Fabrinet(US:FN)2025-11-03 23:02Financial Data and Key Metrics Changes - First-quarter revenue reached $978 million, a 22% increase year-over-year and an 8% increase from Q4 [5][9] - Non-GAAP earnings per share (EPS) were $2.92, reflecting strong revenue flow to the bottom line [5][9] - Gross margin was 12.3%, down 30 basis points from Q4, but in line with expectations [11] Business Line Data and Key Metrics Changes - Optical communications revenue was $747 million, up 19% year-over-year and 8% from Q4 [9][10] - Telecom revenue hit a record $412 million, surging 59% year-over-year and 15% from Q4, primarily driven by data center interconnect (DCI) products [9][10] - DCI revenue was $138 million, representing a 92% increase year-over-year and a 29% increase from Q4 [10] - DataCom revenue totaled $273 million, down 17% year-over-year but only 1% down from Q4, indicating stronger-than-expected performance [10] - Non-optical communications revenue was $231 million, up 3% year-over-year, driven by high-performance computing (HPC) revenue of $15 million [10] Market Data and Key Metrics Changes - Automotive revenue was $122 million, up 19% year-over-year but down 5% from Q4 [10] - Industrial laser revenue was $40 million, up 12% year-over-year and flat sequentially [10] Company Strategy and Development Direction - The company is optimistic about continued growth in Telecom driven by DCI expansion and strong DataCom demand [8][14] - Construction of Building 10, totaling 2 million square feet, is on track for completion by the end of calendar 2026, with portions expected to be completed by mid-2026 [8][12] - The introduction of a new revenue category for HPC products is expected to significantly contribute to growth [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand trends across multiple product categories and customers [62] - The company anticipates revenue growth in Q2 to be between $1.05 billion and $1.1 billion, representing a 29% increase year-over-year at the midpoint [14] - Management acknowledged ongoing component constraints but remains optimistic about overall demand trends [6][66] Other Important Information - The company ended Q1 with cash and short-term investments of $969 million, up $35 million from Q4 [12] - Capital expenditures of $45 million were above maintenance levels due to ongoing construction of Building 10 [12] Q&A Session Summary Question: What is embedded in your December quarter outlook for DataCom? - Management refrained from commenting on individual components but emphasized the company's position to capitalize on the generational transition to photonics [17] Question: Does the HPC program take into account other customer engagements? - The HPC program is expected to grow significantly, with potential for multiple customers in the future [20][23] Question: How do the ramps of the HPC customer compare to the new Telecom customer? - The HPC product is complex and has a slower ramp-up, while the Telecom product is new and growing in the market [28] Question: What are the main drivers for the projected $100 million increase in revenue? - Key growth drivers include the HPC program, new Telecom products, and strong DCI performance [32] Question: How many customers contributed to the sequential growth in Telecom? - The growth was driven by a mix of customers across traditional Telecom and DCI, not reliant on any single customer [36] Question: What is the status of the share repurchase program? - The company has a 10b5-1 Plan in place and is focused on investing in future growth, including capital expenditures for Building 10 [44][50] Question: Is the component supply situation improving? - Management believes the supply situation will improve, although some components remain in tight supply [66]