Flex (FLEX) Q2 Earnings call transcript Oct 30, 2025
2min read Flex, a leading global manufacturing solutions company, reported a strong second quarter for Fiscal 2025, with revenues of $6.5 billion and adjusted EPS of $0.64, marking a record quarterly performance for the company. The earnings call, led by CEO Revathi Advaithi and Interim CFO Jaime Martinez, provided valuable insights into Flex's financial health and strategic direction, particularly in the context of its focus on expanding its advanced manufacturing capabilities and innovative power and compute products and services.
Strong Q2 Performance and Outlook
Flex reported a solid Q2 performance with a record 5.5% adjusted operating margin, driven by strong mix and effective cost management. This achievement is particularly noteworthy given the ongoing challenges in the macroeconomic environment. The company's diverse portfolio, spanning reliability solutions and agility solutions, has contributed to its resilience and growth, with the data center business experiencing a 40% year-over-year growth rate. This growth is attributed to Flex's unique position in the market, delivering customized, fully integrated data center racked solutions and power infrastructure solutions, positioning the company as a key player in the evolving data center landscape.
Strategic Focus on Higher-Value Markets
Flex's strategic focus on expanding its portfolio of advanced manufacturing capabilities, innovative power and compute products, and life cycle services is paying off, with the company seeing strong growth in its cloud business and in sectors like healthcare and automotive. The recent acquisition of Crown Technical Systems is a testament to Flex's commitment to growing in higher-value markets, particularly in the power distribution sector. This acquisition is expected to enhance Flex's data center power portfolio and support growth in its modular power pod business, underscoring the company's long-term value creation strategy.
Financial Performance and Outlook
Flex's financial performance for the quarter was robust, with record revenue, gross profit, and earnings per share. The company also reported a strong cash flow, with $219 million in free cash flow in the quarter, putting it on track to meet its full-year target of $800 million. The acquisition of Crown Technical Systems is expected to be funded by cash balances, with the deal expected to close by December. Looking ahead, Flex expects revenue to be flat to down mid-single digits in the third quarter, reflecting macroeconomic challenges in certain sectors like automotive. However, the company remains optimistic about its growth prospects, particularly in the data center business, where it sees continued strong growth and margin expansion.
Conclusion
Flex's strong second-quarter performance, coupled with its strategic focus on higher-value markets and innovative product offerings, positions the company well for future growth. The recent acquisition of Crown Technical Systems is a strategic move that is expected to further enhance Flex's capabilities and create long-term shareholder value. With a solid financial performance and a clear strategic direction, Flex is well-positioned to navigate the evolving market landscape and capitalize on opportunities in the data center, automotive, and healthcare sectors.
