companies for the next phase of growth as standalone businesses.
We delivered strong revenue growth, margin expansion across all three segments, and record-adjusted earnings per share of $1. As we stated before, our investments in this business are on track to drive accelerated growth and margin expansion in the second half of the fiscal year. We also saw strong growth in our communications and industrial business units driven by high-value markets such as networking, automation, and energy infrastructure. We have built two great businesses that are entering different phases of growth.
The spin allows each company to sharpen its strategic focus, align capital allocation with its growth priorities, and create greater value for customers and shareholders. SpinCo requires a capital allocation framework designed for rapid growth as demand for AI infrastructure accelerates. We see our ability to bring together power, thermal management, and compute technologies, combined with the ability to deploy these capabilities at global scale as a true differentiator in this space. As AI scales, demand will extend far beyond compute, driving investment across power systems, cooling technologies, electrical infrastructure, and ultimately, the grid itself.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | FY2027 | $33.7B-$35.2B (up 23% at the midpoint) |
| Adjusted operating margin | FY2027 | 7.0%-7.2% (~80 bps improvement at the midpoint) |
| Adjusted EPS | FY2027 | $4.42-$4.74 (up 39% at the midpoint); ~21% adjusted tax rate |
| Capital expenditures / FCF conversion | FY2027 | CapEx $1.5B-$1.6B; FCF conversion ~40% including spin-off costs |
| Revenue / Adjusted EPS | Q2 FY2027 | Revenue $7.95B-$8.25B (+19% at midpoint), adjusted operating income $535M-$565M, adjusted EPS $1.00-$1.07 (~375M shares) |
| CPI revenue growth | FY2027 / FY2028 | +65-75% in FY2027 (Q2 +45-55%, power exceeding cloud); framework of ~80% growth in FY2028 still holds |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +21% to $7.9B | Broad-based growth led by CPI (+35%), ITS communications (+20%) and RMS industrial (+12%). |
| Adjusted EPS | +39% to $1.00 (record) | Revenue growth, business mix and productivity; GAAP diluted EPS $0.76. |
| CPI revenue | +35% to $2.2B | Strong Power growth and ramping Cloud/Cooling programs; adjusted operating margin 9.7% (+20 bps). |
| ITS revenue | +20% to $3.1B | Exceptional communications/advanced-networking growth offset by consumer-related weakness; margin +10 bps to 5.2%. |
| RMS revenue | +12% to $2.7B | Strength in industrial (warehouse automation, robotics, energy infrastructure); margin +130 bps to 6.6%. |
| Adjusted operating margin | +70 bps to 6.7% | Business mix and underlying productivity improvements across all segments. |
| Free cash flow | $41M | Reduced by $24M of one-time spin-off cash costs and higher inventory to support revenue growth. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| CPI spin-off into a digital/electrical infrastructure company | CPI a segment within Flex | Tax-free spin targeted for Q1 calendar 2027; SpinCo positioned not as a data center components company but as a digital/electrical infrastructure leader combining power, thermal and compute at global scale, with a growth-oriented capital-allocation framework. | — |
| AI as a power and infrastructure story | AI framed as compute | Management argues the binding AI constraint is power, cooling, electrical systems and grid capacity - not the chip - and that the electrical transformation is a multi-year, long-tail opportunity extending well beyond the data center. | — |
| Integrated power-cooling-compute differentiation | Individual capabilities | Hyperscalers are increasingly having high-level strategic conversations about power/cooling for next-generation silicon; Flex touts true product IP across electrical (400V/800V, future solid-state), cooling (JetCool cold plates/CDUs) and compute integration, plus modular deployment (NVIDIA platform, Crown/EP2 power capacity). | — |
| RemainCo Flex secular growth | Diversified manufacturing | Post-spin Flex focuses on high-value secular markets - healthcare/medical devices, robotics/warehouse automation (regionalization, labor shortages), and energy infrastructure - plus advanced-networking pull-through demand from data centers, with continued portfolio optimization. | — |
| CPI capacity ramp and visibility | Investment phase | The 65-75% full-year CPI growth is back-half loaded and driven by capacity investments (facilities, cooling, manufacturing) now being installed; 90%+ of the next three quarters is booked, with robust FY2028 visibility. | — |
| Customer diversification | Concentrated hyperscaler exposure | The Cerebras engagement (US manufacturing + cooling, with future power) exemplifies hyperscaler diversification, and the Amazon commercial arrangement benefits both CPI and RemainCo businesses. | — |