Flex grew fiscal 2026 revenue 8% to $27.9B as data-center sales jumped 38%; GAAP EPS rose 10% to $2.33 (adjusted $3.30, +25%), and the company plans to spin off its data-center unit in early 2027.
Revenue
$27.9B
+8.1% YoY
Net income
$880M
+5.0% YoY
Diluted EPS
$2.33
+10.4% YoY
Operating margin
4.9%
Overview
Flex is a contract manufacturer: other companies design a product, and Flex builds it for them, from networking gear and medical devices to car electronics. Over the past few years it has also started designing and selling its own power and liquid-cooling equipment for data centers. In fiscal 2026 (the 12 months to March 31, 2026), revenue rose 8% to $27.9 billion. Almost all of that growth came from the data-center business. GAAP net income rose only 5% to $880 million, but diluted earnings per share (EPS) rose 10% to $2.33, because share buybacks cut the diluted share count by about 5%.
The year also changed how Flex will be put together. In the fourth quarter it reorganized its reporting around a new Cloud and Power Infrastructure (CPI) segment. The two older segments, Flex Agility Solutions and Flex Reliability Solutions, became Integrated Technology Solutions (ITS) and Regulated Manufacturing Solutions (RMS), and prior periods were recast to match. On May 5, 2026, Flex announced that it plans to spin CPI off as a separate listed company, targeted for the first calendar quarter of 2027.
Key metrics (fiscal year ended March 31, 2026)
Metric
FY2026
FY2025
YoY Change
Net sales
$27,914M
$25,813M
+8.1%
Gross margin
9.2%
8.4%
+0.8 pts
GAAP operating income
$1,368M
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Operating margin is the share of revenue left after the costs of running the business, before interest and tax. "Adjusted" figures are the company's own non-GAAP measures. They leave out stock-based pay, amortization of acquired intangibles, restructuring and impairment charges, and "legal and other" costs. Adjusted figures and the fourth-quarter figures below come from Flex's May 5, 2026 earnings release (8-K Exhibit 99.1). All other figures come from the 10-K.
Cloud and Power Infrastructure (cloud & cooling, power)
$6,614M
$4,799M
+38%
9.2%
10.2%
Segment margin is Flex's measure of each segment's profit before corporate costs, stock-based pay, amortization and one-off charges, divided by sales.
CPI added about $1.8 billion of the company's $2.1 billion revenue increase. Inside the segment, the 10-K says Cloud and Cooling sales grew 29% and Power sales grew 61%. It attributes the growth mainly to "increased demand in the data center market," plus about $0.2 billion from acquisitions in the United States and Poland. CPI now makes up 24% of Flex's revenue, up from 19% a year earlier and 12% two years earlier. Its margin fell a full point to 9.2%, though. Management blames the costs of ramping up new contracts and "unfavorable mix in the Cloud and Cooling business," partly offset by faster growth in Power, which earns higher margins. CPI's cost of sales rose 40%, faster than its 38% sales growth.
RMS grew 5%. Industrial sales rose 13%, helped by stronger demand and a full year from the Orangeburg, South Carolina plant acquired in February 2025. Healthcare rose 5% on medical-equipment demand. Automotive fell 2% on weaker demand.
ITS shrank 2%. Lifestyle (consumer products) sales fell 9% "as demand weakened in consumer end markets," which more than offset a 6% rise in Communications. ITS margin still improved 60 basis points to 5.4% (a basis point is 0.01 of a percentage point), which the 10-K credits to Communications execution, product mix and cost actions.
This is the key mix point for the year: the two older segments barely grew but earned more on every dollar of sales, while the fast-growing data-center segment earned less. Consolidated gross margin (revenue minus the direct cost of making the products) still rose from 8.4% to 9.2%. The 10-K attributes this to more revenue coming from the higher-margin Cloud and Power business, cost actions, and lower restructuring costs.
GAAP vs. adjusted: why the gap widened
Adjusted EPS grew more than twice as fast as GAAP EPS (+24.5% vs. +10.4%). The main items between the two:
Restructuring and impairment charges of $135 million (vs. $84 million), per the earnings release. They include $51 million of asset impairments, inventory write-downs and other charges after an August 21, 2025 missile strike on Flex's Mukachevo, Ukraine plant. Flex moved that production to other sites.
"Legal and other" costs of $53 million (vs. $9 million), mainly for the planned CPI spin-off and other portfolio work.
A higher tax rate. The effective tax rate rose from 18.1% to 23.0%. That reflects a $19 million charge to settle a foreign tax dispute covering fiscal 2010–2020, the absence of a $26 million Brazilian tax benefit booked the year before, and a shift in where profits were earned.
$31 million of equity-method losses (Flex's share of losses at businesses it partly owns), mostly from one venture capital fund. The release excludes $25 million of this from adjusted results.
Some of these costs are genuinely one-off, like the missile strike and the tax settlement. Spin-off costs will not be, at least through early 2027. In the first quarter of fiscal 2027 they were already $53 million (see below).
Cash, debt and buybacks
Operating cash flow rose to $1.69 billion from $1.51 billion. Capital spending jumped 45% to $633 million, which the 10-K says went to "expanding capabilities and capacity." As a result, free cash flow (operating cash flow minus capital spending) was flat at $1.06 billion. Flex spent $944 million on buybacks at an average price of $49.08 a share, less than the $1.26 billion it spent in fiscal 2025. It had $1.1 billion left under its authorization at year-end. Cash ended at $2.39 billion against $3.75 billion of long-term debt. Accounts payable (money owed to suppliers) rose by about $2.9 billion, which offset most of the cash tied up in growing inventory and receivables.
One detail to note: in August 2025 Flex issued Amazon a warrant for up to about 3.86 million shares at $51.29 each. The warrant vests based on Amazon's purchases from Flex, and its cost is recorded as a reduction to revenue ($7 million in fiscal 2026).
Takeaway: Flex's fiscal 2026 was really two stories. A mature contract-manufacturing business (ITS plus RMS, about 76% of sales) grew about 1% but lifted its margins through mix and cost cuts. A data-center power-and-cooling business grew 38% but gave up a point of margin to ramp costs. The planned spin-off would split these into two separately valued companies. Until it happens, spin-off costs, the Ukraine plant charges and a higher tax rate explain most of the gap between GAAP EPS (+10%) and adjusted EPS (+25%).
Outlook and the latest quarter
Management guidance (from the May 5, 2026 earnings release, before the spin-off): fiscal 2027 revenue of $32.3–33.8 billion (about 18% growth at the midpoint), adjusted operating margin of 7.0–7.1%, and adjusted EPS of $4.21–4.51.
First quarter of fiscal 2027 (quarter ended June 26, 2026, from the 10-Q filed July 31, 2026): net sales rose 21% to $7.93 billion. By segment, ITS grew 20%, RMS 12% and CPI 35%. The 10-Q attributes ITS growth to Communications demand and higher memory-chip prices, which are passed through to customers. It says higher memory prices also squeezed ITS margins. CPI growth included the Electrical Power Products (EPP) business, bought on May 1, 2026 for about $1.2 billion in cash. Gross margin rose to 9.4% from 8.7%. GAAP operating margin was 4.9% and GAAP EPS was $0.76 (vs. $0.50). EPS included a $46 million gain from selling a non-strategic North American business, offset by $53 million of spin-off costs in SG&A (selling, general and administrative expenses). One customer accounted for 12% of sales, mostly in CPI. Flex made no share repurchases in the quarter. According to the July 29 earnings release (8-K Exhibit 99.1), adjusted EPS was $1.00 (vs. $0.72). Management raised fiscal 2027 guidance to revenue of $33.7–35.2 billion and adjusted EPS of $4.42–4.74.
Since then: on September 3, 2026, Flex agreed to buy EPC Power, a maker of power-conversion equipment for data centers and the grid, for about $4.4 billion. It plans to fund the deal with a mix of debt and equity and expects to close in calendar Q4 2026, with EPC joining CPI before the spin-off.
Our view: Flex has now raised its fiscal 2027 outlook once, and revenue is growing faster than at any point in fiscal 2026. That growth is increasingly tied to data-center spending and to a small number of large customers. Some of the headline growth in ITS comes from memory prices, which raise revenue but not profit. The next few quarters will test three things. First, whether CPI's margin climbs back toward 10% as new contracts mature. Second, how much the EPP and EPC Power deals add to debt and share count. Third, how large the spin-off costs become before the separation.