Arrow Electronics Q2 Earnings Beat Estimates, Revenues Rise Y/Y

On a GAAP basis, ARW reported earnings of $5.26 per share, up 47% year over year, while net income attributable to shareholders rose 45% year over year to $273 million. Non-GAAP net income attributable to shareholders was $283 million, up 122% year over year.

ARW's Q2 Revenue Details

Global Components

In the second quarter of 2026, Global Components sales increased 39% year over year on a reported basis and 38% on a constant currency basis to $7.37 billion.

Region-wise, revenues from the Americas increased 44% year over year on a reported basis. EMEA revenues rose 36% year over year on a reported basis and 32% at constant currency. Asia-Pacific revenues increased 38% year over year on a reported basis and 37% at constant currency.

Global Enterprise Computing Solutions (ECS)

Global ECS revenues were $2.63 billion, which increased 14% year over year on a reported basis and 13% at constant currency. Global ECS gross billings rose 14% year over year to $5.86 billion.

Region-wise, the segment's EMEA revenues grew 20% year over year on a reported basis and 17% at constant currency. Americas ECS revenues increased 8% year over year on a reported basis.

ARW's Q2 Operating Details

The Global Components segment reported a non-GAAP gross margin of 11.6%, up 40 basis points year over year, while the Global ECS segment's gross margin contracted 100 basis points to 10.2% year over year. Global ECS operating income for the quarter included a $26.6 million loss related to the underperformance of certain non-cancellable multi-year purchase obligations against a 21.7 million loss of the same nature in the first quarter of 2026.

The non-GAAP operating income from Global Components and Global ECS was $397 million and $86 million, respectively. Global Components' non-GAAP operating income increased 110% year over year, while Global ECS' non-GAAP operating income decreased 12% year over year.

Arrow Electronics' non-GAAP operating income rose to $403 million in the second quarter of 2026, up 87% year over year. The non-GAAP operating margin expanded approximately 120 basis points year over year to 4.0%. Within segments, Global Components' non-GAAP operating margin expanded approximately 180 basis points year over year to 5.4%, while Global ECS' non-GAAP operating margin contracted 100 basis points year over year to 3.3%.

Balance Sheet & Cash Flow

As of July 4, 2026, cash and cash equivalents totaled $245 million, down from $287 million as of April 4, 2026.

Long-term debt was $2.05 billion, down from $2.35 billion at the end of the previous quarter.

In the reported quarter, cash flow from operations swung to a positive $318 million compared with cash used for operations of $206 million in the second quarter of 2025, primarily reflecting the timing of cash flows within the company's supply chain services offering.

In the second quarter of 2026, ARW repurchased $43 million of shares.

Significant Developments

During the quarter, Arrow's board of directors authorized a new $1 billion share repurchase program, effective May 12, 2026, replacing the company's previous repurchase authorization. Management also pointed to book-to-bill ratios remaining well above parity during the quarter, with backlog continuing to build in both size and duration across the business.

ARW Offers Q3 2026 Guidance

For the third quarter of 2026, sales are estimated between $9.6 billion and $10.2 billion.

Global Components sales are projected between $7.50 billion and $7.90 billion. Global ECS sales are anticipated to be between $2.10 billion and $2.30 billion.

Interest expenses are expected to be approximately $50 million. The average tax rate is expected to range from 23% to 25%.

ARW anticipates GAAP earnings of $4.72-$4.92 per share and non-GAAP earnings of $4.83-$5.03 per share.

Changes in foreign currencies are expected to decrease sales by approximately $27 million and earnings per share by 1 cent compared to the third quarter of 2025. On a sequential basis, foreign-currency changes are expected to decrease sales by approximately $50 million and earnings per share by 4 cents compared to the second quarter of 2026.

Zacks Rank & Stocks to Consider

Arrow Electronics currently carries a Zacks Rank #3 (Hold).

Kimball Electronics KE, Quantum QMCO and Lumentum LITE are among the better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Currently, Kimball Electronics sports a Zacks Rank #1 (Strong Buy), while Quantum and Lumentum carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kimball Electronics shares have inched up 1.8% in the past six months. KE is scheduled to report its fiscal fourth-quarter 2026 results on Aug. 13.

Quantum's shares have surged 96% in the past six months. QMCO is scheduled to report its fiscal first-quarter 2027 results on Aug. 10, 2026.

Lumentum shares have gained 48.9% in the past six months. LITE is slated to report its fiscal fourth-quarter 2026 results on Aug. 11.

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