Arrow Electronics delivered first quarter results that exceeded Wall Street’s expectations, with management crediting both segments for the outperformance. CEO Sean Kerins cited improving demand in global components—especially in EMEA (Europe, Middle East, and Africa) and industrial markets—as key contributors. The enterprise computing solutions division also posted year-over-year billings growth, supported by strong cloud and infrastructure software demand. Kerins emphasized the impact of disciplined expense management and value-added supply chain services, noting, “Our value-added offerings, namely supply chain management and integration services, were once again accretive to our operating results.”
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Arrow Electronics (ARW) Q1 CY2025 Highlights:
- Revenue: $6.81 billion vs analyst estimates of $6.36 billion (1.6% year-on-year decline, 7.2% beat)
- Adjusted EPS: $1.80 vs analyst estimates of $1.43 (25.5% beat)
- Adjusted EBITDA: $214.6 million vs analyst estimates of $197.9 million (3.1% margin, 8.5% beat)
- Revenue Guidance for Q2 CY2025 is $7 billion at the midpoint, above analyst estimates of $6.7 billion
- Adjusted EPS guidance for Q2 CY2025 is $2 at the midpoint, below analyst estimates of $2.07
- Operating Margin: 2.3%, in line with the same quarter last year
- Market Capitalization: $6.59 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 Arrow Electronics’s Q1 Earnings Call
- Joseph Quatrochi (Wells Fargo) asked for clarity on the 2–4% potential sales impact from tariffs. CEO Sean Kerins and CFO Raj Agrawal explained that this uplift is not included in guidance and reflects only currently enacted policies, with mitigation strategies in place to manage margin risks.
- Quatrochi (Wells Fargo) followed up on inventory normalization, asking how Arrow’s elevated inventory aligns with customer replenishment trends. Kerins responded that inventory levels are now closely matched to demand, with further improvement anticipated as the industry recovers.
- William Stein (Truist Securities) questioned if higher inventory days are the new normal or if further reductions are expected. Kerins noted some excess remains but expects incremental improvement as demand recovers, especially for IP&E (interconnect, passive, and electromechanical) products.
- Stein (Truist Securities) also asked if strong enterprise computing solutions (ECS) performance was influenced by customers accelerating orders ahead of tariffs. Kerins said there was no evidence of such pull-forward in ECS and attributed growth to sustained cloud and hybrid infrastructure demand.
- Joseph Lehman (Bank of America) inquired about possible order pull-forward in global components due to tariffs. Kerins stated that aside from some activity in China, no significant order acceleration was observed, and U.S. backlog is building into later quarters, not just immediate demand.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) whether Arrow’s industrial and transportation end markets continue their recovery, (2) the extent of tariff-related disruptions or opportunities in global components, and (3) the sustained growth of recurring revenue within enterprise computing solutions. We will also track management’s inventory and supply chain strategies as the company navigates ongoing trade policy uncertainty.
Arrow Electronics currently trades at $127, up from $111.16 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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