The following is a summary of the Fabrinet (FN) Q3 2024 Earnings Call Transcript:
Financial Performance:
Fabrinet reported Q3 revenue of $731.5 million, a 10% increase YoY and a 3% growth compared to last quarter.
Non-GAAP net income achieved a record high of $2.39 per share.
Noteworthy segments include an 18% YoY increase and 4% sequential growth in Optical Communications ($591.4 million) and a huge 150% YoY surge and 6% QoQ increase in Datacom ($305.5 million), primarily propelled by AI applications.
However, Telecom revenue declined 25% YoY but managed a 2% increase from Q3 to $286 million.
Non-optical Communications revenue declined 3% from Q2 to $140.1 million.
Gross margin maintained stability at 12.6% for the third quarter.
Business Progress:
Fabrinet continues to see robust demand for its 800 gig technology for AI applications, with high expectations for the upcoming 1.6 terabytes product to supplement rather than overshadow the existing product.
The company anticipates a thriving AI applications market further bolstering its success and gearing up for next-gen products to satisfy a strong demand for high data rate products.
A modest quarterly growth in datacom and non-optical communications revenue is expected as the company maintains its focus on preserving its leading industry margins.
A share buyback program saw approximately 153,000 shares repurchased at an average price of $193.76 per share during the quarter.
Facility expansion plans, albeit not yet decided upon, could potentially see an additional building through a CapEx investment of $55-$60 million, adding an estimated $1.2 billion worth of additional capacity—with only a detrimental 10 basis point effect on gross margins.
Q3 results surpassed both revenue and EPS projections, and the company is optimistic about a record fiscal year.
More details: Fabrinet IR
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