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Arrow Electronics reported record Q3 revenues of $10.72 billion, up 39% year over year.
Non-GAAP EPS surged 158% to $6.22, beating guidance by a wide margin and consensus by 24.9%.
Q4 guidance projects revenues of $11.55-$12.15 billion and non-GAAP EPS of $7-$7.20.
Arrow Electronics (ARW - Free Report) reported third-quarter 2026 non-GAAP earnings of $6.22 per share, surpassing the previously issued guidance of $4.83-$5.03. The bottom line increased 158% year over year and beat the Zacks Consensus Estimate by 24.9%.
In the third quarter, ARW reported record revenues of $10.72 billion, which rose 39% year over year and came above the company's guided range of $9.6-$10.2 billion. The figure beat the consensus mark by 8%. At constant currency, revenues also increased 39% year over year. Changes in foreign currencies had a negative impact of $10.3 million on sales and a positive impact of 2 cents on earnings per share compared with the third quarter of 2025.
On a GAAP basis, ARW reported earnings of $6.17 per share, which increased 196% year over year and came above the guided range of $4.72-$4.92, while net income attributable to shareholders rose 192% year over year to $318 million. Non-GAAP net income attributable to shareholders was $321 million, up 155% year over year.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
In the third quarter of 2026, Global Components sales increased 43% year over year on both a reported and constant currency basis to $7.94 billion. Sequentially, segment sales rose $577 million, driven by broad-based demand and supplier price increases, particularly in memory. Interconnect, passive and electromechanical sales exceeded $1 billion for the third consecutive quarter.
Region-wise, revenues from the Americas increased 58% year over year on a reported basis. EMEA revenues rose 41% year over year on a reported basis and 42% at constant currency. Asia-Pacific revenues increased 33% year over year on a reported basis and 32% at constant currency.
Global Enterprise Computing Solutions (ECS)
Global ECS revenues were $2.78 billion, which increased 29% year over year on a reported basis and 30% at constant currency. Global ECS gross billings rose 14% year over year to $5.94 billion. Growth was recorded across nearly every strategic area, including compute, storage, security, business applications and cloud and hybrid cloud solutions, as customers invested in AI readiness and IT modernization.
Region-wise, the segment's EMEA revenues grew 30% year over year on a reported basis and 32% at constant currency. Americas ECS revenues increased 27% year over year on a reported basis.
ARW's Q3 Operating Details
Arrow Electronics' consolidated non-GAAP gross margin was 10.8%, flat year over year. The Global Components segment reported a non-GAAP gross margin of 11%, up roughly 10 basis points year over year, while the Global ECS segment's gross margin contracted approximately 40 basis points to 10.1% year over year. Global ECS operating income for the quarter included a $3.8 million loss related to the underperformance of certain non-cancellable multi-year purchase obligations compared with a $26.6 million loss of the same nature in the second quarter of 2026. During the quarter, one underperforming contract was terminated, and another was restructured.
Non-GAAP operating expenses were $719 million, up $104 million year over year, mostly reflecting variable costs. Operating expenses as a percentage of gross profit declined 11.6 percentage points year over year to 62.3%.
The non-GAAP operating income from Global Components and Global ECS was $413 million and $99 million, respectively. Global Components' non-GAAP operating income increased 107% year over year, while Global ECS' non-GAAP operating income increased 53% year over year.
Arrow Electronics' non-GAAP operating income rose to $436 million in the third quarter of 2026, up 101% year over year. The non-GAAP operating margin expanded approximately 130 basis points year over year to 4.1%. Within segments, Global Components' non-GAAP operating margin expanded approximately 160 basis points year over year to 5.2%, while Global ECS' non-GAAP operating margin expanded approximately 60 basis points year over year to 3.6%.
Balance Sheet & Cash Flow
As of Oct. 3, 2026, cash and cash equivalents totaled $216 million, down from $245 million as of July 4, 2026.
Long-term debt was $2.64 billion, up from $2.05 billion at the end of the previous quarter. Short-term borrowings, including the current portion of long-term debt, were $110 million. The adjusted leverage ratio was 1.9x, improving by more than one turn over the trailing 12 months.
In the reported quarter, Arrow used $441 million of cash flow from operations compared with cash used for operations of $282 million in the third quarter of 2025, primarily due to working capital investments to support customer demand. Inventories rose $1.4 billion sequentially to $7.3 billion, of which approximately $600 million related to Arrow Intelligent Solutions orders expected to ship in future quarters. For the first nine months of 2026, ARW generated $577 million of cash flow from operations.
In the third quarter of 2026, ARW repurchased $93 million of shares.
ARW Offers Q4 2026 Guidance
For the fourth quarter of 2026, sales are estimated between $11.55 billion and $12.15 billion.
Global Components sales are projected between $8.15 billion and $8.55 billion, suggesting an increase of 39-45% year over year. Global ECS sales are anticipated to be between $3.40 billion and $3.60 billion, indicating a rise of 19-26% year over year. Management expects Global Components growth to be driven primarily by unit volume, as most supplier price increases took effect in the third quarter.
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 $6.25-$6.45 per share and non-GAAP earnings of $7.00-$7.20 per share.
Changes in foreign currencies are expected to decrease sales by approximately $88 million and earnings per share by 14 cents compared with the fourth quarter of 2025. On a sequential basis, foreign-currency changes are expected to decrease sales by approximately $86 million and earnings per share by 7 cents compared with the third quarter of 2026.
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Arrow Electronics Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Key Takeaways
Arrow Electronics (ARW - Free Report) reported third-quarter 2026 non-GAAP earnings of $6.22 per share, surpassing the previously issued guidance of $4.83-$5.03. The bottom line increased 158% year over year and beat the Zacks Consensus Estimate by 24.9%.
In the third quarter, ARW reported record revenues of $10.72 billion, which rose 39% year over year and came above the company's guided range of $9.6-$10.2 billion. The figure beat the consensus mark by 8%. At constant currency, revenues also increased 39% year over year. Changes in foreign currencies had a negative impact of $10.3 million on sales and a positive impact of 2 cents on earnings per share compared with the third quarter of 2025.
On a GAAP basis, ARW reported earnings of $6.17 per share, which increased 196% year over year and came above the guided range of $4.72-$4.92, while net income attributable to shareholders rose 192% year over year to $318 million. Non-GAAP net income attributable to shareholders was $321 million, up 155% year over year.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote
ARW's Q3 Revenue Details
Global Components
In the third quarter of 2026, Global Components sales increased 43% year over year on both a reported and constant currency basis to $7.94 billion. Sequentially, segment sales rose $577 million, driven by broad-based demand and supplier price increases, particularly in memory. Interconnect, passive and electromechanical sales exceeded $1 billion for the third consecutive quarter.
Region-wise, revenues from the Americas increased 58% year over year on a reported basis. EMEA revenues rose 41% year over year on a reported basis and 42% at constant currency. Asia-Pacific revenues increased 33% year over year on a reported basis and 32% at constant currency.
Global Enterprise Computing Solutions (ECS)
Global ECS revenues were $2.78 billion, which increased 29% year over year on a reported basis and 30% at constant currency. Global ECS gross billings rose 14% year over year to $5.94 billion. Growth was recorded across nearly every strategic area, including compute, storage, security, business applications and cloud and hybrid cloud solutions, as customers invested in AI readiness and IT modernization.
Region-wise, the segment's EMEA revenues grew 30% year over year on a reported basis and 32% at constant currency. Americas ECS revenues increased 27% year over year on a reported basis.
ARW's Q3 Operating Details
Arrow Electronics' consolidated non-GAAP gross margin was 10.8%, flat year over year. The Global Components segment reported a non-GAAP gross margin of 11%, up roughly 10 basis points year over year, while the Global ECS segment's gross margin contracted approximately 40 basis points to 10.1% year over year. Global ECS operating income for the quarter included a $3.8 million loss related to the underperformance of certain non-cancellable multi-year purchase obligations compared with a $26.6 million loss of the same nature in the second quarter of 2026. During the quarter, one underperforming contract was terminated, and another was restructured.
Non-GAAP operating expenses were $719 million, up $104 million year over year, mostly reflecting variable costs. Operating expenses as a percentage of gross profit declined 11.6 percentage points year over year to 62.3%.
The non-GAAP operating income from Global Components and Global ECS was $413 million and $99 million, respectively. Global Components' non-GAAP operating income increased 107% year over year, while Global ECS' non-GAAP operating income increased 53% year over year.
Arrow Electronics' non-GAAP operating income rose to $436 million in the third quarter of 2026, up 101% year over year. The non-GAAP operating margin expanded approximately 130 basis points year over year to 4.1%. Within segments, Global Components' non-GAAP operating margin expanded approximately 160 basis points year over year to 5.2%, while Global ECS' non-GAAP operating margin expanded approximately 60 basis points year over year to 3.6%.
Balance Sheet & Cash Flow
As of Oct. 3, 2026, cash and cash equivalents totaled $216 million, down from $245 million as of July 4, 2026.
Long-term debt was $2.64 billion, up from $2.05 billion at the end of the previous quarter. Short-term borrowings, including the current portion of long-term debt, were $110 million. The adjusted leverage ratio was 1.9x, improving by more than one turn over the trailing 12 months.
In the reported quarter, Arrow used $441 million of cash flow from operations compared with cash used for operations of $282 million in the third quarter of 2025, primarily due to working capital investments to support customer demand. Inventories rose $1.4 billion sequentially to $7.3 billion, of which approximately $600 million related to Arrow Intelligent Solutions orders expected to ship in future quarters. For the first nine months of 2026, ARW generated $577 million of cash flow from operations.
In the third quarter of 2026, ARW repurchased $93 million of shares.
ARW Offers Q4 2026 Guidance
For the fourth quarter of 2026, sales are estimated between $11.55 billion and $12.15 billion.
Global Components sales are projected between $8.15 billion and $8.55 billion, suggesting an increase of 39-45% year over year. Global ECS sales are anticipated to be between $3.40 billion and $3.60 billion, indicating a rise of 19-26% year over year. Management expects Global Components growth to be driven primarily by unit volume, as most supplier price increases took effect in the third quarter.
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 $6.25-$6.45 per share and non-GAAP earnings of $7.00-$7.20 per share.
Changes in foreign currencies are expected to decrease sales by approximately $88 million and earnings per share by 14 cents compared with the fourth quarter of 2025. On a sequential basis, foreign-currency changes are expected to decrease sales by approximately $86 million and earnings per share by 7 cents compared with the third quarter of 2026.
ARW’s Zacks Rank & Stocks to Consider
ARW currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Cisco Systems (CSCO - Free Report) , Analog Devices (ADI - Free Report) and NVIDIA (NVDA - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cisco Systems shares have gained 34.5% year to date. Cisco Systems is set to report first-quarter fiscal 2027 results on Nov. 12.
Shares of Analog Devices have risen 49.7% year to date. Analog Devices is slated to report fourth-quarter fiscal 2026 results on Nov. 24.
NVIDIA shares have gained 7.3% year to date. NVIDIA is set to report third-quarter fiscal 2027 results on Nov. 17.