Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 6, 2026 · Beat 7 of last 7 quarters
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Arrow's strong results reinforce the ongoing AI infrastructure buildout, with ECS backlog up over 75% YoY and components growth driven by data center and AI demand. The company's ability to source alternatives amid memory and SSD shortages highlights its role in the supply chain. Continued broad-based demand across industrial, aerospace/defense, and transportation suggests the buildout is expanding beyond pure AI.
Arrow delivered strong Q2 results with revenue of $10.0B, up 32% YoY, and non-GAAP EPS of $5.45, up 124% YoY. Global components revenue grew 11% sequentially to $7.4B, with book-to-bill above 1 in all regions and backlog building into 2027. ECS revenue grew 14% YoY to $2.6B, with backlog up over 75% YoY, but margins declined 100 bps due to a charge related to restructuring a Beyond distribution agreement with a key partner. The company repurchased $43M in shares and reduced gross debt by $300M sequentially.
Management provided Q3 guidance with revenue expected between $9.6B and $10.2B (up 28% YoY at midpoint) and non-GAAP EPS of $4.83-$5.03. They expect global components to perform at or above seasonal trends in all regions for the remainder of the year, with Asia seasonally strong and EMEA typically weaker in Q3. Supply chain services are expected to return to more normal profit levels in Q3. ECS sales guidance reflects growing over a large partner addition last year. Management expressed confidence in continued operating leverage and margin expansion.
“The starting pitcher is still in the game. Alright? We have not gone to the relief pitcher yet, so it is the early innings of the game. I would say, you know, we are in the second inning, you know, somewhere in that range.”
on Cycle position
“We have now terminated 1 key element of our Beyond distribution agreement, with this partner and continue to work towards restructuring another. We believe these actions will help to get this part of the business on the right track.”
on ECS partner restructuring
“We are not a volume distributor or laptop or PC distributor. We are an infrastructure software hardware distributor in cloud. And we are focusing on this.”
on ECS strategy
What inning are we in for the component cycle?
Bill said we are in the early innings, 'second inning' range. Rick added that the recovery has three parts: AI (evolving), Mil-Aero, and the core business, with core growth steady and backlog building, leaving plenty of time left.
Can you clarify the reported loss of a supplier relationship and its impact on Q3 guidance?
Bill clarified the report was inaccurate; the revenue impact is roughly $700M, not $1.4B. Eric said it was a mutual agreement due to diverging strategies, with no expected impact on ECS growth. Rajesh added that the below-seasonal Q3 guide is due to growing over a large partner addition last year, not a change in trajectory.
Are you seeing OEMs push tier ones to carry more inventory, and are customers prepositioning inventory?
Rick said customers are adding buffer inventory back into supply chains and providing extended visibility, but it's not irrational. He noted no panic or abnormal prepositioning, just normal cycle behavior.