Financial Data and Key Metrics - Q3 2024 revenue was $65.2 million, at the high end of the guidance range of $60 million to $66 million [13] - Non-GAAP gross margin was 25%, within the guidance range of 24% to 26% [14] - Non-GAAP loss per share was $0.21, above the guidance range of $0.14 to $0.20 due to accelerated R&D spending [14] - Total cash, cash equivalents, short-term investments, and restricted cash stood at $41.4 million at the end of Q3 [41] - Total debt, excluding convertible debt, was $39.4 million, up from $27.5 million in Q2 [42] Business Line Performance - Data center revenue was $40.9 million, down 16% YoY but up 90% sequentially, driven by 400G product growth [15] - CATV revenue was $20.9 million, up 104% YoY and 260% sequentially, driven by 1.8 GHz amplifier shipments [16] - Telecom revenue was $2.8 million, down 9% YoY but up 18% sequentially [33] - 67% of data center revenue came from 100G products, 27% from 200G and 400G, and 4% from 40G [23] Market Performance - Data center business saw strong double-digit sequential growth, driven by new 400G product wins [13] - CATV business more than tripled sequentially due to customer transitions to new architectures [13] - Initial orders for 400G products were received from a new hyperscale customer, with shipments already underway [15] Strategic Direction and Industry Competition - The company is focusing on 400G and 800G products for data centers, with significant interest in 1.6 terabit transceivers [17] - CATV customers are transitioning to DOCSIS 4.0, with initial orders already being delivered [30] - The company is investing in US-based production and automated manufacturing to meet future demand [48] Management Commentary on Operating Environment and Future Outlook - Management expects Q4 revenue to be between $94 million and $104 million, with non-GAAP gross margin in the range of 27.5% to 29.5% [46] - Long-term demand drivers for data center and CATV businesses remain strong, with generative AI adoption expected to drive further growth [47] - The company is optimistic about the ramp-up of 800G products in 2025 and expects CATV margins to improve [55][56] Other Important Information - The company raised $59.9 million net of commissions and fees under its at-the-market offering program [45] - Capital investments in Q3 totaled $11.4 million, primarily for production and R&D equipment [43] - The company expects to make sizable CapEx investments over the next several quarters to prepare for increased production of 400G, 800G, and 1.6 terabit products [43] Q&A Session Summary Question: What is driving the increased demand for 400G products? - The demand is driven by data center customers' need for interconnections, particularly for AI networks, and is expected to continue growing [50] Question: What types of transceivers will the company focus on for 800G? - The company will primarily focus on edge-emitting technology (EMLs) and silicon photonics-based solutions, with some interest in VCSEL-based solutions [52] Question: How many of the top hyperscalers are currently customers? - The company has three out of the top five hyperscalers as customers, with ongoing discussions with a fourth [53] Question: What is the outlook for margins as the company transitions to 800G and 1.6 terabit products? - CATV margins are currently higher than data center margins and are expected to improve further, while the transition to 800G and 1.6 terabit products should also boost data center margins [55][56] Question: What is driving the sharp revenue uptick in Q4? - The growth is driven by continued strength in 400G products, some contribution from 800G, and improving CATV margins [59] Question: What is the status of the new hyperscale customer? - The new hyperscale customer is a re-engaging customer and is expected to grow in Q4, potentially becoming a 10% customer in the next few quarters [61] Question: What is the outlook for Microsoft-related revenue? - Microsoft-related revenue was below $5 million in Q3 and is ramping slower than expected, but the company remains committed to reaching a $25 million per quarter run rate [65] Question: What is driving the strength in 100G products? - Hyperscale customers are growing both their existing infrastructure and new AI-focused infrastructure, leading to continued demand for 100G products [67]

Applied Optoelectronics (AAOI) came out with a quarterly loss of $0.21 per share versus the Zacks Consensus Estimate of a loss of $0.17. This compares to loss of $0.05 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -23.53%. A quarter ago, it was expected that this maker of fiber optic products used by cable TV providers would post a loss of $0.29 per share when it actually produced a loss of $0.28, delivering a surprise of 3. ...

Table of Contents Title of each class Trading Symbol(s) Trading Name of each exchange on which registered UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: ...

Revenue and Growth - Q3 2024 GAAP revenue was $65.2 million, up from $43.3 million in Q2 2024 and $62.5 million in Q3 2023[4] - Total revenue for Q3 2024 was $65.151 million, compared to $62.547 million in Q3 2023, representing a 4.2% increase[17] - GAAP revenue for Q3 2024 was $65.151 million, compared to $62.547 million in Q3 2023[19] - Q4 2024 revenue guidance is between $94 million and $104 million[7] Gross Margin and Profitability - Q3 2024 GAAP gross margin was 24.4%, compared to 22.1% in Q2 2024 and 32.3% in Q3 2023[4] - Non-GAAP total gross profit for Q3 2024 was $16.264 million, compared to $20.327 million in Q3 2023[19] - Q4 2024 non-GAAP gross margin is expected to be between 27.5% and 29.5%[7] Net Loss and Earnings - Q3 2024 GAAP net loss was $17.8 million, or $0.42 per basic share, compared to a net loss of $26.1 million in Q2 2024 and $9.0 million in Q3 2023[5] - Q3 2024 non-GAAP net loss was $8.8 million, or $0.21 per basic share, compared to a non-GAAP net loss of $10.9 million in Q2 2024 and $1.7 million in Q3 2023[5] - Net loss for Q3 2024 was $17.757 million, compared to a net loss of $8.953 million in Q3 2023[17] - GAAP net loss for Q3 2024 was $(17.757) million, compared to $(8.953) million in Q3 2023[19] - Non-GAAP net loss for Q3 2024 was $(8.782) million, compared to $(1.691) million in Q3 2023[19] - Q4 2024 non-GAAP net income is projected to range from a loss of $1.9 million to income of $1.7 million[7] - GAAP diluted net loss per share for Q3 2024 was $(0.42), compared to $(0.27) in Q3 2023[19] - Non-GAAP diluted net loss per share for Q3 2024 was $(0.21), compared to $(0.05) in Q3 2023[19] Business Segment Performance - Data center business saw double-digit sequential growth driven by new wins for 400G products[3] - CATV business more than tripled from Q2 2024 due to customer transition to new architectures[3] - Datacenter revenue for Q3 2024 was $40.945 million, a decrease of 16.1% compared to $48.807 million in Q3 2023[17] - CATV revenue for Q3 2024 was $20.947 million, a significant increase of 104.1% compared to $10.268 million in Q3 2023[17] Research and Development - Accelerated R&D spending in Q3 2024 was driven by new customer requests, particularly for 1.6 Terabit transceivers in the data center business[3] - Research and development expenses for Q3 2024 were $13.428 million, a 42.0% increase compared to $9.457 million in Q3 2023[17] Operating Expenses - Total operating expenses for Q3 2024 were $32.464 million, a 20.8% increase compared to $26.860 million in Q3 2023[17] - Share-based compensation expense for Q3 2024 was $2.943 million, compared to $3.235 million in Q3 2023[19] - Expenses associated with discontinued products for Q3 2024 were $202 thousand, compared to $29 thousand in Q3 2023[19] Financial Position and Assets - Total assets as of September 30, 2024, were $409.972 million, up from $389.186 million as of December 31, 2023, representing a 5.3% increase[15] - Accounts receivable increased by 56.3% to $75.154 million as of September 30, 2024, compared to $48.071 million as of December 31, 2023[15] - Cash, cash equivalents, and restricted cash decreased by 24.9% to $41.367 million as of September 30, 2024, from $55.097 million as of December 31, 2023[15] - Total current liabilities increased by 25.4% to $117.102 million as of September 30, 2024, compared to $93.358 million as of December 31, 2023[15] Adjusted EBITDA and Other Metrics - Adjusted EBITDA for Q3 2024 was $(7.685) million, compared to $2.980 million in Q3 2023[19] - Shares used to compute diluted loss per share for Q3 2024 were 42,312, compared to 32,774 in Q3 2023[19]

Core Viewpoint - Applied Optoelectronics, Inc. is set to release its third quarter financial results on November 7, 2024, and will host a conference call to discuss these results and the outlook for the fourth quarter [1][2]. Company Overview - Applied Optoelectronics Inc. is a leading developer and manufacturer of advanced optical products, including components, modules, and equipment for broadband fiber access networks [3]. - The company's products are utilized in various markets, including internet datacenter, CATV broadband, telecom, and fiber-to-the-home (FTTH) [3]. - AOI supplies optical networking lasers, components, and equipment to tier-1 customers across these markets [3]. - The company has its headquarters, wafer fab, and advanced engineering and production facilities located in Sugar Land, Texas, along with engineering and manufacturing facilities in Taipei, Taiwan, and Ningbo, China [3].

Company Overview - Applied Optoelectronics (AAOI) shares increased by 13.7% to close at $15.98, with a significant trading volume compared to normal sessions, and a total gain of 46.2% over the past four weeks [1] - The company is recognized for its strong optical networking technology portfolio, enhancing its position in the cable TV (CATV) market, and benefiting from rising demand for its 100G products in the datacenter business [1] Financial Performance - The upcoming quarterly report for Applied Optoelectronics is expected to show a loss of $0.17 per share, reflecting a year-over-year decline of 240%, while revenues are projected to be $62.66 million, a slight increase of 0.2% from the previous year [1] - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days, indicating a potential lack of momentum in earnings estimate revisions [2] Industry Context - Applied Optoelectronics is part of the Zacks Electronics - Semiconductors industry, where another company, AXT (AXTI), saw a 4% increase in its stock price, closing at $2.08, but has experienced a decline of 27.8% over the past month [2] - AXT's consensus EPS estimate for its upcoming report has also remained unchanged at -$0.06, which is a 50% improvement compared to the previous year [3]

Core Viewpoint - Applied Optoelectronics reported mixed Q2/2024 results, with revenue meeting expectations but non-GAAP gross margins falling short of projections. The company anticipates a significant revenue ramp-up in the latter half of the year and into 2025, despite previous projections not materializing as expected [1][9]. Financial Performance - Q2/2024 revenue was $43.3 million, aligning with expectations, while non-GAAP earnings per share were $(0.28) [1][2]. - Non-GAAP gross margin for Q2/2024 was 22.5%, below the guidance range of 25.5%-27.5% [2]. - The company’s total revenue for Q1/2024 was $40.7 million, with a gross margin of 18.7% [3]. - Free cash flow remained negative at $(6.1) million for Q2/2024, although the net debt position improved to $91.7 million [3]. Share Dilution and Capital Raising - The company raised $16.2 million in net proceeds from selling 1.48 million new shares, contributing to a 40% increase in outstanding shares since the beginning of 2023, leading to significant dilution for existing equity holders [4][5]. - The net debt position declined due to ongoing sales of newly issued shares [1][3]. Segment Performance - The Datacenter segment continued to be the primary revenue driver, generating $34.4 million in Q2/2024, while CATV and Telecom segments contributed $5.8 million and $2.4 million, respectively [6]. - The company has entered supply agreements with Microsoft for next-generation products, although the ramp-up has been slower than anticipated [6][8]. Future Outlook - Management projects a substantial increase in Microsoft-related revenue in late Q3, with expectations for increased orders for 400G data center products through the end of 2024 [8]. - Q4 revenues could approach $100 million, potentially leading to a return to profitability, although this will require significant working capital investments [8][9]. - Current consensus anticipates a revenue increase of approximately 75% next year, with earnings per share expected to exceed $0.50 [8][9].

Group 1: AI Market Overview - The artificial intelligence (AI) investment frenzy is cooling down as investors question the return on large capital expenditures in the sector [1] - Alphabet's second-quarter earnings report showed mixed results, with YouTube ad revenue at $8.7 billion, lower than expected, and capital expenditures rising to $13.2 billion, exceeding estimates [1] Group 2: Intel (INTC) - Intel's stock has dropped over 60% since the start of 2024, struggling to keep pace with competitors like Taiwan Semiconductor Manufacturing Company (TSMC) [3] - The company's Foundry business lost $7 billion last year, prompting a restructuring plan that includes layoffs of 15,000 workers and a dividend elimination [4] - Intel's recent investments in AI chips have negatively impacted its earnings per share, leading to soft guidance for Q3 and ongoing operational inefficiencies [4] Group 3: Qualcomm (QCOM) - Qualcomm's revenues declined 19% year-over-year to $35.8 billion, with handset chip revenues dropping 27% [6] - The company is betting on its new Snapdragon X Elite AI chips for Windows PCs, but consumer demand remains uncertain amid recession fears [6] - Qualcomm's stock has fallen 27% since its 52-week high of $227.09 in mid-July, with potential for further selling pressure [6] Group 4: Applied Optoelectronics (AAOI) - Applied Optoelectronics develops optical transceivers and laser components for data centers, but growth has been slower than expected [7] - The company has seen its shares plummet 60% since the start of the year, with no significant upward revisions to guidance anticipated [7]

The market wasn't in a forgiving mood when it disseminated the company's latest set of quarterly figures.Applied Optoelectronics (AAOI -5.76%), a company that manufactures fiber optics networking components, probably wishes it had called in sick on Wednesday. Its stock price fell by nearly 6% on the day, no thanks to a quarterly earnings report that displeased investors. That decline was far steeper than the almost 0.8% slide of the S&P 500 index.Revenue improvement, bottom-line erosionFor its second quarte ...

Applied Optoelectronics, Inc. (NASDAQ:AAOI) Q2 2024 Earnings Conference Call August 6, 2024 4:30 PM ET Company Participants Lindsay Savarese - IR Thompson Lin - Founder, Chairman and CEO Stefan Murry - CFO and Chief Strategy Officer Conference Call Participants Simon Leopold - Raymond James Timothy Savageaux - Northland Capital Markets Dave Kang - B. Riley FBR Operator Good afternoon. I will be your conference operator. At this time, I would like to welcome everyone to Applied Optoelectronics' Second Quarte ...