Fabrinet Q3 2025 Earnings Call Transcript

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

Question: Karl Ackerman - BNP Paribas - Analyst : Yes, thank you gentlemen. Two questions if I may, for my first question, I wanted to focus on Datacom. So Datacom fell about $50 million sequentially, but your total 800-Gig sales fell only about $20 million. Does that mean the decline in Datacom fell within 400-Gig and below port speeds, or does that mean that the program wins within telecom are 800-Gig and above, and that's supporting. Or at least offsetting some of the decline of 800-Gig products in Datacom.

Question: Karl Ackerman - BNP Paribas - Analyst : Got it. Thank you. Thank you for that. And then just secondly on margins, I was hoping you could, address some of the maybe the, some reasons for the lower gross margins this quarter, and I'm specifically wondering how much perhaps the, warrant and or the type bot influence margins, gross margins this quarter, and it appears that your outlook. It seemed to come for a slight improvement in gross margins in June. I just wanted to clarify that. Thank you.

Question: Karl Ackerman - BNP Paribas - Analyst : Got it thank you.

Question: Samik Chatterjee - JP Morgan - Analyst : Hi, thanks for taking my question. I guess if I can start off on the Datacom revenue as well and your Datacom revenue declined quarter to quarter, so did 800-Gig. As well, and you talked about the product transition for the customer driving that decline. Maybe if you can just flesh that out for us a bit more in terms of is that customer really transition driven by that the customer has a lot of inventory and hence you're waiting for that to clear out before we see a more return to normal demand patterns or is this more share allocation shifting between different suppliers when it comes to 800-Gig and you mentioned the 1.6TB ramp is still in front of you. Maybe if you can just outline how much of that ramp should we expect in the June quarter, which is what is embedded in your guide on that front? I have a quick follow up after that. Thank you.

Question: Samik Chatterjee - JP Morgan - Analyst : And on the 800-Gig ?

Question: Samik Chatterjee - JP Morgan - Analyst : 800-Gig is this product transition for the the the decline that you're seeing is that more a function of the customer having inventory of 800-Gig, or are they allocating share between the different suppliers when it comes to 800-Gig that is driving the decline?

Question: Samik Chatterjee - JP Morgan - Analyst : Got it. And maybe I can just sneak one in your engagement with Amazon Web Services, which you announced, obviously it's a different nature of a customer than what you've traditionally worked with. So maybe just, outline for us, how should we think about the margin opportunity as well as what is the nature of the advanced manufacturing that you're supporting the customer on? Does it include transceivers and what is the magnitude of the opportunity that you see with the customer? Thank you.

Question: Samik Chatterjee - JP Morgan - Analyst : Thank you, thanks for taking the questions.

Question: Mike Genovese - Rosenblatt Securities - Analyst : Great, thanks very much. Obviously Telecom has been, very positive here for a few quarters. I guess just the visibility going forward, how long do you expect telecom to continue to sequentially grow for into the future?

Question: Mike Genovese - Rosenblatt Securities - Analyst : Oh, great, thanks for that. I guess I'm just following up on the Datacom side since you're laying out this, exactly what you just spoke about, sort of in between 800 and ramping 1.6TB with the customer, is there anything more you can tell us just from externally as observers which products from the customer we should be looking for to be more tied to your opportunity versus. The products that they've, shipped so far in the past, is there any help you can give us there?

Question: Mike Genovese - Rosenblatt Securities - Analyst : I'm sorry, did you hear the question? I did.

Question: Mike Genovese - Rosenblatt Securities - Analyst : Okay, perfect. And just last quick follow up for me on the Amazon, the new stuff that we're talking about related to the warrant, will that be counted in the Datacom, I assume? Yeah. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 9:00PM, FN.N - Q3 2025 Fabrinet Earnings Call

Question: Mike Genovese - Rosenblatt Securities - Analyst : Okay, thanks again. I'll pass it on to me.

Question: Steven Fox - Fox Advisors - Analyst : Hi, good afternoon. I had a couple of questions too, I guess first off, maybe a little bit more color on, sort of the, not that it's a huge headwind, but the headwind for as you ramp all these programs you mentioned some sizable programs ramping that 1.6TB sounds like Amazon and ZR. How do we think about sort of the extent of these drags and maybe when they turn into sort of more of a incremental tailwind or do we assume that there's other. Ramps behind them that sort of keep the margins at these levels and then I had to follow up.

Question: Steven Fox - Fox Advisors - Analyst : Right, that's super helpful. And then just as a follow up, I was just wondering the Amazon business that you've won, does that preclude you from going after other cloud players or maybe or or the opposite help you go after other cloud, customers who may be pursuing similar type of supply chain strategies as Amazon when it comes to the the services you provide. Thanks.

Question: Steven Fox - Fox Advisors - Analyst : Great, thank you.

Question: George Wang - Barclays - Analyst : Oh, hey guys, thanks for taking my question. So firstly, just, see, can you kind of talk about overall, ASP trends for the industry, and the kind of, especially from your standpoint, in terms of the 800-Gig and the kind of 1.6TB , earlier you talked about, maybe because of, abundance. Supply kind of you know incremental supply for the 1.6TB , you have less of a 1.5 times multiplier for the ASP and this kind of generally speaking, kind of, can you also address in terms of the merchant supplies kind of initially for the 1.6TB kind of how how are you comparing versus, in all cycle 800-Gig in the past.

Question: George Wang - Barclays - Analyst : Okay, great. Just quickly if I can squeeze in Seamus just in terms of kind of outsourcing trends, potential upside from, your sort of co-petition kind of partners including coherent momentum with a new leadership, like any refresh view in terms of. Getting more business from them in terms of kind of, outsourcing as they might, you outsource more so they for you kind of, from a more so a, OEM kind of standpoint, just any thoughts on, potentially kind of getting more share there.

Question: George Wang - Barclays - Analyst : Okay, great. I'll go back to the queue.

Question: Tim Savageaux - Northland Securities, Inc. - Analyst : Great, good afternoon. Can you guys hear me?

Question: Tim Savageaux - Northland Securities, Inc. - Analyst : Hear you. Sorry about that. Going to try to take another crack at quantifying the Amazon opportunity and here's how I'll go about it. I mean, you've got peers slash competitors, with agreements talking about revenues of, $400 million a year. Now something like that would make Amazon around a 10% customer for you guys and it seems like they ought to have that potential and I don't know if you said it or not, but it seems like Sienna does as well. I mean, do you think Amazon could get to that level with you guys and I guess for both of these ramps, I don't know if this is a concept that applies anymore, given the opportunity you have, but how long do you think you take to get fully ramped there?

Question: Tim Savageaux - Northland Securities, Inc. - Analyst : It's basically the same question, I guess.

Question: Tim Savageaux - Northland Securities, Inc. - Analyst : Great, and that kind of takes me to my second question. With regard to you mentioned, Dana is in very early days, but in terms of the, very strong Telecom growth. You saw in the quarter you cited several a couple of factors, a few I guess to be precise. We are strengthening Telecom, which, I'll take your non-speed rated business increase there as a proxy for that to some degree, and then, and new wins, and I assume that, maybe those are wins other than the ramps that you're talking about or that we were just talking about so as you look at that $60 million sequential increase I kind of I'm inclined to think. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 9:00PM, FN.N - Q3 2025 Fabrinet Earnings Call That the new wins and and strengthening Telecom or or the balance of that but you know or sorry or most of that but I'd like to hear any comments about how you would kind of rank the prospect the drivers for the March quarter in terms of telecom growth.

Question: Tim Savageaux - Northland Securities, Inc. - Analyst : Okay thanks for that.