Earnings Recap — Q1 FY2027
CY Q3 2026 · Reported July 29, 2026 · Beat 7 of last 7 quarters
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Flex's strong CPI growth and raised guidance underscore the accelerating AI infrastructure buildout, particularly in power and cooling. The company's positioning as an integrated power-to-chip solutions provider aligns with the industry's shift toward holistic infrastructure solutions. The planned spin-off of CPI into a standalone company highlights the strategic importance of power and thermal management in the AI era.
Flex delivered strong Q1 FY27 results with revenue of $7.9B, up 21% YoY, and record adjusted EPS of $1.00, up 39%. All three segments grew, with CPI up 35%, ITS up 20%, and RMS up 12%. Adjusted operating margin expanded 70 bps to 6.7%, driven by mix and productivity. The company announced expanded partnership with Cerebras for CS-3 manufacturing and a new liquid cooling solution via JetCool. Free cash flow was $41M, impacted by $24M of spin-related costs. Management reaffirmed the planned tax-free spin-off of CPI in Q1 calendar 2027 and announced additional leadership appointments for both companies.
Management raised full-year revenue guidance to $33.7B-$35.2B (up 23% at midpoint) and EPS to $4.42-$4.74 (up 39% at midpoint). CPI revenue is expected to grow 65%-75% for FY27, with Q2 guided to 45%-55% growth, reflecting a back-half-loaded ramp. Management reiterated its expectation of at least 100 bps of margin expansion in CPI for the year and expressed confidence in the FY28 outlook of over 80% growth. The spin-off of CPI (SpinCo) remains on track for Q1 calendar 2027, with additional leadership appointments announced. Free cash flow conversion guidance was lowered to ~40% to incorporate spin-related costs. Management emphasized that AI infrastructure demand is strong and that capacity investments are on track to support the acceleration.
“Many people still think about AI as a compute story. I think it is increasingly becoming an infrastructure story and more specifically a power story. AI may live in the cloud, but the infrastructure behind it is very physical. It must be built, powered, cooled, integrated, and deployed at scale.”
on AI infrastructure thesis
“We are still at that 90%-plus booked business at this point. For the next three quarters. So we feel good and remain confident in our visibility around this business.”
on CPI demand visibility
“I would say, we are seeing it across multiple customers, hyperscalers without naming out any, would say that you can see that most customers now are quickly thinking about hey, we need to before we deploy the next-generation silicon, we need to be thinking about the power capability and power requirements.”
on Customer engagement on power/cooling
On margins in the CPI segment, looks like revenues grew sequentially but op margin was slightly lower. Is that because of program ramps? And how do you plan to grow margins in power?
Revathi Advaithi: Margins are on track with guidance. We expect at least 100 bps improvement in CPI margin for the year. New programs require initial investment, but mature programs have good flow-through. Power business is growing 70%+ and requires investment, but we are comfortable moving margins toward electrical infrastructure peers.
Full-year CPI guidance implies second-half revenue up closer to 100%. Can you speak to visibility into that acceleration and any change in views for CPI into next year?
Kevin Krumm: The ramp is as expected. We are guiding Q2 to 45%-55% growth and full-year to 65%-75%. Visibility remains strong with 90%+ booked for the next three quarters. The framework for next year still holds, with investments this year supporting continued strong growth.
Relative to the CPI growth outlook, what constraints are you seeing? What is limiting further upside?
Revathi Advaithi: We feel good about the 70% guide. We beat Q1 midpoint. The back-half loading is driven by capacity investments. No significant constraints other than putting capacity in place, which we know how to manage. We are on track to deliver the 70% or better.