Fabrinet Q2 2026 Fabrinet Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Fabrinet Earnings Call
Operator: Good afternoon. Welcome to Fabrinet's Financial Results conference call for Q2 of fiscal year 2026. 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 Tumurjanian, VP of Investor Relations. Please go ahead.
Operator: Good afternoon. Welcome to Fabrinet's Financial Results conference call for Q2 of fiscal year 2026. 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 Tumurjanian, VP of Investor Relations. Please go ahead.
Speaker #1: 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.
Speaker #1: I would now like to turn the Thank you, Operator, and
Speaker #1: I'll now call over to your host, Garo Toomajanian, VP of Investor Relations. Please go ahead.
Garo Toomajanian: 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 second quarter of fiscal year 2026, which ended 26 December 2025. 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 on the investor section of our website, located at investor.fabrinet.com. During this call, we will present both GAAP and non-GAAP financial measures. Please refer to the investor 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.
Garo Toomajanian: 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 second quarter of fiscal year 2026, which ended 26 December 2025. 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 on the investor section of our website, located at investor.fabrinet.com. During this call, we will present both GAAP and non-GAAP financial measures. Please refer to the investor 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.
Speaker #2: joining us on today's conference call to
Speaker #2: Discuss Fabrinet's financial and operating results for the second quarter of fiscal year 2026, which ended December 26, 2025. With me on the call today are Seamus Grady, Chairman and Chief Executive Officer, and Csaba Sverha, Chief Financial Officer.
Speaker #2: This call is being webcast, and a replay will be available on the investor section of our website, located at investor.fabrinet.com. During this call, we will present both GAAP and non-GAAP financial measures.
Speaker #2: Please refer to the investor 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.
Speaker #2: 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.
Garo Toomajanian: 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 presentation, 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-Q, filed on 4 November 2025. 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?
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 presentation, 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-Q, filed on 4 November 2025. 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?
Speaker #2: 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 #2: 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-Q filed on November 4, 2025.
Speaker #2: 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.
Speaker #2: Seamus?
Speaker #3: Thank you,
Seamus Grady: Thank you, Garo. Good afternoon, everyone, and thanks for joining our call today. We had an excellent Q2. Revenue and earnings significantly exceeded our guidance ranges, with multiple large key strategic programs across our business, all contributing to our strong performance. Q2 revenue was $1.13 billion, a new record for the company, which represented growth of 36% from a year ago, and is the fastest year-over-year growth we've achieved since our IPO over 15 years ago. Our remarkable top-line performance also represents 16% growth from the prior quarter. Non-GAAP EPS also set a new record at $3.36 per share, exceeding our guidance range despite stronger FX headwinds in the quarter. Looking at our performance in greater detail, Optical Communications revenue grew 29% from a year ago and 11% from the prior quarter.
Seamus Grady: Thank you, Garo. Good afternoon, everyone, and thanks for joining our call today. We had an excellent Q2. Revenue and earnings significantly exceeded our guidance ranges, with multiple large key strategic programs across our business, all contributing to our strong performance. Q2 revenue was $1.13 billion, a new record for the company, which represented growth of 36% from a year ago, and is the fastest year-over-year growth we've achieved since our IPO over 15 years ago. Our remarkable top-line performance also represents 16% growth from the prior quarter. Non-GAAP EPS also set a new record at $3.36 per share, exceeding our guidance range despite stronger FX headwinds in the quarter. Looking at our performance in greater detail, Optical Communications revenue grew 29% from a year ago and 11% from the prior quarter.
Speaker #3: Garo: Good afternoon, everyone, and thanks for joining our call today. We had an excellent second quarter. Revenue and earnings significantly exceeded our guidance ranges, with multiple large key strategic programs across our business all contributing to our strong performance.
Speaker #3: Second quarter revenue was $1.13 billion, a new record for the company. This represented growth of 36% from a year ago, and is the fastest since our IPO over 15 years ago.
Speaker #3: Our remarkable top-line performance also represents 16% growth from the prior quarter. Non-GAAP EPS also set a new record at $3.36 per share, exceeding our guidance range despite stronger FX headwinds in the quarter.
Speaker #3: Looking at our performance in greater detail, optical communications revenue grew 29% from a year ago, and 11% from the prior quarter. Telecom revenue reached a new record, increasing 59% from last year, and 17% from Q1.
Seamus Grady: Telecom revenue reached a new record, increasing 59% from last year and 17% from Q1. Within telecom, DCI revenue grew 42% from a year ago and 3% from Q1, as strong longer-term growth trends remain firmly intact. Datacom revenue grew 2% sequentially, while the year-over-year decline narrowed to 7% as demand continues to strengthen. In Non-Optical Communications, we delivered a very strong performance, with revenue surging 61% from a year ago and up 30% from last quarter, as High-Performance Computing revenue soared to $86 million in the quarter. We expect this strong sequential growth to continue in the near term, particularly as our second and third fully automated production lines get qualified. Automotive revenue grew 12% from a year ago, but was down slightly from Q1 as anticipated.
Telecom revenue reached a new record, increasing 59% from last year and 17% from Q1. Within telecom, DCI revenue grew 42% from a year ago and 3% from Q1, as strong longer-term growth trends remain firmly intact. Datacom revenue grew 2% sequentially, while the year-over-year decline narrowed to 7% as demand continues to strengthen. In Non-Optical Communications, we delivered a very strong performance, with revenue surging 61% from a year ago and up 30% from last quarter, as High-Performance Computing revenue soared to $86 million in the quarter. We expect this strong sequential growth to continue in the near term, particularly as our second and third fully automated production lines get qualified. Automotive revenue grew 12% from a year ago, but was down slightly from Q1 as anticipated.
Speaker #3: Within telecom, DCI revenue grew 42% from a year ago and 3% from Q1, as strong longer-term growth trends remain firmly intact. DataCom revenue grew 2% sequentially, while the year-over-year decline narrowed to 7%, as demand continues to strengthen.
Speaker #3: In non-optical communications, we delivered a very strong performance, with revenues surging 61% from a year ago and up 30% from last quarter, as high-performance computing revenue soared to $86 million in the quarter.
Speaker #3: We expect this strong sequential growth to continue in the near term, particularly as our second and third fully automated production lines get qualified. Automotive revenue grew 12% from a year ago, but was down slightly from Q1, as anticipated.
Speaker #3: While industrial laser revenue demonstrated respectable growth of 10% from a year ago and 4% from last quarter, we are confident that the same growth drivers that contributed to our success in Q2 will extend into Q3.
Seamus Grady: While Industrial Laser revenue demonstrated respectable growth of 10% from a year ago and 4% from last quarter. We are confident that the same growth drivers that contributed to our success in Q2 will extend into Q3. This includes growth in all major areas of our business, with the possible exception of Automotive. We are experiencing sustained Telecom demand, including strong DCI module growth, ongoing Datacom momentum, and continued growth in HPC as our business ramps. In addition, we continue to aggressively pursue new opportunities across all areas of our business. As our business scales, we remain focused on execution as well as strategic capacity expansion. Construction of Building 10, which will be a 2 million sq ft facility, is still on track for completion at the end of calendar 2026.
While Industrial Laser revenue demonstrated respectable growth of 10% from a year ago and 4% from last quarter. We are confident that the same growth drivers that contributed to our success in Q2 will extend into Q3. This includes growth in all major areas of our business, with the possible exception of Automotive. We are experiencing sustained Telecom demand, including strong DCI module growth, ongoing Datacom momentum, and continued growth in HPC as our business ramps. In addition, we continue to aggressively pursue new opportunities across all areas of our business. As our business scales, we remain focused on execution as well as strategic capacity expansion. Construction of Building 10, which will be a 2 million sq ft facility, is still on track for completion at the end of calendar 2026.
Speaker #3: This includes growth in all major areas of our business, with the possible exception of automotive. We are experiencing sustained telecom demand, including strong DCI module growth, ongoing datacom momentum, and continued growth in HPC as our business ramps.
Speaker #3: In addition, we continue to aggressively pursue new opportunities across all areas of our business. As our business scales, we remain focused on execution as well as strategic capacity expansion.
Speaker #3: Construction of Building 10, which will be a 2 million square foot facility, is still on track for completion at the end of calendar 2026.
Speaker #3: We are making progress on completing about 250,000 square feet of that by the middle of the calendar year. At the same time, we are creating additional manufacturing space at our Pinehurst campus by converting office space into manufacturing space, and relocating those offices into a new building on that campus.
Seamus Grady: We are making progress on completing about 250,000sq ft of that by the middle of the calendar year. At the same time, we are creating additional manufacturing space at our Pinehurst campus by converting office space into manufacturing space and relocating those offices into a new building on that campus. With this capacity expansion, we are well prepared to continue supporting our anticipated growth in 2026 and beyond.
We are making progress on completing about 250,000sq ft of that by the middle of the calendar year. At the same time, we are creating additional manufacturing space at our Pinehurst campus by converting office space into manufacturing space and relocating those offices into a new building on that campus. With this capacity expansion, we are well prepared to continue supporting our anticipated growth in 2026 and beyond. In summary, we delivered an impressive Q2 performance with numerous significant customer programs contributing to our outstanding results. We are well positioned to extend our track record of profitable growth and to meet the increasing level of demand we are experiencing in the Q3 and beyond. I'll now turn the call over to Csaba for more financial details on our Q2 results and our outlook for the Q3. Csaba?
Speaker #3: With this capacity expansion, we are well prepared to continue supporting our anticipated growth in 2026 and beyond. In summary, we delivered an impressive second quarter performance, with numerous significant customer programs contributing to our outstanding results.
Seamus Grady: ...In summary, we delivered an impressive Q2 performance with numerous significant customer programs contributing to our outstanding results. We are well positioned to extend our track record of profitable growth and to meet the increasing level of demand we are experiencing in the Q3 and beyond. I'll now turn the call over to Csaba for more financial details on our Q2 results and our outlook for the Q3. Csaba?
Speaker #3: We are well positioned to extend our track record of profitable growth and to meet the increasing level of demand we are experiencing in the third quarter and beyond.
Speaker #3: I'll now turn the call over to Csaba for more financial details on our second quarter results and our outlook for the third quarter. Csaba.
Speaker #2: Thank you, Seamus, and good afternoon, everyone. We are extremely pleased with our performance in the second quarter of fiscal year 2026. Revenue exceeded our guidance range, reaching a record $1.13 billion, up 36% from a year ago and 16% from Q1.
Csaba Sverha: Thank you, Seamus, and good afternoon, everyone. We are extremely pleased with our performance in the second quarter of fiscal year 2026. Revenue exceeded our guidance range, reaching a record $1.13 billion, up 36% from a year ago and 16% from Q1. Strong execution produced non-GAAP EPS that also exceeded our guidance range at $3.36, which includes the negative impact of a $3 million or 9 cents per share FX revaluation loss. Turning to revenue performance by market in the second quarter, optical communications revenue was $833 million, up a strong 29% from a year ago and 11% from Q1. Within optical communications, telecom revenue grew to a record $554 million, surging 59% from a year ago and 17% from Q1.
Csaba Sverha: Thank you, Seamus, and good afternoon, everyone. We are extremely pleased with our performance in the second quarter of fiscal year 2026. Revenue exceeded our guidance range, reaching a record $1.13 billion, up 36% from a year ago and 16% from Q1. Strong execution produced non-GAAP EPS that also exceeded our guidance range at $3.36, which includes the negative impact of a $3 million or 9 cents per share FX revaluation loss. Turning to revenue performance by market in the second quarter, optical communications revenue was $833 million, up a strong 29% from a year ago and 11% from Q1. Within optical communications, telecom revenue grew to a record $554 million, surging 59% from a year ago and 17% from Q1.
Speaker #2: Strong execution produced non-GAAP EPS that also exceeded our guidance range, at $3.36, which includes the negative impact of a $3 million, or $0.09 per share, FX revaluation loss.
Speaker #2: Turning to revenue performance by market in the second quarter, optical communications revenue was $833 million, up a strong 29% from a year ago and 11% from Q1.
Speaker #2: Within optical communications, telecom revenue grew to a record $554 million, surging 59% from a year ago and 17% from Q1. Within telecom, revenue from data center interconnect, or DCI, modules was $142 million. DCI module revenue delivered another strong year-over-year performance. DCI grew 3% from the first quarter.
Csaba Sverha: Within telecom, revenue from data center interconnect, or DCI modules, was $142 million. DCI module revenue delivered another strong year-over-year performance, increasing 42% and grew 3% from the first quarter. Datacom revenue was $278 million. While revenue declined 7% year-over-year, it increased 2% sequentially, and trends appear favorable for continued sequential growth. Turning to non-optical communications, revenue in this category was $300 million, up a sharp 61% from a year ago and 30% from Q1. This exceptional growth was primarily driven by high-performance computing products, which contributed $86 million to revenue in the quarter, compared with $15 million in Q1, the first quarter in which we broke out this category.
Within telecom, revenue from data center interconnect, or DCI modules, was $142 million. DCI module revenue delivered another strong year-over-year performance, increasing 42% and grew 3% from the first quarter. Datacom revenue was $278 million. While revenue declined 7% year-over-year, it increased 2% sequentially, and trends appear favorable for continued sequential growth. Turning to non-optical communications, revenue in this category was $300 million, up a sharp 61% from a year ago and 30% from Q1. This exceptional growth was primarily driven by high-performance computing products, which contributed $86 million to revenue in the quarter, compared with $15 million in Q1, the first quarter in which we broke out this category.
Speaker #2: DataCom revenue was $278 million, increasing 42%. While revenue declined 7% year-over-year, it increased 2% sequentially, and trends appear favorable for continued sequential growth. Communications revenue in this category was $300 million.
Speaker #2: million, up a sharp 61% from a year ago, and 30% from Q1. This exceptional growth was primarily driven by high performance computing products, which contributed $86 Turning to non-optical quarter, compared with $15 million in Q1, the first quarter in which we broke out this million to revenue in the category.
Speaker #2: We are confident that our first HPC program will continue to grow rapidly and is on track to be fully ramped over the next two quarters.
Csaba Sverha: We are confident that our first HPC program will continue to grow rapidly and is on track to be fully ramped over the next two quarters. Automotive revenue of $117 million was up 12% from a year ago, but was slightly down sequentially as anticipated. Industrial laser revenue grew 10% year-over-year and increased 4% sequentially, contributing $41 million to the non-optical communications category. 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 second quarter was 12.4%, a 10 basis point improvement from Q1 and consistent with a year ago, despite foreign exchange headwinds. At the same time, a modest increase in operating expenses, combined with strong top-line growth, continued to drive operating leverage.
We are confident that our first HPC program will continue to grow rapidly and is on track to be fully ramped over the next two quarters. Automotive revenue of $117 million was up 12% from a year ago, but was slightly down sequentially as anticipated. Industrial laser revenue grew 10% year-over-year and increased 4% sequentially, contributing $41 million to the non-optical communications category. 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 second quarter was 12.4%, a 10 basis point improvement from Q1 and consistent with a year ago, despite foreign exchange headwinds. At the same time, a modest increase in operating expenses, combined with strong top-line growth, continued to drive operating leverage.
Speaker #2: Automotive revenue of $117 million was up 12% from a year ago, but was slightly down sequentially, as anticipated. Industrial laser revenue grew 10% year-over-year and increased 4% sequentially, contributing $41 million to the non-optical communications category.
Speaker #2: Our P&L, all expense, and profitability metrics will be presented on a non-GAAP basis unless otherwise noted. Gross margin in the second quarter was, as I discussed, 12.4%, a 10 basis point improvement from Q1.
Speaker #2: And consistent with a year ago, despite foreign exchange headwinds. At the same time, a modest increase in operating expenses, combined with strong top-line growth, continued to drive operating leverage.
Speaker #2: Operating margin reached 10.9% in the second quarter, up 30 basis points from both Q1 and a year ago. Interest income was $9 million, and was partially offset by a $3 million foreign exchange revaluation loss.
Csaba Sverha: Operating margin reached 10.9% in Q2, up 30 basis points from both Q1 and a year ago. Interest income was $9 million and was partially offset by a $3 million foreign exchange revaluation loss. The effective GAAP tax rate for the quarter was 5.9%. As a result, net income was $122 million, or $3.36 per diluted share. Turning to our balance sheet, we ended Q2 with cash and short-term investments of $961 million, down $7 million from the end of Q1. Operating cash flow for the quarter was $46 million. Capital expenditures of $52 million continued to run above maintenance CapEx levels, reflecting construction of Building 10 and capacity enhancements at our Pinehurst campus.
Operating margin reached 10.9% in Q2, up 30 basis points from both Q1 and a year ago. Interest income was $9 million and was partially offset by a $3 million foreign exchange revaluation loss. The effective GAAP tax rate for the quarter was 5.9%. As a result, net income was $122 million, or $3.36 per diluted share. Turning to our balance sheet, we ended Q2 with cash and short-term investments of $961 million, down $7 million from the end of Q1. Operating cash flow for the quarter was $46 million. Capital expenditures of $52 million continued to run above maintenance CapEx levels, reflecting construction of Building 10 and capacity enhancements at our Pinehurst campus.
Speaker #2: The effective GAAP tax rate for the quarter was 5.9%. As a result, net income was $122 million, or per share. Turning to our balance sheet, we ended the second quarter with $961 million, down $7 million from the end of Q1.
Speaker #2: Operating cash flow for the quarter was $46 million. Capital expenditures were $52 million, continuing to run above maintenance CAPEX levels, reflecting construction of Building 10 and capacity enhancements at our Pinehurst campus, with cash and short-term investments.
Speaker #2: As a result, free cash flow was an outflow of $5 million for the quarter. Turning to our share repurchase program, during the second quarter, we repurchased just over 12,000 shares at an average price of $387 per share, for a total cash outlay of $5 million.
Csaba Sverha: As a result, free cash flow was an outflow of $5 million for the quarter. Turning to our share repurchase program. During the second quarter, we repurchased just over 12,000 shares at an average price of $387 per share, for a total cash outlay of $5 million. At the end of the second quarter, $169 million remained available under the program. Turning to our Q3 guidance. We are confident that the very strong growth trends we have been seeing across our business will continue in the third quarter. We expect revenue to grow sequentially in telecom, datacom, and HPC, while anticipating another modest sequential decline in automotive revenue. We expect total revenue to be in the range of $1.15 to $1.2 billion, representing approximately 35% year-over-year growth at the midpoint.
As a result, free cash flow was an outflow of $5 million for the quarter. Turning to our share repurchase program. During the second quarter, we repurchased just over 12,000 shares at an average price of $387 per share, for a total cash outlay of $5 million. At the end of the second quarter, $169 million remained available under the program. Turning to our Q3 guidance. We are confident that the very strong growth trends we have been seeing across our business will continue in the third quarter. We expect revenue to grow sequentially in telecom, datacom, and HPC, while anticipating another modest sequential decline in automotive revenue. We expect total revenue to be in the range of $1.15 to $1.2 billion, representing approximately 35% year-over-year growth at the midpoint.
Speaker #2: At the end of the second quarter, $169 million remained available under the program. Turning to our Q3 guidance, we are confident that the very strong growth trends we have been seeing across our business will continue in the third quarter.
Speaker #2: We expect revenue to grow sequentially in telecom, datacom, and HPC, while anticipating another modest sequential decline in automotive revenue. We expect total revenue to be in the range of $1.15 billion to $1.2 billion, representing approximately 35% year-over-year growth at the midpoint.
Speaker #2: While the anticipated FX headwinds will persist in Q3, we expect to offset debt pressure through continued strong operating leverage. As a result, we expect non-GAAP EPS to be in the range of $3.45 to $3.60, representing approximately 40% year-over-year growth at the midpoint.
Csaba Sverha: While we anticipate that FX headwinds will persist in Q3, we expect to offset that pressure through continued strong operating leverage. As a result, we expect non-GAAP EPS to be in the range of $3.45 to $3.60, representing approximately 40% year-over-year growth at the midpoint. In summary, we delivered an excellent second quarter. With strong momentum across multiple areas of our business, we are well positioned to extend our track record of success into the third quarter. Operator, we are now ready to open the call for questions.
While we anticipate that FX headwinds will persist in Q3, we expect to offset that pressure through continued strong operating leverage. As a result, we expect non-GAAP EPS to be in the range of $3.45 to $3.60, representing approximately 40% year-over-year growth at the midpoint. In summary, we delivered an excellent second quarter. With strong momentum across multiple areas of our business, we are well positioned to extend our track record of success into the third quarter. Operator, we are now ready to open the call for questions.
Speaker #2: In summary, we delivered an excellent second quarter, with strong momentum across multiple areas of our business. We are well positioned to extend our track record of success into the third quarter.
Speaker #2: Operator, we are now ready to open the call for questions.
Speaker #3: Thank you so much. And as a reminder, to ask a question, simply press *11 to get in the queue and wait for your name to be announced.
Seamus Grady: And thank you so much. And as a reminder, to ask a question, simply press star one one to get in the queue and wait for your name to be announced. To withdraw yourself, press star one one again. One moment for our first question.
Operator: And thank you so much. And as a reminder, to ask a question, simply press star one one to get in the queue and wait for your name to be announced. To withdraw yourself, press star one one again. One moment for our first question. It comes from Samik Chatterjee with J.P. Morgan. Please go ahead.
Speaker #3: To withdraw yourself, press star 11 again. One moment for our first question. It comes from Samiq Chatterjee with J.P. Morgan. Please go ahead.
Operator: ... It comes from Samik Chatterjee with J.P. Morgan. Please go ahead.
Speaker #4: Hi. Thanks for taking my questions, and maybe shamelessly starting with you. You had a pretty strong ramp with the HPC customer, but maybe if you can sort of share your thoughts in terms of where you are with the ramp with that customer. Particularly, I think you talked about a second and third production line.
Samik Chatterjee: Hi, thanks for taking my questions. And, maybe, Seamus, starting with you. You had a pretty strong ramp with the HPC customer, but maybe if you can sort of share your thoughts in terms of where you are with the ramp with that customer. Particularly, I think you talked about a second and third production line. I mean, what does the fully ramped volume look like relative to the $80 million plus sort of level you did this quarter? Are you sort of halfway relative to the full ramp, or are you sort of only 1/3 in because you are adding 2 more production lines? If you can just share your thoughts in terms of what the full ramp looks like and when to expect that full ramp. Kind of a follow-up. Thank you.
Samik Chatterjee: Hi, thanks for taking my questions. And, maybe, Seamus, starting with you. You had a pretty strong ramp with the HPC customer, but maybe if you can sort of share your thoughts in terms of where you are with the ramp with that customer. Particularly, I think you talked about a second and third production line. I mean, what does the fully ramped volume look like relative to the $80 million plus sort of level you did this quarter? Are you sort of halfway relative to the full ramp, or are you sort of only 1/3 in because you are adding 2 more production lines? If you can just share your thoughts in terms of what the full ramp looks like and when to expect that full ramp. Kind of a follow-up. Thank you.
Speaker #4: I mean, what does a fully ramped volume look like relative to the $80 million-plus sort of level you did this quarter? Are you sort of halfway relative to the full ramp, or are you only one-third in, because you are adding two more production lines?
Speaker #4: If you can just share your thoughts in terms of what the full ramp looks like, and when to expect that full ramp—kind of a follow-up.
Speaker #4: Thank you.
Seamus Grady: Hi, Samik. Thank you. Yes, we're, you know, a little bit about halfway, I would say. Maybe a little bit more than halfway. We expect the revenue from our current HPC program to be north of about $150 million when it's fully ramped. We're currently running on two fully automated production lines. We had one line, we got a second production line qualified, and we're in the process of qualifying additional lines. Once, you know, once we're able to achieve that and get the lines ramped, we'll be well on our way to that run rate, again, which we expect to achieve over the next couple of quarters.
Seamus Grady: Hi, Samik. Thank you. Yes, we're, you know, a little bit about halfway, I would say. Maybe a little bit more than halfway. We expect the revenue from our current HPC program to be north of about $150 million when it's fully ramped. We're currently running on two fully automated production lines. We had one line, we got a second production line qualified, and we're in the process of qualifying additional lines. Once, you know, once we're able to achieve that and get the lines ramped, we'll be well on our way to that run rate, again, which we expect to achieve over the next couple of quarters.
Speaker #5: We're a little bit more than halfway, I would say. Maybe a little bit more than halfway. We expect the revenue from our current HPC program to be north of about $150 million when it's fully ramped.
Speaker #5: We're currently running on two fully automated production lines. We had one line, we got a second production line qualified, and we're in the process of qualifying additional lines.
Speaker #5: Once we're able to achieve that and get the lines ramped, we'll be well on our way to that run rate—which we expect to achieve over the next couple of quarters.
Speaker #5: After that, we believe there are a couple of growth paths for us in HPC. Given our one-stop shop kind of value proposition and competitive cost structure, we're pursuing other HPC customers, of course, as our relationship with AWS is not exclusive.
Seamus Grady: After that, we believe there's a couple of growth paths for us in HPC, given our one-stop-shop kind of value proposition and competitive cost structure. We're pursuing other HPC customers, of course, as our relationship with AWS is not exclusive, but the timelines for these is, you know, can be fairly long. Meanwhile, if we can exceed our main... our initial customer, if we can exceed their expectations for cost, quality, and deliveries, we may be able to earn a larger piece of our current program, because we're currently a second source in that program. So, you know, no matter how you look at it, we're very excited to see our high-performance computing business rapidly becoming a pretty meaningful revenue and growth driver.
After that, we believe there's a couple of growth paths for us in HPC, given our one-stop-shop kind of value proposition and competitive cost structure. We're pursuing other HPC customers, of course, as our relationship with AWS is not exclusive, but the timelines for these is, you know, can be fairly long. Meanwhile, if we can exceed our main... our initial customer, if we can exceed their expectations for cost, quality, and deliveries, we may be able to earn a larger piece of our current program, because we're currently a second source in that program. So, you know, no matter how you look at it, we're very excited to see our high-performance computing business rapidly becoming a pretty meaningful revenue and growth driver.
Speaker #5: But the timelines for these can be fairly long. Meanwhile, if we can exceed our initial customer—if we can exceed their expectations for cost, quality, and deliveries—we may be able to earn a larger piece of our current program, because we're currently a second source on that program.
Speaker #5: So, no matter how you look at it, we're very excited to see our high-performance computing business rapidly becoming a pretty meaningful revenue and growth driver.
Speaker #4: Got it. Got it. Okay. And then maybe I wanted to ask you on a couple of opportunities as well. I mean, one of your big customers is now closer to commercializing CPO in more large volume.
Samik Chatterjee: Got it. Got it. Okay. And then maybe I wanted to ask you on a couple of opportunities as well. I mean, your one of your big customers is now closer to commercializing CPO in more large volume. So any more clarity that you have on that front as to what your role in co-packaged optics is going to be and what maybe the content opportunity on that front is going to be? And there's a lot of excitement in the optical space around OCS products as well, optical circuit switches. Do you see that as an incremental opportunity? Any customer engagement on that front as well? Thank you. Thanks for taking my questions.
Samik Chatterjee: Got it. Got it. Okay. And then maybe I wanted to ask you on a couple of opportunities as well. I mean, your one of your big customers is now closer to commercializing CPO in more large volume. So any more clarity that you have on that front as to what your role in co-packaged optics is going to be and what maybe the content opportunity on that front is going to be? And there's a lot of excitement in the optical space around OCS products as well, optical circuit switches. Do you see that as an incremental opportunity? Any customer engagement on that front as well? Thank you. Thanks for taking my questions.
Speaker #4: So, any more clarity that you have on that front as to what your role in co-packaged optics is going to be, and what maybe the content opportunity on that front is going to be?
Speaker #4: And there's a lot of excitement in the optical space around OCS products as well—optical circuit switches. Do you see that as an incremental opportunity?
Speaker #4: Any customer engagement on that front as well? Thank you. Thanks for taking my
Speaker #4: questions. No problem.
Seamus Grady: No problem. Yeah, so we, for us, you know, Co-Packaged Optics, it's really an evolution from Silicon Photonics and the precision photonics packaging capabilities we've developed over many years. You know, we have and will continue to invest heavily and working closely with our customers to align our capabilities with their roadmaps. For many, for many years, you know, Co-Packaged Optics has been just on the horizon, but for now, right now, it's much more real than it's ever been, and we're in an excellent position to benefit from that. We believe we're far ahead of most of our competitors in the space in making this technology a reality, and we're already seeing some CPO revenue, although the amounts are relatively small right now. We're working on Co-Packaged Optics programs with three different customers.
Seamus Grady: No problem. Yeah, so we, for us, you know, Co-Packaged Optics, it's really an evolution from Silicon Photonics and the precision photonics packaging capabilities we've developed over many years. You know, we have and will continue to invest heavily and working closely with our customers to align our capabilities with their roadmaps. For many, for many years, you know, Co-Packaged Optics has been just on the horizon, but for now, right now, it's much more real than it's ever been, and we're in an excellent position to benefit from that. We believe we're far ahead of most of our competitors in the space in making this technology a reality, and we're already seeing some CPO revenue, although the amounts are relatively small right now. We're working on Co-Packaged Optics programs with three different customers.
Speaker #5: Yeah, so for us, co-packaged optics—it's really an evolution from silicon photonics and the precision photonics packaging capabilities we've developed over many years. We have, and we'll continue to, invest heavily and work closely with our customers on roadmaps. For many years, co-packaged optics has been just on the horizon, but for now—right now—it's much more real than it's ever been.
Speaker #5: And we're in an excellent position to benefit from that. We believe we're far ahead of most of our competitors in the space in making this technology a reality.
Seamus Grady: It's not just one customer, Samik; it's actually three different customers. The specific timings on when the revenue will become more material depends on our customers' roadmaps and schedules, but we're very excited about CPO. Again, we don't really want to speak on our customer's behalf, but rest assured, we're quite excited, and we have several products that we're working on, or projects with our customers. You know, as we-
It's not just one customer, Samik; it's actually three different customers. The specific timings on when the revenue will become more material depends on our customers' roadmaps and schedules, but we're very excited about CPO. Again, we don't really want to speak on our customer's behalf, but rest assured, we're quite excited, and we have several products that we're working on, or projects with our customers. You know, as we-
Speaker #5: CPO, again, we don't really want to speak on our customers' behalf, but rest assured, we're quite excited and we have several products that we're working on, our projects—both ours as well as with customers.
Samik Chatterjee: Optical Circuit Switches, yeah.
Samik Chatterjee: Optical Circuit Switches, yeah.
Seamus Grady: As with other customers, we'd expect to see the impact in line with, or slightly ahead of our customers' production schedule. On optical circuit switching, we are engaged on a number of fronts, and again, it's a, you know, completely new product category. We're quite excited about it and looking forward. You know, nothing, again, nothing to announce, but really will depend on our customers' ramp schedules, but we are working on a couple of projects, on, in that space, and we are quite excited about OCS as a technology. We think it has a, you know, a significant role to play in the future.
Seamus Grady: As with other customers, we'd expect to see the impact in line with, or slightly ahead of our customers' production schedule. On optical circuit switching, we are engaged on a number of fronts, and again, it's a, you know, completely new product category. We're quite excited about it and looking forward. You know, nothing, again, nothing to announce, but really will depend on our customers' ramp schedules, but we are working on a couple of projects, on, in that space, and we are quite excited about OCS as a technology. We think it has a, you know, a significant role to play in the future.
Speaker #5: Other customers, we'd expect to see the impact on customers' production schedules. In line with our slightly ahead of our... On optical circuit switching, we are engaged on a number of fronts.
Speaker #5: And again, it's a product—it's a completely new product category. We're quite excited about it and looking forward. Nothing again, nothing to announce, but it really will depend on our customers' ramp schedules.
Speaker #5: But we are working on a couple of projects in that space, and we are quite excited about OCS as a technology. We think it has a significant role to play in the
Speaker #5: future. Got it.
Samik Chatterjee: Great. Thank you. Thanks for taking my questions.
Samik Chatterjee: Great. Thank you. Thanks for taking my questions.
Speaker #4: Great. Thank you. Thanks for taking my questions.
Speaker #5: Thank you, Samiq.
Seamus Grady: Thank you, Samik.
Seamus Grady: Thank you, Samik.
Speaker #3: Thank you. Our next question proceed.
Operator: Thank you. Our next question is from Karl Ackerman with BNP Paribas. Please proceed.
Operator: Thank you. Our next question is from Karl Ackerman with BNP Paribas. Please proceed.
Speaker #3: Please
Karl Ackerman: Yes, good afternoon, gentlemen. Two questions for me, please. First off, do you remain supply constrained on data comm transceivers? Because I, I would have thought that you might see maybe improving data comm mix as laser capacity comes online. I guess as you address that question, could you just speak to, you know, the growth opportunities you see within that segment across hyperscale and across merchant transceiver OEMs? Any update on that would be helpful. Another follow-up, please.
Karl Ackerman: Yes, good afternoon, gentlemen. Two questions for me, please. First off, do you remain supply constrained on data comm transceivers? Because I, I would have thought that you might see maybe improving data comm mix as laser capacity comes online. I guess as you address that question, could you just speak to, you know, the growth opportunities you see within that segment across hyperscale and across merchant transceiver OEMs? Any update on that would be helpful. Another follow-up, please.
Speaker #4: Yes,
Speaker #4: good afternoon, with BNP Paribas.
Speaker #4: Gentlemen, two questions for me, please. First off, do you remain supply constrained on datacom transceivers? Because I would have thought that you might see maybe improving datacom mix as laser capacity comes online.
Speaker #4: I guess as you address that question, could you segment across hyperscale and across merchant transceiver OEMs? Any update on that would be helpful. Another follow-up, please.
Speaker #5: Yeah, thanks, Karl. So yeah, we have been, as you say, supply constrained in our data comp, particularly on the lane, both 800, 1.6 gig, and supply.
Seamus Grady: Yeah, thanks, Karl. So yeah, we have been, as you say, supply constrained in our data comm, particularly on the leading edge products, the 200 gig per lane, both 800 gig and 1.6. Demand continues to outstrip supply, and we continue to ship significant volumes to our main customer, but of course we could ship more if we had more components. We did get approval for a second source for the EML, for the laser, which has been the main cause of the supply constraint. So we were able to get a second source. Our customer was able to approve a second source for the laser during the quarter, and that should benefit us, you know, this quarter and in future quarters.
Seamus Grady: Yeah, thanks, Karl. So yeah, we have been, as you say, supply constrained in our data comm, particularly on the leading edge products, the 200 gig per lane, both 800 gig and 1.6. Demand continues to outstrip supply, and we continue to ship significant volumes to our main customer, but of course we could ship more if we had more components. We did get approval for a second source for the EML, for the laser, which has been the main cause of the supply constraint. So we were able to get a second source. Our customer was able to approve a second source for the laser during the quarter, and that should benefit us, you know, this quarter and in future quarters.
Speaker #5: We are shipping significant volumes to our main customer, and we continue to ship, but of course, we could ship more if we had more components. We did get approval for a second source for the EML, for the laser.
Speaker #5: Which has been the main cause of the supply constraints. So we were able to get a second source, our customer was able to approve a second source for the laser during the quarter.
Speaker #5: And that quarter and in future should benefit us this quarters. So we are making good progress there. We've always felt that that supply constraint will resolve itself, come through now.
Seamus Grady: So we are making good progress there. We've always felt that that supply constraint will resolve itself, and we're starting to see that resolution come through now. The mix between 800 gig and 1.6, you know, at that 200 gig per lane node, it's really not that relevant to us. We don't mind which the customer orders. We're happy to ship what they need from us. So again, good progress, and we're making good progress there. As regards other potential growth drivers in the Datacom space, again, we have several projects that we're working on, both with hyperscale direct and with other potential, you know, product companies who need our services. So several projects that we're working on.
So we are making good progress there. We've always felt that that supply constraint will resolve itself, and we're starting to see that resolution come through now. The mix between 800 gig and 1.6, you know, at that 200 gig per lane node, it's really not that relevant to us. We don't mind which the customer orders. We're happy to ship what they need from us. So again, good progress, and we're making good progress there. As regards other potential growth drivers in the Datacom space, again, we have several projects that we're working on, both with hyperscale direct and with other potential, you know, product companies who need our services. So several projects that we're working on.
Speaker #5: The mix between 800 gig and 1.6, at that, and we're starting to see that resolution, 200 gig per lane, know that it's which the customer orders.
Speaker #5: They're really not that relevant to us. Happy to ship what they need from us. So again, we don't mind good progress, and we're making good progress there.
Speaker #5: Growth drivers in the data comp space, again, we have several projects that we're working on, both with hyperscale direct and with—as regards other potential product companies who we're working on.
Speaker #5: Again, nothing to announce—need our services. So, several projects not yet, but several that we're working on, both hyperscale direct again, and other, let's say, merchant transceiver.
Seamus Grady: Again, nothing to announce yet, but several that we're working on. Again, both hyperscale, direct, and other, let's say, merchant transceiver manufacturers.
Again, nothing to announce yet, but several that we're working on. Again, both hyperscale, direct, and other, let's say, merchant transceiver manufacturers.
Speaker #4: Got it. Very helpful. Perhaps if I could talk...
Karl Ackerman: Got it. Very helpful. Perhaps, if I could talk about telecom development, you know, over the $80 million sequential increase. Was that evenly split between Satcom and the core telecom or optical system business? Just trying to get a relative mix of the Satcom business there. And then, as you address that, do you believe that your Satcom business opportunity could be similar to your high-performance computing opportunity over time? Thank you.
Karl Ackerman: Got it. Very helpful. Perhaps, if I could talk about telecom development, you know, over the $80 million sequential increase. Was that evenly split between Satcom and the core telecom or optical system business? Just trying to get a relative mix of the Satcom business there. And then, as you address that, do you believe that your Satcom business opportunity could be similar to your high-performance computing opportunity over time? Thank you.
Speaker #4: About telecom development—over the $80 million sequential increase, was that evenly split between Satcom and the core telecom or optical line system business? Just trying to get a manufacturer's view.
Speaker #4: Relative mix of the Satcom. And then, as you address that, do you believe that your Satcom business opportunity could be similar to your high-performance computing opportunity over time?
Speaker #4: Thank
Speaker #4: you. Yeah.
Seamus Grady: Yeah. I mean, our, as you call it, the satellite communications business has been growing steadily for us. It's been a, you know, a meaningful contributor for a while. We haven't really broken it out separately. You know, a lot of the growth in the quarter was more focused on the DCI, I think. You know, DCI has been very strong for us. We have a number of customers there and, and really, you know, mostly 400ZR and 800ZR modules. That business has been growing very nicely for us. So we're, you know, again, very optimistic, I would say, about telecom generally, both from a satellite communications point of view and the DCI point of view, and also, you know, complete network systems. Our network system business continue to grow as well.
Seamus Grady: Yeah. I mean, our, as you call it, the satellite communications business has been growing steadily for us. It's been a, you know, a meaningful contributor for a while. We haven't really broken it out separately. You know, a lot of the growth in the quarter was more focused on the DCI, I think. You know, DCI has been very strong for us. We have a number of customers there and, and really, you know, mostly 400ZR and 800ZR modules. That business has been growing very nicely for us. So we're, you know, again, very optimistic, I would say, about telecom generally, both from a satellite communications point of view and the DCI point of view, and also, you know, complete network systems. Our network system business continue to grow as well. So really solid growth, I think, on all fronts in our telecom business.
Speaker #5: I mean, as you call it, the satellite communications business—it has been growing steadily for us. It's been a meaningful contributor for a while.
Speaker #5: We haven't really broken it out. Growth in the quarter was more focused on separately. A lot of the DCI, I think. DCI has been very strong for us.
Speaker #5: We have a number of mostly 400-CR and 800 customers there, and really CR modules. That business has been growing very nicely for us.
Speaker #5: So again, we're very optimistic, I would say, about telecom generally, both from a satellite communications point of view and the DCI point of view.
Speaker #5: And also, complete network systems or network system business continue to grow as well. So, really solid growth, I think, on all fronts in our telecom business.
Seamus Grady: So really solid growth, I think, on all fronts in our telecom business.
Karl Ackerman: Thank you.
Karl Ackerman: Thank you.
Speaker #4: you.
Speaker #5: Thank you,
Seamus Grady: Thank you, sir.
Seamus Grady: Thank you, sir.
Speaker #3: Thank you so much, Karl. Our next question comes from the line of Christopher Rowland with
Operator: Thank you so much. Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed.
Operator: Thank you so much. Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed.
Speaker #3: Susquehanna. Please
Speaker #3: proceed. Thank
Speaker #6: Hi guys, I guess my first one is around CPO. Thanks so much for the question. In terms of switches as opposed to scale-up, are you hearing about increased desire for CPO switches?
Christopher Rolland: Hi, guys. Thanks so much for the question. I guess my first one is around CPO switches as opposed to scale up. Are you hearing about increased desire for CPO switches? Is this perhaps upsiding your capacity plans, and just generally your outlook for CPO switches versus, you know, the typical transceiver set up? How do you think this might move over time?
Christopher Rolland: Hi, guys. Thanks so much for the question. I guess my first one is around CPO switches as opposed to scale up. Are you hearing about increased desire for CPO switches? Is this perhaps upsiding your capacity plans, and just generally your outlook for CPO switches versus, you know, the typical transceiver set up? How do you think this might move over time?
Speaker #6: Is this perhaps upsiding your capacity plans for CPO switches versus the, and just generally your outlook, typical transceiver? How do you think this might move?
Speaker #5: Yeah, I mean, we're involved in the CPO—let's say—supply chain. We're in the ecosystem there. We haven't actually talked about exactly what we are doing, but certainly CPO switches and a number of the products that our customers are working on are very exciting for us.
Seamus Grady: Yeah, I mean, we're involved in the CPO, let's say, supply chain. We're in the ecosystem there. We haven't actually talked about exactly what we are doing, but, you know, certainly CPO, CPO switches and a number of the products that our customers are working on, you know, are very exciting for us. We haven't really... Like I say, we haven't really talked about the switch, the CPO switch opportunities in detail, but yeah, certainly something we're excited about. But I really wouldn't want to go much, much deeper than that at this point, Christopher.
Seamus Grady: Yeah, I mean, we're involved in the CPO, let's say, supply chain. We're in the ecosystem there. We haven't actually talked about exactly what we are doing, but, you know, certainly CPO, CPO switches and a number of the products that our customers are working on, you know, are very exciting for us. We haven't really... Like I say, we haven't really talked about the switch, the CPO switch opportunities in detail, but yeah, certainly something we're excited about. But I really wouldn't want to go much, much deeper than that at this point, Christopher.
Speaker #5: We haven't really—like I say, we haven't really talked about the switch, the CPO switch opportunities in detail, something we're excited about. But I really—but yeah, certainly wouldn't want to go much deeper than that.
Speaker #5: At this point, Christopher.
Christopher Rolland: Understood. Perhaps as a follow-up, DCI seemed a little bit disappointing versus at least our model, and then non-DCI under Telecom had some upside. If you could perhaps address at least the DCI portion, what's going on there? Is that also laser and supply based, or is that a pure demand dynamic?
Speaker #6: Understood. Perhaps as a follow-up, DCI seemed a little least our model and then a bit disappointing versus at non-DCI under telecom, which has some upside. If you could perhaps address at least the DCI portion, what's going on there?
Christopher Rolland: Understood. Perhaps as a follow-up, DCI seemed a little bit disappointing versus at least our model, and then non-DCI under Telecom had some upside. If you could perhaps address at least the DCI portion, what's going on there? Is that also laser and supply based, or is that a pure demand dynamic?
Speaker #6: Is that also laser- and supply-based? Or is that a pure demand dynamic?
Seamus Grady: No, it's you know, demand remains very strong. You know, we continue to see great momentum in our DCI module business. We grew 59% year over year, and we have all of the market leading customers in the space. We do believe the long-term demand is durable, and as we work with the customers on the next generation, 800ZR products, which are yet to ramp. Like any leading edge, leading technology products, there's always gonna be constraints here and there. So, you know, with new products and leading technology products, it's not always straightforward. You know, all the components have to line up, the designs have to work, everything has to go perfectly. But the demand remains very strong.
Seamus Grady: No, it's you know, demand remains very strong. You know, we continue to see great momentum in our DCI module business. We grew 59% year over year, and we have all of the market leading customers in the space. We do believe the long-term demand is durable, and as we work with the customers on the next generation, 800ZR products, which are yet to ramp. Like any leading edge, leading technology products, there's always gonna be constraints here and there. So, you know, with new products and leading technology products, it's not always straightforward. You know, all the components have to line up, the designs have to work, everything has to go perfectly. But the demand remains very strong.
Speaker #5: No, the demand remains very strong. We continue to see great momentum in our DCI module business. We grew 59% year over year. And we have space.
Speaker #5: No, the demand remains very strong. We continue to see great momentum in our DCI module business. We grew 59% year over year. And we have all of the market-leading customers, and do believe the long-term demand is durable.
Speaker #5: And as we work with the customers on the next-generation 800CR products, which are yet to ramp, like any leading-edge, leading-technology products, there's always going to be constraints here and there.
Speaker #5: So, with new products and leading technology products, it's not always straightforward. All the components have to line up, the designs have to work, everything has to go perfectly.
Speaker #5: But the demand remains very strong, particularly strong as we started to see Telecom revenue growth ramp. CNN's new system program, as well as other new program wins that we're particularly excited about, are still in the early period of those.
Seamus Grady: Telecom revenue growth was particularly strong as we started to ramp, you know, Ciena's new system program, as well as other new program wins that we're particularly excited about, but we're still in the early part of those. Specifically on DCI, you know, we broke out our DCI revenue. We talked. We want to be clear that in reporting our DCI revenue, it's for coherent telecom modules that we have high confidence are being used in datacom interconnect, data center interconnect applications. And these include both, you know, 400 and 800 ZR modules and their variants, as well as some embedded coherent line card modules as well. So our DCI revenue does, it does not include telecom systems. That's our pure DCI coherent module business.
Telecom revenue growth was particularly strong as we started to ramp, you know, Ciena's new system program, as well as other new program wins that we're particularly excited about, but we're still in the early part of those. Specifically on DCI, you know, we broke out our DCI revenue. We talked. We want to be clear that in reporting our DCI revenue, it's for coherent telecom modules that we have high confidence are being used in datacom interconnect, data center interconnect applications. And these include both, you know, 400 and 800 ZR modules and their variants, as well as some embedded coherent line card modules as well. So our DCI revenue does, it does not include telecom systems. That's our pure DCI coherent module business.
Speaker #5: Specifically on DCI, we broke out our DCI revenue. We want to be clear that, in reporting our DCI revenue, it's for coherent telecom modules that we have high confidence are being used in data com interconnect—sorry, data center interconnect—applications.
Speaker #5: And these include both 400 and 800-CR modules, and their variants, as well as some embedded coherent line card modules as well. So our DCI revenue does not include telecom systems.
Speaker #5: That's our pure DCI coherent module business. But overall, I think we're remaining very optimistic about DCI. There will always be puts and takes. It won't always grow in a straight line, especially again, as I say, when you're dealing with leading-edge products.
Seamus Grady: But overall, I think we're, you know, we remain very optimistic about DCI. There will always be puts and takes. It won't always grow in a straight line, especially again, Chris, as I said, when you're leading, when you're dealing with leading edge products, there's always going to be challenges here and there, but nothing we're concerned about. The demand remains very robust.
But overall, I think we're, you know, we remain very optimistic about DCI. There will always be puts and takes. It won't always grow in a straight line, especially again, Chris, as I said, when you're leading, when you're dealing with leading edge products, there's always going to be challenges here and there, but nothing we're concerned about. The demand remains very robust.
Speaker #5: There's always going to be challenges here and there, but nothing we're concerned about. The demand remains very strong.
Speaker #5: robust. Thanks,
Christopher Rolland: Thanks, Seamus.
Christopher Rolland: Thanks, Seamus.
Speaker #5: Thank you, Christopher.
Seamus Grady: Thank you, Christopher.
Seamus Grady: Thank you, Christopher.
Speaker #3: Thank you. Our next question, Seamus, comes from the line of George Nodder with Wolf Research. Please proceed.
Operator: Thank you. Our next question comes from the line of George Notter with Wolfe Research. Please proceed.
Operator: Thank you. Our next question comes from the line of George Notter with Wolfe Research. Please proceed.
George Notter: ... Hi, guys. Thanks very much. I just wanted to, kind of, lean in on, you know, new customer opportunities on, on the telecom side of the business. Like, I, I think you're kind of suggesting that you're working with other customers. Are these like OEM customers that are in the marketplace and shifting existing, business from, from other manufacturers to Fabrinet, or are these new product categories? I guess I'm just trying to understand, you know, what you guys are looking at in terms of new opportunity. And, you know, I noticed, from Nokia's earnings call, they talked about expanding their optical manufacturing capacity. I'm just wondering if, you guys are involved in that. Thanks a lot.
Speaker #7: Guys, thanks very much. Hi. I just wanted to kind of lean in on new customer opportunities on the telecom side of the business. I think you're kind of suggesting that you're working with other customers.
George Notter: Hi, guys. Thanks very much. I just wanted to, kind of, lean in on, you know, new customer opportunities on, on the telecom side of the business. Like, I, I think you're kind of suggesting that you're working with other customers. Are these like OEM customers that are in the marketplace and shifting existing, business from, from other manufacturers to Fabrinet, or are these new product categories? I guess I'm just trying to understand, you know, what you guys are looking at in terms of new opportunity. And, you know, I noticed, from Nokia's earnings call, they talked about expanding their optical manufacturing capacity. I'm just wondering if, you guys are involved in that. Thanks a lot.
Speaker #7: Are these OEM customers that are in the marketplace and shifting existing business from other manufacturers to Fabrinet, or are these new product categories? I guess I'm just trying to understand what you guys are looking at in terms of new opportunity.
Speaker #7: And I noticed from Nokia's earnings call, they talked about expanding their optical manufacturing capacity. I'm just wondering if you guys are involved in that.
Speaker #7: Thanks a lot.
Speaker #5: Yeah, I think we're very excited about, obviously, not just strengthening the business, but also the new opportunities. It's a really good pipeline we have that we're looking at that's in front of us.
Seamus Grady: Yeah, I think, you know, we're very excited about, obviously not just the strength in the business, but also the new opportunities. It's a really good pipeline we have that we're looking at, that's in front of us. And we're always pursuing new opportunities, both with potential new customers as well as existing customers. The kinds of opportunities that we've talked about and continue to pursue, things like, you know, the Datacom opportunities we've talked about, you know, including producing transceivers directly for hyperscalers and also building transceivers for merchant vendors. And on the Telecom opportunities, yeah, it would include additional systems, wins, and further penetrating existing customers and also you know, new customers or maybe new to Fabrinet customers. So we've had some success.
Seamus Grady: Yeah, I think, you know, we're very excited about, obviously not just the strength in the business, but also the new opportunities. It's a really good pipeline we have that we're looking at, that's in front of us. And we're always pursuing new opportunities, both with potential new customers as well as existing customers. The kinds of opportunities that we've talked about and continue to pursue, things like, you know, the Datacom opportunities we've talked about, you know, including producing transceivers directly for hyperscalers and also building transceivers for merchant vendors. And on the Telecom opportunities, yeah, it would include additional systems, wins, and further penetrating existing customers and also you know, new customers or maybe new to Fabrinet customers. So we've had some success.
Speaker #5: And we're always pursuing new opportunities, both with potential new customers as well as existing customers. The kinds of opportunities that we've talked about and continue to pursue include things like datacom opportunities we've discussed, including producing transceivers directly for hyperscalers, and also building transceivers for merchant vendors.
Speaker #5: And on the telecom opportunities, yeah, I would include additional systems, wins, and further penetrating existing customers, and also new customers, or maybe new-to-Fabrinet customers.
Speaker #5: So we've had some success. We think we have a winning formula where we're able to deliver, we believe, superior technology, excellent delivery, quality, and responsiveness at a lower cost because we don't margin stack.
Seamus Grady: We think we have a winning formula where we're able to deliver, we believe, superior technology, excellent delivery, quality, responsiveness at a lower cost because we don't margin stack, and we also don't have our own products, which is very important to our customers. We're a pure contract manufacturer. We don't have any of our own products, and that's actually a positive for many of our customers. They don't want us to have our own products. So, you know, overall, we have several new opportunities there that we're pursuing, George, including existing customers and some new customers that we're trying to win. They take time, though. These things always take time. And we also have additional high performance compute customers that we're pursuing and additional CPO.
We think we have a winning formula where we're able to deliver, we believe, superior technology, excellent delivery, quality, responsiveness at a lower cost because we don't margin stack, and we also don't have our own products, which is very important to our customers. We're a pure contract manufacturer. We don't have any of our own products, and that's actually a positive for many of our customers. They don't want us to have our own products. So, you know, overall, we have several new opportunities there that we're pursuing, George, including existing customers and some new customers that we're trying to win. They take time, though. These things always take time. And we also have additional high performance compute customers that we're pursuing and additional CPO.Several growth drivers that we're working on right now.
Speaker #5: And we also don't have our own products, which is very important to our customers. We're a pure contract manufacturer. We don't have any of our own products.
Speaker #5: And that's actually a positive for many of our customers. They don't want us to have our own products. So, overall, we have several new opportunities there that we're pursuing, George, including existing customers and some new customers that we're trying to win.
Speaker #5: They take time, though. These things always take time. And we also have additional high-performance compute customers that we're pursuing. And additional CPO. So, several growth drivers that we're working on right now.
Seamus Grady: Several growth drivers that we're working on right now.
Speaker #7: Great. And then you mentioned potential transceiver designs for hyperscalers and other merchant vendors. I guess at one point I kind of thought that was maybe a number of quarters away, but I'm just curious—programs like that, assuming you guys have success—is that a quarter away, multiple quarters away, or multiple years away?
George Notter: Great. And then, you mentioned potential transceiver designs for hyperscalers and other merchant vendors. I guess at one point I kind of thought that was maybe a number of quarters away, but I'm just curious, like, programs like that, assuming you guys have success, are, is that a quarter away, multiple quarters away, multiple years away? Like, what do you think the timeline would look like? Thanks.
George Notter: Great. And then, you mentioned potential transceiver designs for hyperscalers and other merchant vendors. I guess at one point I kind of thought that was maybe a number of quarters away, but I'm just curious, like, programs like that, assuming you guys have success, are, is that a quarter away, multiple quarters away, multiple years away? Like, what do you think the timeline would look like? Thanks.
Speaker #7: What do you think the timeline would look like?
Speaker #7: Thanks. I would
Seamus Grady: I would say, you know, we're quarters away. I don't think it's years away. I think it's quarters away. We've been working on it for, I don't know, well over a year, probably 18 months at this stage. So we're, I would say, quarters away rather than years away, George, from that turning into meaningful revenue.
Seamus Grady: I would say, you know, we're quarters away. I don't think it's years away. I think it's quarters away. We've been working on it for, I don't know, well over a year, probably 18 months at this stage. So we're, I would say, quarters away rather than years away, George, from that turning into meaningful revenue.
Speaker #5: Say we're quarters away. I don't think it's years away. I think it's quarters away. We've been working on it for, I don't know, well over a year, probably 18 months at this stage.
Speaker #5: And so, I would say we're quarters away, rather than years away, George, from that turning into something meaningful.
Speaker #5: revenue. Got it.
George Notter: Got it. Super. Thanks very much.
George Notter: Got it. Super. Thanks very much.
Speaker #7: Super. Thanks very much.
Speaker #5: Thank you.
Seamus Grady: Thank you.
Seamus Grady: Thank you.
Speaker #3: One moment for our next question. And it comes from the line of Stephen Fox with Fox Advisors. Please proceed.
Operator: One moment for our next question. It comes from the line of Steven Fox with Fox Advisors. Please proceed.
Operator: One moment for our next question. It comes from the line of Steven Fox with Fox Advisors. Please proceed.
Steven Fox: Hi, good afternoon. I guess I had two questions. First of all, on the hyperscale business, the ramp is obviously substantial. You mentioned that maybe improving from a second source with position was possible. From the outside looking in, it looks like it's ramping it very well. Like, you don't see any sort of holes in margins or anything like that. Can you just give a little bit more color on your chances of doing, doing that? And also, I thought there was potentially a second program with that customer that was gonna ramp. Can you just comment on that as well? And then I had a follow-up.
Steven Fox: Hi, good afternoon. I guess I had two questions. First of all, on the hyperscale business, the ramp is obviously substantial. You mentioned that maybe improving from a second source with position was possible. From the outside looking in, it looks like it's ramping it very well. Like, you don't see any sort of holes in margins or anything like that. Can you just give a little bit more color on your chances of doing, doing that? And also, I thought there was potentially a second program with that customer that was gonna ramp. Can you just comment on that as well? And then I had a follow-up.
Speaker #8: Hi, good afternoon. I guess I had two questions. First of all, on the hyperscale business, the ramp is obviously substantial. You mentioned that maybe improving from a second source.
Speaker #8: Position was possible. From the outside looking in, it looks like it’s ramping. It very well—you don’t see any sort of holes in margins or anything like that.
Speaker #8: Can you just give a little bit more color on your chances of doing that? And also, I thought there was potentially a second program with that customer that was going to ramp.
Speaker #8: Can you just comment on that as well? And then I had a follow-up.
Speaker #5: Yeah, so I think the second question first. So, the second program—there's multiple programs. I mean, there's no programs excluded from what we're working on.
Seamus Grady: Yeah. So I'll take the second question first. So the second program, there's multiple programs. I mean, there's no programs excluded from what we're working on. We're working on current products and also new products. So we are ramping multiple products. You know, our chances of growing the business further, like I said in my previous answer, we have two lines, two production lines, fully qualified and additional lines being qualified. We're a little bit more than halfway into the ramp to capacity on those production lines, which, you know, we have ample capacity, and we can build more products. Our chances of growing the business more than that level, you know, we're reasonably confident, but we have to execute.
Seamus Grady: Yeah. So I'll take the second question first. So the second program, there's multiple programs. I mean, there's no programs excluded from what we're working on. We're working on current products and also new products. So we are ramping multiple products. You know, our chances of growing the business further, like I said in my previous answer, we have two lines, two production lines, fully qualified and additional lines being qualified. We're a little bit more than halfway into the ramp to capacity on those production lines, which, you know, we have ample capacity, and we can build more products. Our chances of growing the business more than that level, you know, we're reasonably confident, but we have to execute.
Speaker #5: We're working on current products and also new products, so we are ramping multiple products. Our chances of growing the business further, like I said in my previous answer, we have two lines—two production lines—fully qualified, and additional lines being qualified.
Speaker #5: We're a little bit more than halfway into the ramp to capacity on those production lines. But we have ample capacity, and we can build more products.
Speaker #5: Our chances of growing the business more than that level were reasonably confident, but we have to execute. It's really a case of earning the business by doing an excellent job for the customer—excellent job, excellent delivery, quality, responsiveness, etc.—at very competitive cost.
Seamus Grady: It's really a case of earning the business by doing an excellent job for the customer. Excellent job, excellent delivery quality, responsiveness, et cetera, at very competitive cost. So we're, you know, we enjoy the competition. We, you know, the existing supplier is a very good supplier with a long relationship with the customer. But, you know, we're confident that we can continue to grow that business because the business is very strong, and we're performing very well. So both things we think are in our favor.
It's really a case of earning the business by doing an excellent job for the customer. Excellent job, excellent delivery quality, responsiveness, et cetera, at very competitive cost. So we're, you know, we enjoy the competition. We, you know, the existing supplier is a very good supplier with a long relationship with the customer. But, you know, we're confident that we can continue to grow that business because the business is very strong, and we're performing very well. So both things we think are in our favor.
Speaker #5: So we're enjoying the competition. The existing suppliers are very good suppliers with a long relationship with the customer. But we're confident that we can continue to grow that business because the business is very strong and we're performing very well.
Speaker #5: So, both things we think are in our favor.
Speaker #8: Great, that's helpful. And then, just as a follow-up, just on the dollar, about the currency issue—so, nine-cent drag according to just reported. Any help on how the EPS drag looks this quarter versus maybe 90 days ago?
Steven Fox: Great. That's helpful. And then just as a follow-up, just on the dollar baht currency issue. So $0.09 drag in the quarter you just reported. Any help on how the EPS drag looks this quarter versus maybe 90 days ago? Thanks very much.
Steven Fox: Great. That's helpful. And then just as a follow-up, just on the dollar baht currency issue. So $0.09 drag in the quarter you just reported. Any help on how the EPS drag looks this quarter versus maybe 90 days ago? Thanks very much.
Speaker #8: Thanks very much.
Csaba Sverha: Hi, Steve, this is Shiva. Yes, indeed, the exchange rate environment has been unfavorable for the last several quarters, so we called out about $3 million drag in the last quarter and below the line, and also on gross margins, we have been seeing unfavorable headwinds. So based on our hedging programs that we have in place, we continue to expect about the same impact going into Q3 from exchange rate perspective. Obviously, we are not forecasting anything on the revaluation and below the line, but we do anticipate about 20 to 30 basis points headwind in the gross margin. Nevertheless, obviously, we have been able to deliver slight improvement on gross margin in the last quarters, as well as the drive continues operating leverage.
Csaba Sverha: Hi, Steve, this is Csaba. Yes, indeed, the exchange rate environment has been unfavorable for the last several quarters, so we called out about $3 million drag in the last quarter and below the line, and also on gross margins, we have been seeing unfavorable headwinds. So based on our hedging programs that we have in place, we continue to expect about the same impact going into Q3 from exchange rate perspective. Obviously, we are not forecasting anything on the revaluation and below the line, but we do anticipate about 20 to 30 basis points headwind in the gross margin. Nevertheless, obviously, we have been able to deliver slight improvement on gross margin in the last quarters, as well as the drive continues operating leverage.
Speaker #1: Hi, Steve. This is Chao. Yeah, indeed, the exchange rate environment has been unfavorable for the last several quarters. So we called out about a $3 million drag in the last quarter.
Speaker #1: And below the line, and also on gross margins, we have been seeing unfavorable headwinds. So, based on our hedging program that we have in place, we continue to expect about the same impact going into the third quarter from an exchange rate perspective.
Speaker #1: Obviously, we are not forecasting anything on the revaluation and below the line, but we do anticipate about a 20 to 30 basis point headwind in the gross margin.
Speaker #1: Nevertheless, obviously, we have been able to deliver slight improvement on gross margin even last quarter, as well as the drive continues operating. So we are hopeful that we will be able to offset most of the exchange rate headwinds in operating leverage by keeping our OPEX in check, and as we grow the top line, we should see continued operating leverage on operating income.
Csaba Sverha: So we are hopeful that we will be able to offset most of the exchange rate headwinds in operating leverage by keeping our OpEx in check. And as we grow the top line, we should see continued operating leverage on operating income. But we don't put any guides for exchange rate other than the color that, based on the hedging program we have in place, we do anticipate similar headwinds in the gross margin as in the prior quarter.
So we are hopeful that we will be able to offset most of the exchange rate headwinds in operating leverage by keeping our OpEx in check. And as we grow the top line, we should see continued operating leverage on operating income. But we don't put any guides for exchange rate other than the color that, based on the hedging program we have in place, we do anticipate similar headwinds in the gross margin as in the prior quarter.
Speaker #1: But we don't put any guides for exchange rate. Other than the color that, based on the hedging program we have in place, we do anticipate similar headwinds in the gross margin as in the prior quarter.
Speaker #8: Great. That's very helpful. Thank you.
Ryan Koontz: Great. That's very helpful. Thank you.
Steven Fox: Great. That's very helpful. Thank you.
Speaker #1: You're
Csaba Sverha: You're welcome.
Csaba Sverha: You're welcome.
Speaker #1: welcome. Thank you.
Operator: Thank you. Our next question comes from the line of Mike Genovese with Rosenblatt Securities. Please proceed.
Operator: Thank you. Our next question comes from the line of Mike Genovese with Rosenblatt Securities. Please proceed.
Speaker #3: Our next question comes from the line of Mike Genovese with Rosenblatt Securities. Please.
Speaker #3: proceed. Great.
Michael Genovese: Great, thanks. Congrats on the record results. Maybe my first question is more of a comment, but I think if you counted that Ciena business where that stuff was going in DCI, you'd find the vast majority of your telecom growth was driven by DCI, and that you had a huge sequential DCI quarter. That's just like kind of a segmenting thing. Any thoughts on that?
Michael Genovese: Great, thanks. Congrats on the record results. Maybe my first question is more of a comment, but I think if you counted that Ciena business where that stuff was going in DCI, you'd find the vast majority of your telecom growth was driven by DCI, and that you had a huge sequential DCI quarter. That's just like kind of a segmenting thing. Any thoughts on that?
Speaker #7: Thanks, and congrats on the record results. Maybe my first question is more of a comment, but I think if you counted that Ciena business where that stuff was going in DCI, you'd find the vast majority of your telecom growth was driven by DCI, and that you had a huge sequential DCI quarter.
Speaker #7: But that's just kind of a segmenting.
Speaker #7: Thing. Any thoughts on that? Yeah,
Seamus Grady: Yeah, I think that's pretty accurate. You know, DCI has been very strong for us. The growth is not just DCI, but it's predominantly DCI. It's been very good, and it continues to grow, and the demand looks to be very durable. It's not just Ciena; it's across multiple, you know, multiple customers.
Seamus Grady: Yeah, I think that's pretty accurate. You know, DCI has been very strong for us. The growth is not just DCI, but it's predominantly DCI. It's been very good, and it continues to grow, and the demand looks to be very durable. It's not just Ciena; it's across multiple, you know, multiple customers.
Speaker #5: I think that's pretty accurate. DCI has been very strong for us. The growth is not just DCI, but it's predominantly DCI. It's been very good.
Speaker #5: And it continues to grow. And the demand looks to be very durable. And it's not just Sienna; it's across multiple customers.
Michael Genovese: Yeah. Now, can you give any details on the data center side or datacom side? I mean, between the 800 and 1.6T, yeah, whether in terms of like what the mix is or what the trends are, is one growing faster than the other? Anything you could tell us about that?
Michael Genovese: Yeah. Now, can you give any details on the data center side or datacom side? I mean, between the 800 and 1.6T, yeah, whether in terms of like what the mix is or what the trends are, is one growing faster than the other? Anything you could tell us about that?
Speaker #7: Yeah. Can you give any details on the data center side or data comm side? I mean, between the 800 and 1.6—yeah, 1.6 mix—whether in terms of what the mix is or what the trends are, is one growing faster than the other?
Speaker #7: Anything you could tell us about...
Speaker #7: that? Not particularly.
Seamus Grady: Not, not particularly. You know, I mean, it's, it's predominantly, you know, 200 gig per lane, almost all 200 gig per lane, 1.6 terabit and 800 gig. The exact mix between the two, we don't, we don't really, you know. I won't say we don't care, but we don't put a huge amount of thought into it because it really is a decision that our customer makes and that our customers, customers make. The exact, you know, puts and takes as to why the, the customers would want 800 gig, 200 gig per lane versus 600, sorry, versus 1.6, 200 gig per lane, it's not really something we're, we're involved in. But we're producing, you know, everything we can with the components we have, and the demand remains very robust.
Seamus Grady: Not, not particularly. You know, I mean, it's, it's predominantly, you know, 200 gig per lane, almost all 200 gig per lane, 1.6 terabit and 800 gig. The exact mix between the two, we don't, we don't really, you know. I won't say we don't care, but we don't put a huge amount of thought into it because it really is a decision that our customer makes and that our customers, customers make. The exact, you know, puts and takes as to why the, the customers would want 800 gig, 200 gig per lane versus 600, sorry, versus 1.6, 200 gig per lane, it's not really something we're, we're involved in. But we're producing, you know, everything we can with the components we have, and the demand remains very robust.
Speaker #5: I mean, it's predominantly 200 gig per lane—almost all 200 gig per lane. 1.6 terabit and 800 gig. The exact mix between the two, we don't really—I won't say we don't care, but we don't put a huge amount of thought into it because it really is a decision that our customer makes.
Speaker #5: And that our customers make. The exact puts and takes as to why the customers would want 800 gig, 200 gig per lane versus 600—sorry, versus 1.6, 200 gig per lane.
Speaker #5: It's not really something we're involved in. But we're producing everything we can with the components we have. And the demand remains very robust. But the mix—again, the mix between 1.6 and 800 gig—we don't put too much emphasis on, because it's not that important to us.
Seamus Grady: But the mix, again, the mix between 1.6 and 800 gig, we, we don't, we don't put too much emphasis on, because it's not, it's not that important to us. They're both produced on the same production line, very similar products.
But the mix, again, the mix between 1.6 and 800 gig, we, we don't, we don't put too much emphasis on, because it's not, it's not that important to us. They're both produced on the same production line, very similar products.
Speaker #5: They're both produced on the same production line, very
Speaker #5: similar products. Yeah.
Michael Genovese: Yeah. I guess just final question. In Datacom, I mean, when you, which, you know, you understand you're projecting sequential growth for this quarter. You usually don't guide more than another, but would you continue, you know, more than one quarter of sequential growth? And kind of, how many, in Datacom do you know, do you have visibility to?
Michael Genovese: Yeah. I guess just final question. In Datacom, I mean, when you, which, you know, you understand you're projecting sequential growth for this quarter. You usually don't guide more than another, but would you continue, you know, more than one quarter of sequential growth? And kind of, how many, in Datacom do you know, do you have visibility to?
Speaker #7: I guess just a final question. In data comm, I mean, when you understand the projecting sequential growth through this quarter, you usually don't guide more than another, but would you continue more than one quarter of sequential growth?
Speaker #7: And kind of, how many in data comm do you foresee? Do you have visibility?
Speaker #7: to? Well, we have pretty good
Seamus Grady: Well, you know, we have pretty good visibility. I would say our visibility right now, it's certainly the furthest that I've in my experience. I think we have more visibility now than we've ever had. Like you say, we guide one quarter at a time, but we're very optimistic. You know, we're adding capacity, as Csaba mentioned in his remarks. We're converting significant, you know, office space and warehousing space into manufacturing space at our Pinehurst campus. We're accelerating the build-out of our 2 million sq ft Building 10. And in our Chonburi campus, we'll have 250,000 sq ft completed by the middle of the year, by June. And then the balance of that 2 million sq ft will be ready by probably early 2026, January, February 2026.
Seamus Grady: Well, you know, we have pretty good visibility. I would say our visibility right now, it's certainly the furthest that I've in my experience. I think we have more visibility now than we've ever had. Like you say, we guide one quarter at a time, but we're very optimistic. You know, we're adding capacity, as Csaba mentioned in his remarks. We're converting significant, you know, office space and warehousing space into manufacturing space at our Pinehurst campus. We're accelerating the build-out of our 2 million sq ft Building 10. And in our Chonburi campus, we'll have 250,000 sq ft completed by the middle of the year, by June. And then the balance of that 2 million sq ft will be ready by probably early 2026, January, February 2026.
Speaker #5: Visibility, I would say. Our visibility right now—it's certainly the furthest that I've, in my experience—I think we have more visibility now than we've ever had.
Speaker #5: Like you say, we guide one quarter at a time, but we're very optimistic. We're adding capacity, as Csaba mentioned in his remarks. We've converted significant office space and warehousing space into manufacturing space at our Pinehurst campus.
Speaker #5: We're accelerating the buildout of our 2 million square foot building 10. And at our Chambury campus, we will have 250,000 square feet completed by the middle of the year, by June.
Speaker #5: And then, the balance of that 2 million square feet will be ready by probably early 2026—January, February 2026. So, and there are other ways to expand the capacity that we're looking at.
Seamus Grady: So, you know, and there's other ways to expand the capacity that we're looking at that we'll probably talk about in our next earnings call, but there's a number of activities we have underway that should help us to add additional capacity. So you know, we're pretty excited, Mike, about the demand we have in front of us. It's a very exciting time, I'd say. When you look at what's going on with our customers and what they need from Fabrinet, it's a good place to be right now. We're pretty excited about it.
So, you know, and there's other ways to expand the capacity that we're looking at that we'll probably talk about in our next earnings call, but there's a number of activities we have underway that should help us to add additional capacity. So you know, we're pretty excited, Mike, about the demand we have in front of us. It's a very exciting time, I'd say. When you look at what's going on with our customers and what they need from Fabrinet, it's a good place to be right now. We're pretty excited about it.
Speaker #5: We'll probably talk about it in our next earnings call, but there are a number of activities we have underway that should help us add additional capacity.
Speaker #5: So we're pretty excited, Mike, about the demand we have in front of us. It's a very exciting time, I'd say, when you look at what's going on with our customers and what they need from Fabrinet.
Speaker #5: It's a good place to be right now. We're pretty excited about it.
Speaker #7: Great. Thanks very much. Appreciate it.
Michael Genovese: Great. Thanks very much. Appreciate it.
Michael Genovese: Great. Thanks very much. Appreciate it.
Speaker #5: Thank you, Mike.
Seamus Grady: Thank you, Mike.
Seamus Grady: Thank you, Mike.
Speaker #3: Thank
Operator: Thank you. Our next question comes from Ryan Koontz with Needham. Please proceed.
Operator: Thank you. Our next question comes from Ryan Koontz with Needham. Please proceed.
Speaker #3: You. Our next question comes from Ryan Coons with Needham. Please.
Speaker #3: You. Our next question comes from Ryan Coons with Needham. Please proceed. Great.
Ryan Koontz: Great, thanks. Appreciate the updated milestones on Building 10. Wondering if you can share just a little more color about where you are in that process, you know, what kind of shape the facility is in in terms of the construction and where you are really in the procurement of all the materials you need, as well as, you know, customers to outfit the building, and what that process looks like over the balance of 2026. Thank you.
Ryan Koontz: Great, thanks. Appreciate the updated milestones on Building 10. Wondering if you can share just a little more color about where you are in that process, you know, what kind of shape the facility is in in terms of the construction and where you are really in the procurement of all the materials you need, as well as, you know, customers to outfit the building, and what that process looks like over the balance of 2026. Thank you.
Speaker #8: Thanks. Appreciate the updated milestones on Building 10. When you can, share just a little more color about where you are in that process—what kind of shape the facility is in, in terms of the construction, and where you really are in the procurement of all the materials you need, as well as customers to outfit the building.
Speaker #8: And what that process looks like over the balance of ’26. Thank you.
Speaker #8: you. So we're well underway.
Seamus Grady: So we're well underway. I was there a few weeks ago. We're well underway. The building is a phenomenal building, and it will be a real showcase when it's finished. You know, 2 million sq ft, it's a lot of factory. It's a big factory. But we're well underway. You know, we've had no delays or anything like that with the availability of the material to build the factory. It's going very well. And we'll have about, like I say, about 250,000 sq ft finished and ready to move into by the end of June. So that's well ahead of the completion schedule for the full factory.
Seamus Grady: So we're well underway. I was there a few weeks ago. We're well underway. The building is a phenomenal building, and it will be a real showcase when it's finished. You know, 2 million sq ft, it's a lot of factory. It's a big factory. But we're well underway. You know, we've had no delays or anything like that with the availability of the material to build the factory. It's going very well. And we'll have about, like I say, about 250,000 sq ft finished and ready to move into by the end of June. So that's well ahead of the completion schedule for the full factory.
Speaker #5: I was there a few weeks ago. We're well underway. The building is a phenomenal building, and it will be really showcased when it's finished.
Speaker #5: Two million square feet—that's a lot of factory. It's a big factory. But we're well underway. We've had no delays or anything like that with the availability of the material to build the factory.
Speaker #5: It's going very, very well. And we'll have about, like I say, about 250,000 square feet finished and ready to move into by the end of June.
Speaker #5: So that's well ahead of the completion schedule for the full factory. Then the balance of the factory will complete as we go throughout the year.
Seamus Grady: Then the balance of the factory will complete as we go throughout the year, and I think we'll probably take possession of the balance of the factory in, like, January, February of 2027. So it's going very well. You know, customer demand to consume the factory, you know, again, we don't ask our customers to make a hard commitment. We have to have capacity in place ahead of demand. That's why we're, you know, moving so fast with this. We see, you know, strong demand and strengthening demand from our customers. So, you know, we'll put the factory up, then the customers... We're optimistic, I would say, Ryan, about our ability to fill the factory. You know, when we built Building 8, it was 550,000 sq ft....
Then the balance of the factory will complete as we go throughout the year, and I think we'll probably take possession of the balance of the factory in, like, January, February of 2027. So it's going very well. You know, customer demand to consume the factory, you know, again, we don't ask our customers to make a hard commitment. We have to have capacity in place ahead of demand. That's why we're, you know, moving so fast with this. We see, you know, strong demand and strengthening demand from our customers. So, you know, we'll put the factory up, then the customers... We're optimistic, I would say, Ryan, about our ability to fill the factory. You know, when we built Building 8, it was 550,000 sq ft....
Speaker #5: And I think we'll probably take possession of the balance of the factory in January or February of 2027, so it's going very well. The customer demand to consume the factory—again, we don't ask our customers to make a hard commitment.
Speaker #5: We have to have capacity in place ahead of demand. That's why we're moving so fast with this. We see strong demand and strengthening demand from our customers.
Speaker #5: So, we'll put the factory up. Then the customers—we're optimistic, I would say, Ryan—about our ability to fill the factory. When we built Building A, it was 550,000 square feet.
Speaker #5: And we filled it pretty quickly. Building 9 was 1 million square feet, and that's almost full. So we're pretty optimistic about Building 10. We also have room for Building 11 and Building 12 on the same campus.
Seamus Grady: We filled it pretty quickly. Building 9 was 1 million sq ft, and that's, you know, almost full. So, you know, we're pretty optimistic about Building 10. We also have room for Building 11 and Building 12 on the same campus. So, lots of runway in terms of capacity in front of us.
We filled it pretty quickly. Building 9 was 1 million sq ft, and that's, you know, almost full. So, you know, we're pretty optimistic about Building 10. We also have room for Building 11 and Building 12 on the same campus. So, lots of runway in terms of capacity in front of us.
Speaker #5: So, lots of runway in terms of capacity in front of us.
Seamus Grady: Really helpful. Appreciate the color. Thank you.
Ryan Koontz: Really helpful. Appreciate the color. Thank you.
Speaker #8: Really helpful. Appreciate the color. Thank you.
Seamus Grady: No problem. Thank you, Ryan.
Seamus Grady: No problem. Thank you, Ryan.
Speaker #5: Thank you, Ryan.
Speaker #3: Thank No problem.
Operator: Thank you. Our next question comes from Tim Savageau with Northland Capital Markets. Please proceed.
Operator: Thank you. Our next question comes from Tim Savageau with Northland Capital Markets. Please proceed.
Speaker #3: You. Our next question comes from Tim Savageal with Northland Capital Markets. Please.
Speaker #3: proceed.
Tim Savageaux: Hey, good afternoon, and congrats on the results from me as well.
Tim Savageaux: Hey, good afternoon, and congrats on the results from me as well.
Speaker #9: And congrats on the results. For me as well.
Seamus Grady: Thank you, Tim.
Seamus Grady: Thank you, Tim.
Tim Savageaux: Couple of questions. First, just on, I guess, on continuing on the capacity front. So as you look to add that 250,000sq ft, I guess at this point where we're standing right now, and, and I don't know if this is a reference to, to transceivers being quarters away, or do you have an idea about where that capacity is going? I guess, since it's coming online pretty soon, any color on, you know, what drove that pull in, and if there's any particular projects that are driving that? And as a quick aside to that, still on capacity, I wonder if you might be able to size the kind of Pinehurst repurposing in the context of, of the 250K that you're adding. I assume it's smaller, but anything you can give us there, it's...
Speaker #9: Couple of thank you, Tim, questions. First, just, I guess, continuing on the capacity front. So as you look to add that 250,000 square feet, I guess at this point where we're standing right now—and I don't know if this is a reference to transceivers being quarters away—or do you have an idea about where that capacity is going, I guess, since it's coming online pretty soon?
Tim Savageaux: Couple of questions. First, just on, I guess, on continuing on the capacity front. So as you look to add that 250,000sq ft, I guess at this point where we're standing right now, and, and I don't know if this is a reference to, to transceivers being quarters away, or do you have an idea about where that capacity is going? I guess, since it's coming online pretty soon, any color on, you know, what drove that pull in, and if there's any particular projects that are driving that? And as a quick aside to that, still on capacity, I wonder if you might be able to size the kind of Pinehurst repurposing in the context of, of the 250K that you're adding. I assume it's smaller, but anything you can give us there, it's...
Speaker #9: Any color on what drove that pull-in? And if there's any particular projects that are driving that? And as a quick aside to that, still on capacity, I wonder if you might be able to size the kind of Pinehurst repurposing in the context of the 250,000 that you're adding.
Speaker #9: I assume it's smaller, but anything you can give us there. You look like you're adding, what, $300 million in annual revenue capacity, plus Pinehurst.
Tim Savageaux: You know, you look like you're adding, what, $300 million in annual revenue capacity plus Pinehurst. So just wondering if we have any more visibility on where that's going. Thanks.
You know, you look like you're adding, what, $300 million in annual revenue capacity plus Pinehurst. So just wondering if we have any more visibility on where that's going. Thanks.
Speaker #9: So just wondering if we have any more visibility.
Speaker #9: On where that's going. Thanks. Yeah.
Seamus Grady: Yeah. So I'll let Csaba cover the Pinehurst capacity addition in a moment. Yeah, Chonburi, we're, as you say, pulling in 250,000sq ft. That's 6 to 8 months ahead of the original schedule. There's several customers, Tim, you know, we wouldn't want to quantify them all here, but it's really, you know, several; there's several drivers. Again, our telecom business is very strong. And it's not just TCI. It's TCI, but it's not just TCI. There's also some additional new business and new customer wins that we're working on in the telecom space. Datacom, it's, you know, growth with our main customer, but also we're confident in our ability to win other new Datacom customers, both merchant and also hyperscale direct.
Seamus Grady: Yeah. So I'll let Csaba cover the Pinehurst capacity addition in a moment. Yeah, Chonburi, we're, as you say, pulling in 250,000sq ft. That's 6 to 8 months ahead of the original schedule. There's several customers, Tim, you know, we wouldn't want to quantify them all here, but it's really, you know, several; there's several drivers. Again, our telecom business is very strong. And it's not just TCI. It's TCI, but it's not just TCI. There's also some additional new business and new customer wins that we're working on in the telecom space. Datacom, it's, you know, growth with our main customer, but also we're confident in our ability to win other new Datacom customers, both merchant and also hyperscale direct.
Speaker #5: So I'll let Csaba cover the Pinehurst capacity addition in a moment. Yeah, Chambury, we're, as you say, pulling in 250,000 square feet. That's six to eight months ahead of the original schedule.
Speaker #5: There are several customers, Tim. We wouldn't want to quantify them all here, but it's really several drivers. Again, our telecom business is very strong. And it's not just TCI.
Speaker #5: It's TCI, but it's not just TCI. There's also some additional new business and new customer wins that we're working on in the telecom space.
Speaker #5: Datacom—it's growth with our main customer, but also we're confident in our ability to win other new Datacom customers, both merchant and also hyperscale direct.
Seamus Grady: You know, our business overall, Tim, is just very strong. Our demand, the demand profile we have from our customers is very strong. For us, it's a relatively easy decision to add this capacity because the way we add this capacity, our balance sheet is very strong. As you know, we have very strong balance sheet. We're able to build these buildings and add this capacity with zero debt. So the downside risk for us is very small. As we build Building 10, you know, it will be, I don't know, about $130 million of CapEx.
You know, our business overall, Tim, is just very strong. Our demand, the demand profile we have from our customers is very strong. For us, it's a relatively easy decision to add this capacity because the way we add this capacity, our balance sheet is very strong. As you know, we have very strong balance sheet. We're able to build these buildings and add this capacity with zero debt. So the downside risk for us is very small. As we build Building 10, you know, it will be, I don't know, about $130 million of CapEx.
Speaker #5: Our business overall, Tim, is just very strong. Our demand profile we have from our customers is very strong. And for us, it's a relatively easy decision to add this capacity because the way we add this capacity, our balance sheet is very strong.
Speaker #5: As you know, we have very strong balance sheets. We're able to build these buildings and add this capacity with zero debt, so the downside risk for us is very small.
Speaker #5: As we build building 10, it will be—I don't know—about $130 million of CapEx. Csaba can correct me if I'm wrong on that—about $130 million of CapEx.
Seamus Grady: Csaba can correct me if I'm wrong on that, but $130 million of CapEx, which will add, you know, 2, 2 billion, sorry, 2 million sq ft and capacity for an additional... Depends on the mix, but we said 2.5 in the past. It's probably a little bit north of that at the moment, given the mix that we're looking at. So the upside, you know, opportunity is huge. It's the, if you like, the operating profit that we can generate from that, from that business. The downside risk is very small. The downside risk for us of building a factory that doesn't get consumed as quickly as we'd like is probably 15 basis points, something like that, on a full year basis. So 15 basis points, gross margin headwind.
Csaba can correct me if I'm wrong on that, but $130 million of CapEx, which will add, you know, 2, 2 billion, sorry, 2 million sq ft and capacity for an additional... Depends on the mix, but we said 2.5 in the past. It's probably a little bit north of that at the moment, given the mix that we're looking at. So the upside, you know, opportunity is huge. It's the, if you like, the operating profit that we can generate from that, from that business. The downside risk is very small. The downside risk for us of building a factory that doesn't get consumed as quickly as we'd like is probably 15 basis points, something like that, on a full year basis. So 15 basis points, gross margin headwind.
Speaker #5: It will add to 2 million—sorry, 2 million square feet. And capacity for an additional, depends on the mix, but we said 2.5 in the past—it's probably a little bit north of that at the moment, given the mix that we're looking at.
Speaker #5: So the upside opportunity is huge. It's the, if you like, the operating profit that we can generate from downside risk is very small. That business.
Speaker #5: The downside risk for us of building a factory that doesn't get consumed as quickly as we'd like is probably 15 basis points, something like that.
Speaker #5: And on a full-year basis, so 15 basis points gross margin headwind. So the downside risk is tiny because of the strong balance sheets we have, the way we're able to build these in a very efficient way with no debt. Downside risk is very small.
Seamus Grady: So the downside risk is tiny because of the strong balance sheets we have, the way we're able to build these in a very efficient way with no debt. Downside risk is very small. The upside opportunity is huge. So it's a relatively easy decision for us to add this capacity. Coupled with that, you know, our ROIC is about 40%, so really the best return for us is to add capacity, fill that capacity. You know, with new business that's able to generate, you know, outsized margins for our industry and also outsized returns. So it's a relatively straightforward decision for us, Tim.
So the downside risk is tiny because of the strong balance sheets we have, the way we're able to build these in a very efficient way with no debt. Downside risk is very small. The upside opportunity is huge. So it's a relatively easy decision for us to add this capacity. Coupled with that, you know, our ROIC is about 40%, so really the best return for us is to add capacity, fill that capacity. You know, with new business that's able to generate, you know, outsized margins for our industry and also outsized returns. So it's a relatively straightforward decision for us, Tim.
Speaker #5: The upside opportunity is huge, so it's a relatively easy decision for us to add this capacity. Coupled with that, our ROIC is about 40%.
Speaker #5: So really, the best return for us is to add capacity, fill that capacity with new business that's able to generate outsized margins for our industry and also outsized returns.
Speaker #5: So it's a relatively straightforward decision for us,
Speaker #5: Tim. Great.
Tim Savageaux: Great, thanks. If I could follow up,
Tim Savageaux: Great, thanks. If I could follow up,
Speaker #9: Thanks. And if I could follow up, when you mentioned strength across the business, demand-wise, it sounds like that hasn't really changed as you've gone through the quarter and into the new year here. But given where you're guiding and the sharpness of that HPC ramp, while you say you expect telecom to grow, it seems like only slightly on a sequential basis.
Seamus Grady: Sure.
Seamus Grady: Sure.
Tim Savageaux: And you mentioned strength across the business demand-wise. Sounds like that hasn't really changed as you've, you know, gone through the quarter and into the new year here. But given where you're guiding and the sharpness of that HPC ramp, while, say, you expect telecom to grow, it seems like, you know, only slightly on a sequential basis and, you know, relative to very strong results you just put up here in the quarter. And I guess I'm, am I, first, am I reading that right? And second, you know, do you attribute that to anything in particular, seasonality of customers or anything else, if indeed I'm kind of working through the segments properly? Thanks.
Tim Savageaux: And you mentioned strength across the business demand-wise. Sounds like that hasn't really changed as you've, you know, gone through the quarter and into the new year here. But given where you're guiding and the sharpness of that HPC ramp, while, say, you expect telecom to grow, it seems like, you know, only slightly on a sequential basis and, you know, relative to very strong results you just put up here in the quarter. And I guess I'm, am I, first, am I reading that right? And second, you know, do you attribute that to anything in particular, seasonality of customers or anything else, if indeed I'm kind of working through the segments properly? Thanks.
Speaker #9: And relative to very strong results you just put up here in the quarter—and I guess, am I first? Am I reading that right?
Speaker #9: And second, do you attribute that to anything in particular—seasonality, a customer's, or anything else? If indeed I'm kind of working through the segments.
Speaker #9: properly. Thanks. I'm
Seamus Grady: I'm sorry, Tim. I didn't understand the question. Are you interpreting what correctly? I missed the question.
Seamus Grady: I'm sorry, Tim. I didn't understand the question. Are you interpreting what correctly? I missed the question.
Speaker #5: Sorry, Tim. I didn't understand the question. Are you interpreting what correctly? I missed the...
Speaker #5: question. Just your
Tim Savageaux: Just your segment guidance. Basically, I'm saying with HPC likely up another big chunk in the quarter, while you're talking about Telecom and Datacom growth, it seems like much slower sequential growth than you saw in December in terms of what you're forecasting in March.
Tim Savageaux: Just your segment guidance. Basically, I'm saying with HPC likely up another big chunk in the quarter, while you're talking about Telecom and Datacom growth, it seems like much slower sequential growth than you saw in December in terms of what you're forecasting in March.
Speaker #9: Segment guidance—basically, I'm saying with HPC, it's likely up another big chunk in the quarter, while you're talking about telecom and datacom growth. It seems like much slower sequential growth than you saw in December, in terms of what you're forecasting in March.
Seamus Grady: Okay.
Seamus Grady: Okay.
Tim Savageaux: Is that accurate, and why would that be? I guess would be the question.
Tim Savageaux: Is that accurate, and why would that be? I guess would be the question.
Speaker #9: I think that was accurate. And why would that be? I guess.
Speaker #9: would be the question.
Speaker #5: I think I'll let Chaba
Seamus Grady: I think I'll let Csaba add a little bit of color, but I think our HPC growth, you know, it's not in a straight line because we are dealing with some new products that don't always grow, that the growth is a little bit lumpy, I would say. So HPC won't necessarily grow in a straight line. It looks like a nice straight line, but really, we only have two data points, two quarters of revenue, and as everyone knows, two data points is not a trend. So we have to wait until we have a little bit more HPC experience under our belt. And then maybe I'll let Csaba talk about Telecom and Datacom, and also the question you had about the capacity additions in Pinehurst.
Seamus Grady: I think I'll let Csaba add a little bit of color, but I think our HPC growth, you know, it's not in a straight line because we are dealing with some new products that don't always grow, that the growth is a little bit lumpy, I would say. So HPC won't necessarily grow in a straight line. It looks like a nice straight line, but really, we only have two data points, two quarters of revenue, and as everyone knows, two data points is not a trend. So we have to wait until we have a little bit more HPC experience under our belt. And then maybe I'll let Csaba talk about Telecom and Datacom, and also the question you had about the capacity additions in Pinehurst.
Speaker #5: Add a little bit of color, but I think our HPC growth—it's not in a straight line, because we are dealing with some new products that don't always grow. The growth is a little bit lumpy, I would say.
Speaker #5: So HPC won't necessarily grow in a straight line. It looks like a nice straight line, but really we only have two data points, two quarters of revenue.
Speaker #5: And, as everyone knows, two data points is not a trend. So we have to wait until we have a little bit more HPC experience under our belt.
Speaker #5: And then maybe I'll let Csaba talk about telecom and datacom, and also the question you had about the capacity additions in Pinehurst.
Csaba Sverha: So Tim, hi. Let me give you some pointers on the guidance. As we mentioned, all the segments we anticipate to grow with the exception of Automotive. So HPC, we had a nice bump of about $70 million sequentially last quarter, so that's not going to grow in that space. But we do anticipate double-digit growth in that area. Within Telecom, we anticipate that DCI is going to grow faster than we have seen in the past quarters, so that trend continues into our third quarter, and we also anticipate Datacom to grow. That's the color that we can provide at this stage. Automotive will probably be down in a similar way as it has been in the prior quarter.
Csaba Sverha: So Tim, hi. Let me give you some pointers on the guidance. As we mentioned, all the segments we anticipate to grow with the exception of Automotive. So HPC, we had a nice bump of about $70 million sequentially last quarter, so that's not going to grow in that space. But we do anticipate double-digit growth in that area. Within Telecom, we anticipate that DCI is going to grow faster than we have seen in the past quarters, so that trend continues into our third quarter, and we also anticipate Datacom to grow. That's the color that we can provide at this stage. Automotive will probably be down in a similar way as it has been in the prior quarter.
Speaker #9: So, Tim, hi. So let me give you some pointers on the guidance. As we mentioned, all the segments we anticipate to grow, with the exception of automotive.
Speaker #9: So, HPC, we had a nice bump of about $70 million sequentially last quarter. So that's not going to grow in that space. But we do anticipate double-digit growth in that area.
Speaker #9: Within telecom, we anticipate that DCI is going to grow faster than we have seen in the past quarter, so that strength continues into our third quarter.
Speaker #9: And we also anticipate Datacom to grow. So that's the color that we can provide at this stage. And automotive will probably be down in a similar way as it has been in the prior quarter.
Csaba Sverha: With regards to Pinehurst campus, to answer your prior question, so we are able to create about 120,000sq ft of space or convert offices and warehouse spaces to manufacturing space. A couple of years back, we were able to acquire an adjacent piece of land, which is in a zone that we are able to build office buildings on that land, but we are not able to build a factory. So, we were able to convert some of the office and manufacturing space in the existing campus. So that adds up to about 120,000sq ft, which, if you do the math, again, it's highly dependent on mix, that should give us over $150 million revenue upside opportunity.
With regards to Pinehurst campus, to answer your prior question, so we are able to create about 120,000sq ft of space or convert offices and warehouse spaces to manufacturing space. A couple of years back, we were able to acquire an adjacent piece of land, which is in a zone that we are able to build office buildings on that land, but we are not able to build a factory. So, we were able to convert some of the office and manufacturing space in the existing campus. So that adds up to about 120,000sq ft, which, if you do the math, again, it's highly dependent on mix, that should give us over $150 million revenue upside opportunity.
Speaker #9: With regards to Pinehurst Campus, to answer your prior question, we are able to create about 120,000 square feet of space, or convert offices and warehouse spaces to manufacturing space.
Speaker #9: A couple of years back, we were able to acquire an adjacent piece of land, which is in a zone that we are able to build office buildings on, but we are not able to put a factory there.
Speaker #9: So, we were able to convert some of the office and manufacturing space in the existing campus. So that adds up to about 120,000 square feet, which, if you do the math again, is highly dependent on mix.
Speaker #9: That should give us over $150 million revenue upside opportunity. Again, this is subject to mixed revenue. So overall, and again, in terms of customer requirements for additional space, obviously Pinehurst is prime from that perspective because a lot of our legacy customers are there.
Csaba Sverha: Again, this is subject to mix growth. So overall, and again, in terms of customer, customer requirements for additional space, obviously, Pinehurst is, is prime from that perspective because a lot of our legacy customers are there, and they, they'd like to have more space in Pinehurst. So hence, we are, we are doing the best we can to accommodate all those requirements.
Again, this is subject to mix growth. So overall, and again, in terms of customer, customer requirements for additional space, obviously, Pinehurst is, is prime from that perspective because a lot of our legacy customers are there, and they, they'd like to have more space in Pinehurst. So hence, we are, we are doing the best we can to accommodate all those requirements.
Speaker #9: And they would like to have more space in Pinehurst, so hence, we are doing the best we can to accommodate all those requirements. Great.
Tim Savageaux: Great. And just very quick, is the Pinehurst addition on the same timeline as the Building 10 fill in midyear, or is that kind of happening now, or any comment on that?
Tim Savageaux: Great. And just very quick, is the Pinehurst addition on the same timeline as the Building 10 fill in midyear, or is that kind of happening now, or any comment on that?
Speaker #9: And just very quick, is the Pinehurst addition, is that on the same timeline as the Building 10 pull-in mid-year, or is that kind of—
Speaker #9: Happening now or any time? Yeah, it is.
Csaba Sverha: Yeah, it is happening now. Yes, it is happening now. Seamus doesn't have an office anymore in the campus, so we used to joke when he comes next time to Pinehurst, he will no longer have an office. So it's happening pretty much.
Csaba Sverha: Yeah, it is happening now. Yes, it is happening now. Seamus doesn't have an office anymore in the campus, so we used to joke when he comes next time to Pinehurst, he will no longer have an office. So it's happening pretty much.
Speaker #5: Happening now. Yes, it is happening now. Seamus doesn't have an office anymore on the campus, so we used to joke when he comes next time to Pinehurst, he will no longer have an office.
Speaker #5: So it's happening pretty rapidly.
Speaker #9: Gotcha. Thanks very much.
Tim Savageaux: Thanks very much. Thanks very much.
Tim Savageaux: Thanks very much. Thanks very much.
Speaker #1: Thank you so much. And with that, thanks, Tim. That will end our Q&A session, and I will pass it back to Seamus for closing comments.
Seamus Grady: Thank you.
Seamus Grady: Thank you.
Operator: Thank you so much, and this will end our Q&A session, and I will pass it back to Seamus for closing comments.
Operator: Thank you so much, and this will end our Q&A session, and I will pass it back to Seamus for closing comments.
Seamus Grady: Thank you for joining our call today. We are very pleased with our excellent second quarter performance and with continued momentum across our business. We're optimistic that we can deliver a very strong third quarter as we expand on our strong market position. We look forward to speaking with you in the future and to seeing those of you who will be attending the Susquehanna Conference later this month and the OFC Conference in Los Angeles next month. Thanks again, and goodbye.
Speaker #5: Thank you for joining our call today. We're very pleased with our excellent second quarter performance and with continued momentum across our business. We're optimistic that we can deliver a very strong third quarter as we expand on our strong market position.
Seamus Grady: Thank you for joining our call today. We are very pleased with our excellent second quarter performance and with continued momentum across our business. We're optimistic that we can deliver a very strong third quarter as we expand on our strong market position. We look forward to speaking with you in the future and to seeing those of you who will be attending the Susquehanna Conference later this month and the OFC Conference in Los Angeles next month. Thanks again, and goodbye.
Speaker #5: We look forward to speaking with you in the future and to seeing those of you who will be attending the Cisco HANA conference later this month and the OFC conference in Los Angeles.
Speaker #5: Next month, thanks again and
Speaker #5: goodbye.
Speaker #1: And with that, we conclude our
Operator: With that, we conclude our conference. Thank you all for participating. You may now disconnect.
Operator: With that, we conclude our conference. Thank you all for participating. You may now disconnect.
