Executive Summary

Q4 FY25 delivered record revenue of $909.7M and non-GAAP EPS of $2.65; both were above guidance and modestly ahead of consensus (Rev +$27.7M; EPS +$0.02), with non-GAAP gross and operating margins steady at 12.5% and 10.7% respectively . Q4 consensus: Revenue $882.0M*, EPS $2.63* (beat) (Values retrieved from S&P Global).
Mix favored Optical Communications ($688.7M) led by DCI/ZR within Telecom ($411.8M), while Datacom remained in transition ahead of 1.6T ramps; Non-Optical was $221.0M with Automotive ~$127.9M .
Q1 FY26 guidance implies continued growth: revenue $910–$950M and non-GAAP EPS $2.75–$2.90 vs consensus revenue $935.0M* and EPS $2.82* (range brackets consensus) (Values retrieved from S&P Global) .
Strategic tailwinds: new system wins (e.g., Ciena), AWS multi‑year manufacturing agreement with warrant alignment, and capacity expansion (Building 10) position FY26 for ramps in DCI, 1.6T, and systems—key stock catalysts alongside sustained Telecom strength .

What Went Well and What Went Wrong

What Went Well
- Record Q4 revenue ($909.7M) and record non-GAAP EPS ($2.65), both above guidance; FY25 revenue grew 19% to $3.42B; CEO: “Our fourth quarter was exceptional… record quarterly revenue… non-GAAP EPS also reached a new all-time high” .
- Telecom outperformance and DCI/ZR momentum offset Datacom softness; optical communications revenue reached $688.7M, with DCI at $107.0M and Telecom $411.8M .
- Strategic wins and partnerships: AWS direct relationship with warrant (proof point to other hyperscalers) and Ciena systems ramp underpin FY26 growth confidence .
What Went Wrong
- Datacom softness amid customer product transition; management expects 1.6T ramps ahead but acknowledged near-term pressure and capacity conversion away from 800G .
- Free cash flow tightened sharply in Q4 on elevated CapEx ($50.4M), with quarterly FCF at $4.7M vs $70.4M in Q4 FY24 .
- Margin headwinds from new product ramps and seasonal merit increases expected in Q1; FX revaluation losses also impacted results intra-year .

Financial Results

Metric	Q2 FY25	Q3 FY25	Q4 FY25
Revenue ($M)	$833.6	$871.8	$909.7
GAAP Diluted EPS ($)	$2.38	$2.25	$2.42
Non-GAAP Diluted EPS ($)	$2.61	$2.52	$2.65
Non-GAAP Gross Margin %	12.4%	12.0%	12.5%
Non-GAAP Operating Margin %	10.6%	10.2%	10.7%
Free Cash Flow ($M)	$94.0	$45.7	$4.7

Actual vs. S&P Global Consensus – Q4 FY25:

Revenue: Actual $909.7M vs Consensus $882.0M* (beat by $27.7M) .
EPS: Actual $2.65 vs Consensus $2.63* (beat by $0.02) .
*Values retrieved from S&P Global.

Segment and Product Category Breakdown ($M)

Category	Q4 FY24	Q3 FY25	Q4 FY25
Optical Communications	$596.4	$657.2	$688.7
• Datacom	$314.7	$251.1	$276.9
• Telecom	$281.7	$406.1	$411.8
• DCI (incl. in Telecom)	$73.9	$103.4	$107.0
Non-Optical Communications	$156.9	$214.6	$221.0
• Automotive	$86.0	$129.5	$127.9
• Industrial Laser	$32.1	$40.5	$39.7
• Other	$38.7	$44.6	$53.4
Total Revenue	$753.3	$871.8	$909.7

Cash Flow KPIs – Quarterly ($M)

KPI	Q4 FY24	Q4 FY25
Net Cash from Operating Activities	$83.1	$55.1
Purchase of Property, Plant & Equipment	$(12.7)	$(50.4)
Free Cash Flow	$70.4	$4.7

Balance sheet snapshot: Cash & cash equivalents $306.4M and short-term investments $627.8M (no debt), shareholders’ equity $1.98B as of June 27, 2025 .

Guidance Changes

Metric	Period	Previous Guidance	Current/Actual	Change
Revenue	Q4 FY25	$860–$900M (guided on 5/5/25)	$909.7M (actual)	Beat/Above
GAAP EPS (Diluted)	Q4 FY25	$2.32–$2.47	$2.42 (actual)	In-Range
Non-GAAP EPS (Diluted)	Q4 FY25	$2.55–$2.70	$2.65 (actual)	In-Range
Revenue	Q1 FY26	N/A	$910–$950M	New
GAAP EPS (Diluted)	Q1 FY26	N/A	$2.48–$2.63	New
Non-GAAP EPS (Diluted)	Q1 FY26	N/A	$2.75–$2.90	New
Margin/OpEx color	Q1 FY26	N/A	Temporary margin headwinds from new ramps; seasonal merit increase impact	New commentary

Earnings Call Themes & Trends

Topic	Q2 FY25 (prior)	Q3 FY25 (prior)	Q4 FY25 (current)	Trend
Datacom 1.6T ramp	Visibility; ramp later in CY25 as next-gen transitions begin	“1.6T ramp is in front of us”; capacity converting from 800G to 1.6T	Multiple new ramps ahead (DCI, 1.6T, systems) to drive FY26; seasonal ramp inefficiencies near term	Improving trajectory
DCI/ZR momentum	400ZR reached 10% of total revenue; qualified 800ZR	DCI strength key Telecom driver; ZR again ~10% of total revenue	Continued DCI/ZR strength within Telecom mix	Sustained positive
Telecom market	Rebound; new systems early contributions	Strong YoY and QoQ growth; visibility remains strong	Telecom remains key growth vector; mix at $411.8M in Q4	Positive
AWS partnership	Announced; share repurchase confidence; Building 10 groundbreak	AWS warrant; multi-year manufacturing; potential expansion to other hyperscalers	Q1 call outlook references growth accelerating with AWS ramps	Building
Tariffs/macro	Tariffs possibly a share opportunity; limited impact expected	FOB terms; no meaningful demand change; monitoring	No material update; macro watched	Neutral
Capacity/CapEx	Building 10 (2M sq ft, ~$2.4B revenue capacity proxy)	Project on track; 18‑month timeline to completion	CapEx elevated; Q4 FCF compressed by ramp investments	Investment phase

Management Commentary

“Our fourth quarter was exceptional… record quarterly revenue of $910 million, exceeding our guidance range… non-GAAP EPS also reached a new all-time high… record revenue of $3.4 billion, an increase of 19% from the prior year” — Seamus Grady, CEO .
“Telecom revenue was particularly exceptional… driven by… recent system wins, continued 400ZR momentum for DCI and the strengthening telecom market… the steepest part of the 1.6T ramp is yet to come” — CEO (Q3) .
“Q1 margins will be impacted by temporary inefficiencies from new product ramps and seasonal merit increases” — CFO (Q4 outlook) .
“Our agreement with Amazon reinforces our longer-term optimism… first direct relationship with a leading hyperscaler… multiyear agreement… revenue starting in fiscal year 2026” — CEO/CFO (Q3) .

Q&A Highlights

Datacom transition and 1.6T timing: Big 1.6T ramp still ahead; capacity conversion from 800G; confident no share loss; timing aligned to customer launch schedules .
AWS scope/opportunity: Starting with a product family; nothing excluded by agreement; ramps in FY26; potential proof point to add other hyperscalers .
Telecom visibility: Record $406M in Q3 with multiple vectors (DCI/ZR, new systems); strength expected to continue .
Tariffs: Customers bear tariffs (FOB terms); no meaningful demand change observed; watching policy developments .
Capacity: Building 10 on track (~18 months); potential to accelerate if needed .

Estimates Context

Q4 FY25 actual vs S&P Global consensus: Revenue $909.7M vs $882.0M* (beat); EPS $2.65 vs $2.63* (beat) .
Q1 FY26 guidance vs S&P Global consensus: Revenue $910–$950M vs $935.0M*; EPS (non-GAAP) $2.75–$2.90 vs $2.82* (guidance brackets consensus) .
*Values retrieved from S&P Global.

Where estimates may adjust: Given upside on Telecom/DCI and early FY26 ramps, Street models may need to reflect sustained Telecom strength, gradual Datacom recovery with 1.6T, and near‑term margin headwinds from program starts .

Key Takeaways for Investors

Execution remains best‑in‑class: Q4 revenue/EPS beat, steady non‑GAAP margins, and FY25 +19% revenue growth signal durable operating cadence .
Mix tailwinds: Telecom/DCI/ZR strength offset Datacom transition; FY26 ramps (1.6T, Ciena, AWS) provide multi‑leg growth drivers .
Near‑term watch items: Q1 seasonal merit increases and new ramp inefficiencies may pressure margins; monitor FCF as CapEx remains elevated to support capacity .
Balance sheet optionality: ~No debt, robust liquidity (cash + ST investments) and authorized buybacks support capital allocation flexibility .
Customer concentration rising with AI cycle: NVIDIA ~28% and Cisco ~18% of FY25 revenue underscores exposure to hyperscaler and systems cycles (monitor diversification) .
Modeling implications: Raise FY26 top‑line on Telecom/DCI and new ramps; temper NTM margin assumptions for ramp costs; FCF acceleration expected as ramps mature and CapEx normalizes .
Stock catalysts: Evidence of 1.6T volume ramps, AWS revenue inflection, and sustained Telecom/system wins should drive estimate revisions and multiple support .

Citations:

Q4 FY25 8‑K/press release and financials: .
Q4 FY25 investor slides (mix/segments/margins/balance sheet): .
Q3 FY25 8‑K/press release and transcript: .
Q2 FY25 8‑K/press release and transcript: .
Q4 FY25 call public sources (transcript/access): Seeking Alpha/Yahoo/MarketScreener/Investor site .

Fabrinet (FN)·Q4 2025 Earnings Summary