Avnet Q1 Revenue Rises 82% as Adjusted Margin Reaches 4.7%

Avnet (AVT) reported a sharp increase in fiscal first-quarter revenue and profitability as sales grew across every region and end market, while adjusted operating income expanded substantially faster than revenue. The electronic-components distributor also projected further sequential sales growth for the second quarter, assuming market conditions and component supply remain similar to the first quarter.

Revenue for the quarter ended October 3, 2026, rose 82% year over year to $10.72 billion, or 83% in constant currency. GAAP operating margin was 4.4%, and diluted earnings per share were $3.28. On a non-GAAP basis, adjusted operating income increased 231% to $498 million, lifting adjusted operating margin by 210 basis points to 4.7%. Adjusted diluted EPS rose 332% to $3.63 from $0.84 a year earlier.

GAAP operating income totaled $474.7 million, while GAAP net income was $282.2 million. Adjusted results excluded restructuring, integration and other expenses, amortization of intangible assets, a foreign-currency loss and certain tax items. Adjusted net income was $312.1 million.

Gross margin was 10.0%, while selling, general and administrative expenses totaled $576 million. SG&A represented 53.7% of gross profit, down from 75.6% in the prior-year quarter, reflecting the stronger increase in gross profit relative to operating expenses. Interest expense rose by $32 million year over year and $25 million sequentially to $92 million. The adjusted effective tax rate was 23.0%, compared with a GAAP effective rate of 24.1%.

Growth Across Regions and End Markets

Sales increased in Asia, the Americas and Europe, the Middle East and Africa. Americas revenue more than doubled to $2.86 billion, rising 109% both as reported and in constant currency. Asia sales increased 79% to $5.12 billion, or 80% in constant currency, while EMEA revenue advanced 64% to $2.74 billion, or 67% in constant currency.

Avnet said all end markets recorded year-over-year growth, led by data center and compute, aerospace and defense, and networking. Book-to-bill ratios were well above parity in every region, and lead times were trending higher across most product categories. Pricing also increased during the quarter, with substantially all of that increase related to memory products.

Electronic Components generated $10.14 billion of revenue, up 84% as reported and 85% in constant currency. The group’s operating income rose to $484 million from $159 million a year earlier, and its operating margin expanded to 4.8% from 2.9%.

Farnell revenue increased 46% to $583 million, or 47% in constant currency. Operating income reached $59 million, compared with $17 million in the prior-year period, while operating margin climbed to 10.1% from 4.3%.

Inventory and Liquidity

Inventory ended the quarter at $8.2 billion, an increase of $2.1 billion from the preceding quarter. Inventory days were 72, compared with 71 in the fourth quarter, while working-capital days declined to 64 from 69. Return on working capital, a non-GAAP measure, reached 25.2%, up from 19.2% sequentially and 9.8% a year earlier.

Avnet reported $1.2 billion of available committed credit lines. The company paid a dividend of $0.37 per share, returning $30 million to shareholders during the quarter.

Second-Quarter Outlook

For the fiscal second quarter ending January 2, 2027, Avnet expects revenue of $11.10 billion to $11.40 billion, with a midpoint of $11.25 billion. Adjusted diluted EPS is projected at $3.90 to $4.10, while GAAP diluted EPS is expected to range from $3.80 to $4.05.

The revenue midpoint implies approximately 5% sequential growth, according to the company. Adjusting for the extra week included in the first quarter, Avnet said the midpoint represents about 12% sequential growth.

The forecast assumes market conditions and the supply of electronic components remain similar to the first quarter. It also incorporates interest expense at roughly the first-quarter level, an adjusted effective tax rate of 21% to 25%, and approximately 87 million average diluted shares outstanding.

Avnet cautioned that its outlook remains subject to risks including geopolitical conflicts, competitive pressure, a semiconductor industry down-cycle, supplier relationships and product allocations, customer defaults, foreign-exchange movements, tariffs and trade restrictions. The company also identified supply-chain disruption, cybersecurity incidents, information-system failures and broader economic conditions as factors that could cause actual results to differ from its expectations.