Avnet’s second quarter performance met Wall Street’s revenue expectations with flat year-on-year sales, while non-GAAP earnings per share and adjusted EBITDA both came in above consensus estimates. The company’s results were driven by strong Asia-Pacific growth and ongoing stabilization in its Farnell business, partially offset by weakness in EMEA and the Americas. Management highlighted the positive impact of demand recovery in key end markets such as compute and communications, as well as continued inventory normalization. CEO Phil Gallagher noted, “Sales were better than expected, led by Asia, which delivered 18% year-over-year growth in the quarter.”
Is now the time to buy AVT? Find out in our full research report (it’s free).
Avnet (AVT) Q2 CY2025 Highlights:
- Revenue: $5.62 billion vs analyst estimates of $5.38 billion (flat year on year, 4.5% beat)
- Adjusted EPS: $0.81 vs analyst estimates of $0.72 (12.5% beat)
- Adjusted EBITDA: $174.8 million vs analyst estimates of $155.7 million (3.1% margin, 12.3% beat)
- Revenue Guidance for Q3 CY2025 is $5.7 billion at the midpoint, above analyst estimates of $5.54 billion
- Adjusted EPS guidance for Q3 CY2025 is $0.80 at the midpoint, below analyst estimates of $0.90
- Operating Margin: 2.5%, in line with the same quarter last year
- Market Capitalization: $4.47 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Avnet’s Q2 Earnings Call
- Joseph Michael Quatrochi (Wells Fargo & Company) asked about improving conditions in EMEA and which end markets are driving the change. CEO Phil Gallagher emphasized that while growth remains modest, bookings and backlog are beginning to build in EMEA, suggesting early signs of recovery.
- Joseph Michael Quatrochi (Wells Fargo & Company) followed up on inventory trends for the coming quarter. CFO Ken Jacobson replied that inventory is expected to decline modestly, with ongoing reductions in the core business and targeted investments to maintain appropriate stock levels.
- Ruplu Bhattacharya (Bank of America) questioned the sustainability of Asia’s strength and its impact on margins. Gallagher stated that Asia’s outperformance is expected to continue and acknowledged the resulting margin pressure due to regional mix, but noted that normalization in EMEA and Farnell could offset this.
- Ruplu Bhattacharya (Bank of America) also inquired about Farnell’s margin outlook and the impact of digital initiatives. Gallagher responded that the goal is to return Farnell to double-digit operating margins, supported by increased digital-driven sales and executive team changes.
- Melissa Ann Dailey Fairbanks (Raymond James) asked how merit pay increases would affect operating expenses. Jacobson clarified that the full impact is reflected in first quarter guidance and that expenses will remain elevated but are being managed with ongoing cost controls.
Catalysts in Upcoming Quarters
In the upcoming quarters, our analysts will be watching (1) the pace of demand recovery in EMEA and the Americas, (2) whether Farnell can sustain margin improvements and progress toward digital sales goals, and (3) the impact of Asia’s continued growth on Avnet’s overall sales and margin mix. Inventory management and execution on digital investments will also be critical indicators of the company’s ability to navigate evolving market conditions.
Avnet currently trades at $52.93, up from $51.89 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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