Flex’s first quarter results were met with a positive market response, driven by strong execution in its data center and cloud businesses and a sustained focus on operational efficiency. CEO Revathi Advaithi credited the nearly 4% year-over-year revenue growth to “multiple program ramps” and the company’s ability to shift its portfolio toward higher-value, margin-accretive segments. Management highlighted the success of its Flex Forward strategy in building a more resilient business, with adjusted operating margin reaching a record level, supported by disciplined cost control and a diversified end-market approach.
Is now the time to buy FLEX? Find out in our full research report (it’s free).
Flex (FLEX) Q1 CY2025 Highlights:
- Revenue: $6.40 billion vs analyst estimates of $6.23 billion (3.7% year-on-year growth, 2.6% beat)
- Adjusted EPS: $0.73 vs analyst estimates of $0.69 (5.2% beat)
- Adjusted EBITDA: $534 million vs analyst estimates of $514.1 million (8.3% margin, 3.9% beat)
- Revenue Guidance for Q2 CY2025 is $6.25 billion at the midpoint, below analyst estimates of $6.36 billion
- Adjusted EPS guidance for the upcoming financial year 2026 is $2.91 at the midpoint, beating analyst estimates by 1.8%
- Operating Margin: 4.8%, up from 2.6% in the same quarter last year
- Market Capitalization: $19.41 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Flex’s Q1 Earnings Call
- Samik Chatterjee (JP Morgan) asked about the drivers behind strong margin guidance, to which CFO Kevin Krumm pointed to ongoing mix improvement from cloud and power, as well as growth in services and operational efficiency.
- Steven Fox (Fox Advisors) questioned Flex’s scale advantages in data centers and inventory trends; CEO Revathi Advaithi detailed Flex’s vertically integrated IT integration and engineering capabilities as unique differentiators, while Krumm discussed inventory normalization and targeted free cash flow conversion.
- Ruplu Bhattacharya (Bank of America) sought clarity on the sustainability of 30% data center growth and customer diversification, with Advaithi highlighting a broad hyperscaler and enterprise mix, and Krumm explaining margin benefits from customer-sourced inventory models.
- George Wang (Barclays) inquired about sequential margin step-down and networking share gains. Krumm attributed lower Q2 margins to seasonality and auto market softness, while Advaithi described networking growth as broad-based across geographies and customers.
- Mark Delaney (Goldman Sachs) pressed on the potential impact of tariffs on margins and demand, receiving confirmation from management that tariffs are expected to be pass-through with limited impact on operating profit, though some margin drag is possible if tariff levels persist.
Catalysts in Upcoming Quarters
The StockStory team will be monitoring (1) Flex’s ability to sustain rapid data center and power segment growth despite broader market volatility, (2) the company’s execution on North American and European capacity expansions in response to regionalization trends, and (3) the impact of evolving trade and tariff policies on both customer demand and cost structure. Progress in value-added services and successful integration of recent acquisitions will also be key signposts.
Flex currently trades at $52.38, up from $36.74 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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