Applied Optoelectronics(US:AAOI)2026-02-26 22:30Financial Data and Key Metrics Changes - Total revenue for 2025 increased by 83% year-over-year to a record $456 million, driven by strong demand in both CATV and data center businesses [8][15] - Q4 revenue was $134.3 million, up 34% year-over-year and 13% sequentially, aligning with guidance [25][30] - Non-GAAP gross margin for Q4 was 31.4%, exceeding the guidance range of 29%-31% [12][29] - Non-GAAP loss per share for Q4 was $0.01, narrower than the guidance range of a loss of $0.13 to a loss of $0.04 [12][32] Business Line Data and Key Metrics Changes - Data center revenue for 2025 was $196 million, a 32% increase compared to 2024, with Q4 data center revenue at $74.9 million, up 69% year-over-year [8][26] - CATV revenue nearly tripled to $245 million in 2025, with Q4 CATV revenue at $54 million, up 3% year-over-year but down 24% sequentially [8][13] - Telecom segment revenue for Q4 was $5.1 million, up 45% year-over-year and 37% sequentially [28] Market Data and Key Metrics Changes - 56% of Q4 revenue came from data center products, 40% from CATV products, and 4% from FTTH, telecom, and other segments [25] - Sales of 400G products increased by 141% year-over-year, while 100G products saw a 54% increase [12][26] Company Strategy and Development Direction - The company is focused on scaling next-generation data center products, expanding production capacity, diversifying revenue, and improving operational execution [14][15] - Investments in manufacturing capacity are expected to support anticipated demand, particularly in the Texas facility [14][20] - The company aims to achieve a non-GAAP gross margin of around 40% by late 2026, driven by a shift towards higher-margin products [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for 800G and 1.6T products, particularly as AI-driven data center investments accelerate [15][22] - The company anticipates generating over $1 billion in revenue for 2026, limited by production capacity rather than market demand [38] - Management noted that the demand for 800G modules is projected to exceed production capacity through mid-2027 [10][17] Other Important Information - The company plans to triple its laser manufacturing capacity in Texas to accommodate future growth [36] - Direct tariffs had a $1.2 million impact on the income statement, with less than 10% of component value sourced from China [24] Q&A Session Summary Question: What was the value of 800G revenue in the quarter? - The 800G revenue was below $4 million due to delays related to firmware optimization [41][42] Question: What is the timeline for achieving the target gross margin of 40%? - The company expects to achieve a gross margin of 35%-38% by Q2, with a target of 40% by late Q3 or Q4 of next year [44][46] Question: How does the company view the cable TV market amidst operator outlooks? - The company believes significant spending is directed towards amplifiers and outside plant parts of the network, where it operates [54][56] Question: What is the current status of laser production and capacity expansion? - The company plans to triple indium phosphide production capacity by mid-next year, with equipment already on order [90]