Fabrinet Q2 Earnings Surpass Estimates, Revenues Increase Y/Y

Fabrinet FN reported non-GAAP earnings of $3.36 per share in second-quarter fiscal 2026, beating the Zacks Consensus Estimate by 3.07%. The figure increased 28.7% year over year.

Revenues of $1.13 million increased 35.9% on a year-over-year basis — the fastest growth rate since the IPO — and surpassed the consensus mark by 5.03%.

FN’s Q2 Segment Details

Optical Communications, as a percentage of revenues, was 73.5%, down from 77.6% in the year-ago quarter. Datacom contributed 33.4% to total optical communications revenues, while Telecom contributed 66.6%.

Datacom revenues declined 7% year over year to $278.1 million, while telecom revenues rose 59.3% year over year to $554.4 million.

Non-Optical Communications, as a percentage of revenues, was 26.5% compared with 22.4% in the year-ago quarter.

The non-optical communications segment delivered solid growth, with revenues rising 61% year over year to $300.3 million. Within the segment, Automotive revenues increased 12.3% to $117 million, Industrial Laser revenues grew 10.4% to $41.4 million and Other revenues rose 26.2% to $56.4 million. High-Performance Computing contributed $85.6 million in revenues.

The non-optical communications segment saw healthy growth, with revenues increasing 61% year over year to $300.3 million. Under the non-optical communications segment, Automotive revenues rose 12.3% to $117 million, Industrial Laser revenues increased 10.4% to $41.4 million and Other revenues increased 26.2% to $56.4 million. High-Performance Computing revenues generated $85.6 million.

Fabrinet’s Operating Details

Gross profit expanded 35.4% year over year to $140.3 million in the fiscal second quarter, although gross margin remained flat on a year-over-year basis.

Non-GAAP operating profit reached $123.4 million in the quarter under review, reflecting a 30-basis-point year-over-year improvement in operating margin to 10.9%.

FN’s Balance Sheet & Cash Flow

As of Dec. 26, 2025, cash and cash equivalents and short-term investments were $960.8 million compared with $968.8 million as of Sept. 26, 2025.

The company generated $46.3 million in cash flow from operating activities in the reported quarter compared with $102.6 million in the previous quarter.

Non-GAAP free cash flow turned negative at $5.3 million, down from $57.3 million reported in the previous quarter.

FN’s Q3 Guidance

For third-quarter fiscal 2026, FN expects revenues to be between $1.15 billion and $1.20 billion. Non-GAAP earnings are expected to be between $3.45 and $3.60 per share.

FN’s Zacks Rank & Stocks to Consider

Currently, Fabrinet has a Zacks Rank #3 (Hold).

Advanced Energy AEIS, Cisco Systems CSCO and FormFactor FORM are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Advanced Energy shares have soared 135% over the past year. AEIS is set to report its fourth-quarter 2025 results on Feb. 10.

Cisco Systems shares have appreciated 32% over the past year. CSCO is set to report its second-quarter fiscal 2026 results on Feb. 11.

FormFactor shares have surged 83.6% over the past year. FORM is set to report its fourth-quarter 2025 results on Feb. 04.

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