Jabil (NYSE:JBL) reported fiscal 2026 second-quarter results that exceeded management’s expectations on both revenue and core operating margin, driven primarily by continued strength in Intelligent Infrastructure and better-than-anticipated performance in Regulated Industries. Executives also raised full-year fiscal 2026 revenue and earnings guidance, citing broad-based momentum across multiple end markets and improved visibility into the second half of the year.
Second-quarter results beat guidance as Intelligent Infrastructure leads
Chief Financial Officer Greg Hebard said the second quarter “exceeded expectations on both revenue and core operating margin,” helping drive another increase in core earnings per share. Net revenue totaled $8.3 billion, above the company’s outlook for the period. Core operating income was $436 million for a core operating margin of 5.3%, which the company attributed to favorable mix and ongoing cost discipline.
Hebard characterized the revenue outperformance as broad-based. He said Regulated Industries revenue came in about $200 million above the second-quarter guide, “driven mainly by automotive,” with renewables also better than expected. Intelligent Infrastructure revenue was nearly $300 million above guidance, largely due to cloud and data center infrastructure as well as networking and communications. Connected Living and Digital Commerce was described as largely in line with expectations.
Segment performance: growth in Regulated Industries and sharp acceleration in Intelligent Infrastructure
Jabil’s Regulated Industries segment generated $3.0 billion in revenue, up 10% year over year and “well above” the company’s December outlook. Core operating margin in the segment was 4.8%. Hebard said the year-over-year improvement was driven by all three end markets within the segment.
Intelligent Infrastructure revenue reached $4.0 billion, up 52% year over year, with growth described as broad-based across capital equipment, cloud and data center infrastructure, and networking and communications. Core operating margin for the segment was 5.7%, up 40 basis points year over year, supported by favorable mix and “disciplined execution.”
Connected Living and Digital Commerce revenue was $1.2 billion, down 8% as expected due to planned program attrition and customer pruning. The decline was partially offset by growth in robotics, advanced warehouse, and retail automation. Core operating margin for the segment was 4.9%, also up 40 basis points year over year.
Cash flow, capital allocation, and balance sheet
Jabil reported operating cash flow of $411 million in the quarter and net capital expenditures of $51 million, resulting in adjusted free cash flow of $360 million. Hebard said the company remained positioned to deliver more than $1.3 billion in adjusted free cash flow for the full fiscal year.
Inventory days were 75, or 60 days net of customer inventory deposits, which management said was consistent with its targeted range of 55 to 60 days. Jabil ended the quarter with $1.8 billion in cash and reiterated its commitment to maintaining an investment-grade credit profile.
During the second quarter, the company repurchased $300 million of shares. In the Q&A session, Hebard said Jabil remains committed to its capital allocation framework, including directing about 80% of free cash flow to share repurchases and roughly 20% to “nip and tuck” capability-driven M&A. He added that the company is at a leverage level where it “could lever up” if an attractive acquisition opportunity emerges.
Guidance: Q3 ranges and higher full-year revenue and EPS outlook
For the fiscal 2026 third quarter, Jabil guided total revenue to a range of $8.1 billion to $8.9 billion. The company expects core operating income of $452 million to $512 million and core diluted EPS of $2.83 to $3.23. GAAP diluted EPS guidance was $2.36 to $2.76. The company guided third-quarter net interest expense to approximately $73 million and full-year interest expense to approximately $280 million, with a core tax rate of 21% for both the quarter and full year.
Segment expectations for Q3 included:
- Regulated Industries: revenue of $3.1 billion, reflecting growth in renewables, steady healthcare demand, and stabilizing trends in automotive and transport.
- Intelligent Infrastructure: revenue of $4.2 billion, up 22% year over year, supported by demand in cloud and data center infrastructure, advanced networking and communications, and capital equipment.
- Connected Living and Digital Commerce: revenue of $1.2 billion, down 10% year over year, reflecting program transitions and portfolio optimization, partially offset by growth in automation and robotics.
Chief Executive Officer Mike Dastoor said second-quarter revenue was about $500 million above the midpoint of guidance, with upside spanning cloud and data center infrastructure, networking and communications, automotive, and renewables. He described Intelligent Infrastructure—driven by the AI data center build-out—as the near-term growth engine, while improved automotive and renewables results suggested those markets may have “bottomed” and begun a slow recovery.
AI-driven demand lifts Intelligent Infrastructure outlook; margin targets remain a focus
Dastoor raised the full-year fiscal 2026 Intelligent Infrastructure revenue outlook to approximately $16.5 billion, up $1.1 billion from prior expectations and representing 34% growth over fiscal 2025. He broke down the increase as roughly $600 million in cloud and data center infrastructure, $400 million in networking and communications, and $100 million in capital equipment.
Within cloud and data center infrastructure, Dastoor highlighted that retrofitting at a U.S. East Coast facility to support liquid-cooled racks was “largely behind” the company and finished “two or three months ahead of schedule,” adding capacity earlier than expected. He also pointed to a strong ramp with a second hyperscale customer in Mexico and continued strength in data center power in Memphis, and said integration of the Hanley acquisition was going “very well and according to plan.”
In networking and communications, Dastoor said the higher outlook reflected stronger demand and execution on advanced AI networking programs in India, and he noted that 5G spending was showing signs of recovery. In capital equipment, he cited strong demand in automated test equipment and more encouraging signs in wafer fab equipment, while describing wafer fab demand as still “a little lumpy.”
Jabil increased its fiscal 2026 AI-related revenue outlook by approximately $1 billion versus December, taking the total to roughly $13.1 billion, which management said would represent about 46% year-over-year growth.
For fiscal 2026 overall, Jabil raised its revenue outlook to approximately $34 billion from $32.4 billion and increased its full-year core diluted EPS outlook to $12.25 from $11.55. The company maintained its expectation for full-year core operating margins of approximately 5.7% and reaffirmed adjusted free cash flow of more than $1.3 billion.
Asked about margins, Dastoor said he felt “really good” about the 5.7% full-year margin outlook but described the company as being conservative amid geopolitical uncertainty. He also reiterated confidence in reaching 6% operating margins in fiscal 2027, pointing to mix improvements, operating leverage on higher revenue, improved capacity utilization (he cited utilization rising from about 75% last year to 80% currently), and the scaling impact of acquisitions such as Hanley.
During the Q&A, Dastoor also discussed supply chain constraints, noting tightening in areas such as memory (particularly DDR4 and below) and some printed circuit board constraints. He said the company had already factored supply constraints into its guidance and did not see a major impact from developments in the Middle East at that time, while acknowledging prolonged disruptions could affect consumer demand.
Management also discussed longer-term growth areas including Silicon Photonics and “Physical AI.” Dastoor described Physical AI as still in early commercialization with high costs and complexity, but said Jabil already participates in key hardware building blocks across robotics, warehouse automation, autonomous systems, and related subsystems.
About Jabil (NYSE:JBL)
Jabil Inc (NYSE: JBL) is a global manufacturing solutions provider specializing in electronic manufacturing services (EMS) and diversified products across a wide range of industries. The company partners with original equipment manufacturers to deliver design engineering, supply chain management, precision manufacturing, and aftermarket services. Jabil’s expertise spans sectors such as healthcare, automotive, clean technology, telecommunications, consumer electronics, and packaging, enabling it to support both high-volume production and complex, mission-critical applications.
Founded in 1966 by William E.
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