Fabrinet Beats as Fiscal Q1 Revenue Jumps 51% to $1.47B, Guides Above Consensus and Adds Buyback

Fabrinet (FN) reported record fiscal first-quarter 2027 revenue of $1.4745 billion, up about 51% from a year earlier and above its guidance range. Non-GAAP earnings were $4.34 per share, $0.15 above the $4.19 consensus. The optical and electronics manufacturing services provider guided fiscal second-quarter revenue to $1.60 billion to $1.65 billion, well above the $1.48 billion consensus, and its board added up to $103.0 million to its share repurchase program. Shares were down $12.59, or about 3.9%, at $314.70 on Monday, Nov. 2.

Fiscal Q1 results

By our calculation, revenue beat the roughly $1.4 billion consensus by about 5%, and non-GAAP EPS rose about 49% from a year ago, while GAAP EPS rose about 8%. The gap between the two reflects $53.9 million between GAAP and non-GAAP net income, mostly non-cash items such as share-based pay. Gross margin slipped slightly even as volume rose, so earnings growth came from scale rather than richer margins.

Second-quarter guidance

By our calculation, the revenue midpoint of $1.625 billion is about 9.8% above consensus and about 10% above Q1, and the non-GAAP EPS midpoint of $4.845 is about 9% above consensus. Guidance assumes about 36.2 million fully diluted shares. Chairman and CEO Seamus Grady said the company enters the second quarter with “exceptional momentum.”

Cash flow and buybacks

• Free cash flow. Operating cash flow was $21.3 million and non-GAAP free cash flow was negative $137.4 million, mainly because of $158.7 million of equipment purchases to add capacity.
• Liquidity. Cash and equivalents were $392.3 million, with another $363.4 million in short-term investments.
• Buyback. The board added up to $103.0 million to the repurchase program, bringing total authorization to $637.3 million.

The release does not break out revenue by end market or name customers, so the split between optical communications, data center and other segments is not covered here.

Why the stock slipped

Fabrinet shares fell about 3.9% to $314.70 despite the beat and the guide above consensus. With the stock closing Friday at about $327, investors may be weighing the negative free cash flow and slightly lower gross margin against the growth, and the move shows how high expectations were going into the report.

What to watch

• Capacity spending. Whether equipment purchases of the size seen this quarter convert into revenue and positive free cash flow.
• Margins. Whether non-GAAP gross margin holds near 12% as volume rises.
• Guidance delivery. Fabrinet has been beating its own ranges, so the $1.6 billion to $1.65 billion target sets the bar for next quarter.
• Optical demand. Consolidation and AI data center demand, including Marvell's proposed purchase of Lumentum. See our news report and Research Desk analysis.
• Other earnings. See our report on Palantir.

Sources: Fabrinet's investor relations site and its first-quarter fiscal 2027 results release. Consensus figures and the stock move come from FactSet and published reports and may differ by source. Items labeled by our calculation are our own arithmetic. This article is informational only and is not investment advice.