Fabrinet (FN) - FY Q4 2026 Earnings Call Transcript

TLDR

• Growth is accelerating, led by data centers. Q4 revenue increased 45% YoY to $1.32B, with data center revenue up 68% to $669M and now representing 51% of total revenue. Management believes FY27 could be another year of accelerating growth.

• Capacity is expanding to support the demand. Fabrinet remains on track to complete Building 10 at its Chonburi campus by early 2027, while management continues to work through component shortages already incorporated into guidance.

• Valuation still offers upside, but the path is narrower. Our FY27 scenario implies roughly $6.5B of revenue and ~$700M of net income. At the current ~$15B market cap, we see a plausible path toward ~$20B, but materially more upside likely requires either faster-than-expected AI growth or evidence that Fabrinet can capture higher-margin economics.

Overview

• Changing their reporting structure to focus on 3 revenue categories: i) data centers, ii) communications infrastructure iii) automotive, industrial, and other revenue
• Capacity
  • Building 10 in our Chonburi campus, we remain on track to complete Building 10 by early 27.
• Data centers
  • This includes optical and interconnect products deployed within data centers, including data center networking with an expanded view of DCI high performance computing, and other AI infrastructure applications.
  • Data center revenue was $669 million in the fourth quarter, representing growth of 68% from a year ago, and 13% from Q3.
  • This is the largest category, representing 51% of total revenue. PCI products were the largest contributor to data center growth in the fourth quarter.
  • Anticipating strong broad based growth across transceivers, DCI, and high performance computing products
• Communications
  • This category includes optical and networking products used in telecommunications and enterprise networks, excluding products specific to data center applications.
  • Revenue was $413 million an increase of 40% from a year ago and 1% from Q3, representing 31% of total revenue. Growth was broad based across customers and end markets. Including telecom systems, satellite communications, and telecom components.
• Automotive, industrial, and other category.
  • Revenue was $234 million up 8% from a year ago and 9% from Q3. Representing 18% of total revenue. The improving sequential growth was primarily driven by EV charging infrastructure products with a smaller contribution from growth at certain LiDAR customers.
• Customers
  • 4 customers representing 10% or more of total revenue. These were Cisco at 20% NVIDIA at 16%, Nokia at 11%, and Amazon at 11% of total revenue.