# Jabil Inc. (JBL) — Narrative, fiscal third quarter 2026 (quarter ended May 31, 2026)

Jabil's fiscal year ends on August 31. "Fiscal 2026" is the year ending August 31, 2026; the third quarter covered here ran from March 1 to May 31, 2026.

## Business

*Source: Annual Report on Form 10-K for fiscal year 2025 (year ended August 31, 2025), accession 0001628280-25-045293; segment and customer figures updated from the Form 10-Q for the quarter ended May 31, 2026, accession 0001628280-26-046138.*

Jabil is a contract manufacturer: it designs, builds and manages the supply chain for products that other companies sell under their own brands. Substantially all of its revenue comes from "manufacturing services", meaning production and product management of components and systems built to customer specifications, from data-center racks and networking gear to automotive assemblies, medical devices and consumer products. Customers outsource to Jabil to lower manufacturing, inventory and transportation costs and to get products to market faster. In fiscal 2025 Jabil had net revenue of $29.8 billion and net income attributable to Jabil of $657 million.

Revenue is concentrated among a few large customers. In fiscal 2025 the five largest customers made up about 36% of net revenue, and 87 customers made up about 90%. One customer, reported mainly in Intelligent Infrastructure, accounted for 16% of fiscal 2025 revenue. A second customer, in Connected Living and Digital Commerce, accounted for 11% in fiscal 2024 and 17% in fiscal 2023 but fell below 10% in fiscal 2025. In the first nine months of fiscal 2026 the top five still made up about 36% of revenue, and 78 customers made up about 90%.

Since September 1, 2024 the company has reported three segments:

- **Intelligent Infrastructure**: capital equipment, cloud and data-center infrastructure (including AI infrastructure), and networking and communications. Fiscal 2025 revenue was $12.3 billion, up 34%, and segment income margin was 5.4%. This segment is now the largest: it produced 48% of revenue in the May 2026 quarter, up from 44% a year earlier.
- **Regulated Industries**: automotive and transportation, healthcare and packaging, and renewable energy infrastructure. Fiscal 2025 revenue was $11.9 billion, down 3%, and segment income margin was 5.4%.
- **Connected Living and Digital Commerce**: connected consumer products plus digital commerce, including warehouse automation and robotics. Fiscal 2025 revenue was $5.6 billion, down 25%, and segment income margin was 5.6%. The decline came mainly from the sale of the Mobility Business (below).

Most business units serve a single customer and run dedicated production lines. Jabil uses highly automated, continuous-flow assembly and offers design services in electronics, mechanical, optical, industrial design and test development. It buys components itself as a turnkey provider, which ties up significant working capital, and it bears the risk of component-price swings between contractual re-pricings. Some components come from only one source.

Jabil operates in about 30 countries, including China, Malaysia, Mexico and the United States. It had about 135,000 workers as of August 31, 2025 (Asia 71,000, Americas 49,000, Europe 15,000, including temporary and contingent workers) across roughly 100 locations. Foreign-source revenue was 75.0% of the total in fiscal 2025 and 75.8% in the May 2026 quarter. Competitors include other electronics manufacturing services and design providers, as well as customers' own in-house manufacturing.

Recent portfolio moves explain the current mix. Jabil sold its Mobility Business (Chengdu product manufacturing, with supporting component manufacturing in Wuxi) to an affiliate of BYD Electronic. The deal closed December 29, 2023 for about $2.2 billion and produced a $942 million pre-tax gain in fiscal 2024. It has since bought businesses that add to its data-center and regulated-market capabilities:

- **Mikros Technologies** (liquid cooling for thermal management): completed October 1, 2024 for $63 million.
- **Pharmaceutics International, Inc.** (contract drug development and manufacturing: aseptic filling, lyophilization and oral solid dose): completed February 3, 2025 for $309 million.
- **Rebound Technologies Group Holdings Limited** (supply-chain services, based in the United Kingdom): completed September 1, 2025 for $133 million in cash. The fiscal 2025 10-K first reported this as $134 million.
- **Hanley Energy Group** (energy management and critical power for data centers): completed January 2, 2026 (details under the current quarter).

Jabil divested its operations in Italy on August 1, 2025. It recorded a $97 million pre-tax loss and paid $63 million in cash to the buyer.

Amazon.com NV Investment Holdings LLC holds a warrant, issued December 27, 2024, to buy up to 1,158,539 Jabil shares at $137.7671 per share. The warrant expires December 27, 2031, and its shares vest as Amazon makes payments for purchased products and services. As of May 31, 2026, 1,098,957 warrant shares were outstanding and 59,582 were exercisable.

## Risk factors

*Source: Form 10-K for fiscal year 2025, accession 0001628280-25-045293, Item 1A. The Form 10-Q for the quarter ended May 31, 2026 (accession 0001628280-26-046138) refers back to these risk factors and adds no new ones.*

- **Customer concentration and order volatility.** A small number of customers generates most revenue, and most do not commit to production schedules more than one quarter out. Customers have cancelled orders, changed volumes, delayed production and moved work in-house. Because many costs are fixed, a drop in demand for a major program can quickly cut margins and leave excess or obsolete inventory. Cloud customers follow demand cycles that differ from Jabil's traditional base, which makes working capital harder to manage.
- **Components and pricing.** Jabil buys the components it assembles. Contracts generally allow periodic re-pricing, but Jabil bears cost increases between re-pricings. Single-source parts and shortages, such as the fiscal 2023 semiconductor shortage, can halt production, and buying ahead adds carrying costs and obsolescence risk.
- **International operations, China and tariffs.** A substantial majority of revenue comes from operations outside the U.S., and a significant share of manufacturing is in China. Exposures include trade disputes, export controls, currency controls, labor turnover and changes in Chinese law. The U.S. imposed broad tariffs starting in February 2025. Jabil expects to pass tariff costs on to customers, but higher costs could reduce end demand or force customers to relocate production, and any costs not recovered would hurt results.
- **Acquisitions, divestitures and restructuring.** Jabil continues to buy and sell businesses. The risks include overpaying, integration problems, assumed liabilities, goodwill impairment and losses on exit, such as the $97 million loss on Italy. Restructurings may not deliver the targeted savings.
- **Technology and competition.** Manufacturing processes have little proprietary protection. Competitors may have greater scale, buying power or lower costs, and Jabil must keep investing (including in AI and machine learning) to keep its services competitive.
- **Regulatory and product liability.** Its medical-device work is subject to FDA quality-system rules and similar foreign rules. Inspection failures can lead to warning letters, recalls, import detentions or shutdowns. Product defects can bring liability and recall claims, and environmental laws may require clean-up of soil or groundwater contamination.
- **Information security.** Breaches, ransomware or outages at Jabil or third-party providers could disrupt operations and expose customer data, and wider use of AI tools adds to the risk of leaking confidential information.
- **Financial risks.** These include financially distressed customers or suppliers, credit-market turmoil affecting the receivables-sale and securitization programs Jabil relies on, higher interest rates, a possible credit-rating downgrade, currency moves, and taxes, including the 15% OECD global minimum tax and the possible loss of tax incentives.
- **Natural disasters and climate.** Hurricanes are a specific exposure for the Florida headquarters. Hurricanes Helene and Milton damaged sites in St. Petersburg, Florida and Asheville and Hendersonville, North Carolina in fiscal 2025.

## Management's discussion: fiscal 2025

*Source: Form 10-K for fiscal year 2025, accession 0001628280-25-045293, Item 7 and Note 14.*

In fiscal 2025, net revenue rose 3.2% to $29.80 billion from $28.88 billion. Growth in Intelligent Infrastructure more than offset the revenue lost with the Mobility Business. Intelligent Infrastructure revenue rose 34%, led by a 30% increase from existing cloud and data-center customers and a 10% increase in capital equipment, partly offset by a 6% decline in networking and communications. Connected Living and Digital Commerce fell 25%, mainly because of the Mobility divestiture. Regulated Industries fell 3%, mostly on weaker automotive and transportation.

Gross margin narrowed to 8.9% from 9.3% because of product mix in Connected Living and Digital Commerce and Intelligent Infrastructure. Operating income fell to $1.18 billion from $2.01 billion, and diluted EPS fell to $5.92 from $11.17, because fiscal 2024 included the $942 million gain on the Mobility sale. Fiscal 2025 operating income also absorbed:

- $181 million of restructuring charges, mostly under the 2025 Restructuring Plan, an approximately $200 million program of headcount reductions and capacity realignment approved September 24, 2024;
- a $97 million loss on Italy, partly offset by a $54 million post-closing gain on the Mobility sale;
- costs from Hurricanes Helene and Milton.

Below operating income, Jabil recorded a $46 million impairment of a preferred-stock investment. The effective tax rate was 26.4%.

On the company's non-GAAP "core" basis, which excludes amortization, stock compensation, restructuring, divestiture gains and losses and similar items, operating income rose to $1.62 billion from $1.59 billion, and core diluted EPS rose 14.8% to $9.75 from $8.49. Fewer shares outstanding contributed: diluted weighted shares fell to 110.9 million from 124.3 million. Operating cash flow was $1.64 billion and adjusted free cash flow was $1.32 billion, up from $1.06 billion. Jabil ended the year with about $1.9 billion of cash. In June 2025 it replaced its revolving credit facility with a new five-year $3.2 billion facility that expires June 18, 2030. The Board authorized a new $1.0 billion share repurchase program for fiscal 2026. Selling receivables is a significant source of funding: during fiscal 2025 Jabil sold $11.4 billion under trade-receivable sale programs and $4.2 billion under its $700 million global asset-backed securitization program.

## Current quarter: fiscal Q3 2026 (three months ended May 31, 2026)

*Source: Form 10-Q for the quarter ended May 31, 2026, accession 0001628280-26-046138; guidance from the third-quarter earnings release furnished on Form 8-K dated June 17, 2026, accession 0001628280-26-043719 (Exhibit 99.1), and the second-quarter release on Form 8-K dated March 18, 2026, accession 0001628280-26-019043 (Exhibit 99.1).*

**AI infrastructure drove growth and wider margins.** Net revenue rose 11.8% to $8.75 billion from $7.83 billion, and nine-month revenue rose 17.6% to $25.34 billion. Segment results for the quarter:

- **Intelligent Infrastructure** rose 21% to $4.17 billion. Existing customers in networking and communications added 10 points of growth, cloud and data-center infrastructure 8 points, and capital equipment 3 points. Segment income margin was 6.1%, up from 5.3%.
- **Regulated Industries** rose 4% to $3.18 billion, on automotive and transportation. Margin was 5.6%.
- **Connected Living and Digital Commerce** rose 5% to $1.40 billion. A 13% increase in digital commerce outweighed an 8% decline in connected living. Margin was 4.9%, down from 5.3%.

Gross margin improved to 9.5% from 8.7% on Intelligent Infrastructure mix. Operating income rose 10.4% to $445 million, net income attributable to Jabil rose to $275 million from $222 million, and diluted EPS rose to $2.59 from $2.03. Core operating income rose 20% to $504 million (a 5.8% core margin), and core diluted EPS rose to $3.16 from $2.55. Revenue and core EPS were above the midpoints of the ranges Jabil gave in March: $8.1–8.9 billion for revenue and $2.83–3.23 for core EPS. Selling, general and administrative expense rose to $340 million from $274 million, mainly on salaries, including staff added with the Hanley and Rebound acquisitions. Net interest expense rose to $51 million from $37 million after the January 2026 note issuance. The effective tax rate was 24.7%.

**Hanley Energy Group.** On January 2, 2026, Jabil completed the purchase of Hanley Energy Group, a provider of energy-management and critical-power solutions for data centers, for $752 million in cash. Additional contingent consideration is payable if Hanley reaches future revenue thresholds. The deal adds rack-level data-center power capabilities to Intelligent Infrastructure, which received all $340 million of the goodwill recorded; Jabil also recorded $369 million of intangible assets. As of and for the nine months ended May 31, 2026, Hanley accounted for 3.8% of total assets and less than 1% of revenue. Cash paid for acquisitions in the nine months totaled $852 million, and Intelligent Infrastructure segment assets rose to $8.78 billion from $3.74 billion at the end of fiscal 2025.

**Working capital swung sharply.** The sales cycle (days of receivables plus days of inventory, minus days of payables) fell to 5 days, from 21 days in the prior quarter and 24 days a year earlier, because days payable rose to 135. Inventories reached $5.93 billion, accounts payable $11.91 billion, and prepaid expenses and other current assets $3.93 billion. The last figure includes $2.8 billion of components bought for customers that Jabil expects to record as revenue on a net basis, up from $1.1 billion at August 31, 2025. Management attributes the increases in payables, inventory and contract assets to the timing of payments, shipments and invoicing in Intelligent Infrastructure. Nine-month operating cash flow was $1.27 billion and adjusted free cash flow was $991 million, up from $813 million.

**Balance sheet and capital returns.** On January 23, 2026 Jabil issued $500 million of 4.200% senior notes due 2029 and $500 million of 4.750% senior notes due 2033. Part of the proceeds repaid the $500 million of 1.700% notes due April 2026. Total notes and long-term debt were $3.38 billion at May 31, 2026, cash was $1.36 billion, and unused borrowing capacity was $4.4 billion. In the quarter Jabil bought back 0.9 million shares on the open market for $291 million. As of May 31, it had bought 3.7 million shares for $891 million under the $1.0 billion fiscal 2026 program, leaving $109 million. Total Jabil stockholders' equity was $1.32 billion, down from $1.51 billion at August 31, 2025. Diluted weighted shares fell to 106.5 million from 109.3 million a year earlier. Jabil pays a quarterly dividend of $0.08 per share.

**Tariffs.** On February 20, 2026, the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act. During the quarter Jabil began receiving refunds of those tariffs. It describes the refunds as immaterial and does not expect further refunds to be material.

**Guidance (June 17, 2026).** Jabil raised its fiscal 2026 outlook:

| Fiscal 2026 outlook | March 18, 2026 | June 17, 2026 |
|---|---|---|
| Net revenue | $34 billion | $35 billion |
| Core operating margin | 5.7% | 5.8% |
| Core diluted EPS | $12.25 | $12.70 |
| Adjusted free cash flow | $1.3+ billion | $1.4+ billion |

For the fourth quarter (June–August 2026), Jabil guided to:

- net revenue of $9.2–10.0 billion;
- GAAP operating income of $526–586 million;
- GAAP diluted EPS of $3.24–3.64;
- core operating income of $589–649 million;
- core diluted EPS of $3.80–4.20.

The CEO said AI infrastructure demand "remains extremely strong" and that the full-year AI-related revenue outlook is "meaningfully higher". He also said businesses that had been under pressure, particularly Automotive and Connected Living, were performing better than expected. Jabil now expects net capital expenditures of 1.0–1.5% of revenue in fiscal 2026, down from the 1.5–2.0% it projected in the fiscal 2025 10-K, and 1.5–2.0% in fiscal 2027.
## Subsequent events

*Source: Form 10-Q for the quarter ended May 31, 2026, accession 0001628280-26-046138; Form 8-K dated June 17, 2026, accession 0001628280-26-043719.*

The 10-Q for the quarter ended May 31, 2026 does not include a subsequent-events note and does not report any acquisition, divestiture, borrowing or litigation outcome after May 31, 2026. It lists no material pending legal proceedings. The items it and the June 17 release do disclose after the quarter-end are:

- **June 2, 2026**: payment of the $0.08 per share quarterly dividend declared April 23, 2026 (about $8 million, payable to holders of record on May 15, 2026).
- **June 17, 2026**: release of third-quarter results and the raised fiscal 2026 outlook described above.
- **June 24, 2026**: 104,787,089 shares of common stock outstanding, compared with 104,824,302 at May 31, 2026.

Fiscal 2026 ended on August 31, 2026. Results for the fourth quarter and the full year fall outside the period this page covers.