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SEC filingFabrinet delivered a strong Q3 FY2026 with revenue up 39.3% YoY, driven by broad-based demand in optical communications and high-performance computing.
Fabrinet reported strong results for the third quarter of fiscal year 2026, ended March 27, 2026. Revenue increased 39.3% year-over-year to $1.214 billion, driven by broad-based demand across both optical communications and non-optical communications products. Gross profit rose 41.2% to $144.3 million, with gross margin improving slightly to 11.9% from 11.7% in the prior year quarter. Operating income grew 52.1% to $120.0 million, and operating margin expanded to 9.9% from 9.0%, reflecting operating leverage on higher revenue. Net income increased 54.0% to $125.2 million, and diluted earnings per share rose to $3.45 from $2.25 in the prior year quarter.
As of March 27, 2026, Fabrinet had cash, cash equivalents, and short-term investments of $945.2 million, compared to $950.7 million as of March 28, 2025. Total assets increased to $3.509 billion from $2.831 billion at June 27, 2025, driven by a significant increase in inventories ($876.0 million vs. $581.0 million) and trade accounts receivable ($908.5 million vs. $758.9 million). Total liabilities rose to $1.204 billion from $849.6 million, primarily due to higher trade accounts payable ($859.0 million vs. $637.4 million) and other payables ($152.9 million vs. $66.7 million). Shareholders' equity increased to $2.305 billion from $1.982 billion, supported by retained earnings growth.
For the nine months ended March 27, 2026, Fabrinet generated $201.8 million in cash from operations, compared to $273.3 million in the prior year period. The decrease was primarily due to increased investment in inventories to support higher demand and an increase in trade receivables due to timing of collections, partially offset by higher trade accounts payable. Capital expenditures were $160.6 million, up from $70.7 million in the prior year, reflecting investment in a new manufacturing building at the Chonburi campus. Free cash flow (operating cash flow minus capex) was $41.1 million. The company also repurchased $5.2 million of its ordinary shares during the period.
Management attributed the strong revenue growth to increased demand from key customers for both optical communications and non-optical communications products. Optical communications revenue grew 35.2% YoY, driven by telecom and datacenter interconnect products, while non-optical communications revenue rose 51.7%, led by high-performance computing. The company expects SG&A expenses to increase in fiscal year 2026 compared to fiscal year 2025, mainly due to higher information technology and employee costs. Fabrinet also noted that it expects the portion of future revenues from customers outside North America to remain in line with the nine-month period. The company is investing in capacity expansion, including a new manufacturing facility at its Chonburi campus with a total expected cost of approximately $132.5 million.
Revenue by geography showed North America accounting for 52.1% of total revenue in Q3 FY2026, up from 46.2% in Q3 FY2025, while Asia-Pacific and others decreased to 37.4% from 45.9%. Europe's share increased to 10.5% from 7.9%. The company had four customers that each contributed 10% or more of revenue in the nine-month period, together accounting for 58.1% of total revenue. Share-based compensation expense was $8.5 million in Q3 FY2026, up from $7.8 million in Q3 FY2025. The company recorded a foreign exchange gain of $7.0 million in Q3 FY2026, compared to a loss of $2.7 million in the prior year quarter. Subsequent to quarter end, Fabrinet entered into an agreement to acquire a 16.0% equity interest in Raytek Semiconductor, Inc. for approximately $32.4 million.