Fabrinet Q3 FY2026 earnings call

• Participants welcomed to the call to discuss Fabrinet's Q3 FY2026 results. • Seamus Grady highlighted outstanding financial performance with revenue at $1.214 billion, y-o-y growth 39%, and non-GAAP EPS $3.72. • Datacom: Successfully completed qualification and begun shipping two Datacom Transceiver programs to hyperscalers, with ramping expected in FY2027; making progress on merchant transceiver programs. • Non-optical communications: Driven by HPC revenue growth, with new program wins and expanded scope. • Automotive: Moderated as anticipated, offset by industrial laser growth. • CPO: Deepening engagement with customers, minority investment in Raytech Semiconductor to enhance capabilities in advanced packaging. • Capacity expansion: Progress on Building 10 and acquisition of land in Thailand for future capacity to support growth.

Optical communications revenue was $889 million, with 35% year-over-year growth and 7% sequential growth from Q2. Within optical communications, telecom revenue reached a record $628 million, up 55% year-over-year and 13% sequentially from Q2. Data center interconnect (DCI) revenue was $197 million, growing 90% year-over-year and 38% sequentially from Q2. Datacom revenue was $260 million, up 4% year-over-year but down 6% sequentially from Q2. Non-optical communications revenue was $326 million, up 52% year-over-year and 8% sequentially from Q2, driven by high-performance compute (HPC) revenue. Automotive revenue declined to $115 million, while industrial laser revenue increased to $44 million.

• Expect total revenue in Q4 to be in the range of $1.25 to $1.29 billion, representing y-o-y growth of approximately 40% at the midpoint. • Non-GAAP EPS expected to be in the range of $3.72 to $3.87. • Revenue in all major product categories expected to increase in Q4 despite supply constraints; Datacom growth more measured due to component availability, but new customer programs expected to contribute to FY2027 performance.

• Supply chain constraints affecting Datacom shipments and revenue, with multiple components such as lasers, memory, and ASICs experiencing shortages. • Volatility in the supply chain may continue in the near term, impacting the ability to meet demand.

Q: Double-click on Datacom business, specifically EML supply and CPO opportunity.

A: There are supply constraints in Datacom due to multiple components like lasers, memory, and ASICs; CPO is an area of investment with work on three customer programs.

Q: On HPC program and Building 10.

A: HPC program is ramping according to customer expectations, with timing shifted slightly but long-term outlook strong; Building 10 is making progress with floors coming online and capacity expansion plans.

Q: On new Datacom customer opportunities and OCS.

A: New Datacom customers have significant demand, and OCS is a great opportunity with technology similar to existing products.

Q: On transceiver wins and OCS.

A: Typically disclose transceiver wins when contract signed, qualified, etc.; OCS opportunities are incremental and largely in the future.

Q: On supply constraints and capacity additions.

A: Supply constraints are due to explosive growth, capacity additions are straightforward with upside potential, and there is ample land and capacity planned for years.

Q: On Datacom direct customer opportunities and merchant wins.

A: Datacom direct wins are ramping in FY2027, merchant opportunities are significant with strong demand, and the focus is on not competing with customers.