$CLS · CELESTICA INC
Celestica filed its Q3 FY2026 10-Q, reporting revenue of $5.83B (+82.5% YoY), net earnings of $397.2M, and diluted EPS of $3.26. The Connectivity & Cloud Solutions (CCS) segment drove the surge, with Compute & Storage revenue more than tripling to $1.61B from $470M. Gross margin compressed to 11.0% from 13.0% as hyperscaler revenue mix shifted. The balance sheet transformed via a $3.39B public equity offering in August 2026, pushing cash to $3.96B and total equity to $6.21B. Operating cash flow for the quarter was $389.7M.
- Revenue hit $5.83B in Q3 FY2026, up 82.5% YoY from $3.19B, driven by CCS segment growth.
- CCS segment revenue reached $4.87B (84% of total), with Compute & Storage alone jumping to $1.61B from $470M a year ago.
- Net earnings rose 48% YoY to $397.2M; diluted EPS of $3.26 vs. $2.31 in Q3 2025.
- Cash and equivalents ballooned to $3.96B from $595.6M at year-end, fueled by a $3.39B public equity offering in August 2026.
- Gross margin compressed to 11.0% from 13.0% a year ago as lower-margin hyperscaler revenue dominated the mix.
Extended-hours trading shows CLS at $271.50, up 10.19% from the $246.40 regular close, indicating strong positive reception to the massive revenue beat and hyperscaler demand narrative despite margin compression.
Celestica is emerging as a primary contract manufacturing beneficiary of the AI infrastructure buildout, with revenue nearly doubling year-over-year — but margin erosion raises questions about the quality of that growth.
Celestica's CCS segment is riding the same AI infrastructure capex wave that has propelled Super Micro and Dell's server businesses, but as a contract manufacturer it captures lower margins (8.9% CCS segment margin) than branded peers. The $3.4B equity raise signals capacity expansion to meet hyperscaler demand.
Gross margin fell to 11.0% from 13.0% YoY as hyperscaler revenue carries structurally lower margins; SG&A surged 208% to $118.2M. Customer concentration risk is acute — CCS segment now 84% of total revenue, with Compute & Storage growing 242% YoY, implying heavy reliance on a handful of hyperscaler programs that could shift volumes rapidly.