Core Insights - Applied Optoelectronics Inc. (AOI) has introduced four new software modules to enhance its QuantumLink™ HFC Remote Management solution, aimed at optimizing network performance and reducing operational costs [1][2]. Software Modules Overview - The new software modules are add-ons to the existing QuantumLink Central, providing features such as telemetry, unified visibility, predictive diagnostics, and automated controls for remote amplifier management [2]. - The AI Module enables predictive maintenance by forecasting failures and automating anomaly detection [3][7]. - The Analytics Module offers real-time visibility to facilitate smarter decision-making [4]. Customer Commitment - AOI emphasizes its commitment to helping customers build smarter networks through autonomous technology, combining AI decision-making with human expertise to enhance operational efficiency and network reliability [5]. Availability - Most of the new software features are expected to be available starting in Q4 2025 [6]. Additional Features - The Alarms Module provides automated alarming to detect issues early, reducing operational expenses (OPEX) and improving quality of service (QoS) [7]. - The Network Map Module aids in tracking and managing amplifiers, ensuring accurate asset lifecycle management and optimized inventory usage [7]. Company Background - AOI is a leading developer of advanced optical and HFC networking products, supplying critical infrastructure to tier-one customers in various markets including cloud computing and telecom [9].

Group 1 - The focus has shifted from primarily tech stocks to include offshore drilling, supply industry, and shipping sectors such as tankers, containers, and dry bulk [1] - There is an emerging interest in the fuel cell industry, which is still in its nascent stage [1] Group 2 - The individual has a background in auditing with PricewaterhouseCoopers and transitioned to day trading nearly 20 years ago [2] - The experience includes navigating significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2]

Group 1: Company Research - Applied Optoelectronics (AAOI) has a target price of $45, representing a 95.5% upside from the current price of $23.02[3] - Microsoft (MSFT) has a target price of $600, indicating a 15% increase from the current price of $520.58[11] - TAL Education (TAL) has a target price of $15.90, reflecting a 36.3% growth potential from the current price of $11.68[26] Group 2: Financial Performance - Applied Optoelectronics expects revenues of $471 million, $1.29 billion, and $1.91 billion for 2025, 2026, and 2027 respectively[9] - Microsoft reported a quarterly revenue of $76.4 billion, a year-on-year increase of 18%, with a GAAP net profit of $27.2 billion, up 24%[13] - TAL Education's revenue for Q1 FY26 was $574 million, a 38.8% year-on-year increase, with a net profit margin of 5.44%[20] Group 3: Market Trends and Risks - Applied Optoelectronics is positioned to benefit from a 3-5 year upgrade cycle in North American cable television networks[8] - Microsoft faces risks from cloud computing market competition and potential AI development shortfalls[17] - TAL Education's growth is supported by strong demand for its educational products, but it must navigate the long-term impacts of declining birth rates in China[24]

Core Viewpoint - Applied Optoelectronics reported a quarterly loss of $0.16 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.08, but an improvement from a loss of $0.28 per share a year ago [1][2] Financial Performance - The company posted revenues of $102.95 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.83%, but showing significant growth from $43.27 million in the same quarter last year [3] - The earnings surprise for the quarter was -100.00%, with the company having surpassed consensus EPS estimates only once in the last four quarters [2] Stock Performance - Applied Optoelectronics shares have declined approximately 37% since the beginning of the year, contrasting with a 7.9% gain in the S&P 500 [4] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.03 on revenues of $118.77 million, and -$0.05 on revenues of $472.84 million for the current fiscal year [8] - The trend of estimate revisions for the company was mixed ahead of the earnings release, which could change following the recent report [7] Industry Context - The Electronics - Semiconductors industry, to which Applied Optoelectronics belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, indicating potential challenges ahead [9]

Applied Optoelectronics (AAOI) Q2 2025 Earnings Call August 07, 2025 04:30 PM ET Speaker0Good afternoon. I will be your conference operator. At this time, I would like to welcome everyone to Applied Optoelectronics Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer To ask a question, you may press star, then 1 on your telephone keypad.To withdraw your question, please ...

Part I. Financial Information [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Unaudited Q2 2025 financial statements show strong revenue growth, improved gross margins, narrowed net loss, and increased liquidity Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$796,850** | **$547,032** | **+45.7%** | | Cash and cash equivalents | $64,699 | $67,428 | -4.0% | | Accounts receivable, net | $211,452 | $116,801 | +81.0% | | Inventories, net | $138,867 | $88,135 | +57.6% | | Property, plant and equipment, net | $269,386 | $219,235 | +22.9% | | **Total Liabilities** | **$371,869** | **$317,920** | **+17.0%** | | Accounts payable | $132,962 | $104,969 | +26.7% | | Convertible senior notes | $133,936 | $134,497 | -0.4% | | **Total Stockholders' Equity** | **$424,981** | **$229,112** | **+85.5%** | - Total assets increased by **45.7%** to **$796.9 million**, primarily driven by significant growth in accounts receivable and inventories, reflecting increased business activity[10](index=10&type=chunk) - Total stockholders' equity grew by **85.5%** to **$425.0 million**, largely due to capital raised from public offerings of common stock during the period[10](index=10&type=chunk)[17](index=17&type=chunk) Condensed Consolidated Statements of Operations Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | Six Months 2025 | Six Months 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue, net** | **$102,952** | **$43,270** | **+137.9%** | **$202,811** | **$83,943** | **+141.6%** | | **Gross Profit** | **$31,162** | **$9,562** | **+225.9%** | **$61,706** | **$17,153** | **+259.7%** | | Gross Margin | 30.3% | 22.1% | +8.2pp | 30.4% | 20.4% | +10.0pp | | Loss from operations | ($15,976) | ($26,244) | +39.1% | ($24,914) | ($47,889) | +48.0% | | **Net Loss** | **($9,098)** | **($26,115)** | **+65.2%** | **($18,270)** | **($49,285)** | **+62.9%** | | **Diluted EPS** | **($0.16)** | **($0.66)** | **+75.8%** | **($0.34)** | **($1.27)** | **+73.2%** | - Revenue for Q2 2025 more than doubled year-over-year, driven by strong demand across key product segments[12](index=12&type=chunk) - Gross margin significantly improved to **30.3%** in Q2 2025 from **22.1%** in Q2 2024, reflecting better product mix and cost management[12](index=12&type=chunk) - Net loss narrowed substantially to **$9.1 million** in Q2 2025 from **$26.1 million** in the prior-year quarter, demonstrating improved operational efficiency and higher sales volume[12](index=12&type=chunk) Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($116,389) | ($30,470) | | Net cash used in investing activities | ($75,194) | ($12,156) | | Net cash provided by financing activities | $195,993 | $3,097 | | **Net change in cash, cash equivalents and restricted cash** | **$8,062** | **($38,979)** | | Cash, cash equivalents and restricted cash at end of period | $87,195 | $16,118 | - Operating activities used **$116.4 million** in cash, primarily due to a **$94.7 million** increase in accounts receivable and a **$51.0 million** increase in inventories to support revenue growth[20](index=20&type=chunk) - Investing activities used **$75.2 million**, mainly for the purchase of property, plant, and equipment (**$53.9 million**) and equipment deposits (**$21.2 million**)[20](index=20&type=chunk) - Financing activities provided **$196.0 million** in cash, predominantly from a **$195.8 million** net proceed from a common stock offering[20](index=20&type=chunk) Notes To Condensed Consolidated Financial Statements Revenue by Product Category (in thousands) | Product Category | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | CATV | $56,019 | $5,818 | +862.9% | | Data Center | $44,791 | $34,352 | +30.4% | | Telecom | $1,940 | $2,379 | -18.5% | | Other | $202 | $721 | -72.0% | | **Total Revenue** | **$102,952** | **$43,270** | **+137.9%** | - On March 13, 2025, the company issued a warrant to a subsidiary of Amazon.com, Inc. to purchase up to **7,945,399 shares** at an exercise price of **$23.6956** per share. An initial **1,324,233 shares** vested upon issuance, with the remainder vesting based on up to **$4 billion** in product purchases over 10 years[36](index=36&type=chunk) - The company's top ten customers accounted for **98%** of revenue in Q2 2025, up from **94%** in Q2 2024, indicating significant customer concentration[56](index=56&type=chunk) - As of June 30, 2025, the company had **$133.9 million** in convertible senior notes outstanding, consisting of **$3.5 million** of **2026 Notes** and **$130.4 million** of **2030 Notes** (net carrying amount)[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to strong CATV and data center demand, enhanced liquidity via ATM offerings, and monitors geopolitical risks Results of Operations - CATV revenue surged by **862.9%** in Q2 2025 compared to Q2 2024, driven by the recovery in market demand and the start of a major network upgrade by a key North American MSO customer[122](index=122&type=chunk)[125](index=125&type=chunk) - Data Center revenue grew **30.4%** in Q2 2025 year-over-year, supported by increased orders for **100G** and **400G** products and new business related to generative AI applications[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Gross margin improved to **30.3%** in Q2 2025 from **22.1%** in Q2 2024, attributed to higher sales of high-margin products and ongoing efforts to reduce production costs[128](index=128&type=chunk)[130](index=130&type=chunk) - Operating expenses increased by **31.6%** in Q2 2025, primarily due to a **57.6%** rise in R&D expenses to support customer demand for new products and accelerate project timelines[131](index=131&type=chunk)[132](index=132&type=chunk) Liquidity and Capital Resources - As of June 30, 2025, the company had **$87.2 million** in cash, cash equivalents, and restricted cash, along with **$31.2 million** of unused borrowing capacity[145](index=145&type=chunk) At-the-Market (ATM) Offerings in 2025 (in thousands, except share data) | Offering | Completion Date | Shares Sold | Gross Proceeds | Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | First ATM Offering | April 8, 2025 | ~5.7 million | ~$100,000 | ~$98,000 | | Second ATM Offering | June 18, 2025 | ~5.7 million | $100,000 | $98,000 | | **Total** | | **~11.4 million** | **~$200,000** | **~$196,000** | - The company issued a warrant to an Amazon affiliate on March 13, 2025, for up to **~7.9 million shares**, with vesting tied to up to **$4 billion** in product purchases over 10 years[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk exposure is largely unchanged since year-end 2024, but international trade policy risks, particularly U.S.-China, remain significant - The company's exposure to market risk has not changed materially since year-end 2024[169](index=169&type=chunk) - An analysis as of June 30, 2025, confirmed no material revisions were needed to the market risk disclosures from the **2024 Form 10-K**, despite changes in international trade policies[170](index=170&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and procedures as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[172](index=172&type=chunk) - There were no changes in internal control over financial reporting during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, these controls[173](index=173&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) No material adverse legal claims are pending, but a $1.0 million sales tax dispute with the Texas Comptroller's Office is ongoing with an indeterminable outcome - The company believes there are no pending legal proceedings that would have a material adverse effect on it[99](index=99&type=chunk)[175](index=175&type=chunk) - A sales tax dispute with the Texas Comptroller's Office for approximately **$1.0 million** is ongoing, with the outcome currently indeterminable[100](index=100&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) Geopolitical tensions and volatile international trade policies, including new U.S. tariffs on Taiwan, pose significant risks to revenue, costs, and supply chain - A key risk factor is the heightened geopolitical tension and uncertainty in international trade policies, especially tariffs and export controls involving the U.S., China, and Taiwan[177](index=177&type=chunk) - As of early August 2025, the U.S. has imposed a **20%** temporary tariff on most imports from Taiwan, effective August 7, 2025, which could directly impact the company's operations[177](index=177&type=chunk) - While not significantly impacted by tariffs on China to date, the company warns that future trade barriers could materially and adversely affect its revenue, operations, and financial condition[178](index=178&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) SVP and Chief Legal Officer David Kuo adopted a Rule 10b5-1 trading plan on May 15, 2025, for the potential sale of up to 44,500 common stock shares - David Kuo, SVP and Chief Legal Officer, adopted a Rule **10b5-1** trading plan on May 15, 2025, for the potential sale of up to **44,500 shares** of common stock[180](index=180&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including corporate governance documents, convertible note indentures, the Amazon warrant, and officer certifications - The Exhibit Index lists all documents filed with or incorporated by reference into the quarterly report, including certifications by the CEO and CFO[181](index=181&type=chunk)[183](index=183&type=chunk)[185](index=185&type=chunk)

Exhibit 99.1 Applied Optoelectronics Reports Second Quarter 2025 Results Sugar Land, Texas, August 7, 2025 – Applied Optoelectronics, Inc. (NASDAQ: AAOI) ("AOI"), a leading provider of advanced optical and HFC networking products that power the internet, today announced financial results for its second quarter ended June 30, 2025. "We're pleased to deliver revenue and gross margin in line with our expectations," said Dr. Thompson Lin, AOI's Founder, President and Chief Executive Officer. "While EPS came in ...

Core Insights - Applied Optoelectronics, Inc. (AOI) reported strong financial results for Q2 2025, with significant year-over-year revenue growth and gross margin expansion despite a net loss attributed to increased operating expenses [2][6]. Financial Performance - GAAP revenue for Q2 2025 was $103.0 million, a substantial increase from $43.3 million in Q2 2024 and slightly up from $99.9 million in Q1 2025 [6]. - GAAP gross margin was 30.3%, compared to 22.1% in Q2 2024 and 30.6% in Q1 2025 [6]. - The company reported a GAAP net loss of $9.1 million, or $0.16 per share, an improvement from a net loss of $26.1 million, or $0.66 per share in Q2 2024 [6]. Business Segments - The datacenter business showed steady growth, while the CATV business continued to experience strong demand [2]. - Revenue from the CATV segment was $56.0 million in Q2 2025, up from $5.8 million in Q2 2024, and the datacenter segment generated $44.8 million, compared to $34.4 million in the same period last year [18]. Strategic Initiatives - AOI is investing in R&D and SG&A to support new customer qualification efforts for advanced transceivers, which are expected to yield higher customer engagement and revenue opportunities [2]. - The company anticipates producing over 100,000 units of 800G transceivers per month by the end of 2025, with 40% of production occurring in the US [2]. Future Outlook - For Q3 2025, AOI expects revenue in the range of $115 million to $127 million and a non-GAAP gross margin between 29.5% and 31.0% [7]. - The company projects a non-GAAP net loss between $5.9 million and $2.0 million, translating to a loss per share of $0.10 to $0.03 [7].

Company Overview - Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical and HFC networking products that serve as essential components for AI datacenters, CATV, and broadband fiber access networks globally [2] - The company provides critical infrastructure to tier-one customers in cloud computing, CATV broadband, telecom, and FTTH markets [2] - AOI has R&D facilities located in Atlanta, GA, and engineering and manufacturing facilities at its corporate headquarters in Sugar Land, TX, as well as in Taipei, Taiwan, and Ningbo, China [2] Upcoming Events - AOI will present virtually at the Rosenblatt 5th Annual Technology Summit: The Age of AI on August 19th, 2025, at 11:00 a.m. Eastern time [1] - The presentation will be conducted by Stefan Murry, Chief Financial Officer and Chief Strategy Officer of AOI [1] - A recording of the presentation will be accessible on the investor relations section of the company's website [1]

Core Insights - Applied Optoelectronics Inc. (AOI) has completed testing and received certification from Charter Communications for its 1.8GHz amplifiers and QuantumLink™ remote management software, facilitating Charter's network evolution project [1][2]. Group 1: Product Development and Certification - AOI's latest HFC networking solutions, including system amplifiers, line extenders, and booster amplifiers, have been certified by Charter, enabling support for symmetrical and multi-gigabit services up to 10 Gbps downstream and 1 Gbps upstream [2][3]. - The Quantum18 amplifier lineup addresses the need for providers like Charter to transition from legacy systems while ensuring compatibility with existing amplifier housings [3]. Group 2: Collaboration and Innovation - AOI collaborates with Digicomm International to enhance the end-to-end experience for ongoing installations, leveraging Digicomm's logistics services for Quantum Bandwidth networking products [2]. - Charter Communications emphasizes the importance of AOI's products in driving broadband engineering innovation, particularly in Distributed Access Architecture and DOCSIS 4.0 network upgrades [4]. Group 3: Company Overview - AOI is a leading developer and manufacturer of advanced optical and HFC networking products, supplying critical infrastructure to tier-one customers across various markets, including cloud computing and telecom [5].