0001408710-25-000056
SEC filingRevenue grew 21.6% YoY to $978.1M driven by optical and non-optical segments; gross margin contracted 40bps to 11.9%.
For the three months ended September 26, 2025, Fabrinet reported revenue of $978.1 million, an increase of 21.6% year-over-year from $804.2 million. The growth was driven by broad-based demand across both optical and non-optical end markets. Gross profit rose 17.6% to $116.4 million, but gross margin contracted by 40 basis points to 11.9% as cost of revenues grew faster (22.2%) due to higher material and labor costs. Operating income increased to $94.2 million, maintaining an operating margin of 9.6%. Net income climbed 23.9% to $95.9 million, with the effective tax rate rising to 5.4% from 4.2% on higher pretax income.
Optical communications revenue increased 19.3% to $746.9 million, representing 76.4% of total revenue. Within optical, telecom surged 48.8% to $335.7 million and datacenter interconnect grew 92.3% to $138.1 million, while datacom declined 17.0% to $273.1 million. Non-optical communications revenue rose 30.0% to $231.2 million, driven by automotive growth of 18.7% to $121.9 million, industrial lasers up 12.3% to $39.7 million, and the new high-performance computing segment contributing $15.4 million. The geographic mix shifted, with North America accounting for 43.1% of revenue (up from 38.5%), while Asia-Pacific fell to 47.2% (from 54.3%).
Management expects the portion of revenue from outside North America for the remainder of fiscal 2026 to remain consistent with the current quarter's 56.9%. SG&A expenses are anticipated to increase in fiscal 2026 compared to fiscal 2025, primarily due to investments in information technology and employee costs. The company is constructing a new 2.0 million square foot manufacturing facility at its Chonburi campus, with a total expected cost of approximately $132.5 million. No specific quantitative revenue or earnings guidance was provided.
The company held $305.0 million in cash and cash equivalents and $663.8 million in short-term investments (primarily corporate debt, U.S. agency/treasury, and certificates of deposit), totaling $968.8 million in cash and securities. Total assets were $3.01 billion. The company has no outstanding debt; the $30.0 million credit facility remained undrawn. Shareholders' equity stood at $2.06 billion. Inventories increased sharply to $722.2 million from $581.0 million in the prior quarter, reflecting inventory buildup.
Purchase obligations totaled $1.54 billion as of September 26, 2025. These are legally binding commitments to purchase inventory, generally cancellable. Capital expenditure commitments reached $196.0 million, including a $132.5 million construction contract for a new manufacturing building at the Chonburi campus. Bank guarantees of $2.4 million were outstanding.
During the quarter, the company repurchased 970 shares for $0.3 million at an average price of $276.22. The remaining authorization under the share repurchase program is $174.0 million (the program has been cumulatively increased to $534.3 million, with $100.0 million added in January 2025). No dividends were paid or declared. Capital expenditures were $45.3 million, representing 4.6% of revenue. The company did not draw on its credit facility.
The company operates as a single operating segment but discloses revenue by end market and geography. Optical communications revenue totaled $746.9 million (76.4% of total), up 19.2% YoY, driven by Telecom (49% growth to $335.7M) and Datacenter interconnect (92% growth to $138.1M), partially offset by a decline in Datacom (-17% to $273.1M). Non-optical communications revenue was $231.2 million (23.6%), up 30% YoY, led by Automotive ($121.9M, +18.7%), High-performance computing (new, $15.4M), and Industrial laser ($39.7M, +12.3%). Geographically, North America contributed 43.1% of revenue (up from 38.5%), Asia-Pacific 47.2% (down from 54.3%), and Europe 9.7% (up from 7.2%).