Q3 2025 Fabrinet Earnings Call
Garo Toomajan, Seamus Grady!
Speaker Change: Good afternoon. Welcome to Fabrinet's financial results conference call for the third quarter of fiscal year 2025. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions on how to participate will be provided at that time. As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Garo Toomajanian, by its president of investor relations.
Speaker Change: Thank you, operator, and good afternoon, everyone. Thank you for joining us on today's conference call to discuss Fabrinet's financial and operating results for the third quarter of the fiscal year 2025, which ended March 28, 2025.
Speaker Change: During this call, we will present both gap and non-GAAP financial measures. Please refer to the investor section of our website for important information, including our earnings pressed through these and to the investor presentation, which include our gap to non-GAAP reconciliation, as well as additional details of our revenue breakdown.
Speaker Change: In addition, today's discussion will contain four looking statements about the future financial performance of the company. Four looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations.
Speaker Change: These statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise them in light of new information or future events, except as required by law.
Speaker Change: For a description of the risk factors that may affect our results, please refer to our recent SEC filings, in particular the sectioned captioned risk factors in our form 10Q on February 4, 2025.
Speaker Change: We will begin the call with remarks from Seamus and Chava followed by time for questions.
Speaker Change: I would don't like to turn the call over to Fabrinet's CEO , Seamus Grady.
Speaker Change: Thank you, Garo. Good afternoon and thanks to everyone joining us today.
Speaker Change: We had a very strong, third quarter, with revenue of $872 million, which was above our guidance range. Our execution in the quarter was also strong, and we generated non-GAAP earnings per share of $2.52, which was also above our guidance range.
Looking more closely at our strong quarterly results,
Speaker Change: We saw continued growth in optical communications. Telecom revenue was particularly exceptional and more than an anticipated decline in data-con revenue.
Speaker Change: continued 400s the armamentum for data center interconnect applications, and a strengthening telecom market.
Speaker Change: We're confident that our strong telecom trends will extend into the fourth quarter.
Speaker Change: With respect to data come, we continue to see near-term softness due to a product transition
Speaker Change: and with the steepest part of the 1.60 ramp yet to come.
Speaker Change: In non-optical communications revenue, automotive again saw strong growth with revenue up 76% from a year ago and 24% from Q2.
Speaker Change: Our industrial laser revenue also increased both year over year and sequentially.
Speaker Change: Looking ahead, while we expect continued year-over-year growth in non-optical communications in the fourth quarter, we anticipate that sequential growth may moderate particularly in the automotive segment where we have experienced outside growth over the past few quarters.
Speaker Change: During the Quarfer, we also announced a new commercial relationship with Amazon Web Services.
Speaker Change: This is our first direct relationship with the leading hyperscanner, where we will be providing Amazon with advanced manufacturing services in a multi-year agreement.
Our agreement with Amazon reinforces our longer-term optimism.
Speaker Change: and further aligns our interests to a warrant purchase agreement for up to 1% of our outstanding shares.
Speaker Change: We expect our Amazon partnership to provide an additional boost to revenue starting in fiscal year 2026.
Thank you.
Speaker Change: Our long-term confidence is also reflected in our share of repartus activity, with over 100 million dollars worth of Fabrinet shares repartus so far this fiscal year. In addition, our expansion plans remain on track, with building 10 construction underway to meet our long-term capacity needs.
Speaker Change: Looking ahead, we continue to be very excited about our future.
Speaker Change: We expect to see our consistent track record of year-over-year revenue growth extend into the fourth quarter with the corresponding increase in profitability.
Speaker Change: Most importantly, we remain confident in our proven ability to execute extremely well as we have demonstrated throughout our company history.
Speaker Change: Now I'll turn the call over to Chaba for more financial details on our third quarter results and our guidance for the fourth quarter of fiscal 2025 Chaba.
Csaba: Thank you, Seamus, and good afternoon, everyone. We had a strong third quarter with revenue and non-GAAP net income per share that were above our guidance ranges.
Csaba: Revenue in the third quarter was $872 million, an increase of 19% from a year ago and 5% from Q2.
Csaba: This includes the impact of 4 million dollars in contra revenue from the upfront investing of a portion of the warrant with Amazon.
Csaba: We expect that future investing events will not result in meaningful impacts in our quarterly financial results
Csaba: Non-Get EPS was $2.52, exceeding our guidance range, with control revenue impact slowing to the bottom line.
Csaba: Details of our revenue breakdown are included in the Investor presentation on our website, so I will keep my comments focused on noteworthy highlights.
Csaba: For the third quarter, Optica Communications revenue was $657 million, up 11% from a year ago
Csaba: Within optical communications, DataCom revenue was $251 million, or 38% of optical communications revenue.
Csaba: A decrease of 18% from a year ago, and 16% from Q2, mainly due to product transitions at a large customer, as well as normal demand fluctuations at other customers.
Csaba: Telecom revenue was $406 million, or 62% of optical communications revenue. Another significant increase with revenue up 42% from a year ago, and 17% from Q2.
Csaba: This exceptional telecom performance was again driven by a powerful combination of strong data center interconnect demand, recent system means, and improving trends for traditional
Csaba: Looking at optical communications revenue by data rate, revenue from 800 gig and faster products was $236 million. Down 8% both from a year ago and sequentially.
Csaba: Note that we don't break out revenue by specific speeds. However, I will comment that while 800 gig revenue declined in the quarter, we are seeing increasing 1.60 revenue and believe that the steepest part of the 1.60 ramp is yet to come.
Csaba: Revenue from products below 800 gig was 284 million dollars on increase of 27% from a year ago and 3% from Q2.
Csaba: Grote in this speed category is being driven primarily by 400 ZR products for data center interconnect applications with ZR products again representing 10% of total revenue.
Csaba: Revenue from Optical Communications products that are non-speed rated was $127 million, up 21% from Q2.
Csaba: Non-opticar communications revenue was $250 million, up a strong 53% from a year ago, and 15%
Csaba: Automotive Revenue was the biggest driver of this growth with revenue of $129 million, up 76% from a year ago, and 24% from Q2.
Csaba: industrialized revenue of 40 million dollars increased 33% from a year ago and 8% from Q2. Other revenue of 45 million dollars must flat sequentially.
Csaba: As I discussed the details of our P&L, expense and profitability metrics will be on a non-cap
Csaba: Gross Marching in the third quarter was 5%, but would have been consistent with Q2 levels if not for the contrary new impact.
Operating expenses were flat sequentially at $16 million.
Csaba: Operating income reached a new record of $89 million, representing an operating margin of 10.2%, which would also have been consistent with the prior quarter, similar to our gross margin.
Csaba: Our strong balance sheet continued to produce high interest income of $10 million in Q3.
Csaba: which was partially offset by a foreign exchange evaluation loss of $3 million.
Effective gap tax rate was 5.8%
Csaba: and we continue to expect an effective tax rate in the mid-single digits for the fiscal year.
Csaba: non-GAAP net income was $91 million, or $2.52 per diluted share, which was above our guidance
Csaba: Turning to our balance sheet, we ended the third quarter with cash and short term investments of $951 million, up $16 million from the end of the second quarter.
Csaba: Operating cash flow in the quarter was 74 million dollars, CapEx was 79 million dollars, resulting a free cash flow of 46 million dollars in the third quarter.
Csaba: We remain active in our Sherry Purchase Program during the third quarter, buying back 162,000 shares at an average price of $214 per share, for a total cash outlay of $35 million.
Csaba: Over the past two quarters, we have repurchased just over $103 million, with approximately $197 million remaining under our current autorization at the end of the quarter.
Csaba: Now I will turn to our guidance for the fourth quarter or fiscal year 2025.
Csaba: While global tariffs have been in the headlines, we have not seen any material impacts to date.
Csaba: Given our FOB Fabrinet shipping terms, tariffs are typically handled by customers and so far we have not observed any meaningful changes in demand.
Csaba: As a result, we remain highly optimistic about our business outlook, supported by several
Csaba: These include contributions from recent telecom systems, the transition and ramp of 1.60 data-con products, rising demand for data center interconnect solutions and improving dynamics across traditional telecom markets.
Csaba: In non-optical communications, we expect continued year-over-year growth overall, although we may face some near-term headlines in the automotive segment, where we have seen outside growth over the past few quarters.
Csaba: Nevertheless, we believe the long-term fundamentals across our non-optical portfolio remain strong.
Csaba: For the fourth quarter, we are guiding total revenue between $860 million and $900 million.
Csaba: This broader range mainly reflects the doubling of our revenue since the last set of $20 million guidance range, and also a prudent acknowledgement of the current global macroeconomic environment including tariff risks and other external uncertainties.
Csaba: The expect earnings per diluted share to be between $2.55 and $2.70.
Csaba: While the significant number of new product ramps underway may present some shorter margin headwinds, we view these initiatives as strong catalysts for future growth.
Csaba: This programs are positioning us exceptionally well as we head into fiscal 2026, reinforcing our confidence in the long-term trajectory of our business.
Csaba: Operator, we are now ready to open the call for questions.
Speaker Change: As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your telephone, and wait for your name to be announced.
To withdraw your question, please press star 11 again.
Please stand by when we compile the Q&A roster.
Our first testing comes from Karl Ackerman with BNP Paraba.
Speaker Change: But your total 800 sales fell only about 20 million.
Speaker Change: Does that mean that a client in Gatacom fell within 400 gig and below port speeds?
Speaker Change: Or does that mean that the program wins within telecom are 800gb and that's supporting early soft settings until the decline of 800gb products in gate-accom.
Speaker Change: So, Hi Cardo, this is Shabba, let me take that question. So, it's the later. So, we are seeing some strong growth, particularly in the DCI, which falls under the below 800 gig segment.
Speaker Change: So that perhaps explains why we are seeing declining data come but not as much as of a decline that you would expect in 800 gig.
Speaker Change: And also we still have 400 gig programs in data comm segment as well. So it's a combination of both strong BCI as well as data comms still have 400 gig pitches tapering off now.
Speaker Change: Got it. Thank you. Thank you for that. And then just secondly on margins, I was hoping you could address some of the...
Speaker Change: and it appears that your outlook seems to account for a slight improvement in gross margins in June . I just wanted to clarify that. Thank you.
Speaker Change: So, let me take the warrant first, so we did have an impact of about $4 million in our gross margin in our fiscal Q3, so with that our gross margin had an impact of about 40 basis point. Without a warrant it would have been consistent both on gross margin and operating margin for Q3. The exchange rate headwind was already baked in our guidance, it was not very meaningful.
Speaker Change: Now shifting to our Q4 forecast and guidance, our guidance, although we are not guiding gross margin implies that we will encounter some short-term headwinds from product ramps, which are typically would be absorbed in our...
Results
Speaker Change: However, this time in Q4 VRM being quite few significant recent wins and we have some start-up costs which are preparing us for our strong 2022. So we anticipate some margin headwinds in Q4 but not any significant numbers.
Speaker Change: With regards to exchange rate, we anticipate somewhat flat environment going into Q4.
Speaker Change: So, again, in summary, we had a one-time, I would say, an impact from one Amazon to a 40 basis point in our Q3 results, we don't anticipate that to reoccur going forward. However, we do anticipate some short-term compression because of the new ramps that are leading us to fiscal 2026.
Gary, thank you. Welcome.
Our next question comes from Samik Chatterjee with JB Morgan.
Sam McChatterjee: as well. And you talked about the product transition for the customer driving that decline. Maybe if you can just flesh that out for us a bit more in terms of is that customer really transition driven by that the customer has a lot of inventory and hence you're waiting for that to clear out before we see a more return to normal demand patterns or is this more share allocation
Sam McChatterjee: Shifting between different suppliers when it comes to 800 gig and you mentioned the 1.60 ramp is still in front of you. Maybe if you can just outline how much of that ramp should we expect in the June quarter, which what is embedded in your guide on that front. I have a quick follow up after that. Thank you.
Speaker Change: Hi, Samik. Yeah, the 1.6-T ramp is really in front of us. You know, we've built some qualification boats, we have built shipsome, 1.6-T product, but really the bulk of the ramp is in front of us.
Speaker Change: You know, exactly why that might be, that's again a question, probably more for our customer than for us. They don't necessarily share with us all of the puts and takes. But you know, we don't believe we've lost any market share, anything like that. It's.
Speaker Change: We believe a function of the product that uses 1.6T, I think the customer said that that product will really ramp and launch in the second half of the year.
Speaker Change: So, we're gearing up to support the customer in whatever timeline they need from us. So, we have shipsome, but the big, you know, the big 1.60 ramp is really in front of us.
and on the 800 gig, Shemus.
Speaker Change: Sorry, what was the question on the SNK? On 800g is this product transition for the decline that you're seeing? Is that more of a function of the customer having inventory of 800g or are they allocating share between the different suppliers when it comes to 800g that is driving the decline?
Speaker Change: I think it's more likely more likely shares than the inventory I think in our case you know because we're gearing up to ramp 1.6
Speaker Change: We have been putting capacity in place and in some cases
Speaker Change: Converting capacity, the capacity is somewhat fungible, I would say, but not completely, so we have been converting capacity to gear up to reduce 1.6 and once you've transitioned that capacity over to 1.6.
Thank you very much.
Speaker Change: And maybe I can just sneak one in, your engagement with Amazon Web Services which you announced.
Garo Toomajian, Seamus Grady
Speaker Change: What is the nature of the advancement, factoring that you're supporting the customer on, does it include transceivers, and what is the magnitude of the opportunity that you see with the customer? Thank you.
Thank you.
Speaker Change: So, you know, we expect the relationship to begin with a particular product family and to expand from there over time. You know, nothing is excluded in our agreement with Amazon or in our warrants arrangement with Amazon. There's nothing specified and also nothing excluded.
Speaker Change: So, you know, we're excited to get going again with one product family and we'd be working hard. We're already engaged, I would say with two particular products, two product types that we're ramping.
Speaker Change: and we're working hard on others. So, multiple products within that customer.
But again, the-
Qualification Bills are really going on at the moment.
Speaker Change: and the revenue is ahead of us, the revenue is in FY26, the revenue will ramp in FY26. There will be a little bit of revenue this quarter.
Speaker Change: But as Chabba mentioned earlier, it's one of many qualification bills, start-up costs, we'll have this quarter where we're getting ready to get going, but the majority of the ramp is in front of us.
Speaker Change: Thank you. Thanks for being my questions. No problem. Thank you, Samik.
Our next question comes from Mike Genovese with Rosenblatt Securities.
Mike Genovese: Great, thanks very much. Obviously Telecom has been a great positive here for a few quarters. I guess just the visibility going forward, how long do you expect Telecom continues to quench the growth forward into the future?
Mike Genovese: I think for us, you know, we have some pretty strong growth factors going on in Telecom, you know, in the quarter. Our Telecom revenue, the quarter just ended, was $406 million, which is a high point for us. The previous high point...
Mike Genovese: was 405 million, all the way back in Q1 of 2023, so almost two years ago.
Mike Genovese: and then as we all know of the last couple years we've been going through Inventory.
Mike Genovese: Digestion, and everything else that was going on. But we're now back to growth, so 406 in Q4, and we think we have some several growth vectors there that will, you know, should all go well for the future. We have the Sienna win, which is really yet to ramp.
Mike Genovese: and also the ZR business, the DCI business in general, 400 ZR, 800 ZR beginning to ramp, so several growth factors there for us that we feel good about, you know, I think...
Mike Genovese: Overall, I would say that the telecon business obviously remains very important for us and we seem to have this pattern of if one part of our business is soft because we've always said we have this counter-sicklicality. You know, previously when our telecon business was quite soft, our data-con business showed particular strength.
Mike Genovese: And now with our data come business, I wouldn't call it soft, I'd call it, you know, we're waiting to really ramp a couple of programs that we've won. But our telecom business, yeah, Michael has been particularly strong, and we see that, and we think it's set to continue.
Speaker Change: Great, thanks for that. I guess things are following up on the data come side since you're
Speaker Change: You know exactly what you just spoke about, you know sort of in between 800 and you ramping in one point such as the customer is everything that more you can tell us just.
Speaker Change: from externally as observers, which products from the customer we should be looking for to be more tied to your opportunity versus the products that they've shipped so far in the past. Is there any help you can give us that?
George Notter, Timothy Savageaux, Joseph Cardoso
Bye. Bye.
I'm sorry.
Joe, go ahead.
I'm sorry, did you hear the question?
Speaker Change: Can you hear me? Can you hear me okay? No, it's okay. Yeah, I think my sound was gone from I'm sorry. Yeah, Mike, the our understanding is that the 1.6-Targette that we produce will be used for the customer's Blackwell Ultra product.
Speaker Change: And that's really as much as we know, the exact timing of when they're ready to launch that's a question for them, but we're ready to support them whenever they're ready to go.
Speaker Change: Okay, perfect. Let me just last quick follow-up for me. On the Amazon, the new stuff that we're talking about related to the WANCH, will that be counted in the data column, I assume?
Speaker Change: We're looking at that currently, you know, the revenue at the moment is...
Speaker Change: Probably in the other category, it's quite small at the moment.
Speaker Change: So, we may add a category and we may provide a little bit for the granularity and some of the other product reviews that we have but for now I think unless Chava wants to correct me I think it's in the other category at the moment and then in the future we would expect to have
It would be in a couple of categories we believe.
Thank you. Thank you.
Okay, thanks again, that's a long way. Thank you.
Thank you.
Speaker Change: R. and Patrick T. R. S. B. K. N. B. M. H. K. T. R. S. B. K. N. B. M. R. S. B. K. T. R. S. B.
Our next question comes from Stephen Foxx with Fox Advisors.
Stephen FOX: Hi, good afternoon. I had a couple questions too. I guess first off, maybe a little bit more color on, you know, sort of the, not that it's a huge headwind, but the headwind for
Stephen FOX: As you ramp all these programs, you mentioned some sizeable programs ramping at 1.6 T. Sounds like...
Amazon, NDR.
Stephen FOX: How do we think about sort of the extent of these drags and maybe when they turn into sort of more of a...
Stephen FOX: incremental tailwind, or do we assume that there's other, you know, ramps behind the mechs, or keep the margins at these levels?
Yeah, I think, you know, overall, Stephen...
Stephen FOX: The long-term growth drivers that we look at and that we use to make the long-term decisions for our business, they remain very much intact.
at the midpoint of our guidance for Q4.
Stephen FOX: If it comes to pass, if we were to come in at the midpoint of our guidance for Q4,
Stephen FOX: That will put us out about an 18% growth for the year, which is really, you know, we take industry
Speaker Change: Any short-term headwinds due to program ramps and start-up costs are very temporary in nature, typically, Stephen, when we bring on a new product, the quarter in which you bring on that product, we'll have a child called them start-up costs, but that's very short-lived, that tends to go away as soon as we start ramping.
So, like I say, the long-term growth for every remaining tax.
Speaker Change: You know, we're looking at about 18% here on your road that the midpoint of our Q4 guidance and maybe more importantly, the new wins.
Speaker Change: That we've talked about for the last while are now really all starting to contribute and in fact the ramp for all of them are in front of us and will take place in F826, the 1.6 Terabit ramp.
Speaker Change: The C&O win. We've always talked about that as an FY26 ramp and the Amazon business, you know, we're doing the qualification bills on that but that will ramp in FY26 as well. So we're, we're looking forward to a strong FY26, the Telecom business is back to growth.
Speaker Change: and like I said, we had record telecom revenue of $406 million in the quarter and it looks like the growth drivers for telecom are quite sustainable. So our long-term drivers remain intact in any short-term headwinds that we're seeing to our margin because the start-up costs are very short lived typically.
Speaker Change: Great, that's super helpful. And then, just as a follow-up, I was just wondering, the Amazon business that you've won, does that preclude you from going after other cloud players or maybe, or the office that helped you go after other cloud?
Speaker Change: Yeah, we think it should help us to go after other cloud providers. You know, Steve, we don't have any of our own products. We manufacture our customers products.
Speaker Change: and we are in conversations with other hyperscalers as well. None of our customer relationships are exclusive, and in fact, our success with Amazon could be a proof point for other potential similar customers, so we'll be working hard on the next slide.
Great. Thank you.
Thanks you.
Our next question comes from George Wang with Barclays.
Speaker Change: Hey, guys, I think so, taking my question. So, firstly, just a, Seamus K, kind of top ball overall, ASP trends for the, for the industry, and they're kind of especially from your standpoint, in terms of a hundred gig and they're kind of for 1.60, you know, earlier you top ball, maybe because of, you know, abundance of supply, kind of, you know, incremental supply for the 1.60, you know, you have less of a 1.5 pounds.
Garo Toomajian, Seamus Grady
Unfortunately,
George: George, you seem to have asked me two questions, neither of which I'm able to answer.
Speaker Change: And ASP trends, you know, the customers ASP, we don't have any particular visibility on the pricing trends of the merchant transceivers, we don't have any particular visibility on. We know what our price trend is like with our customer, and it's generally not something we comment in any great detail on, other than say I think we said in the past that the price uplift.
Speaker Change: From our point of view, for what we sell, a 1.16 transceiver for, as compared to what we would have sold at the National Gate Transceiver, is less than you might imagine. We've worked very hard with the customer to bring costs down.
Speaker Change: To drive the yields up and to make sure that we're very cost competitive. So, you know, we feel we have a very cost competitive solution for our customers. But really beyond that, when it comes to broader ASP trends and ASP trends for the merchant suppliers, we don't have any particular view on that George. George Notter, Timothy Savageaux, David
George: Okay, great. Just click on it if I can squeeze in Seamus. Just in terms of four.
kind of all sorts of trends, you know, potential upside of from...
George: You know, you're sort of a co-petition kind of partner, including coherent lumentum with a new leadership like any refresher view in terms of getting more business from them, in terms of kind of, you know, also think as they might, you know, also more survey for you kind of, you know, from a more survey, you know, OEM kind of standpoint, just just any thoughts on potentially kind of getting more share there. [inaudible]
George: Yeah, I mean, we work hard with all our customers to convince them to outsource more with us, outsource more with us, including the two that you mentioned, but
George: It would be premature for me to kind of comment on progress with us but certainly we would very much like to do more manufacturing for both of those companies and all of the other companies but again nothing particularly to talk about in the public forum, George.
Let's go back to the queue. Thank you.
Thank you, George
Our next question comes from Ryan Koontz with Needham.
George: Seamus Grady, Garo Toomajian, Seamus Grady, Garo Toomajian, Seamus Grady, Garo Toomajian,
Ryan Kuntz: Great, thanks. I wanted to drill into Terrace, but I could a little bit, Seamus, and your thoughts there. I mean, there's been a chatter about attempts by commerce to kind of close loopholes for the Chinese setting up facilities outside of.
Speaker Change: You know, in other countries, I wondered if, you know, what you can share where your thoughts are about how this might be resolved for U.S. companies that have set up facilities in foreign countries and anything you could share there.
Speaker Change: Not particularly. We haven't seen any great impact from our customers, I think.
Speaker Change: since Liberation Day. I think like our customers, we are just waiting to see what the future holds.
You know, the way we look at the business.
Again, as I mentioned earlier, the long-term drivers remain intact.
Speaker Change: You know, our customers are responsive for the tariffs, you know, because we ship our product FOB.
Speaker Change: our factory in Thailand, so generally the customers are responsible for the for the tariffs.
Speaker Change: But, you know, while the situation is very fluid, the customer demand we're seeing for optical communications appears to be hold.
Speaker Change: Great. And just a quick update on building tan if you could in terms of where you are, your house is owned, and any rough idea what you might think you might have a, you know, begin some early production there.
Speaker Change: I'm sorry, could you repeat the question? On building 10, any milestones, you can say you're approaching or any new targets on when you might see your first production from the new...
Thank you.
Speaker Change: Yeah, I think we're on track. I would say, you know, we started, we broke ground in January .
Speaker Change: and we've said it's about an 18-month timeline to be fully completed. We could start to produce before that, but it's about an 18-month timeline.
Speaker Change: We're on track, I would say, a very much on track, we haven't in any way.
Speaker Change: Slowed down our progress on building tandem, in fact if anything.
Speaker Change: You know, we were talking last week about maybe looking at options to see if we could, if the need arose, if we could move a little bit quicker to get building 10 up and running but no, we're very much committed to expanding our capacity and we think we need all of us.
Richard, that's all I've got. Thank you.
Thank you. Thank you, Ryan.
Speaker Change: As a reminder, if you'd like to ask a question at this time, please press star 11 on your touch
Our next question comes from Tim Savageaux with Northland.
Tim Szabogo: Jamie O'Line is open. Great, good afternoon. Can you guys hear me?
Yes, hi, Tim. We can rewrite that.
The Amazon Opportunity. And here's how I'll go about it. You've got...
Speaker Change: Peter Slash, Competitors, with agreements talking about revenues of 400 million a year.
Speaker Change: Now, something like that would make Amazon around a 10% customer for you guys, and it seems like they ought to have that potential, and I don't know if you said it or not, but it seems like Ciena does as well.
Speaker Change: I mean, do you think Amazon can get to that level with you guys? And I guess for both of these ramps, I don't know if this is a concept that applies anymore given the opportunity you have, but how long do you think you take to get fully ramped there?
So, I think, uh...
Speaker Change: Prohibitors from discussing any of those kind of details. But your question was, could it get to that level, I think of a quote?
We'll be working very hard to make sure we…
Speaker Change: We start off with one or two product families that we'll be making and that we expand us to others so.
Speaker Change: We don't necessarily see there, let's say there's a revenue, there's a revenue that's tied to the warrant.
Speaker Change: So, yeah, we're quite excited about that. Again, we think we'll do a great job for Amazon. We're already doing a great job for them and we're really looking forward to expanding that relationship.
Did you have a question about Csaba as well?
It's basically the same question, I guess [inaudible]
Speaker Change: Okay, well I think you and others have done a pretty good job backing into the number, if you look at the kind of trajectory that the customer has had previously with new product launches and then the kind of revenue level that they're able to get to and what that might mean.
Speaker Change: when you strip out there at Gross Margin. You know, we have a-
Speaker Change: Let's say a forecast that we have from the customer, but we only guide one quarter at a time, but we're very optimistic about it, Tim, it is and it is in front of us, we're just beginning.
Speaker Change: to get qualified and just beginning to ramp. So, yeah, there's a few very big ones that we think will all ramp in FY26, like they said, the 1.16 ramp is the end of business.
Speaker Change: and then the Amazon, the Amazon new business wins, all of which will ramp in FY26.
Thank you.
Speaker Change: Great, and that kind of takes me to my second question, with regard to you mentioned.
Speaker Change: Danison, very early days, but in terms of the very strong telecom growth.
Speaker Change: You saw in the quarter, you cited several factors, a few I guess to be precise.
VR
Speaker Change: Strengthening Telecom, which you know, I'll take your non-speed rated business, increase at least there is a proxy for that to some degree.
Speaker Change: and then new wins. And I assume that maybe those are wins other than the ramps that you're talking about or that we were just talking about. So, as you look at that $60 million sequential increase, I kind of am inclined to think.
Speaker Change: that the new winds and strengthening telecom are the balance of that, but I'm sorry, are most of that, but I'd like to hear any comments about how you would kind of...
Speaker Change: Ranked the drivers for the March quarter in terms of telecom growth.
Speaker Change: The non-speed, raced products are back to growth again, and then the new winds...
Speaker Change: are really just in qualification-type volumes, they're not particularly meaningful in the revenue in the March quarter, so that growth has really yet to come.
Okay, thanks for...
Thank you, Chen.
Speaker Change: That concludes today's question and answer session. I'd like to turn the call back to Seamus Grady for closing remarks.
Seamus Grady: Thank you for joining our call today. We had a strong third quarter with results that exceeded our revenue guidance and many positive trends in our business.
Seamus Grady: We're excited about closing out another record year with revenue growth of 18% at the midpoint of our guidance and we're even more excited about FY26 with new programs further contributing to our growth.
Seamus Grady: We look forward to speaking with you in the future and to seeing those of you who will be attending the JP Morgan Conference next week. Thank you and goodbye.
Seamus Grady: Disconcludes today's conference call. Thank you for participating. You may now disconnect.