Fabrinet (FN) Earnings & Analysis

Latest quarter

Fabrinet reported Q4 FY2026 revenue of $1.3 billion, up 44.6% from $909.7 million a year earlier and 2.64% above the consensus. Adjusted earnings per share were $4.10, compared with the consensus estimate of $3.85. Revenue and non-GAAP EPS also exceeded the company’s own guidance, CEO Seamus Grady said.

CFO Csaba Sverha said data center revenue rose 68% year over year to $669 million, while communications infrastructure revenue increased 40% to $413 million. Automotive, industrial and other revenue rose 8% to $234 million; Sverha attributed its sequential growth primarily to EV charging infrastructure products.

Fabrinet reported diluted EPS of $3.83, up from $2.42 a year earlier. Gross margin was 12.0%, compared with 12.2% a year earlier, while operating margin increased to 10.2% from 9.79%. Free cash flow was −$36.1 million, compared with $4.6 million a year earlier. Sverha said capital expenditures increased during the quarter as Fabrinet continued construction of Building 10 and purchased a new campus.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Seamus Grady said fiscal-year growth came from increasing demand across customers and markets rather than from one product category or customer. He pointed to customers serving data centers and communications infrastructure, and said demand from both markets continued to increase.

CFO Csaba Sverha said Fabrinet had changed its revenue reporting to reflect where customers’ products are ultimately deployed. The data center category now includes optical and interconnect products used within data centers, while communications infrastructure covers products used in telecommunications and enterprise networks outside data-center-specific applications. Sverha said the change was presentational and did not affect total revenue.

Asked about datacom, Sverha said it was roughly flat in the quarter but that Fabrinet expected a sequential increase in Q1. Grady said the high-performance computing business was ramping a customer’s next-generation silicon platform, with additional capacity being installed. He also expected new data center transceiver programs to begin ramping, including a hyperscaler program in the current quarter and a merchant program in the December quarter.

On supply, Grady said demand for certain components exceeded available supply and that Fabrinet was working to secure what it needed. He said potential supply gaps had been accounted for in the company’s guidance.

Grady said Building 10 was on track for completion by early 2027 and that some production had begun there. He said the new Navanakorn factory would start contributing from Q1, while the acquired Santa Clara campus would support demand for new-product introduction services. Sverha said first-quarter expense seasonality would temporarily affect margins, but he expected operating leverage as revenue grew.

Asked about emerging optical technologies, Grady said Fabrinet was working on co-packaged optics with customers and saw near-packaged optics as a nearer-term opportunity. He said it was too early to discuss revenue and margins from those opportunities because they depend on program specifics.

Guidance

For Q1 FY2027, Fabrinet expects revenue of $1.375 billion to $1.425 billion. Its previous Q4 FY2026 revenue guidance was $1.250 billion to $1.290 billion.

Fabrinet expects Q1 non-GAAP EPS of $4.10 to $4.25, compared with its previous Q4 guidance of $3.72 to $3.87. Sverha said Fabrinet expects growth in data center, communications infrastructure, and automotive, industrial and other revenue in Q1.