Fabrinet (NYSE:FN) stock fell 10.32% (As on August 19, 11:18:28 AM UTC-4, Source: Google Finance) though the company posted better than expected results for the fourth quarter of FY25. The company has established a significant partnership with Amazon Web Services, which they anticipates will be a meaningful revenue driver in fiscal year 2026. Construction began on Building 10, which will add 2 million square feet of capacity to the overall footprint. Telecom revenue increased 46% from a year ago and 1% from Q3, with system programs and demand for data center interconnect products driving the bulk of the growth. In fact, DCI revenue represented one quarter of the total telecom revenue and grew 45% from a year ago. Datacom revenue of $277 million was down 12% from a year ago, but swung to a strong growth of 10% sequentially driven by very strong demand for new, higher data rate products.

Moreover, in the fourth quarter, optical communications revenue was $689 million, up 15% from a year ago and 5% from Q3. In optical communications, revenue from 800G and faster products was $313 million, up 21% year over year and 32% sequentially, driven primarily by the ramp of new 1.60 Datacom products. The company has now begun volume shipments of 1.60 transceivers, a major milestone, and expect demand trends to continue ramping in fiscal 2026. In contrast, revenue from products below 800G was $233 million, up 4% from a year ago but down 18% from Q3, reflecting the industry’s transition to next generation products. Revenue from optical communications products that are non Speed rated was $143 million, up 4% from Q3.  Non optical communications revenue was $221 million, representing a healthy 41% increase year over year and 3% sequential gain. Automotive revenue came in better than expected at $128 million, experiencing a modest quarterly decline following several quarters of rapid growth. Industrial laser revenue was stable at $40 million.

FN in the fourth quarter of FY25 has reported the adjusted earnings per share of $2.65, beating the analysts’ estimates for the adjusted earnings per share of $2.64. The company had reported the adjusted revenue growth of 20 percent to $909.7 million in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $883.01 million. The company ended the year with cash and short term investments of $934 million, down $16 million from the end of Q3.

Fabrinet sees Q1 2026 EPS of $2.75-$2.90 versus the analyst consensus of $2.74. Fabrinet sees Q1 2026 revenue of $910.00M-$950.00M versus the analyst consensus of $915.00M.