Celestica Surpasses Q3 Earnings Estimates on Higher Revenues

Celestica Inc. CLS recorded strong third-quarter 2025 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. 

The Toronto-based electronics manufacturing service provider reported healthy year-over-year revenues backed by robust expansion in the Connectivity & Cloud Solutions (CCS) segment. Management’s emphasis on innovation, product diversification and AI advancements is a key growth driver. Solid growth in free cash flow is a tailwind.

Net Income

Quarterly net earnings were $267.8 million or $2.31 per share, up from $89.5 million or 75 cents per share in the year-ago quarter. The nearly threefold growth in GAAP earnings was primarily attributable to top-line improvement.

Non-GAAP net earnings increased to $183.1 million or $1.58 per share from $123.8 million or $1.04 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.

Revenues

Quarterly revenues were $3.19 billion, up 27.8% year over year, led by healthy demand in the CCS segment. The top line exceeded management’s guidance of $2.875 billion to $3.125 billion and beat the Zacks Consensus Estimate by $170 million.

Quarterly Segment Results

CCS: Total revenues in this segment improved 43.2% year over year to $2.41 billion, primarily driven by strong demand in the Communications end market. The segment accounted for 76% of the company’s total revenues in the third quarter.

Revenues in the Enterprise end market declined 23.9% year over year to $470.1 million. The Communications end market revenues rose 82% to $1.94 billion, with solid growth in the hardware platform solutions portfolio backed by hyperscale customer demand for networking products, including 400G switches and 800G switches. The segment’s operating income increased to $199.4 million (up 54.9%) with a margin of 8.3% (up 70 basis points), driven by greater operating leverage and improved mix.

Advanced Technology Solutions (ATS): The segment’s revenues were $781 million (down 4.1%), accounting for 24% of total revenues in the third quarter. The segment’s operating income increased 6.7% year over year to $42.8 million with a margin of 5.5% (up 60 basis points).

Cash Flow & Liquidity

In the reported quarter, Celestica generated an operating cash flow of $126.2 million compared with $122.8 million in the year-ago quarter, bringing the respective tallies for the first nine months of 2025 and 2024 to $408.9 million and $330.5 million. Free cash flow was $88.9 million in the third quarter compared with $76.8 million in the prior-year quarter.

As of Sept. 30, 2025, the company had $305.9 million in cash and cash equivalents with a long-term debt of $756.7 million.

Guidance Up

For the fourth quarter of 2025, Celestica expects revenues in the range of $3.325 billion to $3.575 billion. Non-GAAP earnings per share are expected to be in the band of $1.65-$1.81. Management expects the non-GAAP operating margin to be about 7.6%. 

With strong quarterly results, Celestica currently anticipates 2025 revenues to be approximately $12.2 billion, up from the previous projection of $11.55 billion. Non-GAAP operating margin is expected to be 7.4%. Non-GAAP adjusted earnings are expected to be $5.90 per share, up from the previous view of $5.50. Non-GAAP free cash flow is estimated to be $425 million, up from $400 million guided earlier.

Zacks Rank & Stock to Consider

Celestica currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release third-quarter 2025 earnings on Nov. 5. The Zacks Consensus Estimate for earnings is pegged at 72 cents per share, suggesting a growth of 20% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 18.7%. Arista delivered an average earnings surprise of 12.8% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release third-quarter 2025 earnings on Nov. 6. The Zacks Consensus Estimate for earnings is pegged at $1.64 per share, indicating a 3.1% growth from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 4.9%. Akamai delivered an average earnings surprise of 7.1% in the last four reported quarters.

Pinterest, Inc. PINS is set to release third-quarter 2025 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at 42 cents per share, implying a growth of 5% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 33.9%. Pinterest delivered an average negative earnings surprise of 1.1% in the last four reported quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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