Cuộc họp báo cáo kết quả kinh doanh Quý 1 năm tài chính 2027 của Fabrinet (FN): Doanh thu tăng 51%, Triển vọng Quý 2 khả quan hơn

Điểm tin chính

• Fabrinet đã báo cáo doanh thu quý 1 năm tài chính 2027 đạt 1,474 tỷ USD, tăng 51% so với cùng kỳ năm ngoái và tăng 12% so với quý trước. Ban lãnh đạo mô tả đây là mức tăng trưởng doanh thu mạnh nhất của công ty trong 10 năm qua.
• Doanh thu từ trung tâm dữ liệu tăng 78% so với cùng kỳ năm ngoái và tăng 16% so với quý trước lên 777 triệu USD, chiếm 53% tổng doanh thu. Các mảng bộ thu phát (transceiver), kết nối trung tâm dữ liệu và tính toán hiệu năng cao đều đóng góp vào kết quả này.
• EPS pha loãng theo GAAP đạt 2,86 USD. EPS pha loãng theo non-GAAP đạt mức kỷ lục của công ty là 4,34 USD.
• Đối với quý 2 năm tài chính 2027, ban lãnh đạo dự báo doanh thu đạt từ 1,6 tỷ USD đến 1,65 tỷ USD và EPS non-GAAP đạt từ 4,77 USD đến 4,92 USD. Tăng trưởng doanh thu ở mức trung điểm của dải dự báo sẽ đạt 43% so với cùng kỳ năm ngoái.
• Fabrinet đang đẩy mạnh đầu tư nâng cao công suất. Tòa nhà 10 dự kiến sẽ nâng tổng công suất doanh thu lên khoảng 10 tỷ USD vào tháng 1, trong khi Tòa nhà 11 được kế hoạch bổ sung thêm 3 tỷ USD công suất.
• Ban lãnh đạo kỳ vọng các chương trình hiện có và các dự án mở rộng sản xuất mới—bao gồm bộ thu phát bán trực tiếp cho hyperscale và bộ thu phát thương mại—sẽ hỗ trợ tăng trưởng. Đóng góp từ NPO dự kiến sẽ diễn ra muộn hơn trong năm tài chính 2027, trong khi CPO vẫn còn cần thêm thời gian.

Dữ liệu tài chính quan trọng

Lợi nhuận ròng GAAP bao gồm khoản dự phòng thuế bổ sung Trụ cột 2 (Pillar 2) phi tiền mặt trị giá 20 triệu USD và khoản lỗ chưa thực hiện phi tiền mặt 21 triệu USD liên quan đến khoản đầu tư thiểu số của Fabrinet vào Raytek. Cả hai khoản này đều được loại trừ khỏi kết quả non-GAAP.

Kết quả kinh doanh và hoạt động

Trung tâm dữ liệu tiếp tục là động lực tăng trưởng chính. Ban lãnh đạo ghi nhận nhu cầu diện rộng trên các mảng bộ thu phát, kết nối trung tâm dữ liệu và tính toán hiệu năng cao. Các chương trình bộ thu phát thương mại và bán trực tiếp cho hyperscale đang bắt đầu tăng tốc sản lượng, trong khi các hệ thống chuyển mạch quang và hệ thống multi-rail vẫn đang ở giai đoạn đầu.

Tăng trưởng hạ tầng truyền thông diễn ra đồng đều ở các mảng hệ thống viễn thông, linh kiện và thông tin vệ tinh. Trong mảng sản phẩm ô tô, công nghiệp và khác, thiết bị laser mang lại đóng góp lớn nhất so với quý trước khi Fabrinet giành được thêm đơn hàng từ các khách hàng trước đây tự sản xuất nội bộ.

Ban lãnh đạo cho biết quý 1 năm tài chính này đánh dấu quý thứ 14 liên tiếp Fabrinet tăng trưởng doanh thu và là quý thứ 7 liên tiếp tăng tốc tăng trưởng so với cùng kỳ năm ngoái. Mức tăng trưởng được phân bổ trên nhiều khách hàng và mảng kinh doanh thay vì phụ thuộc vào một chương trình đơn lẻ.

Fabrinet đang mở rộng công suất để đáp ứng lượng đơn hàng tiềm năng. Tòa nhà 10 tại Chonburi sẽ bổ sung khoảng 2 triệu foot vuông và 3,5 tỷ USD công suất doanh thu. Ban lãnh đạo kỳ vọng tổng công suất sẽ đạt khoảng 10 tỷ USD vào tháng 1, so với 5,8 tỷ USD vào cuối năm tài chính 2026.

Việc xây dựng Tòa nhà 11 được lên kế hoạch bắt đầu sau khi Tòa nhà 10 hoàn thành. Cơ sở dự kiến này sẽ bổ sung khoảng 1,5 triệu foot vuông và 3 tỷ USD công suất doanh thu, dự kiến hoàn thành vào cuối năm tài chính 2028. Fabrinet cũng đang đánh giá thêm các địa điểm mới vì ban lãnh đạo dự báo sẽ cần thêm công suất trước khi Tòa nhà 11 đi vào hoạt động.

Dự báo của Ban lãnh đạo

Đối với quý 2 năm tài chính 2027, Fabrinet dự kiến:

• Doanh thu đạt từ 1,6 tỷ USD đến 1,65 tỷ USD.
• Tăng trưởng doanh thu so với cùng kỳ năm ngoái đạt 43% ở mức trung điểm.
• EPS pha loãng non-GAAP đạt từ 4,77 USD đến 4,92 USD.
• Tăng trưởng được dẫn dắt bởi các chương trình kết nối trung tâm dữ liệu và bộ thu phát, cùng sự đóng góp bổ sung từ các dự án mở rộng sản xuất mới.
• Doanh thu hạ tầng truyền thông và doanh thu mảng ô tô, công nghiệp và khác tiếp tục tăng trưởng so với quý trước và so với cùng kỳ năm ngoái.
• Biên lợi nhuận cải thiện từng bước nhờ hiệu quả hoạt động và đòn bẩy quy mô.

Ban lãnh đạo kỳ vọng biến động tỷ giá hối đoái sẽ ổn định dựa trên các hợp đồng phòng ngừa rủi ro hiện có và không lường trước lực cản tỷ giá bổ sung trong nửa cuối năm tài chính 2027. Công ty cũng kỳ vọng biên lợi nhuận hoạt động sẽ mở rộng khi doanh thu tăng, mặc dù không đưa ra mục tiêu biên lợi nhuận cho cả năm.

Không tính các khoản bổ sung công suất lớn, ban lãnh đạo cho biết nhu cầu chi phí vốn bình thường chiếm khoảng 5% doanh thu. Chi tiêu có thể tăng thêm trong năm tài chính 2027 khi Tòa nhà 11 bắt đầu khởi công và công ty tìm kiếm thêm công suất sản xuất mới.

Rủi ro và Các yếu tố cần theo dõi

• Nguồn cung linh kiện vẫn trong tình trạng căng thẳng. Ban lãnh đạo cho biết Fabrinet có thể giao nhiều hàng hơn nếu nguồn cung dồi dào hơn và tiếp tục phối hợp với khách hàng cùng nhà cung cấp.
• Giai đoạn đầu mở rộng sản xuất của các chương trình mới có thể tạo áp lực tạm thời lên biên lợi nhuận gộp do Fabrinet tuyển dụng nhân sự trước nhằm đón đầu nhu cầu của khách hàng.
• Tỷ giá hối đoái vẫn là biến số lớn nhất trong mô hình kinh doanh, mặc dù công ty đã sử dụng các công cụ phòng ngừa rủi ro để giảm thiểu biến động.
• Chi phí thuế được báo cáo có thể biến động trong các quý tới do các khoản ưu đãi thuế của Thái Lan nhằm giảm thiểu tác động của Trụ cột 2 (Pillar 2) vẫn chưa được triển khai.
• Đầu tư công suất tăng cao đã gây áp lực lên dòng tiền, khiến dòng tiền tự do trong quý 1 năm tài chính âm 137 triệu USD.
• Tòa nhà 11 dự kiến mất khoảng 18 tháng để xây dựng, tạo ra nhu cầu phải đảm bảo thêm công suất tạm thời nếu nhu cầu tiếp tục duy trì với tốc độ hiện tại.

Điểm nhấn phiên Hỏi & Đáp với Chuyên gia phân tích

Ban lãnh đạo cho biết tăng trưởng phản ánh cả các chương trình hiện có và các dự án mới mở rộng sản xuất. Các chương trình mới ra mắt ban đầu đóng góp doanh thu hạn chế, nhưng các chương trình bắt đầu từ các quý trước hiện đang tăng tốc quy mô nhanh hơn.

Về công nghệ quang học, Fabrinet không coi bộ thu phát cắm rời, NPO và CPO là loại trừ lẫn nhau. Ban lãnh đạo kỳ vọng thiết bị cắm rời sẽ tiếp tục phổ biến trong một thời gian dài nữa, với NPO đóng góp sớm hơn và CPO phát triển muộn hơn. Công ty đang hợp tác triển khai nhiều chương trình NPO và CPO với một số khách hàng.

Ban lãnh đạo cho biết OCS và NPO mỗi công nghệ đều có thể trở thành cơ hội trị giá hàng trăm triệu USD cho Fabrinet, mặc dù cả hai vẫn ở giai đoạn đầu và chưa tạo ra lượng giao hàng đáng kể.

Liên quan đến xu hướng hợp nhất ngành, ban lãnh đạo xác nhận Lumentum và Marvell đều là khách hàng của Fabrinet. Công ty không bình luận về các điều khoản giao dịch nhưng cho biết các đợt hợp nhất khách hàng trước đây nhìn chung đều mang lại khối lượng kinh doanh cao hơn với các thực thể sau sáp nhập.

Fabrinet đã mua lại khoảng 77.000 cổ phiếu với giá trung bình khoảng 380 USD trong quý, trị giá 29 triệu USD. Hội đồng quản trị sau đó đã nâng hạn mức mua lại cổ phiếu còn lại lên 200 triệu USD. Ban lãnh đạo nhắc lại rằng tài trợ cho tăng trưởng vẫn là ưu tiên hàng đầu trong phân bổ vốn, tiếp theo là việc mua lại cổ phiếu theo kế hoạch và khi có cơ hội bằng nguồn tiền mặt thặng dư.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good afternoon, and welcome to Fabrinet's Financial Results Conference Call for the first quarter of fiscal year 2027. [Operator Instructions] As a reminder, today's call is being recorded. I'll now turn the call over to your host, Garo Toomajanian, VP, Investor Relations.

Garo Toomajanian

Thank you, operator, and good afternoon, everyone. Welcome to today's conference call to discuss Fabrinet's financial and operating results for the first quarter of fiscal year 2027, which ended September 25, 2026. With me on the call today are Seamus Grady, Chairman and Chief Executive Officer; and Csaba Sverha, Chief Financial Officer. This call is being webcast, and a replay will be available at investor.fabrinet.com. During this call, we will present both GAAP and non-GAAP financial measures. Please refer to the Investors section of our website for important information, including our earnings press release and investor presentation, which include our GAAP to non-GAAP reconciliation as well as additional details of our revenue breakdown.

In addition, today's discussion will contain forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations. These statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise them in light of new information or future events, except as required by law.

For a description of the risk factors that may affect our results, please refer to our recent SEC filings, in particular, the section captioned Risk Factors in our Form 10-K filed on August 18, 2026. We will begin the call with remarks from Seamus and Csaba, followed by time for questions. I would now like to turn the call over to Fabrinet's Chairman and CEO, Seamus Grady. Seamus?

Seamus Grady

Thank you, Garo. Good afternoon, everyone, and thank you for joining our call today. We are off to an excellent start to fiscal 2027 with first quarter revenue that was well above our guidance range and represented another quarter of accelerating growth. First quarter revenue of $1.474 billion increased a remarkable 51% from a year ago and 12% from the fourth quarter with strong year-over-year and sequential growth from all 3 of our key revenue categories.

In addition to delivering our highest top line growth in 10 years, our revenue performance helped generate record non-GAAP earnings per share of $4.34, also well above the high end of our guidance range. Our impressive results are being driven by broad-based demand across multiple product areas, including continued strong momentum for data center interconnect, growing demand for data center transceivers and expansion in high-performance computing. Looking to the second quarter, we expect new program wins and ramps in addition to growth from existing programs to further enhance our growth profile while also supporting our industry-leading margins.

We have discussed some of the new programs that we expect to contribute to our growth this year, in particular, hyperscale direct transceivers and merchant transceivers for the data center market. We are installing capacity to meet demand for optical circuit switches and multi-rail systems. We are also working with a number of customers on NPO and CPO opportunities and expect contributions from these programs toward the end of fiscal 2027. We continue to be extremely enthusiastic about these opportunities and their role in further scaling our business. In order to support the rapidly increasing demand and new program wins across our business, we have taken a number of important steps. During the first quarter, we completed our purchase of a new site in Santa Clara, more than doubling our capacity in Silicon Valley. We're already in discussions with a handful of customers about leveraging this additional capacity. In Thailand, we have been expanding at multiple sites. We are just a few months away from completing Building 10, adding more than 50% to our global footprint.

Having accelerated construction and qualification on portions of Building 10, we are already generating initial revenue from the facility. Our manufacturing expansion at Pinehurst and our new Navanakorn site, which is now up and running, are further helping us to stay ahead of increasing customer demand. However, even with this significant expansion, we foresee the need for additional space based on rapid growth from current engagements, combined with new programs that will be ramping in the quarters ahead. As such, we have made the decision to begin construction of Building 11 at our Chonburi campus as soon as Building 10 is completed in January. Building 11 will add approximately 1.5 million square feet with incremental revenue capacity of approximately $3 billion.

Even as we begin executing plans for Building 11, we are already exploring potential new sites to further support the unprecedented levels of customer activity we are experiencing. In summary, we delivered an excellent first quarter for a strong start to the fiscal year. We are seeing growing demand across the markets we serve and remain focused on executing to meet the exacting needs of our customers. At the same time, we are rapidly scaling up our manufacturing capacity to meet anticipated demand from the pipeline of opportunities in front of us. All of this makes us more excited than ever about our prospects for continued profitable growth.

Now I'd like to turn the call over to Chaba for more details on our first quarter results and our outlook for the second quarter of fiscal 2027. Csaba?

Csaba Sverha

Thank you, Seamus, and good afternoon, everyone. We are off to an excellent start to fiscal year 2027 with first quarter revenue that was well above our guidance range. Revenue of $1.474 billion grew 51% from a year ago for another quarter of accelerating revenue growth. These results flow through the bottom line, producing record non-GAAP EPS of $4.34, which was also well above our guidance range. Looking at the details of the quarter. We had a very strong performance from data center products, which grew 78% from a year ago and 16% from Q4 to $777 million or 53% of total revenue.

Growth in data center revenue was broad-based, driven by strong demand across transceivers, data center interconnect and high-performance computing with continued momentum across all 3 categories. We continue to see growing demand and improving visibility from customers across the data center market, giving us strong confidence in our outlook for Q2. Looking ahead, the full year also looks very promising, supported by continued growth in existing programs and additional contribution from new transceiver programs as they begin to ramp.

Communications infrastructure revenue was $444 million, an increase of 35% from a year ago and 8% from Q4. Growth was broad-based across a diverse range of customer programs and applications, including telecom systems, components and satellite communications. Automotive, industrial and other revenue was $253 million, up 20% from a year ago and 8% from Q4. In the first quarter, the laser market contributed the most to our sequential growth in this category as we make headway with customers who have historically focused on in-house manufacturing.

As I discuss the details of our P&L, all expense and profitability metrics will be presented on a non-GAAP basis, unless otherwise noted. Gross margin in the first quarter was 12.1%, a 10 basis point decline from Q4, primarily due to annual merit increases that take effect in Q1. Gross margin declined 20 basis points from a year ago, primarily due to FX headwinds. Operating expenses remained well controlled at 1.3% of revenue in the first quarter, consistent with Q4.

As a result, operating margin was 10.8%, down 10 basis points sequentially, but up 20 basis points year-over-year. Our operating model continues to deliver leverage with operating margin increasing from a year ago despite a slight decline in gross margin. Interest income was $6 million, and we had a relatively small foreign exchange revaluation loss of $220,000. Our non-GAAP tax expense was $6 million, excluding a $20 million noncash Pillar 2 top-up tax provision, resulting in a non-GAAP effective tax rate of 4% Tax credits intended to mitigate the impact of Pillar 2 are progressing in Thailand, but have not yet been implemented. As a result, we expect some variability in our reported tax expense over the coming quarters.

In addition to the top-up tax provision, GAAP net income includes a $21 million noncash unrealized loss related to our minority investment in Raytek, which is also excluded from our non-GAAP results. GAAP net income was $103 million or $2.86 per diluted share. Non-GAAP net income reached $157 million or $4.34 per diluted share, marking another all-time high for the company. Turning to our balance sheet. We ended the first quarter with cash and short-term investments of $757 million, down $119 million from the end of Q4. Operating cash flow for the quarter was $21 million. CapEx increased to $159 million, driven by investments in growth and capacity expansion.

This included the $77 million acquisition of our second campus in Santa Clara as well as continued construction costs associated with Building 10 in Chonburi and another capacity expansion initiatives. As a result, free cash flow was an outflow of $137 million in the quarter. In the first quarter, we repurchased approximately 77,000 shares at an average price of approximately $380 per share for a total cash outlay of $29 million. Since the end of the quarter, our Board authorized an additional $103 million for repurchases, bringing the total remaining authorization to [ $200 million. ] Turning to our guidance for the second quarter of fiscal 2027. We are encouraged by the increasing demand trends that we are seeing across our business.

We expect that our growth will again be led by data center revenue with expansion from data center interconnect and transceiver programs, further bolstered by new program ramps that we expect to continue increasingly over the course of the year. Data center growth will be complemented by sequential and year-over-year growth in communication infrastructure as well as in automotive, industrial and other revenue. For the second quarter, we anticipate revenue to be in the range of $1.6 billion to $1.65 billion, representing year-over-year growth of 43% at the midpoint.

From a profitability perspective, we expect to see efficiencies and leverage drive incremental improvements in margins. We anticipate non-GAAP EPS to be between $4.77 and $4.92. In summary, our impressive first quarter results represent a strong start to fiscal year 2027. With multiple significant programs ramping over the next few quarters, we are also very optimistic that we can deliver a terrific second quarter with momentum extending through the rest of the fiscal year.

Operator, we are now ready to open the call for questions.

Operator

[Operator Instructions]

And our first question comes from the line of Christopher Rolland of Susquehanna.

Phần hỏi đáp

Christopher Rolland

I guess my first one, like in your prepared remarks and also the press release, you talked about broad-based demand across multiple significant programs and then new product ramps further supporting growth. I guess, first, the existing programs, were those specifically the hyperscale and merchant opportunity?

And secondly, the new programs, was that OCS and multi-rail? And if you could provide any more color as to these new opportunities, the size, engagements, that would be great.

Seamus Grady

Yes. The growth -- Christopher, the growth we're seeing is pretty broad-based. The heartening thing from our point of view is it's across really all of the industries that we serve and all of the customers. The growth has been very strong in our data center business, in our communications infrastructure business and even our automotive and industrial and other business has been growing nicely. And some of that growth is with the programs you mentioned.

Our DCI business continues to be very strong, and we're just starting to get going with the 2 programs that you mentioned, multi-rail and OCS. So the growth vectors, if you like, are multiple and across really all aspects of our business. Even though we've grown, as we said in the prepared remarks, we were up 51% compared to the same quarter a year ago. We're looking at continued very strong momentum as we go into Q2. And a lot of these newer programs are really just beginning to get going. So we're pretty excited about what's in front of us.

Christopher Rolland

And maybe another one, just the NPO CPO opportunity. I think there's a lot more discussion about early programs starting in late '27. Maybe if you can talk about the parts of that opportunity you might be able to supply? Is it just NPO? Is it also HPC boards? And how big do you think this can be for you overall?

Seamus Grady

Yes. We have a number of NPO programs that we're confident we will start to see revenue from those towards the latter half of this fiscal year and also some CPO programs with several customers. The nice thing, I suppose, about our business is it's not really either/or. We've always said that NPO and CPO will be complementary to pluggables. So we see pluggables continuing for a long time. We'll probably see more immediate opportunities with NPO. CPO seems to be still a little bit further out, but we have several programs on both -- for both NPO and CPO. We're finding, as the years go by, we're engaging much earlier with the customers.

So we're getting involved right at the very early stage, in some cases, at the concept stage with the customers and really helping the customers figure out how to build these remarkable products that they design. So our manufacturing expertise is a real benefit to our customers in that we're able to help them figure out how to make the products manufacturable with a predictable yield. So that's really being a benefit to us and our customers in that we're involved very early and really getting to see those latest and greatest products, in many cases, years before they're being talked about. So we're very excited about that.

Operator

Our next question comes from the line of Karl Ackerman of BNP Paribas.

Karl Ackerman

Seamus or Csaba, could you speak to the main drivers of your December quarter outlook by segment? I guess, in particular, within data center, I think you've got a merchant transceiver program layering into your existing datacom scale-out transceiver business as well as the new customer ramping across coherent pluggables. So maybe you could discuss how you see the scale-out versus scale across growth opportunity progressing?

Seamus Grady

Yes. We don't guide by segments. We -- obviously, we talk about the segments when we report the quarter just ended. We don't break out the guidance by segment in -- for the quarter in front of us. But I would say that the growth is broad-based and it's across really all the segments, including the programs that you just mentioned, the merchant programs are beginning to get going as are the hyperscale direct. We're ramping those currently. So we have several programs. Again, I wouldn't want to call out or give specific guidance in any one segment or any one product, but we're on track, I would say, to deliver good solid growth in Q2.

Karl Ackerman

Got it. Maybe for Csaba, if I could sneak one more in, please. I know your share repurchases are opportunistic, but does the expansion of your repurchase program suggests you'll be more aggressive given where the stock is here? I guess, why the need to broaden the repurchase program today and given the capital requirements for Building 10, 11, is there a minimum cash level you need to run and invest in the business?

Csaba Sverha

Karl, so let me give you some brief regarding our capital allocation. So our strategy hasn't changed. So our #1 priority is to continue to invest in growth. As you pointed out, we are using cash and we are using our balance sheet to expand our capacity and working capital requirement as we are going through this staggering growth. Nevertheless, as we have always been opportunistic, we have always been strategic with our share buyback program that we continue to designate surplus cash flow to the 10b5 plan as well as remain opportunistic on the market when we see fit and when we are in an open window.

So last quarter, purchases were mostly driven by our 10b5 plan. And it just happened to be in our first quarter when we review our capital allocation strategy and we launch our new 10b5 plan. So we believe that we will continue to adhere to our policy of, number one, financing growth. Number two is designating surplus cash to the 10b5 plan; and number three, also being opportunistic with buybacks. So those are the footings of our increased authorization as well. So our Board has just increased the buyback to $200 million. So that will be deployed between 10b5 and an opportunistic program as well.

Operator

Our next question comes from the line of Joseph Cardoso of JPMorgan.

Joseph Cardoso

On the results. Maybe for my first one, bigger picture question. You had some large players in the industry announced an acquisition this morning, and I believe they happen to be customers of yours. So maybe curious if you could opine on both whether this -- how you guys are thinking about this relative to an opportunity for Fabrinet as well as any bigger picture thoughts on the consolidation between optics and semis and what this means for the industry going forward more broadly? And then I do have a follow-up.

Seamus Grady

Joe, yes, so we're not familiar with the terms of the deal. It's obviously late-breaking news for all of us, and we haven't had a chance to speak with either company. I will say both companies are customers of Fabrinet. Lumentum has been a customer for a very long time, really since the foundation of our company. Lumentum has been a customer of Fabrinet and continues to be a really excellent customer for us. Marvell has become a customer more recently. And so we're excited about the opportunity in front of us.

Historically, when there's been consolidation in the industry, it has tended to benefit Fabrinet. If you look back at some of the consolidations that happened over the last several years, I think at the time, there was maybe a thought that it might be -- some of those consolidations might be bad for Fabrinet. But in all cases, it turned out to be positive for Fabrinet, whether you look at the, let's say, the Lumentum acquisition of NeoPhotonics or when Infinera acquired Coriant or even the more recent one when Nokia has acquired Infinera.

In all cases, we've seen our business subsequently grow with the combined entity. So we hope and expect that this will be the same. Obviously, our relationship with both companies is really excellent, and we look forward to learning more about the merger and understanding what that means for us and how we can continue to help and support both companies or the new company. As regards to the overall, let's say, merger between electronics and photonics, it's something that we've been really benefiting from and pointing to for a long time really. There is this, if you like, overarching migration from the electronics world to the photonics world.

And it was originally, of course, over vast distances, subsea and the like, and now we're down to much closer distances. And when you get right down to co-packaged optics and near packaged optics, you're down to very, very close connections and including products like optical circuit switching and the like, which are really exciting products. And really, we are seeing the convergence of solid-state and photonics. And fortunately, Fabrinet, we're right in the middle of that, and we feel perfectly poised to benefit as that convergence unfolds and continues. So we're very excited about it. We're excited about the opportunity, not just with the Lumentum-Marvell transaction, but in general, this convergence that's going on and has been going on for some time. And we're really just at the start of this. This is really the very first innings, I would say, of this kind of overarching convergence that's going on.

Joseph Cardoso

Got it. I appreciate the thoughts there, Seamus. And then maybe as my second one, I believe you guys are calling for 1Q to kind of be a trough year for gross margins and then sequential improvement in 2Q. But kind of wanted to take a step back and just -- can you maybe outline how you guys are thinking about the contribution between some of these ramping programs, FX and then anything else maybe that I'm missing there that are drivers there? And then as we think about maybe the full year here, are those tailwinds likely to continue?

And sorry, the last piece of this would just be, obviously, you guys are talking about new -- some of these new opportunities around OCS, multi-rail, MPO/CPO. Could these programs be margin accretive to the model? Or should we think about them kind of triangulating into the average that you guys have talked about in terms of that range?

Csaba Sverha

All right, Seamus. So Joe, let me take this step by step. So if you look at historically, one thing we are very pleased is to see the consistency of our gross margins and incremental improvement of our operating margin as we continue to grow the top line. So we have been very disciplined with spending. So our operating leverage does show as the company grows, and we are going through this huge phase of growth. Obviously, this comes with challenges as well.

Sometimes our gross margin got pressured from early ramp expenses. We want to make sure that we hire ahead of the ramp to support our customer needs. But those initial phases of headwinds tend to fade away after a short period of time. The biggest variable in our business model is and has been exchange rate, which we continue to hedge and try to take out this volatility as much as we can. So -- for the rest of the year, exchange rate seems to be flattening out based on the hedges we foresee. So we don't anticipate any more headwinds from exchange rates going to the second half of fiscal 2027.

With regards to leverage, obviously, we have a very resilient cost structure with fixed cost being about 5% of our cost. You don't get a lot of fixed cost leverage at gross margin level. However, we do anticipate that our operating margin will continue to expand as we grow. With regards to new programs, again, new program wins and early stage of the life cycle tend to be beneficial from a gross margin perspective.

Obviously, as the company goes through this transformation, as you also and Seamus mentioned, this convergence between photonics and electronics we provide a much greater level of value add to our customers, which we do anticipate to accrete our margins. So if you look at strategically, we do anticipate our gross margins to improve over time as we continue to deliver higher level of value to our customers. I think we are doing a good job with managing and mitigating the exchange rate environment and also being disciplined with our OpEx structure, we continue to expect operating margin to grow as we go through 2027 and the years ahead. I hope it covers all your questions.

Operator

Our next question comes from the line of Steven Fox of Fox Advisors.

Steven Fox

I had 2 questions as well. First of all, maybe just to follow up on the last comment in terms of how convergence with electronics, you were able to add more value. Can you give a couple of examples of how that happens and what kind of impact it has on your profitability? And then I had a follow-up.

Seamus Grady

I think the main example is several examples where we're able to help the customers bring the products to market. The customers tell us that we help them bring the products to market earlier than if they worked with, we call it, a traditional contract manufacturer. Our expertise in really figuring out early how to put these products together in a way that's cost effective, but also high yield and repeatable really helps the customer to get the time-to-market advantage.

There are several examples. I wouldn't want to get too specific, but it's everything from the leading-edge transceivers to some of the high-performance compute products and these newer products such as optical circuit switching, NPO and CPO. So I think having the knowledge on really how to put these photonics products together in a cost-effective way and a high-yield way gives our customers a big advantage that results in them continuing to reward us with more and more business.

Steven Fox

Got it. That's helpful. And then as a follow-up, just looking at this big revenue beat and raise, I'm not quite sure if I understand all the dynamics of it. Like you mentioned new programs, but you also mentioned demand. So were you seeing forecasts get upside? Were you able to pull in production? Were you able to add capacity to better meet demand? I'm just not sure what happened here and what were the big -- just sort of broad drivers forgetting about the product segments for a second.

Seamus Grady

Well, I mean, what happened was our revenue accelerated significantly. Q1 marked our 14th -- it wasn't kind of a onetime event. Q1 marked our 14th consecutive quarter of growth and our seventh consecutive quarter of accelerating year-over-year growth. In Q1, we grew a pretty remarkable 51% year-over-year. That's an increase of $496 million versus the same quarter a year ago. It really is just extraordinary momentum, which we expect to continue into Q2. And the growth we are seeing is broad-based. It's across several customers and segments. It wasn't a onetime big upside from one customer. It's just significant increase in demand across all of our customers. In Q1, our data center business was up $340 million versus -- year-on-year versus the same quarter a year ago or 78%. So data center business up 78%. Our communications infrastructure business was up 35% or $114 million versus Q1 of last year. And our industrial, automotive and other business was up 20% or $42 million.

So overall, up $496 million versus the same quarter a year ago across all the industry segments. And then for Q2, we don't break out by segment for Q2, but for Q2 at the midpoint of our Q2 guidance, we would be up again versus Q2 of last year, we would be up $151 million at the midpoint or 43%. So just remarkable growth, and we believe sustainable growth that's broad-based and continuing into Q2 and hopefully throughout fiscal '27.

Steven Fox

But just to be clear, this was mainly from existing programs where you're able to upside versus original expectations as opposed to new program ramps going faster than expected?

Seamus Grady

It's both. It's both existing programs. And I mean, new programs, as we ramp them, their immediate impact on revenue is not that significant because we're just beginning to ramp them. Obviously, new programs then become existing programs and they ramp rapidly, but it's a combination of both. We have a very healthy pipeline of new programs that we're ramping, but also programs that were new programs a couple of quarters ago that are now existing programs that we're ramping. So it's a combination of all of the above.

Operator

Our next question comes from the line of George Notter of Wolfe Research.

George Notter

I wanted to ask about Building 11. It looks like you upsized the size of that building. Can you remind us how big the plan was for that building previously and then what it is now? And then also just looking at the bigger supply chain environment, it feels like maybe componentry is becoming more readily available for you. I guess I'm inferring that based on the upside here and then the upside in terms of the guidance for the December quarter. But maybe some comments on the supply chain environment would be great.

Seamus Grady

Sure. Thanks, George. So first of all, on the capacity. So just to recap, our revenue capacity at the end of fiscal 2026 was about $5.8 billion. We have been aggressively increasing our capacity, and we expect our revenue capacity to be around $10 billion at the beginning of January, so in just a few months from now. But the biggest -- so a significant increase in capacity. The biggest factor driving this will be the completion of Building 10 in Chonburi, which adds 2 million square feet or about $3.5 billion in revenue capacity.

To put that in context, just in terms of the physical size, 2 million square feet is about the surface area taken up by 35 American football fields. So it's quite gigantic. And that revenue increase is about 75% of our actual FY '26 revenue. We have commissioned our campus in Nava, we call it Nava 1, the campus that we purchased recently, and that adds about $400 million of revenue capacity as well as our expanded footprint in Santa Clara, which adds about $300 million. So all told, we'll start the year at about $10 billion of capacity. And we continue to invest ahead of the demand. We're going to rapidly expand our manufacturing footprint to make sure we stay ahead of the demand we're seeing from our customers.

To that end, we're not stopping with Building 10. We will be breaking ground on Building 11 in Chonburi in January. We will probably coincide the ribbon cutting for Building 10 with the groundbreaking for Building 11. Building 11 will add about 1.5 million square feet. You're right, that's maybe a little bit bigger than we originally thought. We tend to get a bit smarter as we go along, we learn a few things. And for Building 11, we don't need much office space in Building 11 because we're more than covered with the other buildings on the campus. We don't need much warehousing space. So it's a lot of, let's say, as a percentage of the total space, a lot more of Building 11 will be manufacturing space.

So about 1.5 million square feet or about $3 billion in revenue capacity. And it will take us about 18 months to build and should come online at the end of fiscal 2028. But based on the pipeline of business we see in front of us, we're already looking for potential new sites, both land but also buildings to make sure we stay ahead of the demand. It's important to note, of course, that this expansion, we funded with our own cash on our balance sheet. As you would have seen, our CapEx was significant last year as we purchased the Santa Clara operation. So we continue to fund this growth with our very strong balance sheet, and we continue to deliver ROIC north of 30%. So it's a very compelling business model that we have.

All told, if you look at the total, let's say, capacity that we have, if you take Building 10 plus what we had before Building 10 plus Nava plus Santa Clara plus Building 11. And if we build a Building 12 in the future, which we can on the campus in Chonburi. Previously, we had sized all of that at about $14 billion of capacity. We've now revised that up to about $16 billion. So Building 11, we originally said it was about $2.1 billion of capacity. We now think that's closer to $3 billion as the revenue kind of per square foot continues to go in our favor, smaller, denser, more revenue dense products improve the revenue per square foot.

So that revenue capacity that we're bringing on will be, like I said, about $10 billion in January. But when Building 11 is completed, that will add another $3 billion to take us to $13 billion. Building 12 will add another $3 billion to take us to $16 billion, plus whatever we add in the meantime in terms of other capacity that we uncover as we continue to search for capacity. In terms of components, we -- I'm sorry, go ahead.

George Notter

I was just going to ask about the follow-up question, the component supply chain question. Go ahead, please.

Seamus Grady

Yes, I say about the components. Yes, we have been making good progress and getting our fair share and thankfully, in some cases, our unfair share of the available components. Components are in tight supply across the board. Obviously, demand for everyone is very strong. But we've been fortunate we've been able to keep ahead of that.

And obviously, we could always ship more if we have more, but our approach is really to work with the customers and the suppliers to make sure we get what we need to meet the customers' demand and continue to add capacity to make sure that we're never capacity gated in terms of our ability to grow. So -- and like I said, we'll continue to add capacity ahead of the demand, and we'll continue to work with the customers and the suppliers to make sure we keep the component supply lined up as well.

Operator

Our next question comes from the line of Mike Genovese of Rosenblatt Securities.

Michael Genovese

First of all, on the transceiver OEMs that are coming in, how many -- are we talking about? Or are we talking about more than one transceiver OEM that's ramping with the company?

Seamus Grady

We have more than 1.

Michael Genovese

Is it more than 2?

Seamus Grady

We're not going to say much more than that because, again, these are always -- as always, Mike, they're confidential sensitive conversations are going on with the customers, and we don't like to say too much, but we have more than one. Yes, and we continue to ramp those nicely. And they're becoming -- as you can see, our growth in the data center business was up 78%, and we continue to see good strong growth going into Q2.

Michael Genovese

Perfect. And just -- most of my questions have been asked. So I'm going to ask about the CapEx and the financing. There was about $75 million of long-term borrowing in the quarter. What's the fiscal '27 CapEx plan? And why borrow rather than fund from cash?

Csaba Sverha

So let me address the borrowing section first. So we have actually favorable interest rate environment in Thailand where the cost of borrowing is cheaper than breaking up our cash that is being invested in the U.S. So that's a simple financial decision when we need cash for investment in Thailand, it's cheaper to borrow there than breaking the investment that it earns.

So secondly, our CapEx plan, as you have seen, we had an outsized CapEx number in Q1 because of the Santa Clara campus purchase. Other than that, our CapEx is running at about 5% of revenue run rate, which has been somewhat consistent in the last fiscal year. So obviously, as Building 10 comes online, will be done by January, we will start Building 11, so that will layer on, on the CapEx spending. As well as Seamus mentioned, we continue to search for additional capacity. So that should come through. We should see some -- even further increase in our CapEx spending for 2027. Having said that, if you take this large chunky capacity additions aside, our normal, I would say, CapEx run rate to support this outsized growth would be at about 5% of the revenue run rate for the year.

Operator

Our next question comes from the line of Tim Savageaux of Northland Capital Markets.

Timothy Savageaux

Congrats on the results and guidance. Kind of want to pick up where we left off last quarter, where you expressed some optimism of being able to accelerate revenue growth in fiscal '27 versus '26. I imagine you're feeling far more confident about that now. So I wanted to kind of follow up on that, which is your first half growth rate was 47% given where you guided. Talked about that growth being sustainable and indeed some new program ramps in the second half of the year. So I guess a 2-part question. We can get an update on your feelings about accelerating growth? And can you sustain something in that range that you're seeing in the first half for the second?

Seamus Grady

Thank you, Tim. You are nothing if not consistent. Yes, I think if you look at the growth we've been seeing, it's pretty remarkable really to consider the growth, and it's across the industry segments, as I mentioned, the numbers I walked through a moment ago, 51% in Q1. Q2, our guidance would have us at 43% growth or up $151 million year-on-year at the midpoint of the guidance. And we're continuing to add capacity as fast as we can. Building 10, we have a clear line of sight to what's going into Building 10 and when it's going into Building 10.

Hence, our decision to pull the trigger on Building 11, but also to look for additional capacity that we can bring on hopefully before Building 11 is completed. Building 11 will take about 18 months from when we start, so somewhere around the middle of calendar 2028, so 18, 20-something months from now. That's when Building 11 will come on stream, but we think we'll need capacity before that. So we're actively looking right now. There's a few projects we're working on, but we're actively looking to bring on additional capacity. Again, both land, but also a factory space that if we can get our hands on to bring on additional capacity. So my -- I suppose my feelings about the accelerating growth are as positive as they were when we spoke approximately 90 days ago, if not a little bit more positive, I would say.

Sustainability, certainly based on the signals we see from the customers who are really happy to show us the demand picture really as far as the eye can see as far ahead as you can see. it appears to be very sustainable. But the nice thing, I suppose, about our business, Tim, as you know, is we tend to have an asset-light model. So -- and our fixed cost is very low. So even in the doomsday scenario, if there is a downturn, we haven't added any real significant fixed costs. So we'll continue to grow and make sure we benefit from this upside environment that we're in, but also we're always mindful of being ready for if there is any kind of a downturn. So we're very -- I'd say, very optimistic about the future, but also we're pragmatic and we're doing it in a way that we think is low risk and sustainable.

So yes, to answer the question, I think we're as optimistic as we were, if not a little bit more so than when we spoke 90 days ago, and we do believe that the growth continues to be sustainable, again, because it's across all industry segments that we serve and many, many customers.

Timothy Savageaux

Okay. Great. Appreciate that. And I wanted to follow up on the NPO, CPO front. Obviously, Lumentum talked about a $5 billion win here this morning and they talked about similar type of numbers in OCS. I guess, how do you look at those 2 opportunities in terms of relative potential for Fabrinet? And it sounds like each of these could be multi-hundred million, if not billion dollar businesses for you guys. Is that crazy to think about?

Seamus Grady

I think that's a fair way to think about it. And they're not even in the -- if you like, the numbers yet. They're only just getting started. But they both look to be very -- have very strong demand. OCS the demand forecast we see for OCS is very strong. And also for these various NPO programs that we're working on looks to be very strong. Yes, either of these or both of these could be multi-hundred million dollar opportunities on their own. And as I said, they're just getting started. We haven't even really started to ship anything yet. But yes, they're very positive, we think, for our business.

Operator

Our next question comes from the line of Ryan Koontz of Needham & Co.

Ryan Koontz

Real nice numbers. I want to ask your view kind of at the macro level about the transceiver market in light of investor concerns that CPO and NPO are going to be highly cannibalistic. And maybe from your perspective, you have a little different view there from talking to your customers and your customers' customers about how you think about the durability of the datacom transceiver market and maybe how the fulfillment models might be changing a bit. Obviously, you're seeing some real nice growth in new green shoots there. So anything you can share about the transceivers would be appreciated.

Seamus Grady

Yes. Thanks. I think the idea that it's kind of either/or or that CPO was just going to kind of cannibalize the pluggable transceiver market is I suppose I'd be kind and call it reductive. I think it's a bit overly simplistic to think that it's one or the other. We believe that pluggables will continue for a very long time, but that NPO and ultimately, CPO will also continue to grow. So we don't really think it's one or the other for a long time to come. You saw the recent announcement from Cisco and NVIDIA, they announced a road map for ultra-dense small form factor pluggables, this USFP product, which looks to, I guess, continue the pluggable architecture for many years to come.

So we think we're ideally positioned to produce all the products in the space, pluggables, NPO, CPO. We're happy to work with the customers. And really, our mission is to just always be ready to produce the customers of the future -- sorry, the products of the future for the customers, whatever that might entail, whether it's more dense pluggables or NPO or CPO or all of the above. So we don't see it as an either/or situation. We see it as an and also situation.

Ryan Koontz

Helpful. And maybe just a follow-up there with regards to your strength in the datacom side of the world as well as telecom side of the world. The middle ground there is coherent lite. Have you announced any coherent light wins? Or is that a market you feel like you're well positioned for?

Seamus Grady

Yes. I mean we feel we're very well positioned. Those products fit perfectly into our kind of capabilities. We haven't announced anything specific in that market. But yes, we would -- they would fit very well with our capabilities.

Operator

I'm showing no further questions at this time. I'll now turn it back to Seamus Grady for closing remarks.

Seamus Grady

Thank you for joining our call today. We're off to an excellent start in fiscal 2027 with year-over-year top line growth of nearly $500 million or 51% and strong momentum continuing into Q2. We are staying ahead of the incredible demand by aggressively expanding our capacity as we see contributions from existing programs and new program ramps driving our rapid growth. We look forward to speaking with you again next quarter. Thanks again, and goodbye.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.