Q3 FY2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $1.7 billion | up 37% year-on-year |
| Adjusted EPS | $2.11 | up 215% year-on-year |
| Adjusted Operating Margin | 22.5% | more than doubling year-on-year |
| Backlog | $8.5 billion | increase of $800 million |
| Adjusted Gross Margin | 46.4% | up 450 basis points year-on-year |
Guidance and outlook
- Q4 FY2026 revenue of $1.75 billion, plus or minus $50 million.
- Full year 2026 revenue midpoint raised to $6.42 billion.
- Q4 FY2026 adjusted gross margins of 45%, plus or minus 50 basis points.
- Fiscal 2027 revenue growth of at least 30% year-on-year, yielding at least $8.3 billion to $8.4 billion.
- Fiscal 2027 adjusted operating margin between 25% and 27%.
How management sounded
Confident (+8 on our -10 to +10 scale). Management reported record results, raised the full-year revenue outlook, and provided a strong preliminary growth forecast for 2027 based on massive, durable AI-driven demand. Management sounded more upbeat than on 92% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Value Exchange
Asked: George Notter asked about price increases and terms and conditions.
Answer: Marc Graff noted price increases ranging from high single digits to high teens or low 20s, alongside holistic discussions on payment terms and supply security.
Backlog Composition
Asked: Tal Liani asked about the nature of the backlog and if customers are buying ahead.
Answer: Gary Smith explained that the backlog is driven by lead times and strong demand, with the company unable to satisfy all requirements for 2027 due to supply constraints.
Hyper-Rail Ramp
Asked: Tim Long asked about the demand profile and ramp for Hyper-Rail.
Answer: Marc Graff stated that standardization is expected by the end of the calendar year, with a ramp to several hundred million dollars in 2027.
Data Center Dependency
Asked: Ryan Koontz asked if WAN projects are independent of data center construction pacing.
Answer: Gary Smith noted that the company is largely immune to data center construction pacing for the next couple of years because existing data centers require massive connectivity upgrades.
What to watch before the next call
- Supply chain capacity and the ability to secure enough components to meet the $10 billion backlog.
- The ramp of Hyper-Rail and its contribution to revenue in 2027.
- The impact of potential new Canadian tariff regimes on margins.
