Fabrinet Q1 Revenue Rises 51% on Data Center Growth

Fabrinet (NYSE: FN) reported record fiscal first-quarter revenue of $1.47 billion, up 51% from a year earlier, as strong demand across its markets was led by a 78% increase in data center sales. Non-GAAP diluted earnings per share also reached a record $4.34, exceeding the company’s guidance.

For the three months ended September 25, 2026, revenue rose from $978.1 million a year earlier and increased 12% sequentially. Data center products generated $777 million, representing 53% of total revenue, compared with 45% in the prior-year quarter. The category includes optical and interconnect products used in data center networking, high-performance computing and artificial intelligence infrastructure.

Communications infrastructure revenue increased 35% year over year and 8% sequentially to $444 million, accounting for 30% of sales. Revenue from automotive, industrial and other markets rose 20% from a year earlier and 8% from the preceding quarter to $253 million, or 17% of the total.

Earnings and margins

Non-GAAP gross profit climbed to $178.0 million from $120.0 million, though the corresponding margin narrowed to 12.1% from 12.3%. Non-GAAP operating profit increased to $158.5 million from $103.6 million, while operating margin expanded by 20 basis points to 10.8%.

GAAP net income was $103.5 million, or $2.86 per diluted share, compared with $95.9 million, or $2.66 per share, a year earlier. Non-GAAP net income rose to $157.4 million from $105.3 million, lifting adjusted diluted EPS to $4.34 from $2.92.

The reconciliation between GAAP and non-GAAP earnings included $11.2 million of share-based compensation, a $21.5 million revaluation of non-marketable equity securities and a $19.9 million tax provision related to Pillar Two, along with smaller restructuring, severance and legal items.

Capital spending weighs on cash flow

Operating cash flow fell to $21.3 million from $102.6 million in the year-earlier quarter. Purchases of property, plant and equipment increased to $158.7 million from $45.3 million, resulting in negative non-GAAP free cash flow of $137.4 million, compared with positive free cash flow of $57.3 million a year earlier.

Fabrinet ended the quarter with $756.7 million in cash, cash equivalents, marketable securities and restricted cash. It reported $74.7 million of total debt, $1.09 billion of working capital and $2.52 billion in shareholders’ equity. The company said its balance sheet supports its growth strategy, which centers on precision optical, electronic and mechanical manufacturing for data centers, communications infrastructure, automotive, industrial and specialized markets.

The presentation identified several uncertainties that could affect future results, including weaker-than-forecast customer demand, slower growth in data center and other end markets, supply-chain disruption, reliance on a limited number of customers and suppliers, increased competition, cost-management challenges and the complexity of operating across multiple countries.