Applied Optoelectronics Reports Second Quarter 2025 Results

SUGAR LAND, Texas, Aug. 07, 2025 (GLOBE NEWSWIRE) -- 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 below our expectations primarily due to elevated operating expenses, the inherent strength of our business fundamentals was apparent with strong year-over-year top line growth and gross margin expansion. The increase in our operating expenses is a direct result of strategic investments in R&D and SG&A expenses driven by increased business activity, including new customer qualification efforts for 800G and 1.6Tb transceivers, which are already translating into higher levels of customer engagement and near-term future revenue opportunities. During the quarter, we saw steady growth in our datacenter business, and we continued to see strong demand in our CATV business. We made positive steps forward in our 800G qualification efforts following the approval of our Taiwan factory for 800G product production from one of our major hyperscale customers. We’re approaching what we believe are the final stages for securing 800G product qualification and continue to believe that we will produce meaningful shipments of 800G products sometime in the second half of 2025.” “Our performance continues to be driven by strength in both our datacenter and CATV businesses, underscoring the strategic value of our diversified revenue streams,” said Dr. Stefan Murry, AOI’s Chief Financial Officer and Chief Strategy Officer. “We made good progress on increasing production in both our US and Taiwan locations, and we continue to expect to exit this year with a production capacity of over 100,000 units of 800G transceivers per month, with 40% of this production being done in the US. We have continued to enhance our resilience by broadening our manufacturing capabilities and scaling our production capacity, and believe these steps position us for long-term success.” Second Quarter 2025 Financial Summary GAAP revenue was $103.0 million, compared with $43.3 million in the second quarter of 2024 and $99.9 million in the first quarter of 2025.GAAP gross margin was 30.3%, compared with 22.1% in the second quarter of 2024 and 30.6% in the first quarter of 2025. Non-GAAP gross margin was 30.4%, compared with 22.5% in the second quarter of 2024 and 30.7% in the first quarter of 2025.GAAP net loss was $9.1 million, or $0.16 per basic share, compared with net loss of $26.1 million, or $0.66 per basic share in the second quarter of 2024, and a net loss of $9.2 million, or $0.18 per basic share in the first quarter of 2025.Non-GAAP net loss was $8.8 million, or $0.16 per basic share, compared with non-GAAP net loss of $10.9 million, or $0.28 per basic share in the second quarter of 2024, and a non-GAAP net loss of $0.9 million, or $0.02 per basic share in the first quarter of 2025. A reconciliation between all GAAP and non-GAAP information referenced above is contained in the tables below. Please also refer to “Non-GAAP Financial Measures” below for a description of these non-GAAP financial measures. Third Quarter 2025 Business Outlook (+) For third quarter of 2025, the company currently expects: Revenue in the range of $115 million to $127 million.Non-GAAP gross margin in the range of 29.5% to 31.0%.Non-GAAP net income in the range of a loss of $5.9 million to a loss of $2.0 million, and non-GAAP income per share in the range of a loss of $0.10 to a loss of $0.03 using approximately 62.3 million shares. (+) Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on non-GAAP financial measures. Conference Call Information The company will host a conference call and webcast for analysts and investors today, August 7, 2025 to discuss its second quarter 2025 financial results and outlook for its third quarter 2025 at 4:30 p.m. Eastern time / 3:30 p.m. Central time. This call will be open to the public, and investors may access the call by dialing 844-890-1794 (domestic) or 412-717-9586 (international). A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company's website at investors.ao-inc.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing 877-344-7529 (domestic) or 412-317-0088 (international) and entering passcode 7484245. Forward-Looking Information This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "predicts," "think," "objectives," "optimistic," "new," "goal," "strategy," "potential," "is likely," "will," "expect," "plan" "project," "permit" or by other similar expressions that convey uncertainty of future events or outcomes. These statements include management’s beliefs and expectations related to our outlook for the third quarter of 2025 and the remainder of 2025. Such forward-looking statements reflect the views of management at the time such statements are made. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company's actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: reduction in the size or quantity of customer orders; change in demand for the company's products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; the company's reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers' products or their rate of deployment of their products; general conditions in the internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in the United States and China); changes in the regulation and taxation of international trade, including the imposition of tariffs; changes in currency exchange rates; the negative effects of seasonality; and other risks and uncertainties described more fully in the company's documents filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. More information about these and other risks that may impact the company's business are set forth in the "Risk Factors" section of the company's quarterly and annual reports on file with the Securities and Exchange Commission. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in the company's expectations. Non-GAAP Financial Measures We provide non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP earnings per share to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP gross margin, we exclude stock-based compensation and related expenses, expenses associated with discontinued products, and non-recurring (income) expenses, if any, from our GAAP gross margin. To arrive at our non-GAAP net income (loss), we exclude all amortization of intangible assets, stock-based compensation expense and related expenses, non-recurring expenses, unrealized foreign exchange loss (gain), losses from the disposal of idle assets, if any, non-GAAP tax benefit (expenses), and losses from the disposal of idle assets, if any, from our GAAP net income (loss). Included in our non-recurring expenses in Q2 2025 and Q2 2024 are employee severance expenses (if any), legal expenses associated with litigation and certain legal and advisory expenses associated with purchase termination or patent protection (if any). Also included in our non-recurring expenses in Q2 2024, but not in Q2 2025, is management's adjustment for unrealized loss on certain aged accounts receivable. In computing our non-GAAP income tax benefit (expense), we have applied an annual effective tax rate for the year to date and applied it to our net income before income taxes. Our adjusted EBITDA is calculated by excluding depreciation expense, non-GAAP tax benefit (expense), and interest (income) expense, as well as the items excluded from non-GAAP net income (loss), from our GAAP net loss. Our non-GAAP diluted net loss per share is calculated by dividing our non-GAAP net loss by the fully diluted share count (for periods in which non-GAAP net income is positive) or basic share count (for periods in which our non-GAAP net income is negative). We believe that our non-GAAP measures are useful to investors in evaluating our operating performance for the following reasons: We believe that elimination of items such as amortization of intangible assets, stock-based compensation expense, non-recurring revenue and expenses, losses from the disposal of idle assets, unrealized foreign exchange gain or loss, and depreciation on certain equipment undergoing reconfiguration is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;We believe that elimination of expenses associated with discontinued products, including depreciation and inventory obsolescence is appropriate because these expenses are not indicative of our ongoing operations;We believe that estimating non-GAAP income taxes allows comparison with prior periods and provides additional information regarding the generation of potential future deferred tax assets;We believe that non-GAAP measures provide better comparability with our past financial performance, period-to-period results and with our peer companies, many of which also use similar non-GAAP financial measures; andWe anticipate that investors and securities analysts will utilize non-GAAP measures as a supplement to GAAP measures to evaluate our overall operating performance. A reconciliation of our GAAP net income (loss), GAAP total gross profit, GAAP earnings (loss), and GAAP earnings (loss) per share for Q2 2025 to our non-GAAP net income (loss), non-GAAP total gross profit, Adjusted EBITDA, and earnings (loss) per share, respectively, is provided below, together with corresponding reconciliations for Q2 2024. Non-GAAP measures should not be considered as an alternative to gross profit, net income (loss), earnings (loss) per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such other non-GAAP measures in the same manner. We have not reconciled the non-GAAP measures included in our guidance to the appropriate GAAP financial measures because the GAAP measures are not readily determinable on a forward-looking basis. GAAP measures that impact our non-GAAP financial measures may include stock-based compensation expense, non-recurring expenses, amortization of intangible assets, unrealized exchange loss (gain), asset impairment charges, loss (gain) from disposal of idle assets, and changes in the fair value of our convertible notes. These GAAP measures cannot be reasonably predicted and may directly impact our non-GAAP gross margin, our non-GAAP net income and our non-GAAP fully-diluted earnings per share, although changes with respect to certain of these measures may offset other changes. In addition, certain of these measures are out of our control. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort. About Applied Optoelectronics Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical and Hybrid Fiber-Coax (HFC) networking products that are the building blocks for AI datacenters, CATV and broadband fiber access networks around the world. AOI supplies this critical infrastructure to tier-one customers across cloud computing, CATV broadband, telecom, and FTTH markets. The company has R&D facilities 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. For additional information, visit www.ao-inc.com. Investor Relations Contacts: The Blueshirt Group, Investor RelationsLindsay Savarese+1-212-331-8417ir@ao-inc.com Applied Optoelectronics, Inc.Preliminary Condensed Consolidated Balance Sheets(In thousands)(Unaudited) June 30, 2025 December 31, 2024 ASSETS CURRENT ASSETS Cash, Cash Equivalents and Restricted Cash$87,195 $79,133 Accounts Receivable, Net 211,452 116,801 Inventories 138,867 88,135 Prepaid Expenses and Other Current Assets 20,824 17,199 Total Current Assets 458,338 301,268 Property, Plant And Equipment, Net 269,386 219,235 Land Use Rights, Net 4,798 4,837 Operating Right of Use Asset 22,106 9,646 Intangible Assets, Net 3,639 3,680 Other Assets 38,583 8,366 TOTAL ASSETS$796,850 $547,032 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable$132,962 $104,969 Bank Acceptance Payable 32,107 19,259 Accrued Expenses 27,686 22,091 Current Lease Liability-Operating 1,905 1,380 Current Portion of Notes Payable and Long Term Debt 22,183 22,370 Total Current Liabilities 216,843 170,069 Convertible Senior Notes 133,936 134,497 Other Long-Term Liabilities 21,090 13,354 TOTAL LIABILITIES 371,869 317,920 STOCKHOLDERS' EQUITY Common Stock 62 49 Additional Paid-in Capital 893,927 683,462 Cumulative Translation Adjustment 1,113 (2,548)Retained Earnings (470,121) (451,851)TOTAL STOCKHOLDERS' EQUITY 424,981 229,112 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$796,850 $547,032 Applied Optoelectronics, Inc.Preliminary Condensed Consolidated Statements of Operations(In thousands)(Unaudited) Three Months Ended June 30, Six Months Ended June 30,Revenue 2025 2024 2025 2024 CATV$56,019 $5,818 $120,520 $14,554 Datacenter 44,791 34,352 76,841 63,338 Telecom 1,940 2,379 4,876 4,648 Other 202 721 574 1,403 Total Revenue 102,952 43,270 202,811 83,943 Total Cost of Goods Sold 71,790 33,708 141,105 66,790 Total Gross Profit 31,162 9,562 61,706 17,153 Operating Expenses: Research and Development 20,612 13,078 38,422 24,790 Sales and Marketing 8,135 5,910 13,492 9,707 General and Administrative 18,391 16,818 34,706 30,545 Total Operating Expenses 47,138 35,806 86,620 65,042 Operating Loss (15,976) (26,244) (24,914) (47,889) Other Income (Expense): Interest Income 286 93 511 353 Interest Expense (818) (1,693) (1,752) (3,369)Other Income (Expense), net 7,410 1,729 7,885 1,620 Total Other Income (Expense): 6,878 129 6,644 (1,396) Net loss before Income Taxes (9,098) (26,115) (18,270) (49,285)Income Tax Expense - - - - Net loss$(9,098) $(26,115) $(18,270) $(49,285)Net loss per share attributable to common stockholders basic$(0.16) $(0.66) $(0.34) $(1.27)diluted$(0.16) $(0.66) $(0.34) $(1.27) Weighted-average shares used to compute net loss per share attributable to common stockholders basic 56,772 39,365 53,426 38,864 diluted 56,772 39,365 53,426 38,864 Applied Optoelectronics, Inc.Reconciliation of Statements of Operations under GAAP and Non-GAAP(In thousands)(Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 GAAP total gross profit(a)$31,162 $9,562 $61,706 $17,153 Share-based compensation expense 94 137 177 239 Non-recurring expense 41 32 41 38 Non-GAAP total gross profit(a)$31,297 $9,731 $61,924 $17,430 GAAP net loss$(9,098) $(26,115) $(18,270) $(49,285)Share-based compensation expense 3,164 6,058 5,726 8,897 Non-cash expenses associated with discontinued products 1,073 1,061 2,118 2,089 Amortization of intangible assets 110 100 218 229 Non-recurring (income) expense 862 1,576 1,255 2,099 Unrealized exchange loss (gain) (5,278) (107) (5,061) 276 Tax (benefit) expense related to the above 337 6,571 4,325 12,807 Non-GAAP net loss$(8,830) $(10,856) $(9,689) $(22,888) GAAP net loss$(9,098) $(26,115) $(18,270) $(49,285)Share-based compensation expense 3,164 6,058 5,726 8,897 Non-cash expenses associated with discontinued products 1,073 1,061 2,118 2,089 Amortization of intangible assets 110 100 218 229 Non-recurring expense (income) 862 1,576 1,255 2,099 Unrealized exchange loss (gain) (5,278) (107) (5,061) 276 Depreciation expense 5,217 3,907 9,790 7,743 Interest (income) expense, net 532 1,600 1,241 3,016 Adjusted EBITDA$(3,418) $(11,920) $(2,983) $(24,936) GAAP diluted net loss per share$(0.16) $(0.66) $(0.34) $(1.27)Share-based compensation expense 0.06 0.15 0.11 0.23 Non-cash expenses associated with discontinued products 0.02 0.02 0.04 0.05 Amortization of intangible assets - - - 0.01 Non-recurring (income) expense 0.01 0.04 0.02 0.05 Unrealized exchange loss (gain) (0.10) - (0.09) 0.01 Non-GAAP tax benefit 0.01 0.17 0.08 0.33 Non-GAAP diluted net loss per share$(0.16) $(0.28) $(0.18) $(0.59) Shares used to compute diluted loss per share 56,772 39,365 53,426 38,864 Shares used to compute diluted earnings per share 56,772 39,365 53,426 38,864 (a) Provided for the purpose of calculating gross profit as a percentage of revenue (gross margin).

Applied Optoelectronics Reports Second Quarter 2025 Results

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