Q3 2026 Jabil Inc Earnings Call

June 17, 2026

Operator 2: Greetings, ladies and gentlemen, and welcome to the Jabil Q3 of fiscal year 2026 financial results Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Berry, Investor Relations. Thank you. Please go ahead.

Operator: Greetings, ladies and gentlemen, and welcome to the Jabil Q3 of fiscal year 2026 financial results Conference Call. At this time, all participants are on a listen-only mode. A Q&A session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Berry, Investor Relations. Thank you. Please go ahead.

Speaker #2: A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press *0 on your telephone keypad.

Speaker #2: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Berry, Investor Relations. Thank you. Please go ahead.

Speaker #2: Good morning, and welcome to Jabil's Third Quarter Fiscal 2026 Conference Call. Joining me on today's call are Chief Executive Officer Mike Dastoor and Chief Financial Officer Greg Hebard.

Adam Berry: Good morning, welcome to Jabil's Q3 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 Q4 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 #2: 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.

Speaker #2: 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.

Speaker #2: Including, among other things, those regarding the anticipated outlook for our business, such as our currently expected fourth quarter and full fiscal year 2026 net revenue and earnings.

Speaker #2: These statements are based on current expectations, forecasts, and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. An extensive list of these risks and uncertainties is identified in our annual report on Form 10-K for the fiscal year ended August 31, 2025, and in other filings with the SEC.

Adam Berry: An extensive list of these risks and uncertainties are identified in our annual report on Form 10-K for the fiscal year ended 31 August 2025, and on 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.

Adam Berry: An extensive list of these risks and uncertainties are identified in our annual report on Form 10-K for the fiscal year ended 31st August 2025, and on 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 #2: 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 #2: Thank you, Adam. Good morning, everyone, and thank you for joining our call today. Before getting into the details, I want to take a moment to talk about how the quarter came together.

Greg Hebard: Thank you, Adam. Good morning, everyone, thank you for joining our call today. Before getting into the details, I want to take a moment on how the quarter came together. We feel very good about Q3. Demand remained strong, our teams executed well, and we delivered ahead of expectations across revenue, margin, EPS, and free cash flow. Revenue upside in the quarter was broad-based across the portfolio, I'll walk through the segment details shortly. Just as important, margins were strong and free cash flow was robust, giving us good momentum as we move into Q4. For Q3, revenue was approximately $8.8 billion, up 12% year over year, and $250 million above the midpoint of our outlook. On a GAAP basis, operating income was $445 million, or 5.1% of revenue. Core operating income was $504 million, and core operating margin was 5.8%.

Speaker #2: We feel very good about Q3. Demand remains strong. Our team's executed well, and we delivered ahead of expectations across revenue, margin, EPS, and free cash flow.

Speaker #2: Revenue upside in the quarter was broad-based across the portfolio, and I'll walk through the segment details shortly. Just as important, margins were strong and free cash flow was robust.

Greg Hebard: Just as important, margins were strong and free cash flow was robust, giving us good momentum as we move into Q4. For Q3, revenue was approximately $8.8 billion, up 12% year over year, and $250 million above the midpoint of our outlook. On a GAAP basis, operating income was $445 million, or 5.1% of revenue. Core operating income was $504 million, and core operating margin was 5.8%. GAAP diluted earnings per share for the quarter was $2.59, core diluted earnings per share was $3.16, up 24% year over year. Turning now to segment performance in Q3. Regulated Industries revenue was $3.2 billion, up 4% year over year, above our outlook for the quarter.

Speaker #2: Giving us good momentum as we move into Q4. For the third quarter, revenue was approximately $8.8 billion, up 12% year over year and $250 million above the midpoint of our outlook.

Speaker #2: On a GAAP basis, operating income was $445 million, or 5.1% of revenue. Core operating income was $504 million, and core operating margin was 5.8%.

Speaker #2: GAAP diluted earnings per share for the quarter was $2.59, and core diluted earnings per share was $3.16, up 24% year over year. Turning now to segment performance in the third quarter.

Greg Hebard: GAAP diluted earnings per share for the quarter was $2.59, core diluted earnings per share was $3.16, up 24% year over year. Turning now to segment performance in Q3. Regulated Industries revenue was $3.2 billion, up 4% year over year, above our outlook for the quarter. The upside was primarily driven by automotive and transportation, where demand was stronger than we expected. Core operating margin was 5.6%, up 10 basis points over the prior year. Intelligent Infrastructure revenue was $4.2 billion, up 21% year over year, reflecting continued strong demand and performance in line with our outlook for the quarter. Growth was broad-based across the segment. Capital equipment and cloud and data center infrastructure were both double digits, while networking and communications was up more than 50%, supported by a strong networking ramp in India.

Speaker #2: Regulated industries revenue was $3.2 billion, up 4% year over year and above our outlook for the quarter. The upside was primarily driven by automotive and transportation, where demand was stronger than we expected.

Greg Hebard: The upside was primarily driven by automotive and transportation, where demand was stronger than we expected. Core operating margin was 5.6%, up 10 basis points over the prior year. Intelligent Infrastructure revenue was $4.2 billion, up 21% year over year, reflecting continued strong demand and performance in line with our outlook for the quarter. Growth was broad-based across the segment. Capital equipment and cloud and data center infrastructure were both double digits, while networking and communications was up more than 50%, supported by a strong networking ramp in India.

Speaker #2: Core operating margin was 5.6%, up 10 basis points over the prior year. Intelligent Infrastructure revenue was $4.2 billion, up 21% year over year, reflecting continued strong demand and performance in line with our outlook for the quarter.

Speaker #2: Growth was broad-based across the segment. Capital equipment and cloud and data center infrastructure were both up double digits, while networking and communications was up more than 50%, supported by a strong networking ramp in India.

Speaker #2: Overall, this continues to be a very strong growth business for Jabil. And as we look from Q3 into Q4, we expect another meaningful step up in revenue across all three end markets.

Greg Hebard: Overall, this continues to be a very strong growth business for Jabil, as we look from Q3 into Q4, we expect another meaningful step up in revenue across all three end markets, supported by continued strength in AI-related programs and the timing of customer ramps. Core operating margin for the segment was 6.1%, up 80 basis points over prior year Q3. Connected Living and Digital Commerce revenue was $1.4 billion, up 5% year over year, above our outlook for the quarter. Relative to our Q3 outlook, the upside came largely from Connected Living, where consumer-related demand was better than the cautious assumptions we had embedded in the guide. Core operating margin for the segment was 4.9%. Turning now to cash flow and balance sheet metrics. Free cash flow was better than we expected in Q3, supported by strong profitability and continued discipline across the business.

Speaker #2: Supported by continued strength in AI-related programs and the timing of customer ramps. Core operating margin for the segment was 6.1%, up 80 basis points over prior year Q3.

Speaker #2: Connected Living and Digital Commerce revenue was $1.4 billion, up 5% year over year and above our outlook for the quarter. Relative to our Q3 outlook, the upside came largely from Connected Living.

Greg Hebard: Relative to our Q3 outlook, the upside came largely from Connected Living, where consumer-related demand was better than the cautious assumptions we had embedded in the guide. Core operating margin for the segment was 4.9%. Turning now to cash flow and balance sheet metrics. Free cash flow was better than we expected in Q3, supported by strong profitability and continued discipline across the business.

Speaker #2: Where consumer-related demand was better than the cautious assumptions we had embedded in the guide. Core operating margin for the segment was 4.9%. Turning now to cash flow and balance sheet metrics.

Speaker #2: Free cash flow was better than we expected in Q3, supported by strong profitability and continued discipline across the business. Cash flow from operations was $535 million, and net capital expenditures were $176 million.

Greg Hebard: Cash flow from operations was $535 million. Net capital expenditures were $176 million, resulting in adjusted free cash flow of $359 million for the quarter. On working capital, inventory days were 84. Net of inventory deposits from customers, inventory days were approximately 68, which was above our normal targeted range of 55 to 60 days. Inventory was largely tied to the timing of customer shipments in Intelligent Infrastructure, and we expect this to normalize back toward our targeted range in Q4. Given how our performance through Q3 and the outlook for Q4, we now expect adjusted free cash flow of more than $1.4 billion for the full fiscal 2026, up from our prior outlook of more than $1.3 billion. Our balance sheet remains in excellent shape.

Speaker #2: Resulting in adjusted free cash flow of $359 million for the quarter. On working capital, inventory days were 84. Net of inventory deposits from customers, inventory days were approximately 68, which was above our normal targeted range of 55 to 60 days.

Speaker #2: The higher inventory was largely tied to the timing of customer shipments in Intelligent Infrastructure, and we expect this to normalize back toward our targeted range in Q4.

Speaker #2: Given how our performance through Q3 and the outlook for Q4, we now expect adjusted free cash flow of more than $1.4 billion for the full fiscal year.

Speaker #2: Up from our prior outlook of more than $1.3 billion. Our balance sheet remains in excellent shape. We ended Q3 with $1.4 billion in cash and debt to core EBITDA of 1.3 times, and we remain fully committed to maintaining our investment-grade credit profile.

Greg Hebard: We ended Q3 with $1.4 billion in cash and debt to core EBITDA of 1.3 times. We remain fully committed to maintaining our investment-grade credit profile. During the quarter, we repurchased approximately $291 million of shares under our existing $1 billion share repurchase authorization, which we intend to fully complete in Q4. With that, I'll walk through our guidance for Q4 fiscal 2026. Starting with the segments, we expect Regulated Industries revenue of approximately $3.3 billion, up 6% year over year. This reflects continued stability in healthcare and packaging, ongoing improvement in renewables, and automotive and transportation performing better than we expected earlier in the year. For Intelligent Infrastructure, we expect revenue of approximately $4.9 billion, up about 32% year over year. This represents a meaningful sequential step-up from Q3, reflecting continued strength in AI-related programs, customer ramp timing, and the timing of shipments, as discussed earlier.

Speaker #2: During the quarter, we repurchased approximately $291 million of shares under our existing $1 billion share repurchase authorization, which we intend to fully complete in Q4.

Speaker #2: With that, I'll walk through our guidance for Q4 FY26. Starting with the segments, we expect Regulated Industries revenue of approximately $3.3 billion, up 6% year over year.

Speaker #2: This reflects continued stability in healthcare and packaging, ongoing improvement in renewables, and automotive and transportation performing better than we expected earlier in the year.

Greg Hebard: This reflects continued stability in healthcare and packaging, ongoing improvement in renewables, and automotive and transportation performing better than we expected earlier in the year. For Intelligent Infrastructure, we expect revenue of approximately $4.9 billion, up about 32% year over year. This represents a meaningful sequential step-up from Q3, reflecting continued strength in AI-related programs, customer ramp timing, and the timing of shipments, as discussed earlier.

Speaker #2: For Intelligent Infrastructure, we expect revenue of approximately $4.9 billion, up about 32% year over year. This represents a meaningful sequential step up from Q3, reflecting continued strength in AI-related programs, customer ramp timing, and the timing of shipments as discussed earlier.

Speaker #2: And in Connected Living and Digital Commerce, we expect revenue of approximately $1.4 billion, roughly flat year over year. Digital Commerce growth remains healthy, while Connected Living continues to reflect a mixed consumer environment, although one that has performed better than our more cautious assumptions.

Greg Hebard: In Connected Living and Digital Commerce, we expect revenue of approximately $1.4 billion, roughly flat year over year. Digital Commerce growth remains healthy, while Connected Living continues to reflect a mixed consumer environment, although one that has performed better than our more cautious assumptions. At the enterprise level, we expect Q4 revenue to be in the range of $9.2 billion to $10 billion, or about 16% year over year growth at the midpoint. We expect core operating income to be in the range of $589 million to $649 million, which implies a core operating margin of approximately 6.4% at the midpoint. We expect core diluted earnings per share to be in the range of $3.80 to $4.20. We expect Q4 net interest expense to be approximately $80 million. Our core tax rate remains approximately 21%.

Speaker #2: At the enterprise level, we expect Q4 revenue to be in the range of $9.2 billion to $10 billion. We're about 16% year-over-year growth at the midpoint.

Speaker #2: We expect core operating income to be in the range of $589 million to $649 million, which implies a core operating margin of approximately 6.4% at the midpoint.

Speaker #2: We expect core diluted earnings per share to be in the range of $3.80 to $4.20. We expect fourth-quarter net interest expense to be approximately $80 million, and our core tax rate remains approximately 21%.

Speaker #2: Taken together, this would represent a strong finish to the year, with continued revenue growth, margin expansion, and free cash flow generation. For fiscal 2026, we now expect revenue of approximately $35 billion, core operating margin of approximately 5.8%, core diluted earnings per share of approximately $12.70, and adjusted free cash flow of more than $1.4 billion.

Greg Hebard: Taken together, this would represent a strong finish to the year, with continued revenue growth, margin expansion, and free cash flow generation. For fiscal 2026, we now expect revenue of approximately $35 billion, core operating margin of approximately 5.8%, core diluted earnings per share of approximately $12.70, and adjusted free cash flow of more than $1.4 billion. Let me close by saying Q3 delivered strong results and gives us greater confidence as we enter the final quarter of fiscal 2026. Our performance this quarter highlights the strength of our diversified portfolio, the momentum in Intelligent Infrastructure, and the disciplined execution of our teams around the world. As we move through Q4 and look ahead to fiscal 2027, our priorities remain clear and consistent: profitable growth, margin expansion, capital efficiency, and sustained cash generation.

Speaker #2: Let me close by saying Q3 delivered strong results and gives us greater confidence as we enter the final quarter of fiscal 2026. Our performance this quarter highlights the strength of our diversified portfolio, the momentum in intelligent infrastructure, and the disciplined execution of our teams around the world.

Speaker #2: As we move through Q4 and look ahead to fiscal 2027, our priorities remain clear and consistent: profitable growth, margin expansion, capital efficiency, and sustained cash generation.

Greg Hebard: As we move through Q4 and look ahead to fiscal 2027, our priorities remain clear and consistent: profitable growth, margin expansion, capital efficiency, and sustained cash generation. With that, I'll turn the call over to Mike, who will share more on fiscal 2026 outlook and how we're thinking about the setup into fiscal 2027.

Speaker #2: With that, I'll turn the call over to Mike, who will share more on the fiscal 2026 outlook and how we're thinking about the setup heading into fiscal 2027.

Greg Hebard: With that, I'll turn the call over to Mike, who will share more on fiscal 2026 outlook and how we're thinking about the setup into fiscal 2027.

Speaker #3: Thanks, Greg, and good morning, everyone. I'd like to begin today's call by thanking our teams around the world for delivering another strong quarter. Achieving 12% year-over-year growth on a business of our scale requires tremendous focus, coordination, and execution across our global operations, customer partnerships, and supply chain network.

Mike Dastoor: Thanks, Greg. Good morning, everyone. I'd like to begin today's call by thanking our teams around the world for delivering another strong quarter. Achieving 12% year-over-year growth on business of our scale requires tremendous focus, coordination, and execution across our global operations, customer partnerships, and supply chain network. I want to thank all of our employees for their contributions and commitment to delivering these outcomes. At the enterprise level, we delivered ahead of our expectations across all of our key metrics, including revenue, margin, EPS, and free cash flow. AI infrastructure demand remained extremely strong, and our full-year AI-related revenue outlook is now meaningfully higher than what we laid out just 90 days ago. At the same time, we continue to see better-than-expected performances in areas of the portfolio that have previously been under pressure, including automotive and transportation, and Connected Living and Digital Commerce.

Speaker #3: I want to thank all of our employees for their contributions and commitment to delivering these outcomes. At the enterprise level, we delivered ahead of our expectations across all of our key metrics, including revenue, margin, EPS, and free cash flow.

Speaker #3: AI infrastructure demand remained extremely strong, and our full-year AI-related revenue outlook is now meaningfully higher than what we laid out just 90 days ago.

Mike Dastoor: AI infrastructure demand remained extremely strong, and our full-year AI-related revenue outlook is now meaningfully higher than what we laid out just 90 days ago. At the same time, we continue to see better-than-expected performances in areas of the portfolio that have previously been under pressure, including automotive and transportation, and Connected Living and Digital Commerce. Over the past several years, we have worked hard to build a diversified model, one which relies on many large end markets. We still believe that's the right model for our business today.

Speaker #3: At the same time, we continue to see better-than-expected performance in areas of the portfolio that have previously been under pressure, including automotive and transportation, as well as connected living and digital commerce.

Speaker #3: Over the past several years, we have worked hard to build diversified models, ones which rely on many large end markets. And we still believe that's the right model for our business today.

Mike Dastoor: Over the past several years, we have worked hard to build a diversified model, one which relies on many large end markets. We still believe that's the right model for our business today. The diversified model not only provides important synergies such as supply chain purchasing power and engineering, which is leveraged across end markets, more importantly, we believe it also allows for more sustainable financial performance over longer periods of time, providing a natural hedge in different economic cycles. With that as a backdrop, let me now walk through fiscal 2026 by end market. Starting with Intelligent Infrastructure, we continue to feel very good about the business. We now expect AI-related revenue to be approximately $13.6 billion in fiscal 2026. That is $500 million higher than our March outlook of $13.1 billion and up from $9 billion in fiscal 2025.

Speaker #3: The diversified model not only provides important synergies, such as supply chain purchasing power and engineering—which are leveraged across end markets—but more importantly, we believe it also allows for more sustainable financial performance over longer periods of time, providing a natural hedge in different economic cycles.

Mike Dastoor: The diversified model not only provides important synergies such as supply chain purchasing power and engineering, which is leveraged across end markets, more importantly, we believe it also allows for more sustainable financial performance over longer periods of time, providing a natural hedge in different economic cycles. With that as a backdrop, let me now walk through fiscal 2026 by end market. Starting with Intelligent Infrastructure, we continue to feel very good about the business. We now expect AI-related revenue to be approximately $13.6 billion in fiscal 2026. That is $500 million higher than our March outlook of $13.1 billion and up from $9 billion in fiscal 2025.

Speaker #3: With that as the backdrop, let me now walk through fiscal 2026 by end market. Starting with Intelligent Infrastructure, we continue to feel very good about the business.

Speaker #3: We now expect AI-related revenue to be approximately $13.6 billion in fiscal 2026. That is $500 million higher than our March outlook of $13.1 billion, and up from $9 billion in fiscal 2025.

Speaker #3: This represents $4.6 billion of AI-related growth this year, or about 50% year-over-year. This level of growth reflects strong customer demand, quality execution from our team, and the capabilities we have built across compute, storage, networking, optics, power, cooling, and rack-level integration.

Mike Dastoor: This represents $4.6 billion of AI-related growth this year or about 50% year over year. This level of growth reflects strong customer demand, quality execution from our team, and the capabilities we have built across compute, storage, networking, optics, power, cooling, and rack-level integration. We also took an important step forward in Q3 by winning our third hyperscale customer. Based on what we see today, we would expect the revenue ramp with this customer to look a lot like what we saw in our second hyperscaler, where we started with a specific capability, executed well, and then expanded the conversation across the data center. That is an important part of the model. We can enter where we have a capability the customer needs, deliver with quality, and then expand as the relationship deepens.

Speaker #3: We also took an important step forward in Q3 by winning our third hyperscale customer. Based on what we see today, we would expect the revenue ramp with this customer to look a lot like what we saw with our second hyperscaler, where we started with a specific capability, executed well, and then expanded the conversation across the data center.

Speaker #3: That is an important part of the model. We can enter where we have a capability the customer needs, deliver with quality, and then expand as the relationship deepens.

Speaker #3: Importantly, this remains an attractive asset-light model for Jabil, as evidenced by our CapEx expectations of 1.5% to 2%. We're expanding capacity in a disciplined way, tightly aligned to visible customer demand, while avoiding the product ownership and IP risk that can come with more OEM-like models.

Mike Dastoor: Importantly, this remains an attractive asset-light model for Jabil, as evidenced by our CapEx expectations of 1.5% to 2%. We are expanding capacity in a disciplined way, tied to visible customer demand while avoiding the product ownership and IP risk that can come with more OEM-like models. Not only do I like the large revenue growth opportunities before us, I continue to like the return profile of the business, including strong free cash flows. Moving to Regulated Industries, where the tone continues to get better. Auto was stronger than expected in the quarter, and we now expect auto revenue of approximately $4.4 billion in fiscal 2026, compared to our March outlook of $4.2 billion. Despite coming in stronger than anticipated, we remain cautious on the automotive market given continued demand volatility.

Speaker #3: Not only do I like the large revenue growth opportunities before us, I continue to like the return profile of the business, including strong free cash flows.

Speaker #3: Moving to regulated industries, where the tone continues to get better. Auto was stronger than expected in the quarter, and we now expect auto revenue of approximately $4.4 billion in fiscal 2026, compared to our March outlook of $4.2 billion.

Speaker #3: Despite coming in stronger than anticipated, we remain cautious on the automotive market given continued demand volatility. That said, stronger export demand from China, industry consolidation, and growth in powertrain-agnostic platforms enabled us to exceed our prior outlook.

Mike Dastoor: That said, stronger export demand from China, industry consolidation, and growth in powertrain-agnostic platforms enabled us to exceed our prior outlook. Renewables also continue to improve. We are seeing support from safe harbor projects, demand for power tied to AI and data center infrastructure, and a shift from residential towards commercial projects. The tone is better than it was earlier in the year. In Healthcare, our long-term view of the opportunity has not changed. The product cycles are long, the margin profile is attractive, and the outsourcing of opportunity is still relatively immature. We continue to see good opportunities around drug delivery, med devices, and broader pharma capabilities. In Connected Living and Digital Commerce, we also saw better performance in the quarter. In Connected Living, the environment remains mixed, but performance was better than the cautious assumptions we had embedded in our outlook, driven primarily by connected devices.

Speaker #3: Renewables also continue to improve. We are seeing support from safe-harbor projects, demand for power tied to AI and data center infrastructure, and the shift from residential towards commercial projects.

Speaker #3: The tone is better than it was earlier in the year. In healthcare, our long-term view of the opportunity has not changed. The product cycles are long.

Mike Dastoor: The product cycles are long, the margin profile is attractive, and the outsourcing of opportunity is still relatively immature. We continue to see good opportunities around drug delivery, med devices, and broader pharma capabilities. In Connected Living and Digital Commerce, we also saw better performance in the quarter. In Connected Living, the environment remains mixed, but performance was better than the cautious assumptions we had embedded in our outlook, driven primarily by connected devices. We now expect Connected Living revenue of approximately $2.7 billion in fiscal 2026, up $300 million from our March outlook.

Speaker #3: The margin profile is attractive, and the outsourcing opportunity is still relatively immature. We continue to see good opportunities around drug delivery, med devices, and broader pharma capabilities.

Speaker #3: In Connected Living and Digital Commerce, we also saw better performance in the quarter. In Connected Living, the environment remains mixed, but performance was better than the cautious assumptions we had embedded in our outlook, driven primarily by connected devices.

Speaker #3: We now expect Connected Living revenue of approximately $2.7 billion in fiscal 2026, up $300 million from our March outlook. We expect Digital Commerce revenue of approximately $2.7 billion, up $100 million from our March outlook.

Mike Dastoor: We now expect Connected Living revenue of approximately $2.7 billion in fiscal 2026, up $300 million from our March outlook. We expect Digital Commerce revenue of approximately $2.7 billion, up $100 million from our March outlook. Digital Commerce remains one of our higher-margin end markets with good opportunities in automation, robotics, retail, and warehouse technology. Putting all of that together, we are raising our fiscal 2026 outlook. We now expect revenue of approximately $35 billion, up from our March outlook of $34 billion. That represents growth of roughly 17% year over year. We also now expect an improvement in core operating margin of 10 bps to approximately 5.8%, core EPS of approximately $12.70, and adjusted free cash flow of more than $1.4 billion, up from our prior outlook of more than $1.3 billion. For me, it is important to recognize that the model is working.

Mike Dastoor: We expect Digital Commerce revenue of approximately $2.7 billion, up $100 million from our March outlook. Digital Commerce remains one of our higher-margin end markets with good opportunities in automation, robotics, retail, and warehouse technology. Putting all of that together, we are raising our fiscal 2026 outlook. We now expect revenue of approximately $35 billion, up from our March outlook of $34 billion. That represents growth of roughly 17% year over year. We also now expect an improvement in core operating margin of 10 bps to approximately 5.8%, core EPS of approximately $12.70, and adjusted free cash flow of more than $1.4 billion, up from our prior outlook of more than $1.3 billion. For me, it is important to recognize that the model is working.

Speaker #3: Digital commerce remains one of our higher-margin end markets, with good opportunities in automation, robotics, retail, and warehouse technology. Putting all of that together, we're raising our fiscal 2026 outlook.

Speaker #3: We now expect revenue of approximately $35 billion, up from our March outlook of $34 billion. That represents growth of roughly 17% year over year.

Speaker #3: We also now expect an improvement in core operating margin of 10 basis points to approximately 5.8%, core EPS of approximately $12.70, and adjusted free cash flow of more than $1.4 billion, up from our prior outlook of more than $1.3 billion.

Speaker #3: For me, it's important to recognize that the model is working. As a result, the business is rapidly growing. Margins are moving higher, and free cash flow expectations are also improving.

Mike Dastoor: As a result, the business is rapidly growing. Margins are moving higher, and free cash flow expectations also are improving. When I look beyond fiscal 2026, I am extremely confident in Jabil's strategic position, the strength of our customer relationships, and our ability to capture the significant opportunities ahead. While we will provide full year guidance for FY 2027 in our annual virtual investor briefing in September, I thought it might be helpful to provide an early view of our AI-related revenue growth. As I mentioned earlier, in FY 2026, we anticipate our AI-related revenue will be approximately $13.6 billion. We are exiting the year with a stronger platform for growth, strong customer engagements, and new capacity coming online in North Carolina, Memphis, India, and other parts of the footprint.

Speaker #3: And when I look beyond fiscal 2026, I am extremely confident in Jabil's strategic position, the strength of our customer relationships, and our ability to capture the significant opportunities ahead.

Speaker #3: While we will provide fuller guidance for FY27 at our annual virtual investor briefing in September, I thought it might be helpful to provide an early view of our AI-related revenue growth.

Speaker #3: As I mentioned earlier, in FY26, we anticipate our AI-related revenue will be approximately $13.6 billion. We are exiting the year with a stronger platform for growth, strong customer engagements, and new capacity coming online in North Carolina, Memphis, India, and other parts of the footprint.

Speaker #3: For all these reasons, I expect AI-related revenue growth in FY27, in percentage terms, to be similar to FY26. What makes that especially impressive is that we expect to sustain this growth rate on a much larger revenue base.

Mike Dastoor: For all these reasons, I expect AI-related revenue growth in fiscal 2027, in percentage terms, to be similar to fiscal 2026. What makes that especially impressive is that we expect to sustain this growth rate off a much larger revenue base. At the enterprise level, there are still a few things that will shape how the full year comes together between now and September. That includes component availability, mix across the portfolio, and the choices we make as we continue to prioritize margins, customer ramp timing, free cash flow, and returns. As these items firm up, they will help determine where the full year ultimately lands. The combination of strong AI growth, improving mix, and continued discipline around free cash flows and returns gives me confidence that Jabil can move core operating margin above 6% in fiscal 2027.

Speaker #3: At the enterprise level, there are still a few things that will shape how the full year comes together between now and September. That includes component availability, mix across the portfolio, and the choices we make as we continue to prioritize margins.

Speaker #3: Customer ramp timing, free cash flow, and returns—as these items firm up, they will help determine where the full year ultimately lands. The combination of strong AI growth, improving mix, and continued discipline around free cash flows and returns gives me confidence that Jabil can move core operating margin above 6% in fiscal 2027.

Speaker #3: Before we wrap up, one incremental opportunity I want to highlight is the AI infrastructure initiative we announced earlier this week with Adani Enterprises. While it is still early days, Adani Enterprises and Jabil are targeting a strategic alliance to build an AI data center infrastructure platform in India.

Mike Dastoor: Before we wrap up, one incremental opportunity I want to highlight is the AI infrastructure initiative we announced earlier this week with Adani Enterprises. While it is still early days, Adani Enterprises and Jabil are targeting a strategic alliance to build an AI data center infrastructure platform in India. This alliance will focus on multi-gigawatt manufacturing capacity for high-density AI racks and associated computing infrastructure. The platform is expected to manufacture next-gen liquid-cooled AI racks, servers, storage systems, and networking equipment and supporting infrastructure equipment required inside modern AI data centers, including power distribution units, transformers, switchgear, and thermal management systems used by hyperscalers, co-location providers, and enterprise data center customers. Importantly, the opportunity represents the potential to help establish a scaled AI infrastructure manufacturing platform in India, a market we believe will become increasingly important for both domestic and global AI infrastructure demand.

Speaker #3: This alliance will focus on multi-gigawatt manufacturing capacity for high-density AI racks and associated computing infrastructure. The platform is expected to manufacture next-generation liquid-cooled AI racks, servers, storage systems, and networking equipment, as well as supporting infrastructure equipment required inside modern AI data centers, including power distribution units, transformers, switchgear, and thermal management systems used by hyperscalers, colocation providers, and enterprise data center customers.

Mike Dastoor: The platform is expected to manufacture next-gen liquid-cooled AI racks, servers, storage systems, and networking equipment and supporting infrastructure equipment required inside modern AI data centers, including power distribution units, transformers, switchgear, and thermal management systems used by hyperscalers, co-location providers, and enterprise data center customers. Importantly, the opportunity represents the potential to help establish a scaled AI infrastructure manufacturing platform in India, a market we believe will become increasingly important for both domestic and global AI infrastructure demand.

Speaker #3: Importantly, the opportunity represents the potential to help establish a scaled AI infrastructure manufacturing platform in India—a market we believe will become increasingly important for both domestic and global AI infrastructure demand.

Speaker #3: There is still work to be done before a definitive framework is established, so we view this as a longer-term opportunity. If the partnership develops as we anticipate, fiscal 2028 is the more realistic starting point for meaningful contributions.

Mike Dastoor: There is still work to be done before a definitive framework is established. We view this as a longer-term opportunity. If the partnership develops as we anticipate, fiscal 2028 is the more realistic starting point for meaningful contributions. In closing, we remain focused on executing our diversified strategy, investing in the right growth areas, and creating long-term value for our customers and shareholders. Thank you for your continued support, and we look forward to updating you on our progress in the quarters ahead. With that, operator, we're ready for questions.

Speaker #3: In closing, we remain focused on executing our diversified strategy, investing in the right growth areas, and creating long-term value for our customers and shareholders.

Speaker #3: Thank you for your continued support, and we look forward to updating you on our progress in the quarters ahead. With that, operator, we're ready for questions.

Speaker #1: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time.

Operator 2: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star one to register a question at this time. Today's first question is coming from Ruplu Bhattacharya of Bank of America. Please go ahead.

Operator: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star one to register a question at this time. Today's first question is coming from Ruplu Bhattacharya of Bank of America. Please go ahead.

Speaker #1: A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star one to register a question at this time.

Speaker #1: Today's first question is coming from Ruplu Bhattacharya of Bank of America. Please go ahead.

Speaker #3: Hi, thanks for taking my questions. Mike, with today's guidance raised, you would have had two years of strong AI revenue growth, and, like you said, the base is higher now for AI revenues.

Ruplu Bhattacharya: Hi. Thanks for taking my questions. Mike, with today's guidance raise, you would have had two years of strong AI revenue growth. Like you said, the base is higher now for AI revenues. A lot of companies are building GPU racks. What gives Jabil the right to win in this space? You talked about a third hyperscaler, and you talked about the announcement with Adani Enterprises in India. How big a revenue driver could these be for Jabil? I have a follow-up.

Speaker #3: A lot of companies are building GPU racks. What gives Jabil the right to win in this space? And you talked about a third hyperscaler, and you talked about the announcement with Adani Enterprises in India.

Speaker #3: How big a revenue driver could these be for Jabil? And I have a follow-up.

Speaker #2: Great. Thanks, Ruplu. So I feel our AI demand continues to be extremely strong. I think the holistic strategy that the team's focused on, where we sort of enable customers to scale AI much faster by delivering fully integrated systems, across compute, storage, networking, power, advanced cooling, we often sort of go in through one channel or one capability and expand the relationship by offering other end-to-end sort of solutions to customers.

Mike Dastoor: Great. Thanks, Ruplu. I feel our AI demand continues to be extremely strong. I think the holistic strategy that the team's focused on, where we sort of enable customers to scale AI much faster by delivering fully integrated systems across compute, storage, networking, power, advanced cooling. We often sort of go in through one channel or one capability and expand the relationship by offering other end-to-end sort of solutions to customers. We actually won our second hyperscaler in exactly that way, and we actually just won our third hyperscaler, and the strategy will be exactly the same. Going really well from a strategy standpoint. In my prepared remarks, I talked about having a similar growth rate. You highlighted that, Ruplu, and it's on a much, much higher revenue base. All three end markets are contributing to this.

Speaker #2: We actually won our second hyperscaler in exactly that way. And we've actually just won our third hyperscaler, and the strategy will be exactly the same.

Speaker #2: So, going really well from a strategy standpoint. In my prepared remarks, I talked about having a similar growth rate—you highlighted that, Ruplu—and it's on a much, much higher revenue base.

Speaker #2: All three end-markets are contributing to this. If you think of capital equipment, test obviously is a high performer there. With all the rapid evolution of chip technology, the test equipment demand is through the roof.

Mike Dastoor: If you think of capital equipment, test obviously is a high performer there. With all the rapid evolution of chip technology, the test equipment demand is through the roof. I think WFE is making a little bit of a comeback, although we'll always be a little bit prudent because WFE historically has always moved to the right a little bit. There is definitely signs of a recovery in WFE right now. If you look at DCI, our cloud infrastructure business, we're opening up new capacity in North Carolina. We're talking about Memphis, India, other parts of the footprint. We recently made the Hanley acquisition, that's bearing fruit as well. Don't forget that's at a higher margin. Last but not least, networking. We've got the whole InfiniBand Ethernet demands going up, especially in India.

Speaker #2: I think WFE is making a little bit of a comeback, although we will always be a little bit prudent because WFE historically has always moved to the right a little bit.

Speaker #2: But there are definitely signs of recovery in WFE right now. And then, if you look at DCI, our cloud infrastructure business, we're opening up new capacity in North Carolina.

Speaker #2: We're talking about Memphis, India, and other parts of the footprint. We recently made the Hanley acquisition—that's bearing fruit as well. And don't forget, that's at a higher margin.

Speaker #2: And then, last but not least, networking. We've got the whole InfiniBand, Ethernet—demand is going up, especially in India. We've sort of almost doubled our revenue over the last year in India there.

Mike Dastoor: We've sort of almost doubled our revenue over the last year in India there partly because of this networking demand. The silicon photonics, we continue to play in that as well. Overall. Very strong demand, very good strategy from Jabil, and you're seeing that in the numbers, you're seeing that in the results. A similar growth rate on such a large revenue base is quite impressive. As it relates to the India opportunity, before I say anything, I just want to say that we do not have a definitive framework in place yet. We're still working on it, can't comment on financials or structure or anything like that. Having said that, I am really excited about this opportunity. If you think of a few things that stand out for me, we're talking about multi-gigawatt AI infrastructure manufacturing in India.

Speaker #2: Partly because of this networking demand, and then the silicon photonics—we continue to play in that as well. So, overall, very strong demand, very good strategy from Jabil, and you’re seeing that in the numbers.

Speaker #2: You're seeing that in the results. A similar growth rate on such a large revenue base is quite impressive. As it relates to the India opportunity, before I say anything, I just want to say that we do not have a definitive framework in place yet.

Speaker #2: So we're still working on it, so I can't comment on financials or structure or anything like that. Having said that, I am really excited about this opportunity. If you think of a few things that stand out for me...

Speaker #2: We're talking about multi-gigawatt AI infrastructure manufacturing. In India, we're talking about the world's highest population, and particularly with a government that's helping push making India a global manufacturing hub and taking it a step further to make for the world as well.

Mike Dastoor: We're talking about the world's highest population, particularly with a government that's helping push Make in India as a global manufacturing hub, taking it a step further to make for the world as well. Really well-aligned there. If you think of the offering that we're providing, it's a one-stop shop, which would sort of appeal to hyperscalers and data center providers, with Adani being one of the largest conglomerates in India, very strong in infrastructure, providing power, Jabil providing all the manufacturing expertise, which has been proved out in the US. We're talking of racks, we're talking of next-gen liquid cool racks, we're talking of servers, we're talking of storage systems and networking equipment. You layer on the supporting infrastructure that we're building today in the US as well, in terms of switchgear, transformers, power distribution units, thermal management systems.

Speaker #2: So really, well aligned there. If you think of the offering that we're providing, it's a one-stop shop, which would sort of appeal to hyperscalers and data center providers.

Speaker #2: With Adani being one of the largest conglomerates in India, very strong in infrastructure and providing power, and Jabil providing all the manufacturing expertise—which has been proved out in the US.

Speaker #2: So we're talking of racks. We're talking of next-gen liquid-cooled racks. We're talking of servers. We're talking of storage systems, networking equipment, and then you layer on the supporting infrastructure that we're building today in the U.S. as well, in terms of switchgear, transformers, power distribution units, thermal management systems.

Speaker #2: All of that comes into play, so the opportunity is quite significant going forward. Again, I do want to highlight that this is an FY28 event.

Mike Dastoor: All of that comes into play. The opportunity is quite significant going forward. Again, I do want to highlight that this is an FY28 event. Obviously, the main gating factor here would be building out this capacity, because this would require a decent chunk of capacity. The opportunity and the potential could be huge.

Speaker #2: Obviously, the main gating factor here would be building out this capacity, because this will require a decent chunk of capacity. But the opportunity and the potential could be huge.

Speaker #3: Okay, thanks for all the details there, Mike. Since we're talking about capacity, maybe I have a follow-up for Greg. You've been adding capacity. Does Jabil now have enough capacity to support the strong AI and data center revenue growth that you're projecting for fiscal '27?

Ruplu Bhattacharya: Okay. Thanks for all the details there, Mike. Since we're talking about capacity, maybe I have a follow-up for Greg. You've been adding capacity. Does Jabil now have enough capacity to support the strong AI and data center revenue growth that you're projecting for fiscal 2027? Can you help investors understand how much revenue can the existing footprint support, which areas would the company plan to invest in, how does this impact free cash flow going forward? Thanks for all the details.

Speaker #3: And can you help investors understand how much revenue the existing footprint can support, which areas the company plans to invest in, and how this impacts free cash flow going forward?

Speaker #3: Thanks for all the details.

Speaker #2: Yeah. Good morning, Ruplu. So, as Mike mentioned just now and also in his prepared remarks, when we look at AI revenue in FY '27, we're going to see similar growth levels, in percentage terms, to '26.

Greg Hebard: Yeah. Good morning, Ruplu. Yeah. As Mike mentioned just now, also in his prepared remarks, when we look at AI revenue in FY27, we're going to see similar growth levels and percentage turns to 2026, also off a larger base. From a capacity perspective, we're real confident we could have that revenue in place from a footprint perspective. Globally, we're adding an incremental 10% on our footprint. New buildings, new locations, and also expansions. We feel really good of the footprint being there to support that capacity. From a CapEx perspective and free cash flow, we have not given any kind of guide for next year yet, we feel really good on continuing to stay within that 1.5% to 2% on total CapEx, even with the footprint expansion that we're seeing in the coming year.

Speaker #2: And also off a larger base. From a capacity perspective, we're real confident we could have that revenue in place. From a footprint perspective, globally we're adding an incremental 10% on our footprint—new buildings, new locations, and also expansion.

Speaker #2: So we feel really good about the footprint being there to support that capacity. From a CapEx perspective and free cash flow, we're not giving any kind of guide for next year yet, but we feel really good about continuing to stay within that 1.5% to 2% on total CapEx, even with the footprint expansion that we're seeing in the coming year.

Ruplu Bhattacharya: Okay. Thanks for all the details.

Speaker #3: Okay, thanks for all the details.

Speaker #1: Thank you. Our next question is coming from Stephen Fox of Fox Advisors. Please go ahead.

Operator 2: Thank you. Our next question is coming from Steven Fox of Fox Advisors. Please go ahead.

Operator: Thank you. Our next question is coming from Steven Fox of Fox Advisors. Please go ahead.

Speaker #4: Hi, good morning, everyone. Just following up on a couple of those things, I was wondering if you can dial in a little bit more into the networking growth.

Steven Fox: Hi. Good morning, everyone. Just following up on a couple of those things. I was wondering if you can dial in a little bit more into the networking growth. Obviously, it's substantial here. How does that look into next year off of the guidance for AI revenues, and where is it coming from? Then I had a follow-up. Thanks.

Speaker #4: Obviously, it's substantial here. How does that look into next year off of the guidance for AI revenues? And where is it coming from? And then I had a follow-up.

Speaker #4: Thanks.

Speaker #2: So the networking growth, we've already grown quite a bit in '26. I think that growth continues in '27, Steve. I think the InfiniBand, Ethernet demand, all the switchgear that we're building in India, the silicon photonics piece, are coming together nicely.

Mike Dastoor: The networking growth, we've already grown quite a bit in 2026. I think that growth continues in 2027, Steve. I think the InfiniBand, the Ethernet demand, all the switchgear that we're building in India, the silicon photonics piece coming together nicely. There's a whole bunch of positives in that networking space, and I think the demand for that networking will be similar or better next year to 2026.

Speaker #2: Yeah. So there's a whole bunch of positives in that networking space. And I think the demand for that networking will be similar or better next year to '26.

Speaker #3: That's helpful. And then, just as a follow-up, can you talk a little bit more, Mike, about margins for next year? I know you don't want to get too specific, but I would imagine the margins you're posting now still include some inefficiencies from plants you're ramping up.

Steven Fox: That's helpful. Just as a follow-up, can you talk a little bit more, Mike, about margins for next year? I know you don't want to get too specific, but I would imagine the margins you're posting now still include some inefficiencies from plants you're ramping up. When do we start to see you guys fully harvest the new capacity at efficient rates as you're adding sales? When can we sort of see better incrementals? Thanks very much.

Speaker #3: When do we start to see you guys fully harvest the new capacity at efficient rates as you’re adding sales? When can we sort of see better incrementals?

Speaker #3: Thanks very much.

Speaker #2: So you're absolutely spot on with the capacity coming through in stages. We don't turn on all our capacity on the 1st of September. It'll phase in through the balance of this calendar year.

Mike Dastoor: You're absolutely spot on with the capacity coming through in stages. We don't turn on all our capacity on the 1st of September. It will phase in through the balance of this calendar year, and I expect a lot of the capacity to be on board by early calendar year next year. You're right, there's definitely some level of ramp impact. Having said that, I feel really confident about 6% plus margins, and I do add the plus up to the 6%. What's driving some of that, the mix is getting better. Some of the end markets that we've had a little sort of lack of recovery in the past, those are coming together nicely like automotive, renewables, healthcare is steady Eddie.

Speaker #2: And I expect a lot of the capacity to be on board by early calendar year next year. So, you're right, there's definitely some level of ramp impact. Having said that,

Speaker #2: I feel really confident about 6% plus margins, and I do add the "plus" after the 6%. I think if you look at what's driving some of that, the mix is getting better.

Speaker #2: Some of the end markets where we've had a little sort of lack of recovery in the past, those are coming together nicely, like automotive and renewables. Healthcare is steady-eddy, even within intelligent infrastructure.

Mike Dastoor: Even within Intelligent Infrastructure, the higher value capabilities like power, liquid cooling, silicon photonics, they're all getting accretion in margin in that Intelligent Infrastructure segment itself. You add on the operating leverage, you talked about utilization, capacity utilization getting better as we progress through 2027. Hanley, where we made the acquisition a few months ago, it's at double-digit margins. All of that coming together very nicely from a margin standpoint. I think the point you made about ramps is important to keep in mind, though. Like I said, my expectations are on a 6% plus margin for FY2027.

Speaker #2: The higher-value capabilities, like power, liquid cooling, Silicon Photonics—they're all getting accretion in margin in that Intelligent Infrastructure segment itself. And then you add on the operating leverage; you talked about utilization.

Speaker #2: Capacity utilization getting better as we progress through '27. And then Hanley where we made the acquisition a few months ago it's at double-digit margins.

Speaker #2: So all of that coming together very nicely from a margin standpoint. I would think the point you made about ramps is important to keep in mind, though.

Speaker #2: But like I said, my expectations are on a 6%+ margin for FY27.

Speaker #3: Great, that's very helpful. Thank you very much.

Steven Fox: Great. That's very helpful. Thank you very much.

Speaker #1: Thank you. Our next question is coming from Samek Chatterjee of JPMorgan. Please go ahead.

Operator 2: Thank you. Our next question is coming from Samik Chatterjee of JPMorgan. Please go ahead.

Operator: Thank you. Our next question is coming from Samik Chatterjee of JPMorgan. Please go ahead.

Speaker #5: Hi. Thank you for taking my question. This is Samek Chatterjee from MP. So my first question is regarding your intelligent infrastructure guide—you have employed an acceleration in year-over-year growth relative to fiscal Q3.

MP: Hi. Thank you for taking my question. This is MP on for Samik Chatterjee. My first question is regarding your Intelligent Infrastructure guide. You have implied an acceleration in year-over-year growth relative to fiscal Q3, it's also higher than your implied guidance, which you had given previously. Just wanted you to double-click on whether this upside relative to prior expectations is driven entirely by the new hyperscaler customer, also any color on what capabilities you are currently ramping on with the new hyperscaler customer. I have a follow-up. Thank you.

[Analyst] (JPMorgan): Hi. Thank you for taking my question. This is MP on for Samik Chatterjee. My first question is regarding your Intelligent Infrastructure guide. You have implied an acceleration in year-over-year growth relative to fiscal Q3, it's also higher than your implied guidance, which you had given previously. Just wanted you to double-click on whether this upside relative to prior expectations is driven entirely by the new hyperscaler customer, also any color on what capabilities you are currently ramping on with the new hyperscaler customer. I have a follow-up. Thank you.

Speaker #5: And then it's also higher than your implied guidance, which you have given previously. So, just wanted you to double-click on whether this upside relative to prior expectations is driven entirely by the new hyperscaler customer, and then also any color on what capabilities you are currently ramping up with the new hyperscaler customer.

Speaker #5: And I have a follow-up. Thank you.

Speaker #2: Just for clarification, is your question about FY26, or the growth rate for FY27?

Mike Dastoor: Just for clarification, your question is about FY2026 or the growth rate for FY2027?

Speaker #5: So fiscal 4Q, your intelligent infrastructure implied acceleration.

MP: Fiscal Q4, your Intelligent Infrastructure implied rate.

[Analyst] (JPMorgan): Fiscal Q4, your Intelligent Infrastructure implied rate.

Speaker #2: All right. So I think Greg mentioned something in his prepared remarks around timing, where we had some finished goods in the warehouse still at the end of Q3.

Mike Dastoor: Okay. All right. I think Greg mentioned something in his prepared remarks around timing, where we had some finished goods in the warehouse still at the end of Q3. Those will start flowing in in Q4. I think there's about a couple of hundred million from Q3 extending into Q4, and then an incremental $300 million across the board. It's not just related to the third hyperscaler, it's demand across the board in racks. I think Memphis is doing really well. There's $500 million upside in the Intelligent Infrastructure guide for FY2026, and it's spread out a little bit. Really happy to see that.

Speaker #2: Those will start flowing in Q4. I think there's about a couple of hundred million from Q3 extending into Q4, and then an incremental $300 million across the board.

Speaker #2: It's not just related to the third hyperscaler. It's demand across the board in racks. I think Memphis is doing really well. So, there's $500 million upside in the Intelligent Infrastructure guide for FY26.

Speaker #2: And it's spread out a little bit so really happy to see that.

Speaker #5: Got it. Thank you. And then for your fiscal 27 guide, you have said that AI growth continues at the similar percentage level and also we are seeing acceleration in growth relative to your other end markets.

MP: Got it. Thank you. Then for your fiscal 2027 guide, you have said that AI growth continues at the similar percentage level, and also we are seeing acceleration in growth relative to your other end markets. Will it be a fair assumption to say that overall fiscal 2027 revenue growth should be at least in line with fiscal 2026 or higher than that? Thank you.

[Analyst] (JPMorgan): Got it. Thank you. Then for your fiscal 2027 guide, you have said that AI growth continues at the similar percentage level, and also we are seeing acceleration in growth relative to your other end markets. Will it be a fair assumption to say that overall fiscal 2027 revenue growth should be at least in line with fiscal 2026 or higher than that? Thank you.

Speaker #5: So does that is it will it be a fair assumption to say that overall fiscal 27 revenue growth should be at least in line with fiscal 26 or higher than that?

Speaker #5: Thank you.

Mike Dastoor: Look, I think we'll provide full year guidance in September. My AI revenue sort of highlight was more to give the street a little bit of idea of what's going on in our AI piece. There's puts and takes on the other side of the business. Some end markets obviously are performing better. We'll continue to look at margins obviously. We'll continue to look at any pruning that we have to do. I wouldn't start expanding revenue on an incremental basis to what I've already said on the AI revenue. That was more an indication of comfortability in terms of the AI revenue growth rates. We will provide guidance, like I said, in September, and I expect it to be a nice number, but let's have some caution. I want to make sure that we don't get carried away with the numbers there.

Speaker #2: So, look, I think we'll provide full-year guidance in September. My AI revenue sort of highlight was more to give the Street a little bit of an idea of what's going on in our AI piece.

Speaker #2: This puts and takes on the other side of the business. Some end markets, obviously, are performing better. We'll continue to look at margins, obviously.

Speaker #2: We'll continue to look at any pruning that we have to do. So I wouldn't start expanding revenue on an incremental basis to what I've already said on the AI revenue.

Mike Dastoor: I wouldn't start expanding revenue on an incremental basis to what I've already said on the AI revenue. That was more an indication of comfortability in terms of the AI revenue growth rates. We will provide guidance, like I said, in September, and I expect it to be a nice number, but let's have some caution. I want to make sure that we don't get carried away with the numbers there.

Speaker #2: That was more an indication of comfort in terms of the AI revenue growth rates. We will provide guidance, like I said, in September, and I expect it to be a nice number.

Speaker #2: But let's have some caution. I want to make sure that we don't get carried away with the numbers there.

Speaker #5: Thank you, Michael.

MP: Thank you, Mike.

[Analyst] (JPMorgan): Thank you, Mike.

Speaker #1: Thank you. The next question is coming from Mark Delaney of Goldman Sachs. Please go ahead.

Operator 2: Thank you. The next question is coming from Mark Delaney of Goldman Sachs. Please go ahead.

Operator: Thank you. The next question is coming from Mark Delaney of Goldman Sachs. Please go ahead.

Speaker #5: Hi. Yes. Good morning. Thank you very much for taking my questions. I'm hoping you can share more color on what led to the win at the third hyperscaler and any product capability in particular where JABIL has had initial success.

Mark Delaney: Yes, good morning. Thank you very much for taking my questions. I'm hoping you can share more color on what led to the win at the third hyperscaler and any product capability in particular where Jabil has had initial success.

Speaker #2: It's across the data center infrastructure space. Look, it's very similar to how we did the second hyperscaler. The hyperscaler second hyperscaler was in a different capability.

Mike Dastoor: It's across the data center infrastructure space. Look, it's very similar to how we did the second hyperscaler. The second hyperscaler was in a different capability, and then we expanded way beyond that capability into all the other capabilities. I would see this as a starting point. The third hyperscaler, I expect it to be in that $couple of hundred million range for 2027, rapidly expanding to $1 billion and then beyond in 2028. Definitely a good sign. We've been working on this for a while, and it's finally come through in our Q3.

Speaker #2: And then we expanded way beyond that capability into all the other capabilities. So I would see this as a starting point, the third hyperscaler, I expect it to be in that couple of hundred million dollar range for '27.

Speaker #2: Rapidly expanding to a billion dollars and then beyond in '28, so definitely a good sign. We've been working on this for a while, and it's finally come through in our Q3.

Speaker #5: Okay, thanks for that. And then in terms of the supply chain considerations for the 50% growth in AI-related revenue for next year, you already spoke a bit about your manufacturing and CapEx plans to support that.

Mark Delaney: Okay. Thanks for that. Then in terms of the supply chain considerations for the 50% growth in AI related revenue for next year, you already spoke a bit around your manufacturing and CapEx plans to support that, but could you speak a little bit more on the supply chain, including labor and parts supply? Given that some companies in the industry have run into parts and component shortages, maybe help investors to better understand to what extent there's any conservatism from a supply chain standpoint factored into that outlook for 50% growth next year. Thanks.

Speaker #5: But could you speak a little bit more on the supply chain including labor and parts supply? And given that some companies in the industry have run into parts and component shortages, maybe help investors to better understand to what extent there's any conservatism from a supply chain standpoint factored into that outlook for a 50% growth next year.

Speaker #5: Thanks.

Speaker #2: Right. No, so it's really a good point, Mark. I think we always appropriately ensure that we factor in all these supply chain issues. There is a high demand for high-bandwidth memory, as everyone's aware.

Mike Dastoor: Right. No, that's a really good point, Mark. I think we always appropriately ensure that we've factored in all these supply chain issues. There is a high demand for High Bandwidth Memory, as everyone's aware. High-end, high-density interconnect PCBs are in high demand. Lead times have been extending. One good thing is obviously, the hyperscalers and our large customers get more than their fair share of some of these components. I think the DDR5s, I think the capacity is decent on that front, but the DDR4s and below, I think there will be some level of shortages, and we try our best to obviously factor in those delays. I think the key here on supply chain is our team is extremely focused, and I'll put our team up against anyone externally. I think if you look at the conversations are changing.

Speaker #2: High-end, high-density interconnect PCBs are in high demand. Lead times have been extending. One good thing is, obviously, the hyperscalers and our large customers get more than their fair share of some of these components.

Speaker #2: I think the DDR5s I think the capacity is decent on that front. But the DDR4s and below I think there will be some level of shortages.

Speaker #2: And we try our best to obviously factor in those delays I think the chain is our team is extremely focused and I'll put our team up against anyone externally.

Speaker #2: I think if you look at the conversations are changing, it's not transactional. It's not about pricing. It's about strategy. It's about access. It's about allocation.

Mike Dastoor: I think if you look at the conversations are changing. It's not transactional, it's not about pricing, it's about strategy, it's about access, it's about allocation, long-term commitments. Overall, I feel really good that our team is approaching this in absolutely the right way. By the way, they've proved it out over the last man, three, four, five years, if you include COVID in all of this. I think the team performed much better than many of the other teams.

Mike Dastoor: It's not transactional, it's not about pricing, it's about strategy, it's about access, it's about allocation, long-term commitments. Overall, I feel really good that our team is approaching this in absolutely the right way. By the way, they've proved it out over the last man, three, four, five years, if you include COVID in all of this. I think the team performed much better than many of the other teams.

Speaker #2: Long-term commitment. So overall, I feel really good that our team is approaching this. And absolutely the right way. And by the way, they've proved it out over the last three, four, five years.

Speaker #2: If you include COVID and all of this, I think the team performed much better than many of the other teams.

Speaker #5: Thank you.

Greg Hebard: Thank you.

Mark Delaney: Thank you.

Speaker #1: Thank you. The next question is coming from Ruben Roy of Stifel. Please go ahead.

Operator 2: Thank you. The next question is coming from Ruben Roy of Stifel. Please go ahead.

Operator: Thank you. The next question is coming from Ruben Roy of Stifel. Please go ahead.

Speaker #5: Thank you, guys. This is Saheed Singh on for Ruben Roy. Hi, Saheed.

[Analyst] (Stifel): Guys, this is Saad, same line for Ruben Roy.

Saad Quddus: Guys, this is Saad, same line for Ruben Roy.

Mike Dastoor: Hi.

[Analyst] (Stifel): Hi, it's me.

Saad Quddus: Hi, it's me.

Speaker #6: Yeah. Go ahead.

Mike Dastoor: Yeah, go ahead.

Speaker #5: What few exits at around?

[Analyst] (Stifel): Q4 exits.

Saad Quddus: Q4 exits.

Mike Dastoor: You're breaking up.

Speaker #6: You're breaking up.

Speaker #5: Can you hear me okay now?

[Analyst] (Stifel): Can you hear me okay now?

Saad Quddus: Can you hear me okay now?

Speaker #2: Yeah. We can hear you now, but you broke up before that.

Mike Dastoor: Yeah, we can hear you now, you broke up before that.

Speaker #5: Yeah, I was just saying, fourth quarter exits at around 6.4% core margin, and FY27 is being framed above 6%. So, can you help us reconcile that?

[Analyst] (Stifel): Yeah, I was just saying Q4 exits at around 6.4% core margin. FY2027 is being framed above 6%, can you help us reconcile that? Is that just early conservatism, or is there genuine near-term margin drag from the onboarding of the third customer, new capacity startup costs and sort of just the ramp before it all scales? What's the path back toward that 7% and higher?

Saad Quddus: Yeah, I was just saying Q4 exits at around 6.4% core margin. FY2027 is being framed above 6%, can you help us reconcile that? Is that just early conservatism, or is there genuine near-term margin drag from the onboarding of the third customer, new capacity startup costs and sort of just the ramp before it all scales? What's the path back toward that 7% and higher?

Speaker #5: Is that just early conservatism, or is there genuine near-term margin drag from the onboarding of the third customer? New capacity startup costs and sort of just the ramp before it all scales?

Speaker #5: And what's the path back toward that 7% and higher?

Speaker #6: Yeah. So typically, Q4 is our highest margin quarter. Last year, we were at 63%. We're going to beat it by 10 basis points for this Q4 at 64.

Greg Hebard: Yeah. Typically, Q4 is our highest margin quarter. Last year we were at 6.3%. We're going to beat it by 10 basis points for this Q4 at 6.4%. Overall feel really good about 5.8%. As Mike mentioned, we're going to be 6%+ for next year. Still a little bit early to talk about the shape of next year, but again, feel good about continuing to improve on gross margins and getting leverage in SG&A to get 6%+ and higher from there.

Speaker #6: So overall, feel really good about 58. As Mike mentioned, we're going to be 6% plus. For next year, still a little bit early to talk about the shape of next year.

Speaker #6: But again, feel good about continuing to improve on gross margins and getting leverage in SG&A to get 6% plus. And higher from there.

Speaker #2: And the Q4 seasonality is quite common. If you go back over the last two or three years, you'll see the same level of seasonality, with Q4 being the highest-performing margin quarter.

Mike Dastoor: The Q4 seasonality is quite common. If you go back over the last two or three years, you'll see the same level of seasonality with Q4 being the highest performing margin quarter.

Speaker #5: Okay, understood. And maybe then, just on the Adani piece of what you mentioned, I guess without getting into financials, can you just help us understand the capital model?

[Analyst] (Stifel): Okay, understood. Maybe then just on the Adani piece of what you mentioned. I guess without getting into financials, can you just help us understand the capital model? A multi-gigawatt build sounds pretty capital intensive, yet you're committed to sort of the 1.5% to 2% CapEx. Is that structured? Are you thinking of structuring that as a JV, or is that partner funded? How are you going to participate in those economics while keeping Jabil asset light and avoiding the IP ownership risk that you've been careful to avoid up until now?

Saad Quddus: Okay, understood. Maybe then just on the Adani piece of what you mentioned. I guess without getting into financials, can you just help us understand the capital model? A multi-gigawatt build sounds pretty capital intensive, yet you're committed to sort of the 1.5% to 2% CapEx. Is that structured? Are you thinking of structuring that as a JV, or is that partner funded? How are you going to participate in those economics while keeping Jabil asset light and avoiding the IP ownership risk that you've been careful to avoid up until now?

Speaker #5: A multi-gigawatt build sounds pretty capital-intensive, and yet you're committed to sort of the 1.5% to 2% CapEx. So, is that structured?

Speaker #5: Are you thinking of structuring that as a JV, or is that partner-funded? How are you going to participate in those economics while keeping JABIL asset light and avoiding the IP ownership risk that you've been careful to avoid up until now?

Speaker #2: Yeah, so I just want to start again by saying, look, we do not have a definitive framework. We haven't figured out structure and capital and all that.

Mike Dastoor: I just want to start again by saying, look, we do not have a definitive framework, we haven't figured out structure and capital and all that. Having said that, I feel really good. If you look at our growth in everything that we're going to do with the Adani Group as well, it's manufacturing racks, it's manufacturing servers, it's manufacturing storage, next gen liquid cooled racks, power distribution, transport. We've been doing that for the last 3, 4 years now. Our CapEx has been proved out already. This is no different. It's just the scale will be enormous. I think I still feel comfortable with 1.5% to 2%. Don't forget, our manufacturing business is relatively asset light in nature. That's the beauty of the model that we have today. You can eat your cake and have it too there as well.

Speaker #2: Having said that, I feel really good. If you look at our growth and everything that we're going to do with the Adani Group as well, it's manufacturing.

Speaker #2: It's manufacturing racks. It's manufacturing servers. It's manufacturing storage. Next-gen liquid-cooled racks, power distribution, transport—we've been doing that for the last three or four years now.

Speaker #2: So our CapEx has been proved out already. This is no different. It's just the scale will be enormous. So I think just I still feel comfortable with 1.5 to 2%.

Mike Dastoor: This is no different. It's just the scale will be enormous. I think I still feel comfortable with 1.5% to 2%. Don't forget, our manufacturing business is relatively asset light in nature. That's the beauty of the model that we have today. You can eat your cake and have it too there as well. I think I feel really good about our CapEx ability once we get going on this venture.

Speaker #2: Don't forget, our manufacturing business is relatively asset-light in nature, and that's the beauty of the model that we have today. You can eat your cake and have it too.

Speaker #2: There as well. So I think I feel really good about our CapEx ability once we get going on this venture.

Mike Dastoor: I think I feel really good about our CapEx ability once we get going on this venture.

Speaker #5: Okay. Helpful. Thank you, Mike. Thank you, Greg.

[Analyst] (Stifel): Okay, helpful. Thank you, Mike. Thank you, Greg.

Saad Quddus: Okay, helpful. Thank you, Mike. Thank you, Greg.

Speaker #1: Thank you. The next question is coming from Melissa Fairbanks of Raymond James. Please go ahead.

Operator 2: Thank you. The next question is coming from Melissa Fairbanks of Raymond James. Please go ahead.

Operator: Thank you. The next question is coming from Melissa Fairbanks of Raymond James. Please go ahead.

Speaker #7: Hey, guys. Thanks so much. Just wanted to start off by saying for Graham and Frank, congratulations on the first round win. I hope to see the tartan army down in Miami.

Rachel Smith: Hey, guys. Thanks so much. Just wanted to start off by saying, for Graham and Frank, congratulations on the first round win. I hope to see the Tartan Army down in Miami. I am not sure if they are listening to the call. I was wondering, we have got a really strong guide for Intelligent Infrastructure, not surprising. Can you give us an update on the North Carolina facility? When can we expect revenue to start flowing through from that facility. I believe you also have first right of refusal of the parcel of land next door. Just wondering, how we can think about that in terms of capacity expansion going forward.

Melissa Fairbanks: Hey, guys. Thanks so much. Just wanted to start off by saying, for Graham and Frank, congratulations on the first round win. I hope to see the Tartan Army down in Miami. I am not sure if they are listening to the call. I was wondering, we have got a really strong guide for Intelligent Infrastructure, not surprising. Can you give us an update on the North Carolina facility? When can we expect revenue to start flowing through from that facility. I believe you also have first right of refusal of the parcel of land next door. Just wondering, how we can think about that in terms of capacity expansion going forward.

Speaker #7: I'm not sure if they're listening to the call. I was wondering—we've got a really strong guide for Intelligent Infrastructure, not surprising. Can you give us an update on the North Carolina facility?

Speaker #7: When can we expect revenue to start flowing through from that facility? And then I believe you also have first right of refusal on the parcel of land next door.

Speaker #7: Just wondering how we can think about that, in terms of capacity expansion, going forward.

Speaker #2: Sure. Thanks, Melissa. I'm sure Frank and Graham will appreciate your comments. They're probably still hungover from Saturday, though.

Mike Dastoor: Sure. Thanks, Melissa. I'm sure Frank and Graham will appreciate your comments. They're probably still hungover from Saturday.

Rachel Smith: Probably.

Melissa Fairbanks: Probably.

Speaker #7: Probably.

Speaker #2: Look, so our North Carolina facility remains on track. I think we had given a timeline of Q1 to Q4, the end of this fiscal year.

Mike Dastoor: Look, our North Carolina facility, it remains on track. I think we'd given a timeline of Q1, Q4, the end of this year, fiscal year. Nothing's changed on that front. We booked one customer. We're talking to others. I think now, if you think about it, January would be probably the date by which we'd be fully ramped. Obviously, we'll have some level of sort of steady ramps through the first quarter of 2027. January onwards, I would expect run rates to be in that $1 billion, $2 billion, $3 billion range over the next one, two, and three years. I think overall, the potential is still the same. No major changes to our North Carolina piece. One of the things with the additional land next door, we're looking at facilities which are easier to get to, as in readily available.

Speaker #2: Nothing's changed on that front. We booked one customer, and we're talking to others. I think, if you think about it, January would probably be the date by which we'd be fully ramped.

Speaker #2: Obviously, we'll have some level of steady ramps through the first quarter of '27. But starting in January, I would expect run rates to be in that $1 billion, $2 billion, $3 billion range over the next one, two, and three years.

Speaker #2: So I think, overall, the potential is still the same—no major changes. To our North Carolina piece, one of the things with the additional land next door is that we're looking at facilities which are easier to get to, as in, readily available.

Mike Dastoor: One of the things with the additional land next door, we're looking at facilities which are easier to get to, as in readily available. We might have capacity coming online, which is already built out as opposed to going through another 12, 18 months of build-out. It's just a slight sort of variation of our initial thought pattern in North Carolina, everything else remains exactly the same.

Speaker #2: So, we might have capacity coming online which is already built out, as opposed to going through another 12 or 18 months of build-out. So, it's just a slight sort of variation of our initial thought pattern—North Carolina.

Mike Dastoor: We might have capacity coming online, which is already built out as opposed to going through another 12, 18 months of build-out. It's just a slight sort of variation of our initial thought pattern in North Carolina, everything else remains exactly the same.

Speaker #2: But everything else remains exactly the same.

Speaker #7: Okay, great. Then maybe shifting gears, looking at regulated industries—let's give someone else a chance to shine. Glad to see the auto business is moving a tick higher for the year.

Rachel Smith: Okay, great. Maybe shifting gears, looking at Regulated Industries we'll give someone else a chance to shine. Glad to see the auto business is moving a tick higher for the year. I think the downtick in healthcare is maybe a little surprising. Wondering if you could give us some more color there.

Melissa Fairbanks: Okay, great. Maybe shifting gears, looking at Regulated Industries we'll give someone else a chance to shine. Glad to see the auto business is moving a tick higher for the year. I think the downtick in healthcare is maybe a little surprising. Wondering if you could give us some more color there.

Speaker #7: I think the downtick in healthcare is maybe a little surprising. Wondering if you could give us some more color there.

Speaker #2: So I wouldn't put too much into that. Don't forget, we took it down by $100 million. Our daily shipments add up to $125–130 million.

Mike Dastoor: I wouldn't put too much into that. Don't forget, we took it down by $100 million. Our daily shipments add up to $125 million, $130 million.

Speaker #2: So, the number or the amount is not as material. It's just one was just $100 million, and with rounding, it was even lower than that.

Rachel Smith: Got it

Melissa Fairbanks: Got it

Mike Dastoor: The number of the amount is not as material. It was just $100 million, and with rounding, it was even lower than that. I wouldn't worry about it too much. Our long-term view of healthcare has not changed at all. The product cycle's extremely long, extremely sticky margin profile, highly attractive. Outsourcing in this industry is still relatively immature, and we continue to see good opportunities around. If you think of GLP-1s, you think of drug delivery, you think of continuous glucose monitors, med devices, chronic disease management. All of that is still well within our control, and I think FY27 should show some level of growth again. Don't forget.

Speaker #2: So I wouldn't worry about it too much. Our long-term view of healthcare has not changed at all. The product cycles are extremely long, extremely sticky, and have a strong margin profile.

Speaker #2: Highly attractive. Outsourcing in this industry is still relatively immature, and we continue to see good opportunities around. If you think of GLP-1s, you think of drug delivery, you think of continuous glucose monitors, med devices, chronic disease management.

Speaker #2: All of that is still well within our control. And I think FY27 should show some level of growth again. And then, don't forget, we'll have Croatia come online right at the end of FY27.

Rachel Smith: Okay, great.

Melissa Fairbanks: Okay, great.

Mike Dastoor: we'll have Croatia come online right at the end of FY27. It's not going to be an FY27 event, but it'll be coming online at the end of FY27, which means it will be an FY28 event. We continue to look at B2B and capability-driven M&A and more vertical integration. I think healthcare continues to be right at the center of our strategy going forward as well.

Speaker #2: So it's not going to be an FY27 event, but it'll be coming online at the end of FY27, which means it will be an FY28 event.

Speaker #2: And then we continue to look at B2Bs and capability-driven M&As and more vertical integrations. So I think healthcare continues to be right at the center of our strategy going forward as well.

Speaker #7: Okay, great. Thanks so much for the detail. Thanks, guys. That's all from me.

Rachel Smith: Okay, great. Thanks so much for the detail. Thanks, guys. That's all for me.

Melissa Fairbanks: Okay, great. Thanks so much for the detail. Thanks, guys. That's all for me.

Speaker #1: Thank you. Our next question is coming from Luke Young—I'm sorry, from Baird. Please go ahead.

Operator 2: Thank you. Our next question is coming from Luke Young of Baird. Please go ahead.

Operator: Thank you. Our next question is coming from Luke Young of Baird. Please go ahead.

Speaker #5: Good morning. Thanks for taking the questions. My question, just to start with the preliminary 2027 AI view, and hoping just to get a little color from a customer standpoint in terms of incremental contributions from your largest customer versus the second and third hyperscalers, or maybe even seeing some more materiality from your clouds in this guidance as well.

Luke Young: Good morning. Thanks for taking the questions. Mike, hoping just to start with the preliminary 2027 AI view and hoping just to get a little color from a customer standpoint in terms of incremental contributions from your largest customer versus the second and third hyperscalers or maybe even seeing maybe some more materiality from neo clouds in this guidance as well. Thank you.

Luke Junk: Good morning. Thanks for taking the questions. Mike, hoping just to start with the preliminary 2027 AI view and hoping just to get a little color from a customer standpoint in terms of incremental contributions from your largest customer versus the second and third hyperscalers or maybe even seeing maybe some more materiality from neo clouds in this guidance as well. Thank you.

Speaker #5: Thank you.

Speaker #2: It's spread out across the board; I think the numbers are well diversified. Obviously, our largest customer plays a role in that. The second hyperscaler will play a role in that as well.

Mike Dastoor: It's spread out across the board, Luke. I think the numbers are well diversified. Obviously, our largest customer plays a role in that. The second hyperscaler will play a role in that. I talked about the third hyperscaler initially in FY 2027. The numbers won't be that material, but FY 2028 will get to a material number. It's really well spread out. Capital equipment is doing well. If you look at DCI, that's doing well with all the new capacity coming online. Networking, it's almost like a really well-diversified portfolio within Intelligent Infrastructure that's outperforming.

Speaker #2: I talked about the third hyperscaler initially in FY27. The numbers won't be that material, but FY28 will get to a material number. But it's really well spread out.

Speaker #2: Capital equipment is doing well. If you look at DCI, that's doing well with all the new capacity coming online. And then networking—it's almost like a really well-diversified portfolio within intelligent infrastructure that's outperforming.

Speaker #5: Understood. And then, can we maybe flip that to the capacity view? So certainly, Carolina, part of this into fiscal ‘27, but can we talk about where you’re able to push on capacity in some of the other key facilities—be it India, be it Memphis—kind of some of the big chunks to support what’s obviously several billion dollars in growth in total?

Luke Young: Understood. Can we maybe flip that to the capacity view? Certainly, Carolina, part of this into fiscal 2027, but can we talk about where you're able to push on capacity in some of the other key facilities, be it India, be it in Memphis, kind of some of the big chunks to support with obviously several billion dollars in growth in total?

Luke Junk: Understood. Can we maybe flip that to the capacity view? Certainly, Carolina, part of this into fiscal 2027, but can we talk about where you're able to push on capacity in some of the other key facilities, be it India, be it in Memphis, kind of some of the big chunks to support with obviously several billion dollars in growth in total?

Speaker #2: Yeah, so North Carolina obviously will play a part there. Like I said, we booked one customer. We're looking at multiple others. We'll provide more guidance on that in September.

Mike Dastoor: Yeah, no. North Carolina obviously will play a part there. Like I said, we booked one customer. We're looking at multiple others. We'll provide more guidance on that in September. Memphis is coming along nicely. I think if you look at the LV/MV switchgear that we have there, the InRow heat exchangers building out in Memphis, they're going well. We're doing the second hyperscaler in Mexico. We've got networking going on right now, expansion going on in India. It's all spread out, and the capacity utilization will quickly come online very fast. Again, I think Mark had asked that question about ramps. There will be some level of ramps that take place. You don't trigger five, six facilities up all on the same day, and they don't start performing from day one. It will take some level of time.

Speaker #2: Memphis is coming along nicely. I think if you look at the LVMB switchgear that we have there, the in-room heat exchangers, building out in Memphis, they're going well.

Speaker #2: We're doing the second hyperscaler in Mexico. We've got networking going on right now, expansion going on in India. So it's all spread out. And the capacity utilization will quickly come online very fast again.

Speaker #2: I think Mark asked that question about ramps. There will be some level of ramps that take place. You don't trigger five, six facilities up all on the same day, and they don't start performing from day one.

Speaker #2: So, it will take some level of time. So, Q1 of '27, we will be in a little bit of a ramp situation. But from January 1st onwards in calendar year '27, I do expect that capacity to come online in a substantial way.

Mike Dastoor: Q1 of 2027, we will be in a little bit of a ramp situation. From the 1 January onwards of the calendar year 2027, I do expect that capacity to come online in a substantial way, in all sorts of different products, different customers, and in a really well-diversified manner.

Speaker #2: It has all sorts of different products, different customers, and in a really well-diversified manner.

Speaker #5: Really helpful. Thank you.

Luke Young: Really helpful. Thank you.

Luke Junk: Really helpful. Thank you.

Speaker #1: Thank you. Our next question is coming from David Vought of UPS. Please go ahead.

Operator 2: Thank you. Our next question is coming from David Vogt of UBS. Please go ahead.

Operator: Thank you. Our next question is coming from David Vogt of UBS. Please go ahead.

Speaker #4: Great, thanks, guys, for squeezing me in here. I've got two questions for Mike and Greg. So maybe, Mike, starting with you—when we think about the soft commentary around fiscal '27, particularly around AI and your margin—how much of that commentary is guided by your view of supply chain component availability and what your customers are seeing?

David Vogt: Great. Thanks, guys, for squeezing me in here. I've got two questions for Mike and Greg. Maybe, Mike, starting with you, when we think about the soft commentary around fiscal 2027, particularly around AI and your margin, how much of that commentary is guided by your view of supply chain component availability and what your customers are seeing? How is that taken into consideration from a margin perspective? Obviously, I would assume that you're building in a buffer there. I'll give you my second question at the same time, maybe for you as well, and maybe Greg could chime in. When I think about the third hyperscaler, I think you mentioned a couple of hundred million dollars of revenue in fiscal 2027. How should we square that with sort of the North Carolina facility coming online next year?

Speaker #4: And how is that taken into consideration from a margin perspective? Obviously, I would assume that you're building in a buffer there. I'll give you my second question at the same time. Maybe for you, as the third hyperscaler, I think you mentioned a couple of hundred million dollars of revenue in fiscal '27.

Speaker #4: How should we square that with the North Carolina facility coming online next year? Are you insinuating that we're going to have multiple customers in that facility?

David Vogt: Are you insinuating that we're going to have multiple customers in that facility, or is it just going to be that one customer? How do we think about sort of how that capacity is going to be allocated among your hyperscaler customers going forward? Thank you.

Speaker #4: Or is it just going to be that one customer? How should we think about how that capacity is going to be allocated among your hyperscaler customers going forward?

Speaker #4: Thank you.

Speaker #2: So, I think when you reference soft guidance, are you talking about '27 similar?

Mike Dastoor: I think when you reference soft guidance, are you talking about 2027 similar-

Speaker #4: Yeah, I'm sorry. Yeah, just the commentary. Yeah, just the commentary around '27 AI growth.

David Vogt: Yeah, I'm sorry.

Mike Dastoor: Percentage-

David Vogt: Yeah, just a commentary around 2027 AI growth.

Speaker #2: Yeah. And that's not.

Mike Dastoor: Yeah, that's-

David Vogt: How much of that is colored by supply?

Speaker #4: Colored by supply.

Speaker #2: Yeah, no, it's a similar growth rate, percentage-wise, on a much, much higher revenue base. So it's a substantially bigger number in revenue dollar terms. So, I wouldn't call it soft, but overall.

Mike Dastoor: Yeah, no, it's similar growth rate percentage on a much, much higher revenue base. It's a substantially bigger number in revenue dollar terms. I wouldn't call it soft.

Speaker #4: I mean, what I meant by 'soft'—I didn't mean soft in terms of performance. You're not giving the official quantitative guidance for '27.

David Vogt: I didn't mean soft in soft performance, like you're not giving the official quantitative guidance for 2027.

Speaker #2: All right.

David Vogt: Okay. All right.

David Vogt: Preliminary guidance. Bad choice of

Speaker #4: Bad choice. Preliminary guide.

Mike Dastoor: That's fair. again

David Vogt: Poor choice of words. Preliminary guide.

Speaker #2: All right, that's fair. I think the reason I actually talked about it was to give an early indication; it wasn't meant to provide guidance.

Mike Dastoor: All right. That's fair. I think the reason I actually talked about it was to give an early indication. It wasn't meant to provide guidance. I didn't want to hijack our September call. We will have a virtual investor briefing in September, we will provide more guidance, more definitive guidance then. Supply chain absolutely is part of our thinking. We're aware of where the shortages are, and obviously, any commentary that we provide for 2027 will have some level of impact, but that will already be built in. The numbers we talked about definitely have that built in. Like I said, a lot of the AI Intelligent Infrastructure customers do manage to get their fair share and then some of components. Look, it's an issue, but I don't lose that much sleep over it from the Intelligent Infrastructure standpoint.

Speaker #2: I didn't want to hijack a September call. We will have a virtual investor briefing in September, so we will provide more guidance—more definitive guidance—then.

Speaker #2: Supply chain absolutely is part of our thinking. We're aware of where the shortages are, and obviously, any commentary that we provide for '27 will have some level of impact.

Speaker #2: But that will already be built in. So the numbers we talked about definitely have that built in. Like I said, a lot of the AI intelligent infrastructure customers do manage to get their fair share.

Speaker #2: And then some Op components. So, look, it's an issue, but I don't lose that much sleep over it from the Intelligent Infrastructure standpoint.

Speaker #2: And I think as we go along over the next three or four months, and we actually have long-term strategy sessions in this Q4 as well, which go out a couple of years, so we'll provide more guidance in September.

Mike Dastoor: I think as we go along over the next three or four months, and we actually have our long-term strategy sessions in this Q4 as well, which go out a couple of years. We'll provide more guidance in September.

Speaker #4: Great. And then on the third hyperscaler ramp versus the North Carolina capacity coming online, how should we think about that? Is it going to be allocated to your hyperscaler portfolio?

David Vogt: Great. On the third hyperscaler ramp versus the North Carolina capacity coming online, how do we think about that's going to be allocated to your hyperscaler portfolio?

Speaker #2: So the third hyperscaler, like I said, is in the data cloud infrastructure space. We booked one customer in North Carolina. We're still trying to figure out where exactly the third hyperscaler would go.

Mike Dastoor: The third hyperscaler, like I said, is in the data cloud infrastructure space. We booked one customer in North Carolina. We're still trying to figure out where exactly the third hyperscaler would go. It might be North Carolina, it might be somewhere else, that's a good problem to have. Like we said, there's capacity coming online in multiple jurisdictions, multiple factories, multiple buildings coming online. I do think the third hyperscaler is ready to go. It's just a matter of us trying to figure out exactly where to put it.

Greg Hebard: The third hyperscaler, like I said, is in the data cloud infrastructure space. We booked one customer in North Carolina. We're still trying to figure out where exactly the third hyperscaler would go. It might be North Carolina, it might be somewhere else, that's a good problem to have. Like we said, there's capacity coming online in multiple jurisdictions, multiple factories, multiple buildings coming online. I do think the third hyperscaler is ready to go. It's just a matter of us trying to figure out exactly where to put it.

Speaker #2: It might be North Carolina. It might be somewhere else. But that's a good problem to have. Like we said, this capacity is coming online in multiple jurisdictions, multiple factories, multiple buildings coming online.

Speaker #2: So, I do think the third hyperscaler is ready to go. It's just a matter of us trying to figure out exactly where to put it.

Speaker #4: Where should I put it? Perfect. Thanks, Mike.

David Vogt: Where to put it. Perfect. Thanks, Mike.

Speaker #1: Thank you. The next question is coming from Tim Long of Barclays. Please go ahead.

Operator 2: Thank you. The next question is coming from Tim Long of Barclays. Please go ahead.

Operator: Thank you. The next question is coming from Tim Long of Barclays. Please go ahead.

Speaker #5: Thank you. Two, if I could here. I think you guys mentioned Hanley as going well. If you could just give us an update there, kind of on both the power side and the more services side.

Tim Long: Thank you. Two, if I could here. Maybe, I think you guys mentioned Hanley as going well. If you could just give us an update there kind of on both the power side and the more services side, how that's ramping and developing internally into a better business for you guys. Second, if you could just touch on the storage business. I'm not sure if you mentioned it that much, but curious how that's going. I think that's been a pretty good ramp. If you could just kind of update us on how that's going this year and the outlook into next year. Thank you.

Speaker #5: How that's ramping and developing internally into, you know, a business for you guys. And then second, if you could just touch on the storage business.

Speaker #5: I think—I’m not sure if you mentioned it that much, but I’m curious how that’s going. I think that’s been a pretty good ramp. If you could just kind of update us on how that’s going this year and the outlook into next year.

Speaker #5: Thank you.

Speaker #2: Sure, Ross. I think, just as a reminder, Hanley expands our capabilities in both power, modular power distribution, energy systems, and then there's a service angle to that as well.

Mike Dastoor: Sure. I think just as a reminder, Hanley expands our capabilities in both modular power distribution, energy systems, and there's a service angle to that as well. It's high margin business. I think from a revenue standpoint, it's actually going better than we'd anticipated during our acquisition. The level of interest the acquisition has generated is extremely positive. I think, again, we were expanding capability offerings and going in through one channel and expanding our capability offering in other channels, and Hanley is part of that solution as well. All going really well. If you think of some of the areas that we can expand into with modular power solutions, I think data center power architecture. I talked about services. That services is a critical part of the offering.

Speaker #2: It's a higher margin business. I think from a revenue standpoint, it's actually going better than we'd anticipated during our acquisition. The level of interest the acquisition has generated is extremely positive.

Speaker #2: I think, again, we were expanding capability offerings and going in through one channel and expanding our capability offering in other channels. And Hanley is part of that solution as well.

Speaker #2: So all going really well. If you think of some of the areas that we can expand into with modular power solutions—I think data center power architecture; I talked about services—that services is a critical part of the offering.

Speaker #2: Not only do we help deploy the gear in the data center, we help maintain it, we help service it. That's a recurring revenue stream as well.

Mike Dastoor: Not only do we help deploy the gear in the data center, we help maintain it, we help service it, and that's a recurring revenue stream as well. Hanley overall going really well. The second hyperscaler, I think you mentioned storage. That's going really well. I think some of that is reflected in our guide for, well, we include guide, but our indication for FY2027. I think when we started on that second hyperscaler journey a couple of years ago, none of us imagined it to be as critical and as big as it's turned out to be.

Speaker #2: So, Hanley, overall, going really well. And then the second hyperscaler, I think you mentioned storage—that's going really well. I think some of that is reflected in our guide, or what we call a guide, but our indication for FY '27.

Speaker #2: I think when we started on that second hyperscaler journey a couple of years ago, none of us imagined it would be as critical and as big as it has turned out to be.

Speaker #4: Okay. Thank you.

[Analyst]: Okay, thank you.

Tim Long: Okay, thank you.

Speaker #1: Thank you. This brings us to the end of today's question-and-answer session. I would like to turn the floor back over to Mr. Barry for closing comments.

Operator 2: Thank you. This brings us to the end of today's question and answer session. I would like to turn the floor back over to Mr. Berry for closing comments.

Operator: Thank you. This brings us to the end of today's question and answer session. I would like to turn the floor back over to Mr. Berry for closing comments.

Speaker #5: Thank you very much for joining. This concludes our call. If you need further clarification, please reach out to us. Thank you.

Adam Berry: Thank you very much for joining. This concludes our call. If you need further clarification, please reach out to us. Thank you.

Speaker #1: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time. And enjoy the rest of your day.

Operator 2: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.

Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.

Q3 2026 Jabil Inc Earnings Call

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