Fabrinet (FN) Q1 2025 earnings summary

Executive summary

• Achieved record first quarter FY2025 revenue of $804.2 million, up 17% year-over-year and 7% sequentially, exceeding guidance and driven by strong demand in Datacom, telecom, and automotive segments.

• Non-GAAP EPS was $2.39, at the upper end of guidance, despite a $0.19 FX headwind; GAAP net income was $77.4 million, with diluted EPS of $2.13.

• All major product groups saw sequential and year-over-year revenue growth, with Datacom and automotive segments highlighted.

• Maintained a strong balance sheet with $908.9 million in cash and no debt as of September 27, 2024.

• Strong business momentum and optimism are expected to continue into the second quarter.

Financial highlights

• Non-GAAP gross margin was 12.7%, up from 12.6% a year ago; non-GAAP operating margin was 10.7%.

• Non-GAAP net income was $86.9 million, up from $72.8 million year-over-year.

• GAAP net income was $77.4 million, with diluted EPS of $2.13, up from $1.78 a year ago.

• Free cash flow was $62.9 million, with capex at $20.3 million.

• Cash and short-term investments ended at $908.9 million, up $50 million from Q4.

Outlook and guidance

• Q2 FY2025 revenue expected between $800–$820 million, with year-over-year growth in Datacom, Telecom, and automotive.

• EPS guidance for Q2 is $2.44–$2.52 per diluted share (non-GAAP); GAAP diluted EPS guidance: $2.20 to $2.28.

• Operating margins expected to remain consistent, with FX pressure on gross margins offset by operating leverage.

• Expects continued supply chain challenges and inventory corrections in optical communications to persist in the near term.

• Forecasts geographic revenue mix to remain consistent for the remainder of fiscal 2025.