Flex's Q4 2025: Contradictions in Cloud Revenue Growth, Margins, and Tariff Impacts Unveiled

Cloud and data center revenue growth, margin improvement and long-term guidance, tariff impact on margins, and power business growth strategy are the key contradictions discussed in Flex's latest 2025Q4 earnings call.



Record Financial Performance:
- Flex Ltd. reported revenue of $6.4 billion for Q4 2025, growing by almost 4% year-over-year, with an adjusted operating margin of 6.2%, the second consecutive quarter above 6%.
- This strong performance is attributed to successful program ramps, strategic acquisitions, and operational efficiency.

Data Center Growth and Diversification:
- The company's data center business experienced 50% year-over-year growth in both Q4 and the full year, reaching approximately $4.8 billion.
- This growth was driven by acquisitions aimed at solving critical challenges in power, heat, and scale, and by providing end-to-end customized hyperscale rack solutions.

Operational Efficiency and Margin Expansion:
- Flex achieved an annual record adjusted operating margin of 5.7%, marking the fifth consecutive year of double-digit adjusted EPS growth, reaching $2.65 per share.
- The margin expansion resulted from portfolio management decisions, operational innovations, and strategic acquisitions that have positioned the company for higher value businesses.

Tariff Mitigation and Regionalization:
- With over 90% of products manufactured in Mexico being USMCA compliant, Flex is well-positioned to help customers navigate tariff environments.
- The company is benefiting from a trend towards regionalization, with increased demand for its North American manufacturing capacity, supported by its extensive global operational footprint.