Flex (NASDAQ:FLEX) Posts Better-Than-Expected Sales In Q1 But Quarterly Revenue Guidance Misses Expectations
Global manufacturing solutions provider Flex (NASDAQ:FLEX) reported revenue ahead of Wall Street's expectations in Q1 CY2025, with sales up 3.7% year on year to $6.40 billion. On the other hand, next quarter's revenue guidance of $6.25 billion was less impressive, coming in 1.7% below analysts' estimates. Its non-GAAP profit of $0.73 per share was 5.2% above analysts' consensus estimates.
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Flex (FLEX) Q1 CY2025 Highlights:
Revenue: $6.40 billion vs analyst estimates of $6.23 billion (3.7% year-on-year growth, 2.6% beat)
Adjusted EPS: $0.73 vs analyst estimates of $0.69 (5.2% beat)
Adjusted EBITDA: $443 million vs analyst estimates of $514.1 million (6.9% margin, 13.8% miss)
Management's revenue guidance for the upcoming financial year 2026 is $25.9 billion at the midpoint, missing analyst estimates by 0.8% and implying 0.3% growth (vs -2% in FY2025)
Adjusted EPS guidance for the upcoming financial year 2026 is $2.91 at the midpoint, beating analyst estimates by 1.8%
Operating Margin: 4.8%, up from 2.6% in the same quarter last year
Free Cash Flow Margin: 5%, down from 9.7% in the same quarter last year
Market Capitalization: $14.09 billion
"We had a very strong finish to the year, with record adjusted operating margins for both Q4 and for the full year, and we delivered our fifth consecutive year of double-digit adjusted EPS growth," said Revathi Advaithi, CEO of Flex.
Company Overview
Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ:FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.
Sales Growth
A company's long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $25.81 billion in revenue over the past 12 months, Flex is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it's harder to find incremental growth when you've penetrated most of the market. To accelerate sales, Flex likely needs to optimize its pricing or lean into new offerings and international expansion.
As you can see below, Flex grew its sales at a sluggish 1.3% compounded annual growth rate over the last five years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.
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