Fabrinet Q4 2025 Earnings Call Transcript

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

Question: Tim Savageaux - Northland Securities Inc - Analyst : Congrats on the results. Just a higher-level question, perhaps. I think maybe it was the close of last quarter's call, Seamus, you talked about the potential for accelerating growth in fiscal '26 off of obviously what was a pretty strong '25, growing 19%. The question is any more precision on that, now that we're three months later, do you still feel like that's the case? Does perhaps the component issues change that? I'd just love to get your view on that previous statement.

Question: Tim Savageaux - Northland Securities Inc - Analyst : Got it. That's evident, to some degree, in your comments about maybe accelerating the Building 10 capacity expansion. Trying to figure out what you're exactly you're trying to communicate here: have you pulled the trigger on something? Are you very close to or -- as you said, evaluating options, how might we see that move forward and over what timeframe?

Question: Tim Savageaux - Northland Securities Inc - Analyst : Great. Last one for me. I wonder if you can talk about whether your new Telecom Systems win contributed in a material way in Q4?

Question: Joseph Cardoso - JPMorgan Chase & Co - Analyst : This is Joe Cardoso on for Samik. Maybe for my first one, in a similar vein to the prior question on the growth prospects for the company heading into next year, just given these multiple customer ramps across various and different products, some of them being newer to the portfolio, anything we should keep in mind relative to the gross margin and OpEx trends, going forward? Anything one-off or different from what we're used to in terms of the historical profile for Fabrinet? Just trying to be mindful that there's a lot of irons in the fire here. And so if there's anything that we should be considering? And then, I have a follow-up.

Question: Joseph Cardoso - JPMorgan Chase & Co - Analyst : And then, just on the OpEx side? And then, I have a follow-up.

Question: Joseph Cardoso - JPMorgan Chase & Co - Analyst : Very clear. And then, maybe just as my follow-up, 800-gig trends. You mentioned 1.6 being the primary driver of growth, sequentially. But curious how much of a gating factor was the supply constraints that you highlighted? As you think about the ramp going forward, any color on how you're thinking about the magnitude of the impact from these bottlenecks and when we potentially could see them easing? And then, maybe just quickly, like, any color on whether that's -- what components those are? Lasers? DSPs? Anything else that you guys are seeing that's the concentration of the supply constraints?

Question: Steven Fox - Fox Advisors LLC - Analyst : I think I'm still a little confused on the gross margins. Can we back up and just talk about the fiscal fourth quarter margins, for a second? You did better than you thought you would on efficiencies but I would assume you had some of the product ramps going on. You avoided the component shortages in the quarter and weren't expanding on Building 10 yet faster than previously thought. Like, if you could just break that down, like, why didn't you see some of these headwinds and how else you got efficiencies in Q4 besides better sales? And then, I had a follow-up.

Question: Steven Fox - Fox Advisors LLC - Analyst : Just one other minor detail on all that -- and that's very helpful -- is that you didn't experience any component constraints to speak of in Q4. Is that correct?

Question: Steven Fox - Fox Advisors LLC - Analyst : Great. And then, just as a follow-up, can you -- a little bit more on the Data Center Interconnect business. I thought you also had talked about some new customers for the new fiscal year. I know you only guide a quarter at a time but can you give us a sense for the momentum? You were up 45% year over year in the quarter. Any way to think about how the momentum directionally continues for the new fiscal year? Any other clues you can provide there?

Question: George Notter - Wolfe Research LLC - Analyst : Can you just remind us the triggers on vesting of the Amazon warrants and recognition of contra revenue? I know that it was $4 million last quarter. I think none here in the June quarter. Can I assume that you did not generate revenue with Amazon this quarter? Is that the right read-through?

Question: George Notter - Wolfe Research LLC - Analyst : Got it. And then, any -- we're all curious about how big that Amazon PCB business can be over time. Obviously, you're breaking it out into its own category. I get that, certainly. But is this hundreds of millions of opportunity? Is this in the billions? Like, how do you think about the scale of what you can do here?

Question: George Notter - Wolfe Research LLC - Analyst : Got it. And then -- I'm sorry, just to be clear, the ramp is in your fiscal Q1 or in calendar Q1 of '26?

Question: Ryan Koontz - Needham & Company LLC - Analyst : I'll ask also about Datacom, maybe a different angle here, if we could. I certainly understand the ramp going on for your large customer at 1.6T. That's self-evident. You've talked about, I think, 800 remaining strong. Obviously, there are other customers involved in the mix there. But Seamus, how would you characterize your visibility for 800 demand, right now, as you look at this next fiscal year? I think there's been some investor concern that that might dry up with your large customer shifting over.

Question: Ryan Koontz - Needham & Company LLC - Analyst : Got it. Helpful. And then, you guys had some pretty decent Auto numbers, Auto segment. Any view of how you think that unravels in '26?

Question: Ryan Koontz - Needham & Company LLC - Analyst : That's great. And one last one, if I could just sneak it in, it's around tariffs. Any dialogue with tariffs that you'd be willing to share, in terms of how your discussions are going with customers?

Question: Tim Savageaux - Northland Securities Inc - Analyst : Just a couple of quick ones. One, could you take a shot at quantifying the impact of the component shortages on Datacom? I assume without that, they'd be up. Would that be up significantly? Throw us a number on that one. And also, obviously, 800 gig and above grew quite sharply in the quarter but much more sharply in -- not as sharply as Datacom -- sorry, Datacom didn't grow that sharply. So it looks like you had a big tick-up at 800 gig and above Telecom. That was what I was asking with (inaudible) before. But if I'm reading the numbers right, I wonder what might be driving that. That's it for me.