A global contract manufacturer that designs and builds electronics for other brands across automotive, healthcare, cloud, and consumer tech. Founded in 1969 as a Silicon Valley family business that hand-soldered circuit boards, it grew into Flextronics and shortened its name to Flex in 2015. It was one of the first American manufacturers to set up shop in Singapore, and it plans to split into two public companies by early 2027.
Flex revenue rises 21% to $7.9B on cloud infrastructure demand, but free cash flow drops 85% as capex and working capital build.
growth accelerated sharply, but cash generation stalled. Revenue rose 21% to $7.9 billion and reached 9.4% as the Cloud and Power Infrastructure grew 35%, while fell to $41 million from $268 million a year ago as the company invested in capacity and absorbed the EPP acquisition. The business is scaling fast, but the spin-off of its fastest-growing segment now looms over the second half of the year.
Key takeaways
rose 21% to $7.9 billion, the fastest quarterly growth rate in the data shown, driven by a 35% increase in the Cloud and Power Infrastructure (CPI) , which includes the newly acquired EPP business.
widened 0.7 points to 9.4%, matching the record level reached in Q4 FY2026, as favorable mix and operational execution in the Regulated Manufacturing Solutions (RMS) , where margin rose 1.3 points, offset higher costs.
fell 85% to $41 million from $268 million a year ago, as a $123 million increase in and investment more than offset higher .
Section summaries
Management's Discussion and Analysis
Q1 FY2027 revenue rose 21% to $7.9B, driven by Cloud & Power Infrastructure and Communications, with gross margin up 70 bps.
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grew 21% to $7.9B, led by a 35% surge in the Cloud and Power Infrastructure (CPI) , including contributions from the EPP acquisition.
improved 70 to 9.4%, driven by growth, favorable mix, and operational execution, with RMS up 130 .
SG&A rose $101M to 4.2% of sales, including $53M in costs related to the intended spin-off of the CPI business.
SG&A rose $101 million to 4.2% of sales, including $53 million in costs tied to the planned spin-off of the CPI business, which the company still targets for early calendar 2027.
Other income swung to a $37 million gain, primarily from a $46 million gain on the sale of a non-strategic North American business, which boosted .
rose 74% to $5.2 billion, reflecting $1.5 billion in proceeds used partly for the $1.1 billion EPP acquisition, while cash and equivalents rose 27% to $2.8 billion.
What changed
The FY2026 10-K flagged whether the 9.2% was sustainable or would expand further as CPI scaled. In Q1 FY2027, gross margin reached 9.4%, up 0.2 points from the full-year FY2026 level, suggesting the favorable mix shift is continuing.
The FY2026 10-K asked whether the CPI spin-off, targeted for early calendar 2027, would cause disruption. This quarter, the company recorded $53 million in spin-off-related costs within SG&A, indicating separation work is underway and beginning to affect operating expenses.
The Q3 FY2026 10-Q asked whether the Mukachevo, Ukraine facility would resume normal operations. No new charges were reported this quarter, suggesting the situation has stabilized after $46 million in charges last fiscal year.
The Q2 FY2026 10-Q flagged whether the FRS could sustain its return to growth. Now reported as RMS, the segment grew 5% in FY2026 and its margin widened 1.3 points this quarter, indicating the recovery is holding.
What to watch
Whether recovers from $41 million as the EPP acquisition is integrated and investment normalizes, or whether elevated to support CPI growth keeps cash generation depressed.
Whether the $53 million in quarterly spin-off-related SG&A costs are a one-time step-up or the start of a sustained expense run-rate as the CPI separation progresses toward its early calendar 2027 target.
Whether the CPI sustains its 35% growth rate as data center and AI infrastructure demand continues, or whether the growth rate moderates as the EPP acquisition contribution annualizes.
Whether the $1.5 billion in proceeds and the rise in to $5.2 billion lead to further leveraging for acquisitions or share repurchases, or whether the company prioritizes deleveraging ahead of the CPI spin-off.
Other income, net swung to a $37M gain, primarily from a $46M gain on the sale of a non-strategic North American business.
fell to $41M from $268M, as a $123M increase in and changes offset higher .
Liquidity remained strong with $2.8B in cash and no borrowings under the $2.75B , following $1.5B in proceeds used partly for the $1.1B EPP acquisition.
Quantitative and Qualitative Disclosures About Market Risk
Other than a $1.45 billion increase in floating rate debt, there were no material changes in our exposure to market risks for changes in interest and foreign currency exchange rates for the three-month period ended June 26, 2026 as compared to the fiscal year ended March 31, 202…
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Other than a $1.45 billion increase in floating rate debt, there were no material changes in our exposure to market risks for changes in interest and foreign currency exchange rates for the three-month period ended June 26, 2026 as compared to the fiscal year ended March 31, 2026. A hypothetical 10% change in interest rates would not be expected to have a material effect on our financial position, results of operations and cash flows over the next fiscal year.
For a description of our material legal proceedings, see note 13 “Commitments and Contingencies” in the notes to the condensed consolidated financial statements, which is incorporated herein by reference.
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For a description of our material legal proceedings, see note 13 “Commitments and Contingencies” in the notes to the condensed consolidated financial statements, which is incorporated herein by reference.
In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which could materially affect our bus…
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In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be not material also may materially and adversely affect our business, financial condition and/or operating results.