[Management View]
Fabrinet reported a record revenue of $978 million for Q1 FY2026, marking a 22% YoY increase and an 8% sequential rise. The company emphasized strong demand across all segments, particularly in telecom and high-performance computing (HPC), with strategic efforts to expand customer base and program offerings.

[Outlook]
The company projects Q2 revenue between $1.05 billion and $1.1 billion, indicating a 29% YoY growth at the midpoint. Fabrinet plans to continue expanding its HPC program and complete a portion of Building 10 by mid-2026 to support growth.

[Financial Performance]
Revenue increased by 22% YoY and 8% QoQ, with non-GAAP EPS at $2.92. Telecom revenue surged 59% YoY, driven by data center interconnect (DCI) products. HPC contributed $15 million, with expectations for further growth.

[Q&A Highlights]
Question 1: What is embedded in your December outlook for datacom, and what are your assumptions on 200 gig per lane capacity?
Answer: Fabrinet is in the early stages of a transition to photonics, with a focus on managing complexity for customers. The company aims to maintain growth by leveraging past performance and expanding customer opportunities.

Question 2: Does your HPC program consider other customer engagements?
Answer: HPC is a distinct category for Fabrinet, with initial success and plans to expand customer base. The company is optimistic about future growth and additional customer engagements.

Question 3: Can you discuss the telecom growth drivers and customer contributions?
Answer: Telecom growth is broad-based, with contributions from DCI and traditional telecom. The company is winning new business and ramping existing programs.

Question 4: What is the status of share repurchases and manufacturing expansion?
Answer: Share repurchases are driven by a 10b5 plan, with capital allocation focused on growth investments, including Building 10. The expansion remains on track, with no changes to previous plans.

Question 5: How is DCI demand affected by distributed cluster power requirements?
Answer: Fabrinet focuses on fulfilling strong demand rather than analyzing specific drivers. The company anticipates continued growth in DCI and related products.

Question 6: Can you elaborate on component shortages and their impact on guidance?
Answer: Component shortages are expected to resolve over time, with improvements anticipated. The company is confident in meeting demand despite current supply constraints.

[Sentiment Analysis]
Analysts and management expressed optimism about Fabrinet's growth prospects, with a positive tone regarding strategic initiatives and market demand. Management highlighted strong execution and customer satisfaction.

[Quarterly Comparison]
| Metric | Q1 FY2026 | Q4 FY2025 | YoY Change | QoQ Change |
|-----------------------------|-----------|-----------|------------|------------|
| Revenue | $978M | $906M | +22% | +8% |
| Non-GAAP EPS | $2.92 | $2.70 | N/A | N/A |
| Telecom Revenue | $412M | $358M | +59% | +15% |
| DCI Revenue | $138M | $107M | +92% | +29% |
| Datacom Revenue | $273M | $276M | -17% | -1% |
| HPC Revenue | $15M | N/A | N/A | N/A |

[Risks and Concerns]
Fabrinet faces ongoing component supply constraints, which may impact short-term operations. However, management is confident in resolving these issues and maintaining growth.

[Final Takeaway]
Fabrinet's Q1 FY2026 results demonstrate robust growth across key segments, driven by strategic initiatives in telecom and HPC. The company is well-positioned to capitalize on market opportunities, with a strong outlook for Q2 and beyond. Management's focus on execution and customer satisfaction underpins its optimistic growth trajectory.