Arrow Electronics, Inc.

Second-quarter total revenue was $10 billion, up 32% year over year (30% constant currency). Non-GAAP gross margin was 11.2%, flat year over year, while non-GAAP operating margin expanded 120 basis points to 4%. Non-GAAP operating income rose $188 million year over year to $403 million, and non-GAAP EPS increased 124% year over year to $5.45. For Q3, Arrow guided to revenue of $9.6 billion to $10.2 billion, with non-GAAP EPS of $4.83 to $5.03; it expects Global Components sales of $7.5 billion to $7.9 billion and ECS sales of $2.1 billion to $2.3 billion. Management also said it still expects low double-digit ECS billings growth for the full year and continued 5%+ margins in components, though ECS should see some additional charges in the second half and supply chain services should normalize in Q3.

Bill Austin emphasized that Arrow is benefiting from broad-based demand, disciplined execution, and a favorable mix shift toward higher-value services. He said leading indicators remain strong, with book-to-bill above parity and backlog building into 2027, and described the component cycle as still being in the early innings. His tone was confident and constructive, repeatedly highlighting Arrow’s position at the intersection of AI, industrial, aerospace and defense, transportation, cloud, and cybersecurity.

Rajesh Agrawal detailed the financial improvement: sales of $10 billion, flat gross margin at 11.2%, operating expenses of $719 million, operating income of $403 million, and EPS of $5.45. He noted that operating expenses rose mainly due to variable costs and FX, while lower debt helped reduce interest expense to $37 million; the tax rate was 23%. On the balance sheet, net working capital fell about $100 million sequentially to $6.8 billion, inventory ended at $5.9 billion, operating cash flow was $318 million in Q2 and over $1 billion year to date, debt declined to $2.2 billion, leverage improved to 1.75x, and the company repurchased $43 million of stock.

Analysts focused on whether the component cycle is getting late-stage, and management pushed back, saying the cycle is still early and backlog/lead times are healthy. A second major topic was ECS: management clarified that a reported $1.4 billion revenue loss was overstated and said the business impact is roughly $700 million on the revenue line, while also stating that the contract change is mutually agreed and should not change ECS growth trajectory. Management also said the Q3 ECS guide looks below typical seasonality mainly because it is growing over a large partner addition last year, not because demand is weakening.