Fabrinet(FN)2024-11-04 23:50Financial Data and Key Metrics - Q1 2025 revenue reached 2.39, at the upper end of guidance despite a 86 million [16] - Cash and short-term investments increased to 50 million QoQ, with free cash flow of 626 million (78% of total), up 17% YoY and 5% QoQ [13] - Datacom revenue grew 36% YoY to 297 million, marking the first YoY growth in six quarters [8][14] - Non-Optical Communications revenue grew 17% YoY to 100 million for the first time [9][15] - Industrial laser revenue reached its highest level in two years [10] Market and Product Trends - Below 800 gig products saw strong growth, with revenue up 30% YoY to 257 million, up 19% YoY but down 1% QoQ due to early-stage customer ramps [15] - 400ZR products accounted for 10% of Optical Communications revenue in Q4 [15] Strategic Developments and Industry Outlook - Construction of Building 10 is progressing, expected to increase total footprint by over 50% and support growth for several years [10] - The company remains optimistic about long-term Datacom trends, particularly in AI applications, and expects Telecom headwinds to turn into tailwinds with continued DCI and Telecom system demand [8][9] - Automotive and industrial laser trends are expected to continue into Q2 [10] Management Commentary on Environment and Outlook - Management highlighted strong momentum across all major product groups and expects Q2 revenue to be between 820 million, with EPS guidance of 2.52 [19][20] - A strengthening Thai Baht may pressure gross margins, but operating leverage is expected to offset this impact [20] Q&A Session Summary Datacom and 800 Gig Trends - The mix between 400 gig and 800 gig products shifted in Q1, with 800 gig remaining robust but transitioning to 1.6 terabit products [23][24] - A new business win contributed to 400 gig growth, alongside a mix shift with the main customer [26][27] Telecom and ZR Products - Telecom growth was driven by DCI products, particularly 400ZR, with traditional Telecom showing signs of stabilization [51] - The company has six ZR customers and is optimistic about continued growth in this segment [53] Automotive and Industrial Trends - Automotive growth is driven by share gains in EV charging infrastructure, not inventory refill, and is expected to be sustainable [44] 1.6 Terabit Transceivers - 1.6 terabit revenue is expected to ramp significantly once the main customer's Blackwell platform ships in volume [46] - No significant component constraints are anticipated for 1.6 terabit products [47][58] Financial Model and Interest Income - Interest income is expected to remain stable in Q2, with potential headwinds from declining interest rates in the future [59]