US ▾
FN
Earnings call · Jun 2026 (Q4 FY26)

Fabrinet Q4 FY26 earnings call FN

Aug 17, 2026 Source

Executive summary

Fabrinet Q4 FY26 — Record Revenue and EPS Driven by Data Center and Communications Infrastructure Growth

Fabrinet closed fiscal 2026 with an outstanding fourth quarter, achieving record revenue and EPS, driven by accelerating demand across data center and communications infrastructure markets. The company is aggressively expanding its manufacturing footprint globally to meet robust customer demand and new program wins, setting the stage for continued strong growth into fiscal 2027 and beyond. Management expressed high confidence in the long-term outlook, supported by strong customer visibility.

Highlights

5

  • Q4 revenue reached a record $1.316 billion, increasing 45% year-over-year and exceeding the top end of guidance.

  • Non-GAAP EPS was $4.10, also above guidance, contributing to a record FY26 non-GAAP EPS of $14.09, up 39% YoY.

  • Data Center revenue grew 68% year-over-year to $669 million, now representing 51% of total revenue, with DCI run rate exceeding $1 billion.

  • Communications Infrastructure revenue increased 40% year-over-year to $413 million, driven by broad-based demand.

  • Aggressive capacity expansion, including the acquisition of a new 130,000 sq ft campus in Santa Clara and commissioning of a 200,000 sq ft facility in Nava Nakorn, positions the company for future growth.

Concerns

3

  • Q4 free cash flow was an outflow of $37 million, primarily due to increased capital expenditures of $92 million for capacity expansion.

  • Non-GAAP gross margin declined 30 basis points year-over-year to 12.2%.

  • A $57.4 million provision was recorded for Thailand's top-up tax regime, reflecting the first year application of the new framework.

Guidance & targets

CategoryTargetConfidence
Revenue
$1.375 billion and $1.425 billion
high materiality
High
Non-GAAP EPS
$4.10 and $4.25
high materiality
High
Longer-term demand trends
strong demand trends
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Data Center
This category includes optical and interconnect products deployed within data centers, high-performance computing, and other AI infrastructure applications. DCI products were the largest contributor to growth, with HPC also making a substantial contribution.
Percentage of total revenue: 51%DCI annualized revenue run rate: >$1 billion
$669 million68%13%—
Communications Infrastructure
This category includes optical and networking products used in telecommunications and enterprise networks, excluding products specific to data center applications. Growth was broad-based across customers and end markets, including telecom systems, satellite communications, and telecom components.
Percentage of total revenue: 31%
$413 million40%1%—
Automotive, Industrial and Other
The improving sequential growth was primarily driven by EV charging infrastructure products with a smaller contribution from growth at certain LiDAR customers.
Percentage of total revenue: 18%
$234 million8%9%—

Deals & partnerships

Nava Nakorn Acquisition of new site for manufacturing expansion. $11 million

New site acquired in Q4 FY26 and commissioned, adding 200,000 square feet of manufacturing space.

Great America Place Acquisition of campus to expand Silicon Valley footprint for new product introduction and services.

Campus consists of two office buildings and a large manufacturing space of approximately 130,000 square feet, more than doubling Silicon Valley footprint.

Capital programs

Building 10 (Chonburi Campus) underway

Benefit:2 million square feet total; adds $3 billion to $3.5 billion capacity

On track for completion by early 2027. 250,000 square feet on the first floor already qualified, with a similar amount on the third floor expected to be qualified this quarter.

Pinehurst Campus Conversion completed

Benefit:120,000 square feet of manufacturing space; adds $0.2 billion to $0.5 billion capacity

Completed the conversion of office space into manufacturing space.

Nava Nakorn Facility commissioned
Period spend: $11 million

Benefit:200,000 square feet of space; adds $0.2 billion to $0.25 billion capacity

Acquired in Q4 FY26 and just commissioned, adding significant manufacturing space. Purchase price for the campus was $11 million.

Great America Place Campus (Santa Clara) completed

Benefit:130,000 square feet of manufacturing space; adds $0.2 billion to $0.25 billion capacity

Recently completed the acquisition of this campus, which will more than double the Silicon Valley footprint to support new product introduction and related services.

Future Chonburi Factories planned

Benefit:Two additional factories, each 1.2 million square feet, adding $1.8 billion to $2.1 billion capacity each

Room to build two more factories in Chonburi to further expand capacity.

Risks & headwinds

Thailand Top-Up Tax Regime first year application

$57.4 million provision

Mitigation:intend to apply a consistent approach while the transition continues

Component Supply Constraints

Demand for certain components is higher than the available supply

Mitigation:supply chain team has been doing an excellent job managing these relationships; potential gaps in supply factored into guidance

Q1 FY27 Margin Headwind Q1 FY27

temporary margin headwind

Mitigation:expect to continue generating operating leverage as revenue growth

What to watch in Q1 FY27

Data Center Revenue Growth

Q1 FY27
Current $669 million (up 68% YoY, 13% QoQ)
Target Continued strong sequential growth

Why it matters

Data Center is now the largest category and a primary growth driver, with new transceiver wins and HPC ramps expected to contribute significantly.

In the data center market, we anticipate strong broad-based growth across transceivers, DCI and high-performance computing products. We expect growth from both established programs and newer wins, providing multiple growth engines for the company.

Q&A highlights

Asked about the dynamics behind the sequential flatness in datacom (under old categories) and the outlook for recovery in the new Data Center category, specifically regarding component supply, program transitions, and sequential/YoY growth.

Csaba clarified that the old datacom was somewhat flat due to a combination of factors, but the new Data Center category (which includes datacom) is expected to be up sequentially in Q1 FY27, with demand remaining robust.

“So we are transitioning to our new revenue categories as we mentioned in our prepared remarks. So if you were to look at or to reconcile our Q4, our datacom was somewhat flat. Obviously, this is a combination of everything that you have mentioned. When we are looking at this category in our data center business in the future quarter, we do anticipate this to be up sequentially in our Q1 guidance.”

asked by Yash Shah · answered by Csaba Sverha

2 min read 7 chapters

Detailed narrative

Strategic Revenue Re-categorization

Fabrinet has updated its revenue reporting to better reflect end markets, now focusing on Data Centers, Communications Infrastructure, and Automotive, Industrial and Other. This change aims to provide clearer insights into underlying business drivers, particularly as hyperscalers become the ultimate customers for many products previously classified as telecom. The new structure is purely presentational and has no impact on total revenue in any period.

Aggressive Capacity Expansion

The company is rapidly increasing its manufacturing footprint to meet rising demand. Milestones include Building 10 in Chonburi (2 million sq ft total, on track for early 2027 completion, 250k sq ft already qualified), conversion of 120,000 sq ft in Pinehurst, and the commissioning of a new 200,000 sq ft site in Nava Nakorn. Additionally, Fabrinet West expanded its Silicon Valley footprint by acquiring a 130,000 sq ft campus in Santa Clara to support new product introduction and transfer to high-volume manufacturing in Thailand.

Strong Data Center Momentum

The Data Center category, now 51% of total revenue, saw 68% YoY growth to $669 million. This was driven by DCI products (annualized run rate exceeding $1 billion) and High-Performance Computing (HPC), which continues to perform ahead of expectations. Management expects continued momentum into FY27, bolstered by new transceiver wins and ongoing ramps of next-generation silicon platforms.

Communications Infrastructure Resilience

This segment, representing 31% of revenue, grew 40% YoY to $413 million. Growth was broad-based across telecom systems, satellite communications, and telecom components. The company remains optimistic about the long-term growth outlook, including opportunities in LEO satellites and multi-rail architectures, which align with Fabrinet's photonics integration and packaging expertise.

Operational Efficiency and Leverage

Fabrinet demonstrated strong operating leverage, with operating expenses at just 1.3% of revenue, leading to an operating margin of 10.9%, its highest in three years. The company's growth model does not require significant incremental operating expenses, supporting continued profitability as revenue grows. Revenue per square foot is also increasing due to a better product mix and improved efficiencies.

Customer Diversification and Key Relationships

For FY26, four customers represented 10% or more of total revenue: Cisco (20%), NVIDIA (16%), Nokia (11%), and Amazon (11%). The relationship with Nokia, which became a 10%+ customer, is highlighted as having significant growth potential, building on the successful integration of Infinera's business and new breakthroughs with Nokia directly.

NPO/CPO Opportunity and Raytek Partnership

Fabrinet is actively engaged in Near Package Optics (NPO) and Co-Packaged Optics (CPO) technologies, with NPO seen as a more near-term opportunity due to its position between pluggable modules and CPO. The company's partnership with Raytek is crucial for manufacturing complexity and yield, with Raytek adding capacity in Thailand to support these advanced packaging capabilities.

AI-generated summary of the company's earnings call. Not investment advice.