Fabrinet Q3 FY2025 earnings call

• Strong third quarter with revenue above guidance and non-GAAP EPS above guidance. - Telecom revenue in Optical Communications was up 42% Y/Y and 17% Q/Q, driven by system wins, 400ZR momentum, and strengthening telecom market. - Datacom faces near-term softness but optimistic on 1.6T ramp. - Non-Optical Communications: Automotive up 76% Y/Y, 24% Q/Q; Industrial Laser up 33% Y/Y, 8% Q/Q. - Announced new commercial relationship with AWS, warrant purchase agreement, over $100M shares repurchased in fiscal year, and Building 10 construction underway.

Fabrinet had revenue of $872 million in the third quarter. Optical Communications revenue was $657 million, accounting for 75.3% of total revenue. Within Optical Communications, Telecom revenue was $406 million (62% of Optical Communications), up 42% year-over-year and 17% sequentially. Datacom revenue was $251 million (38% of Optical Communications), facing near-term softness due to a product transition at a large customer. Non-Optical Communications revenue was $215 million, up 53% year-over-year. Automotive revenue was the biggest driver, at $129 million, up 76% year-over-year and 24% sequentially. Industrial Laser revenue was $40 million, up 33% year-over-year and 8% sequentially. Other revenue was $45 million, flat sequentially.

• Q4 2025 revenue guidance: $860M-$900M. - EPS guidance: $2.55-$2.70. - Expect continued Y/Y growth in Non-Optical Communications in Q4, but sequential growth may moderate in Automotive. - New product ramps may cause short-term margin headwinds but are catalysts for future growth. - Anticipate Amazon partnership to boost revenue starting in fiscal 2026.

• Global tariff risks, although no material impact observed to date. - Product transition risks in Datacom affecting near-term performance.

Q: Karl Ackerman on Datacom and margins A: Csaba Sverha explains Datacom decline is in 400 gig and below, and warrant had $4M impact on gross margin.

Q: Samik Chatterjee on Datacom ramp and Amazon A: Seamus Grady says 1.6T ramp is in front of them, and Amazon relationship starts with product family and will expand.

Q: Michael Genovese on telecom and Datacom A: Seamus Grady says telecom growth to continue with multiple drivers, and Datacom waiting on program ramps.

Q: Steven Fox on Amazon and margins A: Seamus Grady says short-term headwinds from program ramps are temporary, long-term growth drivers intact.

Q: Ryan Coons on tariffs A: Seamus Grady says no material impact seen yet.

Q: Tim Savageaux on Amazon and ramps A: Seamus Grady says Amazon opportunity could grow, and ramps are in front of us for FY '26.