$FLEX · FLEX LTD.
Flex reported Q2 FY2027 results with net sales of $8.491B (+24.8% YoY), GAAP diluted EPS of $0.70, and net income of $263M. Gross margin was 9.6% and operating margin 4.9%. The quarter included $91M in costs related to the planned CPI business spin-off and $19M in acquisition-related costs. All three segments grew, led by Cloud and Power Infrastructure at $2.508B (+54% YoY).
- Revenue of $8.491B, up 24.8% YoY, driven by Cloud and Power Infrastructure segment surging 54% to $2.508B
- GAAP diluted EPS of $0.70 vs $0.52 a year ago; net income rose to $263M from $199M
- Gross margin contracted to 9.6% from 9.0% a year ago, with cost of sales at 90.3% of revenue
- Legal and other charges included $91M in costs tied to the planned CPI business spin-off and $19M for acquisitions
- Cash from operations fell to $777M for the six-month period from $852M a year ago; inventories ballooned to $7.32B from $5.85B
Markets closed — no regular-session reaction yet; extended-hours move not captured here. The 7.08% intraday decline in the regular session before the filing suggests positioning ahead of the print, with the margin compression and spin-off costs as potential headwinds.
Flex's 24.8% revenue growth confirms it's riding the AI infrastructure wave, but sub-10% gross margins and a costly spin-off complicate the bull case.
Flex's 54% Cloud and Power Infrastructure growth mirrors the AI/data-center capex boom benefiting peers like SMCI and DELL, but the 9.6% gross margin underscores the low-margin nature of contract manufacturing even amid surging demand.
CPI spin-off execution risk is front and center — $91M in one-time costs this quarter alone. Inventory build of $1.48B in six months raises working-capital risk if demand softens. Long-term debt jumped to $5.21B from $3.75B at fiscal year-end to fund the $1.13B acquisition spend.