Fabrinet

Good afternoon. Welcome to Fabrinet's Financial Results Conference Call for the third quarter of fiscal year 2025. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions on how to participate will be provided at that time. As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Gero Tumajanian, Vice President of Investor Relations.

Thank you, Operator, and good afternoon, everyone. Thank you for joining us on today's conference call to discuss Fibernet's financial and operating results for the third quarter of fiscal year 2025, which ended March 28, 2025. With me on the call today are Seamus Grady, Chief Executive Officer, and Chabas Farah, Chief Financial Officer. This call is being webcast, and a replay will be available on the investor section of our website located at investor.fibernet.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. 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 February 4, 2025. We will begin the call with remarks from Seamus and Chabot, followed by time for questions. I would now like to turn the call over to Fabrinth's CEO, Seamus Grady. Seamus.

SEAMUS GRADY Thank you, Gero. Good afternoon, and thanks to everyone joining us today. We had a very strong third quarter with revenue of $872 million, which was above our guidance range. Our execution in the quarter was also strong. and we generated non-GAAP earnings per share of $2.52, which was also above our guidance range. Looking more closely at our strong quarterly results, we saw continued growth in optical communications. Telecom revenue was particularly exceptional and more than offset an anticipated decline in datacom revenue. Our telecom growth, which was up 42% from a year ago and 17% from Q2, was driven by a combination of contributions from recent system wins, continued 400 ZR momentum for data center interconnect applications, and a strengthening telecom market. We're confident that our strong telecom trends will extend into the fourth quarter. With respect to Datacom, we continue to see near-term softness due to a product transition at a large customer. However, we remain optimistic about a return to Datacom growth as demand for 1.6T devices increases and with the steepest part of the 1.6T ramp yet to come. In non-optical communications revenue, automotive again saw strong growth with revenue up 76% from a year ago and 24% from Q2. Our industrial laser revenue also increased both year over year and sequentially. Looking ahead, While we expect continued year-over-year growth in non-optical communications in the fourth quarter, we anticipate that sequential growth may moderate, particularly in the automotive segment, where we have experienced outsized growth over the past few quarters. During the quarter, we also announced a new commercial relationship with Amazon Web Services. This is our first direct relationship with the leading hyperscaler, where we will be providing Amazon with advanced manufacturing services in a multi-year agreement. Our agreement with Amazon reinforces our longer-term optimism and further aligns our interests through a warrant purchase agreement for up to 1% of our outstanding shares. We expect our Amazon partnership to provide an additional boost to revenue starting in fiscal year 2026. Our long-term confidence is also reflected in our share repurchase activity. with over $100 million worth of Fibonacci shares repurchased so far this fiscal year. In addition, our expansion plans remain on track with Building 10 construction underway to meet our longer-term capacity needs. Looking ahead, we continue to be very excited about our future. We expect to see our consistent track record of year-over-year revenue growth extend into the fourth quarter with a corresponding increase in profitability. Most importantly, we remain confident in our proven ability to execute extremely well as we have demonstrated throughout our company history. Now I'll turn the call over to Csaba for more financial details on our third quarter results and our guidance for the fourth quarter of fiscal 2025. Csaba.

Thank you, Seamus, and good afternoon, everyone. We had a strong third quarter with revenue and non-GAAP net income per share that were above our guidance ranges. Revenue in the third quarter was $872 million, an increase of 19% from a year ago and 5% from Q2. This includes the impact of $4 million in contra revenue from the upfront vesting of a portion of the warrant with Amazon. We expect that future vesting events will not result in meaningful impacts in our quarterly financial results. Non-GAAP EPS was $2.52. exceeding our guidance range with contra revenue impact flowing to the bottom line. Details of our revenue breakdown are included in the investor presentation on our website, so I will keep my comments focused on noteworthy highlights. For the third quarter, Optical Communications revenue was $657 million, up 11% from a year ago and 2% from Q2. Within optical communications, Datacom revenue was $251 million, or 38% of optical communications revenue, a decrease of 18% from a year ago and 16% from Q2, mainly due to product transitions at a large customer, as well as normal demand fluctuations at other customers. Telecom revenue was $406 million, or 62% of optical communications revenue. Another significant increase with revenue up 42% from a year ago and 17% from Q2. This exceptional telecom performance was again driven by a powerful combination of strong data center interconnect demand, recent system wins, and improving trends for traditional telecom products. Looking at optical communications revenue by data rate. Revenue from 800 gig and faster products was $236 million, down 8% both from a year ago and sequentially. Note that we don't break out revenue by specific speeds. However, I will comment that while 800 gig revenue declined in the quarter, we are seeing increasing 1.60 revenue and believe that the steepest part of the 1.60 ramp is yet to come. Revenue from products below 800 gig was $284 million, an increase of 27% from a year ago and 3% from Q2. Growth in this speed category is being driven primarily by 400 ZR products for data center interconnect applications, with ZR products again representing 10% of total revenue. Revenue from optical communications products that are non-speed rated was $137 million, up 21% from Q2. Non-optical communications revenue was $215 million, up a strong 53% from a year ago and 15% sequentially. Automotive revenue was the biggest driver of this growth, with revenue of $129 million, up 76% from a year ago and 24% from Q2. Industrial laser revenue of $40 million increased 33% from a year ago and 8% from Q2. Other revenue of $45 million was flat sequentially. As I discussed the details of our P&L, expense and profitability metrics will be on a non-GAAP basis unless otherwise noticed. Gross margin in the third quarter was 12%, but would have been consistent with Q2 levels if not for the contra-revenue impact. Operating expenses were flat sequentially at $16 million. Operating income reached a new record of $89 million, representing an operating margin of 10.2%, which would also have been consistent in the prior quarter, similar to our gross margin. Our strong balance sheet continued to produce high interest income of $10 million in Q3. which was partially offset by a foreign exchange evaluation loss of $3 million. Effective gap tax rate was 5.8%, and we continue to expect an effective tax rate in the mid-single digits for the fiscal year. Non-gap net income was $91 million, or $2.52 per diluted share, which was above our guidance range. Turning to our balance sheet, We ended the third quarter with cash and short-term investments of $951 million, up $16 million from the end of the second quarter. Operating cash flow in the quarter was $74 million. CapEx was $29 million, resulting a free cash flow of $46 million in the third quarter. We remained active in our share repurchase program during the third quarter, buying back 162,000 shares at an average price of $214 per share for a total cash outlay of $35 million. Over the past two quarters, we have repurchased just over $103 million with approximately $197 million remaining under our current authorization at the end of the quarter. Now, I will turn to our guidance for the fourth quarter of fiscal year 2025. While global tariffs have been in the headlines, we have not seen any material impacts to date. Given our FOB FaberNet shipping terms, tariffs are typically handled by customers, and so far we have not observed any meaningful changes in demand. As a result, we remain highly optimistic about our business outlook, supported by several growth drivers. These include contributions from recent telecom system wins, the transition and ramp of 1.60 data comproducts, rising demand for data center interconnect solutions, and improving dynamics across traditional telecom markets. In non-optical communications, we expect continued year-over-year growth overall, although we may face some near-term headwinds in the automotive segment, where we have seen outside growth over the past few quarters. Nevertheless, we believe the long-term fundamentals across our non-optical portfolio remain strong. For the fourth quarter, we are guiding total revenue between $860 million and $900 million. This broader range mainly reflects the doubling of our revenue since we last set a $20 million guidance range, and also a prudent acknowledgement of the current global macroeconomic environment, including tariff risks, and other external uncertainties. We expect earnings per diluted share to be between $2.55 and $2.70. While the significant number of new product ramps underway may present some short-term margin headwinds, we view these initiatives as strong catalysts for future growth. These programs are positioning us exceptionally well as we head into fiscal 2026, reinforcing our confidence in the long-term trajectory of our business. Operator, we are now ready to open the call for questions.

As a reminder, if you'd like to ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Carl Ackerman with BNP Paribas.

Yes, thank you, gentlemen. Two questions, if I may. For my first question, I wanted to focus on Datacom. So Datacom fell about $50 million sequentially, but your total 800 gig sales fell only about 20 million. Does that mean the decline in Datacom fell within 400 gig and below port speeds? Or does that mean that the program wins within telecom are 800 gig and above and that's supporting early soft settings on the decline of 800 gig products in datacom?

So, hi, Carl. This is Shabba. Let me take this question. So it's the later. So we are seeing some strong growth, particularly in the DCI, which falls under the below 800 gig segment. So that perhaps explains why we are seeing declining Datacom, but not as much of a decline that you would expect in 800 gig. And also, we still have 400 gig programs in Datacom segment as well. So it's a combination of both strong DCI as well as Datacom still had 400 gig, which is tapering off now.

Got it. Thank you. Thank you for that. And then just secondly on margins, I was hoping you could address some of the, some reasons for the lower gross margins this quarter, and I'm specifically wondering how much perhaps the Warrant and or the Tybot influenced gross margins this quarter, and it appears that your outlook seems to account for a slight improvement in gross margins in June. I just wanted to clarify that. Thank you.

So let me take the warrant first. So we did have an impact of about $4 million in our gross margin in our fiscal Q3. So with that, our gross margin had an impact of about 40 basis points. Without a warrant, we would have been consistent both on gross margin and operating margin for Q3. The exchange rate headwinds was already baked in our guidance. It was not very meaningful. Now shifting to our Q4 forecast and guidance, Our guidance, although we are not guiding gross margin, implies that we will encounter some short-term headwinds from product ramps, which typically would be absorbed in our results. However, this time in Q4, we are ramping quite a few significant recent wins, and we have some startup costs which are preparing us for a strong 2026. So we anticipate some margin headwinds in Q4, but not any significant numbers. With regards to exchange rate, we anticipate somewhat flat environment going into Q4. So again, in summary, we had a one-time, I would say, impact from Amazon to a 40 basis point in our Q3 results. We don't anticipate that to reoccur going forward. However, we do anticipate some short-term compression because of the new ramps that are leading us to fiscal 2026. Got it. Thank you. You're welcome.

Our next question comes from Samic Chatterjee with JP Morgan.

Hi, thanks for taking my question. I guess if I can start off on the Datacom revenue as well, and your Datacom revenue declined quarter to quarter, so did 800 gig. as well. And you talked about the product transition for the customer driving that decline. Maybe if you can just flesh that out for us a bit more in terms of is that customer really transition driven by that the customer has a lot of inventory and hence you're waiting for that to clear out before we see a more return to normal demand patterns? Or is this more share allocation shifting between different suppliers when it comes to 800 gig? And You mentioned the 1.6T ramp is still in front of you. Maybe if you can just outline how much of that ramp should we expect in the June quarter, what is embedded in your guide on that front? I have a quick follow-up after that. Thank you.

Hi, Samik. Yeah, the 1.6T ramp is really in front of us. We've built some qualification builds. We have built ship some 1.6T product, but really the bulk of the ramp is in front of us. You know exactly why that might be. That's again a question probably more for our customer than for us. They don't necessarily share with us all of the puts and takes. But we don't believe we've lost any market share or anything like that. We believe a function of the product that uses 1.6T, I think the customer said that that product will really ramp and launch in the second half of the year. So we're gearing up to support the customer in whatever timeline they need from us. So we have shipped some, but the big 1.6G ramp is really in front of us.

And on the 800G, Seamus?

Sorry, what was the question on 800G?

On 800G, is this product transition for the decline that you're seeing, is that more a function of the customer having inventory of 800G, or are they allocating share between the different suppliers when it comes to 800G that is driving the decline?

Yeah, I think it's more likely share than inventory. I think in our case, because we were gearing up to ramp 1.6, we have been putting capacity in place and in some cases, converting capacity. The capacity is somewhat fungible, I would say, but not completely. So we have been converting capacity to gear up to produce 1.6. And once you've transitioned that capacity over to 1.6, you don't really want to be transitioning back to 800 gigs. So from our point of view, if we look out to FY26, we'd really be tapering off 800 gig and ramping 1.6. Got it.

And maybe I can just sneak one in, your engagement with Amazon Web Services, which you announced. Obviously, it's a different nature of a customer than what you've traditionally worked with. So maybe just outline for us how should we think about the margin opportunity as well as what is the nature of the advanced manufacturing that you're supporting the customer on? Does it include transceivers? And what is the magnitude of the opportunity that you see with the customer? Thank you.

So, you know, we expect the relationship to begin with a particular product family and to expand from there over time. You know, nothing is excluded in our agreement with Amazon or in our warrants arrangement with Amazon. There's nothing specified and also nothing excluded. So, you know, we're excited to get going again with one product family and we'll be working hard together. We're already engaged, I would say, with two particular products, two product types that we're ramping, and we're working hard on others. So multiple products within that customer. But again, the qualification bills are really going on at the moment, and the revenue is ahead of us. The revenue is in FY26. The revenue will ramp in FY26. There will be a little bit of revenue this quarter, But as Chad mentioned earlier, it's one of many qualification builds. Startup costs, we'll have this quarter where we're getting ready to get going, but the majority of the ramp is in front of us.

Thank you. Thanks for taking the questions.

No problem. Thank you, Samik.

Our next question comes from Mike Genovese with Rosenblatt Securities.

Great. Thanks very much. Obviously, telecom has been very positive here for a few quarters. I guess just the visibility going forward, how long do you expect telecom to continue to sequentially grow for into the future?

I think for us, you know, we have some pretty strong growth factors going on in telecom, you know, in the quarter. Our telecom revenue in the quarter just ended was $406 million, which is a high point for us. The previous high point was $405 million all the way back in Q1 of 2023, so almost two years ago. And then, as we all know, over the last couple of years, we've been going through inventory, digestion, and everything else that was going on. But we're now back to growth, so 406 in Q4. And we think we have some several growth vectors there that should augur well for the future. We have the Sienna wind, which is really yet to ramp. And also the ZR business, the DCI business in general, 400 ZR, 800 ZR beginning to ramp. So several growth factors there for us that we feel good about. You know, I think overall, I would say, you know, that the telecom business obviously remains very important for us. And we seem to have this pattern of if one part of our business is soft, because we've always said we have this counter cyclicality. You know, previously when our telecom business was quite soft, our datacom business showed particular strength. And now with our datacom business, I wouldn't call it soft. I'd call it, you know, we're waiting to really ramp a couple of programs that we've won. But our telecom business, yeah, Mike, it has been particularly strong. We see that. We think it's set to continue.

Great. Thanks for that. I guess then just following up on the Datacom side, since you're laying out this, you know, exactly what you just spoke about, you know, sort of in between 800 and ramping 1.6 with the customer, is there anything more you can tell us just from externally as observers, which products from the customer we should be looking for to be more tied to your opportunity versus the products that they've shipped so far or in the past? Is there any help you can give us there?

I'm sorry. Go ahead.

I'm sorry. Did you hear the question?

Can you hear me? I did. Can you hear me? Can you hear me OK?

Now I can.

Yeah, I think my sound was gone for a moment. Sorry. Yeah, Mike, our understanding is that the 1.6 terabit transceivers that we produce will be used for the customer's Blackwell Ultra product. And that's really as much as we know the exact timing of, you know, when they're ready to launch that. That's that's a question for them. But we're we're ready to support them whenever they're ready to go.

Okay, perfect. And then just last quick follow up for me. On the Amazon, the new stuff that we're talking about related to the warrant, will that be counted in the Datacom, I assume? The Datacom bucket?

We're looking at that currently. You know, the revenue at the moment is probably in the other category. It's quite small at the moment. because it's just qualification bills. But at the end of the year, we will probably revise how we categorize the revenue to make it more meaningful and more helpful for people such as yourselves. So we may add a category and we may provide a little bit further granularity on some of the other product revenues that we have. But for now, I think, unless Chaba wants to correct me, I think it's in the other category at the moment. And then in the future, we would expect to have It will be in a couple of categories, we believe. Okay, thanks again.

Thank you.

Our next question comes from Stephen Fox with Fox Advisors.

Hi, good afternoon. I had a couple of questions too. I guess first off, maybe a little bit more color on sort of the, not that it's a huge headwind, but the headwind for as you ramp all these programs. You mentioned some sizable programs ramping now, 1.6T, it sounds like Amazon and ZR. How do we think about sort of the extent of these drags and maybe when they turn into sort of more of a incremental tailwind, or do we assume that there's other ramps behind them that sort of keep the margins at these levels? And then I had a follow-up.

Yeah, I think, you know, overall, Stephen, you know, the long-term growth drivers are that we look at and that we use to make the long-term decisions for our business, they remain very much intact. At the midpoint of our guidance for Q4, if it comes to pass, if we were to come in at the midpoint of our guidance for Q4, that would put us at about an 18% growth for the year, which is really, we think, industry-leading. Any short-term headwinds due to program ramps and startup costs are very temporary in nature. Typically, Stephen, when we bring on a new product, the quarter in which you bring on that product, we'll have, as Chaba called them, startup costs. But that's very short-lived. That tends to go away as soon as we start ramping. So like I say, the long-term growth drivers remain intact. We're looking at about 18% year-on-year growth at the midpoint of our Q4 guidance. And maybe more importantly, the new wins that we've talked about for the last while are now really all starting to contribute and in fact the ramp for all of them are in front of us and and will take place in fy26 you know the 1.6 terabit ramp uh the sienna win um we've always talked about that as a fy26 ramp and the amazon business you know we're doing the qualification builds on that but that will ramp in fy26 as well so we're we're looking forward to a strong fy26 the telecom business is back to growth And, you know, like I said, we had record telecom revenue of $406 million in the quarter, and it looks like the growth drivers for telecom are quite sustainable. So our long-term drivers remain intact in any short-term headwinds that we're seeing to our margin because the startup costs are very short-lived typically.

Great. That's super helpful. And then just as a follow-up, I was just wondering, the Amazon business that you've won, does that preclude you from going after other cloud players or maybe, or the opposite, help you go after other cloud customers who may be pursuing similar type of supply chain strategies as Amazon when it comes to the services you provide? Thanks.

Yeah, we think it should help us to go after other cloud providers. We, you know, as you know, Steve, we don't have any of our own products. We manufacture our customers' products. And you know, we are in conversations with other hyperscalers as well. None of our customer relationships are exclusive. And in fact, our success with Amazon could be a, you know, a proof point for other potential similar customers. So we'll be working hard on that over the next while.

Great. Thank you.

Thanks, Steve.

Our next question comes from George Wang with Barclays.

Hey, guys. Thanks for taking my question. So firstly, just to see if it's okay to talk about overall ASP trends for the industry and especially from your standpoint in terms of 800 gig and 1.6T. Earlier you talked about maybe because of abundance of supply, incremental supply for the 1.6T, you have less of a 1.5 times multiplier for the ASP and this kind of generally speaking, kind of, you know, can you also address in terms of the merchant supplies kind of initially for the 1.6T, kind of how are you comparing versus, you know, in old cycle, the 800G in the past?

Unfortunately, George, you seem to have asked me two questions, neither of which I'm able to answer. ASP trends, you know, the customer's ASP, we don't have any particular visibility on. the pricing trends of the merchant transceivers we don't have any particular visibility on. We know what our price trend is like with our customer, and it's generally not something we comment in any great detail on other than to say, I think we've said in the past that the price uplift from our point of view for what we sell a 1.6T transceiver for as compared to what we would have sold an 800 gig transceiver is less than you might imagine. We've worked very hard with the customer to bring costs down to drive yields up and to make sure that we're very cost competitive. So, you know, we feel we have a very cost competitive solution for our customers, but really beyond that, when it comes to broader ASP trends and ASP trends for the merchant suppliers, we don't have any particular view on that, George.

Okay, great. Just quickly, if I can, squeezing Seamus, just in terms of kind of all sorts of trends, you know, potential upside from uh you know your sort of competition kind of partners including coherent momentum with a new leadership like like any refresher view in terms of getting more business from them in terms of kind of you know also things uh as they might you know also uh more survey for you kind of you know from a more survey in oem kind of standpoint just any thoughts on uh potentially kind of uh getting more share there

Yeah, I mean, we work hard with all our customers to convince them to outsource more with us, including the two that you mentioned. But it would be premature for me to kind of comment on the progress with that. But certainly, we would very much like to do more manufacturing for both of those companies and all of the other companies. But again, nothing particularly to talk about in a public forum, George.

Great. I'll go back to the queue. Thank you.

Thank you, George.

Our next question comes from Ryan Koontz with Needham.

Great, thanks. I wanted to drill into tariffs if I could a little bit, Seamus, and your thoughts there. I mean, there's been chatter about attempts by commerce to kind of close loopholes for the Chinese setting up facilities outside of, you know, in other countries. I wondered if, you know, what you can share, what your thoughts are about how this might be resolved for U.S. companies that have set up facilities in foreign countries? Anything you could share there?

Not particularly. We haven't seen any great impact from our customers, I think, since Liberation Day. I think, like our customers, we're just waiting to see what the future holds. You know, the way we look at the business today, again, as I mentioned earlier, the long-term drivers remain intact and any of the kind of disruption that is likely to be caused by tariffs, we haven't seen any particular impact yet. You know, our customers are responsible for the tariffs, you know, because we ship our product, FOB, our factory in Thailand. So generally the customers are responsible for the tariffs. But, you know, while the situation is very fluid, the customer demand we're seeing for optical communications appears to be holding

Great. And just a quick update on Building 10, if you could, in terms of where you are, your milestones, and any rough idea you might think you might have, you know, begin some early production there.

I'm sorry, could you repeat the question?

On Building 10, any milestones you can say you're approaching or any new targets on when you might see your first production from the new capacity?

Yeah, I think we're on track. I would say, you know, we started... We broke ground in January and we said it's about an 18-month timeline to be fully completed. We could start to produce before that, but it's about an 18-month timeline. We're on track, I would say, very much on track. We haven't in any way slowed down our progress on Building 10. You know, we were talking last week about maybe looking at options to see if we could, if the need arose, if we could move a little bit quicker to get Building 10 up and running. But no, we're very much committed to expanding our capacity, and we think we'll need all of it.

Great to hear. That's all I've got. Thank you. Thank you.

Thank you, Ryan.

As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your touchtone phone. Our next question comes from Tim Sabico with Northland. Tim, your line is open.

Great. Good afternoon. Can you guys hear me? Yes. Hi, Tim. Sorry about that. No problem. I'm going to try to take another crack at quantifying the Amazon opportunity. And here's how I'll go about it. I mean, you've got you know, peers slash competitors, you know, with agreements talking about revenues of, you know, 400 million a year. Now, something like that would make Amazon around a 10% customer for you guys. And it seems like they ought to have that potential. And I don't know if you said it or not, but it seems like Sienna does as well. I mean, do you think Amazon could get to that level with you guys and I guess for both of these ramps, I don't know if this is a concept that applies anymore, given the opportunity you have, but how long do you think you take to get fully ramped there?

So I think, you know, as with all of our customers, Tim, the commercial arrangements between us and Amazon prohibit us from discussing any of those kind of details. But your question was, could it get to that level? I think it could. We'll be working very hard to make sure we start off with one or two product families that we'll be making and that we expand that to others. We don't necessarily see, let's say there's a revenue that's tied to the warrant. We don't see that as a target. We see it as more of a minimum that we'll be going for and a platform upon which to build. So that's, yeah, we're quite excited about that. Again, we think we'll do a great job for Amazon. We're already doing a great job for them. And we're really looking forward to expanding that relationship. Did you have a question about Sienna as well?

It's basically the same question, I guess.

Okay. Well, I think, you know, I think you and others have done a pretty good job backing into the number. If you look at the kind of trajectory that the customer has had previously with new product launches and then the kind of the revenue level that they're able to get to and what that might mean when you, when you, you know, strip out their gross margin. You know, we, we have a, let's say a forecast that we have from the customer, but we only guide one quarter at a time, but we're, we're very optimistic about it, Tim. It is, and it is in front of us. We're just beginning to get qualified and just beginning to ramp. So yeah, there's a, there's a few very big ones that we think would all ramp in FY26. Like you said, the 1.6T ramp is the end of business. and then the Amazon new business wins, all of which will ramp in FY26.

Great. And that kind of takes me to my second question. With regard to, you mentioned standards in very early days, but in terms of the very strong telecom growth, you saw in the quarter you cited a couple of factors, a few, I guess, to be precise, VR, strengthening telecom, which, you know, I'll take your non-speed rated business increase there as a proxy for that to some degree. And then new winds. And I assume that, you know, maybe those are winds other than the ramps that you're talking about or that we were just talking about. So as you look at that $60 million sequential increase, I kind of am inclined to think that the new wins in strengthening telecom or the balance of that, or sorry, most of that, but I'd like to hear any comments about how you would kind of rank the drivers for the March quarter in terms of telecom growth.

Well, I think if you look at the growth in telecom in the March quarter, ZR has been growing nicely for us. That's a good chunk of it. The non-speed rated products are back to growth again. And then the new wins are really just in qualification type volumes. They're not particularly meaningful in the revenue in the March quarter. So that growth is really yet to come.

Okay, thanks. Thank you, Tim.

That concludes today's question and answer session. I'd like to turn the call back to Seamus Grady for closing remarks.

Thank you for joining our call today. We had a strong third quarter with results that exceeded our revenue guidance and many positive trends in our business. We're excited about closing out another record year with revenue growth of 18% at the midpoint of our guidance, and we're even more excited about FY26, with new programs further contributing to our growth. We look forward to speaking with you in the future and to seeing those of you who will be attending the J.P. Morgan Conference next week. Thank you and goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.