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05 Nov 2024
Photonics contract manufacturer smashes prior guidance as quarterly revenues top $800M for the first time.
Fabrinet, the Thailand-headquartered contract manufacturer of optics and photonics products ranging from data center interconnects to industrial lasers, has posted another record-breaking financial quarter.
For the three months ending September 27 it delivered sales revenues of $804 million, up 17 per cent year-on-year and well in excess of the estimated range of $760 million and $780 million predicted back in August.
That translated to a pre-tax income of $80.8 million, up from $70.2 million a year ago.
CEO Seamus Grady said that Fabrinet had seen revenue growth in all of its product areas, including the firm’s first telecom-related uptick for several quarters, and strong traction in automotive applications despite the wider weakness in that sector.
“Industrial laser revenue was also strong, reaching its highest level in two years,” he added. “We believe these strong automotive and industrial laser trends can continue into the second quarter.”
Strong Nvidia connection
The continued strong demand across the business prompted the recent decision to invest in a large new manufacturing facility near Bangkok, with Grady saying he was optimistic that construction would begin by the end of December.
“This facility will increase our total footprint by more than 50 per cent and help support our growth for the next several years,” he pointed out.
But it continues to be the build-out of AI-related data centers requiring high-speed optical interconnects that is driving Fabrinet’s business right now, with data communications revenues up 36 per cent year-on-year thanks to key customer Nvidia and others.
“We remain optimistic about positive long-term datacom trends for our business and are positioned as a leading contract manufacturer serving this rapidly expanding market,” said Grady.
“Our overall relationship with Nvidia remains very strong [and] we do a very good job for them. They're very happy with our performance. And we continue to install capacity to support their needs.”
Along with the recent bounce in demand from longer-distance telecommunications, it means that optical communications products overall accounted for nearly four-fifths of company sales in the latest quarter.
It seems that there will be no let up in demand from the datacoms sector for a while, with Fabrinet’s executive team anticipating their sixth sequential quarter of record-breaking revenue between now and the end of December.
They have pencilled in a range of $800 million to $820 million, with year-over-year growth from each of the datacom, telecom, and automotive markets, of which the latter largely represents non-optical products.
• Despite the strong showing, investors appeared to react negatively following the latest update, with Fabrinet's stock price dropping in value by around 11 per cent in early trading on November 5. At around $210 on the Nasdaq, the stock equates to a market capitalization of approximately $8 billion.
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