Nov 2, 2026 earnings call — Strong data center demand and capacity expansion
Fabrinet reported Q1 revenue of $1.474 billion, a 51% year-over-year increase, and record non-GAAP EPS of $4.34.
Revenue $1.5B (est $1.4B) · EPS $4.34 (est $4.20) · Next-quarter revenue outlook $1.6B–$1.6B
Key quotes
"Our impressive results are being driven by broad-based demand across multiple product areas, including continued strong momentum for data center interconnect, growing demand for data center transceivers and expansion in high-performance computing."
"Building 11 will add approximately 1.5 million square feet with incremental revenue capacity of approximately $3 billion."
"Our revenue performance helped generate record non-GAAP earnings per share of $4.34, also well above the high end of our guidance range."
Analyst Q&A 8
existing vs new programs
Q (Christopher Rolland · Susquehanna): He asked whether the existing programs meant hyperscale and merchant, and whether the new programs were OCS and multi-rail. He also asked about NPO and CPO: which parts Fabrinet might supply and how big those opportunities could be.
A: Management said growth is broad-based across industries and customers, with strong data center and communications infrastructure demand. They said they are just starting the multi-rail and OCS programs. They expect revenue from several NPO programs toward the latter half of this fiscal year and have several CPO programs, with NPO more immediate and CPO further out.
"We have a number of NPO programs that we're confident we will start to see revenue from those towards the latter half of this fiscal year and also some CPO programs with several customers." — Seamus Grady (CEO·CHAIR)
quarter outlook and buybacks
Q (Karl Ackerman · BNP Paribas): He asked for the main drivers of the December quarter outlook by segment, especially data center scale-out vs scale. He also asked why the company expanded the repurchase program and whether there is a minimum cash level for investments.
A: Management said they do not give guidance by segment but described growth as broad-based across segments, including merchant and hyperscale programs that are starting. On capital allocation, they said the priority remains investing in growth, then designating surplus cash to a 10b5 plan and opportunistic buybacks, and that the Board increased the buyback authorization to $200 million.
"So our Board has just increased the buyback to $200 million." — Csaba Sverha (CFO)
industry merger impact and margins
Q (Joseph Cardoso · JPMorgan): He asked how the announced acquisition affects Fabrinet and the industry, and then asked about drivers of the gross-margin trough, including ramps and FX, and whether new programs could be margin accretive.
A: Management said they have not seen deal terms but both companies are customers, and historically industry consolidation has tended to benefit Fabrinet. On margins, they said exchange rates are the biggest variable, they hedge to reduce volatility and expect FX headwinds to flatten into the second half of fiscal 2027. They also said early-stage new programs can be beneficial to gross margin and they expect gross margins to improve over time.
"The biggest variable in our business model is and has been exchange rate, which we continue to hedge and try to take out this volatility as much as we can." — Csaba Sverha (CFO)
how they add value and revenue drivers
Q (Steven Fox · Fox Advisors): He asked for examples of how convergence with electronics lets Fabrinet add more value and improve profitability. He also asked what drove the large revenue beat—forecasts, pulled-in production, or added capacity.
A: Management said they help customers bring products to market earlier than traditional contract manufacturers by making products cost-effective with high, repeatable yield, covering products like leading-edge transceivers, HPC, OCS, NPO and CPO. On the revenue beat, they said Q1 growth accelerated to 51% year-over-year, the increase was broad-based across customers and segments, and the growth comes from both existing programs and new programs ramping.
"In Q1, we grew a pretty remarkable 51% year-over-year." — Seamus Grady (CEO·CHAIR)
Building 11 and supply chain
Q (George Notter · Wolfe): He asked how Building 11 was upsized versus the previous plan and for comments on the component supply chain given the upside and guidance.
A: Management gave capacity numbers: revenue capacity was about $5.8 billion at the end of fiscal 2026 and they expect about $10 billion at the beginning of January driven largely by Building 10. They said Building 11 will add about 1.5 million square feet (about $3 billion of capacity) and should come online at the end of fiscal 2028, and that components remain tight but Fabrinet has been able to secure its share and will work with customers and suppliers to keep supply lined up.
"Building 11 will add about 1.5 million square feet." — Seamus Grady (CEO·CHAIR)
transceiver OEMs and CapEx funding
Q (Michael Genovese · Rosenblatt): He asked how many transceiver OEMs are ramping with the company. He also asked about fiscal 2027 CapEx plans and why the company borrowed instead of using cash.
A: Management said there is more than one transceiver OEM ramping but declined to give exact counts. On financing, they said borrowing in Thailand is cheaper than breaking up cash invested in the U.S., so they borrow locally; normal CapEx run rate is about 5% of revenue run rate, with higher spending for large campus purchases and the Building 10/11 projects.
"So we have actually favorable interest rate environment in Thailand where the cost of borrowing is cheaper than breaking up our cash that is being invested in the U.S." — Csaba Sverha (CFO)
growth outlook and NPO/CPO potential
Q (Timothy Savageaux · Northland): He asked for an update on accelerating revenue growth and whether the strong first-half growth can be sustained in the second half. He also asked how Fabrinet views the relative potential of NPO and CPO and whether those could be multi-hundred million or billion-dollar opportunities.
A: Management said they remain optimistic and noted Q1 grew 51% year-over-year and Q2 guidance midpoint implies about 43% growth, they are adding capacity and seeking more to keep ahead of demand. On NPO and CPO, they said both look to have very strong demand and that either or both could be multi-hundred million dollar opportunities, though shipments have only just started.
"Yes, either of these or both of these could be multi-hundred million dollar opportunities on their own." — Seamus Grady (CEO·CHAIR)
transceiver cannibalization and coherent lite
Q (Ryan Koontz · Needham): He asked whether NPO and CPO will cannibalize pluggable transceivers and how durable the datacom transceiver market is, and whether Fabrinet has any coherent lite wins or is positioned for that market.
A: Management said it is not an either/or: pluggables should continue for a long time while NPO and CPO also grow, and recent vendor road maps support continued pluggable development. They said Fabrinet can produce pluggables, NPO and CPO and that coherent lite products fit their capabilities, but they have not announced anything specific in that market.
"We don't really think it's one or the other for a long time to come." — Seamus Grady (CEO·CHAIR)