Fabrinet Q3 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Period: Third quarter of fiscal 2026 (ended March 27, 2026). All comparisons are year-over-year (YoY) unless noted; sequential comparisons are quarter-over-quarter (QoQ) vs. Q2 FY2026.

Financial Highlights

  • Revenue: Record $1.214 billion, exceeding guidance. +39% YoY (from $872M in Q3 FY2025), +7% QoQ.
  • Non-GAAP EPS: Record $3.72, exceeding guidance. Reflects strong execution and FX tailwinds.
  • Net Income (GAAP): Record $135 million.
  • Gross Margin (non-GAAP): 12.1% (+10 bps YoY, -30 bps QoQ) due to FX headwinds.
  • Operating Margin (non-GAAP): 10.7% (+50 bps YoY, -20 bps QoQ). Operating expenses at 1.4% of revenue.
  • Cash & Investments: $946 million at quarter end. Operating cash flow $53M; free cash flow outflow of $11M due to capex.

Revenue Breakdown by Segment

  • Optical Communications: $889 million (+35% YoY, +7% QoQ).
    • Telecom: Record $628 million (+55% YoY). Data center interconnect (DCI) revenue $197 million (+90% YoY, +38% QoQ).
    • Datacom: $260 million (+4% YoY, -6% QoQ). Demand strong but shipments constrained by component shortages (lasers, memory, ASICs); could have been a record without constraints.
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Operator: Good afternoon. Welcome to Fabrinet's Financial Results Conference Call for the third quarter of fiscal 2026. Later, we will conduct a question-and-answer session, and instructions on how to participate will be provided at that time. As a reminder, today's call is being recorded. I would now like to turn the call over to Garo Toomajanian, Vice President of Investor Relations. You may begin. Garo Toomajanian: Thank you, Operator, and good afternoon, everyone. Thank you for joining us on today's conference call to discuss Fabrinet's financial and operating results for the third quarter of fiscal 2026, which ended March 27, 2026. With me on the call today are Seamus Grady, Chairman and Chief Executive Officer, and Csaba Sverha, Chief Financial Officer. This call is being webcast, and a replay will be available on the Investor section of our website located at investor.fabrinet.com. During this call, we will present both GAAP and non-GAAP financial measures. Please refer to the Investors section of our website for important information including our earnings press release and investor presentation, which include our GAAP to non-GAAP reconciliation as well as additional details of our revenue breakdown. In addition, today's discussion will contain forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current
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