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    JBL
    Earnings call· Nov 2025(Q1 FY26)

    JABIL INC JBL

    Dec 17, 2025 Source

    Executive summary

    Jabil Q1 FY26 — Strong AI-driven Growth and Raised Full-Year Outlook

    Jabil delivered a strong Q1 FY26, exceeding expectations across revenue and core profitability, primarily fueled by robust demand in Intelligent Infrastructure, particularly AI-related segments. The company raised its full-year guidance for revenue, margins, and EPS, reflecting broad-based momentum and strategic investments in areas like liquid cooling and power management. Management expressed confidence in continued growth and margin expansion, driven by a healthy pipeline and diversified model.

    Highlights

    5

    • Q1 Net revenue of $8.3 billion, at the high end of guidance.

    • Q1 Core diluted EPS of $2.85, at the upper end of guidance.

    • Intelligent Infrastructure revenue of $3.9 billion, ahead of expectations, driven by cloud/DCI and networking.

    • Full-year FY26 revenue guidance raised by $1.1 billion to $32.4 billion.

    • Full-year FY26 Core diluted EPS guidance raised by $0.55 to $11.55.

    Concerns

    3

    • Automotive market conservatism

    • Data center power constraints

    • Customer pruning in Connected Living

    Guidance & targets

    25
    CategoryTargetConfidence
    Total Company Revenue
    $7.5 billion to $8 billion
    high materiality
    High
    Core Operating Income
    $375 million to $435 million
    high materiality
    High
    GAAP Operating Income
    $312 million to $382 million
    medium materiality
    High
    Core Diluted Earnings Per Share
    $2.27 to $2.67
    high materiality
    High
    GAAP Diluted Earnings Per Share
    $1.70 to $2.19
    medium materiality
    High
    Net Interest Expense
    approximately $69 million
    low materiality
    High
    Full Year Interest Expense
    approximately $270 million
    low materiality
    High
    Core Tax Rate
    21%
    low materiality
    High
    Core Tax Rate
    21%
    low materiality
    High
    Regulated Industries Revenue
    $2.78 billion, up 2% year-on-year
    medium materiality
    High
    Intelligent Infrastructure Revenue
    $3.76 billion, up 42% year-on-year
    high materiality
    High
    Connected Living & Digital Commerce Revenue
    $1.21 billion, down 10%
    medium materiality
    High
    Total Company Revenue
    approximately $32.4 billion
    high materiality
    High
    Core Operating Margin
    roughly 5.7%
    high materiality
    High
    Core Diluted Earnings Per Share
    $11.55
    high materiality
    High
    Adjusted Free Cash Flow
    more than $1.3 billion
    high materiality
    High
    Intelligent Infrastructure Revenue
    approximately $12.1 billion
    high materiality
    High
    Cloud and DCI Revenue (within Intelligent Infrastructure)
    $9.8 billion
    high materiality
    High
    Networking and Comms Revenue (within Intelligent Infrastructure)
    $2.7 billion
    high materiality
    High
    AI-related Revenue
    approximately $12.1 billion
    high materiality
    High
    Capital Equipment End Market Growth
    16% year-on-year growth
    medium materiality
    High
    Regulated Segment Revenue
    approximately $100 million incremental
    medium materiality
    High
    Connected Living & Digital Commerce Revenue
    approximately $100 million incremental
    medium materiality
    High
    Connected Living & Digital Commerce Revenue Growth
    down by roughly 11% year-over-year
    medium materiality
    High
    Core Operating Margin
    above 6%
    high materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Regulated Industries
    Revenue in line with expectations. Automotive and renewables came in largely as expected. Healthcare continued to deliver steady, reliable revenue performance. Core operating margin up 110 basis points year-over-year, reflecting solid and disciplined execution.
    		$3.1 billion4%—5.8%
    Intelligent Infrastructure
    Revenue ahead of expectations. Upside primarily driven by strength in cloud and data center infrastructure (second hyperscale customer in Mexico, data center power in Memphis) and networking end markets (demand for next-generation liquid-cooled platforms in India). Core operating margin up 40 basis points year-over-year, supported by mix and strong execution.
    		$3.9 billion——5.2%
    Connected Living & Digital Commerce
    Revenue ahead of expectations with broad-based strength in automation, robotics, and retail warehouse programs.
    		$1.4 billion——5.5%

    Operational metrics

    18
    Net Revenue
    $8.3 billionat the high end of guidance range
    Q1 FY26

    Overall company revenue for the quarter.

    Core Operating Income
    $454 million
    Q1 FY26

    Achieved due to mix in revenue and ongoing cost discipline.

    Core Operating Margin
    5.5%
    Q1 FY26

    Achieved due to mix in revenue and ongoing cost discipline.

    GAAP Operating Income
    $283 million
    Q1 FY26

    Operating income on a GAAP basis.

    GAAP Diluted EPS
    $1.35
    Q1 FY26

    Diluted earnings per share on a GAAP basis.

    Core Diluted EPS
    $2.85at the upper end of guidance range
    Q1 FY26

    Diluted earnings per share on a core basis.

    Inventory Days
    70 days
    Q1 FY26

    Total inventory days for the quarter.

    Inventory Days (net of customer deposits)
    57 daysconsistent with targeted range of 55 to 60 days
    Q1 FY26

    Inventory days after accounting for customer deposits.

    Net Capital Expenditures
    $51 million
    Q1 FY26

    Capital expenditures net of disposals.

    Net Debt to Core EBITDA
    1.2x
    Q1 FY26

    Leverage ratio at quarter end.

    Cash and investments balance
    $1.6 billion
    Q1 FY26

    Cash balances at quarter end.

    Share Repurchases
    $300 million
    Q1 FY26

    Amount of shares repurchased under existing authorization.

    AI-related Revenue Growth
    35%up from 25% originally expected
    FY26

    Year-over-year growth for AI-related revenue.

    Capacity Utilization
    closer to 80%up from that 75% range
    FY26

    Improved capacity utilization contributing to margin expansion.

    Second Hyperscaler Revenue
    roughly $1 billionup from $750 million previously
    FY26

    Revenue contribution from the second hyperscaler customer, primarily for AI storage racks.

    Gross Margin
    8.9%up 10 basis points YoY
    Q1 FY26

    Gross margin for the quarter, slightly lower than full-year target due to mix.

    Gross Margin Target Range
    9% to 9.5%
    FY26

    Full-year estimate for gross margin.

    Capex Outlook
    1.5% to 2%
    FY26

    Consistent capital expenditure outlook despite capacity expansions.

    Industry KPIs

    6
    MetricValueDetails
    M a contribution$200MUSD
    Segment revenue growthRegulated Industries: $3.1B; Intelligent Infrastructure: $3.9B; Connected Living & Digital Commerce: $1.4BUSD
    Design wins product cycle rampsRecent program wins with second hyperscaler in Mexico (AI storage racks); stronger demand for next-gen liquid-cooled platforms (India networking); GLP-1 and continuous glucose monitors (healthcare)
    Capacity expansion internal sourcingRetrofitting East Coast factories; North Carolina facility coming up; Memphis expansion
    End market revenue mix organic growthRegulated Industries: 2% YoY; Intelligent Infrastructure: 42% YoY; Connected Living & Digital Commerce: -10% YoY%
    Operating margin incremental leverage5.7%%

    Deals & partnerships

    2
    Hanley Energy GroupProvider of power and energy management solutions, services-enabled business. Strengthens capabilities in modular power distribution and energy systems for next-gen data centers.approximately $200 million (FY26 revenue contribution)

    Gives a platform for deployments and ongoing maintenance revenue stream. Engineering expertise across power distribution, switchgear, energy monitoring, digital power management platforms.

    MikrosAcquired technology, design, and engineering team for liquid cooling.

    Provides ability to design and engineer liquid cooling at chip, network switch, and component levels, integrating into full systems. Acquisition made in FY24.

    Capital programs

    3
    East Coast Rack and Server Factory Retrofit for Liquid Coolingunderway

    Benefit: Accommodate liquid cooling, positioning Jabil for H2 FY26 and FY27.

    Efforts remain slightly ahead of schedule. Originally anticipated retrofit out to be a combination of Q2 and Q3, might come in earlier in Q3.

    North Carolina Facility Build-outunderway

    Benefit: Prefitted for liquid cooling.

    Part of overall capacity planning for cloud business growth.

    Memphis Data Center Power Expansionunder consideration

    Benefit: Expand existing data center power operations.

    Seeing good growth, potential for expansion sooner than North Carolina facility. Does not change CapEx outlook.

    Risks & headwinds

    3
    Automotive market conservatismFY26

    FY26 expected to be a 'conservative year' (flat-to-down)

    Mitigation: Focus on powertrain-agnostic solutions (software-defined vehicles, ADAS), investing in capabilities, long-term program wins for FY27-FY28.

    Data center power constraintsOngoing

    Discussed as an ongoing industry issue.

    Mitigation: Jabil's offerings (design, engineering, liquid cooling solutions) address heat questions; not seeing major impact of slowdown on demand.

    Customer pruning in Connected LivingFY26

    CLDC revenue down ~11% YoY for FY26 due to planned program attrition and customer pruning.

    Mitigation: Partially offset by continued growth in warehouse and retail automation.

    What to watch in Q2 FY26

    5

    Hanley Energy acquisition closing and initial accretion

    Q2 FY26
    CurrentExpected to close in January.
    TargetClosed, initial revenue contribution and modest accretion.

    Why it matters

    Confirms the strategic expansion into power and energy management services, impacting FY26 and FY27 profitability.

    This also includes a modest contribution from the previously announced Hanley Energy acquisition, which our guidance assumes will close sometime in January.

    Q&A highlights

    6

    Seeking more color on new wins, potential benefit from new projects (OpenAI/AMD, Anthropic/AWS), impact of liquid cooling retrofits and Hanley acquisition, and conservatism of full-year guidance.

    Mike Dastoor detailed the $900M increase in Intelligent Infrastructure revenue, attributing $600M to Cloud/DCI (including $200M from Hanley and upside from a second hyperscaler in Mexico for AI storage racks and Memphis DCI business) and $300M to Networking/Comms (India operations for liquid-cooled platforms). He described Hanley as modestly accretive in FY26, providing power/energy management solutions and services. He confirmed the guidance is "appropriately conservative."

    “I think out of the $900 million, think of it in 2 buckets. One is the cloud and DCI bucket, which is up about $600 million. $200 million of that is Hanley... Networking and comms is up by about $300 million... Do I think guidance is conservative? I think it's appropriately conservative.”

    asked by Ruplu Bhattacharya · answered by Michael Meheryar Dastoor

    2 min read6 chapters

    Detailed Narrative

    01

    AI Strategy and Growth Drivers

    Jabil's AI strategy is centered on a holistic view of data centers, encompassing design and engineering across compute, networking, power distribution, and advanced cooling. This approach has led to significant program wins, particularly with a second hyperscale customer in Mexico for AI storage racks and robust performance in data center power operations in Memphis. The company's ability to cross-pollinate capabilities, such as integrating liquid cooling with server racks, is a key differentiator.

    02

    Hanley Energy Acquisition

    The acquisition of Hanley Energy Group, expected to close in January, will add approximately $200 million to FY26 revenue and is anticipated to be modestly accretive in FY26, with greater accretion in FY27. Hanley specializes in modular power distribution and energy systems, strengthening Jabil's capabilities in power, energy management, and data center infrastructure services, including deployment, installation, and maintenance.

    03

    Capacity Expansion and Liquid Cooling

    Jabil is retrofitting its East Coast rack and server factories for liquid cooling, with efforts slightly ahead of schedule for a stronger second half of FY26 and into FY27. The company also has surplus capacity in Mexico and India, and is exploring expansions in Memphis, all while maintaining its CapEx outlook of 1.5% to 2% of revenue. The Mikros acquisition in FY24 for liquid cooling technology and design expertise is seen as a game-changer for thermal management.

    04

    Regulated Industries Performance

    The Regulated Industries segment is tracking above September expectations, driven by better-than-expected results in renewables. Healthcare continues to be a steady and reliable growth engine, supported by drug delivery platforms (GLP-1, continuous glucose monitors), diagnostics, and minimally invasive technologies. Jabil is actively pursuing M&A and B2B opportunities to add capabilities and go vertical in the healthcare space, similar to its GLP-1 OSD transaction.

    05

    Automotive Outlook

    Jabil remains conservative on its automotive outlook for FY26, expecting it to be a flat-to-down year, but sees potential for upside in FY27-FY28. The company is focused on powertrain-agnostic solutions like software-defined vehicles and ADAS, which are applicable across hybrid, EV, and combustion engine platforms. Program wins in this sector typically take 12-18 months to materialize in revenue.

    06

    Gross Margin and Profitability

    While Q1 gross margins were 8.9%, slightly lower than the full-year target range of 9% to 9.5%, this was attributed to mix. The company expects full-year core operating margins of 5.7% for FY26, reflecting improved mix, better capacity utilization (closer to 80%), and SG&A leverage. Management is confident about achieving over 6% operating margin in FY27 and sees a path to even higher numbers long-term.

    AI-generated summary of the company’s earnings call. Not investment advice.