Applied Optoelectronics(AAOI) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Performance Highlights AOI reported strong year-over-year revenue growth and improved gross margin in Q2 2025, driven by strategic investments and robust performance in data center and CATV segments Management Commentary AOI's CEO and CFO expressed satisfaction with Q2 results, highlighting strong year-over-year revenue growth and gross margin expansion, driven by strategic R&D and sales investments in 800G and 1.6Tb transceivers - Revenue and gross margin met expectations, but EPS was below expectations, primarily due to increased operating expenses[3] - Increased operating expenses resulted from strategic investments in R&D and sales management for 800G and 1.6Tb transceivers to drive customer engagement and future revenue opportunities[3] - Both data center and CATV businesses achieved robust growth, with the Taiwan factory receiving 800G product production approval from a major hyperscale customer[3] - Monthly production capacity for 800G transceivers is projected to exceed 100,000 units by the end of 2025, with 40% manufactured in the US[3] Second Quarter 2025 Financial Summary Applied Optoelectronics achieved significant year-over-year growth in Q2 2025, with GAAP revenue reaching $103.0 million and improved gross margin, while net loss narrowed Key Financial Data for Q2 2025 (GAAP vs Non-GAAP) | Metric | Q2 2025 | Q2 2024 | Q1 2025 | Y/Y Change (Q2 2025 vs Q2 2024) | Q/Q Change (Q2 2025 vs Q1 2025) | | :-------------------------- | :------------- | :------------- | :------------- | :------------------------------- | :------------------------------- | | GAAP Revenue | $103.0M | $43.3M | $99.9M | +137.9% | +3.1% | | GAAP Gross Margin | 30.3% | 22.1% | 30.6% | +8.2 pp | -0.3 pp | | Non-GAAP Gross Margin | 30.4% | 22.5% | 30.7% | +7.9 pp | -0.3 pp | | GAAP Net Loss | $(9.1)M | $(26.1)M | $(9.2)M | -65.2% | -1.1% | | GAAP Basic Loss Per Share | $(0.16) | $(0.66) | $(0.18) | -75.8% | -11.1% | | Non-GAAP Net Loss | $(8.8)M | $(10.9)M | $(0.9)M | -19.2% | +877.8% | | Non-GAAP Basic Loss Per Share | $(0.16) | $(0.28) | $(0.02) | -42.9% | +700.0% | Third Quarter 2025 Business Outlook AOI anticipates continued revenue growth in Q3 2025, with non-GAAP gross margin expected to remain stable, while non-GAAP net loss per share is projected to narrow Q3 2025 Guidance For Q3 2025, AOI projects revenue between $115 million and $127 million, with non-GAAP gross margin between 29.5% and 31.0%, and non-GAAP net loss per share between $0.10 and $0.03 Q3 2025 Business Outlook | Metric | Q3 2025 Guidance | | :-------------------- | :----------------- | | Revenue | $115M to $127M | | Non-GAAP Gross Margin | 29.5% to 31.0% | | Non-GAAP Net Loss | $(5.9)M to $(2.0)M | | Non-GAAP Loss Per Share | $(0.10) to $(0.03) | | Shares Used | Approx. 62.3M shares | Consolidated Financial Statements This section presents AOI's preliminary condensed consolidated balance sheets and statements of operations, along with reconciliations of GAAP and non-GAAP financial measures Preliminary Condensed Consolidated Balance Sheets As of June 30, 2025, AOI's total assets increased significantly to $796.85 million, driven by higher receivables, inventory, and property, plant, and equipment, leading to a substantial rise in shareholder equity Balance Sheet Highlights (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 (in thousands of USD) | December 31, 2024 (in thousands of USD) | Change (in thousands of USD) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :--------------------------- | | Total current assets | $458,338 | $301,268 | +$157,070 | | Property, plant and equipment, net | $269,386 | $219,235 | +$50,151 | | Total assets | $796,850 | $547,032 | +$249,818 | | Total current liabilities | $216,843 | $170,069 | +$46,774 | | Total liabilities | $371,869 | $317,920 | +$53,949 | | Total stockholders' equity | $424,981 | $229,112 | +$195,869 | Preliminary Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, AOI reported total revenue of $102.95 million, a significant increase from the prior year, driven by strong growth in CATV and data center segments, leading to higher gross profit and reduced operating loss Revenue by Business Segment (Q2 2025 vs Q2 2024) | Business Segment | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | Y/Y Change | | :--------------- | :-------------------------- | :-------------------------- | :--------- | | CATV | $56,019 | $5,818 | +862.8% | | Data Center | $44,791 | $34,352 | +30.4% | | Telecom | $1,940 | $2,379 | -18.4% | | Other | $202 | $721 | -71.9% | | Total Revenue | $102,952 | $43,270 | +137.9% | Key Statements of Operations Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | Y/Y Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Gross Profit | $31,162 | $9,562 | +225.9% | | Operating Expenses | $47,138 | $35,806 | +31.6% | | Operating Loss | $(15,976) | $(26,244) | -39.1% | | Net Loss | $(9,098) | $(26,115) | -65.2% | | Basic Loss Per Share | $(0.16) | $(0.66) | -75.8% | Reconciliation of GAAP and Non-GAAP Financial Measures This reconciliation details adjustments made to GAAP figures to derive non-GAAP metrics such as gross profit, net loss, and diluted net loss per share, primarily excluding stock-based compensation, non-cash charges, and unrealized foreign exchange gains/losses Reconciliation of GAAP to Non-GAAP Gross Profit (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | | :-------------------------- | :-------------------------- | :-------------------------- | | GAAP Total Gross Profit | $31,162 | $9,562 | | Stock-based compensation expense | $94 | $137 | | Non-recurring expenses | $41 | $32 | | Non-GAAP Total Gross Profit | $31,297 | $9,731 | Reconciliation of GAAP to Non-GAAP Net Loss (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | GAAP Net Loss | $(9,098) | $(26,115) | | Stock-based compensation expense | $3,164 | $6,058 | | Non-cash charges related to discontinued products | $1,073 | $1,061 | | Amortization of intangible assets | $110 | $100 | | Non-recurring (income) expense | $862 | $1,576 | | Unrealized foreign exchange (gain) loss | $(5,278) | $(107) | | Tax (benefit) expense related to above | $337 | $6,571 | | Non-GAAP Net Loss | $(8,830) | $(10,856) | Reconciliation of GAAP to Non-GAAP Diluted Net Loss Per Share (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :------------------------------------------ | :------------- | :------------- | | GAAP Diluted Net Loss Per Share | $(0.16) | $(0.66) | | Stock-based compensation expense | $0.06 | $0.15 | | Non-cash charges related to discontinued products | $0.02 | $0.02 | | Amortization of intangible assets | $0.00 | $0.00 | | Non-recurring (income) expense | $0.01 | $0.04 | | Unrealized foreign exchange (gain) loss | $(0.10) | $0.00 | | Non-GAAP tax benefit | $0.01 | $0.17 | | Non-GAAP Diluted Net Loss Per Share | $(0.16) | $(0.28) | Supplemental Information This section provides explanations for non-GAAP financial measures, company overview, forward-looking statements, conference call details, and investor relations contacts Non-GAAP Financial Measures Explanation AOI provides non-GAAP financial metrics to offer a clearer view of core operating performance by excluding items like intangible asset amortization, stock-based compensation, and unrealized foreign exchange impacts - Non-GAAP metrics aim to eliminate the impact of items unrelated to overall operating performance, such as amortization of intangible assets, stock-based compensation, non-recurring income and expenses, losses on disposal of idle assets, and unrealized foreign exchange gains or losses[11][14] - Non-GAAP metrics are provided to facilitate better comparisons with the company's past performance, current period performance, and industry peers[14] - Non-GAAP metrics should not be considered a substitute for GAAP financial performance and may not be comparable to similarly titled measures used by other companies[13] About Applied Optoelectronics Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical and hybrid fiber coaxial (HFC) network products for AI data centers, CATV, and broadband fiber access networks - AOI is a leading developer and manufacturer of advanced optical and hybrid fiber coaxial (HFC) network products[15] - Its products are fundamental to AI data centers, CATV, and broadband fiber access networks, serving tier-one customers in cloud computing, CATV broadband, telecom, and FTTH markets[15] - The company operates R&D and manufacturing facilities globally, including the US, Taiwan, and China[15] Forward-Looking Information This section serves as a cautionary note for forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially from expectations, with no obligation to update - Forward-looking statements reflect management's beliefs and expectations regarding the Q3 2025 and full-year outlook[9] - These statements involve risks and uncertainties, including changes in customer orders, demand, manufacturing, supply chain, pricing pressures, and macroeconomic conditions[9] - Investors should not consider forward-looking statements as predictions of future events, and the company undertakes no obligation to update these statements[9] Conference Call Information Applied Optoelectronics will host a conference call and webcast on August 7, 2025, at 4:30 PM ET to discuss its Q2 2025 financial results and Q3 2025 outlook - The conference call and webcast will be held on August 7, 2025, at 4:30 PM ET[8] - Investors can participate by dialing 844-890-1794 (domestic) or 412-717-9586 (international)[8] - A webcast and archived version will be available on the company's website at investors.ao-inc.com[8] Investor Relations Contacts Applied Optoelectronics' investor relations are managed by The Blueshirt Group, with Lindsay Savarese as the primary contact - Investor relations contact is The Blueshirt Group[16] - Contact: Lindsay Savarese, Phone: +1-212-331-8417, Email: ir@ao-inc.com[16]