Fabrinet (FN) Q2 2025 earnings summary

Executive summary

• Achieved record Q2 FY2025 revenue of $834 million, up 17% year-over-year and 4% sequentially, driven by strong optical communications and automotive demand.

• Non-GAAP EPS reached a record $2.61, exceeding guidance, with GAAP net income at $86.6 million and net margin improving to 10.4%.

• Growth momentum is expected to continue into Q3, supported by high-growth markets, next-gen datacom products, and deeper customer relationships.

• Expanded share repurchase program by $100 million, bringing total authorization to $534.3 million.

• Maintains strong customer relationships, global manufacturing footprint, and a debt-free balance sheet.

Financial highlights

• Q2 revenue: $834 million (+17% YoY, +4% QoQ); non-GAAP net income: $95.1 million; non-GAAP EPS: $2.61.

• Gross margin: 12.4% (non-GAAP), 12.1% (GAAP); operating margin: 10.6% (non-GAAP), 9.5% (GAAP).

• Cash and short-term investments: $934.6 million at quarter-end; no outstanding debt.

• Free cash flow: $94 million for Q2; CapEx: $22 million; operating cash flow for six months: $199.1 million.

• Return on invested capital for Q2: 34.9%.

Outlook and guidance

• Q3 revenue expected between $850–$870 million; non-GAAP EPS guidance: $2.55–$2.63.

• Datacom revenue anticipated to be down slightly sequentially before ramping with next-gen products later in the year.

• Telecom and automotive revenues expected to grow sequentially in Q3.

• Management expects continued strong demand in optical communications and automotive, with geographic revenue mix consistent with the first half.

• SG&A expenses and cost of revenues expected to increase due to expansion and R&D.