Avnet Inc., a global distributor of electronic components and embedded technology solutions, reported a 6% year-over-year drop in third-quarter fiscal 2025 revenue, reflecting continued macroeconomic pressures in Europe and the Americas that more than offset gains in Asia.
Revenue for the quarter ended March 29 totaled $5.32 billion, down from $5.65 billion in the prior-year quarter. Net income was largely flat at $87.9 million, compared to $88.8 million in Q3 2024, but operating income fell 24.7% to $143.3 million as gross margins compressed.
Based in Phoenix, Arizona, Avnet serves original equipment manufacturers (OEMs) and electronic manufacturing services (EMS) providers by offering design, sourcing, logistics, and supply chain solutions. The company plays a central role in the global electronics supply chain, distributing semiconductors, connectors, passives, and embedded systems across more than 140 countries.
The company’s third quarter showed contrasting regional trends. Asia-Pacific revenue rose 13.0% year over year to $2.48 billion, marking the third straight quarter of growth in the region. In contrast, sales in Europe, the Middle East and Africa (EMEA) plunged 24.1% to $1.56 billion, while the Americas declined 9.2% to $1.27 billion.
CEO Phil Gallagher acknowledged the uneven landscape, noting that Asia’s recovery was a positive development even as “the global demand environment remains choppy, particularly in Europe.” He credited Avnet’s operational discipline for helping the company outperform internal expectations despite the challenging macro backdrop.
Avnet’s largest business unit, Electronic Components (EC), reported Q3 sales of $4.95 billion, down 5.7% from $5.25 billion in the same period last year. Farnell, its high-service distribution business focused on maintenance, repair, and R&D components, saw revenue fall 10.1% to $366.7 million.
The broader trend through the first nine months of fiscal 2025 has also been negative. Year-to-date revenue stands at $16.58 billion, down 8.9% from $18.19 billion during the same period in 2024. Net income is down 43.7% to $234.1 million, and operating income has fallen more than 35%.
Analyst sentiment was mixed, with many viewing the report as emblematic of persistent headwinds across global supply chains. William Stein of Truist noted that the performance in Asia was “encouraging,” but emphasized that the 24% year-over-year revenue drop in EMEA remains a “glaring issue.” He said the regional downturn reflects broader softness in European industrial and automotive sectors, which are significant verticals for Avnet.
Stifel analyst Matt Sheerin said the company is being squeezed by both pricing normalization and changes in geographic mix. “Farnell is still operating well below its historical margin profile, and demand from core customers in industrial and computing is still sluggish,” Sheerin said. He expects the margin pressure to continue into fiscal Q4.
BofA Securities analyst Vivek Arya was slightly more positive, highlighting Avnet’s solid execution and cash flow discipline. “The company continues to generate strong free cash flow and return capital to shareholders, which is a testament to operational strength,” Arya said. “But the top line will remain under pressure until we see stabilization in Europe and meaningful improvement in end markets like automotive, industrial IoT, and telecom.”
During the quarter, Avnet generated $141 million in operating cash flow, contributing to $585 million year-to-date. Over the trailing four quarters, the company has generated $859 million in operating cash flow.
Looking ahead, Avnet issued cautious guidance for the fourth quarter of fiscal 2025, projecting sales between $5.15 billion and $5.45 billion. Avnet expects lower sales in EMEA, with flat results in the Americas and Asia.
While Avnet’s execution remains disciplined, analysts agree that a broader recovery in electronics distribution will take time. “The worst may be behind us, but the rebound will be slow and uneven,” said Arya.
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