Q2 FY2027
Filed Oct 28, 2026Flex reported Q2 net sales of $8.5 billion, up 25% versus the prior year, GAAP EPS of $0.70 and record adjusted EPS of $1.18.
Q2 sales increased 25% versus the prior year, GAAP operating income increased to $414 million from $296 million, adjusted operating income increased to $607 million from $409 million, and the company raised its fiscal 2027 net-sales, adjusted operating-margin and adjusted-EPS guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q2 net salesGAAP | $8.49B | – | up 25% versus the prior year |
| Q2 cost of salesGAAP | $7.66B | – | – |
| Q2 restructuring charges in cost of salesGAAP | $15M | – | – |
| Q2 gross profitGAAP | $812M | – | – |
| Q2 selling, general and administrative expensesGAAP | $371M | – | – |
| Q2 restructuring and impairment chargesGAAP | — | – | – |
| Q2 intangible amortizationGAAP | $27M | – | – |
| Q2 operating incomeGAAP | $414M | – | – |
| Q2 operating marginGAAP | 4.9% | – | – |
| Q2 interest expenseGAAP | $69M | – | – |
| Q2 interest incomeGAAP | $13M | – | – |
| Q2 other charges (income), netGAAP | −$7M | – | – |
| Q2 equity in earnings (losses) of unconsolidated affiliatesGAAP | $5M | – | – |
| Q2 income before income taxesGAAP | $370M | – | – |
| Q2 provision for income taxesGAAP | $107M | – | – |
| Q2 net incomeGAAP | $263M | – | – |
| Q2 diluted earnings per shareGAAP | $ 0.70 | – | – |
| Q2 diluted shares used in computing per share amountsGAAP | 374M | – | – |
| Q2 non-GAAP operating incomenon-GAAP | $607M | – | – |
| Q2 non-GAAP operating marginnon-GAAP | 7.1% | – | – |
| Q2 non-GAAP provision for income taxesnon-GAAP | $118M | – | – |
| Q2 non-GAAP net incomenon-GAAP | $443M | – | – |
| Q2 non-GAAP diluted earnings per sharenon-GAAP | $ 1.18 | – | – |
| Q2 net cash provided by operating activitiesGAAP | $501M | – | – |
| Q2 purchases of property and equipmentGAAP | −$241M | – | – |
| Q2 proceeds from the disposition of property and equipmentGAAP | $1M | – | – |
| Q2 free cash flownon-GAAP | $261M | – | – |
| Six-month net salesGAAP | $16.42B | – | – |
| Six-month gross profitGAAP | $1.56B | – | – |
| Six-month operating incomeGAAP | $806M | – | – |
| Six-month operating marginGAAP | 4.9% | – | – |
| Six-month net incomeGAAP | $548M | – | – |
| Six-month diluted earnings per shareGAAP | $ 1.47 | – | – |
| Six-month non-GAAP operating incomenon-GAAP | $1.14B | – | – |
| Six-month non-GAAP operating marginnon-GAAP | 6.9% | – | – |
| Six-month non-GAAP net incomenon-GAAP | $817M | – | – |
| Six-month non-GAAP diluted earnings per sharenon-GAAP | $ 2.18 | – | – |
| Six-month net cash provided by operating activitiesGAAP | $777M | – | – |
| Six-month purchases of property and equipmentGAAP | −$477M | – | – |
| Six-month acquisition of businesses, net of cash acquiredGAAP | −$1.13B | – | – |
| Six-month net cash used in investing activitiesGAAP | −$1.52B | – | – |
| Six-month net cash provided by financing activitiesGAAP | $1.44B | – | – |
| Six-month free cash flownon-GAAP | $302M | – | – |
Third quarter fiscal year 2027 and updated fiscal year 2027 outlook
- Revenue$8.87 billion to $9.17 billion
- Tax rate21%*
- NoteThird quarter fiscal year 2027 net sales growth of 28% at the midpoint
- NoteThird quarter fiscal year 2027 adjusted operating income: $685 million to $715 million*
- NoteThird quarter fiscal year 2027 adjusted EPS: $1.19 to $1.25*, growth of 40% at the midpoint
- NoteThird quarter fiscal year 2027 Interest & Other: approximately $120 million
- NoteThird quarter fiscal year 2027 weighted average shares outstanding: approximately 375 million
- NoteUpdated fiscal year 2027 net sales: $34.9 billion to $35.9 billion, growth of 27% at the midpoint
- NoteUpdated fiscal year 2027 adjusted operating margin: 7.6% to 7.8%*
- NoteUpdated fiscal year 2027 adjusted EPS: $4.84 to $5.16*, growth of 52% at the midpoint
- NoteUpdated fiscal year 2027 adjusted income tax rate: 21%*
- NoteUpdated fiscal year 2027 guidance reflects expected results for the full fiscal year and does not give effect to the planned spin-off of the Cloud and Power Infrastructure segment.
- NoteUpdated fiscal year 2027 guidance includes contributions from recent acquisitions closed subsequent to September 25, 2026.
Capital returns
- Payments for repurchases of ordinary shares for the six-month period ended September 25, 2026: —.
- Payments for repurchases of ordinary shares for the six-month period ended September 26, 2025: $ (544) million.
What drove it
- Q2 net sales were $8.5 billion, up 25% versus the prior year.
- Q2 GAAP operating margin was 4.9%, compared with 4.4% in the prior-year quarter.
- Q2 adjusted operating margin was 7.1%, compared with 6.0% in the prior-year quarter.
- The company stated that its acquisition of EPC Power further completes its end-to-end Power portfolio and will be immediately accretive in fiscal 2027.
- The company updated fiscal year 2027 guidance to include contributions from recent acquisitions closed subsequent to September 25, 2026.
Concerns
- Q2 free cash flow was $261 million, compared with $305 million in the prior-year quarter.
- Six-month free cash flow was $302 million, compared with $573 million in the prior-year period.
- Free cash flow for the three-month and six-month periods ended September 25, 2026 was negatively impacted by $61 million and $85 million, respectively, of separation costs connected with the Cloud & Power Infrastructure spin-off.
- Q2 legal and other adjustments were $110 million, including approximately $91 million primarily related to the planned spin-off and $19 million of acquisition costs.
- The planned spin-off remains subject to applicable approvals and completion of the spin-off.
What to watch
- Third quarter fiscal year 2027 net sales guidance of $8.87 billion to $9.17 billion.
- Third quarter fiscal year 2027 adjusted operating income guidance of $685 million to $715 million*.
- Execution of the planned spin-off of the Cloud and Power Infrastructure segment into a separate publicly traded company.
- The contribution of recent acquisitions, including EPC Power, to updated fiscal year 2027 guidance.
- Free-cash-flow effects from separation costs, capital expenditures and acquisition activity.
Balance sheet and cash flow
- Cash and cash equivalents as of September 25, 2026: $ 3,083 million; as of March 31, 2026: $ 2,389 million.
- Long-term debt, net of current portion, as of September 25, 2026: $ 5,213 million; as of March 31, 2026: $ 3,751 million.
- Total assets as of September 25, 2026: $ 27,377 million; as of March 31, 2026: $ 22,060 million.
- Total liabilities as of September 25, 2026: $ 21,570 million; as of March 31, 2026: $ 16,916 million.
- Total shareholders’ equity as of September 25, 2026: $ 5,807 million; as of March 31, 2026: $ 5,144 million.
- Six-month proceeds from bank borrowings and long-term debt: $ 2,830 million; prior-year period: $ 500 million.
- Six-month payments of bank borrowings, long-term debt and other financing liabilities: $ (1,401) million; prior-year period: $ (535) million.
- Six-month net change in cash and cash equivalents: $ 694 million; prior-year period: $ (40) million.
Analysis
Flex delivered a strong second quarter of fiscal 2027, with net sales of $8.5 billion, up 25% versus the prior year. GAAP operating income was $414 million, compared with $296 million in the prior-year quarter, while GAAP net income was $263 million, compared with $199 million. GAAP diluted earnings per share was $0.70, compared with $0.52, and adjusted diluted earnings per share was $1.18, compared with $0.79.
Profitability improved on both reported and adjusted measures. Q2 GAAP operating margin was 4.9%, compared with 4.4%, and adjusted operating margin was 7.1%, compared with 6.0%. Adjusted operating income reached $607 million, compared with $409 million. The adjustment bridge included $110 million of legal and other costs, which included approximately $91 million primarily related to the planned Cloud and Power Infrastructure spin-off and $19 million of acquisition costs.
Cash conversion was weaker than the prior-year comparison despite higher Q2 operating cash flow. Net cash provided by operating activities was $501 million, compared with $453 million, but free cash flow was $261 million, compared with $305 million, alongside purchases of property and equipment of $241 million, compared with $150 million. For the six-month period, operating cash flow was $777 million versus $852 million and free cash flow was $302 million versus $573 million. The company stated that separation costs reduced three-month and six-month free cash flow by $61 million and $85 million, respectively.
The balance sheet expanded alongside acquisition and financing activity. Cash and cash equivalents were $3,083 million as of September 25, 2026, versus $2,389 million as of March 31, 2026, while long-term debt, net of current portion, was $5,213 million versus $3,751 million. During the six-month period, Flex used $1,134 million for acquisitions of businesses, net of cash acquired, generated $2,830 million in proceeds from bank borrowings and long-term debt, and made $1,401 million in debt and financing-liability payments.
The company raised fiscal 2027 guidance to net sales of $34.9 billion to $35.9 billion, adjusted operating margin of 7.6% to 7.8% and adjusted EPS of $4.84 to $5.16. Third-quarter guidance calls for net sales of $8.87 billion to $9.17 billion, adjusted operating income of $685 million to $715 million and adjusted EPS of $1.19 to $1.25. The updated full-year guidance includes contributions from recent acquisitions closed subsequent to September 25, 2026 and does not give effect to the planned Cloud and Power Infrastructure spin-off.
Management, verbatim
We continue to execute from a position of strength while advancing our planned spin-off of our Cloud and Power Infrastructure segment. Our acquisition of EPC Power further completes our end-to-end Power portfolio and will be immediately accretive in fiscal 2027, while the unveiling of the Axiom name and anticipated leadership marks another important step toward creating two focused companies positioned for long-term success.
Revathi Advaithi, CEO of Flex
Not in the filing
stated, not guessed- Q2 segment revenue, segment growth and segment profitability were not reported.
- Q2 gross margin was not reported.
- Prior-quarter comparisons for reported metrics were not reported.
- Dividend declarations or payments were not reported.
- Third-quarter fiscal year 2027 gross-margin guidance and operating-expense guidance were not reported.
- Fiscal year 2027 weighted average shares outstanding guidance was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.