Flex Ltd Q2 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ruplu Bhattacharya - Bank of America - Analyst : Hi, thanks for taking my questions. Revathi, you took up revenues for the full year by $500 million at the midpoint. You beat 2Q by $150 million, so there is about $350 million upside in the second half. But interestingly, you didn't raise the guide for data center revenues, although the commentary seemed like there's still a lot of strength and cloud and power. So just curious why there was no upside to that part of the business and I have a follow-up.

Question: Ruplu Bhattacharya - Bank of America - Analyst : Okay, thanks for that clarification. That makes sense. Revathi, can I also ask you for the cloud business, can you comment on the mix as it relates to custom silicon versus merchant silicon. I'm curious because AMD is going to launch a whole set of new GPUs, GPU racks next year. Would that be a business that Flex would bid for and how do you see this mix of custom versus merchant silicon evolving as things like OpenAI Broadcom, OpenAI AMD, OpenAI NVIDIA, all of these big projects are coming up. So how do you see your data center business benefiting from these large projects? Thank you.

Question: Ruplu Bhattacharya - Bank of America - Analyst : Okay. Thank you for all the details.

Question: Tim Long - Barclays Capital, Inc. - Analyst : Thank you. I appreciate the questions here too for me as well. First one maybe on the op margin front, looks like, some good increases coming in the second half. Maybe if you could just talk at a high level, at what's driving some of the second half over first half op margin, improvements, and then second, back to the cloud data center piece. If you could understanding the 35% number, just curious. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:30PM, FLEX.OQ - Q2 2026 Flex Ltd Earnings Call If you can talk a little bit about kind of how you see the economics of that business evolving for you. Are you seeing opportunities as you mentioned, some more specialization, are you seeing that business evolve to where it could be newer programs with that are a little bit more margin and creative, so anything on kind of how you view that you're playing that ecosystem changing from a value standpoint. Thank you.

Question: Samik Chatterjee - JPMorgan Securities LLC - Analyst : Hi, thank you for taking my questions. Maybe for the first one, if I can sort of go back to the question on guidance and just tackle it more on the market front, you're raising your guidance for the full year by about $500 million or so I mean it seems like from an in market perspective data centers doing better but also maybe is a bit better. Can you just pass out if most of the increase in the guide is because of the data center market or other markets that are tracking better than you expected at this time and how much of a headwind is the Ukraine shut down to these sort of rays in the guide that you're issuing today and have a follow-up.

Question: Samik Chatterjee - JPMorgan Securities LLC - Analyst : And for my follow-up to see if you can give us some sense of what to expect from the Amazon partnership that you have now to the extent that you can talk about and you're sort of sounding positive about what you announce in terms of the business, but that is the Amazon partnership part of that optimism that you have as you think about what you talk about in the main.

Question: Samik Chatterjee - JPMorgan Securities LLC - Analyst : Thank you, thanks for taking the questions.

Question: Steven B. Fox - Fox Advisors LLC - Analyst : Hi, good morning, everyone. I had a couple of questions as well. First off, looking at the guidance, it's like some people have mentioned, it seems to imply some accelerating growth into the fourth quarter of the fiscal year. Is that something without getting into numbers for next year? Is that something that we can think about sort of continuing and use that as as a base for some new and different growth for the next fiscal year? And if so, what, how, what would you sort of say is driving it and then it'll follow-up.

Question: Steven B. Fox - Fox Advisors LLC - Analyst : Great, that's super helpful and then Revathi, it wasn't that long ago where the auto markets were pretty attractive growth market for you guys. You mentioned some new compute wins and the business and the, I guess, production kind of stabilizing. So do you see a path now for like this, that segment returning the growth and if there's any color you can provide on that new compute wins, that would be helpful too. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:30PM, FLEX.OQ - Q2 2026 Flex Ltd Earnings Call

Question: Steven B. Fox - Fox Advisors LLC - Analyst : Great, thank you very much.

Question: Jacob Moore - KeyBanc Capital Markets, Inc - Analyst : Hi, good morning. This is Jacob Moore I'm for Steve Barger. Thanks for taking our questions. First, I just wanted to ask about the value add from engineering and services in terms of penetration and margin impact. I think you've emphasized those as margin levers outside of data center and power. Could you share the revenue size of those programs and what do you see the broader opportunity size to be? And then maybe could you frame up the margin to contribute compared to the overall portfolio and if there are any barriers to further penetration?

Question: Jacob Moore - KeyBanc Capital Markets, Inc - Analyst : Understood. That's helpful. Thank you and then the second one for me is on op margins, but maybe a little more specifically on the fiscal fourth quarter. The math suggests a pretty decent sized step up from Q3 to Q4. Could you just walk us through the puts and takes assumed in that sequential step up? And then similar to the question on the growth acceleration in the back half, is a sort of mid to high 6% margin level sustainable moving forward from Q4?

Question: Jacob Moore - KeyBanc Capital Markets, Inc - Analyst : Very helpful. Thank you very much.

Question: Mark Delaney - Goldman Sachs & Co. LLC - Analyst : Yes, good morning. Thank you very much for taking my questions. I was hoping to better understand where Flex stands with its capacity and ability to support the data center opportunity and if there are any supply constraints that you're starting to encounter in that business given the growth you're seeing and you know as you think about that business over the longer-term, do you envision needing to make meaningful increases in your CapEx levels in order to support the growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:30PM, FLEX.OQ - Q2 2026 Flex Ltd Earnings Call

Question: Mark Delaney - Goldman Sachs & Co. LLC - Analyst : Very helpful context. My other question was around Flex's own operations you've spoken in the past about utilizing AI and automation, to be efficient. Yesterday you had some news around a pilot with NVIDIA to maybe even try and get better there and of course there's a lot of innovation happening with AI and robotics. So you think about some of the things you're working on, to tie to those areas, including with what you announced yesterday, anything meaningful you could point to and what we could expect for where Flex may take its own operating and logistics in the future. Thanks.

Question: Mark Delaney - Goldman Sachs & Co. LLC - Analyst : Thank you.