Flex's Q1 2026 Earnings Call: Contradictions on Tariffs, Data Center Growth, and Automotive Performance

Strong Financial Performance and Data Center Growth:
- Flex Ltd. reported revenue of $6.6 billion for Q1 2026, up 4% year-on-year.
- The company delivered an adjusted operating margin of 6% and adjusted EPS of $0.72, a record number for Flex.
- The growth was driven by strong performance in both the cloud and power portfolios within the data center business.

Data Center Portfolio Mix Shift:
- Data center is expected to deliver approximately $6.5 billion in revenue this fiscal year, growing at least 35% year-on-year and representing 25% of total revenue.
- The shift in portfolio mix is attributed to the strategic importance and growth potential of the data center business.

Regionalization and Global Operational Scale:
- Flex's global operational scale, with over 49 million square feet of manufacturing space, allows for complexity production across regions, benefiting customers.
- The company's ability to regionalize operations led to an increase in Americas revenue to 49%, up from 38% in fiscal year 2020, while Asia declined to 30%.

Investment in Capacity and Tariff Management:
- Flex acquired a new manufacturing site in Poland to double its power capacity in Europe, demonstrating a commitment to regional growth.
- The company integrated tariffs as largely pass-through costs in its guidance, maintaining confidence in navigating the dynamic macro environment.