Celestica Smashes Q3 Guidance With $5.83B in Revenue and Sets a $40B Target for 2027

Celestica (CLS) reported third-quarter revenue of $5.83 billion, up 83% from a year ago, and adjusted earnings of $3.30 per share after the close on Monday, beating analyst estimates of $5.47 billion and $2.96. Both results came in above the top of the company's own guidance ranges. Celestica also raised its 2026 outlook and gave its first look at 2027, targeting $40.0 billion in revenue, up 90%.

Third-quarter results

By our calculation, revenue beat the consensus estimate by about $360 million, or 6.6%, and adjusted EPS beat by $0.34, or 11.5%. Against the top of guidance, revenue came in $280 million higher and adjusted EPS $0.22 higher. Chair and CEO Rob Mionis said the 8.5% adjusted operating margin "represents another new high for the company" and that "the demand environment continues to be very robust, supporting our 2027 revenue outlook."

Not every line improved. Adjusted gross margin slipped to 11.2% from 11.7% a year ago, and GAAP operating margin fell to 7.9% from 10.2%. The adjusted effective tax rate was 18%, below the roughly 20% the company had anticipated, which helped adjusted EPS. A total return swap reduced EPS by $0.03 in the quarter.

Segment results

Connectivity & Cloud Solutions, the unit that serves hyperscalers and AI data centers, doubled from a year ago, and by our calculation made up about 84% of total revenue. Within it, Hardware Platform Solutions revenue was about $2.3 billion, up 70%. Celestica renamed the segment's end markets this quarter: Communications is now Networking, and Enterprise is now Compute & Storage. Segment reporting is unchanged.

Outlook: Q4, 2026 and 2027

The 2026 revenue outlook now implies 69% growth and adjusted EPS growth of 91%. Celestica also expects 2027 capital expenditures of $1.5 billion to $2.0 billion and said its 2028 customer demand forecasts are "meaningfully higher" than the 2027 revenue outlook. By our calculation, the $40.0 billion revenue target is about 90% above 2026, and the $21.50 EPS target is about 86% above 2026's $11.55. The fourth-quarter revenue midpoint of $6.425 billion is about 10% above the third quarter, and the $3.47 EPS midpoint is about 5% above.

One number went the other way: 2026 free cash flow was cut to $460 million from $600 million. Celestica said the reduction reflects targeted working capital investments to support 2027 growth. Free cash flow was $412.5 million over the first nine months.

Balance sheet and capital

Celestica ended the quarter with $3.96 billion in cash, up from $596 million at the end of 2025, after completing an offering of 11.1 million common shares on Aug. 7 for gross proceeds of $3.45 billion and net cash proceeds of $3.39 billion. Borrowings under its credit facility and finance lease obligations were about $819 million. It repurchased no shares in the quarter and $22.6 million in the first nine months. Its current buyback program expires Nov. 2, and the company intends to file for a new one in the fourth quarter, covering up to 2.5% of the public float over 12 months. Shares outstanding were 126.1 million at period end.

What it means for investors

The quarter is a clear upside surprise, and the guidance points to Celestica nearly doubling revenue again in 2027. The questions are margins and cash. Adjusted gross margin fell, the 2027 margin target of 9.0% is only modestly higher than this quarter's 8.5%, and free cash flow is being sacrificed to build inventory and working capital ahead of that ramp. The $3.45 billion equity raise gives it ample liquidity, and a forecast this steep leaves little room for slips in demand.

Sources: Celestica Inc., third-quarter 2026 financial results and outlook (Oct. 26), available at celestica.com. Consensus figures are analyst estimates. This is informational, not a recommendation to buy or sell.