stockrowWhat it does
Arrow Electronics distributes electronic components and enterprise computing products, and provides services that help customers design, obtain and use technology. Founded in 1935, Arrow is headquartered in Englewood. William F. Austen is its interim chief executive officer.
Arrow operates through two businesses. Global Components supplies electronic parts to original equipment manufacturers and electronics manufacturing services providers. These customers use the parts to make products for industries such as industrial equipment, automotive and transportation, computing, and communications. Arrow also helps customers design products, manage their supply chains and integrate components into finished systems.
Global Enterprise Computing Solutions, or Global ECS, supplies computing technology to value-added resellers and managed service providers. These businesses, in turn, deliver technology to their own customers. Arrow’s offerings include data-center hardware, software, cloud, security and analytics products, supported by services such as engineering, logistics and training.
ArrowSphere is its software and cloud marketplace and management platform. It helps resellers and service providers manage their as-a-service businesses. Arrow also provides services for suppliers, including selling and marketing activities under outsourcing agreements.
Arrow Intelligence Solutions designs, builds and tests compute and storage infrastructure for AI workloads. The business also builds specific low-volume, high-mix appliances for customers.
How it makes money
In FY2025, Global Components revenue was $21.5 billion and Global ECS revenue was $9.4 billion; total revenue in Q3 2026 was $10.7 billion.
Arrow’s revenue comes primarily from selling semiconductor products, interconnect, passive and electromechanical components, and IT hardware and software. Global Components distributes parts alongside engineering, integration and supply chain services. It can combine products from multiple suppliers and deliver them on schedules or in volumes that customers generally cannot obtain directly from manufacturers.
In 2025, approximately 72% of Global Components sales consisted of semiconductor products and related services. Arrow’s design engineers also work with customers on product designs that use suppliers’ components. These efforts are intended to generate future sales of those components.
Global ECS sells computing solutions and services through resellers and managed service providers. Its 2025 sales included software applications, storage, security, compute, networking and data intelligence. ArrowSphere makes software and cloud solutions available to channel partners and supports their subscription-based businesses. Arrow also earns contractual fees for taking over selected selling and marketing activities for suppliers.
Supply chain services provide fee-based revenue opportunities. Substantially all of Arrow’s sales are made order by order rather than under long-term sales contracts. Some Global ECS supplier outsourcing arrangements, however, include non-cancellable multi-year purchase obligations.
Prices and product mix affect results. Arrow said most of its components revenue growth in Q3 2026 was driven by price increases, with limited capacity particularly affecting memory. It also said that the mix of hardware and software affects how Global ECS sales and margins are reported.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Global Components | $21.5 billion | 69.7% | 7.60% |
| Global ECS | $9.4 billion | 30.3% | 17.8% |
Customers and how it sells
Arrow serves industrial and commercial customers through its two distribution businesses. Global Components sells primarily to original equipment manufacturers and electronics manufacturing services providers. Its industrial customers range from large manufacturers to small engineering and manufacturing firms. Global ECS works with value-added resellers and managed service providers that tailor IT solutions for end users.
Arrow’s sales teams connect customers with field application engineers, who provide technical support and access to supplier partners. Customers can obtain products from multiple suppliers through Arrow, alongside warehousing, logistics, design and integration services.
No single customer accounted for more than 2% of consolidated sales in 2025. Most sales are placed order by order, rather than through long-term contracts, limiting Arrow’s visibility into customer and supplier activity beyond a few months.
Arrow operates across the Americas, Europe, the Middle East and Africa, and Asia/Pacific. It maintains over 140 sales facilities and 39 distribution and value-added centers, serving over 85 countries. In FY2025, revenue was $10.6 billion in the United States, $4.4 billion in China and Hong Kong, and $3.2 billion in Germany. Revenue classified as other was $12.7 billion.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Other | $12.7 billion | 41.2% | 14.5% |
| United States | $10.6 billion | 34.2% | 8.04% |
| China and Hong Kong | $4.4 billion | 14.3% | 9.57% |
| Germany | $3.2 billion | 10.2% | 4.92% |
Suppliers and costs
Arrow sources products from electronic component and enterprise computing suppliers. No single supplier accounted for more than 8% of consolidated sales in 2025. Some parts of the business, including Global ECS, rely on a limited number of suppliers. Most purchases are governed by distributor agreements that are typically non-exclusive and can be cancelled by either party at any time or on short notice.
Arrow said it expanded its HPE partnership with distribution rights for Juniper product lines in North America and selected EMEA markets. It also expanded IBM distribution coverage in EMEA. Arrow distributes suppliers’ products and provides integration and other services; Arrow Intelligence Solutions also builds and tests infrastructure and customer appliances.
Inventory and receivables are important uses of working capital. Certain supplier agreements provide protections against price reductions and obsolescence through returns, allowances or credits. Arrangements covering supplier list-price reductions applied to approximately 56% of consolidated inventories at December 31, 2025; termination-related repurchase arrangements covered approximately 59%. These provisions do not eliminate inventory losses.
Arrow’s restructuring plan includes warehouse and logistics changes, IT investment, real estate consolidation and reduced third-party spending. The company expects to substantially complete the plan by the end of fiscal year 2026.
- Revenue$30.9B
- Cost of revenue−$27.4B
- Selling, general and administrative−$2.4B
- Other operating costs−$253.9M
- Operating income$822.2M
Competitive position
Arrow competes with multinational and national distributors of electronic components and enterprise computing solutions, as well as smaller specialists focused on particular products, sectors or markets. It also competes with its own suppliers for customers. No individual competitor is named in the available company evidence.
Competition creates pricing pressure and a need to improve services. Other competitive factors include product availability, credit, delivery speed, the ability to tailor solutions, product range, training and customer support. Arrow also faces companies entering or expanding in logistics, fulfillment, electronic catalog distribution and e-commerce supply chain services.
Arrow offers customers access to products from multiple suppliers and scheduled deliveries, supported by engineering, logistics and integration services. Its field application engineers help customers incorporate suppliers’ components into future product designs. Global ECS provides channel partners with technical support and ArrowSphere for software and cloud management.
Our reading: Arrow’s supplier portfolio and distribution network provide a meaningful service advantage when customers need multiple products or delivery schedules manufacturers do not offer directly, although rivals can have broader relationships in particular sectors. [item1]
Our reading: Engineering support and ArrowSphere can deepen customer relationships, but the evidence does not establish how difficult either is for customers to replace. [item1]
Growth opportunities
Arrow’s growth strategy includes expanding services alongside component distribution and enterprise computing products. Global Components offers design engineering, supply chain management and integration, while Global ECS supports cloud, security, data-center and analytics solutions through its reseller and managed-service-provider network.
Arrow Intelligence Solutions designs, builds and tests compute and storage infrastructure for AI workloads. Arrow said that in Q3 2026, nearly half of its sequential inventory build was related to data-center activity within that offering. It also said demand for compute, storage, networking, cybersecurity and cloud solutions was connected to customers modernizing their technology environments.
Global Components revenue increased from $20.0 billion in FY2024 to $21.5 billion in FY2025. Global ECS revenue increased from $7.9 billion to $9.4 billion over the same period. Arrow attributed the 2025 Global ECS increase primarily to growth in EMEA, including cloud-based solutions and infrastructure software, as well as a shift toward more sales recognized on a gross basis.
In Q3 2026, Arrow said its components backlog extended into the middle of 2027 and that book-to-bill ratios remained above parity. It also said most components revenue growth in the quarter came from price increases. For Global ECS, Arrow reported demand and improved conversion of backlog into revenue, and said it had terminated one underperforming multi-year contract and restructured another with the same partner.
- $34.5BFY2021
- $37.1BFY2022
- $33.1BFY2023
- $27.9BFY2024
- $30.9BFY2025
Structural risks
- Supplier relationships and availability: Changes to supplier agreements, suppliers leaving distribution, shortages or other disruptions could materially affect Arrow’s business. Most distributor agreements are non-exclusive and can be cancelled on short notice.
- Inventory and working capital: Arrow invests in inventory and receivables. Supplier price protection and return rights do not wholly protect it from inventory losses; estimates of excess or obsolete inventory depend on future demand and market conditions.
- Competition and pricing: Arrow faces pricing pressure from distributors, specialists and suppliers, alongside competition on product availability, delivery and service. Global Components gross margins declined in 2025 as regional, customer and product mix changed.
- International operations: Arrow’s business is exposed to currency movements, tariffs, trade restrictions, transportation interruptions and compliance costs. Approximately 66% of its 2025 sales came from operations outside the United States.
- Contract obligations: Some Global ECS outsourcing agreements include non-cancellable multi-year purchase obligations. Underperformance of certain obligations produced $18.3 million in net losses in 2025. Arrow subsequently terminated one underperforming contract and restructured another with the same partner.
- Technology and liquidity: Cybersecurity incidents can increase costs and cause losses. Arrow also faces the risk that liquidity or capital is unavailable or not cost-effective when needed.
Bottom line
Our reading
Our reading: Arrow is a technology distributor whose business rests on connecting suppliers to customers and providing engineering, logistics and other services around the products it sells. [item1]
Our reading: Its customer base is dispersed, but supplier relationships, inventory commitments and pricing pressure remain important exposures. Recent growth has also reflected price increases as well as demand, while the ECS contract changes show the potential cost of non-cancellable obligations. [item1] [item7] [call_prepared] [call_qa]