FN - Earnings call transcript Q1 2025

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Operator

Good afternoon. Welcome to Fabrinet's Financial Results Conference Call for the First Quarter of Fiscal Year 2025. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to your host for today, Garo Toomajanian, Vice President of Investor Relations. Please go ahead.

Garo Toomajanian

Thank you, operator, and good afternoon, everyone. September us operating conference quarter results year which joining Fabrinet's to of for XXXX, and financial for ended you on call today's discuss fiscal Thank XXXX. XX, the first and the on Seamus Executive Financial today With Csaba me Chief call Sverha, Grady, are Chief Officer; Officer. available located is at being be a section Investors replay and call the of investor.fabrinet.com. This will webcast on our website

for financial we section our measures. as present presentation, and information, website Please of of details to call, both investor will as revenue this well earnings non-GAAP During GAAP our breakdown. Investors refer the our and reconciliation press important including GAAP additional our to release non-GAAP include which

discussion statements financial In the addition, forward-looking contain will today's the about company. future performance of

risks results light them and cause and this current events, except to could we only as our management's from of no subject to revise information materially These of obligation that actual by in statements expectations. reflect law. presentation of required future undertake as new opinions uncertainties are or statements date differ the Forward-looking to

factors on For particular, may Risk description in captioned the risk XX-K filings, refer that recent XXXX. the of please section affect our in Form our Factors August to our XX, a filed results, SEC

Fabrinet's from Seamus the begin would to call the Grady. and will I We by Seamus? with Seamus CEO, for turn followed over call questions. remarks time Csaba, now to like

Seamus Grady

of call you Thank you, We our business. those momentum fiscal afternoon, joining with to Good significant year our across Garo. thanks and started today. XXXX

we're Margins a These enabled XX% and fiscal the the top at all, range, of of with well the of foreign end headwind from our quarter. proud X% after and our to revaluations $X.XX upper were from results guidance million the of year. quarter. EPS operating healthy start even strong year increasing in All results was non-GAAP margin in a end revenue to in quarter the very XX.X% very ago us these of exchange our $X.XX, $XXX range of from QX. deliver First guidance above

As product rapidly AI datacom we about leading long-term driven grew our year market. sequentially a We optical was datacom for products year-over-year remain this and communications, a expanding serving XX% optical ago, optimistic business every from our major revenue positive interconnect revenue applications. up mainly trends position contract anticipated, for and for manufacturer by group. In as

to while by quarters. in growth our business revenue time data encouraged are growth in quarter, telecom first traditional for we continue the products We the Demand to results X business. of which come to interconnect where continues out, systems, saw have the leveled well products appears from for win telecom telecom as year-over-year as center

headwinds by We our system bolstered products. growth and are that revenue the industry into has the for that and telecom over optimistic turn that will demand continued tailwinds time, experiencing further be will DCI been telecom telecom

non-optical saw accelerating in to first the that We exceeded revenue million driven time. for communications. mostly the by Turning automotive quarter, strong $XXX revenue growth

automotive its reaching Industrial products second the Within We into revenue continue level believe continue highest EV see also the these to excellent quarter. X strong, laser market, was and trends momentum. automotive infrastructure in charging industrial laser can strong years.

up during announced to quarter, making approvals. that the would As necessary ground be the and significant that we Building on are year. we progress contractors last we breaking you know, XX report happy lining receiving I'm fiscal in

excellent in into growth to the the optimistic outlook that momentum We're while and as Csaba than start on acceleration growth summary, business our by the highlighted deliver that will by which are industry-leading XXXX, in will by we for extend construction the facility, discuss help year to several reflected our total in had more year positive margins. the a XX% continued footprint moment. begin revenue that end next operating our support We will calendar years. In optimistic continuing also increase second of this will fiscal an quarter

Now, and fiscal I'll Csaba? over more guidance turn the second call quarter our our to of XXXX. quarter the for on Csaba financial for details first

Csaba Sverha

to everyone. Thank afternoon, you, We Seamus, had good a and great year. the start

of optical my million will the on was total from more breakdown First share. increased revenue from million the and revenue, year revenue revenue, exchange the I increase The focus Thai communications and up million was X% Details and quarter, of quarter with for the communications comments XX% XX% optical ago a from ago $X.XX. notable some or and of $XXX and $XXX our at communications, XX% on level headwind, higher $X revenue that loss XX% a FX a and included from quarter. year optical metrics. In baht a revenue was revenue datacom Within of communications for ago in revaluation EPS of end million range QX X% the our expected or the first $XXX million $X.XX from QX. of X% $XXX an the presentation increased that XX% company. upper of in diluted investor ago prior was X% year year represented the at and revenue non-GAAP optical a Even record than quarter meant from website new are higher or X% QX. guidance or XX% at of rate was per our of revenue Telecom from from our

performance million strength optical by most below gig. first rated noteworthy data was below the at result year from XXX strong rate, telecom such the are as and center relative XXX data the Revenue communications from products was Looking trend of a as XXXZR, which due programs from quarter, products $XXX the classified in certain datacom gig from from interconnect QX. The to XX% strength products XX% products. was ago up and

in from and product revenue. optical XXXZR were Revenue products XX% as faster year are communications XXX from X% charging from from communications products products from programs saw from up quarter, non-speed-rated, fourth the XX% arrays and non-optical down or from year $XXX of strong that growth million, QX XX% and programs ROADMs, in quarter a fiber in ago XX% infrastructure Revenue QX. rated a communications customer driven are $X $XXX amplifiers, be ramps. $XXX by mainly gig in devices automotive continues growth the EV new up including As other optical at million, was This down first their million, was early from Revenue to QX. ago million the market.

XX.X%, expense fourth I $XX Gross were large basis consistent this by points which basis increase margin ] [ was of details with million, and representing the XX.X%, metrics million revenue. were X.X% part was P&L, GAAP QX. foreign and be of a will $XX X% the first otherwise Operating Interest the of XX expenses less non-GAAP in rate quarter. income income quarter on the with than Effective income of in an noted. discuss unless $XX margin quarter quarter. offset an tax again the fourth first As profitability a of the our loss record line of A was million revaluation quarter. Operating million. exchange was operating from of was the in greater-than-expected in was $X

diluted net Non-GAAP $X.XX will expect our the per share. this We was mid-single remain rate in million income $XX year. tax digits that or

quarter. $XX free We in was with million, of million, QX the our million the the CapEx short-term the quarter. flow of first quarter fourth cash million. first at million balance consistent the end Operating $XX resulting of ended Turning sheet. from and $XX quarter was cash to in flow up $XX with investments in $XXX cash

the shares. for repurchase We not the $XXX any quarter, program year repurchase fiscal in our authorized anticipate remainder we buybacks. first of did the share During have more active million and being during

Now, XXXX. for second the I of will guidance fiscal our turn year to quarter

after quarters in of another a are We are quarter. well record-breaking revenue, for record row we optimistic positioned X that delivering

area, $XXX as and For to the auto. major expect revenue basis, total of second growth growth we well, by we $XXX a By each datacom and and to QX. from driven up million we from mainly datacom, telecom flat total anticipate slightly anticipate telecom between year-over-year auto with quarter, On sequential in million. be product revenue

increased be in with anticipate line leverage, in result recent with a operating operating should believe to consistent we our margins top results. expect impact putting can We profitability also continued offset on margins. our Thai strengthening strength begin which pressure largely We that baht that will performance. reflected We gross

In As share. ahead. Operator, are a start to per confident call result, we now that with continued anticipate are open we the strong our we $X.XX summary, EPS questions. look to diluted we be we see $X.XX business ready momentum between and as XXXX to are for in our to will excited fiscal

Operator

BNP. for Ackerman Our Instructions] [Operator be Karl you. from Thank first the coming day of will question

Karl Ackerman

themselves. I outlook the for December to markets the regard quarter appreciate with the end

December. transceiver December But a do we anticipate I we in the growth gig to have that to follow-up, may regard readily down sound opto, of to largely just through market? network be flat should flattish in are available first And anticipate with quarter? drill of though, bit they datacom Specifically, revenue sequentially a transceiver the interface could gig until XXXX and further, Or in the you cards XXX XXX down half please. gig XXX be more revenue if

Seamus Grady

the question. for thanks Karl,

look datacom about will we the datacom beneficiary to very market. we're datacom continue growth in the growth, trends you optimistic at our the believe So and of yes, we if be long-term

vendors, different shift seen from have in with optical also a have we most biggest of Of from is bit little merchant little sole What program qualified they quarter. their for but a in we're the source the designed our course, transceivers datacom NVIDIA, it's -- that than products. mix

shifted but mix really datacom we transition XXX Our up, has business gig, between gig is the XXX around to while and X.X.

And the earnest X.X of goes But say, timing XXX gig have gig still I and begin robust, a in XXX level robust, capacity XXX% data really we're remains we But XXX, product installed So, we it available. really wouldn't for ramp of, of transceivers of of to that all rate. will lot what speeds. for NVIDIA becomes ramp into be have geared versus XXX X.X the up, when the granularity. exact let's we irrespective give that market guess, of and once more designed is to prepared the those to getting remains outlook generally share

needs. with do performance and very Our we good to our capacity their for They're happy support to remains NVIDIA We overall relationship with very them. a job strong. install continue very

Karl Ackerman

I appreciate that.

weighted in entirely Or gig in pluggables? that's For revenue toward is there sequential or win growth that gig regard XXX to pickup datacom my uptick business -- else is with ZR quarter? coherent the a driving the something of new XXX follow-up,

Seamus Grady

win a there's a primarily for business new Yes, there it's -- the mix. responsible growth in is that

it but gig. XXX nice of between XXX, growth customer is our mix there's of win Some XXX and chunk also at new a with shift main with a

Operator

And Instructions] Tim of be next question [Operator Savageaux line will you. of the Thank our Capital. Northland from coming

Timothy Savageaux

Can you okay? guys hear me

Seamus Grady

fine. you hear can We Tim. Yes,

Timothy Savageaux

Great. Okay.

I on weird. business little say a just just want acting of assuming regard a up to is you with were that did new to Or discussion customer your just and And the I'm was that's Sound with datacom? having extending reach is or you follow there? that new that telecom sort current whether a customer? win.

Seamus Grady

It's with an existing customer.

it with actually. a right, is telecom customer. existing you're Tim, fact, product DCI an a In product It's

not is win. So, XXX a gig telecom transceiver. it's it datacom although a win, actually It's

Timothy Savageaux

just it. datacom are I driving think your And to customer? shift? talking XXX And that mix doing but Got customers there in that's you're it was gig is I it about the right. heard sure mix Or former. this, make the I I think other addressed shift you within biggest want

Seamus Grady

customer between talked I us making fully XXX But former. for sure at focus is we the on that as Yes, causing products. our shift again, about and we're to that mix what's XXX needs visibility again, servicing is don't for gig, times. all mix us, have the from the which designed their what The

main saw quarter, sometimes the start the us customer geared mix we're there. going to ramping that less a ship than we soon to But soon within more maybe little as and maybe little was would XXX last a like gives bit And have a as we getting bit a mix that. quarter, of customer shift to bit XXX ship as as -- there's up our gig thought yes, little gig shift, X.X, then signal the in into volume

Timothy Savageaux

like Okay. again, revenue once quarter it's assume guide. sounds it no there's But just X.X discussing just -- the what safe following December you're there in to and on X.X,

Seamus Grady

X.X. break mean not some have would We're I some. out, been but There of there some, standing go to we but a would to that going be already start to be we from have shipping would yes, ramp. not level that

So, shipping we've we been been a bit. -- have little

front continue but We ramp to us. significant is ship, the in of

Timothy Savageaux

me. for And one last Okay. Great.

update an Ciena any have over the new can give if visibility or with into of you you I material customers, you business when to ramp? Speaking quarter, expect us the wonder course of greater

Seamus Grady

Yes.

is much spoke accurate. line last I still quarter think the about we time pretty

still being think is us. changes I last very No at do since it's we changes very months working excited spoke. and significant so hard to But for on We're X a no revenue for good stage, or major about that, track. job last from this we spoke. that away probably very there since we win time make with big sure Ciena. everything But happy

We if have share new but new not, program. go we back a name. in we one can can non-Ciena gain the up to to, to your quarter picked well, our the Ciena. on new them picked ahead up spoke have last not as Tim, Unfortunately, other us But no look the in space. additional that it's big we to additional in business business change question, or can in customers that name give -- we a we we to optical case, since case, And the us one business, but

Timothy Savageaux

Okay. just And if get one in there. quick one more I

Just that's in so or you're new systems -- share what optical that of these you the just mentioned programs gain? to with in new regard terms referencing business

Seamus Grady

been In customer, the share in where working case, business a Yes. case, we've of our one And new other it's taking one away system same some for the competitors. on it's that a customer product time. of piece from we're with gain

Operator

JPMorgan. line Instructions] [Operator coming our the of you. Chatterjee next be Samik Thank question And will from of

Samik Chatterjee

about design talked dial into a within Two of sort and questions, quarter. XXX you gig the outside shift gig relative I you bit particular, designs shift more datacom gig XXX well? as suppliers the in Seamus, different your curious to a primary mix are versus gig primary sort your XXX or where supplier? seeing revenue with internal may. between mix the of use seeing sort mix of I customer to if willingness down external in in-house are if was within XXX Are you willingness you gig you that use XXX% of design their shifting the and terms customers' versus with the any to XXX

Seamus Grady

their visibility them which their those not own really This where. in any helps own to their you our are the visibility manufactured how manufacturing they but customer control to don't which their we to any sole and decisions. parts from say, rightly et again us. side, designed don't design, and transceivers, ability designed biggest NVIDIA, into have for Samik, network XXX they products, have X.X, alternatives approved of datacom supply, Yes, complement our those designed really alternate in even into that their so for merchant XXX, cetera. use with we're secure access as customer have the have makes from program really components, to source more or into or Yes, to constraints use how decides by transceivers. We transceivers their our are devices But designed vendors the transceivers

and motivated really that datacom visibility visibility, the to how manufacturing and our to But positioned And resources made, have we're at said, their significant However, very approved for customer, that they it's for and transceivers, but us the are commit can. we're suppliers said, capacity approved use investments products. that it's for leverage upcoming that well gets on as our equipment our as and customers. they've demand they to for into products sites I decision That much based think see our we specific capacity merchant we -- a visibility -- largest continued we including to. merchant have and course, do of customers, current they they're exactly those don't to like of growth. And and tend number optimistic I transceivers they've that NVIDIA, --

transceivers. that ensuring just that retain position satisfy their the us on that for sole is they focus and designed we need source Our we our everything as from

Samik Chatterjee

just question. can move And clarify my Got to it. I and if also second

to And primary shortages your you in from the my second backdrop. any of points So, sort you while XXX macro et haven't help cater just cetera? seen data that that of I the in the demand customer of of to don't have about I where capacity confirm in talked in you clarification, capacity gig terms to a sort mean, then they with equipment, autos, any positive for question, this autos terms

sustainable not So, in how getting demand really sort more of an my versus that a are what you of driving sort demand auto refill -- is all confidence seeing of from improvement side. terms there? That's you're inventory

Seamus Grady

Yes. No problem.

capacity at XXX, confirm, constraints gig, Just X.X. no speeds we XXX any at of the no, have

competitor automotive, for correction have inventory taken main nice correction the constraints away main again, growth in driven by We business. it's infrastructure automotive like capacity we have rebound have anything by where no inventory customer On share side not in some our automotive from that on we seen -- our gain, or and there. gain the business customer of yes, the a or with share EV charging there

share it's So, gain.

sustainable. So, we're that, quietly optimistic that's

perform. We have to

have We customer very and nicely, But customer optimistic with the -- to and business of that take the what it give happy away. relationship. deliver, growing us can we're we're that, course, is that quietly

not rebound. gain, So it's share inventory

Operator

Thank the line of question George Notter coming Instructions] next be you. will [Operator of Jefferies. from Our

George Notter

the are you there that? simply that's like milestones Or love qualifications customer. you anything guys Blackwell or wanted in a for ask to them revenue? I order much that. in platform X.X through go learn and it milestones Is specific guess I'd about like other I I primary to the shipping more to quantities How generate terabit of greater guys? matter the think about about significant to have catalyst more for transceivers more do your that

Seamus Grady

Yes. George. you, Thank

have some, talked to for we're really doing. customer they challenges, what they They So, there Blackwell, yield shipping some to think, challenges some do yield I about think it down publicly main had issues, I is design Blackwell. call some our it with nothing

the more it's level. at think foundry I

once begins to really, and to So behind those them we're Blackwell issues ready go. ramp in are earnest,

unusual Blackwell, should Blackwell milestones, of else. a everything have qualified, when cost to question demand to we customer and really customer normal start ramp and it's beginning closely terms just business we on get shipping is just we So, range go to those that that's drive work through that see beginning steps the ramp in to a and There's to X.X. start of a whole yield detailed of throughput really of believe too of but very will to X.X hoping case And our that. we with nothing It's but all we're increase about see the for up.

George Notter

Got constraints been that componentry? other on feeds the that Anything about have any components. Super. constraints it. know into a opportunity on see in that component-wise? talking you And I people marketplace, EMLs, constraint as

Seamus Grady

we that really can to. None No. speak

bit, given critical a really has we also ample that done about a if think the and the the I sources customer outstanding have good customer things Blackwell of things each critical for time components. is there's by it delayed sure Maybe job in about alternatives to making course, been components. of ample one good extra the sure one of the supply has has capacity the little and place and ourselves make of that for of several

So, good shape. we're we begins think in about be ramp, that. quite once optimistic to should We X.X

Operator

of of from the Our line will Needham. coming Ryan be next Koontz question

Ryan Koontz

main XXXZR to share telecom the It is there you a talked sounds little business Coherent driver that's and systems bit gain. ZR, Hoping a like about some unpack here.

relatively I of is the that balance business the means -- So, remains stalled. assume

you can in if ZR any And seeing with that legacy some see your that? Are forecast of you in and of cannibalizing business? then customers terms potentially do confirm such? that you your b, thoughts So a, of

Seamus Grady

Thanks, Ryan.

in quite quarter, now telecom growth break in So been for would what of yes, our like, down if had a out. of starting has while, overall been us while telecom we've it we've did seen you what into growth business been for telecom the flatten and a telecom. -- strong traditional seeing couple begin buckets, had you take the some ZR. We DCI to primarily that if to business call the as a in we there's we category kind you and see we're And ZR traditional see different

about other degree is tailwind every that I business, about that been -- we're there make We course, to a of for quarters. ZR wouldn't suppose every in don't and some customer. that we're coming So, product of has traditional degree a ZR the really which positioned that's which cannibalizing for going that, is headwind, best time the talk products, to be telecom think probably on. we to optimistic turn we because, a to

growth So, also we had -- happy don't have that very And you the as that. the quarter But said, in business product. ZR. visibility perfect into been a in we we've the the ZR with new certainly, win win was

long So, too it sure. we're with From not, of excited products something view, point about our okay cannibalizes cannibalizing not the making sure again, quite or if if we're as as it's that. ZR. But else ZR, not we're existing

Ryan Koontz

ZR side major have do what And That's for Seamus. have And ZR the Coherent? that? might share you on do global kind pluggable customers have you idea of then, how you for fair, any many

Seamus Grady

the we we we have sizes X have space, they but overall. varying We think Right the shares. ZR leaders a ZR couple customers have of of in customers have and market varying now, X

It's ZR, new visibility of we relatively -- a to. don't share Our pretty new market. great have

winning ZR module products helping and as with where then ZR we I of customers of those as denominator, making the numerator So, we're the qualify we the sure we the what itself. But guess, can those customers clear many and that the is, go on just well -- know components all as that module those we're we're can, focused on. into customers new not as critical, we the key the

their customers question, to capability So, customers we have to work answer and bring But your X ZR very capacity. hard their with our now. we right up

Ryan Koontz

idea a ] at positions we see when volume might Do Great. when And I'm XXXZR? some you XXXZR well sure have up. [ rough there you XXXZR at your you that position turns strong think for

Seamus Grady

Yes, shipping. it's already

Operator

be you. of coming next will And of Securities. the question our [Operator line from Thank Mike Rosenblatt Instructions] Genovese

Michael Genovese

missed... I

Seamus Grady

can't we you, Mike. Mike, hear

Michael Genovese

can't that. I about do anything Okay.

So, I'll have to pass.

Seamus Grady

We now, We Go we can now. ahead. you can now. hear hear you hear you can

Michael Genovese

Okay. just you that you any your about? have Perfect. datacom won can customer talk with systems main I'm curious, business

Seamus Grady

the datacom System chain really our other business with suppliers customer. customer to our contract I interconnect focus. we're with if they their datacom greedy supply is products. in their main main We're use. and our be manufacturers trying after They our have everything. that place, go mean like, manufacturer you optical That's for not prime and other contract

So, our That's focus everything focus. need is on satisfy we interconnect they optical primary that on making sure from the our side.

Michael Genovese

And it. the was Got Okay. again I X.X want earlier, this check I just know to terabit. asked on but

the any that laser You're in supply chain would that be not the seeing cycle make of nothing could constraints, beginning anything supply you other at there? component or

Seamus Grady

of, Yes. being component say, There's I been number that a are would sources have new already. qualified and qualified

there's they and pretty constraints, component in days the early along I'm products, with the overall, has all any that So, in components customer these line, for think there's constraints. component ample our that sure products. go always of of the making main I supply of somewhere have impressed think always job I into sources the ample done But the

to on So, I but be there the huge side. I'm be component expecting wrong, could not constraints

Michael Genovese

put the in should How and then just that? income model? for us on Okay. to we What XQ other and beyond interest model. And would you model the finally, encourage then

Csaba Sverha

income are quarters. somewhat interest as is last And our flat we was seen, time. this Obviously, you at have a guiding X quarter Csaba. in one Mike, the

So, X I will going on. think be dynamics there

present rates as well. As been interest be time has cash the would obviously, position increasing it But some headwinds. same down, would coming time, at over our

us helped to maintain. So, this

you But any will QX. term, longer interest So, sort I coming the in rates to on beyond headwinds that obviously, some future. down, would are as reluctant give be outlook present of

Operator

for I the closing you. Please over to session conclude the to back go And for Seamus does like call ahead and remarks. Thank This would go today. ahead. Q&A turn

Seamus Grady

speaking year start optimistic today. XXXX significant and great another you that in company. of look us. weeks. you and off who another represent of will quarter our We drivers seeing with joining to for attending of strong again Thank will be Conference you couple with in for those with quarter record forward QX several fiscal benefiting Virtual a the the We're We're growth Goodbye. Needham a to business to call revenue momentum

Operator

conference Thank call. you today's all for joining

You may now disconnect.

Fabrinet (FN) 4 Nov 242025 Q1 Earnings call transcript