• Revenue: $804 million, up 17% year-over-year and 7% from Q4.

• Operating Margin: 10.7% for the quarter.

• Non-GAAP EPS: $2.39, at the upper end of guidance range.

• Optical Communications Revenue: $626 million, 78% of total revenue, up 17% year-over-year.

• Datacom Revenue: $329 million, 53% of optical communications revenue, up 36% year-over-year.

• Telecom Revenue: $297 million, 47% of optical communications revenue, up 2% year-over-year.

• Non-Optical Communications Revenue: $178 million, up 17% year-over-year.

• Gross Margin: 12.7%, up 20 basis points from Q4.

• Operating Expenses: $60 million, less than 2% of revenue.

• Operating Income: $86 million.

• Cash and Short-Term Investments: $909 million, up $50 million from Q4.

• Operating Cash Flow: $83 million, consistent with Q4.

• Free Cash Flow: $63 million.

• Guidance for Q2 FY2025 Revenue: $808-$820 million.

• Guidance for Q2 FY2025 EPS: $2.44 to $2.52 per diluted share.

• Warning! GuruFocus has detected 4 Warning Signs with ATIP.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fabrinet (NYSE:FN) reported a record first-quarter revenue of $804 million, marking a 17% increase from the previous year and a 7% increase from the prior quarter.

• The company achieved a healthy operating margin of 10.7% and delivered non-GAAP EPS at the upper end of its guidance range, despite a 19% headwind from foreign exchange revaluations.

• Optical communications revenue grew by 17% year-over-year, with Datacom revenue increasing by 36%, driven by optical interconnect products for AI applications.

• Fabrinet (NYSE:FN) saw its automotive revenue exceed $100 million for the first time, with strong momentum in EV charging infrastructure products.

• The company is making significant progress on its new facility, which will increase its total footprint by more than 50%, supporting future growth.

Negative Points

• Fabrinet (NYSE:FN) faced a higher-than-expected foreign exchange evaluation loss of $7 million due to the stronger Thai baht.

• The company anticipates increased pressure on gross margins due to a strengthening Thai baht in the upcoming quarters.

• Revenue from optical communications products that are non-speed rated decreased by $7 million from the previous quarter.

• The mix shift in Datacom revenue between 400 gig and 800 gig transceivers was not fully anticipated, affecting visibility.

• The ramp-up of 1.6 Terabit transceivers is dependent on the customer's timeline for shipping the Blackwell platform, which has faced delays.

Q & A Highlights

Q: Can you provide more details on the outlook for Datacom, specifically regarding 800 gig transceiver revenue in the December quarter? A: Seamus Grady, CEO, explained that while Datacom growth remains optimistic, there has been a mix shift between 400 gig and 800 gig transceivers. The company is preparing for a transition to 1.6 terabit transceivers. Fabrinet remains the sole source for NVIDIA's designed transceivers, and while exact timing for 1.6 ramp-up is uncertain, the relationship with NVIDIA is strong, and capacity is being installed to meet future needs.