Celestica's Q1 2025: Unpacking Contradictions on Customer Insights, Tariff Effects, and AI Growth Trajectories

Customer visibility and program transitions, tariff impact and customer response, customer concentration and revenue growth, and AI/ML compute ramp timing are the key contradictions discussed in Celestica's latest 2025Q1 earnings call.



Strong First Quarter Performance:
- Celestica reported revenue of $2.65 billion for Q1 2025, exceeding the high-end of their guidance range, with adjusted EPS of $1.20 each.
- The growth was driven by strong demand from hyperscaler customers in their CCS segment, particularly for HPS networking switches, and solid demand in their capital equipment business.

Operating Margin Improvement:
- Celestica achieved an adjusted operating margin of 7.1%, marking the highest performance in the company's history.
- This improvement was attributed to higher margin across both the CCS and ATS segments, with a significant contribution from strong operating performance in capital equipment and improved profitability in their A&D business.

Tariff and Trade Uncertainty:
- Despite trade policy uncertainties, Celestica's customers provided resilience in demand with no significant shifts in existing programs or new awards.
- The company's global manufacturing footprint and regional supply chain capabilities have allowed it to adapt swiftly to potential policy changes, which has provided a competitive advantage.

Guidance and Revenue Outlook:
- Celestica raised its revenue outlook for 2025 from $10.7 billion to $10.85 billion, reflecting year-over-year growth of 12%.
- This revision is supported by strong secular demand in the CCS segment, particularly from hyperscaler customers, and a solid ATS segment performance, driven by capital equipment demand and recovery in the industrial sector.