Fabrinet

SWB:FAN

Earnings Call Transcript

[Operator]

Good afternoon. Welcome to Fabrinet's Financial Results Conference Call for the Second Quarter of Fiscal Year 2025. [Operator Instructions]. As a reminder, today's call is being recorded.

I would now like to turn the call over to your host, Garo Toomajanian, Vice President of Investor Relations.

[Garo Toomajanian, executive]

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 2025, which ended December 27, 2024. With me on the call today are Seamus Grady, Chief Executive Officer; and Csaba Sverha, Chief Financial Officer. This call is being webcast, and a replay will be available on the Investors 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 Investors 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 10-Q filed on November 5, 2024.

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 CEO, Seamus Grady. Seamus?

[Seamus Grady, executive]

Thank you, Garo. Good afternoon, and thanks to those of you joining our call today. Our strong business momentum continued in the second quarter and represented a record quarter for both revenue and profitability, with growth that exceeded our expectations. Revenue of $834 million was an increase of 17% from a year ago and 4% from Q1. Our team executed well to produce record non-GAAP earnings per share of $2.61. While this is a remarkable performance, we are also very excited to see the positive trends in key areas of our business extending into the third quarter. This reflects both increasing demand in the high-growth markets we serve as well as our ability to further deepen relationships with existing customers and gain additional market share. As a result, we are confident that our strong revenue growth will extend into the third quarter, along with the corresponding increase in profitability. We are excited about these growth trends and have ample capacity to meet our near- to medium-term requirements and -- to our customers.

That said, with our continued growth, we will need additional capacity in the future which is why we are pleased to announce that last month, we broke ground on Building 10, a new 2 million square foot facility at our Chonburi campus, adding more than 50% to our total footprint. This new building will provide us with plenty of capacity to support our anticipated growth over the longer term.

Also reflecting our confidence, during the second quarter, we repurchased more than 1/3 of our $200 million authorized for share repurchases, and our Board just authorized an additional $100 million for share buybacks. Looking at the dynamics of the quarter in more detail, within optical communications, datacom experienced some bumpiness ahead of the ramp of next-generation products at a major customer and grew 4% from a year ago, but declined 9% from the [ fourth ] quarter. While we believe datacom demand could see a slight decrease in the third quarter, we remain confident that datacom revenue trends will improve as next-generation technologies at the 1.6 terabit data rate begin to ramp later this calendar year.

Meanwhile, we were pleased to see telecom revenue performed even better than anticipated in the quarter, increased 24% from a year ago and 17% sequentially. Our telecom revenue strength was driven primarily by increased demand for data center interconnect products and by early success with recent telecom systems. We are optimistic that this positive trend will extend into the third quarter.

Turning to non-optical communications. We experienced another healthy performance in automotive with revenue up 32% from a year ago and roughly flat from Q1. Also contributing to our growth in the quarter, industrial laser revenue was up 24% from a year ago and 6% from last quarter. In summary, with the confluence of several positive growth drivers ahead of us, we are more confident than ever in our business. In the coming quarters, we expect our Datacom business to return to faster growth. In telecom, we anticipate further growth driven by increasing momentum from recent shipments coupled with lighting demand for data center interconnect products. Collectively, we are very optimistic as we look to the third quarter and beyond.

Now I'll turn the call over to Csaba for more financial details on our second quarter and our guidance for the third quarter of fiscal 2025. Csaba?

[Csaba Sverha, executive]

Thank you, Seamus, and good afternoon, everyone. We had a strong second quarter with revenue and net income per share that were above our guidance ranges. Revenue in the second quarter was $834 million, an increase of 17% from a year ago, and 4% from Q1. Non-GAAP EPS was $2.61 with revenue upside and FX revaluation gain contributing to our results. Details of our revenue breakdown are included in the investor presentation on our website. So I will focus my comments on some of the more notable highlights.

In the second quarter, Optical Communications revenue was $647 million, up 14% from a year ago and 3% from Q1. Within optical communications, datacom revenue was $299 million or 46% of optical communications revenue, an increase of 4% from a year ago, but a decline of 9% as a major customer transition to next-generation products. Telecom revenue was $348 million or 54% of optical communications revenue, a remarkable increase of 24% from a year ago and 17% from Q1, driven primarily by growth in DCI products and early contributions from recent system business wins. By data rate, revenue from 800 gig and faster products was $257 million, up 12% from a year ago and flat sequentially. Revenue from products below 800 gig was $277 million, an increase of 25% from a year ago and 5% from Q1. 400 ZR products for the center interconnect applications were very strong contributors to growth, reaching 10% of total revenue in the quarter.

Revenue from optical communications products that are [ non-titrated ] was $140 million, up 6% from Q1. Non-optical communication revenue was $186 million, up 29% from a year ago and 5% sequentially. Each of automotive, industrial laser and other revenue category was up sequentially and grew over 20% year-over-year. As I discuss the details of our P&L, expense and profitability metrics field on a non-GAAP basis, unless otherwise noted. Gross margin in the second quarter was 12.4%, compared to 12.7% in the first quarter, primarily due to Q1 FX tailwinds turning into slight headwinds as anticipated.

Operating expenses were flat sequentially at $16 million, of most of the impact of slightly lower gross margins. Operating income was a record $88 million, representing an operating margin of 10.6% compared to 10.7% both a year ago and last quarter. Interest income of $11 million in the quarter was in line with Q1 and our foreign exchange revaluation gain contributed $4 billion. Effective GAAP tax rate was elevated in the quarter at 8.7% due to discrete items. We continue to effect on effective tax rate in the mid-single digits for the fiscal year. Non-GAAP net income was $95 million or $2.61 per diluted share which was above our guidance range and a quarterly record.

Turning to the balance sheet. We ended the second quarter with cash and short-term investments of $935 million, up $26 million from the end of the first quarter. Operating cash flow in the quarter was strong at $116 million. OpEx was $22 million, resulting in free cash flow of $94 million in the second quarter. As Seamus mentioned, we recently program on our new building plan in Chonburi, which will considerably increase our manufacturing capacity. As a result, we expect to incur a higher CapEx outlay over the next several quarters.

Turning to share buybacks. Recall that we increased the size of our share repurchase program in August to $200 million. During the second quarter, we were very active in the program and acquired 292,000 shares at an average price of $235 per share for a total cash outlay of $69 million. As a result, at the end of the second quarter, we had $131 million remaining under our repurchase authorization. As a sign of continued confidence in our business, last week, our Board authorized an additional $100 million for share repurchases.

Now I will turn to our guidance for the third quarter of fiscal year 2025. As James highlighted, we have several reasons to be optimistic about our business in Q3 and beyond, and this is reflected in our outlook. For the third quarter, we expect total revenue to be between $850 million and $870 million. By major product area, we anticipate datacom revenue to be down slightly sequentially in anticipation of the ramp in coming quarters from next-generation products. We expect telecom revenue to see strong sequential growth again in Q3 as the increasing DCI momentum and new system means make larger contributions.

We also expect automotive revenue to continue to grow sequentially. We expect FX pressure on gross margin to persist in the third quarter, but believe we can again offset much of that impact with continued operating leverage. Therefore, we anticipate EPS in the third quarter to be between $2.55 to [ $2.63 ] per diluted share.

In summary, after a very strong second quarter, we continue to be very optimistic about our business as we benefit from several positive trends. We believe Q3 will represent another quarter of record revenue for the company as our strong business momentum continues in the third quarter and beyond.

Operator, we are now ready to open the call for questions.

[Operator]

[Operator Instructions]. Our first question or comment comes from the line of Karl Ackerman from BNP Paribas.

[Karl Ackerman, analyst]

For my first question, I was hoping to discuss telecom for a second. When should we expect to see record revenue in telecom? I guess, is that implied in your March quarter outlook? I asked because Telecom fell from about $400 million a quarter 2 years ago to a trough of [ $280 million ] in June of last year, but now you're seeing fraction coherent ZR modules and 2 large system business wins that appear to be just flowing into your results that do support this end market recovery. So you've got several things acting as tailwinds. So if you can talk about the visibility you see within telecom and when we should see revenue in that segment?

[Seamus Grady, executive]

Yes. Thanks, Karl. So yes, as you're right to say, our telecom revenue was down for the last several quarters as the whole industry digested inventory. The nice thing is the countercyclicality we have in the business when our telecom revenue was flat, our datacom revenue is growing nicely at the moment. So our datacom revenue was a little bit flat as we wait for new product launch and our telecom revenue is back to strength. And the drivers of that are a mixture of new program wins and strength in primarily DCI products and ZR products. So we expect that trend to continue. Some of these system wins are in the beginning to show in the numbers, but the majority of the new system wins are actually not in our results yet. The [ CNN ] we talked about previously is more of an FY '26 story from a revenue perspective and the other system win where we took business away from one of our competitors is really just beginning to ramp. So yes, good strength in telecom really offsetting that softness in datacom, but we expect that strength in telecom to continue for the next several quarters, exactly when it gets back to where we were before the inventory digestion, it's really hard to say and I wouldn't like to speculate. But we're just focused on getting the customers what they need. And we're very happy to see, as I say, the telecom business being very strong for us, just where we needed to be when the datacom business is at -- soft.

[Karl Ackerman, analyst]

Yes. If I may have a follow-up, the growth in your silicon photonics business is now approaching record levels as well. I guess within silicon photonics, is the incremental growth coming from high-speed transceivers inside the data center? Or is it mainly coherent ZR for DCI and other telecom applications?

[Seamus Grady, executive]

That's mainly the latter coherent transceivers for ZR transceivers for DCI applications between the data centers. That's the main driver of our silicon photonics growth. And we were a very early adopter of silicon photonics. We've been building silicon photonics products for a decade at this stage. So we really feel we're in a strong position as the industry moves more towards silicon photonics and also -- packaged optics that for us, it's a fairly natural transition to go from one to the other. But yes, that growth in silicon photonics is primarily driven by coherent ZR DCI products.

[Operator]

Our next question or comment comes to the line of Samik Chatterjee from JPMorgan.

[Samik Chatterjee, analyst]

Seamus, you talked about the next-generation product in datacom for the private customer that you have here. And I think you've referenced sort of a strong visibility you have in ramping the next-generation product. I mean, what's driving that confidence in terms of timing? You're guiding here to a moderation in 3Q as well. So should we just conclude that product sort of ramps starting in 4Q towards the end of the year? And has the timing from the customer in terms of when that next product ramps, has that also changed? Or is it still pretty intact in terms of the timing that you were expecting to ramp the next generation product? Then I have a follow-up.

[Seamus Grady, executive]

Yes, I think the timing of the next generation product really depends on our customers' rush timing. We would expect to see a ramp about 1 quarter before our customer wants to ship product to their customers. We're ready, we're prepared and we're ready to go from a capacity perspective and really just looking to the customer schedule. So no big change other than we're working to the customer schedule in terms of the launch. We have good visibility instead of the same visibility we've had. We have visibility well beyond the component lead times, and we're quite optimistic. We're not concerned. It's really just a question of making sure we're ready to go when the customer is ready to go. So we're ready to ramp and ready to go whenever the product launches.

[Samik Chatterjee, analyst]

Okay. Got it. And related to the volumes that you're expected to ramp initially or even sort of volumes through the cycle as well as pricing on these sort of products, what is the capability that you have currently from the customer, and particularly if you compare it to 800,000 when you were initially ramping in terms of price and volume, how does the next-generation product compare?

[Seamus Grady, executive]

I think in terms of -- if I take volume, first of all, I think the volume, I think once it gets going, it will be a pretty steep ramp. That's not unusual in that part of our business. So we're ready for that. In terms of ASPs, we continually reduce our costs and therefore, our prices to our customers. There's nothing about that. I think if anything, maybe the delay with launching the end product has allowed us and the customer to refocus on cost and make sure we're very cost competitive. So we expect when the 1.6 product launches that we'd be very cost competitive, let's say, relative to 800 gig. It won't be as much of an uplift as might traditionally happen when you double the speed. Like I say, we're ready to go. We're working very hard to make sure the costs are competitive. And yet, the volumes we're just ready to go wherever the customer is, but we're optimistic. We have no reason to be pessimistic or anything like that. We're quite optimistic. It's just a question of timing.

[Operator]

Our next question or comment comes from the line of George Notter from Jefferies.

[George Notter, analyst]

I guess I was going to ask the question of the day, I think, which is tariffs. Obviously, it's been something the industry has been concerned about for some time. I'm wondering if you guys are seeing incremental opportunity associated with tariffs coming in place now, was this an opportunity for Fabrinet to take share? Can you kind of give us a sense for what you're seeing from the customers in your conversations?

[Seamus Grady, executive]

Hi, George. Yes, we're keeping a close eye on that based on where our factories are located, so far at least, we haven't seen any tariffs being imposed in China. So we don't expect any negative impact. If anything, we maybe expect a potential positive impact if customers want to move production with the most recent tariffs, a lot of the supply chain in our industry, if you like, you're still -- all of it is in Mexico and some of it is sell in China. So we're quite happy to work with the customers if they want to move production in our direction. So if anything, we see the tariffs leaving aside the kind of macroeconomic impact, which I'll leave it to people smarter than need to talk about. But just in terms of the demand and our ability to win business, we don't see tariffs as a headwind. If anything, we think it could actually help us a little bit. But it's very early days. It's hard to say no...

[George Notter, analyst]

Got it. And I think part of the stickiness is that there is some lead time moving manufacturing from one country or one geography to another. Is that if there is a benefit, is that month away, quarters away, years away? Like how do you think about what's reasonable in terms of when it could help you?

[Seamus Grady, executive]

Pretty hard to say, George. I don't like to not answer the question, but it's very hard to say. I think if there is a benefit. I put it this, I think if the benefit hasn't materialized in months or quarters, it probably won't at that point because sometimes customers companies decide to say where they are because they find other ways to reduce cost or whatever. But I think it's an opportunity. I wouldn't get too excited about it though. I think it's an opportunity. But I'd say it's probably more months and quarters than years. Yes, the products are complex, but we tend to move. We have a track record of being able to move very complex products very quickly. So if customers want to move there ready to support them, we can move very quickly.

[Operator]

Our next question comes from the line of Ryan Koontz from Needham. Mr. Koontz, your line is open.

[Ryan Koontz, analyst]

Seamus, with your momentum in ZR and DCI, I wonder if you're contemplating or your customers are contemplating yet much of a transition over 800 ZR yet? Or are you really seeing 400 as the dominant force here in '25?

[Seamus Grady, executive]

So yes, so first of all, in F Q4 and F Q1, 400 ZR was 10% or more of our optical revenue and in Q2, 400 ZR was 10% of our total revenue. So it's a very important, if you like, category. If you do the math, that represents about a 43% sequential increase to $83 million. So ZR is very, very important for us. We do expect 400 ZR to remain strong in the coming quarters. We have actually qual and shipped 800 ZR as well. But I think the schedule for ZR is [ 30 ] days, but we have actually qualified and have shipped some 800 ZR as well.

[Ryan Koontz, analyst]

Got it. Great. And as it relates to your expectations, you talked about some lumpiness here on the datacom side. Is that primarily your lower speed datacom do you think that will suffer more or more the high end at 800, you think will see a little bit slow down, anything you can share there?

[Seamus Grady, executive]

Yes. So we don't have much low-speed datacom business. It's most similarly 800 gig above. And what I would say is we're very optimistic about our datacom business overall. When we provided guidance, we indicated that datacom would be roughly flat and things turned out a little bit softer than anticipated. And then the near-term product transition we talked about means our overall datacom revenue, we'll see additional softness in Q3. Again, nothing that we're overly concerned about, but it is at those higher-speed products. We continue to anticipate increasing demand and revenue as our customer ramps the next-generation 1.6 terabit products which makes us optimistic over the longer term, all is, we have some near-term softness. In the meantime, we have several other drivers that contributed to strong growth in Q2, and we'll continue to benefit from those in Q3.

Interestingly, if you look at -- we often talk about the countercyclicality in our business. That it seems when one part of our business is down and other part is up, but that's really what we've been seeing here with our telecom and datacom business. Historically, when we've been going through that inventory digestion for several quarters, our datacom business was strong. And at the moment, our datacom business is a little bit flat, but our telecompanies is very strong. But the overall mix of our business is more on the leading-edge higher-speed products, not the older products.

[Ryan Koontz, analyst]

Got it. Makes sense. And just the last one if I could around. What's the rough time frame between your CapEx and when you could bring capacity online. Are you talking months, quarters?

[Csaba Sverha, executive]

Ryan, if you are talking about our Building 10, the lead time of that is about 18 months. So we will see a linear cash outlay in terms of CapEx. So you will see probably about $20 million uplift in CapEx spend and cash out in the next, let's say, 6 to 8 quarters.

[Seamus Grady, executive]

And just maybe, Ryan, just to put some context around Building 10 in terms of the revenue capacity that we're adding, general datacom, we generate about $1,200 per square foot in annual revenue. So Building 10 will be a 2 million square foot facility. So it's about a $2.4 billion capacity addition that we're investing in. So obviously, the actual revenue will depend on the mix of products, but that's the ballpark capacity that we're adding is about $2.4 billion.

[Operator]

Our next question or comment comes from the line of George Wang from Barclays.

[Dong Wang, analyst]

Just 2 quick ones. The first one, just I kind of want to hold me on 1.6T ramp. Just maybe kind of versus the last quarter. Are you guys seeing further delay or kind of -- status quo kind of still waiting for B-300 transition kind of as you guys called out later this year? And also kind of -- are there other impediments for wider adoption of the full 1.6T such as maybe the supply chain is waiting for the 800G network interface cards, which probably doesn't arrive until later this year. Can you kind of unpack some of the potential other underlying constraints aside from just your largest datacom customer kind of solving on the transition on the ballpark?

[Seamus Grady, executive]

Yes. I think on the wider questions around the supply chain and waiting for net interface cards and things like that, that's probably a question more better directed to our customer. It's not something we have any particular knowledge of. We've been producing sample qualification builds of 1.6T and to the point where we're ready to go whenever the customer is, as I talked about earlier. It's really just a question of the timing of that product launch. Again, wider questions about other parts of the network, we're not really in a position to talk about mostly because we don't know, but it's also just a question that we'll be better directed to our customer.

[Dong Wang, analyst]

Okay. And just a quick one, if I can. Just in terms of Sienna business, obviously, it anticipate is going to be a much bigger customer in the next few quarters, kind of FY '26 as you guys called out. Is there any sort of a refresh view in terms of the fee of revenue run rate? I mean, do you think it can surpass Cisco kind of -- 10% customer? Any sort of lead thoughts in terms of the prospects of Sienna, recognizing it's early days. Just curious if you have additional thoughts on that?

[Seamus Grady, executive]

Yes. So we've had a couple of some of the recent system wins. One of is the Sienna new products that we talked about in our quarters. It's a new networking product that Sienna introducing this year. I think we said at the time when we continue to expect that the bulk of the Sienna ramp will be in late 2025 and into early fiscal 2026. So it's more of a FY '26 story from a revenue point of view. And that really is -- we'll be ramping, of course, in line with the customers' ramp plans. The run rate for Sienna, we wouldn't comment on. We don't comment on individual revenue other than at the end of the fiscal year if the customer becomes customer, we disclosed the revenue. But outside of that, we don't comment on into customers' revenue, and we certainly don't forecast revenue at the customer now. So I'm afraid I can't give you a whole lot more information there, George.

[Operator]

Our next question or comment comes from the line of Tim Savageaux from Northland Capital Markets.

[Timothy Savageaux, analyst]

Congrats on the results and outlook here. Maybe I can try and come at that from another direction. So first question, if you look at the sequential growth in telecom this quarter, you've been pretty clear about the ZR data center interconnect impact. fair to conclude that the other piece of that $50 million is the new program ramp with the major customer that you're talking about or anything to discuss within with regard to the broader telecom landscape recovering?

[Seamus Grady, executive]

So yes, it's primarily ZR and also the beginning, the early days of the ramp of another program win that we had a competitive new business win where we took a little bit of share away from one of our competitors. The customer we named before the Sienna business, that is really not in the numbers yet that hasn't really started yet. So it's a combination of that other competitive system win plus the ramp-up of ZR and DCI. We really took the opportunity and when the telecom business was flat because of inventory digestion, we've spoken about this -- we took the opportunity to use that to go win business. So beginning to see the fruits of that now.

[Timothy Savageaux, analyst]

Okay. Well, that makes this question a little easier. And Csaba has referred to a couple of times, strength in the business in Q3 and beyond, no, I think that fairly opens up a discussion about fiscal Q4. And Seamus, as you just said that Sienna ramp, you do expect to begin in fiscal '25. So I guess looking at the sum total of that, you're typically seasonally pretty strong in the June quarter anyway. But it looks like you've got a fair bit of momentum heading into that June quarter regardless of whether you see 1.6T start to ramp then, which I imagine you might but feel free to comment on that as well. And just your assessment on that overall set up there.

[Seamus Grady, executive]

You're exactly right, Tim. I couldn't have said it better myself. So we have -- the part of our business, which has been a headwind for the longest time, the telecom business has now turned back into a tailwind with a number of growth vectors in there. ZR continues to grow nicely. The new network system wins that we've taken share of existing products away from one of our competitors. And then, of course, the Sienna wind that hasn't really figured in our numbers yet.

And then there's other system wins that we're also working on. Like I said, we alluded to earlier, we've been very busy trying to win telecom business during the time when the industry was flat. And we've been working very, very hard at that. We generally don't announce anything until there's something to announce, but there's others that we're still working hard on. So telecom, yes, is turning from being a headwind. And around the same time, all going well, should start to ramp those next-generation datacom products as well. So we're quite optimistic going into the second half of the year. that coupled with the announcement around the new factory and the increased share back, I think, should give you some indication of that.

[Timothy Savageaux, analyst]

Absolutely. And well, a quick one for me. I missed the nonoptical guide. It wouldn't mind repeating that briefly. And the last real question is my assumption would be -- I guess, I'm trying to see to rank order of magnitude, the size of the relative new systems opportunities. I would assume Sienna would be larger to much larger, but maybe not, if you're willing to comment on that.

[Seamus Grady, executive]

Yes. I think I'll let Csaba, the nonoptical guide in a moment. But I think, yes, the Sienna win, we're very happy with that. They're just a fantastic customer fantastic companies you've -- with resolved and we're so honored to be part of our side chain. And really looking forward to that business ramping, we're ready to support them. We're very excited about that.

But we're also excited about the other new business wins we've had. It's the Sienna one because it's a new product okay, if it doesn't ramp straight away. But when it does ramp then, it is longer lengths. We have it for the life of the product, where some of the other ones, it's great to get the win because you get a quick infusion of revenue. But if you're ramping it if we're ramping it in the middle of the product life cycle, you don't get that full run at the business. But so we're very happy overall. I wouldn't like to try and try and rank them. It's like trying to tell you which Mahindra I prefer we love them all.

[Csaba Sverha, executive]

With regards to the guidance, then we are anticipating out of it to be sequentially up and lasers to be flat to slight up as well. So across the board, we are seeing upside going into Q3 other than the temporary softness in datacom.

[Operator]

Our next question comment comes from the line of Mike Genovese from Rosenblatt Securities.

[Michael Genovese, analyst]

I mean just to clarify something that's been asked a couple of times already. I probably won't get a new answer. So on June versus September, so when we might see datacom grow again sequentially. Is it just too early to tell? Or I mean, do you have a sense one way or the other, whether that would happen in June or September?

[Seamus Grady, executive]

Well, I mean, we guide one quarter at a time, Mike. So right now, we're guiding one quarter at a time. So we're not going to really go beyond that. We have a sense of when the new products will begin to ramp. But as we've learned the hard way over the years, sometimes new products they don't launch exactly in line with your expectations and sometimes they launch much quicker than we think they will. So it's really early days. But from our point of view, we're just ready to support the customer whenever they're ready to start ramping the product, but I wouldn't want to get into this, June or September at this point.

[Michael Genovese, analyst]

And then I guess you probably, again, like don't have a view on the overall market. But do you think that your results are representative of the overall 800G market? Or just you -- I mean, obviously, you have 1 customer there. Do you think the market is maybe doing better than what you guys are showing? Or do you have any idea about that?

[Seamus Grady, executive]

I don't really. We just go with what the customers need from us. I think if you look at 800 gig, let's say, data center 800 gig, there's several players there. Now we're one of -- we're the only supplier let's say, producing our customers' design as a country manufacturer within their other merchant suppliers there. So we don't have visibility to the overall. If you look at our overall 800 gig and above number in our numbers, that also includes, of course, telecom products. So it's really a mixed bag. I don't think we're necessarily representative of the overall industry because, of course, we don't have all the customers who don't have all the products.

[Michael Genovese, analyst]

Okay. And then just final for me, if I can sneak 1 more in. Are you seeing anything with EML, particularly 200G per lane or even 100G plan EML being hard to get. Is that having any impact on either the size or the timing of the 800G market 1.6?

[Seamus Grady, executive]

Yes, I think it's not a secret. They're very hard to guess. The world needs more EMLs. So yes, they're one of the components that's in fairly short supply.

[Michael Genovese, analyst]

Okay. I would ask one more, if I could. As long as I have you. Look, in the beginning of the 800G, there weren't a lot of merchant guys ready yet. So to start 800G was a lot of share gain for [ Sienna ] almost because you guys were the only player in town, the only game in town. I guess 1.6, everyone has had more of a time to sort of develop on the same time line. But do you see 1.6 as an opportunity to gain some share? Or how do you think that could play out?

[Seamus Grady, executive]

It's hard to say. I think it's a little bit different this time around. I mean, for 800 gig, the products where you -- the application was new, and I think we were probably sole source for a period of time until some of the merchant suppliers really caught up with the demand. I think this time around is different. Everyone knows the demand is very real plus the industry, I would assume all the merchant guys are working very hard to get their 1.6 offering ready and with the rollout as well.

On 800 gig, I think the -- one of the reasons we were the sole source in the early days was more to do with just, I assume, reducing the amount of complexity and the number of variables in the total network. I think that's probably still the case. But I think as soon as the merchant suppliers are ready to go, I would assume that'll be in the supply chain fairly quickly. So I think one of the -- it depends on your perspective, but one of the good things about the delay with launching 1.6 is that everyone is ready to go, our customers ready to call. The supply base is more ready to go. So I think more supply overall should see this ramp pretty quickly.

[Operator]

I'm sure no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Grady for any closing remarks.

[Seamus Grady, executive]

Thank you for joining our call today. We're excited that our second quarter results again exceeded our guidance to produce record revenue and EPS for the company. We continue to be very optimistic about our future with several tailwinds driving our growth in the third quarter and beyond. We look forward to speaking with you again and to seeing those of you who will be attending the Susquehanna virtual conference later this month. Goodbye.

[Operator]

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.