Q1 2026 Jabil Inc Earnings Call

December 17, 2025

Speaker #2: Com after today's presentation complete available recording will be on our for concludes , a playback . In addition , we will be making forward looking during this statements presentation , including , among things , those regarding the anticipated outlook for our business , such as our currently second quarter and full fiscal expected year 2026 net revenue and earnings .

Speaker #2: These are based on statements, current expectations, assumptions, forecasts, and involve risks and uncertainties that could cause the actual outcomes and results to differ materially. Extensive list.

Speaker #2: Any risks and uncertainties identified in our Report on Form 10-K for the fiscal year ended, annual filings with the SEC 2025, and other, Jabil disclaims.

Operator: Greetings. Welcome to Jabil's first quarter of fiscal year 2026 financial results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Adam Berry, SVP, IR and Communications. Thank you. You may begin.

Speaker #2: intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With that,

Speaker #2: I've now provided the information, so I'd like to hand the call over to Greg.

Speaker #3: Thanks , Adam , and good morning joining our call today Thanks for , everyone . . quarter we This exceeded expectations across the board .

Adam Berry: Good morning and welcome to Jabil's first quarter fiscal 2026 conference call. Joining me on today's call are Chief Executive Officer Mike Dastoor and Chief Financial Officer Greg Hebard. Please note that today's presentation is being live-streamed, and during our prepared remarks, we will be referencing slides. To view these slides, please visit the Investor Relations section of jabil.com. After today's presentation concludes, a complete recording will be available on our website for playback. In addition, we will be making forward-looking statements during this presentation, including, among other things, those regarding the anticipated outlook for our business, such as our currently expected second quarter and full fiscal year 2026 net revenue and earnings. These statements are based on current expectations, forecasts, and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially.

Speaker #3: Operating income, core revenue, and core earnings per share all came in strong in Q1. Our performance underscores the value of our diversified portfolio and our consistent execution.

Speaker #3: Intelligent infrastructure led the way with impressive growth, while regulated industries, connected living, and digital commerce delivered steady results in line with or above our outlook.

Speaker #3: Let's now walk numbers through. Our net revenue for Q1 was $8.3 billion, high end of guidance range. The mix in ongoing cost discipline revenue and achieve.

Speaker #3: of $454 million and a core operating margin of 5.5%. On a GAAP basis, GAAP operating income was $283 million and GAAP diluted earnings per share was $1.35.

Speaker #3: For diluted earnings per share at the for Q1 was $2.85, coming in at the upper end of our guidance range. Turning now to performance segment in by the quarter.

Adam Berry: An extensive list of these risks and uncertainties is identified in our annual report on Form 10-K for the fiscal year ended 31 August 2025, and other filings with the SEC. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With that, I'd now like to hand the call over to Greg.

An extensive list of these risks and uncertainties is identified in our annual report on Form 10-K for the fiscal year ended 31 August 2025, and other filings with the SEC. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With that, I'd now like to hand the call over to Greg.

Speaker #3: Regulated industries generated $3.1 billion in revenue, in line with expectations and up 4% year over year. Automotive and renewables came in largely as expected, and healthcare continued to deliver steady, reliable performance revenue.

Greg Hebard: Thanks, Adam, and good morning, everyone. Thanks for joining our call today. This quarter, we exceeded expectations across the board. Revenue, core operating income, core margins, and core earnings per share all came in strong. Our performance underscores the value of our diversified portfolio and our consistent execution. Intelligent Infrastructure led the way with impressive growth, while Regulated Industries and Connected Living and Digital Commerce delivered steady results in line with or above our outlook. Let's now walk through our numbers. Net revenue for Q1 was $8.3 billion, at the high end of our guidance range. The mix in revenue and ongoing cost discipline helped us achieve core operating income of $454 million and a core operating margin of 5.5%. On a GAAP basis, operating income was $283 million, and GAAP diluted earnings per share was $1.35.

Gregory Hebard: Thanks, Adam, and good morning, everyone. Thanks for joining our call today. This quarter, we exceeded expectations across the board. Revenue, core operating income, core margins, and core earnings per share all came in strong. Our performance underscores the value of our diversified portfolio and our consistent execution. Intelligent Infrastructure led the way with impressive growth, while Regulated Industries and Connected Living and Digital Commerce delivered steady results in line with or above our outlook. Let's now walk through our numbers. Net revenue for Q1 was $8.3 billion, at the high end of our guidance range. The mix in revenue and ongoing cost discipline helped us achieve core operating income of $454 million and a core operating margin of 5.5%. On a GAAP basis, operating income was $283 million, and GAAP diluted earnings per share was $1.35.

Speaker #3: Core to operating margin was 5.8%, up 110 basis points year over year, reflecting solid execution across the segment and disciplined ongoing healthcare and.

Speaker #3: Intelligent infrastructure strength in revenue was 3.9 billion , ahead of expectations . The upside was primarily strength in our data cloud and center infrastructure , driven by as well as our networking markets end in cloud and DCI , we saw higher revenue due to strong execution as we ramp our second hyperscale customer in Mexico , along with robust our data center power operations in results from Memphis .

Speaker #3: The upside and networking was primarily driven by for demand stronger next generation , liquid cooled platforms , which we currently support in India .

Speaker #3: Core operating margin for the segment was 5.2%, up year-over-year 40 basis points, with a strong mix and supported by execution. Connected Living and Digital Commerce revenue was $1.4 billion.

Greg Hebard: Core diluted earnings per share for Q1 was $2.85, coming in at the upper end of our guidance range. Turning now to performance by segment in the quarter, regulated industries generated $3.1 billion in revenue, in line with expectations, and up 4% year over year. Automotive and renewables came in largely as expected, and healthcare continued to deliver steady, reliable revenue performance. Core operating margin was 5.8%, up 110 basis points year over year, reflecting solid and disciplined execution across the segment and ongoing strength in healthcare. Intelligent infrastructure revenue was $3.9 billion, ahead of expectations. The upside was primarily driven by strength in our cloud and data center infrastructure, as well as our networking and markets. In cloud and DCI, we saw higher revenue due to strong execution as we ramp our second hyperscale customer in Mexico, along with robust results from our data center power operations in Memphis.

Core diluted earnings per share for Q1 was $2.85, coming in at the upper end of our guidance range. Turning now to performance by segment in the quarter, regulated industries generated $3.1 billion in revenue, in line with expectations, and up 4% year over year. Automotive and renewables came in largely as expected, and healthcare continued to deliver steady, reliable revenue performance. Core operating margin was 5.8%, up 110 basis points year over year, reflecting solid and disciplined execution across the segment and ongoing strength in healthcare. Intelligent infrastructure revenue was $3.9 billion, ahead of expectations. The upside was primarily driven by strength in our cloud and data center infrastructure, as well as our networking and markets. In cloud and DCI, we saw higher revenue due to strong execution as we ramp our second hyperscale customer in Mexico, along with robust results from our data center power operations in Memphis.

Speaker #3: Ahead of expectations , with strength and automation , robotics and retail warehouse programs . Core operating margin for the segment was 5.5% . Next , I'll provide an update on our cash flow and balance sheet metrics .

Speaker #3: Inventory days for the quarter came in at 70 days net of inventory deposits from customers. Inventory days, at 57 days, were consistent with our targeted range of 55 to 60 days.

Speaker #3: Cash flow from operations in Q1 was $323 million, and capital net expenditures were $51 million, resulting in adjusted free cash flow of $272 million for the quarter.

Speaker #3: We remain on track to deliver $1.3 billion in adjusted free cash flow for the full year . We ended the quarter with a healthy balance including net debt to core EBITDA of 1.2 times and cash sheet , balances of $1.6 billion during Q1 , repurchased $300 million of shares we under our existing share repurchase authorization With that , let's turn to our .

Greg Hebard: The upside in networking was primarily driven by stronger demand for next-generation liquid-cooled platforms, which we currently support in India. Core operating margin for the segment was 5.2%, up 40 basis points year over year, supported by mix and strong execution. Connected Living and Digital Commerce revenue was $1.4 billion, ahead of expectations with broad-based strength in automation, robotics, and retail warehouse programs. Core operating margin for the segment was 5.5%. Next, I'll provide an update on our cash flow and balance sheet metrics. Inventory days for the quarter came in at 70 days. Net of inventory deposits from customers, inventory days were 57 days, consistent with our targeted range of 55 to 60 days. Cash flow from operations in Q1 was $323 million, and net capital expenditures were $51 million, resulting in adjusted free cash flow of $272 million for the quarter.

The upside in networking was primarily driven by stronger demand for next-generation liquid-cooled platforms, which we currently support in India. Core operating margin for the segment was 5.2%, up 40 basis points year over year, supported by mix and strong execution. Connected Living and Digital Commerce revenue was $1.4 billion, ahead of expectations with broad-based strength in automation, robotics, and retail warehouse programs. Core operating margin for the segment was 5.5%. Next, I'll provide an update on our cash flow and balance sheet metrics. Inventory days for the quarter came in at 70 days. Net of inventory deposits from customers, inventory days were 57 days, consistent with our targeted range of 55 to 60 days. Cash flow from operations in Q1 was $323 million, and net capital expenditures were $51 million, resulting in adjusted free cash flow of $272 million for the quarter.

Speaker #3: guidance for Q2 . 26 , beginning with revenue by segment . We FY anticipate industries revenue regulated of 2.78 billion , up 2% year on year , reflecting an appropriately disciplined outlook automotive for and renewables , with continued growth in health care , intelligent infrastructure revenue of 3.76 billion , 42% year on year , supported by sustained strong demand across cloud data center up infrastructure , data power center cooling and capital equipment liquid .

Speaker #3: This also includes a modest contribution from the previously announced Hanley Energy acquisition , guidance assumes will close sometime in which our January . Connected Living and Digital Commerce revenue 1.21 billion , down 10% , of reflecting planned program attrition and customer pruning , partially offset by continued growth in warehouse and retail automation .

Speaker #3: Putting it all together at the enterprise level, total company revenue for expected Q2 is to be in the range of $7.5 billion to $8 billion.

Greg Hebard: We remained on track to deliver $1.3 billion in adjusted free cash flow for the full year. We ended the quarter with a healthy balance sheet, including net debt to core EBITDA of 1.2 times and cash balances of $1.6 billion. During Q1, we repurchased $300 million of shares under our existing share repurchase authorization. With that, let's turn to our guidance for Q2 FY26. Beginning with revenue by segment, we anticipate Regulated Industries' revenue of $2.78 billion, up 2% year on year, reflecting an appropriately disciplined outlook for automotive and renewables, with continued growth in healthcare. Intelligent Infrastructure revenue of $3.76 billion, up 42% year on year, supported by sustained strong demand across cloud, data center infrastructure, data center power, networking, liquid cooling, and capital equipment. This also includes a modest contribution from the previously announced Hanley Energy acquisition, which our guidance assumes will close sometime in January.

We remained on track to deliver $1.3 billion in adjusted free cash flow for the full year. We ended the quarter with a healthy balance sheet, including net debt to core EBITDA of 1.2 times and cash balances of $1.6 billion. During Q1, we repurchased $300 million of shares under our existing share repurchase authorization. With that, let's turn to our guidance for Q2 FY26. Beginning with revenue by segment, we anticipate Regulated Industries' revenue of $2.78 billion, up 2% year on year, reflecting an appropriately disciplined outlook for automotive and renewables, with continued growth in healthcare. Intelligent Infrastructure revenue of $3.76 billion, up 42% year on year, supported by sustained strong demand across cloud, data center infrastructure, data center power, networking, liquid cooling, and capital equipment. This also includes a modest contribution from the previously announced Hanley Energy acquisition, which our guidance assumes will close sometime in January.

Speaker #3: Core income is expected to be in the range of $375 million to $435 million. GAAP operating income is expected to be in the range of $312 million to $382 million.

Speaker #3: Core diluted earnings per share is expected to be in the range of $2.27 to $2.67, GAAP diluted earnings per share is expected to be in the range of $1.70 to $2.19.

Speaker #3: We expect second quarter net interest expense to be approximately $69 million, and full year interest expense to be approximately $270 million. The increase in interest expense next quarter reflects two key factors.

Speaker #3: First, additional debt associated with the anticipated acquisition of Hanley Energy Group, which we intend to fund through a combination of cash and borrowings, and anticipated refinancing of our existing senior notes in April maturing.

Speaker #3: . Our core tax rate second , the for Q2 and the full year is 21% . closing , Q1 In was a strong start to the we year and carried good momentum into Q2 .

Greg Hebard: Connected Living and Digital Commerce revenue of $1.21 billion, down 10%, reflecting planned program attrition and customer pruning, partially offset by continued growth in warehouse and retail automation. Putting it all together at the enterprise level, total company revenue for Q2 is expected to be in the range of $7.5 billion to $8 billion. Core operating income is expected to be in the range of $375 million to $435 million. Gap operating income is expected to be in the range of $312 million to $382 million. Core diluted earnings per share is expected to be in the range of $2.27 to $2.67. Gap diluted earnings per share is expected to be in the range of $1.70 to $2.19. We expect second quarter net interest expense to be approximately $69 million and full year interest expense to be approximately $270 million.

Connected Living and Digital Commerce revenue of $1.21 billion, down 10%, reflecting planned program attrition and customer pruning, partially offset by continued growth in warehouse and retail automation. Putting it all together at the enterprise level, total company revenue for Q2 is expected to be in the range of $7.5 billion to $8 billion. Core operating income is expected to be in the range of $375 million to $435 million. Gap operating income is expected to be in the range of $312 million to $382 million. Core diluted earnings per share is expected to be in the range of $2.27 to $2.67. Gap diluted earnings per share is expected to be in the range of $1.70 to $2.19. We expect second quarter net interest expense to be approximately $69 million and full year interest expense to be approximately $270 million.

Speaker #3: Our results reflect the strength of our diversified portfolio and the consistency of our execution. As we balance the rest of the year, we remain focused on margin expansion, capital efficiency, and sustained cash generation.

Speaker #3: With that, I'll turn the call back to Mike, who will offer additional color on fiscal 2026 and our updated guidance.

Speaker #4: Thanks, Greg, and good morning. I'd like to begin by personally recognizing and thanking our global team for their extraordinary efforts. They continue to deliver.

Speaker #4: I am extremely pleased with the strong start to fiscal 2026, which could not be accomplished without your discipline and commitment to focus on customers.

Speaker #4: I our see that dedication day across our every operations , and I am sincerely grateful for everything the team continues to deliver . Greg As outlined , the first quarter was better than expected in both revenue and core margin , ultimately drove core EPs to the high end of our guidance range .

Greg Hebard: The increase in interest expense next quarter reflects two key factors. First, additional debt associated with the anticipated acquisition of Hanley Energy Group, which we intend to fund through a combination of cash and new borrowings. And second, the anticipated refinancing of our existing senior notes maturing in April. Our core tax rate for Q2 and the full year is 21%. In closing, Q1 was a strong start to the year, and we carried good momentum into Q2. Our results reflect the strength of our diversified portfolio and the consistency of our execution. As we move through the balance of the year, we remain focused on margin expansion, capital efficiency, and sustained cash generation. With that, I'll turn the call back to Mike, who will offer additional color on fiscal 2026 and our updated guidance.

The increase in interest expense next quarter reflects two key factors. First, additional debt associated with the anticipated acquisition of Hanley Energy Group, which we intend to fund through a combination of cash and new borrowings. And second, the anticipated refinancing of our existing senior notes maturing in April. Our core tax rate for Q2 and the full year is 21%. In closing, Q1 was a strong start to the year, and we carried good momentum into Q2. Our results reflect the strength of our diversified portfolio and the consistency of our execution. As we move through the balance of the year, we remain focused on margin expansion, capital efficiency, and sustained cash generation. With that, I'll turn the call back to Mike, who will offer additional color on fiscal 2026 and our updated guidance.

Speaker #4: And while AI, which continued to be the primary driver of growth, it was great to see all of our three segments contribute to our better-than-expected performance.

Speaker #4: In summary, our Q1 results are believed to reinforce the strength of the strategy we laid out in September and the value of our diversified model.

Speaker #4: And more importantly, we now expect this to continue throughout fiscal 2026 and beyond, with momentum into fiscal 2027. With that momentum as a backdrop, I'd now like to take a few minutes to walk through each of our segments for FY26.

Speaker #4: Beginning with Intelligent Infrastructure. We're updating our fiscal 2027 outlook by raising $900 million, approximately, driven by higher revenue in both cloud and DCI.

Speaker #4: As well as networking, cloud is now expected to be up an incremental $600 million for the year. DCI, too, is stronger than expected; outlook is $9.8 billion.

Mike Dastoor: Thanks, Greg, and good morning, everyone. I'd like to begin by personally recognizing and thanking our global team for their extraordinary effort they continue to deliver. I am extremely pleased with the strong start to fiscal 2026, which could not be accomplished without your focus, discipline, and commitment to our customers. I see that dedication every day across our operations, and I am sincerely grateful for everything the Jabil team continues to deliver. As Greg outlined, the first quarter was better than expected in both revenue and core margin, which ultimately drove core EPS to the high end of our guidance range. And while AI continued to be the primary driver of growth, it was great to see all of our three segments contribute to our better-than-expected performance.

Speaker #4: Program with our wins, second hyperscale customer in Mexico, and upside in our data power business in the Memphis center also includes $200 million associated with the Energy.

Speaker #4: which we expect to close in January . Hanley capabilities in strengthens our power distribution and energy systems for next generation data centers . This will diversify our racks and server business into verticals that extend beyond This compute , including power , energy management and data center infrastructure services in our capital equipment and market demand is also remained very healthy and consistent with our expectations of year on year growth of 16% .

Mike Dastoor: In summary, our Q1 results, I believe, reinforced the strength of the strategy we laid out in September and the value of our diversified model. More importantly, we now expect this momentum to continue throughout fiscal 2026 and beyond into fiscal 2027. With that momentum as a backdrop, I'd now like to take a few minutes to walk through each of our segments for FY26. Beginning with Intelligent Infrastructure, we're raising our fiscal 2027 outlook by approximately $900 million, driven by higher revenue in both Cloud and DCI, as well as Networking. Cloud and DCI is now expected to be up an incremental $600 million for the year to $9.8 billion. The stronger-than-expected outlook is primarily driven by recent program wins with our second hyperscale customer in Mexico and upside in our data center power business in Memphis.

In summary, our Q1 results, I believe, reinforced the strength of the strategy we laid out in September and the value of our diversified model. More importantly, we now expect this momentum to continue throughout fiscal 2026 and beyond into fiscal 2027. With that momentum as a backdrop, I'd now like to take a few minutes to walk through each of our segments for FY26. Beginning with Intelligent Infrastructure, we're raising our fiscal 2027 outlook by approximately $900 million, driven by higher revenue in both Cloud and DCI, as well as Networking. Cloud and DCI is now expected to be up an incremental $600 million for the year to $9.8 billion. The stronger-than-expected outlook is primarily driven by recent program wins with our second hyperscale customer in Mexico and upside in our data center power business in Memphis.

Speaker #4: We now expect our networking and comms end be up market to approximately $300 million for fiscal 2026 to $2.7 billion . This is by stronger demand for next gen , liquid cooled platforms with meaningful supported demand increases in India as customers expand high speed interconnects , both Ethernet and InfiniBand capacity to support the rapid growth in AI including workloads .

Speaker #4: Altogether , we now expect AI related approximately $12.1 billion in revenue of represents fiscal 2026 , approximately 35% year over year growth , up which from 25% originally expected in September .

Speaker #4: The strength we are seeing clearly here validates our strategy by designing and delivering fully integrated systems that combine compute, networking, power distribution, and advanced cooling. We materially shortened cooling.

Mike Dastoor: This also includes approximately $200 million associated with the Hanley Energy acquisition, which we expect to close in January. Hanley strengthens our capabilities in modular power distribution and energy systems for next-generation data centers. This will diversify our racks and server business in the verticals that extend beyond compute, including power, energy management, and data center infrastructure services. In our capital equipment end market, demand has also remained very healthy and consistent, with our expectations of year-on-year growth of 16%. We now expect our networking and comms end market to be up approximately $300 million for fiscal 2026 to $2.7 billion. This is supported by stronger demand for next-gen liquid-cooled platforms, with meaningful demand increases in India, as customers expand high-speed interconnects, including both Ethernet and InfiniBand capacity, to support the rapid growth in AI workloads.

This also includes approximately $200 million associated with the Hanley Energy acquisition, which we expect to close in January. Hanley strengthens our capabilities in modular power distribution and energy systems for next-generation data centers. This will diversify our racks and server business in the verticals that extend beyond compute, including power, energy management, and data center infrastructure services. In our capital equipment end market, demand has also remained very healthy and consistent, with our expectations of year-on-year growth of 16%. We now expect our networking and comms end market to be up approximately $300 million for fiscal 2026 to $2.7 billion. This is supported by stronger demand for next-gen liquid-cooled platforms, with meaningful demand increases in India, as customers expand high-speed interconnects, including both Ethernet and InfiniBand capacity, to support the rapid growth in AI workloads.

Speaker #4: Deployment timelines and reduced total costs for customers are precisely what is required as AI capacity scales. On a note, and as separate from what we discussed in September, we're in the process of retrofitting our East Coast rack and silver factories to accommodate for liquid cooling. Efforts remain slightly ahead of schedule.

Speaker #4: Positioning very JBL well of second half fiscal 2026 for the and fiscal And these 2027 . into regulated industries , fiscal 2026 is tracking above In September expectations by roughly $100 million , better than expected results in driven by we remain cautious with renewables outlook for .

Speaker #4: . Automotive perform as continues to expected , and we continue to on powertrain focus agnostic solutions in next vehicles gen . Importantly , over the longer term , Although remain well in both we renewables and automotive markets team has as the consolidated its share with existing customers In .

Mike Dastoor: Altogether, we now expect AI-related revenue of approximately $12.1 billion in fiscal 2026, which represents approximately 35% year-over-year growth, up from 25% originally expected in September. The strength we're seeing here clearly validates our strategy. By designing and delivering fully integrated systems that combine compute, networking, power distribution, and advanced cooling, we materially shorten deployment timelines and reduce total costs for customers, precisely what is required as AI capacity scales. On a separate note, and as we discussed in September, we're in the process of retrofitting our East Coast rack and server factories to accommodate for liquid cooling. And these efforts remain slightly ahead of schedule, positioning Jabil very well for the second half of fiscal 2026 and into fiscal 2027.

Altogether, we now expect AI-related revenue of approximately $12.1 billion in fiscal 2026, which represents approximately 35% year-over-year growth, up from 25% originally expected in September. The strength we're seeing here clearly validates our strategy. By designing and delivering fully integrated systems that combine compute, networking, power distribution, and advanced cooling, we materially shorten deployment timelines and reduce total costs for customers, precisely what is required as AI capacity scales. On a separate note, and as we discussed in September, we're in the process of retrofitting our East Coast rack and server factories to accommodate for liquid cooling. And these efforts remain slightly ahead of schedule, positioning Jabil very well for the second half of fiscal 2026 and into fiscal 2027.

Speaker #4: healthcare , our business remains solid and aligned with growth our , supported by continued strength in drug delivery platforms , including Glp1 , and expectations for glucose monitors , as well as ongoing across invasive minimally technologies demand .

Speaker #4: Remains healthy, continuous good visibility into ramps, drug delivery, disease program, and other chronic devices management categories. Overall, we expect healthcare will be a regulated growth engine and a durable, multiyear opportunity.

Speaker #4: Putting it all together, we expect a Jabil regulated-now segment to return to growth this year, representing nearly 40% of our revenue in fiscal 2026.

Speaker #4: And finally , in connected living and digital commerce , our outlook is also ahead of our expectations . At the beginning of the year , as we now anticipate approximately $100 million in incremental revenue for the year , driven primarily by broad based strength in automation and advanced retail , robotics warehouse programs .

Mike Dastoor: In regulated industries, fiscal 2026 is tracking above our September expectations by roughly $100 million, driven by better-than-expected results in renewables, although we remain cautious with our outlook for the year. Automotive continues to perform as expected, and we continue to focus on powertrain-agnostic solutions in next-gen vehicles. Importantly, over the longer term, we remain well-positioned in both renewables and automotive markets, as the team has consolidated share with existing customers. In healthcare, our business remains solid and aligned with our expectations for growth, supported by continued strength in drug delivery platforms, including GLP-1 and continuous glucose monitors, as well as ongoing demand across diagnostics and minimally invasive technologies. Our pipeline remains healthy, with good visibility into program ramps across drug delivery, chronic disease management, and other regulated devices categories. Overall, we expect healthcare will be a durable multi-year growth engine for Jabil.

In regulated industries, fiscal 2026 is tracking above our September expectations by roughly $100 million, driven by better-than-expected results in renewables, although we remain cautious with our outlook for the year. Automotive continues to perform as expected, and we continue to focus on powertrain-agnostic solutions in next-gen vehicles. Importantly, over the longer term, we remain well-positioned in both renewables and automotive markets, as the team has consolidated share with existing customers. In healthcare, our business remains solid and aligned with our expectations for growth, supported by continued strength in drug delivery platforms, including GLP-1 and continuous glucose monitors, as well as ongoing demand across diagnostics and minimally invasive technologies. Our pipeline remains healthy, with good visibility into program ramps across drug delivery, chronic disease management, and other regulated devices categories. Overall, we expect healthcare will be a durable multi-year growth engine for Jabil.

Speaker #4: Altogether, we now expect CLDC to be roughly down 11% year over year, due to announced customer in Connected Living, offset slightly by growth in Digital Printing & Commerce.

Speaker #4: increase $1.1 billion from our of prior outlook . also raising our margin expectations for the Importantly , we are year we now anticipate core operating margins of roughly 5.7% , a of ten basis improvement points versus our earlier view meaningful .

Speaker #4: Improvement reflects a strong mix, continued execution, and the leverage in our underlying business. As a result of both higher revenue and higher margins, we now expect core delivered earnings per share to result in $11.55 for the year, an increase of $0.55 from our previous estimate. This—

Mike Dastoor: Putting it all together, we now expect our regulated segment to return to growth this year, representing nearly 40% of our revenue in fiscal 2026. Finally, in Connected Living and Digital Commerce, our outlook is also ahead of our expectations at the beginning of the year, as we now anticipate approximately $100 million in incremental revenue for the year, driven primarily by broad-based strength in automation, robotics, and advanced retail warehouse programs. Altogether, we now expect CLDC to be down by roughly 11% year-over-year due to previously announced customer pruning in Connected Living, offset slightly by growth in Digital Commerce. Given the strength of Q1 and the visibility we have across the business, we're raising our full-year guidance for revenue, core margins, and core EPS. For fiscal 2026, we now expect revenue of approximately $32.4 billion, an increase of $1.1 billion from our prior outlook.

Putting it all together, we now expect our regulated segment to return to growth this year, representing nearly 40% of our revenue in fiscal 2026. Finally, in Connected Living and Digital Commerce, our outlook is also ahead of our expectations at the beginning of the year, as we now anticipate approximately $100 million in incremental revenue for the year, driven primarily by broad-based strength in automation, robotics, and advanced retail warehouse programs. Altogether, we now expect CLDC to be down by roughly 11% year-over-year due to previously announced customer pruning in Connected Living, offset slightly by growth in Digital Commerce. Given the strength of Q1 and the visibility we have across the business, we're raising our full-year guidance for revenue, core margins, and core EPS. For fiscal 2026, we now expect revenue of approximately $32.4 billion, an increase of $1.1 billion from our prior outlook.

Speaker #4: And continue to expect cash flow of more than consistent with the framework we outlined in September, which will allow us adjusted free to continue to $1.3 billion, invest in future growth while continuing to return capital to shareholders.

Speaker #4: Across the company , our priorities remain the same profitable growth , diversified mix , margin expansion , consistent cash generation and strong commitment to buybacks , which was evident in Q1 .

Speaker #4: This focus is driving momentum across the company, allowing us to navigate changing market conditions, deliver consistent results, and steadily build business-term earnings power.

Speaker #4: To summarize , our first quarter results were better than expected , and fiscal 2026 is now tracking well above our initial expectations . What's notable to me about our higher FY 26 it's broad based .

Mike Dastoor: Importantly, we're also raising our margin expectations for the year. We now anticipate core operating margins of roughly 5.7%, a meaningful improvement of 10 basis points versus our earlier view. This improvement reflects strong mix, continued execution, and the underlying leverage in our model. As a result of both higher revenue and higher margins, we now expect core delivered earnings per share of $11.55 for the year, an increase of $0.55 from our previous estimate. We continue to expect adjusted free cash flow of more than $1.3 billion, consistent with the framework we outlined in September, which will allow us to continue to invest in future growth while continuing to return capital to shareholders. Across the company, our priorities remain the same: profitable growth, diversified mix, margin expansion, consistent cash generation, and strong commitment to buybacks, which was evident in Q1.

Importantly, we're also raising our margin expectations for the year. We now anticipate core operating margins of roughly 5.7%, a meaningful improvement of 10 basis points versus our earlier view. This improvement reflects strong mix, continued execution, and the underlying leverage in our model. As a result of both higher revenue and higher margins, we now expect core delivered earnings per share of $11.55 for the year, an increase of $0.55 from our previous estimate. We continue to expect adjusted free cash flow of more than $1.3 billion, consistent with the framework we outlined in September, which will allow us to continue to invest in future growth while continuing to return capital to shareholders. Across the company, our priorities remain the same: profitable growth, diversified mix, margin expansion, consistent cash generation, and strong commitment to buybacks, which was evident in Q1.

Speaker #4: All three segments are contributing outlook is that infrastructure leading the way . move forward , we remain focused on driving long term value for our shareholders As we Before closing , I want to again .

Speaker #4: Teams, customers, and, for their commitment and partnership, suppliers. The consistency in our results is a direct reflection of their efforts, and I am grateful for the trust they continue to place in Jabil.

Speaker #4: want to wish a safe and I also holiday season and trust Happy New everyone . With that , I'll healthy turn the a call over to Adam Year .

Speaker #2: Thanks , Mike .

Speaker #3: Operator .

Speaker #2: We're now ready for Q&A.

Speaker #1: Thank you. We will now be conducting a question and answer. If you would like to ask a question, please star one on your telephone keypad.

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Mike Dastoor: This focus is driving momentum across the business, allowing us to navigate changing market conditions, deliver consistent results, and steadily build long-term earnings power. To summarize, our first quarter results were better than expected, and fiscal 2026 is now tracking well above our initial expectations. What's notable to me about our higher FY26 outlook is that it's broad-based. All three segments are contributing, with Intelligent Infrastructure leading the way. As we move forward, we remain focused on driving long-term value for our shareholders. Before closing, I want to again thank our teams, customers, and suppliers for their commitment and partnership. The consistency in our results is a direct reflection of their efforts, and I am grateful for the trust they continue to place in Jabil. I also want to wish everyone a safe and healthy holiday season and a Happy New Year.

This focus is driving momentum across the business, allowing us to navigate changing market conditions, deliver consistent results, and steadily build long-term earnings power. To summarize, our first quarter results were better than expected, and fiscal 2026 is now tracking well above our initial expectations. What's notable to me about our higher FY26 outlook is that it's broad-based. All three segments are contributing, with Intelligent Infrastructure leading the way. As we move forward, we remain focused on driving long-term value for our shareholders. Before closing, I want to again thank our teams, customers, and suppliers for their commitment and partnership. The consistency in our results is a direct reflection of their efforts, and I am grateful for the trust they continue to place in Jabil. I also want to wish everyone a safe and healthy holiday season and a Happy New Year.

Speaker #1: Our first question is from the line of Ruplu Bhattacharya. Please proceed with your question.

Speaker #5: Hi, thanks. Mike with Bank of America. Thanks for taking my questions. You raised the full-year guide by revenue, $1 billion. There’s lots of things that are happening in the intelligent over infrastructure space.

Speaker #5: You mentioned some of the wins. Can you give us some more color on those? You know, there are a lot of new projects coming up as well.

Speaker #5: as Like slides , AMD Anthropic , AWS . I mean , do you Jabil think has the intent or the opportunity to benefit from some of those And then other things you mentioned , like there are retrofitting factories for liquid cooling and acquiring projects ? Hanley Energy Group .

Speaker #5: Just lay out for us the impact of all of these factors. And would you say the guidance for the fiscal year is still conservative overall?

Speaker #4: , Ruplu . So really think our intelligent infrastructure is outperforming . I , I I one of the reasons I think our AI strategy is working so well is because of the holistic view that we're taking of Thanks data focused on single products or product lines , not just actually invested centers .

Mike Dastoor: With that, I'll turn the call over to Adam.

With that, I'll turn the call over to Adam.

Adam Berry: Thanks, Mike. Operator, we're now ready for Q&A.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we pull for your questions. Our first questions come from the line of Rupalu Bhattacharya with Bank of America. Please proceed with your questions.

Speaker #4: In design and engineering across the board, which allows us to—we're cross-pollinate, which allows us to cross-sell, which allows us to use our liquid cooling capability with some of the server racks and the parts of our intelligent other infrastructure business.

Speaker #4: So in terms of infrastructure performing really well , I think in revenue was 25 our September 9 billion . , we'd taken it In to 11.2 , which was up 25% .

Ruplu Bhattacharya: Hi. Thank you for taking my questions. Mike, you raised the full-year revenue guide by over $1 billion. There's lots of things that are happening in the intelligent infrastructure space. The slides mentioned some new wins. Can you give us some more color on those? There are a lot of new projects coming up as well, like OpenAI, AMD, Anthropic, AWS. I mean, do you think Jabil has the intent or the opportunity to benefit from some of those projects? And then there are other things you mentioned, like retrofitting factories for liquid cooling and acquiring Hanley Energy Group. So maybe just lay out for us the impact of all of these factors. And overall, would you say the guidance is for the fiscal year is still conservative?

Speaker #4: We've now taken it up to 12.1 , which is 35% . a About $900 million increase in that revenue level . I think out of Think of it in two buckets .

Speaker #4: One is the cloud and DCI the 900 . bucket , which is up about 600 million , 200 million of that is And I'll touch on that in a Hanley .

Speaker #4: Balance is the up of minute. Made upside on some recent we had, maybe during Q4 of wins that year with our second Hyperscaler, and that's in Mexico.

Speaker #4: All its AI storage racks that were manufacturing for that second hyperscaler. And then, on the business in Memphis, I think DCI, there's a whole bunch of upsides there.

Mike Dastoor: Thanks, Rupalu. So I really think our Intelligent Infrastructure is outperforming. One of the reasons I think our AI strategy is working so well is because of the holistic view that we're taking of data centers. We're not just focused on single products or product lines. We're actually invested in design and engineering across the board, which allows us to cross-pollinate, which allows us to cross-sell, which allows us to use our liquid cooling capability with some of the server racks and other parts of our Intelligent Infrastructure business. So Intelligent Infrastructure is performing really well. I think in 2025, our revenue was $9 billion. In September, we've taken it to $11.2 billion, which was up 25%. We've now taken it up to $12.1 billion, which is 35%, about a $900 million increase in that revenue level. I think out of the 900, think of it in two buckets.

Speaker #4: The switchgear business is going really well. The exchangers' heat is going really well. So again, cloud and DCI are up by $600 million in total.

Speaker #4: Networking and comms is up by about 300 million . And that's mainly in India . Operations around air and cooled switches liquid , adapters , network adapters Intel and the across Ethernet portfolio .

Speaker #4: So 900 million is is a big number for us to be taking it in in a short , relatively short up period of time on Hanley .

Speaker #4: If I could just touch on that, I think the revenues that we indicated in my prepared remarks is about $200 million for FY26.

Speaker #4: We expect it to complete in January. I would think of Hanley being as modestly accretive in '26; it's '27 when it will be more accretive.

Mike Dastoor: One is the cloud and DCI bucket, which is up about $600 million. $200 million of that is Hanley, and I'll touch on that in a minute. The balance is made up of upside on some recent wins that we had maybe during Q4 of last year with our second hyperscaler, and that's in Mexico. It's all AI storage racks that we're manufacturing for that second hyperscaler. And then on the DCI business in Memphis, I think there's a whole bunch of upsides there. The switchgear business is going really well. The in-rail heat exchanges, again, going really well. So cloud and DCI are up by $600 million in total. Networking and comms is up by about $300 million, and that's mainly in our India operations around air and liquid-cooled switches, adapters, network adapters across InfiniBand and the Ethernet portfolio.

One is the cloud and DCI bucket, which is up about $600 million. $200 million of that is Hanley, and I'll touch on that in a minute. The balance is made up of upside on some recent wins that we had maybe during Q4 of last year with our second hyperscaler, and that's in Mexico. It's all AI storage racks that we're manufacturing for that second hyperscaler. And then on the DCI business in Memphis, I think there's a whole bunch of upsides there. The switchgear business is going really well. The in-rail heat exchanges, again, going really well. So cloud and DCI are up by $600 million in total. Networking and comms is up by about $300 million, and that's mainly in our India operations around air and liquid-cooled switches, adapters, network adapters across InfiniBand and the Ethernet portfolio.

Speaker #4: It's I think everybody knows it's it's a power and solutions energy management company that we acquired . It's more a service services enabled business as opposed to manufacturing .

Speaker #4: And it gives us a really good sort of platform, not just for deployments but for maintenance as well, which will be an ongoing revenue stream.

Speaker #4: So really overall , happy with with Hanley , do I think guidance is conservative ? I think it's appropriately conservative . We're seeing solid upsides everywhere .

Speaker #4: And as , as as Norm , is we've been appropriately . There are . .

Speaker #5: Okay . Thanks conservative for the details . There for my follow up . If I can ask , you know , operating margins , Jabil is going to be at 5.7% operating margin this fiscal looking at year .

Speaker #5: So is it reasonable for investors to assume that operating margin above can get to 6% into fiscal '27? What are the puts and takes? And longer term, how high can margin go?

Mike Dastoor: So $900 million is a big number for us to be taking it up in a relatively short period of time. On Hanley, if I could just touch on that, I think the revenues that we indicated in my prepared remarks is about $200 million for FY26. We expect it to complete in January. I would think of Hanley as being modestly accretive in 2026. 2027 will be when it's more accretive. I think everybody knows it's a power and energy management solutions company that we acquired. It's more a services-enabled business as opposed to manufacturing. And it gives us a really good sort of platform, not just for deployments, but for maintenance as well, which would be an ongoing revenue stream. So overall, really happy with Hanley. Do I think guidance is conservative? I think it's appropriately conservative. We're seeing solid upsides everywhere.

So $900 million is a big number for us to be taking it up in a relatively short period of time. On Hanley, if I could just touch on that, I think the revenues that we indicated in my prepared remarks is about $200 million for FY26. We expect it to complete in January. I would think of Hanley as being modestly accretive in 2026. 2027 will be when it's more accretive. I think everybody knows it's a power and energy management solutions company that we acquired. It's more a services-enabled business as opposed to manufacturing. And it gives us a really good sort of platform, not just for deployments, but for maintenance as well, which would be an ongoing revenue stream. So overall, really happy with Hanley. Do I think guidance is conservative? I think it's appropriately conservative. We're seeing solid upsides everywhere.

Speaker #5: Like, current with the mix of business, do you see to Jabil 7% operating margin at some point? So, thoughts on just your next year, you know, or what should getting in terms of what operating margin progression and how mind can go over time?

Speaker #5: Like, current with the mix of business? Do you see to Jabil 7% operating margin at some point? So, thoughts on just your next year, you know, or what should—getting in terms of what operating margin progression and how mind can go over time we keep in.

Speaker #4: We've still got three quarters left in FY 26 , so we're just going to be focused on on that . We'll provide guidance nearer the time for FY 27 .

Speaker #4: As you know, we increased our margin from 5.6% to 5.7%, which is about 30 bps, up from the 25 number.

Speaker #4: And that's FY 26 due to, for reasons, which 2 or 3 better mix. I think the mix is coming stronger, or utilization better of capacity in.

Speaker #4: Capacity utilization has gone up from that 75% range closer to the 80%, and then leverage as well. So SG&A, I think, range.

Speaker #4: The incremental revenue that we're seeing, the $1.1 billion that you referenced earlier, that's giving nice leverage to us some in FY27.

Mike Dastoor: As is known, we've been appropriately conservative there, Rupalu.

As is known, we've been appropriately conservative there, Rupalu.

Ruplu Bhattacharya: Okay. Thanks for the details there. For my follow-up, if I can ask, looking at operating margins, Jabil is going to be at 5.7% operating margin this fiscal year. So is it reasonable for investors to assume that operating margin can get above 6% in fiscal 2027? What are the puts and takes there? And longer term, how high can operating margin go? With the current mix of business, do you see Jabil getting to 7% operating margin at some point? So just your thoughts on next year, or what should we keep in mind in terms of operating margin progression and how high that can go over time?

Speaker #4: We will be seeing a full year impact of Hanley, so there will be some level of accretion on the margin there.

Speaker #4: then we'll see . And Continued leverage from the revenues . The incremental pipeline that I'm seeing , Ruplu is extremely strong . It's been a long time since I've seen such a such a healthy pipeline .

Speaker #4: So I feel better, about 6% than I ever have. I think if you're asking beyond six and getting to seven, we're not going to, of course, stop getting leverage.

Speaker #4: We're not going to stop getting efficiencies as soon as we hit 6% . So 6% is just a point in time a on on a on a a much march to higher number .

Mike Dastoor: So, Rupalu, we've still got three quarters left in FY26, so we're just going to be focused on that. We'll provide guidance nearer the time for FY27. As you know, we increased our margin from 5.6% to 5.7%, which is about 30 basis points up from the 25 number. That's for FY26 due to two or three reasons, which is mainly better mix. I think the mix is coming in stronger, a better utilization of capacity. Our capacity utilization has gone up from that 75% range, closer to the 80% range. Then SG&A leverage as well. So I think overall, the incremental revenue that we're seeing, the $1.1 billion that you referenced earlier, that's giving us some nice leverage. In FY27, we will be seeing a full-year impact of Hanley, so there will be some level of accretion on the margin there.

Speaker #4: Is it 27 , don't know 28 , 29 ? , I 6% though I feel really good about at this stage for for .

Speaker #5: Got it . for the future details there . If I can in looking at healthcare and packaging for the Thanks last three four years , it's been mostly flat .

Speaker #5: sneak one more it's growing low . Single digits to 5.6 billion . year Any thoughts like , you know , you had talked about some further J&J type of deals you've got this impact from Croatia .

Speaker #5: And so, just can you give us some more color on how you think that business can evolve? Is it still a low single-digit business going forward, or do you think it can accelerate?

Speaker #5: Thank you. Thanks for taking my questions.

Speaker #4: So Croatia going was really well . I think we've always sometime in 27 , maybe second half of 27 is when it referenced actually starts delivering some returns .

Mike Dastoor: And then we'll see continued leverage from the incremental revenues. The pipeline that I'm seeing, Ruplu, is extremely strong. It's been a long time since I've seen such a healthy pipeline. So I feel better about 6% than I ever have. I think if you're asking beyond 6 and getting to 7, of course, we're not going to stop getting leverage. We're not going to stop getting efficiencies as soon as we hit 6%. So 6% is just a point in time on a march to a much higher number. Is it 27, 28, 29? I don't know. 6%, though, I feel really good about at this stage for future.

And then we'll see continued leverage from the incremental revenues. The pipeline that I'm seeing, Ruplu, is extremely strong. It's been a long time since I've seen such a healthy pipeline. So I feel better about 6% than I ever have. I think if you're asking beyond 6 and getting to 7, of course, we're not going to stop getting leverage. We're not going to stop getting efficiencies as soon as we hit 6%. So 6% is just a point in time on a march to a much higher number. Is it 27, 28, 29? I don't know. 6%, though, I feel really good about at this stage for future.

Speaker #4: Again, you just reminded me, margin is higher—good GLP-1 in that space. So, Croatia is going really well, opposed to D as to on the whole deal.

Speaker #4: Piece . I do think the team is actively that of working all . The they're they're currently engaged in B2B conversations . They're in engaged M&A sort of capability driven type of sort of deals as well .

Speaker #4: So it's a it's an active of process that we're going through right now sort . And provide we'll updates our again through FY 26 .

Speaker #4: In terms of what we're seeing out there from a deal . And again , just to remind you , the deals that we're looking at mainly would be sort of add capabilities so that we can go vertical in the healthcare space , a bit our like bit like our the Glp1 OSD transaction that we did last last year , where we added a capability on pharma , sort of filling , of the filling GLP one oral doses , etc.

Ruplu Bhattacharya: Got it. Thanks for the details there. If I can sneak one more in, looking at healthcare and packaging, for the last three, four years, it's been mostly flat. This year, it's growing low single digits to $5.6 billion. Any thoughts? You had talked about some further J&J type of deals, and you've got this impact from Croatia. So just can you give us some more color on how you think that business can evolve? Is it still a low single-digit business going forward, or do you think it can accelerate? Thank you. Thanks for taking my question.

Speaker #4: . So there'll be more of those , more capability driven across the board where we where we operate .

Speaker #5: Thank you for all the okay details.

Mike Dastoor: So Croatia was going really well. I think we've always referenced sometime in 2027, maybe second half of 2027 is when it actually starts delivering some good returns. Again, just remind you, the margin is higher in that GLP-1 space. So Croatia is going really well. As opposed to on the whole deal piece, I do think the team is actively working all of that. They're currently engaged in B2B conversations. They're engaged in M&A sort of capability-driven type of sort of deals as well. So it's an active sort of process that we're going through right now. And we'll provide updates again throughout FY26 in terms of what we're seeing out there from our deal.

Speaker #1: Our thank you. Next question comes from the line of Samik Chatterjee with JP Morgan. Please proceed with your questions.

Speaker #6: is Hi . MP on This for Soumik Chatterjee . Thank you for taking my question . Firstly , congratulations on great results . My question on second Hyperscaler , I think you is highlighted .

Speaker #6: Hi. Second hyperscaler driving upside to your intelligent infrastructure outlook for the like—how much of it are you betting to your customer demand execution versus customers’ customer year.

Speaker #6: Pre-pruning their deployment, then, in the plans and past, you have highlighted $750 million of revenue scale for this business for FY26.

Speaker #6: And then I .

Speaker #4: Yeah . So the the upside on the second Hyperscaler , as I mentioned earlier on , is on the AI storage piece , we we continue get some upsides that , on that on to not sure if that's business .

Mike Dastoor: And again, just to remind you, the deals that we're looking at mainly would be to sort of add capabilities so that we can go vertical in the healthcare space, a bit like our GLP-1 OSD transaction that we did last year where we added a capability on pharma sort of filling of the GLP-1s itself, oral doses, etc. So there'll be more of those, more capability-driven across the board where we operate.

And again, just to remind you, the deals that we're looking at mainly would be to sort of add capabilities so that we can go vertical in the healthcare space, a bit like our GLP-1 OSD transaction that we did last year where we added a capability on pharma sort of filling of the GLP-1s itself, oral doses, etc. So there'll be more of those, more capability-driven across the board where we operate.

Speaker #4: pre-deployment or it's just the the demand is has always been there . It's a matter of fulfilling it . I of we feel really about good upside even from there on some of these on some of hyperscalers that we're in discussion So think if I with .

Speaker #4: you're these looking at the revenue piece for the second hyperscaler , roughly in that billion dollar range , I think earlier , which said So we've taken that up by by 750 . some amount as well .

Speaker #4: you're these looking at the revenue piece for the second hyperscaler , roughly in that billion dollar range , I think earlier , which said So we've taken that up by by 750 .

Ruplu Bhattacharya: Okay. Thank you for all the details.

Operator: Thank you. Our next questions come from the line of Somik Chatterjee with J.P. Morgan. Please proceed with your questions.

Speaker #4: So, really good interest levels coming through. And we're not just stopping with the second half to scale. We're in discussions with even more hyperscalers. Again, looking very strong.

Samik Chatterjee: Hi. This is MP on for Somik Chatterjee. Thank you for taking my question. Firstly, congratulations on great results. My question is on second hyperscaler. I think you highlighted second hyperscaler driving upside to your Intelligent Infrastructure outlook for the year. How much of it is your better execution relative to your customer demand versus customer actually preponing their deployment plans? And then in the past, you have highlighted $750 million of revenue scale for this business for FY26. How should we think about that scale now? And then any color on the broader potential hyperscaler customers, how exactly those discussions are going? And then I have a follow-up.

[Company Representative] (JPMorgan): Hi. This is MP on for Somik Chatterjee. Thank you for taking my question. Firstly, congratulations on great results. My question is on second hyperscaler. I think you highlighted second hyperscaler driving upside to your Intelligent Infrastructure outlook for the year. How much of it is your better execution relative to your customer demand versus customer actually preponing their deployment plans? And then in the past, you have highlighted $750 million of revenue scale for this business for FY26. How should we think about that scale now? And then any color on the broader potential hyperscaler customers, how exactly those discussions are going? And then I have a follow-up.

Speaker #6: Yep . Thank you for

Speaker #3: We do have typically a bit of a lower gross margin on the year—really nothing there other than just mix. Q1 in, a little margin piece.

Mike Dastoor: Yeah. So the upside on the second hyperscaler that I mentioned earlier on is on the AI storage piece. We continue to get some upsides on that business. I'm not sure if that's pre-deployment or it's just the demand has always been there. It's a matter of fulfilling it. We feel really good about upside even from there on some of these hyperscalers that we're in discussion with. So I think if you're looking at the revenue piece for the second hyperscaler, roughly in that billion-dollar range, I think earlier we'd said $750. So taking that up by some amount as well. So really good interest levels coming through. And we're not just stopping with the second hyperscaler. We're in discussions with even more hyperscalers. So pipeline, again, looking very strong.

Speaker #4: We've always sort of really mentioned 9 to 9.5% as the

Speaker #1: Our next question comes from the line of Steven Fox with Fox Advisors. Please proceed with your question.

Speaker #7: morning . I had two questions . If I could , I guess first of all for the gears on the healthcare Hi . Good business like you mentioned , Mike , it's been very steady .

Speaker #7: Understanding it's providing pretty good margins for you guys as well. I guess of all the growth you're seeing in cloud, what's the prospect for maybe investing more aggressively to accelerate that growth, since it's such a good contributor to profitability?

Speaker #7: And then

Speaker #4: Steve, we're constantly evaluating M&A activity in that space. We're in discussions on

Speaker #4: v two Ves . So I think it's it's likely that highly we'll do something . We're obviously a conservative a M&A perspective . So we'll from an right groundwork for that .

Samik Chatterjee: Yep. Thank you for the color there. My next question is around gross margins for this quarter. I think despite the revenues being higher quarter over quarter from F4Q, gross margins were lower. Can you please help us understand the drivers for that? Thank you.

[Company Representative] (JPMorgan): Yep. Thank you for the color there. My next question is around gross margins for this quarter. I think despite the revenues being higher quarter over quarter from F4Q, gross margins were lower. Can you please help us understand the drivers for that? Thank you.

Speaker #4: I But I feel like is is a business steady with higher margins , product life healthcare cycles and steady cash company from that it's all the a of offset from a diversification standpoint such us .

Greg Hebard: Yeah. So Q1, our gross margins were at 8.9%. Year over year, it is up 10 basis points. So typically, we do have a little bit of a lower gross margins on the year. So really nothing there other than just mixing Q1 for the gross margin piece.

Gregory Hebard: Yeah. So Q1, our gross margins were at 8.9%. Year over year, it is up 10 basis points. So typically, we do have a little bit of a lower gross margins on the year. So really nothing there other than just mixing Q1 for the gross margin piece.

Speaker #4: And that feel is a great area that I'm most excited about, flows from a deal long, long.

Mike Dastoor: Something we've always sort of mentioned, 9% to 9.5% is the range for our gross margin. That's still the FY26 estimate.

Speaker #7: warning us about , you know , that you still face some bottlenecks later in the year . ahead of little bit , schedule a which is great .

Speaker #7: And

Samik Chatterjee: Thank you.

[Company Representative] (JPMorgan): Thank you.

Operator: Thank you. Our next questions come from the line of Steven Fox with Fox Advisors. Please proceed with your questions.

Steven Fox: Hi. Good morning. I had two questions, if I could. I guess, first of all, just switching gears. On the healthcare business, like you mentioned, Mike, it's been very steady. My understanding it's providing pretty good margins for you guys as well. I guess, off of all the growth you're seeing in cloud, what's the prospects for maybe investing more aggressively to accelerate that growth since it's such a good contributor to profitability? And then I had a follow-up.

Speaker #4: It was mainly associated with our Hyperscaler factory on the East Coast of the US. A lot of the upside when we talked

Speaker #4: upside , that some of it Mexico , where we had some surplus capacity . Some of it is in India , where it's a combination of 900 million , existing is in capacity and new capacity .

Mike Dastoor: So Steve, we're constantly evaluating M&A activity in that space. We're constantly in discussions on B2Bs. So I think it's highly likely that we'll do something. We're obviously a conservative company from an M&A perspective. So we'll do all the right groundwork for that. But I feel like healthcare is such a steady business with higher margins, long, long product life cycles, and steady cash flows that it's a great sort of offset from a diversification standpoint for us. And that is an area that I'm most excited about from a deal perspective.

Speaker #4: As you know, North Carolina is coming relatively soon in the next six, seven, and eight months. And that, you know, we're fitting.

Speaker #4: If you pre want to up that phrase for liquid cooling. So we've got some decent, we've got some decent upsides. We're planning on capacity in that way.

Speaker #4: Memphis is another I talked about that's seeing some really good growth as well. So we might expand there as well. So there are current expansion plans that we're looking at.

Speaker #4: Those might be even than the North area facility. Again, it doesn't change our CapEx outlook. The CapEx outlook has been 1.5% to 2% of revenue.

Steven Fox: Great. That's helpful. And then just on the cloud business, so a quarter ago, you were warning us about that you still face some bottlenecks later in the year. Now you're ahead of schedule a little bit, which is great. And you're talking about what sounds like a bigger pipeline. So I'm just wondering how we sort of equate your ability to meet demand or meet the growth expectations of adding a new customer or existing customers with all the capacity you have or may need. How are you planning out beyond this year for capacity in order to continue to grow that cloud business? Thanks.

Speaker #4: And that's going to remain consistent for FY26.

Speaker #4: And that that's going to remain consistent for FY26. Sooner. Great.

Speaker #7: Thanks for that, and the visibility into your numbers. This is really helpful—thanks for all of it.

Speaker #4: Thanks , Steve .

Speaker #1: Thank you. Our next question comes from the line of Reuben Roy with Stifel. Please proceed with your questions.

Mike Dastoor: When we talked about the retrofitting piece on the September call, it was mainly associated with our hyperscaler factory on the East Coast of the US. A lot of the upside, when we talked about upside that $900 million, some of it is in Mexico where we had some surplus capacity. Some of it is in India where it's a combination of existing capacity and new capacity. As you know, North Carolina is coming up relatively soon in the next six, seven, eight months. And that we're prefitting, if you want to use that phrase, for liquid cooling. So we've got some decent upsides. We're planning on capacity in that way. Memphis is another area I talked about. That's seeing some really good growth as well. So we might expand there as well. So there's current expansion plans that we're looking at.

Speaker #8: around Hanley and , you know , I'm wondering , there's been a lot of discussion , obviously , around power and power distribution as the industry is out how to get to 800 volt direct current .

Speaker #8: I know , adding imagine that's the the answer . Yes . Given Ebit margins the get . But any color on that would that you And , be helpful .

Speaker #8: Thank you .

Speaker #9: So, I'd like to call out a couple of things.

Speaker #4: Transactions as as it relates to that whole thermal management piece . Obviously Hanley is a service provider . I'll talk about that in a in a minute .

Speaker #4: But the liquid cooling acquisition we made with Micros in '24—that has also been a big game changer. I think thermal management, thermal dissipation, is not new to hyperscalers.

Mike Dastoor: Those might be even sooner than the North Carolina facility. Again, it doesn't change our CapEx outlook. The CapEx outlook has been 1.5% to 2% revenue. That's going to remain consistent for FY26.

Those might be even sooner than the North Carolina facility. Again, it doesn't change our CapEx outlook. The CapEx outlook has been 1.5% to 2% revenue. That's going to remain consistent for FY26.

Speaker #4: Whether it's at chip cooling, or at a switch level, or component level, or even at an infrastructure level with liquid-to-liquid heat exchanges, with reasons we invested in.

Steven Fox: Great. Thanks for that. And thanks for all the visibility into your numbers. This is really helpful.

Mike Dastoor: Thanks, Steve.

Operator: Thank you. Our next questions come from the line of Ruben Roy with Stifel. Please proceed with your questions.

Speaker #4: Micros, as we acquired a technology we didn't acquire—a—we acquired a design and engineering which is constantly pushing the boundaries for the forward team, looking at liquid cooling activities.

Steven Fox: Yes. Thank you. Mike, I wonder if you could spend a minute on just kind of longer-term thinking around Hanley. And I'm wondering, there's been a lot of discussion, obviously, around power and power distribution as the industry is trying to figure out how to get to 800-volt direct current. And if you think about this acquisition longer-term, one of your competitors has been talking a lot about modularized power. Does this help you, do you think, in terms of content per rack and maybe gaining more server rack business by having this? Or is the strategy maybe a little bit different as you think about adding that into the mix? And also, one follow-up on that is, would they own the design of the power distribution? I imagine that's the answer would be yes, given the EBIT margins that you get. But any color on that would be helpful.

Ruben Roy: Yes. Thank you. Mike, I wonder if you could spend a minute on just kind of longer-term thinking around Hanley. And I'm wondering, there's been a lot of discussion, obviously, around power and power distribution as the industry is trying to figure out how to get to 800-volt direct current. And if you think about this acquisition longer-term, one of your competitors has been talking a lot about modularized power. Does this help you, do you think, in terms of content per rack and maybe gaining more server rack business by having this? Or is the strategy maybe a little bit different as you think about adding that into the mix? And also, one follow-up on that is, would they own the design of the power distribution? I imagine that's the answer would be yes, given the EBIT margins that you get. But any color on that would be helpful.

Speaker #4: So to me , that whole acquisition is , is , micro is a is a game changer . think I particularly as , as the thermal piece management more becomes critical , the , the to design ability to ability liquid cooling at at chip level , at , at the engineer network switch level , at different sort of parts , a full system .

Speaker #4: That's the big differentiator integrated into where it steps in, and as it to Jabil, it's more related services organization. It's a provider of power and energy handling management solutions.

Steven Fox: Thank you.

Thank you.

Mike Dastoor: So I'd like to call out a couple of transactions as it relates to that whole thermal management piece. Obviously, Hanley is a service provider. I'll talk about that in a minute. But the liquid cooling acquisition we made with Mikros in 2024 has also been a big game changer. I think thermal management, thermal dissipation is not new to hyperscalers. Whether it's cooling at the chip level, switch level, component level, or even at an infrastructure level with liquid-to-liquid heat exchanges, that's one of the reasons we invested in Mikros is we acquired a technology. We didn't acquire a product. We acquired a design and engineering team, which is constantly pushing the boundaries for forward-looking liquid cooling activity. So to me, that whole Mikros acquisition is a game changer.

Speaker #4: I think the the the expertise engineering that we there have in is across distribution power , switchgear , energy monitoring , digital power management , platforms .

Speaker #4: It allows us to go vertical as well. And I'll give an example. Today, we build low voltage and medium voltage switchgear in Memphis. Hanley will allow us to deploy, install, and then maintain those data centers, which previously was done by third parties.

Speaker #4: other So if you sort of combine the whole server business with the ability to deploy , install and maintain that , that is a that is a highly accretive type of business for us .

Speaker #4: So Hanley , I think is a is a is a really good transaction . We we sort of welcome the team . It hasn't closed yet .

Speaker #4: Expect it to close in that first week of January as soon as we can. So, as we take place, just like the micro transaction has created so much opportunity for us.

Mike Dastoor: I think particularly as the thermal management piece becomes more critical, the ability to design, the ability to engineer liquid cooling at chip level, at the network switch level, at different sort of parts and integrated into a full system, that's the big differentiator where Jabil will have steps in. As it relates to Hanley, it's more of a services organization. It's the provider of power and energy management solutions. I think the engineering expertise that we have in there is across power distribution, switchgear, energy monitoring, digital power management platforms. It allows us to go vertical as well. And I'll give you an example. Today, we build low-voltage, medium-voltage switchgear in Memphis. Hanley will allow us to deploy, install, and then maintain those in data centers, which previously was done by other parties.

I think particularly as the thermal management piece becomes more critical, the ability to design, the ability to engineer liquid cooling at chip level, at the network switch level, at different sort of parts and integrated into a full system, that's the big differentiator where Jabil will have steps in. As it relates to Hanley, it's more of a services organization. It's the provider of power and energy management solutions. I think the engineering expertise that we have in there is across power distribution, switchgear, energy monitoring, digital power management platforms. It allows us to go vertical as well. And I'll give you an example. Today, we build low-voltage, medium-voltage switchgear in Memphis. Hanley will allow us to deploy, install, and then maintain those in data centers, which previously was done by other parties.

Speaker #4: So And again does Hanley . , it's area that you talked about and it's all an exactly the around thermal management and it's not it's not a surprise to any hyperscaler .

Speaker #8: A lot of detail. Thank you very much, Mike. I hope this is a quicker one—just a follow-up on the capital equipment.

Speaker #4: think has been equipment outperforming it outperformed last year . It's outperforming this year . And will continue to to be out . It will outperform the fee side for sure .

Mike Dastoor: So if you sort of combine the whole server rack business with the ability to deploy, install, and maintain, that is a highly accretive type of business for us. So Hanley, I think, is a really good transaction. We sort of welcome the team. It hasn't closed yet. We expect it to close in that first week of January. So as soon as that takes place, just like the Micros transaction has created so much opportunity for us, so does Hanley. And again, it's exactly the area that you talked about. And it's all around thermal management. And it's not a surprise to any hyperscaler. It's not a surprise to anyone who has a data center that that's something that they need to address. And they are addressing that. So I do think the two transactions will be highly well received.

So if you sort of combine the whole server rack business with the ability to deploy, install, and maintain, that is a highly accretive type of business for us. So Hanley, I think, is a really good transaction. We sort of welcome the team. It hasn't closed yet. We expect it to close in that first week of January. So as soon as that takes place, just like the Micros transaction has created so much opportunity for us, so does Hanley. And again, it's exactly the area that you talked about. And it's all around thermal management. And it's not a surprise to any hyperscaler. It's not a surprise to anyone who has a data center that that's something that they need to address. And they are addressing that. So I do think the two transactions will be highly well received.

Speaker #4: I think multiple Dram stacking for high there's bandwidth memory that's creating more demand . One good thing are seeing we and it's it's forward looking .

Speaker #4: So we haven't built that into our forecast. But there is some level of fee improvements coming along as well with the whole AI compute expansion and the NAND factory sort of upgrades.

Speaker #4: So we think a as an more as of that opportunity . In the were past , we like , hey , is going to be steady and static .

Speaker #4: We are seeing some signs of improvements there . until that happens , it those sort of those sort of expectations And move to the right or to the left .

Speaker #4: So, we haven't included that in our guide. The WFP side could actually be some upside for us. But—

Steven Fox: That's a lot of detail. Thank you very much, Mike. I hope this is a quicker follow-up just on the capital equipment. I think you said that that was in line with your expectations, maybe a little bit better. Is there any change, I guess, on your sort of thinking around overall spend in the capital equipment market relative to 90 days ago as you think about this year?

Ruben Roy: That's a lot of detail. Thank you very much, Mike. I hope this is a quicker follow-up just on the capital equipment. I think you said that that was in line with your expectations, maybe a little bit better. Is there any change, I guess, on your sort of thinking around overall spend in the capital equipment market relative to 90 days ago as you think about this year?

Speaker #8: Great . Thank you

Speaker #1: Thank you. Our next question comes from the line of Melissa Raymond James. Please proceed with your question.

Speaker #10: Thanks so much for for questions . I wanted to start off by level of about asking automotive and transport Hey guys . . I see that you taking my maintained the outlook for the full year down a little bit from last year , just wondering if the mix of that business the any of or the trends have changed .

Mike Dastoor: So the automated testing equipment side of the business, the backend, I think has been outperforming. It outperformed last year. It's outperforming this year. And it'll continue to be out. It will outperform the WFE side for sure. I think there's multiple DRAM stacking for high bandwidth memory that's creating more demand. One good thing we are seeing, and it's forward-looking, so we haven't built that into our forecast. But there is some level of WFE improvements coming along as well with the whole AI compute expansion and the NAND factory sort of upgrades. So WFE, think of that more as an opportunity. In the past, we were like, "Hey, WFE is going to be steady and static." We are seeing some signs of improvements there. And until that happens, those sort of expectations normally move to the right or to the left.

Speaker #10: We have geographically heard from some suppliers. Europe suppliers are being a little bit more cautious going into next year. Just the complexion of that business looks like, in the near term, wondering what the—

Speaker #9: let me just .

Speaker #4: Automotive is an area that we continue to be appropriately conservative on. I think we're seeing relatively good, I think, performance.

Speaker #4: . Has it hit a bottom ? I do feel like it has , and there will be upside going forward . On automotive .

Speaker #4: Is it a '26 event or a '27–'28 event? We just don't know the exact timing. So we're being conservative from an automotive standpoint.

Speaker #4: One of the things the team has done really well, invested in powertrain, is agnostic technologies. And what do we mean by that?

Speaker #4: It's software defined vehicles . It's Adas , those sort of those sort of programs go into any platform , whether it's hybrid or or EVs or combustion engines .

Mike Dastoor: We haven't included that in our guide. The WFE side could actually be some level of upside for us.

We haven't included that in our guide. The WFE side could actually be some level of upside for us.

Speaker #4: They were talking all sorts of, all too. And then if you factor in the whole T01, sort of, the OEMs still want to own the design and the IP, as they want to with the EV platforms.

Steven Fox: Great. Thank you.

Ruben Roy: Great. Thank you.

Operator: Thank you. Our next questions come from the line of Melissa Fairbanks with Raymond James. Please proceed with your questions.

Adam Berry: Hey, guys. Thanks so much for taking my questions. I wanted to start off by asking about automotive and transport. I see that you maintained the outlook for the full year down a little bit from last year. Just wondering if the mix of that business or any kind of the geographical trends have changed. We have heard from some suppliers. European suppliers are being a little bit more cautious going into next year. Just wondering what the complexion of that business looks like in the near term.

Melissa Fairbanks: Hey, guys. Thanks so much for taking my questions. I wanted to start off by asking about automotive and transport. I see that you maintained the outlook for the full year down a little bit from last year. Just wondering if the mix of that business or any kind of the geographical trends have changed. We have heard from some suppliers. European suppliers are being a little bit more cautious going into next year. Just wondering what the complexion of that business looks like in the near term.

Speaker #4: That's that's opportunity a good us . EMS as well think companies . And I those those program wins . We do expect we're in discussion again for 27 , 28 .

Speaker #4: And we're doing really well because there's a shift in the way the whole automotive space is working out, not just for EVs.

Speaker #4: It's extended to hybrids and and ice as well , or at now being least the concept is we'll continue to add some . capabilities and and So I think do 26 the best way to define 26 is a conservative year .

Mike Dastoor: So let me just start by saying automotive is an area that we continue to be appropriately conservative on. I think we're seeing relatively good performance. I think, has it hit a bottom? I do feel like it has. And there will be upside going forward on automotive. Is it a 2026 event or a 2027, 2028 event? We just don't know the exact timing. So we're being appropriately conservative from an automotive standpoint. One of the things the team has done really well is invested in powertrain-agnostic technologies. And what do we mean by that? It's software-defined vehicles. It's ADAS. Those sort of programs go into any platform, whether it's hybrid, EVs, or combustion engines. We're talking to all sorts of companies.

Speaker #4: And ’27, we could see some upside. Don't forget, a program in automotive takes 12 to 18 months to win. So programs we're winning…

Speaker #4: Today will only show up in 2728.

Speaker #10: Okay , great . Tell Steve keep up the good work . Maybe just a quick follow up . You know everyone has to ask about at least one question on data center as you're ramping your second hyperscale customer .

Speaker #10: I know your lead hyperscale customer . A lot of that business goes through consignment . Just wondering how much , if any , of of some of these new you're ramping programs that are on consignment and maybe gross revenue is actually coming in a little bit better than than even what we're seeing on the net revenue side .

Mike Dastoor: And then if you factor in the whole Tier 1, sort of the OEMs still want to own the design and the IP as they want to do with the EV platforms. That's a good opportunity for us EMS companies as well. And I think those program wins we do expect. We're in discussion again for 2027, 2028. And we're doing really well because there's a shift in the way that whole automotive space is working out, not just for EVs. It's now being extended to hybrids and ICE as well, or at least the concept is. So we continue to add some capabilities. And I do think 2026, the best way to define 2026 is a conservative year. In 2027, we could see some upside. Don't forget, a program in automotive takes 12 to 18 months to win.

And then if you factor in the whole Tier 1, sort of the OEMs still want to own the design and the IP as they want to do with the EV platforms. That's a good opportunity for us EMS companies as well. And I think those program wins we do expect. We're in discussion again for 2027, 2028. And we're doing really well because there's a shift in the way that whole automotive space is working out, not just for EVs. It's now being extended to hybrids and ICE as well, or at least the concept is. So we continue to add some capabilities. And I do think 2026, the best way to define 2026 is a conservative year. In 2027, we could see some upside. Don't forget, a program in automotive takes 12 to 18 months to win.

Speaker #4: think it's a little bit of a mix . I I think the the consignment model is more our largest customer perspective . Some of the customers other , we're still going gross through versus consignment discussions , but at this stage we're just in gross factoring levels .

Speaker #4: I do think that's more than consignment models popping up everywhere. I think that was likely more that was specifically for that first hyperscaler.

Speaker #4: Will it across every single apply ? I'm not sure . I think it's a wait it's and see approach .

Speaker #10: Okay, great. Thanks so much. Congratulations, guys.

Speaker #4: Thank .

Speaker #11: You .

Speaker #1: Thank you. Our next question comes from the line of Mark Delaney with Goldman Sachs. Please proceed with your question.

Speaker #12: Yes . Good morning . Thanks very much for taking the You questions . took up . Its for AI growth view this year Realize you already spoke on your own capacity to 35% .

Mike Dastoor: So programs we're winning today will only show up in 2027, 2028.

So programs we're winning today will only show up in 2027, 2028.

Adam Berry: Okay. Great. Tell Steve, keep up the good work. Maybe just a quick follow-up. Everyone has to ask about at least one question on data center. As you're ramping your second hyperscale customer, I know your lead hyperscale customer, a lot of that business goes through consignment. Just wondering how much, if any, of some of these new programs that you're ramping are on consignment? And maybe gross revenue is actually coming in a little bit better than even what we're seeing on the net revenue side?

Melissa Fairbanks: Okay. Great. Tell Steve, keep up the good work. Maybe just a quick follow-up. Everyone has to ask about at least one question on data center. As you're ramping your second hyperscale customer, I know your lead hyperscale customer, a lot of that business goes through consignment. Just wondering how much, if any, of some of these new programs that you're ramping are on consignment? And maybe gross revenue is actually coming in a little bit better than even what we're seeing on the net revenue side?

Speaker #12: But can you speak to any constraints your data center face—customers may—from the supply side, including having enough power supply to their data center sites?

Speaker #12: And to what extent you factored any constraints they may be seeing into your guidance.

Speaker #4: Look, power, power set or constraints in the data centers is not a new thing. I think it's been always around and we've grown.

Speaker #4: I think . I can't remember the exact numbers from grew 24 to 25 . exponentially We 25 to 26 . Again , we're growing at 35% .

Speaker #4: And this is all while data center power issues continue perforate . I think overall to , like I said , the offering that we have , the solutions that we have , the design , engineering and including some level of liquid cooling across our offerings , be it on the chip , be it on the on the rack servers , be it on the networking switches , be it on the data center infrastructure itself , actually we're customers to engaged with address a lot those of heat , those heat questions .

Mike Dastoor: I think it's a little bit of a mix. I think the consignment model is more the largest customer perspective. Some of the other customers, we're still going through gross versus consignment discussions. But at this stage, we're just factoring in gross levels. I do think that's more likely than consignment models popping up everywhere. I think that was more specifically for that first hyperscaler. Will it apply across every single hyperscaler? I'm not sure. I think it's a wait-and-see approach.

Speaker #4: So I , I'm not seeing any major impact of slowdown . Like I said earlier , it's actually I've never seen such a healthy pipeline before .

Adam Berry: Okay. Great. Thanks so much, guys. Congratulations.

Melissa Fairbanks: Okay. Great. Thanks so much, guys. Congratulations.

Mike Dastoor: Thank you.

Speaker #4: It is strong and continues to it be strong . I , I know people talk about AI bubbles . We're not seeing any of that at all

Operator: Thank you. Our next questions come from the line of Mark Delaney with Goldman Sachs. Please proceed with your questions.

Greg Hebard: Yes. Good morning. Thanks very much for taking the questions. JBL took up its view for AI growth this year to 35%. Realize you already spoke on your own capacity planning. But can you speak to any constraints your data center customers may face from the supply side, including having enough power supply to their data center sites? And to what extent you factored any constraints they may be seeing into your guidance?

Mark Delaney: Yes. Good morning. Thanks very much for taking the questions. JBL took up its view for AI growth this year to 35%. Realize you already spoke on your own capacity planning. But can you speak to any constraints your data center customers may face from the supply side, including having enough power supply to their data center sites? And to what extent you factored any constraints they may be seeing into your guidance?

Speaker #12: Very helpful. Mike, last.

Speaker #12: You mentioned the possibility of winning a third hyperscale customer. And you spoke to that possibility again on the call today. Can you give more color on that?

Speaker #12: That, including what types of product or products you're hoping to sell to that CSP? And when do you think you may know if you've converted on that opportunity?

Speaker #4: continue to Well , we have discussions . It's little it's a premature to talk products about the the revenue . I think that .

Mike Dastoor: Look, power sort of constraint with data centers is not a new thing. I think it's always been around. We've grown, I think I can't remember the exact numbers, from 2024 to 2025, we grew exponentially. 2025 to 2026, again, we're growing at 35%. And this is all while data center power issues continue to proliferate. I think overall, like I said, the offering that we have, the solutions that we have, the design, engineering, and including some level of liquid cooling across our offerings, be it on the chip, be it on the rack servers, be it on the networking switches, be it in the data center infrastructure itself, we're actually engaged with customers to address a lot of those heat questions. So I'm not seeing any major impact of slowdown. Like I said earlier, it's actually, I've never seen such a healthy pipeline before.

Speaker #4: was more last call was the of a , hey , this And on this is our overall strategy . We're not just targeting one , one Hyperscaler or hyperscalers .

Speaker #4: two there's definitely a third It's Hyperscaler and a fourth Hyperscaler . So our offering . It's that design and engineering architecture needed capability that's driving whole bunch of hyperscalers to a us .

Speaker #4: And in a weird way, the discussion could start about a server in a rack, and suddenly, before you know it, it's liquid cooling moved into, and suddenly moved into silicon.

Speaker #4: photonics It's moved into other parts of our data center infrastructure piece with with heat exchangers and some liquid cooling we're providing . wow , it's the solutions that it's the offering that we have today driving that's So hyperscalers to have these discussions with .

Speaker #4: And like I said, it's not built into any of the numbers. We're not talking about our third hyperscaler yet in any of the numbers.

Mike Dastoor: It is strong, and it continues to be strong. I know people talk about AI bubbles. We're not seeing any of that at all.

It is strong, and it continues to be strong. I know people talk about AI bubbles. We're not seeing any of that at all.

Speaker #4: But I think, going forward, we're still in current, currently discussions.

Speaker #12: Thank you .

Speaker #11: Thank you . Thanks .

Greg Hebard: Very helpful. Mike, last quarter, you mentioned the possibility of winning a third hyperscale customer. You spoke to that possibility again on the call today. Can you give more color on that, including what types of product or products you're hoping to sell to that CSP? When do you think you may know if you've converted on that opportunity?

Mark Delaney: Very helpful. Mike, last quarter, you mentioned the possibility of winning a third hyperscale customer. You spoke to that possibility again on the call today. Can you give more color on that, including what types of product or products you're hoping to sell to that CSP? When do you think you may know if you've converted on that opportunity?

Speaker #1: Thank you. Our next question comes from the line of Tim Long with Barclays. Please proceed with your question.

Speaker #13: you

Speaker #13: . . Thank Two if I could as well . First , I was hoping you little bit on that . The larger hyperscale customer could touch a wasn't really cited as a the strength here .

Mike Dastoor: We continue to have discussions. It's a little premature to talk about the products and the revenue. I think that was more the last call was more of, "Hey, this is our overall strategy. We're not just targeting one hyperscaler or two hyperscalers. There's definitely a third hyperscaler and a fourth hyperscaler if so needed." Our offering, it's that design and engineering architecture capability that's driving a whole bunch of hyperscalers to us. And in a weird way, the discussion could start about a server and a rack, and suddenly, before you know it, it's moved into liquid cooling. It's suddenly moved into silicon photonics. It's moved into other parts of our data center infrastructure piece with heat exchangers and some of the liquid cooling solutions that we're providing. So it's the offering that we have today that's driving hyperscalers to have these discussions with us.

Speaker #13: So, curious what trends are going on there. I do think there's part of product transitions and some of their compute platforms.

Speaker #13: curious So if that's impacting or if there's anything going on there . And then secondly , just more broadly , a lot of around custom Asics and movement excuse .

Speaker #13: Curious how you see Jabil participating. Obviously, TPU is gaining a lot of traction and announcements, at least over the last few months. How do you see Jabil playing in this whole XPU?

Speaker #13: You know, directly and related type of equipment? Thank you.

Speaker #4: when

Speaker #4: we . So talked about the whole retrofitting piece on the September call , we we were specific on one on one site only .

Speaker #4: Yeah. Like the rest of the rest of the—I said, business is coming in all different sides of the retrofitting. It is ahead of schedule.

Speaker #4: I do , I do feel a second half will be stronger in terms of getting it ready . I think originally we'd anticipated the retrofit out to be combination of and Q2 Q3 that might come earlier in in a Q3 , which is which would give us level of upside .

Mike Dastoor: Like I said, it's not built into any of the numbers. We're not talking about a third hyperscaler yet in any of the numbers. I think going forward, we're still in current discussions currently.

Like I said, it's not built into any of the numbers. We're not talking about a third hyperscaler yet in any of the numbers. I think going forward, we're still in current discussions currently.

Speaker #4: demand is there . The it's crazy what we're seeing in terms of in terms of demand . So some , I have concerns about no about the demand side .

Greg Hebard: Thank you.

Gregory Hebard: Thank you.

Mike Dastoor: Thanks.

Operator: Thank you. Our next questions come from the line of Tim Long with Barclays. Please proceed with your questions.

Ruplu Bhattacharya: Thank you. Two, if I could as well. First, we was hoping you could touch a little bit on that. The larger hyperscale customer wasn't really cited as a part of the strength here. So curious what kind of trends are going on there. I do think there's some product transitions in some of their compute platforms. So curious if that's impacting or if there's anything else going on there. And then secondly, just more broadly, a lot of movement around custom ASICs and XPUs. Curious how you see Jabil participating. Obviously, TPU gaining a lot of traction in announcements, at least over the last few months. How you see Jabil playing in this whole XPU directly and related type of equipment? Thank you.

Tim Long: Thank you. Two, if I could as well. First, we was hoping you could touch a little bit on that. The larger hyperscale customer wasn't really cited as a part of the strength here. So curious what kind of trends are going on there. I do think there's some product transitions in some of their compute platforms. So curious if that's impacting or if there's anything else going on there. And then secondly, just more broadly, a lot of movement around custom ASICs and XPUs. Curious how you see Jabil participating. Obviously, TPU gaining a lot of traction in announcements, at least over the last few months. How you see Jabil playing in this whole XPU directly and related type of equipment? Thank you.

Speaker #4: What was your—what was your second question?

Speaker #13: Just on Xcus and Custom, and ASICs, they play directly into that product and peripheral. What does it mean for the rest of the rack, and JBL's participation?

Speaker #4: So Yeah . I , I think we're we're relatively agnostic in terms of , in terms of chips , in terms of what we're doing and who we're doing it with .

Speaker #4: The , the , the custom chips . We're working with multiple individual individual companies on , on those chips . I don't think one another .

Speaker #4: It replaces all complementary, in my view. So I see it more as an upside than a replacement.

Mike Dastoor: So when we talked about the whole retrofitting piece on the September call, we were specific on one site only. Like I said, the rest of the new business is coming in all different sites. The retrofitting is ahead of schedule. I do feel our second half will be stronger in terms of getting it ready. I think originally we'd anticipated the retrofit out to be a combination of Q2 and Q3. That might come in earlier in Q3, which would give us some level of upside. The demand is there. It's crazy what we're seeing in terms of demand. So I have no concerns about the demand side. What was your second question?

Speaker #13: Thank Okay . you .

Speaker #4: Thanks .

Speaker #1: Thank you . Our question is line of from the David Vogt with UBS . Please next proceed with your questions .

Speaker #14: Great . Thanks , guys , for taking my questions . So , maybe one for Mike , Greg . you talked about So strength in data you and one for center infrastructure , power networking .

Speaker #14: We're handling folding , into the numbers . We're seeing strength in the second hyperscaler above expectations . I guess what I'm trying to think is how through do you think about the second half of your year fiscal , particularly given you know what the growth implies is a fairly meaningful deceleration where the underlying demand probably doesn't view ?

Speaker #14: Is that just a rev rec issue ? Is it support that a capacity issue ? How should investors think about sort of the second half of the year , which kind of implies like a dynamic ?

Speaker #14: Is

Operator: Just on XPUs and custom ASICs and the play directly into that product and peripheral, what it means for the rest of the rack and Jabil's participation.

Tim Long: Just on XPUs and custom ASICs and the play directly into that product and peripheral, what it means for the rest of the rack and Jabil's participation.

Mike Dastoor: Yeah. So I think we're relatively agnostic in terms of chips, in terms of what we're doing and who we're doing it with. The custom chips, we're working with multiple individual companies on those chips. I don't think one replaces another. It's all complementary in my view. So I see it more as an upside than a replacement.

Speaker #4: I think we've taken that up $300 or $400 million from our

Speaker #4: By previous sort of indications, the retrofitting obviously had a little bit of impact on the Q2. We're continuing to win. We're continuing to win share.

Ruplu Bhattacharya: Okay. Thank you.

Tim Long: Okay. Thank you.

Mike Dastoor: Thanks.

Speaker #4: I think if you look at last , the year comps from last year , a little difficult to up sort of with , went we match from 0 to 60 , literally in in of few a matter seconds .

Operator: Thank you. Our next questions come from the line of David Vogt with UBS. Please proceed with your questions.

Greg Hebard: Great. Thanks, guys, for taking my questions. So Mike, maybe one for you and one for Greg. So you talked about strength in data center infrastructure, power, and networking. We're folding Hanley into the numbers. We're seeing strength in the second hyperscaler above expectations. I guess what I'm trying to think through is how do you think about the second half of your fiscal year, particularly given what the growth implies is a fairly meaningful deceleration where the underlying demand probably doesn't support that view? Is that just a red flag issue? Is it a capacity issue? How should investors think about sort of the second half of the year, which kind of implies a 10% growth dynamic? Is there enough capacity? And then maybe Greg, I'll give you my question as well.

David Vogt: Great. Thanks, guys, for taking my questions. So Mike, maybe one for you and one for Greg. So you talked about strength in data center infrastructure, power, and networking. We're folding Hanley into the numbers. We're seeing strength in the second hyperscaler above expectations. I guess what I'm trying to think through is how do you think about the second half of your fiscal year, particularly given what the growth implies is a fairly meaningful deceleration where the underlying demand probably doesn't support that view? Is that just a red flag issue? Is it a capacity issue? How should investors think about sort of the second half of the year, which kind of implies a 10% growth dynamic? Is there enough capacity? And then maybe Greg, I'll give you my question as well.

Speaker #4: There , where Q3 Q4 saw solid performance from the previous Q1 , Q2 , where we didn't have some of the the additional facilities that we we took that over from , a from a competitor .

Speaker #4: So I would I would caution against doing comps for Q3 and Q4 because that was a that was a huge growth number in Q3 and Q4 , which was going from nothing to multiple buildings in in that in that facility .

Speaker #4: I look , I feel there's think no there's no other issues going on here . We're being conservative . And I do think second half now reflects a much better picture than it did 90 days ago .

Greg Hebard: Obviously, you took up the full year numbers for revenue, margin, and EPS and left kind of the free cash flow outlook unchanged. I recognize that CapEx is probably going to go up, I don't know, $50 to 100 million year over year. Anything else from a working capital perspective or timing perspective that impacts free cash flow this year versus your original expectations? Thanks.

Obviously, you took up the full year numbers for revenue, margin, and EPS and left kind of the free cash flow outlook unchanged. I recognize that CapEx is probably going to go up, I don't know, $50 to 100 million year over year. Anything else from a working capital perspective or timing perspective that impacts free cash flow this year versus your original expectations? Thanks.

Speaker #4: And I think it'll continue to evolve through the year. We have a, we being tendency of conservative, appropriately conservative. So, second half, I think there's some good upside for us as well.

Mike Dastoor: On the second half piece, I think with the $900 million that we've sort of added, a large part of that comes through in Q3 and Q4. Q2, I think we've taken that up by $300 or 400 million from our previous sort of indications. The retrofitting obviously had a little bit of impact on the Q2. We're continuing to win share. I think if you look at last year, the comps from last year are a little difficult to sort of match up with. We went from 0 to 60 literally in a matter of a few seconds there where Q3, Q4 saw solid performance from the previous Q1, Q2, where we didn't have some of the additional facilities that we took over from a competitor.

Speaker #15: Yeah . Hi , David . David , Hey , it's Greg .

Speaker #3: So on your free cash flow question . Yes . Still sticking to our guidance of 1.3 billion plus for the year . Again , a real strong Q1 with 272 million .

Speaker #3: You're absolutely correct . You know , we do see CapEx slightly ticking up but still staying in our range . And we also do see working capital , you know , with the growth we're seeing in the back half of the year , slightly going up as well .

Speaker #3: So, you know, what I would say is our guide is what we feel is prudent at this time. And we'll continue to update as we go through the year.

Speaker #14: Great . Thanks guys .

Speaker #1: Thank you. This now concludes the question and answer session. I would now like to turn the floor back over to Adam Berry for closing comments.

Speaker #2: Thank you. Thank you for your interest in Jabil. This now concludes our call.

Speaker #1: you . This Thank now today's concludes teleconference . We appreciate your participation . disconnect your You may lines at this time . Enjoy the rest of your day .

Mike Dastoor: So I would caution against doing comps for Q3 and Q4 because that was a huge growth number in Q3 and Q4, which was going from nothing to multiple buildings in that facility. Look, I think there's no red flags, there's no other issues going on here. We're being conservative. And I do think second half now reflects a much better picture than it did 90 days ago. And I think it'll continue to evolve through the year. We have a tendency of being conservative, appropriately conservative. So second half, I think there's some good upside for us as well.

So I would caution against doing comps for Q3 and Q4 because that was a huge growth number in Q3 and Q4, which was going from nothing to multiple buildings in that facility. Look, I think there's no red flags, there's no other issues going on here. We're being conservative. And I do think second half now reflects a much better picture than it did 90 days ago. And I think it'll continue to evolve through the year. We have a tendency of being conservative, appropriately conservative. So second half, I think there's some good upside for us as well.

Operator: Great. Hi, David. Hey, David. It's Greg. So on your free cash flow question, yeah, still sticking to our guidance of $1.3 billion plus for the year. Again, a real strong Q1 with $272 million. You're absolutely correct. We do see CapEx slightly ticking up, but still staying in our range. And we also do see working capital with the growth we're seeing in the back half of the year slightly going up as well. So what I'd say is our guide is we feel is prudent at this time, and we'll continue to update as we go through the year.

Gregory Hebard: Great. Hi, David. Hey, David. It's Greg. So on your free cash flow question, yeah, still sticking to our guidance of $1.3 billion plus for the year. Again, a real strong Q1 with $272 million. You're absolutely correct. We do see CapEx slightly ticking up, but still staying in our range. And we also do see working capital with the growth we're seeing in the back half of the year slightly going up as well. So what I'd say is our guide is we feel is prudent at this time, and we'll continue to update as we go through the year.

Greg Hebard: Great. Thanks, guys.

David Vogt: Great. Thanks, guys.

Operator: Thank you. This now concludes the question and answer session. We now would like to turn the floor back over to Adam Berry for closing comments.

Ruplu Bhattacharya: Thank you. Thank you for your interest in Jabil. This now concludes our call.

Adam Berry: Thank you. Thank you for your interest in Jabil. This now concludes our call.

Operator: Thank you. This now concludes today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Q1 2026 Jabil Inc Earnings Call

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