Fabrinet has recently released its latest 10-K report. The company describes itself as a provider of optical packaging and precision manufacturing services, with operations across North America, the Asia-Pacific region, and Europe. Its business spans optical communications, data-center interconnect products, lasers, sensors, and custom optical and glass components, serving OEMs in communications, industrial, automotive, medical, and sensing markets.
In Item 7, Fabrinet says its results are shaped by a concentrated customer base, international manufacturing footprint, and a cost structure dominated by materials, labor, and infrastructure. The company reported that 77.3% of fiscal 2026 revenue came from customers outside North America, down from 78.4% in fiscal 2025, while North America rose to 22.7% from 21.6%; Asia-Pacific and others accounted for 73.9% of revenue, North America 22.7%, and Europe 3.4%. Fabrinet also said it expects the non-North America share of future revenue to increase versus fiscal 2026, while fiscal 2027 SG&A is expected to rise, mainly because of higher research and development spending, information technology hardware investments, and compensation-related costs.
The filing says Fabrinet depends on a small number of customers for a significant share of revenue, and that a reduction in orders from any major customer could affect revenue, receivables, inventory, and working capital. It also says customer contracts generally run up to three years, renew automatically for one-year terms unless terminated, and do not include minimum purchase commitments, although customers provide rolling forecasts and are generally required to buy finished goods made to their demand requirements. Fabrinet notes that excess or obsolete inventory tied to canceled or ended programs is typically purchased by customers and recognized as an offset to cost of revenue upon shipment.
On costs, Fabrinet says material costs are the largest component of cost of revenues, followed by employee and infrastructure costs. It reported bonus charges included in cost of revenues of $9.5 million in fiscal 2026, $7.7 million in fiscal 2025, and $7.1 million in fiscal 2024, and share-based compensation in cost of revenues of $11.5 million, $10.5 million, and $7.2 million, respectively. In SG&A, bonus charges were $7.0 million, $6.8 million, and $6.4 million across those same years, while share-based compensation was $23.2 million, $22.5 million, and $21.2 million. Fabrinet also says employee costs are expected to rise as wages increase in Thailand and the PRC, and that foreign exchange movements, especially in the Thai baht, can affect results because a substantial portion of payroll and other operating expenses is incurred in baht. Today the company's shares have moved -18.91% to a price of $485.39. Check out the company's full 10-K submission here.
