Fabrinet Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Karl Ackerman - BNP - Analyst : Yes, thank you. I appreciate the outlook for the December quarter with regard to the end markets themselves specifically though, with regard to Datacom. And they sound to be largely flattish sequentially in December, but if we could just drill down a bit further, do you anticipate growth of 800 gig transceiver revenue in the December quarter or should we anticipate that 800 gig transceiver revenue maybe flat to down through the first half of 2025 until [Uhg] network interface cards are more readily available in the market. And I have a follow up, please.

Question: Karl Ackerman - BNP - Analyst : Yeah, thanks for that. I appreciate that. For my follow up is the pickup in 400 gig revenue entirely weighted toward growth of coherent ZR pluggable or is there a new business win or something else? With regard to 400 gig Datacom that's driving that sequential uptick in the quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2024 / 10:00PM, FN.N - Q1 2025 Fabrinet Earnings Call

Question: Karl Ackerman - BNP - Analyst : Perfect. Thank you. I'll see the fourth.

Question: Tim Savageaux - Northland capital - Analyst : Hi, good afternoon. Can you guys hear me? Okay

Question: Tim Savageaux - Northland capital - Analyst : Okay, Great. But is acting a little weird. I just wanted to follow up on that discussion you were just having, with regard to a new business win with, I'm assuming that's with the current customer and just sort of extending your reach there or is that a new customer. And, and did you say whether that was Telecom or Datacom?

Question: Tim Savageaux - Northland capital - Analyst : Got it. And I think you addressed this, but I just want to make sure I heard it right. And the mix shift you're talking about in Datacom is within your biggest customer or are there other customers doing 400 gig that's driving that mix shift? I think it was the former. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2024 / 10:00PM, FN.N - Q1 2025 Fabrinet Earnings Call

Question: Tim Savageaux - Northland capital - Analyst : Okay. But, and once again, just following what you're just discussing there on 1.6 sounds like it's safe to assume there's no 1.6 revenue in the December quarter guide.

Question: Tim Savageaux - Northland capital - Analyst : Okay, great. And last one for me, speaking of new customers, I wonder if you can give us an update or, you know, over the course of the quarter you have any greater visibility into, when you expect material business with Sienna to ramp.

Question: Tim Savageaux - Northland capital - Analyst : Okay. And if I just one more quick one in there, just with regard to what you just mentioned in terms of the new, so that's optical systems business that you're referencing in these new programs or share again.

Question: Tim Savageaux - Northland capital - Analyst : Great. Thanks very much.

Question: Samik Chatterjee - JP Morgan - Analyst : Hi. Thank you for taking my questions and two questions if I may. Seamus, you talked about the 800 gig revenue of the mix between 800 gig and 400 gig with your primary data com customer shifting a bit within the quarter. I was more curious if you sort of dial down into 800 gig in particular, are you seeing a mix shift in terms of your primary customers willingness to use outside suppliers with sort of different designs versus the in-house design where you are the 100% supplier? Are you seeing any mix shift relative to sort of internal versus external design and their willingness to use that within 800 gig as well? Thank you.

Question: Samik Chatterjee - JP Morgan - Analyst : Got it, got it. And if I can just clarify and also move to my second question. So, in terms of clarification, just to confirm that you don't have any capacity shortages in terms of the capacity to cater to the 800 gig demand from your primary customer that you talked about where they sort of help you with the equipment, etcetera. And then so for my second question, autos, I mean, I haven't seen any positive autos data points in a while in this macro backdrop. So how you sort of really getting driving confidence that what you're seeing in terms of auto demand is not an inventory refill versus a more sustainable sort of demand improvement there. And thank you. That's all from my side. Thank you.

Question: Samik Chatterjee - JP Morgan - Analyst : Thank you. Thanks for taking my questions.

Question: George Notter - Jefferies - Analyst : Hi there. Thank you very much. Hey, I guess I wanted to ask more about 1.6 Terabit transceivers for your primary customer. How do I think about the milestones that you know, you guys have to go through in order to generate, you know, much more significant revenue? Is it, it's simply a matter of them shipping the Blackwell platform in greater quantities and that's the catalyst for you guys or are there other milestones like specific qualifications or anything like that? I'd love to learn more about that. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2024 / 10:00PM, FN.N - Q1 2025 Fabrinet Earnings Call

Question: George Notter - Jefferies - Analyst : Got it super and any constraints on componentry. I know in the marketplace, people have been talking about the constraints on emails other components and any anything that feeds into that, you know, that opportunity that you see is a constraint component wise.

Question: George Notter - Jefferies - Analyst : Great, super, thanks very much. I appreciate it.

Question: Mike Genevive - Rosenblatt Securities - Analyst : Great. Thanks. I miss

Question: Mike Genevive - Rosenblatt Securities - Analyst : Okay. I, I can't do anything about that. So I'll have to, I'll have to pass.

Question: Mike Genevive - Rosenblatt Securities - Analyst : Okay, perfect. I'm just curious, have you won any systems business with your main Datacom customer that you can talk about.

Question: Mike Genevive - Rosenblatt Securities - Analyst : Okay. Got it. And I know this was asked earlier but just I want to check again on the 1.6 Terabit. You're not seeing anything in the lasers or laser or any other component supply chain that would make you take the beginning of that cycle could be supply constraints. Nothing there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2024 / 10:00PM, FN.N - Q1 2025 Fabrinet Earnings Call

Question: Mike Genevive - Rosenblatt Securities - Analyst : Okay. And then finally, just on the model, how should we model interest and other income for two Q? And then beyond that, what would you encourage us to put in the model? Unidentified Company Representative - Fabrinet Hi Mike. This is [JVA], obviously, we are guiding one quarter at a time. And as you have seen, our interest income was somewhat flat in the last two quarters. So, I think there will be two dynamics going on as interest rates would be coming down obviously. It would present some of some headwinds, but at the same time, our cash position has been increasing over time as well. So it helped us to maintain. So I would be reluctant to give you any outlook beyond Q2, but on the longer term as interest rates are coming down. Obviously, that would present some sort of a in the future.