Exchange: NYSE | Sector: Technology | Industry: Hardware Equipment Parts
Q2 2025
Published: Apr 8, 2025
Earnings Highlights
Revenue of $6.73B down 0.6% year-over-year
EPS of $1.06 decreased by 85.5% from previous year
Gross margin of 8.6%
Net income of 117.00M
"We're obviously a U.S. domiciled manufacturing service provider. We're U.S. headquartered. We've been in the U.S. for 60 years, so we have a lot of experience... we have 30 sites in the US all over the place. The ability to move manufacturing is highly, highly doable." - Mike Dastoor
Jabil Inc (JBL) QQ2 2025 Financial Analysis: AI/Data Center Momentum, U.S. Footprint Expansion, and Balancing Growth with Margin Discipline
Executive Summary
Jabil delivered solid operating performance in Q2 FY2025, underscored by a diversified, resilient portfolio and strong cash generation. Reported revenue of $6.728 billion supported a GAAP operating income of $245 million and net income of $117 million, while core (non-GAAP) operating income reached $334 million, signaling a 5% core margin profile even as GAAP margins remained lower at ~3.6%. Excluding the divested Mobility segment (~$250 million in the prior year), year-over-year revenue grew about 3%, reflecting stabilization and modest growth as key end markets evolved. Management highlighted meaningful progress across the Intelligent Infrastructure/AI-centric growth engines, with AI-related revenue now guided to about $7.5 billion for FY2025—a ~40% year-on-year rise—driven by data-center infrastructure demand, GPU-based workloads, and silicon photonics capabilities acquired via strategic collaboration with Intel. The company reaffirmed its multi-year growth cadence, including a firmer view of FCF generation (> $1.2 billion for FY2025), a robust US manufacturing footprint (30 sites), and ongoing deleveraging (net debt ~ $1.7 billion; debt/EBITDA ~1.4x). Management also signaled prudent guidance for Q3 and FY2025 amid ongoing tariff discussions and mixed end-market trajectories (notably 5G, EVs, and renewables). Overall, JBL is positioned to benefit from AI/data-center buildouts and digital automation, while remaining vigilant on near-term cyclicality and margin progression.
Key Performance Indicators
Revenue
6.73B
QoQ: -3.80% | YoY:-0.58%
Gross Profit
576.00M
8.56% margin
QoQ: -4.95% | YoY:-9.00%
Operating Income
245.00M
QoQ: 24.37% | YoY:-22.22%
Net Income
117.00M
QoQ: 17.00% | YoY:-87.38%
EPS
1.07
QoQ: 20.22% | YoY:-85.54%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $6.728B in Q2 FY2025 (YoY -0.58%; QoQ not disclosed in detailed figures). Excluding ~$250M Mobility divestiture in the prior-year quarter, revenue was up ~3% YoY per company commentary.
Gross Profit: $576M; gross margin 8.56% (YoY gross margin was about -9.0% YoY; QoQ -4.95% in gross margin).
Net Income / EPS: Net income $117M; net margin 1.74%; GAAP EPS $1.06, diluted $1.06; core diluted EPS $1.94 (YoY EPS -85.5% vs prior year, QoQ +20.2% for reported metric).
Cash Flow and capital deployment: Cash flow from operations $334M; capex $73M; free cash flow $218M in the quarter; YTD free cash flow $487M; full-year guidance for free cash flow > $1.2B.
Financial Highlights
Revenue and profitability snapshot:
- Revenue: $6.728B in Q2 FY2025 (YoY -0.58%; QoQ not disclosed in detailed figures). Excluding ~$250M Mobility divestiture in the prior-year quarter, revenue was up ~3% YoY per company commentary.
- Gross Profit: $576M; gross margin 8.56% (YoY gross margin was about -9.0% YoY; QoQ -4.95% in gross margin).
- Operating Income: GAAP $245M (operating margin 3.64%); Core operating income $334M (core margin ~5.0%).
- Net Income / EPS: Net income $117M; net margin 1.74%; GAAP EPS $1.06, diluted $1.06; core diluted EPS $1.94 (YoY EPS -85.5% vs prior year, QoQ +20.2% for reported metric).
- Cash Flow and capital deployment: Cash flow from operations $334M; capex $73M; free cash flow $218M in the quarter; YTD free cash flow $487M; full-year guidance for free cash flow > $1.2B.
- Balance sheet and liquidity: Cash and cash equivalents $1.592B; total cash & equivalents ~$1.592B; total assets ~$17.396B; total liabilities ~$16.038B; total stockholders’ equity ~$1.358B; net debt ~$1.701B; debt to core EBITDA ~1.4x.
- Segment mix (Q2 by management commentary): Regulated Industries ~ $2.7B (−8% YoY, margins +20 bps to 4.8%); Intelligent Infrastructure ~$2.6B ( +18% YoY, margins +110 bps to 5.3%); Connected Living & Digital Commerce ~$1.3B ( −13% YoY, ex-Mobility + approx. 4% YoY). Q2 segment margins were ~4.5% for CLDC, 4.8% for Regulated, and 5.3% for Intelligent Infrastructure.
- Guidance (Q3 FY2025): Total revenue guidance $6.7B–$7.3B; Core operating income $348M–$408M; Core diluted EPS $2.08–$2.48. Net interest expense ~ $61M; FY2025 target net interest expense $240M–$245M; core tax rate ~21%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.73B
-0.58%
-3.80%
Gross Profit
576.00M
-9.00%
-4.95%
Operating Income
245.00M
-22.22%
24.37%
Net Income
117.00M
-87.38%
17.00%
EPS
1.07
-85.54%
20.22%
Key Financial Ratios
currentRatio
1.02
grossProfitMargin
8.56%
operatingProfitMargin
3.64%
netProfitMargin
1.74%
returnOnAssets
0.67%
returnOnEquity
8.62%
debtEquityRatio
2.42
operatingCashFlowPerShare
$3.04
freeCashFlowPerShare
$1.98
dividendPayoutRatio
7.69%
priceToBookRatio
12.55
priceEarningsRatio
36.41
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights from the earnings call, grouped by themes:
- Strategy and AI/data-center expansion: Mike Dastoor emphasized AI-driven growth, stating AI-related revenue is expected to reach about $7.5B for FY2025 (roughly +40% YoY). He highlighted a shift toward GPU-led system-level design, data-center build-outs, and silicon photonics leveraging Intel collaboration. He noted, “AI-associated business is now expected to represent approximately $7.5 billion in revenue this fiscal year, as demand for servers, racks, photonics, advanced networking gear, storage, and testing equipment all continue to climb higher.”
- U.S. manufacturing footprint and tariffs: Dastoor stressed JBL’s status as a U.S. domiciled manufacturing service provider with 30 U.S. sites and the strategic importance of the U.S. footprint amid tariff uncertainty. He described tariffs as pass-through costs and asserted JBL is well positioned to navigate changes, adding that production can re-shore where needed.
- Gujarat expansion and photonics/healthcare opportunities: Dastoor highlighted Gujarat expansion to bolster photonics capabilities and expressed optimism about domestic manufacturing in India for sovereign data centers. He also discussed the Pharmaceuticals International (PII) acquisition enabling aseptic filling and dry dosage manufacturing, addressing a $20B addressable pharma market in the U.S.
- End-market dynamics and guidance cadence: Greg Hebard noted robust performance in Intelligent Infrastructure and cloud/data-center-related segments, with caution in EV/renewables and 5G markets. He reiterated that Q3 guidance reflects prudent planning given macro and end-market volatility, while Mike emphasized the overall resilience of JBL’s diversified portfolio.
- Margin trajectory and cash generation: Management underscored a core margin target around 5% in Q2 and guided margins of 5.4% for FY2025, with free cash flow expected to exceed $1.2B, supported by steady operating cash flow and moderate capital expenditures.
We're obviously a U.S. domiciled manufacturing service provider. We're U.S. headquartered. We've been in the U.S. for 60 years, so we have a lot of experience... we have 30 sites in the US all over the place. The ability to move manufacturing is highly, highly doable.
— Mike Dastoor
AI-associated business is now expected to represent approximately $7.5 billion in revenue this fiscal year, as demand for servers, racks, photonics, advanced networking gear, storage, and testing equipment all continue to climb higher during the quarter.
— Mike Dastoor
Forward Guidance
Outlook and assessment based on JBL management guidance and industry trends:
- Near-term (Q3 FY2025): Revenue expected in the $6.7B–$7.3B range; Core operating income $348M–$408M; Core diluted EPS $2.08–$2.48; GAAP diluted EPS $1.50–$1.99; Net interest expense ~ $61M; tax rate ~21%; these figures imply continued solid profitability with modest QoQ seasonality in CLDC and potential uplift from Intelligent Infrastructure.
- Full-year FY2025: Revenue guidance ~ $27.9B; Core operating margin ~5.4%; Core EPS ~$8.95; Free cash flow >$1.2B; the company sees AI-related revenue contributing meaningfully to growth, with Intelligent Infrastructure expected to deliver roughly 17% YoY growth (27% excluding legacy networking) on a reported basis and AI-related revenue approaching ~$7.5B for FY2025.
- Growth catalysts: AI/data-center capex, cloud/data-center infrastructure expansion, silicon photonics (1.60 frontend capability and 800G transceiver developments), GPU-led system architectures, and liquid cooling capabilities expanding the addressable data-center market. In addition, the photonics-enabled roadmap via Gujarat and ongoing healthcare initiatives (PII) diversify growth vectors beyond traditional EMS.
- Risks and monitoring: Tariff policy developments and potential end-market volatility, particularly in EVs, renewables, 5G, and consumer-related Connected Living markets. JBL maintains a prudent stance on guidance given macro uncertainties and evolving regulatory environments (e.g., reciprocal tariffs). Investors should monitor AI-related demand intensity, hyperscaler capex cycles, supply chain localization dynamics, and competitive pricing pressure in the EMS space.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
JBL Focus
8.56%
3.64%
8.62%
36.41%
SANM
8.88%
4.62%
2.89%
16.24%
CLS
10.30%
6.10%
5.52%
17.23%
PLXS
9.97%
4.98%
2.89%
22.16%
FN
12.10%
9.55%
4.70%
22.90%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Jabil stands at the intersection of AI/DC infrastructure expansion and diversified manufacturing, with a disciplined capital allocation framework and meaningful free cash flow generation. The company’s strategic investments in silicon photonics, liquid cooling, and healthcare/pharma capabilities position JBL to monetize secular AI/Cloud and digital transformation cycles. The FY2025 guidance implies mid-to-high single-digit growth ex-Nav/Mobility tailwinds, plus a 5.4% core margin target and FCF exceeding $1.2B, underpinned by a robust US footprint and a prudent approach to working capital. Valuation remains premium relative to peers, reflecting JBL’s growth trajectory and margin resilience, but investors should weigh potential tariff-related uncertainty and cyclical end-markets. Key catalysts include AI infrastructure demand, photonics deployments, and Healthcare/pharma outsourcing scale, offset by potential cyclicality in EV/5G channels and macro volatility. Overall, JBL offers a favorable risk-adjusted profile for investors seeking exposure to AI-enabled manufacturing and data-center hardware themes, supported by strong liquidity and a clear buyback/yield strategy.
Key Investment Factors
Growth Potential
AI/data-center infrastructure expansion, silicon photonics and transceiver modules, and photonics-enabled data-center solutions. Gujarat photonics expansion, US domestic manufacturing strength, and healthcare/pharma outsourcing via PII acquisition underpin diversified growth. Digital commerce automation in Connected Living & Digital Commerce (CLDC) and humanoid/warehouse automation present longer-term upside.
Profitability Risk
Tariff/regulatory uncertainty and potential demand headwinds in consumer-driven segments; end-market cyclicality in EVs, renewables, and 5G; competition and pricing pressure in the EMS/DSO segment; geopolitical and currency risk; dependence on hyperscalers for AI/DC demand; up-front investments in advanced photonics and liquid cooling may weigh on near-term returns.
Financial Position
Healthy liquidity with cash of ~$1.592B and net debt ~$1.701B; net debt/EBITDA ~1.4x; debt to core EBITDA within a manageable range; FCF generation guidance (> $1.2B for FY2025) supports optionality for buybacks and potential tuck-in acquisitions. Cash flow stability (operating cash flow ~$334M in Q2) funds ongoing CapEx guidance of 1.5%–2% of revenue.
SWOT Analysis
Strengths
Diversified and resilient revenue mix across Intelligent Infrastructure, Regulated Industries, and CLDC
Strong US manufacturing footprint (30 sites) supporting customer localization and tariff resiliency